Stratfor.com Intel Briefing

Why the U.S. and Saudi Arabia Are Destined to Diverge

2019-03-14T10:31:00Z

Highlights

The relationship between Saudi Arabia and the United States has long been a volatile one, but that volatility will become more frequent in the coming decades, outgrowing some of the personal relationships that provide its framework today.

U.S.-Saudi cooperation has always been based on common interests rather than common needs. While those interests have changed over time, they are now entering a phase in which they will not be as closely aligned.

The shale revolution and its effect on global energy markets is driving Saudi Arabia ever-closer to Russia and China economically and politically.

An ascendant China will force the United States to complete its pivot toward Asia, with a resulting reduction in the attention it pays toward the Middle East. More and more often, Riyadh will struggle to get on the same page as Washington in balancing against China.

President Donald Trump's current enthusiasm for Saudi Arabia notwithstanding, the relationship between the United States and perhaps its most important ally in the Middle East is undergoing a significant transformation. U.S. political pressure on Saudi Arabia is rising, led by a growing congressional discomfort over the Saudi-led intervention in Yemen and the circumstances surrounding the murder of journalist Jamal Khashoggi, but that is just the tip of the iceberg.

Beneath the surface of the politics of the day, a pair of more significant geopolitical shifts is helping pull the longtime allies apart: the evolution of the global system away from U.S. dominance toward an intensifying, near-peer competition with China, as well as the fundamental reshaping of the global oil and gas markets upon which Saudi Arabia has built its wealth and power. As both countries adjust to these changing dynamics, their shared strategic relationship will evolve away from the foundation of oil, counterterrorism and the mutual desire to contain Iran. It's likely that, as those changes play out, the countries' future priorities will not align as they have in past decades.

A Relationship Built on Pragmatism

Despite their obvious differences, Saudi Arabia and the United States have maintained a nearly eight-decade friendship. From the beginning, the U.S.-Saudi relationship has rested on mutual needs, not necessarily shared values. A meeting in the waning weeks of World War II aboard the USS Quincy between U.S. President Franklin D. Roosevelt and King Abdulaziz (better known in the West as Ibn Saud) set the stage for their countries' close ties. The stark contrast between the lands that they governed could not have been more apparent. Roosevelt, arguably the leader of the world's most powerful and industrially advanced country, had just attended the Yalta Conference, where he helped decide the postwar future of the globe. King Abdulaziz, on the other hand, came from one of the least developed countries in the Middle East, its oil industry still in its infancy.

Almost three-quarters of a century later, the countries' differences remain just as stark. The United States, which touts one of the world's most liberal economies, is a democracy that prides itself on religious and cultural tolerance. On the other hand, Saudi Arabia, a state that derives legitimacy from a religious foundation, is one of the world's last remaining absolute monarchies with little space for political opposition. Although Saudi Arabia has worked to shed its image of intolerance, there's only so much it can do. Unlike U.S. relationships with allies that possess a shared set of values, such as Canada and the United Kingdom, Saudi-U.S. ties are based on pragmatism at their core. Although they share interests in certain areas, significant disagreements on others will remain.

History has borne this out.

At the time of the USS Quincy meeting, Saudi Arabia had been looking to establish a close alliance with an outside patron capable of pushing back against colonial interests in the Middle East. The United Kingdom, which controlled most of the surrounding Middle Eastern territory, certainly eyed the monarchy's newfound oil reserves. The United States, meanwhile, also wanted access to Saudi Arabia's oil but had little desire to forge a colonial empire. This drove the two together, as did mutual opposition to the rise of communism, which threatened the legitimacy of the monarchy. But their relationship over the next three decades was not without its complications. As far as Saudi Arabia was concerned, the United States would not drop its support for Israel and would not budge far enough on the Palestine issue, eventually leading to two oil embargoes.

The fall of the shah of Iran in 1979 pushed their relationship in a different direction. This time, the United States and Sunni-dominated Saudi Arabia found themselves on the same side of the issue — with the Shiite-led Islamic Republic of Iran on the other. The Americans and the Saudis still were fighting communists, as their cooperation against the Soviet invasion of Afghanistan evidenced, although once the Soviet Union collapsed, so did the battle against communism as a unifying priority. Just a few years after the Cold War ended, however, another common foe emerged: Iraq's Saddam Hussein. The Gulf War and subsequent U.S. dual containment policy targeting both Iraq and Iran in the 1990s brought the United States and Saudi Arabia closer together. But other events over the years have also pushed them apart. The Iran-Contra affair complicated the relationship in the 1980s, while the rise of the global jihadist movement emanating from the Wahhabism sect, which is closely identified with Saudi Arabia, added another wrinkle, particularly after 9/11.

For most of their history as allies, Saudi Arabia has needed the United States more than vice versa. From the beginning, King Abdulaziz needed the United States to provide a counterweight to the United Kingdom. Later, the United States provided a powerful buttress girding the monarchy against populist movements, including communism. Today, Saudi Arabia counts on Washington to support its struggle against Iran and help it battle transnational militant groups. At every step, Saudi Arabia has had to appeal to the United States by proving its utility to Washington.

A World that is Shaken, not Stirred

Two significant geopolitical shifts are altering the fundamental way that Saudi Arabia and the United States interact: the dramatic transformation in global energy markets and the rise of China, which is reducing the dominance of the U.S.-led Western order that emerged after the Cold War.

The shale revolution in the United States is driving U.S. crude oil production to record levels — more than 12 million barrels per day (bpd) — far eclipsing the 5 million bpd it produced just a decade ago. Rystad Energy projects that by 2025, the United States will become a net exporter of crude, with production of about 16 million bpd. And 2018 marked the first time in three decades that the United States imported less than 1 million bpd from Saudi Arabia.

