Rethinking "The Hack"

Barely 11 days ago, the FBI announced they had identified the chief culprit behind the hack of Sony Pictures, which delayed the release of a major holiday film, and exposed damaging e-mails and financial information that embarrassed the corporation and top executives.

According to the bureau's cyber experts, North Korea was behind the hack, apparently in retaliation for Sony's planned release of "The Interview" a comedy about a talk show host (and his producer) hired by the CIA to kill DPRK dictator, Kim Jong-un.  Needless to say, the hermit kingdom didn't find that premise very amusing, so they (allegedly) launched a major cyber strike on Sony, revealing everything from the social security numbers of studio employees, to gossip-filled e-mails between executives and top producers which confirmed that many of Hollywood's elites are nothing more than hypocrites.

While that revelation was hardly surprising, the Sony hack represented the most serious cyber attack (to date) against a major corporation and it even became a free speech issue when the studio--temporarily--threatened to pull the picture.  Since then, "The Interview" has been shown in limited release, at independent movie theaters and on-line.

But security experts have long expressed doubt that Pyongyang was entirely responsible for the hack, citing a lack of conclusive evidence.  And that theory has gained steam in recent days, with various security firms claiming that the attack was, at least partially, an "inside job."  From the Hollywood Reporter:

Despite the FBI declaring that North Korea was behind the devastating cyberattack on Sony Pictures Entertainment, security experts continue to believe that the hack was an inside job, reports The Security Ledger. 

Security firm Norse claims it has evidence that shows the Sony hack was perpetrated by six individuals, including two based in the U.S., one in Canada, one in Singapore and one in Thailand. Norse senior vp Kurt Stammberger told the Ledger, a security industry news website, that among the six was one former Sony Pictures employee, a 10-year veteran of the company with a very technical background who was laid off in May following restructuring.

The Ledger writes: “Researchers from the company followed that individual online, noting angry posts she made on social media about the layoffs and Sony. Through access to IRC (Internet Relay Chat) forums and other sites, they were also able to capture communications with other individuals affiliated with underground hacking and hacktivist groups in Europe and Asia.”

While the analysis from Norse is not considered conclusive, the company's findings were shared with the FBI earlier this week, and they are consistent with those of other experts.  Almost a month ago, senior officials at AlienVault and Exabeam (among others) postulated that an insider was involved, noting that hackers knew the hardcoded names of Sony network servers, along with the credentials/usernames and passwords needed to access the system.  

So far, the FBI is sticking by its publicly-stated theory.  And there may be a good reason for that, namely the fact that the bureau has access to information beyond the reach of security companies in the private sector.  Fact is, the FBI maintains a close working relationship with NSA on cyber-security issues and can draw upon that agency's vast expertise in that field.   In fact, some members of the FBI's cyber division are stationed at NSA HQ at Fort Meade, MD, to facilitate liaision efforts between the organizations.  It's a safe bet the FBI's "North  Korea"  analysis was based, at least in part, on data provided by NSA, and so far, the feds have said virtually nothing about the role of the SIGINT agency in the Sony investigation. If the assessment is based on NSA data, it would add more credence to the North Korean angle.

In fact, a better question might be why NSA hasn't established a partnership with Sony and other American entertainment companies, given their prominence in the global market.  Shane Harris provided new details on these alliances in his recently-published book @War: the Rise of the Military-Internet Complex (H/T: Tech Dirt):

The NSA helps the companies find weaknesses in their products. But it also pays the companies not to fix some of them. Those weak spots give the agency an entry point for spying or attacking foreign governments that install the products in their intelligence agencies, their militaries, and their critical infrastructure. Microsoft, for instance, shares zero day vulnerabilities in its products with the NSA before releasing a public alert or a software patch, according to the company and U.S. officials. Cisco, one of the world’s top network equipment makers, leaves backdoors in its routers so they can be monitored by U.S. agencies, according to a cyber security professional who trains NSA employees in defensive techniques. And McAfee, the Internet security company, provides the NSA, the CIA, and the FBI with network traffic flows, analysis of malware, and information about hacking trends.

Companies that promise to disclose holes in their products only to the spy agencies are paid for their silence, say experts and officials who are familiar with the arrangements. To an extent, these openings for government surveillance are required by law. Telecommunications companies in particular must build their equipment in such a way that it can be tapped by a law enforcement agency presenting a court order, like for a wiretap. But when the NSA is gathering intelligence abroad, it is not bound by the same laws. Indeed, the surveillance it conducts via backdoors and secret flaws in hardware and software would be illegal in most of the countries where it occurs. 

According to Mr. Harris, a number of companies have been invited to form partnerships with NSA, including tech firms, on-line security providers, and organizations that fall within the 16 categories of "critical infrastructure" that are allowed to have alliances with the agency.  Communications companies form one category of infrastructure, but it doesn't appear that entertainment firms fall under that heading, although "theme parks and casinos" are also defied as critical infrastructure elements.  

With the Sony hack, the categories of companies that can partner with NSA may be expanded once again.  Under current rules, there isn't much the agency can do.  In recent testimony before Congress, the NSA Director, Admiral Michael Rogers, said his organization can "watch" an attack develop and follow its targeting of specific companies and networks, but the agency cannot contact an affected firm on its own, unless it falls under a critical infrastructure category, and a formal agreement is in place. 

In his book. Mr. Harris notes that NSA offers classified briefings and "limited-duration" security clearances to executives from tech firms.  The presentations are aimed at "scaring" the companies into partnerships with NSA, based on threat information provided by the spy agency.  According to individuals familiar with the program, NSA has little difficulty convincing companies to work with them, since many of the presentations offer information beyond the reach of most security firms.  

That's why the North Korean connection cannot be completely ruled out in the Sony case, and it's the likely reason the FBI hasn't retracted its original assessment.  There may be information--beyond the limited forensic data offered so far--that puts Pyongyang in league with the hackers.  Of course, that assumes the feds have their facts straight and that isn't always the case.  According to Business Insider, an FBI bulletin on the threat of future attacks was based (in part) on fake posts and messages created by a prankster. 

Unfortunately, such errors don't inspire much confidence in the federal guardians of our on-line infrastructure.  Neither do new reports about NSA analysts using the agency's vast collection resources to spy on current and former lovers and spouses.  It's hard to do you job when you're trying to trace the phone calls, e-mails and text messages of an ex-wife or current girlfriend or boyfriend.       

The Last of the Dead

Final hours: Clifford Olds (r), a sailor on the USS West Virginia,celebrates with shipmates on the evening of 6 December 1941.  When the Japanese attacked Pearl Harbor less than 12 hours later, Olds was one of three sailors trapped in a water-tight compartment at the bottom of the ship.  They survived for 16 days before succumbing,  Don Martin photo at USSWestVirginia.org.


..Today's reading assignment comes from Streiff at RedState.com, marking a day in American military history that many have forgotten.  It's a powerful and searing narrative, a reminder of the ultimate sacrifice made by some who wear the nation's uniform.

As he observes, some who give their lives in the defense of freedom don't always perish immediately.  Some pass days or even weeks later, in a hospital bed, or in the aftermath of Pearl Harbor, trapped in the hull of a sunken battleship, hoping against hope for rescue:

On the morning of December 7, 1941, the USS West Virginia (BB-48) was moored on Battleship Row outboard of the USS Tennessee (BB-43). She was a Colorado-class battleship, launched in 1921, and represented state of the art in US naval architecture. She’d been designed to slug it out with other battleships holding her place in line of battle. Her vulnerability to air attack wasn’t a great concern. When the attack passed and the damage was assessed, the West Virginia was sunk. She rested in 36-feet of water with her superstructure exposed and accessible.   

Much of her port side had been ripped open by as many as eight Japanese torpedoes and her rudder had been blown off by another.  The battleships's multi-layered, anti-torpedo protection system had been completely broken through, making it impossible to raise the ship without the use of extensive external patches.  These structures, which covered virtually the entire hull side amidships, extended vertically from the turn of the bilge to well above the waterline.  The patches were assembled in sections, with divers working inside and out to attach them tothe ship and each other and were sealed at the bottom with 650 tons of concrete.

