Strategic Intelligence Summary for 04 January 2018

ADMIN NOTE: Happy 2018, everyone! This month we’ll announce the major upgrades happening at Forward Observer, but I wanted to give you a quick snapshot of these changes. Bottom Line Up Front: We’re going to add a bunch of services to your current subscription for free.

1. We’re bringing back the daily Early Warning email for subscribers only and in a new format. That’s our opportunity to reach you each morning (Mon-Fri) at 8am CST, if you choose to opt-in, and let you know about the day’s events and developments regarding global and national security. If you have a few minutes each morning, then allow us to help you stay up to date. We’ll be announcing this opt-in later this month and will make sure that it’s available to all subscribers who want this daily email.

2. You’ll be receiving a new report each week we’re calling National Intelligence, which will be added to all existing subscriptions at no extra cost. Jon Dougherty will continue to write the Strategic Intelligence Summary each week, which will focus primarily on global security and geostrategic issues, in addition to outlining the indicators and risk of war. National Intelligence will bring a renewed focus to national security, domestic systems disruption, and threats to social, political, and economic stability.

3. And we’re going to start a Monthly Intelligence Briefing. This is an opportunity for us to highlight in an interactive form what we believe are the most pressing and pertinent issues, and a time for you to ask questions of our staff who track these developments. We’re undecided on doing video or audio-only brief, so maybe you can help us make that decision. Just respond to this email and let us know. We’ll start the first brief this month, and they’ll be archived in the Library in case you can’t catch it live.

There are also some other projects we’re working on, and we’ll let you know about them as soon as we can announce them. Until then, Happy New Year. Here’s this week’s Strategic Intelligence.

 

Priority Intelligence Requirements:

PIR1: What are the new indicators of political or governmental instability that could lead to collapse or failure?

PIR2: What is the current situation report and risk of war in each of the four flashpoints?

PIR3: What are the new indicators of systems disruption to the economic or financial industry that could lead to instability?

PIR4: What are the new indicators of systems disruption to the critical infrastructure that could lead to instability?


PIR1: What are the new indicators of political or governmental instability that could lead to collapse or failure? 

Americans don’t trust government and are angry about it

A new national survey conducted by the Pew Research Center found that public trust in the government’s ability to problem-solve remains at decade lows. Of 1,500 respondents, just 18 percent said they had faith the federal government would do the right thing “just about always” or even “most of the time.” Then again, that figure has been about the same for a decade. However, what’s new is a rise in anger at government among Democrats, which of course is being attributed to the Trump presidency; 29 percent of them expressed anger at government compared with just 19 percent of Republicans. During the October 2013 government shutdown, which was on President Obama’s watch, the index reached a high of 30 percent. Also, during Obama’s presidency, 33 percent of Republicans expressed anger at the federal government. Today, more Republicans say they trust the government than during the Obama administration — 22 percent versus 15 percent of Democrats. But larger groups of respondents — well over half — say they are “frustrated” with government. One of the biggest differences over previous surveys, Pew said, is that Americans are becoming much more partisan. [source] (Analyst comment: In the Obama and Trump age, Americans are becoming less amicable and tolerant towards those who harbor different political viewpoints. That is spilling over into Congress as well, with lawmakers less willing to compromise on legislation that is good for the country. Recent data shows most Americans are moving farther to the extreme right or extreme left, leaving fewer areas where we agree.)


PIR2: What is the current situation report and risk of war in each of the four flashpoints?

South China Sea SITREP

China may be using the North Korean crisis to gain control over the SCS

There were a couple of reports we noted over the holidays that strongly suggest Beijing is using current events to both thwart U.S. efforts to stop North Korean nuclear development short of war and check Chinese expansionism in the South China Sea. Both suggest that the U.S., so far, is failing in both missions.

