National Intelligence Summary for 13 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… (4,100 words)

  • InFocus: Mueller chisels away at history in the making
  • Rogue spy devices found in D.C.
  • Minnesota bill would make it a felony to train protestors to damage critical infrastructure
  • Feds investigating increasing number of cyber attacks against U.S. pipelines
  • Gun confiscation begins in Florida following passage of post-Parkland law
  • Rising number of states face economic dire straits
  • State Dept. preparing for next deadly disease outbreak
  • Could our enemies attack us with a bioweapon? That seems increasingly likely
  • American public education is failing the current generation of students
  • Bill Gates: 2008-like recession is coming
  • And more…

InFocus: The Mueller investigation continues to be the source of a lot of political volatility. This week, the Mueller team raided the home and law office of Michael Cohen, President Trump’s personal attorney. The Mueller team now presumably has access to Cohen’s personal and work computers. According to Trump sources, Cohen sometimes recorded discussions with clients, and Mueller watchers are pointing to the possibility that Mueller now has those recordings, some of which could involve the president. Cohen’s attorneys told a judge this week that the raid violates attorney-client privilege and anything discovered should be considered inadmissible. (You know things are bad when your attorney needs an attorney.) Meanwhile, civil rights watchers on the Right blasted the Mueller raids, characterizing them as a violation of the Fourth Amendment. Any recovered recordings are expected to go through a review process to ensure that they adhere to the sought-after evidence contained in the search warrant.

I find it curious that this “collusion investigation” is now turning into a witch hunt of epic proportions. It’s gone well beyond collusion and obstruction of justice, and it appears that Mueller is trying to hang Trump on just about anything he can find. And there seems to be some confusion over just what this means. Some legal experts say that Mueller is building multi-count charges on Trump, and is now adding white-collar charges to recommend for prosecution. Others, however, say that because there was no collusion and a flimsy case for obstruction, Mueller is trying to save face by getting Trump on anything. Mueller has a reputation to uphold, and he undoubtedly wants to uncover any illegal activity involved Trump and his associates.

There’s no telling how close we are to Mueller announcing the results of his investigation, and we’re getting into a period of time where the recommended charges could affect the mid-term elections. On that topic, there’s also a split in the GOP over how the mid-terms are shaping up for the House and Senate; some are expecting a major blue landslide. During this year’s primary season, several Democrats accused the Democratic National Convention of backing more moderate candidates to remain competitive in Trump districts. As we saw with several special elections, moderate Democrats performed well in districts where Trump won in 2016. I think that’s shaken up some Republicans, especially House Speaker Paul Ryan, who this week announced his retirement. With Ryan not running for re-election, House Republicans are jockeying to replace him. But aren’t they getting ahead of themselves? What are the chances that the Democrats win the House and install Nancy Pelosi or a challenger as Speaker?

According to Never-Trump conservative commentator Erick Erickson, Republicans are expecting a bloodbath in November. Erick wrote about a recent encounter he had with an unnamed congressman in a Safeway grocery store. Who knows whether or not this is actually true, but it’s at least plausible. Here’s part of what the unnamed congressman allegedly told Erickson:

“Judiciary is stacked with a bunch of people who can win re-election so long as they don’t piss off Trump voters in the primary. But if we get to summer and most of the primaries are over, they just might pull the trigger if the President fires Mueller. The sh*t will hit the fan if that happens and I’d vote to impeach him myself. Most of us would, I think. Hell, all the Democrats would and you only need a majority in the House. If we’re going to lose because of him, we might as well impeach the motherf**ker. Take him out with us and let Mike [Pence] take over. At least then we could sleep well at night.”

“We’re going to lose the House, lose the Senate, and lose a bunch of states because of him. All his supporters will blame us for what we have or have not done, but he hasn’t led. He wakes up in the morning, sh*ts all over Twitter, sh*ts all over us, sh*ts all over his staff, then hits golf balls. F*ck him. Of course, I can’t say that in public or I’d get run out of town.” [source]

Again, who knows how true this actually is… but if it’s true, then it sounds like some Republicans are expecting November to be ugly. And if the Democrats do win both the House and Senate, it’s easy to see how Trump gets removed and Pence becomes virtually useless as president. In this scenario, we could be as little as two to three years away from blanket amnesty, an assault weapons ban, plus a lot of other bad legislation. Two to three years away. Tick tock.