It was noisy in Pearl Harbor during the days and weeks following the Japanese attack.  Salvage control parties worked almost non-stop.  The noise of hammers cutting into the capsized USS Oklahoma; fireboats pouring water on the blazing Arizona, still aflame days after the attack.  

Amid the din, crews working on the West Virginia head an occasion banging noise.  At first, they thought it was a hydraulic line or steel cable slapping against the hull.  But in the early morning hours, when activity slowed, they realized the banging sound was coming from deep inside the ship.  Members of the crew had survived and were trapped in the hull.  

But there was no way to get them out. Streiff resumes the narrative, based on a 1995 Honolulu Advertiser article that was reprinted by the Seattle Times: 

Three young sailors, Ronald Endicott, 18; Clifford Olds, 20; and Louis “Buddy” Costin, 21, were trapped in an airtight storage room below water. They had access to a supply of potable water and emergency rations but it proved a cruel gift.  

To attempt to cut an access route to the submerged  storage room risked the acetylene torches causing a catastrophic explosion on the way in and, because the storage room was submerged, once the compartment was breached there was a good chance it would flood before the men could be extracted.

So, the bangs were ignored; there was no other option.  As the battleship settled into the mud of Pearl Harbor, the portion of the hull where Endicott, Olds and Costin sat trapped was resting against the hull of the USS Tennessee.  

It was impossible to reach that portion of the hull and pinpoint exactly where the noise was coming from. Marines standing guard near the West Virginia covered their ears.  Men that later endured the hell of Guadalcanal, Tarawa and Iwo Jima would remain haunted by the banging inside the hull for the rest of their lives.   

Six months later, the battleship was raised and salvage crews finally reached the storeroom where Endicott, Olds and Costin huddled.  They found flashlight batteries, a fresh water supply and emergency rations.  

And the calendar; a foot high and fourteen inches wide.  The days were crossed off with a red "X" from December 7th until the 23rd, two weeks and two days after the West Virginia went down.  

Officially, the Navy lists the date of the Pearl Harbor attack as the day the three men died.  But eventually, the truth leaked out and reached a few members of the dead sailors' families.  Most were too horrified by what they learned to share it with their kin.

According to the original Seattle Times article, the calendar found inside that storeroom was sent to the Chief of Naval Operations in Washington and disappeared.  Two of the sailors were laid to rest at the National Memorial Cemetery of the Pacific (The Punchbowl), and the third was returned to his hometown for burial.          

 

Limited Options

In response to North Korea's cyber-attack against Sony, the Obama Administration promised a "proportional response."  And it looks like that response is now underway.

According to the Washington Post and other media outlets, North Korea's limited internet infrastructure is current experiencing "major outages," raising suspicions that the U.S. is retaliating for the attack on Sony.  

Experts at NorthKoreaTech.org and Dyn Research tell the Post that Pyongyang may be getting taste of its own medicine:

“I haven’t seen such a steady beat of routing instability and outages in KP before,” said Doug Madory, director of Internet analysis at Dyn Research. “Usually there are isolated blips, not continuous connectivity problems. I wouldn’t be surprised if they are absorbing some sort of attack presently.”

Depicted graphically, the widespread outages look something like this:

 















But before anyone takes a digital victory lap, it's worth remembering this "attack" (regardless of the source) is totally oblivious to most of North Korea's 25 million citizens.  That's because internet access is tightly controlled.  Only senior members of the military, the political elites and personnel assigned to DPRK cyber units are allowed on-line.  For more than 99% of North Korea's population, the internet is an alien concept--hardly surprising in a country where all media is controlled by the government, and does little more than sing the praises of Kim Jong-un's regime.

While the DPRK has clearly developed cyber-warfare skills, its use of the internet for commercial and social purposes remains extremely limited.  The New York Times reports the country has barely 1,000 know IP addresses and less than 50 websites; by comparison, there are billions of IP addresses in the U.S. alone.  So, today's interruption may be an inconvenience for Mr. Kim and his cohorts, but few others.

It's also unclear if the on-going DDofS  (distributed denial of service) attacks have had any impact on North Korea's cyber-warfare units, which are based in Shenyang, China.  At one time, members of at least one cyber detachment, known as Bureau 121, were housed in Shenyang's Chilbosan Hotel, though it's unclear if the unit still operates from that location.  Some tech experts have reported that e-mails released as part of the recent Sony hack were placed on-line at the St. Regis Hotel in Bangkok.  A  defector claims that DPRK cyber specialists operate in various locations around the world, enjoying privileges and luxuries that are unknown to most of their countrymen.

The apparent counterstrike against North Korea underscore the problems of going after an enemy with considerable cyber skills, but little on-line exposure.  The Obama Administration appears to be treading very carefully in this matter, trying to gain China's support, while preventing possible spillover into Beijing's digital networks.  Pyongyang depends on China for access to the internet, and many of those connections run through Beijing's state-run telecommunications company.

There are other issues as well.  Advanced viruses and other sophisticated forms of malware--designed for specific targets--can be copied by hackers and used to launch copycat attacks.  In other words, whatever was used to take down North Korea's limited internet connections could be used against us, though (based on early descriptions) it does not appear that today's attack was sophisticated; just a brute-force DDofS that caused Pyongyang's networks to crash.

By comparison the Stuxnet virus used against Iranian nuclear facilities in 2011 (and widely attributed to the U.S. and Israel) was designed to go after specific computers and networks employed Siemens  software that controlled centrifuges and other key components.  If the virus didn't find the Siemens program, it went dormant.  Stuxnet was reportedly inserted into Iranian computers via flash drives, illustrating the targeted nature of the attacks--and efforts to keep it off the internet.  Ultimately, those efforts failed; stuxnet eventually made its way onto the web, providing a blueprint for the next generation of hackers.

Will Pyongyang respond?  The answer would seem to be "yes," but most countries want to avoid demonstrating the full range of their cyber capabilities.  So, a response by the DPRK may be delayed until Kim Jong-un decides if he wants to escalate the cyber conflict, and what his next target set will be.  Currently, there are no indications that North Korea has the ability to go after elements of our critical infrastructure, such as the power grid, though the acquisition of those skills may be just a matter of time.    

A better course of action, it might argued, would be going after banks and other financial institutions that serve North Korean elites.  That tactic was used a decade ago, after Pyongyang walked away from nuclear talks.  Sanctions against a bank in Macau kept Kim Jong-il from paying his cronies and generals; the DPRK returned to the negotiations less than two months later.  However, a cyber attack of that type carries the risk of involving third parties (notably, China and Switzerland) and it could compromise valuable intelligence sources.

As with other issues in the realm of offensive cyber ops, there are complicated choices and few clear-cut options.  But as the Director of NSA noted last month, staying purely defensive is a "losing strategy."  On the other hand, revealing too much of your offensive skills can be counter-productive as well, since adversaries learn about capabilities and begin taking steps to counter-act them--and in some cases, upgrade their own cyber arsenal as well.   
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ADDENDUM:  Most of Pyongyang's internet capability was restored within nine hours, so the DDofS attack was of limited duration. 
            

 
 

Here it Comes...

Call it the "Ghost of Christmas yet-to-come," or a lump of coal in some future holiday stocking.

If you're a military retiree, be forewarned: the "smart" boys and girls in D.C. have been looking at your health care benefits and ways to slash them.  Seems the lifetime health coverage promised for those who served at least 20 years is far too generous.  That's right, the same Tricare standard option that requires retirees to pay up to 20% of their health care bill is too expensive, and about the bust the federal budget.

That's why the good, left-wing Brookings Institution recently held a forum to discuss possible options for reducing the military's health care bill, which currently totals $52 billion a year.  One idea that kept popping up: moving Tricare beneficiaries to Obamacare.  From Military Times:

"It's a little radical, but should we be thinking about how some of the military system might transition some of their people to the Affordable Care Act exchanges, especially in sparsely populated areas of the country?" said Alice Rivlin, former director of the Congressional Budget Office and the Office of Management and Budget who now serves as a senior fellow in economic studies at the Brookings Institution.   