It is beginning to emerge that China is using the North Korean “crisis” as a diversion for Washington while it carefully, quietly, consolidates control over the SCS. In December, the Center for Strategic and International Security’s Asia Maritime Transparency Initiative, which has been tracking China’s island-building efforts closely via satellite imagery, reported that last year was a banner year for the Chinese. After completing the bulk of its dredging work in creating its artificial islands in previous years, Beijing began fortifying them with military assets in 2017.

As the initiative noted, “Beijing remains committed to advancing the next phase of its build-up—construction of the infrastructure necessary for fully-functioning air and naval bases on the larger outposts.” To that end, China used 2017 to build everything “from underground storage areas and administrative buildings to large radar and sensor arrays.”

The largest amount of work was completed on manmade islands on Fiery Cross Reef in the Spratly Islands; construction there stretched to 27 acres. China built massive hangars near a previously constructed airstrip, while also building large tunnels where ammunition and supplies are likely to be stored. There was also work completed on Subi Reef, which is part of the Spratly chain. The initiative reported that “China is poised to substantially boost its radar and signals intelligence capabilities at Subi Reef.”

In the years ahead, China plans to launch an additional 10 satellites which would focus exclusively on the South China Sea so as to maintain 24/7/365 surveillance over the domain. These will include standard reconnaissance satellites as well as hyperspectral and Synthetic Aperture Radar (SAR) satellites which can perform a host of surveillance functions. [source]

Meanwhile, the Chinese Communist Party (CCP) drew up a directive for its International Liaison Department, the organ in charge of communicating with foreign political parties, informing North Korea that it will continue to have Beijing’s backing, despite publicly voting with the U.S. and other UN Security Council members to impose strict new sanctions on Pyongyang. Included in the directive:

— CCP officials have concluded that international pressure will never lead to North Korea voluntarily abandoning its nuclear arsenal, estimated to be at about 20 warheads;

— As such, the CCP directed its International Liaison Department to let Pyongyang know of Beijing’s continued support;

— The CCP will not move to restrict North Korean and Chinese firms from conducting business;

— The document authorizes a one-time increase in foreign aid to North Korea in 2018 for “daily life and infrastructure building,” with aid to be increased annually from 2019 through 2023 by “no less than 10 percent over the previous year”;

— The document also offers military support including “defensive military construction,” “high-level military science and technology,” and “more advanced mid- and short-range ballistic missiles, cluster munitions, etc.”

The directive instructs the liaison department to “warn the Korean authority not to overdo things on the nuclear issue,” meaning Pyongyang should “maintain restraint” on additional nuclear testing. Then, “after some years when the conditions a ripe, to apply gradual reforms” and eventually get rid of all nuclear weapons.

The CCP also promised Beijing would “protect the Korean government.” [source]

Outlook: No wonder President Trump keeps saying China can “do more” to help rein in North Korea.

That said, China obviously has no intention of doing so; the U.S. has even caught Chinese ships in international waters recently transferring oil to North Korean freighters, in violation of the same UN sanctions Beijing publicly backed. So there’s that.

Beijing simply does not want to do anything to help the United States remain the dominant power in Asia, period, the South China Sea included. It is using any distraction it can — North Korea, Japan, South Korea — to shift focus away from its efforts to exert complete control over the entire South China Sea, while at the same time undermining U.S. influence with its traditional regional allies.

Make no mistake, Beijing seeks nothing less because the CCP’s leadership has concluded China deserves to rule over the region, that China’s time to dominate its neighbors and the region has come.

We are at a historic crossroads, with tectonic shifts in global power occurring. The task of the Trump administration is to not allow North Korea to distract from the wider, more long-term threat to U.S. national security: Chinese dominance of a $5 trillion-a-year trade route.

Unless or until the U.S. directly counters China’s moves in the SCS, Beijing will continue its push into 2018 and beyond.

NATO-Russia SITREP

The new ‘Cold War’ really will be cold

NATO is planning a new command for the ‘top of the world’ as Russia continues to build up and enhance its military footprint in the Arctic. It’s late, but in this case, better late than never.

