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10:00 AM ET, Wednesday, January 10, 2024

Daily national security briefings aren’t just for the president anymore. The Cipher Brief uses AI partnered with human analysis and expert perspective to keep you up-to-date on national security news from around the world. 

Here’s what’s happening now:

THE TOP STORIES

U.S., China resume military policy coordination communications.  US and Chinese defense officials held policy coordination talks at the Pentagon, marking the first in-person meetings since before the pandemic. Deputy Assistant Secretary of Defense for China, Taiwan, and Mongolia, Michael Chase, emphasized the need for safe operations in the Indo-Pacific region and stressed the US commitment to its one-China policy and "peace and stability across" the Taiwan Strait. The talks also addressed Russia's war in Ukraine, North Korea's provocations, and the importance of maintaining contacts between Washington and Beijing to prevent dangerous miscalculations. China urged the US to address its concerns, stating it will not compromise on Taiwan and called for a reduction in "provocative actions" in the South China Sea. The policy coordination talks, typically held annually, were canceled by Beijing in 2022 following then-House Speaker Nancy Pelosi's visit to Taiwan in August. The US and China have been working to restore military-to-military contacts after an agreement struck by Presidents Biden and Xi in November 2021.  Bloomberg  South China Morning Post  Reuters

Houthis launch major drone, missile attacks in Red Sea, prompting U.S. response.  Houthi rebels conducted a major missile and drone attack on commercial shipping routes in the Red Sea. The latest incident, coming just one day after U.S. Secretary of State Antony Blinken warned of “consequences” for continued Houthi attacks, triggered a response from five US and UK warships patrolling the critical global trade region. US Central Command reported that allied forces successfully intercepted and shot down 18 drones, two anti-ship cruise missiles, and one anti-ship ballistic missile during the attack. While the assault was complex, it did not result in any reported injuries or damage to merchant vessels. This marks the 26th Houthi attack on commercial shipping in the Red Sea since November 19. The Houthi group, based in Yemen, has intensified its attacks, demanding an end to Israel's conflict with Hamas in Gaza.  Bloomberg Reuters

ISRAEL AND HAMAS WAR

Blinken meets with Israeli leaders, focuses on preventing spread of Gaza war.  Secretary of State Antony Blinken met with Israeli officials in Tel Aviv, where they focused on trying to prevent the war in Gaza from spreading throughout the region. As tensions between Israel and Hezbollah along the border with Lebanon intensify, Blinken told reporters that “Israelis need to know security so they can return to their homes in northern Israel” and that he believes the Israeli government is committed to diplomacy as the best way to achieve that security. Israeli officials said that if diplomatic efforts should fail, military intervention remains an option.  Blinken also said that Israel has agreed to allow a U.N. mission to visit northern Gaza to discuss the return of displaced residents and what humanitarian aid is needed.  Israeli Defense Minister Yoav Gallant told Blinken that operations in the Khan Younis area of southern Gaza will intensify and will continue until Hamas leadership is identified and Israeli hostages are returned. He also said that to prevent a wider war, more pressure must be put on Iran, which sponsors both Hezbollah and Yemen’s Houthi rebels attacking shipping in the Red Sea.  Regarding post-war plans, Blinken said Israel must “stop taking steps that undercut Palaestinians’ ability to govern themselves effectively.” In particular, Blinken criticized Israeli settler violence “carried out with impunity,” expansion of settlements, demolitions and evictions.  Blinken also reiterated that a lasting peace includes “the realization of a Palestinian state.”  Wall Street JournalWashington Post Financial Times Reuters Bloomberg

Israeli delegation in Egypt to discuss resuming Gaza hostage talks.  Egyptian officials said an Israeli delegation met with Egyptian mediators in Cairo on Tuesday in an attempt to restart talks on hostage releases in Gaza. Israeli officials estimate that approximately 130 hostages remain in Gaza. Egyptian officials said Hamas has ruled out releasing Israeli soldiers being held hostage until there is a permanent ceasefire, but Israeli officials have told Egyptian and Qatari mediators that the demand is unrealistic. Egyptian officials said Israel has suggested it would be willing to accept a two week ceasefire and that it would be willing to discuss the return of Palestinians to northern Gaza and the withdrawal of Israeli forces from some locations.  Wall Street Journal

Israeli far right calls for Palestinians to resettle outside Gaza.  There is a growing call among far-right Israeli ministers for Palestinians to leave Gaza and for Israelis to build settlements there. Prime Minister Benjamin Netanyahu thus far has refrained from public comment on the call by a key segment of his governing coalition. Secretary of State Antony Blinken said he told Netanyahu yesterday that the U.S. “unequivocally rejects” any proposals for resettling Palestinians outside Gaza.  Wall Street Journal

German FM says suffering of Palestinian civilians in Gaza ‘cannot go on.’  German Foreign Minister Annalena Baerbock warned on Tuesday that the suffering of Palestinian civilians in Gaza “cannot go on,” calling on the Israeli military to “do more to protect” civilians in the enclave.  She added that Gaza and the West Bank belong to Palestinains and that they should not be displaced from those territories.  Baerbock also called for the opening of more border crossings into Gaza and more humanitarian pauses to the fighting to allow for greater delivery of aid into the enclave.  Baerbock’s comments came during a visit to Cairo.  She visited Israel on Sunday and visited the Rafah crossing on Tuesday.  Politico

