National Intelligence Bulletin for 06 April 2018

The National Intelligence Bulletin is a weekly look at national security, domestic systems disruption, the risk of failing critical infrastructure, and threats to social, political, economic, and financial stability in the United States. This report is available each week for National Intelligence subscribers.


In this National Intelligence Bulletin… (4,286 words)

  • InFocus: Is America in decline?
  • Net farm incomes in U.S. down 50 percent since 2013
  • Cyberattack targeted energy-industry pipeline data
  • Most critical infrastructure organizations unprepared for cyberattacks
  • Interior Department IG found computers trying to ‘talk’ to Russia
  • FEMA says it won’t be there for every future disaster in ‘blunt’ new message
  • Negative views of opponents drive Americans to political parties
  • Trump to order between 2,000 and 4,000 National Guard troops to the U.S.-Mexico border
  • Russia is looking for defectors inside the U.S.
  • And more…

InFocus: Is America in decline? I don’t see how we’re not. When historians look back on the American Empire, what are they likely to say was the start of decline? Loose monetary policy that created the Dot Com bubble? The 9/11 attacks and the endless global conflicts that followed? Profligate spending that drove the national debt to $11 trillion? Loose monetary policy that created the housing boom and bust that triggered the 2008 recession? Eight years of an Obama administration committed to a fatalistic, “post-American world”? Profligate spending that raised the national debt to $20 trillion? Unanswered Chinese espionage against U.S. industrial and economic targets that allowed them to rapidly develop their own economy and pose a competitive threat to America? (Chinese espionage alone is estimated to cost the U.S. economy $300 billion per year. Over the course of ten years, we’re easily looking at trillions of dollars worth of intellectual property stolen from U.S. research and development.)

Maybe there’s not one single date, but it’s easy to see how all these events and periods overlap and contributed to an empire in decline.

As we saw with President Trump’s recent comments on pulling U.S. troops from Syria, followed by push back from military commanders, and his eventual reluctance to accept a continued mission there; whenever the U.S. deploys a significant military presence to a country, we rarely leave. That is empire. Empires become over extended, they’re hollowed out when productivity and economic expansion slows (you are here), and they inevitably collapse. Why else would so many politicians be so committed to endless immigration? Because in a consumer-based economy, immigration brings economic demand and it expands the tax base. Since the American empire no longer grows its population by territorial expansion, it must grow the population by importation.

If the average lifespan of an empire is 250 years — roughly 10 generations, and I’m the 11th generation of my name on this continent — then how many years do we have left?

Collapse doesn’t happen overnight. Collapse could occur slowly over the course of several generations, or over several decades; but we’re already an empire in collapse. I think the determining factor will be what happens in America’s next war, which will probably be another world war. War is a tool that’s going to be used to extend the lifespan of Pax Americana and the post-1945 global order. If we lose that war, then collapse could be quick. If we win that war, then perhaps collapse occurs more slowly. Either way, we’ve reached Peak America and as far as the empire is concerned, it’s mostly downhill from here.


Priority Intelligence Requirements

PIR1: What are new the indicators of systems disruption and threats to critical infrastructure?
PIR2: What are the new indicators of potentially disruptive social, cultural or political conditions or events?
PIR3: How are state and federal agencies preparing for domestic conflict, emergencies, or other instability?
PIR4: What are the new indicators of systems disruption and threats to the economic or financial industry?


PIR1: What are new the indicators of systems disruption and threats to critical infrastructure?

Net farm incomes in U.S. down 50 percent since 2013

Though President Trump says the tit-for-tat tariffs being imposed by the U.S. and China on tens of billions of dollars’ worth of goods isn’t really a trade war, the view looks different from rural America. Before the tariffs started, net farm income had already declined by half since 2013, where it currently sits at a 12-year low. In response to U.S.-imposed tariffs, the Chinese responded by placing tariffs on 128 American products, many of which are agricultural in nature including pork and some fruits. Producers in the U.S. have increasingly come to rely on China for their exports. Pork farmers especially; China placed a 25 percent tariff on American pork, which is liable to force buyers in China to look for cheaper product elsewhere. Also, one of every three soybeans grown in the U.S. is exported to China, adding to fears among American soybean producers that Beijing could extend its basket of tariffs to include their product as well. [source] (SC: The expected value of the president’s latest tariffs against China is roughly $50-60 billion. China’s response on 128 U.S. products is valued at $2-3 billion. That’s a pretty muted response so far, but it’s enough to be noticed by farmers. China is liable to issue another round of tariffs and they’re threatening to go toe to toe with Trump on tariffs. If that’s the case, then President Trump said today that he may extend farm subsidies. As shown in the chart below, the run up in farm income coincided with a run up in global food prices, so farm income is now reverting to the mean. Our concern is that tariffs on U.S. agriculture products drive farms out of business, only to be purchased by larger corporate farms or even by Chinese investors. The Chinese are in a massive infrastructure buying spree in the U.S., Canada, the U.K., Australia, some European countries, and undoubtedly elsewhere.)