That’s because Russia has for some time been marshaling its resources and forces in the arctic, with the aim of dominating the region with outsized territorial claims much like the Chinese are attempting to dominate the entire South China Sea. Using a sort of ‘first come, first served’ mentality, the Kremlin in pouring resources into beefing up Russia’s military presence in the region in an effort to then dominate extraction of the Antarctic’s natural resources, which are believed to be plentiful.

But dominating the region militarily also gives Moscow a huge strategic advantage over NATO. Russia is now using the arctic waters as refuges for its ballistic missile submarines — the key component of its strategic nuclear strike and deterrent capability — and so will plan to enhance Russia’s military infrastructure there in order to support and protect them. Said one media report: “This is driven by Moscow’s longstanding view that a nuclear war can be won by a better-prepared side.”

As such, Russia created an Arctic Command that became operational in 2015 and embarked on an expensive military buildup consisting of new airfields, ports, air-defense installations and army barracks. Also, the Kremlin has stepped up its pace of Arctic military exercises.

Russia’s Security Council has deemed the Arctic the country’s “main strategic resource base,” which makes sense, given that in 2017, the Council on Foreign Relations reported that 20 percent of Moscow’s gross domestic product and 22 percent of its exports come from Arctic-related products. And of course, much of it is in the form of energy; 95 percent of Russia’s natural gas and 75 percent of its oil (Russia is the world’s No. 2 oil producer).

Receding ice in the region is assisting in Russia’s development. Some summers have been completely ice-free along the Northern Sea Route, which runs parallel to Russia’s Arctic coast.

Meanwhile, there isn’t a single Western military facility anywhere in the Arctic and just a few U.S. Coast Guard assets. [source]

Outlook: Already outsized Russian claims are butting up against those of other Western nations in the region. Denmark and Russia have claimed ownership of the North Pole and stretches of Arctic seabed. And Canada is expected to submit a major competing claim later this year. Currently, governance of the Arctic was handled by a coalition of nations that make up the Arctic Council, created in 1996 by Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden and the U.S. Since it has grown to include 13 non-Arctic observers including China, Japan, and India. It has no power to enforce agreements, and that includes security matters.

Experts believe that NATO should form its own Arctic Command, and the Trump administration supports this. But there is more that must be done in order to counter Russia before Moscow exerts the kind of influence and control over the region that only force will break. That will include stationing new NATO military assets there, including advanced new U.S.-built icebreakers, while conducting more maritime security patrols and holding more exercises.

Russia and China are moving to challenge Western hegemony in two of the world’s most important economic regions. If they succeed, that will only hasten conflict.

Middle East SITREP

Iran now has a stability problem, which is good for the U.S. and Israel

In recent days protests have erupted across Iran. While they largely began as demonstrations against worsening economic conditions, they quickly morphed into anger against the Iranian theocratic regime. And while no one yet expects that the protests will lead to the toppling of the Iranian government, there is an opportunity here for the United States and Israel, in particular.

As we reported on The Watchfloor this week, some protesters are not only angry about worsening economic conditions in the country, they are openly challenging the regime’s regional ambitions. In recent years, Iran has attempted to spread its influence and military assistance throughout the war-torn Middle East — in Syria, Iraq, Lebanon, and Yemen, among other regions — all in an attempt to dominate the region.

“Placards criticizing corruption are rampant, and some demonstrators have even chanted death to the dictator, referring to [Supreme Leader] Khamenei. Protesters have also railed against the costs of Iran’s foreign adventures: One of the earliest chants was, ‘Not Gaza, not Lebanon, my life for Iran,’” said one report.

As people see their subsidies for basic goods reduced — which hits poor and lower-middle-class citizens hardest — protesters are objecting to the fact that the Iranian government is spending billions to supply weapons, armaments and monetary support to proxies like Hezbollah and Hamas. Each year Iran’s mullahs spend around $800 million on Hezbollah alone. Meanwhile, it has cost the Iranian government billions to help Syrian President Bashar al-Assad retain power while battling rebel groups and ISIS in that country’s years-long civil war, which appears to be winding down. [source]

Outlook: Again, no one really expects that the protesters will topple the Iranian regime — yet. That could change; at least one army commander is offering troops to back up police who are battling protesters and demonstrations in the street. If Iranian troops are deployed and open fire on civilians, that could change everything.

