Indian Strategic Studies

6 August 2017

Why Jaitley’s 2017 Budget Will Go For A Toss; GST And Other Disruptions Will Spook Outcomes

R Jagannathan

More than 80 per cent of the year’s fiscal deficit target has been exhausted in the first quarter itself, and we don’t know how the second quarter will fare in terms of revenue yields due to GST uncertainties.

What this means is that fiscal 2017-18’s final figures will bear no resemblance to the budget Finance Minister Arun Jaitley presented in early February.

Thanks to the implementation of the goods and services tax (GST) from last month, truck zoom past old inter-state checkposts that no longer need to collect various taxes or check on goods movement.

But fewer trucks are whizzing past now, with The Economic Times reporting that a quarter of India’s six million trucks were idle, and freight rates were falling steeply by 40-50 per cent.

Barring cars and two-wheelers, which have had a boom month as buyers bought like crazy to benefit from the post-GST price fall, manufacturing as a whole seems to be a bit under the weather. The Nikkei Purchasing Managers’ Index for Manufacturing hit an eight-year low of 47.9 in July, which indicates industry is in contraction mode.

With June seeing a massive destocking exercise due to the impending implementation of GST, July should have seen some pick-up, but compliance issues seem to have slowed down primary sales of refrigerators, washing machines and televisions, as it took almost 10 days to create billing systems to handle GST transactions.

To Survive Cognitive Revolution, Our IT Engineers Need To Move Out Of Their Comfort Zone

Prithwis Mukerjee

To survive the cognitive revolution sweeping the world, our IT engineers need to move out of their zones of comfort.

Rapid advances in machine learning and the spectacular success of artificial intelligence (AI) software in, say, self-driving cars, voice recognition and chatbots for customer service are sending shivers of anxiety through professionals of the Information Technolgy (IT) sector. The havoc that robots and automation technology have wrought with the jobs of blue-collar workers on the shopfloor is now travelling upward into white-collar offices and not a day passes without a new report about automation eliminating jobs.

In India, the IT sector—that includes actual software developers, application maintenance staff, tech support personnel and BPO call centre operators—seems to be particularly vulnerable and it is no secret that a sense of doom and gloom hangs over the cubicles and around coffee machines in large and small IT companies.

To make matters worse, some companies have started to shed mid-level people managers, who have stopped writing code for years, and even senior managers who give poor returns of billability on their bloated salaries. The last straw on the back of the vanishing optimism is the reduction in campus hiring of busloads of low-quality engineers from the hundreds of engineering colleges that have mushroomed on the promise of the Y2K-inspired IT revolution.

A Chinese Fairy Tale That Might Turn Into A Nightmare For Pakistan

So far, the benefits seem to be accruing solely on Beijing’s side of the ledger. If this trend continues as the CPEC expands and develops, Pakistan’s fairy tale may slowly metamorphose into a horror movie.

There is a fairy tale story that says Islamabad, following the yellow bricks of the China-Pakistan Economic Corridor (CPEC), will find prosperity in the embrace of Beijing. The plot line says Chinese funds will flow into Pakistan and help modernise the latter’s infrastructure; this in turn will usher in a boom period for Pakistan’s domestic economy, part of which will derive from an ability to export more. While Pakistan’s external debt and even current account deficit may rise sharply initially as it sucks in Chinese capital and machinery, this will all be capacity-building investment and will provide future returns that will more than compensate for the original payout.

Trade figures for the first half of 2016 show that Chinese imports into Pakistan have surged by nearly 30 per cent. This reflects a huge surge in power-generating material, construction and mining equipment and agricultural machinery – more or less what would be expected going by the above script.

However, there has also been an 8 per cent drop in Pakistan’s exports to China – a surprise given the improving transport links between the two countries. Islamabad has publicly blamed barriers to Pakistani exports that Beijing has put in place and a free trade agreement that is tilted against Pakistan, throwing into question Beijing’s motives in building the corridor.

Doklam Standoff: Why India Can No Longer Ignore China’s Expansionist Designs

Harsh V Pant

China’s growing economic and diplomatic footprint around the world is now being followed by its military footprint, and that’s the reality of great power politics.

To understand that is not being belligerent, but preparing oneself adequately.

Even as Prime Minister Narendra Modi was hugging US President Donald Trump in Washington in July, a tense standoff was underway between the armies of two of Asia’s major powers – China and India. Two units of the Indian Army and the People’s Liberation Army (PLA) have been in a stare-down at the tri-junction between India, China and Bhutan since 16 June – the longest border face-off between the two nations in decades.

It all started when a PLA unit tried to construct a road towards a Bhutanese army camp in Zomplri area of the Doklam Plateau. The Royal Bhutanese Army protested the PLA’s construction activities, to be supported by the Indian Army two days later, and asked China to cease its efforts to alter the status quo. This led to a physical altercation between the two sides with the Chinese soldiers probably destroying a few temporary bunkers of the Indian Army.

