10:00 AM ET, Friday, December 15, 2023
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THE TOP STORIES
US Senate to Vote on Ukraine Funding, Border Security Next Week. The U.S. Senate plans to vote on military aid for Ukraine and Israel next week. Senate Majority Leader Chuck Schumer announced a delay in the holiday break to allow more time for negotiations on changes to U.S. border security policy tied to the funding. President Joe Biden has urged passing a supplemental aid package of $50 billion for Ukraine and $14 billion for Israel. Republicans insist on pairing the aid with new controls for the U.S.-Mexico border. Ukrainian President Volodymyr Zelenskiy expressed optimism about Congress approving the measures soon. Negotiations are ongoing, and any deal would need approval in both the Senate and the House before becoming law. Some senators, including Republican Tom Cotton, note significant differences in proposals and concerns about Democrats not putting their suggestions in writing. Reuters
Orban Blocks EU Aid for Ukraine, signals Block for EU Membership still to come. Hungary blocked a $52 billion European Union aid package for Ukraine today, but EU leaders agreed yesterday to open negotiations for Ukraine to join the organization. Hungarian Prime Minister Viktor Orban said yesterday that aid should be provided only after European elections this coming summer. European Council President Charles Michel said the leaders would meet again early next month to try to reach unanimous agreement on assistance for Ukraine. If Hungary continues to block further funding, the other EU countries could provide funding outside the EU budget process. At the start of yesterday’s meeting, Orban said he planned to veto an official opening of accession talks, arguing that Ukraine is not ready for entry, but later he effectively abstained, agreeing to leave the room when it was time to raise objections to opening the talks. Critics have said Hungary’s objections to Ukraine funding and EU accession talks are an effort to get the EU to release money earmarked for Hungary that has been frozen over the country’s violation of various EU rules. The European Commission released 10 billion euros ($11 billion) in aid on Wednesday, but officials said the timing of the release, on the eve of the EU leaders’ summit, was a coincidence and that Hungary had complied with demands for judicial reforms. New York Times Bloomberg Kyiv Independent Reuters
Ex-FBI Counterintelligence Official Sentenced to Over 4 Years in Prison for Aiding Russian Oligarch. Former top FBI counterintelligence official Charles McGonigal was sentenced to over four years in prison and fined $40,000 for violating sanctions on Russia. McGonigal had gone to work for Russian oligarch Oleg Deripaska, who was under U.S. sanctions since 2018. The judge stated that McGonigal harmed national security by flouting sanctions meant to pressure Russia economically. McGonigal had accepted over $17,000 to help Deripaska collect derogatory information about a business competitor, violating the International Emergency Economic Powers Act. He was also negotiating to help Deripaska get off the sanctions list. McGonigal faces separate charges in Washington, D.C., for concealing at least $225,000 received from a former Albanian intelligence official while working for the FBI. Politico
NATO Chief Issues Warning on Putin. Jens Stoltenberg warned today that Russian President Vladimir Putin will wage war elsewhere if Russia defeats Ukraine. "If Putin wins in Ukraine, there is real risk that his aggression will not end there," Stoltenberg told reporters during a meeting with Slovakia's Prime Minister Robert Fico. Fico has expressed skepticism of supporting Ukraine and halted delivery of military weapons to Kyiv just one day after taking office. Stoltenberg added "The only way to reach a just and lasting solution is to convince President Putin that they will not win on the battlefield. And the only way to ensure that President Putin realizes that he is not winning on the battlefield is to continue to support Ukraine". The NATO chief’s comments came on the same day that Putin confirmed that he has no intention of backing down in his war against Ukraine. Politico NPR
