US Threat Assessment: China and Russia Remain Priority, While Emerging Technology and Global Health Security Gain in Importance
The witnesses that testified at the hearings included Director of National Intelligence Avril Haines, Director of the Central Intelligence Agency William Burns, Director of the Defense Intelligence Agency Lieutenant General Scott D. Berrier, Director of the National Security Agency General Paul Nakasone, and Director of the Federal Bureau of Investigation Christopher Wray. The report itself is a high-level, unclassified intelligence product that provides a unique window each year into some of the analysis that the US Government relies on to inform national security policy. This includes regulatory policy on investment screening, economic sanctions, and export controls – as well as budget-related decisions such as initiatives for developing or sustaining the strategic advantage of the United States in critical technologies.
The 2022 assessment concludes that “[c]ompetition and potential conflict between nation-states remains a critical national security threat,” specifically noting that China, Russia, Iran, and North Korea “have demonstrated the capability and intent to advance their interests at the expense of the United States and its allies.” The Annual Threat Assessment also outlines various other transnational challenges, such as the COVID-19 pandemic, which will “continue to strain governments and societies, fueling humanitarian and economic crises, political unrest, and geopolitical competition,” and the impact of “[e]merging and disruptive technologies, as well as the proliferation and permeation of technology into all aspects of our lives.” The Annual Threat Assessment also outlines risks from non-state actors, such as the terrorist groups ISIS, al-Qaeda, and Al-Shabaab. Below we have captured some highlights of the various threats outlined in this year’s Annual Threat Assessment.
Regulatory Relevance for the Private Sector
The IC’s Annual Threat Assessment often sheds light on the rationale behind a variety of national-security-related US Government policies, as well as the sometimes byzantine regulations that implement them. For example, the nation-states, technologies, and other transnational and national threats outlined in the Annual Threat Assessment are likely to inform the Committee on Foreign Investment in the United States’ (CFIUS) national security reviews of certain investment transactions involving US companies.
CFIUS, in assessing the risk posed to US national security by a transaction, conducts a “risk-based analysis” in which it considers three elements as defined in its regulations: (1) the threat posed by the transaction, “which is a function of the intent and capability of a foreign person to take action to impair the national security of the United States;” (2) the vulnerabilities posed by the transaction, “which are the extent to which the nature of the US business presents susceptibility to impairment of national security;” and (3) the consequences to national security of the proposed transaction, “which are the potential effects on national security that could reasonably result from the exploitation of the vulnerabilities by the threat actor.” Like the Annual Threat Assessment, CFIUS risk-based analyses are directly informed by the IC.
The Annual Threat Assessment is especially helpful in understanding which foreign governments are seen as posing a threat to US national security, as well as which areas of technology or related capabilities (and US companies that are involved with those) CFIUS may see as representing some heightened vulnerability. While each CFIUS review is done on a case-by-case basis, state-owned enterprises (SOEs) from countries the IC sees as higher-threat are particularly likely to be imbued with significant risk. The same is often true with ostensibly privately owned entities from higher-threat nations such as China or Russia.
The Annual Threat Assessment may also inform the types of end-users and technologies on which the US Government imposes stricter export controls, as well as the countries and activities that may be the focus of US sanctions actions as the US Government seeks to punish, deter, or disincentivize certain behavior and activities.
The Annual Threat Assessment notes that China is increasingly a “near-peer competitor, challenging the United States in multiple arenas—especially economically, militarily, and technologically—and is pushing to change global norms and potentially threatening its neighbors.” More specifically, the Annual Threat Assessment notes that:
The Chinese Communist Party (CCP) will continue efforts to achieve President Xi Jinping’s vision of making China the preeminent power in East Asia and a major power on the world stage. The CCP will work to press Taiwan on unification, undercut US influence, drive wedges between Washington and its partners, and foster some norms that favor its authoritarian system.
While the Annual Threat Assessment does note that China “probably will” seek to reduce tensions with the US when it suits China’s interests, it also states that the CCP will continue to use “statist economic policies” and “whole-of-government tools” to achieve its goals, including to “reduce dependence on foreign technologies, enable military modernization, and sustain growth.” One such tool China is set to continue promoting is the Belt and Road Initiative (BRI), with the IC assessing that China will adjust its approach in response to “publicity and sustainability challenges” and to “improve the initiative’s brand and minimize international criticism.”
On technology and military challenges, the Annual Threat Assessment specifically notes potential risks with respect to Beijing’s attempts to assert sovereignty over Taiwan, including what such a move would mean for the global semiconductor market:
We expect that friction will grow as China continues to increase military activity around the island, and Taiwan’s leaders resist Beijing’s pressure for progress toward unification. China’s control over Taiwan probably would disrupt global supply chains for semiconductor chips because Taiwan dominates production.
