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Thursday, July 6, 2023

The Cipher Brief curates open source information from around the world that impacts national security. Here's a look at today's headlines, broken down by region of the world:  

In the Americas

US Treasury Secretary in China.  U.S. Treasury Secretary Janet Yellen arrived in China on Thursday for a four-day visit as part of efforts to manage relations between Beijing and Washington.  It is her first visit to China as Treasury secretary and comes just weeks after Secretary of State Antony Blinken’s trip to Beijing.  Sources say Yellen will focus her trip on trying to find common ground on economic issues with China, reassuring Chinese officials that the U.S. does not seek to damage China’s economy, and assessing Beijing’s approach to the slowdown in the Chinese economy.  Treasury officials report that Yellen will meet Chinese Premier Li Qiang on Friday, as well as her former Chinese counterpart Liu He, top Chinese banking officials, and representatives of U.S. businesses in China.  Given mounting tensions, and China’s recent move to impose export controls on key microchip-making metals, experts say Yellen’s trip is unlikely to yield a diplomatic breakthrough.  Bloomberg New York Times Washington Post

Biden Meets Swedish PM, Offers Support for Stockholm’s NATO Membership Bid.  President Joe Biden met with Swedish Prime Minister Ulf Kristersson at the White House on Wednesday.  During the meeting, Biden reiterated that he is “anxiously looking forward to [Sweden’s] membership” in NATO.  Biden’s comments come ahead of a three-nation Europe tour next week centered around the NATO summit in Lithuania, where Sweden’s potential accession into the alliance will be top of mind.  Turkey and Hungary have yet to back Sweden’s NATO membership bid.  Ankara says it still has security concerns over Sweden harboring individuals from groups that Turkey views as terrorist organizations.  Sweden maintains it has addressed these concerns, namely with a new counterterrorism law, but Turkey says it is still not convinced.  New York Times Reuters

U.S. Reportedly Set to Send Cluster Munitions to Ukraine.  A senior Biden administration official says that the U.S. is expected to announce that it will provide cluster munitions to Ukraine.  Kyiv has long-requested the controversial weapons to more effectively target entrenched Russian positions.  The U.S. now appears to be in agreement with Ukraine, reversing its previous reluctance to send the weapons over concerns about indiscriminate harm to civilians.  Human rights monitors say that Russia and Ukraine have already used cluster munitions since the start of the war in February 2022, reporting that at least 689 people were killed by cluster munitions in the first six months of the conflict.  Most NATO members are signatories of the ban on the use of cluster munitions.  New York Times

U.S. Destroying Last of Its Chemical Weapons.  The U.S. is reportedly set to destroy its remaining stockpile of chemical weapons as soon as Friday.  The U.S. military has spent decades destroying its chemical weapons arsenal, a slow process due to the exceptionally dangerous task of disarming and disassembling such weapons.  The arsenal included cluster bombs, land mines with nerve agents, artillery shells filled with mustard gas, and tanks of poison. Only a handful of weapons remain at a Kentucky arms depot and will reportedly be destroyed in the next few days. The Pentagon warns that there are likely still undeclared stocks of chemical weapons around the world.  American armed forces were not known to have used lethal chemical weapons in battle since 1918, though chemicals like Agent Orange were considered harmful to humans.  New York Times

U.S. Senators Seeking More Pentagon Funding, Transparency for UFOs.  U.S. senators are seeking to boost funding for the Pentagon’s unidentified anomalous phenomena (UAP) office, to heighten security and surveillance in the skies and near space following February’s Chinese spy balloon incident.  Senator Kirsten Gillibrand (D-NY) proposed the increase in funding for the All-Domain Anomaly Resolution Office, whose duties include analyzing and researching UAP’s, in the Senate Armed Services Committee’s type of the 2024 National Defense Authorization Act, saying that it is “critical to our national security that we have strong air domain awareness over our homeland and around U.S. forces operating overseas.”  It is unclear how much more funding the office would gain, given that the budget is classified. But if passed, the bill will also require government contractors to provide a “comprehensive list of all non-earth origin or exotic unidentified anomalous phenomena material” and any other data they have related to unidentified objects to the Pentagon office within 60 days.  C4ISRNET 

