Are We Now Buying the Rope On Which We Will Hang?

by Kevin D. Freeman on December 28, 2015

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got-rope

There’s an infamous quote attributed to Vladimir Lenin (and also to Joseph Stalin):

“The Capitalists will sell us the rope with which we will hang them.”

The idea was that America was so corrupted and so greedy that we would eventually disregard our own national security in pursuit of a short-term profit. Ironically, it turned out that the Soviet system died under the weight of its own corruption. Communists, at least in practice rather than theory, tend to be just as greedy (if not more so) than capitalists. The Soviet Union is gone and America remains.

What Lenin may have missed is that America’s sin of greed is perhaps overshadowed by our gluttony. Yes, greed was at work in the last downturn but so was overconsumption. As a nation, we are at least as guilty in our buying habits as we are in our selling. One example is that the nation has about $19 trillion in Federal government debt, not to mention unfunded liabilities valued in the $100s of trillions, or private debt which is much greater than GDP already. From one view, this enormous quantity of debt could be the rope with which we hang. We buy goods and services from China and they claim the debt we incur to them is a weapon they can use against us. But that is just one example.

Another example is that we, until the shale boom, massively favored foreign oil over domestic production. Over the years, we sent trillions of dollars overseas to regimes that promoted hostility against America. As former Director of Central Intelligence once said, “we are funding both sides of the war on terror” with oil imports.

We’ve discussed another concern in regard to Chinese corporations welcomed with open arms on Wall Street. Despite serious issues being raised, the SEC allowed Alibaba to list on the NYSE via the largest IPO in history. This was AFTER the Hong Kong Stock Exchange turned down the lucrative IPO because it broke their rules on corporate governance.

The problem is that we have lost any real sense of national security. We ignore borders as if they were irrelevant. We are so globalized that we rarely consider national security issues when we make economic decisions. Yet this is precisely where the next war will be waged.

The TPP (Trans Pacific Partnership) agreement may be a prime example. Reports suggest that for the first time in decades, the clause that America retains the right to assert national security interests has been left out. I have not read the agreement and am solely reliant on press reports. If this is true, however, it is astonishing and extraordinarily threatening as explained by political consultant Charles Ellis in a December 21 Breitbart article by Alex Swoyer:

“The text of the Obama administration’s Trans Pacific Partnership (TPP) trade deal between the United States and 11 other countries reverses policies that were originally put into place to prevent a foreign takeover of the nation’s infrastructure, argues political consultant Curtis Ellis, who adds that the deal threatens U.S. national security interests.

Ellis explained:

Previous U.S. trade pacts stated in no uncertain terms that the national security interests of the United States are determined solely by the U.S. government and supersede any provisions of the pacts. The U.S. government had unfettered power to protect our national security interests as it deemed necessary – even if its actions might violate the terms of a trade agreement.

But the Trans-Pacific Partnership agreement reverses this precedent. As a result, other countries could claim our national security interests violate the T.P.P. agreement and force the U.S. to pay billions of dollars in damages.

Ellis says that Chapter 11 in the more than 5,000-page trade deal provides foreign investors with special rights to acquire U.S. land, businesses, natural resources and investments.

‘Under Chapter 28 and Chapter 29, these foreign investors could do an end-run around U.S. courts and sue the U.S. before an international panel, known as an investor-state dispute tribunal, if they feel American law violates their ‘rights’ under the TPP,’ Ellis argues.

Currently, the Committee on Foreign Investment in the United States (CFIUS) reviews pending foreign investments in the U.S. to determine if they pose a threat to national security and can recommend the president shut down investments deemed a threat. Under previous trade agreements, foreign investors would have no recourse.

But under the T.P.P., the Sultan of Brunei, the billionaire autocrat who rules his T.P.P. country under Sharia law, could sue for billions of dollars if CFIUS denied his bid to buy a company providing security to U.S. ports and airports.

He would bring his case before a foreign tribunal that could force taxpayers to award him compensation for “lost profits.” The tribunal, staffed by three unelected lawyers hailing from anywhere in the world, would have the power to second-guess the U.S. government on what constitutes a threat to our national security.

