15 JUL 16 – Executive Intelligence Summary 🔒

EXECUTIVE INTELLIGENCE SUMMARY – 15 JUL 16

[wcm_nonmember]Earlier this week, I published a brief entitled, Assessing the State of Cyber Threats for SHTF, that builds off PIR#1 in last week’s EXSUM.  Be sure to check it out.

Meanwhile, in this EXSUM…

• Marine recruiting priorities indicate future of conflict
• China hack on FDIC is covered up
• UN courts rule against China, in favor of Philippines
• Day of Rage, Black Lives Matter, & the GOP riots
• Goldman Sachs Sees Vulnerabilities in US Markets
• And more…

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NOTE: I’ve axed PIR5, about terrorism, because those events are too random and there’s not enough data out there before an event to provide a lot of insight.  For the future, I will include any pertinent information about terrorism in PIR3.

Earlier this week, I published a brief entitled, Assessing the State of Cyber Threats for SHTF, that builds off PIR#1 in last week’s EXSUM.  Be sure to check it out.

 

Priority Intelligence Requirements:

PIR1: What are the current indicators of systems disruption that could lead to a SHTF event?

PIR2: What are the current indicators of an outbreak of global conflict? (Russia, China, Middle East)

PIR3: What are the current indicators of military, government, political, or social-related instability or violence that leads to widespread domestic conflict?

PIR4: What are the current indicators of economic, financial, or monetary instability that leads to civil unrest?

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PIR1: What are the current indicators of systems disruption that could lead to a SHTF event?

Critical infrastructure

On Wednesday a US House committee released a report detailing the 2013 Chinese hack into the Federal Deposit Insurance Corporation (FDIC), which insures bank accounts at US banking institutions. The committee found that Chinese hackers gained access to 12 computers and 10 servers at the FDIC, including the FDIC chairman’s computer.  FDIC regulators attempted to cover up the attack, and investigators found that FDIC counsel advised employees not to discuss the hack over email so that it didn’t become part of the federal record.  Chinese use of FDIC information, which includes bank accounts at 4,500 institutions, will likely augment Chinese intelligence to recruit US nationals of Chinese descent.

This week, Obama answered reporters’ questions about an unrelated event and said, “We know that we have had hackers in the White House.”  Obama says that cybersecurity should be a top priority.

 

Top Marine job priorities show where conflict is headed.

The top six MOSs the Marine Corps is trying to keep staffed with experienced non-commissioned officers show the types of conflicts in which the Marine Corps expects to fight .  Those jobs are:

• Counterintelligence/human intelligence specialists
• Reconnaissance Marines
• Critical skills operators (Marine Special Operations)
• Cyber network operator
• Information assurance technician
• Explosive ordnance disposal

The Marine Corps is paying out at least a $30,000 bonus for Marines transitioning into these jobs, which is a good indicator that those responsibilities specifically are necessary for a future conflict.  The Army has been going through a similar process of ensuring that experienced intelligence, special operations, and cyber soldiers are retained.  Intelligence collection and counterintelligence are critical for a military at war, while cyber network operators and information assurance technicians ensure that the command, control, communications and intelligence systems are secure from enemy intrusion.  For cyber network operators, that includes disrupting the enemy’s platform from which they launch cyber attacks.

In a previous EXSUM, I’d mentioned that both the Marine Corps and Army are facing a shortfall of NCOs; the experienced mid-level and senior enlisted soldiers who get things done.  (The NCO is referred to as “the backbone of the Army” for good reason.)  NCOs leave the military for a host of reasons: war weariness or too many deployments, stress on family life, college enrollment, or better pay in the private sector.  This is a continuing problem for the nation’s fighting force.  It’s further confirmation of previous warnings by heads of each military branch that the next war will be more costly in terms of life and treasure.

 

Pentagon still concerned about “untrusted” suppliers of military hardware

As far back as 2011, the Pentagon has been working to remove “untrusted” military hardware that could be compromised by a foreign adversary.  The “flood of counterfeit electronic parts” could, for instance, allow a nation like China to disable or potentially take control of a missile en route to its target.  Although Congress has taken steps to mitigate those risks by moving to trusted suppliers of military hardware, the Pentagon is still concerned that our adversaries either could or are actively penetrating the supply chain of microelectronics used in weapons systems.  The Department of Defense still relies primarily on commercial components not manufactured in the US to build weapons, and the problem continues to worry the Pentagon.

 

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PIR2: What are the current indicators of an outbreak of global conflict? (Russia, China, Middle East)

The prospects of global conflict continue to revolve around the usual players: Russia, China, and the Middle East. The ways in which global conflict could cause or contribute to a SHTF scenario in America are myriad and they largely depend on which conflict is initiated. We’re certainly at risk of cyber attack in the event of conflict in any of the three regions. Systems disruption, like the prices and availability of fuel, is also a top concern that could cause a SHTF event.

