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10:00 AM ET, Tuesday, November 7, 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

NATO Suspends Participation in Key Cold War-Era War Arms Treaty after Russian Withdrawal.  Russia on Tuesday formally withdrew from the 1990 Treaty on Conventional Armed Forces in Europe (CFE), which limited key categories of conventional armed forces.  The Russian Foreign Ministry said on Monday that the U.S. push for enlargement of NATO has led to the alliance’s member countries “openly circumventing” the treaty’s restrictions. The ministry also recounted that the U.S. and its allies did not ratify an updated version of the CFE in 1999.  Russia announced a suspension of participation in 2007 and halted participation in 2015.  In response to the Russian withdrawal, the U.S. and NATO served notice that they are formally suspending participation in the pact.  NATO said in June that Russia “has for many years not complied with its CFE obligations” and that Russia’s “war of aggression against Ukraine, and Belarus’ complicity, is contrary to the objectives of the CFE Treaty.”  Associated Press Reuters Wall Street Journal

Russian Undersea Telecoms Cable in Baltic Sea Damaged.  Finland said on Monday that Russia is repairing a telecommunications cable in the Baltic Sea that suffered an outrage last month and that the problem may be linked to recent cases of damage to other undersea infrastructure in the region.  The 620-mile Baltika cable belongs to Russian state-owned telecom company Rostelecom and runs from St. Petersburg to Kaliningrad in the southern Baltic Sea.  A gas pipeline between Finland and Estonia and two other telecommunications cables connecting Estonia to Finland and Sweden were damaged last month. Finnish police have suggested that damage to the Balticonnector gas pipeline may have been caused by a Chinese container ship dragging its anchor along the sea floor but have yet to conclude whether the damage was deliberate.  Reuters

China Acquires Network of Strategic Ports.  Over the past decade, China has acquired a significant stake in a network of key ports around the world. Although Beijing’s stated goal is commercial, the U.S. and its allies have become increasingly concerned about the potential military implications. China is seen as being decades away from matching the international military presence of the U.S., but China now has the largest and fastest-growing navy in the world, which is increasingly venturing beyond the coasts of eastern Asia. For example, U.S. officials say China went from having no naval presence in the Indian Ocean two decades ago to maintaining six to eight warships there at any given time.  The U.S. remains the world’s biggest military power, with about 750 bases overseas, while China has only one. Stephen Watts of the Rand Corporation said China “would be easily overcome in these small outposts if it came to a shooting match.” But Isaac Kardon of the Carnegie Endowment for International Peace said China’s port network presents a different kind of challenge to U.S. security interests, separate from the threat of war. He said China is now the world’s number one commercial maritime power, and its strategic hold over international supply routes could be used to interdict or restrict U.S. trade and troop movements.  Washington Post

China Revamps Development Lending.  A new report by AidData at William and Mary College says China is fundamentally changing the way it lends money to developing nations. According to AidData, Beijing has started to move away from the large bilateral deals it sought to make a decade ago in favor of collaborative lending that reduces financial risk. This has resulted in a moderate reduction in spending, though China remains the world’s leading source of international development finance. China provided aid and loans worth $79 billion to low- and middle-income countries around the world in 2021, more than the $61 billion provided by the U.S. and the $53 billion provided by the World Bank. Between 2013 and 2017, China provided about $117 billion a year in such financing, which outpaced the U.S. by nearly three-to-one. China’s new, more cautious approach is in part due to the financial difficulties faced by many of the countries to which it has lent money.  About 80 percent of Beijing’s lending in the developing world goes to countries in financial distress, AidData says. China has also started to outsource its risk analysis to international institutions such as the World Bank’s International Finance Corporation, and it also is investing through syndicated loans led by Western commercial banks. AidData says this has made China a far more efficient lender and investor in the developing world.  Bloomberg Wall Street Journal 

ISRAEL AND HAMAS WAR

Israel Open to ‘Little Pauses’ in Gaza Fighting, Netanyahu Says.  Israeli Prime Minister Benjamin Netanyahu said on Monday that Israel would consider “tactical little pauses” in its military operations in Gaza to facilitate humanitarian aid and allow hostages released by Hamas to leave Gaza.  However, said there will not be a ceasefire unless all those being held captive are released.  Associated Press Reuters 