It's worth noting that Ms. Rivlin, who has held senior economic posts in several Democratic administrations, never spent a day in uniform.  Ditto for Henry Aaron, another Brookings scholar who once served as Assistant Secretary for Planning and Evaluation at the former Department of Health, Education and Welfare:

"The case for the special supply of [health] services is strong for the active duty. For the families ... the case for having a dedicated supply system is much weaker. That suggests the possible appeal of the option Alice mentioned, which is to help them have fair, well-financed access to the general health care system," said Aaron.

Another speaker, John Mayer of Booz Allen Hamilton, went even further, saying the military was under "no obligation" to provide "free health care" to those who have retired from the armed forces and have access through their employer, or Obamacare.  

"Having a program where they can go in and get free health care, and do it as often as they want seems to be a burden that the American public shouldn't have to bear," Mayer said, speaking of the military retiree population who uses Tricare.   

Interestingly, Mr. Mayer is a West Point grad who now runs his company's energy, military health care and infrastructure division.  Apparently, he left the Army long before he became retirement-eligible, so it's clear Mr. Mayer doesn't have any skin in the game.  And, given his responsibilities at Booz Allen Hamilton, we're guessing he probably has some ideas about moving military retirees and dependents into Obamacare, while helping the corporate bottom line.  

At this point, it's helpful to inject a little reality.  First, as our colleague George Smiley pointed out two years ago, Tricare is anything but a "budget buster."  In fact, the program returned $500 million to DoD in 2012, and the actual refund may be closer to $1 billion.  The reason?  Tricare was operating below projected costs, which slightly debunks Mr. Mayer's notion that military retirees are sucking up all that free health care and bankrupting the Pentagon in the process.  

Secondly, it is helpful to review the recent history of military health care and remember why we arrived at this point in the first place.  Back in the mid-1990s, Bill Clinton was looking for ways to trim the military budget.  One of the tactics he used was under-funding programs that covered on-base treatment for the armed forces community.  Tricare was created to cover services that moved "off-post" when retirees and dependents were largely exiled from base hospitals and clinics.  

As a managed-care program, Tricare was supposed to be affordable, both for patients and the government.  But former Air Force Surgeon General Paul Carlton pointed out the fallacy of that logic, in a 2001 interview with Air Force magazine:

"If a base hospital can do 10 appendectomies but gets budgeted to perform only nine, the 10th patient still gets care. But rather than use military care, the patient is referred to the civilian network. DOD still pays for the operation, eventually, when contracts are adjusted. If it had been done on the base, the cost would have been $300 (the cost of a surgical pack). On the outside, the same procedure will cost DOD $6,000 in payments to the Tricare contractor.

That charge is reasonable, Carlton said, but it shows the folly of shorting military hospitals in hopes of saving money.

"For want of $300, I'm spending $6,000," said Carlton. "There's no guilty party here. This is just an historical account of what has happened. That's the [death] spiral I speak of." 

We're guessing the cost of that surgical pack has increased slightly over the past decade, but that's nothing compared to appendectomy bill at your local, civilian hospital.  According to Health care Bluebook.com, a "fair" price for that procedure is about $10,000.  Assuming our Tricare patient picks up his (or her) 20% tab, the government is still on the hook for $8,000, more than ten time the cost of the surgical pack on-base.  And yet, the experts who convened at Brookings believe that Obamacare will be more efficient than Tricare.  

Finally, we should also observe that no one on the panel seemed overly concerned about the folks who would pay the Obamacare bill--military retirees and their families.  As we've noted (on multiple occasions), the typical service member who leaves the ranks after 20 years isn't a Colonel or General; in fact, the average retiree is an E-6, which equates to a Staff Sergeant in the U.S. Army or Marine Corps; a Petty Officer First Class in the Navy or Coast Guard, or a Technical Sergeant at the USAF.  Their monthly pension is just over $1,800, before taxes and other deductions.  

Currently, that retired E-6 doesn't pay an annual fee to enroll their spouse and children in Tricare Standard; a family of four pays $545 a year to participate in Tricare Prime; after annual deductibles are met, beneficiaries pay 12-20% of their medical bill, depending on their plan and the type of service rendered.  

Critics of Tricare point out that beneficiaries pay far less than their civilian counterparts, reinforcing the notion that military retirees and dependents are crowding doctor's offices for that "free" care.  But such arguments ignore the impact of higher premiums and co-pays on military families.  

Consider this example: TSgt Smith retired from the Air Force last month, after 21 years of service.  He earned an associate's degree while on active duty and is working part-time towards completing his bachelor's.  Before leaving the service, he found a job with a small company that pays $50,000 a year.  Unfortunately, the firm has discovered it's cheaper to pay the Obamacare fine than to offer health care coverage for its employees.  Sergeant Smith's wife is a stay-at-home mom for their two young children.  So (at least for now), government-backed health care becomes their only option.  

How would someone like TSgt Smith--who fits the profile of a "typical retiree"--be affected by a shift to Obamacare?  According to the Henry J. Kaiser foundation, if Sergeant Smith and his family are pushed into the exchanges, they would pay $574 a month for coverage, or $6883 a year, and that's with a monthly subsidy of $191.  If TSgt Smith doesn't qualify for a subsidy, he would pay over $700 a month for the same plan.  And that doesn't include a $2,000 annual deductible, and higher co-pays for all services. 

Put another way: if these "ideas" ever become law, Sergeant Smith is in for quite a shock; if he's lucky, that monthly retirement check might cover his mortgage and health insurance and that's about it.  Quite a change from the "free, lifetime health care" he was promised back in 1993.  

So far, the proposals outlined at Brookings are just that--suggestions.  To date, the Pentagon has resisted major changes in retiree healthcare programs, realizing the potential impact on recruiting and retention.  But every SecDef since Robert Gates has been wailing about rising health care costs, and it's no secret that ideas broached at places like Brookings or the Heritage Foundation are often used as test balloons and (if they garner enough support) become law of the land.  With DoD leadership itching for a change, military retirees and dependents may find themselves longing for the "good ol' days" of Tricare, as they try to navigate the train wreck called The Affordable Care Act.
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ADDENDUM:  As you might expect, there is a political under-current to all of this.  It's no secret that Obamacare needs more enrollees, to ease financial pressure on the program.  So, why not push 9 million Tricare beneficiaries into the system?  The government could mandate enrollment when service members receive their retirement orders and "automatically" deduct premiums from their monthly checks.                  

Don't laugh--it may be closer that you think.  And lest we forget, John Boehner and Congressional Republicans recently funded Obamacare through next September, as part of the $1 trillion Cromnibus crap sandwich.  Based on that precedent, it wouldn't be hard to convince Republican lawmakers that shifting military retirees and dependents to Obamacare is really a good idea.    

 

                                                   

  

The Spy Who Stayed in the Clink

As part of the Obama Administration's "deal" with Cuba, the Castro brothers not only get normalized diplomatic relations, an American embassy in Havana, and billions in trade to prop up their fading dictatorship, they also get three of their spies back.

Under terms announced yesterday, the U.S. will release three Cuban intelligence operatives who were convicted of espionage in 2001.  In exchange, Havana released American contractor Alan Gross and an individual identified as an "one of the most important intelligence agents the United States ever had in Cuba."  The man, whose name has not been released, languished in Castro's gulag for more than 20 years after being caught.

The three Cuban were found guilty of spying against anti-Castro groups in South Florida.  They were part of the so-called "Cuban Five," held in U.S. jails on various charges.  The five are considered heroes by the Castro regime and their images dot propaganda billboards around Havana.  Two of the men were previously released.

But perhaps the real story is the individual who wasn't released in the prisoner swap.  We refer to Ana Montes, the one-time Defense Intelligence Agency analyst and intel wunderkind who was found guilty of passing classified information to the Castro regime and sentenced to 25 years in federal prison.

Ms. Montes was convicted in 2001.  She is currently a prisoner at the Bureau of Prisons facility at Carswell Reserve Base near Dallas, a facility housing female inmates with medical or psychological needs.  With no parole in the federal system, Ms. Montes won't be eligible for release until 2023, when she will be 66 years old.

