Strategic Intelligence Summary for 05 July 2018 – Forward Observer Shop

Strategic Intelligence Summary for 05 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: (6,547 words)

  • Leftist presidential victory in Mexico could usher in new conflict with U.S. 
  • Europe turns down Chinese ‘offer’ to align against U.S. 
  • Race on to build next-gen nuclear subs between U.S., China, Russia Lockheed Martin continuing hypersonic vehicle development  
  • Japan acquiring Aegis Ashore as part of extensive missile defense upgrade 
  • U.S. ‘most vulnerable in the world’ to cyber intrusion
  • And more…

ADMIN NOTE: All reporting and analysis is from Jon Dougherty, unless otherwise marked “S.C.” for Samuel Culper.

In Focus: Depending on which general or cabinet-level official you talk to, the Russians or the Chinese present the biggest long-term threat to the United States. We believe they both post significant threats.

President Trump and Russian President Putin are set to meet in the coming weeks in Helsinki. We’ve come a long way since the Trump-Flynn policy of befriending Russia, and while Trump’s generals (Mattis, Kelly, and Dunford, et. al.) verbally pound on Russia, Trump does seem to have an aversion towards an aggressive policy. NATO is chronically weak and when member nations don’t meet their two-percent-of-GDP defense spending mandate, they don’t appear serious where it concerns deterring Russia’s goals for Europe. At the risk of being repetitive, we should repeat the quote attributed to Vladimir Lenin: “Probe with bayonet. If you hit steel, stop. If you hit mush, push.” This is Putin’s maxim.

Meanwhile, China’s president has made it clear his country isn’t about to disembark from its current journey to become the world’s predominant power. China has ambitions far beyond its neighborhood, and they’ll continue to directly impact U.S. defense policymaking, as well as the policies of our Asian allies.

There’s much more. Welcome to this week’s Strategic Intelligence Summary and thank you for subscribing. We welcome your feedback. — SC and 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 activities are foreign intelligence services directing against the United States our allies?

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

Leftist presidential victory in Mexico could usher in new conflict with U.S.

As expected, Andres Manuel Lopez Obrador, a committed Leftist, won the presidency in Mexico, and by a sizable margin. AMLO, as he is known, captured 53 percent of the vote after promising to lead the country through its biggest transformation since the revolution of 1910. Stressing that the transition of power would be peaceful and ordered, the president-elect told supporters following his victory that he will be guided by three principles: “No lying, no stealing, and no betrayal of the people.” Among his promises: To sell the presidential jet, cut his presidential salary in half, and transform the presidential palace into a cultural center. He promised also that he would double pensions for retirees, increase scholarships for university students, and boost production and employment in the country’s poorest southern regions. It’s not clear how he planned to pay for everything, however, outside of a vague pledge to clean up corruption would free up millions of dollars, according to his campaign team. [source] Analyst comment: The president-elect has been far less clear regarding how he will deal with President Trump. The outgoing Mexican president, Enrique Pena Nieto, is extremely unpopular in part because Mexicans don’t think he’s taken a hard enough line against a U.S. president who has threatened to pull out of NATFA and, according to American and Mexican media, has called Mexican citizens “animals” and “rapists” (though Trump was speaking specifically of criminals and gang members). Business leaders in Mexico are uneasy because they believe AMLO may implement hard-core socialist policies similar to those of Venezuela, Bolivia, and other South American nations which they say have resulted in economic chaos and collapse. In recent weeks AMLO also encouraged Mexican citizens to migrate north to the United States, as doing so was a ‘human rights’ issue. Socialist economic policies combined with encouraging his citizens to cross illegally into the U.S. has the potential to create a massive migrant problem for the U.S. — a situation far worse than currently exists at the U.S.-Mexico border, which is already bad. 

