With each passing day, computer hacking against countries, organizations and people is forcing the subject of cybersecurity to the top of national security agendas.

An estimated 42.8 million cyber attacks will take place this year, according to experts. Scaling up to meet this challenge is why more than 140 people from science, politics, business and the military attended the fourth annual Cyber Security Summit at Stanford’s Center for International Security and Cooperation (CISAC) on Sept. 19-20.

The Munich Security Conference and Deutsche Telekom sponsored the event. CISAC is in the Freeman Spogli Institute for International Studies. Participants delved deep into issues associated with today’s online world, including how to balance privacy and civil liberties with the need for intelligence, for example. Discussions ranged on questions such as:

• What will the future of warfare look like – human soldiers or killer robots?

• How do we ensure that technological progress does not escape human control?

• What are the biggest challenges combatting the online activities of groups like the Islamic State?

• What are the possible cyberspace conflicts between the U.S., Russia and China?

• Are countries ready for cyber attacks against key infrastructure such as energy, water and utilities, or the U.S. election system, for example?

Electoral impact

In a talk on cyber attacks and the U.S. elections, panelists discussed how such electoral manipulation in the ongoing presidential campaign might happen, and what could be done about it. While it was noted that foreign adversaries could undermine the American public’s confidence in its election system, one expert pointed out that it’s unlikely to occur undetected on a widespread basis.

Credibility is now the battlefield, one panelist said. If hacking occurs, how will an election be validated? The track record shows that Russian has attempted to influence elections in Eastern Europe, so hacking into U.S. political entities is their way to sow doubt among voters.

The economic costs of cyber attacks – $400 to $500 billion a year was one participant’s estimate – and “cyberspace norms” were other issues explored. Countries and companies are grappling with the losses associated with these incursions, and with how – and who – should set the rules for the “digital game.”

On encryption, questions in one discussion revolved around how the public and private sectors can resolve such issues, how far data privacy could be compromised for effective intelligence work, and vice versa.

Online jihadism was another subject. The conference panelists talked about which tools are most effective in countering jihadist propaganda and recruitment on the Internet. Also, the need for Europe and the U.S. to work together on such fronts was mentioned.

CISAC and FSI participants included Amy Zegart, co-director of CISAC and senior fellow at the Hoover Institution; Michael McFaul, director of the Freeman Spogli Institute and senior fellow at the Hoover Institution; Martin Hellman, professor emeritus of electrical engineering; among others. Other attendees hailed from U.S. and European Union agencies and businesses, and local Silicon Valley companies.

Zegart said a collaborative spirit and drive for innovation characterizes Stanford. “In the past three years, we have built an exciting program dedicated to educating current and future cyber leaders, producing policy-driven knowledge, and convening leaders across sectors and borders,” she wrote in the program guide.

McFaul, in his opening statement, noted the origins of CISAC – it was created when there was a different technological concern – nuclear materials. Then, scientists and social scientists at CISAC got together to work on nuclear proliferation. Today, the threat is cyber attacks, and CISAC is confronting this challenge. He said the scariest briefing he had in his ambassador position at the U.S. Department of State was on cybersecurity.

For his discussion on terrorism, Hellman brought pages of pro-encryption quotes from government officials. He suggested end-to-end encryption was good for Americans.

Crossing borders

The Munich Security Conference is considered to be the most important informal meeting on security policy. Outside speakers included Michael Cherthoff, former secretary of Homeland Security; Jane Holl Lute, the under secretary general for the United Nations; and Christopher Painter, coordinator for cyber issues at the U.S. Department of State.

Wolfgang Ischinger, the chair of the Munich Security Conference, said at the press conference that, “cybersecurity has over the last few years evolved to be one of the most indispensable agenda items.”

The “quest for rules” in cyberspace, he noted, is overwhelmingly difficult and vitally important.

Thomas Kremer, board member for co-sponsor Deutsche Telekom AG, said, “cyber attacks don’t accept national borders.” Cybersecurity has become a global issue, he explained, with ramifications for countries, companies and everyday people.

He added, “Our chances to fight cyber crime are far better when we collaborate.”

Stanford and CISAC are at the forefront of the national discussion on cybersecurity. The university launched the Stanford Cyber Initiative; hosted President Obama’s cybersecurity summit and defense secretary Ashton Carter’s unveiling of a new U.S. cyber strategy; and CISAC and the Hoover Institution have teamed up in recent years for media roundtables and Congressional bootcamps on cybersecurity.

Finally, CISAC senior research scholar Joe Felter and other experts held Hacking for Defense & Diplomacy class for educators and sponsors on Sept. 7-9. (See the final class presentations here). In spring 2016, they held the first such class to train students in cybersecurity for defense purposes. Steve Blank, a consulting associate professor in the Stanford School of Engineering’s Department of Management Science and Engineering, helped develop the class. This fall, they will prototype a Hacking for Diplomacy course at Stanford.

