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4:00 PM ET, Tuesday, December 12, 2023

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

THE TOP STORIES

U.S. House Committee Calls for Reset on Economic Relations with China.  The U.S. House Select Committee on the Chinese Communist Party released a report that offers 130 policy recommendations on how to reset U.S.-Chinese economic relations.  The report suggests potential increases in tariffs on Chinese goods, wider limits on U.S. investments in China, and stronger restrictions on U.S. market access for Chinese companies like TikTok, drone manufacturers, chip makers, and telecommunications firms.  Specifically, the report calls for a reevaluation of China’s current “Column 1” tariff classification, which confers regular duty rates on imports.  It additionally calls for the renewal of the China 412 safeguard mechanism, which would allow the U.S. to impose tariffs without the need to prove unfair trade practices.  The report also outlines ways to lessen impacts and shocks from partial economic decoupling or full conflict with China and emphasizes the lack of a contingency plan in case of war with Beijing.  The committee notably agreed on the policy recommendations in a rare act of bipartisanship.  Washington Post Reuters

U.S. Intelligence Assesses Russia has Lost Significant Amount of Military Personnel, Equipment in Ukraine War.  A declassified U.S. intelligence assessment said that Russia has suffered staggering losses in its invasion of Ukraine, with 315,000 Russian troops having been killed or injured since the start of the war.  These losses amount to nearly 90% of the 360,000 personnel in the Russian army at the start of the war.  Russia has been forced to mobilize new recruits and convicts to make up for the losses.  The report also said that Russia’s losses in personnel and equipment have set its military’s modernization efforts back by 18 years.  For example, the report said Russia began the invasion with 3,500 tanks but has lost 2,200, forcing it to deploy T-62 tanks produced in the 1970s.  The Russian embassy and the Russian defense ministry did not comment on the report, but Russian officials have previously rejected Western estimates on Russian losses as greatly exaggerated. Ukraine treats its military losses as a state secret and does not disclose it to avoid harming the war effort. However, a New York Times report in August cited U.S. officials as putting the Ukrainian death toll close to 70,000.  The report on Russia’s military losses came as Ukrainian President Voldymyr Zelenksy appealed to U.S. lawmakers in Washington D.C. to approve more military aid for Kyiv.  New York Times Reuters Wall Street Journal

EXPERT PERSPECTIVE: The U.S. Has Aid for Ukraine.  Cipher Brief Expert Rear Adm. (Ret.) Mark Montgomery argues that the U.S. still has funding to support Ukraine: "We are not out of money for Ukraine - the DoD still has a few billion dollars remaining that will allow for $100-200M ammunition and basic systems packages every 10 -14 days over the next few months. But there are still big risks in not getting the supplemental done in the next few weeks, before holiday recess. First, is that we will likely develop a gap in ordering equipment and systems through the Ukraine Security Assistance Initiative - this will then lead to a delivery gap that comes back in 9-12 months with less equipment arriving in theater.  Second, it is unlikely DoD will put larger systems in Presidential Drawdown Authority Requests over the next month or two without a new supplemental done - that will lead to a shortage in HIMARS/MLRS and other vehicle deliveries in 3-4 months.  So it's important that Republicans and Democrats take one or two weeks (but no more please) to iron out their policy differences and get the supplemental done — and we need to stop kidding ourselves, there are always policy kickers in bills like this."

ISRAEL AND HAMAS WAR

Biden says Israel ‘Starting to Lose Support’ Over Gaza Bombings, Says Israeli Government Should Change.  President Joe Biden said on Tuesday that Israel is “starting to lose support” around the world for its “indiscriminate bombing” of Gaza.  He reiterated U.S. support of Israel, but said that Israel must be “careful” with its military actions in Gaza amid criticism of increasing civilian casualties in the territory.  Biden also said the Israeli Prime Minister Benjamin Netanyahu needs to change his hardline government, calling it “the most conservative government in Israel’s history” and noting that members of the government do not want a two-state solution with Palestine.  Biden has described members of Netanyahu’s government as the “most extreme” he has seen, but he has suggested that a change to the Israeli government is necessary until now.  Reuters Times of Israel The Hill Newsweek

