29 JUL 16 – Executive Intelligence Summary 🔒

EXECUTIVE INTELLIGENCE SUMMARY – 29 JUL 16

[wcm_nonmember]In this EXSUM…

• Potential disruptions to the 2016 election
• Kaine’s promises lead to secession/civil war?
• US falls behind Russia on EW
• North Korea “declares war” on the US
• 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 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?

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PIR1: What are the current indicators of systems disruption that could lead to a SHTF event?

Russians and disruptions to Election 2016

US Intelligence agencies this week reached a consensus that Russia was behind the hack of Democratic National Committee (DNC) emails that peg some of its staff members referring to Hispanics as “taco bowl” voters and making fun of a black woman’s name.  In last Friday’s EXSUM (PIR2; Should we get ready for more disruption from Russia and China?), I mentioned that Putin was emboldened by the Brexit and Trump’s comments on NATO.  I look at the DNC breach, and subsequent release by Wikileaks, in two ways.  (Wikileaks, by the way, has long been suspected as a Russian intelligence enterprise.)

The first that came to mind is that Putin would certainly welcome a Trump administration.  A short look at Hillary Clinton’s record shows that she has neo-conservative tendencies when it comes to foreign policy, she’s pro-NATO, and anti-Russia.  She’s criticized European leaders as being “too wimpy” in their stance against Russia, and described Putin’s Crimean land grab as Hitleresque.  In previous EXSUMs, I’ve laid out my thoughts that we’re on a course for war with Russia, and if Hillary Clinton is elected, those chances greatly increase.  In an attempt to be seen as a strong leader, she may take a hard line against Putin.

My second thought is that I wouldn’t put it past the Obama administration to use this to their advantage.  As we’ve seen with the FBI, IRS, cooked intelligence on the Islamic State, and other cases of fraud and lies, I think we have to be cautious when we believe anything this administration says.  Right now, the Obama administration needs every avenue it can find in order to demonize Putin and drum up international support for the US agenda against Russia.  If there was some question as to whether the DNC was hacked or the emails were released by a staffer, Obama is going to err on the side that fits his agenda; namely that Russia is trying to throw the election in favor of Trump, and that Putin must be stopped.  Whether or not Russia is behind the hacked emails, blaming Russia for being pro-Trump gives the democrats another talking point to villainize their top two enemies.

In all fairness, manipulating US elections would not be outside the scope of typical Russian intelligence operations.  They’ve been influencing European elections for years.  In a previous EXSUM, I mentioned that Congress recently ordered US intelligence agencies to investigate Russian involvement in European elections, perhaps in part as a study to see how they could manipulate us domestically.

And all this brings us to some recent comments by security expert Bruce Schneier and futurist John Robb.  Schneier had an article in the Washington Post warning that the US electronic voting system was not secure against foreign manipulation (or domestic manipulation for that matter).  Sure, there have been widespread accounts of voter fraud in the last decade, but a foreign cyber attack against electronic voting machines would be a first (against America, at least).  What might be worse, Schneier points out, is a foreign government deleting US voter rolls stored online, causing massive disruptions on Election Day.  Should it occur in enough precincts, the election results could be ruled null and void.  Where would that leave us?  This Election-geddon scenario is unlikely, but it’s feasible.  It’s a cyber attack vector that could truly descend the US into proverbial chaos.

John Robb, on the other hand, has been warning of a different possibility.  Robb can be ‘out there’ but he’s a forward thinker who has described, years in advance, current events like open source warfare and the proliferation of weaponized drones.  He says that a small team of five personnel calling in bomb threats to voting stations could be enough to swing an election.  A handful of swing states with candidates polling within a few percentage points could be vulnerable to this kind of asymmetric attack.

So there are two scenarios that even a non-state actor could attempt.  Imagine a case of terrorism — either Islamic State-inspired Americans who understand these vulnerabilities or political activist groups — where no one is killed, yet has very grave national consequences and a strategic impact.  Osama bin Laden may have thought that he set the bar too high, but he was wrong.  A failed US election and the ensuing fallout could be the ultimate case of asymmetrical warfare.

