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Who’s Winning—and Losing—the World’s Spy Race

The world’s leading spy agencies have been forced to reckon with the consequences of two major wars on different continents, raging simultaneously.

With Gaza descending into a hellscape of death and destruction under Israeli bombardment in recent weeks, and Europe’s largest ground war since World War II ongoing in Ukraine—intelligence agencies around the globe are reacting to the turmoil and shifting priorities of the moment.

In the Middle East, Israel’s world-renowned intelligence agencies have been lambasted for failing to foil Hamas’ planned attacks on Oct. 7, in which 1,200 people were killed and 200 others were taken hostage. In Russia, espionage operations abroad have suffered greatly following a tidal wave of expulsions by leaders of Western countries targeting Kremlin diplomats and suspected spies. China’s intelligence apparatus, meanwhile, appears to be expanding—likely to the detriment of the U.S., a longstanding target of Beijing’s espionage operations.

In The Art of War, legendary Chinese military strategist Sun Tzu wrote that “All war is based on deception,” and compared spies to water: “On them, depends an army’s ability to move.”

The question now is: Who’s swimming—and who’s sinking?

Israel

The Israeli Defense Forces have admitted the government will eventually have to explain itself for the Oct. 7 attacks. “First, we fight, then we investigate,” Rear Adm. Daniel Hagari, the chief military spokesperson, said this month. Israeli Prime Minister Benjamin Netanyahu has also promised to deliver answers about how Israel missed the Hamas attack—some day.

Right now, the Israeli intelligence apparatus is enormously taxed by efforts to track down hostages, collect intelligence, and hunt down Hamas in Gaza’s network of tunnels, said Norm Roule, the former national intelligence manager for Iran at the Office of the Director of National Intelligence.

“The demands placed on Israel’s intelligence service at present must be extraordinary. Imagine a system that is tasked with exploiting multi-INT collection and analysis, prisoner interrogations, laptops, documents, and battlefield reports all at a speed required to operationalize that information for an ongoing conflict,” Roule told The Daily Beast.

Some of the Israeli intelligence services’ failings may have come from its own poor judgment calls. Israel’s Unit 8200, the country’s signals intelligence agency, stopped monitoring Hamas’ handheld radios due to the sheer volume of information and lack of intelligence value they offered, according to The New York Times.

“It is clear that a review of Israeli intelligence coverage of Gaza will need to be undertaken,” Roule said.

Israeli intelligence agencies ought to undertake an analysis of what went wrong, but it needs to take place after the current blitz of conflict is over or at least died down, said Emily Harding, a former CIA analyst and former director for Iran on the National Security Council.

“Was the collection missing some part of the picture? Were the American analysts who were looking at the information, were the Israeli analysts who were looking at the information, not effectively questioning each other’s assumptions?” Harding said. “We’re not going to answer that for probably six months or more. But I suspect that in the final picture, there’s going to be some quite worrying things.”

Secretary of Defense Lloyd J. Austin III meets with Israeli Prime Minister Benjamin Netanyahu.

Secretary of Defense Lloyd J. Austin III meets with Israeli Prime Minister Benjamin Netanyahu in Tel Aviv, Israel, Oct. 13, 2023.

Chad J. McNeeley/Department of Defense

In the meantime, intelligence communities need to question their counterparts’ assumptions in the absence of a more detailed deep-dive into intelligence failures. Although the United States-Israel intelligence relationship is solid, Israeli officials may not respond very well to the grilling.

“I’m sure the Israelis are not thrilled to be [be dealing with] lots of questions asked of their folks,” Harding said. “It’s going to be one of those moments where a certain degree of trust is lost, and you have to rebuild that by asking a lot of pointed questions in a time when nobody has time for pointed questions so I’m sure it’s a bit tense.”

Despite the Oct. 7 failures, Israel’s performance taking out Hamas indicates it is still near the top of its game, said Roule.

“The failure of Israel to detect the Oct. 7 attacks should not diminish the strong and well-deserved reputations of Israel’s intelligence services. The efficiency associated with Israel’s ability to identify, locate, and eliminate Hamas leaders implies impressive intelligence targeting and the results of these operations are no doubt being watched with concern by Lebanese Hezbollah,” Roule said.

An armed man aims his rifle during the Oct. 7th attack by Hamas in Kibbutz Alumim, Israel.

