EXECUTIVE INTELLIGENCE SUMMARY – 21 July 2017 🔒
[wcm_nonmember]In this EXSUM… (4911 words)
- Top cyber attacks target power, financial infrastructure
- Naval War College hosts high-level cyber war games
- Russia, China, North Korea, Middle East SITREPs
- Defense in Brief
- North Korean ICBM isn’t accurate
- Where is Black Lives Matter?
- Highly leveraged economies like the U.S. cannot withstand interest rate normalization
- And more…
This content is for subscribers only. To continue reading, please log in or subscribe here. [/wcm_nonmember]
[wcm_restrict plan =”fo-osint”]
Bottom Line Up Front: Many observers wonder what small and relatively powerless nations like Montenegro, Croatia, and Albania — among many others — could contribute to NATO in an Article V conflict. The nation of Montenegro, for instance, has the population of Las Vegas and less than 2,000 active duty personnel across three military branches. An even better questions is why NATO continues to expand to include these small nations. The answer is that it’s a geo-strategic land grab to prevent Russia from forming its own alliance and to harden these small countries against Russian influence. NATO expands to prevent another Warsaw Pact alliance, and the opposite is why Russia tried to prevent a pro-NATO government in Ukraine and subsequently annexed Crimea, Dontesk, and Lugansk. This is about jockeying for territory. Putin sees the expansion of NATO — potentially to have included Ukraine — on his door step, and sees this as evidence of a Western conspiracy to overthrow him. Given the West’s proclivity to carry out these operations, I can’t say that Putin is being irrational. Replacing Putin and the Cheka with a pro-NATO government would solve the greatest geopolitical threat to the European establishment’s interests. Geopolitical machinations are the history of the world.
Now as far as Saber Guardian is concerned (see this week’s NATO-Russia SITREP), NATO is doing two things. The first is that it’s demonstrating its resolve and capabilities to fight Russia across Europe. This is the official story; everyone sees this. The second and probably more important objective for NATO is to prepare these smaller nations to carry out irregular warfare in the event of a Russian invasion. NATO currently isn’t strong enough to stop a large scale Russian invasion into Europe — say, into Estonia or Latvia — so the presence of NATO military personnel trained in fomenting insurgency and carrying out sabotage operations is the next best option. What’s been under-reported is that a strong contingent of US Army Special Forces are involved in Saber Guardian and are actively working with and training partner units to conduct stay-behind operations if or when Russia invades. As best I can tell, NATO powerhouses like the US, UK, Germany, and France would commit to the conventional fight (tanks and planes), leaving these smaller nations to carry out insurgency against a Russian occupation force. NATO is focused on building an irregular force capability to counter Putin’s hybrid war, which involves more unconventional tactics than conventional.
An important part of warfare is convincing your enemy that his objectives are unattainable or are too costly to pursue. NATO’s objective here is to deter Russia from another Ukraine incident, and to prepare for a worst case scenario. That being said, a Russian invasion of anywhere is a worst case scenario. That may seem unlikely right now, but Putin’s greatest limiting factor in achieving his objectives are low oil prices. For the better part of a year, I’ve described how low oil prices and sanctions are crippling the Russian economy; how Putin has drained off strategic monetary reserves to keep his government afloat and been forced to make domestic budget cuts to keep his military modernization programs in place. Russia is not in a good place right now, but they aren’t going anywhere, either. Once oil prices rebound, Putin will have an expanded playbook against NATO, and there’s a high likelihood that tensions will escalate even further. If Putin does nothing in the face of NATO expansion and preparation for war, then he risks domestic instability carried out by Western intelligence organizations and may ultimately be deposed. If he chooses not to seek re-election next year, then his predecessor will be faced with the same scenario. Therefore, Putin’s only option is to convince NATO that their objectives are too costly to pursue. How he does that is anyone’s guess, but there are some possibilities. He could inflame the migrant crisis to threaten civil wars in Europe by convincing nationalist, right wing political parties to overthrow their globalist liberal governments. He could continue carrying out inform and influence operations to have pro-Russian leaders elected in NATO nations, thus peeling back NATO one nation at a time. He could also drive a wedge among NATO partners, causing internecine disputes and reducing cooperation among NATO member nations. To some degree, he’s probably doing all three. Fracturing NATO is how Putin wins, and those are the indicators we will keep an eye on.
