The End of “Sue and Settle” is Great News on the EW Front
by KEVIN D. FREEMAN on OCTOBER 26, 2017
We’ve explained the game before. Foreign powers have learned how to manipulate our democratic process to their own ends. They use their influence, lobbying, or money to promote candidates, policies or legislation that benefits their own interests. It’s been going on for years but largely ignored by the mainstream media and most politicians. That is, ignored until the establishment realized they could promote a narrative to try to undermine the Trump Presidency. Nevermind how little evidence has been produced to date.
Obviously, the recent revelations by The Hill regarding corruption and bribery by Russia and implicating the Clinton Foundation makes the case. When you look at the influence demonstrated in obtaining 20% of American uranium with the approval of CFIUS (Committee on Foreign Investment in the United States) you begin to recognize the scope of the problem. When we dig into CFIUS and all of this (and we will), we will no doubt unearth some really disconcerting truths. The good news is that the process of getting to the truth is now (finally) underway.
There are lots of examples of how these manipulations take place. One of the more obvious one is how Russia attempted to undermine our domestic energy industry by pushing for stricter regulations on hydraulic fracking. We know its true. It’s even been confirmed by the former Secretary General of NATO. And at this point, is there anyone who could really doubt such a Russian influence operation? It is a very direct form of economic warfare. Russia wants less oil and gas produced to keep the market tight so they earn more for their energy sales.
Similar to the fracking story, we know that China has promoted tight climate restrictions on Western nations while exempting themselves as an emerging nation. Such was the nature of the Kyoto protocol. What this means is that manufacturing would be shifted to China at the expense of those nations abiding by the environmental restrictions. Fortunately, we stayed out of Kyoto.
The Chinese have acted similarly by creating a monopoly on rare earth minerals. Then they have used their influence to get potential competitors to ban or at least restrict mining of these resources while mining on their own without restrictions under conditions we would never allow. This is another very serious form of economic warfare. Rare earth minerals are essential for our most sophisticated electronics. Whoever controls these resources has a powerful economic weapon for the future. We will report on this one as well at some point.
While there is always plenty of opportunity to report on challenges we face, the purpose of this blog is to share some good news. Administrator Scott Pruitt has announced that the Environmental Protection Agency (EPA) will officially end a practice known as “sue and settle.” This takes away a very powerful weapon used against our economy. How it worked was that environmental groups which may have been funded by foreign interests would bring friendly lawsuits in collusion with the EPA. Career bureaucrats at the agency would then agree to settle the lawsuits, imposing environmental restrictions that were never authorized by the Congress. It has been a serious end run around the legislature and intent of the American people. Ending this practice restores the rule of law and takes away what has been a collusion between the bureaucracy, foreign interests, environmental groups and radical judges.
From the EPA release:
Administrator Pruitt Issues Directive to End EPA “Sue & Settle”“The days of regulation through litigation are over,” – EPA Administrator Scott Pruitt.10/16/2017
WASHINGTON (October 16, 2017) – In fulfilling his promise to end the practice of regulation through litigation that has harmed the American public, EPA Administrator Scott Pruitt issued an Agency-wide directive today designed to end “sue and settle” practices within the Agency, providing an unprecedented level of public participation and transparency in EPA consent decrees and settlement agreements.
“The days of regulation through litigation are over,” said EPA Administrator Scott Pruitt. “We will no longer go behind closed doors and use consent decrees and settlement agreements to resolve lawsuits filed against the Agency by special interest groups where doing so would circumvent the regulatory process set forth by Congress. Additionally, gone are the days of routinely paying tens of thousands of dollars in attorney’s fees to these groups with which we swiftly settle.”
Over the years, outside the regulatory process, special interest groups have used lawsuits that seek to force federal agencies – especially EPA – to issue regulations that advance their interests and priorities, on their specified timeframe. EPA gets sued by an outside party that is asking the court to compel the Agency to take certain steps, either through change in a statutory duty or enforcing timelines set by the law, and then EPA will acquiesce through a consent decree or settlement agreement, affecting the Agency’s obligations under the statute.
More specifically, EPA either commits to taking an action that is not a mandatory requirement under its governing statutes or agrees to a specific, unreasonable timeline to act. Oftentimes, these agreements are reached with little to no public input or transparency. That is regulation through litigation, and it is inconsistent with the authority that Congress has granted and the responsibility to operate in an open and fair manner.
“Sue and settle” cases establish Agency obligations without participation by states and/or the regulated community; foreclose meaningful public participation in rulemaking; effectively force the Agency to reach certain regulatory outcomes; and, cost the American taxpayer millions of dollars.
With today’s directive, Administrator Pruitt is ensuring the Agency increase transparency, improve public engagement, and provide accountability to the American public when considering a settlement agreement or consent decree by:
So, while we have plenty of challenges (with new ones emerging regularly), we should stop for a moment and acknowledge the good news. Thank you Scott Pruitt. Thank you, President Trump.
Putin and the King
by KEVIN D. FREEMAN
on OCTOBER 6, 2017
Our last post, A Conspiracy Against the Dollar?, outlined some of the efforts underway that seem intended to undermine the U.S. dollar as primary reserve currency of the world. Things became a bit more concerning when it was announced that Saudi King Salman bin Abdulaziz was in Moscow to visit Russian President Vladimir Putin. That is significant. He is not scheduled to meet with President Trump until next year.
Consider this from Bloomberg:
The Saudi courtship of Russia reflects a convergence of interests between the world’s two largest oil exporters as the output pact between the Organization of Petroleum Exporting Countries and non-OPEC producers has spurred a recovery in crude prices. King Salman’s journey to Moscow, ahead of planned talks with President Donald Trump in Washington early next year, is also a recognition by Riyadh of the changing political balance in the Middle East after Putin successfully countered indecisive U.S. efforts to topple Syrian leader Bashar al-Assad.
“Is there really anything in the world that’s absolutely permanent?” Putin told an energy forum in Moscow on Wednesday, in response to a question about whether Saudi Arabia will always align with the U.S. on geopolitical issues. “It seems to me, on the contrary, that everything’s changing.”
King Salman, who arrived for the four-day state visit late Wednesday, called Russia a “friendly” country. He told Putin, who accepted the king’s invitation to visit Saudi Arabia, that their talks will boost the global economy as well as aid international stability and security.
It wasn’t that long ago that Saudi King visited Beijing while the Crown Prince went to Washington. In Middle East culture, this could easily be interpreted as a direct insult to America. The King focused on China while the number two visited the United States. Now, we have the King visiting Russia and Putin ahead of America and President Trump. [President Trump did visit with the King earlier this year in Saudi Arabia.] While this could simply be a matter of scheduling and not an intentional diplomatic message, there should be at least some concern regarding any possible message being sent.
Several years ago, we warned that Putin was working to remove the dollar from energy trading. Of course, this required an outreach to the Saudis. At the time, traditional national security commentators suggested we were wrong because Putin supported Iran and the Saudis would oppose him for that. Yet, we continued to see evidence that we were right. In our view, the play is Russia and China working together to undermine the U.S. dollar over the longer term. To achieve that, they need to undermine the petrodollar and this requires Saudi cooperation. Russia is a large producer of oil and the Chinese are large consumers. But to truly impact the global market, you need the Saudis (the long-run largest producer) and Venezuela (holder of the largest reserves). Now, with the Saudis seeking investment in Aramco (most likely from China), the relationships are beginning to set.
