Start at the Prologue and First Chapter here
Sarah Swit saw the two black SUVs coast slowly cross the intersection and glanced at her watch. Darn. Now she was going to be late.
She slowed down as a third black SUV coasted to a stop in the middle of the intersection, blocking the northbound traffic lane, and a fourth sealed off the southbound one. Two men got out of each car and took his place at one end or the other of his vehicle, darting glances in every direction. Oh well. She picked up her cellphone, set it to video, and got out to get a better view of the intersection.
Sure enough, a minute later two pairs of men in dark glasses and identical running gear trotted between the cars blocking the intersection, glancing to the right and left as they did. They were followed by two men who didn’t match, and finally by another pair that could have been doubles of the first two. As soon as all six runners cleared the intersection, the glorified crossing guards hopped back into their SUVs and moved forward slowly, matching the pace of the runners.
Swit stepped back into her car and accelerated through the intersection. At the next light she replayed the video. Good! She’d gotten a pretty good clip of the president of the United States, out for his morning run. That would look good on her Facebook page.
Back on the street she had just crossed, Carson Bekin was happy to be President Yazzi’s running companion. If his boss wasn’t in the habit of using his running time to discuss the day ahead, the president’s Chief of Staff would never be able to fit any exercise into his own schedule.
“So how many more votes do we need in the House?” the president asked.
“About eight. But I think we can swing those if we add increased environmental oversight of off-shore drilling platforms and promise to draft regulations to guarantee responsible disposal of fracking waste water. As usual, the problem is hitting a balance where we pick up more votes on one side than we risk losing on the other.”
“I don’t need ‘think,’ Carson. I need to know for sure we can get this bill through before we ask the Speaker to take it to the floor.”
“Well, Henry, you know this is a heavy lift. You had a strong environmental plank in your platform, and now you’re asking Congress to release most restrictions on off-shore drilling and open up just about all public lands to oil and gas exploitation except National Parks. How do you expect folks up for election in blue states to explain supporting that this November?”
“By pointing out that while the bill puts all that territory in play, it also caps the number of new wells at ten percent of all currently producing wells in the lower forty-eight states, and reminding their constituents this is a once in a generation chance to get Russia to play ball with the western world. Oil and gas prices have been down long enough now we just need to push them a bit lower and then hold them there.”
“That’s an apple to an orange, though, Henry.”
“Okay, then they can tell the voters this: the cheap oil coming out of the new wells will result in an equal number of more expensive old wells being taken off-line. And we’re standing firm on alternative energy tax credits. Over the long term, the results will close down more wells.”
True, but so what? Bekin thought. Anything that couldn’t be fit into a soundbite would go over most voters’ heads. But this wasn’t the time to get down in the weeds with the president. “Well,” he said instead, “that just might play with the center, but we’ll still catch hell from the hard-core greens. And it’s not going to look good to the far left when we need to rely on a bunch of ultra-conservative Congressional representatives to get over the line.”
“Well, it is what it is,” the President said. He ran in silence for half a block and then said, “What’s the latest on that Russian cryptocurrency project?”
“Which one?” Bekin asked. “The public one or the supposedly private one?”
“The second.”
“I don’t know anything more than you do from the Daily Brief.”
“Well, tell Helen to open up an hour in my schedule ASAP for a CIA briefing. If Russia can get around the sanctions in a big way it will cancel out the fall in their oil revenues. I don’t want to catch hell with my base if we’re on a fool’s errand.”
“Will do.”
* * *
Walter Hansen, the young CIA analyst charged with monitoring Russian blockchain intelligence, shuffled his papers and cleared his throat. He’d never briefed a president before. And the Director of the CIA, his ultimate boss, was sitting in the Oval office as well.
“Good morning, Mr. President. Let me start by summarizing the blockchain activities in Russia the Kremlin does publicly acknowledge. Sberbank, one of the largest banks in Russia, leads those efforts. Since January of 2018, a lot of that activity occurs inside an organization it calls the Blockchain Lab. According to the Lab’s public statements, they’re several years away from rolling out any sort of commercial bank platform.
“But as I believe you already know from your Morning Briefs, the private efforts supported by the Kremlin are much more advanced. Most notably, they have an up and running blockchain supporting an alt coin they call the Russ.”
