States have a good offensive policy. I think it was admiral rogers not that long ago within the last few months said just as much as that, that we dont have a good cyber offensive policy. We talked about it ed a inad infinitum in classified settings for the entire 10 years i was on the intelligence community. We could never get consensus to move to the next place what that cyber offensive is. As a personal note i saw the administration say they will make china pay for the consequence of the opm hack. I cant wait. I cannot wait to see what the heck that thing is. Candidly, im not too excited about whats going to be. We havent crossed that threshold to bring everybody in this room to deal with this problem. Long answer to your question i dont believe they can go extra territorial to what they perceive is a threat at that point. Thank you so much. Thank you if we can give a hand to the speaks. You can see how we can take many hours talking about that. We will roll into the next panel capabilities needed to protect and defend in a cyber economic war. This made perfectly into that. Thank you. All right. We want to get you out in a relatively timely fashion. If we can ask yall to reclaim or your seat or somebody elses. While were getting our seats before i turn it over to the panelists for this discussion, i want to read a very short paragraph. There is an intellectual no mans land where military and political problems meet. We have no tradition of systematic study in this area and thus few intensely prepared experts. The military profession has traditionally depreciated the importance of strategy where politics are important as compared to tactics. Now we are faced with novel and baffleing problems to which we try the adapt certain ready made strategic ideas from the past. If we examine the origin and development of these ideas we may be better able to judge whether they actually fit this present and future. This was written in 1959 by Bernard Brodie in this is treaty and strategy in the mission age. I recommend to it all. His calls for new ideas in scholarship to deal with the atomic age helped the u. S. Create the doctrine and capabilities that guided us for the last half century at least. I would add to brodies assessment is there an interested elect intellectual no mans land where military and political problems meet and have no discussion in this area. Within our monograph and in our earlier seminars, i have turned to earlier work i and others did on the nuclear kill chain and thought about its applicability to this evolveing threat of cyber and Economic Warfare and vast differences namely the hurdle for development and acquisition and use. Also what i call in one of the Previous Panels somewhat referenced it, could we be in a war and not notice metric. I think it would be hard to ignore the use of a nuclear weapon. As we heard in our last panel we are fully engaged in a cyber economic war. The kill chain of needed capability so to speak may have to be thought about differently. Nonetheless, its basic element elements, intelligence and warning, te der rents, detection, frisk, intradiction, battle management, consequent management and battle and recovery serve as useful way for our current capability as doctrines and technologyies we need Going Forward. At this point i want to welcome our amazingly talented individuals to talk about the nexus of policy and technological developments. The first is executive director of the defense of foundation democracyies where he leads on nonproliferation and expert on sanctions and testified before congress and advised the u. S. Administration, congress and numerous foreign governments on iran and sanctions issues. He heads the foundation fdd center on sanctions and elicit finance and coauthor of more than a dozen studies of economic sanctions against iran. Mark, off to you. Great. Sam thank you very much. I hope you will keep me to my five minutes, maybe give me a nudge if im over five minutes. I will try to make my remarks first. I want to thank sam for involve meg in this project. A fascinateing project with amazing people to be involved with. Ken, thank you for hosting this and allowing fdd to cohost this and mike and mark and michael. And thanks to the young woman who coauthored this, annie, who cohosted this in new york and the next generation of economic warriors. Juan knows her very well and samantha knows her very well. Its satisfying to the three of us when were playing golf in our retirement someone like annie will be continueing the fight. We talk a little bit about the paper we wrote together. I want to put this in context. The paper is called cyber swift warfare. We call it swift warfare because the case study we dealt with is the Swift Financial messageing global system. If i want to wire money to juan my swift citibank has swift code codes and chase manhattan has swift codes and the way our two Financial Institution talks to each other so i can wire money to juan which i do often. [ laughter ] no, no, absolutely. The key looking at swift was swift really was the high point of the u. S. Governments Economic Warfare campaign against iran. It reminds me there was a point in time we were actually engaged in Economic Warfare against iran. This is coming at a particularly troubleing moment for me having spend a lot of time working on iran to see the u. S. Government dismantle the entire sanctions infrastructure we