Industry sign banking alaska presentation secure
well first I have to start off with an apology I hadn't realized that before DC you all had gone to torrey pines and Napa Valley and other lovely places like San Diego here obviously it's a cold rainy day in Washington DC and you have to listen to policymakers and I really can't think of any any way to say it other than I'm sorry from the depths of my heart also I wanted to say thank you to Pat to Bernard to all of the executive team here at OSI what you do to those of us who are policy makers is magic it's just the same as pulling a rabbit out of a hat the engineers of the world my grandfather was an engineer he worked on getting airplanes to vibrate less during world war two and to those of us who are in the policy world we see what you do as the backbone of our country and as what is going to move us forward into the next century and do the rest of this one every time this country has moved in a major direction it's been becuz of Engineers when I was driving this summer for my summer vacation I drove from Alaska down to Colorado and was listening to books on tape and one of the books i was listening to was Einstein about the physicist and the other was about the Transcontinental Railroad in the building of the railroad the great engineering feat of the 19th century and arguably engineers were behind that and now they're behind the great engineering feats of the 20th century the dams the electricity that we managed to move across the entirety of our country right after the Great Depression and now you're behind the greatest feat of the 21st century bringing the sensors bringing the internet bringing the smart grid into being so thank you for all of the work that you're all doing my job here is to really talk a little bit about policy politics and national security my own background is from the policy world i'm a think-tank person i think a lot I went to Oxford I went to Yale I'm supposed to be smart about this stuff and now I run norges station that trains policymakers politicians and so on to understand these issues we train about 200 congressional staff a year just yesterday we trained every single Democratic challenger for Congress hopefully we'll do the Republicans later on we'll do the Senate in in November so we do a lot of trying to educate the policymakers and the political leaders and then we do a lot of work with veterans and the military and the DoD because energy particularly is a big issue for them and obviously national security in general is very important and what that means is that I crossed the three tribes of Washington DC the political folks we call them the hacks the policymakers who we call the wonks and the military who we call the troops and the Truman project that I run is all about bringing the hacks the walks and the troops onto the same page so that they're looking at the world from the same place and that is stunningly difficult to do we're all problem solvers here you as engineers and myself as a policy maker but today we're going to look at admiring a problem which is what those of us in the policy world spend a lot of time doing we admire the problem before we actually try to solve it you should also know that I come from the Republic of boulder now I just flew over here yesterday morning in the midst of a foot of snow and that means that energy is on my mind a lot as you probably know Boulder is one of the places where they're doing demonstration pilot projects on the smart grid you've got a lot of energy folks working there all the time so it's an exciting place to be energy is an issue of jobs it's an issue of technology and it's an issue of security in different parts of Washington focus on different parts of these issues but we're going to hone in on security and I'm going to talk first about the fuel system since fuel is mostly fueled by oil ninety-four percent oil and then about electricity which is about half coal of course and then a mix of other things nuclear and gas when you look at the fuel system of our country the first thing that strikes you from a security perspective is supply chain bottlenecks so you look at turkey you look at the Straits of Hormuz you look at varying narrow places where terrorists or an accident could sink a tanker and all of a sudden you would not be moving oil through the world there is a group here called safe securing America's future energy that has a whole war game with all sorts of glitz and glamour that they do for policymakers here where a terrorist group sinks a tank are right in the Straits of Hormuz and suddenly all sorts of craziness happens with the oil system so that's the first thing that comes to mind but there's a lot of other insecurity in the fuel system first of all al-qaeda had already declared that this was their number-one goal of attack was was fuel system pipelines and so on the infrastructure the physical infrastructure and of course it's very open it's a very soft target as we say lots of pipelines lots of space that's unguarded lots of plants all over the world and so there's been a lot of work hardening these the Saudis have had numerous attempts to hit their their pipeline infrastructure and we worry about that forty-three percent of our oil comes from countries where the State Department has a travel advisory warning that includes Mexico but you know it's a it's a problem and America has less than five percent of the total reserves even if we tap all of my home state Alaska and so these are all issues but with the oil market we security folks don't solely focus on where it comes from because in a lot of ways it doesn't really matter oil is a global commodity the price is set on the global markets even if we're buying it from Canada we're affecting the global market price and what that means is that every time we buy oil and we're twenty five percent of the market for oil every time we is America by oil we jack up the price around the world including in Iran where we have a ban on buying oil so in 2008 when oil prices spiked Iran got sixty percent of its gdp from oil that means that we are inadvertently directly fueling Iran's nuclear program this worries us security folks every five dollars that the price of oil goes up eight billion dollars goes to Iran a great deal of money goes to Russia Russia also has a very energy-intensive economy now of course there are a couple different prices for oil it's the the of heavy crude versus light crude and so on but generally speaking this is a large problem for the use of