But supposing that the protests don’t result in regime change and the ushering in of democracy, the demonstrations are likely to temper Iran’s attempts at exerting regional dominance and influence, at least in the short-to-mid-term, as leaders attempt to assuage the anger by refocusing resources and attention to domestic concerns, lest there be additional destabilizing protests down the road.

Why do we think this? Because an internal Iranian government memo leaked to American media last week described a regime in panic mode as protesting widened and anger deepened. [source]

All of this suggests that the Iranian government will not only have its hands full placating its people, but that there is decreasing tolerance among the populace for Iranian adventurism elsewhere in the Middle East. The mullahs may have dreams of regional dominance through military force, but at least a plurality of Iranian citizens don’t share those goals, and they are making their displeasure known in potentially destabilizing ways.

It’s hard to believe that the Iranian government wants to see the country become the next Syria.

North Korea SITREP

Countdown to war with North Korea?

Over the New Year’s Day weekend, a couple of interviews given by a former Joint Chiefs chairman and sitting U.S. senator gave us pause regarding the situation with North Korea. While we don’t necessarily see anything happening ahead of the Winter Olympics in South Korea, after the games conclude is another story.

First, former Joint Chiefs of Staff Chairman Adm. Mike Mullen, who served Presidents George W. Bush and Barack Obama. In an interview with ABC News, he gave a rather sober assessment of how he sees the situation between the U.S. and North Korea.

Commenting ahead of North Korean leader Kim Jong-un’s annual New Year’s Day speech to his nation, Mullen said that thanks to President Trump’s “incredibly disruptive” administration, we’re closer than ever to nuclear war with North Korea. “And in my view, an incredibly dangerous climate exists out there in that uncertainty with how this all ends up. One in particular that is top of the list is North Korea,” he said. “We’re actually closer, in my view, to a nuclear war with North Korea and in that region than we have ever been,” he added. “I don’t see the opportunities to solve this diplomatically at this point.” He also wondered aloud of Trump could be ‘deterred’ in his planned course of action — stopping the North from getting nukes — by chief of staff and former Marine Gen. John Kelly or his other former Marine general, Defense Secretary James Mattis. “Will he follow through on his rhetoric? Or will we actually be able to get to a situation where it could be solved peacefully?”

Meanwhile, the senior senator from South Carolina, Lindsey Graham, said in a separate interview he sees 2018 shaping up to be “a year of opportunity and extreme danger.” And he says how Trump handles North Korea will have implications around the world.

“Now, the Iranians are watching the way he engages with North Korea, and vice versa,” Graham said. “So we’ve got a chance here to deliver some fatal blows to really bad actors in 2018. But if we blink, God help us all.” [source]

Outlook: Mullen is a patriot and no doubt we should be thankful for his service, but in truth, we’re ‘closer than we’ve ever been to nuclear war’ with North Korea not because of Trump, per se, but because of North Korea’s continued nuclear weapons development. The past four presidents, including the two that Mullen worked for, vowed to prevent North Korea from developing a viable nuclear program (Bill Clinton being the first, essentially). The difference between them and Trump is the current commander-in-chief seems ready to act on his pledge. As for resolving this issue peacefully, that is primarily, in our view, up to the North Koreans at this point and in particular, Kim Jong-un.

There has been much speculation about whether the Chinese would intervene if the U.S. struck North Korea first, and Mullen appears to be concerned they might, and that in the event of such a confrontation, it could go nuclear. That’s a valid concern and any commander is prudent to harbor it. There is also speculation that South Korea will vehemently oppose any preemptive U.S. actions under the current regime of President Moon Jae-in, who is said to favor diplomacy.