Priority Intelligence Requirements:
PIR1: What are the current indicators of systems disruption or instability that could lead to civil unrest or violence.
PIR2: What are the current indicators of an outbreak of global conflict?
PIR3: What are the current indicators of organized political violence?
PIR4: What are the current indicators of economic, financial, or monetary instability?
PIR1: What are the current indicators of systems disruption that could lead to instability, civil unrest, or violence?
Even a single nuclear detonation would bring about mass starvation, say experts
In January 2017, Cambridge physicist Stephen Hawking opined that a nuclear conflict is a high probability, and perhaps even inevitable. Other US officials agree nuclear war is a possibility, and some believe that the risk is higher now than during the Cold War. A team of researchers from the University of Nebraska published research showing that even one nuclear exchange would cause a disruption in climate patterns known as “nuclear autumn,” significantly disrupting global rainfall (by as much as 80 percent in some parts of the world), growing seasons and weather patterns. In short, there would be mass starvation, costing a billion lives. [source] (Analyst Comment: The research intends to show that a limited nuclear exchange would impact the global climate, causing a cascade of catastrophic effects. I’ve read through the article and remain skeptical. I don’t doubt that a nuclear detonation large enough could disrupt rainfall in other parts of the country, however, we should consider that a limited nuclear conflict — anywhere in the world — might impact the US, if this research as merit. Otherwise, a nuclear war is unlikely in the near term. A survey of the ‘red lines’ of nuclear powers like Russia and China shows that activity which threatens the national sovereignty of these nations is the most likely trigger for the use of nuclear weapons. There is a higher possibility of a ‘limited nuclear exchange’ where surgical, low-yield nuclear strikes are used to destroy strategic targets.)
Top cyber attacks target power, financial infrastructure
Nation-state hackers have identified the most critical targets as those belonging to power and financial services infrastructure. The most critical known cyber attacks include: The Ukrainian power station hack in December 2015, allegedly by Russia, which took an entire plant offline for hours, depriving 230,000 people of power during winter; the Rye Brook, N.Y. dam attack in 2013 (though not reported until 2016), allegedly by Iran; and the SWIFT global banking system spanning 2015 and 2016 by North Korea, specifically targeting funds. U.S.-based nuclear power plants, which could be weaponized via self-destruction and attacks on the energy sector (like the power grid) are the most dangerous possibilities. [source]
Naval War College hosts high-level cyber war games
The Naval War College, together with about 140 representatives from the private sector, military, and government, held a war game exercise involving cyber attacks on critical civilian infrastructure. The goal of the exercise was to figure out how the Pentagon would respond to cyber attacks against various industries including finance, tech, health care, chemical, energy, defense, manufacturing, and transportation. Focus on the exercise was identifying zones of responsibility, as well as capabilities of all relevant players and which sectors would likely be most targeted (and vulnerable). Some members of Congress were also paying attention to the exercise. (AC: In the Trump era, the government finally seems to appreciate the scope of the cyber threat it and its allies face. Now, we’ll see if all of this planning turns into policy.)
PIR2: What are the current indicators of an outbreak of global conflict?
The prospects of global conflict continue to revolve five geopolitical actors: Russia, China, North Korea, Iran, and the Middle East. In the event of war with any of these nations, consider domestic systems disruption a distinct possibility.
Saber Guardian 2017
A very large, multi-national combined-arms, live-fire exercise called Saber Guardian 2017 is taking place across seven European countries, an effort designed specifically to demonstrate NATO’s goal of joint strength in the deterrence of Russian aggression. In addition to tanks and artillery, small-arms fire lit up the Romanian countryside July 18. Fighter planes from Romania, the U.S., Croatia, Armenia, Montenegro (the newest NATO) member and even Ukraine took part in the exercises.
The exercise was born out of a decision at last year’s NATO summit in Poland when members from the 28 states made a decision to shift from a posture that assured allies to full-on deterrence due to Russia’s continued aggression in the region. Consisting of more than 25,000 military personnel from 20 nations, the exercise is designed to show allies and peer adversaries alike U.S. and NATO military capabilities. “Deterrence is about capability, it’s about making sure that any potential adversary knows that we are prepared to do whatever is necessary,” U.S. Army Europe commander Lt. Gen. Ben Hodges said during a news briefing following the exercise. In addition to regular Army, the Army National Guard was also represented; troops from Georgia, North Carolina, Michigan and South Dakota were in attendance, adding to the readiness of the active duty Army’s support infrastructure. The U.S. Army had pulled all of its remaining main battle tanks out of Europe three years ago, but the Pentagon reversed course and rapidly moved forces including armor back to the continent as a deterrent. The Black Sea region is an important one for both NATO and Russia.