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?

China could win a trade war with the U.S. by curbing exports of rare earth minerals

An assessment of the budding ‘trade war’ between the U.S. and China noted that the latter is the No. 1 exporter of vital rare earth elements used in “everything from smart phones to electric car motors, hard drives, wind turbines, military radar, smart bombs, laser guidance, and more.” Rare earth minerals are also used in just about every consumer electronic product powered by microchips. In addition, these minerals — including dysprosium, neodymium, gadolinium, and ytterbium — are hard to mine and process. In fact, the U.S. couldn’t build a modern fighter plane or tank without rare earth metals from China. If China were to choose this ‘nuclear option,’ it could end any trade ‘war’ with the U.S. practically overnight. And in fact, in 2009, China cut off Japan for a time while significantly limited exports to other countries. [source] Analyst comment: The U.S. has plenty of rare earth minerals — they’re not really ‘rare’ — but mining them is expensive while processing them creates dangerous waste and byproducts that has to be properly disposed. That said, whether the government has to subsidize the production of rare earth minerals or find another supplier, this is a strategic weakness that’s been acknowledged for years.

Rogue spy devices found in Washington, D.C.

Federal authorities have discovered what appear to be rogue surveillance devices that are used to listen to calls and intercept text messages. The Department of Homeland Security says it has detected “anomalous activity” that is consistent with cellular site simulators like the StingRay II, but officials are not able to track down where they are because that requires additional funding. It’s also not clear who is deploying the unauthorized devices, which can only be legally sold to public safety and law enforcement agencies. DHS has previously warned the devices could be used by hackers, criminals, and foreign spies to steal information. The devices work by mimicking cellphone towers. How prevalent are they? In 2014, a marketing executive from CryptoPhone, a Berlin-based company, drove around Washington, D.C., looking for the devices; he said he found 18 in less than two days. Some members of Congress including Sen. Ron Wyden of Oregon have said that the Federal Communications Commission (FCC) is not holding phone companies accountable “despite repeated warnings and clear evidence that our phone networks are being exploited by foreign governments and hackers.” [source]

Minnesota bill would make it a felony to train protestors to damage critical infrastructure

Following at least five other states, Minnesota lawmakers will soon consider legislation that would make it a felony for anyone to recruit and then train people to damage “critical infrastructure.” The bill is being proposed as new pipeline construction is set to begin in the state and protests are being anticipated by lawmakers and authorities. Supporters say the legislation is needed to help protect pipelines, power lines, oil refineries, airports, railroads and other important infrastructure. The Minnesota legislation is similar to bills in other states which have been introduced as protests against pipelines has increased. The legislation would penalize “whoever intentionally recruits, trains, aids, advises, hires [or] counsels” others to damage property or other “critical public service facility.” The act would be punishable by a prison term of up to 10 years and/or a fine as high as $20,000. “We can’t have people instructing people on how to destroy critical infrastructure,” said Rep. Dennis Smith, R-Maple Grove, the main author of the House bill. “It’s like aiding and abetting.” [source]

Feds investigating increasing number of cyber attacks against U.S. pipelines

Several federal agencies are probing a series of cyber attacks that were directed at a third-party software system utilized by a number of American natural gas pipeline companies, as the software provider begins to restore lost data. The cyber attacks, which began just days ago, were directed at pipelines via the Electronic Data Interchange, or EDI, a platform offered by Latitude Technologies, Inc. At least four pipeline companies — Oneok Inc., Boardwalk Pipeline Partners LP, Chesapeake Utilities Corp. and Energy Transfer Partners LP (ETP) — have been targeted thus far. The Department of Homeland Security, Department of Energy and the Federal Energy Regulatory Commission are all investigating. [source] Analyst comment: It’s worth reminding everyone that just last month the Trump administration accused Russian government operatives of targeting the U.S. energy sector for more than two years, following a DHS and FBI investigation. China is also known to be probing our energy sector. Other reports noted how vulnerable to cyber attack our national pipeline infrastructure appears to be; experts note that cyber attacks on pipelines can cause spills, explosions, and fires, all of which would lead to loss of life and property, not to mention outages and major price increases.

