One learns to stay open to what John Cage, William Burroughs, and Brion Gysin characterized as “chance operations,” integrating the role of chance and serendipity into one’s scenario planning discipline of “sensemaking and pattern recognition.” William Gibson captured the approach in the character of Cayce Pollard, the fictional protagonist of the 2003 novel Pattern Recognition. Simply put, it is tracking and curating with just the right percentage of open, intuition-based filters. So imagine our surprise when some of the recent insights from Chris Ward’s (Senior Advisor at OODA LLC and an OODA Network Member) – “Decoding of DoD’s Pacific Missions” – converged with our recent deep dive into The Digital Residency Program of the Pacific Island Nation of Palau and our previous tracking of activity in Guam. Following is what is blipping on the geopolitical radar and converging in the Islands and Territories of the Pacific and Oceania.
Contents of this Post:
The Sociotechnical Framework
June 5, 2024: Palau Confirms ‘Major’ Cyberattack, Points To China
June 2, 2024: A Pacific Island With Ties to Taiwan Was Hacked. Was It Political?
May 20, 2024: U.S. Coast Guard visit to Republic of Palau strengthens maritime navigation and cooperation
May 2, 2024: Guam National Guard launches State Partnership with Palau
April 8, 2024: ‘They’re lying’: Palau denies claims by ransomware gang over recent cyberattack
April 4, 2024: ‘An attack on the reputation of Palau’: officials question who was really behind ransomware incident
March 25, 2024: Japan Runs Inaugural Cyber Defense Drills With Pacific Island Nations
February 25, 2024: Rise of Digital Money: Implications for Pacific Island Countries (IMF)
December 20, 2023: US missile defense proposal stirs debate in Palau
February 2022: The Digital Residency Program of the Pacific Island Nation of Palau
What Next?
Decoding DoD’s Pacific Missions: A conversation with OODA expert Chris Ward
OODAcon Global Risk Briefing for 2024
Additional OODA Loop Resources
The Sociotechnical Framework
Research team members from Data & Society – an independent nonprofit research organization focused on the social implications of data, automation, and AI (which is celebrating its 10th anniversary this year) – “Drawing on established literature and historical and present-day examples”…Policy Director Brian J. Chen and AI on the Ground Program Director Jacob Metcalf explain what a sociotechnical perspective is:
“Despite its increasing adoption — or perhaps because of it — the term ‘sociotechnical’ may be among the most misunderstood… Generally, a sociotechnical perspective means viewing society and technology together as one coherent system. In other words, it is not possible to understand the “social” without the “technical,” nor the “technical” without the “social.” Explaining the outcomes of any technology requires focusing on the messier “middle ground” between these two realms. A sociotechnical approach recognizes that a technology’s real-world safety and performance is always a product of technical design and broader societal forces, including organizational bureaucracy, human labor, social conventions, and power.
Palau’s President Surangel Whipps on…confirmed the Pacific archipelago, one of Taiwan’s few diplomatic allies, had suffered a major cyberattack, pointing the finger at China. “This is really the first major attack that we’ve seen on government records,” he told reporters in Tokyo, a day after holding talks with Japanese Prime Minister Fumio Kishida. Palau is one of just 12 countries and states worldwide that diplomatically recognise self-ruled Taiwan, which China insists is part of its territory. Taipei said on Monday it was ready to help Palau beef up its digital defences after the New York Times reported that more than 20,000 documents had been stolen from Palau’s government. “I think China wants to weaken those relationships, show our vulnerability, and what a great way to do it by hacking our system,” Whipps said.
The president said the documents were stolen in March, just as the United States agreed to a two-decade aid package for Palau, and weeks later they appeared on the dark web. Ransomware group DragonForce claimed responsibility for the hack, the New York Times said, citing analysts as saying it would be unusual for China to subcontract such an operation.
“Palau’s claims that China orchestrated the attack remain unproven. But it’s clear that the breach presents a danger for another ally of Palau: the United States.”
