UPDATE 4-Terrorism, cyber attacks top UK security threats

* Security focus on areas including terrorism, cyber attacks

* Threats from al Qaeda, Northern Irish groups highlighted

* Strategy aims to underpin defence review

(Recasts)

By Mohammed Abbas and Rhys Jones

LONDON, Oct 18 (BestGrowthStock) – Cyber attacks, terrorism,
inter-state conflict and natural disasters are the top threats
to British security, officials said on Monday, before a major
military review expected to usher deep defence spending cuts.

A new National Security Strategy highlighted threats from al
Qaeda and Northern Ireland-linked groups, as the government
sought to convince critics that an armed forces review due on
Tuesday is policy-driven, and not a money-saving exercise.

The report also said the Olympic Games, which London will
host in 2012, would “be an attractive” target for disruption.

“Our strategy sets clear priorities — counter-terrorism,
cyber (attacks), international military crisis, and disasters
such as floods,” the government said in its report entitled “A
Strong Britain in an Age Of Uncertainty”.

The government is trying to reduce a record budget deficit
of nearly 11 percent of national output while keeping Britain a
strong military power in Europe and a capable ally of the United
States, which it has backed in wars in Iraq and Afghanistan.

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For reaction to the strategy, click on [ID:nLDE69H1CD]

Graphic on countries’ spending http://r.reuters.com/dur97p

Insider on UK spending review http://link.reuters.com/teb78p

For a menu of stories on spending review, click [nLDE6720PZ]

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The focus on unconventional threats is likely to be used to
justify cuts to big military hardware orders.

“Our most urgent task is to return our nation’s finances to
sustainable footing,” the report said.

Britain will aim to strengthen security ties with other
nations, particularly emerging ones such as China and India, and
will spend some 500 million pounds ($794 million) on a
“transformative” programme for cyber security.

Cyber attacks include criminal activity for financial gain,
as well as attacks by state and non-state groups that could
disrupt military, transport, utility and other networks.

The report explains the principles underpinning a Strategic
Defence and Security Review due on Tuesday, the first since
1998, which critics say has been rushed and ill-thought out.

INDUSTRY SHIFT

“It’s pretty much areas one would have expected them to
highlight … What’s going to be interesting is what kind of
reductions we see over the next four or five years and the
number seems to settling around 8 percent,” said Zafar Khan, an
analyst at Societe Generale.

Negotiations between the Ministry of Defence and the
Treasury have resulted in cuts of less than 10 percent over four
years in a defence budget of 36.9 billion pounds.

This is well below cuts averaging 25 percent expected in
most departments’ budgets, but will still lead to reductions,
delays or cancellation of major hardware orders.

This will be a boon for software and security firms, while
some traditional hardware manufacturers are re-positioning
themselves. British firm BAE Systems (BAES.L: ) recently acquired
L-1 Identity Solutions’ (ID.N: ) U.S. counter-terrorism business.

“We welcome the fact that the government has recognised the
need to invest in cyber security, intelligence and counter
terrorism, three areas where we have allocated increased
resources,” said Andrew Thonis, head of defence technology firm
Cohort (CHRT.L: ).

Shares in the firm ended 6.6 percent higher at 64.5 pence.

Threats in the National Security Strategy report were split
into three tiers, with those threats that are most likely or
would have the deepest impact at the top.

The report relegated threats from insurgencies abroad that
could foster terrorist attacks in the Britain — such as the
Taliban harbouring al Qaeda in Afghanistan — to a lower, “tier
two” level priority.

Other threats highlighted were nuclear proliferation,
organised criminal networks and attacks on UK space satellites.

Officials at the unveiling of the new security strategy gave
little indication of the contents of Tuesday’s military review.
(Additional reporting by Michael Holden; Editing by Alison
Williams)

UPDATE 4-Terrorism, cyber attacks top UK security threats