FP’s Situation Report: Alexander cashes in post-NSA; U.S. accuses Russia of violating arms-control treaty; The Islamic State gets rich off oil; Duncan Hunter on Fallujah and Gaza; and a bit more.

By Kate Brannen with Nathaniel Sobel

FP Exclusive: A look at Keith Alexander’s post-NSA career and why he thinks he’s worth millions a month. FP’s Shane Harris: "Keith Alexander, the recently retired director of the National Security Agency, left many in Washington slack-jawed when it was reported that he might charge companies up to $1 million a month to help them protect their computer networks from hackers. What insights or expertise about cybersecurity could possibly justify such a sky-high fee, some wondered, even for a man as well-connected in the military-industrial complex as the former head of the nation’s largest intelligence agency?

"The answer, Alexander said in an interview Monday, is a new technology, based on a patented and ‘unique’ approach to detecting malicious hackers and cyber-intruders that the retired Army general said he has invented, along with his business partners at IronNet Cybersecurity Inc., the company he co-founded after leaving the government and retiring from military service in March. But the technology is also directly informed by the years of experience Alexander has had tracking hackers, and the insights he gained from classified operations as the director of the NSA, which give him a rare competitive advantage over the many firms competing for a share of the cybersecurity market."

How many patents does Alexander have up his sleeve? Find that out and more here.

Breaking overnight — The United States has accused Russia of violating a 1987 arms control treaty by testing a new ground-launched cruise missile. But, it’s worth noting, Russia’s actions are not part of its latest aggressive behavior in Ukraine. It first began testing these missiles as early as 2008, the NYT’s Michael R. Gordon reports: "…the Obama administration concluded by the end of 2011 that they were a compliance concern. In May 2013, Rose Gottemoeller, the State Department’s senior arms control official, first raised the possibility of a violation with Russian officials."

Ukraine’s role: "Administration officials said the upheaval in Ukraine pushed the issue to the back burner and that the downturn in American-Russian relations has led to an interruption of regular arms-control meetings."

While the White House knew of the violation, it wasn’t ready to go public with it until now. The next step will be high-level talks with Moscow over ways to bring Russia back into compliance with the Intermediate-range Nuclear Forces Treaty. Getting Russia to agree it violated the treaty was never going to be easy, but the task now appears near impossible given what’s going on in Ukraine and Russia’s refusal to take responsibility for its actions on the international stage.

EU leaders could announce new sanctions against Russia as early as today, after yesterday’s phone call with the White House got everyone on the same page. FP’s Jamila Trindle: "Western leaders say they’ve cobbled together a united front against Russia, a week and a half after the downing of Malaysia Airlines Flight 17 killed nearly 300 people. U.S. President Barack Obama on Monday afternoon spoke to the leaders of Britain, Germany, France, and Italy in a joint call, during which they agreed on tougher sanctions against Moscow. The United States says Russia provided the training and weaponry to the militants in eastern Ukraine who shot down the passenger plane on July 17."

But how tough will this new round really be? "Although the European Union agreed last week to consider sanctions against Russia’s energy, defense, and financial industries, it was unclear how far they would go. It’s still uncertain how broad the sanctions will be, but the call on Monday indicated a change of tone from last week, when EU politicians were trading barbs over whether Britain or France was more reliant on Moscow’s money." More here.

Turning our attention to Iraq … The Islamic State is growing rich off the oil business while many inside and outside of the country hope Prime Minister Nouri al-Maliki’s days are numbered.

FP’s Keith Johnson writes that even with its oil money, the Islamic State might not have enough cash to govern the territory it’s seized: "The money it can earn from illicit oil sales further bolsters the group’s status as one of the richest self-funded terrorist outfits in the world, dependent not on foreign governments for financial support but on the money its reaped from kidnappings and bank robberies … But even the millions of dollars a day that the Islamic State seems to be raking in by trucking stolen oil across porous borders is not enough to meet the hefty obligations created by the group’s own headlong expansion. Taking over big chunks of territory, as in eastern Syria and in northern Iraq, could also leave it forced to take on the sorts of expensive obligations — such as paying salaries, collecting the trash, and keeping the lights on — usually reserved for governments."

Michael Knights, a Middle East expert at the Washington Institute for Near East Policy, tells FP: "They’ve gone from being the world’s richest terrorist organization to the world’s poorest state." Read more here.

Meanwhile, Maliki’s critics are closing in. While Maliki handily won the most seats in April’s general election, it was still only a quarter of parliament’s seats, so Maliki was forced to form a new ruling coalition, something that could take months to do. In the meantime, the door has been left open for replacing him with someone else.

The WaPo’s Loveday Morris reported over the weekend that Shiite politicians were discussing other candidates who could lead the country. There have even "been hints from Grand Ayatollah Ali Sistani that it is time for him to step aside," Morris reported.

This would be good news for the United States, which blames Maliki for much of Iraq’s problems today.