In addition to the above, Russia is also positioning chess pieces with Iraq’s Kurdistan and Venezuela. The goal is global energy leadership, adding to a serious relationship already with Iran. And, contrary to previous speculation, having a relationship with Iran is NOT a disqualified to the Saudis (as noted in the Bloomberg article):
The Saudi king “won’t demand the impossible” at his meeting with Putin, said Irina Suponina, a Middle East expert at the Russian Institute of Strategic Studies, which advises the Kremlin. “Saudi Arabia is aiming for real cooperation with Russia and understands that you can’t split Russia from Iran,” she said.
Remember, we used Saudi Arabia to help undermine the Soviet Union at the end of the Cold War. Vladimir Putin considers the demise of the Soviet Union to be one of the greatest tragedies of the last century. He has plotted before to make America fall apart as the Soviet Union did.
All of this suggests a grand scheme to undermine American hegemony not too dissimilar to what Reagan did to the Soviets during the 1980s.
We should also remember that the Saudis deliberately attacked the American shale industry in 2014, starting an oil war. During the same time period the Russians were funding the anti-fracking movement. We can only imagine what purpose Salman and Putin have in meeting now.
The key to all of this is the displacement of the dollar as the world’s reserve currency. We arrogantly assume that the dollar will always be king. But we should not turn a blind eye to the reality that other powers wish it were not so and have taken actions to make their wish come true. Only time will tell if the dollar can be undermined. But do not doubt that serious forces are attempting to undermine it.
Putin’s comment on how nothing is permanent is a clear shot at American hegemony. And, he is a master at messaging. The courting of Saudi Arabia is no doubt an effort of payback he viewed as the tragic collapse of the Soviet Union. But this is not the only evidence we have a what appears to be a masterful plot to undermine America. The Democrats have singularly focused their concerns about Putin on how he may have influenced the election of President Trump. They ignored real and credible evidence of Russian interference prior to the 2008 election. And they made fun of Republican Presidential Candidate Mitt Romney when he warned of Putin.
We have only recently learned that Russia was behind Facebook posts and advertising designed to support riots and division in America via “Identity Politics.” From Daily Caller (September 28, 2017):
Russia used Facebook ads in 2016 to both encourage and inflame identity politics in America as part of its cyber-operation against the U.S., according to new reports.
Previous media coverage on Russian influence operations within the United States has overwhelmingly focused on reported attempts to stir up America’s political right-wing, but new reporting indicates that Russia also sought to promote the identity-focused politics that currently dominates America’s political Left.
Russian accounts targeted Baltimore and Ferguson — both hubs of racial activism — with pro-Black Lives Matter messaging, CNN reported this week. The Washington Post reported that the Russian ads promoted other “African American rights groups” in addition to Black Lives Matter.
Then, on Thursday night, CNN reported that popular black activist accounts operating on Facebook and Twitter under the name “Blacktivist” were linked to the Russian government. Blacktivist accounts frequently stoked racial outrage about police shootings and mass incarceration of black men.
Russian operations similarly targeted American Muslims with anti-American messages, The Daily Beast reported. (RELATED: In Their Own Words: The Radical Political Goals Of ‘Anti-Fascists’)
The Russian-funded accounts impersonated Muslim groups to promote anti-American conspiracy theories — such as that Osama Bin Laden was a “CIA agent” — while praising former Libyan dictator Moammar Gadhafi for not having a “Rothschild-owned central bank” — a reference to anti-Semitic conspiracy theories.
Even The (London) Times (September 29, 2017) recognized the threat this poses:
Thousands of Twitter accounts linked to the Kremlin were churning out material designed to splinter America along political, racial and religious lines yesterday, even as tech executives arrived at Capitol Hill to field questions on Russian meddling in last year’s US election.
An analysis of 600 Twitter accounts linked by the German Marshall Fund, a think tank, to the Russian government has provided the most vivid insight yet into how the Kremlin is seeking to use social media to undermine western societies.
That revelation was last week. This week we learned that Kaspersky Labs security software may have created a vulnerability that allowed the NSA to be hacked. In turn, the NSA hacking has created all sorts of additional vulnerabilities. If this is true (and we have warned about this for years), there should be little doubt that Putin had his hands in it. This is a global cyber-economic war on multiple fronts with multiple players.
What Can We Do About It?
We’ve laid out a prescription that would certainly be effective if adopted in entirety. There are economic steps we must take. Building domestic energy resources, repatriating American corporate capital held hostage overseas by our tax code, genuine tax reform, and sound infrastructure improvement would clearly put us in a position to compete and win in the economic war. In addition, we need to return to teaching the miracle of America rather than just focusing intently on our historic failings. Certainly we shouldn’t ignore our historic failures. But America is good, not evil. And how can we heal the divide without sharing a common understanding and purpose. Finally, and perhaps most importantly, we must return to God for healing and restoration according to Second Chronicles 7:14.
If we undertake such measures, we truly can work together to Make America Great Again. If we do not, however, we clearly risk the loss of the dollar’s reserve currency status and the corresponding economic dislocations that will occur. The world is overdue for a global monetary reset. It should be on our terms and thus we can ensure that the 21st Century is an American Century as One Nation Under God.
The Next Financial Attack
by KEVIN D. FREEMAN on NOVEMBER 13, 2017
Three separate news items of the last week point to the serious trouble we may face in the next financial crisis. At present, all things seem pretty good. The stock market is at record highs. The President just returned from his Asia trip with multiple promises of new business for American companies. Tax cuts are (hopefully) on the horizon.
Before we rush to extravagance this Christmas, we should at least pause to consider a few cracks underneath the celebration trophy. There are some serious global and domestic issues that highlight our vulnerability. All of them can and should be addressed. Unfortunately, very few have shown the sobriety to properly examine, let alone deal with them.
News Item #1: Total Federal Debt Now Exceeds 100% of our GDPWhile the economic horizon does indeed look brighter (thanks in no small part to regulatory reform), we still have a massive Federal debt problem. [For the sake of this discussion, we will conveniently ignore the even more serious problem of unfunded entitlements and focus on the much smaller reported Federal debt. But it is important to recognize that this is simply the tip of an extremely large iceberg. We have discussed the entitlement problem and will do so again.] But the big pronouncement recently was that our Federal debt now exceeds 100% of GDP. The total is well above $20 trillion.
It has long been held that the 100% of GDP mark reflected a serious debt problem. It is made more serious if the debt seems to be accelerating. It is even worse if the acceleration happens in a period of very low interest rates. It is even worse to accelerate debt when the economy is not in recession. Finally, it is understandable if the debt is building when a nation is at war or undertaking some massive programs like infrastructure development.
The problem is that we aren’t in the midst of a major war. In fact, defense spending is below what it should be. Add to that the fact that the infrastructure needs a lot of repair and none of that has been covered in current budgets. And, the economy is growing and tax revenues are at all-time high levels. And interest rates are low so interest expense is not busting the budget. The reality is that we are living with the massive bloat created by the Obama Administration after the last financial crisis coupled with historically lower rates of economic growth.
