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The Cyber-War Against Iran Is a Real War, and a Rehearsal for Future Conflicts

Despite talk of a diplomatic thaw between Washington and Tehran, the U.S. is already locked in battle

Lee Smith
October 09, 2013
Iranian youth play at an arcade that is decorated with portraits of Iran's late founder of Islamic Republic, Ayatollah Ruhollah Khomeini (L), supreme leader Ayatollah Ali Khamenei (R), and an Islamic religious portrait, in the city of Qom, on June 9, 2013.(Behrouz Mehri/AFP/Getty Images)
Iranian youth play at an arcade that is decorated with portraits of Iran's late founder of Islamic Republic, Ayatollah Ruhollah Khomeini (L), supreme leader Ayatollah Ali Khamenei (R), and an Islamic religious portrait, in the city of Qom, on June 9, 2013.(Behrouz Mehri/AFP/Getty Images)

The West’s war with Iran is a war of and for information. Waged by Israel, the United States, and European allies, this campaign has targeted the human vessels storing that knowledge. Last week, Iran’s cyber-warfare chief Mojtaba Ahmadi was found dead with two bullets to the chest, and at least five of Iran’s nuclear scientists have been killed since 2007. But Iran’s own information and knowledge have been treated as equally, and perhaps more, valuable targets. For instance, the joint Israeli-U.S. cyber-initiative known as Operation Olympic Games went after Iranian command-and-control platforms—including, most famously, the Stuxnet computer worm that sabotaged centrifuges at the Natanz enrichment facility.

The non-clandestine—indeed very public—sanctions campaign identifying and targeting the financial networks that have allowed the regime to plan its nuclear weapons program can be understood as part of the same effort. With Iran’s economy crippled and its currency in a nosedive, the Tehran regime has dispatched its emissary of light, President Hassan Rouhani, to seek relief even as Congress, over the objections of the State Department, is looking to pass another round of even stricter sanctions legislation.

While both hawks and doves seem to see sanctions as something short of warfare, the truth of our software-driven universe is that such measures damage their target in much the same way that bombs and seizure of territory do. The reason sanctions have had such a powerful effect on the Iranians, Juan C. Zarate, a former Treasury Department official in the George W. Bush Administration and author of Treasury’s War: The Unleashing of a New Era of Financial Warfare, told me, is that “they use elements of globalization to do big things. Not just to prevent a $100 attack, but to go after a WMD program and do strategic damage not only to the regime’s ability to get money, but also to budget for its future plans, for which you need to be connected to the global finance system.”

The United States and Israel are taking advantage of the newly globalized system that ties together all the world’s economies as well as its production of knowledge, a system whose commanding heights—banking, the Internet, and information technology—the United States and its allies now dominate. While some have seen the information war between the West and Iran as a prelude to a shooting war with bombs, air raids, naval maneuvers, and possibly large troop movements, the reality is that, taken all together, these campaigns are warfare.

The Islamic Republic may still manage a nuclear breakout. That will depend on Tehran’s resolve and ingenuity, as well as Washington and Jerusalem’s determination to prevent Iran from getting the bomb, and not simply contain its nuclear ambitions. Yet in targeting everything from the regime’s financial resources and its most advanced weaponry to key personnel and the regime’s psychological well-being, Washington and Jerusalem have already turned the nuclear showdown with Iran into a testing ground for a new way of war, which proceeds in classic, almost Clausewitzian fashion, but that has rarely been explained in a coherent fashion to the public.

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Zarate, along with his former boss at Treasury, Undersecretary for Terrorism and Financial Intelligence Stuart Levey, and Levey’s replacement, David Cohen, are among the key planners and strategists of this new type of warfare. Now a senior adviser at the Center for Strategic and International Studies in Washington, D.C., Zarate got his start as a federal prosecutor at the Justice Department, where he focused on terrorism and organized crime, before moving on to Treasury in August 2001. With the attacks on the World Trade Center and Pentagon a month into his new job, Zarate understood that protecting the financial system was a core American interest, as important in as many ways as protecting the U.S. homeland’s actual physical infrastructure.

Conversely, it wasn’t hard to see that targeting the financial networks of American adversaries could be as strategic as taking ground and appropriating their resources. After all, if the historical point of invading a country—France, say, or Ukraine—has been to take over its crops or herds or oil fields or whatever constituted the basis of its ability to feed its people and field its armies, here was a new way to destroy one’s opponent’s financial and military resources to continue to feed their own population.

In 2003, Zarate says, “Treasury saw that it was not just about protecting the financial system, but it was also about national security, so we made a decision to go after the bad banks in the system.” Zarate credits George W. Bush for “bringing all elements of national power to bear—economic resources, and using Treasury authority more broadly to go after the illicit financing that was fueling terror.” Naturally, al-Qaida was a Treasury target, but so were nation-states like North Korea, which served as a template for the constriction campaign that Treasury started against Iran in 2005.

“For a long time the orthodox view was that sanctions didn’t work,” Zarate said. “They hurt people that you didn’t want to hurt while it missed those you wanted to hurt, like with Saddam Hussein. But the difference with Iran was financial suasion. We moved to convince the private sector not to engage with suspect sectors of Iran’s economy, which means the Revolutionary Guard Corps. Our fundamental questions for financial institutions were, do you know who your customer is, and do you know where the money is going?”

Treasury’s new financial warfare isn’t about targeting individual assets, as Zarate explains, or physically impeding or blockading the transit of one particular export, like oil. “It’s not about whether you can get a stick of Wrigley’s in Tehran,” said Zarate, “but whether Iranian banks have access to plan the programs they want. It’s about locking in the undercurrent of the financial system to make it harder and costlier to do business. It’s about going after networks that finance bad actors, including not just banks but, for instance, Western Union. These institutions have to calculate the regulatory and reputational risk if they’d been found working with the individuals and institutions sanctioned, and this became a real driver for them.”

In other words, the U.S. Treasury Department has become the doorman or bouncer for the club that is the global financial system. If you’re a terrorist or a state sponsor of terror and you can’t get past the velvet rope, you look for another way in. But if you’re a financial institution caught helping bad actors, you risk banishment from the global club—which is equivalent to a death sentence. Still, Zarate admits that it’s impossible to “fully close the loop.” “There’s always going to be some way around,” he said, adding that sanctions are not a “silver bullet. These are part of the tools we have to gain leverage. I’ve been arguing for some time that they can’t be the only tools, and that we have to do everything to disrupt the Iranian nuclear program.” The Iranians are also fighting back, having enlisted Russian assistance to counter U.S. and Israeli cyber-initiatives.

What we’re watching unfold, then, is something like the information-age equivalent of the Spanish Civil War, with both sides practicing for future, perhaps even more dramatic battles. According to Rep. Mike Rogers, the Michigan Republican who is chairman of the House Permanent Select Committee on Intelligence, illicit cyber attacks by China, Russia, North Korea, and Iran have already cost the United States some $2 trillion in “lost and stolen property.”

This new anatomy of human conflict isn’t necessarily going to replace the old ways, for people will still die, resources will still be taken over wholesale, industries and economies will be destroyed, and the terms of surrender will still be imposed on the vanquished. It just adds another dimension, like fighter planes, submarines, and ballistic missiles, to the conduct of warfare.


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Lee Smith is the author of The Consequences of Syria.