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6:00 PM ET, Wednesday, August 2, 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

Mexico’s Cartels Modifying Trucks for Illegal Activity.  Mexican cartels such as the Jalisco New Generation Cartel, the Gulf Cartel, and the Northeast Cartel, have been modifying trucks like the Ford Raptor and Chevrolet Tahoe in order to carry out illegal activities. Cartels emblazon the exteriors with their initials or in camouflage pattern, sometimes making it difficult to distinguish them from official military vehicles. Larger trucks include metal seats where gunmen can lean their rifles through holes and in the middle is a hatch similar to that of a tank. The state of Tamaulipas announced that it has destroyed 14 so called “monster” trucks, following the destruction of another 11 in February. Since 2019, more than 260 armored vehicles have been destroyed by the authorities in Tamaulipas alone. The creation of these trucks starts with basics, such as steel plates, and requires five to six welders and mechanics, costing roughly two million pesos or $117,000. Analysis done by the Small Wars Journal, an American publication focusing on interstate conflict, stated “that such armored vehicles far outclass standard Mexican police armaments”.  New York Times

Western Europe

Germany's Rheinmetall starts building F-35 fuselage plant. German arms producer Rheinmetall will begin manufacturing parts for F-35 stealth aircraft starting 2025 in a new plant. This investment is the first of its kind by a German weapons manufacturer since Russia invaded Ukraine. Rheinmetall is a partner of US company Lockheed Martin, which makes F-35s together with Northrop Grumman. The factory is estimated to cost €200 million ($219 million) and 450 workers. At least 400 aircraft will be produced, 35 of which are to be used in Germany’s armed forces. Those aircraft are being purchased by Germany as part of the €100 billion package agreed upon by the government last year to upgrade the country’s military. Deutsche Welle

Central and Eastern Europe

Central Europe's arms makers scramble for workers as Ukraine boosts business. Central Europe’s arms manufacturers are scrambling for new ways to tackle the biggest boom since the end of the Cold War. Weapons makers in Poland and the Czech Republic are launching or expanding programs to train new workers since the Ukraine war has driven up a demand for weapons production. Czech ammunition and artillery shell producer STV Group has agreed to build company-financed apartments for new hires nearest to its biggest plant in Policka. Central Europe serves as an important pipeline for Ukraine’s military. Out of the 29 states that supplied major weapons to Ukraine in 2022, Poland and the Czech Republic provided more than 20% of the total Ukrainian arms imports by volume. Czech independent defense analyst Lukas Visingr said, “Of course, you need raw materials and supplies, but the lack of skilled workers is now the main problem hampering the expansion of production,”. Reuters

Ukraine’s Deadly Drone Strikes puts Moscow on Edge.  After the US and Western allies placed limits on the supply of advanced weaponry such as long range missiles and attack drones, Ukrainian forces have developed their own deep strike capabilities. Ukraine has not yet confirmed or denied its involvement in a spate of drone strikes on Moscow and other locations within Russia, but Ukrainian President Volodymyr Zelensky stated that Russians seeing war on their own soil was “inevitable, natural, and absolutely fair”. It is believed that Ukraine has begun or will soon be producing at least six different long-range suicide drones with one being the Bober or beaver drones. Smaller, short range drones have also been used in Crimea and have been used to hit Russian military and civilian targets closer to Ukraine. Wall Street Journal

Reports of Torture, sexual violence used by Russian forces in Ukraine.  Almost half of a group of Ukrainians that were detained by Russian forces in the Kherson region have reported widespread torture, including sexual violence. The Mobile Justice Team, funded by Britain, the EU, and the US, analyzed 320 cases and witness accounts in 35 identified detention centers in the Kherson region.  The Mobile Justice Team announced on Wednesday that of the 320 cases, many detainees recounted instances of suffocation, waterboarding, severe beatings, and threats of rape. At least 36 people have mentioned the use of electrocution during interrogation, often times genital electrocution. The Russian Defense Ministry has not commented on the reports findings.Reuters CNN AlJazeera