In the year 2013, the government warned that our total Federal debt might exceed 100% of GDP by the year 2024. They were right, of course, but the excess happened sooner than projected. Now, we know that some observers will want to exclude the intra-government debt (debt the government owes itself). Yes, it is true that the Social Security Administration holds a lot of U.S. Treasury bonds and many argue that’s not real debt. But it is, especially if we are ignoring future government promises because those who depend on Social Security really do expect to be paid. That debt better be good. In addition, some argue that foreign holdings of our debt shouldn’t count because foreigners use our debt as their permanent currency reserves. This argument also fails, however, because foreign holders don’t view these holdings as reserves as much as they consider them IOUs from us to them. And they fully expect to be paid and may plan to call the IOU sooner than we’d like. Or, they might use the debt as a weapon against us.
Any business person understands that our Treasury debt is real debt. A perfect example is mentioned in this week’s BARRONs:
Triggering a Debt BombWith U.S. debt as a percentage of GDP above 100%, there’s a risk that we might try to inflate our way out of it, which would boost bond yieldsNovember 11, 2017
… Richter says that debt as a percentage of gross domestic product stands at 105%. He adds that Fitch Ratings has estimated that the figure will rise to 120% in 10 years. One corporate leader who opposes adding to this national burden is Howard Schultz, executive chairman of Starbucks. “It’s insanity. It’s not right,” he said at The New York Times Dealbook conference last week …
Estimates are that our total Federal debt will exceed $25 trillion in 10 years and that is wildly optimistic. Total debt was just above $10 trillion when President Obama took office in 2009. In other words, we added $10 trillion in debt, basically doubling the amount in less than a decade with low interest rates and a growing economy. So it shouldn’t be at all difficult to imagine a $5 trillion jump over the next 10 years. In fact, that is very likely a serious understatement, especially if we experience a downturn with higher interest rates. Every 5% increase in rates on a $20 trillion debt equals an extra $1 trillion per year in deficit.
This is not simply an academic worry. A debt crisis will hammer every American, especially those who depend on either the government or pensions. We will cover the pension crisis in detail in a future post but the risks are very high.
On the positive side, renewed private-sector economic growth based on tax cuts and regulatory reform could greatly help offset some of the serious debt risks we face. But we will need to act soon or the explosion of the debt bomb could prove catastrophic. The Bible teaches that “A prudent man foresees danger and prepares while the fool goes blindly on and suffers the consequences.” [Found in both Proverbs 22:3 and 27:12.] Now, while things seem okay is the time to prepare.
News Item #2: The Leak on a Plan for UAE to Attack Qatar Using Financial WeaponryThe Intercept is an online news publication made famous by publishing the national security leaks of Edward Snowden. Last week they published another significant document with global security implications. It is purportedly a presentation of a plan taken from the email of the Ambassador from the United Arab Emirates (UAE) to the United States that outlines a plan of attack against Qatar.
We’ve already explained how Egypt, Saudi Arabia, Bahrain, and the UAE have lined up against Qatar to force an end to support for the Muslim Brotherhood. We have also discussed Qatar’s role in the 2008 financial collapse via an ownership stake in Barclays Bank. This document, however, shows the tables turned with Qatar on the potential receiving end of a severe form of Economic Warfare.
The basis of the alleged plot was to destroy Qatari credit and currency, ultimately removing the World Cup from the nation. As you read the 3-stage plot, you will recognize the use of many of the things we discussed in the book Secret Weapon: How Economic Terrorism Brought Down the U.S. Stock Market and Why It Could Happen Again. There are lots of similarities including the spreading of rumors, the use of a European bank, the role of Credit Default Swaps, and the attacks on currency.
Here is a quick description from today’s edition of The Nation:
DOHA : Qatar is investigating an alleged attempt to manipulate its currency during the early weeks of a Gulf political crisis, now in its sixth month, a government spokesman said Sunday.
The director of Qatar’s government communications office said an unnamed global financial institution — partly owned by United Arab Emirates investors — had been instructed to stop trading Qatari riyals across Europe and Asia. Saif al-Thani’s claim is the latest development in an increasingly complex and bitter crisis. Since June 5, Qatar has been diplomatically, politically and economically boycotted by the UAE, Saudi Arabia, Bahrain and Egypt over charges Doha supports terrorism. Doha denies the accusations. “If this financial warfare is true, it is disgraceful and dangerous not only to Qatar ‘s economy but the global economy,” Thani told AFP. “One of the financial institutions stopped trading in riyals for a few days and it was only when we reached out to them” that it resumed, he said.
Qatar’s intelligence agencies are carrying out an investigation and “have engaged with law enforcement officials in the relevant jurisdictions”, he said. The Qatari claim comes just days after The Intercept, a US-based investigative website, said it had uncovered a UAE plot to “wage financial war” on Doha. It claimed leaked emails belonging to the UAE’s ambassador in Washington, Yousef al-Otaiba, revealed a complex plan to attack the riyal through bond and derivatives manipulation. The plan allegedly aimed to destabilise Qatar ‘s economy to the extent that it would have to give up the right to host the football World Cup in 2022. Al-Thani said Qatar had become aware of the currency issue in July but was revisiting the issue following recent media reports. “Definitely they are attacking 2022 in one way or another,” he said.
Rather than explain all the details, just read The Intercept article. Here is the Qatari perspective from al Jazeera.
Let’s be clear. This is a real plot with huge implications. Most of the world has ignored just how serious this really is. Ignoring this would be like ignoring aircraft carriers before Pearl Harbor. The reality is that this is a new form of warfare and most of the world knows it.
News Item #3: China and Russia Explain Why They Plan to Dethrone the DollarOn November 9, a hardline Turkish news outlet favored by Erdogan, Yenisafak.com, published an article that describes a looming currency war between Russia and China on one side and the United States on the other. Clearly, the Turkish position is pro-China/Russia. Here are some critical excerpts (emphasis added):
China-Russia currency settlement and the dollar systemThe Peoples’ Bank of China has announced a payment-versus-payment (PVP) system for Russian ruble and Chinese yuan transactions to reduce currency risks in their trade. The most likely risk these days of course would be from the U.S. Treasury, for financial warfare to damage Russian-Chinese trade which is becoming very significant in volume and value. By December it should reach a 30 percent rise over 2016. Yet there is more to this seeming technical move by China and Russia than meets the eye.
China plans to introduce similar PVP systems for yuan transactions with other currencies based on China’s Belt and Road initiative (BRI) . . .
The fact that the dollar remains the most significant foreign central bank reserve currency, still 64 percent of all world reserves, gives the U.S. government an extraordinary advantage. Since 1971, the U.S. has run budget deficits for 41 of 45 years. In 2009 the U.S. deficit was $1,400 billion! In 1970 the U.S. deficit was $74 billion.
For other countries this is an enormous disadvantage. Their U.S. dollar treasury bond investments for their own central bank reserves are becoming worthless paper.
China and Russia, as well as Turkey, with their dollar reserves, finance the U.S. military budget by buying U.S. bonds and bills that allow the Treasury to finance that deficit without raising interest rates. The cynical irony is that the U.S. military budget is financed by other nations’ need to hold dollar reserves against potential currency wars by Washington.
