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5:30 PM ET, Tuesday, November 14, 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

Biden says Goal of Xi Meeting is to Restart Military Communications.  President Joe Biden said on Tuesday that his goal for his meeting with Chinese President Xi Jinping in San Francisco on Wednesday is to resume normal communications between Beijing and Washington, including military communications.  Biden said China and the U.S. must get back “on a normal course corresponding” despite ongoing issues, reiterating that his administration does not seek to decouple from China.  Communications between the U.S. and China have been strained over issues like Taiwan, security concerns, and technology export controls.  Washington is hoping the Biden-Xi meeting will help establish some crisis management safeguards, such a reconnected hotline.  White House officials say they are aware that fellow attendees at the Asia-Pacific Economic Cooperation (APEC) forum are seeking stronger dialogue between the U.S. and China to help reduce the risk of regional conflict.  The U.S. is also attempting to get APEC members to sign an end-of-summit joint declaration and is seeking to use the summit to expand cooperation on trade, climate change, anti-corruption and other areas.  Associated Press Reuters South China Morning Post 

China Receiving U.S. Chipmaking Equipment Despite Export Controls.  Chinese companies are still acquiring U.S. chipmaking equipment to produce advanced semiconductors despite U.S. export controls on semiconductor technology, according to an annual report from the House of Representatives bipartisan select committee on China.  The report highlights that current controls bar Chinese chipmakers from getting U.S. chipmaking tools used to make chips at the 14 nanometer node or below, but “limited capacity for end-use inspections” makes it hard to verify if the equipment is being used to make more advanced chips.  The finding comes after China’s top chipmaker SMIC made an advanced 7 nanometer chip for a new Huawei smartphone last year, despite export controls.  Observers said SMIC may have made the chip with equipment it obtained before the restrictions were imposed or acquired from other overseas sources.  The U.S. took measures to address loopholes in controls by convincing Japan and the Netherlands to pass similar export restrictions, but the report said that China stockpiled equipment during the period between the U.S. rules in October 2022 and later moves by Japan and the Netherlands in 2023.  The report does not make specific recommendations on how to address gaps in controls but calls for Congress to make annual evaluations of the effectiveness of the restrictions.  Reuters

Taiwanese Troops Could Train on U.S. Soil.  The bipartisan U.S.-China Economic and Security Review Commission suggested to Congress on Tuesday that the U.S. should train Taiwanese troops on U.S. soil to familiarize them with American weapons and military equipment that Taipei has purchased.  Carolyn Bartholomew, the commission’s chair, said the recommendation aims to ensure that Taiwan is ready to use U.S. weapons once it receives them and avoids a “lag time” for training.  She noted that the Ukraine war has demonstrated the importance of militaries being trained on advanced weapons and systems “before they actually get it, and before they need it in the field.”  Alex Wong, the commission’s vice chair, noted that there is already training of Taiwanese forces on U.S. weapons, but there has yet to be training on weapons that Taipei has yet to receive.  Taiwan has a $19 billion backlog of weapons orders from the U.S. due to supply chain issues, contracting and acquisition delays, and lengthy approval and review processes.

Taiwan has signaled that it seeks, or may already be planning, to have its troops train in the U.S.  Taiwanese Defense Minister Chiu Kuo-cheng said in February that an undisclosed number of troops would train on U.S. soil, and Taiwanese lawmaker Wang Ting-yu said last week that Taiwan seeks to send two battalions of ground troops to the U.S.  Taiwan’s diplomatic office in Washington did not comment on the matter, and the Pentagon would not confirm or deny plans to train Taiwanese troops in U.S. territory.  Defense News

Tens of Thousands Participate in Pro-Israel Rally in DC.  Tens of thousands of demonstrators gathered in Washington on Tuesday to hold a rally in solidarity with Israel in response to the Hamas attack on October 7.  Participants in the rally, called the March for Israel, highlighted the brutality of Hamas and the surge in antisemitism since the militant group’s attack.  Several U.S. lawmakers attended the rally, including House Speaker Mike Johnson and Senate majority leader Chuck Schumer.  The rally came after large protests across major cities around the world criticizing Israeli military actions in Gaza.  Associated Press New York Times

House Intelligence Panel Considers Reforms for 702 Reauthorization.  The House Intelligence Committee is reportedly circulating talking points on a potential bill to reauthorize and reform the Section 702 surveillance program.  The authority expires at the end of the year and is meant to target non-U.S. persons abroad but has been scrutinized for its ability to take up American’s communications.

