May 1st, 2011
02:05 PM ET

Fareed's Take: Washington needs better crisis preparation

This week's big news is that Leon Panetta and David Petraeus will move into new jobs, running the Pentagon and the CIA respectively. They're excellent appointments, but I hope that they will use the occasion to have a major rethink about the way we handle international crises.

The vast American national security bureaucracy has become a world unto itself - massively funded, geared to its own strange internal dynamics and rarely subjected to external tests.

Consider the intelligence community: We spend about $80 billion on intelligence every year, more than the rest of the world put together. And yet we seem perpetually unprepared for global events. The CIA did not imagine the fall of the Soviet Union, the revolutions of Eastern Europe, the break-up of Yugoslavia, September 11th, Saddam Hussein's nonexistent arsenal of weapons of mass destruction, the global financial crisis, and, most recently, the Arab Spring.

Now, I'm not suggesting that it was possible to predict these events. Very few people or organizations foresaw them - certainly not in a timely manner - and those who did might simply have been lucky. International crises happen when they happen or a variety of complex reasons that are always easier to see in hindsight.

But surely we can be better prepared. Government agencies should be preparing policymakers and bureaucrats for sharp changes in international, regional and national patterns. They should be imaginative about the possibilities of sudden shifts and new circumstances. They should force policymakers to confront the scenarios in advance.

That is what has distinguished the most successful private sector firms in managing crises. Contrary to the mythology rampant in Washington and across the country, banks such as J.P. Morgan and Goldman Sachs did not know that the housing market would collapse in 2007. They could have made that prediction just as easily in '05 or '06 and bet on it and lost lots of money, as many firms did.

What J.P. Morgan, Goldman Sachs and others that weathered the financial crisis did was to carefully manage their risk, preparing themselves for sharp shifts in the market.

So I hope that at the highest levels of the U.S. government they are playing out crisis scenarios in Saudi Arabia right now.

Of all the possible events in the Middle East, the most complex by far would be serious protests in Saudi Arabia. If you think gas prices are high now, imagine oil at $200 a barrel.

The other way to be prepared for these kind of crises is to have some surplus power so that you have the firepower to deal with the crisis when it happens. Again, the analogy with the private sector: the banks that did well had some comfortable cushion of cash reserves so that they could ride out the crisis.

Right now, the United States is overextended, struggling with debt and deficits, fighting military actions in multiple places across the globe and beginning to be hit by a demographic and economic time bomb. We might be able to navigate through all this - as long as we don't hit another big crisis.

We will never be able to predict the next geopolitical, economic or natural disaster, but we can position ourselves to be prepared and to have a little more cash in the bank than we do now.

That's my take.  What's on your mind this week? I invite you to share your thoughts below and to follow me on Facebook and Twitter for more throughout the week.

soundoff (63 Responses)
  1. Carlos Luria

    I certainly agree with your contention that the American security bureaucracy has become a world to itself and, I would add, lacks sufficient public scrutiny. But as a member of that community during the Cold War I do take exception to your statement that it is perpetually unprepared for global events, such as the fall of the Soviet Union.
    The CIA tracked and repeatedly reported that the USSR was a knight dying in its armor, that it was imploding economically and disintegrating politically. It did not predict that Mikhail Gorbachev would dissolve of the Central Committee on December 21, 1991 and himself resign four days later, but from the standpoint of formulating contingency plans and strategies for the post-Soviet era, was a knowledge of the exact date really significant?

    By the same token, the CIA gave the leadership lots of advance notice that the East German government was moving ahead with plans to seal off East Berlin and the rest of East Germany. They planned to lay over 90 miles of concertina wire in 24 hours – an impossible feat without bunkering vast rolls of the stuff at strategic waypoints ahead of time. They planned to reinforce their interim, barbed wire “wall” with contingents of armed border guards spaced (if memory serves) 100 meters apart along the entire perimeter; several thousand troops had to be assembled, trained, armed and pre- positioned in anticipation. True, we did not predict that they would make their move at midnight on a Saturday (a clever choice), but Secretary of State Dean Rusk and the Security Council had ample warning to decide how the United States would respond once the barrier was erected. Here too, advanced knowledge of an exact date would have been a "nice-to-know" but it was hardly a "need-to-know".