If countries of Eurasia including Turkey and Iran turn to bilateral arrangements like China and Russia to settle trade, bypassing the U.S. dollar, the dollar domination as world reserve currency will decline. Other currencies will rise, with the gold-backed Chinese yuan and gold-backed Russian ruble leading the way . . .
What China and Russia are doing is not about attacking the U.S. dollar to destroy it. That is highly unlikely and would benefit no one. It’s rather about creating an independent alternative reserve currency or currencies for other nations wanting to protect themselves from the ever-more frequent financial attacks by the U.S. Treasury and Wall Street banks and hedge funds–a gold-backed alternative. [The entire article can be found at yenisfak,com.]
Basically, this is an attempted moral justification for China and Russia to go after the dollar. It is clear that our adversaries view their holdings of U.S. dollars as supporting our military. It is a direct linkage between our currency and our ability to wage war. It is also a connection between Turkey, Iran, Russia, and China. All that’s missing is North Korea from the list, although they don’t have the currency reserves to really participate.
Of course, this isn’t really new. We have been warning that Putin has been plotting this for some time, encouraging China, Iran, and now Turkey to follow suit. The Chinese admitted as much in an edition of Qiushi magazine, the official house organ of the Communist Party.
Putting the Three News Items TogetherGiven our rapidly rising debt, it should be clear that we are vulnerable to a financial attack. And, we must be aware that financial attacks are real and being contemplated. Finally, we have a clear recognition in Turkey that many nations resent the dollar’s hegemony and are plotting against it. Unfortunately, despite the fact that this should be obvious, those pledged to protect are nation appear oblivious to this very clear, very present danger.
The good news is that there are steps we can take to protect our nation IF we recognize the threat as real. The problem is that it is simply too easy to keep going until something breaks badly. Let’s not make that mistake again. That’s why we must get our debt under control and take the necessary eight steps to Make America Great Again.
We Were Right All Along; Now Let’s Get the Problems Solved
by KEVIN D. FREEMAN on OCTOBER 20, 2017
Over the past decade, there have been multiple areas where we made clear statements about an issue or threat only to have the establishment deny there’s even a problem. Then later, sometimes months and sometimes years, people wake up or the truth leaks out and our original position is validated. That is happening with increasing frequency either because the weight of the truth is piling up or perhaps the Trump administration has slowed the stonewalling of information. Whatever the reason, this past week we found substantial corroboration of our positions. Here are four examples just this week:
There is little doubt that the Obama administration went soft on Russia. We had the whole Russia reset button fiasco. There was also the massive FBI investigation (Ghost Stories) to catch Russian spying that was swept under the rug. Remember all those spies we caught (including the notorious Anna Chapman who almost reached into Obama’s cabinet)? They were whisked off and the whole affair covered up so fast it made your head swim:
10 Russian spies deported after guilty pleasJuly 8, 2010
In the biggest spy swap since the Cold War, 10 Russian agents who infiltrated suburban America were deported Thursday in exchange for four people convicted of betraying Moscow to the West.
The spies left New York for Moscow hours after pleading guilty to conspiracy in a Manhattan courtroom and being sentenced to time served and ordered out of the country, said a law enforcement official, who spoke on condition of anonymity because he wasn’t authorized to speak on the record.
And now this week we have the revelations of what is seemingly clear collusion between the Clinton Foundation and Uranium One, a massive scandal that handed Russia control of 20% of our uranium:
FBI uncovered Russian bribery plot before Obama administration approved controversial nuclear deal with MoscowTHE HILL, October 17, 2017
Before the Obama administration approved a controversial deal in 2010 giving Moscow control of a large swath of American uranium, the FBI had gathered substantial evidence that Russian nuclear industry officials were engaged in bribery, kickbacks, extortion and money laundering designed to grow Vladimir Putin’s atomic energy business inside the United States, according to government documents and interviews.
Federal agents used a confidential U.S. witness working inside the Russian nuclear industry to gather extensive financial records, make secret recordings and intercept emails as early as 2009 that showed Moscow had compromised an American uranium trucking firm with bribes and kickbacks in violation of the Foreign Corrupt Practices Act, FBI and court documents show.
They also obtained an eyewitness account — backed by documents — indicating Russian nuclear officials had routed millions of dollars to the U.S. designed to benefit former President Bill Clinton’s charitable foundation during the time Secretary of State Hillary Clinton served on a government body that provided a favorable decision to Moscow, sources told The Hill.
The racketeering scheme was conducted “with the consent of higher level officials” in Russia who “shared the proceeds” from the kickbacks, one agent declared in an affidavit years later.
Rather than bring immediate charges in 2010, however, the Department of Justice (DOJ) continued investigating the matter for nearly four more years, essentially leaving the American public and Congress in the dark about Russian nuclear corruption on U.S. soil during a period when the Obama administration made two major decisions benefiting Putin’s commercial nuclear ambition…
[Take the time to read the entire article HERE. It corroborates the great work of Peter Schweitzer. Of course, it is more than a little troubling to learn that the scandal was swept under the rug by then FBI Robert Mueller, on President Obama’s watch, who is now charged with the current Russia investigation.]
Consider that this investigation came from The Hill, a source considered left center.
“…a story published in The Hill on Tuesday that disclosed the FBI had uncovered evidence showing Russian nuclear officials were engaged in a racketeering scheme involving bribes, kickbacks and money laundering designed to expand Russian President Vladimir Putin’s atomic energy business on U.S. soil. The evidence was first gathered in 2009 and 2010 but Department of Justice officials waited until 2014 to bring any charges. In between that time, President Obama’s multi-agency Committee on Foreign Investment in the United States (CFIUS) gave approval to Russia’s Rosatom to buy a Canadian mining company called Uranium One that controlled 20 percent of America’s uranium deposits. The committee’s members at the time included former Attorney General Eric Holder and former Secretary of State Hillary Clinton, whose husband collected large speech fees and millions in charitable donations from Russia and other entities interested in the outcome of the decision.”
If the name at the center of this scandal was Trump rather than Clinton,we would hear nothing else from TV news for weeks. Yet, despite a valid source and a genuine scandal, there’s barely any mention despite the photographic and email evidence of President Clinton meeting with Putin in the midst of it.
We have warned repeatedly of Russian interference in our economy. Some of the issues we raised including attempts to interfere in the 2008 election, subversion of our stock markets, undermining our currency, and sabotaging our energy industry. All of these were ignored. President Obama was caught on a hot microphone promising Putin “more flexibility” when he got past the scrutiny of an election. President Obama laughed off Mitt Romney’s assertion that Russia was any sort of threat, despite the evidence he had in hand (and covered up) on Russian spying and collusion with the Clinton Foundation to take over American uranium. Russia only became important as a foil to undermine the Trump Presidency. Then, with scant evidence the whole Russia collusion became an article of faith. This persists despite the sketchiness of the discredited so-called Trump dossier that started this all. The firm behind it has basically “plead the fifth.” Now that genuine Russian corruption has been exposed in connection with the Clintons, the media is virtually silent. We haven’t been silent, however.
Point: We were right all along. Russian is a threat to American interests and not when it just seems convenient politically.
