community weblog - [ Strategic Risk Public ]

Dan Farber does a fine job of looking past the "constant chatter among businesses and the intelligence community about insufficient budgets, technology complexity and regulatory compliance" to see that it is a distraction that "masks the underlying failure to inculcate a culture that can overcome those problems with a clear and strategic focus on identifying the key business levers and extracting the relevant data."

He goes on to say that the markers of this decline are only rarely of a 9-11 stature but rather an invisible (perhaps 'ignored under the press of daily threats' is a better phrase) accumulation of degrading capability. I concur with his comment that they rise "from the same source-a lack of essential insight and analysis."

As chance would have it, just moments before Farber's article crossed my desk so did a public list comment by Myron Tribus (a superb disciple of Deming and a gifted thinker in his own right):

Think of Farber's comment applied to our intel agencies:

I have often said of such companies that, "They live at the sufferance of their competitors." The extension of that idea to our intel agencies, their data fusion, and subsequent dissemination to relevant consumers is not a sanguine thought.

Unfortunately the commercial stampede at both the industrial and venture capital level has long been underway and the PRC is harvesting the bounty.

We have painfully learned that at the Venture Capital (VC) level, investors are driving their stable of firms to create product and produce revenue. Risk assessment is very low on their horizon. Private conversations reveal that VCs preach the mantra "to their portfolio companies to outsource hardware development and manufacturing to China or become uncompetitive." Some VCs have already made the next step of forming development groups in the PRC precisely to serve their entire stable of firms. Now the VCs have put a superb target-rich environment under one roof. Unlike established industrial firms that already have revenue streams, VCs have little of value in their stable of firms save their intellectual capital.

On the established industrial side, the OEMs (Original Equipment Manufacturers at the top of their respective supply chains) have been virtually ordering their suppliers explicitly or implicitly to China (a) to produce lower cost products for resale back to the OEM or one of the subsuppliers in the chain, or (b) support OEM plants in-country. The demand for cost reduction is the pole star. Our prediction is that the OEMs, whose hubris leads them to mistakenly feel themselves above the risk horizon, will not protect their suppliers as new Chinese or other low-cost country providers come on line and will shift purchases to those new firms, hollowing out their own industrial infrastructure, even as OEMs press those same suppliers for cost reductions on a year-to-year basis.

I can speak to the means and actors that would gain access to the technologies being developed. It is extreme in its impact on US interests and I think that the VC and industrial communities are blind to it. We are in the process of contacting certain VC and commercial firms to outline the intellectual property (IP) theft being carried out by overt and covert subsidiaries. It is our opinion that the charge of fiduciary breach can be leveled at anyone who callously lets the IP of their stable be stolen.

Certain firms have a sensitivity to risk analysis (Intel, IBM, and HP come to mind), but their horizon has more to do with minimizing time and delivery/availability risk (above and beyond direct costs) in their supply chains. What they almost universally do not do is extend that risk assessment and mitigation to a level that generates legitimate security. It is too often 'feel good' security uniformly applied to all assets instead of a prioritized response against the assets most at risk.

Our experience has shown that there is a lack of tailored, proactive due-diligence and surveillance put in place to identify, and then mitigate. All technology leaks over time. The trick is to degrade and delay that leak. A major component of that is to put in place a process that, in simple terms, drives the bad guys down the street to a less well protected firm.

The US had the expectation of a quiescent, grateful citizenry that would permit administration on the cheap while criminals were tried and democratic institutions were built from scratch. That assumption coupled with fear of the then Iraqi army may have led to the disbanding of the military. The immediate lack of security in a stroke allowed an already failing infrastructure to be looted to the walls while the failure to sequester vast arms caches allowed Baathists to stockpile arms for the asking. There seemed to be no understanding of the debilitating impact of delay, no jobs, and no visible improvement of daily life.

It is like no one ever read Robert Ruark's book, "Something of Value," set in the Mau Mau revolt of Kenya in the 1950s. The British destroyed the existing infrastructure but substituted nothing to replace it:

"If a people lose their gods, they must replace them with something of value."

That something was the Mau Mau revolt and terrorism. It was the Rwanda of its day.

"Iraq was held together by the army before, now it's being held together by the mosques."

Former Baathists and jihadists created a destructive cycle of destabilizing attacks, halting reconstruction, Iraqi unhappiness, and rising support for insurgents. Destruction has displaced construction.

