ENCYCLOPEDIA OF Espionage, Intelligence, and Security Volume ...

Economic IntelligenceIn National Security Council Intelligence Directive No.15, Coordination and Production of Foreign EconomicIntelligence (June 13, 1951), CIA was given responsibilityto determine the overall requirements of foreign economicintelligence, to evaluate foreign economic data ofsignificance to national security issues, and to conduct“such foreign economic research and produce such foreigneconomic intelligence” as required to supplementwork being done by other agencies. A year later, Directorof Central Intelligence, Walter B. Smith, informed the NSCthat the ORR was releasing accurate appraisals of an“enemy’s economic potential” and that an interdepartmentalEconomic Intelligence Committee to establish prioritiesand publish interdepartmental economic estimates,was in place, chaired by the ORR assistant director.The allocation of responsibility for economic intelligenceover the next 20 years shifted between the CIA andthe Department of State. Both worked closely togetherduring the Truman administration when the State Departmentproduced economic intelligence on countries outsidethe Sino-Soviet Bloc while CIA compiled economicintelligence on the Sino-Soviet Bloc. By 1955, the CIAOffice of Research Reports was generally credited withcomposing the first good pictures of Soviet economiccapabilities, including its transport system, current production,and plant capability. This analysis was reliedupon by the Kennedy administration.During the 1960s, the CIA became the government’sleading provider of economic intelligence as it expandedits economic analysis to “Free World” economies, especiallyto examine Soviet bloc economic activity in thedeveloping world. After State’s Bureau of Intelligence andResearch, hurt by shrinking budgets, cut the majority of itseconomic research to maintain its expertise for politicalanalysis, CIA supplied regular economic inputs to nationalintelligence documents and picked up substantial newdemands from policy makers, especially for informationon developing countries.By 1968, the CIA replaced ORR with the Office ofEconomic Research but the CIA’s overall importance in theprovision of economic intelligence lessened during theReagan Administration for several reasons: the U.S. Departmentof the Treasury and the Federal Reserve Boardimproved their monitoring of international financial issues;new competition came from the highly sophisticatedtechnology of international economic analysis availablefrom the private sector; the international financial institutions,such as the International Monetary Fund (IMF) andthe World Bank, supplied their own economic expertise;and a variety of on-line services, newspapers and tradepublications made a vast amount of data available to nongovernmentsubscribers.The exact role of economic intelligence remains awidely debated issue. According to Dr. Mark Lowenthal,Senior Specialist in U.S. Foreign Policy, CongressionalResearch Service, Library of Congress, in testimony beforethe U.S. Senate’s Select Committee on Intelligence,Encyclopedia of Espionage, Intelligence, and SecurityAugust 5, 1993, no one questions the importance of economicissues but there is “no broad consensus” about theIntelligence Community’s proper role in it. He noted thatthe issue has been oversimplified by calls for “moreeconomic intelligence” unsupported by any “knowledgeof long standing activities in that area or of the likely utilityof these intelligence activities and products to economicproblems or issues.” Lowenthal argues that no persuasivecase has yet been made that “U.S. economic competitivenessrequires large-scale aid from the IntelligenceCommunity.”Types of information. There are three main sources ofeconomic intelligence. The first, open sources, range fromofficial statistical publications, newspapers, radio broadcasts,and trade publications to IMF country studies.Unclassified sources generally constitute the foundationof any economic analysis, an interpretation of the overallpicture.The second are the reports and cables from U.S.embassies and consulates, compiled by State Departmenteconomic officers, Treasury Department attachés, andofficers of the Foreign Commercial Service.The third, clandestine information, is obtained withouteither the knowledge or consent of foreign governments.It can come from satellites, from intercepted communications,or from secrets stolen by a foreign nationalemployed by the United States.Present situation. The CIA, assisted by other governmentagencies, provides economic intelligence for U.S.policy, with experts monitoring international transactions(including sanctions enforcement and illicit finance);international economic and environmental problems, includingtrade and finance; defense markets and logistics;geographic resources, including demographics and commodities;civil technology, including aerospace, advancedmanufacturing, and emerging technologies; and energyresources. However, critics feel that American companiesdon’t need the CIA to compete in the global marketplace.The glut of information (sometimes too much information)coming from the Internet, private citizens, groupsand organizations with access to foreign economic activities,and subscriber services, such as The Economist’sEconomic Intelligence Unit (EIU) databases, complementand sometimes replace official channels.Resources. The official record of economic intelligence inU.S. economic diplomacy is in the Foreign Relations of theUnited States series volumes compiled by the Office of theHistorian, U.S. Department of State; published by theGovernment Printing Office. Beginning with 1944: vol. II;General: Economic and Social Matters (Washington: GPO,1967), individual volumes have dealt with U.S. economicpolicy.375