Western Europe

Chinese Military Holds Strategy Talks in Britain, France.  China recently sent a military delegation to Britain and France for “strategy consultations,” suggesting that Beijing is interested in maintaining open lines of military communication with Europe, though it remains resistant to do so with the U.S.  The defense talks were held from June 24 to July 1 during a defense strategic dialogue between the British and French governments.  China’s defense ministry did not say who was involved in the consultations, only that they were focused on “bilateral defense relations,” exchanging views on “security issues of common concern,” and strengthening “mutual understanding and trust.”  The British Ministry of Defense said talks covered topics like the Ukraine war and tensions in the South China Sea and Taiwan.  Despite tensions in the Indo-Pacific, analysts say the strategy talks show Chinese-European military communications are not threatened.  They add that such “defense strategy consultations” are likely to continue.  South China Morning Post

Turkey's Erdogan Says Protests Undermine Sweden’s NATO Membership Bid.  Turkish President Recep Tayyip Erdogan said that Sweden has taken steps in the right direction towards accession into NATO, but still cannot give its approval since continued protests by Kurdish militant sympathizers in Sweden have undermined progress.  Erdogan’s comments refer to continuing protests in Stockholm in support of the Kurdistan Workers’ Party (PKK), which Turkey and Western allies deem as a terrorist organization.  Erdogan’s remarks signal Sweden’s NATO application will still be an issue to work through at the alliance’s upcoming summit in Lithuania next week.  Reuters

Central and Eastern Europe

Prigozhin Reportedly in Russia.  Belarusian President Alexander Lukashenko said Thursday that Russian mercenary chief Yevgeny Prigozhin is in St. Petersburg while his Wagner forces remain at “permanent camps," suggesting they are not in Belarus.  His remarks contrast with the deal that ended the Wagner Group mutiny in late June, which says that Prigozhin will be exiled to Belarus.  Lukashenko’s comments could not be immediately verified.  Kremlin spokesman Dmitry Peskov responded to his claims by saying that Moscow has “neither the ability nor the desire” to track Prigozhin’s whereabouts.  Lukashenko added that for Wagner units in Belarus, they could still stay in contact and could be “activated” to defend Belarus if needed, though he said their deployments are ultimately up to the Russian leadership.  Associated Press New York Times Wall Street Journal

Ukraine, Russia Offer Conflicting Accounts Around Bakhmut.  Both Ukraine and Russia reported conflicting claims of success around Bakhmut.  Russia’s defense ministry said its forces struck three Ukrainian armed units near Bakhmut, and Russian state media reported that Russian troops successfully repelled an Ukranian attack in the area.  In contrast, Ukraine’s General Staff said its forces had “partial success” in advancing in the Klishchiivka area southwest of Bakhmut, which a Russian-installed official in eastern Ukraine denied.  Reuters

At Least Four Killed, 34 Wounded in Russian Missile Strike on Lviv.  Ukrainian officials said that a Russian missile strike on the western city of Lviv killed at least four and wounded 34 on Thursday, in the largest assault on the city’s civilian infrastructure since the beginning of the war.  The Ukrainian air force said Russia launched ten Kalibr missiles from the Black Sea in the attack, seven of which were downed.  Lviv Mayor Andriy Sadovyi said that a school, an office complex, a student campus, 35 residential homes, and 50 vehicles were damaged in the attack.  President Volodymyr Zelensky posted footage online of the aftermath of the attack, and promised that "there definitely will be a response to the enemy. It will be a noticeable one."  The head of Zelensky's office, Andriy Yermak, urged Western allies to provide more defense systems and accept Ukraine as a member of NATO in response.  Russia, which has denied targeting civilians, did not comment on the assault.  New York Times Reuters

