Well, that didn’t disappoint. The daily swimmers in the balmy August waters of the Forty Foot were looking for investment inspiration this week and I was about to be on chair duty for a quarterly IMI panel discussion. The topic on this occasion for the panel experts, drawn from the highest levels of military and global cyber defence experience, was Securing Ireland: Leadership In An Age of Threat. To be honest, the expert insights at the IMI scared the hell out of me. The full-house audience were left in no doubt that Europe is engaged in a ‘hybrid war’ with the Russian Federation where sovereignty is under attack physically and digitally. The ‘physical’ reference might surprise but, if you think about electricity grids, airports and hospitals (in the case of the HSE ransomware attack), then you’d realise that global digital infrastructure is the new “Ardennes Forest” from where ‘Blitzkrieg’ cyber attacks can emerge and destroy the functionality of physical sovereign assets. The advent of AI has merely added to the complexity of trying to defend against bad actors who nowadays must be considered as state-aligned rather than opportunistic crime gangs. Just this week we were treated to the following headlines:
Cyber attack on UK airports hits 8 million passengers – The Telegraph
Third drone and suspected explosives found near Leipzig airport - The Guardian
Russia is escalating hybrid attacks and Europe has no answer – The Japan Times
Romania destroys sea drone, EU slams ‘escalating threats’ - RTE
The Estonian city that fears it’s next on Putin’s list – The Irish Times
CIA Chief’s Surprise Moscow Trip Was To Warn Russia Not To Attack NATO - Wall Street Journal
Ok, this doesn’t sound good. Particularly if the Director of the CIA, John Ratcliff, felt the need to fly secretly to Moscow this week in a C-17 military transport jet…… for a 15 minute meeting with Vladimir Putin. Maybe, I’m becoming a bit too jumpy. If you’re looking for more stable reasoning perhaps take comfort from the world’s most powerful person. The “greatest US President ever” in his own words (no, seriously) took time away from officially re-naming Canada’s Lake Ontario as “Lake America” to do a phone interview with Axios and reassure the free world: “I’m not worried Russia will attack NATO…. There are no problems”. Well, that’s alright then. Of course, Agent Orange might not be fully focused on his Kremlin buddy’s regional intentions. The global trade ‘genius’ has just launched a $900 billion North American trade war with Canada which risks the same lake being named “Lake Epstein” or “Lake Natalie”. One suspects US auto workers, farmers and house builders have more pressing worries…..Anyway, if one were looking for true leadership right now you’d be hoping leaders’ minds would be focused on four huge structural shifts in the global world order:
- Globalisation is in retreat.
- Assumptions re global technology connectivity are under strategic review for commercial defence reasons.
- Critical sovereign services like electrical grids and communications/digital networks will need to build resilience or back-up alternatives.
- Defence of sovereignty will require a re-think of historic political and technology alliances, and a pursuit of new alliances.
Perhaps this week also provided the most up-to-date case study of how all those structural shifts can overlap and prompt both shivers of fear and opportunity. The AI chip superstar and world’s most valuable company, Nvidia, has just announced the $12.9 billion acquisition of New York-based AI developer platform, Hugging Face. Interestingly, the company has three French founders and, if the name sounds familiar, that’s because it was at the centre of possibly the most seismic moment yet in AI risk.
The short version of events is that Hugging Face was the subject of a cyberattack by autonomous AI agents(bots) owned by OpenAI. The scary bit about this attack is that OpenAI had been keeping these models/agents in a secure isolated digital experimental area known as a ‘sandbox’. However, the OpenAI agents escaped or “jumped the sandbox”. Yes, like a virus escaping a test lab environment. Quickly, Hugging Face noticed their servers had been breached and attempted to mitigate damage by deploying American proprietary AI models to defend its assets. Wrong move.
The American models’ AI safety features rejected the Hugging Face team’s requests to confront the rogue agents. Eventually, the US company turned to a Chinese AI model, GLM-5-2, for help in containing the attack. Yes, a China rescue. So, in summary, we are more “connected” to new AI models than we think, a back-up plan is definitely required, and it might involve a technology alliance with a perceived adversary. Clearly, this incident has generated shock waves within the technology community. Again, this week saw two significant developments:
*Bill Gates, the perennial technology evangelist, has written a 5,784 word essay warning about the risks of AI increasing significantly citing cyberattacks and bioterrorism as his biggest concerns.
*Then, 100 technology companies published an open letter calling for collective action against AI-enabled cyberattacks. Specifically, they warn that cyberattacks are out-pacing defences.
So, how’s that de-globalisation thing going? It was striking in this week’s panel discussion how often collaboration, alliances, sovereignty and sustainability were referenced. Say what? Sustainability? Yup. As Europe recovers from its baking hot summer and we watch the appalling flood tragedy in Tibet and Nepal, it’s possible the biggest threat to humanity remains climate change. The irony of the Trumpian “anti-woke” assault on global institutions is that every country and economic bloc in the world is thinking about electricity grid resilience and constructing alternative energy sources. As Premier League football kicks off its season, it seems only appropriate to quasi-quote Eamon Dunphy…. “Renewables, are so back, baby!”. Then, think about your pension and the defence ‘plays’ you might have to include as a preparation for hybrid war. Here’s a few I’m thinking about right now…
**Quantum computing presents an existential threat to modern digital security with its encryption-busting capabilities. So, biometric IDs will become increasingly important with Europe actually providing real global leadership through France’s Thales and Spain’s Amadeus IT, as well as Japan’s NEC Corp.
**Electricity grids with increased AI demands will become critical for sovereign defence/resilience. Germany ships its fair share of strategic criticism these days, particularly with its auto industry perceived to be behind the curve on the global electric vehicle (EV) shift. Not so another Teutonic industrial heavyweight. Check out Siemens AG – its Grid Technologies division just reported a $60 billion order backlog. The Siemens AG share price has almost trebled since 2022, but its market value of €220 billion looks to be very well underpinned by an order book worth €132 billion.
**We write often about the threat to humanity from climate change, AI, pandemic etc. However, many countries are already facing a demographic disaster as birth rates plummet. A visit to Japan last year confirmed where things are going. Robotics will soon be critical to manufacturing and services companies looking to source reliable skillsets. Interestingly, the two watch-making pioneers Japan and Switzerland lead the way globally with their national champion robotics giants, FANUC and ABB respectively.
Clearly, robotics have a military use too. So, as a final thought closer to home, Ireland doesn't have the luxury of defence “neutrality”. We are connected to the global economy through climate, power, health, trade, digital connectivity and finance. It is abundantly clear that the threats we face require alliances and collaboration across technology, communications, healthcare, security and energy. That does not mean dependency. Indeed, sovereignty should mean taking responsibility for proactive preparation.
Hopefully, government will follow your pension defence strategies.
And finally.... a big thank you to Mark Mellett, Jacky Fox and "Whaler Capital" for inspiring this piece.