CSIS’s Anthony Cordesman: "To put it bluntly, Maliki is as much of a threat to Iraqi unity, stability in the Gulf, and U.S. strategic interests as is ISIS. Ever since the power struggles that began as a result of indecisive outcome of Iraq’s March 2010 election, Maliki has driven the country toward civil war. He has alienated Iraq’s Kurds and steadily become more authoritarian and ruthless in dealing with its Arab Sunnis."

Don’t want to wait around for the Pentagon to publicly disclose its assessment of Iraq and the options it’s now considering? Then read Cordesman’s analysis, which lays out what U.S. options are if Maliki is removed from power.

He writes, "The United States should not try to force a leader on Iraq. It can, however, make it clear that the kind of aid that Iraq now desperately needs is conditional. It means Iraq must not give Maliki a third term or consider horrible alternatives like Ahmed Chalibi." More from Cordesman here.

"Reviving the Caliphate: Fad, or the Future?," a new report from CNA Corporation, examines the concept of restoring the caliphate in modern times, a notion that some extremist groups have supported in recent years. It focuses on the Islamic State in Iraq and the Levant’s declaration of a caliphate in Iraq and Syria in June 2014 and discusses the potential ramifications of this action on the region, the global jihadi movement, and U.S. interests in the broader Muslim world. Full report here.

After more than five years blocking U.N. Security Council action on the Israeli-Palestinian conflict, the U.S. backed the U.N. cease-fire call yesterday, providing further evidence of the deepening tension between Israel and the U.S. FP’s Colum Lynch: "Richard Gowan, a U.N. expert at New York University’s Center on International Cooperation, said the United States is trying to walk a diplomatic tightrope by telegraphing displeasure with Israel while heading off a fiercer battle in the council with the Arabs, who favor the passage of a much tougher Security Council resolution on the conflict. ‘In backing the council’s statements, the United States is signaling its frustration with Israel,’ he said. ‘But it is also warding off a fight over a tougher resolution on the crisis it would probably have to veto.’" More here.

Trying to change the subject, the White House and Israel highlight the two countries’ solidarity. FP’s John Hudson: "White House National Security Advisor Susan Rice and Israeli Ambassador Ron Dermer sought to downplay tensions between their respective governments on Monday after the Israeli press reported that senior aides to Israeli Prime Minister Benjamin Netanyahu were sharply dismissive over American efforts to quell the rising violence in Gaza."

Israeli Amb. Ron Dermer: "I speak directly for my prime minister here. The criticism of Secretary Kerry for his good faith efforts to advance a sustainable ceasefire is unwarranted… There is broad understanding between Israel and the United States about the principles for a sustainable cease fire."

National Security Advisor Amb. Susan Rice: "I must tell you, we’ve been dismayed by some press reports in Israel mischaracterizing [Kerry’s] efforts last week to achieve a ceasefire… The reality is that John Kerry on behalf of the United States has been working every step of the way with Israel in support of our shared interests." More here.

Duncan Hunter tells FP that Israel should take a lesson from the U.S. Marines’ experience in Fallujah, which is considered the bloodiest battle of the Iraq War. "The biggest holdup for Israel right now is the civilian casualties in Gaza. That’s what’s keeping them from doing any major operations. So what you do is you tell the good people who don’t want to fight, ‘Hey, leave. We’ll take care of you outside the city,’ and then you cordon off the city. And then the only people left in the city are folks who want to fight you and civilians they trap there," the Republican congressman told Situation Report yesterday.

Hunter notes that Fallujah had about 300,000 people, where Gaza has closer to 2 million. "Fallujah’s a great model, even though it’s a lot smaller. You’d do Gaza in sections, but you could still do it."

The United Nations has tried to offer shelter to Palestinian civilians in Gaza, but even these safe zones have come under fire. The United Nations Relief and Works Agency for Palestine Refugees has said there is no safe place within Gaza for civilians. In Fallujah, it was estimated that 70 to 90 percent of the civilian population fled before the U.S. began its main assault in November, 2004.

And some scenes from Gaza sound an awful like what was left behind in Fallujah. The Daily Beast’s Jesse Rosenfeld: "Apartment blocks are fields of rubble, and as I move through this hostile landscape the phrase that keeps ringing in my head is ‘scorched earth.’ … It’s not like Israel didn’t plan this. It told tens of thousands of Palestinians to flee so its air force, artillery and tanks could create this uninhabitable no-man’s land of half standing, burned-out buildings, broken concrete and twisted metal." More here.

Meanwhile, Prime Minister Benjamin Netanyahu says it’s time to prepare for a prolonged military campaign. Reuters: "Israel knocked out Gaza’s only power plant, flattened the home of its Islamist Hamas political leader and pounded dozens of other high-profile targets in the enclave on Tuesday, with no end in sight to more than three weeks of conflict." More here.

Welcome to Tuesday’s edition of Situation Report. If you’d like to be one of our subscribers, we’d love to have you. Sign up for Situation Report by sending us a note at gordon.lubold@foreignpolicy.com and we’ll just stick you on. Like what you see? Tell a friend.  And if you have a report you want teased, a piece of news, or a good tidbit, you, send it to us early for maximum tease: kate.brannen@foreignpolicy.com And the more shovel-ready, the better. And hey! Follow us: @k8brannen, @glubold and @njsobe4.

