Strategic Intelligence Summary for 26 July 2018 – Forward Observer Shop

Strategic Intelligence Summary for 26 July 2018

Strategic Intelligence contains intelligence reporting on the state of global security and instability, geostrategic issues affecting the United States, pre-war indicators, and assessments on the current risk of war. This report is available each week for Intelligence subscribers.

In this Strategic Intelligence Summary: (4,124 words)

  • China at cold war with U.S.
  • Kissinger behind Trump’s “reverse Nixon-China play”
  • U.S. Navy building ships for autonomous weapons
  • The Army is learning how to sink ships (again)
  • NATO-Russia SITREP
  • Middle East SITREP
  • North Korea SITREP
  • China SITREP
  • And more…

ADMIN NOTE: Jon Dougherty has moved on from Forward Observer. We wish him the best of luck in his future endeavors. All reporting and analysis is the product of Samuel Culper.


In Focus: Secretary of State Mike Pompeo was interviewed by Australian media this week, where he covered a range of issues from the Trump-Putin summit to geostrategic issues in the Indo-Pacific region. Secretary Pompeo said that President Trump and Putin in their meeting last week “disagreed on many things but also set forward some constructive paths on important topics”. When pressed what those topics were, Pompeo said:

Oh, they range from business executives getting together to find places where commerce can be promoted throughout the world. They talked about the important challenges in Syria. We still have over 6 million displaced persons there. How we might find a way to work together in that space to take down the violence level for those families, the incredible strain on Jordan and Lebanon of those – and Turkey for that matter – for those displaced persons, not to mention the tragedy for those human lives. They spoke about Ukraine. They didn’t find much place to agree there. The President was strong in making sure that the world understood that the Minsk path is the right path forward. I could go on. There were many topics across a broad range of places that the United States and Russia encounter each other, and it was very important that the two leaders discussed them.

During the interview, Pompeo reported that the U.S. and Australia had formed an agreement on policy in the South Pacific, with regard to Chinese activities to dominate the region, and mentioned that 2,500 U.S. Marines were ready to deploy to Darwin (northern coast of Australia) as a part of a defense strategy. [source]

As we reported in our Early Warning reports this week, U.S. officials have been in talks with their Australian counterparts to develop an Indo-Pacific defense strategy against Chinese expansion. Of particular note, the “Indo-Pacific” strategy has been renamed from the “Pacific” strategy to incorporate India and its regional waters. I expect to hear much more about what this new strategy entails during the days and weeks ahead.

Welcome to this week’s Strategic Intelligence Summary. Your feedback is appreciated. – S.C.

Priority Intelligence Requirements:

PIR1: What are the new indicators of disruptive events that could cause global or regional instability?

PIR2: What are the latest military and security developments exhibited by the U.S. and their peer and near-peer adversaries?

PIR3: What is the current situation report and risk of war in each of the four flashpoints? (North Korea, China, Russia, Iran/Israel/Middle East)


PIR1: What are the new indicators of disruptive events that could cause global or regional instability?

China at cold war with the U.S.

Speaking at the annual Aspen Security Forum in Colorado last week, a former official at CIA’s East Asia mission center said that China was at “cold war” with the United States. “I would argue … that what [China’s] waging against us is fundamentally a cold war — a cold war not like we saw during the Cold War [between the U.S. and the Soviet Union] but a cold war by definition.” He also described Taiwan as the “Crimea of the East,” with regard to China’s desire to reunite the island with the mainland. [source] Analyst Comment: The People’s Liberation Army Navy (PLAN) started a military exercise last week simulating an invasion of Taiwan. The Chinese Communist Party is sending the proverbial message of “it’s not a threat, it’s a promise” that U.S. support to Taiwan will end with the sunset of U.S. naval dominance in the Pacific. And that promise extends far beyond Taiwan: U.S. allies like India, Australia, Thailand, Vietnam, the Philippines, and others are at risk of severe mismatch against the Chinese military, which is growing in size and technological advantage. We’re already seeing China expand its maritime claims to control more territory, build more military outposts, and prepare the groundwork for becoming the most dominant force in the South Pacific. Within the next decade, the Chinese military is expected to challenge established norms through military force, and that’s why there’s a growing risk of war with China.