Click here for the Munich Security Conference’s agenda for this event and a list of participants. 

The international order is unraveling, according to a Stanford scholar. Since the end of the Cold War, the United States has generally served as the top leader in this world order. But now the power equation is shifting, and the U.S. may see more countries challenging global rules and norms.

Three key factors threaten the distribution of power and authority among nations, said political scientist Amy Zegart, co-director of Stanford’s Center for International Security and Cooperation and senior fellow at the Hoover Institution. But, she said, America can take a “pragmatic” approach to protecting its national interests.

The rise of China, more dangerous non-state actors than ever before and the weakening of international institutions are converging to create greater global instability, Zegart said.

Zegart co-wrote a journal article with Stanford political scientist Stephen Krasner about the benefits of a “pragmatic engagement” approach for the U.S. They also co-chaired a Hoover Institution working group on foreign policy and grand strategy to examine these issues.

If China continues to grow economically at its current rate, it will displace the U.S. as the country with the most material resources in the world, a position the latter has held for more than a century, Zegart said. Such a scenario comes with risks.

“It would mark the first time a great power would be a developing nation,” she said. “This has profound implications for the international order.”

For example, will China become a responsible stakeholder within the existing rules of the global order, Zegart said, or will it challenge that order?

“The record so far is decidedly mixed,” she said, noting that even if China wants to uphold the international economic and political order, it’s not clear that it can, based on its domestic political situation.

Challenges to power

On terrorism, technology has given weak states, non-state actors and even lone individuals the ability to wage cyberattacks, biological attacks and – potentially – nuclear attacks, according to Zegart.

“In this world, uncertainty abounds,” she said. In such an environment, people and even nations tend to retreat and not engage outside their spheres. “That’s part of the reason why in a recent survey, more than half of all Americans said they felt less safe today than they did on 9/11.”

Finally, international institutions such as the United Nations Security Council, the International Monetary Fund and the European Union are “misaligned with power realities,” as Zegart describes it.

“Institutions freeze into place the power relationships that exist at the time of their creation. They struggle to adapt to change. We see this at the domestic level, too. The U.S. government is built around a 1947 national security architecture that has a hard time adapting to 21st-century challenges, from cyberthreats to homeland security,” she said.

In the short term, Zegart said, the world is likely to see more contests for influence and more actors challenging what the United States will do. When the U.S. is not the guarantor of this order, the dynamic invites boundary testing.

“We see this with Iran’s missile testing, even after the Iran deal. We see it with Russia’s invasion of Ukraine and hacking into the Democratic National Committee’s computers. We see it with China’s aggressive maneuvers in the South China Sea. We see it with North Korea’s escalation in the frequency of its nuclear and missile tests,” Zegart said.

Boundary testing is not healthy for international relations – it raises the odds of crisis escalation. “Meanwhile, leaders are so busy managing the crisis du jour that seeing emerging dangers becomes much more difficult,” Zegart said.

To address the challenges, U.S. national security policymakers should “return to the basics and ask what our objectives are in a more chaotic world and what strategies we think will best achieve them, and then deploy resources to meet those objectives,” Zegart said.

Guiding principles

The working group that she and Krasner co-chaired advocated three guiding principles for U.S. national security strategy.

“First, we have to be unapologetic about the pursuit of American economic and security interests, and more tempered in the pursuit of our ideals. We have always as a nation stood for universal freedoms but we have pursued those freedoms abroad in different ways, to different degrees, in different times as the external environment demanded and internal capabilities allowed,” she said.

Zegart said the U.S. should lead by democratic example, not democratic imposition.

“The most fruitful path toward spreading democracy is not toppling dictators without a clear path to a successor regime. It comes from bolstering civil society for internal transitions to democracy and demonstrating the benefits of democracy here at home,” she said.

Second, the U.S. can reform the international order by bolstering alliances and regional organizations, Zegart said. This includes Europe and the Asia Pacific region, and international institutions like the United Nations, World Bank and International Monetary Fund.

“We are advocating pragmatic international engagement, not isolationism,” she said.

Third, Zegart suggests that America can develop flexible unilateral capabilities that can be deployed against a wide array of increasing threats.

“The world is uncertain and our resources are limited. Smarter spending starts with developing more agile military capabilities and more robust non-military levers to advance our vital interests. We need Pentagon acquisition reform, moving from exorbitant, niche weapons systems like the F-35 Joint Strike Fighter and investing in low-cost unmanned systems and cyber capabilities,” she said.

Zegart noted that Defense Secretary Ashton Carter is working hard to reform the way the Pentagon does business, but he faces resistance from entrenched interests.