Second, North Korea is a major cyber threat. We said this years ago with the hack of Sony Pictures. We have warned that North Korea had a serious EMP threat. We warned about North Korean counterfeiting. This is a regime intent on undermining both our economy and security. Yet, despite this, the “experts” told us that North Korea wasn’t really a threat. They told us it would be years if not decades before they got EMP capability given the state of their nuclear program and missile capabilities. Yet, in a very short period they have proven more than capable. We were also told to ignore the satellites they were launching. Now, they are launching even more, any one of which could contain a small nuclear device ready to serve as a remote detonation EMP. And, in regard to cyber, they have actually developed one of the more sophisticated capabilities even as the world was laughing at them:
The world once laughed at North Korean cyber power. No more.By David E. Sanger and David D. Kirkpatrick New York Times October 15, 2017NEW YORK — Amid all the attention on Pyongyang’s progress in developing a nuclear weapon capable of striking the continental United States, North Korea has quietly developed a cyberprogram that is stealing hundreds of millions of dollars and proving capable of unleashing global havoc.
Unlike its weapons tests, which have led to international sanctions, the North’s cyberstrikes have faced almost no pushback or punishment, even as the regime is already using its hacking capabilities for attacks against its adversaries in the West.
While its track record is mixed, North Korea’s army of more than 6,000 hackers is undeniably persistent, and improving, according to American and British security officials who have traced cyberattacks to the North.
When North Korean hackers tried to steal $1 billion from the New York Federal Reserve last year, only a spelling error stopped them….
The regime may be in bad shape but they are fully prepared to wreak havoc.
That’s the admission that we were right all along. North Korea has serious cyber game:
With war plan hack, North Korea finds the trump card- Nikkei Asian ReviewOctober 14, 2017
SEOUL/TOKYO — Straight out of the text book of asymmetric warfare, North Korea’s thousand-plus hackers have allegedly succeeded in breaching the South Korean defense ministry’s data center, stealing 235 gigabytes of military secrets.
It is equivalent to some 15 million pages of documents and includes classified plans jointly drawn by the United States and South Korea. These contingencies include a surprise attack to assassinate North Korean leader Kim Jong Un and other important figures, according to South Korean lawmaker Rhee Cheol-hee of the ruling Democratic Party of Korea.
The issue is not only that the surprise factor has been spoiled. The ease with which Pyongyang managed to steal such vital information may very well limit the quantity and quality of intelligence Washington shares with Seoul.
Cleary the skeptics were wrong. What if they have underestimated the EMP capability as well? Very recent Congressional testimony clearly shows that if our power grid were down for a year, 90% of Americans would likely die.
We can no longer afford to ignore this genuine threat.
The third example that we were right all along comes with the revelation that DARPA is looking for ways to mitigate cyber or other terror attacks on our financial markets as noted in The Wall Street Journal this week:
Pentagon Turns to High-Speed Traders to Fortify Markets Against CyberattackExperts attend brainstorming sessions to identify how hackers might wreak havocAlexander Osipovich October 15, 2017 Dozens of high-speed traders and others from Wall Street are helping the Pentagon study how hackers could unleash chaos in the U.S. financial system.
The Department of Defense’s research arm over the past year and a half has consulted executives at high-frequency trading firms and quantitative hedge funds, and people from exchanges and other financial companies, participants in the discussions said. Officials described the effort as an early-stage pilot project aimed at identifying market vulnerabilities.
The Defense Advanced Research Projects Agency, or Darpa, began the initiative before the revelations of attacks on Equifax Inc. and the Securities and Exchange Commission brought public scrutiny of risks to U.S. market infrastructure….
We told DARPA, the Defense Intelligence Agency, the Office of Net Assessment, SOLIC, the Naval War College, the Naval Postgraduate School, the FBI, the House Armed Services Committee, and a host of government contractors that our markets were vulnerable.
We warned about how even social media websites could be used against the markets and how High-Frequency Trading could be a weapon in a flash crash. We were largely ignored. But now, they are beginning to pay attention. In fact, one of the more serious skeptics has finally come around (from Zero Hedge on October 15):
Adding a sense of theatrical urgency to the DARPA project, the WSJ artistically notes that Manoj Narang, whom we have written about previously on numerous occasions, said he began taking part in the Darpa meetings as a skeptic, thinking the U.S. stock market was resilient and it was unlikely for attackers to cause anything more than temporary damage. But since then, he has gotten more worried. What has the biggest advocate of HFTs most concerned? One scenario he fears: a hack of a U.S. exchange in which the attacker sends a wave of fake sell orders to every firm offering to buy shares. That could potentially erase hundreds of billions of dollars of market value as prices drop and firms try to cover losses by selling on other exchanges, Mr. Narang said.
Again, what this means is that we were right all along. We must shore up our financial market defenses.
The fourth example is the idea that China would ever want to harm the U.S. economy or displace the dollar. We knew it to be true and explained in detail how and why. Despite clear and compelling evidence, there are pro-China factions inside the government and media determined to prevent an American response. A few, such as Michael Pillsbury, have seen the light and produced extraordinary work demonstrating the China threat. But for the most part, Chinese influence has prevented Americans from learning the truth.
We have shown that Russia attempted to get the Chinese to dump the dollar and attack our economy in 2008. We have further noted that this fits the Unrestricted Warfare doctrine as explained in a book by that name in 1999. We also demonstrated that this doctrine was alive and well in the Chinese military. Finally, we pointed out that it is now official Chinese policy to de-Americanize the world and replace the dollar as primary reserve currency. And yet, arrogance or naivety has kept policymakers and economists in serious denial. The Pentagon had my studies and evidence and yet continued to look for anything that would tell them that Chinese intentions were benign.
Now, we have an article in CNBC this past week that basically says, “Wait, What?” Why is China trying to replace the dollar? Don’t they know that’s a bad idea?
Why de-dollarize? The greenback serves China’s economy wellDr. Michael Ivanovich, CNBC, October 16, 2017
….China has been trying for some time to reduce its dependence on the dollar. Beijing actively promotes settlements of bilateral trade transactions in national currencies. More recently, it also offered a gold-backed yuan to fund oil trades. China seems firmly determined to de-dollarize by opening up its capital account to underpin the global use of its own currency.
Such a politically-driven policy change does not seem to be dictated by any readily apparent economic imperatives…
This is pretty nearly an outright admission that the Chinese are carrying out their policy exactly as we have told you for years. But the economists just can’t grasp it. In fact, they say since it is not driven by economics, it must be political. Well, there’s a third option. It is economic warfare.
We also have a few other things from the past week that fit into the economic warfare picture.Russia is developing a Crypto-Ruble. This is their own version of Russian-controlled Bitcoin. Second, the Chinese appear to poised to take 5% of Saudi Aramco. the Saudis wanted to sell 5% of their state-controlled oil company for $100 billion through a stock offering. But it appears that such an offering would require a real twisting of the rules to launch in London. A New York Stock Exchange IPO is possible but the American appetite for oil shares may be limited at today’s oil price. No matter, China has offered to step up. But what they may demand is the end of the petrodollar. They want all oil transactions priced in Chinese yuan. Say, what???? Yes, a massive economic warfare strike that we have warned about for years has now become very close to reality and was reported at CNBC just last week:
China will ‘compel’ Saudi Arabia to trade oil in yuan — and that’s going to affect the US dollarSam Meredith 11 Oct 2017
China will “compel” Saudi Arabia to trade oil in yuan and, when this happens, the rest of the oil market will follow suit and abandon the U.S. dollar as the world’s reserve currency, a leading economist told CNBC on Monday.