Palau, a clump of about 350 small islands in the Pacific Ocean, has become increasingly important to the United States as China tries to build clout in the Indo-Pacific. This year, Washington finalized a long-delayed plan to give Palau hundreds of millions of dollars in aid over two decades. Hours before diplomats gathered at the U.S. Embassy in Palau to toast the agreement, the island nation was hit by an enormous cyberattack. More than 20,000 documents were stolen from the government.
A few weeks later, in April, they appeared on the dark web. There was a presentation about a U.S. radar installation on Palau marked, “For Official Use Only.” There were crew lists of Japanese Navy ships that had visited Palau. And there were hundreds of documents detailing the close relationship between Palau and Taiwan.
The leaders of Palau say the hack was orchestrated by China, which claims Taiwan as its territory and was meant to send a message. Beijing has enticed other countries, like Nauru, another Pacific nation, to sever ties with Taipei.
A ransomware group known as DragonForce has claimed responsibility, saying it carried out the hack purely for financial gain. The group has threatened to do more harm to Palau.
Whatever the motivation, the breach presents a danger to the United States. Hackers could use the information gleaned from it to tailor more sophisticated phishing attacks, experts said. And regardless of whether DragonForce was acting alone, the episode is another reminder of the threat of mercenary hackers.
Officials in Palau, which hosts U.S. military installations and occupies crucial shipping lanes that would be used to defend Taiwan in a conflict, say the attack was politically driven and that China was involved.
Lying about 550 miles east of the Philippines, Palau was administered by the United States in the decades after World War II. It became independent in 1994 but has maintained close ties with Washington through an agreement known as “free association.” This gives Palauans the right to work, live and study in the United States, which funds the local government and gets military access to the archipelago of about 20,000 people. Its nearest neighbors, Micronesia and the Marshall Islands, have a similar relationship with the United States.
Palau is set to receive about $900 million in aid from the United States over two decades. But the monthslong delay in the approval of the agreement had raised fears that China could wrestle an advantage in the region.
Taiwan also gives financial aid to Palau, and some of the leaked documents showed how it had financed Palau’s presence at international forums such as the United Nations and the COP climate summits. Taiwan is excluded from these gatherings because of objections from Beijing.
On May 14, 2024, the U.S. Coast Guard completed a vital weeklong mission in the Republic of Palau, setting the stage for future collaboration and bolstering safe maritime navigation and security. This visit, in response to a request from Palau Marine Transportation, focused on an Aids to Navigation (ATON) Subject Matter Expert Exchange (SMEE). The exchange laid the foundation for a future SMEE planned for later in the year, including personnel from the 225-foot sea-going buoy tender, USCGC Hickory (WLB 212). Palau, a nation consisting of approximately 340 islands and renowned for its maritime heritage and strategic location in the Pacific, plays a crucial role in regional maritime safety, security, and environmental stewardship. With its vibrant tourism industry and commitment to marine conservation, Palau’s efforts are vital for the economic and ecological health of the region.
Lt. Anna Maria Vaccaro and Lt. Jay DeInnocentiis led the U.S. Coast Guard SMEE team. They met with Palau Marine Transportation leadership and ATON technicians to discuss the fixed and floating ATON constellation in Palau. The team also reviewed the equipment storage and set-up for fixed and floating aids. They went to sea with the marine transportation team to inspect the aids on the reef and observed the establishment of a fixed aid.
Palau requested U.S. Coast Guard assistance with establishing four additional fixed aids in locations challenged by the rapid depth changes and strong currents. A microbeacon barge, a type of barge equipped with microbeacon technology which often is used for shallow water ATON positioning and coastal navigation, is the most suitable asset for this task due to the channel’s bathymetry. The barge is provided by the U.S. Coast Guard and will be delivered by USCGC Hickory upon the buoy tender’s arrival back to the Western Pacific. The Palauan team plans to use the microbeacon barge for servicing coastal aids to navigation in shallow waters.
