Hacked Elections Can Harm Sovereign Credit Ratings, Moody’s Says

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The threat of cyber attackers subverting elections around the world puts not just democratic institutions at risk but also a country’s creditworthiness, according to Moody’s Investors Service.

Among countries with popular national elections, Moody’s sovereign-credit ratings and perceptions of electoral integrity are highly correlated, authors including Leroy Terrelonge, a cyber risk analyst, wrote in the report. Cyber attacks undermine that integrity, they wrote. The analysis uses rankings from the Electoral Integrity Project’s 2019 report.

Hacked Elections Can Harm Sovereign Credit Ratings, Moody’s Says

Targeted attacks using social media are especially effective, and such interference from foreign actors became highly publicized in the 2016 U.S. presidential election, the report said. Moody’s warning comes months ahead of the next presidential election in November, with the Department of Homeland Security now looking for help to track and analyze social media disinformation campaigns from Russia, China, Iran and North Korea.

Cyber attackers may also target voting machines or other election technology infrastructure to alter results or prevent voting, the report said.

The resultant institutional weaknesses “could lead to an uncertain investment climate and negative long-run implications for investment, growth, government finances and overall macroeconomic stability,” the report said.

The Bolivian presidential vote last year -- which initially saw the re-election of Evo Morales -- provides a recent example of the direct impact alleged election meddling can have, the report said.

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The vote was marred by irregularities and manipulation, according to a report by the Organization of American States, and widespread protests and social unrest led to Morales resigning and fleeing the country.

The political and social instability magnified existing economic and fiscal challenges and contributed to a downgrade of the country’s credit rating. Moody’s slashed Bolivia’s rating to B1 in March, pushing its debt to a 14-month low at the time.

It’s not just hacking that’s contributing to election disruptions. Moody’s noted the pandemic has led to at least 67 countries and territories postponing polls since February.

©2020 Bloomberg L.P.

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