“’Private efforts’ meaning exactly what, in this case?” Yazzi asked.
“Good question, sir. Like a lot of their offensive cyber activities, the Russians claim the Russ blockchain isn’t a government project at all. The party line is that it’s an open source project staffed completely by volunteer programmers, just like bitcoin. Some are solo developers and others are employees of companies with an interest in the Russ blockchain. Our informants tell us that RussCoin, the private company that’s the driving force behind the Russ blockchain, is actually heavily funded and controlled by the government. There are Russ blockchain programmers both within the Russian Federation as well as located in some of the former Soviet states. That makes it look like a typical western open source project, but we believe most or all of those programmers are actually being paid and supervised by the Russian government.”
“Whose payroll are they on, specifically?” Yazzi asked.
“It’s quite a mouthful, sir. The supervisor works for the Finance Ministry’s Department of Information Technology in the Sphere of Budgeting and State and Local Finance Management.”
“So,” Yazzi said, “The government is on top of it, but the actual coding is done by programmers spread out across the map, some even outside the jurisdiction of the Kremlin? That seems risky to me. I get that they want deniability, but that seems like a higher price to pay than necessary.”
“I take your point, sir. But they’ve used private sector black hats for years now to commission dedicated denial of service attacks, run social media fake news campaigns, and launch election meddling exploits. So much so, in fact that they seem to have painted themselves into a corner, so now – ”
“How so?” Yazzi interrupted.
“Sorry, sir. What I meant was financially. These private sector companies and individual hackers command very high fees when the Kremlin hires them. Plus, the government protects them when they engage in cybercrime on their own account. Between those two lines of business, they’re making far more than they could working directly for the government on standard pay scales. So, no surprise, the Kremlin can’t find enough good cybersecurity talent to staff all their own in-house projects.”
“That must be good for us,” Yazzi said. “Do we have anyone inside the Russ blockchain team?”
“Yes sir. We’ve got a mid-level operative in Byelorussia. Of course, the financial transactions themselves are encrypted, and the sending and receiving wallets are anonymous. But he is in a position to see the transaction volume on the Russ blockchain.”
“And what does he tell us?”
“That business is booming. The Russ blockchain only went into operation nine months ago, but they’d been lining up orders of embargoed goods for another six months before that. So there were a lot of orders ready to ship as soon as the payment channel was in place. With no bank in the middle and totally anonymous wallets, the Russ blockchain provides the perfect means to get around the sanctions. Plus, the payment terms and shipping details are sent in encrypted form directly from buyer to seller, the same as a bitcoin transaction. So even if we succeed in intercepting a transaction, we may not be able to decrypt the information.”
“Give me some numbers,” Yazzi said. “How much is getting around the sanctions?”
“Almost six billion dollars a month of Russ is flowing into Russia on the sale of embargoed Russian goods, mostly shipped out of Black Sea ports to destinations like Syria and Somalia, where the cargoes get broken up and trans-shipped to their ultimate destinations. Russia turns around and spends about half of that on goods that are embargoed in the other direction. It buys those through shell companies in-country and then ships them back through the same channels. The sales volume in both directions is going up rapidly.
“But there’s another major economic benefit,” Hansen said, “that I need to mention.”
“What’s that?” Yazzi asked.
“The Russ has become a darling of cryptocurrency speculators. Right now, only the price of bitcoin is higher, and sometimes the Russ actually trades higher.”
“Where?” Yazzi asked.
“Everywhere – even in the United States, sir, because it’s a much less risky alt coin. The price of Russ does fluctuate, just like the other cryptocurrencies do, but not as much, because the Russians control the supply by buying back the coin to shore up its price whenever it starts to slip. None of the other cryptocurrencies enjoy that kind of support, because there’s no country backing them up. So the upside is unlimited, while the down side is covered. That makes Russ a uniquely attractive alt coin to invest in. Even conservative institutions, like U.S. state employee pension plans, are building up significant Russ positions.”
Yazzi shook his head. The one thing you could always count on with capitalism was that investors would find a way to make a buck whenever and wherever the opportunity presented itself. He turned to the Secretary of State. “So, while we’re planning this grand oil strategy to bankrupt Russia, our own private sector is propping up the Kremlin?”