S.C.: Of particular interest to me were the reports that AMLO will not be utilizing personal bodyguards. In a recent speech, he stated: “There’s going to be a real change, a deep change. It will be a radical change, but nobody should be scared.” He continued: “I will not use the services of the presidential general staff, I will not be surrounded by bodyguards, those who fight for justice have nothing to fear… The people will protect me.” According to sources familiar with the Mexican political situation, AMLO is in the process of re-writing oil, gas, and mineral contracts ostensibly because they’re bad for the environment. According to the source, AMLO’s wealthy backers and family contacts will reap windfall benefits from these re-written contracts to be implemented. That’s a good sign that this is still business as usual for Mexico. Several outlets have expressed concern about whether or not AMLO will become the next Chavez (the now-deceased Leftist populist dictator from Venezuela), while others like the New York Times and Brookings Institute are joyous about a “new era of Mexican politics”. One thing is for certain: creating greater government dependency, as AMLO is doing, is unlikely to lead to more freedom and prosperity for a country. If AMLO’s economic policies don’t help the Mexican people, we’re much more likely to see another mass migration crisis on our southern border. This is why President Trump has a vested interest in helping the Mexican economy.

Europe turns down Chinese ‘offer’ to align against U.S.

Frustrated with President Trump’s refusal to end the tit-for-tat trade ‘war,’ which is set to begin officially on Friday as the U.S. levies $34 billion on Chinese imports with 25 percent tariffs, senior Chinese officials have made a novel proposal to the European Union: Form an alliance and the world’s largest trade block against the U.S., while pledging to open up more of China’s economy to European corporations. Apparently, the plan was floated during recent meetings in Brussels, Berlin and Beijing between senior Chinese officials, including Vice Premier Liu He and the Chinese government’s top diplomat, State Councillor Wang Yi. China has been pressuring the EU to issue a strongly worded joint statement against Trump’s trade policies later this month. But the EU flatly rejected the proposal. “China wants the European Union to stand with Beijing against Washington, to take sides,” one European diplomat told Reuters. “We won’t do it and we have told them that.” [source] Analyst comment: President Trump’s efforts to realign America’s trading partnerships and arrangements to something he believes is fairer to the U.S. is rankling leaders around the world, especially in Europe. But the EU has much greater historical economic and security ties to the United States. Plus, the EU knows that a Chinese offer to open its economy is as phony as the country’s claim to be the global leader in free markets. China’s blatant mercantilism belies those claims. That said, the bold plan to split off Europe from the U.S. makes clear Beijing is much more concerned about a real-deal “trade war” than it is letting on. That will give the Trump administration leverage in any future trade negotiations. Europe isn’t happy with Trump’s trade stances either, but behind closed doors, EU diplomats know that he’s right to take on China, even if they won’t necessarily admit the continent’s own restrictionist trade policies. 

Israel developing technologies to fight devastating fire kites

Over the past three months, militants in the Gaza Strip have flown hundreds of fire kites and flaming helium balloons — some with explosives attached to them — into Israel, causing hundreds of fires and often several per day. The fires have burned thousands of acres; some seven square miles of land on the Israeli side of the border have been burned. More than half the land is located in nature reserves. The new tactic led Israeli military and civilian researchers to find ways to defend against them, and they have come up with two new technologies. One has already been deployed and the second is close to being deployed. The first is called Sky Spotter. It’s built by Rafael Advanced Defense Systems and has been operating along the Gaza border for the past week. Sky Spotter was originally developed to counter small drones, but the same tech can track balloons or kites in the sky and determine where they’re most likely to land. The system’s control panel places a red dot on each incoming fire kite and then tracks its trajectory. The data is relayed to firefighters who arrive to put out the fire before it can spread. But knocking the kites and balloons out of the sky before they land is the real objective. For that, the Israeli military is testing a laser system to target the firebombs while they’re still in flight. Researchers believe that technology will be deployed “soon.” [source]

