Russian President Vladimir Putin is showing no signs of backing down from his military onslaught in Ukraine and could further escalate actions to achieve his goals of neutralizing and disarming the country, top U.S. intelligence officials said on Tuesday.
The unprovoked war against Ukraine by Russia combined with a unified U.S. and allied response to provide lethal defensive weapons to Ukrainian forces, severe economic sanctions against Russia, and the commitment of NATO allies to the wholesale defense of the alliance has dramatically buoyed investor sentiment in U.S. defense sector.
Since the end of January, the valuations of prime contractors in the defense industry are up 34 percent and up 13 percent for information technology (IT) services providers, Sheila Kahyaoglu, an aerospace and defense analyst with the investment firm Jefferies, wrote in note to clients on Tuesday morning.
“We think this momentum is here to stay as US budgets along with int’l spending could increase,” she wrote.
For the IT services companies, they would benefit from increased spending on cyber and network security but increases in defense spending may mean lower spending for federal civilian agencies, which could be a negative for these companies, she said.
Testimony provided by the intelligence officials on Tuesday is likely to buttress these sentiments about the attractiveness of the defense sector.
“I think Putin is determined to dominate and control Ukraine, to shape its orientation,” CIA Director William Burns said during a House Intelligence Committee hearing on the annual global threat assessment by the U.S. intelligence community. “This is a matter of deep personal conviction for him. He’s been stewing in a combustible combination of grievance and ambition for many years.”
Burns said that at the moment, Putin’s “personal conviction matters more than ever” because of how he has narrowed his circle of advisers and because they are afraid to disagree with him.
Despite the challenges that Putin didn’t expect, including stiff Ukrainian military resistance and crippling sanctions, “Putin is unlikely to be deterred by such setbacks and instead may escalate, essentially doubling down to achieve Ukrainian disarmament and neutrality to prevent it from further integrating with the U.S. and NATO if it doesn’t reach some diplomatic negotiation,” Avril Haines, director of national intelligence, told the panel.
She said Putin’s calculus of victory “may change over time” based on the how high the costs are to him.
Burns said that Putin’s challenge is finding a way out of his mess.
“He has no sustainable political end game in the face of what is going to continue to be fierce resistance from Ukrainians,” Burns said.
The intelligence officials testified during the first part of the committee’s threat review, which was open, and was followed by a closed session that was classified.
Rep. Adam Schiff (D-Calif.), the committee chairman, asked about the Russian cyber threat to the U.S. stemming from the war in Ukraine.
Army Gen. Paul Nakasone, director of the National Security Agency and commander of U.S. Cyber Command, replied that the current focus is on Russian-backed ransomware actors that could attack the U.S. and its allies, cyber-attacks against Ukraine that end up spilling into other countries, attacks against allies, and attacks against U.S. critical infrastructures.
FBI Director Christopher Wray agreed with Nakasone, adding that he is concerned with the “spillover” attacks because Russia has previously shown it can’t always contain the effects of the malware it releases, pointing to the 2017 Russian military NotPetya ransomware attack against Ukraine that ended up spreading worldwide.
Wray also said there is also concern that Russian-based cyber criminals could act in support of Russia or by “taking advantage of perhaps the more permissive operating environment that now exists in the middle of this conflict to attack us through cyber criminal means.”
Later in the hearing, Rep. Jackie Speier (D-Calif.) asked why Russia hasn’t conducted cyber-attacks in Ukraine and whether the U.S. might also be at risk.
Nakasone said that Russia has conducted several cyber-attacks against Ukraine that “we’ve watched and we’ve tracked very carefully.” As to why Russia hasn’t done more, he attributed this to efforts by Ukrainian cyber defenders, “some of the challenges that the Russians have encountered and some of the work that others have been able to prevent their actions and so it has not been what we would anticipate when we were going into this several weeks ago.”