Al Sadr's social services network of police, civil services and health care mimic those services provided by Hamas and Hezbollah in Palestine. They also mimic the winning hearts and minds of those organizations who are anything but terrorists in the eyes of their adherents. While oil and electricity production is back at prewar levels, the US-led administration gets no credit.

The US gave the Arab 'news hole' to the Iranian Al Alam, and when it did respond with Al Hurra it was derided for excessive happy talk and hiding issues of pressing interest to Iraqis.

The US may never recover its miscalculation of a pliant Grand Ayatollah Ali Sistani. The abortive process of attempting to create a constitution outside of Iraqi hands smacked of a textbook reading of postwar Japan instead of present day Iraq.

Military theorists (for what happened on the ground) and political analysts (for what happened in Washington) will have a field day for years to come.

Early U.S. Decisions on Iraq Now Haunt American Efforts
Officials Let Looters Roam, Disbanded Army, Allowed Radicals to Gain Strength
Failure to Court an Ayatollah
By FARNAZ FASSIHI, GREG JAFFE, YAROSLAV TROFIMOV, CARLA ANNE ROBBINS and YOCHI J. DREAZEN
Staff Reporters of THE WALL STREET JOURNAL
April 19, 2004; Page A1

Mere weeks ago Lakhdar Brahimi's proposal was downplayed by the US yet now he is the man of the hour and his plan for a caretaker government, the dissolution of the US-appointed council, and a post-transition consultative assembly to advise that caretaker government is being supported by the US will all due speed. I fear that just as with calling in the Iranians to negotiate with al Sadr, that the administration is trying to land Iraq on the UN's doorstep.

The UN, in response, is understandably resisting this newfound US initiative until it is presented with a profile that meets Kofi Annan's requirements that it be "realistic, feasible and advisable." This cannot be made any easier by the mutual distaste of US and UN personnel for one another.

The entire situation is fluid in my mind, not least of all, with the comments by Bob Woodward on 60 Minutes this evening on the apparently unilaternal drive towards war in Iraq, a drive that had the White House briefing 'Bandar Bush' with Top Secret Noforn (no foreign) maps when the Secretary of State had not been informed.

The extra-judicial killing of Hamas' Rantisi has inflamed Palestinian and Arab feelings, and has spelled over into Iraq. The killing has provoked condemnations from many nations, but not the US. It saddens me that the administration can presume that its tacit approval of Israeli actions can proceed in a vacuum that does not impact its support elsewhere and its ability to prosecute the wider war on terrorism.

Friends and enemies alike see the UN as the "only institution that can confer immediate global legitimacy" on a US-initiated representative government in Iraq. I do wonder what their proposal will look like and will it be readily "realistic, feasible and advisable" to all. If not, how long will it take and what concessions will the US administration make in an election year.

When speaking of the possibility of chemical or biologic attack, it is all too easy to dismiss it as improbable. This should be a marker of reality -- and worst of all -- it was decidedly low-tech.

While the recent arrests in the Pacific Northwest for ricin production have been more likely criminal foul play or derangement, the ricin sent to the White House, Transportation Department, and Senate Majority Leader Frist are leaning more along the lines of the thwarted terrorist attacks in France.

The French DST have been pursuing members associated with the ricin production and delivery for more than a year, detaining individuals here and there. Originally seen as an anti-Russian attack by Chechen separatists, it has assumed wider scope.

In January, 2004 the French press reported that an Islamist chemical attack had been thwarted by French DST internal security arrests in the Lyon area. Plans for the attack came to light during the arrest of six suspected Islamic extremists, including the Imam of a Lyon mosque. The suspects appeared before Paris anti-terrorist judges the following week. Evidence gained from the suspects made it clear that an attack with botulism or ricin toxins was being actively prepared. Chellali Benchellali, an imam in Venisseux in the Lyon suburbs, his wife Hafsa and his son Hafed were among those detained on 6 January in a series of dawn raids.

While it has not gained any traction in the US, the Guardian article is the best single English summary that I've seen. (And as the Guardian is seen as some as center left, I have Reuters articles on file that corroborate).

Al-Qaida terror plot foiled, say French police
Jon Henley in Paris
Monday January 12, 2004
The Guardian (UK)

It will be interesting to hear Woodward's interview on 60 Minutes this Sunday (the interview was taped a week ago). I do so like the "the Pottery Barn rule," or the "you break it, you own it" rule of military action.

I am discomfited by the fact that, "Conservatives have long accused Mr. Powell of pursuing his own agenda, and of being more interested in depicting himself as right on the issues than as loyal to his president." Personally, I favor 'right' over blindly 'loyal' as you may not be extending allegiance to the right person. And if you cannot, then leave or start looking around.

