Law-enforcement and intelligence sources said this week there is a growing consensus within the Department of Homeland Security that the terror-alert status will be quickly moved back to “code orange”–meaning a “high” risk of attack–as soon as hostilities in Iraq begin. But officials say this time the regimen of enhanced security, including more intrusive inspections at the borders and police presence at key facilities such as nuclear plants, bridges and dams–will be even more visible to the public than during last month’s 20-day incursion into code orange.

“We’re calling this ‘dark orange,’ said one U.S. security official about the anticipated state of alert . In effect, the official said, security precautions will be just a shade below those that have been contemplated for “code red”–the alert level Homeland Security has devised if officials ever get word that a terror attack is “imminent.” The idea is to send a clear message to the public and to the terrorists that the federal government intends to go to extraordinary, and heretofore unseen, lengths to secure the homeland while U.S. servicemen are fighting abroad, other officials said.

The moment war begins, “you’re going to see a very forceful response” within the U.S., one official said. That means, among other things, that the Coast Guard will move its cutter ships right into harbors and the U.S. National Park Service will substantially increase patrols by park rangers.

In extreme situations, other major sites, such as the Washington Monument and the Liberty Bell in Philadelphia and entire ports could be shut down. At the U.S. Capitol, officials are planning to redeploy a “ninja squad” of masked officers armed with semiautomatic weapons, sprinkle “sniper” and undercover-surveillance teams throughout the area and sharply restrict public access to the House and Senate office buildings as well as the Capitol itself.

But these and other plans have generated intense debate within law-enforcement and security circles. Some officials worry about the economic and psychological costs to the public–especially if a war turns out to be less than the “lightning” victory that Pentagon planners are hoping for. A sustained period of dark orange could have a jolting impact on airlines, commercial shipping, tourism and other sectors vital to an economic recovery. On top of all this is the burden on local police, fire and other agencies forced to pay overtime, extra shifts and other costs imposed by dark orange. “You can’t stand at attention forever,” said U.S. Capitol Police chief Terrance Gainer.

The ultimate decision on terror color codes–and the many gradations of security within each color–will be made by a homeland security committee chaired by Tom Ridge. A spokesman for Ridge’s department insisted none of the current preparations are fixed in concrete, but acknowledged that extensive planning was underway throughout the government. But what security measures are actually taken will depend upon the latest intelligence assessments. “Just as the military is making their plans for war, we are preparing to defend the homeland,” said a spokesman. “But no decisions have been made.”

The impetus for the higher security levels comes from a stream of CIA and FBI intelligence reports for the past six months warning that Saddam Hussein is most likely to try an attack against the United States after an American invasion. In a closed-door Oct. 2, 2002, report to the Senate Intelligence Committee, later declassified, the CIA concluded that while Baghdad was drawing a line against going after U.S. targets directly, that would immediately change once an invasion began. The report concluded that “Saddam might decide that the extreme step of assisting Islamist terrorists (to use unconventional weapons to attack) the United States would be his last chance to exact vengeance by taking a larger number of victims with him.” Asked that day on the likelihood of Saddam doing this, CIA Director Tenet replied: “Pretty high, in my view.” More recently, the CIA has been warning about the possibility of terrorist attacks on U.S. troops abroad and Mideast oil fields.

The Search For Bin Laden Continues

Meanwhile, high hopes that U.S. and Pakistani forces, in the wake of the arrest of high-ranking Al Qaeda operative Khalid Shaikh Mohammed, might be only hours away from capturing Osama bin Laden are being dampened by U.S. intelligence officials close to the hunt. Though intelligence sources say that a cache of documents, computers and telephones seized from Mohammed does indeed contain potentially valuable new evidence about bin Laden’s whereabouts, American officials say that they are not optimistic that the Al Qaeda leader will be captured within days, or even weeks.

Statements by Pakistani officials and evidence of a sharp increase of military activity in southwestern Pakistan shortly after Mohammed’s arrest led to intense speculation that bin Laden was hiding out somewhere in Baluchistan, a wild tribal area that covers parts of Pakistan, Iran and Afghanistan. One Pakistani official was quoted as saying that two of bin Laden’s sons had been captured in the area, provoking a virtual invasion by Western journalists and TV crews of Quetta, a Pakistani metropolis in the heart of the region.

But back in Washington, intelligence officials, and particularly sources close to the CIA, wore themselves out trying to quash the frenzy of speculation about bin Laden’s presence in Baluchistan. For months, the CIA’s view has been that it is most likely that bin Laden has been hiding out hundreds of miles away from Baluchistan, at the opposite end of Pakistani territory, along its mountainous northern border with Afghanistan. This is the same region that U.S. intelligence believes American forces last came closest to capturing bin Laden, in the unsuccessful siege in late 2001 of a cave complex at Tora Bora on the Afghan side of the border. American officials have said it was conceivable that bin Laden, like Khalid Shaikh Mohammed and other Al Qaeda leaders who were successfully captured, could be hiding out in one of Pakistan’s teeming cities like Rawalpindi (where Mohammed was captured) or Karachi (where 9-11 organizer Ramzi bin al-Shibh was captured). But most U.S. intelligence analysts seem to think that the chances that bin Laden has actually left Pakistan or Afghanistan, either for Iran or for some more distant refuge, are extremely unlikely, though some foreign governments, such as France, appear convinced that bin Laden is indeed in Iran. The dominant view inside U.S. intelligence is that bin Laden is still where the CIA believes he has been since Tora Bora, somewhere along the northern Pakistan-Afghanistan border.

Now that a few days have passed since Khalid Shaikh Mohammed’s arrest and bin Laden has not been captured, intelligence officials say their warnings against excessive optimism have been validated by events. And though they would love to be able to say that bin Laden’s capture is only hours away, officials acknowledge that a more realistic view is that Osama is still elusive and his demise–despite intimations from bin Laden’s own recent statements that he anticipates personal “martyrdom” soon–is not necessarily imminent.

Terror Watch, written by Michael Isikoff and Mark Hosenball appears online weekly