The Spying Game
How an Austin company is winning the information war over Kosovo.
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GEORGE FRIEDMAN POINTS EXCITEDLY AT THE MAP. “These are the only roads out of Albania into Kosovo,” he says. “You don’t support four or five divisions that way.”
It’s the middle of April, the crisis in Kosovo is three weeks old, and Friedman can’t believe that some politicians and reporters are talking so naively about mounting a ground war against Yugoslav forces. “There’s no way in hell we’re gonna cross this frontier and attack. Now, there is a line of attack here, but we have to invade Montenegro first. Also, we can’t build up in Albania because there’s no way to get troops from here [Greece] to here [Albania]—the Greeks have denied us the use of Thessalonike. So all this talk about a ground war is very crazy nonsense.”
Friedman has been spouting such opinions since March 24, the day NATO began bombing Yugoslavia and the day his Austin-based company, Stratfor—which specializes in corporate intelligence gathering and analysis—put the Kosovo Crisis Center on its Web site. That first day, the site had some 20,000 visitors. Since then, Stratfor has posted numerous reports, including one on the forbidding logistics of a ground war, another on the hostility between the two main Kosovar rebel groups, and another on NATO’s “preposterous” claim that an old CIA map led to the May 7 bombing of the Chinese embassy. By then Stratfor was predicting that the war was winding down, a process accelerated by the embassy bombing: “Germany and Italy are tired of U.S. leadership in this crisis, and of U.S. mistakes.” Not the kind of things the talking heads at CNN or CBS have the time or the inclination to talk about.
At least on the air. Since day one of the bombing, more and more journalists and government officials have found themselves pointing their browsers to stratfor.com, which has earned a reputation as a vital source of information on Kosovo. They’re also signing up for the company’s e-mail intelligence updates, subscriptions to which have almost doubled in the past four months, to 29,300. “I use their stuff all the time,” says Ken Allard, the military analyst for MSNBC. “It’s timely, accurate, and honest. And they have a huge influence.” The Washington Post and the New York Times have cited Stratfor as a source; the St. Petersburg Times calls Stratfor’s “perhaps the most comprehensive coverage of the war.” Steve Glain of the Wall Street Journal says he uses Stratfor’s commentary as a “benchmark to measure the spin coming out of Washington, Brussels, and London.” Indeed, Stratfor’s biggest contribution to the war effort has been its attitude—refusing to take the word of NATO as the truth and diving deep into issues the mainstream media have overlooked. As a result, Stratfor has angered people of various agendas, from Serbs to Albanians. “We’re getting roughly equal amounts of hate mail and kudos from all sides,” says senior analyst Matthew Baker. “Our role is this,” says David Marshall, Stratfor’s president, “We’re the bullshit detectors.”
Stratfor’s secret: no secrets. All of its information is “open-source,” that is, available to the public, if hard to find. Stratfor scours the electronic world, looking for intelligence from standard wire services, Internet newsgroups, obscure agencies like the Iranian News Agency, e-mails from Yugoslavia, and unclassified Department of Defense studies. “No classified material, ever, ever,” insists Friedman, who is Stratfor’s chairman. “We don’t want it.” They also don’t want Beltway gossip or “expert” information. “We have a unique methodology,” says Baker. “Zero-based analysis: starting stupid. It’s a lot of work, but it’s a lot more accurate.”
Until Stratfor became ground zero for Kosovo analysis, the company was sought out more for its customized intelligence services—monitoring certain parts of the world, setting up security systems, and answering questions, such as, “What is this company, really?” Its clients include banks, international oil companies, and even governments. In short, Friedman and his staff are lawful spies—more adept with mouse and browser than cloak and dagger. “Espionage is the illegal gathering of information,” says the bearded fifty-year-old former college professor. “What we do is intelligence gathering. The problem today, though, is sorting information. One of the CIA’s prime missions used to be sending an agent to Minsk to bring back the local newspapers. Today I can go to Minsk in thirty seconds and get the local papers. The problem today is not collection but analysis.”
