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6:00 PM ET, Monday, July 24, 2023

The Cipher Brief curates open source information from around the world that impacts national security. Here's a look at today's headlines, broken down by region of the world:  

In the Americas

U.S., China Reportedly Discussing Deal to Address Fentanyl Crisis.  The U.S. is reportedly in discussions with China to facilitate joint efforts aimed at countering the U.S. fentanyl crisis.  The U.S. sees China as key to resolving the issue since Chinese companies produce fentanyl precursor chemicals that are shipped to drug cartels in Mexico who use them to produce fentanyl that is smuggled into the U.S.  Beijing is reportedly maintaining its precondition that the U.S. lift sanctions on a Chinese police forensics institute suspected of participating in human-rights abuses before joint counternarcotics work can resume.  Sources say that U.S. Secretary of State Antony Blinken, during his visit to Beijing last month, proposed establishing a working group to revive talks with China on a phased approach to the matter, with China being expected to lay out plans in the working group to cooperate with the U.S. in the fight against fentanyl, while the U.S. would reciprocate with negotiations reconsidering restrictions on the institute.  Talks have not reached a settlement, and the U.S. State Department maintains sanctions on any Chinese entity have yet to be lifted in relation to the working group.  Wall Street Journal

US Sanctions Malian Officials Over Alleged Wagner Group Ties. The U.S. imposed sanctions on three Malian officials on Monday.  These sanctions come over accusations that Mali facilitated the deployment and expansion of Russian Wagner forces within the country.  The U.S. Treasury Department said one of the sanctioned officials is the Malian Minister of Defense, who made several trips to Russia in 2021 in order to reach an agreement for the deployment of Wagner fighters to Mali.  "These officials have made their people vulnerable to the Wagner Group’s destabilizing activities and human rights abuses while paving the way for the exploitation of their country’s sovereign resources to the benefit of the Wagner Group’s operations in Ukraine," Treasury Under Secretary for Terrorism and Financial Intelligence Brian Nelson said.  Both Russia and Mali have said Russian fighters in the African nation are not mercenaries but trainers helping local troops fight a decade-long insurgency by Islamist militants.  Reuters U.S. Department of the Treasury

Western Europe

France’s Macron Visits South Pacific.  French President Emmanuel Macron is visiting Papua New Guinea, Vanuatu, and New Caledonia this week.  Macron started his trip in the French territory of New Caledonia on Monday.  Observers say the most important stop will be in Papua New Guinea (PNG), which Macron will visit on Thursday, due to growing Chinese influence in the country.  Western countries have been working to expand security ties with PNG to counter Beijing’s influence; the country signed a new security pact with the U.S. in May and is in the process of signing a security treaty with Australia.  Macron’s office has insisted that the purpose of this trip is not to encourage an “anti-China” policy, but instead to encourage regional powers to diversify their partnerships beyond Beijing and Washington.  Associated Press

Germany Establishing Anti-Money Laundering Body.  Germany’s finance ministry is drawing up legislation to establish a new body to combat money laundering.  The office, called the Federal Bureau of Financial Intelligence, will be set up next year and will centralize monitoring and analysis of money laundering and sanctions enforcement.  The office aims to have 1,700 employees and will receive over 700 million euros in funding from the finance ministry between 2024 to 2027, according to the draft legislation.  The move to create the body comes after the global Financial Action Task Force (FATF) criticized Germany last year for failing to do enough to combat money laundering.  The new body will combine activities of the two separate bodies currently responsible for addressing money laundering and sanctions evasion, the Central Office for Sanctions Enforcement and the Central Office for Financial Transaction Investigations.  Reuters