An armed man aims his rifle during the Oct. 7th attack by Hamas, in this screen grab from footage captured by a surveillance camera in Kibbutz Alumim, Israel, released on Nov. 20, 2023.

South First Responders/Handout via Reuters

“Israel’s intelligence challenge is also changing. As the Israel Defense Forces eliminate Hamas leaders and identify tunnels, more resources should become available for hostage recovery.”

On the other side, Hamas may continue to receive intelligence help from Iran, said Harding.

The Biden administration has said that there’s no clear evidence that Iran approved Hamas’ October 7 attack, although reports have circulated that Iranian security officials helped plan the attack. There are some suggestions that Iran was entirely clued into the plan: “The evidence in my mind seems to point to Iran and Hezbollah being somewhat surprised by what happened on Oct. 7, especially the scope of it,” Harding said.

But there’s a non-zero chance that Iran played a heavy hand in Hamas’ preparation for the attack, particularly given the level of planning and resources it took to set up.

“Looking at the weaponry that Hamas had, there had to have been a bunch of shipments into Gaza In the months beforehand. The extensive planning that they did… They didn’t do that on their own,” Harding said. “That I look at and I bet Iran and Hezbollah helped them with a lot of background information, and intelligence analysis that went into it and the planning.”

The United States

While Israel needs to reassess its intelligence operations in the region, the attack last month was also an American failure.

“It is extraordinary that the death of several dozen Americans at the hands of a U.S.-designated terrorist group has not warranted a statement by senior U.S. officials to the American people in which they take responsibility for failing to prevent these deaths,” Roule told The Daily Beast. “The lack of such a statement says much about how current policy makers view their responsibilities for national security and how we choose to respond to terrorism. Adversaries will note this silence.”

The United States intelligence apparatus has likely whirred into high gear behind the scenes, helping both Israel and analyzing what went wrong in the buildup to Oct. 7, said Roule.

Allies, including the United States, are likely offering Israel help processing data from Gaza and may also be able to jump in to handle issues Israel must address, but which may not be at the absolute top of the heap, said Roule.

“It would also be useful for Israel’s partners to help out on lower-priority issues that would free Israeli expertise to focus on accelerating the recovery of hostages, sharpening military targeting to limit Palestinian civilian casualties, and bring about an end to this conflict,” Roule said.

Additionally, the U.S. intelligence community is currently working to help Israel understand what the regional reactions are to the Israel-Hamas war, Scott Berrier, the director of the U.S. Defense Intelligence Agency, said at a CSIS event early this month.

But while the United States is surging support, it must also undergo a vast analysis of what went wrong in the buildup to October 7.

“Given the lack of attention paid to these threats, building an effective enterprise will likely take more time than many expect,” Roule said, warning that American intelligence priorities still have China and Russia extremely high on the list as well. “As we tackle this challenge, we need to remind ourselves that the Russian and Chinese threats have not diminished.

Russia

Russian military intelligence appears to be in disarray, according to leaked documents and U.S. intelligence.

That’s in part because Western countries have expelled over 600 Russian diplomats since Vladimir Putin’s war in Ukraine began, according to TASS, chipping away at Russia’s ability to conduct operations abroad.

In addition to that, the officers who have been expelled are expressing some major dissent toward the Russian government and how it has handled their resettlement in Russia in the meantime.

A number of expelled GRU officers signed a dissent letter early this month and sent it to the Kremlin to express displeasure and disappointment in Moscow for failing to properly help families who were expelled from European countries in the wake of invading Ukraine, according to The Insider.

They complain about the lack of jobs for them and their wives, for instance, and lament the lack of spaces in schools for their children.

Russian President Vladimir Putin chairs a meeting with members of the Security Council.

Russian President Vladimir Putin chairs a meeting with members of the Security Council via video link at the Novo-Ogaryovo state residence outside Moscow, Russia on Nov. 16, 2023.

Sputnik/Gavriil Grigorov/Kremlin via Reuters

“For many of the officers’ families, the unexpected departure from diplomatic missions became a personal tragedy and gave rise to numerous problems,” one portion of the letter, dated Nov. 5, states. “We are told to be patient, and that everything will be resolved in the near future. Many wives, almost all of whom have higher education, have taken up employment on their own, but there are simply no decent jobs or salaries available.”