But Graham, who has made it clear on more than one occasion last year that Trump is prepared to do what it takes to prevent the North from deploying a credible nuclear force capable of threatening the U.S., makes a very valid point about Iran, which is still believed to be covertly working on their own nuclear capability despite the Obama-era deal: They are watching what Trump does with North Korea. Any ‘flinching’ by the president now could convince both Pyongyang and Tehran that Trump, like his predecessors, is all bark and no bite. And if they come to believe they can do whatever they want moving forward, they will do whatever they want, and that will only make matters worse.

The Winter Olympics are coming up next month in South Korea. Kim made an unusual overture to South Korea during his New Year’s Day address, most likely to undermine the U.S. and Trump, since we don’t believe he would give up his nuclear program under any circumstances. Nothing is likely to happen before the games conclude, but we agree with the assessments of both Mullen and Graham: The Korean situation is getting dangerous, and it’s liable to come to a head sometime this year.

Defense in brief:

Air Force

These 3 programs are ones to watch in 2018

This year should be an interesting one for Air Force programs, and three in particular are worthy of keeping tabs on. The first involves the Joint Surveillance Target Attack Radar System, which is the service’s principal provider of ground-based surveillance, targeting info, and command-and-control. Rather than recapitalize it, Air Force leaders may be leaning more towards a new airborne node to conduct future command-and-control, so the JSTARS recapitalization may be in danger of being abandoned. Secondly, the OA-X Light Attack Aircraft experiment involving four prop-driven aircraft designs may similarly be in danger of going away. The Air Force may take two or more of the planes to the Middle East for real-live missions this summer. Thirdly, the T-X aircraft trainer is likely to be awarded this year, and production should begin before the end of Fiscal Year 2018. [source]

Navy

Budget request will include more for shipbuilding, fleet expansion

The Navy’s FY2019 budget request contains more money for shipbuilding as well as life extensions on existing surface and undersea combatants in a bid to grow the size of the fleet, as per President Trump’s directive. To reach 355 ships, a goal established by the the incoming Trump administration and Navy planners in December 2016, “is a primary focus of the Navy,” said NAVSEA Commander Vice Adm. Tom Moore. “We’re having ongoing discussions about how we’re going to do this. I think you’ll see the budget that comes out for ‘19 is going to significantly add to shipbuilding, and you’ll see that we’re leaning forward on the looking at what we can do to SLEP (service life extension program) some ships and also make the necessary investments in the shipyards. It’s really an integrated plan,” Moore said. In addition to building more ships, Navy brass are looking at ways to extend the life of current Arleigh Burke-class destroyers (DDGs). That seems to have gotten the most support from Congress as well. [source] (Analyst comment: With the world becoming more unstable and China and Russia more aggressive, the U.S. Navy has no option other than to grow, if the U.S. is to maintain its presence — and its edge — in increasingly contested waters worldwide.)

Army

Army self-propelled howitzers will outgun Russian rivals

The Soviet/Russian military has a reputation for up gunning its systems over NATO/Western rivals, but the U.S. Army is planning upgrades to its self-propelled howitzers that will give them a bigger, more lethal punch than their Russian counterparts. The Army will begin formal production of a an M109A7 Self-Propelled Howitzer variant designed to move faster, provide better structural protection, and contain additional advancements in suspension and technology. The new vehicle will be more capable, have a bigger chassis, and provide a platform for building a next-gen cannon that will outgun existing Russian designs. “Right now we have the 39 caliber cannon we have had since the 80s. We are range limited and the Russians can outgun us and shoot farther,” Maj. Gen. David Bassett, former Program Executive Officer, Ground Combat Systems, said recently. “If you had not replaced the chassis first, you would never be able to put that larger cannon on there.” [source] (Analyst comment: This is another one of those ‘maintenance’ development projects the Army put off for years because it was more focused on fighting low-tech militants than a high-tech great power. That focus is obviously changing.)