Netanyahu Sees Post-War Israeli Security Role in Gaza.  Israeli Prime Minister Benjamin Netanyahu said on Monday Israel will manage security in Gaza after the fighting there has ended. In an interview with ABC News, Netanyahu said that “for an indefinite period” Israel will have overall security responsibility in Gaza “because we’ve seen what happens when we don’t have it.” Meanwhile, the Israeli military said it exchanged fire with Hamas as Israeli forces advanced to encircle Gaza City.  Health officials in Gaza said the death toll there has surpassed 10,000.  Bloomberg Barrons Wall Street Journal

U.S. Planning $320 Million Weapons Transfer to Israel.  The Biden administration is planning to transfer $320 million worth of precision bombs to Israel. The administration notified Congressional leaders last week that it plans to transfer Spice Family Gliding Assemblies, a type of precision-guided weapon fired by warplanes.  Weapons manufacturer Rafael USA would transfer the bombs to its Israeli parent company Rafael Advanced Defense Systems for use by Israeli forces.  Israel requested the weapons before the Hamas attack on October 7.  Wall Street Journal Forbes Reuters 

Biden’s $14 Billion Request for Israel Would Boost Iron Dome Arsenal.  U.S. officials say the Biden administration’s $14 billion aid request for Israel would expand Israel's missile defenses, including by giving Israel new Iron Dome launchers equivalent to more than double what it currently has deployed. The package includes funds to build up to 100 more Iron Dome launchers and at least 14,000 of its Tamir interceptors, officials say. Wes Rumbaugh, a missile defense analyst at the Center for Strategic and International Studies, said that with three or four launchers per battery, that would be “conservatively 25 new batteries,” though he said some of the new equipment could be used to replace existing batteries rather than add new capabilities. The Defense Department confirmed that the missile defense component of the aid package is $3 billion for Iron Dome and $1 billion for another system called David’s Sling.  Bloomberg 

U.S. State Department Staffers Submit Dissent Memo Over Israel Policy.  U.S. State Department staff submitted a dissent memo that heavily criticizes the Biden administration’s handling of the Israel-Hamas war, specifically mentioning the unwillingness of officials to publicly condemn some actions by the Israeli military.  The memo highlights the wishes of staffers that the U.S. would support calls for a ceasefire in Gaza and take a more equitable stance in public and private messaging regarding Israel. The document states that current messaging “contributes to regional public perceptions that the United States is a biased and dishonest actor,” damaging U.S. interests worldwide. The staffers also expressed the need for the U.S. government to condemn “Israel’s violations of international norms, such as failure to limit offensive operations to legitimate military targets” and “communicate publicly that this goes against our American values so that Israel does not act with impunity.” The memo was regarded as “sensitive” but not classified, and the number of signers is unknown. The memo was reportedly authored by two staffers who deal directly with Middle Eastern affairs, according to an anonymous department employee.  Politico

Germany Approves 71 Million Euros in Aid for Palestinians, Promises 20 Million More.  Germany’s Development Ministry said on Tuesday that Germany will release 71 million euros ($75.8 million) in aid as part of an ongoing review of support for Palestinians and promised an additional 20 million in further funding.  Germany had suspended development aid to the Palestinian territories following the Hamas attack on Israel.  Citing “the fragile situation in the region,” the ministry said its review on Palestinian aid “has not yet been fully completed.” The German assistance is designated for providing basic services for displaced people in Gaza and assistance for Palestinian refugees in Jordan.  Reuters

Barcelona Port Union Refuses to Handle Military Equipment Amid Israel-Hamas War.  The Barcelona port stevedores’ union (OEPB) is refusing to load or unload military material and equipment amid the Israel-Hamas war and is calling for the protection of  civilians in Gaza.  The move follows a similar effort that Belgian transport unions started last week.  Josep Maria Doep, the secretary of the OEPB union, said groups promoting peace can help the union identify shipments containing military material.  He added that the refusal to move military shipments is largely symbolic and aimed at encouraging other Spanish ports to follow suit.  OEPB adopted a similar boycott in 2011 in response to the conflict in Libya.  Spanish government sources told state news last week that Spain doesn’t plan to send lethal military equipment for use in the Israel-Hamas war.  Reuters

Armed Drones Downed Near Northern Iraq Military Base Hosting U.S. Troops.  Air defenses intercepted three armed drones in two separate attacks targeting Al-Harir military base in northern Iraq, where U.S. and other international forces are based.  Iraqi Kurdistan’s counterterrorism service said the drones were downed over Erbil airport, which is around 40 miles northeast of the Al-Harir base.  The service said defenses at a military base defended against the drones.  A group called “Islamic Resistance of Iraq” claimed responsibility for the attack.  A U.S. Defense Department official said the attack caused no damage or casualties.  The official added that there have been at least 38 attacks against coalition forces since October 17.  The violence adds to regional unrest following the Hamas attacks on Israel.  Reuters 

