Oscars for Intelligence

bondslarge2.jpg It is difficult to conjur up an image of the “intelligence community” without the CIA or other US intelligence agencies. So, it might come as a surprise to see that no US body has made it to the list of the world’s top intelligence agencies, published by Foreign Policy this month.

And the winners are:

1. Russia’s Foreign Intelligence Service (SVR)

Area of expertise: Officially – counterterrorism and protecting Russian commercial interests abroad. Unofficially – consolidating political power back home.

2. China’s Ministry of State Security

Area of expertise: Industrial espionage and data analysis, domestic security

3. India’s Research and Analysis Wing

Area of expertise: Destabilizing Pakistan

4. Pakistan’s Inter-Services Intelligence

Area of expertise: Destabilizing India

5. Britain’s Secret Intelligence Service (MI6)

Area of expertise: Counterterrorism, James Bond nostalgia

6. Israel’s The Mossad

Area of expertise: Combating Islamist terrorism, evacuating Jewish refugees

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INTSUM: Privatization of the Kyrgyz Electricity Industry Likely to Hit Hardest the Poor

kyrg_water.jpg IWPR (Bishkek) 25 January 2008

Plans to privatize Kyrgyzstan’s electricity industry are under way, after President Bakiyev’s statement that the only way to bring more money into the sector is through privatization. He and his officials believe that Kyrgyzstan can become self-sufficient in energy as privatization would help with renovating derelict Soviet equipment and with the building of new plants. However, while those who support privatization as the only way of salvaging a loss-making industry, opponents say the privatization process has been anything but fair and transparent, expressing a low degree of trust in the way the government handles potential bids.

Analysis:

It is very likely that privatization of the electricity industry will continue rapidly, with several major investment deals likely to close by summer 2008. While Russia, and Gazprom in particular, are highly likely to be favored as investment partners, it is also likely that Kyrgyz authorities will be open to other bidders, including Kazakhstan, Uzbekistan, China, some Middle East countries, and possibly even the US.

As private investors move in, the prices for electricity and heating are very likely to increase by about 30%, which will have the most severe effects on the Kyrgyz poor, and especially on the retired segment of the population.

Source reliability: 8

Analytic Confidence: 8

WEF Global Risks 2008 Report Adopts Vocabulary from Complexity and Systemics

wef.jpg WEF is convening its annual session in Davos next week (24-26Jan), and have just put online their 2008 risk assessment report, which covers the topics that will be discussed at the various panels.

The report is very interesting, not least because of the 2nd appendix, which features a table of predicted risks and their likelihood and severity in numerical terms – a topic of central concern to my last two courses in intelligence analysis. Further, what I personally find rather fascinating is the emergence (sic) of a homogenized vocabulary to talk about what we label these days “new risks”. This vocabulary, stems entirely from subjects like complexity and network sciences, as well as some of the more metaphysical parts of physics and mathematics. Now, I’m no financial risk specialist, nor do I have any knowledge other than popular explanations of Physics and Math theories, but when I read a report, whose audience is primary in the finance sector, make repeated use of words  such as emergence, uncertainty, aggregation, resilience, systemic finacial risk, interconnectedness, diffusion, complexity, “tail events”, etc., etc., a bell goes off in my ears. Is this current mania toward homogenuity, assimilation, the universal, and big picture telescopization not blinding us to what lies immediately before our eyes? I find something grotesque and almost cannibalistic in this process.

Nonetheless, the report is well worth reading, if not for its linguistic “anomalities” than for its forecasting methodology (complete with a  fashionable SNA -social network analysis). This is not to say that I dislike WEF’s assessments. On the contrary, I find many of the observations and the parallels drawn between finacial risk evaluation and geopolitical risk assessment, as well as the discussions on food security, supply chains, and the role of energy, highly informative. In fact, I buy a large part of the arguments. I’m slightly surprised but pleased to read such humble conclusions (contrary to conventional wisdom, which looks at two aspects of risk – likelihood and severity and traditional prevention and mitigation measures of countering them)  as acknowledgements that in the face of “new risks”, which are entirely unforseeable, such strategies fail.

It is refreshing to read a report produced mainly by financial analysts (notoriously conservative) that: “It may not make sense to attempt to eliminate risks which ultimately represent a source of opportunity as well as hazard. Rendering the global financial system as flexible and resilient (my emphasis) as possible by improving early indicators, enforcing more stress testing, enhancing understanding of tail risk and requiring better contigency planning may be more effective.

Ultimately, strategies to deal with systemic financial risk must reflect the fundamental shift in the global financial system to a market-driven model. There is considerable scope for increased public and private sector collaboration on stress testing, liquidity management, risk assessment and prevention.”

I welcome such initiatives from the private sector as I truly share their opinion in the value such collaborations can bring. The question is, has the public sector woken up to the idea that this might be its most viable strategy in fullfilling what its ultimate purpose is supposed to be: duty to its electorate?

I’ll be covering more news from the 3 day WEF session in Davos on my blog next week.


