Strategic Intelligence Summary for 05 April 2018 – Forward Observer Shop

Strategic Intelligence Summary for 05 April 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 Strategic Intelligence subscribers.

In this Strategic Intelligence Summary: (4,605 words)

  • Incoming NSA chief to target Russia
  • Russia was mapping the U.S. fiber-optic network in Seattle
  • Shadow banking seen as a risk to China’s growing debt crisis
  • U.S. Army looking to change fitness standards, lengthen Basic as it prepares for great-power war
  • U.S. Army to prioritize upgrades to artillery
  • First Russian S-400 missile defense system delivered to China
  • U.S. Navy’s new frigates could be the most powerful warships ever
  • Israeli F-35s breach Iranian airspace — undetected
  • South China Sea; Russia/NATO; North Korea; Middle East
  • Former Russian double agents fear for their lives in U.S., abroad

In Focus: The more I look out at the world today and see what is developing, the more I am convinced that we are in a period of great-power alignment prior to great-power conflict, much as the world did in the decade before World War II.

China and Russia are growing closer, as evidenced by a bilateral defense meeting in Russia this week, with Beijing declaring specifically that it was aligning closer with Moscow as a direct challenge to the U.S. Meanwhile, America continues to shore up its alliances with allies throughout the Asia-Pacific region and with NATO; India in the Indo-Pacific region appears to be in play and is being courted by both ‘alliances.’ It’s hard to imagine that New Delhi would swing towards Russia and China, but then again that’s the neighborhood in which India lives. But this budding alliance, if you will, bears closer watching and I will be doing so in the months ahead.

To me, China today resembles Japan in the 1930s. Its military modernization and development have been rapid relative to its economic growth and desire to become a first-world global power. The advances being made by the People’s Liberation Army Navy (PLAN) are especially similar. The PLAN is building advanced destroyers, frigates, submarines and aircraft carriers, and while these carriers are not on par with American flattops, they are nevertheless increasing China’s force projection capabilities and with major strategic implications. China has regional objectives first; most importantly Taiwan and some unfinished island business with Japan. I read a report earlier this week that said China looks at Taiwan like Russia looked at the Crimea; I can’t disagree with that. By controlling Taiwan, China will have direct access to the Western Pacific and thus be able to greatly extend its influence in the East and South China Seas.

As the U.S. and China heat up their trade war, Washington’s policymakers continue to grapple with Russia’s ‘hybrid warfare’ — a combination of cyber, information warfare, and influence-peddling via social media. Some analysts think this new type of warfare, in which Russia is becoming very adept, is a greater threat to our national security than traditional warfare. I’m not convinced, though I’m not downplaying the effect of Russia’s hybrid efforts.

I’m also not yet sure what to make of the upcoming summit with North Korea. I tend to lean towards the skeptical side. Kim Jong-un is conducting a charm offensive in order to buy himself some more time to perfect his nuclear arsenal. I’m not sure he can do that without further testing, though — and conducting any new missile tests or underground nuclear tests will prove he’s not serious about denuclearization, as the Chinese insist. I agree that talks should indeed be held because diplomacy is always better than war. But that’s if diplomacy is effective and in our best interests. Thus far, diplomacy with North Korea has failed to produce favorable results for us and our allies, though direct leader-to-leader talks have never taken place in the modern era. We’ll see. China won’t be left out of any negotiations and final settlement, of that I’m convinced — Beijing as a rising global power will ensure that whatever is decided will also be in China’s best interests. President Xi reportedly called President Trump recently and offered to set up a four-way diplomatic channel between the U.S., South Korea, North Korea and China, conspicuously leaving out Japan. It’s unclear yet if Trump has agreed to it.

Welcome to this week’s Strategic Intelligence Summary and thank you for subscribing. We welcome your feedback. — JD

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)

PIR4: What is the current security situation along the U.S.-Mexico border and south of the border?