As for the domestic and political impacts of a less stable world, Zegart said it is difficult to foresee all the consequences.

But she pointed to some disturbing indicators: growing chaos across the Middle East, rising nationalism in the U.S. and Europe, rising tensions in the Asia-Pacific region and domestic politics in many countries.

“I worry about rising political violence, erosion of trust in many institutions, not just political ones, and the backsliding of democracy, both in the United States and abroad,” she said.

Contact

Amy Zegart, Center for International Security and Cooperation: (650) 725-4202, zegart@stanford.edu

Clifton B. Parker, Center for International Security and Cooperation: (650) 725-6488, cbparker@stanford.edu

Stanford foreign policy experts discussed flashpoints around the world at an OpenXChange event this week.

Three of Stanford's most seasoned international affairs experts discussed foreign policy and diplomacy – and practiced a bit of it on stage, too – as they tackled the topics of refugees, Russia and other politically thorny issues at a campus forum March 1.

The event, "When the World Is Aflame," featured Condoleezza Rice, a Stanford political science professor and former U.S. secretary of state; Michael McFaul, director of Stanford's Freeman Spogli Institute for International Studies and former U.S. ambassador to Russia; and Jeremy Weinstein, a Stanford political science professor and former director for the National Security Council.

Janine Zacharia, a Stanford visiting lecturer in communication and former Jerusalem bureau chief and Middle East correspondent for the Washington Post, was the moderator.

The event was hosted by OpenXChange, a campus initiative to provide a forum for students and community members to focus on today's societal challenges.

"So you were resetting some of my policy?" Rice half-jokingly interjected, as McFaul discussed the objectives behind the U.S. trade talks with Russia a few years ago.

"It was not about making friends with the Russians – I want to make that clear," McFaul continued after the laughter in the audience died down. "And it wasn't that we needed to correct the wrongs from the previous period," he said, casting a quick glance over at Rice. "The Russians had an interest in giving the Iranians a nuclear weapon. Our answer was, no, and let's work with them to prevent that."

A series of trade sanctions with Russia were eventually accomplished, but as it turns out, McFaul noted, the political environment has since changed with Russia's aggression in Crimea, Ukraine and Syria.

Today's conflict in Syria was laid about four years ago, the panelists agreed, when the United States decided to aid the rebels and not overtly attack the current regime.

"There were reasons our president and others did not go down that path, but it was an invitation to others to play games in that environment," Weinstein said. "What their endgame is, we don't know."

Rice added that Russian President Vladimir Putin "does not mind countries that basically don't function." As such, "a stable, functioning Syria was never his definition of success."

Zacharia asked, "Are you saying we have yielded the endgame to the Russians in Syria? There is nothing we can do? And we're playing defense?"

"Yes," Rice answered.

"Wait, there is no endgame," McFaul said. "It's not that we yielded the endgame."

"Right," Rice replied.

Though the panelists' opinions differed at times, the trio of political science professors agreed on many points, including that international order is being tested, and that the refugee crisis is an overwhelming problem – one that the United States should help resolve.

"I'm a firm believer that America has a moral obligation to take [refugees]," Rice said. "But let's remember that we have to have a way to take them that is actually going to work within the system."

"We have a humanitarian architecture that simply isn't up to the task," Weinstein said. Securing congressional funding to reform the system will be a challenge.

What's more problematic, McFaul added, is that the current political rhetoric about how the United States should handle refugees is "based on fear."

"We're not having a rational debate about this in my opinion," McFaul said. "We have to fill the debate with empirical facts instead."

Public fears will continue as long as extreme Islamic State terrorist groups remain influential, "inspiring lone wolves like [those] in San Bernardino," Rice said, referring to the December 2015 terrorist attack there that killed 14 and injured 22 people.

"Somebody has got to defeat ISIS in its crib," Rice said. "They march in columns; they don't hide in caves like al-Qaeda. If CBS News can find them, then the American military can find them."

The tougher challenge, however, will be the task of influencing sectarian politics and creating a more stable state in the long term, Weinstein said.

Stanford – with its cache of expertise – should strive to shape the national dialogue with concrete facts and analyses, McFaul said. Inspiring students and giving them the foundational tools to become the new generation of policy leaders is also part of that, he said. Adding a course on Russian politics would also be an improvement, he said.

Weinstein is a senior fellow at the Freeman Spogli Institute. Rice, a former Stanford provost, is the Denning Professor in Global Business and the Economy at Stanford Graduate School of Business and the Thomas and Barbara Stephenson Senior Fellow at the Hoover Institution.

The panelists urged students to gain a deep knowledge of the areas and issues they care about.

"Know your facts," Rice emphasized.