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

Race on to build next-gen nuclear subs between U.S., China, Russia

There is an underwater nuclear-powered submarine race quietly taking place between the world’s three largest naval forces — the U.S., China, and Russia. For the time being, most analysts agree that by far the U.S. Navy retains the most potent undersea force, though Beijing and Moscow are working hard to exploit perceived U.S. disadvantages. The three naval powers have different objectives for their next-gen nuclear submarine forces. For the United States, the goal is to build lethal, technologically superior subs for less cost and more operating efficiency. Russia and China, meanwhile, appear to be going for technological advances and more stealth. The ‘contest,’ as it’s being considered, comes as territorial claims, counterclaims and disputes arise between all three. It also comes as China continues to make outsized claims to the entire South China Sea while militarizing newly built islands in the Spratly chain and elsewhere. [source] Analyst comment: One expert, James R. Holmes, professor of strategy at the Naval War College, thinks the U.S. Navy and the Pentagon are dramatically underestimating the number of subs needed to win a full-scale conflict in and around the South China Sea. “You need to divide the number [of total ships] by two, three, or even more to estimate realistically how many ships are available for duty on any given day. The rest are in overhaul, undergoing training, or relaxing after deployment,” Holmes said. “So, divide the number of SSNs in the Pacific by three, then look at the map. That’s very few boats to manage events in the world’s largest body of water.” He’s not the first analyst to make this claim. One thing to remember as well: Chinese vessels would be operating much closer to home than U.S. subs, though we have allies in the ‘neighborhood.’

Lockheed Martin continuing hypersonic vehicle development

Lockheed Martin Corp. will continue its research on hypersonic technology. An $11.8 million contract awarded by Strategic Systems Programs provides for Hypersonic Booster technology development that seeks to demonstrate technologies related to intermediate range capability via booster design, fabrication and validation testing. Strategic Systems Programs is a regularly-used contractor for the U.S. Navy’s development and procurement of sea-based deterrent missile systems. Hypersonic missiles can travel at speeds between Mach 5 and Mach 10 — between 3,106 and 15,534 miles per hour — or one to five miles per second. China, Russia and the United States are all currently investing heavily in hypersonic systems, while a few other countries are also exploring the technology to a much lesser extent. Lockheed’s work will be performed at various locations, including Sunnyvale, California; Magna, Utah and Elma, New York. It’s scheduled for completion by June 2019. [source] Analyst comment: The fact that all three of the world’s major powers are working quickly to develop and deploy hypersonic missile technology first indicates how important such systems are in terms of next-gen nuclear capabilities. The designs are said to be impervious to current missile defenses because hypersonic vehicles are simply too fast to intercept. The Trump administration has made U.S. hypersonic missile development a priority after the Pentagon assessed that it had substantially fallen behind Chinese and Russian development. Hypersonic nuclear missiles are game-changers, so hypersonic missile defenses are the next logical step, and they could either be hypersonic interceptors or, more likely, laser weapons, which are also under development, to varying degrees, by the world powers.

Australia has ordered its next-gen frigate

The Australian government has contracted with BAE Systems for the production of the country’s next-generation, anti-submarine warfare (ASW) frigates. The $25.9 billion contract is Australia’s largest peace-time warship-building program. The design criteria included a multi-role versatility, a platform flexible enough to adapt to future needs, affordability in terms of first-build costs and life-support costs over the duration of the class, and exportability. The new ships are intended to begin replacing the eight workhorse Anzac-class frigates of the Royal Australian Navy (RAN) in 2027–28. The new Hunter class will be constructed by ASC Shipbuilding at Osborne on the outskirts of Adelaide. [source] Analyst comment: As China rises and its navy becomes more powerful, the U.S. will have to rely more on its Asian allies to help check Beijing throughout the region. That, of course, will include the Australian navy. That aside, the Australian government’s decision to make such a significant naval investment during peacetime is an indication that Canberra shares both U.S. concerns and deterrent objectives.

China develops laser rifle that can set targets ablaze 1 kilometer away

Chinese developers have fielded a new “AK-47”-type laser rifle capable of causing burns and other damage to human skin from a distance of one kilometer, though it’s being classified as “non-lethal.” The beam cannot be seen by the naked eye but it is powerful enough to pass through glass windows and cause the “instant carbonization” of skin and tissues. One developer claimed that the beam is powerful enough to “burn through clothing…If the fabric is flammable, the whole person will be set on fire.” It can also cause unbearable pain. The rifle can be mounted on boats, vehicles and even planes and is now ready to be mass-produced. The first deliveries are expected to go to the Chinese Armed Police, but the beam is powerful enough it could also be used by the military for covert operations. It has the capability to burn through a large gas storage tank and set it on fire. The rifle is powered by a rechargeable lithium battery and can fire more than 1,000 shots, each lasting no more than two seconds. [source] Analyst comment: News of this new rifle comes amid reports last month from U.S. military pilots flying near the American base at Djibouti that they were being targeted by laser devices from the nearby Chinese base. Two pilots reportedly have suffered minor eye injuries. Clearly, the Chinese are working to develop and improve laser capabilities. Beijing is tightly controlling production and distribution of these rifles for fear of them falling into the hands of an enemy or terrorist.