Who’s Where When: Adm. Samuel Locklear, commander of U.S. Pacific Command, hosts a press briefing on "U.S. Operations in the Pacific" at 12:30 p.m. at the Pentagon…

The House Armed Services Committee has a hearing on the "Security Situation in Iraq and Syria: U.S. Policy Options and Implications for the Region" at 10:00 a.m. in the Rayburn building…

At the State Department, Kerry is meeting with Ukrainian Foreign Minister Pavlo Klimkin at 9:45 a.m., followed by a press availability at 10:15 a.m. Then, Kerry heads to the White House for a meeting with Defense Secretary Chuck Hagel and National Security Adviser Susan Rice at noon.

And Under Secretary for Political Affairs Wendy Sherman is testifying before the Senate Foreign Relations Committee and the House Foreign Affairs Committee on Iran.

BREAKING —  Karzai’s cousin is killed by a suicide bomber. The AP: A cousin and close associate of outgoing Afghan President Hamid Karzai was assassinated on Tuesday by a suicide bomber who hid his explosives under his turban, a provincial official said. The bomber walked up to the home of Hashmat Khalil Karzai to greet him after morning prayers for the Muslim holiday of Eid al-Fitr, and detonated the explosives after shaking hands with the president’s cousin, said the official." More here.

Released yesterday, a SIGAR audit found problems with the accountability of weapons the U.S. supplied to the Afghan National Security Forces. Full report here.

Libya warns of a disaster as Tripoli fuel tank fire spreads. The WSJ’s Beniot Faucon: "Libya warned Monday of the risk of a humanitarian and environmental disaster after a second fuel tank caught fire amid heavy fighting at Tripoli airport between rival militias … A missile late Saturday ignited a storage tank containing petroleum fuel at a complex near the airport. The igniting of a second tank has increased the risk of an explosion at the site, which contains 90 million liters (almost 24 million gallons) of fuel and cooking gas." More here.

Everyone’s evacuating … err, ‘temporarily relocating’ from Libya: BuzzFeed’s Nicolás Medina Mora: "Several European governments ordered their citizens to leave Libya on Monday after intense fighting resulted in an uncontrollable oil fire near the Tripoli airport." More here.

And China is urging the 1,000 Chinese nationals still in the country to leave too, the Xinhua News Agency is reporting.

The news is bad enough … and then you add Ebola to the mix. Clair MacDougall reporting for FP from Liberia: "Liberia, along with its neighbors, Guinea and Sierra Leone, were once wracked by war. Today, they are all facing a new and deadly crisis: Ebola, a virus that attacks organs and leads to fever, diarrhea, bleeding, and in most cases death, has swept across the countries and threatens to extend its reach. The virus, which cannot be cured but can be treated, can kill up to 90 percent of those who catch it. The overall death rate in the three West African countries is currently around 60 percent. Roughly 1,200 cases have been identified, the most ever in an outbreak, and some 670 people have already died." More here.  

The editors at Bloomberg View argue more should be done. "This Ebola epidemic is different. Unless resources are mustered to bring it under control, it’s going to kill many more people in Africa, and perhaps beyond." More here.

For Military Times, Jeff Schogol’s interview with Texas Gov. Rick Perry about his decision to send 1,000 National Guardsmen to the Mexico border, here.

Military personnel costs need a hard look. The WaPo’s Walter Pincus: "In our troubled world, would you prefer that the United States had six more F-16 squadrons over the next year or pay the 1 percent annual ­cost-of-living adjustment for military retirees under age 62?" More here.

Northrop’s drone for the Navy has increased 25 percent in cost. Bloomberg’s Tony Capaccio, here.

The U.S. Army plans to select a new standard-issue handgun. If history is a guide, similar pistols will soon start appearing at gun stores and crime scenes near you. Matt Valentine for the Atlantic, here.

The chairmen of the House and Senate Veterans’ Affairs committees achieved something very rare on Capitol Hill these days: a bipartisan compromise on a $17 billion VA reform bill. Military Times’ Leo Shane III: "The deal, if approved later this week, gives lawmakers a surprising success story to take back to their home districts as Congress begins its extended, pre-election legislative break. The comprehensive veterans measure is one of only a few significant bills to become law this year, and comes after weeks of promises that leaders from both parties would move quickly to address recent VA scandals." More here.

And the Senate is scheduled to vote on the confirmation of Robert McDonald to be Veterans Affairs Secretary at 2:45 p.m. today.

Speaking of vets, IAVA and Defense One are hosting a big event at the National Press Club tomorrow. Scheduled speakers include Montel Williams, Rep Jeff Miller (R-Fla.), Sen. John Walsh (D-Mont.) and Rep. Tulsi Gabbard (D-Hawaii). Get the full lineup and more info here.