Stratfor the "Annonymous"

[Jonathan Nitzan <nitzan@xxxxxxxx>]

To Chris Burford request, enclosed is a recent
NYT article on Stratfor and George Friedman.

                  Copyright 2003 The New York Times Company
                               The New York Times

                  April 20, 2003, Sunday, Late Edition - Final

SECTION: Section 6; Page 28; Column 1; Magazine Desk

LENGTH: 2326 words

HEADLINE: THE WAY WE LIVE NOW: 4-20-03: ENCOUNTER;
Spooky

BYLINE: By Matt Bai; Matt Bai is a contributing writer for the magazine. He last
wrote about Lincoln Chafee.

BODY:
   'The war is going to start at 8 tonight," George Friedman told me on the
phone. His voice, over the hum of his rental car, was hushed and urgent; I
thought maybe he was being tailed. B-52's from Britain were already in the air
and would be "in country" soon, he told me. President Bush had already decided
to address the nation at 9.

   On the eve of war, I had arranged to meet Friedman in Melbourne, Fla., where
he was headed for a family bar mitzvah. Friedman is the founder, chairman and
"chief intelligence officer" of Stratfor (short for "Strategic Forecasting"), a
private intelligence company based in Austin, Tex. Stratfor is an upstart in
this little-known industry. While more established firms discreetly sell their
expertise on world events to large corporations, Stratfor operates a more
populist service, a Web site for subscribers, for whom it claims to do
"predictive, insightful global intelligence." In other words, for a fee, George
Friedman will tell you what happens next.

    Since I arrived at my hotel before Friedman, I turned on the TV in my room
and flipped the channels. No one was expecting the war to begin immediately. The
White House hadn't asked the networks for TV time. Some correspondents, not to
mention Peter Jennings, were heading home. Friedman, ensconced in his
climate-controlled sedan on I-95, was claiming to know something the best
reporters in Washington didn't.

   When 9 p.m. came and went without any new developments, Friedman was
troubled. I found him in his new command post at the Hilton, a mauve-and-green
room overlooking the ocean with a bedside desk and a high-speed modem. He was
pacing, in a T-shirt and shorts, studying maps of U.S. troop deployments and
ordering up situation reports from his analysts in Austin. At 54, Friedman is a
bearded, owlish figure, with small, alert eyes and a slightly hunched gait. "I
need caffeine," he told his wife, Meredith, who is also his public relations
director. "I need sugar. I need beef."

   He turned to me. "Understand that you're now in a superheated atmosphere," he
said. "There are all kinds of rumors floating around. And one of the players is
deliberately feeding us lies." I nodded. I wondered whether I was safe.

   Then, suddenly, Meredith's cellphone rang. "Triple A going crazy over
Baghdad!" she called out. ("Triple A," or AAA, I learned, is what the pros call
anti-aircraft artillery.) Friedman grabbed the phone. "Repeat," he commanded. He
listened, then informed me that the war had begun.

   I asked how he knew that, since it still wasn't on TV. "I can't tell you
where that came from," he replied.

   Within minutes, the White House announced that U.S. forces had indeed
launched cruise missiles into Baghdad, and by 10:15, Bush himself was speaking
from the Oval Office. It was an impressive moment for Friedman, and I told him
so. But his relief at being proved right was already starting to fade as he
plunged back into his maps and fired off a new round of e-mail.

   "We were told he would speak at 9, and for some reason it was delayed an
hour," he said. "The question is: why?"

   His clients would want to know the answer; indeed, their lives might depend
on it. And yet Friedman's clients weren't on the battlefield. They are the
financial traders and investors who get advice from Stratfor's Web site or from
Friedman himself. In the global economy, unrest and uncertainty cloud the market
like an Arabian sandstorm, and the Wall Street guys desperately want to know:
Will oil be up or down? Is the E.U. a friend or an enemy?

   "We're a place you can go," Friedman told me, "to get the mysteries answered.
"

   The strangest thing about George Friedman -- and this is by no means an easy
call to make -- is that he wouldn't know Wall Street from Little Italy. He doesn
't even own stock, and he never had any aspiration to make money off the
financial world. For Friedman, it's always been about war and spooks. Growing up
in the Bronx, he watched his father, who served with his fellow Hungarians on
the Russian front, follow the progress of Soviet troops into Hungary. Later,
after earning a doctorate from Cornell in political theory, Friedman worked on
some of the earliest computer war games for the Pentagon. His ambition was to
create his very own military-intelligence service -- a kind of C.I.A. for the
masses.