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

Incoming NSA chief to target Russia

The incoming head of the National Security Agency and Cyber Command, Army Lt. Gen. Paul Nakasone, plans to aggressively confront Russia’s hybrid warfare that includes cyber-targeting critical infrastructure, U.S. elections, and other areas of disruption. Nakasone, who will be responsible for providing President Trump counter-options to Russian actions, comes at a time of heightened tensions between Moscow and Washington, but Nakasone has every intention of making Russia the priority. During his confirmation hearings, he said regarding Russia that “the most important thing is we want the behavior to change.” [source] (Analyst comment: Russia is quickly surpassing China as the United States’ most threatening adversary. That’s not to count China out, mind you, but I sense Putin believes he has a closing window of opportunity to enact his agenda against the West before the risks of pushback and even war will become too high.)


Shadow banking seen as a risk to China’s growing debt crisis

The People’s Bank of China’s new governor must face up to tackling the country’s growing debt crisis, brought on in large part by shadow banking operations. The country’s debt nearly doubled between 2008 and mid-2017 to 296 percent of GDP, while overall economic growth has fallen from double digits to around 6 percent. The Financial Stability Board, or FSB — an international organization that monitors global financial systems — reports that about 15 percent, or roughly $7 trillion, of the world’s riskier non-bank loans, were being held in China. They are linked to the supply of credit and thus pose a “systemic risk” to the country’s finances. This follows Chinese government takeovers of some financial instruments including the Anbang Insurance Group in February as it neared collapse after years of free-wheeling spending based on loans given with cheap credit. [source]

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

U.S. Army looking to change fitness standards, lengthen training as it prepares for great-power war

In the era of the Trump military, the U.S. Army is preparing to make substantial changes — upgrades, really — to the way it trains its soldiers. The Army is looking at adding weeks to its 10-week Basic Combat Training, as well as the introduction of a six-station fitness test that stresses battlefield conditions rather than running for time and doing pushups and sit-ups for count. And all of these changes are coming with one perspective in mind: To get troops ready (again) for great-power war. The Army must focus on “recruiting and retaining high-quality, physically fit, mentally tough soldiers who will deploy and fight and win decisively on any future battlefield,” Secretary of the Army Mark Esper says. “A decade from now, the soldiers we recruit today will be our company commanders and platoon sergeants. That’s why we are considering several initiatives, to a new physical fitness regime to reforming and extending basic training in order to ensure our young men and women are prepared for the rigors of high-intensity combat,” he added. Starting in early summer this year, BCT will be rebooted. The new focus will be instilling strict discipline and re-instilling esprit de corps by emphasizing drill and ceremony, inspections, and building pride in military history. These traits will be combined with more focused battlefield skills — physical fitness, communications, marksmanship, and first aid. The changes are the direct result of surveys conducted with thousands of leaders who have watched standards fall, discipline levels drop, and work ethic slump. Even troops fresh out of basic were sloppy, careless with equipment and had discipline problems. Units will get physical therapists, strength coaches and dietitians to make soldiers better and keep them that way. [source]

U.S. Army to prioritize upgrades to artillery

The U.S. Army has identified a huge gap — and likely one that Russia has also identified — in the range of its artillery and is making it the service’s top priority upgrade. In a recent assessment, the Army reckoned that during the first few weeks of combat, at least, in a war with Russia, troops would be fighting without any air cover, due to Russia’s sophisticated air defenses. That includes, especially, close-air support. As such, the Army will develop longer-range fires using existing platforms to make up for the lack of air support. U.S. defense experts know that the Russians have always taken their artillery power seriously, and have for decades. So even though Russian forces would also have to fight U.S. and NATO without appreciable air cover from their own air force, that means a head-on fight in which Moscow currently holds the advantage, at least in this area of combat power. [source]

First Russian S-400 missile defense system delivered to China

The Russian government has delivered the first of several S-400 Triumf air defense systems ordered for $3 billion in 2014. Two vessels carrying elements of the first battery arrived in China on 3 April. The delivery includes a command post, radar stations, launching stations, and various power and other equipment. Part of the system was damaged by Russian handlers and was returned to Russia; that equipment is being repaired. China has ordered anywhere between four and six of the systems, but the exact number of systems to be delivered has not been publicly released. [source] Analyst comment: The S-400s are among the world’s most advanced interceptor-based air and missile defense systems.

