Tuesday, July 4, 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
U.S. Ambassador to Russia Meets Detained WSJ Reporter. U.S. ambassador to Russia Lynne Tracy was granted access to detained Wall Street Journal reporter Evan Gershkovich, who was arrested by Russian authorities in March on espionage charges that he and the U.S. deny. The visit came after a Moscow court upheld a request by Russia’s FSB security service to extend Gershkovich’s detention to August 30 while he awaits trial. The Wall Street Journal and U.S. State Department did not provide details on Tracy’s meeting with Gershkovich, which was the second such meeting since his detention. Kremlin spokesman Dmitri Peskov says that discussion on a potential prisoner swap with the US, that would include Gershkovich, have taken place. Peskov told reporters on Tuesday that the talks must not take place in public and must be carried out in secret. Reuters Wall Street Journal Washington Post
Putin Reportedly Has Invitation to Visit Cuba. Russia’s ambassador to Cuba, Viktor Koronelli, said on Monday that Russian President Vladimir Putin has received an invitation to visit Cuba. Koronelli told Russian state media that it is still too early to discuss preparations for such a visit. He also said that the Cuban president visited Moscow relatively recently in November of last year. Koronelli’s remarks came after Russia’s Aeroflot airline announced it is resuming flights to Cuba. Reuters
U.S. Concerned Over Election Interference in Guatemala. US Secretary of State Antony Blinken said the U.S. is concerned about efforts to interfere in Guatemala’s first-round presidential election results, which saw former first-lady Sandra Torres win over the front-runner Bernardo Arevalo. The US government has endorsed the findings of the Organization of American States, who approved the validity of the results. Guatemala’s top court on Saturday ordered ballots from the first-round vote to be reviewed after challenges were brought forth by Arevalo’s supporters, setting up the potential for a recount before the runoff date which is set for August 20. Guatemala’s Supreme Electoral Tribunal on Sunday stated that it would abide by the Court’s decision and will direct local branches to review the ballots within the next five days. Reuters The Guardian
Western Europe
Finland and Sweden Will Empower NATO in Countering Russia. NATO’s northward expansion, with new member Finland and potential member Sweden, gives the alliance new opportunities and capabilities to contain Russia, according to diplomats and experts. Most significantly, the addition of Finland and Sweden to NATO would greatly expand the alliance’s territory. It would give NATO better access and control over the Baltic Sea and northern Barents Sea, which would secure the route for reinforcements and supplies from North America to northern Europe. This new territory also has new infrastructure to utilize, namely Scandinavian rail infrastructure, which will increase the reach of supply routes for NATO. Finnish rail lines in particular can allow the alliance to reinforce its border with Russia and deploy forces near critical bases in northwestern Russia. More widely, the territorial expansion would allow NATO to treat northwest Europe as one bloc, integrating strategy and operations in a region stretching from the Baltics in the south to the high north of Finland and Sweden. The two Scandinavian countries also offer new military assets, with Finland buying fighter jets and Sweden providing its submarines. And the two countries also offer polar capabilities and expertise that will be critical to counter Russian expansion in the Arctic. Reuters
NATO Stands to Gain from Sweden’s Submarines. When Sweden joins NATO, the alliance will get access to the Scandinavian country’s top submarine fleet, which analysts say has some of the world’s most advanced conventional submarines. Swedish naval officials say the country offers “regional expertise” that only it can provide to NATO. Sweden has been operating submarines in the Baltic Sea since 1904 and has been more active underwater than any of its neighbors. Sweden therefore has knowledge and developed capabilities to operate in the waterway. Its submarines can account for differing levels of salinity and shallow waters in the Baltic Sea. Swedish submarines also use liquid oxygen to run diesel engines underwater and recharge batteries, meaning that they can stay underwater longer than other submarines. Sweden is also developing its new A26 submarines, which will feature a dive-lock, called a multi mission-portal, in their bows to allow for the deployment of remotely operated vehicles. Experts say this feature will make the new submarines uniquely equipped for future autonomous underwater warfare, which includes operations like the protection or destruction of critical infrastructure on the seabed. Reuters
