Experts Warn of Security Risks in Financial Downturn

By Joby Warrick
Washington Post Staff Writer
Saturday, November 15, 2008

Intelligence officials are warning that the deepening global financial crisis could weaken fragile governments in the world's most dangerous areas and undermine the ability of the United States and its allies to respond to a new wave of security threats.

U.S. government officials and private analysts say the economic turmoil has heightened the short-term risk of a terrorist attack, as radical groups probe for weakening border protections and new gaps in defenses. A protracted financial crisis could threaten the survival of friendly regimes from Pakistan to the Middle East while forcing Western nations to cut spending on defense, intelligence and foreign aid, the sources said.

The crisis could also accelerate the shift to a more Asia-centric globe, as rising powers such as China gain more leverage over international financial institutions and greater influence in world capitals.

Some of the more troubling and immediate scenarios analysts are weighing involve nuclear-armed Pakistan, which already was being battered by inflation and unemployment before the global financial tsunami hit. Since September, Pakistan has seen its national currency devalued and its hard-currency reserves nearly wiped out.

Analysts also worry about the impact of plummeting crude prices on oil-dependent nations such as Yemen, which has a large population of unemployed youths and a history of support for militant Islamic groups.

The underlying problems and trends -- especially regional instability and the waning influence of the West -- were already well established, but they are now "being accelerated by the current global financial crisis," the nation's top intelligence official, Director of National Intelligence Mike McConnell, said in a recent speech. McConnell is among several top U.S. intelligence officials warning that deep cuts in military and intelligence budgets could undermine the country's ability to anticipate and defend against new threats.

Annual spending for U.S. intelligence operations currently totals $47.5 billion, a figure that does not include expensive satellites that fall under the Pentagon's budget. At a recent gathering of geospatial intelligence officials and contractors in Nashville, the outlook for the coming fiscal cycles was uniformly grim: fewer dollars for buying and maintaining sophisticated spy systems.

"I worry where we'll be five or 10 years from now," Charles Allen, intelligence director for the Department of Homeland Security, said in an interview. "I am deeply worried that we will not have the funding necessary to operate and build the systems already approved."

Intelligence officials say they have no hard evidence of a pending terrorist attack, and CIA Director Michael V. Hayden said in a news conference Thursday that his agency has not detected increased al-Qaeda communications or other signs of an imminent strike.

But many government and private terrorism experts say the financial crisis has given al-Qaeda an opening, and judging from public statements and intercepted communications, senior al-Qaeda leaders are elated by the West's economic troubles, which they regard as a vindication of their efforts and a sign of the superpower's weakness.

"Al-Qaeda's propaganda arm is constantly banging the drum saying that the U.S. economy is on the precipice -- and it's the force of the jihadists that's going to push us over the edge," said Bruce Hoffman, a former scholar-in-residence at the CIA and now a professor at Georgetown University.

Whether terrorist leader Osama bin Laden is technically capable of another Sept. 11-style attack is unclear, but U.S. officials say he has traditionally picked times of transition to launch major strikes. The two major al-Qaeda-linked attacks on U.S. soil -- the World Trade Center bombing in 1993 and the 2001 hijackings -- occurred in the early months of new administrations.

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