The explosion of around 5,000 pagers belonging to Hezbollah operatives and others in Lebanon has revealed how the complexity of global supply chains makes them vulnerable to being hacked, and could lead to risks for other components as well as a disruption in global trade, experts have told i.
On Wednesday further explosions were reported among hand-held radios used by Hezbollah. It comes after at least 12 people were killed in explosions on Tuesday, including two children, while a further 2,750 others were injured throughout Lebanon and Syria, according to Lebanon’s health ministry.
Hezbollah security chiefs have blamed Israel’s spy agency for placing small amounts of explosive material in the pagers before the detonations in a plot that is believed to be several months in the making.
Israel has not commented on the claims. However, the attack is leading to questions over how it was carried out, spotlighting global supply chains which are vulnerable to sabotage due to a lack of accountability, visibility and regulation, experts told i.
Taiwanese pager firm Apollo Gold – whose branding was on the exploded pagers – claims it did not make the devices.
“We only provide brand trademark authorisation and have no involvement in the design manufacturing of this product,” the company said, before adding: “The design and manufacturing of the products are entirely handled by BAC” – a Hungarian consultancy firm based in Budapest.
BAC Consulting chief executive Cristiana Bársony-Arcidiacono confirmed that her company worked with Gold Apollo. But when asked about the pagers and the explosions, she told NBC news: “I don’t make the pagers. I am just the intermediate. I think you got it wrong.”
Experts told i the finger pointing between the two companies highlights the lack of accountability in global supply chains and need for tighter regulations on imports – which may slow down trade.
Professor Fahian Anisul Huq, Chair in Operations and Supply Chain Management at The University of Manchester, told i: “This lack of transparency is evident in the current case, where both Apollo Gold and BAC Consulting deny responsibility for the explosive pagers.”
“This incident clearly demonstrates how modern supply chains, involving multiple intermediaries and manufacturers, can be exploited for malicious purposes.
“The ability to sabotage goods, as seen with the pagers, could lead to stricter regulations on imports, which could, in turn, slow down trade and supply chain processes.
“Critical sectors like medical devices, infrastructure components, or consumer electronics are not immune from such threats, posing significant global security concerns.”
It comes as unrest in the Middle East has already disrupted the free flow of trade, with Iranian-backed Houthi rebels regular attacks on cargo ships in the Suez Canal leading to the rerouting of trade around Africa.
This has delayed the supply of oil, parts for cars and increased cost of shipping containers – leading to fears it could push up inflation, according to analysis by JP Morgan.
However, experts say the affects on global trade as a result of the deaths in Lebanon will be materially different due to the “unprecedented nature” of the attack and lack of clarity surrounding the explosions.
Professor Basil Germond, Chair in International Security at Lancaster University told i: “Global supply chains are complex. And the more complex a chain is the more vulnerable to physical or digital interference it is, and thus the more likely it is to be compromised”.
Eddie Anders, a Professor of Analytics and Operations Management at Imperial College Business School told i: “We should not forget the logistics component in all this.
“Not only are there many different manufacturers involved in supply chains, but there is a complex logistics web that is needed to connect everything together. This involves warehouses where things are stored, and transport links around the globe.”
It remains unknown at what point of the supply chain the pagers were tampered, with multiple sources of exposure at manufacture, processing, packaging and distribution.
In order to evade sanctions, Hezbollah may have sough to lengthen the global supply chain trying to make any shipment less connected in chain through entities, lengthening the chain through various places to not be discovered or intercepted, Noam Ostfeld, principal analyst at geopolitical risk consultancy Sibylline told i.
“But by extending the supply chain, more opportunities for the pagers to be tampered with, may have made it easier for Israel to intercept with more opportunities to exploit at some of the various destinations along the supply chain,” he said.
In a televised speech, Hezbollah leader Hassan Nasrallah told supporters to break, bury or lock their phones in an iron box in September, which may have led to the use of pagers to avoid the interception of telecommunications.
But analysts says Hezbollah’s mobile phone warning to its supporters had been far too public – liable to interception by Israel.
Mr Huq added: “The infiltration of the supply chain that led to the pager blasts serves as a stark warning for industries and governments alike.”
“Enhanced visibility, better supplier auditing, and stronger regulatory frameworks are critical to mitigating these threats and ensuring the stability of global supply chains.”
“To mitigate these risks, private firms must increase the visibility of their supply chains by auditing suppliers, mapping out supply chain tiers, and employing technology to enhance transparency.
“Governments may also respond by implementing stricter procurement frameworks, ensuring that both software and hardware in public sector projects meet rigorous supply chain security standards.”