Integrating Intelligence Support Into U.S. Industrial Policy

Moving from a free-market approach to an industrial policy centered on national security requires the U.S. intelligence community to rethink its relationship with the private sector. Former CIA Deputy Director David Cohen argues that the old rule of avoiding economic espionage to help private firms is no longer practical when commercial innovation and national defense are so closely linked. This shift reveals a reality: by keeping a strict barrier between intelligence and business, the U.S. limits its own strategic power. Understanding this change clarifies how industrial policy is moving from a passive regulatory role to an active, intelligence-supported strategy, while also creating friction between national security goals and the risks of favoring specific domestic companies.

The Erosion of the National Security Firewall

For decades, the U.S. intelligence community followed a simple rule: intelligence could support trade talks or sanctions, but it could not provide a commercial advantage to a specific American company. Cohen argues that this norm, which was a strategic benefit when the U.S. held a clear technological lead, is now a liability. As frontier technologies like AI, semiconductors, and quantum computing become dual-use assets that serve both consumer markets and national defense, the line between commercial interest and national security has blurred.

The system is already reacting to this pressure. Cohen notes that the norm is experiencing a gradual erosion behind the scenes. This creates a dangerous cycle: if the U.S. abandons its current stance without a formal, transparent framework, it risks unregulated, ad-hoc interference that lacks the guardrails needed to prevent corruption or political favoritism.

> "The United States has tilted the playing field against itself and magnified the Chinese threat."
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> -- David Cohen

The Hidden Complexity of Neutral Criteria

The biggest challenge to proactive economic espionage is not technical, but the administrative difficulty of picking winners. If the state starts providing intelligence to private firms, it must manage competition between American companies.

Cohen suggests that the solution requires moving from informal, corruptible processes to a system based on neutral criteria set by the president and Congress. However, this creates a new risk: the need to rely on political institutions to remain objective. The result of such a policy is that the intelligence community would become a market participant, requiring a level of oversight from inspectors general and congressional committees that is historically unprecedented.

> "One is that by favoring certain firms in the economy, that favoritism sort of bleeds over into corruption frankly."
>
> -- David Cohen

Cultural Inertia vs. Operational Necessity

A secondary dynamic is the internal culture of the intelligence community. Historically, the agency has prioritized a clear mission-based ethos. Cohen points to a sentiment from a 1990s case officer: "I'm prepared to give my life for my country but not for a company."

While Cohen views this as an outdated perspective, the transition requires more than a policy change; it demands a shift in personnel strategy. To provide value to the private sector in fields like AI, the intelligence community must create a channel for people to move between the private sector and the state. This creates a dependency: the quality of state intelligence becomes tied to the ability to attract and retain private-sector talent, forcing the intelligence community to mirror the agility of the industries it aims to protect.

> "It will require this careful and more robust communication between the private sector and the intelligence community and it requires I think continuing to bring on board into the intelligence community, people who have experience expertise education in these tech sectors."
>
> -- David Cohen

Key Action Items

• Establish Legislative Guardrails (Immediate): Congress must codify neutral criteria for intelligence sharing before the current erosion of norms leads to unchecked, opaque favoritism.
• Formalize Oversight Mechanisms (Next Quarter): Implement dedicated oversight by inspectors general to audit the selection process for intelligence recipients and mitigate the risk of political corruption.
• Integrate Personnel Pipelines (12-18 Months): Develop formal, recurring rotation programs that move technical talent between the private sector and the intelligence community to ensure analysts remain current with frontier technology.
• Define Strategic Sectors (Ongoing): The government must explicitly identify which industries qualify as national security-centric, moving away from broad free-market assumptions toward a targeted industrial policy.
• Establish Feedback Loops (Ongoing): Create secure channels for private firms to report cyber-threats and receive actionable intelligence, moving from passive defense to active, intelligence-informed cooperation.