EXECUTIVE INTELLIGENCE SUMMARY – 01 JUL 16
[wcm_nonmember] In this EXSUM…
- Food insecurity exercise shows darker days may loom
- Europe to forge ahead with creation of a Euro Army
- The coming trouble at the RNC Convention
- And more…
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Priority Intelligence Requirements:
PIR1: What are the current indicators of systems disruption that could lead to a SHTF event?
PIR2: What are the current indicators of an outbreak of global conflict? (Russia, China, Middle East)
PIR3: What are the current indicators of political-related instability or violence that leads to widespread domestic conflict?
PIR4: What are the current indicators of economic, financial, or monetary instability that leads to civil unrest?
PIR5: What are the current indicators of Islamic terrorism or the expansion of the Caliphate?
PIR1: What are the current indicators of systems disruption that could lead to a SHTF event?
Critical Infrastructure
In November 2015, a US government contractor ran a simulation of threats to the global food supply. The two-day “Food Chain Reaction” event involved officials from 65 countries who wargamed, from the year 2020 to 2030, the effects of disruptions to food production and transportation: changes in demographics and increased demand, prolonged drought and crop failure, extreme weather events, oil prices, climate change, and other effects. During the simulation, a member of the control cell noted that, “The ‘new normal’ is volatility.”
The tabletop wargame found that governments were slow to react to data points trending towards a crisis, but later became focused on creating resiliency in food infrastructure. The need for timely and accurate information was highlighted as a top priority for decision-making. (Download the technical report here.)
Wargamed threats to the global food supply included:
- Weather disruptions from El Niño and La Niña
- Major droughts across food-producing regions
- Sharp rise in crude oil prices
- Which leads to increased biofuels production
- Which leads to increased food insecurity
- Which leads to increased biofuels production
Wargamed effects on the global food supply included:
- Food prices increase of up to 395 percent
- Social unrest and migration
- Panic buying and hoarding
- Strained budgets to deal with the food crisis
I don’t buy into man-made climate change, but I do think that climates change. We’ve seen massive heating and cooling fluctuations on earth — for instance, the last North American mini-ice age was during the American Revolution — and I think that evidence of climate change is due to natural phenomena, rather than cars and factories making the earth warmer. We can say that climate change is real, and that there’s evidence of climate change, without becoming an eco-alarmist. The “global warming” theory is easily disputed, which is why we’ve seen a shift to the more accurate terminology of “climate change”.
But even if you don’t subscribe to climate change, we can’t deny the fact that prolonged droughts and extreme weather affect food production. Keep in mind that 100 percent — every square inch — of California is under drought conditions, and nearly 60 percent of the state is under severe drought. That drought is part of a decadal weather pattern; that is, it could last for decades.
The “food insecurity” threat to the U.S. in terms of food production is low, but we’ll continue to see the effects of extreme weather events and global instability in our food prices. With agricultural technology producing high yields, the large-scale threat is really the disruption to machinery, transportation, and commerce. A conflict that sends oil prices skyrocketing or a cyber attack on the financial sector are the most likely to cause widespread systems disruption.
PIR2: What are the current indicators of an outbreak of global conflict? (Russia, China, Middle East)
The prospects of global conflict continue to revolve around the usual players: Russia, China, and the Middle East. The ways in which global conflict could cause or contribute to a SHTF scenario in America are myriad and largely depend against which conflict is initiated. We’re certainly at risk of cyber attacks in the event of any of the three regions. Systems disruption, like the prices and availability of fuel, is also a top concern.
NATO/Russia:
As both parties continue to rattle their sabers, we did see some interesting developments this week.
Russian security and intelligence services for months have been harassing and breaking into the homes of US diplomats. There have been reports of rearranged furniture, the murder of US diplomat’s dog, and an instance where a Russian officer defecated on a bedroom pillow. And earlier this month, Russian guards outside the US embassy beat up an American diplomat Sadly, this should not be considered surprising behavior, but we can certainly call it an escalation of force. Putin is very good at pushing the envelope, and I think it shows not only his complete lack of respect for Obama, but also Obama’s weakness as a leader. In retaliation, the State Department canceled some Russian consul positions in America, further angering Russia.