Friedman has a lot of experience with that. A political science professor who was born in Hungary and raised in the South Bronx, Friedman was the head of the Center for Geopolitical Studies at Louisiana State University, a think tank in Baton Rouge. In 1995 he founded Strategic Forecasting, which eventually became Stratfor. He soon realized that a growing intelligence company couldn’t thrive in Baton Rouge, so Stratfor, which included his wife, Meredith, and about fifteen former LSU students and employees, began looking for a new home. Eliminating Washington, D.C. (“So we couldn’t go to lunch with people,” says Friedman), they ran some variables through a computer: high-tech environment, large university library, nice place to live. “Out popped Austin,” Friedman says. “I’d never been there before.” After a weekend visit, the extended family moved in 1997.
Analysis is Stratfor’s forte, but forecasting pays the bills. “Our job,” says Baker, “is to find the overlooked leading indicators of what’s going to be headline news next week and next month.” Though the company has made some boners, such as predicting the failure of the euro (Friedman still thinks it will eventually crash and burn), its crystal ball has been clear enough to keep adding clients. Notable bull’s-eyes include foreseeing the 1997 East and Southeast Asian economic crisis in July 1996 and the 1998 Indonesian civil unrest in October 1997.
Then, in its 1999 forecast (published online January 4), Stratfor predicted that Serbia would challenge the U.S. in Kosovo. In mid-March the company began creating the Kosovo Crisis Center as the first in a series of ready-to-go crisis centers—much like newspapers prepare for celebrity deaths by stockpiling obituary information. Before long, on March 24, the bombs were falling. “We realized we weren’t going to get a better opportunity to demonstrate what we can do,” says Marshall. The site went online at ten o’clock that night with thirteen pages; today there are more than four hundred, including detailed maps, up-to-the-minute news updates, and unpredictable commentary. The writing is clear and decidedly unacademic, an influence of Meredith, Stratfor’s communications director.
Running the crisis center has turned Stratfor’s downtown Austin office into a quietly bustling headquarters. Besides the Friedmans, there are about twenty employees, most twentysomething men (senior analyst Baker is 28). Friedman says they are split conceptually into three groups: “Sponges” troll the Web looking for provocative phenomena, “ferrets” seek out missing information, and “foxes” put it all together. “But all of us are all three,” he says. “Everybody does everything.” The main protocol is what Friedman calls the “Holy smoke!” factor. This can be an item as seemingly innocuous as wages outstripping productivity in Malaysia (the tip-off that the Asian economies were in trouble) or as eye-opening as Saddam Hussein’s restructuring armies and executing commanders just before the December 16 bombing of Iraq (which led Stratfor to theorize the bombing was done to cover up a failed U.S.-backed coup).
On one wall of the office are three clocks, showing Austin, Belgrade, and Greenwich time. A foosball table sits idle. A TV blares MSNBC—to no one. Everyone is working eighty-hour weeks, says 24-year-old Chris Treadaway, one of the architects of the crisis center. He and the rest of Stratfor’s computer nerds and academics display the shared enthusiasm of earnest, exhausted youth. They fall into easy hyperbole and then just as easily into the routines of hard work. Or play—more than anything Stratfor resembles a giant war game: young men poring over maps and arguing strategy, certain they are at the center of something important.
Of course, not everyone involved in this game is having fun. How has Friedman himself gotten beyond all the suffering and outrage of this war? “The Zen of intelligence is not that you don’t care,” he replies, “but that you can for the moment suspend the need to judge so that you can understand. My passion is to understand how the world actually works, in a political, economic, and military sense. And to be able to predict what will come next.”
Stratfor thinks the future is bright for the U.S. and Latin America but sees trouble in the East. Besides economic turmoil in Japan and Asia, Russia will try to recreate the Soviet Union, and China will step up its repression. Most important, Stratfor predicts the emergence of a Russian-Chinese alliance to offset the United States’ status as the world’s only superpower. No wonder the title of Stratfor’s 1999 forecast was “A New and Dangerous World.” “We’re pessimists,” says Friedman. “We are the people who tell you the bad news.” No wonder he has a twinkle in his eye. You don’t need a crystal ball to see that, for Stratfor, bad news is good business.