Carl Weinberg, chief economist and managing director at High Frequency Economics, said Beijing stands to become the most dominant global player in oil demand since China usurped the U.S. as the “biggest oil importer on the planet.”
Saudi Arabia has “to pay attention to this because even as much as one or two years from now, Chinese demand will dwarf U.S. demand,” Weinberg said.
“I believe that yuan pricing of oil is coming and as soon as the Saudis move to accept it — as the Chinese will compel them to do — then the rest of the oil market will move along with them.”
In addition to all of that, it is reported that China intends to assume full global leadership within a few decades. They are no longer content to be a rising power or emerging economy. They want to rule the world. And they don’t mind who gets shoved aside in the process. How will they accomplish that feat? Why economic warfare, of course. This is their doctrine. It’s in all their literature. From forced technology transfer to shoving their weight around with neighbors, the Chinese master plan is underway. And, of course, we warned about this as well. In fact, I debated Michael Swaine of the Carnegie Institute for World Peace on this very subject a few years ago at the DIA headquarters.
Now, of course, having been proved right about what is happening, the “establishment” wants to blame the Trump administration. The Carnegie Institute for World Peace is now claiming that President Trump’s nationalist, America-first, approach is why the Chinese are winning. This is as ridiculous as their denials a few years ago regarding the fact that China was attempting to displace us. They are flat out wrong and likely complicit in a globalist view. We are in a global economic war and have been for years. We’ve just had our head in the sand about it. Now that the evidence is becoming overwhelming, the shift is to blame the first President in years to recognize the war underway.
Here’s the good news. We can still win this war if we acknowledge it and act quickly. We can stop the flow of forced technology transfer and Intellectual Property theft. We can protect the Power Grid. We can shore up financial market defenses. We can unleash the American economy with tax and regulatory reform. We can rebuild American infrastructure and finance it with repatriation of corporate earnings trapped overseas. This is a formula for victory. And, several of these things are in the Trump plan.
Of course, if we call it the Trump plan, it will sadly find uninformed opposition. Maybe we should tell everyone it is Bernie Sander’s plan? After all, when college students were told that the Trump tax plan was Bernie’s idea, they loved it.
Our bottom line is that we shouldn’t follow the failed leadership that has consistently denied the problem. Now that we know the truth we must start down a sensible path that will make America great again before it’s too late.
The Home Game Has Arrived: Lessons from the 10th Asymmetric Threat Symposium
by KEVIN D. FREEMAN on OCTOBER 31, 2017
Last week I was privileged to attend the 10th Asymmetric Threat Symposium. It’s not the first of these I’ve attended but was clearly the best. Maybe the participants felt less restrained by politics and thus spoke more directly to the issues we truly face. Or maybe the quality of experts is rising. For whatever reason, the event was candid and sobering, even for me. The event was held near our nation’s capitol and was sponsored by CACI International, the Center for Security Policy, and ISW (Institute for the Study of War). The title: What Does It Take to Protect America? Combatting Global Asymmetric Threats.
While the rules of the event require that comments be shared without attribution, I’m pleased to offer a recap for our readers. You can read the agenda and see information about prior versions at www.asymmetricthreat.net. The speakers and panelists were impressive. In fact, I counted 36 stars on the shoulders (Admirals and Generals) of about a dozen participants, both active and retired, not to mention academic and civilian experts.
There were many important points covered and I’ll recap just a few:
First, the question was asked and answered. Are we already at war?
In a word, “Yes.” World War 3 has started but it is not the type that is declared. In fact, we were told (and you already knew) that this is a cyber-economic war. Over and over we heard why “It’s the economy (stupid).” And virtually all the panelists and speakers covered the main points we have been sharing in the Blog and our books. The topics included energy warfare, hacking, quantum computing, drones, hijacking the IT supply chain, threatening financial markets, and attacks on currency. Threats come from the big four (Russia, China, Iran, North Korea) as well as non-state actors and terror groups. There was even candid discussion of threats (by participants and/or attendees) from presumed allies such as Saudi Arabia, Turkey, Qatar and possible emergence of threats in Africa and South America.
We were also told that the problem we are facing is not a “messaging” problem but rather a reality problem. After all, how can we win if we never admit the bad guys are the bad guys? This was a refreshing change from other conferences where participants do verbal gymnastics to avoid calling out a real threat to appease political masters and political correctness.
We were also told that we cannot simply “kill our way out of this.” So far more than 70,000 have been killed in this so-called “war on terror.” And yet the approach we’ve taken has done little more than “keep the grass mowed,” so to speak. More “combatants” keep popping up. The reason? We have failed to articulate a defense of Western Civilization as we know it. We pretend that all cultures are equal and in doing so have empowered our enemies. Worse still, we apply such ridiculous double standards so that the American way is seen as inferior under any circumstances. Yet, objectively the opposite is clearly true. Did we have discussions during World War II regarding whether “Nazism” deserved respect? Of course not.
Today, we struggle with rationality. Can you imagine, for example, the outcry if the NFL only now decided they would admit women into stadiums to watch football games? Now imagine if women were to be allowed to enter stadiums but forced to sit in “separate but equal” sections? Sounds ridiculous doesn’t it. Yet that is what is just now (October 2017) being allowed in Saudi Arabia. Even better, Women will be allowed to drive cars starting in June 2018. It seems obvious to me that our way of life is superior here. To win this war, we will have to first identify with clarity who we are fighting and then what we are fighting for (preserving Western Civilization). Europe has failed in this regard and is paying the price right now.
The next major point that was made was that even though we may have an awesome “away game,” we are being forced to fight a “home game” as well. What this means is that our fight will no longer be confined to wars across oceans. Just as terrorism has come regularly to Europe, it is increasing in America. Tonight’s sad headlines from New York demonstrate just how true this is already.
As we’ve noted, the war we are fighting is more than just trucks and bombs, or even missiles. Tonight’s terror announcement with at least eight dead and more than a dozen injured is terrible. So was the Las Vegas shooting, the Boston Marathon bombing, Fort Hood, and all of the other kinetic terror attacks. The hack of Equifax and dozens of government agencies are also a serious threat. Just because there weren’t immediate casualties does not mean that the compromise of sensitive information will be painless. In fact, a hacker that takes control of our critical infrastructure could cause tremendous damage. Imagine if a nuclear power plant was forced into meltdown. What if key figures in our government were compromised (as Anna Chapman and the Russian spies were supposedly very close to achieving)?
While I was in DC last week at the Asymmetric Threat Symposium, we learned that the Russians were apparently at it again, this time attempting to compromise CyCon, one of America’s preeminent Cyber Conferences. Imagine what could be compromised by hacking those in National Security most interested in cyber defense (more on this at a future blog).
One of the most important bottom line truths from the Symposium was a recognition that the economy leads everything. Unless we grow our economy, we will lose in 10 years or less. Our enemies know this and thus have targeted our economy and infrastructure. The truth is that if we have to cut our Federal budget, defense spending will get hit the worst. We were told that we currently have the “smallest, oldest, and least-ready” Air Force in history. Let that sink in. And then realize that there is a similar truth regarding the Navy and our ground-force capabilities. Other nations are catching up and in some areas surpassing our military capabilities.