Politico reports that the panel’s reauthorization bill will require a warrant for a subset of searches of American’s information obtained through 702.  The warrant would be for “evidence of a crime” searches, which are not related to foreign intelligence.  The Biden administration has said for months that it is opposed to any warrant requirements, arguing that it would undermine the effectiveness of the authority.  Notably, the panel’s warrant requirement is narrower than calls from privacy hawks for a wider warrant requirement for any U.S. person searches.  Privacy advocates say that limiting warrants to “evidence of a crime” searches exempts most Americans’ information from the warrant requirement.

The panel’s bill also requires “independent audits” of FBI queries for Americans’ information under 702, though it doesn’t specify who would complete the audit.  It would also tie FBI compensation to query compliance and reduce the number of FBI personnel who have access to 702 data for Americans’ information.

The panel’s bill additionally reforms the Foreign Intelligence Surveillance Act (FISA), which 702 is housed under.  This reform would allow foreigners applying for visas, immigration or asylum to be searched under the 702 authority.  This follows the disclosure that the National Security Agency was using 702 to vet foreigners being processed for travel to the U.S. or benefits under immigration laws.  The reform would also strengthen the intelligence community’s ability to use 702 to track fentanyl threats and drug cartels.  The bill does not include other reforms suggested by privacy advocates, such as measures preventing data brokers from selling consumer data to federal law enforcement or moving a Reagan-era executive order on surveillance under FISA.  Politico

Russia Mostly Selling Oil Above $60 Price Cap.  Most Russian oil has been selling above the $60 per barrel price camp that the U.S. and its allies have been trying to impose, according to the Financial Times citing unnamed Western officials.  The report says that while the price cap saw some initial success in December 2022, Russia has found ways to bypass it by doing business with third-party countries and circumventing loss of access to western shipping and insurance services by operating without insurance and using a “ghost fleet” of aging oil tankers.  By avoiding these restrictions, Russia is likely selling its oil at an average of $80 per barrel, back to its pre-war status.

However, some figures cited in the report refer to official statistics from Russia’s Finance Ministry, which have “been questioned” throughout the Ukraine war.  Additionally, some officials say that while Russia may be selling oil at higher prices, the price cap and related measures have impacted Moscow’s oil revenues since operating without insurance and Western shipping is more costly and working with certain third-party countries results in longer journeys for tankers.  Still, the data about the price cap has renewed discussions about whether to tighten restrictions on Russian oil exports.  Kyiv Independent Financial Times

ISRAEL AND HAMAS WAR

Israeli Foreign Minister says U.N. Chief Not Fit for Position.  Israeli Foreign Minister Eli Cohen on Tuesday said that U.N. Secretary-General Antonio Guterres “does not deserve to be the head of the U.N.,” arguing that he has not condemned Hamas enough and is too close with Iran.  Cohen’s comments add to Israeli criticism of Guterres, who has said there is something “wrong” with Israel’s military operations in Gaza, citing resulting civilian casualties in the territory.  Separately, Cohen suggested that the International Committee of the Red Cross (ICRC) do more to access hostages being held by Hamas.  ICRC President Mirjana Spoljaric, who met with Cohen, said the U.N. is trying to gain access but cautioned that the ICRC “cannot force its way in to where hostages are held.”  Reuters

U.S. and U.K. Jointly Impose Sanctions Against Hamas, Palestinian Islamic Jihad.  The U.S. and U.K. imposed coordinated sanctions targeting Hamas’s funding network on Tuesday.  The U.S. measures targeted Hamas officials, namely the militant group’s co-founder Mahmoud Khaled Zahhar.  The sanctions also targeted officials from Hamas’s ally Palestinian Islamic Jihad (PIJ), including Nasser Abu Sharif, PIJ’s representative to Iran, and Akram al-Ajouri, PIJ Deputy Secretary General and leader of its militant wing, the Al-Quds Brigade.  The measures also targeted Lebanon-based money exchange company Nabil Chouman & Co, which is accused of facilitating the transfer of millions of dollars from Iran to Gaza for Hamas.  The British sanctions also targeted four Hamas leaders and two financiers.  The U.S. has now issued three rounds of sanctions against Hamas.