Kissinger behind Trump’s “reverse Nixon-China play”

The Daily Beast reported this week that a series of meeting between former Secretary of State Henry Kissinger and government officials from the Trump administration was to blame for Trump’s stance on Russia. During the Nixon years, Kissinger was the architect of opening up China in an effort to counter the Soviet Union. Now, Kissinger is proposing the opposite: team up with Russia to counter China. Kissinger said of the Trump-Putin summit: “It was a meeting that had to take place. I have advocated it for several years.” To those backing this new policy, it’s a matter of world power suvrival. Said one former official familiar with the policy: “Russia and China are cozying up to each other and it’s a lethal combination if they’re together.” [source] Analyst Comment: If true, and right now I have no reason to doubt it, this would explain why Trump has been at times deferential to Vladimir Putin. Trump builds a friendship, trust, and ultimately a new alliance, if that’s his goal, by letting bygones be bygones, giving Putin some slack on past aggression, and forging ahead on a new path. In previous summaries, I’ve explained the level of importance Mike Flynn’s global strategy — which was teaming up with Russia to defeat Islamic jihad — had on President Trump. Between Flynn’s and Kissinger’s influence, there’s no doubt that the president has a similar outlook. The policy, however, may be somewhat misguided as conditions stand today: Putin wants to destroy NATO by driving a wedge between the U.S. (and nationalist leaders in Europe) and the internationalist leaders in Europe. Russia remains a revisionist power and Putin is committed to Russian re-emergence. But Putin doesn’t achieve that objective while NATO remains a strong competitor and check to Russian power. Since Putin became president in 2000, NATO has added 10 member nations, and Macedonia will become 11, possibly later this year. Those are large setbacks for Putin’s objectives and, as I’ve mentioned before, Putin considers NATO and pro-democracy organizations to be a matter of national security. It’s difficult to see how any progress can be made with Russia as long as NATO remains; Trump would essentially be choosing a Russian alliance against China over a NATO alliance against Russia. That’s a tectonic shift in foreign policy, but it’s one that actually makes sense considering that President Trump, first as candidate Trump, first called NATO an “obsolete” organization.


PIR2: What are the latest military and security developments exhibited by the U.S. and their peer and near-peer adversaries?

U.S. Navy building ships for autonomous weapons

The U.S. Navy has struggled to meet its global security obligations since sequestration, but Navy officials are buying amphibious fleets for the future of warfare. “We have a moonshot idea for amphibious assault, which says it’ll be a long time before you see a Marine step off of something because we’re going to go autonomous. Get autonomous and unmanned to do a lot of the work,” said Maj. Gen. David Coffman, director of Expeditionary Warfare, Office of the Chief of Naval Operations. In future wars, the Navy and Marine Corps expect amphibious assaults to occur in highly contested battlespaces, which is why the Navy is pushing for ships that are capable of transitioning to deploying autonomous weapons systems. Until then, “Marines can do almost anything, but until they can walk on water we better be building them more ships.” [source]

The Army is learning how to sink ships (again)

During a recent Rim of the Pacific (RIMPAC) exercise, a U.S. Army unit fired a Norwegian-made Naval Strike Missile that sank their target: an old, decommissioned ship. Because of the rise of Russian and Chinese navies, the U.S. Army is trying to figure out how its soldiers can defend against — and sink — enemy vessels. The Naval Strike Missile has a range of 100 nautical miles, which would be useful for Army units operating in littoral environments. [source]


Raytheon awarded $307 million to produce Javelins for foreign military sales

The Defense Department awarded Raytheon-Lockheed Martin a $307,535,950 package to produce Javelin missiles for Australia, Estonia, Lithuania, Turkey, Taiwan and Ukraine. The Javelin is an anti-tank missile, and this contract is significant because of its recipients: NATO members Estonia and Lithuania who might be fighting Russian armored vehicles, and Pacific allies Australia and Taiwan to might be fighting Chinese armored vehicles.

PIR3: What is the current situation report and risk of war in each of the four? (North Korea, China, Russia, Iran/Israel/Middle East)


Significant Developments:

Last week, the Pentagon announced a $200 dollar military aid package to Ukraine to supply “training, equipment and advisory efforts to build the defensive capacity of Ukraine’s forces,” and “enhance Ukraine’s command and control, situational awareness systems, secure communications, military mobility, night vision, and military medical treatment,” according to a Pentagon statement. [source]

According to the Russian defense minister, more than 70 units have been set up in western Russia in response to NATO forces. “The situation developing in the western strategic direction requires us to constantly improve the troops’ combat structure and the system of their stationing. For these purposes, over 70 large units and military formations have been set up, including two divisions and three brigades.” In addition, the defense minister said that 54 percent of Russian troops in the region now have modern armament, which is up from 39 percent. [source] Analyst Comment: The Russians have a history of publicly exaggerating their strength and capabilities, however, the defense ministry has made its Western Military District a focus for a large scale presence of troops.