Japan acquiring Aegis Ashore as part of extensive missile defense upgrade

Japan will select Lockheed Martin in support of its multibillion-dollar missile defense system and has plans to deploy the batteries by 2023. The two Aegis Ashore sites will likely cost around $4 billion, almost twice the amount previously expected. Lockheed will provide a version of its Long-Range Discrimination Radar (LRDR)in support of the defense efforts. The radar provides precision metric data to improve ballistic defense discrimination. The missile defense upgrade is a clear message to China and North Korea. Japanese military planners still see North Korea as an immediate danger, though that could soon dissipate depending on the outcome of U.S.-North Korean denuclearization talks. Japan also views China’s growing military power as a long-term threat. [source]

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:

NATO allies partner for high-end anti-submarine warfare exercise: In recent days the Pentagon sent a U.S. aircraft carrier back into the Atlantic Ocean for routine patrols in response to increased Russian submarine activity. Last week kicked off Dynamic Mongoose 2018, a high-end anti-submarine warfare exercise involving warships and subs from several NATO partner nations. The exercise is being held off the coast of Norway and includes forces from Denmark, France, Germany, the Netherlands, Norway, Spain, Turkey and the U.S. In addition to interoperability training, the sea forces are focusing, not coincidentally, on anti-submarine warfare. [source]

Russia’s strategic missile force to be upgraded with new ICBMs by 2028: The Russian military’s Strategic Rocket Missile Force will be reared with new military hardware by 2030, but will receive upgraded and advanced missile systems in the 2027-2028 time frame. The rearming will begin before that time frame but these are the current estimated completion dates. [source]

Pentagon reassessing U.S. troop presence in Germany: The Pentagon is taking a new look at the costs of keeping 35,000 American troops in Germany, as President Trump and Chancellor Angela Merkel continue to disagree over trade and NATO. The president has frequently criticized NATO and its richest member outside of the U.S., Germany, for not contributing enough to the alliance’s defense. It’s not clear who, if anyone, requested the review, though the Pentagon said it regularly conducts them. Some believe that Pentagon policymakers — aware of Trump’s displeasure at the U.S.-NATO arrangement — may have launched the probe preemptively in an effort to convince the president of the value of keeping American forces there. [source] S.C.: While many German citizens aren’t thrilled by the presence of U.S. troops, there are some European countries who would enthusiastically receive a few extra U.S. brigades; namely the next-door neighbor of Germany: the former Soviet satellite state Poland.


Even as President Trump and Russian President Putin are set to meet, it has become obvious that Moscow is focusing on the expansion of influence in the region stretching from the Baltic States to the Nordic States. Proof abounds: Russia’s Zapad 2018 exercise, which was a major undertaking, was aimed at influencing the behavior of West-allied neighbors; threats issued over the past few years against the Danes and Norwegians saying if they modernized their forces and defenses in the Nordic region they would face destruction; simulated attacks against Norwegian territory; sending a large naval force from the Kola peninsula without any prior notification; and cyber attacks against Sweden, among other examples.

With these and other actions, Russia aims to intimidate and isolate these countries. In addition, Moscow likely has been hoping for divisions between the U.S. and EU and NATO to widen as well, which would further isolate the Nordic States.

In addition, Russia is expanding its presence in the Arctic, where it’s building new bases or rehabilitating old ones, adding additional military capability and economic infrastructure while the U.S. and Canada have largely been unresponsive to the moves. (S.C.: U.S. Strategic Command, Northern Command, and other military elements have been actively completing a military/defense study of the Arctic, although that was an extremely belated response to Russian expansion there.)

But despite Moscow’s threats, the Nordics have moved to strengthen their alliance with Washington via enhanced military cooperation and plans to mobilize their entire countries in an effort to counter Russian intimidation. Norway, in particular, has focused on crisis response and mobilization, while Sweden — which recently held its largest military exercise in 20 years — has undertaken similar efforts. The 2018 Trident Juncture military exercise, which is a major NATO undertaking, is more to Norway this year than just testing of weapons and enhancement of their Total Defense Concept, which focuses on the ability of the civilian sector to support the military in a crisis. 