put in place to pursue this nuclear deal but thats a topic for another panel. As saveddavid sanger explained in the u. S. Times, the Treasury Department where juan worked and his leadership and levy and david cohen and now adam zhu bin, the u. S. Treasury was described as president obamas favorite combatant command. For good reason it was Economic Warfare against the Iranian Regime and was a decade of measures that began under president bush, the destination of key iranian banks and revolutionary guard entities and culminated in the passage of sanctions legislation by congress, congressman rogers certainly played a key role in that. It was fascinateing because it as these sanctions escalated you saw over time a dramatic impact on iranian economy and iranian decision making. Some of the key events along the way in concluded u. S. Treasury departments and tractortrailer acttractortrailer patriot act 311 there was a jurisdiction of primary Money Laundering concern and legislation passed by senator ss that legislatively designated the central bank of iran as the key polar of that Money Laundering concern. In 2012 congress over the objections of the administration and the europeans actually passed legislation threatening sanctions against the board of directors of swift and that legislation encouraged the europeans and eventually swift to expel dozens of iranian banks from the swift system. It was unprecedented the first time in swifts history there was dewholesale of a countrys Financial System and made it impossible for the iranians through the formal system to move money and finance trade and repatriate their Foreign Exchange earnings. It was certainly a tool of very effective coercion but something our adversaryies learned from. I note when it comes to swift we see calls from the u. S. Congress, British Government in fact from pro palestinian organizations to use swift again as this ultimate instrument of economic coercion. Last year, pro palestinian organizations asked swift to deswift israeli banks in the dispute territories. The British Governments asked swift to deswift russian banks. That led to a response from the head of one of russias largest banks who said that deswifting of this bank would be an act of economic war. Weve seen our adversaryies try to take our playbook on iran and use it in other ways. In russia russians are using Economic Warfare against our allies in Central Europe and eastern europe. There, theyre using energy warfare. The dependence our european allies have on russian natural gas for example. A whole series of measures both offensive measures against russia because of annexation of crimea and Eastern Ukraine but retaliatory measures against our allies and the United States leading to a need for defensive measure measures. If you move to the asia pacific region, china use economic and Political Warfare against taijuan for years to persuade the International Community taijuan should not be recognized as an independent state. Chinese cut off export of Rare Earth Minerals a couple months when there was a dispute with the japanese. Those Rare Earth Minerals were important to Key Industries of the japanese economy and there have been significant territorial disputes between china and japan and other countries and chinese have match matched their naval maneuvers with economic coercion. What youre seeing essentially is our adversaryies learning from us, the power of Economic Warfare and economic coercion as a dominant instrument of state craft. Now, the United States and certainly our allies in the middle east and asia and europe are lucky. The United States still remain this dominant Global Financial super power. 81 , i think it is, of Global Transactions are done in the u. S. Dollar. 60 of Foreign Exchange reserves held in this u. S. Dollar. 45 of Global Financial transactions done in the u. S. Dollar. Because of the u. S. Dollars dominant position we still yield tremendous power. Make no mistake that is changeing and change ing some fundamental way ways. The russians and chinese are createing an alternative to the Swift Financial messageing system. Its unlikely to attract the support swift has today with 10,500 Financial Institutions using the swift system. Over time it may erode the global dominant position of swift. The chinese have a combination credit card interact card which is available in 100 plus countries around the world. It has a market position it represents 45 of the total number of cards in global circulation. 25 to 30 of this total transaction value extraordinary and because of the russians, its d linked from new york. When were imposeing sanctions from russian banks, the chinese moves in after mastercard and visa moved out and offered this card to russian banks to offer an interact card and global credit card dealing from new york and therefore not susceptible to our sanctions. Chinese set up the Asia Investment bank an alternative bank for Infrastructure Finance financing which has attracted significant Global Support including most u. S. Allies. As a final example and there are many others. The chinese have gone to the imf and asked something called the sdr, special drawing rights, essentially represent a global asset, on for exchange asset, that asset is linked to a basket of currencyies including the u. S. Dollar and chinese yuan. The chinese have been pressuring the imf to actually change the allocation, percentage