Hugh Calhoun shifted uneasily in his chair. “That would be one way to put it, Mr. President. But I wouldn’t think the appreciation in the value of the Russ would be enough to match the impact of a big drop in the price of oil.” He hoped he was right.
“How much impact exactly?” Yazzi asked.
Calhoun turned to the suddenly flustered aide sitting beside him. Flustered, the aide said, “Can you give me a moment to work that figure up?”
“Shall I go on, sir?” Hansen said, hoping to help the aide out.
“Continue,” Yazzi said.
“As I was about to say, sir, the Russians can not only buy back Russ, they can tell the developers running the blockchain to issue as much or as little Russ as the Kremlin wants, because the total amount, and the current supply, has never been made public. And they don’t have to worry about causing inflation with the ruble, because the Russ isn’t the official, fiat currency of the Russian Federation. So, when the Russian government buys billions of rubles worth of embargoed goods using Russ instead, it isn’t really costing it anything at all.”
“Nothing at all,” Yazzi said, turning back to his Secretary of State. “So, tell me, Hugh. Exactly how are we going to drive the Russians to their knees and back to the bargaining table if the Kremlin can keep spinning up more and more Russ?”
“Excuse me, Mr. President,” the aide interrupted meekly, “I have that number now. At current rates, in six months the combined impact of Russia’s sale of embargoed products and appreciation of the Russ would cancel out a drop in the price of oil of approximately two dollars and thirty-one cents.”
“That’s it!” Yazzi said, slapping his desk with the flat of his hand. “That means we’ll have to push the price of oil well below thirty-three dollars a barrel to break the Russians. We’ll never get the oil companies to go along with that. What do you have to say?”
There was nothing the Secretary could think of to say.
“It’s a heck of a situation,” Yazzi continued, “when I’m the one that has to find a critical flaw in a plan my own team brings to me. We’re in too far to turn around now, so I strongly suggest that you and Terry,” he gestured to the CIA Director, “come up with a plan for busting the Russ blockchain before the National Security Council meeting on Thursday. You can be sure that will be at the top of the agenda.”
* * *
Frank desperately wanted to scratch his nose. But Fang would surely notice. Frank needed the squirrel to get a little closer before he could be sure to reach him with the extra strength, toy water gun Frank was holding.
There! Fang was tensing to make his leap from the railing to the feeder! Frank drew and fired, catching the little bandit in mid-air. Hah! Take that!
But Frank’s act of defiance had unexpected consequences. The force and distraction of the jet of water made the squirrel miss its target. Frank watched in triumph, and then in horror, as the squirrel flew past the feeder and out into the void. It disappeared downward, hurtling towards the street and the traffic below. Frank dropped the soaker and walked hesitantly to the railing, afraid he would see a small, still, two-dimensional form pasted to the pavement below. But Fang was nowhere to be seen. Had it crept away, severely injured?
Frank sat slowly down in the folding chair on the porch. Could he have actually killed the squirrel? He felt terrible. Then he remembered that squirrel tails had evolved to provide efficient parachutes for the aerial animals. As if on cue, a fierce chattering attracted his attention. Sure enough, the infuriated squirrel was back on the ivy next to his porch, out of range and giving Frank a thorough dressing down. Game on! It seemed to be saying.
The next day, the feeder was not only empty, but lying on the porch. Fang had gnawed through the wire.
* * *
Authors Notes for This Week:
FFOF will remember Carson Bekin as Henry Dodge Yazzi’s campaign director in The Lafayette Campaign. The other characters popping up are new faces, and likely destined to be merely temporary characters of convenience. Generally, an author doesn’t want to invest many words describing such characters, as they will slow the story down and the investment in character development will have no payoff. As the excellent British author and satirist Evelyn Waugh stated in his Paris Review Interview:
There are protagonists and there are characters who are furniture. One gives only one aspect of the furniture.
Harsh, but then again, Waugh was notoriously thoughtless to his characters, and his family besides.
