23 JUN 17 – Executive Intelligence Summary – Forward Observer Shop

23 JUN 17 – Executive Intelligence Summary


[wcm_nonmember]In this EXSUM… (3287 words)

  • Sessions announces National Public Safety Partnership
  • An overview of DHS activities and their results
  • Russia & China SITREPs
  • Defense in Brief
  • Overview of Leftist situation in Texas
  • Fed’s Bullard: Rate raising is unnecessarily aggressive
  • Shiller on ‘technological unemployment’
  • MVP: Risk of Fed raising rates
  • And more…


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Bottom Line Up Front:  American political scientist and professor Harvard Graham Allison coined the term “Thucydides Trap,” which describes what happens when two world powers vie for supremacy.  The United States is an established global power with the ability to project force anywhere on the planet, while China is a rising nation that is currently building a number of global power projection platforms. Both are led by nationalist leaders — Xi Jinping in China and Donald Trump in the U.S. — who seek to make their countries “great.”  [Remember several months ago that members of the American Enterprise Institute (AEI) met with Chinese government officials.  The Chinese officials asked AEI members what they thought of Donald Trump, to which one member replied, “He’s a strong leader.”  After an awkward moment of silence, one Chinese official said, “Our leader is strong, too.”]

History shows that risk of conflict is elevated when a rising power challenges the established power.  The theory was summarize by Thucydides, the Athenian historian and general, in a single line: ‘It was the rise of Athens and the fear this inspired in rival Sparta that made their conflict inevitable.’  In similar circumstances, war has resulted in 12 of 16 cases over 500 years, Allison notes in his new book, Destined for War: Can America and China Escape Thucydides’s Trap?  His dour view, however, is tempered by another expert, Sinologist Arthur Waldron, a history professor at the University of Pennsylvania, who maintains that U.S.-China war is not pre-ordained.  Waldron questions whether China’s rise really poses a significant challenge to U.S. hegemony, given China’s chronic problems and issues with infrastructure, corporate debt, internal strife, and an aging population. China understands that much of its economy is dependent on exports to the world’s largest consumer nation (the U.S.).  Plus, American and Chinese companies are building new relationships while strengthening others.  China under President Xi, however, seeks to restore itself as the preeminent power in the East, as it was centuries ago.  The Trump administration seems acutely aware of this Thucydides Trap; Allison visited the White House last month for a meeting with Trump’s National Security Council, to discuss the theory and possible ways to avoid the ‘trap.’  In a statement this week, SECDEF Mattis seemed particularly open to the idea that war was not inevitable with China, and said that he sought greater cooperation with China to reduce the risk of war.  I don’t suspect, however, that optimism is to going to persuade China from further militarizing its stolen territory in the South China Sea.  If not shut already, the window of opportunity is closing on the US military to prevent a point of no return whereby China can successfully defend this stolen territory.  And this puts the ball squarely in the court of the Trump administration: how far is the U.S. willing to go in order to prevent Chinese hegemony against our allies in the Pacific?

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?

Sessions announces National Public Safety Partnership

This week, US Attorney General Jeff Sessions announced the creation of the National Public Safety Partnership to Combat Violent Crime.  Twelves cities were selected to receive federal assistance to tackle their violent crime problems.

  • Birmingham, Alabama
  • Indianapolis, Indiana
  • Memphis, Tennessee
  • Toledo, Ohio
  • Baton Rouge, Louisiana
  • Buffalo, New York
  • Cincinnati, Ohio
  • Houston, Texas
  • Jackson, Tennessee
  • Kansas City, Missouri
  • Lansing, Michigan
  • Springfield, Illinois



An overview of DHS activities and their results

Department of Homeland Security Secretary John Kelly warned Congress that the court injunctions against the so-called “travel ban” are preventing DHS from keeping America safer.  “I’m not fully confident in our ability to prevent those who seek to do us harm from taking advantage of our generous immigration and — and visa system,” Kelly said.  Secretary Kelly also stated his belief that the next terror attack that comes from outside the country will have come through Central America and across the US southwest border.  Trump administration policies have resulted in a 72 decrease in illegal aliens coming across the US border.  Unaccompanied minors are down below that number.

