IT WILL be one of the biggest mergers ever. The newly consolidated business will have an annual turnover of $37 billion and 169,000 employees. The chief executive is babbling about synergies, benefits of rationalization and economies of scale. The track record of ordinary mergers, involving two companies, is poor—and this one consolidates 22 units from 12 different companies. Meanwhile, in the background, the shareholders—or their representatives—are bickering and the unions are suspicious. If this were a real corporate merger, Wall Street would already be discounting the share price.

So the first question to ask about America's new Department of Homeland Security is whether the basic design (see chart) is the right one. It will bring most of the main functions of domestic security under one roof. Huge agencies will be seized from other departments—the Immigration and Naturalization Service (39,500 employees) from Justice, the Coast Guard (43,600) from Transportation, the Customs Service (21,700) from the Treasury. Other independent entities—like the Federal Emergency Management Agency (5,100)—will be gobbled up whole. Yet the new department will not be omnivorous: it is not eating up some 100 departments and agencies that remain on its patch.

 

There are still people who think it should have been bigger or smaller. In 2001 a commission chaired by former senators Gary Hart and Warren Rudman proposed an even more sweeping reorganization that would have also shaken up the Defense Department and the National Security Council (NSC), which are both basically untouched by the new entity. George Bush initially did not want a new department at all, merely a coordinating office in the White House, with the operational divisions left in different departments.

In fact, there is a lot to be said for the compromise agreed upon this week. To have folded everything into one giant department would have been logical but administratively impractical. As Richard Falkenrath, the policy director for the Office of Homeland Security, told a panel at the Brookings Institution, the job “requires specialization and expertise. There's also a fair bit going on in the rest of the world which the NSC needs to stay focused on.”

But leaving agencies scattered around would have been no good either. Consider two examples. If there were a chemical or biological attack now, health advice would come from no fewer than 12 federal agencies, to say nothing of local government ones. If there were an attack on a nuclear power plant, one agency would distribute anti-radiation treatment if you live within 10 miles. A different one distributes it if you live outside that circle. A third controls the drug stockpile. And a fourth takes over if the attack also happens to be within 10 miles of a nuclear-weapons facility.

So it is not surprising that the president came round to seeing the benefits of rationalization. With such an immense job of co-ordination to do, having a single department with budgetary control looked necessary. An advisory White House office could never bang heads together.

The bill approved this week does more than merely move bureaucratic boxes into one place: it vests the powers of the various units in the new secretary (likely to be Tom Ridge, now head of the White House Office of Homeland Security), in order to eliminate duplication or enforce the adoption of common standards. He can delegate authority back to the bits as he sees fit, and he also has the power to take 5% of the budget of any one bit of his empire and move it around.

In other words, the bill vests a lot of administrative discretion in one person. That may be risky. Democrats also argued that it was unconstitutional, and trampled over employment rights. These were the issues that held up approval of the homeland-security bill for months over the summer and autumn. But it is probably just as well the administration won the fight: much discretionary power will be required to overcome bureaucratic inertia.

Two reforms look particularly promising. First, the new department will gather together all the border and transport agencies into one place. At the moment, people entering America fill in one form for immigration officials and another one for customs, and they may have to see Department of Agriculture officers. That will now be rationalized—a no-brainer, admittedly, but this is by far the largest section of the new department, with 156,200 of the 169,000 employees.

The second reform concerns “information analysis”. For the first time, America will have a central clearing house for assessing the vulnerabilities of, and threats to, Americans at home. At present, the Energy Department supervises security at power stations, the Transportation Department looks at roads and bridges, and so on. Bringing these things together will not guarantee better intelligence, but it should be easier to spot trends and connections.

 For now, the new department will merely analyze intelligence gathered by others. But several figures, including Richard Shelby, the senior Republican on the Senate Intelligence Committee, and a commission chaired by Jim Gilmore, the former governor of Virginia, have argued that America needs a proper domestic intelligence-gathering operation, like Britain's MI5. At the moment, the gathering is done by the FBI, whose director, Robert Mueller, vigorously opposes any idea to split off spying from policing, even though most spooks insist that spying and policing are often contradictory things.

That battle is for the future, but similar vested interests are bound to make Mr Ridge's nice draft design extremely hard to put into practice. One cautionary tale comes from the Transportation Security Administration, the division which supplies the baggage screeners that went to work this week and which, at full strength, will be the second largest single part of the new department. The TSA was set up last year with congressional goodwill, a tough boss and an ambitious program. But it lost the confidence of Congress and airport managers. It failed to get baggage-screening devices delivered on time. It could not resolve the competing claims of security and airport efficiency. And its first boss was sacked.

From this perspective, it is worrying that the new department does not really begin with firm political backing. Although the Senate voted 90 to nine this week to set up the department, that was only after months of squabbling. And the new department faces four challenges that may cost it more support.

• The transition. The new department is supposed to be up and running a year after the president signs the bill (which may be next week). It took 40 years and several congressional interventions to get the last comparable government reorganization right, the establishment of the Department of Defense. It would be a disaster if the bureaucratic effort to set up the new department distracts from the real job of protecting the homeland.

• Sporadic shortages of money. Proposed spending on homeland security has roughly doubled since September 11th (though not all the promised money has materialized). Still there are holes. The Coast Guard has one of the oldest fleets in the world and no amount of reorganization will provide enough money to buy new ships.

• Civil liberties. Even in its pre-MI5 incarnation, the department's domestic snoops are likely to come into conflict with civil libertarians. Privacy watchdogs are up in arms about a new “office of information awareness” which, they say, could put all e-mails, credit-card transactions, drug prescriptions and every bit of electronic information you generate on to one vast, Orwellian database. This nightmare idea has been floated by the Defense Department, and may come to nothing. But the fracas carries a warning to the Homeland Security Department.

• The private sector. Many of America's most vulnerable targets, such as chemical factories, are privately owned and guarded. Any Republican government will be reluctant to wade in and impose new federal regulations on private firms. But what if private security is not enough? Mr. Ridge could well find himself battling against several huge industries.

In short, the new department is a step forward, but just a step. Eventually, it should make America's borders safer and improve domestic intelligence. But those are only parts of the picture. It is a top-down reform to improve security at a time when the most useful form of protection comes from the bottom up—from a security guard noticing something strange at a power plant, from a customs officer following up a hunch, from passengers overpowering a shoe bomber. Even after the new mega-merger, those are the people who will keep the homeland secure.