In addition to the SMEE, Capt. Nicholas Simmons, U.S. Coast Guard Forces Micronesia/Sector Guam commander, and Capt. Robert Kistner, the incoming commander, traveled to Palau for brief yet impactful introductions and to express gratitude for the support received during Capt. Simmons’ tenure as commander.
Strategic Importance of ATON
The strategic relationship between the U.S. Coast Guard and the Republic of Palau is vital for ensuring maritime safety, security, and prosperity in the Pacific region. The ATON system is crucial for safe navigation, preventing maritime accidents, and ensuring the smooth flow of marine transportation. This system supports economic activities, fisheries, and the overall security of maritime routes, which are essential for Palau and its partners. “The economic and environmental value of ATON in maintaining a safe and efficient maritime transportation system cannot be overstated,” said Capt. Simmons. “Our collaboration with Palau Marine Transportation demonstrates our commitment to enhancing maritime safety and supporting our partners in the Pacific. It has been a privilege to be in Palau, and I am profoundly grateful for the exceptional relationship and hospitality extended to us.”
Future Support
The Service tentatively plans an ATON SMEE accompanied by the Hickory and crew for late 2024 to further engage with Palauan partners and establish a realistic timeline for servicing aids in Palau. This continued partnership underscores the U.S. Coast Guard’s commitment to supporting maritime navigation and security in the region, reinforcing the positive impacts and legacy of reliability.
“Our continued collaboration with the Republic of Palau is a testament to the strong strategic partnership we share,” said Capt. Kistner. “By working together, we can enhance Palau’s maritime transportation system and build local capacity, ensuring the safety and security of its waters and contributing to the stability of the broader Pacific region. We are deeply grateful for Palau’s cooperation and support in this mission.” The U.S. Coast Guard Forces Micronesia/Sector Guam team focuses on maritime safety, security, and stewardship in Oceania. With a primary presence in Guam and Saipan and over 300 members across Guam and the Commonwealth of the Northern Mariana Islands, the team maintains a strong U.S. presence in the Micronesia sub-region and adjacent areas, closely tied to local communities.
In a historic ceremony at the Ngarachamayong Cultural Center in downtown Koror, Palau President Surangel Whipps Jr., Guam Gov. Lou Leon Guerrero and Col. Michael Cruz, adjutant general of the Guam National Guard, signed a declaration formalizing the nation’s newest state partnership between the U.S. Territory of Guam and the Republic of Palau. Senior Enlisted Advisor Tony Whitehead, senior enlisted advisor to the chief of National Guard Bureau; U.S. Ambassador Joel Ehrendreich; Palau Vice President J. Uduch S. Senior, and members of the Palau National Congress and Council of Chiefs witnessed the ceremony.
Managed by the National Guard Bureau and executed with combatant commanders, the State Partnership Program develops enduring relationships, improves interoperability, and enhances the readiness of the United States and partner nations to meet emerging challenges together. The program has been building relations for over 30 years and includes more than 100 nations. This year, NGB selected the Guam Guard to partner with Palau.
“When we talk about commonalities between Guam and Palau, we voyaged as warriors and seafarers thousands of years ago,” said Leon Guerrero. “Our ancestors braved the seas and storms with no computers or science at all, except the feel of the current and wind, the temperature of the water, and knowledge of the stars. We are innovative and resilient people who have weathered world wars, colonization and struggles for political identity. This partnership is just one way we will continue fighting for and defending our freedom.”
Guam and Palau’s island of Peleliu were sites of major battles during World War II. Although Palau has no military, the State Partnership Program fosters a whole-of-government approach. Opportunities include exchanges in law enforcement and border security, cyber protection and resilience, medical and civil engineering community engagements, humanitarian assistance and disaster response. Staff Sgt. Christina Adelbai, UH-72 Lakota helicopter mechanic for the Guam Guard’s aviation detachment, greeted the audience in native Palauan before reading the Declaration of Partnership in English. “I just want to take a moment to say how proud I am of this partnership,” Adelbai said. “To be a Soldier in the Guam National Guard, standing here as a daughter of Palau, there’s a lot of pride.”