Britain’s Cameron says ‘worried’ Israel may have broken international law in Gaza.  UK Foreign Secretary David Cameron expressed concerns that Israel may have violated international law during the Gaza conflict and called on the country to do more to allow aid to flow into the region. Cameron's comments mark a shift in tone from the UK, which has generally been supportive of Israel's actions against Hamas. He urged Israel to allow 500 trucks of aid to enter Gaza daily, up from the current 150, to prevent widespread hunger. This statement coincided with US Secretary of State Antony Blinken's call for Israeli leaders to rein in settler violence in the West Bank and stop undermining Palestinian governance, reflecting growing frustration in the Biden administration with Israel's handling of the conflict.  Bloomberg

Hezbollah strikes Israeli military base, says it does not want wider war.  Hezbollah launched explosive drones from Lebanon, targeting an Israeli army base in Northern Israel.  The Iran-backed group says the strike was in response to recent Israeli assassinations in Lebanon. Simultaneously, Israel conducted an attack that killed three Hezbollah fighters in south Lebanon. These events occurred within the context of heightened hostilities between Israel and Hezbollah, which have been ongoing since October when Hamas attacked Israel from Gaza. Hezbollah's deputy leader, Naim Qassem, stated that while the group did not want to escalate the conflict, their response would be significant if Israel continued its actions. Additionally, Israel claimed to have killed the commander of Hezbollah's aerial unit in southern Lebanon, a claim rejected by Hezbollah.  Reuters

THE UKRAINE UPDATE

Ukraine, allies held secret meeting in Saudi Arabia on peace plan.  A secret meeting took place in Saudi Arabia last month between Ukraine, its Group of Seven (G7) allies, and some Global South countries to garner support for Ukraine's conditions for peace talks with Russia. The meeting aimed to discuss Ukraine's "peace formula" and plans for moving the peace process forward. However, there was no major progress, as Ukraine and its G7 allies resisted calls from Global South nations to engage directly with Russia. China, Brazil, and the United Arab Emirates did not send representatives to the meeting, and Beijing is seen as influential in influencing Moscow. Ukraine and its allies plan to hold another meeting in Switzerland, inviting over 100 countries, to discuss the peace blueprint and potential leader-level summits in the coming months. Bloomberg   Kyiv Independent 

Zelensky makes surprise visit to Lithuania to discuss war.  Ukrainian President Volodymyr Zelensky made an unannounced visit to Lithuania, discussing the war, Ukrainian integration into the EU and NATO, and cooperation on electronic warfare and drones. Lithuania has been a steadfast supporter of Ukraine amid its conflict with Russia, offering significant financial support. Zelensky, who reportedly arrived in an airplane with the Ukrainian coat of arms displayed, expressed gratitude for Lithuania's support during Russia's aggression. Lithuania has committed around 1.4% of its GDP in aid for Ukraine, ranking second highest among Kyiv's allies, according to the Kiel Institute for the World Economy. Zelensky's visit to the Baltic states follows sustained Russian airstrikes on Ukraine at the start of the year, marking a challenging period for the war-torn country.  CNN

Zelensky says Russian defense industry slowing down.  Ukrainian President Volodymyr Zelensky said on Tuesday that there are “clear signs of a slowdown” in Russia’s defense industry, though he did not provide evidence for his assertion.  Despite the claim, Zelensky called for stronger sanctions to further curb Russia’s defense production, noting that “sanctions loopholes must also be blocked 100%.”  Russian officials have said that production of military equipment has increased in recent years.  Reuters

Ukraine wants more Western air defenses ‘right now’.  Ukraine's Foreign Minister, Dmytro Kuleba, hopes that Wednesday’s NATO-Ukraine Council meeting will result in new commitments to bolster Ukraine's air defense capabilities in response to recent Russian air attacks. Ukraine is seeking modern systems and ammunition to fend off these attacks. The meeting was called after Russia launched an upsurge of attacks on Ukrainian cities using Iranian-made drones and missiles. Germany's Chancellor, Olaf Scholz, has urged EU nations to provide more military aid to Ukraine, and Kuleba is calling for regular supplies of missiles for air defense systems. Kuleba added that strengthening Ukraine's air defense not only protects the country but also prevents Russian missiles or drones from accidentally entering NATO airspace.  Politico

Ukraine producing more drones than state can purchase, minister says.  Ukrainian manufacturers have significantly increased the production of Unmanned Aerial Vehicles (UAVs), leading to a situation where Kyiv's current budget for drone procurement cannot keep up with the production pace. Mykhailo Fedorov, Ukraine's deputy prime minister responsible for digital matters, has been advocating the use of drones to combat the Russian invasion. He highlighted the market's rapid growth compared to available funding, calling for increased financing and expanded markets to lower prices through competition and local production. The 22-month war between Ukraine and Russia has witnessed extensive use of UAVs, offering constant aerial surveillance and the capability to target high-value assets like air defense systems and advanced radars. Around 200 Ukrainian companies are now manufacturing drones, with approximately 70 firms securing contracts to supply drones to the state.  Reuters