Central and Eastern Europe

Ukrainian Defense Minister Admits Counter-Offensive is Behind Schedule.  Ukrainian Defense Minister Oleksii Reznikov has admitted that the Ukrainian counter-offensive is behind schedule, but insisted that he is “not worried” during an interview with CNN over the weekend. Reznikov stated that there were several reasons as to why the counteroffensive is behind schedule, but the biggest reason is the intricate mine fields left behind by Russian forces. He said that mined areas are “very difficult to break through,” highlighting that Ukrainian forces on the southern front have had to resort to clearing the fields by hand.  In separate remarks, other Ukrainian military officials said that Russia’s ability to jam drones is also slowing the counteroffensive.  An Ukrainian air force spokesperson said that Russia has fielded powerful electronic warfare systems which can more easily intercept Ukrainian drones than anti-aircraft systems, adding that while Ukraine has made progress in its own electronic warfare capabilities, it is lagging behind because “we started late.”  Despite the difficulties, and in reference to Reznikov’s persistent optimism, Ukrainian forces continue to report modest progress.  Ukrainian military commanders report advances “from 350 meters up to 1.4 kilometers” in the south, continued offensive operations towards Melitopol and Berdiansk, and successful defenses against Russian attacks in the Bakhmut area.  CNN 

Russia Hits Ukrainian Grain Terminals on Danube River.  Russia launched strikes on Ukrainian ports along the Danube River on Monday, destroying vital grain storage infrastructure.  The attacks came after similar attacks on grain infrastructure in sea ports of Odesa following Russia’s withdrawal from the Black Sea grain deal.  The new targeting of Danube ports, which offer a critical alternate export route for Ukrainian grain shipments, further restricts the ability to safely send Ukrainian foodstuffs to international markets.  Ukrainian Foreign Minister Dmytro Kuleba accused Moscow of “holding 400 million people hostage” with the attacks, calling them acts of “food terrorism.”  Around 30 cargo ships have since dropped anchor near the Danube port of Izmail, which some Ukrainian outlets said was one of the ports that was attacked.  It was not immediately clear why the ships stopped and dropped anchor.  BBC Politico Reuters Wall Street Journal

Putin Extends Age of Russian Military Reservists.  Russian President Vladimir Putin signed a law on Monday that raises the age limit by five years for citizens to remain in Russia’s Military Reserves.  The amendments to the federal law will now increase the age limit from 35 to 40 years for soldiers, sailors, and sergeants; from 45 to 50 years for foremen and warrant officers; and from 50 to 55 years for midshipmen. It will also increase the maximum age limit for those in the mobilization reserve. The changes will take effect on January 1, 2024 with a transitional period until January 1, 2028.  CNN

Ukraine Detains Former Senior Military Official over Suspected Graft.  Ukrainian authorities detained former Ukrainian senior military official Yevgen Borisov over allegations of accepting bribes in return for exempting people from being mobilized into the army.  Ukraine’s State Bureau of Investigation said it started to investigate Borisov after reports that his family had purchased real estate in Spain worth millions of dollars shortly after the start of the Russian invasion.  Borisov was in charge of mobilization and conscription in the southern region of Odessa until he was dismissed in late June. Borisov has been charged with “unlawful enrichment,” as well as the deliberate evasion of military duty due to his alleged attempt to flee the country.  Borisov faces up to ten years in prison if convicted.  Al Jazeera

China Sending Military Gear to Russia.  A Politico investigation has revealed that China is sending military equipment to Russia’s army amid the Ukraine war.  The investigation looked at customs data that shows that China has exported dual-use products to Russia, while also lessening exports of such items to Ukraine.  The materials include millions of dollars-worth of drone components, ceramics which are used in body armor, bulletproof vests and helmets.  The investigation came days after Emmanuel Bonne, the head of French President Emmanuel Macron’s diplomatic team, told the Aspen Security Forum that China is sending items to Russia that can be used for military purposes.  He said that China is “doing things we would prefer them not to do,” and while he said Beijing is “not delivering massively military capacities to Russia,” he asserted the West seeks “Chinese abstention” of deliveries of any such equipment.  French officials later said that Bonne referenced dual-use technologies and non-lethal assistance like helmets and body armor.  China has repeatedly denied sending military equipment to Russia since the start of Moscow’s full invasion of Ukraine in February 2022.  Politico

