Business Intelligence And CIA Don't Mix

CIA director James Woolsey would be well advised to take a careful, skeptical view of suggestions that his agency reorient itself more fully to economic targets. Business intelligence is best left to the private sector; it is closer to the sources of the information it needs, and it understands better how to analyze and use that information.

The notion that since the cold war is over the Central Intelligence Agency and the rest of the intelligence community should shift their attention to serving the needs of the United States business community is fundamentally wrong. Furthermore, it could end up damaging US businesses at home and abroad.

The premise behind aiming the CIA at economic targets appears to be that foreign companies have valuable business secrets that are ripe for plucking. Perhaps there are some secrets, but they are hardly the type that are vulnerable to the techniques of the US government's spying apparatus.

True, lurid tales of industrial espionage have appeared in business magazines; yet it is hard to find evidence that industrial espionage has done any good. The French have been accused of spying on leading US computer and microelectronic firms, yet France's share of the international markets in these areas is paltry and shrinking. No one seriously believes that the Japanese created their microelectronics, automobile, or computer industries from stolen blueprints. Low interest rates, massive investment in

the latest production equipment, modest consumption, and hard work - not spying - account for their success. Japan doesn't even have a secret intelligence service.

Technological advancement and, more important, the ability and will to develop them commercially, do not spring from secret formulas. As one intelligence expert puts it, "the problem is not secrets, but mysteries." The laws of physics are the same in Tokyo, Paris, and Silicon Valley. The "secret" of IBM's success was never technological superiority; IBM mainframe computers were universally known to be technologically inferior to those of its competitors, such as Control Data (no longer in the business) o r Cray Research (a tiny fraction of IBM's size). IBM's "secret" was in its marketing prowess, organizational discipline, and past success. The reasons for IBM's current difficulties are not that the Japanese stole their chips, it is that smaller and more nimble personal computer and workstation companies ate their lunch.

EVEN if the CIA was somehow to acquire relevant commercial information, it is questionable that it would recognize it as such. In fairness, some of the CIA's general economic statistics have been useful, although others could do the same job. Nonetheless, the agency's record in predicting business trends is not remarkable, and for the good reason that government bureaucrats are simply not business experts.

The typical CIA information collector and analyst is not rooted in either the political or the economic marketplace. The most critical pieces of information a business competitor needs are the price structure of his adversaries, their suppliers, customers, and the competition. This type of information is provided by the market to those who are in the market. While it would be advantageous to individual business people to eavesdrop on the phone calls and read the mail of those with whom they deal, it is h ardly desirable. The thought of government bureaucrats doing it for them boggles the imagination.

US business is handicapped enough by its own cultural myopia: It pays insufficient attention to the opportunities to cooperate with foreign enterprises in developing markets abroad and servicing the domestic market more efficiently. The chilling effect on international business cooperation of increased CIA participation in the commercial activities of US firms is obvious.

Better to let intelligence agencies perform the functions for which they were formed - identifying and analyzing threats to US security. In a world fraught with military and political dangers, the CIA should concentrate on doing better on the job it was created to do.

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