The Russian FSB has arrested two military technology researchers who, they say, is responsible for leaking information on Russia’s hypersonic missiles to NATO officials. According to one Russian newspaper, Russian counterintelligence is investigating as many as 10 defense industry workers. [source] Analyst Comment: U.S. defense officials have expressed doubts as to whether or not Russia’s new hypersonic missiles were as capable or successful as was reported; now we know why. NATO penetrations into the missile program was likely responsible for damning evidence that led Western intelligence to doubt the missile’s capabilities.


This afternoon, President Trump said that NATO is more beneficial for Europe than it is the United States, despite a majority of European NATO allies not “paying their bills”. The president went further and described NATO as “Kings, queens, presidents, prime ministers and a dictator or two,” as he pointed out that NATO defense spending is increasing because of his efforts. It’s statements like these that last week pushed the German foreign minister to say that that his country and NATO could no longer rely on the United States (mimicking similar comments from German Chancellor Angela Merkel). But we all need to consider whether or not NATO member nations are serious about Article V.

Should a Russian hybrid invasion break out in the Baltics, would the German military give its all — sacrifice thousands of its troops — to attempt to repel Russia there? Late last year, a Germany infantry unit had to practice with broom sticks because it didn’t have enough rifles, the country doesn’t spend the required two percent of its GDP despite being the wealthiest European NATO member, and in a new deal they’re about to get 50 percent of their natural gas from Russia (despite the objections of NATO member nations) — NATO should be asking if they can depend on Germany, not the United States.

This week, the Daily Beast ran an article about the potential influence former Secretary of State Henry Kissinger may have had on President Trump, regarding allying with Russia against China. (There’s more on that in this week’s China analysis.) Briefly, I point out that a U.S. alliance with Russia isn’t possible with NATO opposing Russian re-emergence, which may be why then-candidate Trump said that NATO was obsolete. But if you’re Vladimir Putin, you have to look at NATO’s relative weakness and inability to prevent a hybrid invasion into eastern Estonia and Latvia, which is predominantly ethnically Russian, as somewhat inviting if your goal is to reunite your empire with the ethnic Russians left behind after the collapse of the Soviet Union. Despite the efforts of some 29 countries, NATO still has no path forward for defending its own Baltic members. That can’t be blamed on President Trump or the United States when countries like Germany aren’t prepared to stop what they act like is inevitable. NATO certainly has problems, but President Trump providing some logical conclusions about the lack of readiness from countries like Germany is the least of their worries. NATO has bigger problems with their own members inside Europe.


Middle East:

Significant Developments:

On Wednesday, Iranian-backed Houthi rebels attacked two Saudi oil tankers, causing only minimal damage to one, according to reports. On Thursday morning, the Saudi Energy Minister reported a temporary halt to oil shipping through the Bab al-Mandeb Strait in the Red Sea until the area became safe for Saudi ships. [source]

Iran’s foreign minister said that the military has “countermeasures” should the U.S. attempt to block Iranian oil shipments. “If America wants to take a serious step in this direction it will definitely be met with a reaction and equal countermeasures from Iran.” New rounds of sanctions are scheduled to be implemented against Iran in August and November of this year as the Trump administration pressures allies to stop oil imports from the country. Last weekend, the Iranian president threatened to close the Strait of Hormuz, which would disrupt oil supplies from the Middle East. [source]

The Trump administration is set to release $195 million in military aid to Egypt, as the U.S. tries to keep the country within its sphere of influence. President Trump initially blocked the scheduled funding over Egypt’s recent human rights record, along with military arms trade with North Korea. The State Department felt that those issues were addressed. [source]


Overnight, the war of words between the U.S. and Iran reached new highs for the Trump administration when Iranian Revolutionary Guard Corps – Quds Force (IRGC-QF) commander Qassem Soleimani said, “I’m telling you, Mr Trump the gambler, I am telling you: know that where you are not thinking of, we are near you. Places you cannot imagine, we are next to you… The Quds force and I are your match. We don’t go to sleep at night before thinking about you.” [source]