oil in our country there's also a problem of terrorism we get oil from countries like Saudi Arabia countries that are allies of ours but some of that money that gets into private hands is getting into terrorists hands and it doesn't take a whole lot terrorist action is very cheap actually Richard Holbrooke the former Richard Holbrook who was the the Czar of the afghan-pakistan situation and really an incredible diplomat one of the last things he did right before his death was started to draw the lines between oil money and terrorist financing and showing how it was worked nobody wanted to talk about this because Saudi Arabia is an ally of ours that's where a lot of the money is flowing from and it's going through private hands and some of those private hands are connected to the royal family it's a very large royal family and so it's something that's very uncomfortable to talk about but I should have started off by saying this is off the record I was raised by wolves in Alaska and I tend to be blunt but please it's off the record I've spent time in Saudi Arabia I would like to be able to go back so this is a problem that our own money is fuelling terrorism the former director of the CIA Jim Woolsey who I've done some work with and written with says this is the first war this war on terror first war since the Civil War where we're funding both sides and think about that here we're spending billions of dollars a year were impoverished in our own country fighting this war on terror and yet we're also paying for the people on the other side of it to fight us that doesn't make a whole lot of sense and those of us in the security room start thinking well gosh what do we do to move away from oil there's also another problem with oil which is the deep connection between dictatorship and oil there's a lot of research on this West Point did the most recent studies on it and what they found is that the vast majority of countries where oil is making up most of their gdp more than sixty percent of the gdp are dictatorships there's a lot of reasons for this you have a natural resource that you can extract that means that a government can get rents very easily they don't need a tax base necessarily a lot of the company a lot of the countries that rely on oil for most of their gdp don't need to tax their citizens well we might all hate paying taxes but if you don't pay any taxes then your government really doesn't need to do much for you because there's not that reciprocal relationship I live in the last guy I can speak to this very very well we don't pay taxes there's no income tax in Alaska the government does do a whole lot there we don't have garbage collection we don't have public water and a lot of the co-state whole bunch of things don't get done because there's not there's not that reciprocal relationship it's even more so in a lot of other countries the dictatorships that all spawn might seem like just a human rights issue but in fact another study West Point did was looking at the root causes of terrorism there's been a lot of talk about what causes terrorism is it caused by poverty is it caused by ideology is it caused by family recruiting networks well a little bit of all of these things seems to be true but the strongest correlation is actually with dictatorship much more so than poverty much more so than even just ideology is this combustible mix of ideology plastic tater ship plus poverty with dictatorship being the strongest correlated variable and that actually makes some sense what happens is people don't have the ability to speak right there's no way to voice your concerns in a peaceful way so groups become violent some little fringe group becomes violent they're angry about something the government being a dictatorship tends to crack down on that group they crack down too hard more people become angry the group grows now you have a bigger group that's angry the dictatorship grows and it's pushing down of that problem and you get ass vicious cycle that grows and grows and that's how you get a lot of terrorist activity around the world that combined with the al-qaeda ideology is part of what we're dealing with that combined with oil money means that dictatorship real problem oil is fueling it and those of us in the secure field start saying well gosh how do we turn oil into something that is not fueling our economy because right now ninety-four percent of our transportation is fueled on oil we don't want to slow that down our security also rests on economic security no country that has not been a strong strong economy has been a great power in this world so how do we get economic security how do we get economic growth while cutting down our oil so that we're not fueling all the problems that are coming back to bite us that are costing us on the on the economic side as well as on the on the side of the lives of our soldiers and troops overseas so that's the fuel economy then of course there's also and i should add here that some people then say well you know let's just buy it locally let's have local oil let's drill locally of course we don't have enough here and then other people say FN all is the answer at the truman project at least we don't think ethanol is the answer because ethanol then jumps into throwing you from the frying pan into the fire because ethanol is an extremely inefficient fuel the the amount that you get for the amount that you put in does not work out very well mathematically speaking i leave this to you engineers but from what i can look at when i see the numbers and that throws you into the issue of climate change well why should we care about climate change i'm a security person i do come from alaska so i have seen that our snow is decreasing every year up there but why does the security world care about this isn't this just an issue for the birkenstock crowd in Boulder Colorado that you know wants to wants to cause problems well actually the CIA has now created a center for climate change and they're studying it they have a satellite that's actually studying the polar ice caps because they're worried that Russia will be coming through that polar ice cap will be looking at the northern passage and that can cause all sorts of problems for who controls the Seas who can get where militarily more quickly Russia has already put a flag down there near the North Pole claiming that it's theirs so the CIA is quite worried about climate change the DoD is also worried about climate change they also have an office for climate change well why is