   During his 20 years as a college professor, Friedman lectured at military
policy centers and wrote impossibly dry books with titles like "The Future of
War." He was running a center on geopolitical studies at Louisiana State
University in the mid-1990's when his research on ethnic enclaves took him to
Eastern Europe.

   "We went to Slovakia, and we were meeting with Hungarian dissidents," he
recalled. "One of them slides into a booth across from me and says, 'I think I'm
being followed.' This is wonderful! It's like a 1930's movie."

   Friedman had a revelation: like so much else in the Internet age,
intelligence was about to undergo a revolution. Foreign newspapers, once
available only to the C.I.A. at great expense, were now online for free. The
business of recruiting informants, once the exclusive purview of governments,
could now be reinvented by a professor and a bunch of students eating pizza in a
computer lab.

   He set up Stratfor in 1996 and began sending out his free daily briefing on
world events to contacts in national defense and business, who then sent it on
to others. He predicted that the surging Asian economy would collapse by the end
of 1997, while the American economy would reach unprecedented heights. These
weren't exactly Nostradamus-type predictions, but Friedman found a modest
following nonetheless.

   Eventually, Friedman hired a former Russian colonel, who goes only by the
name Victor, as his director of intelligence. Victor won't say exactly what he
did in the old days, but let's put it this way: he knows 10 languages and spent
a fair amount of time operating in countries like Iraq, Iran and Afghanistan.
You figure it out.

   Between them, Friedman and Victor say they've amassed hundreds of contacts
around the world who now feed them tips or, in some cases, trade what they know
for information about another country. Some of Stratfor's 150,000 Web
subscribers -- who include devotees in the military, foreign governments and
Fortune 500 companies -- have become informants as well. "I'll give you a range,
" Friedman said. "A senior commander, the head of one of the services of a NATO
member, communicates with us continually. Down at the other end, I just got an
e-mail from somebody at Fort Hood who's an enlisted man. And they are everywhere
in between. A great deal of the information they give me is dubious, O.K.? But a
lot of it is valuable."

   These sources correspond with Friedman and Victor by e-mail or cellphone at
all hours of the day. This business of private-sector spying seems remarkably
similar to the daily activities of your average 16-year-old: it entails a lot of
sitting around with a computer, instant-messaging everyone you know.

   On the morning after the opening strike of the war, I was sitting with
Friedman in his hotel room when we were interrupted by Meredith. "Apaches," she
said.

   Friedman snapped upright. "The Apaches are moving?" He had expected bombing
first; now the ground forces were mobilizing. He returned his wire-frame glasses
to his nose and swiveled his chair back toward the computer in a single motion.

   "O.K. - right now, it gets really, really interesting," he told me, reaching
for the phone. "You don't know how badly this violates all the doctrines of
joint operations we've been taught in the last 10 years."

   Soon a midlevel officer in the Air Force was e-mailing Friedman. "Is this
starting to make sense to you now?" the officer asked, almost tauntingly. "You
had most of it laid out in your diary" -- a daily feature on the Web site --
"but the timing is/has been difficult to project, even from where I was/is. I'm
available tonight if you have questions."

   Friedman smiled. "I wrote a piece saying this war would be different from
every other war, because it was dynamic and would not have a fixed plan," he
told me. "But it's really strange sitting here watching it happen."

   I watched as Friedman discussed these unfolding events with his analysts in
Austin before deciding what interpretation to post on the Stratfor site. The
company has about 20 full-time analysts, and the internal debate over their
divergent theories -- Friedman calls it a seance -- can sometimes veer into the
surreal, if not the delusional.

   Several days later, for instance, as it became apparent to Friedman that the
military was facing a troop shortage, he and his chief analyst, Matt Baker,
studied a wall-size map of the region. Baker offered the possibility that U.S.
forces might allow the Turks to invade from the north and slaughter the Kurds if
that would enable the Americans to get to Baghdad quicker. Friedman pondered
this as if it now fell to him to make a difficult battlefield decision. "I can
live with that deal," he said. "Can you?"