Additionally, “China will remain the top threat to US technological competitiveness as Beijing targets key sectors and proprietary commercial and military technology from US and allied companies and institutions,” with China expected to continue using “espionage, subsidies, and trade policies” to advance its objectives in this sector. Notably, the Annual Threat Assessment concludes that the Rocket Force of China’s People’s Liberation Army (“PLA”) tested its first “operational hypersonic weapons system, the DF-17 hypersonic glide vehicle” in 2020, which the IC says “could challenge US missile defense systems,” strongly suggesting that advancing and countering hypersonic technology may be an increased area of focus for the US Government moving forward. Lastly, on cyber threats, the IC assesses that:
China presents the broadest, most active, and persistent cyber-espionage threat to the US Government and private sector networks. China’s cyber pursuits and export of related technologies increase the threats of attacks against the US homeland, suppression of US web content that Beijing views as threatening to its control, and the expansion of technology-driven authoritarianism globally.
The IC assesses that Beijing’s cyber capabilities “almost certainly” give it the ability to launch cyberattacks that could disrupt critical infrastructure and services in the US, including oil and gas pipelines and rail systems.
We first want to note that this year’s Annual Threat Assessment was prepared with information available only as of January 21, 2022, and, therefore, the document itself does not reflect the latest information on Russia’s invasion of Ukraine. However, in testimony before the HPSCI, the IC officials stated that Russia’s war in Ukraine is one that Russian President Vladimir Putin “cannot afford to lose,” adding that it “is a matter of deep personal conviction for him” and that he may escalate the conflict without concern for civilian casualties.
The Annual Threat Assessment notes that “Russia will remain the largest and most capable WMD rival to the United States for the foreseeable future as it expands and modernizes its nuclear weapons capabilities.” However, in her live testimony, Director of National Intelligence Avril Haines added that Putin’s announcement in early March that Russia’s nuclear forces would move to a higher level of readiness status, while “highly unusual,” is better understood as signaling. “We obviously take it very seriously when he’s signaling in this way,” Haines said. “But we do think he is effectively signaling, and he’s attempting to deter” NATO’s involvement in the war against Ukraine, she concluded.
In the long-term, the IC assesses that “Moscow will continue to employ an array of tools to advance its own interests or undermine the interest of the United States and its allies,” with these tools being “primarily military, security, and intelligence tools, with economic cooperation playing a smaller role.” The IC expects Russia “to insert itself into crises” when its “interests are at stake, the anticipated costs of action are low, or it sees an opportunity to capitalize on a power vacuum.”
On the military front, the IC expects Russia to “sustain military modernization and enhance its armed forces,” enabling it to defend its national security “while projecting influence globally and challenging the interests of the United States and its allies.” This assessment is likely to evolve, however, because of Russian military losses in Ukraine and robust export controls and sanctions imposed on Russia by the US and allied nations, which threaten to cut Russia off from the technology it needs to sustain and advance its military.
On cyber, the IC assesses that “Russia will remain a top cyber threat as it refines and employs its espionage, influence, and attack capabilities,” with the country viewing “cyber disruptions as a foreign policy lever to shape other countries’ decisions, as well as a deterrence and military tool.”
Combined with the IC’s assessment that “Russia presents one of the most serious foreign influence threats to the United States, using its intelligence services, proxies, and wide-ranging influence tools” to undermine the US domestically and abroad, the US Government may seek to continue deterring Russia in this space, particularly with the upcoming 2022 Mid-Term Elections.
The IC assesses that “Iran will primarily be a regional threat that “will continue to threaten US interests as it tries to erode US influence in the Middle East, entrench its influence and project power in neighboring states, and minimize threats to regime stability,” although it “also remains committed to developing networks inside the United States—an objective it has pursued for more than a decade.”
In particular, the IC assesses that Iran’s hybrid approach to warfare … will pose a threat to US interests in the region for the foreseeable future,” including direct threats to US persons in the region via proxy attacks. The IC further assesses that Iran will continue to back its various proxy forces, including, among others, Iraqi Shia militias, Lebanese Hizballah and other terrorist groups, and the Huthis in Yemen. These groups and individuals associated with them may continue to be the target of US sanctions under the US Department of the Treasury, Office of Foreign Assets Control (“OFAC”) Counter Terrorism Sanctions Program.
The IC also assesses that “Iran’s growing expertise and willingness to conduct aggressive cyber operations make it a major threat to the security of the US and allied networks and data,” with Iran’s “opportunistic approach” and recent cyber-attacks on Israeli and US critical infrastructure signaling that “critical infrastructure owners in the United States [are] susceptible to being targeted by Tehran.”
The IC assesses that “North Korean leader Kim Jong Un will continue efforts to steadily expand and enhance Pyongyang’s nuclear and conventional capabilities targeting the United States and its allies, periodically using aggressive and potentially destabilizing actions to reshape the regional security environment in his favor.” Increased US focus on North Korea’s nuclear and WMD capabilities will likely continue because Kim “views nuclear weapons and ICBMs as the ultimate guarantor of his totalitarian and autocratic rule” and he “remains strongly committed to expanding the country’s nuclear weapons arsenal and continuing ballistic missile research and development.”
