Manipulated Social Media And The Stock Market

Earlier this year, Elon Musk tweeted that the Tesla stock price is too high. His twitter account had a reach of 33.4 million followers (41 million as of this writing). The immediate impact on Tesla’s stock price was a midday trading deficit of 9% compared to the closing stock price of the previous day. Tesla’s company valuation suffered an estimated loss of $14 billion. The episode triggered concerns over a potential violation of his 2018 settlement with the Securities and Exchange Commission after misleading tweets implying to have raised sufficient capital to take Tesla private. Presumably this time it was in response to California’s restrictive shelter-in-place lockdown measures to tackle the coronavirus pandemic. Maybe Elon Musk felt the weight of his responsibilities weigh twice as much during these challenging times. In any case, as an investor, his actions made me think of the power of social media at the hands of a social media influencer (i.e. stock promoter). Moreover, it made me think about content policies tailored to protect economic value while safeguarding information integrity. This empirical study conducted by researchers of the Pantheon-Sorbonne University discusses effects of illegal price manipulation by way of information operations on social media, specifically Twitter.

tl;dr

Social media can help investors gather and share information about stock markets. However, it also presents opportunities for fraudsters to spread false or misleading statements in the marketplace. Analyzing millions of messages sent on the social media platform Twitter about small capitalization firms, we find that an abnormally high number of messages on social media is associated with a large price increase on the event day and followed by a sharp price reversal over the next trading week. Examining users’ characteristics, and controlling for lagged abnormal returns, press releases, tweets sentiment and firms’ characteristics, we find that the price reversal pattern is stronger when the events are generated by the tweeting activity of stock promoters or by the tweeting activity of accounts dedicated to tracking pump-and-dump schemes. Overall, our findings are consistent with the patterns of a pump-and-dump scheme, where fraudsters/promoters use social media to temporarily inflate the price of small capitalization stocks.

Make sure to read the full paper titled Market Manipulation and Suspicious Stock Recommendations on Social Media by Thomas Renault at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3010850

Credit: Lucas Jackson/Reuters

Social media platforms are an accepted corporate communication channel nowadays closely monitored by investors and financial analysts. As an investor, social media offers swarm intelligence on trading the company’s stock, access to real-time information about the company, product updates and other financially relevant information. Large and small-cap companies usually maintain a presence on social media. Although in particular small-cap companies with low liquidity are vulnerable to stock price manipulations by way of information operations on social media. According to researchers of the Pantheon-Sorbonne University an information-based manipulation involves rumors, misleading or false press releases, stock analysis or price targets, etc. that is disseminated in a short, time-sensitive period. Nearly 50% of this disinformation is spread by an influencer. The investment terminology calls this pump-and-dump scheme: 

“Pump-and-dump schemes involve touting a company’s stock through false or misleading statements in the marketplace in order to artificially inflate (pump) the price of a stock. Once fraudsters stop hyping the stock and sell their shares (dump), the price typically falls.”

The empirical study collected tweets containing the cashtag ticker symbol of more than 5000 small-cap companies. Over an eleven-month period 248,748 distinct Twitter users posted 7,196,307 financially relevant tweets. They adjusted the data for overoptimistic noise traders and financially relevant news reporting. They found a spike in volume of tweets concerning a company’s stock on social media correlates with a spike in trading of the company’s stock from two days before peak activity on social media up to five days after it. Some content concerned positive financial signals advocating to buy the stock. Other content concerned disinformation about the company’s performance. It was spread to a large, unsophisticated Twitter audience by influencer in concert with a network of inauthentic accounts and bots. This was then followed by a price reversal over the ensuing trading days. In the aftermath, the actors part of the scheme went into hibernation or ceased social media activity altogether.

Risk And Opportunity For Social Media Platforms

Information operations to manipulate stock price are quite common on social media. Albeit hard to detect only few are investigated and successfully prosecuted. Consumers exposed to stock disinformation that fell victim tend to exit the stock market altogether. Moreover a consumer might reduce their footprint on social media after experiencing real-world financial harm. Depending on the severity of the loss incurred, this might even lead to litigation against social media platforms. The tools leveraged by bad actors undermine the integrity efforts of social media platforms, which in some cases or in conjunction with class-action litigation can lead to greater scrutiny by financial watchdogs pushing for tighter regulations.

To tackle these risks social media platforms must continue to expand enforcement of inauthentic coordinated behavior to eliminate botnetworks used to spread stock disinformation. Developing an account verification system that is dedicated to financial professionals, analysts and influencers will support and ease enforcement. Social media platforms should also ease onboarding of publicly traded companies to maintain a presence on social media. This decreases the effects of collateral price reversals. In order to mitigate stock disinformation social media platforms must develop content policies tailored to balance freedom of expression including price speculation with the inherent risk of market-making comments. The latter will hinge on reach and engagement metrics but also on detailed definitions of financial advice and time and location of the content. Here, a close working-relationship with watchdogs will improve operations. Added friction, for example an interstitial outlining the regulatory requirements before posting or a delayed time of posting or certain labels informing the consumer of the financial risks associated with acting on the information in the posting. There are obviously more measures that come to mind. This only serves as a start of a conversation.

So, was Elon Musk’s tweet “Tesla stock price too high imo” an information-based market manipulation, a market-making comment or just an exercise of his free speech? 

 

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Understanding America

When I first arrived in New York City, this most portrayed American city appeared intimidating with its never-ending concrete jungles, incessant traffic and an overwhelmingly fast-paced populace. It made me wonder, is this the land of the free? Is this what America is like? Fast-forward a couple decades when the United States finds itself polarized, divided and void of compassion, insecure about its future. In times like these, I was looking for its identity. An identity forged by openness not oppression. A dear family member recommended reading Travels with Charley in search of America by John Steinbeck. It would become a starting point of how we got here.    