South China Sea SITREP:
A year later, the Hague’s ruling against China is largely moot
Roughly one year ago a five-judge panel at the Permanent Court of Arbitration in the The Hague ruled in favor of the Philippines’ claims over China in the South China Sea. The case, filed in 2013, came following a standoff between Manila and Beijing over the Scarborough Shoal; China ultimately seized it from the Philippines and remains in control of it today. There are a couple of reasons for this: 1) China never recognized The Hague’s legitimacy to ‘rule’ on the issue, and thus never considered the ruling legitimate; and 2) The Philippine government, led by President Rodrigo Duterte, has sent mixed signals, possibly shifting away from Washington and towards Beijing.
The court ruled unanimously in favor of the Philippines; it should be noted, however, that the case was brought in 2013 by then-President Benigno Aquino, who was solidly pro-United States. That changed with Duterte; rather than proceeding backed by international law, Duterte instead began an effort to improve relations with Beijing, and Beijing has largely reciprocated.
The U.S. continues to support the decision of the international ruling, but as an extra-regional power has thus far been unable to goad ASEAN nations into doing much to oppose China’s out-sized claims and military expansion throughout the South China Sea — likely the result of a perception that the previous U.S. administration was not wholly committed to them or the region in general. And while that commitment may change in the coming years under the current Trump administration, The Hague’s ruling remains unenforced and, increasingly irrelevant as China continues to solidify its hold on the region with seven artificial islands throughout the Spratly group with fortifications, Coast Guard, and naval presence. [source]
Indeed, there has been defiance against Chinese expansion: Indonesia, in a direct challenge to China’s territorial claims, will now refer to the northern areas of its exclusive economic zone as “North Natuna Sea,” a decision that has, of course, ruffled Chinese feathers. Many ASEAN nations have increased military spending over the past several years after recognizing the China threat. Vietnam, for instance, is paying for a military buildup specifically to deter Chinese aggression.
Meanwhile, the People’s Liberation Army Navy, or PLAN, is continuing its transformation from a “brown water” largely coastal fleet to a “blue water” fleet capable of projecting power far beyond China’s shores. In June the PLAN launched the first of a new, much larger class of destroyer, the Type 055. That ship joins 23 others commissioned by the PLAN in 2016 alone, making the Chinese navy the fastest-growing great-power fleet.
(AC: The window of opportunity to act in the South China Sea is closing. China’s anti-access/area-denial (A2/AD) strategy intends to eventually close off US access to the South China Sea by engaging the US Navy in the “far seas”. A paper published last year by a pair of Chinese naval officers outlines those deeper ambitions. This comes as a Chinese Navy vessel entered into the BALTIC SEA after passing through the English Channel. The paper further argues that the PLAN uses peacetime operations to expand — and normalize — its presence in other parts of the world. [source] Still, for now, the status quo appears to be holding in the South China Sea.)