 

Kaine’s immigration promise will lead to artificial imbalances in the electorate

During his DNC Convention speech, Vice Presidential candidate Tim Kaine promised that, “[I]n the first 100 days we’ll put forward a comprehensive immigration reform package that includes a path to citizenship.”  Immigration and a “path to citizenship” were a top agenda for Kaine while he was in the Senate.  He supported the DREAM Act and gave a speech in Spanish on the Senate floor.  His immigration policies mirror Clinton’s.

For a state like Texas, a pathway to citizenship could be the death knell of conservative dominance, and would ensure that Democrats carry Texas in future elections.  That would mean no more Republican presidents for generations.  Consider that Romney won Texas by roughly 1.2 million votes, but a recent estimate shows that 1.4 million illegal immigrants call Texas home.  Now consider that swing states like Florida, Ohio, North Carolina, and Virginia are all in the top 10 number of states with the largest illegal immigrant populations, and each of those states were lost or won in 2012 by less than the number of illegal immigrants estimated to be living there.

If Hillary Clinton is elected and her immigration reform plan passes Congress, we’re likely to see future elections with a greater number of Democrats being elected to Congress, and in, perhaps two or three election cycles, we’re likely to see national gun laws passed as well… not to mention a Supreme Court stacked with progressives.

It’s too early to say what states will do in response, outside of challenging laws in the court system.  There’s already a sizeable secession movement underway in Texas, and secession is becoming a more popular opinion among conservatives.  I would expect to see a fervent response in favor of secession if Hillary is elected and her immigration policies are enacted.  We might additionally see efforts by conservatives to migrate from blue to red states.  We can examine this in a future EXSUM.

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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 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 prices and availability of fuel, is also a top concern that could cause a SHTF event.

US Army focusing on upgrading EW capabilities

One trend we’ve been following this year is the US Army’s focus on developing electronic warfare (EW) skills.  In the past 15 years of the Global War on Terror, EW has taken a back seat because our adversaries didn’t have sophisticated equipment that needed to be disrupted.  Outside of the radio frequencies that remotely detonated improvised explosive devices, I can’t think of a single time that I ever heard EW referenced in Iraq or Afghanistan.  As a result, the Army’s EW skills atrophied.

Russian EW capabilities outpace the US by ten years, according to experts.  As they observed US operations that are so dependent on communications for command and control, the Russians realized that they could make the US military vulnerable.  After all, disrupting communications is as good an activity as any if you want to degrade adversary operations.  And then there were American soldiers training in Ukraine reporting that their radios were being jammed.  Russia was the obvious culprit.  So in June’s Polish national military exercise called Anakonda, the Army practiced its EW skills.

Ordinarily, the US Army reverting back to conventional warfare training after 15 years of fighting irregular opponents wouldn’t be a an indicator of global conflict.  But given that Russian capabilities are outpacing our own, and Russia is among the most likely adversaries we’ll face, renewing a focus on EW in Europe is a sign that military leaders expect they could face the Russians on the battlefield.

 

Russia competes in military buildup against NATO

New reports this week signal Russia’s buildup of military forces in its Northwest Federal District, which borders Finland and the Baltic nations.  Russia is sending additional S-300, S-400, Pantsir–S1, and Buk M2 surface-to-air missile systems to the region to increase its air defenses against NATO.  In August, Russia is also sending upgraded S-400 missile batteries to Crimea.  The S-400 is the newest surface-to-air missile in the Russian military, and can engage aircraft within 400km, which includes a significant portion of the Black Sea.  The S-400 battery in Crimea would also provide air defense against NATO partners Romania, Bulgaria, and Turkey to the south and southwest.  The Black Sea is considered a strategic area for Russia.

 

China continues hard line against giving up ground

Since the 12 July UN ruling against China, the Chinese government remains resolute in their commitment to not leave their islands in the South China Sea.  A US admiral this week said that the US Navy will continue to conduct operations in the South China Sea.  In response, a Chinese admiral said that they will never give up their islands, and that any attempts to remove Chinese presence “will have the opposite effect.”  There have been so significant changes in the situation or the prospect of a Chinese conflict.  For additional background information, see previous EXSUMs.

