The Phantom War has begun

The Phantom War will be different from all the others that came before it. There will be no triggering incidents, no frantic diplomatic efforts to stave off conflict, no declaration of war, no battles, and there will be no end to it. It will certainly, however, take a huge toll, destroy lives, shake great nations, and, ultimately, almost certainly result in death and mayhem. It may even result in more traditional forms of conflict.

And make no mistake about it, the Phantom War will touch you personally and, in all likelihood, it will rock your world … and I don’ t mean that in a good way.

Indeed, you will understand just how different Phantom warfare from the fact that it has already begun and most people don’t even know it.

Some dimensions of the war have made headlines, such as the successful Stuxnet attack on Iran’s nuclear program. Others are hinted at in reports, such as the just released report from the U.S. Office of the National Counterintelligence Executive (ONCIX). The 2011 report, produced in compliance with an act of Congress, details the degree to which foreign powers are actively invading U.S. cyberspace and conducting thousands upon thousands of operations that in a more traditional sense might be called reconnaissance, spying or sabotage.

The report is particularly striking in that it calls out Russia and China as particularly egregious violators who pose "significant and growing threats" to America’s security and economic vitality. Calling them "the most aggressive collectors of U.S. economic information and technology," the ONCIX report goes on to predict that the two rival powers "will almost certainly continue to deploy significant resources and a wide array of tactics" in support of their efforts to level the playing field between themselves and the United States. But of course, the implication is clear, particularly in the wake of Stuxnet, cyber-reconnaissance and spying are just the tip of the iceberg. They test our defenses, test our borders and prepare for the days ahead of deeper engagement.

Said one experienced U.S. diplomat with whom I spoke this week, "the war is already under way and we are ill prepared for it. We know it is going to happen but we don’t have the doctrines or the strategic awareness we need to manage the growing threat." Said one investor with whom I spoke this week, "This is the black swan I worry about. One day…one day soon, in the next couple of years…I expect a power grid to go down or a stock market to be penetrated in a way that will cause a massive disruption, even a panic."

There are signs everywhere that the issue is growing in importance and being viewed with a sense of urgency by those who are aware of it. Take this week’s cybersecurity forum in London designed to address a problem that Britain alone estimates already costs it 27 billion pounds per year. Or look to the story that stirred some notoriety earlier this week when it was revealed the international group of online hackers known as Anonymous were challenging Mexico’s brutal Zetas, a cartel that has been reaping havoc near the U.S. border for years. (See the New York Times: "After a Kidnapping, Hackers Take On a Ruthless Mexican Crime Syndicate.") The latter story indicates that just as modern conflicts are often between state and non-state actors, so too will this new form of conflict involve a plethora of groups all with very different objectives, often very difficult to trace or tell apart.

"America still hasn’t quite understood that we are opening Pandora’s box. Take drones. We feel we can use them anywhere, soon others will be using them against us. There are dozens of countries around the world developing their own drone technology or buying what is out on the market. The same is true for technologies like those associated with Stuxnet," said the former senior diplomat who has worked closely throughout his career with the military and intelligence communities. Or as another journalist friend of mine put it who has been covering the issue closely, "The day after Stuxnet was like the day after Hiroshima. We had the technology and no one else did. But within a matter of a few years that had changed." So had the nature of modern warfare…and by extension of modern diplomacy and that’s what is going to happen here.

Imagine wars that were conducted constantly, wars in which both sides might not be bent on destroying one another but would rather focus on capturing resources or slowing down economic performance or producing popular frustration or distributing misinformation or manipulating elections or markets. Shutting down power grids or stealing money from bank accounts or spilling pollutants into a river are old hat with current technologies. Imagine what the future might hold.

This is already triggering an arms race but unlike past such races, new technologies will be deployed all the time and small groups of non-state actors will be able to produce almost identical results as massive state-sponsored efforts might. Technological advantages will also have a much shorter shelf-life. Launch a worm and you provide your enemy with the means to replicate it or defend against it the next time. And because this really is Phantom War, retaliation is going to be challenging and international treaties about respecting borders or sovereignty will be worthless. In many respects, they already are, vestiges of another era in which conflict wasn’t invisible and conducted at the speed of light.

The costs to individuals and companies trying to defend themselves will be hundreds of billions…much higher after the first few publicized attacks. And, as a scenario I once helped out with at Davos a few years indicated, the attacks don’t have to be successful to have a devastating impact. Imagine the consequence of simply a rapidly spreading perception that a stock market’s security had been compromised and that prices were being manipulated. We’d be back to paper trading or no trading at all in a matter of hours.

While the world looks to the economic crisis in Europe this week, acknowledging that international finance is the first place we are feeling the risks associated with living in such a closely interconnected world, there are rumblings of further such risks. But how long will it take for us to come up with a strategy to defend ourselves and limit damage in this already on-going war….or an appropriate code of ethics for conducting it…this war that it seems quite likely no one can ever win.