THE UKRAINE UPDATE

Russian Media Reports Explosions Close to Military Bases in Crimea.  Russian media agencies on Tuesday reported a number of blasts close to military bases in Crimea. The explosions were reportedly heard near the Belbek military airfield close to Sevastopol, where the headquarters of Russia’s Black Sea Fleet is located.  The Russian-appointed government chief of Sevastopol, Mikhail Razvozhaev, said that Moscow’s anti-air systems intercepted and shot down five Ukrainian UAVs.  He said debris from the intercepted drones damaged a private home but did not cause casualties.  Meanwhile, the Russian Defense Ministry claimed that its air defense systems intercepted and destroyed 17 drones launched from Ukraine over both the Black Sea and Crimea.  The ministry said that eight drones were intercepted by electronic jamming and nine destroyed by air defense systems.  The reports could not immediately be independently verified.  Kyiv Independent Reuters

Ukraine Claims Russian Losses Near Avdiivka Includes 7,000 Soldiers.  Ukraine’s 47th Mechanized Brigade claimed on Monday that Russia has lost 100 tanks and 250 other armored vehicles and that 7,000 Russian soldiers have been killed or injured near Avdiivka in the Donetsk region over the last three weeks.  The unit posted a video on social media showing the devastation of Russian armor in the area by personnel from Ukraine’s 47th Mechanized Brigade, 110th Mechanized Brigade, and the Presidential Brigade "Hetman Bohdan Khmelnytskyi.”  The 47th said that Russian forces are “unable to surround Avdiivka thanks to the actions of our defenders.”  According to the Institute for the Study of War, geolocated footage from November 3 shows that Moscow made minor progress southwest of Krasnohorivka, four kilometers to the north of Avdiivka. The White House has estimated that Russia will most likely continue its offensive in the area and may “achieve some tactical successes," though National Security Council spokesperson John Kirby argued that these wins would come at the expense of thousands of untrained, unmotivated Russian soldiers. Kyiv Independent

Ukraine’s Zelensky Says It’s Not the Right Time for Elections.  Ukrainian President Volodymyr Zelensky said on Monday that it is not the right time for the nation to hold elections, dismissing the idea as “irresponsible” and asserting that it was necessary to instead focus on unity and the defense of Ukraine against Russia. Some U.S. Republicans, such as Senator Lindsey Graham, have urged Ukraine to vote to prove that the country is indeed democratic, prompting Ukrainian media to frequently feature the topic. Zelensky, who would be preparing for a presidential election in March of next year if not for marital law and Moscow’s invasion, said that “the waves with any things that are politically divisive must stop.” Bloomberg Reuters

Top E.U. Diplomat says Israel Conflict Impacting Ukraine Policy.  E.U. foreign policy chief Josep Borrell, speaking at the 2023 E.U. Ambassadors' Conference, said that the Israel-Hamas war is impacting aid policies and international support for Ukraine. Borrell noted that both wars are “completely different” in both their “causes and consequences," but maintained that the plight in the Middle East is having a “lasting” effect on the E.U. 's policy for Kyiv.  He also voiced concerns about nations in the Global South using the crisis in Israel to dispute the West’s view of Ukraine, saying that some countries may attempt “to underscore” what they consider as a “contradiction in our positioning or even a contradiction among Europeans.” He also called on European nations to move away from the idea of the "West against the rest." Kyiv Independent European Union

E.U. Set To Progress Ukraine Membership Talks.  The European Commission is meeting on Tuesday to decide whether to recommend formally opening talks on Ukrainian membership in the European Union. It is generally expected that Ukraine will be accepted, but with conditions attached. According to documents and people familiar with the matter, the Commission will recommend that formal negotiations begin upon completion of reforms and legislation on minorities, dealing with corruption, “de-oligarchization” and lobbying. When Ukraine was granted candidate status in June, the E.U. identified seven reform steps for Kyiv to take. Ukraine’s Radio Svoboda reports that four of those steps have been taken, relating to Ukraine’s judiciary, media independence, and money laundering. The Commission’s opinion is to be released tomorrow, and its recommendation will be discussed when E.U. leaders meet for a summit in December.  Bloomberg

Trump Declines Zelensky’s Invitation to Visit Ukraine Due to “Conflict of Interests.”  Former U.S. President Donald Trump reportedly declined Ukrainian President Volodymyr Zelensky's invitation to visit Ukraine. Trump said he had “great respect” for Zelensky but thought it would be “inappropriate” to visit Kyiv at the moment due to a conflict of interests, as the administration of President Joe Biden “is currently dealing with him.” Zelensky previously extended the invitation to Trump to show that the conflict with Russia cannot be resolved in “24 hours,” as Trump once claimed.  Kyiv Independent

