Pentagon plans covert spy program to back economic war on China

The latest:

A proposed US military espionage program would place undercover operatives abroad disguised as businesspeople and private-sector employees, forming the secret arm of a broader Pentagon economic-warfare campaign against China and other rivals, the Washington Post reported, citing six people familiar with the initiative. The effort remains in planning and has not launched. Its organizational home inside the department has not been settled.

Details:

• Who leads it: Planning is overseen by Tom Rakusan, a senior adviser to Deputy Secretary Steve Feinberg, according to people familiar with the project who spoke to the Washington Post on condition of anonymity. Rakusan, 39, served at the CIA until retiring in 2021 and was deputy director of operations in 2017.
• The career path: After leaving the agency, Rakusan joined Cerberus Capital Management, the private-equity firm Feinberg co-founded, before moving with him to the Pentagon in 2025. He earlier led the CIA response to the Russian interference campaign in the 2016 US presidential election.
• Who is involved: Specialists from the armed services, the office of the under secretary of war for intelligence and security, and former CIA officials are taking part in the planning, the sources said. The program could be built as a standalone covert-action unit or by expanding existing Pentagon human-intelligence capabilities.
• The denial: The department denied the initiative is being implemented. Deputy Pentagon spokesman Jacob Blis said the inquiry “appears to be based on inaccurate information,” adding that those making the claims either lack accurate information or are deliberately misleading. The CIA declined to comment and Rakusan did not respond to a comment request.
• The economic unit: Feinberg announced an economic defense unit this year to deter adversaries, deny them resources and disrupt their activities economically, according to a memo to senior Pentagon officials. In February he tapped George Kolitides, a former Cerberus executive, to run it. The unit has since announced hundreds of millions of dollars in oil refinery and mining investments, including $750 million to help secure a major rare-earth reserve site in Brazil.
• The internal pushback: The unit was floated earlier as a possible home for the secret program, but growing media and congressional scrutiny of its investments led to the idea being dropped, one source said. A former senior CIA official familiar with the discussions said Rakusan simply wants his own CIA inside the Pentagon.
• The legal gap: The Post said the legal basis remains unclear. Title 10 authorities cover military intelligence tied to battlefield preparation, while Title 50 governs intelligence agencies collecting information and running covert operations abroad. Former officials called the proposed program a sarcastic Title 60 — an authority that does not exist.
• The operational risk: Non-official-cover officers cannot work from US embassies or claim diplomatic immunity if detained. An internal CIA report prepared during the coronavirus pandemic found roughly 75% of deep-cover officers would be retirement-eligible by the mid-2020s, a former official said, with too few replacements trained.
• A past failure: After the September 11, 2001 attacks, the cover of operatives linked to Joint Special Operations Command was blown in a remote part of Africa after their lack of mining knowledge aroused suspicion among geologists and engineers they met, according to an investigation by the intelligence outlet High Side.

Background:

The Trump administration has made economic warfare a core foreign-policy tool through tariffs, export controls, investment in critical resources and technologies, and coordination with private capital in defense industries, the Washington Post said. In September, CIA Deputy Director Michael Ellis said Washington is expanding spying on Chinese AI, biotech and advanced semiconductor firms.

Between the lines:

The Post reads the initiative as evidence of the Pentagon’s rising weight inside the administration as it seeks a record $1.5 trillion budget. Former officials said CIA Director John Ratcliffe has pledged more aggressive human-source recruitment, but the agency remains cautious about offensive espionage while the Pentagon appears willing to carry greater risk. One former senior CIA official said the department has the money, authorities and capabilities.

What’s next

Watch whether congressional intelligence committees are briefed, where the program is ultimately housed inside the department, and whether lawmakers move on the legal authority question raised by the Title 10 and Title 50 split.