Drones reportedly strikes oil depot in Russia.  Several drones reportedly targeted "facilities of a fuel and energy complex" in Russia's Oryol region on Tuesday, according to regional governor Andrey Klychkov. Ukrainian kamikaze drones were allegedly responsible for hitting the Orelnefteprodukt oil depot and a local energy provider, Oryolenergo, with three people reportedly injured. Another drone fell on a non-residential building near Oryol without causing casualties. While Klychkov attributed the attack to Ukraine, Kyiv has not claimed responsibility, and Ukrainian authorities rarely comment on attacks inside Russia. Russia has escalated attacks on Ukraine's cities and critical infrastructure as temperatures dropped, following a similar strategy as in the previous year. Ukraine has vowed to defend itself and respond to Russian attacks on its critical infrastructure. Kyiv Independent 

ISW: Russian media attempting to sow political instability in Moldova.  Russian state media appears to be supporting pro-Russian separatists in Moldova, potentially aiming to create political instability and division, according to a report by the Institute for the Study of War. Vadim Krasnoselsky, president of the Russian-backed breakaway region Transnistria, expressed concern about Moldova's increased military activity, which includes higher defense spending, NATO exercises, and military aid from European nations. Transnistria, internationally recognized as part of Moldova, has been occupied by Russian troops since the 1990s. Krasnoselsky rejected the idea of Moldova defending itself against Russia and accused Moldova of escalating tensions. The report suggests that Russia's efforts to destabilize Moldova may be related to changes in the Moldovan Customs Code, requiring Transnistrian companies to pay import customs duties to Moldova, potentially impacting the profits of individuals with ties to Russia.  ISW Kyiv Independent 

US, Ukraine, allies denounce North Korea's alleged ballistic missile transfers to Russia. A coalition of dozens of countries, including Ukraine, the UK, and the US, have jointly condemned alleged ballistic missile transfers between North Korea and Russia, in violation of United Nations sanctions. The group, which includes the European Union, Argentina, Australia, Japan, South Korea, and others, expressed their strongest possible condemnation, citing the use of these weapons against Ukraine in late December and early January. They argued that such transfers increase suffering in Ukraine, support Russia's aggression, and undermine global non-proliferation efforts. The coalition is deeply concerned about the security implications of this cooperation in Europe, the Korean Peninsula, the Indo-Pacific region, and worldwide. The issue will be raised with the UN Security Council. Russia declined to comment on the allegations. Reports of such weapons transfers emerged in 2022, and speculation intensified after a summit between Vladimir Putin and Kim Jong Un. North Korea recently announced successful satellite launches and heightened tensions with South Korea.  Al Jazeera

ANALYSIS — Ukraine’s resistance movements.  Amid almost two years of full-scale war, Ukrainians in Russian-occupied territories are engaging in various forms of resistance, conveying the message that Russia's hold on these areas is temporary and weak. These acts of resistance range from intelligence gathering to information campaigns to direct actions. Ukrainian special forces soldiers maintain networks of informants, often ordinary civilians, who provide critical information on Russian movements. The information is then used to coordinate strikes against Russian forces. Resistance groups like Atesh operate both within the occupied territories and within Russia itself, engaging with Russians sympathetic to their cause. Meanwhile, movements like Yellow Ribbon focus on symbolic acts of resistance, such as tying yellow ribbons, to inspire and remind both those under occupation and those in Ukrainian-controlled territory of their shared goal of liberation. These acts of resistance persist despite the challenges and risks they entail.  Kyiv Independent 

Belgian PM says EU to increase support of Ukraine.  ​​Belgium, which assumed the presidency of the European Council, has pledged to increase its support to Ukraine. Prime Minister Alexander de Croo stated that the European Union (EU) will intensify its assistance to Ukraine while emphasizing progress on Ukraine's path to EU accession. De Croo discussed this commitment with German Chancellor Olaf Scholz and Ukrainian President Volodymyr Zelensky. Additionally, Belgium is sending two F-16 fighter jets and 50 training personnel to Denmark to support the training of Ukrainian pilots as part of the "fighter jet coalition" aimed at training Ukrainians to operate F-16s. Belgium has previously advocated for using frozen Russian assets to fund Ukraine's reconstruction and for sanctions on Russian diamonds, which were included in the EU's 12th package of sanctions in December 2023.  Kyiv Independent 

ELSEWHERE IN THE WORLD

The Americas

White House Demands Official Notifications After Austin's Hospitalization.  The White House has ordered new procedures for cabinet secretaries that require notification any time they are unable to perform their duties.  This comes after new details have emerged that say Defense Secretary Lloyd J. Austin III had been diagnosed with prostate cancer a month ago and had surgery on Dec. 22 without informing President Biden or his staff. The White House chief of staff, Jeffrey D. Zients, has reportedly ordered a review of procedures. Despite the frustration and concerns about secrecy, the White House confirmed that President Biden would not fire Mr. Austin and still had "full faith and confidence" in him. Mr. Austin's doctors disclosed that he had been diagnosed in "early December" and did not describe the surgery as "elective." The Defense Department has initiated its own review of the incident.  NY Times  Wall Street Journal 