In one respect, Montes was a rarity among American turncoats: her motive for betraying this country was ideology, not financial gain.  He treachery was exposed (largely) through the efforts of Scott Carmichael, a counter-intelligence officer at DIA.  He fought long and hard to investigate Montes, who rose swiftly through the ranks after joining the agency as a junior analyst.  From our 2007 post on the Montes case, which coincided with the publication of Carmichael's book, True Believer: 

Montes joined DIA in 1985 and quickly rose through the ranks, eventually becoming the agency's top analyst on Cuba. In hindsight, Mr. Carmichael and other counter-intelligence officials believe that Montes may been a Cuban agent when she joined DIA, and her treachery began almost immediately. Two years after joining the spy agency, Montes was briefed on the location of a secret U.S. special forces training camp in El Salvador. Montes passed the information to Havana, and less that two weeks later, Cuban-backed rebels attacked the camp, killing Sergeant Gregory Fronius, a Green Beret. Proceeds from Carmichael's book will be given to the Fronius family.

Mr. Carmichael's book...also revealed a rift in counter-intelligence circles, regarding Cuba's alleged penetration of our government and intelligence services. Officially, Montes has always been regarded as an anomaly--the exception, rather than the rule. But Carmichael believes that other Cuban agents remain inside our government, passing on critical information to Castro's regime. And he believes the level of penetration is stunning, as are the long-term consequences of such activity. As he told Bill Gertz of the Washington Times: 

"I believe that the Cuban Intelligence Service has penetrated the United States government to the same extent that the old East German intelligence service, the Stasi, once penetrated the West German government during the Cold War," he said.

Havana's intelligence service shares its stolen secrets with U.S. adversaries, including China, Russia, Iran and Venezuela, Mr. Carmichael said.

"If Cuban agents among us today are indirectly passing our innermost secrets, via their Cuban handlers, to countries who actively work to undermine American interests throughout the world, then we will suffer for it, in many ways," he said. "War fighters like Greg Fronius will die as a result. This is not a game." 

Someone might want to remind President Obama of that inconvenient fact--assuming he'd actually listen.  By normalizing relations, he has (quite literally) injected new life into a dying regime.   The flow of dollars from the U.S. to Cuba will give Havana new revenue to promote more mischief in the Caribbean and elsewhere around the globe.  

It was the diplomatic, economic and political equivalent of throwing a life ring to a drowning man.  With the end of the Cold War, Russia had to pull the plug on sugar subsidies, which kept Castro's government afloat.  More recently Havana has depended heavily on aid from Venezuela to keep going.  But with oil prices cratering, the regime in Caracas was finding it increasingly difficult to fund its own programs and prop up the Castro brothers.  So, Fidel and Raul simply found a new patron, at 1600 Pennsylvania Avenue.  

Which brings us back to Ms. Montes.  Her betrayal not only cost Sergeant Fronius his life, it resulted in the death or detainment of other U.S. intelligence assets.  And, when she became DIA's top analyst on Cuba, she was in a position to shape American policy toward Castro's government.  There is some evidence to suggest that Bill Clinton's "softening" of our official stance against Cuba in the 1990s may have been influenced by assessments written by Ana Montes.  

On the tenth anniversary of her arrest, the Washington Post Magazine published a lengthy, fascinating piece on the Montes case.  Written by Jim Popkin, the story largely affirms the narrative of True Believer; Ms. Montes viewed American policies as "unfair" to the Cuban people and she willingly signed on as an agent for Castro's intelligence service.  

The article also captures many of the ironies associated with the case.  Montes's brother, Tito, was a special agent for the FBI until his retirement and his wife was an agent as well.  Her sister Lucy also worked for the bureau as an intelligence analyst.  Lucy Montes participated in a number of cases that thwarted Cuban efforts to penetrate the U.S. government--efforts that were aided by her sister, the spy.

More than a decade into her incarceration, Ana Montes remains unrepentant.  Here's an excerpt from one of her letters to a family member, who shared it with Mr. Popkin:

“Prison is one of the last places I would have ever chosen to be in, but some things in life are worth going to prison for,” [Montes writes in a 14-page handwritten letter] “Or worth doing and then killing yourself before you have to spend too much time in prison.”

But there may be one last piece to the espionage puzzle.  Federal officials tell the Associated Press that the unnamed U.S. spy who was released yesterday provided vital information which helped lead authorities to Montes and former State Department official Walter Kendall Meyers, another Cuban mole who is now serving a life term.  He is also credited with helping to break up the so-called "Wasp Network," the Florida-based spy network that included the Cuban Five.  One of those men, Gerardo Hernandez, was convicted of conspiracy to commit murder in the deaths of four American pilots, whose light planes were shot down by a Cuban MiG-21 over the Florida Straits in 1996.  

Still, this latest revelation leaves some unanswered questions.  The just-released American operative had reportedly been behind bars since the early 1990s.  But the FBI didn't roll up the Wasp Network until 1998 and Ana Montes remained free for another three years.  Why did it take so long to follow-up on his information?  How much damage could have been averted by acting earlier?  

Indeed, the timing of Montes's arrest was dictated--in large measure--by her access to war plans for the invasion of Afghanistan.  It's common knowledge that Castro's intelligence service shares information with other rogue regimes.  We can only wonder how many secrets made their way to Moscow, Tehran, Beijing and other locations while Ana Montes and the Cuban Five plied their trade.  

The last three members of the Wasp Network will be greeted as conquering heroes in Cuba;   meanwhile, Ms. Montes enjoys a more ignaminious fate, sharing a two bunk cell at Carswell with another felon, forgotten by her former handlers.  

Sometimes, justice is served.

           

Last of the "Boys"

Present at the birth of broadcast journalism: Richard C. Hottelet (far left) at CBS's wartime offices in London, 1944.  He was joined by Charles Shaw, Larry LeSeur and Edward R. Murrow.  Mr. Murrow's wife, Janet, is seated at the desk (CBS photo via The New York Times)


Richard C. Hottelet died Wednesday, and with his passing we lost one of the last links to the early, pioneering days of broadcast journalism.

Mr. Hottelet was one of "Murrow's boys," the team of CBS radio correspondents hired by the broadcasting legend.  Collectively, they literally invented broadcast news during the late 1930s and World War II.  They reported from every battle front and created the standard for the generations of radio and TV reporters that followed.

Ed Murrow set the bar very high; he originally envisioned CBS news reporters as "scholar-correspondents," with the depth and knowledge to cover global stories completely and accurately.  Two (Howard K. Smith and Charles Collingwood) were Rhodes Scholars; most were well-educated and many worked for wire services or print outlets in Europe during the run-up to the Second World War; it was excellent preparation for the assignments that followed at CBS.

But Murrow also demanded that his reporters cultivate a certain look.  Years later, he told Mr. Collingwood that he almost didn't hire him because the prospective correspondent wore a "God-awful" pair of argyle socks to the job interview.   Murrow believed that his reporters should look the part, and Mr. Hottelet fit the bill; tall, handsome, with a broadcaster's voice and a winning smile.

But, as Stanley Cloud and Lynne Olsen wrote in Murrow's Boys (1996), Hottelet was also an aggressive reporter; working for United Press in Berlin before the U.S. entry into World War II, he questioned Nazi officials who were loading Jews onto trucks for the concentration camps.  His activities angered the Gestapo, who arrested him on espionage charges.  He spent four months in a German prison before being released in a prisoner exchange.

After a stint with the Office of War Information (OWI), Hottelet was hired by Murrow in 1944.  Over the next year, he provided one of the first eyewitness accounts of D-Day, flying over Utah Beach in a B-25 at 4,500 feet.  He was one of the few reporters present at the Battle of the Bulge, describing American soldiers having to use axes and shovels to dig foxholes in the frozen soil.

As the Allied advance moved into Germany in 1945, Mr. Hottelet described street fighting in Aachen, noting that the floors beneath his position were still in Nazi hands, and if snipers drew a bead on the position where he was broadcasting, the "listeners would never hear it."  Later, he was forced to bail out of a crippled B-17 while covering Operation Varsity, the Allied airborne assault across the Rhine River in late March of that year.