Additionally, the Islamic Sultanate of Brunei — a country that’s a party to President Obama’s trade agenda — has outlawed Christmas and threatens to place offenders in prison.”

In other words, it appears that national security and our nation’s sovereignty have been ignored entirely by a lengthy document that appears to favor foreign interests over our own. This is appalling and a serious departure from modern precedent. The claim is that other nations such as Australia, Canada, Mexico, and New Zealand all included national security provisions even as we did not. If true, this is a blatant disregard for American sovereignty.

Another frightening example can be seen in how we have outsourced a good deal of coding and cyber security to firms tied to the Russian regime.

Really? Can it be true that the Pentagon (inadvertently) outsourced critical coding to Russian firms? Sadly, the answer is that this happened (despite being against the law and the two firms involved in the work had to pay multi-million dollar fines when caught).

From The Daily Beast on November 4:

Pentagon Farmed Out Its Coding to Russia

By Patrick Malone, Center for Public Integrity — November 4, 2015

The Pentagon was tipped off in 2011 by a longtime Army contractor that Russian computer programmers were helping to write computer software for sensitive U.S. military communications systems, setting in motion a four-year federal investigation that ended this week with a multimillion-dollar fine against two firms involved in the work.

Greed drove the contractor to employ the Russian programmers, he said in his March 2011 complaint, which was sealed until late last week. He said they worked for one-third the rate that American programmers with the requisite security clearances could command. His accusations were denied by the firms that did the programming work.

“On at least one occasion, numerous viruses were loaded onto the DISA [Defense Information Systems Agency] network as a result of code written by the Russian programmers and installed on servers in the DISA secure system,” Kingsley said in his complaint, filed under the federal False Claims Act in U.S. District Court in Washington, D.C., on March 18, 2011.
[To CONTINUE READING at The Daily Beast….]

Unfortunately, this is not isolated. We also know that a good deal of American cybersecurity in the private sector has been hired out to a Russian company with close ties to the Russian government. From Bloomberg earlier this year:

The Company Securing Your Internet Has Close Ties to Russian Spies

March 19, 2015
Kaspersky Lab has published reports on alleged electronic espionage by the U.S., Israel, and the U.K.—but hasn’t looked as aggressively at Russia.

Kaspersky Lab sells security software, including antivirus programs recommended by big-box stores and other U.S. PC retailers. The Moscow-based company ranks sixth in revenue among security-software makers, taking in $667 million in 2013, and is a favorite among Best Buy’s Geek Squad technicians and reviewers on Amazon.com. Founder and Chief Executive Officer Eugene Kaspersky was educated at a KGB-sponsored cryptography institute, then worked for Russian military intelligence, and in 2007, one of the company’s Japanese ad campaigns used the slogan “A Specialist in Cryptography from KGB.” The sales tactic, a local partner’s idea, was “quickly removed by headquarters,” according to Kaspersky Lab, as the company recruited senior managers in the U.S. and Europe to expand its business and readied an initial public offering with a U.S. investment firm.

In 2012, however, Kaspersky Lab abruptly changed course. Since then, high-level managers have left or been fired, their jobs often filled by people with closer ties to Russia’s military or intelligence services. Some of these people actively aid criminal investigations by the FSB, the KGB’s successor, using data from some of the 400 million customers who rely on Kaspersky Lab’s software, say six current and former employees who declined to discuss the matter publicly because they feared reprisals. This closeness starts at the top: Unless Kaspersky is traveling, he rarely misses a weekly banya (sauna) night with a group of about 5 to 10 that usually includes Russian intelligence officials….
[To CONTINUE READING at Bloomberg Business Week…]

There are other examples of Russian Cyber Security firms that are potential national security threats. One was reported by Bill Gertz on December 16:

Russian cybersecurity intelligence targets critical U.S. infrastructure

By Bill Gertz – – Wednesday, December 16, 2015
U.S. intelligence agencies recently identified a Russian cybersecurity firm, which has expertise in testing the network vulnerabilities of the electrical grid, financial markets and other critical infrastructure, as having close ties to Moscow’s Federal Security Service, the civilian intelligence service.

