National Intelligence Bulletin for 19 January 2018 – Forward Observer Shop

National Intelligence Bulletin for 19 January 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… (4323 words)

  • 45 percent of federal email domains miss security deadline
  • GOP senators warns of future Russia cyber intrusions
  • Can the U.S. shoot down a ballistic missile fired by North Korea?
  • Gun store robberies up 227 percent since 2013
  • Immigration to pose challenges to U.S. stability
  • China expanding soft power against U.S.
  • How will Facebook changes impact society?
  • ICE planning ‘massive immigration sweep’ in coming weeks
  • Panel discusses plans for biodefense
  • Inflation? Deflation? Here’s what the latest numbers say
  • Some states want internet sales tax ruling updated
  • And more…

ADMIN NOTE: At the time of publication, Congress still has not reached a deal to avert a government shutdown. We’ll publish an addendum to this report by Monday with an update.

In Focus: Good afternoon, everyone. I wanted to take some time and formally welcome you to the National Intelligence Bulletin. For a long time, Jon and I have tried to squeeze items and analysis of strategic and national interest into one report, and we just couldn’t do it anymore. As of this week, the Strategic Intelligence Summary and the National Intelligence Bulletin are going their own ways. Jon will still head up Strategic, with some input from me, and I’ll be taking over National. That means that subscribers are getting a wider spectrum of intelligence reporting and, as always, access to the conditions and events shaping the future of the United States and America’s place in the world.

From 2008 to 2016, it was widely believed that America was in immediate and irreversible decline. In fact, political pundits opined that Obama would do a superb job of managing the slow decline of American power and influence. As the Obama administration saw it, the best way for the United States to avoid nation-state conflict was to simply cede power and influence back to our near-peer competitors in their respective regions: Russia in Eastern Europe and Central Asia, and China in East Asia… and both Russia and China responded. But then November 2016 happened and ‘America First’ policies have many scratching their heads: Is America cured? Can Trump get the economy back on track and lead the U.S. into another period of economic expansion? Does America First spell the end of international socialism, American retreat, and global intervention? While the Trump administration sends mixed signals between putting the American People first and bolstering our allies against powers seeking to revise American influence around the world, we’re stuck in a proverbial fog of cold war.

On the current trajectory of building up military force in Europe to protect NATO’s expanding interests, I do believe that we’re inching closer to war with Russia. At this point, a war against NATO is probably a matter of national survival for Russia, as NATO expands eastward. And in the South China Sea, our window of opportunity for meaningful deterrence against Chinese expansion has closed. This means that if the United States means to protect our allies and maintain free navigation through the South China Sea, we’re probably looking at war with China in a matter of years. The options are quite simple: fight wars to maintain American hegemony or don’t fight wars and cede our positions back to regional powers, who are threatening to become global powers. Given the mixed signals, I’m not sure what the president’s plans are, and maybe he doesn’t yet know, himself.

While the week-to-week drama of geostrategic issues and indications of war are covered in Strategic Intelligence, I’d like to remind you that conflicts with peer and near-peer competitors likely mean systems disruption at home, which is why I briefly covered America’s position in the world in the paragraphs above. Peer and near-peer competitors are likely to engage in cyber and maybe even space warfare against the U.S., especially if a conflict threatens national sovereignty or becomes unlimited in focus. That means potentially wide ranging systems disruption domestically. Geopolitical conflict and potentially war abroad probably means widening fault lines among racial, cultural, and social classes here at home, and it likely means exacerbating the existing foundational long-term vulnerabilities found in the financial, cyber, and critical infrastructure industries. All that is to say, even if a global conflict doesn’t happen, we still have plenty of problems at home; and if a large scale conflict does break out, it’s likely to negatively affect domestic stability.

There’s plenty of fear, uncertainty, and doubt about America’s domestic and international future. But America is still a resilient nation filled with some of the world’s best people and ideologies. It’s also filled with some of the world’s worst people and ideologies, and that’s where this report picks up. We’ve introduced four Priority Intelligence Requirements, or PIRs, in this report, and each is aimed at describing persistent and emerging national threats.