White House email domain said to be weak, poses threat to national security

More than 95 percent of the email domains overseen by the Executive Office of the President are at risk of being attacked by phishers and thus pose a “national security risk,” a new study has found. Of the 26 domains managed by the office, the Global Cyber Alliance said it found that 18 of them have not begun implementing the Domain Message Authentication Reporting & Conformance protocol that will prevent spammers from attacking email domains in all sectors. Some of the domains listed in study include those of the White House itself, Office of Management and Budget, and the Office of the United States Trade Representative. Only one of the remaining eight domains — max.gov — has implemented the highest levels of DMARC to prevent harmful phishing attacks and other malicious emails from entering email accounts. “Email domains managed by the EOP are crown jewels that criminals and foreign adversaries covet,” Philip Reitinger, president and CEO of the Global Cyber Alliance, said in a statement. “The lack of full DMARC deployment across nearly every EOP email address poses a national security risk that must be fixed.” [source]


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

Gun confiscation from mentally unstable begins in Florida following passage of post-Parkland law

A state judge in Florida has granted a request by the Tallahassee Police Department to confiscate guns from a man who has a history of mental illness and making threats to hurt others under a newly passed law in the wake of the Parkland, Fla., school shootings Valentine’s Day. The Tallahassee request is reportedly the first under the new law that gives law enforcement more authority to take guns from those with documented mental health issues. Leon County Circuit Judge granted the request to take guns from Christopher Mark Newhouse, 21, saying he “poses a significant danger of causing personal injury to himself or others in the near future.” According to court papers, Newhouse has threatened to kill police officers, himself, and others dating back to April 2017. He reportedly owns a pair of AR-15-style rifles and two other semi-automatic rifles as well. He has had at least one of his AR-15s taken from him, temporarily; in September, the TPD responded to his house after neighbors reported he fired the weapon into his backyard while intoxicated. He threatened to kill officers last July. [source] Analyst comment: This law is likely to be challenged in federal court over the risk that it will be abused to extend to those for questionable or arbitrary reasons. The things we’re watching for include how widespread such laws will become around the country and what will happen to officers ordered to go pick up guns. 

Rising number of states face economic dire straits

More than half of states are on shaky economic ground thanks to falls in revenue, even as the U.S. as a whole is doing quite well under current fiscal and tax policy coming out of Congress and the Trump administration. In all, 27 states did not see revenues meet expectations, making it more difficult to meet expenses and balance budgets, which most are legally required to do. What is mostly driving costs up are health care and pension fund costs, neither of which is likely to fall anytime soon. States have been grappling with ways to bolster revenue, most often via new tax hikes — use taxes, sales taxes, gasoline taxes, etc. The problem is that during flush economic times states are profligate spenders, not savers; when times get tough, budgets have to be slashed and taxes raised. It seems as though lawmakers in each state are constantly reacting to the current business cycle rather than planning for downturns and other economic contingencies. Part of the problem is that putting tax dollars into a savings account is often considered obscene by the public so states are loathe to do it, though some have and now there is about $70 billion in state surplus funds. But the problem here is that tax-cutting policies on the right don’t always equate to good policy because in lean times budgets and services have to be cut, which angers the public. Left-leaning profligate spending on oodles of social programs doesn’t cut it either. [source]

State Dept. preparing for next deadly disease outbreak

The U.S. State Department’s USAID program is working with experts to develop new technologies to help ward off and defend against future outbreaks of deadly infectious diseases like Ebola, which killed more than 10,000 people in West Africa in 2014. The agency is also looking at ways to protect the population from other potentially deadly or debilitating diseases such as the Zika virus and yellow fever. [source] Analyst comment: Much of this is just USAID and the State Dept. being proactive, but such projects require funding (which is always scarce), meaning somebody or several somebodies in the know are worried that the next deadly outbreak is brewing or in the pipeline already. As we’ve seen during previous health scares, the speed of overseas travel means that disease from an outbreak is never farther than 72 hours away from reaching the United States.