The relationship between the company and the FSB, as the spy agency is known, has heightened fears among U.S. cyberintelligence officials that Moscow is stepping up covert efforts to infiltrate computer networks that control critical U.S. infrastructure such as oil and gas pipelines and transportation.

The effort appears to be part of FSB and Russian military cyberwarfare reconnaissance targeting, something the Pentagon calls preparation of the battlefield for future cyberattacks. The Russian company is taking steps to open a U.S. branch office as part of the intelligence-gathering, said officials familiar with reports of the effort who spoke on background.

Officials familiar with reports about the company did not identify it by name. However, security officials are quietly alerting government security officials and industry cybersecurity chiefs about the Russian firm and its covert plans for operations in the United States.
[To CONTINUE READING at The Washington Times…]

Is there any wonder that Russian hackers have been so successful in penetrating control systems?

From Security Week (September 17, 2015):

The industrial control systems (ICS) that run the United States’ critical infrastructure have been targeted by Russian threat actors, according to Director of National Intelligence James Clapper.

In a statement made last week on worldwide cyber threats before the House Permanent Select Committee on Intelligence, Clapper warned of the increasing threat to national and economic security, and the expansion of attack methods, targeted systems and victims.

“Politically motivated cyber attacks are now a growing reality, and foreign actors are reconnoitering and developing access to US critical infrastructure systems, which might be quickly exploited for disruption if an adversary’s intent became hostile. In addition, those conducting cyber espionage are targeting US government, military, and commercial networks on a daily basis,” the US intel chief said.

Russian hackers have also targeted our financial system with recent exposures at Dow Jones (owner of The Wall Street Journal), Morgan Stanley, and possibly JP Morgan (via hackers for hire). In addition, there is a Russian connection to compromising institutions such as Deutsche Bank. It was less than a year ago that an alleged Russian spy was caught and accused of attempting to learn methods for destabilizing our financial markets. And recently, Vladimir Putin explained how critical a nation’s financial system is to its sovereignty:

“I just said that the financial stability and the independence of a country are absolutely intertwined. Please, proceed from these key basic considerations,” Putin said, addressing the Russian Parliament, the Federal Assembly.

We know that Russia has a modern fixation on seeing our financial system fail with an attempt to cause that as recently as 2008.

It only makes sense that you would target a potential adversary’s financial system in the event of a conflict. We must be aware that Russia also has shown interest in the transatlantic cables that carry Internet traffic as well as the satellites. The nation that controls these, or at least is able to cut them off, could inflict serious economic damage. But that’s ok, right? We can always replace downed satellites. Unfortunately, we outsourced this to Russia as well. From The Wall Street Journal (May 14, 2014):

After a series of launch failures in the 1990s cost the Air Force six satellites, the military began searching for a reliable, cheap alternative to its existing rocket engines. The Clinton administration at the time was pushing to strengthen ties with Moscow, and the U.S. opted to use Russian-made engines that were then considered sophisticated and reliable space technology.

But the policy of partnering with Russia in space has turned from a foreign-policy success to a source of friction, as relations between Moscow and Washington have soured over the annexation of Crimea and the ongoing crisis in Ukraine.

This week, Russian officials said they would cut off U.S. access to its engines and would seek to prevent the Air Force from using them to launch national security satellites.

The U.S. relies on Russian engines not only to launch spy satellites, but also to transport astronauts to and from the International Space Station.

The Russians (as well as the Chinese and Iranians) understand modern warfare and have been covering their bases in case we become adversarial. We can know their playbook by watching actions in Ukraine. The upsetting thing is that despite this knowledge, we continue to ignore the national security implications and outsource critical capabilities to potential adversaries. Previously, we were warned that we might greedily sell the rope on which we would hang. Now, however, it seems we may be the buyers of that rope instead, even if the end result is the same. It is time we wake up and make American national security and sovereignty a priority.

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