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The Reason For US Intelligence Failures

By Gary D. Halbert
August 17, 2004


1.  The 9/11 Commission’s Final Report

2.  Stratfor’s Take On Intelligence Failures

3.  A Spy Network Without A Clear Mission

4.  Intelligence Is Now A Political Football


No doubt, you have now heard about the Final Report from the National Commission On Terrorist Attacks Upon The United States, also known as the “9/11 Commission.”  As you will recall, this supposedly bipartisan Commission was established to probe into the intelligence failures that led to the surprise 9/11 terrorist attacks, identify weaknesses in our intelligence agencies and suggest reforms to help avoid similar terrorist attacks in the future.  Already, the 9/11 Commission’s report has become a political football in the presidential election.

Let me confess that I have not read the entire 9/11 Commission Report.  I have read the Executive Summary and various other significant portions of the Report, but I feel no need to read the entire report (almost 600 pages), which has been discussed ad nauseum in the media.  With that said, I want to bring you’s latest analysis on the 9/11 Commission Report.

The Commission’s Final Report

As you know, much has been said and written about the Commission’s investigation into the intelligence failures that fell short of detecting the 9/11 attacks.  The Commission was also charged with investigating how law enforcement agencies, diplomacy, immigration and border control, flow of assets to terrorist organizations, commercial aviation, congressional oversight and resource allocation, and any other relevant factors may have contributed to the lapse in security that led to the attacks. 

With all of that territory to cover, it is no surprise that the Commission’s final report consists of almost 600 pages of information.  In preparing the report, the Commission reviewed over 2.5 million pages of documents and conducted some 1,200 interviews in 10 countries, including the highly publicized public testimony of 160 witnesses in the US.

The bottom line of the final report has been widely communicated.  In a nutshell, it said that the US was woefully unprepared for a massive terrorist attack, though we should have known one was coming.  However, contrary to earlier predictions, the Commission’s report did not point fingers at any one person or persons, since the failures were the result of many years of poor management under various Democratic and Republican administrations.

The Commission’s report also recommended remedies for the problems it encountered.  Among these recommendations was the creation of a National Counter-Terrorism Center (NCTC), specifically charged with fighting Islamist terrorism, and the appointment of a new National Intelligence Director to head the NCTC and unify the various intelligence agencies, provide for better sharing of information and strengthen congressional oversight.

While the Commission takes on the question of what happened to make the US vulnerable to terrorist attack, a recent report by sheds light on WHY our intelligence infrastructure was unprepared for an enemy like al Qaeda. On Intelligence

As I have frequently pointed out in this E-Letter, is one of my very best sources of geopolitical information and forecasts.  They often have unique perspectives on various domestic and global issues that are a result of their impressive intelligence network.  With their permission, I am able to share some of their intelligence with you periodically. 

Just about every news outlet has carried the story of what the 9/11 Commission report said, and are now on to covering the political salvos being lobbed back and forth between Bush and Kerry regarding its recommendations.  However, I think it is instructive to see what has to say about why the US intelligence system became the mess it did.  After all, those who do not learn from history are destined to repeat it.  So here we go.

It is also significant that this article was written by Dr. George Friedman,’s founder and CEO.  While’s staff is excellent, I always pay a little more attention to anything George writes himself.  Here’s what he had to say about the state of US intelligence capabilities leading up to 9/11:

“In trying to think through the root cause of the Sept. 11 attacks, it seems to us, when everything else is boiled away, that there were two fundamental problems. The first was that the U.S. intelligence community was built specifically to deal with the Soviet Union and the threat posed by Soviet intelligence. The end of the Cold War should have led to a rethinking of both mission and organization. There was a bit of the former, but hardly any of the latter.
Second, U.S. leaders did not understand the changes that were taking place in the Islamic world. They viewed al Qaeda as simply a new manifestation of the Arab organizations that had used terrorism in the 1970s and 1980s for limited political aims. The United States failed to realize that al Qaeda was fundamentally different. The second failure was rooted in the first failure -- indeed, it was the first failure that made the second almost inevitable.
The Central Intelligence Agency, the National Security Agency and the vast apparatus of the U.S. intelligence community were created in the late 1940s with one purpose: to combat the Soviet Union. They were constructed to contain and defeat Soviet power, and specifically to undermine the efforts of Soviet intelligence. In a very real sense, Soviet intelligence -- to which we will refer as the KGB for the sake of convenience -- was the model on which the U.S. intelligence organizations were built….
…U.S. intelligence was created to block the KGB. But on a more subtle level, it was built as a mirror of Soviet intelligence -- designed to do to Soviet agents what they were doing to the United States. Like its Soviet counterpart, the U.S. intelligence apparatus saw its primary mission as penetrating the Soviet leadership, particularly the KGB, and preventing the Soviets from returning the favor. The second purpose was misleading the Soviets about U.S. capabilities and intentions. The third -- much less important for the United States than for the Soviets, but not trivial -- was stealing Soviet military technology. And finally, blocking Soviet attempts to use the intelligence services to recruit and manage assets in Third World countries -- while doing the same itself -- was critical to the United States.
U.S. and Soviet efforts diverged over time in a fundamental way. The United States became much more heavily dependent on technical means of intelligence-gathering than did the Soviets. Where the Soviets would try to recruit well-placed Americans to extract information, the United States would try to tap into Soviet systems of communication to gather the same information. …Obviously, the United States ran agents and the Soviets had technology, but on this point there was a relative divergence of emphasis.”

This insight from helps to understand the weakening of the human intelligence capabilities of the CIA during the Clinton Administration.   As you will recall, under Clinton the CIA was told to stop dealing with “distasteful people,” presumably in an effort to appease human rights organizations.  Since not many spies regularly attend Sunday School, this action limited the available covert resources and thus reduced the agency’s abilities to infiltrate terrorist organizations.  However, as Friedman points out, this would not have been viewed as a major problem by an agency that mostly relied upon technological resources for information gathering. continues:

“However, each side was obsessed with the other's covert capabilities. Each side looked at the world through the prism of that obsession. For the United States, the terrorist groups of the 1970s and 1980s were not seen as independent actors, but as entities designed or at least guided by the KGB toward psychological and political ends. On the whole, this was not a bad way to view the world.
The KGB used these groups -- particularly Palestinian groups -- to create political environments that were conducive to Soviet ends. This was not to say that these groups were simply puppets of the KGB -- it was far more complicated than that -- but to say that these groups were enabled by the KGB and satellite organizations and could not have been nearly as effective without them. The Soviets maintained a program designed to seduce, manipulate and manage the leadership of these terrorist groups. The United States understood that the best way to defeat these groups was by disrupting their relations with the Soviets. Both sides were quite realistic.
After The Soviet Collapse, A Ship Without A Compass
By the time of Desert Storm, the Soviets were no longer key enablers of terrorism. The problem was that the CIA had lost the prism through which it viewed organizations that were using terrorism as a weapon. To be more precise, where the United States previously had viewed the Arab world through the prism of the CIA-KGB competition, the end of the rivalry did not bring with it a new prism. The CIA knew that the Soviets were no longer managing the situation, but they did not develop a new way of thinking about that situation.
Indeed, it could be put this way: The United States, during the Cold War, did not take seriously most groups that did not have a tie to the KGB. Without such a tie, such groups were not viewed as posing challenges to the United States and -- even if they wished to -- could not be effective unless they had access to a national intelligence agency. It was an article of faith that any group that was effective had a dependency on a national intelligence service -- almost invariably Soviet-bloc.
Al Qaeda -- not accidentally -- was designed to be as different as possible from predecessor groups that used terrorism. First, there was no dependency on a single intelligence agency: Al Qaeda used relations with Pakistani and Saudi intelligence, among others, but did not depend on them. Second, the group understood how the Soviets and Americans had used intelligence during the Cold War, and created an organization that was not easily penetrated by either human or technical means. They admitted into the inner circle only those they knew well so that agents could not easily be slipped in. They did not run cables that submarines could tap into or chatter on car phones, so the NSA had limited opportunities to intercept.
From the standpoint of the CIA therefore, al Qaeda was not a strategic threat. Without a state sponsor that controlled them, the CIA believed, they could not muster the resources needed to be truly effective. Since they avoided using the communications systems that U.S. intelligence regarded as essential for global operations, the assumption was that they did not represent a global threat.
The CIA did not take al Qaeda seriously because, from all appearances, it seemed to be the kind of organization that would have been easily dismissed during the Cold War. It did not fit into the paradigm the CIA had been working from during the previous 40 or 50 years. The CIA viewed al Qaeda as weak and underdeveloped -- primitive. The agency did not recognize al Qaeda as a group that had evolved in such a way as to deliberately come in below the U.S. intelligence radar, from both a technical and scientific standpoint. Al Qaeda did not intend to look threatening, and it was not perceived as threatening.
The CIA, institutionally, did not have a frame of reference for al Qaeda. The agency was organized for penetrating the upper circles and lines of communication of a nation-state or a state-sponsored group. It was built to deal with the KGB and its creations. Its analysts -- not all of them, by any means, but enough in senior positions -- despite understanding that the Soviet Union had collapsed, could not understand how the global threat had therefore changed.
The conclusion drawn by many in the CIA -- along with most of American society -- was that the threat to the United States had declined because of the fall of the Soviet Union. The idea that the nature of the threat had been transformed by the loss of an enabling superpower and that a range of unpredictable threats was now developing was not an idea that was easily embraced. To the CIA, the collapse of its main adversary could only mean that the world was safer. The agency was not ready to move into a world in which new adversaries existed.
That meant that there was no urgency in transforming the U.S. intelligence community as a whole. The same panoply of institutions -- CIA, DIA, NSA, NRO, etc. -- that had served in the Cold War was left in place. The internal structure of these organizations also was left in place. What had been built to be congruent with Soviet intelligence was now left standing alone, congruent with nothing....
This was, as the 9/11 commission put it, a failure of imagination. We would argue that it was, in some ways, an understandable -- if not defensible -- failure. What was harder to understand was not the events leading up to Sept. 11, but the events after Sept. 11. A reasonable person could have thought on Sept. 10 that there was time to redesign the intelligence community; no reasonable person could have believed on Sept. 12 that a system designed to defeat the KGB was going to be appropriate for defeating al Qaeda. Yet George W. Bush, in his most inexplicable action as president, made no substantial changes in either the structure of the intelligence community or in its personnel.
Yet -- and this is the critical thing -- the fact is that the old hands of the intelligence community, even after Sept. 11, did not think they were out of their league. Even after that defeat, they believed profoundly and completely that the same organizational structure and people that took down the KGB would eventually take down al Qaeda -- no wholesale changes required. It is understandable that people who had triumphed once would think that they could triumph again using the same tools….”

As you might expect, I disagree with George regarding the allegation that the Bush Administration did nothing to improve US intelligence capabilities after 9/11.  I recall that the restriction on using undesirables in human intelligence was almost immediately reversed, as was the Ford-era restriction on using assassination where appropriate.

In addition, the Bush Administration orchestrated the creation of the Department of Homeland Security in an effort to coordinate the various agencies charged with keeping America safe.  Bush also pushed the Patriot Act, which gave domestic intelligence additional tools, albeit at the cost of certain civil liberties.  While these efforts may have been flawed, I hardly consider them to be doing nothing.