Steinbeck’s travelogue is comprised of simple ingredients: a man and his best friend, a three-quarter-ton pick up truck, and the wide and open roads of America. His best friend, a poodle named Charley is a main character in this non-fiction novel. His pick up truck Rocinante loads a little camper designed for housing. The duo is road tripping across rural America, sleeping wherever Rocinante finds a parking spot and a theme of this philosophical journey is to engage strangers in conversation over a cup of coffee. While this adventure takes place  in the America of the 1960s, it is somehow a timeless reflection of America’s soul. In somber passages, Steinbeck describes the struggle of Black Americans for equality. In more uplifting parts, he paints an American identity imbued in the spirit of tall, green Sequoias, who have seen all of history’s main events – free of discrimination. It’s a book about America, the beautiful, the ugly and the never-finished. Much as Steinbeck didn’t know his country in the 1960s, I don’t know my country in the 2020s: 

“I did not know my own country. I, an American writer, writing about America, was working from memory, and the memory is at best a faulty, warpy reservoir. I had not heard the speech of America, smelled the grass and trees and sewage, seen its hills and water, its color and quality of light. I knew the changes only from books and newspapers. But more than this, I had not felt the country for twenty-five years. In short, I was writing of something I did not know about”

Nevertheless, acknowledging a lack of knowledge is the first step in learning. “Travels with Charley in search of America” is an important piece of American literature. Its authentic historical account, its poetic beauty and the felt tragedy that is this great American democracy live on in our generation. What will we learn from it? 

The Nuclear Option in Cyberspace

Stuxnet was a malicious computer worm that caused substantial damage to Iran’s nuclear program. It was likely deployed to prevent a conventional military strike against Iran’s nuclear facilities. The 2015 cyber attacks on Ukranian critical infrastructure caused loss of energy for hundreds of thousands citizens of Ukraine in December. It was likely staged to test cyber operations for the upcoming 2016 U.S. presidential election. Both cases offer interesting takeaways: (a) offensive cyber operations often empower rather than deter an adversary and (b) offensive cyber operations resulting in a devastating cyber attack to the integrity of the target may be responded via conventional military means. But where exactly is the threshold for escalating a cyber attack into conventional domains? How can policymakers rethink escalation guidelines without compromising international relations? This paper discusses achieving strategic stability in cyberspace by way of transferring the concept of a nuclear no-first-use policy into the current U.S. cyber strategy.  

tl;dr

U.S. cyber strategy has a hypocrisy problem: it expects its cyberattacks to deter others (defend forward) without triggering escalatory responses outside cyberspace, while it is unclear about what it considers off-limits. A strategic cyber no-first-use declaration, like the one outlined in this article, could help solve risks of inadvertent instability while allowing cyber-​operations to continue.

Make sure to read the full paper titled A Strategic Cyber No-First-Use Policy? Addressing the U.S. Cyber Strategy Problem by Jacquelyn Schneider at https://www.tandfonline.com/doi/full/10.1080/0163660X.2020.1770970

Credit: J.M. Eddins Jr./Air Force

In 2018 the Trump administration adopted its progressive National Cyber Strategy. These sort of policy declarations are commonly filled with agreeable generalities, albeit this National Cyber Strategy read in conjunction with the 2018 Department of Defense Cyber Strategy introduced a new, rather reckless cyber posture of forward attack in cyberspace as a means of a preemptive cyber defense. Key themes, e.g. 

  • Using cyberspace to amplify military lethality and effectiveness;  
  • Defending forward, confronting threats before they reach U.S. networks;  
  • Proactively engaging in the day-to-day great power competition in cyberspace;  
  • Actively contesting the exfiltration of sensitive DoD information; 

raise important questions of national security. Why does an industrial superpower like the United States feel a need to start a cyber conflict when it could redirect resources toward building effective cyber defense systems? How many cyber attacks against critical U.S. infrastructure are successful that it would justify a forward leaning cyber defense? What is the long-term impact of charging the military with cyber strategy when the private sector in Silicon Valley is in a much better position to create built-in-cybersecurity and why aren’t resources invested back into the economy to spur cyber innovation? Each of these questions is material for future dissertations. Until then, instead of a defend forward strategy in cyberspace, a cyber policy of no-first-use might complement securing critical infrastructure while ensuring allies that the U.S. cyber capabilities are unmatched in the world and merciless if tested. 

No-first-use is a concept originating in the world of nuclear warfare. In essence, it means 

“a state declares that although it has nuclear weapons, and will continue to develop and rely on these weapons to deter nuclear strikes, it will not use nuclear weapons first.”

Instead conventional (non-nuclear) warfare will be utilized to respond to attacks on its sovereignty. These policies are not treaties with legal ramifications if violated. They’re neither agreements to ban production of certain weapon systems nor intended as arms control measures. In fact, no-first-use policies often take shape in form of a public commitment signaling restraint to friends and foes. They are made for strategic stability in a given domain. 

No-First-Use Cyber Policy 

Taking the no-first-use concept to cyberspace may be a national security strategy at low cost and high impact. Cyberspace is by its configuration transient, hard to control, low cost of entry and actor-independent. For example, a web crawler is at times a spiderbot indexing websites for search engines to produce better search results. At another time the same web crawler is configured to recon adversary cyber infrastructure and collect intelligence. Yet another time, the tool may carry a malicious payload while scraping website data. This level of ambiguity introduces a wealth of cyber policy hurdles to overcome when drafting a no-first-use cyber policy. Schneider recommends starting with distinguishing the elements of cyber operations in its strategic context. As mentioned before some actions in cyberspace are permissible, even expected, other actions using the same technology, are not. Now, there is no precedence for a cyber operation to be so effective at scale that it would compromise its target (state) altogether. For example, no known cyber operation has ever irreparably corrupted the energy infrastructure of a state, destroyed social security and health data of its citizens and redirected all government funds, bonds and securities without a trace or leaving the state in a position unable to respond within conventional warfare domains. This means the escalation risk from a cyber operation against critical infrastructure is lower in cyberspace compared to an attack with conventional weaponry. Therefore a successful no-first-use cyber policy must focus on the cyber operation that produces the most violent results and is effectively disrupting a conventional defense (by disrupting critical infrastructure). 