However, the Annual Threat Assessment also notes that North Korea will continue to invest in “niche” conventional weapons capabilities as a way of deterring outside intervention, offsetting “enduring deficiencies in the country’s conventional forces, and coercively advance[ing] [Kim’s] political objectives.” The Annual Threat Assessment notes that some of these capabilities include new weapon systems such as “a nuclear-powered submarine, hypersonic glide vehicles, long-range solid-propellant missiles, and multiple independently targetable reentry vehicles (MIRV).”
The IC also assesses that “North Korea’s cyber program poses a sophisticated and agile espionage, cybercrime, and attack threat,” with the country “probably” capable of causing “temporary, limited disruptions of some critical infrastructure networks and disrupt[ing] business networks in the United States.”
The Annual Threat Assessment also indicates that health security will continue to be a focus of the US Government over the coming years. In particular, the IC assesses that “[a]lthough the most severe health impacts of COVID-19 are lessening as global vaccination coverage increases and natural immunity builds, countries worldwide will continue to grapple with COVID-19” and the “socioeconomic and political implications of the pandemic” which will “ripple through the world for years.”
Interestingly, the Annual Threat Assessment also includes the IC’s views on the origins of COVID-19. The IC assesses that COVID-19 likely “emerged and infected humans through an initial small-scale exposure that occurred no later than November 2019.” As to the virus’s origins, the Annual Threat Assessment posits two competing hypotheses as plausible explanations:
- “Four IC elements and the National Intelligence Council assess with low confidence that the initial SARS-CoV-2 infection was most likely caused by natural exposure to an animal infected with it or … a virus that probably would be more than 99 percent similar to SARS-CoV-2.”
- “One IC element assesses with moderate confidence that the first human infection with SARS-CoV-2 most likely was the result of a laboratory-associated incident, probably involving experimentation, animal handling, or sampling by the Wuhan Institute of Virology.”
In addition to the acute effects of the COVID-19 pandemic, the IC assesses that it will “likely continue to strain health systems and create conditions that could facilitate the spread of other infectious diseases globally, including to the US homeland.” Indeed, according to the Annual Threat Assessment, “[c]ountries globally remain vulnerable to the emergence of a novel pathogen that could cause a devastating new pandemic.”
Lastly, the IC also assesses that new technologies could bring about risks associated with biological weapons, specifically noting that “[r]apid advances in dual-use technology, including bioinformatics, synthetic biology, and genomic editing, could enable development of novel biological weapons that complicate detection, attribution, and treatment.” As a result, we expect high US Government scrutiny of related dual-use technologies moving forward.
- Risks Associated with New Technologies
The IC assesses that new and emerging technologies have resulted in fresh opportunities for transnational interference and conflict. The Annual Threat Assessment posits that “increasing convergence of seemingly unrelated fields and the rise of global competition to generate and lock in advantage are leading to a global diffusion of emerging technologies,” which have shrunk development timelines and, in what is likely a reference to China’s Military-Civil Fusion strategy, “blurred lines between commercial and military endeavors.”
The IC specifically notes the “[n]ovel uses of both mature and new technologies are proliferating among a growing number of state and non-state actors, posing direct and growing threats to traditional pillars of US military power.” Specifically, the IC assesses that:
- “One of the most significant, ongoing trends in new military technology and weaponry is the growing combination of high speed, long-range, greater maneuverability, and pinpoint accuracy,” with “UAVs, guided rockets, artillery shells, and mortars” presented as examples. The Annual Threat Assessment notes the battlefield use of UAVs by Azerbaijan and Ethiopia as an example of how some of these technologies from advanced countries are trickling down to “smaller and less expensive systems,” indicating the US Government may seek to curb their proliferation.
- “[C]ertain technologies, such as hypersonic systems and “nascent efforts to operationalize military AI” will “probably … remain within the purview of great powers and wealthier states.” However, less expensive systems, such as “cyber tools to unmanned aerial and naval vehicles could be exploited by lesser powers … to achieve a higher impact and even strategic-level effects.”
The IC’s assessment indicates that in addition to more conventional military threats, new technologies that allow lesser powers to wage asymmetric warfare against the US and its allies may increasingly be a focus of the US Government for the foreseeable future.
- Global Terrorism
The IC assesses that “[t]errorism remains a persistent threat to US persons and interests at home and abroad,” with “[i]ndividuals and small cells inspired by a variety of ideologies and personal motivations—including Sunni violent extremism, racially or ethnically motivated violent extremism, and militia violent extremism—probably present[ing] the greatest terrorist threat to the United States.” ISIS, al-Qaeda, and “terrorists aligned with Iran such as Lebanese Hizballah, probably pose the greatest threat to US persons and interests abroad,” according to the Annual Threat Assessment. The IC assesses that ISIS “almost certainly” will continue to inspire attacks that may take place in the domestic United States, but that al-Qaeda will likely seek to gauge its ability to operate under Taliban-controlled Afghanistan before engaging in external operations, while Hizballah will largely seek to reduce US influence in Lebanon and the Middle East although it does to a “lesser extent” maintain the capability to target US persons and interests in the United States.
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