Could Prediction Markets Prevent Wars?

A retrospective on the road to the Iraq war

In May of 2001, a cargo ship carrying a rather unassuming shipping container laden with 3,000 aluminum tubes left a port in south China. Each tube was cast with mechanical precision to 81mm in diameter and 900mm in length, or roughly the size of a large twirling baton. The shipment was destined for Iraq — but it never reached its destination.

The commercial barge made its way west, hugging the southern tip of the Indian subcontinent. But before it could complete its journey up the Persian Gulf, the shipment was intercepted and confiscated by the U.S. Central Intelligence Agency.

The CIA’s interest in a container full of aluminum cylinders may seem a bit odd. But, as innocuous as they appear, tubes of these dimensions are sometimes used to construct Uranium-enriching centrifuges. And U.S. authorities suspected that the shipment was part of a broader effort led by Saddam Hussein to reconstitute the Iraqi nuclear weapons program.

Yet, not all aluminum tubes are condemned to a life of radioactive rotation. They have many possible uses. In reality, it was quite plausible — perhaps even likely — that the seized tubes were destined for more harmonious ends.

However, this alternative was never given due consideration. And so what was ultimately little more than speculation, ended up playing a decisive role in U.S. foreign policy.

Indeed, years after American boots first tread on Iraqi soil, an intelligence report found that these ‘conclusions’ “failed to communicate the paucity of intelligence supporting its assessments,” and that the pre-war intelligence “contained several inaccurate statements.”

Might there have been a better way to make such a consequential decision?

Imagine if a prediction market had been created where participants could trade on the following question: Is the seized shipment of aluminum tubes part of an effort to rehabilitate the Iraqi nuclear program?

Might the United States have opted not to go to war?