CIA's economic analysis: not this fad again?

The Obama administration's top economic policy makers are taking a daily Central Intelligence Agency briefing on world economic matters, reported National Public Radio's Tom Gjelten on Tuesday, just like their predecessors in the Clinton administration did--for a time, anyway.

CIA's economic intelligence is likely to be short-lived during the Obama administration, for the same reasons it didn't last under Clinton.  CIA analysts who were drawing link charts of Bin Laden's gun runners until a month or so ago just can't do economic analysis better than its competitor, the vast private sector financial media complex.  Top CIA analysts will lose interest as soon as the next career-enhancing 'big thing' comes along--like another terrorist attack, or a cabinet re-shuffle that advances policy makers with interests other that economics.

According to Gjelten, "Since February, the CIA and other intelligence agencies have been producing a three- to four-page daily 'economic intelligence brief' for distribution to a half-dozen senior U.S. government officials."

Gjelten added that this new EIB is in addition to the better-known President's Daily Brief and the National Economic Council's daily brief.

How does CIA's economic brief stand out in this crowded field of seemingly competing daily briefs?

"We supply the classified information," an unnamed senior intelligence official told Gjelten, adding that CIA's economic analysis is "more multidisciplinary."

A former senior intelligence official explained that classified economic analysis, based on clandestine sources, could help the President and senior policy makers better understand the inner workings of China's financial policies, for example.

But it's difficult to imagine how secret economic intelligence could have improved on extensive coverage of global economic affairs offered by the well-exercised and established financial media, let alone forestalled or mitigated the current economic crisis. Global finance happens more or less out in the open, after all, and millions of individuals of virtually every nationality participate.

About halfway through his story, Gjelten offhandedly mentioned that CIA had provided economic intelligence briefings for a brief period once before, during the Clinton administration.  But the veteran NPR reporter didn't offer any explanation for why the briefings didn't last.

CIA economic briefings didn't become a permanent fixture in the last decade because they weren't irreplaceable or vitally needed. Bloomberg, Financial Times, Wall Street Journal, Economist, and the legions of analysts employed world's leading banks, insurers, and investment houses get there the firstest with the mostest real time economic insights.

Economic intelligence is not without its political and diplomatic perils.  When US intelligence collection did manage to steal valuable economic secrets during the Clinton years, close US allies were often the target.  In 1995, Tokyo officially complained to Washington over eavesdropping against Japanese officials during trade negotiations.  Two years before, US intelligence's discovery of corruption in a French firm's bid for the SIVAM radar network mega-project in Brazil made waves in Washington' relations with both Paris and Brasilia.

CIA's venture into economic analysis during the Clinton administration also dilluted the agency's military, political, and technical analytic capabilties, for which US intelligence is still paying the price.

For top CIA analysts, the Clinton administration's economic focus and consequent interest in economic intelligence was a kind of salvation.  In the early nineties, senior CIA analysts were in the wilderness: the Cold War was over, the Gulf War came and went quickly, and the peace dividend took its toll on both the CIA workforce and the agency's relevance and prestige.

The CIA unit where I spent my first few years as an analyst during Clinton's first term had, over a year or two's time, beefed up its bench of economists, while filling many of its management slots with economists.  Meanwhile, political and especially military analysts--like me--fell out of fashion.

But the real world intruded.  When large conflicts--like war in the Balkans--or even small military crises--like a border skirmish or attempted coup d'etat in South America--cropped up, our little unit of mostly economists and economist managers could barely answer the mail.  

Predictably, military and political analysts came back into fashion at CIA by the late nineties.

Which helps explain a major problem at CIA today: the agency has an extremely young and inexperienced cadre of analysts. Constant, fickle realignment of priorities are partly to blame.  With CIA's analytic focus changing so precipitously within a few short years--from a few dozen to a few hundred terrorism analysts, seesawing interest in economics analysis--it's easy to see why a couple of generations of CIA analysts precipitously left the agency in the few years immediately following 9/11 to join contractors or leave the intelligence profession.

They wanted stability.

Maybe this time, CIA's flirtation with economic analysis will stick.  But the record isn't hopeful.