After the ceremony, Whipps shared the importance of the newly signed partnership. “We are here today to celebrate and, really, I think, to begin a new chapter in this relationship that creates a lot of opportunities for our people to continue to help each other in that Pacific Way,” Whipps said. “Caring for each other and helping each other build each other up. Most importantly, being prepared and keeping our Indo-Pacific free and open and ensuring that our values, our democratic values, are made strong.”
“The incident drew speculation about geo-political motives due to its timing with the signing of an agreement between Palau and the US government.”
The government of Palaudenied several new claims by a ransomware gang that the two sides were in contact following an attack last month. The DragonForce ransomware gang officially posted Palau to its leak site on Sunday, threatening to publish data stolen from the island-nation’s government in three days. Why it matters:
The DragonForce ransomware gang’s threats to publish stolen data from Palau‘s government are being taken seriously, despite Palau officials’ insistence that the contents of the stolen files are neither sensitive nor significant. This emphasizes the nature of cyber attacks as not just technologically disruptive, but also as potential sources of misinformation and confusion.
Cyber attacks like this one on Palau‘s Ministry of Finance can have tangible real-world impacts even if the targeted government contends the stolen data isn’t critical. Palau had to resort to issuing paper checks for wages, an inefficiency that underscores the dependency on digital systems and the disruption that can ensue when these systems are compromised.
The incident drew speculation about geo-political motives due to its timing with the signing of an agreement between Palau and the US government. Ransomware attacks, traditionally perceived as financial crimes, could also potentially serve more strategic, politically-charged purposes, which could alter how these threats are responded to internationally.
Government employees on the island of Palau came into work on March 14 and booted up their computers like any other day. But when the Windows screens wouldn’t load they called up IT. Why it matters:
The Island of Palau‘s recent ransomwareattack may have roots in geopolitical tensions. In particular, Palau‘s longstanding issues with China, which has been juggling for control and support from Palau‘s government, may have led to the cyberattack. The timing of this event, coinciding with a ceremony between Palau and U.S. officials, has led some to speculate that it is an attack on Palau‘s reputation as well as that of the U.S.
Ransomware groups LockBit and DragonForce, who left ransom notes during the attack, did not negotiate or accept any payment. This unusual behavior suggests the attack could be a form of sabotage rather than a typical financial heist. The presence of dead Tor links in the ransom notes also emphasizes this unusual aspect of the attack.
Palau‘s solid cybersecurity response minimized damage from the attack. Despite the cyber incident, its government had backup data and was able to restore the encrypted server within five days. No evidence of data exfiltration was found, suggesting no data was stolen. The experience from a previous attack allowed Palau to respond effectively to this one, demonstrating the importance of comprehensive cybersecurity planning and preparedness.
Kiribati, the Marshall Islands, Micronesia, Nauru, and Palau participate in the cybersecurity exercise held in Guam: “Hackers could attack government networks and crucial infrastructure of Japan and Taiwan…via these countries.”
Japan held cyber defense exercises with five Pacific island nations last month in an effort to shore up cybersecurity defenses in the region. The cybersecurity exercise event, held in Guam in mid-February, was a first for Japan. Japan’s Ministry of Internal Affairs and Communications led the event, which included government officials and network providers from Kiribati, the Marshall Islands, Micronesia, Nauru, and Palau, with Fiji and Tonga on-site as observers.