‘Never Underestimate Russia,’ Senior NATO Leader Warns. Admiral Rob Bauer, chair of the NATO military committee, stated Monday that although the majority of Russia’s forces are fighting in Ukraine, he says the alliance “will continue to look at them as a serious threat.” He explained that NATO is “convinced that the Russians are going to reconstitute” and so the alliance’s policy on countering Russia should be based on the state of its military before the Ukraine war. Bauer further reiterated that “we should never underestimate the Russians and their ability to bounce back, as they have shown in history a couple of times.” Politico
Turkey’s Erdogan Says Sweden Must Stop Sheltering ‘Terrorists’ for NATO Accession. Turkish President Recep Tayyip Erdogan said on Monday that Ankara will not support Sweden’s NATO membership bid until the Scandinavian country stops harboring groups that Turkey views as “terrorists.” Turkey has repeatedly said it will continue to oppose Sweden’s accession into NATO until it takes further steps against groups like the Kurdistan Workers’ Party (PKK) and those allegedly linked to a 2016 coup attempt in Turkey. Erdogan said that Turkey “will not back down” over its opposition to Sweden’s NATO application until all of its “demands are met.” Sweden maintains it has done its part with a new anti-terrorism law, but Turkey says the measure is “meaningless” as PKK protests continue in the country. Reuters CNN
Central and Eastern Europe
Zelensky Presses Biden for NATO Membership, Says Counter-Offensive Making Progress. Ukrainian President Volodymyr Zelensky urged US President Joe Biden to invite Kyiv to join NATO “now,” even if official membership cannot actually happen until after the war. Zelensky told CNN that Biden is the “decision maker” about the situation, and said that though the President “supports our future in NATO,” an invitation to join the security alliance now would drive and inspire Ukrainian troops. Zelensky asserted that though membership must follow the end of the war, it is crucial now “to feel that you are really being around allies in the future.” The topic of Ukraine’s possible accession into NATO will be top of mind at the alliance’s upcoming summit in Vilnius. Separately, Zelensky also told CNN that he acknowledges the slow-pace of the counteroffensive and the difficulties of countering Russian forces in battle, but he asserted that Ukrainian soldiers are steadily “making progress.” In the past week, Kyiv’s military has reportedly reclaimed 14 square miles (37 square kilometers) of territory. CNN
Putin Projects Power and Solidarity in First International Appearance After Mutiny. Russian President Vladimir Putin used his appearance at an international forum to push a message of domestic stability and to reaffirm Russia’s alignment with China, India and other non-western nations. Speaking at the Shanghai Cooperation Organization (SCO) event, hosted virtually by India, Putin thanked member states for their support following the attempted mutiny by Wagner group, an event that analysts say posed the greatest threat to Putin’s control since he assumed power. The SCO was founded by Russia and China in 2001 as a counter to western influence. Associated Press CNN Deutsche Welle
Moscow Reportedly Deploys 180,000 Troops to Lyman and Kupyansk. Serhii Cherevatyi, a spokesperson for the eastern grouping of the Ukrainian Armed Forces, told Ukrainian media on Monday that Moscow has deployed 180,000 soldiers to Lyman and Kupyansk, two primary northeastern battlefronts that are around 100 kilometers apart. Cherevatyi said that the “enemy is concentrating their forces” at the Lyman-Kupyansk front because it is longer and harder to defend, adding that there are currently 120,000 Russian soldiers there. Cherrvatyi said it was “a pretty powerful grouping” that includes not only Storm Z assault companies, which recruit people with criminal records, but also “air assault and mechanized units, units of the Bars combat army reserve, and territorial forces.” Cherevatyi added that Bakhmut’s front has around 50,000 Russian soldiers. Ukrainian deputy defense minister Hanna Maliar said that the fighting in Bakhmut is “changing very rapidly,” and that “control over the same positions can be lost and regained twice a day.” CNN
