Intelligence Shop

A company of analysts sets its private eyes on government.

Maureen Miskovic oversees an elite unit of 28 intelligence analysts who collectively speak 28 languages and have lived in or are experts on some of the most volatile spots on Earth-from Africa to the former Soviet bloc to the Middle East. They typically hail from top training grounds, such as the School of Advanced International Studies at Johns Hopkins University or the Fletcher School at Tufts University. On a daily basis, they assess the likelihood that foreign governments will collapse, whether from coup, natural disaster, economic catastrophe or any other circumstance. Miskovic and her analysts pride themselves on providing unvarnished analysis. They leave their political beliefs at the door and tell their customers what they think will happen, not necessarily what the clients want to hear.

At first glance, Miskovic's group looks a lot like a government intelligence agency. But she has never been a government employee. She doesn't even hold a security clearance, nor do her analysts. Miskovic is the chief operating officer of Eurasia Group, a 7-year-old, privately held Manhattan company that relies on open source information-such as newspapers, corporate earnings statements and Internet chat rooms-to create detailed analyses on the fate of nations for more than 170 customers.

Some of those customers are in the federal government's intelligence community, and Eurasia Group is aiming to increase its business with those agencies. In March, the firm acquired Washington-based Intellibridge, another open-source analysis company, founded by David Rothkopf, who has served in senior posts at the Commerce Department and is the former managing director of Henry Kissinger's international consulting group. Intellibridge gives Eurasia Group three things it wanted, Miskovic says: Skilled analysts, a Washington address and a valuable roster of clients, which have included intelligence agencies, Defense Department organizations and U.S. combatant commands.

Recent exposure of intelligence agencies' shortcomings might drive business toward Eurasia Group and its ilk. Specifically, investigations of the deeply flawed appraisal of Iraq's capacity to build nuclear, chemical and biological weapons have criticized the intelligence agencies for relying too much on secret, often single-sourced information, rather than publicly available data. Such information is often indispensable. But a presidential commission recently urged intelligence agencies to better blend their secret activities with analysis of information from open sources and to look outside government for help.

Miskovic, who before joining Eurasia Group in 2000 was the chief risk officer at investment bank Lehman Brothers, says her company is not that different from a government intelligence shop. It collects data and uses proprietary methods and the expertise of its analysts to convert raw information into something its clients can use to help make decisions. In government, this is called "actionable intelligence." In Miskovic's world, she uses a different label-"transactionally relevant."

But the two are analogous. Most of Eurasia Group's clients-financial institutions-want to identify, for example, the risks that attend investing billions of dollars in new factories or energy plants in often turbulent developing countries. Similarly, governments want to grasp the risks and rewards of foreign policy decisions, such as military interventions or diplomatic initiatives. In each case, the client has to understand a country's political reality, something the CIA and others sometimes have failed to do, with dire consequences.

Eurasia Group publishes its findings in a quarterly "Stability Summary and Outlook." The January 2005 edition provided "stability ratings" for two dozen countries, and weighed issues such as the wisdom of single-district proportional voting in Iraq, the likelihood that Nigerian president Olusegun Obasanjo would take strong military action against rebel factions, and how competition among local political party leaders in Argentina might disrupt the national government. The country analyses are concise, compellingly written and peppered with charts, ratings and summary bullet points. And they're based on verifiable information.

Eurasia Group also conducts "one-off" projects for clients, such as one for an investor who wanted to build a toy manufacturing plant in one of four former Soviet satellite nations. Eurasia Group assessed the stability of each government, and the hospitality it might show a foreign investor, in order to determine the most favorable place to build.

Eurasia Group analysts have measured the state of the Russian railroad system and studied the regulation of Internet service providers in Pakistan. But Miskovic says they also are capable of heady macro analysis: the rise of political Islam in the Middle East, the role of diasporas in societies, how cities affect national stability. If the question involves political calculation, the company will tackle it.

Students of intelligence analysis will recognize that such big-picture reports are not only the kind of product the CIA and others would like to make, but increasingly the kind they need to make. The recent intelligence critiques have found that the government is too focused on "current analysis" and doesn't take a longer term view of the world's trouble zones. The benefit of consulting firms and think tanks might be that such groups can take a longer view, one less encumbered by the ideological leanings of a given administration, which might be preoccupied with current crises. As Miskovic puts it, Eurasia Group specializes in "the things that ought to be on [the client's] radar, but aren't yet."

As governments become more interdependent-economically and politically, especially in the face of terrorism-Miskovic is betting that the market for outsourced intelligence will grow. She doesn't worry about the government poaching her employees. Many of them aren't U.S. citizens, which reduces their chances of landing a government job.

Now, with the Intellibridge acquisition, Eurasia Group is trying to identify the best potential government clients, Miskovic says. The firm never has relied much on marketing, preferring the personal recommendations of clients when building the business. In the closed, suspicious world of U.S. intelligence, that's probably a smart strategy for a lesser-known player. The company already has some government clients, which Miskovic won't disclose. But, she says, given the nature of the work Eurasia Group is doing for them right now, "it would surprise me if others didn't find it useful."