AFIO Intelligence Notes Issue 27

AFIO Weekly Intelligence Notes (WINs) are a 1998 initiative to enhance services to AFIO members and to encourage them to recruit new members. We need new members!

WINs are produced by Editor Roy Jonkers, and includes adaptations of articles produced by RADM Don Harvey (USN ret) and AFIO members. WIN re-transmission is not permitted except without concurrence of the WIN Editor.

See the AFIO Homepage <www.afio.com> for back issues.

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SECTION I - INTELLIGENCE COMMENTARIES & BRIEFS

INTELLIGENCE BUDGETS - It may become open season on intelligence budget numbers speculation since the figure on the total budget has "come out of the closet." Washington's Brookings Institute has published a new book, Atomic Audit, which included a road map through intelligence budgets enroute to its analysis of US spending on nuclear weapons ($5.5 trillion). Using unclassified Pentagon documents and deductive math, it arrived at a $3 Billion budget for CIA, tucked away, according to Brookings, in a bland Air Force budget line called "Selected Activities." The NSA and DIA combined amount was set at $4.4 Billion. (Business Wk 27 Jul98, p 45) (RJ)

FINANCIAL INTELLIGENCE - With the IMF loans to the Russian banking system -- hugely profitable to holders of Russian debt - - Russia is lurching out of its banking crisis for the time being. Japan remains a questionmark. If financial speculators succeed in devaluing the yen, analysts predict a deflationary impact on the world economy, changing politics and policies, and impacting on intelligence.

According to author and financial analyst Robert Kuttner, we are again learning the difference between free commerce in GOODS - based on competition - and free commerce in MONEY - which holds economies hostage to the whims of financial speculation. In ordinary commerce, prices adjust and markets find their equilibrium, but in global money markets, "erratic and damaging overshooting is the norm." The post-WWII Bretton Woods system stabilized currencies and regulated capital movements, but it collapsed in the 1970's. The danger is now that the world will enter a serious deflationary period, triggered by events in Asia. US policy favors the IMF view of liberalizing capital markets to reassure investors. On the other hand, there is also talk (e.g. Secretary of the Treasure Robert Rubin) of the need for Asian social safety nets and keeping a pegged exchange rate for China - ideas which do not reflect deference to raw money market forces. The positions appear intellectually contradictory. What is needed, according to Kuttner, is a coherent systemic policy to reduce short term currency speculation. (Business Wk 27 Jul 1998, p. 16) (RJ)

CYBER INTELLIGENCE - The vulnerability of national infrastructures to electronic attack has been widely accepted. Recent publicity is centered on the Y2K phenomenon. When the year 2000 clicks in most computers will go haywire. Many countries could face widespread power outages, transportation foul-ups, banking problems and telecommunications failures. The global cost of revising software is estimated at over $1 trillion, not including embedded computer chips in everything from VCR's to offshore oil rigs. Even if everything in the US is fixed, we will be affected by problems in other countries. Globalization of economies make everyone vulnerable.

It all stems from an early decision by software engineers to reflect the date with just the last two digits. When the year 2000 arrives, the double zero will be interpreted as 1900, turning bank ledgers into gibberish, impacting on such as accounts as interest earned, taxes and pension payments. Traffic control glitches could make it unsafe to fly over some nations. In Egypt, a power grid shutdown of even a few days could ruin irrigated crops, causing disaster. International finance electronically transfers some $3 trillion every day, and problems anywhere could cause a global system breakdown.

Addressing the Y2K problem is adversely impacted in Europe by the competing demand on software engineers to convert business and government computers to deal with the 1999 start of the EURO as common currency; in Asia, because of the financial crises; in Russia, which is trying to avert economic implosion, because the problem is not widely understood; and in much of the developing world because both money and political will is often lacking. In addition, "cry wolf" and "chicken little" syndromes affect problem credibility. The financial intelligence estimate by the international investment firm Deutsche Morgan Grenfell is for a 70% chance of a global recession around 2000 to equal in severity the 1973-74 oil crisis. (WT 20 July 98, p. A14) (RJ)

MILITARY INTELLIGENCE - ISRAELI MILITARY TRANSFORMATION. Israel is evaluating changes in military doctrine and shifts of defense budget resources. It is likely to result, as in other countries (e.g. France) in smaller, more professional forces, less deeply rooted in Israeli society. It will start with naval and air forces. Meanwhile, Israel has initiated a series of ambitious weapons procurement programs, aided by massive US funding, including

- an anti-ballistic missile system against short and medium range ballistic missile (e.g. Scud) attack

- "star wars" interceptors to destroy hostile ballistic missiles in the "boost" phase

- German built (and donated) submarines to carry nuclear-armed cruise missiles to provide additional security, over and above the inventory of Jericho II ballistic missiles (range 3,000 miles) and hundreds of nuclear warheads now available.

- OFEK reconnaissance satellites for real-time intelligence and warning -- independent of the United States.

- deployment of a radically improved long-range HOMA radar system for warning and increased conventional airstrike capability

- deployment of the NAUTILUS laser gun to destroy Soviet-supplied multiple rocket mortars that the Syrian and Iraqi armies rely upon.