U.S. Navy’s new frigates could be the most powerful warships ever

The Navy’s new Guided Missile Frigate (FFGX) will be able to sense enemy targets from great distances, launch next-generation, over-the-horizon precision weapons, employ the latest intelligence, surveillance, and reconnaissance networking and technologies, operate unmanned systems, tackle undersea threats, be able to counter small boat and drone swarms, and generally defeat technically advanced adversaries in open water. “The FFG(X) small surface combatant will expand blue force sensor and weapon influence to provide increased information to the overall fleet tactical picture while challenging adversary Intelligence, Surveillance, Reconnaissance, and Tracking (ISR&T) efforts,” Naval Sea Systems Command FFG(X) documents said. The Navy wants to award contracts by 2020 and have the first ships added to the fleet by the mid-2020s. [Source] (SC: Last year, the Navy launched a new strategy to prepare for future sea warfare in the Pacific. Dubbed “Distributed Lethality”, the Navy’s new approach is weaponizing more ships, focusing on increasing lethality, and distributing these intelligence-gathering sensors to cover a wider area of the battlespace. With the adoption of the Joint Strike Fighter program, the Navy wants its F-35s and ships to be able to call out to each other the position of enemy targets and simultaneously target those enemy positions, hence the term “distributed lethality”.)

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


In the wake of the tit-for-tat diplomatic expulsions, two U.S. Senators — Jeanne Shaheen, D-New Hampshire, and Thom Tillis, R-North Carolina — have reestablished the Senate NATO Observer Group. First established in 1997, the bipartisan group proved vital in guiding the Senate’s approval of NATO-aspiring countries from Eastern and Southern Europe that were former client states of the Soviet Union. Now that Russia’s resurgence and use of hybrid warfare have become a major security issue both for Europe and the United States, Shaheen and Tillis thought it was time once more to reestablish the observer group. Its reemergence comes after Russia instigated a massive cyber-attack against Estonia; seized land in Georgia; annexed Crimea; attempted a coup in Montenegro; continued to provoke violence in eastern Ukraine; and launched destabilization campaigns throughout the West including the United States causing distrust that continues to this day. The focus of the NATO Observer Group is multifaceted: 1) It will closely monitor implementation of new NATO initiatives which include the establishment of two new NATO commands — one to bolster NATO’s presence and capabilities in the Atlantic Ocean, and one to improve logistics or the movement of NATO forces across Europe; 2) The establishment of a new cyber center; 3) Continued focus on counterterrorism; and 4) Promotion of Western democracy throughout the region.

In addition to targeting U.S. infrastructure with wide-ranging cyber probes, insertion of malware, and meddling in the political system, Russia is also continuing its stealth campaign of looking for critical logistical choke points as well as ways to dramatically disrupt commerce and communications during a conflict. Russian ships have been spotted with alarming frequency in the vicinity of underground fiber-optic communications cables again, which is likely just reconnaissance ahead of taking some retaliatory or preemptive action in the future. Last month U.S. Army Gen. Curtis Scaparrotti, head of U.S. European Command, told Congress that Western intelligence has seen “activity in the Russian navy, and particularly undersea in their submarine activity,” not seen since the 1980s, in the waning years of the Cold War. Undersea cables — about 400 of them — carry nearly all of the world’s calls, emails, texts, and other communications, as well as about $10 trillion worth of daily financial transactions. Needless to say, losing any of these cables would be a major blow to our economy; losing a lot of them would cripple it for months or longer. This isn’t a new concern, mind you. Since World War I, undersea cables have been tampered with or used to gather intelligence. It’s just these the world relies upon these cables much more today for virtually everything related to modern life.