that what's this strategic issue with climate change a number of things first of all a lot of people in the security community look at climate change is a threat multiplier it's not causing the threats but it is causing a multiplication effect that metastasizes them into something much more dangerous much more frightening and problematic so look at countries like Bangladesh Bangladesh to Delta country largely underwater heavily Muslim country extremely poor while they're not really a dictatorship I did election monitoring over and Bangladesh they're officially a democracy but it's an extremely corrupt democracy and they have real problems and al-qaeda has been doing recruiting in Bangladesh Pakistan we all know about Pakistan huge problems with terrorism in pakistan huge problems with recruiting it's where the Taliban are coming from that are fighting us in Afghanistan Pakistan is a nuclear-armed country well guess what climate change is heavily affecting those regions of the world Bangladesh is likely to be underwater if it continues what does that do it throws refugees into India which is right next door well India is already erected a fence they're not waiting to see one hundred percent science they've already erected a fence to keep out Bangladeshi refugees and they're shooting refugees for trying to come across the border right now hundreds a year well as that number increases you get a war between Bangladesh and India a Hindu country in a Muslim country do you get a tense situation between a nuclear-armed country and a country that has friends and high places and the rest of the Middle East you could that would not be good on the Pakistan side a fifth of Pakistan was underwater last year what happens when a country goes underwater like that well a lot of people are killed a lot of bad things happen to individuals but the first people on the ground helping those people are not the US Marines we did send people out there it takes a while to get people from here to there the first people on the ground helping them just like here our church oops except that some of their church groups are terrorist groups not all of them by any means but some of them and they particularly like to exploit natural disasters and tragedies so that they can provide charity health education and so on and then bring people into their ideology so the madrasas and so on set up and people are destabilized from their normal lives they're accepting this help and then they're brought into an ideological world that causes us trouble and this has become a huge problem in Pakistan as severe weather events continue particularly in that part of the world we'll see more and more destabilized people searching for help and also feeling the need for some kind of answers right some kind of theocratic or metaphysical answers that's going to cause us more and more problems because the prom with terrorism that we're fighting is not primarily a guns and bullets problem it's a hearts and minds problem it's what's going on in the hearts of people and people who are destabilized who are feeling at a loss who are looking for something some kind of meaning are more likely to move toward a more fundamentalist ideology that causes us tr
uble it's also a threat multiplier in parts of Africa so it's no surprise that if you look in Africa most of the problems that we're having our along a single line of latitude it's called the Sudan of suhail line and it goes through Molly it goes through Ethiopia it goes through parts of Somalia it's a line that goes right through there happens to be a line of desert ification place where things are getting drier and drier the arable land is getting less and less climate change is exacerbating that causing more desert ification well what happens you have resource wars you have resource wars in the Sudan they were one of the exacerbating factors and the Sudanese genocide you have resource wars in Somalia you have a huge famine going on right now in the Horn of Africa right right now over 800,000 people starving well climate change is exacerbating that and then it links up with other issues that are going on it links up with terrorist ideology it links up with countries fighting other countries it links up with tribes fighting other tribes and suddenly you have a whole realm of destabilized area running right through countries like Nigeria which is one of the places we get most of our oil a large percentage comes from Nigeria running right through countries where al-qaeda has bulkheads like Somalia and suddenly we have to respond and you might say we shouldn't respond why don't we stick to our knitting and stay closer to home but the reality is we're still the superpower in the world we're going to respond because we need to deal with those problems there before they come here and that means we'll be sending more blood and treasure into further and further parts of the world so we worry about climate change we also worry about climate change from some very practical reasons there's things like naval bases the ports are starting to the water rises it affects our ports can't use as many ports Diego Garcia which is one of the island basis that's way out in the South Pacific that we got during World War two places like Diego Garcia are sinking you know is the aisle are the waters rising take it either way that this causes a lot of trouble so there's very practical issues that our military is starting to think about with climate change and then of course there's physical and security and cyber and security in the electrical grids so if you aren't just thinking about the issue of the fuel choice what we're actually using for the fuel you can think about the actual physical issues going on of course there's cyber I know you all think a lot about this you're working a lot with the grid and the smart grid I was in China in January when Robert Gates the secretary of defense was there revealing that they had a stealth bomber and talking to them about this fact and i was on what's called a track to diplomatic mission so with the group of people from harvard former government leaders but all civilians who were having conversations with chinese government leaders chinese business leaders and so on at the same time and at some point one of the people who is with us who used to be the head of the National Intelligence Council which is kind of the think tank for the CIA or the whole intelligence community actually he said look I understand you're trying to steal our state secrets we're also