The U.S. and Norway have also agreed to host a larger rotating contingent of U.S. Marines in the Nordic State, nearly doubling the current rotation from 350 to 700, for a period of up to five years. The Russians have responded with new threats and intimidation.

Finland, meanwhile, is revamping its training of conscripts to better integrate them into a more combat-ready mobilization force. Finland uses conscription to identify quality candidates for its professional military, especially “tech savvy” candidates needed for a 21st-century force. 

The Swedish military exercises — Aurora 17 — involved forces from many other nations including Denmark, France, Finland, Estonia, Lithuania and the U.S. And in May, Sweden and Finland signed a new trilateral agreement with Washington.

The West’s response to Russian aggression, including seizing Crimea, inserting forces into Syria, and supporting rebels in Ukraine, has been met not with acquiescence but with new resolve and preparedness. The Nordic States especially have gotten the message that vulnerability is a liability. They have been working in tandem with the U.S. to shore up their defensive capabilities and serve as a genuine deterrent to future Russian aggression. This could cause Putin to rethink his maximum pressure strategy. 

Now, couch these developments with the expectation that next week, when he meets with NATO allies, President Trump will press them to contribute more to the defense of the alliance — something they won’t want to hear. While Trump knows that NATO, for now, is heavily reliant on the U.S., he must also know that national governments have only so many resources to go around and recalcitrant politicians who remain unconvinced that more money should be spent on military readiness. Still, at some point, Trump seems destined — if nothing changes — to decide that the U.S. contribution to NATO is far too outsized to sustain and seek to cut it. That will be a moment of truth for the alliance — and Russia: Allies will step up or they won’t, and if they don’t, that may give Putin all the confidence in the world that the alliance doesn’t have the will to oppose him should he move on the Baltics or the Nordic States.

S.C.: The thing to keep an eye on here is that while roughly 5,500 miles separate us our home base in Austin, Texas to the Baltic city of Riga, Latvia; effects of this conflict could be felt close to home. There’s a potential for systems disruption in the U.S. should Putin feel he has a green light to take back the eastern regions of Latvia and Estonia, which have high populations of ethnic Russians (just like eastern Ukraine). During World War II, the Soviets implemented a system whereby ethnic Latvians and Estonians were deported, while the Soviet government encouraged ethnic Russian immigration to the region. Putin reportedly views these ethnically Russian populations as being trapped in pro-Western countries and they, of course, need to be reunited with a demographically-shrinking Russia. This is part of the plan to re-establish Russia as a global power, and Putin will make a convincing case if he’s able to accomplish this goal. The potential for systems disruption in the U.S. comes because it would be vital to slow, degrade, or deter a U.S. military response. There aren’t enough U.S. and NATO forces deployed to the Baltics to stop a Russian hybrid invasion reminiscent of Donetsk and Luhansk in Ukraine. Putin’s desire is that the U.S. is either unable or unwilling to fight a land war in the Baltics and that Europe’s domestic problems preclude their governments and militaries from coordinating a successful campaign. As for the U.S., we could see the same types of information operations Russia’s conducted in Ukraine and Europe: cyber attacks, disinformation, exploiting social movements and supporting various flavors of domestic terrorism.

Middle East: 

Significant developments:

Protests continue in Iran: Last weekend spontaneous protests broke out in the Iranian capital of Tehran over deteriorating economic conditions demonstrators are blaming on the regime. In addition to rising frustration and anger regarding Iran’s weakening economic state, additional protests broke out in the country’s south over water scarcity, further compounding tensions. Protesters confronted police and security forces; gunfire could be heard in videos posted to social media. Officially, Iranian authorities said one civilian and 10 police officers were wounded. [source]

Russian warplanes return from Syria: Six Russian air force Su-25 attack aircraft have returned from Syria after a lengthy mission there. Pilots were at one time flying daily sorties in Syria in support of government forces as they battled ISIS and rebels to regain lost territory. The return of the planes is a sign Russia is scaling back its military presence in Syria. [source]