Testing of new weapons continues as well. Russia has now twice tested a nuclear-powered cruise missile (yes, you read that correctly, a nuclear-powered cruise missile). This is an experimental platform that so far has not been productive. The idea is to use a small reactor to fuel long-range flight. Both tests were conducted in the Russian arctic on the island of Novaya Zemlya, where there is a Russian air base and nuclear testing site. One of the two tests occurred in November; in neither instance did the nuclear power source ignite. There are few other details known about the new missile, which U.S. military intelligence has tracked for a year. It was not mentioned in the Pentagon’s most recent Nuclear Posture Review along with the other new strategic weapons Moscow is developing.

Diplomatically, Russia has been active in seeking new regional partners, the most important of which is China (see below in “South China Sea”). The Kremlin is also strengthening military ties with Vietnam, inking a “roadmap” of cooperation until 2020 just recently while building up ties with Pakistan and eyeing sales of the S-400 air defense missile system to India. (SC: Pakistan has never been a U.S. ally, although their limited cooperation has been purchased for the past roughly 17 years. China is currently building a port in Pakistan that could be used as a naval base, so Pakistan’s turn towards Russia and China is a big deal for the U.S., strategically speaking.)

Russia is also building a plant in Venezuela, scheduled to begin operations by the end of 2019, to build 25,000 AK-103 assault rifles per year, while the country has also invited Russian combat pilots in to share their aerial experiences. The South American country will send its Su-30 pilots to Russia for training; this comes on the heels of a major weapons deal between the two inked in December.

Finally, Russian envoy to NATO Aleksandr Grushko has said that NATO’s military buildup along Russia’s western borders has “crossed a red line.” The trend is clear: Russia is continuing to push its advantage and look for weaknesses in NATO and U.S. defenses, and sadly, there are many. A new assessment from U.S. and UK defense experts note that Europe’s defensive capabilities “are at the nadir of a cycle of decline” due to major and sustained cutbacks since the end of the (first) Cold War. While NATO countries are finally spending more on their militaries, thanks to being pressed by the Trump administration, budget increases are still slow to come online. Plus it takes months to build many modern weapons and years to build enough of them to serve as a deterrent. So this gives Russia a shrinking window of opportunity in which to make whatever moves Putin feels confident enough to make without receiving substantial pushback from the alliance. Whether or not Trump really did invite Putin to meet at the White House at some point in the future, as reports claimed this past week, the Russian leader isn’t likely to change his spots or his strategy moving forward.

(SC: After hosting the 2014 Winter Olympics in Sochi, and soon hosting the 2018 World Cup in June, Putin is putting Russia on display. More than anything, Putin wants to be taken seriously as a global power. Reports are coming out of Ukraine today that Russia has moved some 77,000 troops to the Ukraine border. It’s not inconceivable that after the World Cup, Russia starts another round of military operations in the country.)

Middle East: 

The Middle East continues to remain a volatile area rife with new opportunities for conflict that could involve the United States and its regional allies. In Syria, for instance, we’re beginning to see end-game strategies take shape as regional and great powers vie for advantage by exploiting the weak Syrian government. Iran, Turkey, and Russia all have designs on Syria, and for their own self-interests. Russia and Iran now enjoy unfettered access to the Black Sea coast as well as a clear path all the way to the Iraqi capital of Baghdad. That will allow Iran to continue to harass Israel as well as increase its own hegemony over the region. Turkey, meanwhile, has its proxies controlling areas west of the Euphrates River along to the Idlib. There, Sunni militants are free to create their own communities into which Syrian refugees in Turkey may eventually return. But the U.S. retains considerable firepower in the region and Israel has been active in its own defense, continuing to strike targets in Syria belonging to Syrian government forces and Iranian elements.

