16 JUN 17 – Executive Intelligence Summary – Forward Observer Shop

16 JUN 17 – Executive Intelligence Summary


[wcm_nonmember]In this EXSUM… (2296 words)

  • US companies warned of cyberweapon targeting critical infrastructure
  • Mountain View drone crashes power
  • US to restrict Chinese investment in artificial intelligence
  • Musk: AI to disrupt human activity in 20-30 years
  • NATO-Russia and Middle East SITREPs
  • Soldiers deter tank assault with cyber and electronic warfare
  • Highlights from Gen. Milley’s Congressional testimony
  • Antifa member arrested for assault
  • Economic and financial outlook
  • And more…


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Priority Intelligence Requirements:

PIR1: What are the current indicators of systems disruption or instability that could lead to civil unrest or violence?

PIR2: What are the current indicators of an outbreak of global conflict?

PIR3: What are the current indicators of organized political violence?

PIR4: What are the current indicators of economic, financial, or monetary instability?

PIR1: What are the current indicators of systems disruption that could lead to instability, civil unrest, or violence?

US companies warned of cyberweapon targeting critical infrastructure

Security researches are now saying that CrashOverride, the tool used in a 2015 cyber attack against a Ukrainian power plant, was purposely built to be re-configured to attack other power plants.  That cyber attack knocked out power for 230,000 Ukrainian residents in Kiev, and researchers are concerned about the tool being used again.  “It’s a nightmare,” one researcher said. “The malware in its current state would be usable for every power plant in Europe. This is a framework designed to target other places.”  CrashOverride appears to have been built to cause regional outages, and it’s unlikely that, in its current form, it could be used to cause nationwide outages.  A January 2016 report from the US Department of Energy claimed that such an attack against US infrastructure would “undermine U.S. lifeline networks, critical defense infrastructure, and much of the economy; it could also endanger the health and safety of millions of citizens.”  US industrial control systems remain highly vulnerable to this and similar attacks.


Mountain View drone crashes power

A drone operator crashed his drone into high voltage power lines this week in Mountain View, CA. The crash caused a power outage which effected approximately 1,600 residents.  Repairs took about three hours to complete, and law enforcement is still searching for the drone operator.


US to restrict Chinese investment in artificial intelligence

Over the past several years, US regulators have worried that Chinese investments are increasingly becoming an issue of national security.  In fact, several Chinese offers to buy or invest in critical infrastructure have been turned down on those grounds.  Those problems come as China is engaging in very aggressive industrial, commercial and economic espionage against the US, and government officials are worried that Chinese investment in US-led research into artificial intelligence (AI) will give the Chinese military advantages over the US.  According to one Congressional aide, “These [AI] technologies are so new that our export control system has not yet figured out how to cover them, which is part of the reason they are slipping through the gaps in the existing safeguards.”  Those export controls should regulate the transfer of technology that could pose a risk to US interests, however, at the rate of Chinese investment, the regulatory body is not able to keep pace.  (AC: This week, the US Chairman of the Joint Chiefs of Staff warned Congress that US military advantages were “eroding” against near-peer competitors like Russia and China.) (SOURCE)


Musk: AI to disrupt human activity in 20-30 years

Researchers at Oxford University predict that in 120 years humans won’t be working anymore. Their other prediction include that humans will be out matched at translating languages in seven years, writing school essays in nine years, driving a truck in ten years, and AI will put millions of retail workers in 14 years.  We will also be outmoded in more complex matters like writing a bestselling book in 32 years and conducting surgery in as little as 36 years.  Some have warned that the computer programming could eventually become too complex for humans to work on that we could lose the ability to work on or control them at all.  But Elon Musk, founder of Tesla and SpaceX, says that AI-enabled computers will be better than humans at “everything” by 2030. (SOURCE)

PIR2: What are the current indicators of an outbreak of global conflict?

The prospects of global conflict continue to revolve five geopolitical actors: Russia, China, North Korea, Iran, and the Middle East. In the event of war with any of these nations, consider domestic systems disruption a distinct possibility.


Last week, the Canadian government reported it would increase defense spending by 70 percent over the next ten years, which represents a move towards the NATO goal of each country spending two percent of their GDP on defense.  As it stands, the USA constitutes 70 percent of NATO military spending, and Britain, Estonia, Greece, and Poland are the only countries that currently meet the two percent threshold.  “The United States welcomes Canada’s marked increase in investment in their military and their continued commitment to a strong defense relationship with the United States and NATO,” Secretary of Defense James Mattis said in a statement.