Unsurprisingly, the astronomical rise in U.S. oil production has caused major ripples in global oil markets, contributing to the glut that caused oil prices to plummet below $100 a barrel in 2014. Riyadh's desire to balance the increasing U.S. supplies has prompted it to lead the effort by OPEC and other major producers to trim production — something that has driven Saudi Arabia closer to Russia. The close cooperation that both countries must achieve in order to micromanage oil markets is driving their political cooperation on other levels as well.

As the United States' thirst for its oil decreases, Saudi Arabia has pivoted more forcefully to Asia to find alternative markets. Increasing Chinese consumption and falling production make it an attractive substitute. Thus, China, along with the rest of Asia, represents Saudi Arabia's oil market of the future. And as with Russia, the growing economic interdependence is driving political cooperation at the highest level between Riyadh and Beijing.

To be clear, even though U.S. dependence on oil from Saudi Arabia and the Middle East has fallen, that does not mean that it is losing significant interest in maintaining stable energy production in the region. Any crisis in the Middle East that would reverberate through the global economy would bring the United States – which is deeply tied to the global financial system – down with it. Beyond 2030, however, even this could shift as alternative energy sources, electric vehicles and battery technology continue to alter the structure of energy geopolitics.

Toward a Multipolar World

After the Cold War ended, the United States was left standing as the global system's dominant power. But with China's emergence, that is evolving into a more multipolar structure, and the United States has, naturally, refocused its attention on countering its rising rival. This includes not only economic competition – as the trade war represents – but also shifting its security posture away from places like the Middle East to free resources to manage the burgeoning great power competition.

In fact, it is this shift in focus, especially the U.S. overtures to Iran under President Barack Obama, that concerns the Saudis the most. For Obama, striking the nuclear deal with Iran meant reducing the risk that yet another Middle Eastern conflict would draw in the United States. But for Saudi Arabia, the deal meant losing its close U.S. support in its campaign against its regional nemesis. With a new administration in the White House came a shift in U.S. attitude back toward more hostile relations with the Islamic republic. Over the next two decades, however, the prospect of at least a partial normalization with Iran will present a tantalizing option for U.S. presidents as national priorities continue to change.

The new normal of relations with the United States will present a difficult adjustment for most regional powers like Saudi Arabia. Absent an emerging need, Riyadh may find itself filling a lesser role in the grand U.S. strategy than it has for nearly a century. Saudi Arabia's increasing economic interconnectivity with China and Russia may also mean that soon, for the first time since that initial meeting between FDR and King Abdulaziz, the kingdom may find itself dropping down the list of U.S. strategic partners.

A Relationship that Bends but not Breaks

Even if Saudi importance in the eyes of the United States declines, their relationship would not necessarily reach a breaking point, but it would certainly become more volatile. Status as a less important partner would mean that the amount of political capital a U.S. president would be willing to invest in Saudi Arabia will decline, both domestically and internationally.

But perhaps the biggest consequence for Saudi Arabia over the next two decades will be the likely inevitability that Tehran and Washington will one day reach some form of understanding. A strategic reversal on Iran would make sense for the United States on several levels as the global picture changes. For one, Iran would be more inclined to cooperate with the United States and India in South and Central Asia, particularly as Pakistan and China's cooperation on the China-Pakistan Economic Corridor deepens. In the short term, progress on the U.S.-Iran relationship is likely to be minimal, but significant generational shifts in both countries will bring to power additional political leaders whose views are not as colored by the immediate events surrounding the Islamic Revolution and subsequent U.S.-Iran hostage crisis. U.S. detente with Iran would allow Tehran to consolidate the regional gains it has made in places like Iraq, meaning that the competition between Iran and Saudi Arabia for regional hegemony would likely increase.

The potential decline of the U.S. role as a security guarantor will continue to force Riyadh to diversify its relationship with the other power poles in the global system. This is already happening in the area of weapons sales. Saudi Arabia is trying to build an indigenous defense industry, and while the United States is reluctant to include the technology transfer rights that would accelerate that process in its arms deals with the kingdom, China and Russia are more than willing to do so. That said, there are significant limitations to how far and how quickly Saudi Arabia can diversify away from U.S. weapons suppliers. Nevertheless, a Saudi turn toward U.S. rivals will certainly alienate Washington, as happened with a drone factory that China built in Saudi Arabia to serve the local market.

Another key area to monitor will be how Saudi Arabia moves forward with its nuclear energy ambitions. It has been negotiating with the United States, China, Russia and others over the construction of nuclear power plants in the country. But the kingdom has demanded that much of the fuel enrichment and reprocessing cycle remain under its control, an idea that has not sat well with Washington over concerns that it could allow Riyadh to develop nuclear weapons. But if the United States is unwilling to budge on its position, Saudi leaders will certainly consider a deal with China or Russia, which may not adhere to the same standards.

The kingdom's human rights record is also likely to increase the distance between Saudi Arabia and the West. The outcry against the Saudi war in Yemen and Khashoggi has been growing in the U.S. Congress. But no real change in Saudi behavior can be expected as long as oil prices remain low and the kingdom continues to struggle to implement long-term economic reform under Saudi Vision 2030. That means that as the U.S. need for a close relationship with Saudi Arabia declines, Washington's responses to such issues are likely to become increasingly harsh.