CYBER AND TECH RUNDOWN

Iran-Linked Hackers Launch Data Theft Attacks Against Israeli Education, Technology Entities.  Suspected Iran-linked hackers are launching new forms of malware against Israeli organizations, according to Palo Alto Networks, a U.S. cybersecurity firm.  Agonizing Serpens is the name of the hacker group reported to be part of a broader offensive campaign against Israel as the conflict with the Hamas terrorist group continues.  Palo Alto reported Monday that it blocked destructive cyberattacks targeting educational and technology entities that began in January and continued through October.  The goal of the campaign appeared to be extraction of sensitive personal data and intellectual property.  Researchers said the hacking group leaked passport scans, emails and addresses on social media and Telegram channels.  The group also deployed wiper malware to destroy data.  Three previously unknown wipers were used in the latest attacks — MultiLayer Wiper, PartialWasher, and BFG Agonizer Wiper.  Hackers gained access to targeted environments through vulnerable internet-facing web servers.  The most recent hacking attacks did not involve ransom demands but the theft or destruction of significant data and disruptions of business operations.  The Record

OpenAI Reveals ‘ChatGPT Turbo’ Model with Enhanced Features at Developers Conference.  OpenAI, the maker of ChatGPT, opened a developers conference Monday with the announcement of a new model, ChatGPT-4 Turbo, featuring support for longer content length with more accuracy, higher control over model behavior, and new modalities, including a new natural and improved text-to-speech model.  The Turbo model’s knowledge of the world will be updated to April 2023 while the previous version operated with a knowledge base current as of September 2021.  The 128K context window can handle more than 300 pages of text in a single prompt.  Turbo is open to paying developers currently, with a production-ready model expected to be released in the coming weeks.  The conference opened with a live-streamed speech by CEO Sam Altman, who appeared with Microsoft CEO Satya Nadella to discuss how the companies’ partnership is proceeding.  Nadella pledged Microsoft resources to ensure that "you all as builders of these foundation models have not only the best systems for training and inference, but the most compute so that you can keep pushing forward on the frontier."  Altman lauded the partnership as the “best…in tech” and noted that a "gradual iterative deployment is the best way to address the safety challenges of AI... and move forward carefully."  Altman promised ChatGPT’s custom features will be improved alongside price reductions of up to 50 percent for newer models and tools.  Cybernews Reuters

Beijing Approves Public Release of Ant Group AI-Powered Financial Service Apps.  China’s Ant Group was granted permission by the Beijing government to roll out for public use products built on its own large language model.  The Hangzhou-based company, which is the fintech affiliate of Alibaba, said that multiple products will be based on its foundational Bailing LLM.  Ant applications include a chatbot that answers questions for customers and another that assists financial professionals.  AI-powered solutions are expected to offer help to a financial sector hit by credit losses stemming from China’s property crisis in areas from marketing and investment advisory to anti-money laundering compliance.  Ant vice-president Xu Peng said that “Ant’s LLM … aims to create value in the industry” with additional public AI applications based on its development of innovative products across vertical industries.  In early September, Ant unveiled a LLM called AntfinGLM powered by Bailing as an upgrade to Zhixiaobao, the firm’s “intelligent financial assistant” for wealth management and insurance.  At that time, Ant also introduced Zhixiaozhu, an AntfinGLM-based application to assist practitioners in investment research, insurance and marketing.  South China Morning Post Financial Times

Chinese Start-Up Says Open Source LLM Model Boasts Better Metrics Than U.S. Rivals.  A Chinese company, 01.AI, in less than eight months has developed an AI open source model that performs better than leading open-source LLM’ss already on the market, including Meta Platform’s Llama 2.   Hugging Face posted evaluations over the weekend ranking the Chinese model first in the category for pre-trained base LLMs.  The Beijing-based company’s LLM is now available to developers globally in Chinese and English.  The 01.AI founder, Lee Kai-fu, noted that Meta’s Llama 2 has been the “gold standard” in open source LLM’s but his company has been able “to provide a superior alternative not just for China but for the global market.”  Lee said that U.S. restrictions on AI technology exports to China are “regrettable,” but noted that 01.AI has sufficient chip stockpiles for the foreseeable future.  He said, “we basically bet the farm and overspent our original bank account.  We felt we had to do this.”  Lee worked at Google, Microsoft, and Apple before moving into venture capital and put together a team of more than 100 people at 01.AI, with colleagues from U.S. companies and Chinese nationals who have been working overseas.  “Our proprietary model,” Lee said, “will be benchmarked with GPT-4” and with capabilities in English and Chinese will offer advantages to global concerns like bank and trading companies.  01.AI plans to add more languages in the future.  South China Morning Post