Interestingly, unlike in the past, China has taken an unusually aggressive tone in its protests, portraying itself as a victim of Indian aggression. It upped the ante by asking India to recall the 1962 war and learn a lesson, to which New Delhi responded that “India of 2017 is different from India of 1962”. Expressing deep concern over China’s construction of a road in the disputed area, India conveyed to Beijing that such an action would represent a significant change of status quo with “serious” security implications for India. For its part, Bhutan has issued a demarche to China over the construction of the road and asked Beijing to restore the status quo.

PLA In The Last 50 Years: Just How Strong Is The Dragon?

Rakesh Krishnan Simha

What has been the PLA’s record in warfare since the 1962 conflict with India?

China’s threat that India would suffer a fate worse than the defeat of 1962 is laughable. For the Chinese have conveniently forgotten that since that conflict nearly 50 years ago, it is Beijing that has suffered defeats – at the hands of India, Russia and Vietnam in that order. In fact, the last time the People’s Liberation Army (PLA) faced off against the Indian Army, it had to endure the ignominy of a humiliating climb down.

But first, a reality check. The 1962 defeat happened because of two reasons. One, the Indian Army wasn’t given the weapons and divisions it had been wanting since the mid-1950s for the defence of the Himalayas. When the Chinese invaded, an entire Indian brigade (of at least 2,000 troops) was equipped with just 100 rounds of ammunition and no grenades. Prime minister Jawaharlal Nehru and his arrogant protégé, defence minister V K Krishna Menon, kept up the pretence that China would not attack.

Second, India’s armed forces were not allowed to fight to their full potential. Ignoring India’s commanders, Nehru conferred with American ambassador John Kenneth Galbraith, who advised the prime minister not to use the Indian Air Force against the Chinese intruders. Before the war, the Nehru-Menon duopoly had ended the career of Korean War hero General Thimayya – who saw the Chinese as a threat to India early. They later promoted Lt General B M Kaul and General Pran Nath Thapar. These officers did not know where the border was.

This Is What The Chinese State And Social Media Are Saying About The Doklam Stand-Off

Mahalakshmi Ganapathy

Here’s what the Chinese government is telling its people regarding Doklam

The border stand-off between India and China in the Doklam tri-junction area has entered its second month. It has quickly snowballed into a geopolitical stalemate that has the potential to escalate into a full drawn conflict. While armies on both sides are waiting for the other to 'blink' first, China has mounted a concerted media-led psychological warfare on India through its various state and social media outlets.

In this media-led war, Indian journalists and citizens have placed high focus on the English language press of China, excessively relying on cacophonous editorials from the semi-official Global Times or reportage from the official Xinhua or People’s Daily. Language limitations prevent readers from understanding how China is actually framing the stand-off in Doklam. What is the Chinese version of the story? How is history omitted or represented and relayed to its domestic audience? How does the state and social media respond to the firm Indian stance and what geopolitical factors beyond Doklam are assessed by Chinese experts while trying to understand India’s assertive posture? These are some of the questions that would be explored in this article.

To present the Chinese perspective on the Doklam issue, a number of official state media reports and opinion articles, and some phone and television interviews with Chinese scholars in the Chinese media have been translated and analysed. Social media plays a very influential role in China, the most influential being Weibo, a Chinese equivalent of Twitter that has over 313 million monthly active users and WeChat, a cross between WhatsApp, Facebook and India’s Paytm having around 938 million active users. Chinese users rely majorly on posts and articles from these social media portals and thus they have been included in this analysis.

The U.S. Military vs. Russia and China: Who Would Win World War 3?

Robert Farley

U.S. alliance structure in the Pacific differs dramatically from that of Europe. Notwithstanding concern over the commitment of specific U.S. allies in Europe, the United States has no reason to fight Russia apart from maintaining the integrity of the NATO alliance. If the United States fights, then Germany, France, Poland and the United Kingdom will follow. In most conventional scenarios, even the European allies alone would give NATO a tremendous medium term advantage over the Russians; Russia might take parts of the Baltics, but it would suffer heavily under NATO airpower, and likely couldn’t hold stolen territory for long. In this context, the USN and USAF would largely play support and coordinative roles, giving the NATO allies the advantage they needed to soundly defeat the Russians. The U.S. nuclear force would provide insurance against a Russian decision to employ tactical or strategic nuclear weapons.

The United States discarded its oft-misunderstood “two war” doctrine, intended as a template for providing the means to fight two regional wars simultaneously, late last decade. Designed to deter North Korea from launching a war while the United States was involved in fighting against Iran or Iraq (or vice versa,) the idea helped give form to the Department of Defense’s procurement, logistical and basing strategies in the post–Cold War, when the United States no longer needed to face down the Soviet threat. The United States backed away from the doctrine because of changes in the international system, including the rising power of China and the proliferation of highly effective terrorist networks.

China Carries Out Flight Test of Anti-Satellite Missile

BY: Bill Gertz

DN-3 missile highlights growing space warfare capabilities

China's DN-3 Test

China recently carried out a flight test of a new anti-satellite missile that highlights the growing threat of Beijing's space warfare capabilities.