While the Saudi-U.S. relationship is not destined to crash, it will grow increasingly rocky over the next two decades as the imperatives that brought them together continue to change. The countries will continue to cooperate on key issues, especially if resurgent transnational terrorist groups like Islamic State or al Qaeda target the West, again derailing the U.S. pivot to Asia. But in the end, the Saudi-U.S. relationship will always be defined by mutual interests, not mutual values. That means that as the global system evolves to a place in which neither needs as much from the other, their friendship is unlikely to be as steadfast.

The Jihadist Peril Lurking in Algeria's Protests

2019-03-13T01:25:00Z

Highlights

Prolonged unrest in Algeria could provide jihadists additional operational space, enabling them to regroup and rebound, as has occurred in Libya, Egypt and Tunisia.

Even if President Abdel Aziz Bouteflika holds out against the current round of protests, his lack of a successor means instability is inevitable in Algeria.

Al Qaeda was caught off guard by the Arab Spring, but al Qaeda in the Islamic Maghreb (AQIM) will do all it can to capitalize on the present unrest.

No stranger to civil conflict, Algeria is once again experiencing significant political unrest. Protests in the country are gathering steam, indicating deep and widespread discontent with the power structure that has helped Algerian President Abdel Aziz Bouteflika remain in power, even though the octogenarian suffered a debilitating stroke in 2013. The trigger for the most recent protests that erupted on Feb. 22 was the announcement that Bouteflika — who is wheelchair-bound and unable to speak — would stand for a fifth term in presidential elections on April 18. On March 11, however, he announced that he was withdrawing from the election, which authorities will delay until a national conference sets a date for a new election. In climbing down, Bouteflika is clearly hoping to defuse the current protests. But until the particulars are known, it is difficult to determine if he will succeed. The protests are not only focused on the ailing president but the powerful cabal behind him, meaning that simply removing Bouteflika from the ballot will not dissolve the resentment toward the ruling clique.

Such protests are nothing new to Algeria. Similar demonstrations wracked the country in 2011 and 2012, but Bouteflika, then in better health, succeeded in dampening the discontent by extending food subsidies and lifting a 19-year state of emergency. These stop-gap measures, however, failed to address the deep, festering issues causing the unrest. This time around, significant change appears likely in Algeria; the simple question is how.

To date, the protesters have been insistent and loud, albeit peaceful. But in the absence of a rapid and non-violent resolution, the unrest is likely to spawn profound security challenges — not only in terms of disruptions and security crackdowns, but also by providing additional space for Algeria's militant groups to recover and expand.

The Militant Threat in Algeria

Algeria has been contending with a jihadist threat since the military staged a coup in the wake of the fundamentalist Islamic Salvation Front's electoral victory in December 1991. In the aftermath of the coup, Islamists took up arms against the military, precipitating a brutal and bloody civil war that raged until 2002. In all, upward of 150,000 people perished in the conflict, Bouteflika said himself in 2005. After his election in 1999, Bouteflika managed to coax most of the Islamist opposition back into the political fold with amnesties. But more radical Islamist factions, such as the Armed Islamic Group and a successor group, the Salafist Group for Preaching and Combat (GSPC), continued their armed opposition. After receiving support from Osama bin Laden's al Qaeda, organizations like the GSPC openly announced their allegiance to the transnational jihadist group in 2003.

On the fifth anniversary of 9/11, the GSPC formally joined the al Qaeda movement, renaming itself al Qaeda in the Islamic Maghreb (AQIM). Marking the transition, the group traded insurgent attacks against security forces in favor of large suicide operations, including attacks on two police stations in 2006 and a twin suicide bombing in Algiers in April 2007. These large and destructive bombings, however, turned public opinion against the group, allowing the government to launch a massive crackdown on AQIM in which it arrested hundreds of militants. The group has persisted in the north of the country, especially in the mountains east of Algiers, but it currently only poses a low-level threat due to relentless pressurefrom Algeria's security forces.

AQIM's branches in Algeria's vast southern areas have enjoyed more room to maneuver over the past decade. But the January 2013 attack against the Tigantourine natural gas facility near Ain Amenas prompted Algerian security forces to step up their efforts in the region — forcing AQIM branches such as Jamaat Nusrat al-Islam wal-Muslimin (JNIM) to focus their efforts further south in the Sahel, including in northern Mali.

Algerian security forces have also worked hard to keep the Islamic State franchise in Algeria, Jund al-Khalifa, in check. In fact, Jund al-Khalifa is even weaker than AQIM. The key to containing Algerian jihadists, however, has been a massive and sustained effort from the Algerian security forces and their European and U.S. allies. If Algeria's unrest forces the security services to curtail those efforts, jihadists could rebound. Ultimately, Bouteflika has presented himself as the man who tamed the jihadist threat, leading his supporters to argue that he must remain in power, lest instability open the door to Islamist militants. Yet efforts to keep the president in power, particularly if they persist and authorities use violence to repress the demonstrations, could increase the jihadist threat in the country — the very thing Bouteflika's supporters claim they are attempting to avoid.

Shifting the Focus

While it is difficult to draw a direct comparison between the current situation in Algeria and the events in Egypt, Libya and Tunisia since the 2011 Arab Spring, I do believe that the latter three provide some important lessons.

Like Algeria, Libya's government waged a long struggle against a jihadist insurgency. Using a carrot-and-stick approach (in the form of amnesties, as well as brute force), the government of Moammar Gadhafi brought the Libyan Islamic Fighting Group to heel, forcing Libyan jihadists to travel abroad to locations like Iraq and Syria to continue their fight. But once Gadhafi began to lose his grip on the country, many of these jihadists returned to Libya, where they gained a significant foothold in the east of the country —especially in Derna and Benghazi. Following Gadhafi's fall and demise, the Libyan state imploded amid civil war, opening up opportunities for a variety of Islamist and jihadist militias to thrive. The Islamic State's wilayat in the city of Sirte became the group's most powerful franchise outside Syria and Iraq, as well as the branch most closely aligned with the organization's core.