Gunmen Kill Several Iranian Security Officers in Police Station Attack. At least 11 Iranian security personnel were killed in an attack on a police station in the southeastern border province of Sistan-Baluchestan. The attack, claimed by the Sunni armed group Jaish al-Adl, resulted in the deaths and injuries of senior police officers and soldiers. The assailants also suffered casualties in the ensuing shootout with Iranian security forces. Sistan-Baluchestan, near the border with Afghanistan and Pakistan, has faced unrest due to drug-smuggling gangs, Baluchi rebels, and Sunni Muslim hardliners. Jaish al-Adl, formed in 2012 and designated as a "terror" group by Iran, has been responsible for similar attacks in the region. The province has experienced previous incidents, including clashes in July and May of this year. Al Jazeera Deutsche Welle
The Alleged Russian Agent Behind the Wirecard Scandal. Jan Marsalek, the former COO of the now-defunct payment processing giant Wirecard, is suspected of being a Russian spy for almost a decade. After Wirecard reported in June 2020 that almost $2 billion had disappeared from its balance sheet, Marsalek fled to Russia. He is accused of allegedly gathering intelligence on Wirecard’s clients to support Russian spy agencies in global covert operations. He is also accused of running a spy ring in the U.K. and planning kidnappings. There is high concern about the impact of Marsalek’s activities due to extensive ties between Wirecard and Western intelligence agencies. Marsalek is still at large despite international arrest warrants. Western intelligence says that Marsalek is now in Dubai, where he helps Moscow acquire weapons and supports Russia’s Wagner Group. (Editor’s Note:Read what Cipher Brief Expert Sonya Seunghye Lim says the Wirecard scandal tells us about Russian intelligence operations here.) Wall Street Journal The Cipher Brief
German-Owned Ship hit by Houthi Drone. A projectile launched from Houthi-controlled Yemen hit the Liberia-flagged, German-owned ship Al Jasrah, on Friday, reportedly causing a fire but no injuries. A U.S. defense official reported that a drone was believed to have struck the vessel. In a separate incident, a Liberia-flagged container ship, MSC ALANYA, was ordered to alter course toward Yemen by individuals believed to be Houthi members. The vessel took evasive measures, and there were no reported attacks. The Houthis, aligned with Iran, have been targeting vessels in Red Sea shipping lanes and launching drones and missiles, claiming it supports Palestinians in the Israel-Hamas conflict. Reuters Deutsche Welle
Houthis Launch Missile at Commercial Vessel Off Yemen. The U.S. military says Yemen’s Houthis fired a ballistic missile at a container ship in the Bab el-Mandab Strait off Yemen on Thursday. U.S. Central Command said the missile did not hit the ship, the Maersk Gibraltar, which was traveling from Salalah, Oman to Jeddah, Saudi Arabia. Danish shipping company A.P. Moller-Maersk confirmed the attack and said the crew and ship were safe. A Houthi spokesperson later claimed, without offering evidence, that the group hit the ship with a drone strike and that the vessel was headed for Israel. The British military’s U.K. Maritime Trade Operations issued an alert warning about the incident in the strait after the attack. The Iran-backed Houthis have attacked several commercial vessels in the region amid the Israel-Hamas war in Gaza. Associated Press Reuters
ISRAEL AND HAMAS WAR
U.S. Urges Israel to Conduct ‘Lower Intensity Operations’. White House National Security Advisor Jake Sullivan arrived in Israel yesterday, where he pressed Israeli leaders to shift to “lower-intensity operations” in Gaza. U.S. officials said Sullivan urged Israeli leaders to shift from reliance on airstrikes to ground operations and that he also warned a long war could make Gaza more difficult to govern afterward. Israeli Defense Minister Yoav Gallant told Sullivan that the war against Hamas “will last more than several months,” and Prime Minister Benjamin Netanyahu’s office said later that Israel will continue fighting until Hamas is eliminated. An Israeli government spokesman later said on Friday that Israel is “clearly winning the war right now” and has “significantly degraded Hamas’ capabilities inside Gaza,” citing a drop in rocket fire from Gaza into Israel. Sullivan travels to the West Bank for meetings with Palestinian Authority leaders today. Washington Post Wall Street Journal