The flight test of the Dong Neng-3 direct ascent missile was tracked by U.S. intelligence agencies on July 23 from China's Jiuquan Satellite Launch Center in Inner Mongolia, in northwestern China, said U.S. defense officials familiar with reports of the launch.

The officials said the launch was not successful and the DN-3 appeared to malfunction in the upper atmosphere after the launch at night.

The launch took place after Chinese authorities posted a notice to airlines to avoid flying near the flight path of the missile. The missile's flight was captured in photographs and video by several Chinese internet users near the Jiuquan facility.

Despite the failure, China's space warfare program is said to be advancing rapidly as an asymmetric warfare weapon that will allow a less capable Chinese military to defeat the U.S. military in a future conflict.

Enhancing China’s Status as a Great Power

JEFFREY ENGSTROM

China is investing heavily in its military modernization program as it aims to extend its power, not only in the region, but globally. This has been a key focus of Chinese President Xi Jinping in the run up to the Communist Party Congress later this year, where he is expected to be designated for a second term as general secretary of the party and as president. The Cipher Brief’s Will Edwards asked RAND Corporation experts, East Asia senior analyst Jeffrey Engstrom and political scientist Michael Chase, to explain China’s expansion of its military force projection and how it will impact U.S. goals in the region.

The Cipher Brief: China is investing heavily into improving its ability to project power beyond its borders. What are some of the capacities it is acquiring/expanding?

Jeffrey Engstrom and Michael Chase: Beyond the attention-grabbing acquisitions of aircraft carriers and large amphibious ships, the People’s Liberation Army (PLA) is also acquiring less heralded, though absolutely necessary platforms to engage in both regional and global power projection. These include the steadily growing fleet of at-sea replenishment ships, enabling naval combatants to operate on-station for long periods of time. It also includes the recently developed Y-20 heavy transport aircraft, allowing the PLA to rapidly send forces and equipment globally.

India and China: Will the Doklam Row Plateau Off?

Shashank Joshi

Since mid-June, India and China have been locked in the most serious crisis between the two countries in 30 years.

Indian forces last month entered the Doklam plateau, an area claimed by China and India’s ally, Bhutan, near the tri-junction point of the three countries, in order to prevent People’s Liberal Army (PLA) personnel from extending a road towards the militarily important Jam Pheri ridge.

If this work is completed, it would put the PLA in a higher and stronger position closer to India’s narrow Siliguri corridor.

China has responded angrily, using official and quasi-official channels to threaten the use of force. India, having prevented the road extension, has preferred to emphasise diplomacy, with the offer of mutual withdrawal.

However, New Delhi has also taken opposition parties into confidence, moved troops from mountain divisions closer to Doklam and indicated that it will keep forces in place as long as necessary.

Neither side is likely to back down unilaterally. Although Chinese rhetoric eased in the last weeks of July, it is clear that Beijing wants New Delhi to believe that a war is a serious possibility.

Does India need to be invaded by China to wake up?

Very few in India have heard of Taksing.

It is the last village on the Tibet (China)-Arunachal Pradesh border, and the first village likely to be invaded if Beijing retaliates.

Scarily, it takes jawans THREE days of walking to reach Taksing.

In all the noise surrounding the Doklam confrontation, Claude Arpi focuses on a crucial issue that has hardly been covered -- the construction of roads for the armed forces and the local population to reach the most remote border posts.

Very few incidents have triggered so many comments as the confrontation at the tri-junction between Tibet, Bhutan and Sikkim.

On June 16, 2017, Chinese troops entered a stretch of land at the southern tip of the Chumbi Valley to build a road on Bhutanese territory. They were stopped by the Indian Army.

Beijing's response was sharp, probably due to the surprise; China did not expect Delhi to militarily defend Thimphu.

The tri-junction is a strategic hotspot for Delhi, and by occupying it, the Chinese would have a 'view' not only of the Chumbi Valley, but also the Siliguri corridor, which is India's main strategic weakness in case of a military conflict.

Is China Outsmarting America in A.I.?

By PAUL MOZUR and JOHN MARKOFF

HONG KONG — Sören Schwertfeger finished his postdoctorate research on autonomous robots in Germany, and seemed set to go to Europe or the United States, where artificial intelligence was pioneered and established.

Instead, he went to China.

“You couldn’t have started a lab like mine elsewhere,” Mr. Schwertfeger said.

The balance of power in technology is shifting. China, which for years watched enviously as the West invented the software and the chips powering today’s digital age, has become a major player in artificial intelligence, what some think may be the most important technology of the future. Experts widely believe China is only a step behind the United States.

China’s ambitions mingle the most far-out sci-fi ideas with the needs of an authoritarian state: Philip K. Dick meets George Orwell. There are plans to use it to predict crimes, lend money, track people on the country’s ubiquitous closed-circuit cameras, alleviate traffic jams, create self-guided missiles and censor the internet.

Beijing is backing its artificial intelligence push with vast sums of money. Having already spent billions on research programs, China is readying a new multibillion-dollar initiative to fund moonshot projects, start-ups and academic research, all with the aim of growing China’s A.I. capabilities, according to two professors who consulted with the government on the plan.