Asia and Oceania

North Korea Fires Ballistic Missiles After U.S. Submarine Arrives in South Korea.  South Korea’s military reports that North Korea fired two ballistic missiles off its east coast late on Monday.  Japan’s defense ministry said it also detected apparent ballistic missile launches from North Korea.  The launches came hours after a U.S. nuclear-powered submarine arrived at a naval base in South Korea to load military supplies while on an unspecified mission.  Pyongyang has reacted angrily to the deployment of U.S. submarines, bombers and aircraft carriers to South Korea and has said the presence of such strategic assets in the region could meet criteria for a nuclear response.  Associated Press Reuters

High-Level Chinese Delegation to Visit North Korea.  North Korea’s KCNA news agency reports that a high-level Chinese delegation will visit North Korea this week.  The delegation will include Chinese Communist Party politburo member Li Hongzhong and will take part in celebrations marking the 70th anniversary of the Korean Armistice Agreement.  The visit will mark the first acknowledged trip by foreign officials to North Korea since the country closed its borders due to the Covid-19 pandemic.  Reuters

Philippine President Vows to Defend Territory Through Diplomacy.  Philippine President Ferdinand Marcos Jr. on Monday said he is committed to defending his country’s territory, in a veiled reference to territorial disputes with China.  Speaking in his state-of-the-nation speech to Congress, Marcos said that his administration will work to ensure the Philippines “remains intact and inviolable” and “protect our sovereign rights and preserve our territorial integrity, in defense of a rules-based international order.”  He added that Manila will work to achieve this mainly through “constant dialogue and diplomatic approaches.”  Marcos did not directly mention China, but his speech follows increased encounters between Chinese and Philippine vessels in disputed waters as well as Marcos’ move to open new military bases to the U.S. as part of efforts to reforge security ties with Washington amid China’s assertiveness in the region.  Beyond territorial issues, Marcos also announced he will offer amnesty to armed insurgents, vowed to address smugglers of agricultural products, and promised to boost the economy.  He did not mention human rights issues, including the International Criminal Court’s investigation into former Philippine President Rodrigo Duterte’s drug war.  Associated Press 

Taiwan Starts Annual Han Kuang Drills.  Taiwan on Monday began its annual Han Kuang war games to test readiness to a cross-strait conflict.  The first day of exercises included drills that tested the mobilization of reservists, deployments of air and naval forces, and civilian responses to air raids.  Taiwan’s defense ministry said the start of the drills demonstrated the island’s ability to maintain air and naval combat strength in the event of a Chinese invasion.  This year’s exercises notably include drills at Taiwan’s main Taoyuan International Airport and the Fenglien airport in Taitung.  Separately, Taiwan’s military reported that an explosion of a 120mm mortar at an ammunition depot in Keelung in northern Taiwan injured nine soldiers.  Authorities are investigating the incident.  South China Morning Post

China Criticizes Japanese Chip Equipment Controls.  Japan has added 23 chipmaking-related tools and items to an export control list, including extreme ultraviolet lithography machines used to produce high-performance chips.  Beijing criticized the move, calling on Tokyo to prioritize bilateral relations.  China’s foreign ministry stated that the action was directly aimed at China and said that Beijing “will closely monitor the impact of the regulatory policy and resolutely safeguard our own interests.”  Notably, the ministry did not threaten reciprocal measures against Japan, in contrast to threats of retaliatory action against U.S. sanctions and export controls.  Nikkei Asia

Pakistani Authorities Issue New Arrest Warrant for Former PM Khan.  Pakistan’s Election Commission has reportedly issued a non-bailable arrest warrant for former Prime Minister Imran Khan, according to Geo news.  It is unclear what charge the Election Commission’s warrant is related to and whether police will act on the warrant.  Khan has faced a series of charges including graft, murder and sedition.  He was arrested in May on corruption charges, but was released on bail shortly after amid fierce protests launched by his supporters.  Reuters

Middle East and Northern Africa

Jordanian Army Downs Drone Carrying Drugs.  The Jordanian army reported on Monday that it has downed a drone carrying two kilos of crystal methamphetamine from Syria. The drone was shot down in Jordan’s northern frontier region.  It was the third such drug smuggling incident in recent weeks.  The Jordanian government has blamed pro-Iranian militias for smuggling drugs across its borders in order to get to Gulf Markets.  Damascus has claimed that it's doing its best to clamp down on smuggling and continues to bust smuggler operations in the south and has denied complicity with Iranian forces.  Reuters

