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6:00 PM ET, Tuesday, August 1, 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

Chinese, U.S. Officials Meet in Washington.  Senior Chinese and U.S. diplomats met at the U.S. State Department on Monday in the latest engagement between Beijing and Washington aimed at managing relations.  Daniel Kritenbirk, assistant secretary of state for East Asian and Pacific Affairs, and Sarah Bernan, the National Security Council’s senior director for China and Taiwan affairs, hosted the meeting.  China was represented by Yang Tao, the Chinese foreign ministry’s head of North American and Oceanian affairs.  The State Department said the talks were “candid, substantive and productive” and covered various issues, including the Ukraine war.  Experts added that the meeting was part of efforts towards working-level dialogues on visas, aviation and other issues.  Experts also said that meetings showed less concern over an imminent conflict over Taiwan, though there is still private sector concern over escalating trade restrictions between the U.S. and China.  South China Morning Post 

BlackRock, MSCI Accused of Facilitating Capital Flows to Blacklisted Chinese Firms.  The House of Representatives’ Select Committee on the Chinese Communist Party (CCP) is investigating asset management firm BlackRock and index provider MSCI for facilitating investments into blacklisted Chinese companies.  The panel has accused the firms of investing in companies linked to China’s military or found guilty of human rights abuses.  BlackRock denies any wrongdoing and said on Tuesday that it will cooperate with the panel on the issue.  MSCI said that it is “reviewing the inquiry” from the committee.  A spokesperson from the Chinese embassy in the U.S. said the investigation is “overstretching the concept of national security and politicizing economic, trade and investment issues.”  Financial Times Reuters 

U.S. Limits Hungarian Visa Rights.  The U.S. announced on Tuesday that it will limit Hungarian participation in a visa waiver system for Budapest’s failure to tackle security issues flagged by the U.S. The U.S. embassy in Budapest announced the move, which will be effective immediately.  Under the new rules, Hungarians will now only be allowed single rather than multiple entry under the Electronic System for Travel Authorization (Esta) visa waiver program, and Hungarians’ Esta permit will now only be valid for one year rather than two.  The embassy cited “security vulnerabilities” from Hungary’s “simplified naturalization process” as the reason for the change.  The move comes after Hungarian Prime Minister Viktor Orban’s government issued around 1 million passports to those who claimed Hungarian ancestry between 2011 and 2020.  The embassy said this process was done “without adequate security measures in place to verify their [applicants’] identities.”  BBC Financial Times Washington Post

U.S. Sanctions China-Based Companies Over Alleged Links to Xinjiang Forced Labor.  The U.S. is banning imports of goods from two more China-based companies over their alleged use of forced labor in China’s northwest Xinjiang province.  The U.S. Department of Homeland Security announced the sanctions on Camel Group, a battery manufacturer, and Chenguang Biotech Group, a food additive and extracts company.  The department said the measures aim to promote accountability for the “ongoing genocide and crimes against humanity” against Uighurs and other minorities in Xinjiang.  A total of 24 companies have been sanctioned over reported use of forced labor from Xinjiang since 2021.  China has yet to respond to the new restrictions.  The Hill South China Morning Post

Western Europe

German Projects Aimed at Lessening Dependence on Russian Energy Stymied by Wartime Bombs.  German efforts to build infrastructure aimed at breaking dependence on Russian energy are being complicated by unexploded ordnance from past wars.  Construction sites for new energy and infrastructure projects in Germany regularly close when unexploded munitions from the World Wars are found, with work paused until the munitions are either safely removed or destroyed on site.  The issue has been particularly serious at the port of Wilhelmshaven, the planned site of new liquefied natural gas (LNG) terminals, where hundreds of munitions have been found.  The port was one of the German Navy’s largest bases in World War Two and was bombed repeatedly by Allied forces, and then used as a dumping ground for unused munitions.  At least 150 to 200 unexploded bombs, grenades and mines have been found in the port’s harbor.  While the first LNG terminal at Wilhelmshaven has come online, new terminals are on hold until unexploded ordnance is removed.  The terminals are essential to helping Germany not return to Russian pipeline gas.  New York Times

Central and Eastern Europe

Ukraine Says Russian Shelling Hit Kherson Hospital, Killing Doctor.  Ukrainian officials report that Russian shelling on the southern city of Kherson hit a hospital on Tuesday, killing a doctor and injuring five medical workers.  Medical charity Médecins Sans Frontières (MSF), which had been working from the hospital to help people displaced by the destruction of the Kakhovka Dam, condemned the “disgraceful attack” on the medical facility.  Regional officials report that a separate Russian shelling attack in the northeastern village of Pershotravneve in the Kharkiv region killed another person.  CNN Reuters Washington Post