allocation in that basket so the yuan is more highly lyly represented. These are four examples how over time chinese are trying to erode our global dominance. We may be witnessesing creation of reduceing the u. S. Dollar. Let me end on this. Annie and i conducted a lot of interviews with folks in the u. S. Government, former treasury and state officials people in europe and asia because what we really wanted to find out what kind of defensive measures were we actually taking . We have been very good on offense. How good have we been on the defense . We discovered in the u. S. There hasnt been as much thinking about defense of Economic Warfare, how do we create an economic defense of shields to protect the u. S. And allies from use of offensive weapons by iranian iranians, russians, chinese and others against our closest allies. The monograph came out with specific recommendations, but specific recommendations within the u. S. Government and institutional changes within the inner Agency Office of policy plan planning. The state has one and our recommendation the Treasury Department has an office of policy plan ingning where theyre thinking about these kinds of defense measures and have the time unlike the friends at treasury drinking through a fire hose everyday to think through the specific measures we can put in place to defend the United States and our allies. Number two standing up to Economic Warfare. There are folks who have a lot of strong planning on the economic side, understand markets, understand financial markets. But the idea of having people at the nsc who understand sanctions and elicit finance and use of Economic Warfare would be useful. Three was establishing doctrine on the use of Economic Warfare. We have doctrine froms the use of nuclear age and Missile Defense and certainly a new cyber doctrine folks have spoken about. Doctrine would be very useful. How should we be using this offensively and defensive. It may be a controversial recommendation, the idea of setting occupy an Economic Warfare command. We actually have commands in the u. S. Government most at the pentagon. This idea would be an Economic Warfare command that would draw the best and brightest and necessary resources across the inter interagency. Our recommendation was located itlocated locate it at treasury. Those four on doctrine and institutional changes to protect our allies against the use of economic coercion. Ill finally end with this. Israel has been an interesting example because the boycott investment sanctions movement against israel suggests we are seeing the canary in the coal mine. Here is a small liberal democracy ally of this United States where all of a sudden Economic Warfare is being used against israel in order to achieve political objectives of those who oppose israels position in the territories. Whatever position you take on the territories or position on these regional disputes my assessment and my conclusion is we should be protecting our allies with cyber defenses, ballistic Missile Defenses military defenses and Economic Warfare defenses regardless of our assessment whos right with respect to the regional dispute. This is the canary in this coal mine. As terrorism came to our shores economic problems will come to our shores and we have to think of changes to create economic defensive shields. Thats great. The only thing i would take issue with is Economic Warfare has reached our shores. I think they would agree they really do delve down if were going to be serious about that lets be serious. What does that mean in terms of organizational changes that may be necessary in the u. S. Government. But our next two speakers focus on where really the rubber meets the road in terms of the technologyies that are going to be needed, how we think about that. Ultimate ultimately, you know, you will have to be able to back up our words of deterrence with our technology technologies. The first speaker is dr. Michael shed a Program Manager in the Information Office at darpa for those who may not know is the Defense Advanced Research project agency. His focus is on quantitative and crypto cryptographic techniques for big data and software. Previously he was a Research Scientist at sisc and scientific consultant at Booz Allen Hamilton and holds a phd in chemistry from princeton. Michael. First of all, thanks, sam. I think i speak for mark, too when i saiy those who work on the Technology Side of the house found this to be a very useful and fun exercise for this to be a broader context our work lives. As a preparatory remark all my opinions i express today are my own since i am still with u. S. Government and not fdd. I will start on a slightly down beat note. Today, you can barely turn on your news browser without seeing a fresh story about another American Firm of espionage or intellectual property theft. There does not seem to be a clear path out of this bad ec librium. The purpose of my article is to help provide some new thinking out of the state by taking an Historical Perspective on economic espionage as a timeless instrument of competition between nation states. Number two a scientific perspective on technologies to help us flip the transcript on economic spyies and i prksp pirates undermining our National Economic strength. To begin we have history to help us here. The notion of interested electoral property actually evolved over centuries as enshrinement of e