Sub Saharan Africa

China’s Wang Yi Makes Surprise Trip to Ethiopia, Reaches Out to Kenya, Nigeria.  China’s top diplomat Wang Yi is in the middle of a four-nation tour of Africa, underscoring Chinese efforts to expand its influence across the continent.  Wang first made an unannounced visit to Ethiopia, where he met with Ethiopian Prime Minister Abiy Ahmed to discuss Chinese support for Ethiopia’s reconstruction and economic recovery after the Tigray war.  Officials say talks included discussions on debt restructuring.  Experts say China sees an opportunity in expanding ties with Ethiopia as the country’s relations with Western countries suffered over the country’s civil war.  Wang then traveled to Kenya on Friday to engage with the new administration of President William Ruto.  In a meeting in Nairobi, Ruto presented new infrastructure projects open to Chinese investment, including a major highway project and plans to upgrade airports.  Wang later arrived in South Africa on Sunday to attend a BRICS high representatives’ meeting on security affairs ahead of a wider bloc summit next month.  He is then expected to stop by Nigeria before heading back to China.  South China Morning Post

Sudan Warns Against Regional Peacekeepers.  Sudanese General Yassir al-Atta on Monday warned that if Kenya leads East African peacekeepers into Sudan to help stop the country’s civil war, they will be seen as enemy forces and “not one of them would make it back”.  Sudan’s army has rejected the Kenyan-led peacekeeping initiative since it believes Kenya supports the paramilitary Rapid Support Forces (RSF).  General al-Atta has also accused the Kenyan government of being bought off by an unnamed third country.  Kenya’s Foreign Affairs principal secretary Korir Sing’Oei stated that the accusations are unfounded and that “this statement is unworthy of our comment”.  Reuters

Cyber and Tech

Norwegian Government IT Systems Experience Cyberattack Through Vendor Platform.  Norwegian government IT systems experienced a cyberattack earlier this month through a vulnerability exploited by hackers on a platform operated by one of the government’s service providers.  The system flaw has since been patched.  Twelve ministries were affected by the hack although the foreign, defense, and justice ministries, which operate on a different IT platform, were not impacted.  Staff access to some shared services at ministries where the cyberattack took place was blocked, including email, although mobile devices still were operable.  Norwegian cybersecurity specialists identified the attack following "unusual" traffic on the service provider’s platform.  No group has yet claimed responsibility and the full scope of the hack still is being investigated.  Norwegian security officials have said that “a number of measures” have been taken in response to the attack.  NATO member Norway, Europe's largest gas supplier, has been targeted by hackers on a number of occasions recently.  In early July, an online database of the Norwegian Refugee Council that stores the personal information of project participants was hit by a cyberattack.  Reuters The Record

Recent Crypto Supply Chain Hack Shows North Korean Sophistication, Adaptability.  The hack by a North Korean-linked threat actor against the JumpCloud cloud-services company and its downstream cryptocurrency clients demonstrates how hackers from that country continue to evolve.  The Mandiant cybersecurity firm on Monday identified UNC4899 as the cryptocurrency-focused hacking group that carried out the JumpCloud attack.  UNC4899 is a component of North Korea’s Reconnaissance General Bureau.  According to Mandiant, recent North Korean operations show their efforts to penetrate service providers, like JumpCloud, have “cascading effects” by creating the conditions through which they can “compromise downstream victims.” The supply chain attack on JumpCloud followed a March attack targeting X_Trader financial trading software, which was used to compromise 3CX desktop communications software in a financially motivated operation.  Mandiant concluded that North Korean threat actors will continue to evolve MacOS malware capabilities in order to launch attacks on “high-value individuals within the cryptocurrency industry, and the software solutions they use.”  Mandiant also noted that the North Korean groups are capable of quick changes in focus, with separate  operations featuring ransomware, cyberespionage, and cryptocurrency theft attempts.  “This seeming ‘streamlining’ of activities by DPRK,” Mandiant wrote, “often makes it difficult for defenders to track, attribute, and thwart malicious activities, while enabling this now collaborative adversary to move stealthily and with greater speed.”  CyberScoop

