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Intelligence

The French economic intelligence and the Intelco case

Gagliano Giuseppe

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Christian Harbulot

In order for the intelligence to contribute to making the best strategic decisions, it is necessary that the mechanism linking intelligence, decision-making and actions should work smoothly. Therefore, it is important to provide a critical evaluation of the information and to understand that in the information society there is a great number of accessible sources.

In this regard, the French Intelco project had this specific goal and turned out to be a very positive experience. Funded in April 1993 by Christian Harbulot and Jean Pichot-Duclos, Intelco is a laboratory of ideas on the role of the information in post-Cold War geo-economic power relations.

Intelco was originally part of the Council of International Defense (DCI) that had been granted full autonomy to start a debate over economic intelligence in France. The original six members of Intelco were sided by one or two other members nominated by the DCI; Intelco’s main goals were 1) promoting research and awareness on economic intelligence through conferences sponsored by the Institute for Higher National Defense Studies and partnership with universities; 2) direct support to institution and enterprises. Intelco contributed to expanding the national debate on new frontiers of economic intelligence such as information war and cultural interference.

Intelco’s message encountered the opposition of those who refused to acknowledge the concept of economic warfare and maintained that while war brings death, liberalism creates wealth. Such a misconception can lead to wrong conclusions like considering the Clinton system as liberal, when in reality it is a mix of protectionism, diplomatic interventionism and special services to support U.S. companies, abuse of power in controlling electronic fluxes (the United States control 90% of the software industry). Besides, refusing the idea of economic warfare can also favor criminal organizations that are increasing their turnover.

The Intelco experience aimed at raising the awareness on real problems in the people who were supposed to solve them beyond ideologies and partisan interests. The most problematic hurdles Intelco had to overcome resulted from French cultural inertia. Economic intelligence was regarded with distrust: engineers were not familiar with indirect strategies imposing to perform invisible and transversal actions; security specialists had troubles adapting their traditional approach into a new context in which information is accessible to everybody.   Intelco had to face the antimilitarism of those refusing to admit that defense operations could also be helpful to companies and ignored the role of the Pentagon in protecting the economic interests of the United States.

Contrary to what most ideologues maintain, capital holders and defenders of national interests do not automatically get together and join forces. Despite its many enemies, Intelco continues to develop the concept of economic intelligence, which sooner or later will be integrated with the concept of global intelligence as the complexity of globalization increases.

The experience with Intelco led to the development of a scientific literature in French on the use of information and intelligence in both private and public sector. The cultural gap with the United States shrank significantly despite the fact that state administration, academia and business have long ignored this issue. The contribution this literature gave to the debate on economic intelligence is very important since it puts into question the Anglo-Saxon approach – that is usually narrow-minded and influenced by big corporations – and therefore provides room for a comparative study of market economies.

According to the United States laws and business mentality, companies must be free to deal with economic competition through offering better deals. The facts proved this assumption to be wrong. In fact, to protect the automobile industry from foreign competition, all stakeholders of the U.S. economy came together (companies, trade unions, federal authorities). The ultra-liberalism suddenly turned into a patriotic liberalism. The politically correct propaganda promoted by the international institutions under the Anglo-Saxon influence did not prevent Clinton to consider defense as number one priority for the U.S. economic interests.

Another achievement of Intelco was the creation of the School of Economic Warfare, in collaboration with the School of Trade (ESLSCA); the choice of using the words “economic warfare” instead of “economic intelligence” was driven by the fact that the former is more impactful than the latter.

Companies struggling with the competition attacks know very well what economic warfare is about, but is very rare for them to realize the importance of the role of information in developing their business.

The functioning of the School of Economic Warfare was based on the following principles: fighting spirit, teamwork, risk-taking, cunning. These principles find their equivalents in some of the illness of the French society: fighting spirit only for career goals, information that is not shared, little awareness of the importance for the business world to join forces, risk-adverse attitude.

Globalization requires companies to adopt all strategies necessary to protect themselves against the encirclement techniques used by foreign competitors. Companies not only need to promote their own products but they also need to consider the destabilization factors that competitors or other opponents can put in place.

The School of Economic Warfare aims at seeking solutions to these problems, but so far it is just a drop in the ocean. If the French elites continue to ignore the importance of a culture on intelligence, they risk leaving the world in the hands of one single owner. Clinton created a state-led security system allowing the United States to increase exports while creating and keeping hundreds of jobs. Placing the intelligence to the top of this mechanism significantly contributed to the expansion of the U.S. power, together with favorable trends of the world economy.

EU Commissioner Édith Cresson explicitly said that the United States need its own intelligence policy in order not to be affected by the other states’ one. In this regard, former French Secretary General for Defense Alain Juillet defined economic intelligence as a governance tool focused on controlling strategic information and aimed at increasing competitiveness and security for both national economy and private business.