 

North Korea propaganda expands, “declares war” against the US

After sanctions against Kim Jong Un and top military officials earlier this month, a top North Korean diplomat this week said, “The United States has crossed the red line in our showdown.  We regard this thrice-cursed crime as a declaration of war.”  Specifically, the diplomat said that North Korea would take action if annual US-South Korean war game exercises go forward next month.  The “Ulchi-Freedom Guardian” exercise has been held annually around Augsut since 1976, and North Korea protests the exercise each year. In last week’s EXSUM, I wrote about a new missile system to be stationed in South Korea to protect the US and its allies against North Korean intercontinental ballistic missiles (ICBM), which also has North Korean military leaders angry.

North Korea has a history of threatening action or retaliation and not following through, especially in regards to threats against the US.  There’s no indication that this “declaration of war” came from directly Kim Jong Un or was actually broadcast on the North Korean Central News Agency.  It could be that the diplomat was toeing the strong party line of resistance and warning to the US.  Still, the North Korean regime is an unpredictable one and the Kim regimes never considered the previous Korean War as being finished, so in theory the war could actually break out again.

Recently, North Korea has increased its propaganda operations against its neighbors, first by beginning a series of blind transmission broadcasts, similar to the “numbers stations” heard in Europe.  The numbers and coded messages broadcast over radio signals are typically used to give further instructions to intelligence officers.  North Korea did this in previous decades to communicate with its spies, so this is not an insignificant development.

Also this week, South Korean soldiers found plastic bags which contained North Korean propaganda leaflets.  The bags were discovered in a river on the Korean border, which means they were likely intended to reach propagandists in South Korea.  The leaflets contained threats that North Korea would launch missile attacks on South Korea, among other messages.

Without better access to their decision makers, it’s impossible for me to say that war will or won’t break out over next month’s exercise.  If history is a solid indicator, then we can expect the recent warnings to be more bluster about war against the US.  There have been reports, however, about instability in the Kim regime and North Korea.  In the event of regime collapse, then war might actually break out.

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PIR3: What are the current indicators of military, government, political, or social-related instability or violence that leads to widespread domestic conflict?

Report on Mexican cartel activity

This month, the Mexican government released a report detailing the status of Mexican cartels.  The report found that in the past 24 months, most Mexican cartels have actually lost ground to federal security forces.  According to the chart below, Pacífico (also called Sinaloa Cartel) was the only organized crime group to expand from 2014 to 2016.  [Sinaloa also has the best relationships with the Drug Enforcement Agency (DEA).]  According to this chart, the two largest cartels in Mexico are now Pacífico and CJNG, also called New Generation.

Below is a map showing where cartels are active.  According to the official report, Mexican cartels are active in 60% of the Mexican states.

Cartels that operate along the border include:

• California: Pacífico/Sinaloa and Tijuana
• Arizona: Pacífico/Sinaloa and Beltràn Leyva
• New Mexico:  Pacífico/Sinaloa and Beltràn Leyva
• Texas: Pacífico/Sinaloa, Juarez, Gulf Cartel (Càrtel del Golfo), and the Zetas

 

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

Wealth is outpacing economic growth, just like 2006/07

Although admitting that economic stability could last another three or four years, a former Federal Reserve economist is warning that the growth of household wealth has been outpacing economic growth since 2009.  The last two times that happened, household wealth drove up asset prices, creating a bubble.  That was in the late 1990s and early 2000s, and again in 2006.  Those bubbles were burst by recessions.  And it should be concerning because this is looking like a recession year.  If the past two instances continue a third time, then we’re looking at wealth and asset bubbles bursting.

“[T]he financial cycle is way ahead of the economic cycle,” the economist said.  “Nobody knows what’s going to happen.  But there’s plenty of reason to think that’s a scary [trend].”

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Appendix:

DNC: Democratic National Committee

ICBM: Intercontinental Ballistic Missiles

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