Russian Drone Attack on Sumy Kills Two. Ukrainian authorities report that a Russian drone strike on the northern city of Sumy killed at least two people and injured 19 others on Monday. Regional officials say an office building and two residential buildings were damaged in the attack, adding that four Iranian-made Shahed drones were involved in the attack. Ukrainian President Volodymyr Zelensky responded by saying that the attack shows Ukraine “does not yet have a sufficient number of high-quality air defense systems” to protect its entire territory and counter all Russian attacks. He called for more air defense systems to be delivered to Ukraine, adding that his country will “in future become the basis of a European air shield.” Reuters
Russia Claims Ukraine Launched Five Drones at Moscow. Russia’s Defense Ministry claimed Tuesday that Ukraine attacked Moscow with at least five drones. The ministry said four of the drones were downed by Russian defenses, while the fifth jammed and fell over the Odintsovo district of Moscow. No one was wounded in the alleged assault. Russian media reports that one drone was detected in the Kaluga region while two others were intercepted close to a settlement 19 miles (30 km) southwest of the Kremlin. One was shot down near the village of Kubinka, about 40 miles (63 km) west of Moscow. Flights at Moscow's Vnukovo airport were disrupted for a few hours on Tuesday morning amid the purported attack. Russia has condemned the drone assaults as terrorism, with a Russian foreign ministry spokesperson calling Ukraine a “terrorist regime." Kyiv has not taken responsibility for the attack. Reuters
Russia Says it Thwarted Ukraine Plot to Assassinate Russian-Backed Head of Crimea. Russia’s FSB security service claimed on Monday that it thwarted a Ukrainian plot to assassinate Sergei Askyonov, the Russian-backed head of Crimea. The FSB said it arrested a Russian national allegedly hired and trained by Ukraine’s SBU intelligence agency to blow up Askyonov’s car. Russian state TV has since aired a purported video of the suspect confessing that he was a Ukrainian agent. Askynov later thanked the FSB and said he is sure Russian authorities will arrest and punish those behind the alleged assassination plot. Officials in Ukraine, which has pledged to liberate Crimea, did not immediately comment on the matter. Reuters
Prigozhin Promises More ‘Victories at the Front.’ Wagner Group head Yevgeny Prigozhin shared an audio message on Monday, marking his first recording since his mercenary group’s aborted mutiny. In his message, Prigozhin said he thinks his group’s uprising “succeeded” in “fighting traitors and mobilizing [Russian] society.” He also said Wagner will win the “next victories” in the Ukraine war. It is unclear what he meant by this since the Wagner Group has reportedly been prohibited from further joining in Russia’s invasion of Ukraine. Prigozhin’s latest message was posted on a Telegram associated with Wagner, though other channels associated with him and the group did not broadcast the message. Washington Post
Russian Defense Minister Shoigu Makes First Public Appearance Since Mutiny. Russian Defense Minister Sergei Shoigu said the “loyalty” of Russian forces helped repel the Wagner Group mutiny against the Russian military leadership. He also said Russian forces in Ukraine have “courageously and selflessly” served. His comments were carried on Russian state television, marking his first public comments since the uprising. Notably absent from the gathering was General Sergei Surovikin. Surovkikin, dubbed “General Armageddon” for his brutal tactics in Syria was reportedly questioned by Russian security services following the attempted mutiny and hasn’t been seen in public since the event. Barron's Politico Bloomberg
Ukraine Charges Former Top Security Official With Treason. Ukrainian authorities have charged Oleh Kulinich, who headed the Security Service of Ukraine’s (SBU) Crimea directorate, with treason. The SBU said Kulinich was arrested last July on suspicion of recruiting Russian-friendly operatives to work for Moscow. Ukrainian President Volodymyr Zelensky called Kulinich’s arrest as part of a process of “self-purification,” which included the firings of other Russia-friendly officials. Reuters says that Kulinich could not be reached for comment. If convicted, Kulinich could face up to 15 years in prison. Separately, Ukrainian authorities are investigating Andriy Naumov, a former head of the SBU’s department of internal security, who was arrested after arriving in Serbia last year with significant amounts of cash and emeralds. Reuters