“When it comes to cybersecurity, Pacific island countries have been what I call a ‘soft belly,’ very vulnerable to cyberattacks,” Hideyuki Shiozawa, senior program officer for Pacific island nations at the Sasakawa Peace Foundation, told Kyodo News, which reported on the event. “Hackers could attack government networks and crucial infrastructure of Japan and Taiwan, for example, via these countries,” he told the media outlet. “Giving these countries technical training and providing them with antivirus software and other cybersecurity tools will also reduce security risks in other parts of the Indo-Pacific.”
“…the paper suggests that a regional approach could help address capacity and scalability challenges in introducing new digital money forms and payment methods in PICs.”
Summary
The departmental paper, “Rise of Digital Money: Implications for Pacific Island Countries,” delves into the fast-evolving landscape of digital money in a diverse region of extremes in size, remoteness and dispersion, highlighting its significant macroeconomic and financial consequences. It provides an overview of the development of digital money and payment systems in Pacific Island Countries (PICs), assessing potential benefits and risks, with a focus on how they can harness digital technology to enhance financial inclusion and payment efficiency while minimizing risks. To this end, the paper also examines the prerequisites for successfully adopting various forms of digital money and proposes a strategic framework for policy decisions.
The paper underscores the potential of digital money in advancing public policy goals, like financial inclusion and improved cross-border connectivity – given the specific characteristics of the region – while cautioning against the risks of rapid and inadequately regulated adoption. Accordingly, it advocates a gradual, well-informed approach, tailored to PICs’ unique monetary and financial circumstances, including the presence of national currencies and the maturity of payment systems. Moreover, the paper suggests that a regional approach could help address capacity and scalability challenges in introducing new digital money forms and payment methods in PICs.
“Although there are growing concerns that the U.S.-China rivalry may be headed toward conflict, the biggest challenges facing Pacific island countries are climate change and economic growth.”
The U.S. and Palau are discussing the permanent deployment of advanced missile defense systems in the Pacific island nation, Palau President Surangel Whipps said part of Washington’s efforts to check China’s influence in the region. The revelation of talks over missile defence systems comes as U.S. President Joe Biden host a second summit with Pacific island leaders at the White House…while the meeting focus on climate change, economic development and health care, the U.S. sees such high-level engagement as paving the way for more military cooperation to counter China. The competition for influence over Pacific countries has become more intense since Beijing signed a security pact with Solomon Islands in April 2022.
A U.S. senior administration official recognised that the strategic competition motivated Washington to step up its engagement with Pacific island nations. “There’s also no question that there is some role that [China] has played in all this, no question that its assertiveness and influence, including in this region, [have] been a factor that requires us to sustain our strategic focus,” the official told reporters. Palau, which has received economic assistance from the U.S. in exchange for defence cooperation under a decades-old agreement, is increasingly concerned about China’s aggressive maritime movement near its territorial waters.
A Chinese research vessel operated within Palau’s exclusive economic zone in May and August without permits, Whipps said in an interview.
“I think that’s a clear violation of the rule of law in our understanding,” Whipps said, adding “it sure looks” like the ship was conducting maneuvers to study the possibility of cutting off undersea cables in the event of a crisis. “We expect that the U.S. military should be present and also [help] deter these types of activities,” the president stressed, expressing his hope for more frequent port visits by U.S. Navy ships. “We are a believer that the way you preserve peace is through strength,” Whipps said, citing former U.S. President Ronald Reagan’s foreign policy doctrine.
Palau has become an increasingly important partner for the U.S. military due to its strategic location between the U.S. territory of Guam and the Philippines. The U.S. has plans to install over-the-horizon radar systems in Palau in 2026. They are expected to enhance air and maritime domain situational awareness for U.S. and allied forces as the Chinese military extends areas of operation to the Pacific Ocean. Palau has asked the U.S. to deploy Patriot air defence systems because the radar systems may make Palau a more likely target in a conflict, Whipps said with China in mind. While Patriot systems were temporarily deployed there during an exercise, the island has requested permanent deployment. A U.S. Defence Department spokesperson said that the Pentagon “routinely assesses requirements for what capabilities and assets to station and rotate throughout our military installations, as well as locations where we have access.”