Another consideration for an effective no-first-use cyber policy is the rationale of continued development of cyber capabilities. A no-first-use cyber policy does not preclude its parties from actively testing adversaries’ cyber vulnerabilities; it only bars them from exploiting such weaknesses unless the adversary strikes first. 

A strong argument against adopting a no-first-use cyber policy is diplomatic appearances. First, it might signal a weakness on part of U.S. cyber capabilities or indicate to allies that the U.S. will not commit to protecting them if under attack. Second, it may also result in hypocrisy if the U.S. launches a first strike in cyberspace after political changes but is still bound to a no-first-use policy. For Schneider a successful no-first-use cyber policy 

“credibly convinces other states that the U.S. will restrain itself in cyberspace while it simultaneously conducts counter-cyber operations on a day-to-day basis.”

She also recommends strategic incentives through positive means: information sharing, foreign aid or exchange of cyber capabilities. The end goal then ought to be strategic deterrence through commitments in cyberspace to restraint high-severity cyber attacks.  

I found the idea of a no-first-use cyber policy captivating, albeit inconceivable to be implemented at scale in cyberspace. First, even though cyber operations with the potential to blackout a state are currently reserved for professional militaries or organized cyber operators in service of a state-actor, I don’t believe that a lone non-state actor is not capable of producing malicious code with equal destructive powers. Second, I see attribution still as a roadblock despite improving cyber forensics. Any democracy would see the hypocrisy of mistakenly engaging a non-state actor or the risk of misidentifying a state-actor as perpetrator. Moreover, the current state of attribution research in cyberspace is considering humans with certain intent as foundation when future cyber conflict may be initiated by a rogue or faulty autonomous weapon system under substantial control of an artificial intelligence. Third, any policy without legal or economic ramifications isn’t worth considering. An effective deterrence is hard to achieve without “skin in the game”. Perhaps an alternative to a no-first-use cyber policy would be a first-invest-into-cyber defense policy. Emulate the Paris Climate Accord for cyberspace by creating a normative environment that obligates states to achieve and maintain a minimum of cybersecurity by investing into cyber defense. This way constant innovation within the private sector reduces vulnerabilities, which will lead to a self-sustaining deterrence.   

Ballistic Books: Space Exploration

Elon Musk’s SpaceX has redefined space exploration. Jeff Bezos Blue Origin is in a close second of a Billionaire Space Race. These efforts to elevate humanity made me wonder about our place as humans in this universe but perhaps more importantly where we will venture in the future. Now, I have no solid knowledge of physics, math or science fiction. Like many, I dreaded these subjects in school. It’s reason enough to challenge myself. One book is a must-read for me, Astrophysics for People in a Hurry, for I am a great admirer of the works of Neil deGrasse Tyson. A Brief History of Time sort of made the list because it was written by Stephen Hawking, who is synonymous with both endless possibilities and making sense of our universe. From here I will rely on colleagues’ recommendations. The Future of Humanity seems to offer answers to my pressing questions: when will humanity leave earth? What will human life in the universe look like? Aside from this Michio Kaku appears to be a great lecturer. Lastly, Until The End of Time by Brian Greene strikes me as a perfect conclusion of elevating my mind into these far-fetched, astronomical Gedankenexperiments.    

Ballistic books is a series to present literature of interest. Each edition is dedicated to a specific topic. I found it challenging to discover and distinguish good from great literature. With this series, I aim to mitigate that challenge.

1. Astrophysics for People in a Hurry by Neil deGrasse Tyson

Neil deGrasse Tyson is an Astrophysicist, Frederick P. Rose Director at the Hayden Planetarium and host of StarTalk. You can find Neil deGrasse Tyson on Twitter at @neiltyson

2. A Brief History of Time by Stephen Hawking

Stephen Hawking was a theoretical physicist and director at the Centre for Theoretical Cosmology at the University of Cambridge. Hawking’s research enabled the study of black holes. His life inspired many people and was portrayed by Hollywood in The Theory of Everything in 2014. You can learn more about Stephen Hawking’s fascinating life and research at https://www.hawking.org.uk/  

3. The Future of Humanity: Our Destiny in the Universe by Michio Kaku

Michio Kaku is a theoretical physicist and a professor of theoretical physics at the City College of New York and CUNY Graduate Center. He is known for his research on string field theory. Kaku brought astrophysics to a broad audience through frequent television appearances, public events and is the author of many popular books on space exploration. You can find Michio Kaku on Twitter @michiokaku

4. Until The End of Time by Brian Greene

Brian Greene is a theoretical physicist, string theorist and a professor at Columbia University. Greene made some groundbreaking discoveries in his field, which I fail to grasp yet and won’t pretend to understand by listing them here. He recently went on the Joe Rogan Podcast, which offers a glimpse into his, our universe. You can find Brian Greene on Twitter @bgreene

Trump’s Grand Strategy

Legacy matters these days. As President-elect Joe Biden is about to take office I thought it is worth my while to reflect on America’s leadership role in the world. How did Donald Trump fare with international relations? What happened to the immigration ban and withdrawal of U.S. military overseas? Is the world safer because of Trump’s ‘America First‘ rhetoric? This paper sheds light on the contrasting ideologies that governed U.S. foreign policy under Trump.

tl;dr

When a new President is elected in the United States, the first thing analysts do is define that President’s grand strategy; yet, naming Donald Trump’s grand strategy was a difficult task as his pre-election speeches often contradicted traditional US foreign policy norms. Trump’s ambiguous grand strategy combines two US foreign policy strategies: nationalism in the sense that his preference is for unilateral policies prioritising American interests, and a traditional foreign policy approach, as seen in the moves taken against China and Iran. Surprisingly, this grand strategy unintentionally contributes to cooperation in Eurasia, as actors like Russia, China, Turkey, India and the European Union continue to try to balance the threat from the United States instead of competing with each other, while smaller countries are reluctant to challenge the regional powers due to mistrust towards Trump.