U.S. Calls for ‘Negotiated Outcome’ on Lebanon-Israel Border. White House National Security Advisor Jake Sullivan also urged Israeli leaders to seek a “negotiated outcome” to resolve tensions on the Lebanon-Israel border. Sullivan’s comments refer to Lebanon's Iran-backed militant group Hezbollah, which has attacked Israeli military posts along the border since the Hamas attacks on October 7, forcing the evacuation of 20,000 Israelis near the border. Sullivan said that while the U.S. will not tolerate threats from Hezbollah, the situation can be resolved through “diplomacy” and deterrence and “does not require the launching of a new war.” Israeli officials have said they do not want a full-scale war with Hezbollah as the war in Gaza continues, but they have said that they will respond if Hezbollah escalates the situation. Associated Press
Israeli Raids and Airstrikes in Gaza, Lebanon, West Bank. The Israeli military said on Thursday that it has conducted raids and strikes in Gaza, the occupied West Bank, and Lebanon over the past day. The Israel Defense Forces (IDF) said it killed militants in northern Gaza, including during a search of “a central operating site” for Hamas in the Shejaiya district. The IDF said the site was located in a school compound and that it “dismantled military infrastructure” there. Also in northern Gaza, the IDF said it killed militants and seized weapons in Jabalya. In southern Gaza, the IDF said it conducted raids in Khan Younis, targeting tunnels, a weapons storage facility, and a rocket launch site. Al Jazeera reported that Israel also launched air strikes in southern Gaza, including in Rafah, killing at least 26 people. The IDF did not respond to requests for comment on the strikes. Outside of Gaza, the IDF said it conducted “counterterrorism activity” in Jenin in the occupied West Bank, killing over 10 “terrorists.” Palestinian officials said 12 Palestinians were killed in the raids. Israel also reported striking Hezbollah targets in Lebanon after Hezbollah fighters attempted to launch projectiles at Israeli territory. Washington Post Washington Post Reuters
Almost Half of Israeli Munitions Used in Gaza Not Precision-Guided, DNI Says. A U.S. intelligence assessment has found that almost half the munitions Israel has used in Gaza since the beginning of the war have been unguided bombs, and some arms experts say that helps explain the high civilian death toll. The assessment from the Office of the Director of National Intelligence says the Israeli Defense Forces have fired more than 29,000 air-to-ground munitions into Gaza since October 7, and that only 55 to 60 percent of them have been precision-guided. U.S. Marine Corps and CIA veteran Mick Mulroy, speaking at an event hosted by the Middle East Institute, said Israel may be holding some of its “smart” bombs in reserve because they are more expensive and harder to obtain. Washington Post
THE UKRAINE UPDATE
Western Officials Attempt to Estimate Ukraine’s Future if U.S. Aid Falters. As the Ukraine aid package faces delays in the US Congress, concerns are growing about the potential impact on Ukraine's defense and its longer-term prospects in the war, according to multiple US and European officials. The most immediate worry is the effect on Ukraine's ongoing counteroffensive in the east and south, where Ukrainian forces have struggled to make significant progress. The loss or further delay of US support could also impact aid from its allies. Western officials fear that if the US fails to continue providing support, European nations may follow suit. Western intelligence agencies are currently calculating how long Ukraine could hold out without US and NATO help, with estimates ranging from months to a worst-case scenario of significant setbacks or defeat by summer. A Russian victory would be disastrous for Ukraine and have significant implications for wider European security. Ukrainian forces are already rationing ammunition, and without additional US aid, they would run out of critical munitions, affecting their defense capabilities. CNN
E.U. Agrees to New Russia Sanctions. The European Council on Thursday announced that E.U. member states have agreed to impose a 12th sanctions package on Russia, prohibiting the import of Russian diamonds and strengthening rules for adherence with the G7 Russian oil price cap. The European Council said it “welcomes the adoption” of the sanctions, which will take effect on the first of January. The package includes a phased bar on diamond imports from third nations starting in March, as well as measures to prevent Russia from obtaining dual-use technologies. Sources said that Austria, which did not provide its final approval for the sanctions package until late on Thursday, has been attempting to remove Raiffeisen Bank International, the largest Western bank in Russia, from a Ukrainian blacklist in exchange for approving new E.U. sanctions. The bank, however, is still on the list. Kyiv Independent Reuters
