EXECUTIVE INTELLIGENCE SUMMARY – 25 November 16 🔒
[wcm_nonmember]In this EXSUM… (3611 words)
- Military tapped to take greater role in US cybersecurity
- Significant Critical Infrastructure Reporting
- Russia & China SITREPs
- The risk of Obama’s political involvement on post-Obama America
- Overview of the TPP, Chinese trade initiatives, potential trade war
- DeMark: Get ready for the market to tumble back down
- And more…
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Bottom Line Up Front: Earlier this year, we produced a Weekly Infrastructure Report that listed events concerning US critical infrastructure. I decided to discontinue that report because there just wasn’t enough to put out each week. Because it’s still threat intelligence of interest, I’m going to start including that information under PIR1 – Systems Disruption. Before each title, I’ll include the affected state in parenthesis for quick reference. I recommend scanning through these items each week, even if they don’t pertain to your state, so you can form a baseline for the types of events happening elsewhere that could one day hit your local area.
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?
PIR3: What are the current indicators of military, government, political, or social-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?
PIR1: What are the current indicators of systems disruption that could lead to a SHTF event?
Military tapped to take greater role in US cybersecurity
Breaking from Obama’s policies of assigning cybersecurity of critical infrastructure to the Department of Homeland Security, the Trump administration is expected to tap the military’s cyber units to aid the DHS purview. In a video released on Monday, President-elect Trump explained, “On national security, I will ask the Department of Defense and the chairman of the Joint Chiefs of Staff to develop a comprehensive plan to protect America’s vital infrastructure from cyber attacks and all other form of attacks.”
Regardless of who’s up to bat after DHS, the administration has the unenviable task of ensuring adequate protection of US critical infrastructure, most of which is privately owned. And that’s the kicker — should private corporations be required to report intrusions or suspicious activity to DHS, the military, or any other government organization? Having unbridled access to that information can lead to trend and traffic analysis on nefarious activities, making cyber defense an easier task, however, it’s unclear what the administration’s plans will be. Some industry experts support the idea that Trump should get tough on cyber hacking groups, including state-sponsored groups in Russia and China. Replacing Obama’s soft approach to cybersecurity will likely result in fewer cases of cyber exploitation, especially those as heinous as several we’ve seen in the past four years.
(NJ) Turbine fault shuts down Oyster Creek nuclear power plant
PIR2: What are the current indicators of an outbreak of global conflict?
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 they largely depend on which conflict is initiated. We’re certainly at risk of cyber attack in the event of conflict in any of the three regions. Systems disruption, like the price and availability of fuel, is also a top concern that could cause a SHTF event.
NATO-Russia Situation Report (SITREP)
In a recently published interview with filmmaker Oliver Stone, Russian President Vladimir Putin commented on his perspective of the NATO-Russia conflict. “There could be very grave consequences. The base [AC: unknown, but likely referring to a NATO base near the Russian border], per se, doesn’t mean anything, but there is a nuance that I would like to point out. Why do we react so vehemently to NATO’s expansion? We are concerned with the decision-making process. I know how decisions are made. As soon as a country becomes a member of NATO, it can’t resist the pressure of the USA. And very soon anything at all can appear in such country — missile defense systems, new bases, or, if necessary, missile strike systems. What should we do? We need to take countermeasures, meaning, to aim our rocket systems at the new facilities which we consider to be threatening us. The situation gets tense.”
One trend I’m seeing right now is this expansion of allied countries, which Senator John McCain has referred to as “global NATO”. According to the global NATO theory, constraining the organization to Europe will not be enough to respond to challenges around the globe. And that’s why we’re seeing Japan, South Korea, and other non-European democracies become more active in response to the 4+1 threat framework of Russia, China, Iran, North Korea, and international terrorism. In a glaring example of the consequences of global NATO, we’re seeing Russia and China projecting military power in response — for Russia that means the Arctic and the Pacific. In addition to sending strategic assets to the Arctic Circle, Russia recently placed anti-ship missiles in the Kuril Islands which are embroiled in a territorial dispute between Russia and Japan. The Kurils sit just north of Japan, which pre-World War II was actually Japanese territory. Before the war ended, the Soviet Union took over the small island chains north of Japan, which remains a Japanese point of contention to this day. But there’s really no other way to look at Russian missiles in the Kurils than as a direct response to the formation of a global NATO.
