By Tom Still
MADISON, Wis. – It’s tempting to think Russia’s invasion of Ukraine won’t have an immediate effect on the United States, much less Wisconsin, which lies some 5,000 away from the fighting.
It’s the rest of Europe that should be worried, many might reason, not a powerful nation guarded by oceans to the east and west and friendly neighbors to the north and south.
Tempting, but probably not very accurate.
Beyond drops in Wall Street markets and rising prices at the gas pumps, the war in Ukraine could hit home in many ways – especially in an economy already tested by the pandemic, inflation, supply chain woes and the likelihood of higher interest rates. However, the biggest danger may be cybersecurity attacks.
The Russian economy itself may be ill-prepared for the war President Putin started. Despite its vast physical size and large population, Russia’s overall economy isn’t a world leader. Economists have noted Russia’s economy is smaller than Canada, Italy and South Korea, to name a few. Quoted this month in the New York Times, Harvard economist Jason Furman said Russia is “basically a big gas station” anchored by its energy resources.
With oil, coal and natural gas reserves that all rank in the world’s top five, however, Russia is an essential gas station for many of its neighbors.
Economic risks extend beyond energy. If Ukraine falls, the U.S. semiconductor chip industry could be hurt. Ukraine is a major producer of neon gas critical for lasers used in chipmaking and supplies more than 90% of U.S. semiconductor-grade neon.
Russia also exports materials used in production of jet engines, automobiles and more. Plus, it’s among the world’s biggest producers of wheat and Ukraine isn’t far behind.
In terms of direct trade in Wisconsin, however, Russia is not a major player. According to the Wisconsin Economic Development Corp., it ranks between 25 and 30 on the list of state export destinations, in a neighborhood with Spain, Peru, Costa Rica and Colombia. Wisconsin’s largest trading partners are Canada, Mexico and China.
Aside from direct military threats, Russia’s main weapons against the United States in a 21st century “hybrid war” are cyberattacks.
In addition to sanctions aimed mainly at leading Russian banks and elite families, the federal government has warned of possible Russian attempts to digitally bring down businesses, institutions, even public utilities.
As part of what is being called the “Shields Up” initiative, the Cybersecurity and Infrastructure Security Agency is encouraging businesses, public agencies and other organizations to make sure their “most critical digital assets” are protected.
Other experts are saying much the same. Writing this week in the Harvard Business Review, cybersecurity expert Paul R. Kolbe observed that “early cyber-skirmishing has already begun… (with) vigilant U.S. companies noting dramatic increases in cyber probing.”
Kolbe quoted the chief executive officer of Dragos, a leading cybersecurity firm, as saying: “We have observed threat groups that have been attributed to the Russian government … performing reconnaissance against U.S. industrial infrastructure, including key electric and natural gas sites in recent months.”
Scott Singer, a retired U.S. Navy captain who is part of the Madison-based CypberNINES firm, said private companies that work in the defense industrial base can expect tighter vigilance. Such companies can get some free help at https://www.nsa.gov/About/Cybersecurity-Collaboration-Center/.
“For all companies, number one is to have a good backup of critical data and then disconnect the backup from the internet,” Singer said. “Also, ensure virus software and systems are at current patch levels; have multi-factor authentication turned on; and, having a code texted to your phone is not as good as using the native phone app to get the tokens. There will be an increase in spearphishing. Do not open links in emails from unknown sources.”
The invasion of Ukraine is already leading to loss of life, destruction and instability in a country that treasured its freedom from the former Soviet Union. What remains to be seen is how far, and how deep, the effects of that war extend to the world and U.S. economies.
Geography has long protected America from invasions such as what has taken place in Ukraine. In a digital age, however, physical and economic borders can be pierced.
Still is president of the Wisconsin Technology Council. He can be reached at tstill@wisconsintechnologycouncil.com.
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