trying to steal your state secrets that's espionage we get that that happens but you're also trying to steal all of our industrial secrets and that's not cool that's not a lie in the rules of the diplomatic game so what can we do to get you to stop stealing or all of our industrial secrets because it's causing us a real real problem and the interlocutors and the way things are in China when you're at one of these government meetings with the government guest house everything was bugged every time I came back to my room my cell phone would be turned on and I'd taken a sim card out so back in America so I wasn't using the cell phone everything is sort of being tested everything is scripted on the Chinese side there you're getting official government answers and what the answer he got back was look that's a feature not a bug we're trying to take your secrets that's the whole idea behind the way that we're operating in this world they saw trade in a very mercantilist way they saw trade very much as a zero-sum game rather than an all boats can grow or the pie can grow together we'll move forward which is how a lot of Americans see trade they saw it as look you can come here you can make money for a while we'll let you make as much money as you can for a little bit and then we'll learn what you do and we'll learn about how you do it and then we'll kick you out and we'll have companies that do the same thing that's the plan that's worrisome for a lot of reasons but it's worrisome particularly from an industrial perspective our own competitiveness perspective and for certain key industries such as your own particularly the electricity and energy industries it's worrisome from a national security perspective the wall street journal reported a couple years ago in 2009 that the Chinese had been hacking and the Russians also had been hacking and testing the SCADA systems that are connected to the electricity grid so all of these systems were not designed to be secure they were designed to move electricity from one place to another they were designed to be controlling systems we didn't think about security when they were set up and then they got connected to the internet when the internet came along again not a lot of thought about security it was more about how neat this was and how much more efficient it was well all of a sudden the Chinese and Russians have access to this and it seems like they're probably testing it well when I say this to people when I'm out in Colorado they say well okay so Chinese can turn on my washer dryer this doesn't really upset me that much you know maybe they will get things done more efficiently than I would but what we worry about is things like a war with Taiwan where the Chinese then turn out the lights on major military installations here you know what if they launch a war and then cause our systems to break down our entire military is hooked up to electricity grid it's a very important way that we function and if we can't use it if they have the ability to turn it on and off well boy that's a problem for us and so you're seeing responses trying to pull off and so on from the from the grid trying to watch my time here a little bit you also have this the issue of a weak and old and overstressed grid so natural disasters things like the branch that fell on the Ohio station number years ago caused the Northeast power blackouts it's another issue physical and security so how does DC respond how does Washington respond all of these energy challenges well let's go back to those three tribes that hacks the wonks and the troops and we'll take the wonks first the policy technocrats are looking at these problems and they say well how do we how do we deal with these problems and the policy technocrats tend to be divided up by agency and so some people are looking to sell right Department of Commerce they're here to help you sell other departments Department of State Department of Defense National Security Agency there to protect and they're just looking through that lens there's not a lot of looking through multiple lenses so you get a lot of regulation that's what happens on your end the electricity grid gets declared a critical infrastructure it's been a critical infrastructure for a long time that has a whole lot of repercussions and suddenly there's more and more regulation saying hey this is a real problem we're very worried about this we need you to fix it because we policy people might have gone to fancy schools but we don't have engineering background we don't know how to solve it all we know is that we're scared this is a problem and we need you to do something and that also results in badly written regulations because when you're regulating something that you fundamentally don't understand that well on the technical end you can get some really problematic regulation that there's it's very difficult to bridge and so the need particularly in the cybersphere to bridge this gap between those of you who have the technocratic background and those of us who have the policy background is particularly important I was saying earlier to somebody that the the cybersphere the way that it's being looked at in Washington it's just like the sea the air the water the earth when the military looks at these that you know the sea is the Navy's right the earth is the Army's the air and space are the Air Force cyber is just a whole nother realm and it's a realm where good things happen commerce happens industry happens and it's a realm or bad things happen that need to be protected and we're still wrapping our head around what do we do in this realm how do we protect it what do we do about it so that's how the policymakers are responding and how did the military respond to the troops well the military tends to be very pragmatic and they have a whole lot of solutions and have a whole lot of money so they can throw things at problems so first the military started looking at well what are we actually paying for fuel and instead of counting it at the wholesale price they started looking at what they call the fully loaded cost of fuel which is how much does it cost by the time it gets to the theater of war and what they found a man named Colonel Nolan started that Colonel Dan Nolan really smart guy he knew how to push the bureaucracy to move so they'd been counting oil based on their wholesale price but when you get it into the theater suddenly you get prices like four hundred dollars a gallon to get oil to Afghanistan well gosh suddenly now your price your pricing