Before 2011, Egyptian jihadists had conducted a series of dramatic attacks against soft tourist targets in the Sinai Peninsula, but they were unable to gain any serious momentum or establish much of a foothold in mainland Egypt. This changed with the Tahrir Square protests, which ousted President Hosni Mubarak and diverted a great deal of the security force's attention to securing Cairo. Two years later, the military overthrew President Mohammed Morsi, who was closely aligned with the Islamist Muslim Brotherhood, before smashing the resulting protests with force. The events not only provided the Sinai's jihadists with much-needed breathing room, but they also radicalized many Muslim Brotherhood supporters who, disenchanted with the idea of democratic change, soon perceived violence as the only means to bring true change to Egypt. The result was an explosion of jihadist activity in Egypt. In the wake of the 2013 Egyptian coup, groups like Ansar Beit al-Maqdis and Ajnad Misr formed, followed by Hasam, as well as Ansar al-Islam and Jund al-Islam.

New recruits, greater operating space and a steady flow of weapons from war-ravaged Libya supercharged the Sinai insurgents, who joined the Islamic State to become Wilayat Sinai, which is one of the strongest Islamic State franchise groups. The Egyptian military has spent years trying to blunt Wilayat Sinai's power; today, it no longer has the ability to take control of the peninsula, but it does pose a significant, continuing militant threat. And even in mainland Egypt, the country is still facing a multi-faceted militant threat.

Libya and Egypt are extreme examples, as the former has imploded, while the latter has faced a prolonged political crisis. Tunisia, by contrast, has not experienced as severe a political and security crisis in the aftermath of the Arab Spring, but Islamists have nevertheless found additional space to strengthen. For one, greater democracy allowed the Islamist Ennahda political party to win elections. A group of Salafists also stormed the U.S. embassy in Tunis in September 2012, causing considerable damage to the embassy motor pool and sacking the adjacent American school. More seriously, jihadists conducted an attack on the Bardo museum in downtown Tunis in March 2015, killing 23 people, most of whom were European tourists. Three months later, a gunman attacked a tourist beach in Sousse, killing a reported 37 people, including British, German and Belgian tourists.

Learning Lessons From the Past

These past examples provide ample reason for businesses and organizations with interests in Algeria to pay close attention to the current political unrest, especially as al Qaeda has indicated that it has learned from its missteps during the Arab Spring, which caught the group off guard. This time, AQIM has already released a statement titled "Algeria and the Exit From the Dark Tunnel," noting that it is better prepared for unrest and seeking to take advantage of the situation.

While Bouteflika may have removed himself from the ballot and postponed elections, the absence of a capable successor who is acceptable to the protesters increases the likelihood of a politically messy transition — meaning the next leader could take years to consolidate power. And with instability on the way, political and militant groups alike will have an opportunity for action they haven't had for years.

The Fight Against Jihadists Is Shifting to Africa

2019-02-28T11:36:00Z

Highlights

As the United States and its partners dial down operations against the Islamic State in Syria and Iraq and contemplate a withdrawal from Afghanistan, the focus of global jihadist activity will shift to Africa.

Because external powers do not have the same interests in Africa as they do in the Middle East, counterterrorism operations there will likely draw in different actors who could fight at a different intensity.

While the United States will likely maintain its pressure on al Shabaab in the Horn of Africa, other theaters such as the Sahel and Sahara will likely witness more counterterrorism operations from countries like France.

The suppression of jihadist groups in the Middle East may, in turn, make African theaters a more appealing destination for foreign fighters and financiers.

Editor's Note: This assessment is part of a series of analyses supporting Stratfor's upcoming 2019 Second-Quarter Forecast. These assessments are designed to provide more context and in-depth analysis on key developments over the next quarter.

When 9/11 kicked off the global war on terrorism, the main focus of counterterrorism efforts was al Qaeda-linked groups operating in the Middle East and South Asia. Close to two decades later, the United States and its allies are still involved in efforts to suppress al Qaeda and its offspring in Iraq and Afghanistan — albeit perhaps not for much longer. After an exhausting effort, the United States is signaling a shift elsewhere as the Islamic State (which rose from the ashes of al Qaeda in Iraq) has suffered a comprehensive reverse, while Washington has sat down for talks with the Taliban as a precursor to a possible withdrawal of U.S. and allied troops from Afghanistan over the next several years.

But just as extremist activity has waned — in relative terms — in the Middle East and Afghanistan, Islamist militancy has increased in different parts of Africa, particularly following the collapse of Moammar Gadhafi's government in Libya, which created a power vacuum that sparked increased jihadist activity in the Saheland Sahara. The escalation of Mali's conflict in 2012, when lingering jihadists from al Qaeda in the Islamic Maghreb (AQIM) combined with local Tuareg tribes, has led to a situation in which several new successors operate from Algeria and Libya all the way to Burkina Faso. But before these groups came to the fore in the Sahara and the Sahel, two other groups were already active: al Shabaab in Somalia, which appeared in 2006, and Boko Haram, which emerged in 2009 before evolving into the Islamic State West Africa Province (ISWAP). More than a decade on, these two groups are still stalking the continent. As a result, Africa has now become home to some of the most active jihadist groups in the world. That, in turn, appears set to shift the focus — for militants and those battling them alike — to the continent, even if local factors are likely to make the battle there very different than in the Middle East.