Wired Profiles Lucrative AI-Related Data Collection from Ukraine Battlefields.  The conflict in Ukraine has seen billions of dollars in military aid pouring into the country, which has been a bonanza for defense technology providers and contractors.  But it is not only equipment and services vendors that have benefited, but those that are capitalizing on data collection and exploitation.  Weapons systems and high-tech sensors in use in Ukraine have generated enormous amounts of data about equipment performance under battlefield conditions.  As Wired reports, for “businesses that want to build the next generation of weapons, or train systems that will be useful in future conflicts, that is a resource of incalculable value.”  Cameron Chell, an executive with the Draganfly drone company, underscored the value of data inputs collected and stored by Draganfly sensors:  “Making sure that it's your sensors collecting that data, and feeding it into your software, is absolutely important. It’s more important than ever to be present.”  Just as chatbots are trained on huge language models, the software for landmine-detection drones operated by Draganfly must train their AI on thousands of images to distinguish between a rock formation and a modern mine.  A number of companies have recognized the profit potential of wartime data.  As Ingvild Bode, an associate professor at the University of Southern Denmark, notes, “Ukraine is the only place in the world where you can get that data at the moment.”  Consequently, companies like the German AI firm, Helsing, and data analytics company, Palantir, have a constant in-country presence to gather data.  Bode notes there are various reasons for such companies to be involved in Ukraine, but “the value of the data will absolutely be one of them.”  Ukrainian officials recognize the benefits of real-world battle experience for AI and software development.  Alex Bornyakov, Ukraine’s deputy digital transformation minister, said, “you can’t even imagine how many foreign companies are already using Ukraine as a testing ground for their products: AI companies like Clearview, Palantir; anti-jamming systems; everything that has a software component is in Ukraine right now.”  Bornyakov adds that such companies should expect to contribute to Ukraine in exchange for the data they collect.  “This experience we’re in right now,” Bornyakov says, “how to manage troops, how to manage them smarter and automatically—nobody has that.  This data certainly is not for sale.  It’s only available if you offer some sort of mutually beneficial cooperation.”  Bornyakov also recognizes the post-conflict benefits the wartime operations of systems and data may have for Ukraine:  “After the war has finished,” he said, “Ukraine companies will go to the market and offer solutions that probably nobody else has.”  Wired

Pro-China Financial News Content, Commentary Fed to U.S. News Websites.  A Chinese communications firm based in Shanghai has been quietly inserting pro-Beijing news reporting on news websites throughout the United States.  Although the relationship between Haixun Press and the Chinese government is unclear, the company has links to various official organizations and the content it distributes often comes from state media sources or think tanks.  The company website boasts that it can plant news reporting around the world, and further amplify the content with fake “social media likes” on outlets like Twitter, Facebook, and Instagram. Haixun-generated articles have been published in the financial news sections of 32 websites, including the Arizona Republic and the Pittsburgh Post-Gazette.  Some of the reports direct harsh criticism toward U.S. officials and others who critique Chinese policy and actions.  The Washington Post notes that Haixun has Chinese clients including state police and government bureaus.  Ryan Serabian, a senior Mandiant analyst, says that operations like Haixun try to “blur the line between fiction and fact” by planting pro-Chinese articles in U.S. news platforms that may not be aware of the origin of the reports.  Serabian concludes that” it’s very important for us to shine a spotlight on that so that measures are taken to prevent this from happening.”  The Haixun financial and market content is distributed to small-scale U.S. news outlets through the CloudQuote newswire service, a subsidiary of the California-based FinancialContent firm.  Questioned about the Haixun content appearing on their websites, the Arizona Republic and the Pittsburgh Post-Gazette redirected viewers where Haixun content appears to other website pages.  The Post-Gazette said it was unable “to comment on this at this time” while the Arizona Republic’s owner, Gannett, commented: “These pages no longer include the Arizona Republic branding and we have informed [FinancialContent] of the misinformation.”   Washington Post

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