04 NOV 16 – Executive Intelligence Summary

EXECUTIVE INTELLIGENCE SUMMARY – 04 November 16 🔒

[wcm_nonmember]In this EXSUM…

  • Fears of cybersecurity still weigh heavy on elections
  • Russia & China SITREPs
  • White House orders Pentagon to build a five-year warfighting budget
  • US Cyber Command reaches IOC
  • Kilcullen on a US insurgency
  • Rickards: Trump Wins, Market Crashes, Gold Rises
  • And more…

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Bottom Line Up Front: The tit-for-tat accusations over election security was at fever-pitch this week, with Russia taking the brunt of blame.  On one side was the Hillary camp blaming Russia for leaks and cyber exploitation; an issue surely to come up during a Clinton presidency, and one for which Russia is likely to see payback in the event she wins.  And Trump’s been accusing the elections of being rigged for his opponents since the beginning of the GOP Primary.  At this rate, I doubt that either candidate accepts the “election results” by Wednesday morning, and we very well may see a period of gridlock where the results are in limbo (for instance, serious accusations followed by an investigation into the validity of election results in the wake of a Trump victory).  A hotly contested or failed election will obviously carry grave consequences, and it represents my ‘worst case scenario’ for next week.

The risk of systems disruption regarding the election and internet next week is HIGH.  Note that risk is not likelihood, however.  There’s a difference between how likely an event is and the impact it will have (e.g., the Impact-Likelihood Matrix taught in class).  An important part of being a good analyst is separating fear from reality (or separating anything that’s not reality from reality).  I admit that I am fearful over what will happen next week.  I think that fear is justified, especially because the downside is so great.  There’s a moderate likelihood of a large SHTF event, and a much higher likelihood of low-level disruption.  Still, I would advise that we all be especially sensitive to the possibility of a major downside.  I’m going to have the truck packed and things ready just in case.

Based on some trends I’ve been following for the past few months, I expect we can see the start of a market correction and possibly a recession if Trump wins next week.  There have been sporadic threats of riots and civil unrest should Trump win.  Large cities with large black populations are at the highest risk of civil unrest.

 

Priority Intelligence Requirements:

PIR1: What are the current indicators of systems disruption that could lead to a SHTF event?

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

PIR3: What are the current indicators of military, government, political, or social-related instability or violence that leads to widespread domestic conflict?

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


PIR1: What are the current indicators of systems disruption that could lead to a SHTF event?

Fears of cybersecurity still weigh heavy on elections

Vladimir Putin probably reads the headlines with glee because Russia has successfully affected the American public’s faith in “free and fair” elections.  I’ve not minced words about Russia’s involvement in foreign elections (even going so far as to say that turnabout is fair play).  We are absolutely experiencing Russian information operations designed to manipulate public opinion and affect the election.  And I don’t think it’s necessarily directed at Hillary Clinton specifically as much as it’s directed towards undermining the US Government (USG) and degrading its credibility in general.  (In the event of a Trump victory, we could see a similarly devastating leak of GOP emails should Republican warhawks push for conflict.  For Russia, this is more about Russia winning back their hemisphere than it is about who wins an election.  For Putin, this is a redux of political warfare by which the Soviets achieved foreign policy goals without military conflict.)

NBC published an article this week citing government and intelligence sources who say that the USG is on alert for potential disruption to the internet and election systems on Tuesday.  In that article, officials fear:

  • Disinformation on election results via social media
  • An “11th Hour” release of scandalous information that could affect the election before it’s vetted
  • Tampering with voter registration information
  • Systems disruption targeting the internet and communications

On a separate note, I’m very familiar with the counterclaim that Obama officials or other US actors are behind the leaks and cyber exploitation, but are blaming those actions on Russia in order to drum up war, which would be followed by the invocation of the War Powers Act to potentially keep Obama in office past January 2017.  I only bring it up to say that I’ve read several of those articles, and found them to be highly conspiratorial and light on evidence (to include the video from Steve Pieczenik, who is a fabricator in his own right).  I’m more likely to reference Occam’s Razor that says the simplest explanation is the most likely.  I’m not discounting the Obama regime’s desire to prevent Donald Trump from assuming office, perhaps by any means necessary; however, Russia has a very clear track record of employing the asymmetric political warfare we’re seeing now.  And Obama’s weakness as commander in chief, along with sequestration that gutted military readiness, are two major factors that have been put the US in this vulnerable position.  Russia is simply playing to their strengths and making the most of American weakness.

 

Accenture: One-Third of Corporate Cyber Attacks Succeed

According to a report published last week, one-third of cyber attacks against corporations succeed.  Although 75 percent of security executives are “confident” in their cybersecurity measures, Accenture points out that an average organization on the receiving end of a hundred “focused and targeted” hacking attempts each year will suffer two to three successful hacks each month.  To further compound the problem, half of all survey respondents said that detecting a breach takes “months”.  Now consider that leading cybersecurity practices originate in the private sector, and we get a very clear picture of just how vulnerable public sector systems (i.e., federal and state government) are when faced with not just criminal but state-sponsored cyber attacks.


 

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

The prospects of global conflict continue to revolve around the usual players: Russia, China, and the Middle East. The ways in which global conflict could cause or contribute to a SHTF scenario in America are myriad and they largely depend on which conflict is initiated. We’re certainly at risk of cyber attack in the event of conflict in any of the three regions. Systems disruption, like the price and availability of fuel, is also a top concern that could cause a SHTF event.