becomes much more thoughtful how much you're actually spending and then they started looking at the cost in human lives and they realize that in the Afghanistan and Iraq Wars for every 24 fuel convoys that went into those countries one person died so every twenty-four convoys a soldier marine died that's not a great ratio and so they started saying how do we reduce our fuel how do we reduce consumption and they looked at all sorts of things they have all sorts of interesting / terment power Aaron so they did everything from HVAC efficiency moves they started putting foam on the edges are all around installations in the desert because the foam kept down the HVAC costs tremendously reduced the number of convoys that needed to go in and if you think about these convoys just to make it real these are oil tankers right there snaked out through the desert to get into one place or their snaked out through Pakistan to get through one mountain pass which is a bottleneck mountain pass these are sitting ducks the one of the most dangerous jobs in these countries is to be a truck driver and so they start doing all of these HVAC improvements they start looking at ways they can reduce fuel by biofuels by looking at local fuels they start looking at distributed generation of energy they start looking at waste to energy production so they can use the waste from a Forward Operating Base that's out in theatres to burn it or to combust it in one way or another and create fuel so they don't have to drag it in lots and lots of innovation going on with the pricing they start looking at gosh can we can we use biofuels can we use synthetic fuels what can we do so that we're not funding the enemy at the same time that we're trying to fight wars they're trying to move away from oil for that reason as well they're doing a lot of micro grid work I know some of you are going on to a DoD micro grid conference but they're really expanding with micro grids they're also experimenting with getting bases fully off grid because they're worried about this ability of the Chinese they're less worried about the Russians for a whole bunch of reasons that we could talk about but they're worried about the Chinese being able to turn on or off the lights so they're taking nellis they're trying to take various spaces completely off grid as an experiment and then they're looking at things because they're trying to do that they're looking at renewable energy sources as well so okay we want to take it off grid we know we need to firm so they'll probably be using natural gas or something like that is affirming but they're trying to look at renewable sadar / which is the really amazing innovative platform that lets them do very quick turnaround innovation DARPA's developed solar panels that are forty-two percent efficient it's pretty good for a solar panel so they're looking at things like that lots and lots of innovation going on in the military space that's all of it oh and then the Navy is also trying tidal harvesting so they're looking at you know can you harvest energy from the tide which is pretty neat then how do politicians look at all this well the first thing they look for is jobs because right now everything is about jobs and so you've got the military saying let's not fuel our own threats so let's move away from oil let's look for local sources of energy so that we stop paying 400 bucks a gallon to get oil to theater and let's start moving toward renewables and off-grid and other things here at home so that our enemies can't turn on/off our lights politicians are saying where do we have industry here where can we build jobs who's buttering my bread right those kinds of questions and in politicians should be thinking about jobs and about their major industries at home and about how to employ people but what that means is politicians in the farm States democratic or republican are looking at ethanol right simple it's easy politicians and places like my home state are looking at oil and drilling same with Texas Louisiana places like that Colorado where I live now solar pet solar power is now a bigger employer than oil and gas in Colorado just surpassed the oil and gas industry so suddenly they're all about renewable energy so you kind of have a thousand flowers blooming in the political space and there's some really direct reasons for that and it's not necessarily ideological much more fueled by geography much more fueled by where they're sitting you also have politicians who have to deal with a whole lot of issues and they're making laws very very quickly they're making laws quickly in response to major events in the world so you get things like the blackout in 2003 and you get a major law passed in 2005 that says secure the whole energy grid somehow that kind of thing happens all the time when Newt Gingrich came into power the whole contract with america one of the things he did is to slim down government was he took the brains out of the house he took all of the think tank parts that were in the house out of the house the senate still has some of them but what that means is that they're working with very little information you also have a political class that's working with very young staff has anyone here seen in the loop there's a movie about DC so there's a scene in this movie the British come over to America it's about the Iraq war and it's a comedy it's made by this British comedian and so the British come over here and they're sent to have a briefing with the White House and they sit down with this 23 year old kid and the character who's based on a real character from the British government whose very potty-mouthed just starts cursing at this kid so angry sitting down with his 23-year old when he's a very high up person well that's what happens in our government all the time because the house actually does not have particularly the house does not have that much money for Steph and so they pay their staff 25,000 bucks a year 30,000 bucks a year well who's going to work for that you get a lot of kids right out of college some of them are moonlighting at other places we held our first conference and went to dinner and we were talking about national security policy and all sorts of things and the waiter was extremely attentive and afterward I thanked him I said you know we're not that wealthy a group I really appreciate that you were so attentive I'd like to give