Report Now Becoming A Political Football

As we might expect in this election year, the 9/11 Commission’s report has now become the latest political bone of contention between Bush and Kerry.  Liberals rejoice in the Commission’s finding that they found no evidence of a collaborative relationship between Iraq and al Qaeda prior to 9/11.  Conservatives take heart in the same discussion because it proves there was contact between the two. 

The conservative media and their liberal counterparts are having a field day slicing and dicing the Commission’s report to suit their own agendas.  The sad fact is, as points out, that the intelligence organization that had evolved since the 1940’s during many different Democratic and Republican administrations was to blame, and it needs to be fixed.

However, even the fix is now becoming politicized beyond recognition.  While the Commission’s members have completed their task, some are making the talk show circuits to press for passage of their recommendations.  No doubt some members are probably working on books to cash in on the blame-game craze that has made other authors so much money during this election cycle.


The most important thing for the US government to do is to fix the intelligence problems that led to the 9/11 attacks.  It should be the heart-felt desire of EVERY elected official, Republican or Democrat, to make sure our way of life remains secure.  It is definitely not the time to try to use the Commission’s recommendations to score partisan political points.  It’s time for our elected representatives and senators to do their job.  I am contacting my representative and senators to let them know how I feel, and I hope you do the same.

Even before the 9/11 Commission’s final report, Conservative Democratic Senator Zell Miller recognized the divisiveness that the Commission’s hearings were creating, and how this was not only hurting the chances for true bipartisan reform, but also sending the wrong message to our enemies and our troops.  While his comments related to dredging up the past for political gain, they remain relevant to the political discussion regarding implementation of the Commission’s recommendations.  I leave you today with a brief excerpt from Senator Miller’s March 30, 2004 speech, as only he can say it:

“…Tragically, these hearings have proved to be a very divisive diversion for this country. Tragically, they have devoured valuable time looking backward instead of looking forward. Can you imagine handling the attack on Pearl Harbor this way?… Some partisans tried that ploy, but they were soon quieted by the patriots who understood how important it was to get on with the war and take the battle to America 's enemies and not dwell on what FDR knew, when. You see, back then the highest priority was to win a war, not to win an election.
…A congressional hearing in Washington, DC is the ultimate aphrodisiac for political groupies and partisan punks. But it is not the groupies, punks, and television-sotted American public that I am worried about…No, it is the real enemies of America that I am concerned about. These evil killers who right now are gleefully watching the shrill partisan finger-pointing of these hearings and grinning like a mule eating briars.
Chances are very good that these evil enemies of America will attempt to influence our 2004 election in a similar dramatic way as they did Spain’s. And to think that could never be in this country is to stick your head in the sand.
…That is why the sooner we stop this endless bickering over the past and join together to prepare for the future, the better off this country will be. There are some things--whether this city believes it or not--that are just more important than political campaigns.  The recent past is so ripe for political second-guessing, ``gotcha,'' and Monday morning quarterbacking. And it is so tempting in an election year. We should not allow ourselves to indulge that temptation. We should put our country first.”

Amen, Brother Zell, preach on!

Very best regards,

Gary D. Halbert



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Forecasts & Trends E-Letter is published by Halbert Wealth Management, Inc. Gary D. Halbert is the president and CEO of Halbert Wealth Management, Inc. and is the editor of this publication. Information contained herein is taken from sources believed to be reliable but cannot be guaranteed as to its accuracy. Opinions and recommendations herein generally reflect the judgement of Gary D. Halbert (or another named author) and may change at any time without written notice. Market opinions contained herein are intended as general observations and are not intended as specific investment advice. Readers are urged to check with their investment counselors before making any investment decisions. This electronic newsletter does not constitute an offer of sale of any securities. Gary D. Halbert, Halbert Wealth Management, Inc., and its affiliated companies, its officers, directors and/or employees may or may not have investments in markets or programs mentioned herein. Past results are not necessarily indicative of future results. Reprinting for family or friends is allowed with proper credit. However, republishing (written or electronically) in its entirety or through the use of extensive quotes is prohibited without prior written consent.

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