A decade ago (and seemingly forever before that) our military was in the lead technologically. Things would be built for the military and later offered commercially. That is no longer true. Commercial advances now lead the military. What’s worse is that in some cases the commercial developers are reticent to share with those who defend our freedom. They too often view themselves as economic citizens of the world and want to sell everywhere. What this means is that foreign corporations can acquire our technology and they will unfortunately transfer it to their military.
We have all seen the graphs that attempt to prove that our defense spending is greater than the entire rest of the world combined. Yet the reality is not so simple. A good deal of our defense spending actually is on behalf of other nations that we defend. Another portion is segmented for paper pushing and bureaucratic inefficiencies that earn billions for the defense consulting industry. Some is used for politically correct social experimentation. And what’s left isn’t optimally allocated. We build huge weapons systems that are sometimes outdated, more prepared for the last battlefield than the next.
By contrast, the defense spending of our adversaries is not simply what is reported officially. There is a lot that is hidden. You also have to add back all of the commercial development done by companies owned or controlled by the foreign government or military. In China, every company is subject to government or PLA intervention and sometimes outright control. And even American companies doing business in China are forced into “technology transfers” that help them leapfrog what our fighting men and women have available. Beyond that, there is also outright technology theft taking place. We spend billions developing a system only to watch it be hacked away or reverse engineered.
Unless we grow our economy, we will lose this war in this generation.
Some areas where we must invest right away to keep up include drones, Artificial Intelligence (AI), and Quantum Computing. We saw one video of drone races, some of which are sponsored in part by the Air Force. This was a truly amazing visual to behold. It also demonstrated one glimpse into the future of warfare.
On the final panel hosted by my friend Frank Gaffney (founder, President and CEO of the Center for Security Policy), there was a question about new and emerging threats. I was grateful that both he and the moderator discussed broader aspects of Economic Warfare and even cited some of our work. The good news is that it wasn’t unfamiliar to the broad cross-section of National Security leadership in the room.
FINAL POINT: WE CAN (and MUST) WIN THIS WAR. It will take a national effort and requires honest assessment. Fortunately, it appears that many of our top National Security leaders finally are beginning to understand this reality.
When the IT Supply Chain is Compromised “Inside the Wire”
by KEVIN D. FREEMAN on OCTOBER 10, 2017
The term “inside the wire” generally suggests a zone of safety. Going outside the wire suggests being at risk. But what happens when the enemy gets inside the wire? Extreme threat.
Our society has become increasing dependent on electronics and information technology (IT). With that dependence, we recognize that there are numerous external vulnerabilities. Hackers, for example, can break into Equifax and steal our personal information. The North Koreans can break into South Korea’s defense establishment and steal war plans. Not a week goes by without some sort of massive hack being discussed prominently. In response, we have turned to a cadre of technical advisors and security experts. We add the latest and greatest software. We employ strict measures of protection.
So what happens when our trusted sources for security are themselves compromised? This is the same as allowing an enemy to get inside the wire. It is an extreme threat. This was noted by Samantha Ravich from the Foundation for the Defense of Democracies and Michael Hsieh at the Council on Foreign Relations in The Cipher Brief:
Expelling Digital Demons from U.S. Sensitive Supply ChainsAugust 16, 2017
The open manner with which U.S. national security enterprises bid for goods and services can be exploited by U.S. adversaries seeking to inject counterfeit or malicious components into sensitive electronic hardware. The unprecedented challenge of policing the vast and complex supply chains for such hardware will require radical innovation in technology and governance to ensure that the rules-based system of international trade that the U.S. has long championed is not degraded into a chaotic arena of unrestricted economic warfare.
It is beyond dispute that the supply chains for the electronic hardware used by U.S. armed forces are under attack. Security researchers have documented multiple cases of sophisticated, malicious functionality being surreptitiously introduced into such hardware potentially allowing an adversary, in times of crisis, to turn our own devices against us. But even if this worst-case scenario fails to materialize, the uncertainty in both the reliability of U.S. warfighting arsenal and the civil infrastructure upon which U.S. national security industrial base relies, imposes a cost in its own right.
In 2011, it was reported that, “1,700 supposedly-new memory parts from an ‘unauthorized distributor’ showed signs of previous use, prompting the Missile Defense Agency to have to call for almost 800 parts to be stripped from the assembled hardware.” Then-head of the Missile Defense Agency, Lieutenant General Patrick O’Reilly, testified before the Senate that, “We do not want a $12 million THAAD [Terminal High Altitude Area Defense] interceptor to be destroyed by a $2 part.”
These supply chain attacks are seen as a particular kind of cyber-enabled economic warfare. U.S. national security leadership is confronted with the problem of blunting the aggression of foreign powers who have perverted the peaceful bonds of international trade into channels of espionage and sabotage, while preserving as much as possible the open nature of global trade on which U.S. economic prosperity depends. In lieu of seeking promises of better behavior from adversaries, which are hard to verify, or erecting import restrictions that can trigger a cascade of mutual retaliation, we endorse a mix of technology and governance innovation based on detection and deterrence.
The complexity and scale of the transactions that comprise U.S. sensitive supply chains create a kind of informational fog in which adversaries can hide . . .
We have been warning about this for quite some time. Just recently, however, have our warnings come to life in frightening ways. Rather than go into details, I’ll offer a few links and brief explanations regarding recent headlines. You will get the idea.
The NSA was broken into because a contractor using Russian security software?
Russian-based Kaspersky software believed to been used to take classified NSA dataCBS NEWS October 5, 2017, 11:51 PM
Russian-based Kaspersky Lab software was believed to have been used to take very sensitive and classified NSA data from an NSA contractor’s personal computer, CBS News confirmed Thursday, resulting in a significant security breach.First reported by the Wall Street Journal Thursday, the 2015 hack occurred when the contractor took the data with him from the NSA and then loaded it onto his personal computer, which had Kaspersky antivirus software on it. The software enabled Russian hackers to see his files. The hack has still not been disclosed by the government, according to the Wall Street Journal ….
What is so dangerous about this is that access to NSA files opens up tools that can be used to hack almost anything as noted in this CNN article:
NSA’s powerful Windows hacking tools leaked online – Apr. 14, 2017 Apr 14, 2017 – A hacking group has dumped a collection of spy tools allegedly used by the National Security Agency online. Experts say they are damaging. The exploits, published by the Shadow Brokers on Friday, contain vulnerabilities in Windows computers and servers. They may have been used to target a global banking system. One collection of 15 exploits contains at least four Windows hacks that researches have already been able to replicate . . .
How do we know this? Apparently, the Israelis hacked Kaspersky (the Russian security software). From The Washington Post:Israel hacked Kaspersky, then tipped the NSA that its tools had been breached
By Ellen Nakashima October 10, 2017 at 7:22 PMIn 2015, Israeli government hackers saw something suspicious in the computers of a Moscow-based cybersecurity firm: hacking tools that could only have come from the National Security Agency.
Israel notified the NSA, where alarmed officials immediately began a hunt for the breach, according to people familiar with the matter, who said an investigation by the agency revealed that the tools were in the possession of the Russian government.