After the war, Hottelet remained with CBS, reporting from Russia and West Germany before returning to the U.S.  He was anchor for the network's morning news program in the 1950s.  He was named U.N. correspondent in 1960, back when that organization had some relevance on the global stage.  Mr. Hottelet spent the rest of his career on the U.N. beat before retiring from the network in 1985.  His tenure at CBS was longer than any of the other correspondents hired by Murrow.

While Mr. Hottelet never attained the "star" status of colleagues like Smith, Collingwood, Eric Sevareid (and Murrow himself), he was a talented and fearless reporter who understood the real mission of journalism.  He offered a straight-forward description of his duties as a war correspondent in a 2003 interview with the Hartford Courant:

“It was not our job to inspire people, to educate, to move them,” he said. “It was our job to tell them what was going on. We were accredited war correspondents. That was it. We were serious people at a serious job. We were out in the field, flying, on the front lines getting shot at — along with a 100,000 other people.”        

In this era of narrative and agenda-driven journalism, that notion seems almost quaint.  And sadly, it's a reminder of how far Mr. Hottelet's profession has fallen.   
 

                

Torturing the Truth

For anyone who's ever been involved in the intelligence game, the past few days have been fascinating, disturbing and illuminating.

We refer, of course, to the release of the Senate Intelligence Committee's "report" on enhanced interrogation techniques, used against high-value Al Qaida detainees in the years after the 9-11 attacks.  The term "report" is used with a great deal of caution, since most documents bearing that title make some effort to present both sides of an issue.

But Democrats on the committee, led by outgoing Chairwoman Diane Feinstein, abandoned at pretense of balance or fairness long ago.  Their "report" was compiled completely by Democratic staffers, who (in the process of analyzing enhanced interrogation methods) never bothered to interview the four CIA Directors who ran the agency while those techniques were utilized, or the former director of the agency's clandestine service, who oversaw their development and early implementation.

The result is a thoroughly unbalanced, one-sided analysis which makes these (and other claims):

- Enhanced interrogation methods were more widely used that the CIA has previously claimed.

- Employment of these techniques (described as "torture" by Senator Feinstein and her colleagues) did not produce any actionable intelligence.

- The CIA lied to Congress about the scale and scope of the program. 

Such claims are easily refuted.  Water-boarding, regarding as the most heinous of the disputed techniques, was used on a grand total of three terrorist detainees, out of hundreds captured over the past 13 years.  The report also fails to note that the staggering number of water-boarding sessions (more than 180 for 9-11 mastermind Khalid Sheik Mohammed) represent the "splashes of water" poured on the terrorist, not the number of interrogation periods when he was water-boarded.  Incidentally, the differentiation between splashes of water and actual water-boarding sessions was provided by Jose Rodriguez, the former chief of CIA undercover operations.

That sort of context is lacking throughout the report.  In fact, the document is so distorted that three former CIA Directors (two Republicans, one Democrat) took the unprecedented step of penning a Wall Street Journal op-ed to refute its claims.   The agency's current director, John Brennan, also made a rare, televised appearance to defend the interrogation program, echoing the claims of his predecessors.  All agree that enhanced interrogation measures yielded valuable information and saved American lives.

They also challenge assertions that Congress was misled by the CIA.  Indeed, documents obtained four years ago by Judicial Watch revealed that the agency briefed 68 members of the House and Senate on the interrogation program between 2001 and 2007.  That group included House Minority Leader Nancy Pelosi and Senator Feinstein, who began receiving updates when she joined the intelligence committee in 2005.  Former CIA leaders assert that Congress never challenged the use of enhanced interrogation techniques, or the legal authority to employ them.  In fact, some members of Congress asked the agency if it was "doing enough" to obtain information from captured terrorists.

It's bad enough that Senator Feinstein elected to release the report, rehashing issues that were largely resolved years ago.  But the real damage will be measured elsewhere, long after the current furor has faded.

Consider the foreign intelligence services (notably Poland, Jordan and Romania) that went out on a proverbial limb to host "black site" detention centers and in some cases, assist with the interrogation.  What are the odds they would partner with the CIA again?  Why risk having your operatives and locations subject to media scrutiny, international prosecution and possible terrorist reprisal.  Fact is, these same services are extremely valuable in assisting with regional issues, ranging from Russia to Syria.  Expecting the same level of cooperation in the future is doubtful, at best.

Likewise, the agency's skills in prisoner debrief and interrogation will likely go fallow once again.  The Feinstein report is highly critical of two psychologists who were paid more than $80 million to develop and direct the program.  Why was the job outsourced?  After the Cold War, the agency allowed its interrogation skills to atrophy; after 9-11, the agency realized it had few people capable of extracting information from suspected terrorists, or creating a program of enhanced interrogation.  The psychologists were veterans of the Air Force's SERE (Survival, Evasion, Resistance and Escape) program, one of the few organizations that retained expertise in questioning prisoners and compensating for counter-interrogation techniques.

When controversy over enhanced interrogations erupted years ago, the psychologists (and their firm) were sent packing.  Meanwhile, CIA officers who acquired skills as interrogators were left twisting in the wind, as the Justice Department contemplated possible criminal charges.  While no charges were filed, the episode sent a clear message to members of the clandestine service: stay away from anything resembling an interrogation program, lest a member of Congress deem your actions excessive and even criminal.

Sound familiar?  It should.  After the Church and Pike committees savaged the CIA for past mistakes in covert operations, our capabilities in human intelligence (HUMINT) flatlined; supervisors were reluctant to approve new operations, fearing Congress would learn of the enterprise and leak it--or worse.  Newly-hired officers began plotting their escape from the clandestine service, viewing it as a dead end.   The same cycle will now repeat itself with our interrogation program and the next time the agency needs to question large numbers of prisoners, it will have to scramble again.  

To be fair, mistakes were made during the enhanced interrogation program, and they have since been corrected.  Beyond that, many of the controversial techniques have now been outlawed and acceptable measures must now comply with the Army Field Manual on interrogations.

But that raises an interesting question: what happens if the U.S. finds itself in a situation similar to the post 9-11 environment, worried about imminent threats that could kill thousands of Americans.  Individuals in captivity could provide information needed to foil those plots, but "conventional" interrogation techniques have failed.  What happens next?  CIA Director Brennan has refused to rule out enhanced methods in the future and while that upsets the ACLU, it is the right course of action.  No one can predict what the future may bring and what may be necessary to extract information to save American lives.  That should not become carte blanche for torture, but we should not exclude certain, enhanced techniques that may persuade a terrorist to talk--before a nuclear device explodes in a U.S. city.

That's the real truth that comes with interrogating terrorists.  Unfortunately, that truth has been twisted and distorted beyond all recognition, much like circumstances surrounding the death of Missouri teenager Michael Brown.  "Hands up, don't shoot," is light-years away from what actually transpired on the streets of Ferguson, just like the Feinstein report bears little resemblance to reality.  But as the left learned long ago, never let the facts get in the way of a convenient narrative.            



                           

And They Wonder Why Troop Morale is So Low

...Hugh Hewitt details the lump of coal Congress is putting in the stockings of military members, just before the holidays:


Those commandos who went into Yemen to try and rescue Luke Somers on Saturday? Congress thinks they should have their scheduled pay raise cut; that they need to start paying a co-pay on their and their families' medications; that the annual adjustment in housing allowance their families receive should be reduced in 2015 so that it is 1 percent below inflation.

Just before Christmas, the Grinch that is the lame duck Congress is poised to pass a National Defense Authorization Act that cuts the pay and benefits of the entire uniformed active duty military, including the young men and women at sea and away from their families this Christmas, the kids in basic training and the soldiers at the DMZ in South Korea as well as across Afghanistan, Iraq and of course in Africa containing the Ebola plague.

Congress has decided that the $5 billion the president says is needed for expanded operations in Iraq and Syria is going to come out of the paychecks of the people fighting there and elsewhere. Stunning but true. Incredibly, terribly at odds with the values and feelings of civilian America — but when has that every stopped a Congress not facing imminent election?

