Good morning. Here’s your Daily Situational Awareness for Thursday, 10 August 2023.
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TODAY’S BRIEFING:
- READ TIME: 5 Minutes, 24 Seconds
- Inside the Beltway
- (1) DARPA Turns To AI After Chinese Code Found in Infrastructure
- (2) Roy Demands Mayorkas Removed After Impeachment Falters
- (3) “Bidenomics” Hits New Snag With Medicaid Rolls Purge
- Domestic INTSUM
- (4) Another Commercial Real Estate Siren
- (5) Government CAFE Standards Kill the Nissan Titan
- Global SITREP
- (6) Shoigu: Poland, Ukraine to Build Joint Military Unit
- (7) China Powering Energy Security with Coal
- (8) Israel Threatens to “Stone Age” Lebanon
- (9) Ecuador: Right Wing Presidential Candidate Assassinated
INSIDE THE BELTWAY
- (1) DARPA TURNS TO AI AFTER CHINESE CODE FOUND IN INFRASTRUCTURE: The Defense Advanced Research Projects Agency (DARPA) announced a two-year competition in collaboration with Google, Microsoft, OpenAI, and Anthropic for AI-based programming tools to develop code to protect government software from cyber attacks.
- DARPA Program Manager Perri Adams said, “We want to create systems to automatically defend any kind of software from attack,” and the winning team must build an AI that can rapidly defend critical infrastructure code from cyber attacks.
- Why It Matters: U.S. critical infrastructure is vulnerable to cyber attacks by both state and criminal actors, and while direct cyber attacks against critical infrastructure could be devastating, the most common type of attack is ransomware. This contest is likely a response to ransomware attacks on government agencies in the last few months and reports last week that the Biden administration was scrambling to deal with malicious Chinese code in critical infrastructure that feeds power and water into military bases in the continental U.S. and abroad. – R.C.
- (2) ROY DEMANDS MAYORKAS REMOVED AFTER IMPEACHMENT FALTERS: Representative Chip Roy (R-TX) demanded President Biden remove Homeland Secretary Alejandro Mayorkas to ensure his vote on spending bills after the August recess.
- Roy said, “No member of Congress should agree to fund a federal agency at war with his state and people.”
- Why It Matters: Impeachment efforts against Mayorkas have stalled in the House, with moderate Republicans coming out against impeachment efforts and Speaker Kevin McCarthy (R-CA) waffling back and forth. Talk of an impeachment inquiry against President Biden has eclipsed the Mayorkas effort, with McCarthy recently revealing an additional $20 million in payments to the Biden family. Increased border encounters, if they continue to trend upward, could reignite impeachment efforts against Mayorkas. – R.C.
- (3) “BIDENOMICS” HITS NEW SNAG WITH MEDICAID ROLLS PURGE: States purged more than four million Americans from their Medicaid rolls after the end of a COVID-era policy preventing them from doing so ended, and that number is expected to increase to 15 million in the next year.
- Georgetown University’s Center for Children and Families Director Joan Alker said, “This is a huge challenge and an unprecedented situation” for the Biden administration.
- Why It Matters: Biden’s reelection bid is centered on economic prosperity for everyday Americans as a direct result of his policies. Fifteen million Americans, many of them likely Biden voters, losing health coverage right before the 2024 general election could spell trouble for his campaign. Biden won 2020 by tens of thousands of ballots in key states and depressed Biden voters could cause a reversal in the Republican candidate’s favor. This could also be a flashpoint for protests and demonstrations during the run-up to the election. – R.C.
DOMESTIC INTSUM
- (4) ANOTHER COMMERCIAL REAL ESTATE SIREN: WeWork, which operates nearly 20 million square feet of coworking spaces, is in financial distress – another sign of trouble in the commercial real estate sector.
- “As a result of the company’s losses and projected cash needs,” WeWork executives noted that “substantial doubt exists about the company’s ability to continue as a going concern.”
- WeWork leaders estimate that the company can only stay in business if liquidity and profitability improve over the next 12 months.
- Why It Matters: During the zero-interest rate environment of the 2010s, WeWork executives borrowed heavily to build in-demand office spaces. But now, some Americans are still working remotely, which means less office demand and higher interest rates have increased WeWork’s loan payments. WeWork’s collapse could add more pressure to struggling commercial real estate. – H.B.