The signatories also express their anger at the press and the way journalists have been portraying Russian military intelligence during the war.

“Media outlets have published articles that accuse the officers of the Main Directorate of the General Staff of the Russian Federation of incompetence and inaction, sometimes even gross unprofessionalism,” the letter says, claiming that press outlets “fail to adequately portray the heroic deeds of their fallen comrades from the GRU assault brigades in Ukraine.”

The Insider redacted the names of the purported signatories, but when it got in touch with them, they reportedly claimed they had not sent the letter.

The Russian GRU took another blow this month when Ukraine’s SBU unearthed a Russian agent plotting strikes in Kharkiv. The SBU arrested the suspected GRU officer, who was reportedly responsible for tracking Ukrainian Armed Forces movements, documenting missile strikes on a defense entity in Kharkiv, and providing targeting information to Russia.

The suspect is now in custody and faces life imprisonment, the SBU said.

Scott Berrier, the director of the U.S. Defense Intelligence Agency (DIA), said last month the Russian’s methodology on targeting Ukrainian critical infrastructure was impressive, warning that the winter months ahead Ukrainian armed forces can likely expect similar threats from Russia.

“Their methodology on that, I have to give them a nod on that. Accuracy? Maybe not so much,” Berrier said. “I think they’re probably thinking about that again… they probably will be doing that again.”

But Russian intelligence agencies’ ability to understand and analyze the battlefield is not a Russian strong suit, the DIA Director added.

“Intelligence preparation of the battle space and their intelligence agencies: They didn’t do so well. In fact, I think I would give them an F,” Berrier said, adding that he thinks Russia will “probably” not achieve its strategic objectives in Ukraine.

China

While Russia flounders, China’s intelligence apparatus is as formidable as ever. So much so that the Five Eyes intelligence leaders—an alliance between the United States, Canada, the U.K., New Zealand, and Australia—gathered last month to warn about China’s increasingly aggressive and capable economic espionage.

“The People’s Republic of China represents the defining threat of this generation in this era,” FBI Director Chris Wray said in an interview with CBS. “There is no country that presents a broader, more comprehensive threat to our ideas, our—our innovation, our economic security, and ultimately our national security. We have seen efforts by the Chinese government, directly or indirectly, trying to steal intellectual property, trade secrets, personal data—all across the country.”

President Joe Biden meets with Chinese President Xi Jinping at Filoli estate.

President Joe Biden meets with Chinese President Xi Jinping at Filoli estate on the sidelines of the APEC summit, in Woodside, California, on Nov. 15, 2023.

Kevin Lamarque/Reuters

There are currently over 2,000 active investigations related to Beijing’s efforts to steal information alone, Wray said. Chinese intelligence operatives continue to target individuals working at large and small companies alike in order to conduct intelligence gathering, said Ken McCallum, the director general of MI5.

China’s cyber capabilities are emerging as the “biggest hacking program in the world,” Wray added, noting China’s efforts to repress, science, stalk, and harass dissidents living abroad, and other efforts to purchase land near U.S. military sites.

“We welcome business with China, visitors from China, academic exchange,” Wray said. “What we don’t welcome is cheating, theft, and repression.”

Some cracks have emerged this year in Beijing’s espionage operations, however. When China’s spy balloon floated across the United States earlier this year, Chinese President Xi Jinping was caught off-guard, according to a report from the New York Times.

While Xi has become more brazen with his country’s espionage operations targeting the United States, this one had derailed conversations with Blinken and diplomacy with the United States writ large.

In June, Biden took a jab at Xi’s apparent lack of control over his intelligence services.

“The reason why Xi Jinping got very upset in terms of when I shot that balloon down with two boxcars full of spy equipment in it is he didn’t know it was there,” Biden said at the time, in an apparent effort to embarrass Xi. “No, I’m serious. That’s what’s a great embarrassment for dictators, when they don’t know what happened.”

Earlier this month, Biden met with Xi—a breakthrough in a relationship that has been at odds for months.

Nonetheless, the intelligence threats from China—and around the world—remain. Asked if the Five Eyes partnership is stretched too thin across all of the major conflicts ongoing, Andrew Hampton, the head of New Zealand’s Security Intelligence Service, said the partnership and sharing resources are still helpful.

“I think one of the strengths of the Five Eyes partnership is that we share some really fundamental values as countries and as agencies,” Hampton said.



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