ou a big tip and and he said oh no I'm a staffer on the hill I'm moonlighting here as a waiter and I just really love this stuff I was excited to be listening in to your conference so you know if you've got that and that's who your brains are on the house side this is not to denigrate them they're often very smart kids but they're covering a lot of issues right your policy makers are voting on everything from how to regulate the financial world to electricity grid cyber security to the post office in their local area to veterans benefits I mean the level of things they have to cover is immense and so they turn to these kids to help them out they can get a little bit of help from outside lobbyists give them a little bit of help they get a little help from think tanks but they really need your help to understand the issues better they really need the help of technical people who are able to explain things to them to understand what they're regulating because what they get is a cry for help some story comes out in the Wall Street Journal that says the Chinese are hacking the grid and there's a cry for help and all of a sudden people are lobbying them there's action somebody needs to do something where they're going to pass along and if that law isn't good it's because they don't have the resources and the ability and the thinking to make it good and so they need the help to do that because one thing you can be certain of is in this energy world that we're living in there will be more law and there will be a lot more attention over time this is an issue that isn't going away Pakistan right now is having riots because their electricity grid keeps browning out and Pakistan is very hot even this time of year it's over a hundred degrees a lot of the time you don't want brown outs with a lot of poor people or it's over a hundred degrees and people are mad that kind of thing is happening over there here in this country nobody wants another California style bra no nobody wants to be governor of a state that's going through that and so people are worried about that and we see these threats that are coming down the pike and we say gosh we have to move away from oil it's pretty clear that that's a cause of our security threats there's a great book out by um and Israeli and American here and Corinne and God left called turning oil and assault that is all about taking a strategic commodity salt used to be a strategic commodity military's would fight over salt because it was how you preserved food and if you couldn't preserve food your nation couldn't survive and so there are lots of wars but the Brits fought wars a result well nobody even thinks about that anymore you don't think about where your salt comes from you still use salt will still use oil but there's a real push on the security community to make it less strategic to make it matter a lot less meanwhile there's a real push for renewables because of the climate change issue because of all the security problems that are coming up around climate change and also because of the availability now of natural gas there will be a renewal there's another way to firm it to firm the renewables that seems more acceptable to some of the environmental community and so on so politische we're going to be able to move in that direction so you're going to see the legislation moving in that direction of course there are some people who are pushing it back and pulling it back but if you if you would like it to move in that direction in a smart way if you would like it to move in that direction in a way that you will be happy with in your industries the more you're talking the more you're explaining to Washington the realities of the magic you do because it really does look like pulling things out of a hat the magic you do is pretty uncomprehensible to those of us who are working on the geopolitics and that sort of thing every day and the more you can explain that magic the better that the government will be able to be for you and hopefully the safer our future will be for all of us so thank you 15 three there but um it's a little bit of both so certainly some people have been banging this gong for a long time you know since the 70s we've recognized that oil was a weapon being used against us and 73 during the first oil embargo the OPEC oil embargo there were lots of articles about my gosh were hostage to this economic weapon and then oil went down it was cheaper again everyone forgot about it you know you've probably noticed how hard it is to get anything done in Washington DC if anyone can drop an issue they happily will and so the issue sort of rises and falls usually with gas prices right when gas prices are high 2008 1973 times like this everyone here gets very worried and they realized voters will care and they start looking at these strategic issues and at other times it's hard to get things through Congress other parts of the government might be working on them so the DoD I'll continue working but the DoD also has to deal with congressional legislation so my organization we do some advocacy as well we were just working because the Defense Department has been developing these biofuels and some folks up on Capitol Hill for more ideological reasons wanted to get them to stop actually wanted to get them to not have to move towards renewables there's legislation that says they have to move toward more renewables or toward synthetic fuels and some folks on Capitol Hill wanted to stop that because it's become ideological and so things that go up to Congress get gummed up so it's not that it's such a surprise but it's that it ebbs and flows in getting political attention for it the other thing is the way you put it was beautiful you should come up to Capitol Hill ma be some time that's beautiful metaphors being used very intelligently but um a lot of people have vested interests in the ways things are and so you need lobbying groups you need a push from different sides Jim Woolsey when you writes about this says you need the security Hawks the tree huggers the church groups who care about religious freedom in these countries all these people to come together to get something through Congress that's probably what's going to have to happen yeah I think you're absolutely right and a lot of it is not and this does not fall in the technical sphere this falls in the political sphere right when you look at the building of the Transcontinental Railroad which I know have read a book about on tape when you look at that it was held up for almost a decade by the slavery question because Congress was fighting about whether the riot would go through the north through the south the northerners