Asia and Oceania

Taiwan Detains Military Officer Suspected of Spying for China. Taipei has vowed to step up anti-espionage efforts after authorities detained a lieutenant colonel accused of spying for Beijing. The Taiwanese defense ministry said in a statement on Tuesday that the military would increase vigilance and strengthen education on counter-intelligence. The ministry and national security units had conducted a joint investigation after receiving tip-offs and evidence had been given to prosecutors. The suspect accused of leaking defense intelligence to Beijing via a middleman, is lieutenant colonel Hsieh. It’s said he was based in the 601st Brigade of the army’s Aviation and Special Forces Command in Taiyuan. Hsieh is also accused of meeting with retired and serving military personnel in an effort to develop a spy network. Both Hsieh and the suspected middleman have been detained on suspicion of treason. - South China Morning Post 

Australia Invites Chinese Foreign Minister to Visit Canberra.  Australia’s embassy in Beijing has issued an invitation from Minister for Foreign Affairs Penny Wong to the Director of the Communist Party’s Central Foreign Affairs Commission, Wang Yi to visit Canberra. Australia’s Department of Foreign Affairs stated that “future meetings between the foreign minister and her counterpart will be announced at an appropriate time”.  No date has been set yet, but former Chinese Foreign Minister Qin Gang was originally set to visit Australia in July for a “reciprocal visit”. China’s Ministry of Foreign Affairs has not commented on the matter. South China Morning Post  

China’s Foreign Minister Wang Yi Raises Hopes of Xi-Biden meeting.  US State Department spokesman Matthew Miller has confirmed on Tuesday that China’s Foreign Minister and the Communist Party’s Foreign affairs chief, Wang Yi, has been invited to visit Washington.  The invitation comes after a meeting on Monday between Chinese Foreign ministry’s head of North American and Oceanian Affairs, Yang Tao, and US assistant Secretary of State for East Asian and Pacific affairs, Daniel Kritenbrink. Wang is believed to be one of China’s most powerful foreign ministers in decades and is considered “Xi’s most influential foreign policy adviser”. Wang had prepared and accompanied Chinese President Xi Jinping at many meetings with foreign leaders and US President Joe Biden’s foreign policy principals would be familiar with him. South China Morning Post

U.S. Reports Boost to China’s Aircraft Carrier Forces. China’s navy has transferred most of its aviation units to the Air Force. This move will allow the navy to focus more attention on its aircraft carriers, according to US Air Force experts. The goal is to strengthen China’s aircraft carrier forces. On Monday, a report published by the China Aerospace Studies Institute (CASI) added that H-6 bombers that were previously operated under the Chinese navy allow the Air Force to make more bomber units, these units will be capable of carrying missiles armed with nuclear warheads. This comes amid Beijing's efforts to make its aircraft carrier forces stronger amid rising tensions with Washington and its allies in the Asia-Pacific. China has two operational aircraft carriers. The Liaoning, a modified Soviet carrier commissioned in 2012, and the Shandong domestically built and commissioned in 2019. Just last year, China launched its most advanced aircraft carrier called the Fujian which is currently undergoing sea trials. South China Morning Post

Countries Seek to Chip Away at China's Grip on Vital Rare Earths.  The West has greatly increased its urgency to pry away China’s grip on strategic metals gallium and germanium after Beijing announced export controls on said materials. These two metals are some of the necessary 17 metals needed for a clean energy transition and if these projects continue to fail, several economies could fail to meet their goal of net zero carbon emissions by 2050 without China’s cooperation. China has a strong grip on the rare earths industry with the International Energy Agency claiming that China controls 87% of global rare earths refining capacity. China has also ensured that finished products are sold at lower prices, inhibiting foreign competition. Several private companies, including Tesla, Leading Edge Materials (LEM), and American Rare Earth are currently working on several different projects in order to bypass China’s hold while simultaneously lowering environmental risks.  Reuters