Streamlined Pentagon need to bolster U.S. development of AI to counter China’s military advancements.  The United States is focusing on restructuring the Pentagon's bureaucracy alongside building AI capabilities to respond to China's military advancements. The Replicator Initiative, aiming to deploy thousands of autonomous systems within the next 18 to 24 months, plays a central role in countering China's rapid military buildup. Michael Horowitz, US deputy assistant secretary of defense, emphasized the need for "precise mass" in military capabilities and how the initiative is about showing that the US can develop and deploy capabilities at speed and scale. Streamlining the Defense Department is a significant challenge, given bureaucracy, inertia, and turf battles. Horowitz believes in the importance of integrating emerging capabilities into military planning and fostering international cooperation in the responsible use of autonomous weapons.  South China Morning Post 

ANALYSIS — Defense industry revived amid global tensions.  The Financial Times editorial board writes that the world is facing increased geopolitical tensions and the highest risk of conflict since World War II. Ongoing conflicts in Ukraine, the Israel-Hamas conflict, and regional clashes in the Red Sea, Lebanon, and Iran pose a risk of broader regional wars. China's growing military assertiveness adds to the global security concerns. This rising threat environment has led to a significant increase in orders for the defense industry, with major defense companies such as Lockheed Martin, General Dynamics, and BAE Systems reporting robust order books. Global military expenditure reached a record $2.2 trillion in 2022. Investors have also shown interest in defense stocks, with the MSCI's global defense benchmark rising about 15% in the past year. Demand for military hardware, including drones, sensors, precision missiles, and cybersecurity solutions, remains strong. To meet this demand, defense companies need to enhance supply chain resilience, collaborate on diversification, and invest in talent and innovation. Financial Times

US defense official to visit Guyana amid border tensions with Venezuela.  U.S. Deputy Assistant Secretary of Defense for the Western Hemisphere Daniel P. Erikson is visiting Guyana to strengthen a bilateral defense and security partnership amid tensions with Venezuela over the disputed Esequibo region. While Guyana and Venezuela agreed to avoid the use of force in the dispute last month, the U.S. aims to support regional stability in the area. The Esequibo region, though generally recognized as part of Guyana, has been contested by Venezuela in recent years due to significant oil and gas discoveries. Western diplomats are seeking mediation from Brazilian President Luiz Inacio Lula da Silva's government, which maintains relations with Venezuela.  Reuters

Ecuador violence surges, Noboa declares emergency.  An armed gang stormed a public television station in Ecuador during a live broadcast, threatening employees and highlighting the country's struggle against drug-related violence. The assailants appeared to be members of the Los Tiguerones prison drug gang. During the attack, masked men with handguns kicked employees, and what sounded like gunfire was heard in the background. Ecuador's new president, Daniel Noboa, declared a state of emergency and proposed classifying more than a dozen gangs as terrorist organizations due to the ongoing internal armed conflict. The drug trade has led to a surge in violence in Ecuador, with a significant increase in homicides in recent years, making it one of the world's highest homicide rates.  Wall Street Journal Reuters

Asia and Oceania

U.S. using new economic tools to target China’s military expansion.  The US is expanding its campaign against China beyond trade and technology to focus on finance. President Biden's Executive Order 14105, set to take effect in the coming months, will bar US investments in Chinese entities involved in next-generation weaponry development, including semiconductors, quantum computing, and artificial intelligence. This move aims to choke off financing for industries critical to China's military and cyber capabilities. While the full impact remains uncertain, it is part of a broader strategy to treat China as a strategic adversary rather than a partner, driven by concerns that China is leveraging private-sector opportunities to obtain cutting-edge technology for military purposes.  Bloomberg 

China’s envoy to U.S. says Beijing has no compromise on Taiwan independence.  China's Ambassador to the U.S., Xie Feng, declared that Beijing has no room for compromise with those advocating "Taiwan independence" ahead of the island's presidential election. Xie emphasized that separatism is incompatible with peace in the Taiwan Strait. China views the leading presidential candidate Lai Ching-te, Taiwan’s current vice president and the candidate for the ruling Democratic Progressive Party, as a separatist seeking Taiwan’s independence.  While Xie did not specify China's reaction if Lai wins, he reiterated that Taiwan is a sensitive issue in U.S.-China relations, urging the Biden administration to take concrete actions to avoid supporting "Taiwan independence." Separate from tensions over Taiwan, Xie highlighted potential areas of cooperation between China and the U.S., including the Middle East, Ukraine, North Korea, trade, energy, agriculture, law enforcement, education, and people-to-people exchanges.  Bloomberg

US and China ambassadors identify areas of cooperation as well as danger zones.  The US and Chinese ambassadors commemorated the 45th anniversary of diplomatic ties, highlighting areas of cooperation and disagreement. US Ambassador to China Nicholas Burns praised Beijing for actions against fentanyl precursors and the resumption of military-to-military dialogues while emphasizing the need for technology export restrictions. China's Ambassador expressed concern that Washington's characterization of China as a "competitor" was akin to containment, hindering bilateral relations. Disagreements also persisted on issues like Taiwan and technology restrictions. Both envoys expressed optimism about joint efforts on artificial intelligence to manage risks and challenges, with a focus on avoiding scenarios where machines wage war against humans. The Pentagon's announcement of high-level military-to-military discussions highlighted improving ties in the military realm, but disagreements persisted over issues such as military harassment in the South China Sea.  South China Morning Post 