A Different Battle

From the perspective of jihadist groups, Africa may bring renewed opportunitiesfor them. With the Islamic State on the wane in its heartland, the Sahel, Sahara and East Africa may attract an increasing number of foreign fighters. What's more, groups operating there may also witness a surge in support from foreign financiers who had previously directed their funds to the Middle East. Nevertheless, Africa's emergence as a prominent area for militancy illustrates more the repression of al Qaeda and Islamic State activity in the Middle East and Afghanistan than it does an uptick in jihadist operations on the continent. The biggest surge in militancy in Africa actually occurred between 2006 and 2012 — but that was at a time when the activities of al Qaeda-affiliated groups in Iraq, Yemen and Afghanistan drew more of the world's resources. Naturally, the Islamic State captured even more of the globe's attention when it burst onto the scene, seizing Mosul in 2014. But even if jihadists in Africa have grabbed fewer international headlines like their brethren in the Middle East, they invariably have proved themselves resilient through the years, despite a number of African-led security operations, as well as Western-led interventions.

With less need for counterterrorism resources in the Middle East or Afghanistan, Africa's stubborn militant movements are likely to come more onto the radar of external powers, as well as become a magnet for foreign fighters no longer able to battle in the Levant. That, however, does not entail that the conflict between militants and the states intent on eliminating them will proceed in Africa as it did in the Middle East. In the latter, the conduct of Western counterterrorism operations has dovetailed with other geopolitical imperatives. Accordingly, Western countries have worked with and through their local allies, reinforcing their regional position and guaranteeing a stable environment for economic interests. Those same interests simply don't translate to the African theater. For one, the global economic importance of the Sahel, Sahara and Somalia is much more limited than that of the Middle East, which is a hub of oil production and transit activity. This means that over time, states different from those that have spearheaded activities in the Middle East and South Asia, especially the United States, may come to prominence in countering terrorism in Africa. And with a different set of regional interests involved in the global fight against militancy, the African theaters might not attract the same degree of interest in future global counterterrorism operations.

More of a Local Fight?

External actors other than the United States traditionally have taken the lead against militants in the Sahel and Sahara. Since its intervention in Mali in 2013, the most prominent outside power in the conflict has been France. Paris' deep historical ties to the Sahara and Sahel, as well as its wealth of military experience in the area, have put it in the driver's seat when it comes to counterterrorism efforts in most of the continent's theaters, although it has also received support from the United States and European allies. But because it possesses fewer total resources than the United States, France has also worked to play a supporting role for local governments by enhancing local and regional capabilities, such as through the G5 Sahel Force. Nevertheless, the weaknesses of African security forces have forced Paris at times to act directly through its Operation Barkhane.

France's central role in Africa does not preclude U.S. engagement on the continent. The United States has been particularly active in the Horn of Africa, where it maintains the ability to rapidly engage in counterterrorism operations from its base in Djibouti. Thanks to this presence, the United States has supported continued operations against al Shabaab and the Islamic State in Somalia. In the years to come, such efforts are only likely to intensify. Meanwhile in West Africa, the U.S. military's Africa Command (AFRICOM) has continued to develop regional logistical capabilities that indicate a longer-term commitment to supporting counterterrorism operations there. Nevertheless, the United States is unlikely to be front and center in pursuing jihadists in Africa. The country's military planners have displayed a reluctance to dig in too deeply, particularly after a militant attack on the U.S. Green Berets in Niger, while Washington also views some of these groups as less of a direct threat to the United States — meaning it can delegate the bulk of the responsibility for counterterrorism operations in the area to France.

Now that the caliphate is no longer, the Sahel, Sahara and East Africa may become the destination of choice for foreign fighters — a fact that is unlikely to escape the notice of outside powers. Ultimately, however, militant groups might find the time and space to hone their capabilities, particularly if external powers feel less geopolitical imperative to devote resources to stabilizing areas of Africa in which the jihadist threat is highest. That's something that could further destabilize local states — and even travel back up the transnational jihadist network to inflict harm on Europe and the United States themselves.

Why Egypt's Terrorists May Choose to Go It Alone

2019-02-26T11:57:00Z

Highlights

No one has claimed responsibility for a recent series of attacks in the Cairo area despite the existence of multiple groups eager to strike at the Egyptian state.

The recent attacks indicate the emergence of a grassroots terrorist threat in Egypt.

Egypt's major jihadist groups have been under pressure from government forces over the past year, undermining their ability to organize and conduct attacks.

After a relatively quiet 2018 in terms of terrorist attacks, Cairo and the adjacent tourist destination of Giza have experienced a series of bombings in the past two months. On Dec. 28, 2018, a roadside improvised explosive device exploded next to a tourist bus near the Pyramids in Giza, killing three tourists and an Egyptian tour guide and injuring 11 other people. On Feb. 15, police found three explosive devices, also in Giza. One of them detonated, injuring two police officers and three civilians. Then on Feb. 18, a suspected bombmaker detonated a suicide device while reportedly conducting pre-operational surveillance near central Cairo's Khan el-Khalili market, killing himself and two police officers and wounding three bystanders.

Authorities did not suggest the first bombing had links to any particular militant group. Though authorities did blame the last two bombings on numerous militant groups with a history of staging attacks in Egypt, they did not provide evidence for such links. And whereas attacks generally generate claims of responsibility, no group has claimed any of the three attacks, something that is unusual for Egypt.

This suggests Egypt now faces a grassroots militant threat, alongside the extant risk from organized militant groups. This, in turn, means Egypt is likely to suffer more, albeit less potent, terrorist attacks.

