Financial intel killed
The Pentagon's intelligence directorate is killing off one of its most strategically important mission areas: monitoring efforts by foreign governments to buy U.S. firms and technology, such as the multiple efforts by China's military-linked equipment company Huawei Technologies to buy into the U.S. high-technology sector.

Defense officials tell Inside the Ring that Thomas A. Ferguson, acting undersecretary of defense for intelligence (USDI) and a former Defense Intelligence Agency (DIA) space analyst, initiated the dismantling of the financial-threat intelligence monitoring.

According to the officials, Mr. Ferguson thinks the financial mission is not appropriate for the USDI office, even though the Treasury Department lacks the resources to do similar monitoring. Defense Secretary Robert M. Gates signed off on the change, the officials said.

Mr. Ferguson and Pentagon spokesmen could not be reached for comment.

The officials said that the move will kill one of the Pentagon's most important and successful financial-threat monitoring programs, designed to track illicit and legal acquisition efforts by China and other foreign nations.

The USDI's threat-finance officials played a key role in revealing undercover Chinese technology activities. The data was provided to the Treasury-led Committee on Foreign Investment in the United States, which in 2008 blocked a proposed merger between Huawei and 3Com.

Last week, according to the Wall Street Journal, Sprint Nextel decided not to go ahead with an equipment deal with Huawei over reported national security worries that China would electronically penetrate U.S. cell-phone networks through the equipment.

"This will eliminate DoD's capability to uncover nefarious foreign financial and economic activities," said a person close to the issue who opposes the change. The intelligence mission focus, called threat finance, was carried out under a Pentagon directive after similar efforts by the DIA were found to be insufficient.

Edward T. Timperlake, a former director of technology security assessments at the Pentagon, said eliminating the USDI financial-threat monitoring is a mistake.

"Activities by the People's Republic of China pose an across-the-board threat, including espionage, agents of influence and financial activities," Mr. Timperlake said. "To de-emphasize the monitoring of foreign financial activities is disturbing and unexplainable."

Mr. Timperlake said he hopes the new Republican-led House will look into the Pentagon policy change.

Tehran-Taliban links
U.S. military and intelligence agencies are worried that Iran will increase its support for the Taliban by providing shoulder-fired anti-aircraft missiles to the Islamist insurgents.

"We do know that the Iranians … are interested in introducing some anti-aircraft weapons in Afghanistan, but we have yet to see it play itself out on the battlefield," said a U.S. official familiar with intelligence reports. "But we are concerned that it may in fact be a motivation of Iran to do so."

A U.S. air crew in Afghanistan reported seeing what was believed to be a ground-fired missile fired at their aircraft, but the missile missed, the official said. So far, no U.S. or allied aircraft have been shot down by Iranian-supplied arms.

There also are fears that Iran will increase the lethality of covert arms supplies to the Taliban by shipping deadly explosively formed projectiles (EFPs), the armor-piercing bombs used against U.S. troops in Iraq.

"We do not believe the EFP has been introduced" in Afghanistan, the official said, noting that in nine years there has been only one unconfirmed report of an EFP attack on a vehicle.

Instead, Iran's radical Islamist Shiite forces are working to provide limited support to the Sunni Taliban — mainly rifles, ammunition and some medium and heavy machine guns.

Small numbers of Iran's Islamist paramilitary Quds force operatives and other elements of the Tehran regime have been detected inside Afghanistan, helping train the Taliban and direct some attacks. The support is located mainly in western Afghanistan, which shares a long border with Iran.

Also, a small number of Taliban were sent to Iran for military training. The Afghans travel back and forth across the border, and the support they get includes weapons and sniper rifle training, schooling in basic guerrilla warfare tactics, and munitions-handling training.

"What we're seeing is a level of malign influence that is troubling but not at a level that causes great concern," said the official, adding that Iran is playing both sides in the Afghan war by supplying arms and training that help the Taliban keep the war going, but not enough to help them win power.