Middle East SITREP:

This week, Secretary of Defense Mattis answered questions in front of the Senate Armed Services Committee about the current rift in the Middle East, saying that the split could indicate that Russia “trying to break any kind of multilateral alliance … that is a stabilizing influence in the world.”  There were previous claims that Russian interference led to Saudi Arabia and other Gulf Arab nations breaking ties with Qatar over alleged support of terrorism.  US and Qatari officials currently believe that Russian hackers published false news on a Qatari news site, which said that Qatar supported the Muslim Brotherhood.  The news story also claimed that the Qatari Emir said that there was no justification for Arab hostility towards Iran, which would completely ignore the ongoing Saudi-Iranian proxy war.  But Iran could also be to blame for the hack, in an attempt to sow discord among the Gulf Arab alliance.  Either way, this seems to be a fight that Saudi Arabia has wanted for some time, as Qatar often disagrees with the Saudis’ stance against Iran.  The Saudi-led group of Arab nations closed air, land, and sea travel to Qatar.  Only days after President Trump accused Qatar of supporting terrorism, SECDEF Mattis signed a deal to sell $12 billion worth of F-15s to the Qatari military.  To be certain, this is another data point in the Middle East proxy war and it complicates the case for US-Gulf Arab cooperation.  The US, however, continues to arm Sunni Arab nations who are spoiling for a fight against Iran.

Defense in Brief:

DIA: US must boost war games, data sharing with allies

Lt. Gen. Vincent Stewart, the Marine general who leads the Defense Intelligence Agency, gave a speech comparing the successes of the past to the challenges of the future.  He outlined the use of open source information as a viable means to create actionable intelligence products in a shorter time frame.  The most important aspects of the new intelligence landscape are the sharing of information to a wider field of countries and the dissemination of useful intelligence to law enforcement agencies.  Lt. Gen. Stewart called for two new trends; a return to the practice of war-gaming that happened during the 40’s and 50’s (which reduces blind spots in the planning process), and the use of Intelligence Community Information Technology Enterprise (ICITE which uses tags to make the information more easily searched).

Soldiers deter tank assault with cyber and electronic warfare

During field exercises at Fort Irwin, CA, cyber and electronic warfare (EW) attacks against communications systems halted a simulated tank assault.  The lack of radio operability during the assault ultimately forced the tankers from their tanks after they couldn’t communicate.  These attacks included jamming radios and infiltrating communications networks, and now Defense Department officials are studying how to infiltrate civilian communications networks during a conflict.  An official from the Army’s Rapid Capabilities Office indicated that there are stopgap EW kits currently being field-tested in Germany by the 2nd Cavalry Regiment. These current kits will be finalized and the Army expects to launch three new EW programs within the next few years.  (AC: These programs are designed to counter the Russian military in a potential conflict.)

Highlights from Gen. Milley’s Congressional testimony:  Despite reports last year claiming that the US Army was at 33% combat readiness, Army Chief Gen. Milley said this week that his goal is for the Army to be at 66% combat readiness.  The Fiscal Year 2018 budget request pegs the Army at 1,018,000 personnel, however, Gen. Milley is requesting 540,000-55,000 soldiers in the regular Army; 350,000-355,000 in the National Guard; and 205,000-209,000 in the Reserve for a total of 1,095,000-1,114,000 troops overall.  About half of the 62 Cyber Protection Teams are fully operational.  (AC: The Cyber Protection Teams are staffed at brigade headquarters to assist combat commanders with defensive cyber warfare activities.  The teams will primarily be charged with protecting the electromagnetic systems, such as communications, against enemy disruption.  Most offensive cyber capabilities will remain with NSA and US Cyber Command.)  Additionally, the Army will staff five or six Security Force Assistance Brigades to conduct advisory and training missions overseas. (AC: Such as in Ukraine, Iraq, Afghanistan, and other places where training missions and advise and assist operations are being conducted.)

PIR3: What are the current indicators of organized political violence?

