The Outsider Perspective, brought to you by The Beltway Outsiders.
Good Friday Morning! Welcome to this week’s newsletter. This week I break down the good media week Trump has had, by his standards, break down the all the issues surrounding the reports involving Russia and Trump, and wrap things up by convincing you on why you should care about American dominance in the semiconductor market.
If you have reader questions, feel free to shoot them to me at Daniel.Vaughan@thebeltwayoutsiders.com. I’ve used reader questions as full sections in this in the past.
Trump and the GOP begin their domestic blitz
Last week I wrote about the gameplan for the GOP. Specifically, I noted how they were going to go full air-raid offense on Democrats. This week is the first drive on offense for Trump and the GOP. You have nomination hearings, Trump holding his first press conference (and the fallout), and all the mini-stories that pop up each day. Long story short: If you’re in Trump tower, you have to consider this week and the opening drive a massive success.
Democrats and the news media need a single unifying storyline to cover. They need a unifying narrative. They don’t have it for any story. What exists instead is a scrum of storylines all vying for attention. In the process, one story robs airtime from another story. The serious stories, cabinet nomination hearings and the release of a joint CIA/NSA intelligence report, are buried by a mass of everything else. In effect, the negative press on Trump suffocates itself.
Which means all the news, all the think-pieces, all the hot-takes, and all the “outrage” pieces over Trump is unorganized, unfocused, and ineffective. No one single story is emerging as a threat. Some stories may be larger than others, but nothing demands attention. Any Democratic grandstanding rises up and collapses within a single day. If you don’t believe me, take a look back at all the “big” news cycles that have come and collapsed within this past week:
- Nov. 6: Trump tweets out a blast at Arnold Schwarzenegger for the Celebrity Apprentice ratings. Calls himself the “ratings King.” NSA/CIA release their report on how Russia interfered with the US election.
- Throughout the week: Trump goes back and forth on whether or not Russia engaging in cyber attacks on America. This creates a steady barrage of outrage from the left who continue to call it the “Russian hacking” even though that’s not an accurate description.
- Jan 8-9: The Golden Globes are held. Meryl Streep goes off on Trump. Trump blasts her back the next day attacking her. He calls her “overrated.” The Associated Press for some reason decided to “fact check” Trump’s personal attack of using the term “overrated.” Which in a nutshell, is why modern media fact checking has become a more politicized thing than basic journalistic reporting.
- Jan 10: The nomination hearings begin in earnest with AG-Nominee Jeff Sessions going through his hearing. Democrats plan and try to paint Sessions as a racist.
- Jan 11: Other nomination hearings begin. Including SoS nominee Tillerson. All with hearings on full tilt. Trump also announces that Obamacare alternative should be passed with the repeal plan. Trump holds his first press conference in a long time, disses a CNN reporter, gives multiple storylines for the media to cover, and announces the new trust structure for his company to avoid conflicts of interest.
- Jan 12: Trump continued his attacks on CNN, calling them fake news, nomination fights continue, and the Russia hacking stories continue simmering.
Now, from those storylines: find the story that sticks. You can’t. None of them are sticking. Most stories completely fade from the public mind instantly. Each story becomes nothing more than a footnote. All of this for an administration that hasn’t even taken power or office yet. It’s not that some of these stories aren’t important. The problem is that none of them will stick and will be forgotten. There is nothing forcing a story to stay at the top of the news. For Trump, this is a perfect storm. He can manipulate the news cycle to his desire and the media and their liberal allies will follow along. All of his important policies get obfuscated by the media scrum.
Republicans should take note of these tactics. This is how Trump could turn on them down the road. He would launch a massive media blitz and drown out their voices in an echo chamber of his creation. It took one tweet to back the GOP down over proposed changes to an ethics office. If he wanted to try and bury them on a future policy or issue, he’ll have the power to do it.
Russia and the Multiple Intelligence Reports
This week has seen a bonanza of reports released on Trump, Russia, connections between them, and evidence the US intelligence community (IC) has on Russia interfering with the US election. A frustrating part to all of this is that pundits are conflating the the good and bad reports and agencies reporting them. So I’m going to provide a brief breakdown of this issue and what should have your full attention.
NSA / CIA Russia Hack Report
The most important report out there right now is the 25 page declassified report from the NSA and CIA assessing the likelihood Russia interfered with the US Presidential election. This report was written by and based on US intelligence. This is what our agencies know with a high degree of confidence. Of all the reports out there, you should take this one seriously and know what it says. You can that report in its entirety here (and I recommend reading it). Here is what you should take away from this report:
Russian efforts to influence the 2016 US presidential election represent the most recent expression of Moscow’s longstanding desire to undermine the US-led liberal democratic order, but these activities demonstrated a significant escalation in directness, level of activity, and scope of effort compared to previous operations.