Iran may block other oil tankers if U.S. contains Iranian oil exports: The Iranian government hinted that if the U.S. moves to block all of the country’s oil exports, its navy may begin blockading the oil exports of other nations in the Persian Gulf. “The Americans say they want to reduce Iranian oil exports to zero…. It shows they have not thought about its consequences,” Iranian President Hassan Rohani said. The U.S. has told allies they must not import any Iranian oil after the Trump administration reimposes sanctions beginning Nov. 4 after pulling out of the nuclear deal. [source]


As Iran and the U.S. trade threats, the Iranian leadership has a much more pressing problem on its hands: Growing unrest. This is the most significant development in the Middle East this week and it’s a trend we’ve been watching since December 2017, when protests over deteriorating living standards began in earnest. We’ve noted recently that ordinary Iranians are becoming increasingly frustrated with the regime’s priorities — military adventurism and expansionist foreign policy in their quest to make Iran the dominant power in the region.

These efforts need financing, and increasingly the regime has been criticized for spending too much on military interventions and not enough on the people. As we’ve seen again this week, Iranians once again took to the streets battling police and security forces over economic conditions. The country’s currency, the rial, fell again causing many shop owners and businesses that are vital to the support of the regime to whip up new protests that are adding to the country’s overall instability.

The regime is attempting to paint the U.S. as the bad guy, but increasingly, angry Iranians are blaming the regime for the country’s problems, not the United States. During this week’s protests, many chanted, “Our enemies are right here! America is not our enemy! No to Gaza, no to Lebanon!” [source] Even more notable: Protesters are getting angrier at Supreme Leader Ayatollah Ali Khamenei. 

In the December protests, the regime cracked down hard, resulting in 5,000 arrests and the deaths of 25 Iranians. What’s more, they are originating among the country’s poor and working class from rural areas; that’s significant because protests in 2009 against the fraudulent re-election of former President Mahmoud Ahmadinejad were led by urban middle-class and professional elites. 

An unstable, increasingly angry population will grow only more frustrated and violent if the Trump administration’s campaign to convince even a plurality of America’s allies to abandon Iranian oil, thereby depriving the regime of even more economic resources.

North Korea:

Significant developments:

Secretary of State Pompeo travels to Pyongyang: Roughly a month after Kim Jong-un’s historic meeting with President Trump, the hard work of putting in place elements of what both reportedly agreed to will begin. Secretary of State Mike Pompeo travels to Pyongyang today to sit down with Kim and other officials, according to the White House. The trip is part of Pompeo’s week-long swing through Asia and Europe. Officially, the State Dept. said Pompeo will remain in Pyongyang until Saturday to “continue consultations and implement the forward progress” Trump and Kim have begun. The visit comes amid reports that North Korea is continuing to develop its nuclear arsenal and improve nuclear research facilities. [source]

Work on nuclear facilities continuing: According to images taken on behalf of 38 North, “improvements to the infrastructure at North Korea’s Yongbyon Nuclear Scientific Research Center are continuing at a rapid pace.” The images also show “modifications to the 5 MWe plutonium production reactor’s cooling system appear complete” and that “construction continues on support facilities throughout other operational areas of Yongbyon, especially at the Experimental Light Water Reactor (ELWR).” [source] (S.C.: Some of these photos were taken before the historic summit between President Trump and North Korean dictator Kim Jong-un.)

Despite sanctions assurances, China relaxes customs inspections on North Korean border: China is relaxing customs inspections and allowing restricted goods to flow across its border with North Korea, according to sources, despite making assurances that it will continue to enforce sanctions against the reclusive nation until it fully dismantles its nuclear arsenal. A trader in China’s Dandong city, located in Liaoning province across the Yalu River from the city of Sinuiju in North Korea, recently told RFA’s Korean Service that inspections on trucks heading across the border to the North “have eased significantly,” and that customs officers who “used to check every single item following x-ray scans” are now searching “only around half of all vehicles.” [source]

North Korea still receiving illegal goods at sea: Japan issued a photo of a ship in the East China Sea transferring fuel to a North Korean vessel while describing the cargo transfer as illegal last week. The Japanese disclosure is the first of its kind since the conclusion of the June 12 summit in Singapore. Earlier in the year, a North Korean ship was seen accepting cargo in the East China Sea on multiple occasions. [source]


When President Trump agreed to meet with Kim Jong-un after the latter’s ‘charm offensive’ that began ahead of the Winter Olympics in South Korea, it was always seen as a gamble that came with no assurances of a positive outcome. Trump went into the meeting knowing full well that past North Korean leaders have played nice with the U.S. and its allies for a while, only as a means of buying more time to continue developing the country’s nuclear weapons program. Any agreements that were reached were eventually discarded by Pyongyang.

