Trouble Ahead for the American Intelligence “Bazaar”

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CIA Director Leon Panetta has acknowledged that with a $1.5 trillion budget deficit the United States are going to “hit the wall”. The costs for the giant American intelligence-security complex – employing more than 800,000 people – have become unaffordable. This is the background to the current debate over the dysfunction and inefficiency of the American intelligence system.
by Michael Liebig


Beginning July 19, the Washington Post ran a three-part article series, titled “Top Secret America”1. The investigative series, written by Diana Priest and William M. Arkin, covers the giant American intelligence-security complex – of which the CIA is just one and by no means the biggest component. Priest and Arkin describe the intelligence-security complex as “a hidden world growing beyond control”. They write that their investigation generated the following data:

  • “Some 1,271 government organizations and 1,931 private companies work on programs related to counter-terrorism, homeland security and intelligence”
  • “An estimated 854,000 people, nearly 1.5 times as many people as live in Washington, D.C., hold top-secret security clearances,” of which 265,000 are private contractors
  • “The U.S. intelligence budget is vast, publicly announced last year as $75 billion, 21/2 times the size it was on Sept. 10, 2001. But the figure doesn’t include many military activities or domestic counter-terrorism programs.”

Priest and Arkin don’t analyze the American intelligence-security complex as a potential threat to civil liberties. They seem to have little concern that the sheer weight of this vast and secret apparatus might overwhelm both the government, to which it belongs, and Congress. Instead, their focus is that the American intelligence-security complex “has become so large, so unwieldy and so secretive that no one knows how much money it costs, how many people it employs, how many programs exist within it or exactly how many agencies do the same work.” Priest and Arkin quote Gen. John R. Vines, who is reviewing the Defense Department’s intelligence activities, as saying: “The complexity of this system defies description.“

Intentions & Resources

Indeed, there seem to be two basic questions:

  1. Has the American intelligence-security complex become largely dysfunctional?
  2. Do the United States still have the resources to employ 854,000 people at a cost of more than $75 billion in the intelligence-security complex?

Let’s start with the second question by first comparing the American intelligence-security complex with its German counterpart.

Germany with a population of roughly 80 million and a GDP of $3.5 billion, has three intelligence services (BND, BfV/LfV and MAD) with roughly 12,000 employees all together. Let’s add another 10,000 persons working in or for other governmental security/intelligence-related agencies. That makes a total of 22,000 for the German intelligence-security complex. The USA, with a population of 310 million and a GDP of $14 billion, has 854,000 people working in its intelligence-security complex. With roughly 4 times the population and the GDP of Germany, the USA employs more than 40 times the number of people in the intelligence-security complex. By German standards – and I don’t think Germany has a dwarfish intelligence system – the USA would have some 80,000 people – not 854,000 – working in its intelligence-security complex.

The BND has a budget of some $700. As a rough estimate, Germany might spent up to $2 billion for its intelligence-security complex in total (neutral experts see a 10-15% underfunding). Compare $2-2.5 billion to the figure given by Priest and Arkin for the United States: $75 billion – at minimum. So again, the USA spends approximately 40 times more on its intelligence-security complex than Germany.

The intelligence-security complex and the “military-industrial complex” are the two pillars of the American “national security” apparatus. The American military and intelligence structures are closely linked in many respects. So let’s take a look at the US military and make some correlations as well.

In 2010, the German defense budget is roughly $45 billion, while the US Defense budget is officially $662 billion2. If extra funding for the wars in Afghanistan and Iraq is added, it’s around $700 billion. And, if defense-related expenditures outside the Defense Department are added, total military spending is between $900 billion and $1 trillion. So, with a GDP 4 times bigger than Germany’s, the United States spends between 15 to 20 times more on defense than Germany.

One final figure: The German budget deficit in 2010 is roughly $80 billion, the annual US budget deficit is $1.5 trillion. With a GDP 4 times bigger than Germany’s, the US deficit is 19 times higher than Germany’s.

“Hitting the Wall”

At this year’s Farnborough Air Show, the British Defense Minister Liam Fox made a remarkable statement: “Labour have left us with such a car crash that next year the interest on the national debt will be nearly one and half times the defence budget. That is not sustainable.”

What Fox said for Britain, applies to the US – almost. On July 22, 2010, the Pentagon’s “Defense Business Board” estimated that, the latest by 2017, the interest paid on the US federal debt will exceed the defense budget. The board noted the following “turbulence” factors affecting the US defense budget:

  • the necessity for deficit reduction
  • the protracted economic slowdown
  • ever-escalating DoD health care and personnel costs (as a consequence of the wars since 2001)
  • the costs of unwinding the wars in Iraq and Afghanistan (ending a war is quite costly too)

The simple fact is: Current levels of the US defense budget are unsustainable. The defense budget will have to be cut, which usually starts with a “spending freeze.” Whenever spending has to be cut, the catchword “overhead” – nonessential or outright wasteful costs – pops up. The Defense Business Board sees “overhead” of “at least $200 billion” in the defense budget and recommends to lay off 110,000 civilian DoD employees, sharply reduce the number of private contractors, and disband a number of military staff organizations, among them the U.S. Joint Forces Command.

It it safe to assume that, as the wars in Afghanistan and Iraq are being phased out over the next three to four years, a new “war” will erupt in Washington. Actually, this “war” has started already. What personnel, bureaucratic and/or staff organizations, weapon systems, bases, or other defense-related programs will be labeled as “overhead” – and are thus slated for elimination. This “war” will be fought ruthlessly. But, “eliminating overhead” will not suffice.