 

Cyberattack targeted energy-industry pipeline data

A cyberattack earlier this week targeted Dallas pipeline company Energy Transfer Partners, causing the company to notify oil and gas customers that its data system for the extensive pipeline network has been hacked by unknown attackers. The attack did not affect pipeline systems and was limited to the electronic data exchange system that handles oil and gas transactions as they move through the company’s pipelines. The attack was directed towards the contractor that manages the system, Latitude Technology. It’s one of the latest in a dramatic uptick in cyberattacks aimed at critical U.S. infrastructure over the past two years, and while a foreign actor is not yet implicated in this particular incident, Russia, especially, has been targeting American systems more frequently. [source] (SC: For years, we’ve warned that critical infrastructure in the U.S. is at grave risk of disruption, and we’re nearly certain that it would be targeted in a war with Russia or China. Both the Russians and Chinese have demonstrated the intent and capability to disrupt public utilities, including the electrical, oil and gas, and communications sectors, in the event of a war. It’s uncertain whether a potential attack might be characterized as ‘catastrophic’ but we should certainly remain prepared for significant systems disruption.)

Most critical infrastructure organizations unprepared for cyberattacks

Speaking of cyber, some 60 percent of executives at critical infrastructure operations responded in a recent survey that they do not have adequate defensive systems in place to protect their environments from security threats. Organizations have steadily been making investments in cybersecurity to IT infrastructures but have yet to fully address cyber-threats to operational technology. Fifty-seven out of 100 executives from various critical infrastructure organizations surveyed said they aren’t confident their organization or others can fend off major attacks against their architecture. In addition, the survey lays bare the lack of cyber-preparedness in many vital sectors including utilities, manufacturing, and energy. Some 35 percent said they had little visibility into the state of security within their organization; 23 percent said they had none at all. And 63 percent said insider threats and misconfigurations were their biggest security risk. [source]

Interior Department IG found computers trying to ‘talk’ to Russia

Three years after U.S. investigators discovered the Chinese had hacked into Office of Personnel Management (OPM) computers hosted on Interior Department servers and stolen the identities and security clearances of more than 22 current and former government workers, a new probe has found that the department’s computers are still unable to detect “some of the most basic threats,” including malware that is actively trying to make contact with Russian systems. The department’s Office of Inspector General, which completed a 16-month investigation earlier this year and filed a report last month, found that the Interior Department’s technicians “simply did not implement a sweeping array of mandatory, government-wide defensive measures ordered up after the disastrous OPM hack, didn’t investigate blocked intrusion attempts, and left ‘multiple’ compromised computers on their network ‘for months at a time.’” Among other things, the IG found that Interior data could be removed without being detected, that a computer at the U.S. Geological Survey, an Interior agency, was routinely attempting to contact Russian computers, and that computers found to contain malware were scrubbed and then immediately put back into service without anyone trying to find out the scope and nature of the threats to the broader network. [source] (JD: This is a cyber-disaster of the first magnitude. Government computer systems are all notoriously out-of-date, so it’s safe to assume that the computers in many other federal agencies have been compromised as well. By the way, Interior “manages the nation’s national parks and vast land resources. But federal lands and waters also supply some 30 percent of U.S. oil and gas production, and the department’s bureau of reclamation is the country’s second-largest provider of electrical power. The U.S. Geological Survey monitors water resources and harvests satellite data on a global basis.”)


PIR2: What are the new indicators of potentially disruptive social, cultural or political conditions or events?

 

FEMA says it won’t be there for every future disaster in ‘blunt’ new message

Last year’s string of devastating hurricanes and other natural disasters have prompted a series of innovative changes at the Federal Emergency Management Agency, and now one of its top officials wants to inform Americans about what FEMA can and cannot do. “EMA is not a first responder,” Daniel Kaniewski, the agency’s deputy administrator, said. “We are going to be very blunt with the American public about what FEMA can and can’t do, about what the federal government can and can’t do, and I hope state and local governments take this forward as well.” For instance, FEMA cannot manage and lead emergency response efforts for every single disaster. As such, the agency says it will begin relying more on state and local governments to respond first to natural and man-made disasters, with FEMA playing a supporting role. Kaniewski said the agency wants to build a “culture of preparedness” among states as part of a new national campaign. [source]