An Egyptian Grassroots Terrorist Threat

While Egyptian authorities have not provided any evidence linking the suspect killed Feb. 18 to existing jihadist groups, they have provided evidence he was a skilled bombmaker. Shortly after the suspect died Feb. 18, police searched his apartment and found a well-stocked explosives laboratory containing tools, pipe, wiring and what appears to be precursor chemicals for making explosives. The suspect may have used large sections of well casing to construct a large bomb, such as a vehicle-borne improvised explosive device, as well as smaller pipe elbows that have appeared in small explosive attacks linked to jihadists elsewhere. While police have not tied the suspect to the Dec. 28, 2018, attack against the tourist bus, jars of ball bearings visible in a photo of the suspect's apartment are consistent with the shrapnel added to the device used in that attack.

At 37, the suspect was older than the typical suicide bomber, suggesting he had more training and experience. This would make him akin to the veteran bombmakers prized by terrorist groups rather than just a young, recently radicalized and expendable recruit. The suspect is known to have spent time in the United States and France before his deportation to Egypt — a factor that might have given him opportunities for networking and training.

Surveillance video shows the suspect detonating an explosive device in his backpack just as officers descended upon him, suggesting he chose to avoid imminent arrest rather than plan such an attack. The video also raises the possibility that he may have been conducting surveillance of the prominent al-Azhar Mosque nearby and was only carrying the explosives to ensure he would not be taken alive if his cover was blown.

The decentralized nature of the grassroots terrorist threat makes small, dispersed attacks harder to stop, though it also tends to limit the scope of assaults. None of the three recent attacks was particularly sophisticated or deadly, but the bomber was able to progress through the attack cycle undetected thanks to the inherent operational security that comes with acting alone. Working alone reduces the risk of allowing an informant into a group, having communications intercepted by authorities or jeopardizing the operation when security forces arrest and interrogate one individual. Operational security, however, comes at a price: The greatest of these is that the lone attacker must conduct each step of the attack cycle by himself, exposing militants like the Cairo bomber to interdiction at every step.

All the evidence so far suggests the suspect killed Feb. 18 was a capable, valuable terrorist operator. But the mystery of why no group has claimed responsibility for his actions remains.

A Successful Crackdown on Militant Groups

Part of the solution may lie in the crackdown on jihadist groups in Egypt over the past year. Aggressive counterterrorism operations have thwarted efforts by various jihadist groups to carry out attacks in the capital and other densely populated areas, meaning affiliation with one of those larger organizations gives rise to operational security risks outweighing the reward of tapping the resources of a larger network. This suggests the bombmaker was working alone as a grassroots terrorist conducting attacks across the Cairo region. The lack of reports of further arrests after his death also suggests he was working in isolation.

The dynamic of successful counterterrorism operations against groups resulting in grassroots attacks has been seen before in Western countries and Morocco, where vigorous counterterrorism programs have stymied efforts by hierarchical terrorist organizations to conduct spectacular attacks. This has forced jihadist groups to rely on inspired or directed individuals following the leaderless resistance model of terrorism to conduct attacks in their name.

Terrorist organizations that form networks and cells and allocate resources to maximize the impact of their attacks pose a greater threat to the security and internal stability of a country. But as the attacks in Egypt show, breaking such terrorist organizations up or at least stopping them from expanding is no guarantee violence will end altogether: Radicalized individuals or small independent cells can continue to carry out attacks. But their effectiveness and the duration of their campaigns tend to be limited. The Cairo bombmaker's death, for example, could end the recent string of successful attacks in the Cairo area. Even so, there are doubtless more individuals like him who could choose to follow in his footsteps.

As for militant groups themselves, several prominent terrorist groups continue to pose a threat to Egypt's population centers despite short-term government successes against them. These include the Islamic State's Wilayat Sinai, al Qaeda-linked groups and the Hasam Movement.

Wilayat Sinai

The Islamic State's Wilayat Sinai has waged a multiyear insurgency in the Sinai Peninsula, which it has also used as a base to strike in mainland Egypt. In its most notable terrorist attacks, it brought down a Russian airliner in 2015, bombed Coptic Christian targets in Cairo and Alexandria, and killed more than 500 people in a November 2017 attack on a Sufi Mosque in the Sinai Peninsula. While the number of attacks in Sinai dropped following Operation Comprehensive Sinai 2018 — a yearlong counterterrorism campaign by the Egyptian army — the group has still conducted frequent insurgent attacks against security forces on the peninsula, and was behind the last significant attack in the Cairo area when it targeted a Coptic store and church in Helwan in December 2018. But Egyptian operations have treated Sinai more as a counterterrorism operation rather than a counterinsurgency. The failure to address the underlying grievances helping to drive the insurgency means future attacks are likely.

Al Qaeda-Linked Groups

Various al Qaeda-linked groups operate in different parts of Egypt. Ansar al-Islam, which operates in its Western Desert region, was behind an October 2017 raid that killed dozens of Egyptian soldiers. The group would like to attack targets in Cairo, but it faced significant setbacks in 2018. It lost its leader, Hisham Ashmawy, whom Libyan authorities arrested in October 2018, and is not known to have carried out any attacks that year. Jund al-Islam, meanwhile, operates in the Sinai, where, in line with al Qaeda doctrine, it has largely chosen to strike security forces and foreigners rather than local civilians. Occasionally, it has even attacked Islamic State militants in an effort to win the support of Sinai Bedouin tribes. Ansar al-Islam has previously targeted security forces, high-profile officials and foreign civilians.