"When you're making policy decisions at the table, the people who understand these places and understand the political dynamics – those are the people whose voices are second to none around the table," Weinstein said.

"And we need to get you prepared for that in a more robust way," McFaul said, inviting students to pass any ideas about this to him.

In terms of career choices, "there's nothing greater" than public service, he said. "Sometimes I would get goose pimples when I could stand in front of Russians with the American flag behind me, representing the United States of America."

China's tight control over its economy is one reason why it is facing an economic slowdown of global implications, Stanford scholars say.

China's stock market fall is now in its third week, and share prices have lost a third of their value since mid-June, though the market is still higher than a year ago. China has the world's second-largest economy, with deep financial links to the United States.

Nicholas Hope, director of the China Program at the Stanford Center for International Development, which is part of the Stanford Institute for Economic Policy Research, said the simple answer behind the slowdown is that "nothing grows at 10 percent forever."

However, the dropoff is sharper than the government of China expected or desires, he noted.

Hope said the deceleration is due to the effects of slow growth globally on international trade, slower progress than hoped in rebalancing the Chinese economy toward spending more on consumption and less on investment, and the inefficiency of much of Chinese investment. Another big problem is the debt load of local and regional governments.

Hope does not think the steep fall of China's stock market is comparable to the American crash of 1929 – "so long as the Shanghai market index remains comfortably above where it was a year ago."

Yet the "frighteningly sharp correction" over the past few weeks highlights the fragility of the Chinese financial system, he said. It also serves as a cautionary tale for the many small investors who speculated on high returns with borrowed money.

"Borrowed funds have financed many risky economic investments in infrastructure by subnational [regional and local] governments as well as stock purchases by unwise investors," he said. "The result threatens to be an unwanted increase in non-performing loans in the banking system as borrowers are unable to repay."

Hope believes China can overcome its problems if it adopts economic reforms aimed at fostering more private enterprise and less state control over the market. Back in 1993, China's Communist Party announced those reforms and updated them in 2013, so they are technically on the books.

"Paradoxically, current weaknesses could be a longer-term source of strength, as the shares of income and consumption in Chinese GDP rise, investment is increasingly more efficiently allocated by a transformed financial system and all factors of production – land, capital and labor – are put to more productive uses," he said.

To counteract the market drop, the government ordered state-owned companies to buy shares, hiked the amount of equities insurance companies can hold and offered more credit to finance trading. Hope said this may cause a problem.

"It is introducing considerable moral hazard by attempting to bail out small investors because of the concern over the potential for social unrest if too many of those investors lose all of their savings," he said.

Charlotte Lee, associate director of the China Program at Stanford's Walter H. Shorenstein Asia-Pacific Research Center, says it is too early to tell if the market fall will diminish the credibility of the government and Communist Party in the eyes of the people. China's President, Xi Jinping, does want to maintain his popularity.

"The government's management of the economy is, however, one of the pillars of its credibility," Lee said.

She described this as a "small dent" in that credibility, as the government has many other ways it aids the Chinese people.

Opening up the economy

Stanford Professor Darrell Duffie says that it will be hard for China to maintain its past high growth rates.

"China's growth rate is still very high, but it is less high than it was because most of the giant pool of cheap and underutilized labor that China had 20 years ago has by now been put to work relatively productively," said Duffie, the Dean Witter Distinguished Professor of Finance at the Graduate School of Business.

"Additional sources of productivity gains are harder to find," he added.

Duffie is concerned about excessive leverage in China's equity markets.

"Chinese investors have borrowed a lot of money to invest in equities. This margin financing was used too aggressively. China's corporations and local governments are heavily indebted, and that will be a drag on future growth," he said.

He suggests that China would do well to continue on its current course of opening up its economy to cross-border capital flows and reducing its economy's reliance on state-owned enterprises.

If China's economy slows down, the country will decrease its demand for American goods and services, he added. American businesses that plan to operate in China should learn as much as possible about how China's economy and government works.

And Duffie advised, "Whenever possible work with trusted partners in China."

Asian power games?

With China ramping up its military in recent years, what are the risks to U.S. national security if China's economy plunges?

Amy Zegart, co-director of Stanford's Center for International Security and Cooperation, said it is possible that a slowing economy might make China behave differently in terms of its hard and soft power.

"For all the worry about a rising China, a fragile China is bad for the United States. The Chinese Communist Party's legitimacy rests on a promise of economic prosperity. The more China's growth falters, the more party leaders will be driven to stoke the fires of nationalism to secure domestic support," said Zegart, who is also a senior fellow at the Hoover Institution.

She added, "We've seen this movie before. It stars Vladimir Putin behaving recklessly abroad to win political support at home as his economy stalls."

Clifton Parker is a writer for the Stanford News Service.