We assess Russian President Vladimir Putin ordered an influence campaign in 2016 aimed at the US presidential election. Russia’s goals were to undermine public faith in the US democratic process, denigrate Secretary Clinton, and harm her electability and potential presidency. We further assess Putin and the Russian Government developed a clear preference for President-elect Trump. We have high confidence in these judgments.
That’s the 30,000 foot view. Russia engaged in a direct interference campaign in the US election. Note the overall goal for Russia: “undermine the US-led liberal democratic order.” Russia wants the downfall of America, NATO, and the West. This is very clear. Their goals are beyond simply aiding Trump. They want the downfall of America itself. Russia and Putin should never be viewed as allies.
Now the methods, broadly speaking, the Russians used in their propaganda/interference campaign:
Moscow’s influence campaign followed a Russian messaging strategy that blends covert intelligence operations—such as cyber activity—with overt efforts by Russian Government agencies, state-funded media, third-party intermediaries, and paid social media users or “trolls.”
Russia, like its Soviet predecessor, has a history of conducting covert influence campaigns focused on US presidential elections that have used intelligence officers and agents and press placements to disparage candidates perceived as hostile to the Kremlin. Russia’s intelligence services conducted cyber operations against targets associated with the 2016 US presidential election, including targets associated with both major US political parties.
This matches the “Active Measures” campaign that former NSA analyst John R. Schneider has written about extensively. Russia has been using fake news sites, Wikileaks, and social media to spread disinformation and propaganda out to undermine the election and US democracy as a whole.
The last point to be made: It is impossible to determine if this propaganda campaign led to an actual effect on the US election. There is no evidence you can point to saying that Clinton lost as a result of Russian interference. Did it hurt Clinton? Absolutely. But the correlation/causation issue makes it impossible to tease out the factors that led to Trump winning and Clinton losing. So while it is an absolute fact the Russians interfered, using active measures and their state intelligence agencies, it is impossible to say they are the reason Trump won.
The truth in this case is highly nuanced. The Russians did not “hack” the election. There is no evidence the vote tallies were tampered with in any way. The Russians did interfere. But it is unclear how much that interference hurt Clinton.
The Buzzfeed / CNN / NBC Russian dossier report
The second major report is a 35 page “dossier” written by a former MI6 agent, British Intelligence, now in the private sector. This report is known by US intelligence and has been floating around the Western intelligence community and media for several months. The media wanted to report it. The report made waves among journalists because of “explosive” claims like Trump hiring prostitutes to urinate on a bed formerly used by President Obama. The problem is that the report is impossible to verify for journalists. They are ill-equipped to determine the veracity of an intelligence report like this one. The report is based on HUMINT, or human intelligence:
This was a rather standard example of raw human intelligence reporting, a mishmash of claims, some of them obviously untrue. But the essence of its case—that Trump has been playing footsie with Vladimir Putin for years and knowingly accepted his secret help to win the White House—may well turn out to be true.
The media, unaccustomed to seeing raw HUMINT reports, acted aghast at the salacious nature of some of the claims in the dossier: Trumpian sex romps caught on camera by Russian spies, our new commander-in-chief paying prostitutes to urinate on a hotel bed where President Obama had slept. Whether those particular claims are true or not—and they ought to be looked at with immense skepticism and even the PEOTUS himself said today that his infamy as a germophobe, which way predates these accusations, ought to raise concerns about some of these tales—there’s no doubt that Putin’s Federal Security Service, the all-seeing FSB, keeps close tabs on foreign VIP’s when they’re on their turf. If Trump was unwise enough to engage in randy behavior in Russia, the FSB unquestionably has it on video.
This report is why Trump attacked Buzzfeed, CNN, and NBC. He called CNN’s story “fake news.” CNN reported generally about the dossier: that intelligence had briefed both Obama and Trump on the contents and that the dossier could be used to compromise Trump. CNN refused to report the full dossier because the contents could not be verified. NBC focused on the fact that US Intel chiefs didn’t brief Trump on the dossier, like CNN claimed, but were rather using the dossier as a means to show Trump unverified intel. Buzzfeed irresponsibly posted the entire dossier. You can see the 35 pages yourself, here.