The only other significant development reported in open source this week is that Russia announced that it was draining about $17 billion from its Reserve Fund, and also taking money from its National Wealth Fund, in order to maintain planned defense spending. At this rate of spending, Russia’s Reserve Fund will be completely empty by the end of 2017, further illustrating Russia’s dire economic and financial conditions.
South China Sea SITREP
Briefly revisiting the concept of a “global NATO,” Japan and South Korea announced this week a defense intelligence sharing agreement aimed an increasing awareness of North Korean and Chinese activities in the region. In a predictable response, China attacked the agreement, accusing the two nations of ‘opening Pandora’s box’ in the region. And this is on top of South Korea green-lighting the deployment of US Terminal High Altitude Air Defense (THAAD) systems, which should arrive by late summer 2017. As stated in previous EXSUMs, the THAAD’s X-Band radar is able to track aircraft over most of China and a significant part of Russia, which has further inflamed relations between the US, South Korea, and China. The THAAD deployment is in response to five North Korean nuclear weapons tests, and the potential for a sixth test in the near-term.
This week, a disclosed Japanese intelligence report shows that China is escalating attempts to take over the Senkaku Islands in yet another territorial dispute regarding China. And here’s where the rubber meets the road: the US has maintained that the Senkaku Islands are covered by the US-Japan defense treaty, and that the US will help Japan defend those islands. From my perspective, China’s in a foot race to expand to as many islands as it can in order to build a buffer of weaponized islands. Anti-Access/Area Defense, often referred to as A2/AD, is a strategy in which China is currently engaging. The goal is to have as many barriers to mainland China as possible to prevent a US presence in the South China Sea. That requires a large increase in Chinese presence against an allegedly committed US Navy.
I think there’s been a latent arms race brewing for some time between China and global NATO nations. There’s no doubt, even if it’s not currently being called an arms race. If we look at defense spending, we see steady increases among US-aligned nations in Asia. Here’s what I wrote on the topic back in May (20 MAY EXSUM):
As U.S. commanders have warned Congress, the U.S. military is not wholly prepared to fight a large war, and certainly not one in China’s backyard. Yet that’s exactly the direction that U.S. policy is headed. That’s partly because a handful of Asian nations are also preparing for a conflict. Evidenced by expanding military expenditures (below), Association of Southeast Asian Nations (ASEAN) nations are rightly concerned over their own security as China expands control into the South China Sea.
For these reasons, I still believe that we’re on a course for conflict with China. Militarily speaking, China still has significant challenges, and I believe there are some vulnerabilities in their military, even if their A2/AD strategy looks solid. But in the coming years, I do expect China to close some of those vulnerabilities and capability gaps. Earlier this month, I wrote that the US Navy is the smallest it’s been since World War I. At around 272 total ships committed to missions spanning the entire globe, US Navy leaders have stated that there aren’t enough resources to undertake global maritime missions, much less fight a war. President-elect Trump published plans to grow the US Navy to somewhere in the ballpark of 350 ships, which is more than Navy leaders have requested. Given that those plans represent a substantial threat to Chinese power in the region, I think we’re going to see a lot more news about military technology and naval advancements coming out of China.
Overview of developments on the TPP, Chinese trade initiatives, potential trade war
Donald Trump used the withdrawal from the Trans-Pacific Partnership (TPP) trade deal as a campaign platform and vowed to do it within the first 100 days. From my perspective, there are very few reasons to support the TPP, however, one of the major reasons the TPP passed was because of its importance as a strategic tool against China. If there’s one clear trend in the Pacific right now it’s that both Russia and China view it a space in which they must project military power. For the past twenty years, China’s military has advanced with the goal of challenging the US in the Pacific. If there’s a second trend, it’s that both Russia and China view the Pacific as a space where US influence must be diminished, and we’re seeing plenty of activity to suggest both nations are working towards those goals.
