Hack Attack – Shutting Down the Economy

Successful hacker attack could cripple U.S. infrastructure, experts say – U.S. News.

A report tying the Chinese military to computer attacks against American interests has sent a chill through cyber-security experts, who worry that the very lifelines of the United States — its energy pipelines, its water supply, its banks — are increasingly at risk.

A unit of the Chinese Army is suspected in the most recent attacks.  But Iran and North Korea can’t be far behind.

[a] report considered blackouts lasting weeks or even months across large parts of the country, and suggested they could lead to public fear, social turmoil and a body blow to the economy.

What worries Dmitri Alperovitch, co-founder of the computer security company CrowdStrike, is a coordinated attack against banks that modifies, rather than destroys, financial data, making it impossible to reconcile transactions.

What would you do if there were no electricity for several weeks – no gasoline, no food in the stores, no phone, no Internet…

While the report Tuesday focused on China, the experts also highlighted Iran as a concern. That is because China, as a “rational actor” state, knows that a major cyberattack against the United States could be construed as an act of war and would damaging critical economic cooperation between the U.S. and China.

Iran has no economic stake in the US, so they have no motivation to hold back.

Where will this all lead?  Will US companies finally beef up their security?  And how much will it cost?  And finally, will it be enough to prevent a crippling attack?

 

 

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Iran Cuts own Throat, Stops Oil Exports to EU

via Iran ‘stops oil exports’ to UK and France – Middle East – Al Jazeera English.

Iran has stopped selling crude to British and French companies, the oil ministry has said, in a retaliatory measure against fresh EU sanctions on the Islamic state’s lifeblood, oil.

Most countries in the EU have stockpiles that will last them several months, until supplies from Saudi Arabia and others can catch up with the shortfall.  Hardest hit will be Greece, the debt-ridden nation.

Motor Oil Hellas of Greece was thought to have cut out Iranian crude altogether and compatriot Hellenic Petroleum along with Spain’s Cepsa and Repsol  were curbing imports from Iran.

Iran was supplying more than 700,000 barrels per day (bpd)  to the EU plus Turkey in 2011, industry sources said.

By the start of this year imports had sunk to about 650,000 bpd as some customers cut back in anticipation of an EU ban.

Will Saudi Arabia, Qatar, and other Middle Eastern oil-rich states be able to make up the short-fall?  How much will the price of oil rise?   How will the resulting increase in gasoline and foodstuff costs affect the worldwide economic crisis?

And in the United States, how will Newt Gingrich be able to provide $2.50/gallon gas, as he recently promised?  Doesn’t he realize that world markets are a little beyond his control?

Here It Goes Again

via Exclusive: EU agrees to embargo on Iranian crude | Reuters.

(Reuters) – European governments have agreed in principle to ban imports of Iranian oil, EU diplomats said on Wednesday, dealing a blow to Tehran that crowns new Western sanctions months before an Iranian election.

If the deal is approved by the EU, Iran will be ‘between a rock and a hard place.’  Other customers of Iran, including China and India, will be able to force steep price discounts, leaving Iran in hard economic straits.  Already the price for foodstuff has soared in Iran, and the value of their currency is dropping.

The embargo will force Tehran to find other buyers for oil. EU countries buy about 450,000 barrels per day (bpd) of Iran’s 2.6 million bpd in exports, making the bloc collectively the second largest market for Iranian crude after China.

Biggest trading partner China, driving a hard bargain, has cut its orders of Iranian oil by more than half this month.

The economic sanctions and the oil embargo are a result of Iran’s nuclear program.  Although Tehran claims it is only for peaceful purposes, many other nations believe they intend to develop nuclear weapons.  Talks aimed at allowing UN inspectors into the country to visit the program broke down a year ago.

The oil embargo has already caused the price of crude to rise, and any embargo will be implemented in stages, to prevent a shock to the market.