Israeli F-35s managed to penetrate — reportedly undetected — Syrian and Iranian airspace during what appeared to be reconnaissance missions in search for future targets, including (in Iran) nuclear facilities. A pair of the fifth-gen fighters flew through Syrian and Iraqi airspace in order to reach Iran, ‘targeting’ locations in the Iranian cities of Bandar Abbas, Esfahan, and Shiraz. The planes reportedly circled suspected Iranian nuclear sites at high altitude, but went undetected including by Russian radar operating inside Syria. Israel has seven F-35s so far; the planes have a good range as well, being able to fly from Israel to Iran and back twice without refueling. [source]

Overall, the region’s two biggest powers — Russia and Turkey — are growing closer, which of course presents a special problem for NATO, given that Turkey has long been a member of the Western alliance. But Ankara’s interests in Syria and the wider Middle East are increasingly conflicting with U.S. and Western objectives and interests, which is fueling Ankara’s shift towards Moscow. Turkey is waging a campaign against the Kurds inside Syria, in a bid to drive them out of the area and away from Turkey’s borders. Trouble is, the U.S. is allied with the Kurds and has troops embedded with Kurdish forces in Manbij — which Ankara is eyeing. As divisions grow with NATO, Turkey deepens its military and economic ties with Russia, including plans to build a nuclear power station using a Russian-built reactor on Turkey’s Mediterranean coast at Akkuyu and the construction of a “Turkstream” gas pipeline to pump in Russian product. At the same time, the U.S. is said to be considering permanent cutbacks to its air forces at Turkey’s Incirlik Air Base in the country’s south.

Throw into the mix some confusion coming out of Washington. Reports earlier this week said that President Trump was considering rapidly withdrawing U.S. forces from Syria after declaring ISIS defeated, though his commanders on the ground and in D.C. have said otherwise. Some have noted that American-led forces are close to completely destroying the less than 3,000 fighters remaining in the region, but that the group would grow and flourish again if the president pulled American forces out too soon. By week’s end, reporting claimed that Trump was changing his mind and that he was leaning towards leaving U.S. forces in place.

North Korea:

While there continues to be much anticipation of favorable outcomes regarding the upcoming “denuclearization” talks between North and South Korea and the United States, it’s important to point out that the Kim family has made such promises before. Kim Jong-il made a similar trip to China before he died in 2011 and promised then that he would end his quest for nuclear weapons. Also, we don’t yet know what Kim will demand in return for denuclearization, but it’s a safe bet to believe he will want significant concessions from President Trump and South Korea, and perhaps more than either nation is willing to give or can give. One other thing that Seoul and Washington will want is unfettered inspections of North Korean nuclear facilities, which Kim may never agree to. China is also an unknown, though agreeing to receive Kim ahead of summits with South Korea and the U.S. is a tacit signal that Beijing won’t lie down for any preemptive strikes by Washington.

There are conflicting reports as to whether Pyongyang is preparing another nuclear test, however, another test is likely to disrupt any planned summit. Japan’s foreign minister recently said that North Korea is preparing a new test, saying Pyongyang is “working hard to get ready for the next nuclear test.” A noted Korea-watching blog, 38 North, disputes that claim, however. “While it is unclear whether the foreign minister was referring to activity observed over the last few days or from earlier work conducted after North Korea’s September 2017 nuclear test, commercial satellite imagery from March 23 shows quite a different picture: namely, that activity at the test site has been significantly reduced compared to previous months,” the organization said of activity at the North’s main Punggye-ri nuclear test site. This would make sense if the North is serious about talks.

Most experts are warning against outsized expectations for any upcoming summit and negotiations because there are still too many unknowns. Also, many are warning that Trump should not be seen as being too eager to meet with Kim and too willing to make pre-summit concessions because it will be seen as a sign of weakness that Kim and China will use to their favor. One concession has already been given: The annual joint military exercises between U.S. and South Korean forces has been trimmed from two months to one month, and have also scrapped any use of strategic assets. History shows that giving concessions to the North has never worked.