It's all part of the National Defense Authorization Act, a parting shot from the retiring chairmen of the House and Senate Armed Services Committees, Representative Buck McKeon of California and Senator Carl Levin of Michigan.  Both are leaving with generous Congressional pensions, healthcare for life and should they choose, a seven-figure annual income on K Street.  As for the troops, let them clip a few more coupons or forego next year's vacation.  

Did we mention that the same poll that reflects plummeting military morale also revealed another interesting trend: service members have virtually no confidence in senior leadership.  

Can you blame them?        

Putin Ups the Ante

Ever wonder how Vladimir Putin might respond to western economic sanctions against Ukraine?

Some of his option are readily apparent.  Analysts have long believed the Russian leader might limit (or even turn off) energy supplies to customers in Western Europe.  But with the recent plunge in oil prices--and his own economy heavily dependent on crude and natural gas exports--that ploy might not be as feasible as first thought.  

But Mr. Putin has plenty of fall-back plans.  And one was exposed in Syria over the weekend, when Israeli warplanes reportedly bombed a "warehouse" containing surface-to-air missiles.

More from the Jerusalem Post:

Syrian opposition sources told Arab media on Monday that the airstrikes destroyed a storage facility housing anti-aircraft missiles and drones belonging to Hezbollah, and cut off the power supply from Damascus International Airport.

While the Lebanese Shi’ite group has yet to officially comment on the attack, Channel 2 is citing a report in the Hezbollah-affiliated newspaper Al-Akhbar which said that “the Israeli action was intended to preserve the rules of the game.”

The newspaper claimed that the IAF struck weapons caches “that belonged to Hezbollah.” These arms are considered to be “capable of tilting the strategic balance,” namely threaten Israel’s ability to act freely in the skies above Lebanon.










In this case, "tilting the strategic balance" is thought to be a reference to the S-300 air defense system, which is capable of engaging aircraft, cruise missile and ballistic missile targets at long range.  From bases in Syria or Lebanon, S-300 batteries could target airborne assets deep inside Israeli territory, challenging the IAF's aerial dominance. 

As noted in this McClatchy report, Sunday's attacks are consistent with Israel's long-standing pledge to prevent Syria--or Hizballah fighters in Lebanon--from operating the S-300.  On at least three occasions over the last two years, the IAF has launched air strikes aimed at preventing the transfer of advanced weaponry to Hizballah, both in Lebanon and Syria. 

In August, Russian media sources claimed that Moscow would halt future deliveries of S-300 components to Syria, breaking an export deal that was approved in 2007.  Both Russia and Syria's Assad government acknowledge that some elements of the SAM system were delivered prior to the August decision.  Yesterday's raid suggests that Israel only recently became aware of the location of previously-delivered items, or Mr. Putin has resumed S-300 deliveries to the Syrians and/or Hizballah. 

Our money is on the latter option.  The Israelis have shown no hesitation in attacking S-300 components in the past, and their intelligence in both Syria and Lebanon is very good.  Obviously, it's much easier to take out an advanced SAM system before it goes operational, even if that means tracking down and destroying individual components, such as radars, launchers, and of course, the actual missiles. 

The reported presence of additional S-300 hardware in Syria also raises questions about the air defense system and Iran.  Moscow's plans to supply the S-300 to Tehran collapsed under international pressure in 2010, but the Iranians remain very interested in the system, as a hedge against a potential IAF strike against their nuclear facilities.  

Resuming deliveries of advanced SAMs to Iran and Syria is a relatively easy way for Mr. Putin to put a little pressure on the west (read: the United States).  He knows the S-300 in Iran would accelerate an Israeli attack against Tehran's nuclear capabilities, a scenario that could wreak havoc in the Middle East.  His offer to Washington would be rather simple: roll back sanctions resulting from the Ukraine crisis, or be prepared to deal with S-300s in Syrian and Iran, and the prospect of near-term Israeli action, with all the associated consequences.  And did we mention it might trigger a sudden spike in oil prices?

Besides, Mr. Putin pegged President Obama as a weakling long ago.  So, he's more than willing to stoke the fires in places like Syria and Iran, knowing that the U.S. would likely ease sanctions against Russia, if Moscow agrees to stop future S-300 shipments to Damascus and Tehran.  

Chalk up another one for the Russian president.  He may get a lot of mileage out of some blown-up missiles or SAM radars. 

                        

     

Hollowed Out

The Military Times newspapers have posted a first-rate, in-depth report on the morale of our armed forces, and the results reflect a military that is burned out, worried about the future and with little confidence in leadership.

Consider these data points from a survey of 10,000 service members, retirees, veterans and family members, which provides the foundation for the article.  The Times reporting team compared results of this year's survey with a similar query in 2009; they found a military that is increasingly adrift, as the war in Afghanistan winds down, and sequestration-driven budget cuts take full effect.  Key questions from the survey show a seismic shift in morale and optimism about what lies ahead:
 
The quality of my life is good or excellent:

2009:  91%
2014:  56%

Quality of my life will decline in the coming years (2014 only):

Yes:  70%
No:   30%

Base pay and allowances are rated as good or excellent:

2009:  87%
2014:  44%

Military medical care considered good or excellent:

2009:  78%
2014:  49%

At first blush, the decline in morale seems absolutely stunning, given the conditions faced by the military in 2009 compared to the present day.  Five years ago, the U.S. was still fully engaged in two wars, and just past the "surge" that reversed the situation in Iraq--at a significant cost in blood and treasure.  Today, the war in Iraq is officially over, though deteriorating conditions have forced the U.S. to dispatch more than 1,500 troops to serve as "advisers" to Iraqi and Kurdish forces battling the ISIS terrorist Army.  Afghanistan is winding down as well, but the U.S. will be forced to maintain a residual force to keep the Taliban in check.

So why has morale plummeted, despite fewer deployments?  The answer is very clear, based on results from the Military Times survey.  Many service members fell "used and abused;" after a decade of war, thousands are being forced from the ranks by budget cuts; there is palpable fear on military bases among personnel facing involuntary separation from the armed forces, well short of the 20-year (or longer) career that offers a full pension and retirement benefits.

Making matters worse, wage growth in the military (which out-stripped the private sector during the last decade) has again slipped behind civilian companies and firms.  Re-enlistment bonuses, available for dozens of military occupations in recent years, have all-but-evaporated, and a number of service families who participated in the survey are feeling squeezed by the economy.

But the most troubling aspect of the survey is the near-collapse in confidence in leadership; in 2009, 78% of survey participants rated military officers as good or excellent; five years later, only 49% gave their officers similar grades.  And the results for senior military leaders were even worse; five years ago, 53% of those responding felt that senior leadership had "my best interests at heart."  In 2014, only 27% agreed with that sentiment.  To be fair, the military rank-and-file have always had reservations about those who wear the stars, but that 27% confidence level must represent a new low for the post-Vietnam era.

And there's plenty of blame to go around, starting with an administration that has failed to articulate a clear strategy for the war on terror (beyond drone strikes), while slashing funds for operations, maintenance and training.  But military "leadership" bears responsibility as well.  There is very clear perception among service members that "no one has their back" and that only exacerbates the sense of drift.

Read the entire piece, and future installments on military readiness (14 December) and the armed forces' cultural revolution (21 December).  We're on the verge of a new "hollow force," both operationally and emotionally, and sadly, few seem willing to acknowledge the problem, or offer realistic solution.
***
ADDENDUM:  As with previous surveys, Military Times freely acknowledges that the 2014 product is not a scientific poll.  Subscribers to their various publications are invited to participate, while other respondents were recruited via social media.  This year, results were tallied from 10,000 military-affiliated individuals, with active duty personnel representing about 25% of the respondents.  These surveys tend to over-represent career military personnel (and soldiers) while junior enlisted members are less likely to participate.  Given this methodology, there is no way to determine potential margins of error, but (as the Times observes), participants are more likely to be in positions of responsibility, and active involved in day-to-day operations that are impacted by the issues outlined in the survey.                                        





   

Imagine That

Former CIA Chief and Defense Secretary Leon Panetta.  A new Congressional report concludes that the Pentagon IG "bungled" an inquiry into Mr. Pantetta's disclosure of classified information to film makers who produced "Zero Dark Thirty," Hollywood's verson of the hunt for Osama bin Laden.  (McClatchy photo)  



Flashback to the spring of 2011: SEAL Team 6 had just administered multiple rounds of final justice to Osama bin Laden at his complex in Abbottabad, Pakistan and the Obama Administration couldn't wait to take its victory lap.