Center Opens to Investigate Russian Crimes of Aggression Against Ukraine. U.S., E.U. and Ukrainian authorities opened the new International Centre for the Prosecution of the Crime of Aggression (ICPA) in The Hague to build possible cases against the Russian leadership for Moscow’s invasion of Ukraine in February 2022. The center is meant to do initial work for an eventual special tribunal for aggression. Kyiv says it has over 93,000 reports of Russian war crimes — including sexual violence, kidnapping of children, and displacement of civilians — that the centre can help review and process. The International Criminal Court does not have the jurisdiction to prosecute the crime of aggression, in which a state launches an unprovoked attack. The center will help fill this gap and add to global efforts to hold the Russian leadership criminally responsible for the Ukraine war. European Commission Reuters The Guardian
Russia Could Cancel Elections in Occupied Ukraine. The chair of Russia’s Central Election Commission, Ella Panfilova reportedly told Russian President Vladimir Putin on Monday that elections in Russian-controlled parts of Ukraine planned for September may have to be canceled. In their meeting, Panfilova reportedly said that the situation in these areas remains “really difficult” and that “if unforeseen circumstances arise” that pose a “serious danger to the life and health of residents” there, Russia can postpone elections as needed. Putin reportedly replied: “Understood.” Moscow previously announced plans for elections in Russian-controlled areas, which include some territories in the Donetsk, Luhansk, Zaporizhzhia and Kherson regions and Crimea, in what analysts say was a bid to assert control and project normalcy amid Ukraine’s counteroffensive. Reuters
Germany, Poland Negotiating Tank Hub Deal, Patriot Unit Deployments. German Defense Minister Boris Pistorius said on Monday that he is seeking to finish negotiations on the establishment of a Leopard tank maintenance hub in Poland “within the next 10 days.” The facility would focus on repairing Leopard tanks damaged in the Ukraine war and readying them for redeployment. The negotiations appear to be most stalled over problems with German and Polish companies that would be involved in the hub. Pistorius added that talks will point to “what direction to plan” for the maintenance hub, which analysts say was a veiled threat that Germany could establish it outside of Poland. In a separate negotiation, Poland is seeking the extension of Germany’s deployment of three Patriot air defense units to the southern Polish town of Zamosc. The units are there to help secure Polish airspace and protect the town’s crucial railway link to Ukraine, and Warsaw wants them to stay for at least another year to defend against potential spillover of the war from Ukraine and possible threats from the Wagner Group presence in Belarus. The two issues add to wider tensions between Germany and Poland on a variety of topics, including support for Ukraine. Reuters
Moscow Says 700,000 Ukrainian Children Now in Russia. Grigory Karasin, the head of Russia’s upper house of parliament, said on Sunday that 700,000 Ukrainian children “have found refuge” in Russia, fleeing fighting and violence in Ukraine. Moscow stands by the claim that its program of bringing children from Ukraine into Russia is to protect orphans and children abandoned in conflict zones. However, Ukraine maintains that many children have been illegally deported. The U.S. backs Kyiv, saying that thousands have been forcibly removed from their homes. In July 2022, the U.S. estimated that 260,000 children had been “forcibly deported” and the Ukrainian ministry of Integration of Occupied Territories said that 19,492 children had been illegally deported. Reuters
Former President Bill Clinton Visits Kosovo. Former U.S. President Bill Clinton, during a visit to Albania, on Monday called for a solution to escalating tensions in northern Kosovo, where the ethnic Serb majority has clashed with the Kosovo government after ethnic Albanian mayors took office. Clinton, who is credited for playing a critical role in ending the Kosovo war, said that it was a “mistake” for ethnic Serbs to boycott the vote and that ethnic Albanians should not “take advantage” of the issue to “make their point,” concluding that the best thing to do is to “stop this nonsense” and establish “decent” municipal governments in northern Kosovo with full elections. Clinton later met with Serbian President Aleksandar Vucic to stress the importance of de-escalating tensions and normalizing relations between Belgrade and Pristina. Reuters
Asia and Oceania