At the same time, the Iranians are inflicting casualties on the United States "to put a check on the West's ability to dominate and to embarrass the West and to string this thing out," the official said.

"So they're doing just enough low-level activity that aren't game changers but enough to keep much of the Taliban in the west [of Afghanistan] supplied with weapons -- and some of the [improvised explosive device] material they need for the IEDs we're seeing."

The main worry is that the Iranians "literally have the ability to ratchet this thing up or down at their will, with not much stopping them."

U.S. military special-operations forces are targeting small pockets of Iranian networks operating in western Afghanistan, the official said.

Veterans Day
Defense Secretary Robert M. Gates praised America's current and past warriors in a message for Veterans Day, which originally was a day to mark the end of World War I in 1918.

"The hundreds of thousands of brave Americans courageously serving in harm's way face a malicious enemy abroad, while their families faithfully await their safe return at home," Mr. Gates said in a message to troops and veterans. "I know I'm joined by the American people in thanking you for your continued sacrifice and dedication to this country."

Mr. Gates said it is the duty of all Americans to properly recognize the service and sacrifice of veterans and their families.

"To the veterans of the armed forces, we honor your valor and your exemplary service," he said. "To current servicemen and women who uphold their legacy, we thank you for your tireless commitment to America's security."

Ruling Elite
Angelo M. Codevilla, a former Senate Intelligence Committee-staff-member-turned-professor, has written a book highlighting what he calls the sharp political divide between the "Ruling Elite" and the "Country Party" -- the vast majority of Americans who are trying to take back control of government from the minority elitists -- mostly Democrats but Republicans, too -- who look down on them as unprofessional rubes.
"America's Country Party is the party of Outs," Mr. Codevilla states in the book. "But there is one difference: America's Outs — the two-thirds of Americans who feel that the Ruling Class is demeaning us, impoverishing us and demoralizing us -- are people who embody the ideas and habits that made America the world's envy. And they want the Ruling Class off America's back."

Mr. Codevilla notes that the more Ruling Class has supported ideas such as global warming and government-guaranteed health care, "the more the Country Class has turned its back on it."

"While the Ruling Class thinks that Americans are unfit to run their own lives, most Americans have noticed that our Ruling Class has lost every war it fought, run up unpayable national debt, and generally made life worse," he says.

The book, "The Ruling Class: How Political Elites Hijacked America," includes an introduction by commentator Rush Limbaugh, who notes that a key feature of the Ruling Elite is their belief that "the United States is the problem in the world."

HASC Democrats out
Voters threw out a number of pro-defense Democrats Nov. 2, setting the stage for a more liberal minority on the House's Pentagon-oversight committee next year.

The election vanquished the House Armed Services Committee's most senior Democrats, including Chairman Ike Skelton of Missouri, a party icon on defense who represented a sprawling western Missouri district for 34 years.

Also defeated were two committee stalwarts -- Reps. John M. Spratt Jr. of South Carolina and Gene Taylor of Mississippi -- plus five other committee moderates and conservatives.

A ninth Democrat, 14-term Rep. Soloman P. Ortiz of Texas, who may be in line to become the committee's ranking Democrat, was still trailing by more 700 votes but has not conceded.

The axing of nearly a third of the committee's 35 Democrats means the party has lost a big chunk of its center-right bench strength and likely will turn to liberals to fill committee vacancies, reports special correspondent Rowan Scarborough.

"I don't know if the Democrats are going to be more conciliatory or if they're going to be even more hardline liberal," said Rep. Duncan Hunter, a California Republican who soon will experience his first committee turnover in his second term.

"Are they going to have the numbers of conservative Democrats to put on the Armed Services Committee to where it does not become a political committee and keeps its bipartisanship?" he asked rhetorically.

"I think the tone for the next two years could be set on what happens in the lame-duck Congress," Mr. Duncan said. "If you see the Democrats doing a whole lot of sneaky things, that's going to make us respond in a certain way."