Immigration and Customs Enforcement (ICE) reports that arrests are up 37 percent since this time last year, criminal charges are up 47 percent, and detainers issues are up 75 percent.  Through Fiscal Year 2017, ICE has removed over 155,000 illegal aliens from the United States; 55 percent of this number (85,474) had criminal convictions.  In addition to enforcing immigration laws, DHS and ICE have worked to combat gangs as well.  From FY16 to FY17, ICE made over 8,000 arrests of gang members, and 1,117 administrative immigration arrests of gang members.  During Project New Dawn (26 MAR – 06 MAY), US law enforcement arrested:

  • 104 members of MS-13
  • 118 members of Sureños
  • 137 Bloods
  • 104 Crips

Currently ICE has 87 domestic and international gang investigations targeting MS-13 members in

  • Long Island, New York
  • New York City
  • New Jersey
  • Boston, Massachusetts
  • Maryland
  • Northern Virginia/DC
  • Norfolk, Virginia
  • Columbus, Ohio
  • Colorado
  • Detroit, Michigan
  • Nashville, Tennessee
  • Dallas, Texas
  • Houston, Texas
  • Miami, Florida
  • Los Angeles
  • Fresno County, California
  • San Jose, California
  • San Francisco, California
  • Honduras and
  • El Salvador

(Read the full report here.)


Friday’s Tornado Watch Advisories



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.


A quarter century after the Cold War ended with the collapse of the Soviet Union, two rivals are squaring off in Cold War 2.0: US National Security Advisor H. R. McMaster and Russian Gen. Valery Gerasimov.  McMaster and Gerasimov began their careers similarly as junior armor officers.  McMaster earned his reputation as a master strategist and armor officer during the first Gulf War, and later, as developer of a counterinsurgency strategy in Iraq that served as a platform for the 2007 surge.

McMaster does not believe that future warfare will center entirely around special forces, pinprick drone strikes and other low-intensity conflict. He believes that major land battles involving conventional forces, which gives a huge advantage to the U.S., will also occur. People who know him believe he will dramatically influence Trump’s military strategy and influence Pentagon spending.

To avoid or win a future conflict with Russia, McMaster has focused his area of study on the first Cold War, which was won by ensuring the United States’ conventional forces, as well as its nuclear deterrent, were well-understood by the enemy to be far too strong to oppose.  To this end, McMaster is also the author of a well-regarded, classified study on Russian military tactics in Ukraine.  The study notes how Russian forces employed a combination of electronics and drones to bolster accuracy of its artillery.  His strategy moving forward in Europe is to replicate those of the first Cold War: forward deploy heavy brigades backed up by armor and artillery. (The Army has already starting creating new Heavy Armor Brigade Combat Teams.) The core of this force is four U.S.-led brigades of some 3,500 troops each – one U.S. brigade and three others supplied by NATO, positioned in eastern and central Europe.

Gerasimov, meanwhile, is also a student of recent U.S. military “regime-change” operations in Iraq and Afghanistan. In an oft-overlooked 2013 essay in an obscure military journal he argued that Russia must master similar operational methods. [Read this article here.] He is a believer in non-lethal methods for containing an adversary.  “The West doesn’t get that what Gerasimov has described—hybrid war—is how you prepare the ground before you send in the men with guns,” says Mark Galeotti, senior researcher at the Institute of International Relations, a foreign-policy think tank in Prague.  Of McMaster’s view of readiness and capability, “Your enemy has to believe you have the means to do what you absolutely say you are going to do,” said Col. Patrick Ellis, the commander of the 2nd Cavalry Regiment.

This week, the Russian Defense Minister warned a Russian defense board that the NATO military buildup was ‘deteriorating’ regional stability.  “The situation developing near our western borders tends toward deterioration. This is due to the increased military activity of NATO countries in Eastern Europe.”  He continued by describing the Russian response:

The actions of our Western colleagues lead to the destruction of the global security system, increase mutual distrust and force us to implement response measures, primarily in the Western strategic direction. We are improving the combat strength of the troops and their basing system.  More than 30 battalions and company tactical groups that are manned and equipped with the needed materiel are in readiness for immediate combat use.  Before the end of the year, around 20 army units will be formed in the Western Military District. For their stationing, about 40 military camps are being constructed.

Over the past six months and coming at no surprise, Russia bolstered its capabilities in the Western Military District, which borders Finland, Estonia, Latvia, Belarus, and Ukraine, moving some 300 pieces of military equipment (especially rocket artillery) to the region.  The Russian military has also focused on hardening its communication systems against a NATO electronic or cyber attack.  And this presents a problem for NATO.  Just last year, national security advisor Gen. McMaster (Ret.) was the director of the Army’s Capabilities Integration Center and said this:

We’re out-ranged by a lot of these [Russian artillery] systems and they employ improved conventional munitions, which we are going away from. There will be a 40- to 60-percent reduction in lethality in the systems that we have [due to being out-ranged]…  Remember that we already have fewer artillery systems. Now those fewer artillery systems will be less effective relative to the enemy.

