Undeclared global warfare

Let’s do a quick straw poll. I need your opinion on something. It’s the biggest and most controversial geopolitical story in the world right now.

Did Russia “hack” the US election?

Did Russian cyber-attacks favour the presidency of Donald Trump over Hillary Clinton? The current US administration and intelligence services clearly believe so. Last week they published a report in which the NSA, CIA and FBI claimed:

Russian President Vladimir Putin ordered an influence campaign in 2016 aimed at the US presidential election. Russia’s goals were to undermine public faith in the US democratic process, denigrate Secretary Clinton, and harm her electability and potential presidency.

That’s the current house view in the US. But it’s not a view shared by president-elect Donald Trump. He has at best healthy skepticism, and at worst open derision, for that position. It isn’t clear whether that’s because he knows the government has deceived the people in the past (think Iraqi weapons of mass destruction) and wants to reserve judgement, or because it would be political suicide to admit Russia had a hand in his election.

Since I can’t ask Donald, I’ll ask you. Where do you stand? Do you believe what the intelligence agencies are saying… or do you fall on the skeptical/Trump side of the story?

You can write in and let me know at nick@southbankresearch.com.

The new normal

Here’s the thing though. Fixating on who did what in the election misses the bigger point, which is the inarguable fact that we’re living through the world’s first cyberwar. It just hasn’t been declared yet. This is the “new normal” we all need to accept and come to terms with, just as previous generations did during the Cold War.

I’m not celebrating that fact. But to me it’s important we all accept it.

This is a story that goes much further than the relationship between the US and Russia. That’s why the media’s focus on that aspect of it is myopic. This is a conflict that every major superpower is engaged in, round the clock. It may be undeclared but it’s real.

By definition it is hard to report on. The whole point of hacking is it creates confusion and chaos. It’s hard to track. We can be sure of the damage but not always the perpetrator. It’s not like dropping a bomb on St Paul’s Cathedral, but the destruction is real.

It’s an undeclared global war. It’s happening now. And it’s going to define the next four years of Donald Trump’s presidency. He actually made this clear last week (while refuting the current administration’s position). Here’s what he said (added emphasis mine):

While Russia, China, other countries, outside groups and people are consistently trying to break through the cyber infrastructure of our governmental institutions, businesses and organisations including the Democrat National Committee, there was absolutely no effect on the outcome of the election.

We’re like the hacking capital of the world.

He also said he’d be tasking his incoming administration with devising a new plan to “aggressively combat and stop cyber attacks”. If that’s the case, he’ll have plenty of support in Congress. As part of last week’s declassified cyber report, Congress announced it’ll be creating a new Armed Services subcommittee dedicated to cyber issues.

It’ll be chaired by Senator Lindsey Graham. His position was short of nuance and heavy on aggression (added emphasis mine): “I think what Obama did was throw a pebble. I’m ready to throw a rock. Putin is up to no good and he better be stopped.”

Cyber special ops

This all ties in to a point that Eoin Treacy made to readers of Frontier Tech Investor last year. Cyber-warfare is the conflict none of us can avoid. But it also has clear investment implications. And looked at from the right angle, it means opportunity.

Why?

Because most people think of cyber-defense as the key element of the industry. And it is important. But in a global conflict in which all nations are engaged in 24/7 operations, it’s not enough to be passive and defensive. You have to be pro-active, pre-emptive and aggressive.

I expect Donald Trump’s presidency to be exactly that.

In fact it’s already a part of the US Department of Defense’s capabilities. A 2015 DoD Cyber Strategy paper outlined this in detail. Here’s what it said (added emphasis mine):

If directed by the President or the Secretary of Defense, DoD must be able to provide integrated cyber capabilities to support military operations and contingency plans. There may be times when the President or the Secretary of Defense may determine that it would be appropriate for the U.S. military to conduct cyber operations to disrupt an adversary’s military- related networks or infrastructure so that the U.S. military can protect U.S. interests in an area of operations.

For example, the United States military might use cyber operations to terminate an ongoing conflict on U.S. terms, or to disrupt an adversary’s military systems to prevent the use of force against U.S. interests. United States Cyber Command (USCYBERCOM) may also be directed to conduct cyber operations, in coordination with other U.S. government agencies as appropriate, to deter or defeat strategic threats in other domains.

This isn’t defense. It’s offence. It’s the special operations element of cyber-warfare. The “Cyber SAS”, if you like. And what’s interesting here is that government can’t do this alone. It works closely with the private sector to develop these capabilities (just as all militaries rely on the innovation of the private sector). That leads to opportunity.

I’ve asked Eoin to prepare a report on precisely this subject, outlining his top investment recommendations to capitalise on the situation. Given the context of Donald Trump’s election, it wouldn’t surprise me if these firms soared in the next four years. More on that as soon as I get it.

Until next time,

nick_signature

Nick O’Connor
Associate Publisher, Capital & Conflict

Category: Geopolitics, Investing in Technology

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