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6:00 PM ET, Tuesday, August 8, 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. Lawmakers Raise Alarm Over Chinese-Made Cellular Modules.  The Republican chair of the U.S. House of Representatives China Select Committee, Mike Gallagher, and the committee’s top Democrat, Raja Krishnamoorthi, sent a letter to Federal Communications Commission (FCC) Chair Jessica Rosenworcel raising concerns over Chinese-made cellular modules in equipment used in the U.S.  Cellular modules enable internet of things (IoT) devices to connect to the internet.  The lawmakers warn in the letter that since the modules are usually controlled remotely and are the necessary link connecting the device to the internet, China could “control” the module to potentially access or control the IoT device using it or exfiltrate data from the device.  The lawmakers said this is of particular concern “in the context of critical infrastructure and any type of sensitive data.”  The letter asks if the FCC will consider using its “Covered List” to designate and require extra certification for Chinese companies that make cellular modules.  Reuters

Canada Sanctions Iranian Officials.  Canada imposed new Iran-related sanctions on Tuesday, targeting seven individuals Ottawa accused of being involved in activities that threaten international peace and security.  The Canadian foreign ministry said the sanctioned people include a former Islamic Revolutionary Guard Corps commander, senior Iranian officials involved with supplying Iran’s national Law Enforcement Command, and individuals holding senior positions in Iranian state-directed firms that create lethal combat drones.  Reuters 

U.S. Court Sentences Colombian Cartel Leader to 45 Years in Jail.  Dairo Antonio Usuga, known as Otoniel, was sentenced to 45 years in prison by a federal court in Brooklyn for running the Gulf Cartel, a northern Colombian drug cartel and paramilitary group.  Usuga was charged with conspiracy to ship cocaine from Colombia to the U.S.  He was captured by the Colombian military in 2021 and then extradited to the U.S.  He had been under indictment in the U.S. since 2009 before his arrest for running the cartel’s enormous cocaine production and shipping operations since 2003.  U.S. prosecutors say that Usuga offered bounties for the killing of law enforcement, witnesses, and others along with ordering the murders of people who worked for rival traffickers.  The Gulf Clan was one of the largest distributors of cocaine in the world and had as many as 6,000 members.  Even after Usuga’s arrest, prosecutors say Gulf Clan members attempted to poison potential witnesses involved in his case.  Associated Press New York Times Al Jazeera

Western Europe

German-Made Leopard 1 Tanks from Belgium Being Sent to Ukraine.  Fifty Leopard 1 tanks previously owned by Belgium were sold to another European country which will send them to Ukraine.  OIP Land Systems, a defense company, bought the tanks from Belgium over five years ago.  Belgian Defense Minister Ludivine Dedonder said Brussels explored buying back the tanks to send to Ukraine but was presented with unreasonable prices.  Freddy Versluys, the CEO of OIP Land Systems, did not disclose the name of the European government that ended up buying the tanks or at what price.  He did say the tanks are being overhauled, with some being used for spare parts and others being repaired for deployment to Ukraine in four to six months.  Germany’s Handelsblatt newspaper reported that German arms maker Rheinmetall acquired the tanks and will export 30 of them after they are refurbished.  The newspaper did not state the European government behind the deal.  The Belgian and German defense ministries did not comment on the matter, which has underscored the difficulties Ukraine’s Western allies are facing in maintaining military support for Kyiv.  Reuters 

Germany Extending Deployment of Patriot Defense Systems in Poland Until End of 2023.  Germany is offering to extend the deployment of three of its Patriot air defense units in Poland until the end of 2023.  The German defense ministry announced the offer, adding that a further deployment beyond 2023 is “not foreseen” since some Patriots are needed for NATO’s quick reactions response force in 2024 while others need to undergo maintenance.  The Patriots and 300 German soldiers are based in the Polish town of Zamosc, which is around 30 miles from the Ukrainian border, to protect critical railway links in the area used to transport supplies to Ukraine.  The Patriots were deployed after a stray Ukrainian missile hit a Polish village in the region last November.  Reuters