Make sure to read the full paper titled Mixing Grand Strategies: Trump and International Security by Murat Ülgül at https://www.tandfonline.com/doi/full/10.1080/03932729.2020.1786928 

Image credit: Barbara Kelley

When Donald Trump assumed office as 45th President of the United States the world was facing a known unknown. A mercurial real-estate developer and reality show entertainer was suddenly in a position to reshape America’s international relations. Until then, Trump’s political record consisted of commentary on current affairs and one failed attempt to run for President in 2000. His business record was strained with few successful real estate developments in New York City and a number of unsuccessful business ventures in different industries.  

Historically U.S. foreign policy is set by the President. Entire presidencies rested on a sophisticated strategy to secure American interests at home and abroad. Following WWII the United States adopted a foreign policy of primacy, which according to Patrick Porter branches into a grand strategy of 

  1. Military preponderance 
  2. Allied relationships  
  3. Proliferation of U.S. capitalism 
  4. Absolute control of nuclear (power) weapons

However Trump’s world views stand in stark contrast with that of previous administrations. His nationalistic rhetoric of ‘America First’ struck a chord in harmony with authoritarian dictatorships. It created concerns among democratic nations whether President Trump would continue to invest into alliances and build amicable relationships or if he would lead the United States into isolationism. His chaotic leadership style had many scholars speculate whether Trump would recognize the power imbalance between America’s allies and Russia or China. It raised questions whether Make America Great Again rhetoric meant a complete withdrawal from the international stage and mark a pivot point in America’s pursuit of primacy as its grand strategy. 

“Grand strategy can be defined as a great power’s roadmap to realising its long-term objectives with its actual and/or potential resources”

In this paper, Murat Ülgül reframes the analysis of Trump’s grand strategy by focusing on the complementary elements of a nationalist traditionalism rather than its competing positions. Unlike other scholars have suggested, Trump’s grand strategy is not exclusive continuity of previous “business as usual”. Albeit divisive in rhetoric throughout his pre-election years and time in office, his grand strategy cannot be viewed as raw isolationism. Moreover Ülgül makes a case for a combination of nationalism and traditionalism. Nationalism can be observed in the character and image of Donald Trump himself. Traditionalism leaves its mark in Trump’s choices for his national security advisors, e.g. Michael Flynn, H. R. McMaster and John Bolton, which had gained significant influence over Trump throughout the course of his presidency. This unique but ambiguous combination appears to mitigate the negative effects of each individual strategy. Both are conflict-prone strategies yet the rate of international conflicts has steadily decreased during Trump’s tenure. America First has led the United States to a delayed or complete disengagement from international contests. All the while his administration is running a traditional, hawkish narrative that has led foreign powers known for the pursuit of authoritarian objectives to cooperate and resolve their disagreements with America’s allies against a potential fallout from the United States. In other words, the administration continues to influence global policy without military leverage or engagement. Nevertheless its impact is waning. As a result of this grand strategy, the United States has suffered some reputational damage for fewer countries retained faith into America’s ability to manage international relations or to be a beacon of democracy. 

While this paper goes into more depth than I can summarize here, I found this idea of a mixed grand strategy not as new as the paper suggests. Prior to WWII, the United States practiced a calibrated offshore balancing. In 2016, Stephen Walt suggested a deliberate withdrawal from conflict areas in favor of an intentional engagement of strategic partners. Walt’s propositions imply an element of deliberation of U.S. foreign policy which never seemed to register with Trump, but it helps in finding Ülgül’s argument even more convincing. It further helps to see some positive from this oddball presidency as he disappears from the international (relations) stage.    

How Cyberwarfare Is Used to Influence Public Policy

Cyberspace differs from physical domains. How do we know a hacker’s motive or allegiance? Among the many cyber conflicts in cyberspace only a few escalate into a real world conflict. Those which do, however, beckon a reevaluation of existing policies. This paper argues current research is underrating the second-order impact from cyber-enabled political warfare on public policy. It makes a case for policy makers to consider changes of public policy beyond mere retaliation. Moreover it offers insights into the complex investigations process tied to cyber operations that fall out-of-pattern.

tl;dr

At present, most scholarship on the potential for escalation in cyberspace couches analysis in terms of the technological dynamics of the domain for relative power maneuvering. The result has been a conceptualisation of the logic of operation in cyberspace as one of ‘tit-for-tat’ exchanges motivated by attribution problems and limited opportunity for strategic gain. This article argues that this dominant perspective overlooks alternative notions of how cyber tools are used to influence. This, in turn, has largely led scholars to ignore second-order effects – meaning follow-on effects triggered by a more direct outcome of an initial cyber action – on domestic conditions, institutions, and individual stakeholders. This article uses the case of cyber-enabled political warfare targeting the United States in 2016 to show how escalation can occur as a second-order effect of cyber operations. Specifically, the episode led to a re-evaluation of foreign cyber strategy on the part of American defence thinkers that motivated an offensive shift in doctrine by 2018. The episode also directly affected both the political positions taken by important domestic actors and the attitude of parts of the electorate towards interference, both of which have reinforced the commitment of military planners towards assertive cyber actions.

Make sure to read the full paper titled Beyond tit-for-tat in cyberspace: Political warfare and lateral sources of escalation online by Christopher Whyte at https://doi.org/10.1017/eis.2020.2

Credit: Jozsef Hunor Vilhelem

Cyber-enabled political warfare takes place on a daily basis. It is orchestrated by democracies and authoritarian states alike. A prevailing academic school of thought evaluates these cyber operations by a four-prong perimeter guidance: 

(1) Common intelligence-gathering
(2) Signal testing
(3) Strategic reconnaissance which may result in a
(4) Major cyber assault on critical infrastructure

On both sides, attacker and defender, it is incredibly difficult to determine whether a cyber operation is a tolerated everyday occurrence or a prelude to, if not the final attack against national security. This overpowering imbalance between signal-to-noise ratio has led to a dominant academic perspective that argues cyber operations are an endless loop of retaliatory instances overlooking clandestine long-term objectives. It begs the question: when does an instance of cybersecurity become a matter of national security? When does a cyber operation escalate into full-on warfare? In this paper, the author creates a notion for cyber operations as an instrument to influence public policy beyond mere breach of cybersecurity post escalation. Through examples of cyber-enabled political warfare, the author makes a case for vulnerabilities in democratic societies that originate from a failure to evaluate cyber-enabled political warfare under cyber conflict standards. Therefore creating a vacuum for policy development skewed to overstate potential cyber risks in public policy.    