Ukraine Reports Strike on Russian-Occupied Makiivka.  Ukraine’s military claims it struck a military base in the Russian-occupied city of Makiivka in the Donetsk region on Wednesday.  The military shared footage of the attack which featured a massive explosion, suggesting that the target was an arms depot.  The military added that a “Russian base’ had “ceased to exist” thanks to the attack.  Russian-installed Donetsk officials countered the Ukrainian account by saying that the attack targeted a civilian area, killing one civilian and injuring 68 others.  Neither claim could be immediately verified.  Reuters New York Times

Russian Border Regions Come Under Shelling.  Russia’s western border regions of Kursk and Belgorod came under a shelling attack on Wednesday.  Regional officials report that at least one person was killed, and residential areas were damaged in the attack.  Belgorod’s governor said the attack lasted over an hour, claiming that Ukraine fired 12 times from Grad rocket launchers in the assault.  He also said that Russian defenses intercepted three aerial objects in the attack, including one drone.  Russia’s western border regions have come under attack in recent months, which Moscow has blamed on the Ukrainian military or pro-Ukrainian saboteur forces.  Kyiv has remained silent on the matter.  Reuters

Explosion Hits Court in Kyiv.  Ukrainian officials report an explosion rocked a district court in the center of Kyiv on Wednesday. Ukrainian Interior Minister Ihor Klymenko said that according to “preliminary information,” a man died after barricading himself inside part of the court and detonating an explosive device.  Two security guards were injured in the incident.  The man was reportedly at the court attending a hearing for his suspected connection to the deaths of four Ukrainian national guardsmen in 2015. Ukrainian authorities are investigating the matter.  Reuters

IAEA Says No Evidence of Explosives at Zaporizhzhia Nuclear Power Plant.  The IAEA said on Wednesday that recent inspections have yet to yield evidence that any mines or explosives have been planted at the Zaporizhzhia nuclear power plant, though the agency said it needs more access to the facility to be sure.  The IAEA said it is particularly seeking access to the roofs of the third and fourth reactors, which Ukraine claims Russia has placed “explosive devices” on.  Russia and Ukraine have accused each other of planning an imminent attack on the plant.  Kremlin spokesman Dmitry Peskov reiterated on Wednesday claims that Kyiv is planning “sabotage” on the plant, which Ukrainian President Volodymyr Zelensky responded to by saying “the only danger to the Zaporizhzhia nuclear power plant is Russia and no one else.”  Reuters

Russia Says it Thwarted Plot to Bomb Sakhalin Energy Project.  Russia’s FSB security service said on Wednesday that it detained a Russian man who was allegedly planning to destroy an energy facility on Sakhalin island off Russia’s Pacific coast.  The FSB published footage of what it said were improvised explosive devices and chemicals purportedly found at the house of the suspect, who the service added was a follower of “Ukrainian neo-Nazism.”  The FSB did not say what the man allegedly sought to target on Sakhalin, which hosts several projects owned by Japanese and Indian companies.  Reuters

Russia Bans NGO for Allegedly ‘Sabotaging’ Pipeline.  Russia has accused the Altai Project, a small U.S.-based charity, of “sabotaging” construction of a major gas pipeline and has banned the NGO as an “undesirable organization.”  The Russian prosecutor general’s office said that the group claims to work on nature conservation but meddles in Russia’s internal affairs and could potentially threaten Russian economic security.  The pipeline the group allegedly sabotaged, the Power of Siberia-2 pipeline, is planned to eventually deliver 50 billion cubic meters of Russian natural gas per year to China via Mongolia.  The Altai Project said it has previously campaigned to reroute the pipeline away from the Altai region in southern Siberia but is no longer working on the issue since the planned route of the pipeline avoids the area.  The Altai Project’s director Jennifer Castner said accusations of wrongdoing against the group are “absurd,” maintaining that the NGO works to support environmental activism and cultural preservation in the region.  Reuters