Along with military expansion, Beijing’s sought to simultaneously improve trade relations with surrounding countries and demonstrate that those nations’ best interests in the long term are in aligning with China over the US. Those efforts include the formation of the Regional Comprehensive Economic Partnership (RCEP), which is party to 16 Asian-Pacific nations and excludes the US. With the TPP looking dead in the water, we can expect the Chinese RCEP to look pretty attractive as a replacement, which could grow to include South American countries previously party to the TPP. That’s a negative development for US influence in Asia, which may push Trump to take more drastic trade measures and which could result in a trade war.
President-elect Trump has vowed to label China a currency manipulator in his first 100 days. And China does manipulate the value of its currency in order to keep wages low and make the price of Chinese goods attractive to foreign markets. Formally accusing China of manipulating its currency will increase tensions, although it’s not expected to have a large impact, especially where an SHTF event is concerned. Where we’ll get into higher risk territory is if Trump introduces tariffs on Chinese goods coming into the US, which he’s also threatened. To give some context, in 2009 President Obama imposed a 35 percent tariff on Chinese tires, to which China responded by imposing tariffs on US chicken and automotive parts. China’s counterpunch forced Obama to back off further tariffs against Chinese goods at a time when a flood of cheap Chinese tires were hurting American companies. In other words, the tariff was intended to protect American businesses from cheap Chinese goods — the exact same thing Trump wants to accomplish. I’m not defending or supporting Trump’s position right now, however, we can absolutely expect China to retaliate against a 45 percent tariff across the boards, as has been proposed. There’s a substantial risk of a out-and-out trade war if that happens.
It’s too early to tell exactly what a trade war would look like and how it would immediately affect the US, but experts are saying that it could at least result in an increase in unemployment as Chinese demand for US goods dries up. A Chinese paper regularly identified as a mouthpiece of the communist Chinese state recently threatened that the sale of US products would be restricted and that US agricultural products would cease to be imported entirely. (The prevailing thought right now is that China would eventually come out ahead in a trade war.) Ultimately, China’s growth — as long as central planners in Beijing can manage its ebbs and flows — poses a medium and long term threat to the US standard of living as nations seek economic and military safe haven from a growing Chinese power, and Chinese products replace American-made goods through Asian-Pacific trade deals.
PIR3: What are the current indicators of military, government, political, or social-related instability or violence that leads to widespread domestic conflict?
The risk of Obama’s political involvement on post-Obama America
Hand in hand with the traditions of a peaceful political transition from one president to the next comes another: previous presidents typically keep quiet about the leadership of their successors. In remarks recently made in Peru, Obama praised former president George W. Bush, saying, “[Bush] could not have been more gracious to me when I came in.” Yet Obama warned that he, himself, might not sit idly by while another president leads the nation.
“I want to be respectful of the office and give the president-elect an opportunity to put forward his platform and his arguments without somebody popping off in every instance.”
“As an American citizen who cares deeply about our country, if there are issues that have less to do with the specifics of some legislative proposal or battle but go to core questions about our values and our ideals, and if I think that it’s necessary or helpful for me to defend those ideals, then I’ll examine it when it comes.”
Obama’s remarks point to the possibility of a “shadow presidency,” not unlike the shadow government in Afghanistan. Understand that I’m not comparing the two, except to point out that in the case of Afghanistan, the Taliban have developed shadow leaders at the district and provincial levels who mirror their Afghan government counterparts. This strategy of mirroring the legitimacy of elected Afghan leaders, and proscribing the same authority to the de facto Taliban shadow leaders, has gone a long way to undermine the actions and messages of the Afghan government.