Cyber operations resulting in cyber conflict are here to stay. In an increasingly accessible space of computer science and affordable hardware, nation states as well as hostile individual fringe groups find more and more fertile ground to develop new generations of cyber tools to pursue anything from criminal objectives to ideological influence operations to subvert public opinion. In the context of cyber operations being part of an everyday occurrence this poses the first problem of identifying a targeted cyber operation as a departure from regular everyday probes in cyberspace. Aforementioned affordability increases difficulty to assess the situation since the cyber operation may originate from a state-actor or is a proxy action driven by individual fringe groups that may or may not be adherent to a state-actor. Here, states need to decide between tolerance, which may result in a failure to detect a major assault on critical infrastructure or a measured response, which will always result in giving away signal that an opponent may abuse for future cyber operations. Of course, the former carries risk of escalating into a real world conflict. Whereas the latter carries the risk of setting the stage for a real world conflict under even less favorable circumstances. In this latter scenario the author creates a notion to consider the second order effects on public policy. In other words, when investigating cyber operations, it is necessary to review beyond the technical means and parse the attack with current affairs. This notion reverberates into the policy development process for the event of a shift in strategic policy.

“What pressure points and vulnerabilities dictate the utility of cyber operations and, subsequently, the shape of potential escalation?”

Democracies delegate the power of the people to elected leaders based on an information exchange system that requires integrity. Cyber-enabled political warfare seeks to exploit integrity by sowing distrust in the political system and its elected leaders. By example of the 2016 U.S. presidential elections, the author builds a case for clarity on how the cyber operations were not only a ‘tit-for-tat’ engagement in support of a particular candidate but rather deployed with a strategic, long-term objective to subvert the integrity of U.S. democracy. The disruption of the democratic process took place by 

(1) Identifying a lack of government regulation for social media platforms that have critical reach with the electorate
(2) Understanding flaws in the algorithmic design of information distribution via social media
(3) Increased cyber attacks on private information that carry disruptive elements once published
(4) Increased deflection of attempts to specifically attribute cyber operations. Therefore enabling plausible deniability
(5) A domestic political landscape that is so polarized that it tolerates foreign interference or is even further divided by domestic agent’s rhetoric and 
(6) A foreign actor (Russia) who is willing to exploit these vulnerabilities

Through these various inter-connected and standalone stages of cyber-enabled political warfare, the Russians were able to effectively undermine public trust in both political candidates, the democratic process and beyond that to an extent that triggered a critical reevaluation of the U.S. cyber strategy resulting in new public policy. The implication for policy makers is to critically consider lateral side effects of cyber operations beyond the method employed and damage done. The potential to influence decision-making of state leaders might be enhanced by these second order effects especially when misinterpreted. Aside from attribution, an effective policy response must take a holistic approach beyond closing a vulnerability in national security.    

A History Of Disinformation And Political Warfare

After political powerhouse Hillary Clinton lost in a spectacular fashion against underdog Donald J. Trump in the 2016 U.S. presidential elections, the world was flabbergasted to learn of foreign election interference orchestrated by the Russian Internet Research Agency. Its mission: to secretly divide the electorate and skew votes away from Clinton and towards Trump. In order to understand the present, one must know the past. This is the baseline of ‘Active Measures – The Secret History of Disinformation and Political Warfare’ by Johns Hopkins Professor of Strategic Studies Thomas Rid. 

I bought this book to study the methodology, strategy and tactics of disinformation and political warfare. To my surprise, the book only spends 11 pages on disinformation. The remaining 424 pages introduce historic examples of influence operations with the bulk of it dedicated to episodes of the cold war. Rid offers insights into the American approach to defend against a communist narrative in a politically divided Germany. He details Soviet influence operations to time-and-again smear American democracy and capitalism. The detail spent on the German Ministry of State Security known as “Stasi” is interesting and overwhelming. 

While my personal expectation wasn’t met with this book, I learned about retracing historic events to attribute world events to specific nations. Its readability is designed for a mass audience fraught with thrilling stories. What is the role of journalistic publications in political warfare? Did Germany politically regress under American and Soviet active measures? Was the constructive vote of no confidence on German chancellor Willy Brandt a product of active measures? Who did really spread the information the AIDS virus was a failed American experiment? On the downside, this book doesn’t really offer any new details into the specifics of disinformation operations. Most contemporary espionage accounts have already been recorded. Defectors told their stories. This makes these stories sometimes bloated and redundant. Nevertheless, I believe to understand our current affairs, we must connect the dots through the lens of political history. Rid presents the foundations for future research into influence operations.

Consistent Chaos: Trump’s Leadership Style And US Foreign Policy

U.S. foreign policy concerns a wide range of highly complex issues. It requires consistency, integrity and long-term strategy. President Trump demonstrates none of these characteristics in his presidency. Accordingly, foreign policy experts grow concerned about the direction of U.S. diplomatic relations. Does Trump have the leadership skills to recognize the weight of the office? Is his erratic behavior on social media a harbinger for isolationism? And what is the impact of Trump’s leadership style on U.S. foreign policy? It turns out: there is a method to this chaos.

tl;dr

This article examines President Trump’s foreign policy behavior as a product of a leadership style that is entrenched in a plutocratic worldview. We apply elements of Hermann’s leadership traits framework to Trump’s engagement with NATO, and characterize him as a low-conceptual complexity president, enabled by limited search for information and advice, a confrontational and insensitive approach to his environment, and proclivity to violate international norms and rules. We show that Trump’s low- conceptual complexity is underpinned by a plutocratic worldview which is transactional and money-first. We argue that while this signals change between Trump and his predecessors, this plutocratic approach has been one of the most significant sources of consistency within Trump’s administration.