Russia Claims Downing Drone in Crimea.   The Russian-installed governor of the occupied Crimean port of Sevastopol, Mikhail Razvozhaev, says Russian defenses intercepted a drone in the Kara-Koba area of the city.  Razvozhaev said the drone exploded when it crashed into the ground.  Residents reported hearing a loud explosion on Tuesday and saw smoke rising from the city center.  CNN

Wagner Presence & Airspace Violations Ratchet Up Tension Between Belarus and Poland. Belarusian president Alexander Lukashenko taunted Poland over the presence of Russian Wagner mercenaries on their border, stating that Warsaw should thank him for keeping them in check. Since the brief Wagner mutiny in June, Wagner forces have been stationed in Belarus, and Poland has started moving more than 1,000 troops closer to their shared border. Last month, Lushenko had joked that some Wagner fighters are keen to enter Poland and “go on a trip to Warsaw and Rzeszow”. State news agency Belta quoted him on Tuesday saying that Poles “should pray that we're holding onto (the Wagner fighters) and providing for them. Otherwise, without us, they would have seeped through and smashed up Rzeszow and Warsaw in no small way. So they shouldn't reproach me, they should say thank you”. This comes as Poland’s Foreign Ministry said two Belarusian helicopters violated Polish airspace.  The ministry summoned the Belarusian envoy to Warsaw to protest the incident.  The Polish defense ministry notified NATO of the incident and said it will deploy more Polish troops to the border with Belarus in response.  The additional deployment will include combat helicopters.  Belarus’s Defense Ministry denied claims it violated Polish airspace.  CNN Reuters Associated Press Barron’s Bloomberg

Asia and Oceania

ANALYSIS — Chinese Drone Export Controls May Be Show of Neutrality in Ukraine War.  Chinese based defense analysts say China’s recent export restrictions on drones could be viewed as a response to Western pressure on Beijing’s ties with Russia.  The controls, which will require Chinese firms to get government approval to export civilian drones with potential military applications, will make it more difficult for Russia and Ukraine to buy Chinese drones for use in the Ukraine war.  Analysts say the controls may be seen as a “compromise” and a “responsible answer” to avoid potential Western sanctions for the involvement of drones in the war, especially after the U.S. Office of the Director of National Intelligence said it found evidence that China has exported military and dual-use technology to Russia, including drones in a recent report.  Analysts also noted that the drone controls will not prevent third countries from reselling Chinese drones or drone parts to Russia, adding that it will be hard to determine whether Moscow or Kyiv will be impacted more by the restrictions since it depends on how many drones they import from third countries.  Analysts did conclusively say the controls will hurt China since it has a major share of the international drone market.  One analyst said the controls could be a move by China to show it is a “responsible great power” that is “willing to sacrifice its economic interests” in certain areas.  South China Morning Post

Taiwan Testing Eastern Defenses With Missile Drills.  Taiwan will conduct live-fire missile drills this month off of its less fortified eastern coast to test combat readiness amid increased concerns over Chinese aggression.  The exercises will include air and naval forces firing air and ship-launched missiles at sea-based targets.  A military source said Taiwan’s air force will test its F-16s, Mirage-2005s and IDF fighter jets in the drills and the island’s navy will deploy several warships to fire a variety of missiles.  The drills come as experts note increased Chinese military deployments to the east and southeast of Taiwan.  Taiwan has said it is focusing on preparing how to counter a Chinese naval blockade against the island.  South China Morning Post

Kazakhstan Still Deciding on Extradition of Russian Cyber Expert.  Kazakhstan says it has not agreed to hand over detained Russian cybersecurity expert Nikita Kislitsin to Moscow.  Kazakh authorities detained Kislitsin, an employee of Russian cybersecurity firm F.A.C.C.T., on June 22 and both Russia and the U.S. filed extradition requests for him.  Russia’s Kommersant daily cited the Russian consulate in Kazakhstan as saying that Astana is fulfilling Moscow’s extradition request, but a spokesman from the Kazakh Prosecutor General’s Office then said no decision has been made and that prosecutors are still studying his case.  The case could further strain relations between Russia and Kazakhstan which have suffered over Astana’s refusal to support Moscow’s invasion of Ukraine.  Reuters

