Iran Attacks Israel, Risking Escalating Conflict

On April 13, Iran retaliated against Israel for the targeting of its consular building in Syria by sending more than 300 drones and missiles from Iran, Yemen, and Lebanon. Israel, supported by the US, UK, and France, successfully neutralized 99% of the strikes, though a signals facility and F-35 base were damaged. Israel called the attack a “declaration of war.” A government spokesperson said, “We reserve the right to do everything in our power, and we will do everything in our power to defend this country.” 
 

It is unclear how Israel intends to respond, but the United States has explicitly stated they will not participate in actions that will escalate conflict in the region and has asked Israel to not retaliate too quickly. President Biden also appears unlikely to expand sanctions on Iran – something that Israel has “demanded”. Iran’s attack was most likely intended to try and avoid triggering a wider war, there was ample prior warning it would happen, and it said after the attack that it considered the matter resolved. However, Iran needed to act to demonstrate resolve against Israel’s earlier attack. It is now Israel’s response that will determine how the conflict will develop. However, there are several geopolitical implications that go beyond immediate security considerations or expanded conflict in the region, which remains a persistent threat.

First, Iran has shown that second-rate powers can utilize drones, a cheap alternative that they can build despite their lag in technological development, as part of significant attacks. The attack would have most likely overwhelmed Israeli defenses without the support from the US and others. It was also the first time Iran has directly targeted Israel instead of using its proxies in the region. From a strategic perspective, Iran’s use of drones and missiles should shift the mindset of how to assess the military capabilities of regional powers and terrorist organizations.

Second, Arab countries (Jordan, Saudi Arabia, and UAE) were also reportedly part of Israel’s defense by either directly taking down projectiles, providing intelligence, or allowing Israel and its allies to use their airspace. Although Arab states remain decidedly pro-Palestine, they assisted because of their own security interests, a more damaging Iranian attack would have severely increased the risk of a broader conflict, and to help contain Iran. Jordan and the UAE had normalized their relationship with Israel and Saudi Arabia was set to do the same. Their actions may indicate their intent to carry on working towards normalizing relations with Israel after the war ends. Although this will be much more difficult.

Finally, Russia has pledged to supply advanced weapons to Iran that would help defend against future Israeli airstrikes, and the countries are helping strengthen the capabilities of each other with Iran assisting Russia by supplying drones and other weapons to support its war in Ukraine.  The conflict in the Middle East is interconnected with conflicts in Europe, Africa, and Asia, and it is important for corporations to understand how conflicts and geopolitical issues impact each other globally rather than just regionally.

Political Battle in House Over Ukraine/Israel Aid

The US House of Representatives is in further chaos as right-wing members have turned against Speaker Mike Johnson over his support for a new national security bill to support Ukraine and Israel. Iran’s attack against Israel has increased pressure on Johnson to get the legislative package to the Senate as aid has been significantly delayed. The package is the latest attempt to appease more extremist members of Congress who have refused previous pieces of legislation. There are technically four bills because military and foreign aid have been decoupled regionally. Allocation will include: $60 billion for Ukraine, $14 billion for Israel, and $5 billion for Indo-Pacific allies trying to counter China. This increases the likelihood of each part of the legislation failing to pass because different political groups oppose different parts. For example, populist Republicans oppose aid to Ukraine while left-wing Democrats oppose aid to Israel (especially if it lacks humanitarian aid for Gaza). One piece of the legislative package is meant to appease Republicans by requiring some aid to be paid back and forcing TikTok to divest from ByteDance. Even if Johnson can get these bills through the House, it remains unclear if the Senate will pass them.

However, Johnson’s mere introduction of support for Ukraine without “border security” measures has led to the ire of right-wing populists in the House, such as Thomas Massie and Marjorie Taylor Greene. Those two members of Congress have introduced a resolution to remove Johnson from the Speakership. If Congress fails to pass a military aid package for Ukraine, then Russia is more likely to win the conflict because there is a direct correlation between American support and Ukraine’s continued ability to fight. In addition, the political battle in Congress shows the instability of policy making in the US currently. Johnson came to power in the Speakership to appease the far right of the Republican Party, but even he is insufficient for that because he does not do exactly what they always want. This is a strong indicator that policymaking will be increasingly difficult in the House and that corporations should understand this medium-term political risk.

Niger Turns Against the United States

Encouraged by the ruling military junta, people in Niger are protesting against the presence of US troops. Niger has started turning against the US as its military junta is decidedly anti-Western (especially anti-French), and the government has explicitly complained about the 2012 agreement with the US because they argue it has only served Western interests. Also, they now claim that the agreement is illegal and ended it in March even though the US has more than 1,000 soldiers in Niger at a base used for drones to monitor jihadists in the region.