Two other leading experts of economic warfare, Christian Harbulot and Éric Delbecque offered their own definition of economic intelligence. Harbulot defined it as the constant research and interpretation of open source information with the aim of understanding the other actor’s intentions and capabilities. Delbecque identified economic intelligence as part of economic warfare culture, specifically in the competence – meaning the combination of methods and instruments of surveillance, security and influence – and in public policy that aims at increasing power through elaborating and implementing geo-economic strategies and establishing collective control of strategic information.

The concept of intelligence here derives from its original Anglo-Saxon meaning, that is a collection of information enabling to operate in different fields. This understanding of intelligence is not related to the espionage Cold-War techniques, in which information circulated only within a restricted group of experts through the use of illegal means such as technological transfers, theft of IT material, firing high-profile managers.

A more detailed analysis on economic intelligence and the practical application of the so-called economic warfare, reveals three main fields of action: the watch, the protection of information and lobbying practices. In particular, the watch consists in the surveillance of the economic reference ambient in order to instantly detect possible threats or opportunities to seize; there are seven kinds of watch: competition, trade, technological, geographic, geopolitical, legislative and corporate. The states that are able to perform these practices are those which truly experience an increase in influence and thus in power. This perspective privileges the state capability to use this strategic weapon over the one of single companies that use it in order to expand their trades and increase their profits. Since economic intelligence can be considered as both offensive and defensive tool (for example when it is used to either foresee an alliance between competitors or perform disinformation operations), it is the crown jewel of economic warfare policies, especially due to the importance of information in modern economies.

In this regard, it is necessary for both public and private sector to join forces. An interesting model is provided by the case of post-WWII Japan, where the Japan External Trade Organization started collaborating with the above-mentioned MITI, which had a significant role in strengthening of commercial ties with other states. The Japanese case is very interesting not only for its flourishing economic but also for the cultural environment, where every citizen feels morally engaged in pursuing the nation’s greatness through technological and trade primacy. It is no coincidence that 10-15% of Japan national budget for research and development is allocated to scientific and technical information. The United States also adopts a similar strategy, although it tends to disguise it as an official matter of fair competition. The U.S. administration has in fact established a counter-intelligence service. Through expanding the CIA mandate, this U.S. agency also plays an active role in industrial espionage and provides companies secret information about their foreign competitors.

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Intelligence

Where does allegiance lie?

Bob Budahl

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Dongfan “Greg” Chung who is a native of China and a naturalized U.S. Citizen had “secret” security clearance while working with Rockwell and Boeing Corporations on the Space Shuttle project. He had retired in 2002 but returned a year later as a contractor until fall 2006. The government proved Chung committed espionage by taking and concealing Boeing secrets regarding the Delta IV rocket and also the Space Shuttle. He did this for the People’s Republic of China. He was convicted on charges of acting as an agent of the PRC as well as economic espionage.

The investigation of a different engineer working within the U.S is what led to Chung’s investigation and resulting conviction. He was sentenced to more than 24 years in prison.

The Chinese had sent letters requesting information as far back as 1979. In correspondence with the PRC Chung expressed his wishes to help the PRC modernize. He also sent 24 manuals related to the important B-1 Bomberfrom Rockwell Corporation which was very damaging.

Travel trips to the People’s Republic of China occurred on multiple occasions to lecture but he also met with government officials. In letters from his handlers they use his wife Rebecca and Chi Mak to transmit information. In the fall of 2006 FBI and NASA agents searched his home and discovered more than 250,000 documents from Boeing, Rockwell and others which were secret.

The Shuttle Drawing System or “SDS” that Rockwell and Boeing engineers created held information regarding performing processes regarding the Space Shuttle. The engineers need a password and authorization to be able to access this system and files. This is a clear case that defensive counterintelligence measures could have prevented printing, concealment and removal of documents from the workplace. One great example of offensive counterespionage was the search of Chung’s trash which led to much revealing evidence.Also his extensive travel to the PRC was an indicator that his scope of activities while in the PRC were above speaking engagements, seminars, teaching, personal. The authorities did conduct offensive counterintelligence to the best of their abilities once it learned via the other agent implicated in similar dealings with the PRC.

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Hacking of the Newswires connected with Trading: A refresher for the business community

Bob Budahl

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This case I am touching on is regarding Leonid Momotok in which he and other traders used insider trading information from not yet released press releases to amass windfalls in illegal trading. He pleaded guilty to conspiracy to commit wire fraud in his role to hack into three business newswires and obtain through theft the information related to finance that enabled illegal trading advantages. Their trades resulted in at least $30million in illegal profits. He pleaded guilty and faced up to 20 years in prison, restitution, a fine and criminal forfeiture.