The ultimate problem is this dossier deals exclusively in human reports and rumors. It’s impossible to prove or disprove. Only the CIA, FBI, or NSA could prove or disprove each claim. And they will never release their evidence out of concern for revealing assets in Russia and elsewhere. The evidence for anything in this report would be deeply classified. I would agree with John Schindler’s assessment of the dossier:
In truth, the provenance of the 35-page dossier is well known in proper channels. Some of its assertions have been made by other NATO intelligence agencies, privately. Some of its claims are false, some are true, and some may linger between truth and fiction indefinitely. What’s important here is that the IC leadership decided to brief a small circle of the most senior American officials on that dossier’s findings. They don’t do that, ever—treating raw private intelligence reports by foreigners as worthy of briefing to “the top”—unless they can corroborate significant portions of it.
And because we aren’t in those same intelligence community (IC) circles, we aren’t going to know the veracity of any of the claims. Some of it likely is true. But you can’t pretend all of it is true. And in truth, I don’t buy this is the full list of things the Russians potentially have in their real dossier of Trump (which they absolutely have — going back into the 1980’s when Trump was traveling to Russia). Like Schindler, one of my first thoughts was this being a misdirection campaign. A campaign encouraged by Russian intelligence to hide the real dossier:
There is a darker possibility, however—namely that the dossier was leaked to muddy the waters, perhaps even to distract from even more troubling information about Trump’s ties to the Kremlin.
Russian intelligence calls this provokatsiya—provocation—and it’s as commonplace as kompromat in their ranks. This wouldn’t be the first time that Kremlin spies leaked secret information, partly true, to throw spies and journalists off the real trail. “It would be what I’d do,” explained a former KGB senior officer whom I’ve known for years. Possessing long experience with provocation against Western governments, my friend added how Russian spies would approach this: “I would certainly let the media know some of what we have on Trump, to confuse reporters, and also to let the new president know we can take him down at any time, so he better do what Moscow wants.”
As I recently explained, the heart of Trump’s longstanding secret ties to Russia is about money, not espionage. The Trump Organization gives the appearance of possessing dubious financial ties to Russian organized crime, which is linked to the Kremlin and its intelligence agencies. Putin and his spies know all about Trump—they have no need for clandestine meetings in Central European capitals to arrange anything.
What to take away from all these reports
So what should you take away from these reports? I’d boil everything down to the following broad points:
- The NSA/CIA report should be trusted, understood, and inform all our decisions regarding Putin and Russia
- The 35 page Buzzfeed dossier should be taken with many grains of salt. There is no way to know fully which claims are true and which claims are false.
- The Russians are actively interfering with the US by pumping our news and airwaves full of propaganda and misinformation.
- The Russians likely have blackmail worth material on Donald Trump in their official dossier of him.
- The Russians are engaging in cyber espionage, hacking, and active measures against the US, not just Democrats. Republicans have absolutely been hacked in the same manner as the Democrats.
- If it is in their interest, the Russians will destroy Trump, the GOP, and all their allies in the same way they attacked Clinton and the Democrats.
- All of this is being directed by Vladimir Putin
- The next President must take a hard line towards ending the Cold War 2.0 before we travel further down this road
If you keep these points in mind on any of the “Russia hacking” stories in the media, you’ll have a step ahead.
Why you should care about Chinese semiconductor trade
A report in the WSJ caught my eye as I was preparing this newsletter. Along with the report on Russian hacking, the Obama administration released a second report on how the Chinese are attempting to become the global supplier of semiconductors. The WSJ reports:
Semiconductors are essential to everything from home appliances to cars, satellites and fighter aircraft. The U.S. has led the industry since its start in the 1950s, with firms like Intel, Qualcomm and Apple today accounting for nearly 50% of global sales, worth about $165 billion a year, and employing some 359,000 Americans (four times more than the steel industry). Semiconductors are the fourth-most valuable U.S. export behind airplanes, petroleum products and cars.
China hopes to change this through state subsidies and predatory trade practices. The White House report, drafted by industry and policy experts, warns that “Chinese policies are distorting markets in ways that undermine innovation, subtract from U.S. market share, and put U.S. national security at risk.”