U.S./China:

The UN’s South China Sea ruling came and went with little fanfare domestically.  On 12 July, the UN court ruled in favor of the Philippines against China in their land dispute in the South China Sea.  But the real problem was, and continues to be, the enforcement of that ruling, as it’s currently toothless.  China remains indignant and warned that they will ignore the ruling, which puts southeast Asia in a precarious situation of having a wolf by the ear.  The Obama administration is stuck because it doesn’t want to hold the disputed islands in the South China Sea, but feels like it also can’t let them go.

The danger here is that China feels like the ruling was an affront to their nation, certainly to what they consider as a national security imperative, and is likely to become more defensive in the region.  After the ruling, China announced that it was beginning a three-month exercise and might enact an air defense identification zone (ADIZ)  around their artificial islands, some of which serve as the equivalent of aircraft carriers.  In 2013, China announced an ADIZ in the area, which prompted two US B52 bombers to fly over the airspace uncontested.

It’s difficult to say exactly what the Obama administration will do in response to a Chinese ADIZ, however, I stick with the assessment laid out last week.  I still believe that China will maintain control of the islands and diplomatic means will produce limited, if any, results.  China won’t be pushed off those islands short of war, and I believe that the US Navy could win a conflict in the South China Sea.  The problem is that if war does break out and the US is successful in clearing the area, then US bases and assets in the region will likely come under attack.  China could also respond with asymmetric attacks against the US homeland, to include any type of systems disruption.

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PIR3: What are the current indicators of military, government, political, or social-related instability or violence that leads to widespread domestic conflict?

Day of Rage, Black Lives Matter, and the GOP protests

People lost their minds this week after an individual, allegedly related to the hacktivist group Anonymous, encouraged a “Day of Rage” in 37 cities on Pastebin.  In 2014, a similar attempt to organize a national Day of Rage was attempted, but did not materialize.  Since the post was picked up by a clickbait blogger, law enforcement and even the Defense Department issued safety warnings.

Anonymous hive members — well-known and long-established social media accounts — claim that the Day of Rage is not supported by the core group members.  It appears to me that the Day of Rage has little support, however, it’s been publicized so widely by the media that we may see some unrest as a result.  I remain unconvinced that there will actually be rage in 37 cities today, or in any but a handful of instances.

On the other hand, the GOP riots are coming.  I spent the majority of this week looking at protest and riot groups who will converge in Cleveland over the weekend, ahead of Monday’s convention kick-off.  As soon as the SHTF Intelligence class in North Carolina is over, I’ll be heading back home to battle track the riots.  My aim is to produce near real-time intelligence during the convention, including a daily roll-up.

[pdf-embedder url=”https://store.forwardobserver.com/wp-content/uploads/2016/07/FO-GOP-Primer-DL.pdf”]

 

Expansion of Panama Canal could lead to increased drug trafficking

Interpol warned this week that the expansion, which is set to double the shipping capacity, could also lead to increased drug trafficking.  Although ninety percent of global trade involves maritime shipping containers, only two percent of containers are inspected.

 

Retired general John Kelly warns presidential candidates of difficult challenges ahead

Retired Marine Corps General John Kelly warned in a recent interview that the presidential candidates, “will be in desperate need — and I mean desperate need — of military and foreign policy advice, because the world out there is just getting crazier and crazier.”  He leveled criticism against both candidates, saying that they “are not serious yet about the issues” and that their campaigns “don’t reflect reality.”

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PIR4: What are the current indicators of economic, financial, or monetary instability that leads to civil unrest?

Goldman Sachs sees vulnerabilities in US stocks and bonds

In a note on Monday, Goldman warned its investors that the US market looked “expensive”, and that equities could face a sell-off due to “negative growth surprises”.  That’s Goldman-speak for the looming recession.  Goldman itself has begun focusing on maximizing its profits ahead of the expected downturn.  Last week, we reported they’re cutting travel budgets.  Earlier this year, Goldman also laid off ten percent of its trading desks after its first-quarter profit dropped 60%, its worst first-quarter performance since 2006.

Goldman sentiment was echoed this week by the CEO of Blackrock, the world’s largest asset manager, who said that there’s “not enough evidence to justify” the levels seen in the equity markets right now.

 

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Appendix:

ADIZ: Air Defense Identification Zone; requires aircraft to identify themselves while approaching the ADIZ

FDIC: Federal Deposit Insurance Corporation

NCO: Non-commissioned officer; enlisted soldiers, corporal and above

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