Netanyahu Notes ‘Disagreement’ Between Israel, U.S. on Post-War Gaza Plans.  Israeli Prime Minister Benjamin Netanyahu said on Tuesday that he would block the Biden administration’s proposal for the Palestinian Authority to take over Gaza after the war with Hamas.  Netanyahu said he will not let Gaza become “Hamastan nor Fatahstan,” referring to both Hamas and Fatah, the faction that controls the Palestinian Authority.  He added that he will not “repeat the mistake of Oslo,” referring to the 1993 Oslo Accords which established the Palestinian Authority.  Netanyahu has repeatedly voiced opposition to the Palestinian Authority, accusing it of indirectly supporting terrorism targeting Israel through education and financing.  He has said Israel will retain an open-ended security presence in Gaza post-war, and Israeli officials have suggested establishing a buffer zone on the Palestinian side of the Israel-Gaza border to prevent attacks.  The U.S. has suggested the Palestinian Authority could rule post-war Gaza to avoid an Israeli reoccupation of Gaza or a further downsizing of the territory.  U.S. officials have said that for the Palestinian Authority to take over Gaza, it must first undergo significant reforms in its leadership and security forces.  Reuters Wall Street Journal 

Iranian Foreign Minister Says Israel, U.S. Cannot Wipe Out Hamas.  Iranian Foreign Minister Hossein Amirabdollahian said on Tuesday that Israel and the U.S. “will never be able to eliminate Hamas.” Speaking at the U.N. in Geneva alongside counterparts from other Middle Eastern countries, he also asserted that Israel can only achieve the release of hostages held by Hamas in Gaza with a political solution.  Tehran has long backed Hamas and other armed militant groups in the region.  Reuters 

China’s Wang Yi Calls for Gaza Ceasefire in Talks with Iranian Counterpart.  Chinese Foreign Minister Wang Yi spoke with his Iranian counterpart Hossein Amirabollahian on Monday, marking their second call since the start of the Israel-Hamas war.  China’s foreign ministry said that the pair focused on discussing the conflict in Gaza, reporting that Wang reiterated calls for an immediate ceasefire, more aid for Gaza, and a two-state solution.  Wang highlighted that China has a “high level of consensus” with Islamic countries and the international community and is “aligned” with the Arab world on the matter.  South China Morning Post

Israeli Port Warns Houthi Attacks Pose Direct Threat to Maritime Trade.  Israel’s Port of Ashdod said on Tuesday that Houthi attacks on commercial vessels are a threat to global shipping routes and seaborne traffic but added that there has been no impact on port activity. The port’s statement came after Houthis attacked a Norwegian commercial tanker off Yemen in protest of Israel’s aerial bombardment of the Gaza Strip.   The Norwegian tanker reportedly was not directly owned or managed by an Israeli company or individual, but the vessel was “tentatively nominated” to go to Ashdod in January.  Israel relies heavily on maritime import and exports, with Ashdod and Haifa being the country’s largest ports. The port of Ashkelton, which lies closest to Gaza, has been shut down temporarily due to the war.  Reuters

THE UKRAINE UPDATE

U.S. Sanctions Russian Military-Industrial Network.  The U.S. on Tuesday imposed new sanctions on over 250 people and entities in China, Turkey, and the United Arab Emirates as part of efforts to counter Russian evasion of sanctions.  The Treasury Department said that it imposed sanctions on four entities and nine individuals based in China, Russia, Hong Kong, and Pakistan over the transfer of Chinese military technology to Russia. The department added that it also targeted companies in Turkey, the UAE, and China over the shipment of technology and equipment including ball bearings, aircraft parts, and X-ray machines. Some Chinese firms targeted include commercial satellite companies accused of providing high-resolution images to Russia’s Wagner Group.  Several Chinese entities were also targeted for their alleged role in procuring microelectronics for Russian state conglomerate Rostec for use in the development of electronic warfare systems.  A spokesperson from China’s foreign ministry said Beijing opposes the measures as “illegal” and “unilateral” and asserted that China regulates shipment of military and dual-use goods.   ReutersU.S. Department of the Treasury

Ukrainian Bank Hit by Massive Cyberattack.  CEO of Ukraine’s Monobank, Oleh Horokhovskyi, said Tuesday that the bank suffered a “massive” hacker attack on Tuesday.  He did not assign responsibility to the attack but speculated that Russia was behind it. Moscow has repeatedly been accused of launching cyberattacks against Ukrainian entities throughout Moscow’s invasion. The attack on Monobank was reportedly a denial of service (DDoS) attack. Horokhovskyi said that the situation is currently under control. The reported attack came after Kyivstar, Ukraine’s leading phone services provider, also said it was hit by a hack on Tuesday morning.  Kyiv Independent