German Drone Maker Opening R&D Center in Ukraine. Quantum Systems, a German drone manufacturing company, announced on Thursday that it will open a research and development (R&D) center in Ukraine, where it will begin producing spare parts for drones and eventually complete drones. Quantum Systems produces sophisticated Vector reconnaissance drones, 152 of which have been given to Kyiv by Germany. In the spring of this year, the company established a Service, Support, Training, and Logistics Center in Ukraine, where Ukrainians are taught how to operate Vector drones. Last week, the Digital Transformation Ministry revealed that Quantum Systems had joined the Diia City portal, an "economic zone" for legislation, taxation, and employment benefits for both local and foreign tech firms. Kyiv Independent
Zelensky Visits U.S. Army Base in Germany. Ukrainian President Volodymyr Zelensky made an unannounced visit to Germany on Thursday, during which he toured the headquarters of the U.S. Army Command in Europe and Africa in Wiesbaden. After visiting the American army base, Zelensky said he was “once again convinced of the excellent quality of U.S. military” assistance to Kyiv. He added that Ukraine “critically” needs aid in order to have victory against Russia and expressed hopes that the U.S. Congress would approve additional financing. Zelensky has traveled to several nations in recent days, including the U.S., Norway, and Argentina, to appeal for continued international support for Ukraine. Kyiv Independent RFE/RL
Estonia Sending $88 Million in Military Aid to Ukraine. The ERR national broadcaster announced that Estonia’s government on Thursday approved an $88 million military aid package for Ukraine, which includes ammunition, Javelin anti-tank missiles, machine guns, vehicles and vessels, and diving equipment. Estonian Defense Minister Hanno Pevkur expressed hopes that the aid package would help bolster international interest and support for Ukraine, as the world’s attention moves away from Kyiv and aid begins to dry up. Pevkur said Estonia’s goal with “this extensive aid package” is to demonstrate that Ukraine’s “fight for freedom can only succeed if the Allies continue helping.” Pevkur added that Estonia sought to replace “necessary stocks” and do as much as possible for Ukraine without hurting its own defense capabilities. In total, Estonia has sent $550 million in military aid to Ukraine since Russia invaded in 2022, which comprises about 1.4% of the small Baltic country's GDP. Kyiv Independent Ukrinform
THE CYBER AND TECH RUNDOWN
Yellen Says U.S. to Assess Risks from AI to Financial Stability. Treasury Secretary Janet Yellen said during a meeting of the Financial Stability Oversight Council (FSOC) yesterday that the group will focus on monitoring evolving AI technologies and their risks to the stability of the financial system. Yellen said “responsible innovation” can lead to benefits such as increased efficiency, but that “existing principles and rules for risk management” should be applied. The FSOC released its annual report, which listed several ways AI could create new risks or accelerate existing ones at financial institutions but proposed little in the way of regulatory changes. Bloomberg
New U.S. ICBM Program Risks Termination Due to High Costs. The U.S. Air Force’s Sentinel project, a new intercontinental missile program, is at risk of being canceled because of its cost. According to one estimate, each of the new ICBMs and related expenses may cost as much as 50% more than the 2020 estimate of $118 million. That could bring the cost for the 659 missiles planned to almost $117 billion. The Sentinel project, developed by Northrop Grumman, is meant to replace 1970s-era Minuteman III missiles as part of a modernization of all three legs of the air-land-sea triad of nuclear weapons. Although the program has significant support in Congress, the increasing costs could trigger a 41-year-old law designed to warn lawmakers when projected costs exceed certain thresholds. This would require the Pentagon to issue a formal reaffirmation of the rationale for the program. The Air Force has begun a review of the program this week at Hill Air Force Base in Utah and submitted a “Program Deviation Report” to Air Force headquarters. Air Force acquisitions chief Andrew Hunter told Bloomberg News that new information has emerged about “factors that are driving changes to important aspects of the program,” including the cost of materials and labor and the timeframe needed to construct launch facilities. The Air Force said its review will take approximately 45 days to determine whether the Sentinel program exceeds the law’s cost thresholds. Bloomberg