Meanwhile, European leaders are restless after the Brexit, and have complained that it undermines European security, resulting in calls for the creation of a European army. With efforts to form and deploy additional multi-national brigades, like the Polish-Latvian-Ukrainian one formed in 2009, Europe is getting its first tastes of what that might entail. For starters, it would require changes to the European Union’s constitution, so we shouldn’t expect that a Euro army will be formed any time soon. But countries could circumvent that process by signing treaties for multi-national units, essentially creating the puzzle pieces of a European army. We should certainly expect the EU to continue to harden its stance against Russia, due to the continuous reporting of how insecure eastern Europe is to a Russian incursion.
Even though Russian president Vladimir Putin said that he would not engage in an arms race with Europe, his track record and future plans show quite the opposite. In the next four years, Russia is focusing on developing over a thousand new defense technologies; the navy is expanding its nuclear submarine fleet and making moves to control the Black Sea; and are likely to deploy nuclear-capable missile to counter the US missile defense shield.
Give all this, the likelihood of war in the near-term is low, however, we’re still in uneasy territory where tactical decisions can have strategic consequences.
U.S./China:
The Rim of the Pacific exercise kicked off on Wednesday, with China finally involved as a participant. This doesn’t do anything to ease tensions growing in the South Pacific, but presents China with an excellent opportunity to collect valuable intelligence about participants.
Middle East:
There have been no significant developments of SHTF indicators in the Middle East. Israel is still preparing for a future war with Hezbollah, and Hezbollah are still making preparations to defend Lebanon against Israel.
PIR3: What are the current indicators of military, government, political, or social-related instability or violence that leads to widespread domestic conflict?
RNC security concerns:
I continue to be concerned about the upcoming Republican National Convention, and in more ways that one. For weeks now, officials in Cleveland, Ohio have been warning that they’re not prepared to maintain security during the event. Last week, the president of the Cleveland police union went so far as to say that convention-goers were “sitting ducks” due to the lack of security. We’re still seeing protest groups organizing to crash the convention, with one group winning a court battle with Cleveland this week that will allow them to protest closer to Quicken Loans Arena.
Below is a map of the Trump parade route on the morning of Monday, 18 July. We’ve noted and will track over a dozen protest groups planning to stage demonstrations at the event, and we’ll have an updated map later next week.
PIR4: What are the current indicators of economic, financial, or monetary instability that leads to civil unrest?
Trump slump?
Effects of the Brexit are still shaking out, with renewed calls to ease instability as markets try to rebound after all the panic selling. Noting the parallels of the Brexit and the Donald Trump campaign, prominent economists are warning that a Trump victory will send us into a global depression. I’m of the belief that it might happen regardless, however, a political reaction to a Trump victory could manifest itself as an economic or financial reaction.
China’s looming depression
An Asia economist formerly at Morgan Stanley and the World Bank is warning that 2016 China resembles 1929 US markets, and is concerned that China is now set up for its own Great Depression. There are other notable economists warning that time is running out on China’s bubble, which they say will be worse than the 2008 bubble burst in the States.
US Recession
The indicators from previous EXSUMs still suggest that we’re entering a recession window within the next 12 months. I think that the Chinese bubble burst or a US recession will trigger the other. I’m pretty concerned about a financial replay of 2008, and potentially much worse. I’ve watched for years as economists and amateurs both have attempted to time the market and have made calls for its impending crash. I obviously am not going to try to time the market. We know that, at a minimum, market consolidation is coming. We’ll continue to monitor our financial indicators in the meantime.
PIR5: What are the current indicators of Islamic terrorism or the expansion of the Caliphate?
FLASH PRIORITY: Perhaps the most important indicator this week of a terrorist attack is the correlation of American Independence Day and the end of Ramadan. Traditionally, Muslim holidays and anniversaries of significant events in Islamic history are prime windows for terror attacks. Because Ramadan ends on Tuesday, 05 July, we should expect the possibility that a terror attack occurs on or around Independence Day or the end of Ramadan. There is at least one active advisory warning that terror attacks are possible.
This week intelligence and counterterror officials in the US, Belgium, and Germany warned of the inevitability of more terror attacks. Parroting the US Director of National Intelligence, they said that as the Islamic State loses ground, it will attempt to strike out with attacks in Europe and elsewhere. Nothing significant to report.
Appendix:
RIMPAC: Rim of the Pacific Exercise
NATO: North Atlantic Treaty Organization
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