Trump administration heating up ‘war’ with California

Earlier this week the Trump administration ramped up rhetoric with California to void a state law obstructing the sale of federal lands, as California officials threatened a lawsuit if the administration eases automobile efficiency standards. It’s the latest back-and-forth between the federal government and an increasingly resistant government in Sacramento. The Justice Department is alleging that a California law giving the state the right of first refusal on sales of federal land parcels is unconstitutional and is responsible for delaying transactions involving land that the U.S. Postal Service, the U.S. Navy, and the Department of Veterans Affairs control. Meanwhile, Trump opponent Xavier Becerra, the state attorney general, threatened to sue over EPA plans to cut fuel efficiency regulations for cars and light trucks. Also, the agency is said to be considering whether to revoke a waiver allowing California to set its own emissions standards that are higher than federal regulations. In a statement, U.S. Attorney General Jeff Sessions lamented the fact that his office is “forced to spend our resources to bring these lawsuits against states like California that believe they are above the law.” [source] JD: These latest salvos are part of an increasing coarse dialogue between Sacramento and Washington. Recently, Becerra even hinted that he would arrest a county sheriff for complying with federal immigration law and cooperating with ICE agents, violating California’s “sanctuary state” laws. Ultimately California is going to have to face reality; the Supremacy Clause of the U.S. Constitution plainly states that federal laws supersede state laws. Also, presidential authority carries over from administration to administration; just because Obama let California ‘run wild’ doesn’t mean Trump has to. And Trump isn’t. And Trump won’t. Neither will Sessions. This ‘feud’ will get worse, and is likely to drive California’s secessionist movement.

Special counsel Mueller’s probe could impact 2018 midterms

Conservative columnist Victor Davis Hanson said he believes that special counsel Robert Mueller’s ongoing investigation into matters beyond alleged collusion between the Trump campaign and Russia could have an impact on the midterm elections, which are already contentious. Hanson said that Mueller’s probe appears to be very one-sided; that is, he seems only interested in following leads and pursuing charges against former members of the Trump campaign while ignoring obvious evidence of malfeasance among current and former officials with the FBI and Justice Department and the campaign of Hillary Clinton, which may have actually worked with Russian operatives during the 2016 election cycle. Trump, Hanson noted, has not been tied to any of the indictments of his former staffers and none of those indictments have had anything to do with Mueller’s original publicized mandate of investigating Russian election meddling and campaign collusion. Hanson said that the investigation now appears to largely be political rather than a legal matter. [source] Analyst comment: Hanson is spot-on. Consider: If the goal of the Russians was to sow mistrust in our political system and cause dissension among the American citizenry, Putin has accomplished this in spades. He’s had help: Our media, for one, and at least one political party for another, have helped spread the hatae, discontent, and mistrust. Mueller faces a serious challenge: does he end the probe and announce the results before or after November elections? It’s going to be a political issue, either way.

Negative views of opponents drive Americans to political parties

Forget ‘bipartisanship.’ A new study has found that an increasing number of Americans are driven to political parties not because they believe its policies will benefit the country per se, but because they so bitterly oppose the ideals and ideology of the opposing party (and by default its members). “About three-quarters of Republicans (76 percent) and 72 percent of Democrats say a major reason for belonging to their party is that its policies are good for the country, according to the survey of 4,656 U.S. adults conducted Jan. 29-Feb. 13. Republicans (71 percent) are more likely than Democrats (63 percent) to cite the harm from the opposing party’s policies as a major reason to affiliate with their party.” Almost four-in-10 surveyed said a major reason why they backed a particular party is because “they have little in common with members of the other party.” [source]

Americans’ perception of the economy turning positive, driven by Republicans

And now for some good news. Americans’ views of economic conditions around the country continue to improve with the portion of those saying the economy is good or excellent rising to its highest point in nearly 20 years, according to a new survey. The sea change in positivity is being driven by Republican voters: “The overall rise in positive assessments seen over the last year is driven by the shifting views of Republicans and Republican-leaning independents. Nearly three-quarters of Republicans (74 percent) now view the economy in positive terms. That is a marked improvement from last October (57 percent). In December 2016, shortly after the presidential election, just 14 percent of Republicans rated the economy as excellent or good.” By contrast, just 37 percent of Democrats believe the economy is in excellent or good shape. [source] Analyst comment: As a side note, jobless claims in February dropped to their lowest point in 45 years, though claims did rise in March, while the number of people receiving welfare benefits like food stamps dropped by 2 million people between January 2017 and January 2018.