It is daunting to follow the Quaker admonition "to speak truth to power" and I think that Powell does a creditable job. Perhaps Powell felt that he could have an influence. I think that he has but it has been more an external influence on a portion of our electorate and upon foreign leaders. It's a hard job. More of us track to Voltaire's "I am very fond of truth, but not at all of martyrdom."

Wary Powell Said to Have Warned Bush on War
By DOUGLAS JELL
April 17, 2004
New York Times

NewsHour, 15 April, carried an audio clip on Al Hurra (The Free One), a US sponsored TV channel broadcasting to 22 Middle Eastern countries with 170 million potential listeners that is fighting for space among the some 130 satellite stations now in the Middle East.

Yes, its sibling Arabic-language radio, Radio Sawa, or in English, begun two years earlier is doing better.

Think what the Voice of America did for the US during the Cold War. Al Hurra could be the cheapest weapon that the US ever inserted into the middle east.

Gordon Housworth

I found the extended criminal trial over French culpability in the collapse of the large California insurer, Executive Life, in the early 1990s, less interesting as a marker of a declining Franco-American relation than as a window into a very tight coupling of French politics and business (supported by intelligence) that assumes ('presumes' might be a better word) a "political solution" can always be relied upon to sweep away the putative laws and treaties in force between any partner, competitor, and customer.

Now the French government has pleaded guilty to a criminal count, paid a packet over and above the bailout costs already borne by their taxpayers, and is staring down the bore of 'big money' in the US civil suit to follow. It must astonish the French just as it has, and still does, the Chinese, say, when they expect the US in suppress activities of Chinese dissidents here in the US.

On the reverse, US businesses are lulled into a false sense of security when they go overseas assuming that the 'script as written are the words that make it into the movie.' It does not work that way and US firms need to have a risk mitigation strategy in place when they go so that their investment is protected.

As one who has advised US firms in resisting the deprecations of combined French political, intelligence, and industrial assets in the energy sector, part of our guidance to mid-size energy firms operating in Africa are to:

Postwar France has deemed its right to a foreign policy independent of NATO to rest upon its nuclear Force de Frappe and its suzerain over Francophone Africa. France exercises that suzerain aggressively by using all its state and commercial assets. (The French are not all that pleased of our presence in non-Francophone Africa for that matter. Witness our rapprochement with Libya. In a stroke, we divert both Libyan spending and Libyan crude oil to the US -- crude oil that was flowing inexpensively across the Med to France, a point not lost on the US government.)

Do read the article as it is a delicious tale. And do armor up your risk detection and risk amelioration posture when you venture offshore into a region, or an industrial segment, of high value to France.  Or Israel, or Germany, or Russia, or the PRC:

How Insurance Spat Further Frayed U.S.-French Ties
Paris Forks Over $375 Million In Executive Life Dispute; Gucci Owner Pinned Down
California's Civil Suit Looms
By JOHN CARREYROU and GLENN R. SIMPSON
Staff Reporters of THE WALL STREET JOURNAL
April 16, 2004; Page A1

Ref my earlier note on sites offering guidelines for prioritized attacks on Western commercial and private humint targets, these sites also offer their own form of 'sign-up here" along with tradecraft instructions. Al Jazeera (in English) is tame in comparison to Maktab-al-Jihad. Both are worth reading from time to time as you will wonder if you and they are on the same planet. Not much room for compromise here.

Before starting any discussion on Arabs and Middle Eastern Muslims, I keep in mind this Bedouin saying:

The many-to-many relationships of interacting clans is much more useful to understanding this area than is the concept of a nation-state. Indeed, Saddam Hussein acted much like Josip Broz Tito in Yugoslavia in restraining this web of conflicting relations that US forces released at the fall of Saddam.

Having US forces (read Infidels) at the gates of the Shite Vatican at all, much less without a plan other than to lay siege, is numbing. It is difficult to operate solely on unclass information, but one wonders who is thinking of the immediate secondary effects much less the longer term effects. It reminds me of the change that I so often level at Israelis in their dealings with the Palestinians: They win every battle and lose every war.

Even as I write things are moving rapidly as the US has enlisted Iran to offer temporary sanctuary to al Sadr after he surrenders to the grand ayatollahs who will then negotiate with US authorities. Cole is surprised that the US would seek Iranian assistance, thinking it a "sign of real desperation on the part of the Bush administration to turn to the Axis of Evil for help."