Australian Lawmakers Recommend Ban on Chinese Messaging App WeChat from Government Devices.  An Australian senate committee released a report on Tuesday detailing 17 recommendations to counter efforts by foreign powers to use social media to interfere with Australian affairs.  The recommendations include new transparency rules which expand upon an existing ban of TikTok on government devices, including a recommendation for the potential ban of Chinese messaging app WeChat on government devices.  Committee chair Senator Paterson said in a statement that TikTok and WeChat posed “unique security risks” because of their parent companies, ByteDance and Tencent, which are subject to China’s national security laws.  Senator Paterson said, "Platforms like TikTok and WeChat that are subject to the control of authoritarian regimes illustrate the broader cyber security risk to sensitive government information,”. The committee also recommends that Australia help developing countries within the Indo-Pacific resist “malicious information operations” by authoritarian states.  Reuters

Hindu-Muslim Clashes Near New Delhi Kill Five.  Violent clashes erupted on Monday after a Hindu religious procession passed through the Muslim dominated Nuh region in the Haryana state.  Police officials say that at least five people, including two police officers, were killed in the clashes between Hindus and Muslims.  Another 60 people, including 10 police officers, were injured during the clashes.  The violence has also spilled over into the neighboring province of Gurugram where a mosque was torched, killing a cleric and injuring another person.  Authorities have arrested five people over the violence and ordered public order clampdowns in the region.  Local government officials in both Nuh and Gurugram met representatives from both Muslim and Hindu communities in their regions on Tuesday to appeal for calm.  Reuters

Middle East and Northern Africa

Palestinian Gunman Killed After Injuring Six Israelis in Shooting Attack.  A Palestinian gunman was killed after shooting and injuring six Israelis outside a shopping mall in the settlement of Ma’ale Adumim in the occupied West Bank on Tuesday.  An off-duty police officer killed the assailant.  The Hamas militant organization that governs the West Bank claimed responsibility for the attack, saying it was in response to Israeli officials entering the Al-Aqsa Mosque in Jerusalem last week.  Reuters

Chief of Hezbollah Calls for Halt to Clashes in Lebanon.  Hassan Nasrallah, the head of Hezbollah, has called for an end to the deadly clashes in the Palestinian refugee camp Ein el-Hilweh in Lebanon.  At least eleven people have been killed in the camp since fighting broke out between the Fatah and the Junud al-Sham group on Saturday.  Local media has reported that an additional 40 people, including children, have been wounded.  Negotiations between the two factions have led to brief pause to the violence, but have failed to produce a stable ceasefire with fighting starting up again on Tuesday.  Fighting broke out after an unknown gunman attempted to kill Mahmoud Khalil, a member of an armed group, but instead killed his companion. The confrontation that ensued ended in the deaths of Fatah commander Abu Ashraf al-Armouchi and several of his aides.  The Palestinian Presidency denounced the attack calling it a “heinous massacre.”  Al Jazeera 

Shooting at Swedish Consulate in Turkey Injures One.  A gunman opened fire at Sweden’s honorary consulate in the western Turkish city of Izmir on Tuesday, injuring a Turkish employee.  Authorities arrested the assailant,  The local governor’s office said the attack was carried out by a “mentally disabled” person, and Turkish broadcaster Haber Turk reported that the incident appeared to have been linked to a dispute about the visa application process.  There was no indication of any political motive behind the attack.  Sweden’s foreign ministry said the Swedish consul general in Turkey will visit Izmir to get more information on the incident.  Al Jazeera Reuters

Southern Yemen Attack Kills Five Linked to Secessionist Group.  An attack on Tuesday in Wadi Omran in the Abyan province has killed at least five fighters linked to a secessionist group in southern Yemen. The attack also wounded four fighters from the Southern Armed Forces, which is connected to the Southern Transitional Council.  A spokesperson for the Southern Transitional Council said that the attackers used mortars and rocket-propelled grenades in the assault before fleeing to a mountainous area between Abyan and neighboring Bayda province. No group has claimed responsibility for the attack, though it bore the hallmarks of attacks from the Yemen-based al-Qaeda in the Arabian Peninsula (AQAP).  Al Jazeera