Before departing for Singapore the president even said he was prepared to walk away from any deal if he sensed that Kim was “playing” him. When he left the meeting, he praised the North Korea leader and said he appeared to be serious in his intent to denuclearize his country and rejoin the international community once verification of denuclearization had been completed.

As noted in our significant reporting this week, there are indications that North Korea is already intent on violating any agreement Kim reached with Trump. One analyst noted that those reports and other developments ‘prove’ that Kim was never serious about giving up his nuclear weapons capability. Others agree and see a new crisis with North Korea as early as late summer, depending on what Kim and Pompeo talk about. It could be that Kim has a list of demands that Pompeo — who is equally aware of this week’s reports and other intel we don’t have access to — has been instructed by the president to reject. That would essentially put us back to square one and, most likely, a new confrontational tone between the U.S. and North Korea would take shape.

The report regarding the upgrades to North Korea’s nuclear research facility is troubling, of course, if we assume that the upgrades are being made to bolster the country’s nuclear weapons program. It’s a nuclear research facility, so what if the upgrades are aimed at improving research and development of a peaceful civilian nuclear power industry? Does anyone in the U.S. intelligence community know for certain that all research conducted at the facility is aimed at developing Pyongyang’s nuclear weapons program? 

The Defense Intelligence Agency thinks it does. Officials with the DIA told CNN this week that the agency has concluded that Kim has no intention of denuclearizing, at least for the time being. For that reason, Pompeo is expected to deliver to Kim a detailed set of tasks Washington expects him to undertake to begin the process of denuclearization. Another DIA official told the network Kim may publicly agree to denuclearize but will hide weapons infrastructure and retain the capability. 

Former UN weapons inspector David Albright told CNN on Monday that his firm has new information about a secret North Korean facility producing highly enriched, weapons-grade uranium. The information, Albright says, comes from Western intelligence sources. “At Kangsong they’re using gas centrifuges,” he said. Pointing to a photo, Albright identified the rotor assembly. “They’re producing weapons-grade uranium for nuclear weapons. And the site may have up to 6,000 or more of these centrifuges.”

During an appearance on a CBS News program last week, National Security Advisor John Bolton said North Korea would have to provide “full disclosure of all its chemical and biological, nuclear programs, ballistic missile sights.” The question of whether Kim would ever agree to these conditions remains the same as last week: Unknowable at this point. 

South China Sea:

Significant developments:

State Department requests Marines for Taiwan: The State Department has asked that U.S. Marines be dispatched to help safeguard the United States’ de facto embassy in the country, which prompted a Chinese warning to “exercise caution.” One official said the request was received several weeks ago and has yet to be formally approved. Talks between State and the USMC are ongoing. If the request is approved it will be the first time in 40 years U.S. Marines will be on guard at an American diplomatic post in Taiwan. Defense Secretary James Mattis just completed his first visit to China last week. Under the U.S.’ “One China” policy Washington does not officially recognize Taiwan as a sovereign country, but we do have a defense pact with Taipei. [source]

China’s Belt-and-Road Initiative leaving ‘partner’ nations in Beijing’s debt: China’s One Belt-and-One Road Initiative — one of the largest-ever infrastructure projects projected to cost close to $1 trillion — is leaving “partner” nations with massive financial debt, which in turn leaves them in China’s debt. In all, debt in eight countries (Sri Lanka, Djibouti, Kyrgyzstan, Laos, the Maldives, Mongolia, Montenegro, Pakistan, and Tajikistan) now nearly exceeds their entire annual GDP, and in the case of Sri Lanka, nearly all of its debt ($13 billion) is to China (annual GDP for 2018 is projected to be $14 billion). China is selecting ‘partners’ based in large part on strategic objectives; a port it built and now controls in Sri Lanka is just 100 miles from rival India. [source]


Defense Secretary Jim Mattis visited China last week on a tour through Asia, in which he also went to South Korea and Japan. But his China trip was the most significant.