Taiwan Holds Live Fire Drills on Southern Coast. Taiwan’s military conducted live-fire drills on the island’s southern coast on Monday. The exercises involved the destruction of targets near the shore line in a simulation of an invasion. The drills were held in Pingtung county, which is strategically located towards the Taiwan Strait, South China Sea, western Pacific Ocean, and Bashi Channel, which separates Taiwan and the Philippines. The drills come weeks before Taiwan holds its annual Han Kuang exercises, which will be focused on countering a blockade and will involve operations and defense at civilian airports. Reuters Wall Street Journal
China’s Top Diplomat Accuses U.S. of Escalating Tensions with Japan, South Korea. China’s top diplomat Wang Yi on Monday accused the U.S. of stoking tensions between Beijing and Japan and South Korea. In a thinly-veiled reference to Washington, Wang said “a certain major power outside the region” is trying to sow discord by exaggerating “ideological differences” and pursuing policies aimed at “excluding others.” He added that while China respects the relationships of Japan and South Korea with other powers, such relations “cannot be used for the purpose of containing” others. He urged Tokyo and Seoul to deepen cooperation with China and make the region “self-reliant,” emphasizing that Beijing seeks “peaceful development” and appealing that “Asia is our common homeland, and we are neighbors who are not going anywhere.” Wang’s comments follow moves by Japan and South Korea to bolster military ties with the U.S. Reuters South China Morning Post
Taiwan Landmine Deal Sparks Controversy. Critics are casting doubt on Taiwan’s new deal to buy Volcano Vehicle-Launched Scatterable Mine Systems from the U.S. Under the deal, Taiwan will receive the mine systems by 2029. Taiwan’s army said last Friday that the systems will be used for future operations in coastal areas and beaches in northern, central and southern Taiwan. Supporters of the deal say the mines would be an effective defense in the event of a Chinese amphibious attack on the island. Those doubting the deal have raised concern over the risk of heavy civilian trucks triggering accidental explosions of the mines; whether the deal violates the Ottawa Treaty, which calls for the elimination of all landmines globally; and if the deal marks a step away from Taiwan’s long-standing defense strategy to try and keep the bulk of fighting in a potential attack outside of Taiwan. South China Morning Post
China Draws from Ukraine War to Inform Drone Integration. Chinese state media coverage of military exercises shows increasing use of drones in battle operations. Experts say China’s inclusion of unmanned aerial vehicles in military strategy has increased due to lessons learned from the Ukraine war. Both Russia and Ukraine have relied on drones in the conflict, with Moscow using reconnaissance drones to provide low-cost, effective support to anti-aircraft and anti-missile defense systems. China is following Russia’s lead, moving to expand drone usage as a countermeasure to protect its armored units. South China Morning Post
Taiwan Draws from Ukraine Conflict To Bolster Telecommunications Resilience. Drawing on lessons from the Ukraine conflict, Taiwan now regards communications resilience as a key security issue and is prioritizing the bolstering of infrastructure and networks, developing spare capacity, and establishing backup systems including satellite broadband. Digital communications on Taiwan depend on undersea cables linked to four landing points on the island, which are publicly known. Chinese-flagged ships earlier this year accidentally cut two undersea cables, isolating parts of Taiwan from the internet, and reminding the island of its vulnerability to communications blackouts in a conflict with China. Taiwan’s space agency, TASA, is leading the nation’s efforts to develop domestic satellite broadband capacity. TASA plans to launch its first low-earth-orbit satellite in 2025 and the government will commit $820 million over the next decade to promote space-related industries, including satellites. Taiwan President Tsai Ing-wen has expressed interest in Starlink satellite communications capabilities, according to Michael McCaul, chairman of the House Foreign Affairs Committee, who led a bipartisan delegation on a visit to the island. Audrey Tang, Taiwan’s digital minister, included a tour of OneWeb headquarters while visiting London in June. The company recently completed deployment of a fleet of satellites in low-earth orbit. Tang said she anticipates multiple global industry providers would contribute to Taiwan’s communications resilience. Wall Street Journal