Could our enemies attack us with a bioweapon? That seems increasingly likely

In conjunction with the previous entry above, biowarfare is becoming more likely as an “asymmetric” means of attacking a powerful United States, argues one expert. Gene-editing technology now exists that could allow an adversary to ‘weaponize’ a biological compound like smallpox or anthrax. Through a genetic editing process known as CRISPR, “a biologist in Pakistan or North Korea can fashion a microbe that mimics the transmissibility and lethality” of such infectious diseases “with technology ordered online for less than $200.” Worse, virtually no regulations exist to monitor such transactions. The Trump administration’s National Security Strategy, which was released in December, warns of increased biological threats to the homeland. [source] Analysis: The expert goes onto note that the U.S. response to the Zika and Ebola viruses was “uncertain.” And here’s a fun fact for you: In 2004, outgoing Health and Human Services Secretary Tommy Thompson said two things concerned him most about potential terrorist actions against the U.S. — “pandemic flu,” which he deemed a “big one,” and an attack on our food supply. “I, for the life of me, cannot understand why the terrorists have not, you know, attacked our food supply because it is so easy to do. And we are importing a lot of food from the Middle East, and it would be easy to tamper with that.” Thanks for the tip-off, Tommy. It hasn’t happened yet, but the CRISPR technology makes all of this stuff more possible.

American public education is failing the current generation of students

America has experienced a “lost decade” of education, as evidenced by the latest results from the National Assessment of Educational Progress showing most national trends as flat. This latest assessment comes on the heels of an earlier assessment showing modest declines in 2015. “It’s now been almost a decade since we’ve seen strong growth in either reading or math, with the slight exception of eighth-grade reading. There’s no way to sugarcoat these scores; they are extremely disappointing.” As to the “why,” the NAEP doesn’t show that; it just shows raw data (see below). [source] Analyst comment: We’re not educators but we’ll take a stab at the ‘why.’ A number of analysts believe that primary school students lack critical skills and abilities in reading, writing, basic math, and reasoning because their teachers aren’t very skilled in those areas. Teachers are coming out of college without any of the same abilities, so it’s futile to expect them to teach those skills to their students.

The machines are coming (for our jobs) and Americans aren’t prepared 

A new study by the Council on Foreign Relations-sponsored Independent Task Force has found that we are in the midst of profound technological changes will have a permanent effect on employment moving forward. What’s more, the study has found that Americans are not ready for this change and that “governments, businesses, educators, and other institutions need to do far more to help Americans adapt and thrive in the face of these disruptive forces.” Smart machines and other new technologies are remaking how we do our jobs; some jobs are forever lost now, thanks to improving robots, and more will follow. Even agriculture is transforming with increased use of machines over human labor. As labor changes technologies will create new areas of work, but an extremely large plurality of the American labor force will face extreme difficulties in acquiring the education and skills necessary to make it in the new automated work environment. [source] Analyst comment: A book published a few years ago by Gallup Chairman Jim Clifton called “The Coming Jobs War” lays out a frightening scenario: In the years ahead, only nations that can quickly and effectively train their workforces to adapt to the new, emerging techno-robotic revolution will remain viable and stable. Those that do not, he argued, very likely could devolve into social conflict amid widespread unemployment and unrest.