UK Expands Sanctions Against Russia, Belarus.  The UK expanded sanctions against Russia and Belarus on Tuesday.  The measures targeted six Belarus- and 19 Russian-affiliated individuals and entities.  The companies sanctioned include electronic and defense equipment firms accused of exporting microelectronics for drones to Russia.  Sanctioned individuals include Slovakian national Ashot Mkrtychev, who is accused of being involved in an arms deal between Russia and North Korea, and Swiss national Anselm Oskar Schumucki, who works in Russia’s financial services sector.  UK Foreign Secretary James Cleverly said the sanctions show, “There is nowhere for those sustaining Russia’s military machine to hide.”  CNN 

Central and Eastern Europe

Ukraine Claims Advances in Zaporizhzhia Amid Assessments that Counteroffensive is Progressing Slowly.  The Ukrainian military reports some advances in the southern Zaporizhzhia region.  Serhii Kuzmin, deputy commander of the Tavria Operational and Strategic Grouping for Strategic Communications, said Ukraine advanced towards the Berdiansk sector despite the area being densely mined and occupied by a significant number of Russian troops.  He added that there are also ongoing offensive actions to “eliminate” Russian forces around the village of Robotyne.  Kuzmin noted that Ukrainian forces have reached the “first line of defense of the occupiers” and blamed setbacks to progress on minefields and “lack of aviation.”  Russia has claimed to have repelled attacks around Robotyne in recent days.  The reports come amid “sobering” assessments by Western officials saying that significant Ukrainian breakthroughs are unlikely due to entrenched, multi-layered Russian defenses marked by tens of thousands of mines and vast trench networks.  Ukrainian President Volodymyr Zelensky’s office later released a video of him on Tuesday saying that the counteroffensive is “happening probably slower” from various complications, though he maintained that Ukraine is still “attacking” and “has the initiative” and that “it is more difficult for the Russians.”  CNN

Russia Says Ukrainian Shelling of Donetsk City Kills Three.  Denis Pushilin, a Russian-appointed official for the city of Donetsk, claims that shelling by the Ukrainian military killed three people and injured 11 others.  Pushilin said that several civilian infrastructure facilities were hit in the attack, including a school, a kindergarten, and a factory.  He also alleged Ukraine used cluster munitions in the attack.  CNN 

Ukraine Foils Attempted Russian Hack of Military Networks.  Ukraine’s SBU security service said on Tuesday that Ukrainian special services foiled an attempt by Russian hackers to breach Ukrainian military networks for intelligence gathering.  The SBU said the hackers sought to access “sensitive information on the actions of the Ukrainian Armed Forces, the location and movement of the Defense Forces, [and] their technical support.”  The service said the hackers also planned to use Ukrainian military tablets to spread viruses throughout Kyiv’s defense networks.  SBU blamed the attack on a Russian hacking team known by cybersecurity researchers as Sandworm.  The announcement of the attempted intrusion added to Ukrainian reports of increased Russian attempts to conduct cyberattack against Ukraine.  Reuters

Asia and Oceania

Chinese Exports Fall, Partially Due to Trade Drift from West.  Chinese exports fell 14.5% in July compared to last year, marking a drop for the third consecutive month and the deepest decline since February 2020.  Customs data shows that imports also fell 12.4% from a year earlier.  Analysts say the fall in exports will lead to weaker production and that drop in imports points to lower domestic demand, both of which threaten China’s annual growth target of around 5 percent.  Some analysts note that subdued demand from the U.S. and Europe due to Western de-risking trends have contributed to the drop.  Other analysts say wider cyclical economic factors have had the most impact, but de-risking moves do point to longer-term drifts in trade relations with Western countries, demonstrated by the recent decline in foreign investment in China.  Reuters South China Morning Post