In last week’s EXSUM (before the Peru speech), I wrote: “There’s a long-standing tradition for former presidents to avoid commenting [on] or editorializing the policies of current presidents. I wouldn’t be surprised if Obama is more vocal in his criticisms of the Trump administration, especially if Obama’s own legacy is dismantled.” Now I don’t expect Obama to go stump his platform against President Trump and influence Americans through his decrees like the Taliban shadow government does. But well-timed comments or criticism of the Trump administration or Congress could cause significant disruption to a government elected to pursue more populist and nationalist goals. And just as we saw Obama do nothing to assuage the fears or frustration of protestors and rioters, I believe we can expect his influence over this section of America to help guide what they do in the future. (Obama’s high approval ratings inside the Democrat Party indicate that his authority will continue to bear weight.) After all, Obama was a community organizer before seeking public office and he will likely be one once he leaves.
Efforts to force election recount in MI, WI, PA could have grave consequences
Here’s what we know… Green Party candidate Jill Stein raised over 4.5 million dollars this week to fund the recount efforts in the key swing states of Michigan, Wisconsin, and Pennsylvania, after a computer scientist pointed to “anomalies” in the voting patterns in some of their precincts. Although statements from election officials and data scientists say there’s no reason to suspect foul play, a University of Michigan computer scientist recently persuaded the Clinton campaign to look into the possibility of pursuing a recount. The so-called anomalies come down to the claim that in Wisconsin, Clinton received seven percent fewer votes via electronic voting machines than she did on paper ballots. In a statement released on Wednesday, computer scientist Alex Halderman wrote:
“The only way to know whether a cyberattack changed the result is to closely examine the available physical evidence — paper ballots and voting equipment in critical states like Wisconsin, Michigan, and Pennsylvania. Unfortunately, nobody is ever going to examine that evidence unless candidates in those states act now, in the next several days, to petition for recounts.”
Friday at 5pm is the last day for state election officials to submit a petition, and even then there must be sufficient evidence of wrongdoing to force a recount. So far, election officials in all three states have declined to advance recounts, and officials from the US Intelligence Community said that there was no evidence to suggest any tampering of election results. But on Wednesday, Jill Stein said that she would petition for recounts, even if the Clinton campaign didn’t. Although Halderman’s argument resulted in a minor dust up on social media, right now it seems unlikely that recounts will go forward.
DHS cuts flight hours of aerial surveillance along the border
Despite receiving full funding, DHS directed the Department of Defense to cut flight hours by half for aerial surveillance along the southern US border. In a bi-partisan letter, Texas Governor Greg Abbott wrote, “Given the continuing surge of migrants along the southern border beyond FY15 numbers and a large uptick in apprehensions already for the month of November 2016, we believe DHS should be requesting more surveillance and security resources, not less.” This letter comes at a time when DHS is scrambling to find more detention centers to house individuals caught crossing the border illegally.
Reich: Dems should embrace ‘progressive populism’
“If the Democratic Party fails to do what it must do, then there’s going to be a gigantic void on the progressive side of this great tide of populism. What then? Well, I’m not an advocate for a third party, because I think historically we know that third parties tend to hurt the dominant party closest to it, ideologically. But there may be an organization that grows up outside of the Democratic Party that pushes the Democrats, not unlike the Tea Party. The original Tea Party organization pushed the Republicans in a totally different direction.” (SOURCE)
PIR4: What are the current indicators of economic, financial, or monetary instability that leads to civil unrest?
DeMark: Get ready for the market to tumble back down
This week the US stock market hit new highs as the Dow passed 19,000, in what’s being called the “Trump bump.” But that should be concerning because what goes up must come down. The market forecaster says, based on technicals: “Expectation is for U.S. stocks to endure at least 11% decline after top recorded.” I’ve been reading similar prognostications for months as the market keeps on hitting high after market high. Eventually these people are going to be right.
Cautionary warning
No one can dispute that Trump’s victory infused America with economic and financial optimism. I, myself, have had more brighter days in the past two weeks than I’ve had in the past two months leading up to the election. I would just remind everyone that Trump may delay the inevitable, but the past 20+ years of illusory wealth, rising levels of public and private debt, a recession that has to happen sooner or later, and a geopolitical landscape still tilted against the US — the fundamental drivers of the future — haven’t gone anywhere. Enjoy the breathing room for however long it lasts, but I just don’t think we’ve escaped our future. This financial hole that’s taken 20+ years to dig doesn’t disappear overnight.
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