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

Guard troops already deploying to the U.S.-Mexico border as states opt out

In response to President Trump’s order to deploy National Guard troops to the U.S. southwest border in support of federal immigration authorities, Texas became the first state to deploy — about 250 troops — followed by Arizona, as New Mexico began preparing its troops for deployment. In all, according to the White House and Department of Homeland Security, some 4,000 troops could be deployed indefinitely, as the president has said he wants to keep troops in place until his border wall is built, which may not be anytime soon given Congress’ reluctance to fund it. Meantime, it appears as though even this effort to protect the country from rising numbers of illegal border crossings (more than 50,300 were apprehended in March, a new one-month high), reduce human and drug trafficking is becoming political. States with Republican governors are generally lining up with the president; states with Democratic governors are not. Democratic governors in Oregon, Montana and Nevada have already said they will not be contributing troops, and that number is likely to grow (Nevada’s governor, Brian Sandoval, is a Republican but there are a lot of aliens, illegal and otherwise, living in his state). By week’s end, California Dem. Gov. Jerry Brown agreed to send around 400 Guard troops but specifically told the administration he would not allow them to perform any duties related to interdicting illegal aliens. (source) Analyst comment: If you had any doubts about just how political polarized our country is right now, this should dispel those doubts. Democrats and Never-Trump Republicans are so infuriated by Trump’s continued efforts to enforce all immigration laws and build his border wall they are now refusing to take part in helping defend the country. The administration has designated the situation at the border as a “crisis,” but that doesn’t seem to matter. We can’t think of an instance where any governor resisted Presidents Obama and Bush when they ordered Guard troops to the border.

Energy Dept. offers $1.8 billion to beat China in supercomputing

In recognition that the Chinese are surpassing the U.S. in supercomputing capabilities, the Department of Energy is looking to partner with American industry to build the world’s fastest, most powerful supercomputers. In a just-published request worth up to $1.8 billion, the department is looking to build two exascale supercomputers and, potentially, a third one in the coming years. Each computer is expected to cost between $400 million-$600 million and would be scheduled for completion in 2021 and 2023. Currently, the most powerful supercomputer in existence is China’s Sunway TaihuLight supercomputer, by more than ten-fold. It can run 50—100 times faster than the current most powerful U.S. supercomputer. American technology experts have estimated that exascale technology would enable a machine to make more than one quintillion calculations per second, which is close to the capacity of the human brain — or about 3.1 million times faster than an iPhone X. [source]


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

Chinese state hackers target U.S. firms’ financial data

State-controlled Chinese hackers are increasing their attacks against U.S. companies in a bid to obtain data on bid prices, contracts, and mergers and acquisitions, according to FireEye, an American cyber-security company. Charges of financial espionage come on the heels of tit-for-tat tariffs and other trade tensions between the world’s two biggest economies, leading to fears that this will contribute to a full-blown trade war. China has denied the hacking, but U.S. cybersecurity investigators are certain of where the hacks are coming from. China has long been accused of — and responsible for — theft of American intellectual property. FireEye did not identify the firms or the number of cyber attacks they had suffered. It also wasn’t clear what date was taken. [source]

Bill Gates: 2008-like recession is coming

One of America’s richest men, Microsoft founder Bill Gates, says that another recession like the one that hit the country in 2008 is on the way, and there will be resulting financial hardship associated with it. When asked at a recent event about the possibility of another recession like the one that occurred a decade ago, Gates didn’t hesitate: “Yes. It is hard to say when but this is a certainty.” He added: “Fortunately, we got through that one reasonably well. [Billionaire investor] Warren [Buffett] has talked about this and he understands this area far better than I do.” That said, Buffett wrote in a recent column that years of growth “certainly lie ahead” and that “most American children are going to live far better than their parents did.” [source] Analyst comment: Of course, it’s impossible to say what will trigger another 2008-like recession, and that will certainly have an impact on how mild or serious it is. Will be war? A crippling cyber attack? Market over-speculation? Another financial sector collapse? 

New ‘jackpotting’ cyber-bug turns ATMs into slot machines

While “ransomware” malware attacks appear to be decreasing, there is an emerging cyber-threat on the horizon: “ATMJackpot.” This malware, according to cybersecurity researchers, likely originated in Hong Kong and could still be under development. ATM jackpotting has been used by cybercriminals for a lot of years, mostly in Europe and Asia, but attacks have recently begun to surface in the U.S. It’s not clear whether cyber thieves are installing the malware physically by opening ATMs or remotely. Places that have been targeted include ATMs at banks, pharmacies, and chain stores including Target and Best Buy. ATMs can dispense as much as $2,500 a minute. Hackers have hit machines in the Gulf Coast and in the New England region. [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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