Seems melodramatic, right? Well, there’s good reason to take this threat seriously. The IRGC-QF is an Iranian mix between the U.S. Special Forces and CIA responsible for operations throughout the Middle East and beyond. When we consider Iran’s support to Iraqi proxy groups like Khataib Hezbollah and Asaib Ahl al-Haq — terror groups who have American blood on their hands — and the reach of Hezbollah, we have reason to take Soleimani’s words seriously. The Iranian military is not build for force projection; that’s the job of groups like IRGC-QF and Hezbollah, and they have a significant reach. Hezbollah has active cells in the U.S., Mexico, and in South America; they’re probably the world’s most advanced and most capable terrorist organization.

In his statement, Soleimani mentioned that the Red Sea is no longer secure for the U.S. military. Early this morning, Saudi Arabia announced that following an attack on two oil tankers by Iranian-backed Houthi rebels in Yemen, the country is “temporarily halting” oil shipments via the Red Sea. The Saudi Energy Minister stated that oil shipments would resume once the situation became more safe. This seems like a good opportunity for President Trump, who’s previously enjoyed flexing the military’s muscle, to deploy U.S. Navy assets to the region to bolster security. At least two time previously, Houthi rebels have targeted U.S. ships as they’ve sailed past Yemen. I wouldn’t be surprised if, in a message to Iran, President Trump and/or Secretary Mattis orders a show of force to the region.

In other news, United Arab Emirates Ambassador to the U.S., Yosef al Otaiba, spoke at the Aspen Security Form last week and explained some background on the war in Yemen, the proxy war between Iran and the Arab alliance led by the Saudis. Arab governments have watched as Middle Eastern countries (Syria, Iraq, Yemen, Lebanon, Bahrain, and others) have come under the dominance of the Iranians. Otaiba, speaking about the Iranian presence in Yemen, says: “We cannot allow an Iranian foothold on the border of Mecca and Medina [in Saudi Arabia]… If you think the Middle East is unstable now, imagine what it would be like to have an Iranian missile land in Mecca.” Otaiba is speaking about Iranian missiles being fired by Houthi rebels into Saudi Arabia; several attacks of which have happened since the outbreak of war in Yemen. [source]

The Iranians are being isolated now that the Trump administration is working with the Saudis, United Arab Emirates, and other nations to push back Iranian influence in Arab countries. During that discussion at the Aspen Security Forum, the panel seemed to have achieved consensus that the Middle East is the most likely region for the next major confrontation.


North Korea:

Significant Developments:

This week, Secretary of State Mike Pompeo told Congress that North Korea continues to make fissile material for nuclear weapons, despite its pledge to end the activity. Pompeo said the president remains optimistic about the prospect of de-nuclearization by the North, and stated that the policy, right now, is diplomatic patience. [source]

According to satellite imagery, North Korea appears to be dismantling one of its nuclear sites, reports North Korean watch blog 38 North. “Since these facilities are believed to have played an important role in the development of technologies for the North’s intercontinental ballistic missile program, these efforts represent a significant confidence building measure on the part of North Korea.” [source]


So which one is it? Will North Korea de-nuclearize or not? Here are three options:

Option #1. North Korea is being North Korea again. A series of missile tests over Japan rattles Asia and escalatory rhetoric convinces the world that war is inevitable, before North Korea gains some concessions from the U.S. — a “freeze for freeze” where North Korea stops missile testing in return for cancelling joint U.S.-South Korean military drills. North Korea gives the appearance of cooperation, while it continues its nuclear weapons program under the table. In this case, we’ll be back to square one soon enough and Kim Jong-un will have to find another way to string us along until or unless there’s reason for the U.S. to believe that war is the only way forward.

Option #2: Unsure of U.S. intentions — regime change is always on the table — North Korea makes some verifiable concessions, like dismantling nuclear sites, while continuing its nuclear weapons program in case the U.S. is not serious about peace. If the peace plan falls apart, North Korea is no worse off than it was, and Kim is still working towards his nuclear ambitions. If the deal remains in place and Kim is sufficiently convinced that he can gain great wealth and economic power by opening up his country to investment, then Kim will make verifiable achievements towards de-nuclearization. Much of that rests on Secretary of State Pompeo to convince Kim that de-nuclearization is the only way to remain in power, and that Kim’s retention of nuclear weapons is more of a threat to his regime than to the U.S., South Korea, or Japan.