New Details on North Korea's Second ICBM Test Suggest Improvements, Further Testing Ahead

By Ankit Panda

North Korea’s Hwasong-14 intercontinental-range ballistic missile may see further testing and development.

On July 28, a little more than three weeks after its first-ever flight test of an intercontinental-range ballistic missile, North Korea carried out a second test. The missile launched at nighttime from near Jonchon in the heart of North Korea’s Chagang province, near a site known as Mupyong-ni.

The missile flew to an apogee of 3,700 kilometers, demonstrating the highest lofted apogee yet for a North Korean ballistic missile. Over a flight time of 47 minutes, it eventually descended and landed in the Sea of Japan, some 1,000 kilometers from its point of launch.

The trajectory, some experts assess, demonstrates a capability to strike U.S. east coast targets, depending on the missile’s eventual payload weight and other variables.

For the first time, more detail is available on the specifics of the Hwasong-14’s flight on the night of July 28. According to U.S. officials with knowledge of the test who spoke to The Diplomat, North Korea achieved the demonstrated trajectory by burning the missile’s liquid-propellant-based engines, which were configured differently in the second stage, for a different amount of time each than in the July 4 test.

In the July 28 test, the missile’s first stage burned for 151 seconds, a slight increase from the 145 seconds observed during the July 4 test. Moreover, the missile’s second stage burned for 224 seconds in the second test, a slight decrease from the 233 observed on July 4.

“We are Decades Behind” in Countering Russian Propaganda

MACKENZIE WEINGER

Robert Hanssen. Aldrich Ames. Those are just two of the faces peering out from a mock-up “Wall of Shame” of double agents and leakers that leads down a hallway to the United States government's senior counterintelligence official’s office. The pictures in the nondescript office building just outside Washington, D.C. serve as a reminder of the danger malicious insiders pose to the United States — and the hard work that goes on behind closed doors to stop them.

Trying to get a handle on insider threat — everything from spies to unwitting insiders to someone who could snap and cause harm to fellow government employees — is just one of the many tasks Bill Evanina, the Director of the National Counterintelligence and Security Center, tackles every day.

Evanina’s work in the Office of the Director of National Intelligence crosses both the security and counterintelligence worlds. That means dealing with background investigations and clearance reform efforts as well as with operations and analytics throughout the Intelligence Community, NATO, and the “Five Eyes” alliance of Britain, the U.S., Australia, Canada, and New Zealand.

It is impossible to look at those pictures of former FBI agent Hanssen and former CIA officer Ames — both convicted of spying for Moscow — without thinking of Russia and the Kremlin’s malign, aggressive actions to try to upend the country it considers its main enemy. From employing double agents to pushing out propaganda to ordering a cyber and influence campaign aimed at interfering in the U.S. election and boosting then-candidate Donald Trump’s chances, Moscow’s activities remain a high priority for anyone in the counterintelligence sphere.

Russia Launches ‘Summer Offensive’ in the Domain of Information and Cyber Security

By: Sergey Sukhankin

The Russian parliament (Duma) adopted a piece of legislation, on July 21, which virtually outlaws anonymous communication over Internet-based instant messengers (IM) (Rosbalt.ru, July 21). The new law forces all IMs operating in the Russian Federation to:

– identify users by their actual telephone number;

– store and protect data pertaining to the identification of its users;

– block the delivery of messages that contain information that fails to comply with normative acts and laws of the Russian Federation; and

– restrict the delivery of messages at the request of the Russian government.

Moreover, a week earlier, on July 12, the Duma adopted a package of laws (three in total) to regulate the protection of Russia’s critical informational infrastructure against viruses and cyberattacks (Rosbalt.ru, July 12). In order to achieve this goal, the legislation stipulates the creation of a system (directly controlled by government agencies) to detect, warn and liquidate virus threats and cyberattacks against online information resources. These new laws also introduce severe punitive measures. For instance, anyone responsible for hacker attacks (and the creation of hostile online software) will be punished with up to ten years in prison and a fine of 1 million rubles (approximately $16,000). Whereas violations of rules and regulations pertaining to the storage, processing and transmission of protected information will be punished by six years of imprisonment. Both sets of laws come into legal force on January 1, 2018.

A Perfect Storm Is Brewing In U.S. Foreign Policy

by Reva Goujon

The White House's pledge to put "America First" in its policymaking implies that the president has a responsibility to prioritize his country's problems over the rest of the world's. But making good on that promise isn't as easy as it sounds. After all, the foreign policies of great powers are crafted, not imposed.

If we can assume that every nation follows its own interests, we can also expect the executor of its foreign policy to make sense of a complex geopolitical landscape by internalizing the imperatives and constraints shaping the behavior of itself and its peers. In part this means identifying potential points of competition and collaboration,giving priority to the issues that pose a strategic threat to the republic. It also means teasing out and testing implications, determining the most critical points of stress that demand attention. Excessive ambition, whether driven by egotism or romanticism, will inevitably seep into the foreign policy realm, but it can be tamed. And the greater the power, the more tools at its disposal to form a policy designed to subtly steer its adversaries and allies toward its desired course without any party losing face.