Sub Saharan Africa

European Countries Start Evacuations from Niger.  France and other European nations are sending planes to Niger’s capital of Niamey to evacuate their citizens following the recent coup in the West African country.  France sent evacuation notices to its citizens in Niger after its embassy in Niamey was attacked.  The French Foreign Ministry added that it will help other Europeans leave.  Germany is urging its citizens in Niger to join the French evacuation flights.  Italy is also organizing a special flight to repatriate its nationals.  The U.S. says it is urging Americans in Niger to avoid “unnecessary movements” and stay alert to changes, though the White House said there is currently no indication of direct threats to U.S. citizens or facilities.  U.S. National Security Council spokesman John Kirby added that U.S. troops in Niger are currently not assigned to help evacuations of other countries’ nationals and will continue counterterrorism and capacity building operations.  The moves come after Niger’s military removed President Mohamed Bazoum from power.  Burkina Faso and Mali said foreign intervention to restore the ousted government will be seen as a declaration of war, suggesting a possible burgeoning West African alliance between the two countries and Niger.  Associated Press Al Jazeera CNN Washington Post Reuters

Ukraine Says Russia Behind Niger Coup.  Mykhailo Podolyak, an advisor to the Ukrainian president, on Tuesday accused Russia of orchestrating the coup in Niger.  His comments referred to the military takeover in the Western African country that removed President Mohamed Bazoum and his democratically-elected government from power.  Podolyak said the coup was a “standard Russian tactic” aimed at “provoking instability” to capitalize on expanded conflict.  He added that only removing Russian President Vladimir Putin and his supporters from power and “sending Russia to the political rebirth” will restore global stability.  The Kremlin on Monday said the coup was “cause for serious concern” and called for restraint from all sides.  Russia’s Wagner Group, which has a strong presence in West Africa, did not claim responsibility for causing the coup, but welcomed it.  The White House has dismissed claims that Russia was behind the coup, with National Security Council spokesperson John Kirby saying the U.S. has seen “no indication” that Moscow is responsible.  Al Jazeera The Hill

Cyber and Tech

Cybercriminals Use Widely Available Training Data To Develop New Threat Chatbots.  Cybercrime groups have surfaced another generative AI clone trained on malware-focused data called FraudGPT, following on the heels of a similar chatbot, WormGPT.  Reportedly, a third malicious-intent chatbot is under development based on Google’s entry into the field, Bard.  The threat-oriented chatbots are trained for attacks ranging from phishing and social engineering to exploiting vulnerabilities and creating malware.  An unidentified individual with the username CanadianKingpin12 released FraudGPT on July 25 and advertised the tool on hacker forums for use by fraudsters, hackers, and spammers.  The SlashNext cybersecurity company reports that CanadianKingpin12 is using unrestricted data sets from the dark web to actively train new chatbots.  The chatbot developer reportedly is working on a “dark version” of Bard, called DarkBART.  The FraudGPT promoter, according to researchers, had access to a large language model named DartBERT that was trained by South Korean researchers to defeat cybercrime.  According to SlashNext, CanadianKingpin12 claims that the malicious version of the DarkBERT bot is designed to create sophisticated phishing campaigns targeting passwords and credit cards; execute advanced social engineering attacks for cyberespionage or to gain unauthorized access; exploit vulnerabilities in computer systems and software; and create and distribute malware.  BleepingComputer

Army Finds ‘Promising’ Results in Tests of AI-Enabled Social Media Tool.  The U.S. Army is testing a variety of AI-enhanced tools to assist decision-making by commanders, including one called Data Robot that has drawn particular interest.  It was one of 17 AI applications examined during Cyber Quest, an Army testbed focusing on emerging technologies held at Fort Gordon, Ga.  Col. John Agnello, director of an Army information advantage office, said Data Robot uses open-source data to detect bots and deep-fake algorithms.  Information derived from Data Robot potentially could aid commanders’ insights and decision-making by creating an “overlay” of the information space.  Agnello added that the technology was used during an exercise in Pacific Sentry in Hawaii for bot detection.  The Army’s questions examined during the testing of Data Robot included can it create an information overlay from open source and, if so, can military systems be used to provide such insights to devices linked to a command computing environment?  According to Col. Brett Riddle, the Army’s cyber battle lab director, this is a capability that does not yet exist in the Army cyber arsenal.  The opportunity to test such technologies allows the Army to hone in on requirements that meet military needs, not just those that satisfy commercial and industrial uses.  Maj. Gen. Paul Stanton, commander of the Army’s Cyber Center of Excellence at Ft. Gordon, noted that industry and academic users may find a technology satisfactory while “it oftentimes needs to be tweaked in order to meet some of the fundamental requirements that we have in the Army.”   Riddle said the Army is working “technical issues” with Data Robot but said “promising work” has been noted.  Cyber Quest examinations of other technologies included a Peraton system that produced heat maps in near-real time from electromagnetic signatures.  Cyber Quest testing included partners from U.S. Army Forces Command, the Indo-Pacific region, Australia, Canada, and private sector S&T firms.  BreakingDefense   DefenseScoop