Korean Peninsula SITREP:
The South Korean government has taken the first [anticipated] step toward reducing tensions on the border, with an offer of some military and humanitarian exchanges. I say “anticipated,” because South Korea’s new president, Moon Jae-in, has regularly said he prefers dialogue and diplomacy to any military solution to North Korea’s growing nuclear and ballistic missile capabilities. And though North Korea has voiced skepticism of Moon’s offer, Kim Jong-un has nevertheless signaled a willingness to at least consider Moon’s Olive Branch. [source]
Against this backdrop, President Donald J. Trump is growing increasingly frustrated by China’s lack of progress (and lack of real effort) in helping reign in Pyongyang’s nuclear and missile programs, but as we’ve mentioned before, it isn’t in Beijing’s interest to see Kim deposed or otherwise defeated, leaving a U.S.-aligned government on its border. Plus, after North Korea’s successful test of an ICBM-capable missile over the July 4 holiday, the Trump administration will feel additional pressure to deal with Pyongyang’s nuclear/ICBM programs on its own, and that most likely would involve some sort of preemptive military strike. Still, most credible military analysts understand that there are no good ‘military options’ regarding North Korea. It’s not as if China hasn’t done anything. The China National Petroleum Corp. has reportedly suspended exports of gasoline and diesel to North Korea, sending prices skyrocketing. That most definitely hurts, since Pyongyang imports all of its oil and oil-based products. North Korea is mitigating some of this pain by encouraging cross-border fuel smuggling from China, according to NK defectors. [source] At the same time, the North is strengthening its bargaining power, so to speak, by bolstering its stockpile of nuclear weapons; a U.S.-based monitoring group believes Pyongyang has increased its plutonium stocks, which if true would likely mean the construction of additional nuclear weapons. [source]
All said, if Pyongyang signals any willingness at all to accept Moon’s olive branch, it will most likely be under the same pretexts Kim’s father, Kim Jong-il, used to accept what were essentially bribes offered by the West in a decades-long attempt to convince the North to give up its nuclear weapons program, which was of course unsuccessful. The one caveat in Moon’s offer is that Team Trump does not want to repeat the previous cycle of failure, as bad as any military or other destabilizing options may be. But for now, the president of the United States may not be in much of a position to intervene, given that any military action by the U.S. would almost certainly have to be approved by the Moon government. For now, the threat of war on the Korean peninsula appears to be subsiding. Any one of several events, however — including a new nuclear test by Pyongyang, an attack on South Korean military installations or a missile test gone awry — could change that.
Middle East SITREP:
This week, Iran’s Foreign Minister (FM) spoke at an event held by the Council on Foreign Relations. FM Zarif speaks about issues concerning the Middle East. He begins by saying that one of the main causes of instability in the region is due to foreign intervention; namely the 2003 US invasion of Iraq which caused extremism to proliferate. Additionally, FM Zarif says there’s been a failure of governments, and that many people believe their governments are “incapable of addressing the most important basic needs,” which has “given rise to anger, to resentment, to disenfranchisement.”
Earlier this year, the now-Crown Prince of Saudi Arabia gave an interview in which he was quoted as saying, “We won’t wait for the battle to be in Saudi Arabia. Instead, we will work so the battle is in Iran, not in Saudi Arabia.” FM Zarif responds by characterizing the quote as a threat against Iran and then accuses Saudi Arabia of supporting terrorism in the Islamic world and bringing terrorism to Iran.
SECSTATE Tillerson was recently quoted as saying he called for “Supporting elements inside Iran that would lead to a peaceful transition of the Iranian government.” Additionally, several US senators have called for regime change in Iran. FM Zarif responds by saying that the US “doesn’t learn from history,” and that he believes that the US still pursues a policy of regime change in Iran. Despite the massive aid given to its Arab neighbors and in spite of “crippling sanctions,” FM Zarif says that Iran has survived, and will continue to survive any attempt at regime change.
A former national security advisor to Prime Minister Benjamin Netanyahu believes that the current Syrian ceasefire will pave the way to a war between Iran and Israel. The former advisor, Yaakov Amidror, believes, in fact, that such a conflict is “inevitable.” [source]
In a recent conference call with The Israeli Project, Amidror discussed geopolitical and geographic changes that have put Tehran in a much better position to strike Israel than perhaps at any time in recent history. He sees two primary issues of concern: 1) The formation of a direct land corridor from Iran, through neighboring Iraq, Lebanon and into Syria, and on to the Mediterranean Sea, essentially putting Iranian forces on Israel’s border; 2) Iran is reportedly building bases with its client militant group, Hezbollah, in Syria, which could force Israel into a two-front battle against Iranian/Hezbollah forces in Syria and Lebanon — a situation Israeli “should prevent…whatever it will be the price.” He added: “If [the Iranians] begin to build infrastructure which might be used against Israel in Syria and will connect this land corridor into Iraq and begin to move materials from this area into Syria, that will make the war inevitable.”
U.S. lawmakers are also keeping tabs on this development, with some having sent a letter to Secretary of State Rex Tillerson warning of Iran’s increasing ability to inflict damage on two close American allies — Israel and Jordan.