The bottom line is that Russia foresaw a potential conflict with the US and is more prepared to exploit US vulnerabilities, while the US plays catch up in Europe.



SECSTATE Tillerson recently accused China of creating instability across the South China Sea region.  “We have told [China], ‘You are creating instability throughout the Pacific region that will bring us into conflict; please don’t do that.”  Tillerson continued with his thoughts on how the Chinese economic boom was contributing to its military buildup.  “We cannot constrain their economic growth.  We have to accommodate their economic growth.  But as their economic growth then translates into spheres of influence that then begin to threaten our national security, this begins to disrupt these conditions that have allowed us to live without conflict for the last 50 years.”  Strong words from Tillerson, which renew his previous warnings that China’s current course puts both nations on the path to war.
Following talks with high level Chinese officials this week, SECSTATE Tillerson and SECDEF Mattis provided a joint statement to reporters.  Tillerson generalized the talks as focusing on North Korea — what he described as the top threat to national security — and moving forward on shared interests.  China has a responsibility, Tillerson said, to help restrain in North Korea via diplomatic and economic pressure in order to prevent further escalation, and that more effort needed to be made to curtail North Korea’s illicit sources of funding (such as extortion, malicious cyber activity, money laundering) for its weapons programs.  Tillerson also said that he had reached an agreement with China and that their leaders agreed to cooperate in the fight against international terrorism.
For his part, Mattis reiterated that the US wants constructive and tangible results in the relationship with China.  Mattis said the US was committed to improving military relations and resolving friction, which includes the exchange of officers “to improve transparency and mutual understanding.”  Tamping down on current tensions, Mattis said, “Our two nations can and do cooperate in mutually beneficial ways.  While competition between our nations is bound to occur, conflict is not inevitable.”  Mattis spoke positively, if not optimistically, that China would be doing more to cooperate with the US on the North Korea situation; however, he also reiterated that the US will continue to do whatever is necessary to ensure defense against North Korea.

Defense in Brief:

Marines extending Norway deployment

The Pentagon reached an agreement with the Norwegian government to extend a U.S. Marine Corps training and exercise rotation through 2018, following an initial, limited evaluation period. The extension is for another year.  Marines have been training in central Norway with elements from the Norwegian and British militaries. The purpose of the training is two-fold: 1) To practice inter-service operability between allied militaries; and 2) to provide realistic Arctic-like training for soldiers involved, in particular the Marines.  The increased emphasis on cold-weather training comes as Russia has dramatically bolstered its military presence in the Arctic as well over the past few years, to a level of presence unseen since the Cold War. The Russian military now has more capability in the Arctic than it did during the days when the Soviet Union still existed. (SOURCE)

PIR3: What are the current indicators of organized political violence?

Overview of Leftist situation in Texas

Leftist journalist Kit O’Connell was interviewed last week about what’s going on in Leftist circles in Texas.  He reports that the Left has experienced an increase in “very focused” anti-communist action in Texas.  He cites the heavy right wing opposition to the Marxist May Day rally in Austin as one piece of evidence.  O’Connell observed that right wing members in Texas will travel from Dallas, Houston, Austin, and surrounding areas to attend counter demonstrations against Leftist events like May Day.  Speaking about last Saturday’s March Against Sharia in Austin, he says that Antifa members passing out bandanas could lead to more radical action than would have otherwise taken place.  Furthermore, he says of the Left: “I’m seeing coordination, organization, and intelligence sharing among the Left in Texas that I haven’t seen since I started being, you know, very active in [Occupy Wall Street].”  O’Connell runs a collective called Oh Shit, What Now (OSWN) and encourages students to attend their classes to learn more about Leftist organizing and demonstration tactics.  (SOURCE: https://itsgoingdown.org/austin-tx-audio-report-back-anti-muslim-rally-shutdown/)