Of course, this approach doesn't preclude conflict. A successful foreign policy, however, will anticipate, manage and even harness clashes to ensure a balance of power that is ultimately intended to preserve the might of the republic. The unique collection of foreign policy challenges facing the United States today will require a particularly deft hand to address as Washington looks to parse the unavoidable disputes from the avoidable ones, and to prepare Americans for them. But the ongoing power struggle between the ideologues and professionals on the White House's policy team seems certain to only intensify, leaving little room for strategic planning and ample room for error in some of the world's most pressing conflicts.

Continuous Dissemination: Three Techniques for Improved Intelligence Support

by John G. Wildt and David Del Signore

In the 21st century, America’s adversaries are conducting operations and making decentralized decisions at increasing velocities. As intelligence professionals, we must provide timely intelligence support to maneuver commanders if we are to remain relevant. However, the traditional intelligence cycle itself has often stood in the way of our success during the last 15 years of counterinsurgency (COIN) and Gray Zone operations. Specifically, the fact that dissemination occurs at the end of the intelligence cycle has kept us at the mercy of the enemy’s decision cycle, which often has fewer constraints and is faster than ours. In order to fix this deficiency, the authors propose that “continuous dissemination” is the right mindset for 21st century military operations. Though nothing proposed in this article should be seen as revolutionary, the authors recognize that many intelligence professionals may not have had the advantage of deploying to and working in a high-op-tempo environment.

While serving as the intelligence staff for a special operations’ task force in Afghanistan in 2014, our team tested this approach and found the results to be excellent. We used three methods to ensure that we were synchronized with our maneuver elements. The first method we used was constant communication with the special operations teams we supported through the entire operational cycle. Some of our analysts were collocated with the teams to help plan operations, while other analysts at our headquarters made sure they disseminated all the intelligence they could find and develop. The second method we used was knowledge management. Our routine and predictable file architecture helped our supported teams find the information they needed, night or day. Finally, we worked hard to provide the best possible real time intelligence support once our teams were actively engaged with the enemy. Through trial and error, we developed what we believe is an excellent template for supporting troops in contact (TICs) with the enemy. We believe that these three methods together will provide intelligence professionals with an effective way to support their maneuver elements.

Why the 4th largest military evokes neither respect nor fear

ADMIRAL ARUN PRAKASH (RETD.)

A file photo of Indian Army’s T-90 tank rolling during the celebration of 68th Republic Day at Rajpath, on January 26, 2017 in New Delhi

The Indian military remains in a World War II time-warp and is organised into 19 unwieldy commands against China’s five and United States’ six. A part-time Raksha Mantri also weakens the structure

A "security dilemma" in international relations represents a situation in which accretion of power -- military and economic -- by a state generates fear amongst its rivals, leading to tensions, a possible arms race and the possibility of conflict. India's acquisition of power is based on its nuclear arsenal, a modern but under-equipped military with 1.5 million personnel under arms and a defence expenditure of $60 billion. And yet, far from striking fear, India often fails to evoke respect in its Asian neighbourhood.

The Economist weekly, in a 2013 article titled Can India Become a Great Power, seemed to put its finger on the reason: "India has the world's 4th largest military," it said, "and yet its political class shows little sign of knowing or caring how the country's military clout should be deployed." Warning India against "an unstable but dangerous Pakistan and a swaggering and intimidating China", it observed: "The absence of a strategic culture and the distrust between civilian-run ministries and the armed forces has undermined military effectiveness."

With Likely Tata Exit And RCom Tottering, Telecom May Be An Oligopoly Of Three Private Operators By 2020

R Jagannathan

By 2019 or 2020, we will have a private sector oligopoly in telecom, with government-owned BSNL as the only balancing factor.

The government should quickly put BSNL on the block, when a good price may be available, and not after three years, when it will be candidate for becoming the next Air India.

It has been clear for a while that the Tatas will be the next wicket to fall in the hyper-competitive telecom industry, where the entry of Reliance Jio with very low data tariffs has pushed most of the big players into losses.

The last one year has seen Vodafone announce a merger with Idea Cellular, Airtel acquiring Telenor, and Reliance Communications huffing and puffing to repay debts even as its merger with Sistema and Aircel is still to be completed.

This leaves only the Tatas with a depleting sack of subscribers – a meagre 45 million, the lowest in the industry (excluding government-owned MTNL), and falling fast. In May, according to Telecom Regulatory Authority of India (Trai) data, Tata lost 2.1 million subscribers, the highest in the industry.

This offers us a key insight: customers may be forcing a consolidation even if bankers and debtors are gung-ho about it.

Culture for a digital age

By Julie Goran, Laura LaBerge, and Ramesh Srinivasan

Risk aversion, weak customer focus, and siloed mind-sets have long bedeviled organizations. In a digital world, solving these cultural problems is no longer optional.

Shortcomings in organizational culture are one of the main barriers to company success in the digital age. That is a central finding from McKinsey’s recent survey of global executives (Exhibit 1), which highlighted three digital-culture deficiencies: functional and departmental silos, a fear of taking risks, and difficulty forming and acting on a single view of the customer.