Other complaints include the US being “condescending” about Niger’s relationship with other countries. In a social media post, the government claimed, “How can we talk about the interests of Niger when Americans think that their enemies must necessarily be our enemies. How can we talk about the interests of Niger when the USA denies us even the basic right to choose our partners?” That is where Russia comes into the equation. Russia sent anti-aircraft defense systems and 100 instructors to Niger days before the protests in Niamey. The two countries signed a defense pact in December 2023, and the instructors are part of the Africa Corps (formerly Wagner Group). Niger has also started meetings with the Chinese ambassador and Iranian officials over a mining deal, further turning away from the US.

The United States and Western governments continue to lose ground in Africa to competing powers like Russia and China, and this will have broadly negative impacts on economics and security. Niger has already removed French diplomats and troops, and they ended a migration deal with the European Union. Shifting away from the US is more recent because the coup leader General Abdourahmane Tchiani had been trained by the US military. Companies are going to face an increasingly hostile environment in Africa because it will be harder for Western companies and organizations to either enter the market or maintain their presence over these political issues. Everything from mining to technology will be impacted by this geopolitical competition.

Mandiant Publishes Report on Sandworm

Mandiant has published a new report on Sandworm activity, a Russian threat actor in the GRU. Also called APT44, Sandworm is critical to Russian operations as “no other Russian government-backed cyber group has played a more central role in shaping and supporting Russia’s military campaign.” Despite their criticality for the Ukrainian conflict, “operations from the group that are global in scope in key political, military, and economic hotspots for Russia.” Of particular concern to corporations is the role Sandworm has had in attacking OT systems in the US and Europe, including a water utility in Texas and wastewater treatment plant in Texas. Sandworm was the group behind NotPetyra in 2017 that severely disrupted supply chains. While cybersecurity risks are persistent and ever present, understanding individual threat actors helps corporations prepare defenses against their TTPs. Nation-state actors are especially a threat because of their resources and how they support the government’s strategic interest.

Duo’s Breach Reduces Trust in MFA

Cisco acknowledged that one of its providers for multifactor authentication (MFA) messages was breached on April 1. Duo, the MFA company owned by Cisco, had its MFA SMS message logs breached, and it shows the vulnerabilities even within cybersecurity. Experts strongly encourage MFA because it significantly reduces the likelihood of identity-based attacks, but a breached MFA company will significantly reduce trust in the process. Major American companies, such as Lyft, Yelp, Box, AmeriGas, and government agencies are all customers of Duo. Not only does this create risks within cybersecurity itself, but it is also important for corporations to understand that threat actors are targeting entities several degrees away from the actual target. Security cannot only encompass the immediate infrastructure, otherwise there will be major blind spots in monitoring.

Germany Increases Investment in US Due to Energy Prices

Germany continues to suffer economically from turning away from Russian energy as German industry lost access to cheap gas due to the war in Ukraine. Generally, German industry will find this difficult to overcome, especially as the country is facing a recession. Overreliance on natural gas from a single country created these structural problems for the economy as Germany had imported 55% of its natural gas supply before February 2022. Now, energy prices are higher there than in most of Europe. In response to these problems, German companies almost tripled investment in the United States in 2023 to almost $16 billion. This is a key example of how conflict such as the war in Ukraine creates fundamental risks to corporations by how they impact markets. German companies have had to shift their market approach due to the structural mistake of overreliance from one source.

Terrorist Threat to Major Sporting Events

There is an increased risk of attempted terrorist attacks targeting major sporting events in the coming months. Security was recently increased around football (soccer) matches in France, Spain, and the UK after threats from the Islamic State (IS). An online post by IS reportedly urged followers to recreate a November 2015 attack on the Stade de France stadium or target events using drones.

Upcoming major sporting events:

• 26 May-9 June - Tennis - French Open, Roland Garros, Paris
• 1 June - Football (soccer) - Champions League final, Wembley Stadium
• 7-12 June - Athletics - European Championships, Rome
• 14 June to 14 July - Football (soccer) - Euro 2024, Germany
• 29 June to 21 July - Cycling - Tour de France (starts in Italy)
• 1-14 July - Tennis - Wimbledon
• 26 July to 11 August - Olympic Games, Paris
• 28 August to 8 September - Paralympic Games, Paris

Fears over Jihadist attacks have increased because of the recent IS-K attack in Moscow. IS and other groups have the intent to carry out mass casualty attacks against crowded locations. While complex coordinated attacks cannot be ruled out, the primary risk is from self-radicalized individuals using firearms, IEDs, bladed weapons, and vehicles.