Israeli spies had found the hacking material on the network of Kaspersky Lab, the global anti-virus firm under a spotlight in the United States because of suspicions that its products facilitate Russian espionage.
Last month, the Department of Homeland Security instructed federal civilian agencies to identify Kaspersky Lab software on their networks and remove it on the grounds that “the risk that the Russian government, whether acting on its own or in collaboration with Kaspersky, could capitalize on access provided by Kaspersky products to compromise federal information and information systems directly implicates U.S. national security.” The directive followed a decision by the General Services Administration to remove Kaspersky from its list of approved vendors. And lawmakers on Capitol Hill are considering a government-wide ban . . .
Is there any wonder that Russia rejects foreign software? From Reuters on CNBC:
Putin tells Russia’s tech sector: Ditch foreign software or lose outPublished 7:15 AM ET Sat, 9 Sept 2017
Russian technology companies will lose out on state orders unless they switch to using home-grown software, Russian President Vladimir Putin was quoted as saying on Friday.
Putin said that, in some spheres, state institutions could not work with companies running foreign software because that represented a risk for national cyber-security . . .
It should be noted that while the Kaspersky risk is significant, it is not the only recent example. CCleaner software was targeted and compromised. Like Kaspersky, consumers and institutions have relied on CCleaner to keep their computers safe. A single compromise on a single network computer can put the entire ecosystem at risk. From BBC News:
Alert over booby-trapped security software18 September 2017
A security company has issued a warning after its software was compromised by malicious hackers.
Piriform told users a booby-trapped version of its CCleaner software had been made available in August and September.
Millions of people use the CCleaner program to remove unwanted junk from Android phones and Windows PCs.
Piriform’s owner, Avast, said it had managed to remove the compromised version before any harm had been done . . .
Of course, besides software there is also the risk of rogue contractors such as Edward Snowden and rogue employees. The most famous recent example of rogue IT employees is the suspicious case of the Awan brothers working for a Congresswoman who was recently head of the Democratic Party, Debbie Wasserman Schultz (along with quite a few other Democrat Congress members). There’s so much to this story that we could never do it justice. And, we are just getting the facts a few at a time. But there is enormous smoke and it involves an IT staff with ties to Pakistan basically with full access to all the information in the House of Representatives and the Democrat National Committee. Here is a link to the latest:
The Democrats’ IT scandal just got even more bizarreby Frank Miniter, Fox News October 10, 2017
Perhaps you’ve lost track of the Democrats slowly exploding IT scandal, as much of the media is doing all it can to simply ignore it away.
I’m referring to the strange case of Imran Awan, the IT aide Rep. Debbie Wasserman Schultz, D-Fla., kept on her congressional payroll even after it became known he and his wife, Hina Alvi Awan, were being investigated by the Capitol Police for possible theft, fraud, moving terabytes of data off Congress’s system and more . . .
There are, of course, many other examples of compromised employees but this is one of the most significant and most bizarre.
We also have examples of compromised regulators such as we just learned about with the SEC. So what happens when a regulator insists on checking your network for vulnerabilities but they have already been compromised? Or what happens when a trusted contractor shows up with software to safeguard your network while unwittingly compromising it? The truth is that the bad guys know how to use force multipliers by targeting those we trust to keep us safe.
The Chinese have adopted a different approach. They force all suppliers to bend to their rules and even to turn over security secrets. This could enable them to get backdoors into whomever is working with them and thus gain access to all of that suppliers customers. So, should we be worried that Apple has bowed to Chinese demands? What about Microsoft turning over all source code as demanded by China?
Even if the Chinese aren’t looking for ways to compromise everyone, they are still able to use forced technology transfer as a direct means of economic warfare. Technically, it’s not Intellectual Property theft because the suppliers allow the transfer to gain market access. But it is clear-cut economic warfare on a grand scale.
So, the way we do business by accepting IT supply contracts creates risks inside our wire. Russia works hard to keep external suppliers outside their wire. The Chinese allow outside suppliers but only if they turn over their security secrets. Why is it that our approach seems the most naive and creates the greatest vulnerabilities?
There is some good news. President Trump has recently blocked a Chinese supplier that posed a threat of IT compromise. From Bloomberg:
Trump Blocks China-Backed Lattice BidBloomberg News
September 13, 2017President Donald Trump blocked a Chinese-backed investor from buying Lattice Semiconductor Corp., casting a cloud over Chinese deals seeking U.S. security clearance and spurring a call for fairness from Beijing.
It was just the fourth time in a quarter century that a U.S. president has ordered a foreign takeover of an American firm stopped on national-security concerns. Trump acted on the recommendation of a multi-agency panel, the White House and the Treasury Department said Wednesday. The spurned buyer, Canyon Bridge Capital Partners LLC, is a private-equity firm backed by a Chinese state-owned asset manager.
That is a step in the right direction. It shows a recognition of the problem and a willingness to address it. The President is also considering using his office to block forced technology transfers.
Samantha Ravich and Michael Hsieh offer an additional glimpse of hope regarding how a free society can reduce the threat by using Blockchain technology. Here are some additional excerpts from their Cipher Briefarticle:The complexity and scale of the transactions that comprise U.S. sensitive supply chains create a kind of informational fog in which adversaries can hide. However, if the information associated with each such transaction can be projected onto a timely and granular digital dataspace, the U.S. can harness the power of modern machine learning methods to identify suspicious activities within its supply chains at scale. Although there are many technologies with which this dataspace can be constructed, we believe the blockchain has, even in its nascence, demonstrated that it has the economy, security, and power that make it the ideal technology for this purpose.
Simply put, the blockchain is a ledger of business transactions whose validation is distributed to a large network of participants that are well incentivized to coordinate their efforts to prevent bad actors from tampering with the ledger’s events. The nature of the incentives and the nature of the efforts ensures that the honest participants do not have to consciously collaborate; the collective weight of their honest efforts is enough to safeguard against tamper motivated by theft, sabotage, or any other reason. This is evidenced empirically by the security of the bitcoin blockchain protocol over its nine years of existence.
We acknowledge the risks and challenges that this approach entails. Blockchain technology is new, and legacy acquisitions systems are deeply ingrained. However, the existential dangers introduced by the supply chain threat and the unprecedented scale of the systems engineering problem of defeating them calls for solutions that are as potent as these problems are hard. The blockchain is not the only technology that will be required for a fully-articulated solution, and technology will need to be joined with similarly bold innovation in governance.
Our broader hope in spotlighting a technology as revolutionary as the blockchain for the national security mission is that the U.S. can, through example, shorten the lag between technological innovation and governance practice. We also seek, through this advocacy, to create an enduring collaborative dynamic between the government and technology communities in which technologists need not relinquish working on the most exciting technologies of the day if they choose to help solve national security problems of gravest importance.
This is clearly a very serious issue. If we focus on it and address the risks, we can find effective means of mitigating the threats at least at the defense department level. In regard to personal computer users, we will have to be ever vigilant. The days of simply trusting security software to protect your computer have ended. This is especially true for those who have relied on foreign applications. Hopefully American suppliers will adopt some best practices and use the Blockchain for securing their systems so they can better serve us.
This is a global cyber-economic war. We must all get on a war footing.