Almost immediately, there were disturbing leaks about the unit that had carried out the mission.  Special forces operators half-way around the world began worrying about family and friends in Virginia Beach (home of SEAL Team 6), after Vice-President Joe Biden publicly disclosed their participation in the raid.  Biden's leak was subsequently confirmed by CIA Director Leon Panetta, who had already been confirmed as the next Secretary of Defense.  That didn't set well with the outgoing SecDef (Robert Gates), who recalled "promises" to maintain the operational security that surrounded the mission.

As recounted by Mark Thompson of Time magazine:

“Frankly, a week ago Sunday, in the Situation Room, we all agreed that we would not release any operational details from the effort to take out bin Laden. That all fell apart on Monday — the next day.”

That’s a pretty amazing statement. Here you have the nation’s warlord calling out his senior colleagues inside the Obama Administration for spilling the beans. Although he didn’t name names, there was ire inside the Pentagon at White House homeland security chief’s John Brennan’s Monday on-the-record briefing, which offered far more detail than a background session conducted the same day at the Pentagon. Brennan spoke in front of cameras about bin Laden being protected by female human shields, and implied he was armed — both of which had to be retracted as untrue the next day (the very act of retraction means the speaker had drifted into discussing operational details that had to be…retracted).

And the leaks kept coming when Hollywood got involved; with extensive cooperation from senior defense officials, directory Kathryn Bigelow eventually released Zero Dark Thirty, a dramatization of the long hunt for bin Laden and the mission that finally took  him down.  During the film's development, there were persistent reports that the Ms. Bigelow and the screenwriter, Mark Boal, had received classified information from Mr. Panetta and other senior leaders.  An official complaint was later filed and after that, the media and members of the public quickly lost interest.  

Meanwhile, Mr. Panetta went on to serve as President Obama's Secretary of Defense, and Zero Dark Thirty was nominated for a total of five Academy Awards.  As for that complaint against Leon Panetta, we are now learning that it was bungled by Pentagon staffers.  Senator Charles Grassley of Iowa, one of the few members of that body who seems interested in accountability by government officials, has reviewed the leak investigation and described it as absolutely worthless.  McClatchy reporters Jonathan Landy and Marisa Taylor obtained a copy of Grassley's scathing letter to the Pentagon:

Two top officials in the Pentagon Inspector General’s Office bungled an investigation into allegations that former Defense Secretary Leon Panetta and other defense officials leaked classified information to Hollywood filmmakers, a senior Republican senator is charging.

The investigation produced “a second-class report that wasn’t worth the paper on which it was written,” Sen. Chuck Grassley asserted in a scathing Nov. 17 letter to John Rymer, the Defense Department’s inspector general. “The . . . project was an unmitigated disaster spawned by a series of top-level missteps and blunders.”

In the end, Grassley noted, no one has been held responsible more than two years after the leaks to the makers of “Zero Dark Thirty,” a blockbuster film depicting the May 2, 2011, Navy SEALs raid on Osama bin Laden’s hideout in Pakistan.

[snip]

Grassley’s charges were based on an inquiry by his staff into the leak investigation that was overseen by Lynne Halbrooks, the principal deputy Pentagon inspector general who was serving as acting inspector general at the time, and James Ives, a deputy Pentagon inspector general.

The staff cited possible misconduct by the pair that included discussions that Halbrooks held with Panetta and his aides about the investigation while it was still underway. Moreover, the public release of the final report was held up until after Panetta resigned on Feb. 27, 2013.

The delay created “the perception that the report process was slowed by PDIG Halbrooks and others working at her direction to shield DOD officials from scrutiny and perhaps to bolster” a bid by Halbrooks to permanently win the post in which she was temporarily serving, said the staff’s findings.

As the McClatchy reporters dryly note, the incident highlights a "double standard" in how the Obama Administration goes after leakers.  Lower-level personnel are aggressively pursued, while high-ranking officials (like Mr. Panetta) get off scot-free.  

Borrowing a phrase from Captain Renault in Casablanca, we're "shocked...shocked" to learn that the system goes out of its way to protect the powerful--or for that matter, anyone deemed of value in advancing a key narrative, or covering up alleged misconduct.  Does anyone really believe that Ms. Halbrooks and Mr. Ives didn't know they weren't supposed to discuss the investigation with Panetta and his aides while it was underway? (emphasis ours)  But they did it anyway, apparently without fear of any long-term consequences from their actions.  

At the end of the day, we're left with the knowledge that a senior official willingly divulged classified information to a Hollywood scriptwriter, working on a film that promised to be very favorable for the administration, with a release originally planned to coincide with the 2012 elections (it was later pushed back).  And for deliberately ignoring classification rules--and potentially placing American lives in danger--Mr. Panetta didn't even get a slap on the wrist.  

Sadly, the defense establishment has a long history of ignoring misconduct by the connected and powerful.  At one point in my career, your humble correspondent was the intelligence briefer for an Air Force flag officer who was an unmitigated disaster, both personally and professionally.   He bullied his staff; flaunted rules on the use of government transportation and generally did as he damn well pleased.  There were also unconfirmed reports that the same individual had two DUI "stops" as a flag officer, but that didn't slow him down, either.  We use the term "stops" because there was never any confirmation the general was actually arrested.    

Most of us were delighted when the general moved on to a new assignment and we thought his career would finally end following an episode at his new headquarters.  Reportedly, he was waiting for a brief from a mid-level officer. who happened to be an African-American woman.  Apparently, she was running a bit late; just before the woman entered the room, the general asked loudly--in front of his senior staff: "Where is that g--d----ed black b---h?"

For mere mortals, that moment of undiluted racism would be enough to kill a career.  But not this particular officer, who moved on to four-star rank and was dogged by controversy almost until he retired. Incidentally, the incident involving the African-American officer was "thoroughly" investigated by the military.  The individual placed in charge of the probe was a mere Colonel, who was given the task of gathering evidence and building a case against a well-connected three star.

You can guess how that turned out.  In his report, the Colonel acknowledged the vile comments uttered by the general, which were heard (and affirmed) by his assembled staff.  But the Colonel noted that other members of the general's team were subjected to similar behavior, so the racism experienced by the African-American officer was consistent with the experiences of other personnel.  Case closed.  

 

 
     
       

Playing with Fire

Ambrose Evans-Pritchard, in the UK Telegraph, on Saudi Arabia's gambit to curb U.S. shale oil production by letting oil prices tumble--a strategy that may quickly backfire:

Saudi Arabia and the core Opec states are taking an immense political gamble by letting crude oil prices crash to $66 a barrel, if their aim is to shake out the weakest shale producers in the US. A deep slump in prices might equally heighten geostrategic turmoil across the broader Middle East and boomerang against the Gulf’s petro-sheikhdoms before it inflicts a knock-out blow on US rivals.  

[snip]

Chris Skrebowski, former editor of Petroleum Review, said the Saudis want to cut the annual growth rate of US shale output from 1m barrels per day (bpd) to 500,000 bpd to bring the market closer to balance. “They want to unnerve the shale oil model and undermine financial confidence, but they won’t stop the growth altogether,” he said. 

There is no question that the US has entirely changed the global energy landscape and poses an existential threat to Opec. America has cut its net oil imports by 8.7m bpd since 2006, equal to the combined oil exports of Saudi Arabia and Nigeria. 

The country had a trade deficit of $354bn in oil and gas as recently as 2011. Citigroup said this will return to balance by 2018, one of the most extraordinary turnarounds in modern economic history. 

As Evans-Pritchard writes, the Saudis (and the rest of OPEC) badly misjudged the threat posed by U.S. and Canadian shale oil production; as recently as last year, senior officials in the kingdom were dismissing shale as a flash in the pan--nothing more than a temporary inconvenience for the oil barons of the Middle East.