The Hasam Movement

The Hasam movement has staged numerous attacks in the Nile Delta, including shootings and bombings targeting police officers in Cairo and Alexandria. During 2016 and 2017, the group maintained a high tempo of attacks, which included assassinations of prominent officials. Aggressive security measures by Egyptian authorities have recently stymied its efforts, and the group has only been linked to three attacks (all unsuccessful) since the beginning of 2018, including a botched attack on the Myanmar Embassy in Cairo.

We expect these groups, and others like them, to continue their efforts. The recent bombings, however, strongly suggest Egypt now also faces a more multifaceted, yet less potent, grassroots threat.

How Geopolitics is Bringing Nationalism Back to Spain

2019-02-21T11:53:00Z

Highlights

Like so many other European countries, Spain is now experiencing a re-emergence of nationalism. In Spain's case, it is occurring as a reaction to Catalan separatism.

Spain's geography has contributed to competing nationalisms in the country, which has led to resistance in the country's periphery to Madrid's centralizing efforts.

The April 28 general election will most likely result in a fragmented parliament, opening the door for nationalists to be key in the formation of a government. This would lead to renewed discord with Catalonia and potential clashes with the European Union.

Calls for constitutional reform will grow louder, but political fragmentation would make that process increasingly difficult to complete.

Spain is preparing for an early general election that will mark a new chapter for the country. The vote on April 28 appears likely to result in a hung parliament and long coalition talks, furthering the process of political fragmentation that began earlier this decade when the two parties that dominated the country for the past 40 years (the center-right People's Party and the Socialists) lost ground to emerging political forces. But the April election will have an additional peculiarity, as it may well result in the right-wing nationalist Vox party, which has grown powerfully since the general election in 2016, when it earned just 0.2 percent of the vote, entering the Spanish parliament for the first time.

Propelled by factors such as the global financial crisis, rising economic inequality, growing skepticism about globalization, and fears of the economic, cultural and security effects of immigration, nationalist and populist political parties have made gains in national elections across Europe over the past decade, and in some cases have entered government coalitions. Spain had remained an exception — until now. The country is finally joining its European neighbors in experiencing a rise in nationalism. But the process is taking a very distinctive shape, setting Spain apart in a new way.

Nationalists Are Back

In December 2018, Vox became the first right-wing party to enter a regional parliament in Spain in more than three decades when it won 11 percent of the vote in the southern region of Andalusia. Vox helped the People's Party and centrist Ciudadanos form a government, putting an end to decades of Socialist rule in the region. Then in February, Vox joined the People's Party and Ciudadanos in an anti-government protest in Madrid, confirming that the party had gained a seat at the table with Spain's main conservative forces. Current opinion polls put Vox's national popularity at around 10 percent, which, in a fragmented parliament, is sufficient to allow this former marginal party to play a critical role in forming a coalition government after the general election.

Vox's sudden rise is primarily in reaction to the independence movement in Catalonia, one of Spain's autonomous regions. Catalan secessionists have been active during the past decade, holding large demonstrations in Barcelona and other cities and repeatedly demanding a legally binding independence referendum. Catalonia's push for secession reached its peak in October 2017, when the regional government held an illegal independence referendum and then declared independence. Madrid reacted to these events by dismissing the rebel government and taking temporary control of the region.

This development had two consequences. First, Catalan independence parties had to reassess their political strategies after their plans to build a republic proved deeply flawed and many of their leaders were either incarcerated or fled the country. Now, the secessionists still govern the region, but they are internally divided. The second consequence was that Vox's popularity skyrocketed. The party shares some elements with nationalist forces from other EU countries because it wants to expel irregular immigrants, supports increased protection for Europe's external borders and is critical of the European federalization process. (This last platform means that a Spanish government including Vox would certainly make Brussels nervous, as Madrid has traditionally supported EU integration.) But Vox's main focus is to recentralize the Spanish state so that Madrid regains full control of areas such as education, health care and the police, which are currently managed at the regional level.

Vox's popularity is forcing Spain's main parties to adapt to a new political environment. The People's Party sees Vox as a threat to its decadeslong domination of the conservative electorate, while Ciudadanos, a party that was born in Catalonia but gained popularity because of its anti-independence positions, now has a rival that is strong on the same issue. As a result, both have toughened their position on Catalonia, even promising to take direct control of the region if they win the general election. The Socialists and left-wing Podemos, meanwhile, will defend the need for dialogue with Catalan separatists, hoping to attract moderate voters. This may prove a hard sell because outgoing Spanish Prime Minister Pedro Sanchez sought to appease Catalan separatists through dialogue and promises of greater investment in the region, but the pro-independence parties still voted against his budget bill, forcing him to call an early general election.

Spain's Complex Relationship With Nationalism

These developments are only the latest in Spain's long and complex relationship with nationalism — driven in large part by the country's geography, which tends to produce cultural, political and economic fragmentation. The Iberian Peninsula is a mountainous region home to multiple population pockets that, over the centuries, developed their own cultures and languages. This history explains why efforts by political, economic and intellectual groups to create a single "nation" (in the sense of a group of people sharing a common sense of belonging and aspiring to be sovereign) in the peninsula have traditionally encountered obstacles. It also explains why Spanish nationalism is strong in the country's center but weak in the periphery, where it coexists with other national identities and narratives.

Spanish nationalists tend to identify the union between the kingdoms of Castile and Aragon in the late 15th century as the birth of the Spanish nation. But while this dynastic union did create a state that covered most of the Iberian Peninsula, it did not create a nation in the modern sense of the word. More concrete efforts to establish a common Spanish identity came in the 19th century, largely correlating with similar efforts taking place in other parts of Europe. Spanish leaders attempted to implement legislation and education, introduce national symbols, monuments and holidays, and promote Spanish music and literature. But 19th century Spain was plagued with unstable governments, economic decay and the loss of colonial possessions, which made it hard for the country to consolidate a national identity. Moreover, Madrid's attempts to create a shared Spanish identity competed with similar efforts that were taking place in places like Catalonia and the Basque Country.