Xi’s Shake-Up Exposes Problems at China’s Nuclear Force.  Chinese President Xi Jinping has abruptly replaced top Rocket Force commanders General Li Yuchao and his deputy, General Liu Guangbin. It is unclear why the commanders were replaced nor have they appeared in state media reports in months. Allegations of corruption or disloyalty to President Xi have slowed China’s ability to upgrade Rocket Force, the custodians of China’s nuclear arsenal. The lack of response from the government has triggered a flurry of speculation and has raised questions regarding corruption in the Rocket Force. The two leaders replacing General Li and General Liu are Wang Houbin and Xu Xisheng. Houbin was a deputy commander in the Navy while Xisheng was a political commissar who oversaw discipline and personnel issues in the Air Force. New York Times

Partial Pardon Granted to Myanmar’s Aung San Suu Kyi.  A partial pardon has been granted to the former democratic leader of Myanmar, Aung San Suu Kyi. The partial pardon would reduce Suu Kyi’s sentence by six years, reducing her 33 year sentence to 27 years. Suu Kyi has been convicted of 19 offenses, including corruption, since the aftermath of the coup that ousted her in 2021. Junta officials have announced that five of the 19 offenses have been pardoned, including breaching a natural disaster mitigation law while campaigning during the COVID-19 pandemic. Ally and former leader of the National League for Democracy, Win Myint, has also received a partial pardon, reducing his sentence from 12 to 8 years. Deutsche Welle  Asia Nikkei

Sub Saharan Africa

West African bloc sends delegation to Niger for talks with coup leaders.  Abdel-Fatau Musah, the Economic community of West African States (ECOWAS) Commissioner for Political Affairs, Peace, and Security, announced that a Nigerian-led delegation is in Niger in an attempt “to negotiate” with coup leaders. Musah stated that the delegation is led by the former military ruler of Nigeria, Abdulsalami Abubakar. Abubakar oversaw the transition in Nigeria from military to civilian rule back in the late 1990s and was last seen at the opening of talks with other ECOWAS military chiefs in the Nigerian capital of Abuja. The delegation and coup leaders are expected to have several meetings on Wednesday. France 24

Cyber and Tech

White House Microchip Coordinator Leaves Post Following Major Chips Legislation.  Ronnie Chatterji, a National Economic Council adviser who served as White House coordinator for major chips legislation, will leave his post this week to return to Duke University where he teaches business.  Chatterji’s departure occurs as the Biden administration implements its semiconductor strategy to boost U.S.-based chip-making facilities to lessen dependence on Taiwan and other foreign manufacturers.  Chatterji told Politico that “supply chain policy is something that’s still relatively new in Washington and around the world.”  He said that if he had been asked during the Obama administration, which he also served as a senior economist, he would not know who to turn to.  The difference now, Chatterji said, is that “a lot of us are focused on supply chains. That new skill set is something that is going to take time to percolate through government.”  He advised less focus on the short-term throughout the chip industry and more concern “about having in place what we need to produce chips for what I see is going to be a growing market in the years to come,” including electric vehicles, large language models for artificial intelligence and other emerging technologies.  Commerce Secretary Gina Raimondo described Chatterji as “an incredible asset” to the administration, saying she “relied on his expertise and guidance to help make major strides in bolstering America’s supply chains, strengthening our national security, and creating good jobs across America.”  Politico

Chinese Media Report ‘Breakthrough’ in Domestic Chip Lithography Manufacture.  Chinese media, including the official Xinhua news agency, are reporting that a government-backed semiconductor manufacturer is nearing completion of a project to produce its first 28-nanometer lithography equipment, described as a “major breakthrough” for China’s chip sector.  The original report of Shanghai Micro Electronics Equipment Group’s accomplishment was published in a Chinese newspaper, Securities Daily, and has since been carried by state-run media.  If confirmed, the domestic production of such equipment reportedly would lessen China’s reliance on U.S. and Western semiconductor technology.  Bloomberg notes that chip-making machinery is one of the “weakest links in China’s semiconductor supply chain,” with the country’s top chip manufacturers dependent on foreign equipment.  Bloomberg adds that it is unclear at present if the Shanghai manufacturer can produce the new equipment “in bulk.”  Bloomberg   South China Morning Post