did not want it to go through the south it was a slave state area at that point everyone knew that we needed a Transcontinental Railroad but it took a lot of ideological fighting to get to that point and so that's what you've got in Congress right now you've got technical solutions that you can move toward an ideological fighting that's preventing them over here and actually if you could if you could say where you're from or sort of where you're coming from now be helpful just out want some comments on road groups and how you feel they might impact all this groups like anonymous who might attack China or Russia or whatever you know they've been pivotal and what happened in Egypt etc and how will they impact decisions it's a real I just finished an article actually that's going to come out in December on just how much the foreign policy world is changing and how hard it is for us to wrap our heads around it for years and years we focused on other countries right a foreign policy was all about country to country action now you have hyper empowered individuals and groups who can organize over the internet for very very little money who can create bombs for very little money they don't need a military industrial base to create these things they get the plans off the internet they can communicate with one another by cell phones they can set off bombs with cellphones and suddenly you're in a whole new world of paper empowered individuals hyper empowered groups your threats can come from many different places and what that means is the security job is very difficult because for instance cybersecurity it can be very hard to prove who did it it's hard to find out where it came from there have been cyber wars now between Russia and Georgia and between russia and estonia in estonia it looks like the purse who did it was living in Estonia and so it was hard to show that Russia was the cause even though most people in the security community sort of figured Russia was the cause but proving it is very difficult and that makes it hard to retaliate based on the laws of war you've got countries that are taking advantage of this so China has invested heavily in cybersecurity as a state-based asymmetric threat against us there they see that we're an open society they're more closed society this is something they can use against us Russia has got a very different platform they've been developing it in-house they've got a Russian military cyber capacity but they also have just a lot of really smart nationalistic hackers and they've created this whole culture of kind of punk nationalistic hacker types who are hacking according to them according to the hackers there hacking based on their own nationalism their own patriotism for Russia now is that true are they really being paid off it's very hard to tell it's hard to tell if they're what we call catspaw organizations that have plausible deniability of separation from the government but are in fact controlled by the government or whether they really are rogue because of course we could have rogue groups here in America as well all it takes is some smart people some intelligent pcs I mean my laptop computer that fits in my purse is smarter than a 1960s supercomputer so it doesn't take that much and because it's hard to prove and because governments are using this cat's paw ability to separate themselves out and makes it very hard to stop now the good news is that America is at this point at least probably the best in cyber security we've invested the most we probably have the best capabilities but the fact that we're using it and it's pretty clear now that with the Iran Stuxnet virus that we launched against their nuclear facilities that that had something to do with America and something to do with Israel exactly what it had to do with those two countries is highly classified and not known but it probably had something to do with both of them now that that cats out of the bag it opens up the doors for lots of people to use this and there are no rules in this space no rules at all it's pretty it's pretty interesting there's a lot of areas now that don't have rules in them friends if we use a drone to kill someone in another country and that drone person using the drone is sitting in Nevada an Air Force Base in Nevada and then someone from that other country comes here and murders that drone user when he's going home to his family that night is that an act of war is that a crime a typical murder very hard to know cyber is exactly the same thing there's no rules Rachel Brice Barnes Cisco Systems managing architect for our manufacturing center of excellence quick question on the oil economy clearly we've identified an oil economy here there's a value chain that stretches all the way back to the Middle East and throughout the world there are enormous economic beneficiaries here at home to the oil economy how do we address the value chain from their benefit perspective these are oil companies these are agribusiness these are all types of economic entities even the American consumer themselves is benefiting from what is really an indirect subsidy to energy through our military how do we address the real problem at home and fundamentally change things so that it happens more naturally it doesn't have to be a policy as much as it is an organic change it's a very very smart question I put most of my money and most of my thought in technological improvements if you can make another source of energy cheaper people are going to move to that other source of energy and that's first of all probably the most likely way that this is going to happen because regulation and government is going to be very slow very problematic and it's the best way for this to happen because the people who use the most oil as individuals I'm not now talking about industry the individuals who use the most oil tend to be poorer people right when you're out in Nebraska I was at Nebraska at a ranch with a friend of mine who was running for Congress and he was campaigning well the nearest town to him was 60 miles away that was 200 people the nearest town with any real people was over an hour and a half away a lot of people in rural states in the Prairie states in the South are living in situations like that so you real don't want a huge tax on oil because it's a very regressive tax also for our industry you don't want a huge tax on oil because my gosh we have enough problems with our economy without slowing down the very engines that are driving jobs and so to me the best