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An increase in cyberattacks across the Persian Gulf has underscored the region's rising geopolitical tensions and cybersecurity vulnerabilities.

The big picture: Government agencies, critical infrastructure and flagship state-owned firms are the prime targets for these cyberattacks, many of which have been linked to Iran or its proxies. While Iran has long threatened to close the Strait of Hormuz during a military conflict, its asymmetric cyber warfare capabilities have become a key means to destabilize competitors and adversaries.

Driving the news: Hackers targeted Bahrain’s National Security Agency, Interior Ministry, and first deputy prime minister’s office on Aug. 5, according to the Wall Street Journal. American intelligence suggested Iranian involvement in the cyberattacks.

This incident closely follows a July 25 cyberattack on the country’s Electricity and Water Authority and another suspected, but unconfirmed, attack on Aluminum Bahrain, one of the world's largest aluminum producers.

Background: These attacks have been increasing throughout the region.

Bahrain’s Information and eGovernment Authority claims to have successfully interrupted over 6 million attacks and 830,000 malicious emails in the first 5 months of 2019.

The United Arab Emirates has witnessed a growing number of cyberattacks on its oil and gas sector. Of 113 cyberattacks reported in the first 5 months of 2019, 7 were categorized as critically harmful and 11 as inflicting medium damage.

On Aug. 7, the U.S. government warned about GPS interference and bridge-to-bridge communications spoofing, likely connected to the Iranian military's efforts to mislead and harass vessels in Gulf waterways and other key maritime chokepoints.

The impact: Heightened concerns around data and digital infrastructure security pose commercial and reputational risks, especially as Gulf Arab countries seek to develop tech-driven knowledge economies.

Bahrain aims to be a regional fintech hub. It's home to the Middle East office of Amazon Web Services and has passed legislation permitting foreign countries and firms to host external data in various national jurisdictions.

The United Arab Emirates is aggressively digitizing economic activities as part of its AI strategy. Emirate-level governments, especially in Dubai, strongly support digital innovation agendas and the incorporation of advanced technologies.

Plans for Saudi Arabia’s $500 billion Neom project reveal intentions to build a highly automated, futuristic city complete with flying taxis and robots.

What to watch: Bahraini officials and their Gulf Arab counterparts will likely demonstrate cautious restraint in their rhetoric to avoid an escalation of tensions with Iran. Behind the scenes, however, government and private-sector actors will be working furiously to identify and resolve their cybersecurity risks.

Robert Mogielnicki is a resident scholar at the Arab Gulf States Institute in Washington.

Spree of cyberattacks highlights digital vulnerabilities in the Gulf

Many have been linked to Iran or its proxies.

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An increase in cyberattacks across the Persian Gulf has underscored the region&#x27;s rising geopolitical tensions and cybersecurity vulnerabilities.The big picture: Government agencies, critical infrastructure and flagship state-owned firms are the prime targets for these cyberattacks, many of which have been linked to Iran or its proxies. While Iran has long threatened to close the Strait of Hormuz during a military conflict, its asymmetric cyber warfare capabilities have become a key means to destabilize competitors and adversaries.

China is becoming the most formidable rival America has faced, and the risk of confrontation with Russia, North Korea or Iran still looms. Authoritarians are rising, the chaotic Afghanistan exit revealed the limits of U.S. power, and the pandemic, climate change and other critical challenges continue to pose grave threats.

Iranian cryptocurrency developers have created a blockchain platform, IranRescueBit, to facilitate aid donations in Bitcoin, Ethereum and Litecoin — a move that threatens to undermine sanctions at the center of the Trump administration's "maximum pressure" campaign.

Why it matters: The platform's purported aim is to circumvent U.S. sanctions that prevented international donations from reaching the Iranian Red Crescent Society following damaging spring floods in Iran, but its scope appears likely to expand.

Where it stands: Iran could leverage cryptocurrencies, crypto exchanges and brokerages, and other cryptocurrency applications to evade sanctions and ease the financial strain on Iranian companies.

Yes, but: The U.S. Treasury Department announced in November 2018 that it is targeting cryptocurrency exchangers associated with Iranian cyber actors.

Meanwhile, the global cryptocurrency industry hopes to shed the perception that its applications and platforms are used by cyber criminals and for illicit purposes.

Background: Iran initially took a cautious approach to cryptocurrencies, whose decentralized and anonymous transactions have worried global regulators. But the launch of IranRescueBit suggests the regime has grown more permissive, even though the government has no reported involvement with the platform.

Iran clamped down on cryptocurrency mining in June after claiming the activity inflicted an inordinate strain on the state-subsidized electricity system.

In July, officials announced a domestically encrypted digital currency that would free up the frozen assets of local banks. It would be overseen by the Central Bank of Iran and backed by gold reserves.

Iran’s cabinet then ratified a bill on Aug. 4 clarifying that foreign cryptocurrencies are not legal tender and that the central bank would not recognize domestic transactions in cryptocurrencies.

What to watch: Despite an initially cautious approach, the Iranian government is likely to further embrace a cryptocurrency industry capable of disrupting sanctions. 

The U.S. administration and Treasury will monitor how Iranian cyber actors use emerging cryptocurrency platforms, as the scope of the pressure campaign widens beyond fossil fuels to include digital assets.

Greater U.S. scrutiny of cryptocurrency applications in the Gulf region will force neighboring countries with fast-growing crypto industries, such as Bahrain and the United Arab Emirates, to strengthen controls on money laundering and terrorism financing.

Cryptocurrencies could help evade U.S. sanctions on Iran

A new platform designed to channel humanitarian aid may find broader applications.

Animated illustration of a crypto coin bouncing over a chain-link fence. 

Iran

Iranian cryptocurrency developers have created a blockchain platform, <a class="gtmContentClick" data-vars-link-text="IranRescueBit" data-vars-click-url="https://www.aljazeera.com/ajimpact/iran-crypto-developers-launch-platform-flood-victim-aid-190814163329345.html" data-vars-content-id="c6a68e07-03c3-4b99-8dde-882d6f729130" data-vars-headline="Cryptocurrencies could help evade U.S. sanctions on Iran" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.aljazeera.com/ajimpact/iran-crypto-developers-launch-platform-flood-victim-aid-190814163329345.html" target="_blank">IranRescueBit</a>, to facilitate aid donations in Bitcoin, Ethereum and Litecoin — a move that threatens to undermine sanctions at the center of the Trump administration&#x27;s &quot;maximum pressure&quot; campaign.Why it matters: The platform&#x27;s purported aim is to circumvent U.S. sanctions that prevented international donations from reaching the Iranian Red Crescent Society following <a class="gtmContentClick" data-vars-link-text="damaging spring floods" data-vars-click-url="https://media.ifrc.org/ifrc/press-release/iran-floods-two-million-people-need-humanitarian-aid/" data-vars-content-id="c6a68e07-03c3-4b99-8dde-882d6f729130" data-vars-headline="Cryptocurrencies could help evade U.S. sanctions on Iran" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://media.ifrc.org/ifrc/press-release/iran-floods-two-million-people-need-humanitarian-aid/" target="_blank">damaging spring floods</a> in Iran, but its scope appears likely to expand.

Robert Mogielnicki

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Cryptocurrencies could help evade U.S. sanctions on Iran

Spree of cyberattacks highlights digital vulnerabilities in the Gulf