Chinese Military Leadership Changes Cast Shadow on Xi’s Anti-Corruption Drive.  Recent shakeups in the leadership of China’s People’s Liberation Army are casting doubt on the effectiveness of Chinese President Xi Jinping’s anti-corruption drive, and the related image of his hold on power.  The latest upheaval was the abrupt replacement of top commanders in the PLA Rocket Force, which manages China’s conventional and nuclear missiles, over suspicions of graft and other misconduct.  Xi’s anti-corruption drive first focused on reforming the military, which served as a model for later efforts to consolidate and centralize power around himself.  Basically all members of China’s military leadership today owe their positions to Xi, and he is even willing to purge generals he has promoted to protect his authority.  The leadership changes point to surviving elements of economic corruption, which Xi has warned is linked to political disloyalty.  Experts say Xi is intent to continue strong discipline and harsh anti-corruption measures to ensure loyalty to him.  New York Times

Middle East and Northern Africa

Israel Threatens to Send Lebanon Back to ‘Stone Age’ in Conflict With Hezbollah. Israel threatened to “return Lebanon to the Stone Age” on Tuesday, in the case of any war against Hezbollah.  Israeli Defense Minister Yoav Gallant said, “Do not make a mistake. We do not want a war. But we are prepared to protect our civilians.”  The rhetoric has been heard on both sides since the last Israel-Hezbollah war in 2006.  However, it escalated after a roadside bombing in Israel in March, in which Israel blamed a Hezbollah infiltrator for the attack.  Hezbollah has not claimed responsibility for the bombing.  Most recently, there have been face-offs between one group of Hezbollah operatives and Israeli troops across the fortified Israeli-Lebanese border.  Reuters

Israel Demolishes Refugee Camp Home of Suspected Palestinian Attacker.  Israeli forces raided the Askar refugee camp in the West Bank city of Nablus and demolished the home of a Palestinian man who was allegedly involved in the killing of two Israelis. According to Wafa, a Palestinian news agency, Israeli forces surrounded the home of Abdelfattah Kharousheh overnight on Tuesday and blew it up six hours after the raid. The Israeli army has accused Kharousheh of shooting and killing two Israelis driving through the town of Huwara in February.  Israeli forces killed Kharousheh during a raid the following month.  Before the demolition, Wafa reported that Israeli forces moved 60 Palestinians living next to the home of Kharousheh to a local mosque to be detained.  The latest raid has sparked confrontations between the Israeli army and the camp’s residents. The Israeli military said in a statement that, “violent riots were instigated which included rock hurling and tire burning” and “explosive devices were hurled, and live fire was shot at the forces, who responded with riot dispersal means.”  Al Jazeera 

Syria Extends UN Aid through Turkish Border Crossings.  Syria announced that it has extended permission for the UN to deliver aid into rebel-held areas in northern Syria via two Turkish border crossings for three months.  Damascus initially allowed the UN to bring aid to the opposition-held areas in February after deadly earthquakes.  The aid operation was renewed in May and has now been extended until November 13.  The EU and US have both issued sanction waivers in order to facilitate the humanitarian aid shipments into Syria.  The EU has extended its sanction waiver until February 24, but the broad US authorization has expired on Tuesday.  A US Treasury spokesperson stated that US authorization facilitating the work of aid groups, including the UN, remains in effect.  Reuters

Russia Criticizes Western Pressure on Iran over Nuclear Deal.  Russia Deputy Foreign Minister Sergei Ryabkov met with his Iranian counterparts Ali Bagheri Kani and Reza Najafi in Tehran on Tuesday to discuss Western pressure on Iran over its nuclear program.  Russia’s Foreign Ministry released a statement after the meeting saying that Moscow and Tehran agree that the failure to implement the 2015 nuclear deal stemmed from the “erroneous policy of ‘maximum pressure’ pursued by the United States and those who think similarly”. This comes after European diplomats had informed Tehran that they planned to join the US in reinstating sanctions on their ballistic missiles program due to reports of Iranian military support for Russia amid the Ukraine war.  Reuters