Russia to Increase Germanium Output After Chinese Export Controls.  Russia’s state defense conglomerate Rostec said on Wednesday that it will increase its output of germanium, a critical metal for semiconductor production and defense industries, for domestic use following China’s decision to impose controls on its export.  Rostec says one of its alumina plants can produce up to 20 tonnes of germanium a year and is currently only running at 30 percent production capacity, emphasizing that “if foreign supplies are restricted” it can “cover the needs of domestic consumers in Russia.”  Rostec added that it will also accelerate a separate project to build capacity to produce high-purity germanium.  Rostec also said it has a separate plant that can produce 6 tonnes of gallium, another metal China has curbed exports on, annually.  The Chinese export controls came in response to Western chip-related sanctions targeting its semiconductor industry.  Nikkei Asia

Asia and Oceania

Philippines Says China ‘Harassed’ its Vessels Near Disputed Reef.  The Philippines coast guard said on Wednesday that several of its vessels have been “harassed and obstructed” and subject to “dangerous maneuvers” by Chinese coast guard ships.  A Philippine coast guard spokesperson said the latest incident occurred on June 30 near the disputed Second Thomas Shoal, during which Philippine coast guard vessels assisting in a naval operation were confronted by much larger Chinese coast guard vessels.  The spokesperson added that in the encounter, the Philippine vessels had to reduce speed to avoid colliding with the Chinese ships.  The shoal is well within the Philippines’ 200-mile exclusive economic zone and is controlled by Manila with a handful of troops.  China claims sovereignty over the reef as part of its territories in the South China Sea.  Neither China’s embassy in Manila nor the Chinese foreign ministry mentioned the incident, which follows a series of encounters between Chinese and Philippine vessels in the disputed waterway.  Reuters

Taiwan Presidential Candidate Affirms He Won’t Seek Independence.  Taiwan vice president and presidential contender William Lai Ching-te wrote an opinion piece in the Wall Street Journal on what his approach to cross-strait policy will be if elected the island’s next president.  In his piece, he called for the maintenance of status-quo and emphasized that he has no intention to declare independence.  He also offered a “four-pillar plan for peace,” which includes building Taiwan’s military deterrence; ensuring Taiwan remains a critical high-tech and secure link in global supply chains; forming partnerships with fellow democracies; and promoting steady and principled cross-strait leadership.  Lai was nominated by Taiwan’s ruling Democratic Progressive Party (DPP) to run for president in January as incumbent Taiwanese President Tsai Ing-wen cannot run for another term.  Experts say Lai’s opinion piece was aimed at framing his potential presidency as one that will be marked by pragmatism and consistency to reassure the U.S. that he will not escalate tensions with China.  South China Morning Post  Wall Street Journal 

China Tests New WS-15 Fighter Jet Engines.  Footage circulating online suggests that China has possibly conducted the maiden test flight of its new WS-15 engines.  The video shows a J-20 stealth fighter jet outfitted with the new engines at a test airfield in the southwestern city of Chengdu.  It is unclear if and when the flight took place and China’s military has not commented on the matter, but analysts say the footage may be a “quasi-official confirmation” of a successful test of the engines.  Some experts say the engine, which would be China’s most powerful domestically built jet engine, narrows the technology gap between the U.S. and China in fighter jets, though other experts note that the WS-15 engines still do not match the endurance of the most advanced American engines and are not ready for mass production.  South China Morning Post

India Refuses to Back China’s Belt and Road Vision.  India did not endorse statements promoting China’s Belt and Road Initiative at a recent meeting of the Shanghai Cooperation Organization (SCO), suggesting different priorities and goals among members of the group.  Analysts say India’s reluctance to back China’s global infrastructure and development plan was expected because India has its own development projects, and that given some of China’s infrastructure planning would go through areas in the disputed Kashmir region.  Experts also say that India wants the SCO to focus more on regional counterterrorism, while other efforts like regional connectivity are secondary concerns.  China and Russia are pushing for the SCO to facilitate economic integration, which is complicated by New Delhi’s trade relationships with Western economies.  South China Morning Post 