Taiwan presidential candidate Lai says he is willing to reopen talks with China. Taiwan's leading presidential candidate, Lai Ching-te, expressed a desire to reopen dialogue with China after almost eight years of strained communication. Lai, Taiwan’s current vice president, said the door is always “open” to engagement based on “equality and dignity” as part of efforts to maintain peace and avoid war.  However, he also emphasized that if he is elected president, he will maintain the island's de-facto independence in the face of China’s political, military, and economic threats. Lai also acknowledged the need to build up Taiwan's defense and economic security while strengthening global partnerships with democracies to deter Chinese aggression. Taiwan’s upcoming elections are pivotal, potentially impacting cross-strait dynamics and the broader China-US geopolitical landscape.  Associated Press

China details Fujian cross-strait ‘model zone’ ahead of Taiwan elections.  China has unveiled details of its plan to make Fujian, a coastal province, a "model zone" for integrated development with Taiwan. The measures aim to boost cross-strait ties and make Fujian the primary mainland gateway for Taiwanese residents and companies. The policy paper includes 14 measures across five sectors, such as support for Taiwanese service trade businesses investing in Fujian's Pilot Free Trade Zone and mutual recognition of professional qualifications. However, Taiwan's ruling Democratic Progressive Party (DPP) criticized Beijing's integration plans as an attempt to benefit from Taiwanese funds and talent. The outcome of Taiwan's presidential vote is expected to impact cross-strait relations and US-China ties.  South China Morning Post

Taiwan's de facto ambassador to US meets US House speaker.  Taiwan's de facto ambassador to the United States, Alexander Yui, met with U.S. House Speaker Mike Johnson, a move that sparked strong criticism from Beijing. Taiwan’s foreign ministry said that Yui, who assumed his role last month, expressed gratitude to the U.S. Congress for its consistent bipartisan support and commitment to strengthening Taiwan's defenses. The ministry also said this was the first meeting between Yui and Johnson. China voiced anger at the meeting, warning U.S. lawmakers against supporting "Taiwan independence separatist forces" and intervening in Taiwan's elections. Beijing routinely opposes official contacts between Taiwanese and U.S. officials, viewing them as interference in its internal affairs.  Reuters 

Taiwan disenfranchises thousands of voters to secure elections from China.  Taiwan's commitment to safeguarding its elections from Chinese interference has led to a unique voting system requiring in-person ballots, disenfranchising certain groups, like police officers and medical workers who can't leave their posts, as well as Taiwanese living abroad. The paper-based system is deemed uniquely resistant to hacking, which is critical due to concerns about China’s interference in Taiwanese elections.  However, calls for reform have emerged. The ruling Democratic Progressive Party (DPP) suggests absentee ballots only for those in Taiwan unable to vote in person, fearing that widespread absentee voting from outside of Taiwan could favor the opposition Kuomintang (KMT).  The DPP is most concerned that overseas absentee voting would allow more Taiwanese businesspeople who live in China to vote, arguing that these businesspeople are believed to mostly be KMT supporters and could be more easily influenced by Beijing. The KMT defends its outreach to Taiwanese voters in China as promoting democratic rights.  The DPP has also looked to other Taiwanese overseas, in places like Southeast Asia and the U.S., for support.  There is little reliable data on overseas voter turnout, the extent of their impact, and how susceptible this group is to outside influence.  Bloomberg

Xi says world needs stable China-U.S. relations.  Chinese President Xi Jinping, in response to a letter from an Iowa native he first met in 1985, emphasized the importance of stable Sino-U.S. relations for the future and destiny of the planet. Xi said that stability in China-U.S. relations is needed given the two countries’ roles as the world's largest developing and developed countries. Bilateral ties have faced challenges, including a trade war and issues surrounding the origins of COVID-19. Although communications have improved since Xi's talks with President Joe Biden in November, tensions persist, particularly concerning Taiwan and friction on trade and technology exports.  Xi expressed his sentiments on Sino-U.S. relations in a letter to Sarah Lande, whom he initially met in 1985 when leading a delegation to Iowa. The two reunited in 2012 in Iowa and again in November 2023 when Lande attended a dinner for Xi in San Francisco.  Reuters

China promotes military transport plane to foreign buyers.  China is actively promoting its Y-20 Kunpeng military transport aircraft for international sales, with the state-owned Xian Aircraft Industrial Corporation (XAIC) expanding production capacity to meet potential demand. The Y-20, dubbed the "chubby girl" for its large fuselage, has served as a heavy lifter for the People's Liberation Army since 2016, capable of carrying up to 66 tonnes. XAIC has delivered nearly 100 Y-20s to the PLA Air Force. The Y-20 is comparable to the Soviet Ilyushin Il-76 and the Boeing C-17. The transport plane entered the international market in November, targeting countries seeking strategic military transport capabilities. China aims to use the Y-20 to expand its strategic relationships and cooperation with buyer nations. XAIC employs advanced assembly techniques to build the plane, including a "pulse line" similar to automobile production, and over 90% of the aircraft's parts are made using digitized systems and precision technology. The push to sell the plane abroad reflects China's ambitions to expand its influence in the global arms market.  South China Morning Post 