Chinese Navy Hospital Ship Visiting South Pacific. A Chinese navy hospital ship, the Peace Ark, is enroute to Kiribati and the Solomon Islands to offer free medical services. China’s navy said the hospital ship will also provide services in Tonga, Vanuatu and East Timor. The navy added that the ship’s mission is a “pragmatic initiative” to boost Beijing’s ties with countries in the South Pacific and promote China’s “fine” culture and emphasize the “peaceful development” of its military. The ship’s visit comes after Kiribati and the Solomons switched official diplomatic recognition from Taiwan to China in September 2019. Reuters South China Morning Post
Hong Kong Authorities Issue Arrest Warrants for 8 Pro-Democracy Protesters. Authorities in Hong Kong have set a bounty of HK$1 million ($127,637) for information leading to the arrest of eight pro-democracy protesters. The eight are accused of colluding with foreign forces under a security law that was passed after the widespread pro-democracy protests broke out in 2019. The eight protesters are all based in the UK, Australia, or the US. British Foreign Secretary James Cleverly responded by saying that the UK would “not tolerate any attempts by China to intimidate and silence individuals in the UK and overseas.” Australian Foreign Minister Penny Wong likewise expressed concerns for the erosion of rights and freedoms in Hong Kong. BBC Reuters
Middle East and Northern Africa
Israeli Operation in West Bank Continues for Second Day. Israeli forces continued airstrikes and ground attacks in the West Bank city of Jenin for a second day on Monday. The military operation, which has killed at least ten people and reportedly injured hundreds, is the most significant Israeli operation in the occupied West Bank in years. The Israeli Defense Forces (IDF) said its first airstrike targeted an apartment used as a hideout for Palestinians who have attacked Israelis, and as a “command center” for the militant Jenin Brigades. The IDF later said it had seized explosives and military equipment from a mosque affiliated with “terrorist organizations” in the area. An IDF spokesperson added that the military operation could last for days to “break the mindset’ that Jenin is a “safe haven for terrorists,” citing an “upscale in attacks” on Israelis from people operating from Jenin as a reason for the operation. Ambulances reportedly struggled to enter the Jenin refugee camp due to the fighting and damage to roads. The UN also warned that it is “deeply concerned” that the Israeli operation has disrupted water and electricity services in the camp and is keeping those in need from leaving their homes. Hundreds of Palestninians across the West Bank marched in protests of the Israeli operation. Palestinian Prime Minister Mohammad Shtayyeh said the attack was a “new attempt to destroy [Jenin] camp,” adding that the camp is “resistant to the occupation and its invasions.” Palestinian President Mahmoud Abbas also suspended contact and security coordination with Israel following the raid — a move he has done in the past after previous rounds of violence. BBC Washington PostWall Street Journal
Sub Saharan Africa
Chinese Naval Fleet Visits Nigeria. A naval fleet of China’s People’s Liberation Army (PLA) — including a destroyer, an accompanying frigate, and a supply ship — arrived in Nigeria on Sunday for a five-day visit. The Chinese embassy in Nigeria said the visiting fleet is ready to support Nigeria in addressing regional maritime security threats and boosting stability in the Gulf of Guinea. Maritime authorities say the Gulf of Guinea is one of the most dangerous and important shipping routes. The region also sees significant exports of crude from West Africa, including from Angola and Nigeria, which are two of China’s top oil suppliers. There is speculation that China will open its next overseas military base in the Gulf of Guinea, where China has already made significant investments to support the region’s oil production. Al Jazeera
Senegalese President Will Not Run for Re-election. Senegal President Macky Sall announced on Monday that he will not be running for re-election following violent protests that erupted in response to the arrest of popular opposition leader Ousmane Sonko. Critics saw the arrest as a move by Sall to sideline opponents. Nigeria, Guinea Bissau and the African Union applauded Sall’s decision, stating that it will ease tensions in the region. Sall’s party will have to select a new successor before the February polls, but it is unclear who will run. Reuters
Cyber and Tech