Reportedly, Netanyahu lobbied hard for the final joint Russia-U.S. ceasefire agreement to include a provision requiring both countries to work to keep Iran, Hezbollah and additional Shi’ite militias away from Israel’s border. He was also said to have not trusted the Russians — of which Iran is a client state, same as Syria — to patrol the southern Syria safe zone, but his pleas were ignored. “The agreement as it is now is very bad,” an Israeli official said. “It doesn’t take almost any of Israel’s security interests and it creates a disturbing reality in southern Syria.” [source]
It is unclear whether the Trump administration is prepared to take counter-actions against any Iranian aggression directed at its principle Mideast ally, Israel. What seems more clear, however, is that Israel is preparing for eventual preemptive strikes against Iranian military and naval bases that are being contemplated — something Tel Aviv has a history of doing when it feels threatened (hence the talk of “inevitable” war). If that were to happen, such strikes would probably not invite counterstrikes from Russia — because that would invite counterstrikes from the U.S. (although such a scenario cannot be entirely ruled out) — but it will most likely invite a response from Iran, especially if Tehran has moved substantial forces and logistical supplies into the newly-established land corridor. And yet, Israelis know they cannot afford even a single error when it comes to their security. This development makes a new war in the Middle East much more likely.
Defense in brief
North Korean ICBM isn’t accurate
North Korea may have recently tested an intercontinental missile with enough range to bring part parts of the western United States into range, but Pentagon brass doesn’t think the missile has much in the way of accuracy. “What the experts tell me is that the North Koreans have yet to demonstrate the capacity to do the guidance and control that would be required,” Army Gen. Paul Selva, the vice chairman of the U.S. Joint Chiefs of Staff, told the Senate Armed Services Committee. [source] (AC: Interestingly, Selva was also asked what the United States’ next move in the region ought to be; he offered that a preemptive military strike is an option that ought to be considered. This adds to evidence the Trump administration truly does believe North Korea to be a clear and present danger, because it continues to keep this option open, rather than dismiss it out of hand like previous administrations.)
Army boosting laser power
The U.S. Army is set to dramatically boost the power of its laser systems, from the 5-10 kilowatt range to something more along the lines of 50-100 kWs, or a 10-fold increase. The added power may make those systems lethal enough to kill helicopters and low-flying planes, and may also blind cruise missiles. The Army plans to test-fire a 50 kW weapon next year; a 100 kW weapon is expected to be ready for testing in 2020. The goal is to develop technology that reduces the size and power requirements for such systems while bolstering destructive power. [source] (AC: A workable laser anti-missile system that can effectively target multiple warheads and even hypersonic missile systems — still many years off — may one day finally make nuclear weapons obsolete. Just an observation.)
Turkish newswire service screws U.S. over in Syria
The Turkish newswire Anadolu has published a map [source] of 10 U.S. military outposts and bases in Syria, and while they were already likely known to Russia, Iran, the Syrian government and other players in the country, the newswire did not publish the locations of anyone else’s outposts. What’s more, Anadolu even listed the number of U.S. forces in several of the locations; in two cases included the presence of French special forces. The list “points to a U.S. presence from one end to the other of the Kurdish self-administration region — a distance of more than 200 miles,” one report noted. This is noteworthy because the Turkish government, a NATO member, has been openly critical of the Trump administration (and the Obama administration before it) over its support for a militia led by Kurds, affiliated with the Kurdistan Workers Party (PKK), in its battle against ISIS. It is a separatist movement now at war with Turkey. (AC: The situation in Syria is complicated, for certain, including the U.S. position — which is in opposition to Syrian President Bashar al-Assad, ostensibly same as Turkey’s position. But Ankara’s bigger concern has become clearing out the PKK and Kurdish opposition, ensuring those forces don’t fill the territorial void left by fleeing ISIS forces. Still, it is highly improper for a NATO ally to reveal such details about another member’s forces during active military operations; this will further strain the Turkish-NATO relationship.) [source]
PIR3: What are the current indicators of organized political violence?
Where is Black Lives Matter?