Semiconductors are used in every electronic device on the market. The original science and engineering behind semiconductors, developed from the late 19th and early 20th centuries, helped us create things like the first transistor radio. When you think of America harnessing the power of electricity and creating all the many electronic devices on the market today, it begins with the invention of the semiconductor. The reason this is a national security risk is because military experts are wary of allowing foreign countries, like China, build semiconductors for our military equipment. Congress and the White House have gone so far to block Chinese takeover of semiconductor businesses:
The recent attempt by Chinese investors to buy German firm Aixtron, which isn’t mentioned in the White House report, raises particular red flags. Two state-backed Chinese firms, Fujian Grand Chip and San’an Optoelectronics, may have colluded to put Aixtron into distress by canceling a large order at the last minute. Then Fujian Grand Chip swooped in for a takeover last year. German and U.S. regulators blocked the deal, citing Aixtron’s U.S. subsidiary and the sensitive military applications of its technologies.
There’s also the pending bid by Canyon Bridge, a California-based fund backed by China’s State Council, for Oregon-based Lattice Semiconductor, which makes field-programmable gate arrays, an especially sophisticated integrated circuit. Two Chinese nationals were indicted for trying to smuggle similar Lattice chips in 2012, and in 2004 Lattice paid a $560,000 civil fine for illegally exporting to China. The pending takeover, warned 22 U.S. lawmakers in a recent letter, “could disrupt the military supply chain and possibly lead to a reliance on foreign-sourced technologies for many critical Defense Department programs.”
Defense analysts and futurists have identified takeover of the semiconductor business as a key potential weakness for the US. There’s even a novelization of this idea in the book: “Ghost Fleet – A Novel of the Next World War” by P.W. Singer and August Cole. It’s a novel with over 400 end notes, detailing the sources and ideas they relied upon when projecting how a future world war would look. One of the trends they relied upon in the book is China taking over semiconductor businesses and becoming the global supplier of all semiconductors.
In the novel, once the Chinese established global trade dominance with semiconductors, they had their companies sell semiconductors to US companies. This included US defense contractors. The Chinese loaded malware onto the chips of these semiconductors that went into every new piece of US technology. This malware was used at the beginning of the war to disable US military vehicles and technology. In one of the key vignettes describing this technology, a new US jet is scrambling to fight off a surprise Chinese invasion force in Hawaii. Once it gets airborne, the Chinese semiconductor chip uses the malware loaded on it to allow Chinese anti-aircraft missiles to lock on more easily to the aircraft, even when flack and evasive maneuvers are used. The malware disabled common defense systems and made the plane and pilot easy prey.
That is just one example of how having a foreign power like China produce all the semiconductors in the world is a bad idea. This is why the White House and Congress are guarding this area much like you see them guard Uranium companies. All this to say, this is why you should care about semiconductors. The sector has wide-reaching consequences on who controls the market and trade.
Other stories and links for your radar
Ed Whelan at the Bench Memos section of NRO has been following a the NYT story attacking the late-Justice Scalia on his faith. Whelan lays out in this piece all the ways he’s tried to force the Times to issue a retraction on how they’ve gotten their characterization of Scalia wrong. If you’ve seen people call Scalia an “anti-science,” it’s likely based on this NYT piece.
In this New Criterion piece, James Bowman takes Paul Krugam to task for attacking Republicans over Deficit reduction. Krugman, who has long argued deficit reduction doesn’t matter and that we need more deficit spending, conveniently changes his position during the current Presidential transition. As a person who wants the GOP to reduce the debt and deficit on some level, I don’t care for their position flipping. I also don’t buy Krugman’s newfound deficit hawk positioning. Like all things, Krugman looks at the political winds and aligns accordingly.
Many Americans don’t know how US based charities can act as laundering agents for overseas terrorist organizations like Hamas. In this piece, Sam Westrop explains how the flow of money from American charities can make it overseas. In the missing “28 pages” report from the 9/11 commission, US intelligence connected the dots then to US based charitable mosques and organizations sending money abroad to terrorist groups. That issue continues today.
One of the reporters who was actually on the ground and saw the groundswell of support for Trump during the election was Salena Zito. She hit the ground and interviewed everyone in the Midwest, particularly Pennsylvania, who would talk to her. She found the Trump supporters that flipped these states to him. In this piece, she uses that experience as a juxtaposition against the currently liberal railing against Trump’s electoral win. The two liberals reactions she mentions, aside from Meryl Streep, can be found here and here.
This is the million dollar question amid all the debates on Russia and Trump. None of the information we have publicly now was unavailable during the primaries and general election. President Obama had this information and chose not to engage Putin. And not only that but there are other questions about Trump ally and cabinet official Mike Flynn. In this piece, senior officials say Flynn was communicating with a Russian ambassador the day Obama evicted all the known Russian spies. Like most things involving Trump and Russia, the smoke has to be cleared. We need answers to the question in this piece and other questions.
Thanks for reading!