Antifa member arrested for assault

Lisa Simon, an Antifa protestor, was arrested and charged with aggravated assault, illegally taunting a police animal (horse), prohibited offensive weapons, disorderly conduct, resisting arrest and obstruction of administrative law. Her arrest followed the ACT for America’s protest against Sharia Law on 10 June.  Simon attacked a police horse named Sampson with her flag pole near the Pennsylvania capital in Harrisburg. She is being held on $100,000 bail. (SOURCE)


Batesville, AR Antifa report back

Central Arkansas and Ozarks Antifa gathered to protest the March Against Sharia in Batesville, AR.  According to the report back, attendees included “8-12 fascists holding a banner stating, ‘Diversity=White Genocide,’ under a pavilion protected by a police line, 30-40 local counter-protesters, and an 8-person masked [black bloc] consisting of diverse backgrounds and leftist ideologies including individual anarchists, and socialists including members of Democratic Socialists of America (DSA) and Socialist Alternative (SA).”  The Antifa groups initially showed up with golf balls and bottle rockets before being turned away by police.  The report back claims that the marchers were “laughed off stage,” before Antifa members met and conversed community members.  Other Antifa groups present included Mountain Home Redneck Revolt, Anti-Tyranny Brigade, and Anon-Resistance. (SOURCE: https://itsgoingdown.org/batesville-ar-anti-racist-action-report-back/)


Raleigh, NC Antifa report back

Reportedly over 250 protestors gathered to disrupt the March Against Sharia event in Raleigh, NC.  The Antifa group claims their noise demonstration disrupted the ACT for America event, while Antifa protestors prevented the public from hearing the anti-Sharia message. (SOURCE: https://itsgoingdown.org/raleigh-nc-report-back-united-racism-islamophobia/)


Portland, OR Antifa Day of Solidarity report back

Antifa handed out propaganda literature to more than 100 individuals during their Day of Solidarity in Portland, OR.  This event was on Sunday, 11 June, during the US Navy’s Fleet Week.  (SOURCE: https://itsgoingdown.org/portland-june-11th-day-solidarity-report-back/)


Seattle, WA Antifa report back

The Seattle Solidarity Network organized a counter demonstration against the March Against Sharia on 10 June.  Protestors brought whistles, vuvuzelas, and semi-truck horns which were hooked up to a car batter in order to drown out the march.  Antifa complains that there were only a few minor skirmishes, and then law enforcement stepped in after antifas achieved the upper hand in the fray.  The march was scheduled to end at 2pm, however, it ended around noon; likely as the Antifa noise demonstration was effective.  Following another brawl after the rally, law enforcement stepped in and arrested three antifas.


Syracuse, NY Antifa report back

The New York Antifa Alliance, which included out-of-state protestors, mounted a counter-protest against the March Against Sharia on 10 June.  The Antifa report back claimed they had the upper hand against ACT for America, out-numbering them 2 or 3 to 1 at any given point during the demonstration. The Syracuse Police Department was noted for being a neutral party. (SOURCE:  https://itsgoingdown.org/syracuse-ny-report-back-march-sharia/)

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

Economic and financial outlook

On Wednesday, the Federal Reserve raised interest rates for the third time this year, and said that a fourth rate hike could happen later this year.  The Fed cited its confidence in the strength of the economy, and financial media outlets are following that line of reporting.  And the markets are following that line, too, undeterred by more expensive borrowing.  I have concerns.  What the media is not reporting is the real reason why they have to raise interest rates quickly: the next recession.  Historically, the Federal Reserve has lowered interest rates by three percent to spur borrowing and economic activity to dig ourselves out of economic recession.  With the current federal funds rate at 1.25 percent, the Fed has little room to lower interest rates during the next recession.  Its plan right now is to raise interest rates to two percent in 2018 and up to three percent in 2019.  I believe the Fed is actually in a race to raise interest rates to three-plus percent so they can lower them again during the next recession. Currently, the Business Cycle Index is signalling no recession in the next 11 weeks, and unless there’s a precipitous drop in the Forward Rate Ratio, we’re unlikely to see a recession this year (image below).  But should geopolitical risks turn to flashpoint in the Middle East, North Korea, or South China Sea, or if any number of other factors are triggered — to include a cyber attack, terror attack, or any case of systems disruption — we could see a recession sooner.


Mike Shelby is a former military intelligence NCO and contract intelligence analyst. He spent three years in Iraq and Afghanistan and is now the intelligence and warfare researcher at Forward Observer.

1 Comment

  1. Musk might be a con man. There are respected financial people who believe this. I’d like to see FO do some sort of study on this guy.

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