South Korea Retrieves Crashed North Korean Satellite, Says Unfit for Military Use.  South Korea’s military said on Wednesday that it retrieved the wreckage of the North Korean spy satellite that crashed in May following a failed launch, as well as debris from the rocket used to carry it.  South Korean military officials said that analysis of the wreckage showed that the satellite had “no military utility as a reconnaissance satellite at all.”  Pyongyang said the crash of the satellite was the “gravest failure,” but has vowed to continue in its effort to launch satellites into orbit for military reconnaissance.  Washington and Seoul have condemned such efforts as they violate UN Security Council resolutions banning North Korea from using ballistic missile technology.  C4ISRNET Nikkei Asia

Four Arrested in Hong Kong Accused Of Helping Overseas Activists.  Hong Kong police on Wednesday arrested four men suspected of supporting insurgency abroad and promoting the city’s independence from China.  Police said that the four men received funds to “support people who have fled overseas and continue to engage in activities that endanger national security" and “provoked hatred” towards a Chinese official.  Authorities added that their activities violated Hong Kong’s National Security Law, which Beijing imposed after pro-democracy protests in 2020.  The arrest of the four men comes two days after Hong Kong authorities issued warrants and bounties for eight activists suspected of foreign collusion and the advocacy of secession from Beijing.  It is unclear if the four men arrested were connected to the overseas activists.  Reuters

Middle East and Northern Africa

U.S. Navy Prevents Iran from Seizing Tankers in Gulf.  The U.S. Navy said on Wednesday that Iran attempted to seize two oil tankers in the Gulf of Oman and withdrew when the U.S. guided-missile destroyer USS McFaul responded.  A spokesperson from the U.S. Navy’s Fifth Fleet said Iranian forces fired on one of the tankers with small arms and machine guns, but no major damage or casualties were reported. Chevron confirmed one of its tankers was involved, and that its crew is safe.  A White House National Security Council spokesperson said the U.S. and its allies will “respond to Iranian aggression” and work to “ensure the freedom of navigation through the Strait of Hormuz and other vital waterways.”  Tehran did not comment on the matter.  The incident is the latest in a series of attempts by Iran to seize and attack commercial vessels in the region. The Cipher Brief  Associated Press Reuters

ICJ to Hear Case on Iran’s Downing of Ukrainian Passenger Liner.  Canada, Sweden, Ukraine, and Britain have called on the International Court of Justice (ICJ) to open a case against Iran over the Iranian Revolutionary Guards’ downing of a Ukrainian passenger plane in 2020.  In the incident, the IRGC shot down the plane after it took off from Tehran Airport, killing all 176 people aboard.  Iranian officials at the time called the destruction of the plane a “disastrous mistake.”  The Iranian government later said in a final 2021 report that its forces accidentally shot down the jet, blaming a misaligned radar and human error.  In their filing to the ICJ, the four countries argue that Iran violated the Montreal Convention, which is aimed at securing the safety of civilians during air travel, by failing to take practical measures that would have prevented the downing of the plane.  They added that Tehran failed to conduct a partial, transparent, and fair criminal investigation into the matter.  The Cipher Brief Al Jazeera Deutsche Welle Kyiv Independent Reuters

Sub Saharan Africa

Kenya Delaying Re-Opening of Somalia Border Over Militant Attacks.  Kenya is delaying the re-opening of its border with Somalia over a “wave of terror attacks” blamed on al Qaeda-linked al Shabaab militants.  Kenya’s interior minister Kithure Kindiki said the border will be reopened after a “comprehensive and conclusive handling” of the cross-border attacks.  Kenya and Somalia agreed in May to reopen several border crossings within 90 days.  The crossings have been closed since 2011, when Kenya deployed its forces into southern Somalia to help in the fight against al Shabaab.  Reuters