Option #3: Chinese president Xi Jinping can’t allow President Trump to solve the North Korean puzzle. It would support Trump’s re-election bid, and China probably hopes that he’s replaced by someone more predictable; someone who might be better suited to China’s game of economic extortion (i.e., allowing China to revise the balance of power in the Pacific in return for U.S. economic opportunity in China, which is what we’ve seen for the decade prior to 2017). We previously reported that Chinese exports to and imports from North Korea were significantly decreasing, but President Trump has complained that China wasn’t doing enough to stave off the North’s nuclear threat. China doesn’t want a nuclear North Korea, but they also don’t want a North Korea beholden to the U.S.; and they certainly don’t want a North Korean puppet regime set up by the Americans.

My guess is that Xi’s plan is to allow North Korea to continue playing its game, because as long as North Korea remains a geostrategic wild card, the U.S. is forced to spend time and resources on North Korea instead of focusing solely on Chinese expansion and the South China Sea. Once China is militarily capable of defending the South China Sea and ready to continue its Pacific expansion, a Chinese-led diplomatic mission would attempt to de-nuclearize North Korea with the credible threat of a growing Chinese military. China is more than able to tighten financial screws on North Korean figures — China could obviously be doing a lot more — and we’ll probably get to that point. Option #3 affords Xi two objectives: replacing a geostrategic wild card with a stable, peaceful, pro-Chinese North Korea, and allowing Xi to focus on military expansion in the South Pacific. The only way China gets to a 360 win is through Option #3, and I’m looking for China to get a 360 win.



Significant Developments:

Bill Gertz reported this week that the U.S. intelligence community is being forced to revise a decade’s worth of intelligence assessments predicting a benign rise of Chinese power. Mr. Gertz describes a series of intelligence failures that did not recognize China’s growth. He writes: “China is now capable of destroying most strategic U.S. satellites and crippling key elements of U.S. critical infrastructure through cyber attacks.” In addition to a buildup of military power, one former CIA official described China as “learning to be more coercive, learning to be more aspirational, learning to be more assertive by what they’re getting away with.” [source]

Speaking on Wednesday, the US Assistant Secretary of Defense for Asian and Pacific Security Affairs called for strengthened military ties with Taiwan in the face of mounting pressure from China. [source]

According to the Brookings Institution, China now holds 14% of Africa’s sovereign debt, as they fund infrastructure and other large scale projects on the continent. Said one U.S. official: “We’re seeing countries at 50%, 100%, and in one case 200% of GDP debt, based on concessionary loans from China.” Last year, China built its first permanent military base in Africa, close to Camp Lemonnier in Djibouti. [source]


Last week, we included information from an interview with Steve Bannon, who warned Australians that their country was coming under the influence of China. In fact, Chinese citizens and Australian citizens of Chinese descent have come under some scrutiny for intelligence gathering, as China is the largest foreign intelligence threat to Australia. Why has China been allowed to become intertwined with Australian politics? Because Australian officials want to grow their economy at the risk of Chinese influence. We see the same thing in the United States, especially under former president Barrack Obama. That administration looked past growing Chinese power and influence so that U.S. corporations would be allowed to do business in China. Just this week, U.S. airlines were forced to remove “Taiwan” from their flight lists, instead opting for just the name of its capital city Taipei. Why? Because China still considers Taiwan a province, and China gave those U.S. airlines an ultimatum: change the name on your websites or stop flying here. And every U.S. airline that does business in China removed “Taiwan” from their websites. (I just checked Delta. The flight reads, “Austin, TX to Taipei,” — they haven’t removed the comma, yet.) That’s the kind of economic power that China wields because it treats doing business in China as a privilege, not a requirement for its own economic growth. And we see that with the way China treats U.S. automobile manufacturers, who are forced to give a 51 percent share of its operations to Chinese companies, which is the price of doing business in the Chinese economy.

China is on track to supplant the U.S. as the world’s leading power, in part through economic warfare and every other avenue short of war. That includes heavy influence operations like giving gifts to foreign politicians who will defend Chinese interests in their own countries, and setting up branches of the Confucius Institute at foreign universities to advance Chinese culture and introduce U.S. students to Chinese businesses. That’s part of China’s charm offensive, but we also see China readying to push its weight around military. China’s advances in space warfare are meant to disrupt perhaps the greatest advantage of the U.S. military: satellite navigation and communications.



– S.C.

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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