My aim with this report is to catalogue the nation’s vulnerabilities and enable readers to not only be more informed about threats, but also be better able to manage their effects. If you’re like me, then you believe that America is changing rapidly, due to demographic, cultural, political, and technological shifts. We know that the American public is becoming more politically polarized, with the Left moving farther Left and the Right moving farther Right. My concern remains the potential for increasing domestic conflict, and therefore my goal is to describe how close we are and what that will look like before it happens. After all, that is the crux of producing intelligence. Thank you for the support and I hope that you’ll take a few minutes each week to augment your knowledge each week, so we can better navigate whatever the future holds. – MS

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 and/or 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?

45 percent of federal email domains miss security deadline

Nearly half of all federal email domains — including 85 percent of email domains at the Department of Homeland Security — missed a deadline last weekend to install a new anti-spoofing security tool. ‘Spoofing’ is an attack delivered via email using what appears to be an official email address, often tricking the receiver into downloading and running a file attachment containing malware. DHS mandated the use of the security tool last October in order to improve security. [source] (Analyst Comment: This is not a breaking news alert, however, it does show that many U.S. Government employees are either not serious or incompetent where it concerns cybersecurity. We know that much of the government feels understaffed and overworked; that’s not likely to change any time soon, and undoubtedly adds to the failure of implementing these cybersecurity tools. Still, much of the government remains vulnerable to cyber attacks, most probably using email attachments as a vector to introduce malware or phish for passwords. Data theft threatens the security of critical infrastructure on a daily basis, and that’s especially concerning because of the amount of surveillance and intelligence collection that goes into cyber exploitation and attacks against critical infrastructure. One industry professional told me last year that the best hackers will gather intelligence on a target for a year or more before planning and executing an attack. And when U.S. Government employees don’t have the tools in place to protect vital information, they make cyber exploitation more likely. How it affects you: Personal or sensitive data stored by the government could be up for grabs because the government is not doing an adequate job of protecting it. Furthermore, data theft could lead to the discovery of vulnerabilities in critical infrastructure, making systems disruption more likely.)


GOP senator warns of future Russia cyber intrusions

Cybersecurity firm Trend Micro published a report last week that levels charges against Pawn Storm (also called Fancy Bear), an advanced persistent threat (APT) hacking group which is believed to be Russian. The report claims the APT group set up a fake Senate website last summer, hoping to net login credentials which could be used to gain access to the Senate network. Senator Ben Sasse (R-NE) now wants Attorney General Jeff Sessions to appear before the Senate Armed Service Committee to explain what the Trump administration is doing to thwart Russian hackers. “Russia is just getting started and the hacks, forgeries, and influence campaigns are going to get more and more sophisticated,” Sasse said. [source] (Analyst Comment: We know without a doubt that Russian hackers are active in espionage around the globe. That’s a demonstrable fact, and gives reason to believe that they’re also highly active against the United States, who represents Russia’s greatest existential threat. Perhaps the greatest reason to believe this is because the United States is very active against Russia in cyberspace, as well. Where it begins to get cloudy is exactly what activities Russia is involved in. I’m very confident that Russia gained illegal access to DNC email servers last year. Although I’m open to other theories concerning who leaked those emails, we do know the Russian FSB and GRU were absolutely monitoring Democrat email traffic last year before security researchers identified their presence. And the only reason the Russians were caught red-handed is because the GRU started siphoning off data from the server, a red flag for cybersecurity officials. As far as activities after the election are concerned, I have no reason to believe that Russia ceased cyber espionage against the United States just because their cyber listening posts were identified. In fact, as long as U.S. cyber actors are active against Russia, the opposite will also be true. While I can’t confirm or deny that Fancy Bear is actually Russian GRU, as opposed to a Russian nationalist hacking group, we do have very good reason to believe that Russian cyber exploitation will continue against the United States as long as they’re able to do so. And as long as the United States, NATO, and the West at large remains an existential threat, the Russian government will push back.)


Can the U.S. shoot down a ballistic missile fired by North Korea?