In response to the proposed embargo Iran has been threatening to close the Strait of Hormuz, and on Tuesday they threatened to take unspecified action if a US carrier group sails back into the Persian Gulf.

Washington, which has a carrier strike group led by the USS John C Stennis in the Arabian Sea, brushed off that threat and said its navy would continue to sail the strait.

What will happen if Iran follows through on it’s threat?  How high will the price of oil go if the embargo takes place?  Where will Europe and China go for ‘replacement’ oil?

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Closing the Strait of Hormuz?

via Iran Threatens to Block Oil in Reply to Sanctions – NYTimes.com.

WASHINGTON — A senior Iranian official on Tuesday delivered a sharp threat in response to economic sanctions being readied by the United States, saying his country would retaliate against any crackdown by blocking all oil shipments through the Strait of Hormuz, a vital artery for transporting about one-fifth of the world’s oil supply.

Merely uttering the threat appeared to be part of an Iranian effort to demonstrate its ability to cause a spike in oil prices, thus slowing the United States economy, and to warn American trading partners that joining the new sanctions, which the Senate passed by a rare 100-0 vote, would come at a high cost.

The first sanctions against Iraq, in 2006, did nothing to slow their uranium enrichment program.  Although Iran claims the program is solely for peaceful purposes, Western nations are fearful of a ‘nuclear Iran.’  The new sanctions would hit India and China, as well as Europe, very hard, since they buy most of Iran’s oil.  Supposedly the slack could be picked up by Saudi Arabia, but many analysts don’t think that’s possible.  Undoubtedly the price of oil would rise.

Some economists question whether reducing Iran’s oil exports without moving the price of oil is feasible, even if the market is given signals about alternative supplies. Already, analysts at investment banks are warning of the possibility of rising gasoline prices in 2012, due to the new sanctions by the United States as well as complementary sanctions under consideration by the European Union.

Rising oil prices could set back the economic recovery, and cause more economic woes worldwide.  But an even worse outcome is possible – can Iran really block the Strait of Hormuz?  What will our response be if they try?

Egypt Protests Continue

via Egypt Protests Continue as Government Resigns – NYTimes.com.

CAIRO — Tens of thousands of protesters once again defied President Hosni Mubarak’s curfews and threats of a harsh crackdown, taking to the streets for a fifth day as the Egyptian leader struggled to hold on to the power that he has maintained in nearly 30 years of authoritarian rule.

Living on less than $2 per day?  Welcome to Egypt.  Can’t find a job?  Welcome to Egypt.

… soldiers invited protesters to climb aboard their armored personnel carriers to have their pictures taken, and in Alexandria, demonstrators took tea to troops.

If the army joins the protesters fighting security police, Mubarak is toast.  How far will this spread?  Yemen and Jordan are seeing the same sort of protest, and surely all the autocratic governments in the region are fearful of what started in Tunisia.

The Egyptian government also attempted to thwart protesters using cell phones and social networking websites to organize:

Although cellphone service was restored in much of the country, the government appeared to still be blocking or restricting the Internet in an attempt to keep protesters from using social networking sites to communicate. The leaders of the early demonstrators, many of them young, used those sites to organize their protests, successfully evading Mr. Mubarak’s efficient security apparatus, which has for years co-opted opposition leaders it could and jailed those it could not.

There is also anger at the US:

“We are very disillusioned by President Obama’s speech,” said Muhammad Shafai, 35, a lawyer, who called for Mr. Obama to distance himself from Mr. Mubarak.

In his speech Friday night, Mr. Obama took on a stern tone, saying he had personally told Mr. Mubarak that he needed to listen to his people’s demands for a “better democracy.” But the United States has counted on Egypt for help in the region, whether supporting American moves in Iraq or trying to defuse tensions between the Palestinians and Israelis.

Will this end the same way as last year’s revolt in Iran?  We’ll have to wait and see…

Statistics:

half the population is under 25
GNI per capita $1800

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