Inevitably, further questions will be raised: What are primary threats to the “national security” of the United States? Which are of lower priority? What areas on the of globe are truly essential for US geo-strategic interests? Which overseas bases, with what staffing, must be kept and which could be given up? The very concept of America’s “national security” will be put in question. The ideological axioms that the United States

  • have an exclusive and exceptional role in world history
  • are predestined to play an “unique world leadership” role
  • must be militarily stronger than the rest of the world

will have to be abandoned.

The “war” in Washington over these questions there will likely be particularly nasty. Yet, in the end, I think, we will hear from Washington a variation of Liam Fox‘ Farnborough speech: “We don’t have the money as a country to protect ourselves against every potential future threat. We just don’t have it.”

This reality – the widening gap between intentions and resources – is the context in which the Washington Post series on the American intelligence-security complex should be situated. CIA Director Leon Panetta, is quoted by Priest and Arkin as saying: “Particularly with these deficits, we’re going to hit the wall. I want to be prepared for that. Frankly, I think everyone in intelligence ought to be doing that.” Panneta further said that he has begun mapping out a five-year plan for the CIA because the levels of spending for intelligence since 2001 “are not sustainable.”

When senior government officials use metaphors like “car crash” and “hitting the wall” to describe their countries‘ fiscal condition, the situation must be serious indeed.

The core message in the Washington Post series is: The American intelligence-security complex is riddled with “overhead”, “duplication”, “redundancy”, “inefficiency” and “waste”. Priest and Arkin quote a senior intelligence analyst at the Pentagon saying: “It’s about how many [intelligence] studies you can orchestrate, how many people you can fly all over the place. Everybody’s just on a spending spree. We don’t need all these people doing all this stuff.”

The penetration of the American intelligence-security complex by private contracting has reached a level of close to 30% of the total workforce. And they often perform what are called “inherently government functions”, while being “obligated to shareholders rather than the public interest,” as the Washington Post put it, adding that the cost of private contractors is 25% higher than that of government employees (citing Defense Secretary Robert Gates as the source).

“Knowing All – Anywhere, Anytime”

Just like the US military, the American intelligence-security complex is not only facing the problem of “overhead” and “waste.” The problem is axiomatic and systemic. I think it’s no exaggeration to state that American intelligence is driven by an ideological obsession: Know everything – anywhere in the world, at any time and preferably in “real time”. In psychological terms, one might speak of “collecting mania”. And technology is the way to act out the collecting mania: electronic interception, data mining, satellites, reconnaissance aircraft, naval vessels and other technical gadgetry.

According to Priest and Arkin, the almost 40,000 employees of the National Security Agency (NSA) – which has twice the manpower and budget of the CIA – “intercepts and stores 1.7 billion e-mails, phone calls and other types of communications” – per day!

No question, in the American intelligence community there is a large number of superb intelligence officers, particularly intelligence analysts. But collecting ever vaster quantities of information by means of technology will not automatically lead to a corresponding improvement of the quality of intelligence findings. Quite the opposite, the overload of technology-generated, “raw” information will tend to stifle competent analysis and intelligence assessment. Most intelligence will simply be irrelevant – along with an increasing likelihood of missing what is really crucial intelligence.

Priest and Arkin report that the American intelligence-security complex is “publishing 50,000 intelligence reports each year”. Who has the time to read even a tiny fraction of these intelligence reports? The CIA Director? The Director of National Intelligence (DNI), who is supposed to coordinate and direct all 16 major intelligence organizations? The President’s National Security Advisor?

Priest and Arkin name a few of the periodical intelligence reports: CIA World Intelligence Review, Spot Intelligence Report, Daily Intelligence Summary, Weekly Intelligence Forecast, Weekly Warning Forecast, IC Terrorist Threat Assessments, NCTC Terrorism Dispatch or NCTC Spotlight. To me, it borders at the absurd that the Office of the Director of National Intelligence is producing an in-house “daily online newspaper, Intelligence Today.” Every day, “a staff of 22 culls more than two dozen agencies‘ reports and 63 Web sites, selects the best information and packages it by originality, topic and region. “

In late 2008, I interviewed the former head of the BND, Hans-Georg Wieck, for a research paper. He then said that American intelligence community is “producing the most expensive ’newspaper‘ in the world”. Intelligence quality tends to get defined by up-to-dateness and journalistic standards tend to substitute the criteria of intelligence analysis, Wieck said. At the time, I thought this was meant metaphorically – it wasn’t.

Less Can Be More

To stay with metaphors, the series by Priest and Arkin reconfirms what experts on the US intelligence community have known for a long time: The American intelligence-security complex resembles a giant bazaar – not Macy’s. It’s an almost oriental labyrinth of competing “shops” with hectic salesmen and “workshops”, where frantically vast amounts of incoming “raw materials” are processed by legions of “craftsmen” into a myriad of products that must, first of all, look “fresh” and “sexy”. And, many of the competing “shops” offer exactly the same “products,” albeit with different packaging.

There are two other peculiarities in the giant American intelligence “bazaar”. First, there are very few customers, because they need a top secret security clearance to go “shopping”. Such customers come from the government, Congress, some research institutes – and the intelligence-security community itself. The second peculiarity is that the whole intelligence bazaar is not a “free market,” but state-owned. The taxpayer pays for all these salesmen, clerks, craftsmen, tools and supplies.

Intelligence is indispensable for the security and welfare of any nation and it is the prerogative of the state. But no nation can sustain a mismatch of resources and (ideologically derived) intentions in the long run. When the flow of money is drying out, issues that seem irresolvable forever, tend to get settled fast. Therefore, the era of “American exceptionalism” in intelligence and military affairs will likely come an end rather soon.

After all, less can be more. Quality can beat quantity. I would think that this is particularly true in intelligence affairs.

Endnotes

22010 Figures from SIPRI, Stockholm

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