Tom Still: Russia’s Invasion of Ukraine May Harm US Economy, Cyberattacks Top Concern | Economic news


It’s tempting to think that Russia’s invasion of Ukraine won’t have an immediate effect on the United States, let alone Wisconsin, which is about 8,000 miles away from the fighting.

It is the rest of Europe that should be worried, many will think, not a mighty nation guarded by oceans to the east and west and friendly neighbors to the north and south.

Tempting, but probably not very accurate.

Beyond declines in Wall Street markets and rising prices at the gas pump, the war in Ukraine could hit in many ways – especially in an economy already strained by the pandemic, the inflation, supply chain issues and the likelihood of higher interest rates. However, the greatest danger may be cybersecurity attacks.

The Russian economy itself may be ill-prepared for the war unleashed by President Putin. Despite its vast physical size and large population, Russia’s overall economy is not a world leader. Economists have noted that Russia’s economy is smaller than that of Canada, Italy and South Korea, to name a few. Quoted this month in The New York Times, Harvard economist Jason Furman said Russia is “essentially one big gas station” anchored by its energy resources.

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With oil, coal and natural gas reserves that all rank in the world’s top five, Russia is an essential fueling station for many of its neighbors.

The economic risks go beyond energy. If Ukraine falls, the US semiconductor chip industry could be hit. Ukraine is a major producer of neon gas essential for lasers used in chip manufacturing and supplies more than 90% of America’s semiconductor-grade neon.

Russia also exports materials used in the production of jet engines, automobiles, etc. Moreover, it is one of the largest wheat producers in the world and Ukraine is not far behind.

In terms of direct trade in Wisconsin, however, Russia is not a major player. According to the Wisconsin Economic Development Corp., it ranks 25 to 30 on the state’s list of export destinations, close to Spain, Peru, Costa Rica and Colombia. Wisconsin’s main trading partners are Canada, Mexico and China.

Besides direct military threats, Russia’s main weapons against the United States in a 21st century “hybrid war” are cyberattacks.

In addition to sanctions aimed primarily at Russia’s big banks and elite families, the federal government has warned of possible Russian attempts to digitally take down businesses, institutions, and even public services.

As part of what is called the “Shields Up” initiative, the Cybersecurity and Infrastructure Security Agency encourages companies, public bodies and other organizations to ensure that their “digital assets the most critical” are protected.

Other experts say pretty much the same thing. Writing this week in the Harvard Business Review, cybersecurity expert Paul R. Kolbe observed that “the first cyber skirmishes have already begun… (with) vigilant corporate America noting a dramatic increase in cyber investigations.”

Kolbe quoted the CEO of Dragos, a leading cybersecurity firm, as saying, “We have observed threat groups that have been attributed to the Russian government…conducting reconnaissance against US industrial infrastructure, including key sites of electricity and natural gas in recent months. ”

Scott Singer, a retired US Navy captain who is part of Madison-based CyberNINES, said private companies that work in the defense industrial base can expect stricter vigilance. These companies can get free help using this link: https://bit.ly/3vbBd2h.

“For any business, the first thing is to have good backup of critical data and then disconnect the backup from the internet,” Singer said. “Also ensure software and anti-virus systems are at current patch levels; enable multi-factor authentication; and, having a code texted to your phone is not as good as using the phone app to get the tokens. There will be an increase in spear phishing. Do not open links in emails from unknown sources.”

The invasion of Ukraine is already causing loss of life, destruction and instability in a country that cherished its freedom from the former Soviet Union. What remains to be seen is to what extent and how far the effects of this war extend to the global and US economies.

Geography has long protected America from invasions like the one in Ukraine. In the digital age, however, physical and economic borders can be crossed.

Tom Still is the president of the Wisconsin Technology Council. Email: [email protected]

Beyond declines in Wall Street markets and rising prices at the gas pump, the war in Ukraine could hit in many ways.

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