The U.S. also issued guidance on providing legitimate humanitarian assistance to the Palestinian people despite sanctions on Hamas.  The guidance clarified that support for international organizations, like the U.N., and some nongovernmental organizations sending medical aid or supporting hospitals in Gaza are authorized.  Al Jazeera Associated Press Reuters U.K. Government U.S. Department of Treasury

THE UKRAINE UPDATE

Ukraine Says it Gains Foothold in South.  Andriy Yermak, Head of the Office of the President of Ukraine, said on Tuesday that Ukrainian forces have secured a foothold on the eastern side of the Dnipro River in the southern Kherson region, marking the first official acknowledgement of the advance.  Russia seized the Kherson region at the start of its invasion but was forced to withdraw to the eastern bank of the Dnipro River late last year.  They have shelled Kherson city and other areas on the west bank since then.  Unofficial accounts have reported Ukrainian advances on the east side of the river this month.  Russia’s military said it thwarted attempts to forge a bridgehead on the eastern bank, killing 500 Ukrainian soldiers.  Reuters could not independently confirm this claim, and Russian state news agencies reported on Monday that Moscow had moved troops to “more favorable positions” on the east bank of the Dnipro River, only to retract that information soon after.  Russia has used such language to describe retreats.  Yermak added that Russia is not seeking to end the war and hopes to “outlast and out-endure the unity of democracies.”  He warned against this and appealed for continued military support to counter Russian air superiority and missile capabilities.  Reuters The Guardian

Ukraine says Russia Lost Over 4,000 Troops on Eastern Front Over Past Two Weeks.  Ukrainian Ground Forces Commander Oleksandr Syrskyi said on Tuesday that Russia’s military lost over 4,000 soldiers and 500 piece of military equipment on the eastern front in the Kharkiv and Donetsk regions over the last two weeks.  Syrskyi said Russia has continued intense relentless attacks around Kupiansk and Bakhmut, but Ukrainian troops from the Khortytsia group have effectively defended their positions and inflicted heavy casualties.  Syrskyi added that Russia has increased its use of attack drones but “is losing its offensive capabilities every day.”  Kyiv Independent

Ukraine Indicts Officials Linked to Investigation of Hunter Biden.  Ukrainian authorities accused two politicians and a former prosecutor of treason for allegedly colluding with Russia’s military intelligence agency (GRU) to support efforts by Rudolph W. Giuliani in corruption cases in Ukraine against the Biden family.  Former Ukrainian deputy prosecutor general Kostyantyn Kulyk was accused of drafting a memo in 2019 suggesting that Ukraine investigate Hunter Biden, President Joe Biden’s son, for his role on the board of a Ukrainian energy company.  Kulyk was also more widely accused of using his position to promote investigations that would be in the Kremlin's interest.  A current member of Ukraine’s Parliament, Oleksandr Dubinsky, and a former member, Andriy Derkach, were also implicated for publicly advocating for an investigation into Hunter Biden and promoting a theory that Ukraine interfered in the 2016 U.S. presidential election.  Critics of the investigation into Hunter Biden say it was politically motivated, aimed at harming Biden’s changes in the 2020 presidential election.  The trio were charged with treason and belonging to a criminal organization for “information-subversive activities.”  Dubinsky, who is in a Ukrainian jail, denied the accusations, saying that prosecutors had “not presented one fact.”  Derkach and Kulyk fled Ukraine after the start of Russia’s invasion in 2022.  New York Times

Germany’s Rheinmetall Sending Leopard 1 Tanks to Ukraine.  German arms maker Rheinmetall announced on Tuesday that it is sending 25 main battle tanks Leopard 1A5 to Ukraine.  The company will also send five Bergepanzer 2 armored recovery vehicles and two driver training tanks.  It is also providing training and logistics support.  The Leopard tanks will be delivered in 2024 and are currently being repaired and prepared for use by Rheinmetall.  The tanks are being sent as part of an order financed by the German government, which said on Monday that it was sending over 10 Leopard 1 A5 tanks and other defense aid to Kyiv.  Kyiv Independent

E.U. Struggling to Meet Ammunition Pledge to Ukraine.  The E.U. acknowledged on Tuesday that it may not fulfill its promise to provide 1 million rounds of ammunition to Ukraine by spring 2024.  Only around 300,000 rounds have been delivered to Ukraine from E.U. stocks so far.  German Defense Minister Boris Pistorius plainly told reporters that “the 1 million will not be reached” and doubted if the goal was even “realistic.”  E.U. foreign policy chief Josep Borrell likewise said that “maybe by March we will not have the 1 million shots.”  Estonia’s defense minister Hanno Pevkur said the bloc’s struggle to reach the production goal shows that it must invest more to ramp up the supply of munitions.  E.U. Commissioner Thierry Breton insisted that European industry could produce the 1 million rounds as long as member states “place their orders.”  However, European defense officials placed the blame more on producers.  Dutch Defense Minister Kajsa Ollongren insisted that, “We have all signed contracts. We’ve done joint procurement. So industry now has to deliver.”  Ukrainian Foreign Minister Dmytro Kuleba appeared to agree, saying that the E.U. does not lack political will to militarily support Ukraine, but ammunition deliveries are being hampered by the “lamentable state” of Europe’s defense industry.  Borrell has suggested that a method to get more ammunition to Kyiv is by redirecting current E.U. exports to Ukraine, highlighting how around 40% of defense production is “being exported to third countries.”  Associated Press Bloomberg Reuters Kyiv Independent 

