Conspiracy Theorizing at the Pentagon

Ashby Monk

It’s a very busy day here at the SWF shop, as I’m still digging out from all my vacation emails (if I owe you one, it’s coming soon). Nonetheless, I wanted to take a brief moment to share a report making its way around the nets, webs, spheres, and verses: it’s a piece of research that was commissioned by the Department of Defense Irregular Warfare Support Program on the potential risks and responses of economic warfare. The paper, which is written by Kevin D. Freeman, CFA, is entitled “Analysis of Twenty-First Century Risks in Light of the Recent Market Collapse.” And, for a government report, boy is it colorful! Here’s a line right out of the summary:

“..this report exposes the fact that these vulnerabilities are subject to exploitation not only by greedy capitalists seeking profit but also by financial terrorists, intent on destroying the American financial system.”

Wow! For real? I find that kind of hard to swallow (as I do this entire report). But, let’s press on, as Freeman takes direct aim at SWFs:

“Potential suspects include the vast and growing Sovereign Wealth Funds, supported by substantial excess oil revenues. While a number of experts have attempted to dismiss out of hand any fears of nefarious activity by Sovereign Funds, this ignores the reality that government owned funds are or will be political in nature over time. “

Yowsa!! Come on, really?

Listen, I’m not sharing this paper with you because I think it has worthwhile content; I’m sharing it because it gives some insight into the type of advice the Pentagon is actually receiving about these funds. After reading this paper, I’m left only with a clear sense of the normative bent of the author (rather than imparting any groundbreaking facts or figures). It seems to me that the defense department commissioned a one-sided lit review which fosters fear rather than comprehension.

2 Responses to “Conspiracy Theorizing at the Pentagon”

  1. 1 Prof. Bruce W Bean March 2, 2011 at 12:48 pm


    I beg to differ on this post.

    The point of the Pentagon is defense.
    Their role as adding new insights to the lit on SWFs.

    It is a risk someone needs to consider. That is their role.

    Have you heard in the past two weeks the complaints that “no one knew the Mideast Youth Revolutions might occur?”

    Identifying a possible area of concern is in fact their job. Having identified this issue, it will be added to the myriad of risks they think about. They do not bomb or invade risks. They think about them. They are identifying a risk, not assessing its likelihood.

    Frankly, I don’t think that is bad.

    • 2 Ashby Monk March 2, 2011 at 12:59 pm

      Hi Bruce, Thanks for the comment. That’s a fair critique of my entry above. I too see the role for even-handed scenario planning and threat assessments. And, I agree, the Pentagon should be commissioning papers that help it think through some of the risks associated with SWF investments. That being said, I feel this paper missed the mark due to its normative style…Anyway, thanks again. Ash

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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