The crux of the enabling operation to obtain an illegal advantage was gained through computer hackers in Ukraine who gained intrusion into Marketwired L.P, PR Newswire Association LLC (PRN) and Business Wire (Newswire Companies).Marketwired is owned by NASDAQ Inc., Business Wire is part of the billionaire Warren Buffet’s Berkshire Hathaway and PR Newswire is a Cision unit. The hackers used cyber-attack methods to obtain entry into the Newswire Companies’ networks. Once in, they stole upcoming press announcements about earnings, gross margins, confidential and material financial information and revenue information. They even sent messages regarding their activities. They went on to state they had gained access to the log-on to 15 wire business employees. While the traders made lists of what information they wanted, the hackers provided instructions on how to access and use the overseas server networks. And by having insider information before the public release the traders capitalized by placing trades prior to release date of the press releases. Caterpillar, Hewlett Packard, Panera Bread, Home Depot and others were some of those affected regarding nonpublic information. The hackers received a percentage of the profits and received it through shell corporations.       

The Dubovoy Group defendants tried to avoid detection by spreading their trading to more than 10 brokers firms in various names, etc. They helped each other with the activities as much as able. They stole over 100,000 unpublished press releases. Leonid Momotok owned 1% interest in two of Arkadiy Dubovoy’s companies.“He advised Arkadiy Dubovoy how to trade using the stolen information, and he had formal trading authority for brokerage accounts used in the scheme but held in the name of other members of the Dubovoy Group, …p 12.’

Involvement in the apprehension and prosecution of the perpetrators included many government agencies. The President’s Financial Fraud Enforcement Task Force had a leading hand in the pursuit and prosecution.

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9-11 Terrorist Attack: Defensive countermeasures of deter and detect

Bob Budahl

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On September 11, 2001 at 8:46 a.m. an airliner slammed into the North Tower of the World Trade Center in New York City. At 9:03 a.m. a 2nd airliner slammed into the South Tower. The planes carried thousands of gallons of jet-fuel aboard in effect making them lethal weapons. Tens of thousands of people worked in these buildings daily and both buildings fell to the ground within 90 minutes. More than 2,600 people died in the World Trade Center tower attacks. Then at 9:37 a.m. a 3rd airliner rammed into the western side of the Pentagon. 125 people died in the Pentagon attack. And a 4thairliner was intended for attack in either the U.S. Capitol or White House but the heroics of passengers crashed the plane, hence thwarting the attack. A total of 256 people died in the four planes. The death toll even surpassed the Pearl Harbor attacks of 1941.

Those responsible for the horrific attack were 19 Arabs carrying out Islamist extremists plans. Their headquarters were located in Afghanistan. They were resourceful and some had lived in the United States for some time and four of them had trained to be pilots. They were not well educated. They carried out the terrible attacks with knives, cutters, mace, etc. And they had tried to bring down the World Trade Center in 1993 but failed however in the result killed six people and wounded a thousand. It was an effort led by Ramzi Yousef. Others including Omar Abdel Rahman who had plans to blow up the Lincoln and Holland tunnels and other New York City landmarks, but they were arrested. Ramzi Yousef and others had various other terror plans of which some succeeded and some fortunately did not.

Bin Ladin was known and thought to be a financier but not thought of as a terrorist leader until later. In 1998 Bin Ladin and four others issued a fatwa in which it was publicly declaring it was God’s order that Muslims should try to kill any American they could. Bin Ladin was a wealthy Saudi and had conducted jihadist activities against the Soviet Union. But he also held grievances against the United States such as a U.S. troop presence in Saudi Arabia. He recruited and trained followers in Afghanistan and continued carrying out acts of terror, including on the United States. His people attacked embassies, hotels, and even attempted to sink the USS Cole Navy Ship by a terrorist attack. His rhetoric is derived from Islam, history and the economic and political disorder in the area. He formed an alliance between the al Qaeda group he led and the Taliban. The Clinton administration had tried cruise missile strikes against al Qaeda in Afghanistan and tried to get the Taliban to force Bin Ladin to leave Afghanistan. The U.S. unsuccessfully utilized CIA paid foreign agents to try to capture or kill Bin Ladin and his group.

As early as 1998 or 1999 Bin Ladin had been contacted by Khalid Sheikh Mohammed with an idea of using the planes as a method of attacking the World Trade Center and other targets. The original plans were for 10 planes to target both east and west coasts of the United States. The CIA did uncover some reports of Bin Ladin’s intent on attacks. The U.S. continued its disruption attempts globally and also utilized diplomacy with countries. The “predator drone” was eventually fitted with a missile should an attack on Bin Ladin provide an opportunity. Some of the reasons and connections to the actions of the perpetrators of the planned 9-11 terrorist attack became apparent after the attack. Unrest had come to the surface in the time before the attack as the Taliban leader opposed attacking the United States, in contrast to Bin Ladin’s wishes.