Here is the impact of the H-2B Guest Workers in 2017

Last year visas were down a little, but worker certifications continue to increase, despite the Trump administration’s pledges to lower overall immigration and reform the visa lottery system. The H-2B program allows employers to hire temporary foreign workers to fill low-skill, non-agricultural positions. [source]

Number of 2017 Certified H-2B Workers by Location of Worksite:

Analyst comment: The law provides for an annual cap of 66,000 visas per year, with a few exceptions; critics say every one let in for a job on an H-2B guest visa means an American citizen won’t get it. As this analysis notes, “The program adversely affects opportunities for American workers with low education and skill levels.” It recommends that lawmakers “instead consider more innovative ways to encourage Americans to enter into the workforce.”

Justice Dept. files suit against California over new law restricting federal land sales

The legal war between the Trump administration and California escalated last week after the state passed a new law that restricted federal land sales. It’s not clear why state lawmakers believed they had this authority, but the Justice Department wasn’t impressed and filed suit. Under the statute, California granted a state agency the authority to block federal land sales, donations, or exchange of federal lands by the federal government to any other person or entity. The law (SB 50) seeks to penalize (up tp $5,000) anyone who knowingly files real estate records regarding federal land transfer unless the California government certifies that the transfer is in compliance with state law. That’s not constitutional, the Justice Department argued. “The Constitution empowers the federal government—not state legislatures—to decide when and how federal lands are sold,” said Attorney General Jeff Sessions. “California was admitted to the Union upon the express condition that it would never interfere with the disposal of federal land. And yet, once again, the California legislature has enacted an extreme state law attempting to frustrate federal policy.” [source] Analyst comment: We don’t really expect that relations between the Trump administration and California’s elected leaders will improve anytime soon. The real test will come when federal courts decide a range of issues in the federal government’s favor; will California rebel or comply? We’re not optimistic that compliance is what state leaders will choose.


PIR3: How are state and federal agencies preparing for domestic conflict, emergencies, or other instability?

Experts believe U.S. needs a ‘Dept. of Infrastructure’

As U.S. infrastructure — roads, bridges, airports, the power grid, water transport, and treatment — continue to decay, it is becoming apparent that the current method of addressing the problems is not working, argue two experts. Instead of industry groups lobbying Congress annually for a piece of the infrastructure pie, the Trump administration should launch a Department of Infrastructure to reduce federal bureaucratic overlap, better organize priorities, and get them funded. Example: “In February of this year, the Department of Energy announced the creation of a new Office of Cybersecurity, Energy Security and Emergency Response. Yet, the Department of Homeland Security and the Department of Justice both have their own cybersecurity units. The Department of Commerce also has the more policy-oriented National Telecommunications and Information Administration, which seems like it ought to be more integrated with some of these other efforts.” There are numerous other examples the experts point out; disparate agencies and bureaus performing essentially similar functions with no centralized coordination, which makes all infrastructure vulnerable. “Consolidating these entities into a Department of Infrastructure would give stakeholders — from the American Society of Civil Engineers to the American Water Works Association, from AECOM to Blackrock, from states to municipalities — much-needed clarity on how our physical systems are funded, regulated and operated.” [source]

DHS drafting handbook for tech first responders

With the number of apps, devices, network, and situational awareness tools for technology first responders continuing to grow, the Dept. of Homeland Security’s Science and Technology Directorate put together a handbook for developing and managing the technologies. Called the “Next Generation First Responder Integration Handbook,” it provides an outline for a “plug-and-play,” standards-based environment that will enable commercially-developed tech to work with current first responder infrastructure. “The age of large, proprietary and disconnected first responder systems is ending,” the handbook states, replaced by a modular system that permits first responders to choose components with open standards and interfaces so they can be effortlessly integrated into their own public safety systems. [source]

Election commissions getting cybersecurity funding

As part of the recently-passed omnibus spending bill, the District of Columbia and four U.S. territories will get funding to bolster their electronic elections infrastructure ahead of the 2018 Midterms, in which U.S. intelligence agencies expect Moscow to attempt to meddle again. The funding is tied to the 2018 HAVA Election Security Fund and provides states with additional resources to secure and improve their election systems. Each state successfully applying for and receiving grant funds will have to match 5 percent of what is provided. [source] Analyst comment: This is a start but that’s all it is. The government is only providing $380 million; it will cost the state of Pennsylvania alone more than $79 million to replace paperless voting machines; it’s only getting $13.5 million.