Chinese Agency Blocks 8,000 Social Media Accounts for ‘Smearing’ Domestic Business.  China’s cyberspace agency has blocked over 8,000 social media accounts for violating business rights, which includes the “smearing” of the first passenger jet to be produced domestically.  The latest actions of the Cyberspace Administration of China (CAC) “clean up” campaign focused on accounts “fabricating facts, spreading false news reports, maliciously associating negative industry information with certain companies or making up enterprise-related rumors under the disguise of ‘patriotism’.”  A recent blogger critique of the computer and smart device manufacturer, Lenovo, for selling off state assets, paying high executive salaries, and employing foreign executives is an example of a trend toward “nationalist voices” gaining prominence on Chinese social media.  The CAC has requested websites and social media platforms such as WeChat, Weibo and Douyin to take responsibility for content management by upgrading censorship systems, handling complaints, and blocking rumors.  Several accounts that had been critical of the development program for the C919, China’s domestically manufactured passenger jet, were among those shut down.  It has been reported that the majority of C919 parts are imported, including the engine, avionics, control systems, communications and landing gear. Other accounts were closed for using fake branding to mislead the public, infringing on the rights and interests of the companies, according to the regulator.  The CAC announced that it will further tighten control of problematic online platforms and accounts to “create a favorable online business environment for enterprises to concentrate on their business and development.”  South China Morning Post

Chinese Surge in Legacy Chip Production of Growing Concern to U.S., Europe.  China’s fast-paced expansion into manufacturing less sophisticated semiconductors is of growing concern to U.S. and European officials, Bloomberg reports.  Beijing has responded to U.S. and Western moves to restrict the flow of advanced chips, especially those designed for AI and potential military applications, by investing billions into production facilities for “legacy chips.”  While not leading edge, this class of chips is widely used in consumer devices and military hardware.  Commerce Secretary Gina Raimondo told an audience at the American Enterprise Institute last week that Chinese subsidies could lead to an “excess capacity” of legacy chips, adding “that’s a problem that we need to be thinking about and working with our allies to get ahead of.”  A senior Biden administration official noted that all options are on the table.  The concerns expressed center on both economic and security factors.  Potentially, Chinese companies could cause a glut in the global semiconductor market by unloading stores of legacy chips and driving competitors out of business, with the follow-on effect making Western firms more reliant on Chinese suppliers.  Of special concern would be semiconductors needed in the manufacture of military equipment.  A recent essay in a Hoover Institution publication by researchers Robert Daly and Matthew Turpin cautioned that Western nations should be on guard about market maneuvers by Chinese firms to avoid creating “new U.S. or partner dependencies on China-based supply chains that do not exist today, impinging on U.S. strategic autonomy.”  Chinese firms are constructing new plants at a speed unmatched anywhere in the world, with 26 new fabricating facilities projected through 2026.  Bloomberg

China’s Xi Pledges More Research Funding and Support Amid International Competition. Chinese President Xi Jinping has promised to increase investment and support for research into scientific fundamentals, with the goal of achieving technological self-reliance for China. The push for further self-reliance comes amid the intensifying strategic competition between the United States and China over critical technologies such as artificial intelligence, semiconductors, and biotech. Xi suggested tax incentives may help attract funding from business and that wider society should be encouraged to help fund new research. China is currently the second biggest spender in the world when it comes to research and development, with a total expenditure surpassing 3 trillion yuan ($419 billion) in 2022. Xi also encouraged Chinese scientists to publish their findings in Chinese journals in an effort to ensure the country’s scientific literature and databases had international influence. The party committee of the Chinese Academy of Sciences also said it would work to encourage scientists to focus on national strategic needs. South China Morning Post

Amazon Investing $7.2 bln in Israel, Launching AWS Cloud Region. Amazon said on Tuesday that it’s planning to invest about $7.2 billion through 2037 in Israel. Amazon has also launched its Amazon Web Services (AWS) data centers within the country. Amazon cloud services within the region will allow the Israeli government to run applications and store data in data centers within Israel. AWS is Amazon’s cloud computing platform, used primarily for enabling storage, networking and remote security. Amazon’s presence in the region is intended to allow the Israeli government to migrate substantial governmental workloads to the cloud. Reuters

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