Exhibit 1

Data Breach Digest: Ransomware rising to the top of the nation-state threat vector list

BY MICHAEL BRUEMMER

Michael Bruemmer, CHC, CIPP/US, is vice president with the Experian Data Breach Resolution group. With more than 25 years in the industry, Bruemmer brings a wealth of knowledge related to business operations and development in the identity theft and fraud resolution space where he has educated businesses of all sizes and sectors through pre-breach and breach response planning and delivery, including notification, call center and identity protection services. Bruemmer currently resides on the Ponemon Responsible Information Management (RIM) Board, the International Security Management Group (ISMG) Editorial Advisory Board and the International Association of Privacy Professionals (IAPP) Certification Advisory Board.

Today the use of ransomware extends far beyond the traditional cybercriminal ploy for payout, serving as probable acts of war by nation-states – think the recent Petya and WannaCry incidents. Whether the rise in these types of attacks – ransomware and nation-state – are directly correlated or not, there’s no denying the gradual and coincidental increase in both. In his monthly "Data Breach Digest" column, Experian's Michael Bruemmer analyzes the current landscape, explores why ransomware attacks continue to be successful and provides guidance to businesses that often get stuck in the crosshairs.

Cyberattack on industrial control systems can put a whole nation at risk

By Macy Bayern

Ukraine is a hotspot for cyberattacks and there's a lot companies can learn from the country's experience in cyberwar.

Tech Republic's Dan Patterson talks with Karl Holmqvist, CEO of Lastwall and Ryan Brack, Organizer of the Global Cybersecurity Summit [LINKS] about the lessons every company should learn amidst a cyberwar. Ukraine's power grid, railways, and national election system have all recently been attacked, displaying what happens when cyberattacks reach an industrial level.

At the 2017 Global Cybersecurity Summit, a panel of expertsdiscussed Ukraine's vulnerability to cyberattacks. Brack echoed the sentiments expressed at the Summit, explaining that Kiev is a hotbed for industrial vulnerabilities and cyberattacks.

"Most people consider it testbed attacks," Brack said in reference to the most recent cyberattacks in the Ukraine. By saying "testbed," Brack explained that Ukraine could be the trial run for attacks that could be used on other democracies. This notion is particularly unnerving with the US relying so much on critical infrastructure, Patterson stated.

'The Darkening Web' warns of destruction through cyber means

By Steve Donoghue

The implication throughout the book couldn't be clearer: In cyber warfare, there are no civilians.

At the conclusion of his magisterial 2016 book "Cyberspace in Peace and War," US Naval Academy cybersecurity expert Martin Libicki takes a scolding tone toward rag-tag hackers who liked to demonstrate “their intelligence if not their maturity” and told his readers that cybersecurity was a three-star problem that was “hyped into a four-star problem, a standing that it never deserved.”

It was an odd conclusion even in 2016 – after all, in 2015 there'd been an enormous coordinated cyber-attack on Ukraine's power system, in which a quarter of a million Ukrainians were deprived of power in the middle of winter. And from the vantage point of 2017, after the world watched in appalled horror at the 2016 US presidential election and its aftermath – in which Russian state agencies hacked US election rolls and perhaps did much more – Libicki's complacent conclusion seems downright naïve.

Updating the picture is Alexander Klimburg's quietly horrifying new book The Darkening Web: The War for Cyberspace, which opens with a brutally sobering declaration about the kind and extent of damage that cyber warfare could inflict. “In reality,” Klimburg writes, “pretty much any form of destruction is achievable through cyber means; for those with the resources, the only limitation is their own creativity.”

Stage set for cyber war

SANJIB SINHA

Forget the past. The future of war suddenly presents itself with great razzmatazz. Two consecutive ransomware attacks — ‘WannaCry’ and ‘GoldenEye’ — shook the world with such ferocious force that it was evident — they were intended to attract only attention. The noisy and noticeable activity was not meant for stealing money only but to shout out a certain kind of presence in the cyber sphere. After that with every new computer installation the hardware people are now coming up with a warning — please don’t use pirated or back dated Windows operating system. Forget and forgive their naivety. The hacker’s target is no longer the singular person.

A new war front has opened up. Nation states have become the target now. Not persons. In the recent past generally, the hardware people happily install old Windows operating system without any caveat — of course. What happened to them? Why are they so scared? The recent consecutive ransomware attacks that affected thousands of individuals and organizations worldwide suddenly changed the whole postulated sequences of possible events and our mindset.

First ‘WannaCry’and then ‘GoldenEye’ has changed it permanently. In May, it had been deliberately done by the hackers to extort money by locking the personal or organizational computer and networks. With ‘WannaCry’ virus hackers were successful in their mission. No one had been arrested. As ransom, more than one hundred thousand dollar had been deposited by the affected. The money was put into the designated account through Bitcoin — the mysterious digital currency used in dark web. And it’s unbelievable — they didn’t touch the money. Actually, it was not money. It was something else they had wanted to prove!