- (5) GOVERNMENT CAFE STANDARDS KILL THE NISSAN TITAN: Nissan announced plans to scrap the Titan full-size truck line and will pivot more to electric vehicle (EV) manufacturing due to federal Corporate Average Fuel Economy (CAFE) standards.
- CAFE standards are based on a truck’s “footprint” – the truck’s wheelbase multiplied by its width. Trucks with smaller footprints must get 40 or more miles per gallon, and by 2026, these trucks must get 54 mpg – an impossible task for automakers.
- Since car companies couldn’t produce smaller trucks that met these fuel standards, they shifted to bigger trucks that didn’t have as strict of standards. This plan worked for a few years, but CAFE standards are getting even more strict.
- Why It Matters: The U.S. government has left Americans with fewer choices. If they want a truck, Americans have to spend more money on a bigger one. But to drop weight and increase fuel efficiency, these bigger trucks use less steel, which affects safety. Small trucks could return to America, but they will be EVs that don’t have to meet CAFE standards and won’t be cheap. – H.B.
GLOBAL SITREP
- (6) SHOIGU: POLAND, UKRAINE TO BUILD JOINT MILITARY UNIT: Russian Ministry of Defense Sergei Shoigu told reporters that Poland and Ukraine are planning to build a joint military unit based in western Ukraine.
- According to Shoigu, the Polish say the unit is for the defense of western Ukraine, which borders Poland but is, in fact, intended for the eventual occupation of the territory.
- Why It Matters: Some analysts have speculated that a negotiated settlement will lead to Russia officially annexing eastern parts of Ukraine while the rest of the country becomes a rump state, possibly under Polish control. Shoigu’s remarks may be part of an influence campaign to sow distrust or otherwise dissuade the Ukrainians from the move. Poland has historically claimed the region going as far back as the 1600s. – M.S.
- (7) CHINA POWERING ENERGY SECURITY WITH COAL: In the first half of 2023, China approved more than 50 gigawatts of new coal power production.
- Reduced hydropower generation caused Beijing to build more coal-fired power plants and to increase the country’s 2022 coal output by 9% to 4.5 billion tons – more than half of the world’s annual coal production.
- Why It Matters: China’s focus on energy security has slowed its clean energy transition. If the country’s hydropower generation continues to decline, expect Beijing to double down on its reliance on coal. Despite Western countries’ desire to pivot away from coal, it will still be widely used in China and developing countries. – H.B.
- (8) ISRAEL THREATENS TO “STONE AGE” LEBANON: Israeli Defense Minister Yoav Gallant threatened to “return Lebanon to the Stone Age” in pointed remarks intended for leaders of Hezbollah.
- “Do not make a mistake. We do not want a war. But we are prepared to protect our civilians, our soldiers, and our sovereignty,” Gallant warned.
- Why It Matters: The Israelis issued a series of threats earlier this year that indicated conflict could be imminent. These comments are the latest in the back-and-forth between the two sides, both of which are preparing for the next armed conflict. – M.S.
- (9) ECUADOR: RIGHT-WING PRESIDENTIAL CANDIDATE ASSASSINATED: Ecuadorian presidential candidate Fernando Villavicencio was assassinated at a campaign rally yesterday in the capital city of Quito. Police shot the gunman and arrested six others.
- Villaveciencio’s political party said that armed men also attacked the party’s offices in Quito in a separate incident.
- Organized crime, such as cartels or the mafia, are suspected in the killing, as Villavicencio had repeatedly promised to destroy the crime rings.
- Why It Matters: Ecuador is one of a few remaining Latin countries with an ostensibly right-wing president. Villavicencio was considered to have been an ideological replacement for outgoing President Guillermo Lasso, who will not finish his first term due to calling for snap elections. Luisa González of the Citizens Revolution Movement, the democratic socialist party formed by former leftist President Rafael Correa, is heavily favored to win the presidential election. – M.S.
— END REPORT
M.S. indicates analyst commentary from Mike Shelby
M.M. indicates analyst commentary from Max Morton
J.V. indicates analyst commentary from Jared Vaughn
R.C. indicates analyst commentary from Robert Cook
H.B. indicates analyst commentary from Harrison Burge