The Cyber War Heats Up - Vivek Kaul's Diary
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The Cyber War Heats Up

Dec 22, 2016

39

And there you have it! Just days after I spoke to you about the increasing cyber-conflict that I think could mark the next US president's reign... the current president came out and confirmed what I'd been saying.

A word of warning. Several people wrote to me last week alerting me to the fact that just because the US says Russia is hacking its institutions, doesn't mean that it's true. What is said and what is happening may be two different things. I'm with you. We need to take what's said by the state with a pinch of salt, and judge it with the same rigor we would if it involved monetary or fiscal policy.

Nevertheless, the narrative from the US government on this conflict is important. It may or may not be true. But you can be sure it'll shape how and where money will be spent. And that's our number one goal here, remember: to understand what's happening in the world and turn that understanding into successful investments.

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With that in mind, let's take a look at what President Barack Obama had to say at the back end of last week, with added emphasis from me:

  • Look, we will provide evidence that we can safely provide, that does not compromise sources and methods. But I'll be honest with you, when you are talking about cybersecurity, a lot of it is classified, and we're not going to provide it - because the way we catch folks is by knowing certain things about them that they may not want us to know, and if we're going to monitor this stuff effectively going forward, we don't want them to know that we know...

    The target of cyberattacks is not one entity, but it's widely dispersed and a lot of it is private, like the DNC [Democratic National Committee]. You know, it's not a branch of government. We can't tell people what to do...

    To prevent some sort of cyber arms race because we obviously have offensive capabilities as well as defensive capabilities. And my approach is not a situation which everybody's worse off because folks are constantly attacking each other back and forth, but putting some guardrails around behavior of nation states, including our adversaries, just so that they understand that whatever they do to us, we can potentially do to them.

There are three points worth underlining about what Obama said. I think they're illuminating for a number of reasons.

Put simply, a lot of the coming cyber-conflict is going to be non-public; it's going to operate at the intersection between public and private entities; and it's going to involve all sides moving onto the attack, as well as preparing their defenses.

Please note: This article was first published in Capital and Conflict on December 20, 2016.

Nick O'Connor is a writer and editor at Moneyweek. He is also the publisher of Exponential Investor.

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