China Security Ministry Makes Social Media Debut with Anti-Espionage Appeal.  China’s Ministry of State Security has launched a WeChat account that calls on “all members of society” to partner in the campaign against espionage.  The usually secretive ministry, which does not operate a public website, opened an account on the widely used messaging app to promote counter-espionage efforts, and offered rewards and protection for anyone providing information.  In a post calling for “the mobilization of all members of society,” the ministry noted the government’s use of hotlines and online platforms to handle information on suspected espionage activities.  The ministry cited as one of the goals of the public campaign, “to normalize the mechanism for the people to participate in counter-espionage work.”   The ministry’s WeChat post also drew attention to new amendments to the counter-espionage law approved by China’s legislature earlier this year.  The amendments came into effect on July 1.  The post also called on news outlets, broadcasters, television, cultural entities, and internet providers to participate in counter-espionage education.  CNN  Reuters

DoD Policy Chief Says Ukraine Driving Military Grasp of AI, Drone Technology Uses.  While acknowledging the “horrible” aspects of Russia’s invasion of Ukraine, Mara Karlin, the acting undersecretary of defense for policy, told reporters recently “there are really robust efforts across the department” to discern the lessons of the conflict and the ways in which it shapes the military’s understanding of the changing character of war.  Karlin noted that a significant part of this is “absolutely the role of drones and also artificial intelligence.”  The emergence of drone technology and AI applications as key factors in the conflict has “pushed a real culture change,” Karlin said.  An example of this is the Pentagon’s participation with Britain and Australia in a recent autonomous AI testbed in which AI-equipped drones operated in a “collaborative swarm” to test their ability to detect and track simulated targets.  Karlin explained that the DoD’s updating of its autonomous weapons policy in January had a goal of providing incentives for military personnel “to be creative and think under the key policy principles about how and in what ways autonomous capabilities might be relevant.”  One of key purposes of establishing the Chief Digital and AI Office (CDAO) at the Pentagon, according to Karlin, was to deploy chief data analytics officers to the combatant commands to enable these components to “understand that there is this kind of key approach to how to take in a whole bunch of information from a whole bunch of sources in a really fast way, and then incorporate it into your day-to-day work.”  The CDAO has been key, Karlin said, in helping forces “internalize and realize on a daily basis the impact AI can have.”  The DoD still has much to learn about these capabilities, according to Karlin, “but it feels as though kind of the speed of learning has gotten increasingly robust.”  DefenseScoop

China-Linked Hackers Use Three-Stage Malware To Breach Europe Industrial Systems.  New malware designed to defeat air-gapped systems has been deployed by China-sponsored hackers against industrial systems in Europe.  Kaspersky researchers have uncovered at least 15 distinct malware implants in Eastern Europe attributed to the APT31 cyberespionage group.  The malware operates in three stages.  Initial phase implants create persistence and allow remote access to compromised systems while collection reconnaissance data. APT31, in the second stage, inserts specialized malware capable of extracting data from air-gapped systems through USB propagation.  In the final stage, the threat actors employ implants that upload collected data to command and control servers.  APT groups find air-gapped systems to be attractive targets that are compromised through USB drives that deliver malware and exfiltrate data from the isolated environment.  Kaspersky researchers discovered second-stage malware capable of evading data security safeguards while investigating a string of cyberattacks against critical infrastructure in Eastern Europe.  Researchers have concluded that threat groups are attempting to establish a permanent presence in industrial control systems through the use of this novel malware.  BleepingComputer   HackRead

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