THE CYBER AND TECH RUNDOWN

U.S. Helping Taiwan Reinforce Defenses Against Massive Financial Sector Cyberattack.  The U.S. Treasury Department and a private American cybersecurity firm are consulting with government and financial sector officials on Taiwan to help reinforce the island’s defenses against advanced Chinese cyberattacks that would cause upheaval in economic markets.  The U.S.  assistance to Taiwan organizations includes simulated cyberattacks that compress a three-week cyber campaign into an eight-hour drill.  Charles Li, the chief analyst at the Taiwan TeamT5 cybersecurity firm, said that “Taiwan has near zero capability to defend itself from these advanced cyberattacks.”  TeamT5 noted the surge in state-sponsored attacks, which have doubled in three years.  The Fortinet cybersecurity company reports that cyberattacks against Taiwan this year represent 55 percent of billions of threats monitored in the Asia-Pacific region.  Taiwan’s digital affairs ministry has reported that theft of sensitive information is the most common type of cyber intrusion with spikes in activity corresponding to geopolitical events.  Jon Clay, a threat intelligence executive with Trend Micro, said the majority of incidents his firm monitors are cyberespionage attacks where the hackers attempt “to maintain a persistent presence inside these networks for as long as they possibly can.”  Bloomberg

Microsoft, Labor Unions Form Alliance To Manage AI Impacts on Workforce.  Microsoft has created an alliance with two major labor unions to establish an “open dialogue” on the impacts of artificial intelligence development on workers.  The agreement with the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), which represents 60 labor unions, or about 12.5 million workers, includes an arrangement for Microsoft to provide workers and labor leaders with training on AI operations.  The training sessions will begin late next year.  Microsoft also will hold feedback sessions with labor groups, concentrating on “key selected sectors.”   The Microsoft-labor initiative, which comes as concerns mount over the impact of AI on jobs and workers, is the first collaboration on AI involving the technology sector and unions.  Microsoft President Brad Smith said the program’s goal is to engage both sides in a dialogue that enhances the workplace environment.  Smith added, “I can’t sit here and say that AI will never displace a job.  …AI is well-designed to accelerate and eliminate some of the parts of people’s jobs that you might consider to be drudgery.”   AFL-CIO President Liz Shuler said the partnership with Microsoft “reflects a recognition of the critical role workers play in the development, deployment and regulation of AI and related technologies.”  She described the agreement as “groundbreaking,” and said it creates an “historic” alliance.  Bloomberg CNN CNBC

ELSEWHERE IN THE WORLD

Finland Partially Reopens Border with Russia.  Finland is reopening some border crossing points with Russia after closing its entire border two weeks ago.  Most border closures will continue, but the Vaalimaa and Niirala border crossing points will reopen from Thursday till at least January 14.  The Finnish government closed the border in response to Russia’s alleged pushing of migrants to the border to create an artificial migrant crisis for Finland to pressure it over its cooperation with NATO.  Moscow has denied this allegation.  Finnish Prime Minister Petteri Orpo said the partial border reopening is meant to assess if the situation has improved, though he noted that the risk that Russia may continue to weaponize migration remains extremely high.  Orpo added that if the issue continues, Finland will close the crossing points again.  New York Times Politico 

German Prosecutors Charge 27 Over Far-Right Coup Plot.  German prosecutors on Tuesday charged 27 people with supporting a terrorist organization and preparing an act of high treason, a year after members of a far-right organization were arrested on suspicion of planning a coup. Federal prosecutors said that the group, Reichsbuerger, aimed to create a new state and install aristocrat Heinrich XIII Prinz Reuss as its leader. The group allegedly planned to send an armed group into the German parliament, arrest lawmakers, and overthrow the government.  The group reportedly recruited military personnel, purchased equipment, and even conducted shooting training for the coup plot. Prosecutors allege that Reichsbuerger had also built a network of armed forces across the country that would mobilize after receiving a signal. They added that members of the group followed a mix of conspiracy theories, including some stemming from the QAnon ideology, and were fully convinced that Germany was being run by a “deep state.”  Reuters 

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Ethan Masucol, Ken Hughes, and Leighton Durham contributed to this report. 

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