The challenge of digitization and technological advancement

By: Kevin Coleman

Leaders around the world have begun to embrace being digital, and for good reason. It is changing the military, defense and intelligence organizations; and it is dramatically changing businesses, the economy and many, if not most aspects of our lives. It is the digitization that has substantively increased the criticality of cybersecurity, defense and intelligence. What is really meant when we talk about digitization?

The term digitization has been bantered about for a while now, and a uniformly accepted definition seems to be illusive. In general terms, digitization refers to the movement that converts physical elements into ones and zeros that are the essence of anything digital. The management consultants at PWC refer to digitization as a “mega trend,” and for good reason. Computers, the internet, cellphones and smartphones, tablets, connected cars, and all of the Internet of Things have and will continue to transform how we perform our duties. In fact, this phenomenon has reached a point where it is a requirement for and threat to our nation’s economy and national security.

Digitization is not a new issue for the military and intelligence communities. In fact, it can be traced back to the early to mid-90s! That drew out the concept of the digital battlefield, which became a hot topic for investigation and research. Since then, the concept was presented as well as discussed, and strategic questions were asked about the issues and opportunities digitization presented to our military and intelligence communities. The defense industry entered with their research, analysis and development of everything from theories and concepts to products and services. It would be nearly impossible to put a dollar figure on what has been spent pursuing this subject matter, much less project what will be spent if digital technologies continue to advance at an ever-increasing pace.

The Proposed ´Digital Geneva´ Convention: Towards an Inclusive Public-Private Agreement on Cyberspace?

By Maria Gurova

Introduction

On 14 February 2017 Microsoft president Brad Smith addressed1 the participants of the RSA Conference in San Francisco with a passionate speech in which he called on all representatives of the private sector to unite their efforts to create a “digital Geneva” convention and digital “neutral Switzerland” regime. The initiative is inspired by the Geneva Conventions signed in 1949 in the aftermath of the Second World War and by Switzerland’s longstanding tradition of neutrality. Considering the initiative’s good intentions and the role Microsoft played in its creation, what lies behind this proposal, and has it emerged at the right time?

Key Points

Microsoft president Brad Smith’s proposal that private sector entities should draw up and adopt a digital convention is timely, but risks being another exclusive coalition of like-minded actors without proper global outreach.

In substance, the six principles of the proposed digital convention more closely resemble a mix of public and private international law than the principles of international humanitarian law, which are already applicable to the cyber domain, with some exceptions.

Without support from the government sector and comprehensive outreach to the international community, any digital regime on a global scale will not be feasible.

U.S. Cyber Diplomacy Requires More than an Office

David P. Fidler

Keeping the Office of the Coordinator for Cyber Issues at State only makes sense if the White House makes cyber diplomacy a foreign policy priority. That's not the case.

Secretary of State Rex Tillerson’s decision to close the State Department’s Office of the Coordinator for Cyber Issues and fold its responsibilities into the Bureau of Economic and Business Affairs has provoked widespread criticism. Critics often express two arguments. First, the decision signals that the Trump administration is downgrading cyber’s importance in U.S. foreign policy. Second, the decision means the United States will forgo the benefits a cyber-focused unit within the State Department can generate. Neither argument is persuasive, which undermines calls for the Trump administration to maintain the office.

It was clear well before Secretary Tillerson’s decision that the Trump administration was not going to emphasize cyberspace in foreign policy as the Obama administration did. Closing the cyber coordinator’s office is consistent with the Trump administration’s marginalization of cyber issues in foreign policy. Nothing communicates this attitude better than the White House’s refusal to confront Russia’s cyber interference in the 2016 election and, instead, express a desire to establish a joint cybersecurity unit with Russia. Closing the office is also consistent with the administration’s marginalization of the State Department in its “America First” foreign policy.

5 August 2017

*** Modernize the South Asia Nuclear Facility ´Non-Attack´ Agreement

By Tony Dalton

Introduction

On January 1, 2017, Indian and Pakistani diplomats exchanged official lists of the nuclear facilities located in their respective countries. According to news accounts at the time, this was the 26th such annual exchange of lists, pursuant to a 1988 bilateral confidence building agreement not to attack each other’s nuclear installations.i The fact that this exchange has been implemented without interruption, during periods of both calm and military crisis, makes it the most enduring nuclear confidence-building measure (CBM) on record in South Asia. At the same time, the banality of this exchange suggests that the agreement has little practical contemporary meaning for peace and security in the region.

When the non-attack agreement was originally negotiated, both countries’ nuclear weapons enterprises were relatively small and secretive, and fears (in Pakistan, at least) of a surprise attack on nuclear facilities had been rampant for several years.ii The agreement in theory helped allay concerns that nuclear facilities could be attacked purposefully, either by surprise or during a conflict, thus mitigating the potential humanitarian or environmental consequences that might result.

