How Silicon Valley Became a Den of Spies

The West Coast is a growing target of foreign espionage. And it’s not ready to fight back.

Jack Shafer writes: Russian intelligence has had an intensive interest in San Francisco stretching back to the beginning of the Cold War. In those days, the Russians were primarily gathering information on local military installations, said former officials, including the Presidio, the strategically located former military base set on a wind-swept northern tip of the San Francisco peninsula, overlooking the Golden Gate Bridge.

Since then, Russian operations have become bolder, with one notable exception: the immediate post-Cold War period. “The only time there was a collective sigh regarding Russia, like maybe things have changed, was under Gorbachev,” said LaRae Quy, who worked on Russian and Chinese counterintelligence in the Bay Area from 1985 to 2002. “We even put in a big ‘Going Out Of Business’ sign in the Palo Alto squad room.”

But this optimism quickly faded when Putin was elected in 2000, recalled Quy, who retired in 2006. “Russia has been steadily escalating since then.”

As the Bay Area transformed itself into a tech hub, Russia adapted its efforts accordingly, with Russian spies increasingly focused on obtaining information on valuable, sensitive or potentially dual-use technologies—those with both civilian and military applications—being developed or financed by companies or venture-capital firms based in the region. Russia’s espionage activities have traditionally been centered on its San Francisco Consulate, which was forcibly closed by the Trump administration in early September 2017.

But even with the consulate shuttered, there are alternative vehicles for Russian intelligence-gathering in Silicon Valley. One potential mechanism, said three former intelligence officials, is Rusnano USA, the sole U.S. subsidiary of Rusnano, a Russian government-owned venture capital firm primarily focused on nanotechnology. Rusnano USA, which was founded in 2011, is located in Menlo Park, near Stanford University. “Some of the [potential intelligence-gathering] activities Rusnano USA was involved in were not only related to the acquisition of technology, but also inserting people into venture capital groups, in developing those relationships in Silicon Valley that allowed them to get their tentacles into everything,” one former intelligence official told me. “And Rusnano USA was kind of the mechanism for that.”

Rusnano’s interests, said this former official, have extended to technology with both civilian and potential military applications … (read more)

Source: POLITICO Magazine