thing to do is to put some money into R&D to make it as as end user blind as possible to not favor one industry over another but try to put it into basic rd and move this along more quickly because ultimately if we can find something cheaper than oil people will move to that cheaper source now there are vested interests that are pushing against some of this there's some legislation now about open fuel standards and all sorts of things and their vested interests you really don't want to move away from oil but i think the nice thing about the slowness of our policy process is it it lets everyone see the writing on the wall so you now have oil companies and gas companies they see the writing on the wall they see where things are going and they're starting to diversify their investments right a lot of these companies are actually investment companies as much as they are anything else and as they as they diversify their investments if they're an oil company they're also investing in biofuels that kind of thing they'll make money they'll find a way to make money the ones that are smart or getting on that bandwagon already haha come talk to me after boy I wish I had a friendlier answer for you because this is the you know that is the 60 million dollar question right there one of our members of our trim and community who's in the finance industry trying to finance these projects was asking me something very similar couple days ago and this is this is the worry because you're dealing with a government and the government can change its mind and the financing requires long-term investment we're fighting right now there's the military wanted to invest in Montana and some alternative fuels in Montana and OMB the office of management budget was saying well you need to put the entire 30 year contract in the first year that's one way to be sure that you'll get paid right because it's all already budgeted it's already on the books it's also a way to be sure it will never happen because when you look at one year cost of fuel versus 30 years cost of fuel you know that's not going to cut it Congress will cut that right away so you have that tension right now um obviously we do have the rule of law here and contracts our contracts and even if government changes its policy it tends to uphold contracts so you have that comfort you also have the comfort that government rarely removes something once it put something in even if Republicans come in and don't like renewable fuels I mean we're still giving out peanut subsidies to farmers that were from the Great Depression right i mean we don't really have a problem with peanuts in this country but those farmers still get major subsidies same with cotton same with all sorts of things so it haha if you can learn peanuts into fuel then you really got a business mono i'm being told that there's one more but we can talk more afterward hello I just wondered if you would comment since she said you were in China and having these discussions what was talked about regarding very earth materia
s boy you know it was only talked about a little bit in China but I was talking yesterday with one of them one of our Truman community members who works in the State Department and has been working on economic statecraft Secretary Clinton just gave a series of four speeches where she's talking about the need for America to exercise economics craft which we've never done really a lot of other countries see their economy as a strategic asset and I use it in that way America has been much more laissez-faire about it rare earth minerals or something that people who studied that field have almost for a decade been saying hey look at what's going on here for the city who don't know this area rare earth minerals first we'll have a really sexy name which is useful for getting people's attention but they're actually somewhat rare we have them here in the United States but we have EPA regulations against mining them so we do have the ability to mine them here they're used for everything oh you know this more than I do but most of our electronics are now requiring some rare earth minerals China has cornered the market and turned off the spigot for a little while and that was a big wake-up call was probably very poor statecraft on their part because what it did was it we'd been a lot of us have been beating the drum on this for a while trying to get policymakers to realize that we needed to look at strategic commodities that other countries were investing sovereign wealth in because a lot of countries now have sovereign wealth funds is a fairly new thing and they're investing strategically in assets around the world both commodities and also businesses and Silicon Valley has a whole industry of this of other countries coming over to Silicon Valley and we hadn't been making a lot headway frankly with the with the political leaders they were having a lot of trouble understanding what the problem was because every country compares their model to other countries it's very hard for political leaders in any country to not believe that other countries are like them so when you go over to Pakistan the media thinks that our media is just a mouthpiece for the government because their media is a mouthpiece for the government right and so with rare earth minerals we would say look at what these sovereign wealth funds are doing look at how they're investing look at where they're cornering the market and a lot of people on Capitol Hill would say well that's the that's the market you know they'll have an interest in selling us where customers why would they cut it off and they just weren't thinking strategically the fact that China did cut it off meant that all of a sudden people realize no no this is not just a market this is a government that's choosing how to use it how to throw its weight around and so now I think you're going to see change you might see change here you might see some of those EPA regulations relaxed which would be the simplest way to deal with it you might see us starting to invest financially we don't have a sovereign wealth fund in America there's talk about having a national infrastructure bank that might be allowed to invest there's various things that can be done there's also a push in the State Department to use more serious economic statecraft against China not necessarily tariffs and kind of blunt instruments like that but just being a little more serious about how we act towards towards their gestures of that sort I think I think my time is up thank you