U.S. Space Plane Launch Delayed, China Launches Counterpart. China launched its space plane for the third time yesterday, the Xinhua news agency reported. Meanwhile, the U.S. Space Force is still waiting for the next launch of its counterpart, the Boeing X-37B, after multiple delays attributed to bad weather and launch site issues at the Kennedy Space Center. The mission, known as USSF-52, will be the U.S. plane’s seventh mission into orbit since 2010 and its second using a SpaceX rocket. Chief of Space Operations Gen. Chance Saltzman said Wednesday that the X-37B could be pushed forward because of competition with China, adding that it is “probably no coincidence” that China planned to launch its plane around the same time the X-37B was scheduled to launch. SpaceX posted its latest update on the status of the USSF-52 mission on Tuesday, saying the launch was postponed to an undisclosed date for “additional system checkouts.” South China Morning Post
ELSEWHERE IN THE WORLD
Asia and Oceania
U.S. Military Returns to focus on Jungle Training. The NY Times is out with a new report that analyzes a renewed focus on jungle training for the U.S. military. U.S. soldiers are undergoing training in the dense jungles of Hawaii, preparing for potential conflicts in the Pacific, particularly with China. The training, which involves navigating difficult terrain and river crossings, is aimed at enhancing soldiers' readiness for the challenges of the Pacific theater. The soldiers are practicing skills necessary for potential conflicts in the Pacific, similar to the conditions they might face in areas like Vietnam. The training emphasizes becoming "resident professionals" and being well-prepared before engaging in potential conflicts. The focus on jungle warfare and river crossings is part of the broader effort to ensure U.S. forces are equipped and trained for the unique challenges of the Pacific region, where the geography and conditions differ significantly from other recent theaters of U.S. military operations. New York Times
China Pressures Taiwan with Trade Probe and Warplanes a Month Before Election. China’s Commerce Ministry said today that Taiwan has implemented trade barriers in violation of World Trade Organization (WTO) rules and a trade agreement China signed with Taiwan in 2010. The ministry did not announce any countermeasures. Taiwan’s Office of Trade Negotiations called China’s conclusions one-sided, inconsistent with the facts, and a violation of WTO mechanisms and norms. The office called on China to “stop their political operations immediately.” Taiwan’s Economy Ministry pointed to Chinese barriers to Taiwanese exports, including bans on various agricultural products “without warning many times.” Taiwan’s ruling Democratic Progressive Party called China’s trade investigation “obvious meddling” in its elections, to be held January 13. In a separate development, Taiwan’s defense ministry said it detected 10 Chinese military aircraft operating around the island in “joint combat readiness patrols” with Chinese warships. Reuters South China Morning Post
Hong Kong Security Chief Can Freeze Assets Through National Security Case Legal Proceedings. Hong Kong has expanded the power of its security chief, allowing the official to freeze assets in national security cases until legal proceedings conclude, removing an earlier two-year cap. The change, which came as an amendment to the Beijing-imposed national security law, is allegedly aimed at addressing legal uncertainties and is effective immediately. The Hong Kong government said the change is meant to clarify the validity period of freezing notices and does not alter fundamental principles in national security cases. Secretary for Security Chris Tang Ping-keung added that with the change, individuals in national security cases should not assume protection from foreign governments and signaled that providing financial assistance to suspects could be deemed a criminal act. The change comes after the arrest of four people suspected of funding activists through crowdfunding. Critics said the move grants excessive power and raises concerns about property rights. South China Morning Post