Over time, however, the agreement has proven to be merely symbolic and its potential as a building block for enhanced confidence has remained limited. It was never backed by verification provisions, for example. During the period prior to 1998, in which neither state had openly declared its nuclear weapon status, it was widely assumed that both sides omitted nuclear weapons-related facilities from their respective declarations.iii It is almost certainly the case today that neither side declares sites associated with nuclear weapons storage and operations, and perhaps other facilities as well. Any stabilizing influence the agreement contributed in the past has long since dissipated.iv

** The Trump Administration Reaches for a Trade Sledgehammer

The White House is planning to launch new investigations into China's trade and intellectual property practices, and soon. The move underscores how talks between the United States and China have broken down over Washington's expectations that Beijing would help rein in North Korea's nuclear program. With the 100-day action plan on trade that followed U.S. President Donald Trump's April meeting with Chinese President Xi Jinping over, and with Pyongyang still aggressively pursuing a fully functional and deliverable nuclear weapon, the White House already had signaled it would no longer be constrained when dealing with China before Trump tweeted July 29 that he was "very disappointed in China" for its inaction on North Korea. And now that comprehensive trade talks are frozen, the United States is pursuing far more aggressive measures against China's economic policy — though it still retains the option to walk this pursuit back if needed.

According to several reports, the Office of the U.S. Trade Representative will investigate technology transfers mandated by China pursuant to Section 301 of the Trade Act of 1974. Beijing requires foreign companies to share technology in exchange for allowing them to invest in China or access the massive and lucrative Chinese market. The investigation could be announced this week and is likely to be rolled into an executive order by Trump that includes other enforcement actions related to trade, investment and intellectual property.

A Heavy Tool, With Limitations

** The Lebanese Armed Forces, Hezbollah and the Race to Defeat ISIS

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On July 20, 2017, the Lebanese Shi’a militant group Hezbollah confirmed that it had put in motion a plan to dislodge Jabhat al-Nusra (JAN) militants from Lebanon. The commencement of Hezbollah military operations preempted the Lebanese Armed Forces (LAF) from putting in motion plans tied to clearing JAN and the Islamic State in Iraq and Syria (ISIS) militants from Lebanese territory on its own. On July 27, 2017, Hezbollah announced that it and JAN had reached a tentative ceasefire as negotiations intensified to secure safe passage for remaining Nusra fighters to rebel-held areas in Syria.

Hezbollah’s decision to take on JAN militants militarily placed the LAF in an all but untenable position. The LAF’s leadership are uncomfortable that Hezbollah’s campaign against JAN amounted to a media nightmare for the Government of Lebanon and the military. However, it must be said the LAF has had three years to plan, push for, and execute a military option to deal decisively with the presence of JAN and ISIS fighters in Lebanon, and missed several opportunities to do so.

Since the accession of General Joseph Aoun to the post of LAF Commander, LAF-Hezbollah relations have remained largely civil – much like the LAF’s relations with all of Lebanon’s major political sectarian factions. However, below the surface, some of the LAF’s recent key military personnel choices have annoyed Hezbollah. Despite that, the LAF is not in a position where it can be openly antagonistic towards Hezbollah – the preeminent faction in Lebanon’s sectarian political landscape.

Why 2017 is not 1987

by Sushant Singh

A more nationalistic Beijing and the location of the dispute make the current India-China crisis different from the earlier stand-off

In 2007, Bhutan had offered a swap deal to China where it agreed to give Doklam in exchange for the disputed areas in its north, which India vetoed.

The stand-off between the Indian and Chinese armies at Doklam shows no signs of a resolution. For New Delhi, the most preferred option is a mutual withdrawal by the two armies from the contested area. The next best option is continuation of the status quo, a prolonged stand-off at the site where Chinese road construction has been stalled. The Chinese thus cannot build the road to the militarily important Jampheri ridge, and diplomats of the two countries can use the prolonged period of détente — of a few months if not more — to find an amicable solution.

Japan Is Building India's Infrastructure

By Tridivesh Singh Maini and Sandeep Sachdeva

Japan should help develop India’s northeast, and in so doing send a message to China.

In recent years, India-Japan relations have considerably improved in both the economic and strategic spheres. July provided two important examples of how strategic ties have improved immensely. First, there were the week-long trilateral naval exercises between India, Japan, and the United States, which this year came amidst the standoff between India-China over the Doklam plateau. Then on July 20, the landmark India-Japan civil nuclear agreement came into force. The pact was signed in Tokyo on November 11, 2016, during Prime Minister Narendra Modi’s visit to Japan. According to the deal, six new nuclear reactors will be built for power generation. India and Japan are also working on Asia-Africa Growth Corridor (AAGC), which was unveiled on May 23, 2017 during the 52nd Annual Meeting of the African Development Bank (AfDB) held in Gandhinagar, Gujarat.

In the area of infrastructure too, India is seeking to benefit from Japanese expertise. Japan is already associated with the assistance and know-how it provided for Phase 1 of the Delhi Metro. Now, according to some media reports, the Mumbai-Ahmedabad bullet-train project going to be launched during Japanese Prime Minister Shinzo Abe’s visit to India from September 12-14. The Japanese are also involved in other mega projects, like the Delhi-Mumbai Industrial Corridor, which began a decade ago.

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