 

Speculations about Nuclear Cargo Detained in Kyrgyzstan Continue

Speculations about the origin and destination of the nuclear cargo discovered on a Tajik train at the Kyrgyz-Uzbek border are continuing as IAEA has launched a formal request to the Kyrgyz government to cooperate with the investigation. RFL just published another article, in which a US expert on nuclear proliferation and terrorism talks about the properties of the radioactive substance cesium-137, and postulates that a malicious intent of smuggling is unlikely, purporting instead, that the incident is more likely to be a cause of negligence.

Code word: Tom & Jerry

Further to my posts on the growing of the Hizb ut-Tahrir’s following in Southern Kyrgyzstan, here’s an article the Institute for War and Peace Reporting (IWPR) just published on the spread of Islamist propaganda in the form of CDs and videotapes (alias Tom  & Jerry) by one Muhammad Amin – a passionate supporter of the Uzbek exiled Islamic radical Tahir Yoldash.

While the Hizb ut-Tahrir movement has always taken pains to disassociate itself from the Islamic Movement of Uzbekistan (IMU), of which Yoldash is supposed to be the leader, on the grounds that the former does not support violence, it is nonetheless worth noting that in face of the “common enemy” the two Islamist groups face, i.e. the secular authoritarian regimes of Kyrgyzstan and Uzbekistan, such disassociation may not remain a permanent fixture.

For what’s worth, the Kyrgyz government has historically been a lot more tolerant to its opposition (both secular and Muslim) than its Uzbek counterpart. One thing, however, is clear, and that is support for more radical Islamist groups in the south of Kyrgyzstan is on the rise. This is sure to have increased pressure on Bakiyev’s domestic policies as well as bilateral relations with neighbouring Uzbekistan.

Nassim Nicholas Taleb’s Black Swan – a Brilliantly Irreverant Attack on Bildungsphilisters*

For some time now I have had a second-hand exposure to Black Swan theory but this weekend I came face-to-face with Nassim Nicholas Taleb’s brilliant writing – a most hedonistic Saturday and Sunday, when uninterrupted by worldly social or work distractions, save a short school assignment, I read Taleb’s The Black Swan cover to cover.

“Erudite” is a word Taleb is fond of using throughout this book in reference to the likes of Benoit Mandelbrot, Sextus Empiricus, Friedrich Hayek, Pierre Bayle, Pierre-Daniel Huet, Michel de Montaigne, etc. to distinguish them from idiot savants from a gamut of disciplines, ranging from mathematics to economics to the social sciences to philosophy to “professional” risk and – ouch!- intelligence analysts.

All this name dropping might make one think that Mr Taleb falls into the category of the latter, but nothing could be further from the truth (my version of it). This is an author – philosopher by vocation, mathematician and trader by profession – with some remarkably fresh ideas and a sense of humour that is more aesthetic than cynical.

I will not attempt to describe what this book is about beyond the standard reference to Taleb’s Black Swan theory, i.e. low probability high impact events. Chance is something that impacts life on all levels, hence the book can be of interest to just about anyone: writers in temporary Starbucks jobs, 9-5 accountants, the great great great son of one of Catherine The Great’s 12 lovers, high-brow-brown-nosed-self-perpetuating academics, gamblers or crooks or entrepreneurs, the military (any), Casanova wanna-be’s, testosterone-ridden overachievers (either male or female), Muslims, Christians, Greek Orthodox, mystics, sceptics, Richard Dawkinseans…ad infinitum.

Thank you, Mr Taleb, for the exquisite pleasure of reading your book! Of course, given your disregard for blogs, the probability of your stumbling upon this review of not your book, but its impact on a random reader, is sadly negligible. Yet, the inspiration it has aroused might well have a deeper impact.

* A Bildungsphilister (a neologism: Bildung + philistine) is “a philistine with cosmetic, nongenuine culture. Nietzsche used this term to refer to the dogma-prone newspaper reader and opera lover with cosmetic exposure to culture and shallow depth. I extend it to the buzzword-using researcher in nonexperimental fields who lacks in imagination, curiosity, erudition, and culture and is closely centered on his ideas, on his “discipline”. This prevents him from seeing the conflicts between his ideas and the texture of the world.” NNT

INTSUM: Afghanistan – a New Migration Destination for Kyrgyz Workers

While the majority of Kyrgyz economic migrants still seek better opportunities in the booming economies of northern neighbors Russia and Kazakhstan, some are turning instead to conflict-ridden Afghanistan, where higher security risks are compensated with higher wages. A major source of employment for south-bound Kyrgyz migrants are US private contractors in Afghanistan. The US State Department has stated that it employs some 29, 000 private contractors there, many of whom are neither US nor Afghan citizens, but third country nationals (TCNs), who despite harsh and often dangerous conditions, are lured by the much higher wages.

Analysis:

Given the small number of Afghanistan-bound Kyrgyz migrants, it is unlikely that this trend will have any severe short-term impacts on Kyrgyz economy. In fact, those returning to their homeland with accumulated capital, are likely to have a positive impact in the area of SME development in Kyrgyzstan. However, given the general trend in migration causality from politico-ideological to economic, such a trend is likely to have more long-term consequences, which would be difficult to predict, and may even fall under a Black Swan category. One likely psychological outcome may well be a diminished sense of risk aversion in the segment of population that is facing exceedingly gloomy employment prospects at home.

Source Reliability: 8

Analytic Confidence: 8