ANALYSIS — China upgrades relations with record number of countries in counter to U.S.  Chinese President Xi Jinping intensified efforts to upgrade ties with a record number of countries in 2023, notably from the developing world, as part of a strategy to reshape the U.S.-led global order. Last year, Beijing upgraded its relations with 17 countries and territories, a pace unprecedented in Xi's first decade in office. China's approach involves leveraging aid, trade, and investments to win over developing countries that constitute the majority of the global population. Xi aims to consolidate partnerships with nations that depend on China economically or share similar worldviews. This contrasts with the U.S., which has a diplomatic strategy mostly dependent on coalitions with wealthy nations. Beijing also labels its relationships with partner countries differently, using terms like "all-weather strategic partnership" and "strategic" to denote strong friendships and potential coordination on international and regional affairs. The shift in Xi's diplomatic approach also notably involves fewer international travels for him and more visits by global leaders to China.  Bloomberg 

North Korea’s Kim calls South Korea ‘principal enemy.’  North Korean leader Kim Jong Un has escalated pressure on South Korea by labeling it the "principal enemy."  Speaking during a visit to munitions factories, Kim called South Korea a hostile state with a nearly 80-year history of confrontation that should no longer be seen as a partner for reunification.  Kim also pledged that North Korea is ready for war but has no intention to start one.  Kim’s remarks came amid heightened tensions after North Korea fired artillery near the South Korean island of Yeonpyeong Island.  South Korea's spy agency suggests North Korea's provocations aim to attract attention before the April parliamentary elections.  North Korea's pattern of missile and nuclear tests during elections aligns with its opposition to conservative politicians, like South Korean President Yoon Suk-yeol.  Bloomberg France 24 Associated Press

North Korea’s Kim highlights arms production amid criticism of missile transfers to Russia.  Beyond tensions with South Korea, Kim Jong Un mentioned at visits to the arms factories that recent “shortcoming” in organization of munitions production need to be addressed, with emphasis on the “strategic importance of the production of major weapons.” Kim’s visit to the factories comes amid condemnation of Russia’s procurement of North Korean ballistic missiles for use in its invasion of Ukraine.  U.S. and Ukrainian officials have most recently said that the missiles were used in Russian attacks on Kharkiv in early January.  The U.S. and its allies are set to raise the issue with the U.N. Security Council this week.  Reuters

Indonesia, Philippines discuss energy cooperation and South China Sea.  Indonesian President Joko Widodo met with Philippine President Ferdinand Marcos Jr. in Manila to discuss bolstering energy and security cooperation, as well as tensions in the South China Sea. Marcos said he and Widodo discussed cooperation among ASEAN members on issues in the South China Sea, without elaborating on details. This came after Indonesia’s foreign minister said that the country is ready to work with other Southeast Asian countries to finalize a code of conduct for the South China Sea.  Widodo added that agreed with Marcos to strengthen defense ties and existing border cooperation agreements.  The Philippines and Indonesia previously demarcated their maritime borders in the Mindanao and Celebes Seas in a 2014 pact.  They also have a 1975 border patrol agreement to address piracy and smuggling issues.  Marcos and Widodo also signed a memorandum of understanding on energy ties to boost cooperation on supplies of fuels like coal and liquefied natural gas.  Bloomberg Nikkei Asia Reuters 

Militants in Pakistan kill three police officers, civilian.  Militants in northwestern Pakistan attacked a police checkpoint along the Indus Highway on Wednesday, killing three police officers and a civilian.  The attack was the third on police in the past three days in Khyber Pakhtunkhwa province.  A search is underway to find the attackers.  No group immediately claimed responsibility for the attack, but authorities suspect the Pakistani Taliban was behind it.  Both the Pakistani Taliban and Islamic State have claimed responsibility for recent attacks in the area.  Associated Press 

Europe

German industry calls on Berlin to support military protection of Red Sea vessels.  German industries are urging the government to provide military support in securing the Red Sea for container vessels. They expressed concerns that attacks by the Iranian-backed Houthis in the Red Sea are disrupting trade, forcing global shippers to redirect vessels to alternative routes, such as around southern Africa, that are more expensive and take longer.  German industry warned that these disruptions could impact production in Germany, Europe’s top economy.  The Red Sea is crucial for Germany, accounting for about 10% of its exports and imports and providing key raw materials and components from Asia.  The German Defense Ministry is considering participation in the U.S.-led naval mission "Prosperity Guardian," which is tasked with protecting commercial shipping in the southern Red Sea and Gulf of Aden.  Reuters

Germany’s high-tech defense industry changing amid Ukraine war pressures.  German high-tech defense firms are adjusting their business strategies, shifting from a boutique approach to mass production for faster delivery of systems. The change comes amid heightened demand for military equipment as the Ukraine war continues.  The shift is in response to the “Zeitenwende,” or turning point, that came after the start of the conflict, marked by Germany’s €100 billion cash infusion into its armed forces and commitment to exceed NATO’s 2% GDP defense spending target.  The imperative of speed and lingering impacts of the Covid-19 pandemic on supply chains has forced high-tech defense manufacturers to focus on adaptability in production and delivery.  Defense News

Navalny says he is in tiny, isolated punishment cell in Arctic penal colony.  Russian opposition leader Alexei Navalny said in a social media statement that he has been isolated in a tiny punishment cell at the Arctic penal colony where he is serving a 19-year sentence. Navalny claimed that prison officials accused him of refusing to introduce himself in line with protocol, resulting in a seven-day confinement. The move is seen as the latest attempt to exert pressure on Navalny, who was transferred to a "special regime" penal colony above the Arctic Circle last month, which his allies said was an effort to silence him further. The remote colony in Kharp, in the Yamalo-Nenets region, is known for severe winters and isolation. Navalny, jailed on charges of extremism, has faced multiple prison terms, and his imprisonment has drawn international attention and condemnation for alleged political motivations.  Associated Press 