Well, it depends who you ask, but consider this: one former vice chairman of the Joint Chiefs of Staff is casting some doubt. “A first misconception is the notion that the U.S. can simply shoot down any North Korean missile—including a test—launched in any direction should we desire to do so. Unfortunately, as good as our systems are, this is simply not true.” He goes on to describe that while ground-based interceptors from the Missile Defense Agency are station in Alaska and California, “the GBI ‘kill chain’ is not optimized to defend Hawaii.” Luckily, he says a ballistic missile attack from North Korea isn’t imminent, and that the Navy has a suitable plan to defend Hawaii, if an attack were imminent. [source] [Analyst Comment: The risk of a North Korean nuclear attack could be overstated. First, few have any doubts that the North Koreans will eventually be able to mount a nuclear device on an intercontinental ballistic missile (ICBM). Few have any doubts that a North Korean ICBM would be able to target the mainland U.S., or U.S. interests or allies abroad. But unless the national sovereignty of North Korea is threatened or perceived to the threatened, the Kim regime is unlikely to risk their survival for a first-strike against the United States. This is something to keep an eye on, but nothing to lose sleep over.]

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

Gun store robberies up 227 percent since 2013

According to the latest Alcohol, Tobacco, and Firearms (ATF) numbers, robberies of federal firearms licensees are up 227 percent, and burglaries of gun stores are up 71 percent since 2013. In 2017, over 7,800 firearms were stolen, compared to around 3,300 in 2013. [source] (Analyst Comment: We reported on this trend last year and ran some numbers through the first half of 2017, looking for indicators and trends about the culprits. Gangs? Revolutionaries? Black market suppliers? Give us a couple of weeks and we’ll finish up 2017 and produce the results in this report.)

Immigration to pose challenges to U.S. stability

In Monday’s Early Warning, I briefly described what makes nearly half of all immigrants to the United States so problematic. According to Pew, 51 percent of immigrants have the equivalent of a high school education or less. In fact, more (29 percent) have less than a high school education than who have graduated high school (22 percent). This doesn’t bode well for the future of jobs and social stability in the coming age of automation and robotics, which will displace many low skill workers. Add news in the past month shows there’s now one open job in America for every job seeker, and limitless immigration makes zero sense… But the picture of immigration is more problematic than just this.

Pew projects that by 2065, the foreign-born population of America will reach 78 million, up from 43.2 million today. Only about half of today’s immigrants are “English proficient”. Just 55 percent of immigrants living in the U.S. for 20 years or longer are proficient in English — meaning that 45 percent of immigrants who have been in the U.S. for longer than 20 years still don’t know how to speak English.

About 76 percent of these immigrants are here legally; 24 percent illegally. As of today, Asians are outpacing the flow of Hispanic immigrants and by 2055 (37 years from now), Pew projects that Asians will become the nation’s largest immigrant group. This is, along with massive immigration from Central and South America and the Middle East, is what’s been referred to as the “browning of America,” as the U.S. Census Bureau has previously estimated that by 2044, non-Hispanic whites will no longer be a majority in the United States.

The more diverse a country’s population is — whether by race/ethnicity, culture, language, religion, political ideology, or socioeconomic class — the more potential fault lines there are for domestic strife and instability. That’s especially the case when it comes to combinations of race and social class. And so my concern is that economic disruption — say, a trade war with China, an economic recession, a stock market crash, or some other black swan event — could exacerbate current problems or cause these fault lines to fracture. America is no longer a melting pot (it’s a fruit salad of self-interest groups), and when the diverse elements of a country put their race/ethnicity, religion, culture, political ideology, or socioeconomic class interests ahead of the nation’s interest, conflict ensues due to limited resources and competing self-interests. Add to this the fact that American politics is becoming more extreme — the Left is moving farther Left and the Right is moving farther Right — and this is exactly why I believe we’re headed for a domestic conflict. There’s a good chance this occurs within the next 10 years.

China expanding soft power in the U.S.

The Confucius Institute is a Chinese-funded educational program with locations at 110 colleges and universities in the United States (and hundreds of other locations throughout the world). [source:] The official objective is to educate U.S. students about China and their issues, culture and language. “The Confucius Institute is an appealing brand for expanding our culture abroad,” said a member of the Chinese politburo in 2011. “It has made an important contribution toward improving our soft power… Using the excuse of teaching Chinese language, everything looks reasonable and logical,” he continued. That’s the soft power — economic/financial and cultural influence as opposed to military power — China wants to expand its overall influence around the globe. But the problem is that the truth is a little more nefarious than that.