Reportedly there were several issues discussed but all of them more or less had to do with a singular issue: China’s rapid, ongoing militarization in the South China Sea. To be clear, China’s outsized claims on the whole of that body of water are not reasonable and under today’s international maritime agreements and understandings are not legal. But when the Chinese decided to stake their outsized claim and act upon it by building islands and expanding atolls, Beijing calculated that no one would seriously oppose the effort, as in militarily. The calculation proved accurate.

Other than diplomatic bluster, not a single country including the United States put up any resistance, and so the Chinese continued to build — and then militarize — their holdings. Today they serve as outposts of Chinese power projection as Beijing continues to reinforce them with additional military capabilities. No one in the region has the strength, or the willpower, to challenge Chinese supremacy.

The U.S. is the only nation capable of challenging China and, should it come to war, most believe the U.S. would win in a relatively short period of time. But the balance of power in the region is changing, meaning the Chinese are quickly developing a formidable ground, air, and naval force that will pose substantial challenges to any U.S. attempt to intervene militarily.

Regarding Mattis’ discussions, outwardly he said that talks went “well” and intimated that some progress was made on various issues. But Chinese President Xi Jinping made one thing very clear: He said China would not surrender “even one inch” of territory that China’s ancestors left behind. That’s significant because it means that Xi isn’t at all prepared to live up to today’s international order; he is intent on recreating an old international order and one that sees China as the world’s foremost power. Xi is harkening back thousands of years during China’s dynastic periods when it was a great regional power; Mattis, the warrior-academic-historian is no doubt very clear about what Xi said and what Xi means.

Xi also said that he’s committed to peace with the U.S., but clearly, he wants peace on his terms, not ours. And his are terms we and our Asian allies likely can’t live with. 

China is not making idle investments in its South China Sea holdings and its Belt-and-Road Initiative simply for trade, although the latter is certainly being driven in large part by trade. China is in a years-long process of transforming the world order; remember, China is a revisionist power and is not interested in simply existing as another nation among nations in the existing Western (U.S.)-led global order. 

For his part, Mattis likely informed Xi that the U.S. Navy and its partners in the region will continue to operate in the South China Sea as they always have — freely, and without provoking Chinese navy vessels. For now, Xi’s government will likely continue to lodge diplomatic protests when such “Freedom of Navigation Operations” (FONOPS) occur, much like other countries did when China began encroaching on their exclusive economic zones with outsized claims to the entire SCS. 

But that won’t last. As China becomes more powerful Xi is liable to become emboldened enough to insist upon making the rules in the region, which will mean he expects the U.S. Navy to vacate the region and defer to regional navies and Chinese authority. At that point, the U.S., Japan, South Korea, the Philippines, Australia and other allies will have to make a decision about drawing lines in the water, so to speak, that they’re not willing to allow Beijing to cross. 

PIR4: What are the activities regarding intelligence services involving the United States our allies?

U.S. ‘most vulnerable in the world’ to cyber intrusion

The United States’ cyberwar capabilities are among the most potent in the world, if not the most potent, but its cyber defense capabilities are among the world’s worst. The U.S. is “the best in the world on the offense,” said Rob Knake, a former director for cybersecurity policy at the Obama White House, before adding that America is politically and technically the most susceptible nation in the world to digital attacks. “We are going to be less reactive to incoming cyber attacks because we have more to lose and we’re in a democratic society that is going to force government to take certain responses,” Knake said during a 20 June event at the Council on Foreign Relations. “That’s not true of China, Russia, Iran or North Korea.” Knake said that between 2011 and 2013 Iran launched a series of cyber attacks against American banks. While the Obama administration’s first instinct was to strike back, he said the administration decided against doing so because there was an ongoing secret dialogue with Iran over Tehran’s nuclear capacity that might be thrown into chaos after an American digital retaliation. Second, Knake said there was a decision not to “legitimize” the Iranian hacking. Instead, the Obama administration decided to “to put the costs on the banks, (because) they can afford it.” [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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