Make sure to read the full data memo titled Low-conceptual complexity and Trump’s foreign policy by Asaf Siniver and Christopher Featherstone at https://www.researchgate.net/publication/339911972_Low-conceptual_complexity_and_Trump’s_foreign_policy

Source: @AllHailTheTweet

When Trump was inaugurated as the 45th President of the United States, I began to wonder what his Presidency will mean for our country, then in pursuit of a grand strategy of primacy. The Donald Trump the world knew until 2016 seemed to be oblivious to pursuing long term objectives. His entertainment persona was crafted for instant gratification, quick returns and scorched earth when necessary. Isolationism seemed inevitable as promised in his campaign. How would he handle this dichotomy? I am fascinated with human behavior. In particular in leadership positions. I believe responsibility and public pressure does shape the character, but the outcome might be one leader becoming a beacon for hope and progress while another will be remembered as the demise of democracy as we know it. Which is President Trump? An intriguing paper by researchers from the University of Birmingham analyzed the influence of Trump’s leadership style on U.S. foreign policy. They argue that Trump follows a plutocratic worldview, basically placing a higher value on individual wealth than on social welfare, which in conjunction with his mercurial nature and often unpredictable decision-making has led him to conflate complex foreign policy with his simple transactional leadership style. 

The Trump administration struggled from inauguration day with filling important cabinet and senior staff roles. A polarized election campaign produced the highest rate of staff turnover in the history of the U.S. government. As Trump’s campaign promises centered around domestic issues, a rigor negligence of foreign policy was omnipresent. The nature of America’s presidential system places Trump as the head of state and the head of government in a unique position to shape U.S. foreign policy based on his personality and his conduct. This resulted in a high degree of uncertainty of U.S. foreign policy and left allies as well as trade relationships in a suffocating limbo. This paper examined the degree of conceptual complexity present as observed in the President’s cognitive behavior over the course of his first term as President of the United States. Conceptual complexity refers to an individual’s ability to identify and differentiate several degrees of information. It indicates prowess to structure complex information using critical thinking and reflection. Magret G. Herman presented conceptual complexity as part of the seven leadership traits that can be analyzed based on what they (leaders) say. The researchers extrapolate this definition onto leaders, who 

understand reality through a multi-dimensional prism. They are sensitive to contextual variables and rely on information gathering and deliberation before making decisions. “

Within international and diplomatic relations this might encompass an ability to identify cultural nuances, economic dependencies and access to natural resources of one country in conjunction with multilateral trade agreements, historic alliances or geopolitical tensions and conflict zones. A leader’s soft skills to compare, weigh and reflect this plethora of competing information under pressure defines high-conceptual complexity leaders. This is in contrast with 

low-complexity leaders (who) generally do not differentiate the dimensions of their environment. They view the world in binary terms (e.g good/bad, friend/enemy), and are thus more likely to make decisions based on intuition and emotion

Even the most lenient interpretation of it cannot suppress the immediate notion of Trump’s leadership style being drenched in low-conceptual complexity. Here, this paper is building a case that Trump effectively deceived his electorate of blue-collar workers who bought into the idea that a businessman with noble interests has arrived to ‘drain the swamp’. Through divisive and polarizing rhetoric, Trump disguised his administration of unprecedented wealthy staff as equals with the disenfranchised poor citizens in this country. Therefore creating a plutocratic rule by the few over the many – an American tendency with a rich history. Taking this together, the researchers find Trump’s decision-making process with regard to U.S. foreign policy is largely driven by plutocratic interests to allocate wealth of the many to a few wealthy. It places U.S. foreign policy in a transactional environment. In this environment, Trump allows few critical voices in his short process of deliberating foreign policy measures with little information at hand and an approach of keeping his hands close to the chest rendering complex diplomatic processes next to impossible to implement.    

His advisers didn’t know whether he was an isolationist or a militarist, or whether he could distinguish between the two.

The result is a catastrophic U.S. foreign policy that creates fertile ground for political and diplomatic repercussions on the internal stage and is an invitation for threats against U.S. national security. Trump’s contradictions are further observed in the debate around climate change. In 2009, the private citizen Trump and other business leaders lobbied for decisive investments into clean and renewable energy. Ironically this is an acknowledgment of climate change, which Trump has later denied and is persistently questioning on social media. In 2017, then President Trump initiated the exit of the United States from the Paris Climate Accord rendering it as detrimental to U.S. economic interests. In another example of Trump exhibiting plutocratic low-conceptual complexity, the tradition of paying a first diplomatic visit to our neighbors in Canada or Mexico was set aside to ‘make a deal’ with Saudi Arabia. Incidentally, Trump did not hide his personal business interests in Saudi Arabia. Such insensitivity to diplomatic nuance is low-conceptual complexity fueled by the pursuit of increasing individual wealth (or here his personal brand value as dealmaker). The paper closes with the relationship of President Trump and NATO. Trump operates with a small staff and wealthy cabinet members. He possesses little to zero knowledge of details of fiscal procedures of NATO or the overarching purpose of NATO. Further, Trump, a native of New York City did not seem to be aware that the infamous Article 5 was invoked in the wake of the September 11 attacks on the World Trade Center. And while all these examples imply erratic cognitive contradictions, the researchers were able to identify consistency in the chaos that is Trump’s leadership. Viewed through a prism of plutocratic worldview established in his business endeavors, Trump exhibits strong signals for a leadership style governed by low-conceptual complexity. His transactional mindset based on limited information and suppressing critical voices applied to U.S. foreign policy is a threat to the foundations of peace.        