Trump to order between 2,000 and 4,000 National Guard troops to the U.S.-Mexico border

In response to dramatic increases in illegal border crossings and drug smuggling, President Trump announced that he will deploy between 2,000 and 4,000 National Guard troops to the U.S. southwest border to support and assist federal immigration and border security agents and officials. If the president’s words are any indication the rotations could go on for quite a while. During Q&A with reporters, Trump said he was planning to “probably keep them or a large portion of them until the wall is built.” He added: “We have to have strong borders. We’re going to have the wall,” Trump said. “We’ve started building and fixing miles and miles of wall that’s already up and fence and we’re gonna have our wall and we’re gonna get it very strongly and the military is going to be building some of it.” [source] JD: Customs and Border officials are cautioning the president from rushing the deployment, but the Republican governors of Texas, New Mexico, and Arizona are supporting the measure. Oregon’s Democratic Gov. Kate Brown has already said she won’t allow her Guardsmen to be deployed (and governors can indeed refuse this deployment request).

 

California cities taking a lesson from recent Mexico earthquake

Several cities of varying sizes are taking a lesson learned from a recent devastating earthquake in Mexico to identify seismically vulnerable buildings for the first time in a generation — and ahead of a major quake in the state that experts say is inevitable. “What happened last year in Mexico City, we don’t want to experience in California,” said David Khorram, the superintendent of building safety in Long Beach, in reference to the quake that killed more than 360 people. The city is talking about spending up to $1 million to identify as many as 5,000 potential buildings. Other California cities are taking similar steps. That said, some cities have already passed ordinances requiring retrofits, while others are considering it. Either way, experts expect “the big one” practically at any time. [source]


PIR4: What are the new indicators of systems disruption and threats to the economic or financial industry?

Russian cyber spy wanted by FBI admits to sharing intel — link to Trump dossier?

A senior official in the FSB, Russia’s spy agency, who is wanted by the FBI and may be linked to Russian interference in the 2016 elections, said he would plead partially guilty to sharing information with a foreign intelligence service, according to Russian media. Maj. Dmitry Dokuchaev has apparently admitted he indirectly transferred information to a foreign intelligence service, which is presumed to be the U.S. Dokuchaev claimed that it was informal sharing regarding information pertaining to the activities of cyber-criminals who were not working for Moscow. But that conflicts with a separate Russian media report from 2017 stating that one person Dokuchaev shared information with was Yevgeniy Nikulin, a suspected Russian hacker. The U.S. recently succeeded in extraditing Nikulin from the Czech Republic, which was bitterly opposed by the Kremlin. He will face charges for allegedly hacking LinkedIn, Dropbox, and Formspring databases in 2012. Dokuchaev is also wanted by the FBI for allegedly directing and facilitating the hacking of 500 million Yahoo accounts in February 2017. It’s not yet clear how the two men’s efforts fit into Russia’s attempts to interfere in the 2016 U.S. elections. However, Russian media reports noted that Dokuchaev and the cybercrime unit’s deputy director Sergey Mikhailov were led out of FSB HQ with sacks over their heads in December 2016. [source]

Russian spying in Pacific Northwest goes back decades

If you wondered why the Trump administration chose to shutter the Russian consulate in Seattle, Wash., as part of its decision to kick 60 diplomats out of the country, it’s because the region has been a hub for Russian espionage for decades. The area is home to major naval assets and defense contractors like Boeing. Also, the University of Washington is there, which receives a number of government research contracts. Naval Base Kitsap, near Bremerton, includes a sub base at Bangor, which is the home port for America’s West Coast fleet of nuclear-armed Trident submarines. FBI officials estimate that up to one-third of Russia’s consulate staff was involved in intelligence gathering. The closure of the Seattle consulate leaves only three Russian consulates left in the U.S. and none on the West Coast after the closure of Russia’s San Francisco consulate in 2016. [source]

Russia is looking for defectors inside the U.S.

Over the past two years, CIA teams protecting Russian defectors inside the U.S. have spotted suspected Russian operatives who are searching for them. The effort is so serious that the FBI and CIA are bringing people out of retirement who have expertise in working against Russians in the 1990s. But what really has U.S. counterintelligence officials on edge is Russia’s brazen assassination attempt against former spy Sergei Skripal and his daughter in England on 4 March. And another former Russian double agent says that he, too, has been warned by ‘friends’ that Moscow was coming for him. This differs from the recent past, when Moscow sometimes attempted to lure them back to Russia the message that ‘all is forgiven.’ U.S. counterintelligence officials are on the alert that assassination attempts could occur on U.S. soil, and in fact, Russian defectors living here are certain they’ll be targeted at some point. [source]

Jon E. Dougherty is a political, foreign policy and national security analyst and reporter with nearly 30 years of experience in both fields. A U.S. Army veteran of Operation Enduring Freedom, he holds BA in Political Science from Ashford University and an MA in National Security Studies/Intelligence Analysis from American Military University.

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