Middle East 

Iraq PM says seeking swift withdrawal of U.S. forces, no deadline set.  Iraq's Prime Minister, Mohammed Shia al-Sudani, stated that Iraq aims for a quick and orderly negotiated exit of U.S-led military forces from its soil but has not set a deadline. Sudani described the presence of the U.S-led coalition as destabilizing, especially amid regional spillover from the conflict in Gaza. He emphasized the need to reorganize the U.S.-Iraq relationship to prevent Iraq from becoming a target for internal or foreign interference that could affect its stability. Sudani suggested that the exit should be negotiated under a process of understanding and dialogue, agreeing on a quick time frame to avoid a prolonged U.S. presence and potential attacks. He stated that the end of the conflict in Gaza is the only solution to stop the risk of regional escalation. The move to seek the coalition's exit comes after a series of U.S. strikes on Iran-linked militant groups in Iraq. The Pentagon has said that it has no plans to withdraw U.S. troops from Iraq.  Reuters

U.N. Security Council to vote on resolution demanding end to Houthi attacks in Red Sea.  The UN Security Council is set to vote on a US-drafted resolution condemning and demanding an immediate halt to attacks by Yemen's Iran-backed Houthi rebels on merchant and commercial vessels in the Red Sea. The resolution claims at least two dozen Houthi attacks have impeded global commerce and undermine navigational rights and freedoms, threatening regional peace and security. The resolution also demands the immediate release of the first ship attacked by the Houthis, the Galaxy Leader, a Japanese-operated cargo ship linked to an Israeli company, seized on November 19 along with its crew. The Houthis say their attacks in the Red Sea are in support of Palestinians and in response to Israeli military actions in Gaza targeting Hamas. The attacks have forced many companies to avoid the Red Sea region, impacting global trade.  Associated Press 

Sri Lanka joining naval operation protecting commercial shipping in Red Sea,  ​​Sri Lanka's navy is set to join Operation Prosperity Guardian, the U.S.-led naval operation safeguarding commercial vessels in the Red Sea from Houthi rebel attacks. A Sri Lankan navy spokesman said no date has been set for when Sri Lankan ships will be deployed and the area they will operate in has not been finalized.  Sri Lanka’s defense minister said the country will fulfill its “global responsibilities” to counter terrorism by joining the taskforce.  The minister added that the operation will not cost Sri Lanka more since participating ships are already patrolling in the Indian Ocean.  Opposition lawmakers have criticized the move, citing Sri Lanka’s ongoing economic crisis.  Associated Press

Africa

Somalia leader vows to fight Ethiopia-Somaliland sea access deal.  Somalia's President, Hassan Sheik Mohamud, warned that he will take "all necessary measures" to defend his country if Ethiopia proceeds with securing direct access to the Red Sea through a deal with Somaliland, a breakaway region of Somalia. This comes after Mohamud invalidated Ethiopia's sea access deal with Somaliland, which would have Somaliland lease a sea corridor to Ethiopia for 50 years to establish a military base and commercial facilities.  Mohamud called on Somalis worldwide to defend their country against any such incursion. The issue is escalating tensions in the region.  Egypt positioned itself against the sea access deal by expressing "unwavering support for Somalia's sovereignty.” Djibouti has urged de-escalation and talks between Somalia and Ethiopia. On Monday, the head of Ethiopia's defense forces met with his Somaliland counterpart to discuss military cooperation.  Thousands protested against the maritime deal in Somalia, while Somalilanders rallied in favor.  Bloomberg

THE CYBER AND TECH RUNDOWN

China orders banks, insurers to review data, cybersecurity.  China's National Financial Regulatory Administration (NFRA) has directed banks and insurers to conduct thorough reviews of cyber and data security across their operations. The NFRA instructed financial institutions to address any identified loopholes to mitigate the risk of ransomware attacks by mid-January. Specific measures included reinforcing the secure usage of emails and enhancing protection against phishing attempts. This directive follows heightened concerns about cybersecurity after a cyberattack on Industrial & Commercial Bank of China (ICBC) in November disrupted part of its US operations and affected the US Treasury market. China has intensified its scrutiny of national security and data flows, with a data security law enacted in 2021 to exert more control over information flows.  Bloomberg

NSA cybersecurity chief says AI tools help detect malign Chinese cyber operations.  Rob Joyce, the director of NSA’s cybersecurity directorate, said Tuesday that AI and machine learning technologies are being used by NSA and other government agencies to detect Chinese cyber operations directed at U.S. critical infrastructure.  The advanced tools, Joyce said, are uncovering Chinese activity that might not have been discovered by traditional cyber defenses.  Joyce said the recent Chinese operations have not employed known malware that could be identified by established signatures.  Hackers now exploit architecture flaws and misconfigurations, among other tactics, to access networks, establish persistence, and then map networks and carry out operations.  To counter these threats, Joyce said, “machine learning, AI and big data help us surface those activities.”  AI models, he explained, are better equipped to identify “anomalous behavior” of counterfeit users.  Joyce said the motivation for the Chinese is neither intelligence nor financial gain, but to opportunity to “cause societal disruption and panic at a time and place of their choosing” through penetration of electrical, transportation, and port systems.  CyberScoop