How COVID19 Will Impact The 2020 US Presidential Election

The way Americans choose their President is complicated. Foreign election interference in previous elections as well as a polarized, partisan political arena at home only made it more complicated to elect the leader of the free world. In the 2020 U.S. presidential election, the coronavirus pandemic completely upended how presidential campaigns rally supporters and how to run for public office at large. An underfunded and stripped of its human capital Postal Service is facing an unprecedented volume of mail-in ballots. This leaves me with the question: What is the impact of COVID on the race for the White House? How are both campaigns using it (or not) to drive their political pitch to capture voters? An answer might be a recent data memo by researchers from the University of Leeds – School of Politics and International Studies.    

tl;dr

The impact of COVID on the upcoming November 2020 US election will be an important topic in the coming months. In order to contribute to these debates, this data memo, the final in our summer 2020 series on COVID, considers this question based on an analysis of social media discourse in two week-long periods in late May and early July. We find that only a very small proportion of tweets in election-related trends concern both the election and COVID. In the May period, there was much evidence of conspiracy-style and misinformative content, largely attacking the Democrats, the seriousness of COVID and postal-voting. Tweets also showed that the stances of the Presidential nominees towards the coronavirus has emerged as a major point of political differentiation. In the July period, tweets about COIVD and the election were dominated by the influence of a new anti-Trump Political Action Committee’s viral videos, with the hashtags associated with these videos found in 2.5% of all tweets in election-related trends across the period. However, this criticism was not mirrored in the wider dataset of election-related or political tweets in election-related trends. Criticism of Trump was frequent across all time periods and samples, but discourse focused far more on Trump especially in the July period in which tweets about Trump outnumbered tweets about Biden 2 to 1. We conclude that these patterns suggest the issue of COVID in the US has become so highly politicised that it is largely only one side of the political spectrum engaging with how COVID will impact the US election. Thus, we must ask going forward not how COVID will impact the process and outcome of the election but rather how COVID will be used as a political and campaign issue in the coming election.

Make sure to read the full data memo titled COVID’s Impact on the US 2020 Election: Insights from Social Media Discourse in the Early Campaign Period by Gillian Bolsover at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3714755 

Chip Somodevilla (Getty Images) & Gerry Broome (AP Photo)

We had a good run in the first three months of 2020. Then the COVID pandemic spread across the globe. Most industrial nations had to shut down their economies with rigorous lockdown and shelter-in-place policies paralyzing its citizens and economies alike. COVID also impacted the democratic processes of many developed nations. For example, New Zealand rescheduled their national election until late 2020. Elections for the Hong Kong city legislature were postponed until 2021. At least 88 elections were impacted in one way or another by COVID. This data memo focuses on the 2020 U.S. presidential elections, which will not only decide a highly polarized presidential campaign between incumbent President Donald Trump and his democratic challenger Joe Biden, but also elect the entire U.S. House of Representatives, a third of the U.S. Senate and decide numerous races for public office. It takes a snapshot from the campaign trail comparing social media data discussing the elections and COVID in conjunction with either candidate and it does demonstrate how the pandemic not only impacts the 2020 U.S. presidential elections but how COVID is used as a political weapon to advance campaign objectives.

For most people across the globe, Mid-March marks the beginning of indoor restrictions, facemasks, social distancing and the loss of minimal certainty that our socio-economic environments have to offer. It was a pivot-point for political operatives, who in past elections were able to rely on a candidate’s charisma at in-person political rallies. COVID forced both campaigns to adhere to public health guidelines. Republican and Democratic campaign events were either cancelled or moved indoors and online. Supporters and candidates alike were confined to choppy Zoom calls on small screens. Studies have shown that these national crises usually create an increase in favorability for an incumbent president, e.g. the popularity of George W. Bush spiked following the terrorist attacks on September 11. They also tend to benefit Republican or conservative leaders more in particular in conjunction with a patriotic narrative. This effect is known as the ‘Rally-Round-The-Flag’ effect. However, its impact is subject to media coverage and proliferation of the political narrative that is spun up by the incumbent’s campaign. And Trump as an experienced social media operative stood to benefit from the COVID pandemic: the U.S. economy was in good shape in Q1 2020, the tactical assassination of Qasem Soleimani did not start another war in the Middle East nor did the impeachment proceedings cause any apparent political damage to his reelection campaign. The administration’s track record could have been far worse. Despite these advantages, however, Trump’s often erratic behavior prompted social media platforms to more restrictively apply content policies to public figures and politicians. Twitter started labelling Trump’s tweets as misinformation or removed tweets for violating Twitter’s content policies.

Source: https://twitter.com/realDonaldTrump/status/1265255835124539392

The researchers focused on a snapshot of both campaigns by analyzing Twitter data in the months of May and July. To avoid limitations or cognitive biases, the researchers took sample data from all trending topics within the U.S. They found a small number of trends solely focusing on elections while a large number of trends concerned general politics. COVID and the election was found to be a significant topic of discussion. However, the researchers found little evidence for trends directly discussing correlations between COVID and the election. Few example cases demonstrated hyper-partisan, authoritarian labelling to divide an in-group from an out-group. For example, the unrestricted proliferation of baseless conspiracy claims against the Democratic party in conjunction with misinformation, as seen below: 

Source: https://twitter.com/realjameswoods/status/1264686760509882376

Other examples appeared to offer evidence but misunderstood it. Therefore shifting responsibilities away from the administration: 

Source: https://twitter.com/BasedSavannah/status/1265021232392650753

The majority of these hyper-partisan examples played out on the conservative end of the political spectrum. Democrats were found to capitalise on fewer opportunities to link administration failures to mitigate COVID with the election because Democrats treated finding a scalable policy solution as a serious health issue not to be trifled with. This imbalance between the two political campaigns created a further polarization of the issues: Democrats moving campaign activity online was used by Republicans as further ‘evidence’ for a conspiracy. Social media users reacted to this behavior by retracting support for both candidates. Anti-Biden content dropped as well while Trump remained at a consistent negative level. Trump, however, generated twice as much consistent traffic, which drove more voter attention to his campaign. Despite consistent criticism of the administration’s handling of the pandemic, the negative sentiment towards Trump did not create tangible support for Biden. And visibility can also be an indicator of success in the election. As the incumbent, Trump has the advantage over Biden. The researchers therefore conclude that a hyper-partisan narrative surrounding COVID and elections have been successful in using COVID as a political weapon to undermine the solutions-oriented approach driven by the Democratic party, which further entrenched both political camps at extreme ends making this election even more polarized. In summary, it can be argued that Republicans and Trump utilized COVID as a means for political gains. Democrats on the other side focused more on the issue of crisis management, which was spun by conservatives into a polarised partisan attack outside of scientific realities.