Some of the authors I admire most can describe a character in the merest handful of words in a way that indelibly sets the individual in your mind. Perhaps the most effective way to do so is with a twist or a pithy turn of speech. My favorite example of that technique, although I can no longer remember the character’s name after some forty years, was penned by Sinclair Lewis, in Elmer Gantry. In the scene in question, the young minister Mr. Gantry has been found rolling in the hay with the buxom daughter of a parishioner. Confronted by the irate parent, Gantry proposes marriage.
Desperate to escape the consequences of his own conduct, Gantry notices that another young parishioner, who is a clueless, inarticulate young rube (let’s call him Homer Gomer), is hopelessly infatuated with the same girl. Sinclair describes him as follows:
Homer Gomer looked the way Homer Gomer would.
Masterful!
When I’m working on the first draft of a book, I’ll add description that comes easily to me, but not work too hard on it at the time, as my primary purpose is to get the plot out there and keep my momentum moving (assuming it happens to be moving, which is a topic for another week’s notes). During the second or third of the half a dozen further drafts that follow I make the addition, improvement, and where appropriate, pruning of description a major task.
Next Week: We’ll see another old face reemerge to recruit Frank to help the CIA figure out a way to disrupt the Russ blockchain as our multiple plots begin to thicken and intertwine.
A quick typo (or misunderstanding on my part): Para. 5 there seems to be a spurious ‘the’ before Carson Bekin.
I am also planning to short sell the Russ, because it sounds an awful lot like quantitative easing!
This cunning plan will only work if you let me know which crypto-currency exchange the Russ uses. Because I am all out of Rubles, having converted them into real estate in all the major cities in the world.
Thanks for catching that. While it is indeed THE Carl Bekin we remember, there’s no reason I should be pedantic about it.
As to the exchange, I think I’ve stuck my neck out far enough already with what I’ve revealed already. Too many things I’ve written about in the past have come true – I don’t want any threatening knocks on my door at midnight!
This scheme to support the Russ does indeed sound like the infamous policy of the Bank of England to keep the pound linked to the European Exchange Rate Mechanism. It made Soros’ fortune.
https://www.investopedia.com/ask/answers/08/george-soros-bank-of-england.asp
Stupid monetary policies make smart investors rich. Given his character, I do not expect Frank to get rich from this scheme 🙂
Thanks very much for that. Now you’ve got my mental wheels spinning. Perhaps the U.S. strategy should be to drive down the value of the Russ instead of attack it electronically. Or both.
You’ve given me something to think about, because, as usual, I only ever have the very broadest of plot strokes planned out in advance, and make the rest up as I go along.
https://goo.gl/PZz2gp “Bitcoin Reveals Exchange Rate Manipulation and Detects Capital
Controls”
Thanks, Frank. As I understand this, the author is suggesting that real-time blockchain exchange data could be used as a superior way to detect exchange rate manipulation, which is an interesting idea. I may well be able to weave that into the plot, so a very welcome link.
Nice to see that the blockchain nation (Estonia) entered this story in the previous chapter.
I really do hope your powers of clairvoyance are failing you this time, though. I am planning to travel to Estonia and Latvia this summer. I really do hope Putin will not ruin my holidays there.
More relevant to this chapter, here is an interesting paper about ways to track stolen Bitcoins (by Ross Anderson). Might be useful in the story:
Blog
https://www.lightbluetouchpaper.org/2018/03/26/tracing-stolen-bitcoin/
Paper
https://www.cl.cam.ac.uk/~rja14/Papers/making-bitcoin-legal.pdf
You can do a lot with very simple means.
Thanks very much for the interesting links; the discussion of the blog entry is particularly interesting and enlightening. I don’t know whether I’ll find a plot to twist to work this in, but I’ll likely mention the problem and the fact that there’s no current feasible solution along the way.
They didn’t mention in the article that paper currency (in the US at least) has a serial number, which permits direct tracing of the physical currency. That doesn’t address the issue of good faith, down stream holders, but it does make direct confirmation of stolen currency easy and painless. Presumably doing the same would be possible with crypto currency, and even crypto currency broken up into change and then reconstituted, so long as the new coin continues to identify its constituent bits.
As to your summer plans, my oracular sense tells me that you’re safe at least through August 14th. After that, no guarantees.
Safe travels.