UNCLASSIFIED
Targeting U.S. Technologies

Near East

Case Study

OVERVIEW

In fiscal year 2010 (FY10) the number of reported cases traced to the Near East region more than doubled over the previous year. Yet as a percentage of all suspicious contact reports (SCRs), the Near East's share actually declined slightly, due to the even greater increase in reporting attributed to East Asia and the Pacific. Nonetheless, the Near East remained the second most active region in foreign attempts to obtain illegal or unauthorized access to sensitive or classified information and technology resident in the U.S. cleared industrial base.

As a region, the Near East is subject to a great deal of turmoil. Continuing problematic aspects include the Arab-Israeli conflict, a war in Iraq and the effects of another next door in Afghanistan, violent extremism, religious disputes over holy sites, unresolved border disputes, and populist uprisings in numerous Near Eastern countries in early 2011. The region contains aspiring states, regional powers, and world players in various categories of achievement. Some of the most active collectors in the region engage in active enmities with other countries in the region or nearby.

As both a cause and a result of this turmoil, the area has many illiberal if not authoritarian governments. Many of these states consider it imperative to maintain the utmost military capabilities they can acquire. While the various states within the region have different relationships with the United States, all seek to gain as much advantage from whatever access to U.S. sensitive or classified information and technology they can gain.

In FY10 the top Near East collector affiliation remained the commercial category, but the percentage declined significantly from FY09, while three other categories increased. The most common method of operation (MO), the request for information (RFI), decreased in percentage of attempts from last year, but still accounted for half of this year's total. Information systems (IS) remained the most sought after technology; however, the Near East spread its collection efforts over a wider range of technologies than previous years.

COLLECTOR AFFILIATIONS

There was interesting movement in the collector affiliation categories from last year. In FY10, only one source, government collectors, remained unchanged as a percentage, at 14 percent of collections. Last year's largest category, commercial, declined from 50 to 34 percent, while last year's smallest category, individual, more than tripled, from 5 to 18 percent of the total. For the remaining two categories, government affiliated increased considerably, while unknown decreased considerably.

The decrease in the unknown category's share suggests that both industry and the Defense Security Service (DSS) were more successful at discerning the identities of the collectors encountered. Of those identities, SCRs attributed to individuals and government-affiliated collectors increased more rapidly than those attributed to government, and significantly more so than commercial collectors.

Analyst Comment: The nature of many Near Eastern governments may explain why this region is an exception to the general trend toward increased reliance on commercial collectors. More authoritarian regimes tend to be less willing to delegate governmental functions to nongovernmental entities operating within their borders. (Confidence Level: Low)

The marked percentage decline in SCRs attributed to commercial entities was not
a result of fewer commercial affiliations; in fact, there was a 50 percent quantitative increase in commercial reports.

Because of the varied nature of the governments in the Near East, industry reporting indicated that some used more government-affiliated collectors than others. Such government-affiliated entities might consist of premier science and technology universities and research institutions or large government-affiliated companies.

Analyst Comment: Considering the past degree of reliance on this category of collectors, the degree of investment by countries in their government-affiliated infrastructure, and recent trends in industry reporting, DSS assesses that collection by government-affiliated entities will probably continue at an increased level in FY11. (Confidence Level: Moderate)

During FY10, DSS observed the most significant increase in reported collection attempts by individual collectors: the category's percentage of the total tripled from FY09. This category represented a relatively high percentage of the reported cases from states where the ruling government has a poor relationship with the United States.

Analyst Comment: This pattern almost certainly indicates government interest in obscuring collection attempts. DSS assesses it is very likely this trend will continue, with individuals concealing their affiliation in an effort to deceive U.S. companies. (Confidence Level: High)

In some cases the commercial affiliation, like the resort to individual collectors, can be attributed to an attempt by governments with poor relationships with the United States to minimize their signature in collection efforts. By using a collector entity distanced from the government, the request is likely to draw less attention.

Some governments within the region had no hope of gaining U.S. technologies for their militaries on a cooperative basis. In such cases, companies requested dual-use technology, claiming commercial applications as justification. A frequent augmentation to this tactic was to seek out third countries with relaxed export control laws and trade agreements to divert U.S. technology.

Analyst Comment: It is possible that some of the requests originating from commercial entities in the Near East contained falsified end-user information. If acquired, dual-use items may be diverted to military and/or government elements to support modernization efforts, or to third parties. (Confidence Level: Low)

Figure 8

METHODS OF OPERATION

It is necessary to follow the data regarding the MOs used by Near Eastern collectors through the categorization and labeling changes DSS made since last year's report.

Last year's direct requests decreased as a percentage from 69 percent to this year's 50 percent for requests for information (RFIs).

The 15 percent for FY09's solicitation and seeking employment category yielded a combined 27 percent for FY10's solicitation and marketing, seeking employment, and academic solicitation. Academic solicitation was especially significant, as that single category in FY10 experienced two times the number of cases as the entire combined category last year.

Last year's 14 percent for foreign visits and targeting declined slightly to 9 percent for the three new categories (foreign travel and targeting; official foreign visits and targeting; and conferences, conventions, and trade shows) combined.