   In the years after the tech boom collapsed, a few unforeseen calamities
befell Wall Street. First there was the attack on the World Trade towers and the
following war on terrorism. All at once, a new era of geopolitical turmoil burst
upon the street, as investors worried that uncontrollable events might lead to
soaring oil prices or failing airlines. Then the Henry Blodgets of the world
fell into disgrace, along with the brokerage firms that created them. These
crises created a vacuum of credible advice.

   The natural beneficiaries of this misfortune have been the handful of firms
who use inside information to analyze global events for investors. One outfit,
Medley Global Advisors -- founded by Richard Medley, a former Yale professor and
Congressional economist -- advises clients on geopolitical risks, ranging from
war in Iraq to the spreading virus SARS. Another, Eurasia Group, puts out an
index with Lehman Brothers that measures the financial and political stability
of emerging markets.

   These larger, high-end companies look down on Stratfor, which has four Web
sites -- including one for the energy industry and one specifically for the Iraq
war -- with sharp graphics, a pop-up window and various price packages, starting
as low as $49.95 for six months. They see it as the Drudge Report of global
analysis, a tip sheet posing as serious forecasting. There's some basis for this
charge; Stratfor has a habit of throwing a lot of unconfirmed rumors onto its
Web site. And yet there is a kind of genius in Stratfor's approach. The markets
now are increasingly dominated by jumpy day traders and short-term bettors --
the perfect audience for Stratfor's rapid-fire postings. A trader who sees a bit
of good news on the Stratfor site should be able to buy stock before the
mini-rally and sell it later in the day for a tidy profit.

   In at least one instance leading up to the war, for example, Stratfor moved
the financial markets all by itself when it reported that a Russian envoy was en
route to Baghdad to negotiate peace with the Iraqis. That sent the Dow into a
spasm of momentary optimism.

   Day traders aren't the only ones who have taken note. In recent weeks,
Salomon Smith Barney organized calls with Friedman for fund managers and
clients. Immediately after the U.S. invasion, Friedman began holding
early-morning conference calls, six days a week, with hundreds of traders at
Wall Street's biggest firms. Access to one of these calls costs $100, but if you
just can't get enough of Friedman's wisdom, you can get a package of 30 calls
for just $1,800.

   There is a temptation, when you are around George Friedman, to treat him like
a Magic 8 Ball. Does North Korea really have the bomb? No. Will America's feud
with France deepen? Yes. Will Bush win re-election? Ask again later.

   As Baghdad's statues of Saddam toppled on cable TV, Friedman predicted there
was little chance that the United States would ever bring Saddam into custody.
"I'm not sure we really want to capture Saddam," he told me. "If we capture him,
we can't just shoot him down."

   I asked about the reconstruction.

   "I think Iraq will have a formally independent government that will be in
perpetual gridlock and chaos," he said. "And essentially, there will be a U.S.
military administration utilizing NGO's that can do a lot of the heavy lifting
in the country."

   "And will there still be U.S. troops there in a year?"

   "Oh, absolutely," he said. "The whole reason for the war is to get American
troops into the region to put pressure on other governments. This is going to be
the main American military base in the region."

   The next confrontation, he told me, will most likely be with Iran, although
Syria and Pakistan are serious trouble spots as well. The markets will be
upended by turmoil in two oil-producing countries that no one is paying much
attention to: Nigeria and Indonesia.

   Not all of this -- maybe none of it, for that matter -- will come to pass.
This doesn't really concern Friedman. "If you're right 99 percent of the time,
you're not making really interesting calls," he likes to say. Either way, George
Friedman is living his dream. It's the colorful battlefield maps and secret
informants -- not the direction of the Dow -- that drive him to do what he does.
For Wall Street, predicting geopolitics is a business. For Friedman, it's the
ultimate war game, and he's getting paid to play.

   "Your 15 minutes are here, Friedman," he muttered to himself as we drove in
his Lexus from San Antonio to Austin. Meredith asked him what he meant by that.

   "I'm just saying," he said. "All your life you know useless and obscure
things. And suddenly. . . ." His voiced trailed off thoughtfully. "It is a
fairly strange experience."

   He stared out the window. There are some mysteries for which even George
Friedman has no answer.

   http://www.nytimes.com