The Patriot air defence system is capable of responding to a wide range of threats such as ballistic and cruise missiles, and aircraft. Ukraine is operating the defence systems to repel barrages of Russian missiles. Although there are growing concerns that the U.S.-China rivalry may be headed toward conflict, the biggest challenges facing Pacific island countries are climate change and economic growth. Climate change is “destroying our crops. It’s invading our homes, and it’s really going to destroy our culture and our heritage, and what is so valued with us,” Whipps said.
But the U.S. is not politically positioned to make long-term commitments, as Democrats and Republicans remain divided on climate change. Washington might scale back its climate pledge and assistance if a Republican wins the presidential election in November 2024. This uncertainty over its climate commitment, along with China’s advanced economic engagement across the Pacific islands, has weakened Washington’s standing in the region.
State-owned Bank of China opened its first representative office in Papua New Guinea while Beijing proposed a free trade agreement with the island this year. This economic push took place after the U.S. and Papua New Guinea signed a defense cooperation agreement in May. The Biden administration acknowledged the U.S. is lagging behind China in terms of economic support.
In the first of our case studies in the OODA Loop Digital Self-Sovereignty Research Initiative, we turn to the digital residency program of the Pacific Island nation of Palau. Add digital residency platforms to the list – along with non-nation-state APT hacking groups and non-nation-state drone armies – as an at-work mechanism in the potential dissolution of the centrality (and/or the partial or complete disintermediation) of nation-states as the organizing principle (and principals) of geopolitics and global conflict.
The annual OODA Global Risk Briefing was the penultimate session at OODAcon 2023. Jen Hoar spoke with Johnny Sawyer about the strategic prism business leaders need to apply to the geopolitical risk environment. Following are the insights from the discussion.
The Global Polycrisis: The Middle East, China, The Indo-Pacific, Russia, Ukraine, and NATO: Polycrisis: A cluster of interdependent global risks create a compounding effect, such that their overall impact exceeds the sum of their individual parts. The geopolitical players and regions of the global polycrisis (jagged transitiosn, strategies, binaries fractures, major developments, and crucial events) summarized here include: The Middle East, China and the Indo-Pacific, and Russia, Ukraine, and NATO.
Geopolitical Trends
Great power competition introduces new corporate risks, from supply chain disruptions to cyber threats. This competition extends to resources like food, water, and rare-earth elements, with heightened risks surrounding global computer chip supply.
Russian Invasion of Ukraine: Russia’s aggression against Ukraine prompts global repercussions on supply chains and cybersecurity. This act highlights potential threats from nations like China and could shift defense postures, especially in countries like Japan. See: Russia Threat Brief
Economic Weakness in China: China’s economy faces dim prospects exacerbated by disasters, COVID-19, and geopolitical tensions. Amid limited financial transparency, some indicators suggest China’s economic growth is severely stunted, impacting global economic stability. See: China Threat Brief
Networked Extremism: The digital era enables extremists worldwide to collaborate, share strategies, and self-radicalize. Meanwhile, advanced technologies empower criminals, making corruption and crime interwoven challenges for global societies. See: Converging Insurgency, Crime and Corruption
Food Security and Inflation: Food security is emerging as a major geopolitical concern, with droughts and geopolitical tensions exacerbating the issue. Inflation, directly linked to food security, is spurring political unrest in several countries. See: Food Security
Demographic Time Bomb: Industrialized nations face demographic challenges, with a growing elderly population outnumbering the working-age demographic. Countries like Japan and China are at the forefront, feeling the economic and social ramifications of an aging society. See: Global Risks and Geopolitical Sensemaking
Daniel Pereira is research director at OODA. He is a foresight strategist, creative technologist, and an information communication technology (ICT) and digital media researcher with 20+ years of experience directing public/private partnerships and strategic innovation initiatives.