    Too many critics ignore the fundamental weakness that hobbles intelligence reporting: CIA’s Director serves “at the pleasure of the president.” That subjects the Agency and its analysts to immense political pressure, for crises are good for business, for employment and for tax revenues. The Military Industrial Complex (and their Congressmen) did not want to hear that the "missile gap" was a fantasy or that the USSR was on the verge of collapse. Nor does it wish today to heed the voices from within the Joint Chiefs – namely, that our present threats are more economic than military and that to retain our pre-eminence we should re-focus our resources on domestic needs: education, health care and infrastructure.

    If the new National Security team can bring about such a transformation, it will indeed put America back on the road to excellence.

    May 1, 2011 at 11:04 pm | Reply
  2. Mouser

    Complete pile of gobbledygook by the author.

    May 2, 2011 at 2:06 am | Reply
  3. Ehab Hassan

    So happy to see a lot of Americans are into the Middle East problems, however something very important it is a fact that for the last decades Conspiracy Theories were dominating around here, no one can deny the role of CIA, MOSSAD etc… but please please do not undermine or take away credit form Arab people. this was suppose to happen many years ago but Iraq 1st war then 9/11 and another Iraq war postponed the revolutions. Previous events have a huge damage on our region and were exploited in a very ugly way by Arab dictators. Thank you all

    May 2, 2011 at 3:08 am | Reply
  4. joe

    Hey Fareed is that 80B per year well spent now with bin laden dead? Any thoughts on if the CIA or intelligence community had anything to do with it?

    though so

    May 2, 2011 at 8:14 am | Reply
  5. barrymillay

    Fareed Zakaria – pimping for Obama and Soros. A plant. A stooge. Bought and paid for by The One. This explains the fawning interview he had with his paymaster, George Soros.

    May 14, 2011 at 8:20 am | Reply
  6. barrymillay

    Fareed Zakaria – pimping for Obama and Soros. A plant. A stooge. Bought and paid for by The One. This explains the fawning interview he had with his paymaster, George Soros.

    May 14, 2011 at 8:21 am | Reply
  7. Joe Ciccone

    All this bragging about killing Bin Laden will one day come back and bite Obama in his ass. All the Taliban has to do
    Is keep those human bombs coming at a steady rate, and he's toast.
    Somebody give me what they think was a good reason for doing that, other than thinking it will help get him re elected.
    Bin Laden should have been killed, and taken and dumped at sea....period, end of story.
    It's just mind boggling how stupid those in power can be.

    May 15, 2011 at 11:12 am | Reply
  8. Roy Gacasan

    Hi Fareed,

    Your take at and during your CNN Sunday morning, 5/15/11 TVcast on India's corruption, and the world map showing where the worst and corrupt countries & areas in the world should have shown the USA as the most "RED." You only showed the small fry corruption. Look at the US finanacial disaster which is still far from a solution and causing the whole world to unnecessarily suffer resulting from its blatant manipulation of its financial institutions leading into the "financial bubbles" which eventually blew up. The lonely American tax payers are now made to pay up and carry into their future generations trillions of debt burden on their backs. Who allowed this debacle to happen? Who are the responsible people behind this corruption? Most of these men and women are still in positions of power and influence. What do you think these people will do next? Yes, you are very, very wrong! You need to review your TAKE and dig deeper and deepest. Hope & pray that you'll do better next time. God bless your work. Regards.


    May 15, 2011 at 1:57 pm | Reply
  9. Liliane

    Netanyahu: "America is Easy to Push Around (English Subtitles)"


    May 31, 2011 at 11:04 am | Reply
  10. tryecrot

    Yes there should realize the opportunity to RSS commentary, quite simply, CMS is another on the blog.

    August 27, 2011 at 8:53 am | Reply
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