Pro-Ukrainian hackers claim breach, data theft from Russian Internet provider.   A pro-Ukrainian hacker group named Blackjack, reportedly in cooperation with Ukraine’s SBU security service, claims to have breached a Moscow internet provider, M9com, in retaliation for a Russian cyberattack on Ukraine's largest telecom company, Kyivstar.   Blackjack posted Monday on its Telegram channel promising to reveal more details soon.  The group has provided screenshots of the M9com’s allegedly hacked systems, and some data obtained during the hack was made accessible on a darknet site through the Tor browser.  The claimed breach of M9com follows a previous cyberattack on Russia's largest private bank, Alfa-Bank, where pro-Ukrainian hackers, reportedly collaborating with the SBU, said they breached Alfa-Bank’s systems.  Some bank data initially was released on a darknet site, and was followed later by the release of information on 30 million bank customers.  The time frame for the M9com hack is unknown although the telecom provider’s website is operational.  Russian media have not reported any M9com shutdown and the company has not replied to requests for comment.  The Record Reuters

Paraguay communications agency warns of ‘significant’ disruption of Internet operations.  Paraguay’s military communications agency has described a ransomware attack as having a “significant impact” on the country’s Internet operations.  Although the alert did not identify a particular Internet provider, the warning from the General Directorate of Information and Communication Technologies (Digetic) followed a ransomware attack on Tigo, on of Paraguay’s largest Internet services.  Digetic said the attack is affecting various Internet systems, including backups, web pages, emails, and cloud storage.  The agency also reportedly issued a private notice linking the attack to the Black Hunt ransomware group.  A statement from Tigo acknowledged a January 4 security incident that impacted infrastructure and specific services for some corporate customers. Tigo denied that the Black Hunt gang was involved and downplayed the scope of affected companies. Tigo gave assurances that it is working with affected companies to restore services and cooperating with government agencies.  The Record

Hacking group targeting Microsoft SQL tool in U.S., European, Latin America attacks.  Hackers hackers are deploying Mimic ransomware against targets in the U.S., E.U., and Latin America according to the Securonix cybersecurity firm.  A Securonix threat research executive, Oleg Kolesnikov, said that a significant element of the ransomware campaign is the way hackers have tailored their attacks to each organization.  Kolesnikov said the attacks appear to be “a financially motivated, ongoing campaign” using “a more targeted approach” than normal through via exploits and commodity payloads.  Once hackers gain access, they map targeted systems and degrade cyber defenses to establish persistence.  Typically, the researchers report, the threat actors spend about one month in a system before deploying the Mimic ransomware.  The hackers are focused on Microsoft SQL, a product for storing and retrieving data requested by applications.  Secronix researchers detected the campaign after a mistake by the threat actors revealed significant parts of their communications, negotiations, and other elements.  The Record

China likely to advance in AI technologies despite U.S. chip export restrictions.  Analysts from the Swiss investment bank, UBS, project that China will continue development of large-language models (LLM’s) and generative AI systems even in the face of chip export restrictions imposed by the U.S.  UBS analysts say that China will press ahead with domestic AI accelerator programs and make more effective use of computing resources as the country manages the constraints on access to advanced semiconductors.  UBS technology research chief Nicolas Gaudois noted that China’s capacity to overcome hurdles in technology development should not be underestimated.  The country’s tech sector weathered a U.S. export chokehold in 2023 as illustrated by Huawei’s surprise release of a new smartphone equipped with an advanced domestically produced processor.  Another UBS analyst, Randy Abrams, referred to China’s strong market growth in mature, or legacy chips not subject to U.S. sanctions.  Abrams anticipates steady market advances for China “in mature applications, such as camera image sensors, micro-controllers, analogue chips and discrete semiconductor devices for EVs.”  South China Morning Post

U.S. legislators urge Commerce action to blunt Chinese dominance in ‘legacy’ chips.  Congressmen of both parties have called on Commerce Secretary Gina Raimondo to take “urgent action” to blunt U.S. dependence on Chinese “legacy chips” – semiconductors based on older technology but still broadly used in dozens of consumer goods.  Rep. Mike Gallagher, chair of the House Select Committee on the Chinese Communist Party, and Rep. Raja Krishnamoorthi, the committee's ranking member, wrote to Raimondo and Trade Representative Katherine Tai jointly sent a letter to Commerce Secretary Gina Raimondo and Trade Representative Katherine Tai urging action, including tariffs, to stem the flow of Chinese chips into U.S. and global markets.  The legislators warned that China “is on track to flood the United States and global markets with foundational semiconductors," a trend that has been eclipsed by the attention given to export restrictions on advanced AI chips.  The lawmakers, who requested a briefing on the issue within 60 days from Commerce and the USTR, proposed the creation of "component tariffs" that would place import duties on legacy chips rather than finished products.  The Commerce Department last week announced plans to award Microchip Technology $162 million in CHIPS and Science Act grants to support its legacy chip-manufacturing efforts.  Nikkei Asia

The data cutoff for this product was 7:00 a.m. E.T.

Brad Christian, Ethan Masucol, Bruce Wilmot, Ken Hughes, Katharine Campbell, Leighton Durham, Ryan Simons, and Tiffany Krueger contributed to this report.

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