Just two years earlier, that same politburo member described the Confucius Institute as an “important part of China’s overseas propaganda set-up.” The idea is similar to the tactic America pursued during World War Two and the Cold War with Voice of America and Radio Free Europe — this is how you deliver your message out around the world, and the Confucius Institute is no different. While universities love the perspective it brings to the schools, and the money it puts into the schools’ coffers, the Confucius Institute is undoubtedly aimed an improving the American public’s opinion of China by reaching students who, they hope, will become supporters of Chinese influence, at home and abroad. [source] (Analyst Comment: Last year, the Congress forced several Russian media outlets to register as foreign agents under the Foreign Agents Registration Act, or FARA, which was enacted in 1938. Shortly after, the Russian government designated as foreign agents nine U.S. media outlets operating in Asia. Around the same time, several U.S. senators called for Chinese media outlets operating in the U.S. to register under FARA, as well. We’ll see how serious the Congress is when it comes to countering foreign influence in our own country.)

How will changes at Facebook impact society?

After wandering into the world of driving media consumption, CEO Mark Zuckerberg wants Facebook to get back to its roots as a social network. Recently announcing changes, Facebook is planning on restricting the availability of news and media pages in favor of showing more content from friends and family — actual people instead of brand pages. This is based on user feedback which says that the brand content is “crowding out the personal moments that lead us to connect more with each other.” Describing these changes in a post on Facebook, Zuckerberg says that academic research led Facebook officials to believe that users would be happier seeing content from close connections, as opposed to posts from “businesses, brands, and media”. In the coming months, users can expect to see these changes in their News Feeds. And Zuckerberg expects users to spend less time on Facebook consuming media. [source] (Analyst Comment: On its face, these changes will focus more on building social connections and personal content, than on displaying content designed for mass consumption. Maybe this is due to the realization that foreign media outlets are using Facebook as a platform for propaganda, or that certain political and ideological pages were having an outsized influence on the Facebook community, which created political problems for Facebook. If I were to take a Machiavellian approach here, then these upcoming changes would ensure that centralized influence can be limited, especially through shadow banning, an apparently popular tactic to control the reach of influencers on Twitter. It would also allow Facebook to limit the influence of bots — algorithms using Facebook accounts to post influential and often incendiary information and opinions. Because these bots have no real connections to people — it’s unlikely that a bot account is an established member of your social network — the likelihood that an average user would encounter a bot in everyday use would greatly decrease. This means that undesired influence on Facebook users is greatly limited. Another related point of interest: a couple weeks ago, I tried to post an article about a hate crime hoax involving a Navy sailor, but the comment was marked by Facebook as spam. The article itself was from Navy Times, clearly a mainstream and acceptable news source, yet despite repeated attempts to post the link, I was unable. Enough Facebook users must have previously marked that article as spam, triggering an automatic block from Facebook algorithms. As a user trying to demonstrate a multitude of fake hate crimes, I had no recourse but to not post the link. And this is yet another way Facebook is attempting to limit the reach of influential and undesirable news and information. Also, given the interest in Congress for identifying and peeling back foreign influence in the U.S., I can’t help but believe that these Facebook changes are somehow related.)

ICE planning “massive northern California immigration sweep”

Following this month’s widely reported Immigration and Customs Enforcement (ICE) sweeps, San Francisco Gate is citing an unnamed source and reporting that ICE is planning a “massive.. immigration sweep” for the Bay Area and northern California. According to the source, ICE has the goal of arresting 1,500 illegal immigrants in the area, specifically targeting the sanctuary city of San Francisco. The report states that ICE will be searching for illegal immigrants who have already received deportation orders and “those with criminal histories”. Last week, ICE Director Thomas Homan said that the federal government would not allow California to be “a sanctuary state for illegal aliens,” and that ICE would “conduct at-large arrests in local neighborhoods and at worksites, which will inevitably result in additional collateral arrests”. [source] (Analyst Comment: The Bay Area is, of course, a breeding ground for the Alt-Left — revolutionary communists, radical anarchists, and other anti-capitalist militants. We’ve observed new groups like the Revolutionary Abolitionist Movement moving into California, and given the commitment to violence against perceived fascists, I think there’s a real chance that Bay Area antifascists get their opportunity to push back against ICE officers if this sweep goes forward, especially now that they have early warning. That push back could include violence, property crimes, or non-violent protests, however, this presents the single most likely event so far of massive organizing against ICE sweeps against illegal immigrants. Beyond the tactical level, this has also become an operational battlespace for resistance against the enforcement of federal immigration laws and the ongoing culture war. Just this week, California’s attorney general said that his office would  prosecute employers who cooperated with federal immigration officials, citing the Immigration Worker Protection Act, which bars employers from providing information to Immigration and Customs officials. When employers “start giving up information about their employees or access to their employees in ways that contradict our new California laws, they subject themselves to actions by my office. We will prosecute those who violate the law,” he said.)