China Announces Export Controls on Metals Vital to High-Performance Chips. China has announced export restrictions on two metals – gallium and germanium – that are critical in the manufacture of semiconductors, 5G base stations, and solar panels. China’s Commerce Ministry said the export control would go into effect on August 1 as a measure to “safeguard national security and interest.” Under the new restrictions, gallium and germanium exporters will be required to apply for licenses and disclose information on foreign purchasers. Industry observers say the new requirements are retaliation for recent U.S. and allied export controls on advanced chip and semiconductor manufacturing equipment to China. The announcement of the controls on the metals came days before U.S. Treasury Secretary Janet Yellen is scheduled to meet in Beijing with senior government officials. Experts say the Chinese controls will be highly disruptive in the short-term, as China is the lead producer of gallium and germanium. According to the UK Critical Minerals Intelligence Centre, China accounts for 94% of global gallium production, and the European industry association Critical Raw Materials Alliance (CRMA) reports that China produces 60% of the world’s germanium. Alastair Neill, a critical minerals expert with deep experience in the Chinese metals sector, said that the announced export control “will have an immediate ripple effect on the semiconductor industry, especially with regards to high-performance chips.” However, some analysts also say the move will likely encourage the West to start extracting the metals themselves and finding other alternative sources, which could end China’s market dominance, as has happened before with some other metals and rare earths. Bloomberg South China Morning Post Wall Street Journal
U.S. to Restrict Chinese Cloud Computing Access. The Biden administration is reportedly planning to limit Chinese businesses’ access to U.S. cloud-computing services. The controls would most likely require U.S. cloud-service providers, including Microsoft and Amazon, to receive approval from the US government before offering cloud-computing services that utilize advanced artificial intelligence chips to Chinese consumers. This measure could prevent Chinese AI firms from circumventing current export controls related to advanced chips through cloud services. Sources say the Commerce Department is set to announce the development in the near future as an extension of its semiconductor export control policy enacted last fall. This restriction on cloud services would be the latest move in a series of tit-for-tat actions between the U.S. and China as they compete for technological advancements. Wall Street Journal
EU Markets Chief Cites Expanded Chip Cooperation with Japan During Tokyo Visit. Thierry Breton, the EU’s internal markets commissioner, announced during a visit to Tokyo that Europe and Japan will intensify cooperation on semiconductors, with a special emphasis on securing the semiconductor supply chain. In a move viewed as strengthening technology alignment in the defense, electronic, and auto industries, Breton said the two sides will promote exchanges of scientists and engineers while the EU will help Japanese semiconductor firms that seek to operate in the EU. The first-ever EU-Japan Digital Partnership talks featured meetings between Breton and Taro Kono, Japan’s digital affairs minister, as well as communications minister Takeaki Matsmoto and trade minister Fusae Ota. In addition to semiconductors, the ministerial discussions resulted in cooperation agreements on undersea cable connectivity, cyber security, and other areas of the digital economy. Breton noted during a news conference that much of the conversation was dominated by AI, and that another round of talks would take place in Brussels next year. Reuters
Japan Leans Toward ‘Softer’ Approach to AI Regulation than EU. An official involved in talks about Japanese regulation of AI says Tokyo is inclined to adopt “softer rules” for the technology than the EU. The unidentified official described Japan’s attitude as closer to the U.S. in contrast to the “stringent” regulations reportedly being developed in Europe. One of the implications of the Japanese approach is that the EU’s hopes for global standards on AI issues such as copyright could be hampered. The chair of Japan’s AI strategy council views the EU draft AI act as a “little too strict,” noting the difficulty of pinpointing copyrighted material used to build large language models. Yutaka Matsuo said the EU’s approach focuses on “making already large companies take responsibility." Reuters
