A hundred years ago, a mysterious new technology began to disrupt politics and society in Europe and North America. Through the medium of radio, live broadcasting to the masses became possible. Politicians quickly took advantage of radio’s potential to reach millions. It was Nazi Germany who pioneered the concept of Weltanschauungskrieg or “Worldview warfare”, using information to mobilise citizens and influence enemies. By 1938, Hitler’s speeches were broadcast, live, around the world, from Lithuania to Uruguay.
How Putin keeps the internet under state control
The Soviets refined worldview warfare, and by the 50s, the KGB built a unit dedicated to spreading conspiracies, planting false stories and using information to influence enemies. Today we call it fake news, but the Russians have always used the term Aktivnye Meropriyatiya – “active measures”.
A century later, Russia has successfully adapted its active measures for the digital age. The internet has hypercharged their effectiveness and the west has re-awakened to Russian dezinformatsiya by the SVR, the successor to the KGB. Now that the west is conscious, again, of Russian active measures, where else could Russia use its cyber capabilities, and to what end?
A clue may lie in military strategy. The struggle for power between nations takes place on three fronts: military, psychological and economic. While we are aware of Russia using active measures to alter military and psychological spheres, little attention is paid to its efforts in disrupting the western economy.
Our financial system is dependent on trust, openness and reliable information – areas that Russian intelligence excels in undermining. It is worth noting the SVR has an entire directorate dedicated to economic espionage. Recently, Russia has combined both human agents and hackers based abroad to understand and destabilise Western financial markets. In 2016, Evgeny Buyakov pleaded guilty to FBI prosecutors that he was working for the SVR’S ‘MS’ (active measures) Directorate and sought intelligence on market destabilisation strategies. In 2010, the Securities and Exchange Commission found a Russian trading firm was artificially manipulating stock prices using what it called a “hack, pump and dump scheme”.
In hacker-speak, to dox is to acquire and publish sensitive information about your target online to damage their reputation. “Stock-doxing” is the use of doxing to artificially affect share prices and create profit. Several shadowy US trading firms have made large profits by buying short-options in a listed company, doxing it via the publication of a damaging dossier, eroding a share price and subsequently the trading firms’ cash out on their short-options. Russia could use its information warfare resources to conduct “stock-doxing” attacks on listed firms.
Russia has already demonstrated its willingness to dox institutions: last year the Fancy Bears – a hacking group linked to Russia, doxed the World Anti-Doping Association (Wada), dumping athletes’ medical records online, and damaging Wada’s reputation in the process. And in 2015, an Israeli and American hacking group with close ties to Russian crime, was charged with stock-market manipulation and securities fraud, culminating in hacking JP Morgan, in Wall Street’s biggest ever cyberattack. The ringleader hid in Moscow for eight months before being extradited to the US in late 2016.
The most concerning scenario is that of Russia deploying cyber weapons against stock exchanges and banking systems. Stock markets in London and New York trade almost entirely using algorithms operating at the speed of light – known as high-frequency trading, or HFT. Global banking depends on the proper functioning of these algorithms, but, like any computer program, they can be manipulated, repurposed or deleted. These systems are so complex nobody can accurately model how they will react or respond to manipulation or freak events. The erroneous and uncontrollable behaviour of trading algorithms – known as flash crashes – are regular occurrences in many stock markets. Critically, there are few human stockbrokers left, leaving the financial world with no backup if the markets were manipulated or wiped.
Russia thrives on exploiting such weaknesses. In 2010, highly advanced cyberattack code was found on the world’s second-largest stock exchange, NASDAQ, and subsequent investigations believed Russia was the likely culprit. During 2014, the Warsaw Stock Exchange was hacked by a Russian group false-flagging as “cyber-jihadists”. As a former cyberintelligence professional myself, I would expect Russia to have developed the capability to trigger financial collapse by using cyber weapons against stock markets in Europe and North America. This is a view shared by a former director of the US National Security Agency, Keith B Alexander, who warned that a cyber-attack on Wall Street would “take down the US economy… it would be very difficult to see or stop”. Despite spending millions on cyber defence, global banks are no match for an advanced cyberattack from a nation state like Russia. One high-ranking US Intelligence official recently admitted “We’ve seen a nation-state gain access to at least one of our stock exchanges… and it’s not crystal clear what their final objective is…”.
The answer to this question may well be metallic. During economic depression and financial collapse, investors, banks and nations seek out the physical reassurance of one precious metal: gold. For many years, Russia has bought more gold than anyone else, acquiring huge amounts by historical standards. With the economic equivalent of nuclear weapons now in existence, it would be wise to consider the possibility that at some point in the future, Russia may decide to convert its bytes into bars.
Cameron Colquhoun is managing director of Neon Century, which conducts ethical intelligence investigations.