Intel Shelves Expansion of Chipmaking Operations in Vietnam.  Intel has reportedly shelved plans to expand its chip manufacturing operations in Vietnam.  Intel has its largest factory for assembling, packaging and trading chips in Vietnam, which was seeking an expansion in the company’s operations after the U.S. agreed to support the Southeast Asian country’s chips industry during President Joe Biden’s visit in September.  However, a source who participated in a meeting between U.S. officials and businessmen after Biden’s visit said Intel decided in July that it would not expand its Vietnam operations.  Intel did not specify its reasons, but another source who attended separate meetings said the company was concerned about Vietnam’s power supplies and excessive bureaucracy.  Intel said Vietnam will remain a “critical part” of its manufacturing operations.  The U.S. embassy in Hanoi and the Vietnamese government did not comment on the matter.  Vietnam is seeking to expand its chips industry to position itself as an alternative to China and Taiwan.  Reuters 

ELSEWHERE IN THE WORLD

Australia and China Agree to Resume Annual Leaders Meetings as Trade Restarts.  Australian Prime Minister Anthony Albanese met with Chinese Premier Li Qiang in Beijing on Tuesday.  Albanese, who met with President Xi Jinping on Monday, said his meeting with Li marked the resumption of an annual leaders’ dialogue that will continue as relations between Canberra and Beijing stabilize.  Albanese is visiting China to mend Sino-Australian relations, which have mainly been damaged by security concerns, to bolster trade ties.  On Tuesday, Chinese customs data showed that China’s October imports from Australia increased 12% from last year to $11.96 billion.  Reuters

Canada Issues Nigeria Travel Advisory after Explosion at Embassy.  An explosion at Canada’s High Commission in Nigeria killed two people on Monday.  The embassy said it is temporarily suspending operations “until further notice” and issued a travel advisory, warning against non-essential travel to Nigeria “due to the unpredictable security situation.”   Canadian Foreign Minister Melanie Joly said Ottawa is investigating the incident, which came after the U.S. and Britain warned on Friday of an “elevated threat to major hotels in Nigeria’s largest cities” and advised against travel to the West African country.  Reuters

Peru’s Foreign Minister to Resign After Failing to Arrange Meeting Between Peruvian and U.S. Presidents. Peru’s foreign minister, Ana Cecilia Gervasi, resigned from her position on Monday. She had been in office for less than a year.  Many speculate that her resignation came due to criticism for her failure to arrange a meeting between Peruvian President Dina Boluarte and President Joe Biden during Boluarte’s visit to the U.S.  Congress has reportedly summoned Gervasi to testify as to why the plans shared by her administration alluded to a “bilateral meeting” that had not come to pass.  Gervasi said in a post on X that the itinerary she had submitted was accurate.  The Peruvian ambassador to the U.S., Gustavo Meza Cuadra, also resigned, saying he was “responsible for preparing” the visit.  Reuters Bloomberg

Cuba Hosts Business Fair with Hopes of Attracting Foreign Investment.  Cuba hosted as many as 800 foreign companies on Monday to lobby for new investments. U.S. sanctions have long discouraged foreign companies from doing business with Cuba.  Cuban foreign trade minister Ricardo Cabrisas said in a speech at the conference’s opening, “Today we work ...to minimize the negative impact of the economic, financial and commercial blockade.”  Cuban President Miguel Diaz-Canel told participating companies that participation at the meeting was the biggest turnout in “the last five years” and demonstrates growing faith from the international community in the Cuban economy.  One attendee, Jay Brickman of Crowley, a shipping and logistics company, mentioned that this year’s conference placed a strong emphasis on “medium and small businesses and a little less on state entities.” American pressure still prevents significant development, though. In September, Biden announced plans to support the private industry in Cuba, though any plans to do such have yet to materialize.  The fair notably came one day after Cuban Prime Minister Manuel Marrero met Chinese President Xi Jinping in Beijing, where they signed economic cooperation documents.  Reuters

The data cutoff for this product was 8:00a.m. E.T.

Ethan Masucol, Bruce Wilmot, Emma Fisk, and Katharine Campbell contributed to this report.

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