On 9/11 the terrorists were successful in hijacking the four planes. The planes were being used as terrorist weapons and confusion was present with air control. But eventually the FAA and NORAD who controlled airspace did receive a “shoot down order” but it was after the plane in Pennsylvania had been forced down by passengers in the only way to stop the plane from being used as a weapon.      

The enactment of the United States “Patriot Act” removed barriers that had impeded terrorism investigations in their outlay, scope and means. And in effect sped up the investigation and prosecution of the defendants. The FBI was point on the investigation that followed the attack and the operation was named Operation PENTTBOM. At one time more than half of the FBI’s personnel worked on the case. They followed through on more than one-half million leads. It was the largest crime scene in the FBI’s history.  Also in the time period following the 9/11 attack the Department of Homeland Security was created in March 2003, which brought together 22 separate agencies and offices into a Cabinet level department. The 9/11 Commission had made several recommendations and in this report some details are brought forward. These would be included under the defensive counterintelligence support mode of operation and include the principles of deter and detect within the countermeasures. It included recognizing 72 fusion centers throughout the country which acts as a focal point for receipt, analysis and sharing of threat related information. Also establishing related training and informational programs to deal with threats. One such example is the National Terrorism Advisory System. And the DHS developed and implemented a risk-based transportation security strategy. An action taken such as strengthening airline passenger’s pre-screening and targeting terrorist travel will deter terrorists as they become aware of increased security measures and thwart terrorists from attempting to board airlines for terrorist activities. The airliner’s cabin cockpit doors have been hardened post-911 and Air Marshalls are used appropriately as well as some flight crew being eligible to carry firearms. The TSA behavior detection officers use non-intrusive behavior observation to identify people who may be high risk. The TSA also utilizes detection methods such as canine teams to sniff for explosives on passengers and in luggage. Post 9/11 all cargo on U.S. planes is screened commensurate with their checked luggage. The flights coming into the U.S. from foreign countries are required to provide information prior to departure and checks all passengers against watch lists the government utilizes such as the Secure Flight Program. It also increases efficiency by allowing those cross-checked with biometrics to have expedited travel.

Today a significant defensive countermeasure post-911 is that airlines now screen all checked and carry-on baggage for explosives. The U.S. has increased security of U.S. borders and identification documents. Certain areas are closely watched and critical security improvements along the Northern and maritime are emplaced. The Dept. Of Homeland Security has taken aggressive action to enhance the security of the nation’s infrastructure and also cyber infrastructure and networks. There in a federal government system cyber intrusion detection system which includes EINSTEIN and the National Cybersecurity and communications integration center is the nation’s hub for organizing cyber response efforts. DHS and DOD are working together to protect against threats to military and civilian computer systems and networks. This is another example of defensive countermeasures. DNDO is affiliated with nuclear detection and back in 2003 only 68% of arriving trucks and passenger vehicles were scanned along the northern border with no system on the southwest border. But today the systems scan 100% of all containerized cargo and personal vehicles arriving in the U.S. through land port of entries and up to 99% of sea containers. Counter-proliferation of nuclear and biological threats is a high priority of the DHS. The tragic occurrence of 9-11 has brought about real focus on the danger of leaving vulnerabilities open to exploitation. The DHS also has importantly increased efforts to track and disrupt terrorist financing through programs such as ECTF or Electronic Crimes Task Force.

Another action taken post-9/11 was the creation of the National Counterterrorism Center or NCTC which was to serve 5 functions which were; Threat Analysis, Identity Management, Information sharing, Strategic Operational Planning and National Intelligence Management.

The U.S. Department of Justice charged ZACARIAS MOUSSAOUI with numerous terrorism charges and indicates others involved in the terrorist acts. The United States Department of Defense obtained a video tape of Bin Ladin basically accepting responsibility of the 9-11 attacks and the DOD has a transcript of the video and a portion I will quote is as follows. UBL refers to Osama Bin Ladin: “UBL: The brothers, who conducted the operation, all they knew was that they have a martyrdom operation and we asked each of them to go to America but they didn’t know anything about the operation, not even one letter.  But they were trained and we did not reveal the operation to them until they are there and just before they boarded the planes.UBL: (…inaudible…) then he said: Those who were trained to fly didn’t know the others.”

Bin Ladin, America’s most wanted terrorist was killed by United States Special Forces in a compound in Pakistan on May 2, 2011. The CIA had been involved in investigating Bin Ladin for years.      

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