Sub Saharan Africa

Niger Continues to Rebuff Diplomatic Overtures.  The Niger military junta continues to rebuff diplomatic efforts by the UN, US and African neighbors.  In the latest snub to engagement, Niger military leaders rejected a meeting with representatives from the West African bloc ECOWAS, the African Union (AU), and the UN on Tuesday.  This came a day after the junta refused to let acting U.S. Deputy Secretary of State Victoria Nuland and meet with Niger military leader General Abdourahmane Tchiani or with ousted Niger President Mohamed Bazoum.  Nuland was able to talk with General Moussa Salaou Barmou, the former head of Niger’s special forces, describing it as “extremely frank and at times quite difficult.”  In addition, Niger’s military leaders ignored the Sunday deadline set by ECOWAS to release Bazoum and reestablish order under threat of military intervention.  ECOWAS is now dealing with a lack of uniformity in how to respond to the situation. Cote d’Ivoire and Senegal have endorsed a Nigerian-led plan to intervene in Niger, but Burkina Faso, Mali, and Guinea have come out against it, saying that such action will be a “declaration of war” in which they will support Niger.  Non-ECOWAS countries, such as Chad and Algeria, are also getting involved, with Algerian President Abdelmadjid Tebboune warning that a military intervention in Niger would be “a direct threat” to his country.  ECOWAS is set to meet on Thursday to discuss options.  France 24 Reuters New York Times 

Japan, Namibia Sign Rare Earth Exploration Deal.  Japan signed an agreement with Namibia on Tuesday to jointly explore for rare earth minerals.  The Japan Organization for Metals and Energy Security will collaborate with Namibia’s state-owned mining firm Epangelo under the deal.  This comes as Tokyo looks to develop supply chains for cobalt and other minerals used in making electric vehicle batteries.  Japan's minister for economy is visiting five countries which have significant deposits of rare earths to establish such supply chains, with stops in Namibia, Zambia, and the Democratic Republic of the Congo.  Japan is seeking to be less reliant on China, which has dominated supplies of rare earths and battery materials.  Reuters

Cyber and Tech

Def Con To Feature Hacker Competitions Against AI Models, On-Orbit Satellite.  This week top hackers from around the world will gather at the annual Def Con convention in Las Vegas in a competition to probe and test  AI models in order to expose flaws and biases that include political misinformation, defamation, and algorithmic discrimination.  The Generative Red Team Challenge hosted by Def Con’s AI Village is endorsed by the Biden administration as a component of its campaign to stimulate “responsible” AI innovation.  Leaders in the AI field like Google, OpenAI, and Anthropic will offer their latest chatbots and image generators for the hacking challenge, with findings sealed for several months to allow the companies time to correct flaws.  The use of “red team” exercises, common in the tech sector, has now caught the interest of government regulators and technology critics.  Of particular concern is the way recent generative AI products have demonstrated a capacity for deception, such as generating fake images or creating textual content that masks its AI origins.  Companies like San Francisco-based Scale AI, developer of the software platform for the Def Con red-team challenge, are offering red-teaming services to AI producers.   The use of the exercises seems likely to be part of the commercial sector’s efforts at self-regulation as government actors continue to struggle to establish governance rules.  Also featured at Def Con is a satellite hacking competition, the so-called Hack-a-Sat contest that will invite hackers to probe systems aboard the “Moonlighter” satellite launched in June.  It will be the first challenge to feature an on-orbit satellite as hackers seek to penetrate system defenses and seize lines of code, or “flags,” for which points are awarded.  Prizes ranging from $20,000 to $100,000 will be given out for the most flags captured.  Rachel Mann, a program manager at the Air Force Research Laboratory, said the contest is designed to bridge “a gap between space people and cyber people” as awareness grows about satellites’ vulnerability to cyberattack. Hack-a-Sat, Mann said, seeks not only to bridge gaps, but to “make collisions in these communities, to bring all of the necessary folks to the table and work on the problems that are occurring in front of us every day.”  Washington Post CyberScoop