South Korean Official Says North Korea Could Test ICBM Soon. A South Korean official on Friday warned that North Korea could test-launch one of its intercontinental ballistic missiles (ICBM) sometime this month. South Korea’s deputy national security adviser, Kim Tae-hyo, would not give details about the possible missile test, but discussed the U.S.’s "extended deterrence" policy as a “way to put down” a nuclear assault “early and decisively.” Kim also said that South Korea, Japan, and the U.S. were working on a real-time data sharing project on Pyongyang’s missiles. In July, the North tested a solid-fuel, long-range ballistic missile, which successfully flew on a lofted trajectory and reached an altitude of 4131 miles, falling into the sea east of the Korean Peninsula. Reuters Bloomberg
South Korea Scrambles Fighters After Chinese, Russian Military Aircraft Enter Air Defense Zone. South Korea’s military said it scrambled fighter jets after two Chinese and four Russian military aircraft entered South Korea’s Air Defense Identification Zone (ADIZ) in the Sea of Japan on Thursday. The planes did not violate South Korea’s territorial airspace, only entering the country’s ADIZ and then leaving around 20 minutes later. It is the first time in six months that Chinese and Russian military aircraft entered the South Korean ADIZ . South Korea said it contacted Beijing through a direct military communications channel to protest the flight. Seoul did not contact Russia since they do not have a military communication channel. A Chinese foreign ministry spokesperson said the incident was “routine flight activity” in line with international law. Separately, China scrambled its own jets to monitor Chinese and Russian military aircraft conducting joint flights in the channel between Japan and South Korea. The flights come as Beijing and Moscow are stepping up military cooperation. Al Jazeera Deutsche Welle Reuters USNI South China Morning Post
Africa
Official Says Eastern Congo Ceasefire Extended. A senior U.S. official speaking on anonymity said that a ceasefire in eastern parts of the Democratic Republic of the Congo has been extended by two weeks. Relevant parties have not confirmed the deal, and the governments of Congo and Rwanda did not immediately comment on the report. Washington announced a 72-hour ceasefire starting on Monday, which applied to armed units and non-state armed groups holding some areas in the eastern DRC. The new ceasefire is expected to apply to the same zones and parties. The extended ceasefire would come ahead of Congo’s general elections on December 20. The Biden administration official said that the U.S. believes Congo’s elections will go ahead as planned. He added that “having an election when there is an active conflict is not in anyone’s interest.” Congo has alleged that Rwanda supports the M23 insurgent organization, an accusation that Rwanda denies. Reuters
Europe
Finland Reclosing Russian Border Crossings. Finland is reclosing its border crossings with Russia on Friday. Finland had announced it would temporarily reopen two border crossings with Russia and planned to keep them open till January 14, 2024. Finland closed its whole border with Russia for two weeks on November 30 after an unusually high number of asylum seekers arrived at the border. Helsinki accused Moscow of pushing the asylum seekers there to create an artificial migrant crisis to pressure Finland over its cooperation with the U.S. and NATO, which Russia has denied. Finnish authorities sought to reopen two border crossings to test if the situation had improved, but they reported the continued influx of migrants at the checkpoints. Kyiv Independent Associated Press
Russian Railways says Finland Unlawfully Seized Trains. Russian Railways on Friday accused Finland’s state-owned railway company VR of unlawfully seizing four Allegro trains co-owned in a joint venture. Russian Railways said such a transfer was “not agreed” and that VR refused proposals to resume operation of the trains under the Karelian Trains joint venture. VR on Thursday said it seized the trains, which used to carry passengers between Russia and Finland before the Ukraine war, after over 18 months of failed negotiations. VR said Russia neglected its financial obligations towards the joint venture and repaid Karelian Trains’ loans to Finnish banks when the venture faced bankruptcy in 2023, thus having VR secure the rights that enabled the seizure of the trains. The trains are expected to be used for long-distance domestic travel in Finland from 2025. Reuters
The data cutoff for this product was 8:00a.m. E.T.
Brad Christian, Ethan Masucol, Bruce Wilmot, Katharine Campbell contributed to this report.
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