Israeli military sources indicate that these programs will provide a formidable second-strike nuclear capability, a greatly increased conventional airstrike capability, real-time intelligence capabilities, and smarter precision-guided weaponry. It will further increase the already enormous disparity in military capabilities between Israel and its neighbors or other potential threats. US analyst Harold Hough, writing in Jane's, states that Israel continues to focus on producing more nuclear weapons as if envisioning a nuclear exchange with a geographically large country.

As usual in Israel, there is vigorous debate on various programs and strategic options, including calls for a radical review of its nuclear weapons policies. (WTimes, 15 July98, pA13, Jul 1, p. A1) (RJ)

MILITARY INTELLIGENCE -- FRANCE MODERNIZES ITS FORCES France will reduce its Army from 289,000 to 136,000 personnel by 2002 in preparation for full professionalization. The 15 army divisions will be replaced by 11 mobile brigades -- including 85 regiments (instead of the current base of 182 regiments) . A planned army corps of 50,000 men will be formed according to NATO specifications. The Army and Navy will be cut less drastically. The Air Force will lose two squadrons of Jaguar fighter-bombers, and the Navy will lose its ancient carrier Foch, three frigates and some maritime reconnaissance aircraft. To reduce the impact on local employment, some 80,000 civilian support jobs - such as cooks and bakers - will be created to support the smaller, more mobile military in garrison. (WT 8 Jul 98 p A13, 12 Jul 98, p A7 (RJ)

SECTION II - BOOKS & PUBLICATIONS

- THE PENTIUM MISSION, by Joe Fontana, Orchises Press, Alexandria Va 1998 (ISBN 0-914061-72-0) . For a change of pace, a novel of murder, suspense and intrigue in the international intelligence community by Washington international lawyer and professor of International Transactions Fontana, who is breaking new ground as a novelist. His novel deals with the shadowy trade in "weapons of mass destruction." A rollicking good tale featuring Russian Mafia assassins, international intrigue and "special operations" supported by intelligence. This is a fictional adventure tale which, if occasional media articles are to believed, contains an image of truth - and much easier to digest. A good read and way to relax.(RJ)

- DECISION FOR DISASTER: BETRAYAL AT THE BAY OF PIGS, by Grayston L. Lynch, 1998. The author was the CIA case officer on the command ship, leading the first combat team ashore. He is also the only surviving American of the operation, and from his perspective the operation was betrayed by the Kennedy administration and the follow-on cover-up. The book incorporates recently declassified information, and is, in the words of Seymour Hersh, "not a book for those who love Camelot." Much, perhaps too much, has already been written about the Bay of pigs. Most charitably it can be said that no field operative can ever know all the elements upon which top command decisions are based. It has been written that the President may well have expected that Castro would have been assassinated at the time of the invasion - he had approved the attempt - but the assassin did not succeed, and the invaders paid the price. For clandestine operations history buffs, an action-packed story by a field operative. (RJ)

SECTION III AFIO CALENDAR

er - AFIO LUNCHEON, Fort Myers Officers Club, Arlington Virginia 1030 - 1400. Speakers: Major General (USA ret) Jack Singlaub (Operation Tailwind) and Dr. Hamilton Merritt, Nobel Prize Nominee (Tragic Mountains, Lao-Hmong). Luncheon Chairman: Mr. Theodore Shackley. Registration: AFIO members $26, Non-members $29. Send check with name and address to AFIO, 6723 Whittier Ave, Ste 303A.

12-14 November AFIO National Symposium and Convention, Fairview Park MARRIOT, Fairfax County, Virginia. CHALLENGES FOR INTELLIGENCE: THE FUTURE IS NOW. Registration information will be disseminated shortly.

7 December - AFIO LUNCHEON at Fort Myer. Speakers TBD

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SECTION IV - BULLETIN BOARD

TAPS - Lucien E. Conein, former OSS, CIA and US Army veteran, died on 3 June 98 at age 79. He was a fabled covert intelligence operative whose exploits included landing by aircraft in Nazi-occupied France, and covert activities against the Japanese in Vietnam, both aided by his French background. After WWII he participated in operations infiltrating spies and saboteurs into Eastern Europe, training paramilitary forces in Iran, organizing anti-communist guerrillas in North Vietnam after the French defeat (under General Edward Lansdale), and participation in the (unfortunate/ ed.) coup against President Ngo Dinh Diem in 1963, to name a few. He retired from CIA, where he had kept his military cover, in 1968, and joined DEA in 1972. An inveterate and enthusiastic story teller, he was cited by authors (Halberstam, Karnow) and Ambassador Henry Cabot Lodge, who called him " that indispensable man" (RJ)

The newly organized AFIO Northeast Florida Chapter will hold its first organizational Dinner Meeting on Friday 11 September 1998 at the holiday Inn, Palatka, at 5:00 pm. For reservations or information, contact Col Barney Barco (352) 475 2351, or email <bmbarco@juno.com.