Warnings of Cyber Issues in Critical Infrastructure

The business advisory firm Aprio released a new survey looking at the cybersecurity threats to US manufacturing, a critical area of the economy. Aprio found that “nearly two-thirds of manufacturers experienced unauthorized access to their companies’ networks and data in the past year and 18% report[ed] five or more breaches.” Despite the persistent breaches to their security, Aprio also found that less than half of the surveyed companies had cybersecurity policies and only a little more than a third had enhanced IT security. The survey was released around the same time as a new FBI notification sent to the energy industry that warns there will likely be an increase in Chinese and Russian cyberattacks on energy infrastructure.

Attacks are likely to increase because of geopolitical concerns, such as the US’s increase in LNG exports and continued Western sanctions on Russia. There are low-level attacks consistently against US energy infrastructure by Chinese and Russian APTs, which indicates the pursuit of capabilities for larger attack. Both the business survey and government notification highlight the persistent cyber threats over geopolitical issues. While major technology firms and financial institutions are often prepared for such attacks, much of the US’s critical infrastructure has not prepared for the same level of threats. Manufacturing and energy are vital to the US’s economy, but many of the corporations in those spaces do not have the defenses or policies in place. Even smaller corporations must now prepare for cyberattacks that could cripple their operations because great powers want to harm the US any way they can.

Positive Economic Indicators: Europe

Europe has faced systemically difficult economic problems over the past decade, particularly around productivity. In 2008, the EU and US had approximately similar GDPs of more than USD $14 trillion, but over the past fifteen years Europe’s GDP has only increased by about one trillion dollars while the US’s GDP has increased more than eleven trillion dollars. However, there are some positive economic indicators for Europe that show some improvements in their economic structure. In the eurozone, inflation reached its lowest levels in two years in September, meaning the higher interest rates introduced by the ECB are working.

This strongly indicates the Europe has reached peak interest rates, and if inflation continues to decline over the next year, then the ECB is likely to start reducing rates slowly. Though not part of the eurozone, the UK also has positive indicators. New data shows that the UK’s economy is 1.8% larger than the last quarter of 2019 before the pandemic started, which is larger growth than both France and Germany. Previous data from August indicated that the UK was 0.2% smaller than before the pandemic, but the revision is a strong positive indicator.

The UK’s labor market also has positive indicators as employers are offering more flexible hours and better benefits to attract workers. High-tech manufacturing is also coming to Europe. Intel will begin manufacturing EUV lithography machines at its plant in Ireland. As the markets for manufacturing and technology change because of the geopolitical competition between the US and China, opportunities will increase in Europe.

Tech Sector Opposes Biden’s Cloud Policy

The US technology sector has issued a report disapproving of the Biden administration’s current plan to improve cloud infrastructure security called Know Your Customer (KYC). KYC would require tech firms to collect personal information on users, but major companies like Amazon, Microsoft, and Palo Alto criticize the policy because it would cost the industry billions of dollars in administrative and logistical costs. However, the Biden administration is refusing to listen to the tech sector and will continue to push KYC. This policy is highly likely to harm smaller businesses working in cloud services, and it is likely to make coordination on threat intelligence more difficult because of privacy issues. Should the administration succeed in KYC, then the tech sector is highly likely to face fiscal and security risks.

FCC Wants to Bring Back Net Neutrality

FCC Chairwoman Jessica Rosenworcel established a plan to bring back net neutrality regulations by reversing the 2017 decision by the commission (see FCC fact sheet here). The goal of the policy is to “treat broadband internet service as an essential service for American life.” As with most policies, there will be costs and benefits to re-establishing net neutrality. Benefits for consumers and businesses include guaranteed service no matter one’s socio-economic status, protections for freedom of speech because ISPs cannot regulate content as well, and no additional costs for businesses to have their content available. However, consumers and businesses will likely see higher overall costs to offset not paying for specific data. There will also be significantly less investment available for new internet infrastructure, and likely less innovation due to regulations.