People who have sat at negotiating tables with North Korean officials in the past note they are rational and clever. They are keen to exploit weaknesses and able to extract pledges of cooperation and assistance without really giving up anything in return. Trump’s new national security advisor, seasoned diplomat John Bolton, a hardliner on North Korea, isn’t likely to fall for any of this, and that’s probably one reason why Trump named him to the post. Right now it appears to be a bridge too far to expect Kim to give up his nuclear weapons after working so hard and spending such scarce resources to acquire them.

South China Sea:

As the U.S. and China trade tariffs, Beijing and Moscow are inching closer. China sent a delegation to Russia recently — according to Russian media — to show “unity” in opposition to U.S. and Western hegemony. Chinese Defense Minister Wei Fenghe reportedly voiced strong support for Moscow during talks with his Russian counterpart, Sergey Shoigu. Wei stressed “the united position” in international affairs, noting further: “The Chinese side came to let the Americans know about the close ties between the Russian and Chinese armed forces.” The meeting came after a report in China’s state-run Global Times headlined, “Western pressure brings China and Russia closer.”

The rift over trade and tariffs has China concerned the U.S. Navy will begin more regularly patrolling the South China Sea. A Chinese-language daily reported this week that the USS Theodore Roosevelt carrier strike group anchored at Singapore could soon be deployed in the South China Sea. The group, led by Carrier Strike Group 9, is planning to conduct operations on behalf of the Seventh Fleet. Other navies — regional allies — may join in upcoming drills. This comes on the heels of a major Chinese navy drill involving around 40 ships and submarines and the training carrier Liaoning.

Speaking of carriers, the Chinese navy’s first domestically-built aircraft carrier will head out to begin shakedown and sea trials later this month. The Type 001A is smaller than U.S. carriers, meaning it won’t carry as many aircraft (48) and the aircraft, using a ski-jump-type of bow, cannot carry as much fuel or as many armaments. Nevertheless, flattops give China force projection capability which Beijing plans to use in the South China Sea and beyond. China’s first carrier, the Ukraine-built, China-refurbished Liaoning, is officially a training carrier and has not yet been assigned to any of China’s three naval fleets. So the 001A is the first official battle carrier. More are planned, and China hopes to build a nuclear-powered platform within seven years.

Dozens of other countries in the region are more and more eager to embrace the United States and, to a lesser degree India, as bulwarks against rising Chinese power. This is evidenced by the growing number of navies interested in taking part in U.S.-led exercises. But these countries remain worried about China’s continued rise — economically, militarily, and geopolitically. They worry that the spillover from U.S.-China trade wars could equate into even more aggressiveness by Beijing. China and Vietnam appear on the cusp of working out their differences, for example, but just last week despite a recent visit from the first U.S. aircraft carrier since 1975, Vietnam caved to Chinese pressure to scrap an oil exploration project in disputed waters.

PIR4: What activities are foreign intelligence services directing against the United States our allies?

Russia was mapping the U.S. fiber-optic network in Seattle

As time passes we learn more about why the Trump National Security team chose to order Russia to close its consulate in Seattle: It was a major espionage hub that included mapping the entire U.S. fiber-optic infrastructure for later targeting. There are a lot of intelligence assets in and around the Seattle consulate — defense contractors (like Boeing); naval bases (including a major Trident sub base); and technology companies. Seattle is considered to be a “top five” intelligence target, so forcing Moscow to close its consulate there means that Russia no longer has a permanent base on the West Coast. [source]

Former Russian double agents fear for their lives in U.S., abroad

Former Russian double agents living abroad — in the U.S. and throughout the West — live in fear every day that they will become the next target of revenge by Moscow for leaving the employ of the Kremlin. Their fears have been compounded by the recent brazen assassination attempt against Skirpal and his daughter. The threat is so real that the CIA and FBI are reactivating retired former agents who dealt with Russia in the 1990s because they require their experience and tradecraft. “I would certainly not rule out” an attempt on a defector’s life here, Daniel Hoffman, a 30-year CIA veteran who spent five years on duty in Russia, said. “Putin has demonstrated there are no limits to the methods he would use to target Russia’s ‘main enemy’ and our allies.” [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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