Cyber and Tech

Microchip Restrictions Are ‘Just A Start,’ Chinese Trade Advisor Warns.  A Chinese economics think tank executive, who formerly served as the country’s vice commerce minister, told a Beijing newspaper that if foreign countries continue to pressure China, the recently announced export curbs on semiconductor metals will be “just a start.”  Wei Jianguo described the recently announced export controls on gallium and germanium as a “well thought out heavy punch” in response to U.S. and Western restrictions on the flow of advanced semiconductor technology to China.  Wei’s remarks to the China Daily newspaper, an official publication of the Chinese Communist Party, came the day before U.S. Treasury Secretary Janet Yellen is scheduled to arrive in Beijing for talks.  Wei, the vice chairman of the China Center for International Economic Exchanges, predicted that “countermeasures will escalate” if technology exports to China continue to be restricted.  Reuters

Meta Plans Thursday Launch of ‘Threads’ Microblogging Rival to Twitter.  Meta Platforms is planning to target Twitter with the launch of a rival app called “Threads.”  The new microblogging app is expected to use Meta’s Instagram platform to quickly build a user base as Thread members will be permitted to use their Instagram usernames.  Twitter has not commented on the release of the new service.  Threads has been under development for several months, but the opportunity to take advantage of recent difficulties and product changes at Twitter reportedly moved up Meta’s launch plans. Notably, Threads is not expected to be released for EU markets “at this point,” according to Ireland’s data privacy commission.  The leading EU privacy agency has not blocked the service, but Meta has not yet prepared Threads for compliance with the EU’s General Data Protection Regulation (GDPR).  Wall Street Journal Axios Associated Press Irish Independent

UN Security Council Plans First-Ever Meeting on AI Threats to Global Security.  Britain’s Ambassador to the UN, Barbara Woodward, has announced that the UN Security Council will hold its first-ever session focusing on the potential threats posed to international security by artificial intelligence.  The meeting is scheduled for July 18 during Britain’s presidency of the council.  Among the topics to be covered are the risks AI poses in autonomous weapons and the control of nuclear arsenals.  The UK-organized session will feature briefings by UN Secretary General Antonio Guterres as well as leading AI experts from around the world.  Guterres in June described the “alarm bells” over potential misuse of AI as deafening, including warnings from the technology’s developers.  At that time, he announced plans for an AI advisory board to be formed in September to develop recommendations for the UN, including a possible new UN agency designed along the lines of the International Atomic Energy Agency (IAEA).  In describing the goals of the July 18 meeting, Ambassador Woodward said a global approach is needed to manage “huge” AI risks and opportunities.  Among the possible benefits AI may bring to the UN mission, Woodward mentioned humanitarian aid and peacekeeping operations as well as data analysis to support conflict resolution and prevention.  Woodward said the Security Council meeting will be chaired by UK Foreign Secretary James Cleverly, and will provide an opportunity to begin a discussion among the 15 council members on AI’s implications.  Associated Press

EU Commission Announces New Procedures To Accelerate Data Privacy Investigations.  The European Commission has announced new procedures to speed up cross-border investigations by European privacy watchdogs over operations of big tech companies.  The revisions of the General Data Protection Regulation (GDPR) come in response to sharp criticism of prolonged privacy probes as well as the “outsized role” of the Irish privacy regulator in examinations of big tech.  In addition to the length of investigations, critics say that fines imposed for privacy violations are too low to prevent similar practices by big tech companies.  The Irish Data Protection Commissioner (DPC) has served as the EU’s leading regulator due to the basing of some of the world's largest technology companies in Ireland.  The new rules require the DPC to share summaries of key issues to its peer organizations, which allows them to provide early feedback and to establish joint deadlines for cross-border cooperation and dispute resolution.  The new rules also permit companies under investigation to be heard “at key stages in the procedure” and allow access to pertinent documentation.  Reaction to the new procedures from some privacy activists and tech lobbying groups has been negative.  Max Schrems, who has filed complaints against Meta and Google, said the Commission changes “strips citizens of existing rights (rather) than ensuring their enforcement."  A spokesperson for The Computer & Communications Industry Association pointed to deficiencies in the new procedures in the right of companies to appeal and to a fair hearing in “a realistic timeframe.”  Reuters Politico