Suicide Bombing in Pakistan

On 29 September, suicide bombings in Pakistan’s Baluchistan and Khyber Pakhtunkhwa killed approximately sixty people in total. The attack in Baluchistan targeted the Barelvi sect on a holiday venerating the Prophet Muhammad, which some Islamists consider an act of heresy. Terrorism remains a persistent threat in Pakistan with dozens of attacks every year, especially from Tehreek-e-Taliban-e-Pakistan (TTP), Baloch Nationalist Army, Baluchistan Liberation Army, and Islamic State in Khorasan. A recent terrorist attack and military clash in North Waziristan significantly increases the threats to physical security for corporations operating in Pakistan because the military has threatened retaliation over TTP attacks, which would likely lead to a spiral of even more terrorist attacks and increase tensions with Afghanistan because the attacks are happening in border provinces.

Twitter Eliminates Election Integrity Team

Elon Musk, owner of X (formerly Twitter) stated that the company has eliminated the Election Integrity team focused on countering disinformation on the platform. Musk tweeted in response to news reports about eliminating the team, "Oh you mean the 'Election Integrity' Team that was undermining election integrity? Yeah, they’re gone." The EU’s digital chief explicitly criticized Musk and X as the social media platform with the most disinformation. Europe is deeply concerned about Russian interference in elections as countries including Poland, Luxembourg, and the Netherlands will hold elections soon. The EU’s Digital Services Act punishes corporations that do not attempt to mitigate the risks of disinformation with fines up to 6% of global annual revenue. Insight Forward published a report this week on how dis- and misinformation negatively impacts corporations, not just governments. See here for IF’s report.

Supreme Court to Hear Cases on Content Moderation

The US Supreme Court has agreed to hear two cases involving state regulations of the technology sector because lower courts were split on the issue. State laws in Texas and Florida limit the kind of content social media companies can remove or ban on their platforms. Tech industry groups challenging the laws argue they violate the First Amendment and that it is unconstitutional for the government to require private websites to publish extremist views. Content moderation is a contentious issue because there are significant political implications. Conservative and right-wing groups have accused social media companies of banning them under the guise of preventing extremist content. This court decision is extremely likely to impact the way states can regulate the technology sector, and it will impact anti-tech sentiment on the political right. If the Supreme Court strikes down the laws, then Republicans are likely to take up the issue in Congress after the 2024 election.

Saudi Arabia Indicates a Possible Relationship with Isreal

The post-Abraham Accords Middle East continues to see geopolitical changes as Saudi Arabia has strongly indicated it will pursue ties with Israel if the US acquiesces to a defense agreement with the Kingdom. This is an historic change because Saudi Arabia indicated they will establish a relationship with Israel even without concessions on the Palestinian issue. The US is unlikely to enter into a collective security-type defense agreement, but the final product could look like treaties the US has with Asian countries on defense. In addition, the US could make Saudi Arabia a “Major Non-NATO Ally,” giving the kingdom the same status as Israel. If the agreement goes through and Saudi Arabia opens up to Israel, then the Middle East will fundamentally be a different place geopolitically. This will also create major investment opportunities for Western corporations in areas such as energy and technology.

Poland’s Elections

Poland will Hold Elections on 15 October that will play a pivotal role in shaping its relationship with the EU. Since being in power, the ruling Law and Justice (PiS) party has had a tense relationship with the EU, which criticizes it for undemocratic practices. Recently the PiS has also fallen out with Germany, the country’s main trading partner and has been ramping up nationalist rhetoric by accusing main opposition leader, Donald Tusk, of being a foreign stooge. Poland has been one of Ukraine’s most ardent supporters in its war against Russia. However, the PiS has threatened to stop sending weapons to Ukraine because of tensions over Ukrainian grain exports through Poland. The PiS says they impact the income of local farmers. The PiS is leading the polls but is unlikely to secure a majority and would likely have to form a coalition government, possibly with parties that are calling for reduced aid to Ukraine. A PiS victory will exacerbate existing tensions with the EU and Germany and could dampen support for Ukraine. A victory for the opposition, led by Tusk, will likely lead to a more collaborative approach with the EU.