Now, the Saudis believe falling crude prices--perhaps going as low as $40 a barrel--will force some shale producers to reduce production and lay off workers.  But some American firms are one step ahead of OPEC, hedging much of their output for 2015 and 2016 at higher prices, set before the recent drop.  Additionally, shale producers can additional wells on line at a much lower cost, since the biggest expenses (including land acquisition) have already been absorbed.  That means new wells can remain profitable--even if the price floor dips to around $40 a barrel.

US producers have locked in higher prices through derivatives contracts. Noble Energy and Devon Energy have both hedged over three-quarters of their output for 2015.     

Pioneer Natural Resources said it has options through 2016 covering two- thirds of its likely production. “We can produce down to $50 a barrel,” said Harold Hamm, from Continental Resources. The International Energy Agency said most of North Dakota’s vast Bakken field “remains profitable at or below $42 per barrel. The break-even price in McKenzie County, the most productive county in the state, is only $28 per barrel.”   

Efficiency is improving and drillers are switching to lower-cost spots, confronting OPEC with a moving target. “The (price) floor is falling and may not be nearly as firm as the Saudi view assumes,” said Citigroup. 

[Edward] Morse, commodities chief at Citigroup, says the “full cycle” cost for shale production is $70 to $80, but this includes the original land grab and infrastructure. “The remaining capex required to bring on an additional well is far lower, and could be as low as the high-$30s range,” he said. 

Indeed, the economics of cheap crude don't work for Saudi Arabia and most of the world's other oil exporters.  The break-even point is $98 a barrel for the House of Saud and even higher for countries like Russia ($105); Iran ($131), Iraq ($111) and Venezuela ($161).  Falling oil prices are creating havoc for national budgets that depend on energy exports, and the current trend could prove catastrophic for regimes in Libya, Yemen and even Algeria, which have only a tenuous hold on power.

Meanwhile, regional instability is creating new opportunities for ISIS and other Islamic terrorist organizations, which could gain control of more oil fields in places like Libya and Nigeria.  There is also the matter of Iran or Russia formenting new crises, to boost crude prices and force concessions from countries dependent on their energy supplies (read: Western Europe).

All the more reason to accelerate energy production in the U.S., and become a net exporter of crude and natural gas.  There is more than a touch of irony in all of this; first, the fracking revolution will achieve what everyone said was impossible--allowing America to become energy independent, with all the power and privileges that come with that status.  Secondly, as the oil producers of the Middle East slide further into chaos, they will call on--you guessed it--the United States to rescue them from the fundamentalist forces they unleashed.  At what point do we decide enough is enough and tell them to take that proverbial flying leap?
  

The Fall Guy

Defense Secretary Chuck Hagel is being forced out, after less than two years on the job.  The New York Times (which received the initial leak from the White House), gladly served up administration spin that Mr. Hagel, a former Republican Senator from Nebraska, lacked the required skills to deal with emerging threats.

The officials described Mr. Obama’s decision to remove Mr. Hagel, 68, as a recognition that the threat from the Islamic State would require a different kind of skills than those that Mr. Hagel was brought on to employ. A Republican with military experience who was skeptical about the Iraq war, Mr. Hagel came in to manage the Afghanistan combat withdrawal and the shrinking Pentagon budget in the era of budget sequestration.

But now “the next couple of years will demand a different kind of focus,” one administration official said, speaking on the condition of anonymity. He insisted that Mr. Hagel was not fired, saying that the defense secretary initiated discussions about his future two weeks ago with the president, and that the two men mutually agreed that it was time for him to leave.

But Mr. Hagel’s aides had maintained in recent weeks that he expected to serve the full four years as defense secretary. His removal appears to be an effort by the White House to show that it is sensitive to critics who have pointed to stumbles in the government’s early response to several national security issues, including the Ebola crisis and the threat posed by the Islamic State.

To be fair, there is an element of truth in the critique of Chuck Hagel's leadership skills.  He was a lousy choice for SecDef at the very moment our military establishment needed an extraordinary leader.  As we observed during Mr. Hagel's tortured confirmation process in 2013, he was the wrong man for the wrong job at the worst possible time: 

It doesn't take a military genius to understand that DoD desperately needs someone with ideas, exceptional managerial acumen and a road map for America's military forces in the 21st Century.  To date, President Obama hasn't offered much, other than winding down the wars in Afghanistan and Iraq (which would have occurred regardless of who was in the Oval Office); his strategic focus on the Pacific theater and massive cuts in the defense budget.

The next Secretary of Defense faces huge challenges.  Even without sequestration, the Pentagon is looking at roughly $500 billion in cuts over the next decade, along with cuts in personnel and hardware that will create significant operational obstacles.  Good luck taking on a modernized Chinese military with a force that, on its current trajectory, will be completely hollowed out by the end of Mr. Obama's second term.

And we're being told that Chuck Hagel is the right man to lead the Defense Department at this critical moment.  How rich.  We're not sure if Mr. Hagel ever had a marshal's baton in his knapsack (following Napoleon's famous dictum); at this point, we'd just like to know if he actually has a clue.  

To date, Chuck Hagel is the only former enlisted soldier to be appointed as Secretary of Defense.  As an Army infantryman in Vietnam, Hagel served honorably, receiving two Purple Hearts and the Army Commendation Medal.  But his involvement with the military largely ended when he returned from Vietnam and didn't resume until Hagel entered the U.S. Senate in 1996.  As a member of that body, he developed a friendship with Barack Obama, centered on their skepticism about the war in Iraq.  

And there's the rub: searching for a replacement for Leon Panetta, the commander-in-chief's primary concern was finding someone with the requisite anti-war credentials and not the vision and leadership needed to lead DoD in an environment defined by the emergence of ISIS; China's growing military might, a resurgent Russia, continued military operations in Afghanistan and sequestration-imposed budget cuts.

It doesn't take a general to understand that dwindling resources translates--quickly--into decreased military readiness, a problem compounded by the so-called "procurement holiday" of the 1990s and a decade of war in the Middle East.  In an interview with Charlie Rose last week, Mr. Hagel said senior DoD leaders were openly worried about the situation facing our armed forces (H/T: PJ Tattler):

Hagel re-iterated that to Rose, but also left viewers to wonder about the direction that President Obama is taking the military.

“I am worried about it, I am concerned about it, Chairman Dempsey is, the chiefs are, every leader of this institution,” Hagel said, including Pentagon leadership but leaving both President Obama and Vice President Joe Biden’s names out of his list of officials who are worried about the U.S. military’s declining capability. Hagel said that the Congress and the American people need to know what while the U.S. military remains the strongest, best trained and most motivated in the world, its lead is being threatened because of policies being implemented now.

[snip]

In the past couple of years, Hagel has warned that defense budget cuts implemented under President Obama were hurting readiness and capability. The “how smart you are” line may be a veiled shot at President Obama, who basks in a media image that he is a cerebral, professorial president.

Reportedly, the "professor-in-chief" became miffed when Mr. Hagel recently suggested that ineffective policies against ISIS in Syria were actually aiding that country's dictator, Bashir Assad.  The outgoing defense chief has a point, but some would ask if he--and the service chiefs--could have been more forceful in stating their opposition to budget cuts, micro-management of the campaign against ISIS and the President's refusal to acknowledge the threat posed by the terror army until is was almost too late.

And the situation is unlikely to improve under Secretary Hagel's potential successors, Michelle Flournoy, Ashton Carter and Jack Reed.  Ms. Flournoy served in senior defense posts in the Clinton Administration and was Under-Secretary of Defense during Obama's first term; Carter was the Deputy SecDef during the same period and Reed is a longtime Democratic Senator from Rhode Island.  Early speculation suggests Ms. Flournoy has the inside track, which would allow President Obama to appoint the first female Secretary of Defense.  

Of the three, only Senator Reed has served in uniform; after graduating from West Point, he was an active-duty officer from 1971-1979 and remained in the Army Reserve until 1991.  Describing him as a doctrinaire liberal would be an understatement.  

At this point, it probably doesn't matter who serves as SecDef; Mr. Obama shows no inclination to change his national security policies, and the outlook for defense spending is equally grim.  Perhaps the real question is who will be nominated for the job in 2017, as part of the next administration.  That individual--whomever it might be--will face a near-impossible job.