Largest Japanese Port Operations Halted by Ransomware Attack.  The port of Nagoya, Japan’s largest and busiest port, has experienced impacts on container terminal operations as a result of a ransomware attack.  According to the port authority, the central system for container terminal control known as the Nagoya Port Unified Terminal System (NUTS) has experienced malfunctions attributed to a “ransomware infection.”  The port handles more than 2 million containers annually and is used by Toyota for export of the majority of its vehicles.  NUTS operations are expected to resume on Thursday.  Meantime, all loading and unloading operations at trailer terminals have been suspended.  Responsibility for the ransomware attack has not yet been claimed publicly, while a police investigation found that the port operator has received ransom demands.  In 2022, the Nagoya port was hit by a distributed denial-of-service attack by the Russian threat actor, Killnet, which halted website operations for a brief period.  BleepingComputer Nikkei Asia

India Plans Nation’s First Semiconductor Assembly Plant by 2024.  India plans to open the country’s first semiconductor assembly plant by the end of 2024, with construction on the government-supported $2.7 billion project beginning in August.  Ashwini Vaishnaw, India’s minister of electronics and information technology, said the government’s India Semiconductor Mission program is working to gain the participation of “supply chain partners,” including producers of chemicals and manufacturing equipment.  In comments to the Financial Times, Vaishnaw noted the speed with which the semiconductor program is being conducted:  “I’m not just saying a new company — this is a new industry for the country.”  India has reopened bids for its $10 billion chipmaker subsidy program after the first three applicants — including a consortium of the Vedanta industrial group and Taiwanese Apple supplier Foxconn – did not qualify for government support.  Modifications to India’s specifications now call for proposals to produce “mature nodes” of 40 nanometers or above.  More expensive 28nm chips were specified in the earlier solicitation.  Financial Times

Germany’s Scholz Says Expecting Chip Investments.  German Chancellor Olaf Scholz said Wednesday that he is aware of plans for large investments in Germany’s semiconductor industry.  In remarks to the Bundestag, Scholz said “German companies and many others” like Intel have listed chip-related projects.  Scholz said these investments will help Germany and Europe as a whole become less reliant on semiconductors from other regions such as China.  His announcement of the chip investments comes after China imposed export controls on gallium and germanium, two key chip-making metals of which Germany is a top importer.  Reuters 

UK Bank Hedges Against Future Cyber Threat with Role in Quantum Key Experiment.  Britain’s HSBC bank plans to be the first UK financial institution to experiment with a quantum key distribution (QKD) system operated by Amazon, Toshiba, and a UK telecommunications group.  QKD systems are thought to be an important component of defenses by offering new encryption methods. HSBC Europe CEO Colin Bell noted that quantum computing’s ability to defeat existing encryption is a “’when’ rather than an ‘if’ question,” and explains the bank’s willingness to “take part in a trial like this.”  HSBC will install equipment to transmit test data between its London headquarters and a nearby data center, allowing examination of QKD effectiveness to encrypt and decrypt data through use of a shared secret key.  Bloomberg

Nordic Cyber Firms Witness Wave of Mergers Amid NATO Expansion.  A wave of mergers among Nordic defense firms is taking place as the potential of increased cybersecurity funding approaches with NATO’s expansion.  Finland already has entered NATO and Sweden’s candidacy is under review by the alliance.  Defense budgets for those countries as well as Denmark, Iceland, and Norway are expected to allocate more than $2 billion in upgrades to military and civilian cybersecurity systems over the next three years.  Strategic partnerships between Nordic military forces and private cybersecurity firms are beginning to develop.  Norway’s Atea company was awarded a two-year, $45 million contract for IT and cybersecurity services from the country’s defense research center and national security authority.  This follows the 2022 collaborative agreement between the Finnish software firm, Digia, and Denmark’s Arbit Cyber Defence Systems, a cybersecurity technologies vendor.  The agreement between the two companies was a key element in the award of a $6 million contract to build a secure information-exchange gateway for Finland’s military.  DefenseNews

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