Ukraine, Poland Fail to Make Progress on Border Protests.  Ukrainian border guard spokesman Andriy Demchenko said negotiations between Ukraine and Poland have failed to stop a week-long protest by Polish truckers at the Ukrainian border.  The truckers are blocking roads to three crossings to protest what they see as the Polish government’s inaction on a loss of business to foreign competitors since the start of the Ukraine war.  The truckers are demanding a return of a limited number of licenses for Ukrainian truck drivers, which Kyiv says it will not agree to.  Protest organizer Tomasz Borkowski added that the Polish truckers want empty trucks from the E.U. to be excluded from an electronic queuing system and for permits to be given to Polish and Ukrainian companies to transport commercial goods.  Demchenko said that there are 1,300 trucks in line on the Polish side at the Yahodyn checkpoint, and 500 trucks at both the Krakovets and Rava-Ruska crossings.  He added that there is now congestion of around 1,100 trucks at the Shehyni checkpoint as drivers are changing their routes there.  Reuters

THE CYBER AND TECH RUNDOWN

CISA, FBI Issue Advisory on ‘Rebranding’ of Prolific Royal Ransomware Gang.  CISA and the FBI have released an advisory warning that the Royal ransomware gang may be rebranding itself as BlackSuit, named after an encryptor used in the gang’s cyberattacks.  In June,  BleepingComputer reported that the Royal ransomware gang was testing a new BlackSuit encryptor, which shared many similarities with the operation's usual encryptor.   The CISA-FBI advisory says there are indications that “Royal may be preparing for a re-branding effort and/or a spinoff variant.  Blacksuit ransomware shares a number of identified coding characteristics similar to Royal.”  The agencies note that in the last 14 months Royal has launched attacks on more that 350 targeted organizations worldwide with ransom demands exceeding $275 million.  Some experts assess that Royal ransomware itself is a spinoff of the Conti threat actor, which last year launched a devastating cyber disruption of systems in Costa Rica.  The Record  Cybernews BleepingComputer

Russia-Linked Group Suspected of Largest-Ever Hacks of Danish Energy Infrastructure.  A new report indicates that hackers with suspected links to Russian military intelligence conducted coordinated cyberattacks against Danish energy infrastructure this past spring.  SektoCERT, a Danish cybersecurity center, described the attempted intrusions as the country’s largest cyberattacks ever recorded, with hackers gaining access to 22 Danish companies involved in managing Denmark’s energy infrastructure.  Researchers say that if the hackers had chosen to do so, they could have shut down electricity and heating services to 100,000 people.  The intrusions were discovered quickly and solutions implemented in short order.  SekoCERT reported that the attacks were well planned and executed, adding that while Denmark experiences constant cyberattacks “it is unusual that we see so many concurrent, successful attacks against the critical infrastructure.”  Zero-day vulnerabilities in Zyxel firewalls used by many Danish infrastructure operators were exploited because companies failed to update their firewalls, researchers said.  While SektorCERT does not say explicitly who was behind the attacks, the company’s analysis indicated traffic on breached networks came from servers associated with the Russian GRU military intelligence service’s Unit 74455, popularly known as Sandworm.  Cybernews

Russia’s ‘Cozy Bear’ Launches Phishing Campaign Against Azerbaijani Targets.  Ukrainian cybersecurity researchers report that multiple embassies and international organizations have been attacked in a recent cyberespionage campaign carried out by Russian state-sponsored hackers.  The threat actor known as Cozy Bear, also tracked as APT29, carried out the attacks in September with the goal of “infiltrating embassy entities” in Azerbaijan, Greece, Romania, and Italy.  In addition, Otenet, the Greek Internet provider, was targeted, according to Ukraine’s National Cyber Security Coordination Center (NCSCC).  The deepest intrusions were against diplomatic accounts affiliated with embassies in Azerbaijan and Italy, with the possible motivation of collecting information on Azerbaijani plans for military operations in the Nagorno-Karabakh region. A total of 200 email addresses were targeting in the Cozy Bear operation although it is not known how many were successful.  The threat actor sent phishing emails to targeted organizations that contained links to PDF documents with embedded malicious code designed to gain access to compromised systems.  The lure of sales information on diplomatic BMW automobiles was used to entice recipients to open the attachments.  The Record