After starting with a bang in 2013, the Black Lives Matter (BLM) movement (part of an umbrella group called the Movement for Black Lives) is… noticeably AWOL. Sure, they’re still around, causing the occasional disruption, but they’re not nearly as strong as we’ve seen in previous years. A Buzzfeed article posted last month contained interviews with several BLM advocates, who described the organization as rife with infighting, factions, and inaction. BLM members were generally pessimistic about the group’s future. According to the Buzzfeed writer, “Black Lives Matter is still here. Its groups are still organizing. But Black Lives Matter is on the verge of losing the traction and momentum that sparked a national shift on criminal justice policy.” A strategic planning meeting organized shortly after the Trump inauguration apparently broke down after little progress was made in identifying how to respond to the Trump administration. The Buzzfeed article describes the condition of the BLM movement: “After years of organizing, local activists were cash-strapped, trying to keep their people motivated, and struggling to coordinate with other groups nationally while staying relevant at home.” One reason for the movement’s departure from relevance is that the planners focused on building policy to be implemented by government. No longer being relevant to the government and their goal of policy implementation no longer available to them, BLM seems lost.
PA: “Alt-Right” fails to shut down Antifa’s Refuse Fascism event (15 JUL) (Source: https://itsgoingdown.org/philadelphia-pa-alt-right-tries-fails/)
PIR4: What are the current indicators of economic, financial, or monetary instability that lead to worsening economic conditions or civil unrest?
Wage growth will continue to be flat
Wages have not grown much in years, and that trend is likely to continue, even if the Trump administration and Congress are able to rework previous trade deals and return factories and plants to the United States. That’s because those plants if they even return, are not going to be labor-intensive. While U.S. manufacturing is in a position to rebound if certain political and policy factors align — lower corporate taxes via tax reform, continued administration efforts to reduce companies’ regulatory burdens, etc. — automation will play a major role in the alignment, thus alleviating the need for large (and expensive) workforces. “Even if we rebuild factories here and you build plants here, they’re just not going to employ thousands of people — that just doesn’t happen,” said one analyst. Meanwhile, Americans in manufacturing and other industries are going to continue to work harder but earn less, as it is an employers’ — not an employees’ — market, meaning workers are in no position to demand higher wages. Automation, combined with a lack of marketable skill sets, high regulatory costs like Obamacare and the cost of benefits will keep wages flat. [source]
Highly leveraged economies like the U.S. cannot withstand interest rate normalization
The U.S. economy and others around the world that have subsided for years on easy money policies will lapse into recession or worse if there is a normalization of short-term interest rates, an influential bond investor, Bill Gross of Janus Henderson Investors, believes. Saying the easy money policies followed by the Federal Reserve and other central banks have “distorted capitalism as we once knew it,” Gross warned of “unknown consequences” of those policies in the near- and long-term. He noted also that while governments may be able to afford the extra expense of increased interest payments, corporations and individuals similarly leveraged cannot. The end result may well be another recession, perhaps along the lines of the last one. [source]
Pensions in America’s heartland are collapsing
Pension plans — both private-sector, union-managed, and government pensions — are continuing to collapse, with some monthly benefits being slashed by more than 50 percent, leaving some retirees destitute. What’s more, the prognosis for the future fiscal health of these plans is not good. At least 50 Midwestern pension plans are under water and are considering major cuts to monthly benefits or staring at bankruptcy. Affected mostly: Some 4 million former truck drivers, office and factory employees, bricklayers and construction workers; the cuts, when they come, will likely last for the rest of their lives. The first to go is the Central States Pension Fund, which has 400,000 members. There are many reasons why these funds are going belly up, including the 2008 stock market crash, fewer workers in fewer jobs who are contributing to funds, low-interest rates, and bad regional economies. The most endangered public pension funds include those managed by Illinois, New Jersey and Connecticut. [source]
Why it now takes an average of 31 days for companies to hire a new American worker
A startling new survey of U.S. employers reveals that it now takes an average of 31 days for American companies to hire one new worker, up from 23 days in 2006 and 15 days in 2009. The reason? Eight-five percent of employers who are looking for help reported “few or no qualified applicants for their open positions,” the survey from the National Federation of Independent Business’s small business optimism report said. In May, the organization found that 33 percent of employers could not fill an open job in the previous month, which is the highest reading since 2000. In addition to the difficulty of finding qualified workers, companies are also having trouble finding committed workers. “Workers appear to have less loyalty to the job,” said the Philadelphia Federal Reserve. One major reason why finding qualified help is difficult — as mentioned above — flat wages, one hiring specialist said. [source]