Non-citizens commit disproportionate amount of crimes

According to the U.S. Sentencing Commission, 44.2 percent of crimes committed between 2011 and 2016 were committed by non-citizens. These non-citizens make up roughly eight percent of the population: four percent illegal immigrants and four percent legal immigrants. While federal data excludes all law enforcement at the state and local level, 67,000 of the 312,000-people sentenced were non-citizens who committed non-immigration crimes. This means that the 8.4 percent of non-citizens in the United States account for 21.4 percent of crimes not involving immigration. Non-citizens as a group are responsible for higher-than-average percentages of crimes involving kidnappings, drugs, money laundering, auto thefts, and others. Non-citizens commit a proportionate amount of assaults, homicides, and firearm crimes. [source]


Other Notable Indicators

DOJ sentences Minnesota man to 10 years for terrorism related charges

“Prime age” men labor-force participation remains lower than a decade ago

PIR3: How are state and federal agencies preparing for domestic conflict and/or instability?

Blue Ribbon Panel to discuss plans for biodefense

On Thursday, health officials gathered at the University of Miami to hold a Blue Ribbon Study Panel on Biodefense. Former U.S. lawmakers Joseph Lieberman, Tom Ridge, and others gathered to discuss “state, local, tribal and territorial ability to respond to large-scale biological events”. The panel focused on a number of issues, including government abilities at all levels to “operate before federal assistance arrives and after federal resources are exhausted”, and “shift to population management when a biological events overcomes pre-hospital and hospital response protocols”. [source] (Analyst Comment: A biological attack in the United States is a low likelihood event, but the likelihood isn’t zero. Given that significant attention goes into planning for biological attacks and ensuring that all levels of government are prepared, at least some in and around government are taking the biological threat seriously.)

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

Inflation? Deflation? Here’s what the latest numbers say

Here’s what the Bureau of Labor Statistics’ latest Consumer Price Index says about inflation and deflation in the U.S. economy. (Analyst Comment: The CPI — one measure of the cost of consumer goods — is calculated on a basis called ‘hedonics’, which is a weighted system and not necessarily reflective of what makes the most sense to the average consumer. Still, the CPI are the numbers we have and the numbers by which the economy is judged. Here they are.) Year over year, the CPI is up 2.1 percent (meaning that the overall price of goods in the index costs 2.1 percent more than they did last year). Seeing slight to significant boosts after declines in 2016 are: new and used vehicles, food at home, communication/cell services, and medical care. Deflationary pressures still exist in airfare, apparel, and education. Meanwhile wage growth is up 0.4%, as compared to last year.

Chamber of Commerce to propose added 25-cent gas tax to offset infrastructure costs

The U.S. Chamber of Commerce is set to propose an added 25-cent federal gas tax to help pay for the Trump administration’s infrastructure plans. Admittedly “a tough vote”, Republican lawmakers have cast doubt on the prospect of increasing the federal gas tax. [source] (Analyst Comment: Any tax increase, especially on fuel, is going to drive up the cost of living. By some estimates, the average American uses 656 gallons of gasoline annually, so the tax reflects an additional $164 annual cost for the average driver. Gas prices have been low while we power our way through the global glut of oil, however, that’s eventually going to end. Oil prices will eventually spike again, which could hurt the U.S. economy.)

Some states want internet sales tax rule updated

Nearly three decades ago, the Supreme Court ruled that much of the internet would be a tax-free zone. South Dakota, along with other states, is leading an argument that the 1992 ruling should be obsolete in the new era where internet sales are at an all-time high. According to the Government Accountability Office (GAO), state and local governments could have collected near $13 billion in 2017 from online merchants and other sellers. Arguments will be presented in April but a decision from the court is not expected until June. South Dakota’s plan calls for any retailer who has more than $100,000 in annual sales to pay a 4.5% tax on purchases. Finding a middle ground is the goal of many small and medium-sized companies who argue that the new plan will stifle their access to a national market. [source]


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.

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