Political Warfare Is A Threat To Democracy. And Free Speech Enables It

“I disapprove of what you say, but I will defend to the death your right to say it” is an interpretation of Voltaire’s principles by Evelyn Beatrice Hall. Freedom of expression is often cited as the last frontier before falling into authoritarian rule. But is free speech, our greatest strength, really our greatest weakness? Hostile authoritarian actors seem to exploit these individual liberties by engaging in layered political warfare to undermine trust in our democratic systems. These often clandestine operations pose an existential threat to our democracy.   

tl;dr

The digital age has permanently changed the way states conduct political warfare—necessitating a rebalancing of security priorities in democracies. The utilisation of cyberspace by state and non- state actors to subvert democratic elections, encourage the proliferation of violence and challenge the sovereignty and values of democratic states is having a highly destabilising effect. Successful political warfare campaigns also cause voters to question the results of democratic elections and whether special interests or foreign powers have been the decisive factor in a given outcome. This is highly damaging for the political legitimacy of democracies, which depend upon voters being able to trust in electoral processes and outcomes free from malign influence— perceived or otherwise. The values of individual freedom and political expression practised within democratic states challenges their ability to respond to political warfare. The continued failure of governments to understand this has undermined their ability to combat this emerging threat. The challenges that this new digitally enabled political warfare poses to democracies is set to rise with developments in machine learning and the emergence of digital tools such as ‘deep fakes’.

Make sure to read the full paper titled Political warfare in the digital age: cyber subversion, information operations and ‘deep fakes’ by Thomas Paterson and Lauren Hanley at https://www.tandfonline.com/doi/abs/10.1080/10357718.2020.1734772

MC2 Joseph Millar | Credit: U.S. Navy

This paper’s central theme is at the intersection of democratic integrity and political subversion operations. The authors describe an increase of cyber-enabled espionage and political warfare due to the global spread of the internet. They argue it has led to an imbalance between authoritarian and democratic state actors. Their argument rests on the notion that individual liberties such as freedom of expression put democratic states at a disadvantage compared to authoritarian states. Therefore authoritarian states are observed to more often choose political warfare and subversion operations versus democracies are confined to breaching cyber security and conducting cyber espionage. Cyber espionage is defined as

“the use of computer networks to gain illicit access to confidential information, typically that held by a government or other organization”

and is not a new concept. I disagree with the premise of illicit access because cyberspace specifically enables the free flow of information beyond any local regulation. Illicit is either redundant for espionage does not necessarily require breaking laws, rules or customs or it is duplicative with confidential information, which I interpret as synonymous with classified information. Though one might argue about the difference. From a legal perspective, the information does not need to be obtained through illicit access.

With regard to the broader term political warfare, I found the definition of political warfare as, 

“diverse operations to influence, persuade, and coerce nation states, organizations, and individuals to operate in accord with one’s strategic interests without employing kinetic force” 

most appropriate. It demonstrates the depth of political warfare, which encompasses influence and subversion operations outside of physical activity. Subversion operations are defined as 

“a subcategory of political warfare that aims to undermine institutional as well as individual legitimacy and authority”

I disagree with this definition for it fails to emphasize the difference between political warfare and subversion – both undermine legitimacy and authority. However, a subversion operation is specifically aimed to erode and deconstruct a political mandate. It is the logical next step after political warfare influenced a populace in order to achieve political power. The authors see the act of subversion culminating in a loss of trust in democratic principles. It leads to voter suppression, reduced voter participation, decreased and asymmetrical review of electoral laws but more importantly it poses a challenge to the democratic values of its citizens. It is an existential threat to a democracy. It favors authoritarian states detached from checks and balances that are usually present in democratic systems. These actors are not limited by law or civic popularity or reputational capital. Ironically, this bestows a certain amount of freedom upon them to deploy political warfare operations. Democracies on the other hand uphold individual liberties such as freedom of expression, freedom of the press, freedom of assembly or equal treatment under law and due process. As demonstrated during the 2016 U.S. presidential elections, a democracy generally struggles with identifying political warfare initiated by a foreign (hostile) state from certain segments of the population pursuing their strategic objectives by leveraging these exact individual freedoms. An example from the Mueller Report 

“stated that the Internet Research Agency (IRA), which had clear links to the Russian Government, used social media accounts and interest groups to sow discord in the US political system through what it termed ‘information warfare’ […] The IRA’s operation included the purchase of political advertisements on social media in the names of US persons and entities, as well as the staging of political rallies inside the United States.”

And it doesn’t stop in America. Russia is deploying influence operations in volatile regions on the African continent. China has a history of attempting to undermine democratic efforts in Africa. Both states aim to chip away power from former colonial powers such as France or at least suppress efforts to democratise regions in Africa. China is also deeply engaged in large-scale political warfare in the Southeast Asian region over regional dominance but also territorial expansion as observed in the South China Sea. New Zealand and Australia recorded numerous incidents of China’s attempted influence operations. Australia faced a real-world political crisis when Australian Labor Senator Sam Dastyari was found to be connected to political donor Huang Xiangmo, who has ties to the Chinese Communist Party. Therefore, China having a direct in-route to influence Australian policy decisions. 

The paper concludes with an overview of future challenges posed by political warfare. With more and more computing power readily available the development of new cyber tools and tactics to ideate political warfare operations is only going to increase. Authoritarian states are likely to expand their disinformation playbooks by tapping into the fears of people fueled by conspiracy theories. Developments of machine learning and artificial intelligence will further improvements of inauthentic behavior online. For example, partisan political bots will become more human and harder to discern from real human users. Deep fake technology will increase sampling rates by tapping into larger datasets from the social graph of every human being making it increasingly possible to impersonate individuals to gain access or achieve certain strategic objectives. Altogether, political warfare poses a greater challenge than cyber-enabled espionage in particular for democracies. Democracies need to understand the asymmetrical relationship with authoritarian actors and dedicate resources to effective countermeasures to political warfare without undoing civil liberties in the process.