Marine Corps

New amphibious vehicle to be selected by summer

The Marine Corps hierarchy plans to select a new amphibious combat vehicle by summer 2018 as the service is currently testing prototypes from BAE Systems and Science Applications International Corp. The new vehicle, when selected, will begin replacing the service’s current fleet of Assault Amphibious Vehicles. The branch awarded two contracts worth up to $225 million combined to both defense contractors in November 2015 to come up with a new ACV design. USMC officials are expected to begin production phases for the new vehicle by fall 2018, with initial plans to procure 204 ACC 1.1. vehicles, then buy an additional 490 ACV 1.2 vehicles following the initial manufacturing stage. The proposed new vehicle will feature a V-shaped armored hull designed to transport a three-person crew, 10 troops and feature a .50-caliber remotely operated gun. [source] (Analyst comment: Like the Army, the Marine Corps is beginning to refocus on major-power warfare.)


PIR3: What are the new indicators of systems disruption to the economic or financial industry that could lead to instability?

Sears continues to close stores

Sears holdings announced it will continue a string of store closures, including 64 Kmarts and 39 Sears locations between March and April of this year. Stores are closing because they’re unprofitable. (Analyst Comment: Previously, Sears locations have been considered ‘anchor stores’ in shopping malls as they have attracted large volumes of customers who also shop at stores in the same mall. Now that these stores are closing, these shopping malls may suffer financially, which could have an negative economic impact in the area.  Here’s a list of Sears stores that are closing.)

 

California homeowners complain of high home insurance rates

The fall of 2017 was a bad year for California wildfires, which destroyed some 14,700 homes and so far resulted in over $9 billion in insured damages. Now a state regulator is warning that the “problem of insurance availability is going to expand”. Some homeowners in fire-prone areas have complained of being dropped from their insurance plans; the number of those dropped have increased by 250 percent from 2010 to 2016. In six of the 24 most fire-prone counties, the number of homeowners insurance plans cancelled rose by 50 from 2015 to 2016. [Source]

 

Investors continue foresee an improving U.S. economy

Billionaire Warren Buffet says that years of economic success lie ahead. He joins other economists and investors who have in recent months point to an improved economic future for the U.S. “In the years of growth that certainly lie ahead, I have no doubt that America can both deliver riches to many and a decent life to all. We must not settle for less,” Buffet wrote in a Time Magazine article. [Source] The godfather of technical analysis, Ralph Acampora, told CNBC today: “I am so bullish I have to sit down and calm down.” [Source]


PIR4: What are the new indicators of systems disruption to the critical infrastructure that could lead to instability?

Data breach affected hundreds of thousands of Homeland Security workers

The Department of Homeland Security’s inspector general says that some 247,000 DHS employees and other people who communicated with some of them had their personal information compromised in 2014 due to internal theft. In May the DHS IG found a copy of its investigative case management, along with the reams of personal information contained within it, in the possession of a former IG office employee. The case management system was discovered as part of a wider criminal investigation, but DHS inspectors would not say if the former employee is a target of that probe. The department said the case management system contained the personal information on 247,167 DHS employees who were employed there when the information was stolen in 2014. The department is offering free credit monitoring to employees and other people whose information was compromised. [source]

Keyboard app developers leave personal info of 31 million online

The personal data belonging some 31 million customers of a popular virtual keyboard app has been leaked online. Security researchers say the AI.type app’s developer did not adequately secure the server that contained everything from usernames and locations to the contents of their electronic address books. The app, which is available for Android and iOS, has more than 40 million users globally. Security researchers at the Kromtech Security Center said that the server containing personal data was not secured with a password. That allowed anyone to access the company’s records database. The server is owned by Eitan Fitusi, co-founder of AI.type. The server has since been secured. [source]

Jon E. Dougherty is a political, foreign policy and national security analyst and reporter with nearly 30 years of experience in both fields. A U.S. Army veteran of Operation Enduring Freedom, he holds BA in Political Science from Ashford University and an MA in National Security Studies/Intelligence Analysis from American Military University.

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