Antifa violence at Evergreen College, OR

On 15 June, Antifa protestors attacked a free speech rally at Evergreen College, OR.  Around 100 masked black bloc members hurled projectiles at the free speech rally goers, and later took pictures of license plates and slashed the tires of cars in the parking lot. (SOURCE)
Harrisburg, PA report back for March Against Sharia
During a meeting among Leftist groups, members pointed out some weaknesses in the movement; most notable is that there is no centralized leadership. Each group is allowed to put forth a ‘spokes’ (spokesperson) to join with the other spokes and attempt to build consensus. Everything that is agreed upon is non-binding and each ‘spokes’ is subject to immediate recall by their group.  The second major issue with the Antifa groups, as pointed out, is a lack of discipline. On the day of the protests only one group arrived on time, and other groups began arriving an hour later. By the time Antifa had coalesced, their opponents had already been set in place. The third major flaw of this protest was that there was a lack of communication between groups. This lack of communication caused chaos when the first plan was no longer viable and there was no way to build a second plan via consensus. As the Antifa groups retreated they were easily disrupted and prevented from causing very much damage.  Some were arrested.  Their learning points from this engagement are straightforward:
  • Conduct reconnaissance of the location for key terrain (choke points, avenues of approach, etc)
  • Conduct in depth planning and contingency planning
  • Encourage protesters to have courage in the face of police horses

PIR4: What are the current indicators of economic, financial, or monetary instability that lead to worsening economic conditions or civil unrest?

Fed’s Bullard: Rate raising is unnecessarily aggressive

Federal Reserve Bank of St. Louis President James Bullard believes the Fed has raised interest rates enough for the time being, and that the central bank ought to begin divesting its $4.5 trillion in assets “sooner rather than later.”  While last week’s small quarter-percent bump to between 1 percent and 1.25 percent, the third increase since mid-December, was “not such a big problem,” Bullard believes the Fed’s goal of boosting the interest rate to 3 percent over the course of 2.5 years “is unnecessarily aggressive.”

“The trajectory that the committee has laid out seems to me to be inappropriate given the situation that we’re in,” he says, noting that the U.S. economy is not growing quickly enough to justify larger, faster rate increases.  He also noted that the central bank has already achieved its goals of holding inflation steady and boosting hiring.  Bullard’s view is supported by Chicago Fed President Charles Evans, who also believes that the Fed should not raise rates again until the end of 2017.

I sometimes wonder if there isn’t something more global, more technological that’s taking place that we don’t quite have our arms around very well,” Evans said.  Other Fed rate voters agree.  Bullard also said it’s time for the Fed to start reducing its $4.5 trillion in bonds and other holdings, which was amassed during the recent financial crisis as a way to stimulate the economy — a tactic with questionable results. Some worry that a declining balance sheet will lead to long-term increases in the interest rate, however. (SOURCE)


Shiller on ‘technological unemployment’

Robert Shiller, made famous by the Nobel-winning Case-Shiller Home Price Index, was interviewed on Bloomberg this week.  Shiller provided his thoughts about how the 1930s echo today, and said that Americans believe they’re living in another era of ‘technological unemployment’:

“I think we’re living in a period of long run anxiety about our future. And it’s a time when people’s identity is challenged by job market changing conditions, by automation, by globalization. …

I think that there has been a change in just the last four years. We are back to the depression narrative of technological unemployment.  I think these narratives arise from stories, particular stories. So in 1930s, the story was they now have these amazing cereal box filler. They put the empty cereal, Corn Flakes boxes, on a conveyor belt and it’s moving along the conveyor belt and the machine automatically squirts in the whole load measured of Corn Flakes. And then the boxes are sealed up.  This is ’30s. People thought ‘what is going to happen to factory jobs’ and they were scared.

Shiller cited examples of driverless cars and machines at grocery store cash registers, implying that this fear is justified.


MVP: Risk of Fed raising rates

Bill Miller IV of Miller Value Partners was on CNBC last week talking about the risks posed by the Federal Reserve raising interest rates.  “I think the risk is actually asymmetric and that’s the problem.  To the extent that they hike rates too fast and send things downward, the economy gets worse; it’s way bigger risk to go into a deflationary environment than it is to actually let the economy run a little bit hot, see some wage gains, and see things improve.”  This is yet another investor sounding the alarms about raising interest rates too fast.  Remember that last week I pointed out that the Federal Reserve is in a rush to raise interest rates to 3% by 2019 so they have interest rates to cut in time for the next recession.


Mike Shelby is a former military intelligence NCO and contract intelligence analyst. He spent three years in Iraq and Afghanistan and is now the intelligence and warfare researcher at Forward Observer.

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