Taiwan Chip Manufacturer Commits $3.8 Billion to German Semiconductor Plant.  The Taiwan chip manufacturer, TSMC, has committed $3.8 billion to its first European plant, a fabrication facility in Dresden, Germany.  TSMC received a significant German government subsidy for the $11 billion project and is seen as a critical part of Germany’s goal of developing a domestic semiconductor sector that will benefit the country’s car industry.  German Chancellor Olaf Scholz pointed to the significance of the TSMC facility, describing Germany as “now becoming the major location for semiconductor production in Europe” following Intel’s investment in two chip-making plants in a project valued at nearly $33 billion.  German Economy Minister Robert Habeck, in noting the downstream impact of the expanding semiconductor industry, said:  "It's going to generate orders for the whole sector: for machine builders, for optics manufacturers, for skilled workers."  TSMC announced after the board meeting approving the German investment that it had also approved a capital injection of up to $4.5 billion for a plant in Arizona as part of its overall $40 billion investment.  Reuters

UK Reports Extended ‘Hostile Actor’ Breach of Electoral Registry Systems.  A 14-month breach of British electoral registry systems has resulted in exposure of “the name and address of anyone in the UK who registered to vote between 2014 and 2022, as well as the names of those registered as overseas voters.”  The total number of individuals affected has not been disclosed from the electoral system hack that persisted from August 2021 to October 2022.  According to the UK Electoral Commission, the penetration of its internal systems did not impact any elections or individuals’ voter registration.  The Commission does not regard the compromised information as high risk, noting that "much of it is already in the public domain."  Security specialists say, however, that apart from individual names, other exposed data such as phone numbers and email addresses could be used by threat actors in targeted phishing attacks or identity theft.  The Commission urges UK voters to watch out for phishing emails attempting to gather information such as passwords, account numbers, or financial information.  The Record BleepingComputer Reuters

MOVEit Hack Extends to 600 Targeted Organizations With No End in Sight.  The ongoing hacker compromise of the MOVEit file transfer tool has now tallied around 600 victims across the globe, Reuters reports.  The hack of the Progress Software program has impacted 40 million people worldwide and the threat actor involved, the Clop ransomware gang, has “become increasingly aggressive about thrusting their data into the public domain.”  Marc Bleicher, chief technology officer at Surefire Cyber, noted that the campaign likely is in its “very early stage,” adding "I think we'll start to see the real impact and fallout down the road."  Although system breaches occur regularly, Reuters pointed out that the enormous range of targeted organizations, “from New York public school students to Louisiana drivers to California retirees,” illustrates the repercussions that can stem from a flaw in an obscure software component.  Eric Goldstein, a senior CISA official, offered a positive note, saying "many organizations were in fact able to deploy the patch before it could be exploited." According to cybersecurity specialists, educational facilities at all levels made up one-quarter of the targeted organizations, with more than 100 in the U.S.  Oddly enough, the hackers may have collected more data than they can effectively handle.  According to Alexander Urbellis, a senior counsel with a New York law firm that assists organizations in calculating their exposure to the hacks, the hackers’ “creaky darknet website” has made it impossible to exploit all of the stolen data.  In late July, the Clop gang apparently attempted improvements by adding websites better equipped to expose stolen data.   Surefire’s technology officer Bleicher said, "once this data starts to be slowly leaked, it shows up more on the underground," adding that it "will probably get much larger than we think it is now."  Reuters

China Issues Draft Rules on Public, National Security Use of Facial Recognition Technology.  The Cyberspace Administration of China (CAC) has issued draft rules to tighten use of facial recognition technology for general purposes while expanding national security applications.  The CAC has opened a month-long “public consultation’ period on the new rules, which it said seek to apply regulations that will protect legitimate individual rights while reinforcing “social order and public safety.”  The proposal forbids misuse of facial recognition by organizations as well as in public spaces such as banks, airports, and sporting facilities. Many Chinese courts and local governments have fined companies for excessive use of facial recognition devices.  Entities that currently use the technology in public spaces, or have stored more than 10,000 facial recognition records, must register with local internet regulators within 30 working days.  In addition, these organizations will need to explain their use of the technology and the measures they have in place to handle and protect collected data.  Notably, the draft rules allow broad use of biometric data for national security purposes, including the analysis of personal information such as race, ethnicity and religious beliefs.  Tech firms using the technology are instructed to prioritize data from the government’s central identity databases.  China has 200 million CCTV cameras installed across the country, compared to 50 million in the U.S.  South China Morning Post Reuters

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