Researchers Report Chinese Cyberespionage Campaign Targeting European Embassies. Cybersecurity researchers report that Chinese cyberespionage actors have targeted European embassies and foreign affairs ministries in a campaign they dubbed SmugX. According to Check Point specialists, hackers have deployed modular PlugX malware implants within HTML documents featuring “lure material” with a diplomatic focus. Countries targeted since last December include Britain, France, Sweden, Ukraine, Czech, Hungary, and Slovakia. Check Point said the campaign suggests a shift to European government components specializing in foreign policy. The diplomatic content of the lure material, researchers said, in more than one case “was directly related to China,” including a letter supposedly from the Serbian Embassy in Budapest. Other lure material was described as a priorities document of the Swedish presidency of the Council of the European Union, and an article about two imprisoned Chinese human rights lawyers. The Check Point researchers noted overlaps with activity previously attributed to Mustang Panda and RedDelta, two China-linked advanced persistent threat (APT) groups. The PlugX malware has been used by multiple suspected Chinese threat groups in the past, including against the Vatican in 2020, an Indonesian intelligence service in 2021, and Ukraine in 2022. The Record BleepingComputer
Microsoft Denies Anonymous Sudan Claim of Data Breach, Customer Data Theft. Microsoft dismissed claims by Anonymous Sudan hacktivists that the group breached company networks, resulting in the theft of 30 million customer credentials. On July 2, the hacktivists claimed a successful hack of Microsoft and the seizure of a “large database containing more than 30 million Microsoft accounts, emails, and passwords.” Anonymous Sudan posted an offer to sell the database for $50,000. urging interested buyers to communicate via Telegram bot to arrange the data purchase. Meanwhile, a Microsoft spokesperson denied the breach claims, stating, “At this time, our analysis of the data shows that this is not a legitimate claim and an aggregation of data.” BleepingComputer
Hacktivist Group Launches Politically-Oriented Attacks on State Government Systems. A hacking group known for conducting political and criminal campaigns said it has targeted satellite and industrial control systems across the U.S., “particularly in states banning gender affirming care.” The group known as SiegedSec, which first appeared in April last year, claimed that it had seized control of Halliburton, Shell, and other company accounts used for monitoring satellite services and internet services. The group’s July 1 message on Telegram included links to 40 gigabytes of data stolen from the city of Fort Worth Transportation & Public Works. On June 28, SiegedSec posted 500,000 files that included work orders, employee lists, invoices, police reports, emails between City of Fort Worth employees, camera footage “and lots, lots, lots more~!” A June 28 post on the group’s Telegram channel reported that it had launched attacks on the Nebraska Supreme Court, the South Dakota Boards and Commissions website, the Texas State Behavioral Health Executive Council, the South Carolina Criminal Justice Information Services portal and the Pennsylvania Provider Self-Service website. In an email to CyberScoop, SiegedSec said the group focuses “more on the message than the money. Although we mostly consider ourselves more blackhat than hacktivists. Money is not our main goal, most of the time we just want to have fun and destroy stuff.” CyberScoop
Japan, ASEAN to Establish Center for Cross-Border Data Flows. Japan and ASEAN have agreed to establish a research and innovation center focused on promoting the free flow of data across borders in Southeast Asia. Currently, businesses face varied regulations that different countries in the region have on transmitting data overseas, such as rules on data encryption. The center will guide businesses on how to navigate these regulations with the goal of improving cross-border data flows across the region. The center will be in Jakarta, Indonesia and start operations in late August. Smoother data flows will help companies better manage and adjust supply chains and track data such as greenhouse gas emissions and workers’ rights. China has worked to keep data within its own borders, placing severe limitations on what data can be moved abroad. In response, Japan and ASEAN have worked closely on the issue to ensure free data flows to maximize economic development. Nikkei Asia
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