This region yielded no SCRs on suspicious internet activity or exploitation of relationships in FY09, but in FY10 suspicious network activity (SNA) and exploitation of relationships accounted for 3 and 8 percent of total SCRs.

The overall significance of this data is that half of the region's reported collection attempts were made using RFIs. In addition, direct approaches made during short-term exposures (e.g., targeting cleared contractor employees during some kind of travel) still represent a significant part of the effort. However, reporting also increased in MOs that require more patience, such as academic solicitation and seeking employment. In such cases, entities are prepared to invest significant time and effort to develop a long-term relationship so as to achieve placement and access that may yield opportunities to obtain illegal or unauthorized access to sensitive or classified information and technology.

As noted, industry reporting showed that overt requests for information (RFIs) remained the predominant MO in FY10. The use of email, telephonic, or in-person solicitation remains consistent as the principal collection techniques.

Analyst Comment: It is likely that Near Eastern entities attempting to procure sensitive U.S. technology and information use RFI as the primary method because such solicitations are less intrusive and can appear innocuous or legitimate in nature. (Confidence Level: Moderate)

As noted, the use of academic solicitations continued to rise. Industry reports showed that student requests varied, but were typically for post-graduate positions, research assistantships, thesis assistance, and review of scientific publications, or requests for dual-use technology for use in research.

Analyst Comment: In keeping with the Near East's typically close relationship between government and commercial entities, many universities and corporations conduct research and development (R&D) for government and military projects. It is likely that most, if not all, of the technology and information they generate, including via academic solicitation, can support government and military R&D projects in some way. (Confidence Level: Moderate)

Especially notable during FY10, several Near Eastern nationals—some located in their own countries, some in the United States—sought employment with cleared contractors to become directly involved in the most commonly sought after U.S. defense technologies.

As measured by SCRs, Near Eastern entities used SNA in only three percent of collection attempts in FY10, either because their infrastructure and capabilities in this area were rudimentary or because other MOs seemed to promise higher returns.

Analyst Comment: DSS continues to receive SCRs on attempted collections of telecommunication technology and information technology software, indicating an active Near Eastern desire to acquire the technology necessary to increase the capability to conduct SNA. The U.S. cleared industrial base will probably experience increased SNA as the relevant communications networks improve. (Confidence Level: Moderate)

For those countries within the Near East maintaining closer relationships with the United States, including those with technical assistance agreements (TAAs) between a company of that foreign country and U.S. cleared contractors, the targeting of U.S. personnel by foreign defense company personnel increased significantly. According to FY10 SCRs, the visitors casually but persistently asked for sensitive information outside the scope of the TAA throughout the U.S. visits.

Targeting U.S. travelers overseas emerged as a common MO for the Near East in FY10. Tactics included randomly selecting employees for invasive questioning at airport security checkpoints, during which time the employees' company-issued laptops and electronic devices were confiscated and reportedly exploited. In addition, some cleared employees experienced unauthorized hotel room entries and suspicious check-in procedures.

Analyst Comment: It is unlikely that airport security personnel had reason to select the cleared employees for additional screening. Instead, the airport and hotel security officers in question were probably associated with the national and/or military counterintelligence services responsible for counterintelligence, airport, and/or defense industry security. (Confidence Level: Moderate)

Figure 9

TARGETED TECHNOLOGIES

While SCRs concerning collection attempts aimed at the most commonly targeted technologies all approximately doubled, the relative relationships between those technology categories remained fairly consistent.

IS; aeronautics systems; and lasers, optics, and sensors (LO&S) technologies remained the Near East's most sought after, yet their respective percentages of the total all declined. Industry reporting indicates that the Near East spread its collection efforts more broadly in FY10.

IS remained the perennial favorite technology, but the interconnections with aeronautics systems, LO&S, and space systems technology were significant, with some resultant shifting of precedence between those categories. Several countries within the region are aspiring space powers, seeking to operate their own rockets and launch their own satellites. There is often a relationship between a country's civilian space program and its ballistic missile program. Technologies used in space launch vehicles (SLVs) and civilian space programs can be modified to support ballistic missile programs. Historically, countries have developed SLV and ballistic missile programs concurrently because of the similarities in the technology. Given the geopolitical situation within the Near East, this often gives rise to a concomitant interest in and attempts to develop missile defense and countermeasure systems. Such indigenous space and rocket programs continue to advance, with several communications and remote sensing satellites currently in development.

Nonetheless, these rising programs are generally still reliant on technology legally and illegally procured from international entities, foreign governments, and commercial producers. In addition to the many students requesting to study space-related programs, Near Eastern collectors targeted technology that could support a space program, such as remote sensing and geospatial information systems.

As an example, in FY10 Near Eastern collectors continued to seek fiber optic gyroscopes (FOGs), likely for use in ballistic missile programs. Targets included not only FOGs themselves but related technology, including restricted U.S. high-resolution commercial imagery, high-resolution imagery satellites, and downlink stations. Some attempts to illicitly acquire protected technology used third-party intermediaries in the United States and other countries.