Pro-Palestinian Cyberespionage Group Targets Middle East Government Systems.  A pro-Palestinian cyberespionage group tracked as TA402 has launched selective phishing campaigns against Middle East governments through the use of a new tool to breach targeted systems.  Joshua Miller, a senior threat researcher at the Proofpoint cybersecurity firm, reported that TA402 attempted breaches of Middle Eastern and North African government systems “using complex infection chains and drumming up new malware to attack their targets.”  The activity continued throughout October, which indicates the Gaza conflict has not slowed TA402’s operations.  Details on the hacking group are scarce and their affiliations and home base are unknown.  Beginning in July and continuing through October, the cyberespionage effort used a compromised email address at an unidentified foreign ministry to target Middle East government organizations.  Email lures promising information related to economic issues sought to trick victims into clicking Dropbox download links containing malware deploying three other files onto targeted computers.  These files gave the attacker the option to deliver additional malware, including the new initial access tool the researchers dubbed “IronWind.”  CyberScoop Cybernews

Cybersecurity Observers Note FBI’s Challenge in Rounding Up Casino Hackers.  Cybersecurity experts and targeted organizations say the FBI has struggled to contain a highly aggressive cybercrime gang that has targeted multiple corporate interests over the past two years.  Despite knowing the identities of a dozen members of the hacking group that launched destructive attacks on two major casinos, there has been a notable lack of arrests.  Crowdstrike President Michael Sentonas said he believes there has been a “failure here’ of effective action by law enforcement.  Sentonas told Reuters, "for such a small group, they are absolutely causing havoc."  The FBI reports it is investigating the casino hacks but would not comment on the larger group responsible or where the investigation stands. A Justice Department spokesperson also declined to comment.  Staffing shortages, the reluctance of victims to cooperate with the FBI, and the decentralized structure of the cybercrime group are all cited as reasons for the slow progress of the investigations.  Reuters

ELSEWHERE IN THE WORLD

iPhone Supplier Foxconn Braces for China’s Backlash Over Founder’s Bid for Taiwan’s Presidency.  Terry Gou, the founder of Foxconn Technology, a key supplier for Apple, qualified on Tuesday to run in Taiwan’s presidential election in January.  Foxconn Chairman Young Liu told investors that the company is preparing contingency plans in case of possible backlash from China over Gou’s bid for Taiwan’s presidency.  Chinese state media reports that Foxconn is facing tax and land-use investigations in China.  A spokeswoman for Beijing’s Taiwan Affairs Office said that the probes are a “normal law-enforcement practice.”  The head of Taiwan’s National Security Council, Wellington Koo, disagreed, saying that the investigations are aimed at pressuring Gou to not participate in the election so he doesn’t split the vote for candidates running against the incumbent Democratic Progressive Party, which Beijing views as pro-independence.  Gou relinquished control of Foxconn in 2019 and announced his candidacy for Taiwan’s presidency in August.  Wall Street Journal

Europe

Finland Accuses Russia of Sending Asylum Seekers to Border.  Finland’s Prime Minister Petteri Orpo on Tuesday accused Russia of sending asylum-seekers to the Finnish border.  Orpo told reporters that Moscow is allowing people access to the border without proper travel documents and that Russian border guards are escorting them to the frontier.  Finland’s border guard authority said the arrivals from Russia are still small but are increasing.  The authority reported that around 60 asylum seekers reached the border via Russia since Monday, in comparison to 91 arrivals from August 1 to November 12.  Finland’s interior ministry is reportedly preparing a proposal to allow for the limiting of border traffic or closure of crossing points to secure its eastern border.  Finland last year adopted legislation that allows its border authority to stop receiving asylum applications at certain crossing points to counter any mass immigration orchestrated by another country.  Belarus has been accused by some of its neighbors of straining their borders by pushing migrants to them.  Russia’s Federal Security Service (FSB), which is in charge of Russian border security, did not comment on the matter.  Associated Press Financial Times Reuters

Africa

Mali Army Claims to Capture Rebel Stronghold.  Mali’s army said on Tuesday that it seized the northern rebel stronghold of Kidal.  Ethnic Tuareg rebels seized a base vacated by U.N. peacekeepers in Kidal last month.  A spokesman for the rebels said they made a strategic withdrawal from the city.  Mali and the Tuaregs have been fighting over areas the U.N. has vacated.  Reuters 

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Ethan Masucol, Ken Hughes, and Brad Christian contributed to this report.

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