 

NATO-Russia Situation Report (SITREP)

Russia -This week, the Russian Defense Minister echoed previous comments that a NATO buildup on Russia’s western border necessitated a defensive response.  “The United States and other NATO members are actively building up their offensive potential on the western frontiers of Russia’s ally [Belarus], opening new bases and developing military infrastructure. There are incessant attempts to impose their will on other countries using economic and political diktat, and also military force. An open information war is underway,” General Shoigu said. Some of those continuing defensive measures have included increasing command and control capabilities and beefing up the armed services of Belarus, which borders the Baltic nations of Estonia and Lithuania, along with Poland and Ukraine.  An joint exercise to take place in 2017 will involve Russian and Belarussian forces and is expected to be based on a NATO conflict in the region.

In other news, a senior Turkish general arrived in Moscow this week to discuss bilateral military cooperation between the two countries and to ‘assess the situation’ in the region.  Continued cooperation between Turkey and Russia is widely seen as Putin’s strategy to peel away Turkey from NATO.

NATO – The small Baltic nation of Lithuania last week published a guide on guerrilla warfare in the event of a Russian invasion, which is the third edition of the manual.   The guide includes an illustrated guide to Russians weapons and munitions, instruction on fighting tactics, and survival information.  (DOWNLOAD THE MANUAL HERE)  Meanwhile, in nearby Estonia — which boasts a national military of 6,000 personnel — civilians in the Estonian Defense League are volunteering for weekend war games which teach them tactics of partisan warfare and survival.  Interestingly, one of the challenges during the exercise is playing a trivia game for which only local Estonians would know the answers.  In theory, that would allow for the identification of locals, as foreigners posing as Estonians (like Russian hybrid soldiers) aren’t likely to know the local answers.

 

South China Sea SITREP

This week, the USS Decatur passed through what the Chinese claim as their territorial water in a Freedom of Navigation operation.  China has demanded that all ships passing through the region first request permission, a demand which the Decatur ignored.  The Chinese protested the “illegal” and “provocative” actions, however, we’ve seen no significant activity this week that would lead to war.

 

White House orders Pentagon to build a five-year warfighting budget

In perhaps one of the most significant conflict indicators I’ve seen this year, officials from the White House Office of Management and Budget have directed Pentagon planners to develop a five year budget for Overseas Contingency Operations (OCO).  The Pentagon currently plans five years in advance for base defense operations for its facilities abroad, however, planning for OCO for the next five years represents quite a change in planning policy.  Currently, the OCO budget is delivered to Congress each year because contingencies, by nature, can’t be planned for in advance.  But the White House ordering military leaders to begin planning overseas warfighting budgets for the next five years is a good indicator that they expect contingency operations into the future that aren’t built into the base defense budget.  This five year plan starts in 2018 and runs until 2022.

 

US Cyber Command reaches IOC

US Cyber Command (CYBERCOM) announced that all 133 teams have reached initial operating capacity, and half of those are at full operating capacity.  As the Pentagon continues plans to rope the cyber domain into the concept of Air-Land-Sea battle, CYBERCOM is expected to contribute heavily to future conflicts.  In context, ‘initial operating capacity’ means that the lights are on and the cyber troops are at their desks.  It doesn’t mean that they are ready for operations.  And despite its limited operations in Syria, CYBERCOM still has years worth of staffing and training issues to work through.


 

PIR3: What are the current indicators of military, government, political, or social-related instability or violence that leads to widespread domestic conflict?

Kilcullen on a US insurgency

David Kilcullen is a former Australian soldier and expert on insurgencies and civil wars.  In an article I read about a US civil war, he was quoted as saying:  “I think what we’re seeing now is, what I would describe as a proto-insurgency situation … the ingredients are out there, if somebody knew what they were doing, [they could] pull together an effective movement.”

I’ve talked about politicized social bases (like the militia and Black Lives Matter movements) as a prerequisite for insurgency.  Politicized social bases are clearly already here, as Kilcullen describes.  The next step is a flashpoint and we’re heading into a period of time with numerous potential catalysts (political, economic, Second Amendment, global conflict, etc.), which is why the likelihood of a domestic conflict is becoming greater.

 

US Intelligence warns of potential terror attacks on Monday

CBS news published an article on Friday citing sources who warn of a potential al-Qaida terror attack on Monday.  Although no specific targets have been discovered, US Intelligence has warned terrorism task forces of a possible attack in Texas, New York, and/or Virginia.

 


 

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

Earnings recession may not be over

One trend I’ve kept a close eye on is the corporate earnings recession.  In previous EXSUMs, I’ve talked about the 80% correlation between a corporate earnings recession and an overall economic recession.  Now that 400 of the 500 companies that comprise the S&P 500 have posted their earnings reports, we’re likely still in a corporate earnings recession (chart below).  That’s the eighth straight quarter of negative growth, which has historically been a reliable indicator of a coming recession.  I still believe that a recession is likely within the next 6-12 months.

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Rickards: Trump Wins, Market Crashes, Gold Rises

If Hillary wins nothing happens, if Trump wins you will have an earthquake.”  Contrarian investor and author said in a recent interview that he thinks Trump “will probably win”, which will be followed by a 10% decline in the market and a rise in gold prices.  A market correction, which should already be happening even without an election, seems to be the prevailing opinion of a great many traders, as investor react to an uncertain future, much like happened after the UK’s Brexit vote.

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Samuel Culper 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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4 Comments

  1. Norman,

    Google translate will be able to handle small sections at a time. Or do a search, someone already did the legwork, and put up a transcript. I just dont remember where.

    T

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