A related phenomenon affecting IS collection efforts was the focus on modeling and simulation software. Several cleared contractors received requests for export-controlled missile modeling and simulation software programs commonly used in the design and analysis of missile aerodynamics and performance. Industry also reported numerous requests for modeling and simulation software capable of predicting realistic three-dimensional radar signatures.

Analyst Comment: DSS assesses that such requests for various missile modeling and simulation software programs likely mean that some states within the region are developing their missile programs and improving their missile defense capabilities through the acquisition of sensor and radar technologies. (Confidence Level: Moderate)

Within the LO&S category, Near Eastern collectors requested software programs with applications in space-based imaging systems and missile guidance systems. Some commercial companies from the region requested technology associated with unmanned aerial systems (UAS) or proposed joint ventures to develop a UAS. In yet another case the use of a possible front company with links to the Near East revealed regional interest in acquiring a UAS sensor data link which provides in-flight communications to and from UAS. Other disparate phenomena, such as Near Eastern students seeking to study mechanical and aerospace engineering, could also be related to interest in U.S. UAS design activities going on at cleared contractor facilities conducting R&D for the Department of Defense.

Development and deployment of missile defense and countermeasure systems requires access to specific sub-technologies. While some within the Near East have or are attempting to develop their own systems, they continue to make acquisition of U.S. technology a priority. In FY10 these included radar; sensor-to-shooter command, control, communications, computers, intelligence, surveillance, and reconnaissance technology; and cellular monitoring technology within the IS category.

Table 2

ANALYTICAL FORECAST

Most countries within the Near East are far from achieving long-term self-sufficiency in technology development. When indigenous technologies or systems fail to perform effectively, acquisition of the corresponding U.S. technology is very likely to remain a collection goal and even increase in priority. For the foreseeable future, countries within the region will almost certainly remain dependent on foreign acquisition to support their various military industrial base and defense strategies. (Confidence Level: High)

Countries within the Near East that have established and seek to sustain a degree of global economic advantage and effective security measures will likely continue to attempt to acquire U.S. technology and information through both legitimate and illicit means. It is likely that regional collection tactics will evolve, favoring innovative methods that appear legitimate. (Confidence Level: Moderate)

The prevalence of individual and unknown collector affiliations in SCRs will probably persist. As Near Eastern collectors continue to provide little or no identifying information, increasingly seeking to mask their true affiliations, RFIs will probably become more difficult to attribute. (Confidence Level: Moderate)

Some Near East collectors will likely continue to rely on third-party intermediaries, front companies, and procurement agents in pursuit of U.S. technologies. In many cases the end use and end users can be obscured easily, making it difficult to trace collector affiliation. (Confidence Level: High)

The Near East's exploitation of academic solicitation, including using students, professors, scientists, and researchers as collectors, will probably continue. Placing academics at U.S. research institutions under the guise of legitimate research offers access to developing U.S. technologies and cutting-edge research. The likely result will be better educated scientists and engineers able to provide the necessary intellectual infrastructure to indigenously create defense technologies to fulfill future military requirements. (Confidence Level: Moderate)

Where U.S. cleared contractors have defense contracts with Near Eastern companies, it is likely that the participation of foreign government personnel in visiting delegations will increase. The exploitation efforts (e.g., persistent questioning outside the scope of the agreement and unwittingly bringing in cameras/laptops/thumb drives) may continue to be interpreted as innocuous and legitimate, but DSS assesses that it is likely that these efforts will remain a preferred tactic to circumvent U.S. export control laws. (Confidence Level: Moderate)

The top targeted technologies will likely remain consistent as aspiring powers in the Near East continue force modernization efforts. It is likely that aeronautics and space systems technologies will continue to be a major focus as indigenous UAS, space, and ballistic missile programs continue to develop. (Confidence Level: Moderate)

An exception to this probable consistency is that, based on trends in the autonomous underwater vehicle (AUV) industry, DSS assesses that it is likely that worldwide demand for AUVs will increase dramatically over the coming years, especially as more military and commercial capabilities are developed. As the technology advances, some may successfully acquire AUVs through legitimate means, but DSS assesses that it is likely that foreign collectors will increase their targeting of U.S. cleared contractors working on AUVs or related systems over the next several years. Any technologies or information acquired will probably help foreign governments develop their indigenous AUVs, assist foreign navies in countering U.S. AUVs, and potentially threaten U.S. undersea battlespace dominance. (Confidence Level: Moderate)

Reporting from industry confirms that some of the collectors most active in targeting U.S. AUVs and related technologies are from the Near East. DSS assesses that government-affiliated, commercial, and individual entities from the region are likely in the immediate future to attempt to collect AUV technology and information. They are likely to use a variety of MOs, largely reliant on RFI followed by SNA. (Confidence Level: Moderate)

Given the unstable security situation in the Near East and the adjacent South and Central Asia region, countries within the Near East will very likely remain interested in UAS technology due to its value for intelligence collection and indications and warning. This means the more advanced U.S. UAS technology will almost certainly remain a collection priority for the near term. (Confidence Level: High)

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UNCLASSIFIED