This history makes Spain different from Italy, a country where geography also contributed to divisions along political, economic and cultural lines. The 19th-century emergence of the Risorgimento, a cultural, social and political movement, led to a proliferation of Italian art, literature and music and gave birth to a political process that was crucial for the unification of the country in the 1860s. Spain is also different from France, where the French Revolution propelled French nationalism and was followed by government homogenization efforts in the 19th century. Spain experienced no similar developments.

In the 20th century, dictatorships made a stronger push to consolidate a common Spanish identity, defending a vision of Spain based on traditional values, Catholicism, administrative centralization and cultural homogeneity around the Spanish (that is, Castilian) language. The left, in the meantime, struggled to find a balance between Spanish patriotism and its calls for an international workers' revolution. After the Spanish Civil War (1936-39), Francisco Franco's dictatorship sought to consolidate a homogeneous "Spanish" identity, banning regional languages and cultural expressions. As a result, Spanish nationalism became closely associated with right-wing ideologies, authoritarianism and political centralism, a perception that to some extent continues to this day and partially explains why it took so long for openly nationalist parties to re-emerge.

Again, Spain is different from Italy and France in this regard. During the first half of the 20th century, Italy and France participated in two world wars. War efforts tend to bring a nation together, creating a shared experience that leaves long-term social and political effects. Unlike Italy or France, Spain fought only one war in the 20th century, and it was against itself. Moreover, Benito Mussolini's fascist regime in Italy only lasted for two decades (half the duration of Franco's dictatorship) and was not the result of a civil war, contributing to the reasons nationalism in Italy is not as closely associated with right-wing authoritarianism and fratricidal war as it is in Spain.

Where To Next?

Aware of their country's complex relationship with nationalism, the writers of the Spanish Constitution that followed Franco's death in 1975 sought a delicate compromise. The constitution declares Spain an indivisible country where national sovereignty lies in the hands of "the Spanish people," an argument that Madrid has used to reject independence referendums in the country. But the constitution also created a system of autonomous regions with different degrees of self-government, which were progressively given control of areas such as education and culture. Regional governments in places like Catalonia have used these attributions to promote their identities and language, as well as their own (sometimes negative) interpretations of Spanish history.

This model brought stability to Spain for four decades but is now being questioned across the political spectrum. Some support introducing a federal system. But what many in the "federalist" camp actually propose is transferring additional policy areas from the central government to the regional administrations, ignoring the fact that a federation is based on a pact that is signed by political entities that recognize each other as equals. A true federalization of Spain would have to start by accepting the country's heterogeneity, and then seek as much unity as possible; reforms that assume unity as the starting point and then seek to address heterogeneity are representative not of federalism, but of decentralization. Additional decentralization could generate stability for a few more decades, but it would not address Spain's structural issues. And even a modest reform to clarify the powers of the national and regional governments would require a degree of consensus — both across the political spectrum and across the regions — that seems unlikely in the current atmosphere of political fragmentation and conflicting nationalisms.

The events in Catalonia have also reignited support for a recentralization of the country. Opinion polls suggest that around 30 percent of Spaniards would like for the country's regions to either lose some of their attributions or be directly abolished — a notable increase from the roughly 10 percent that supported these positions in 2005. Spain's conservative parties exploit these sentiments when they argue that Madrid should once again take direct control of Catalonia. But if a federalization of Spain is unlikely in the current context, a recentralization is even less likely, as it would be contested not only by the political left but also by regions beyond Catalonia. (Support for Basque independence is modest these days, but it would be reignited should Madrid seek to regain some of the powers it transferred to the region.)

Finally, Catalan nationalists are having debates of their own. The events of 2017 revealed the obvious limitations of their plans, especially without international support. (Here's another history lesson: external assistance, particularly from the United Kingdom, was key for Portugal's quest to break free from Castilian domination. However, when Catalonia declared independence, the European Union rushed to side with Madrid.) While some secessionist leaders still defend unilateralism, others argue that independence cannot happen without negotiation with Madrid. Some even argue for putting more effort into growing support for independence, as elections in recent years have shown that support for pro-independence parties is consistently close to, but not quite at, 50 percent of the electorate. These internal debates will probably continue for years, though a nationalist government in Madrid, giving Catalan secessionists a common rival to oppose, could help reunite them.

The situation in Catalonia helped trigger the April 28 election, and the region will be a central topic in the upcoming electoral campaign. The debate will, for the most part, remain superficial, as issues such as nation, identity, federalism, centralism and the role of nation-states in an increasingly globalized world are too complex to address in a modern electoral campaign. But they will be the underlying themes of the election, and the results will show how Spaniards feel about them, even if people are not completely aware of it when they cast their votes.

However, a divided electorate, lack of consensus on how to address the shortcomings of the Spanish Constitution, and competing nationalisms mean that the general election will not put Spain any closer to solving its centuries-old territorial disputes. The upcoming election will likely lead to a fragmented parliament, making it difficult for Spanish lawmakers to reach agreements on reforms of the country's territorial model. And if the central government that is formed leans more toward nationalism, which is quite possible, this would reduce the chances for Madrid and Barcelona to reach a negotiated solution to their conflict. While Spain's territorial unity is not under an immediate threat, the questions about its future will remain unanswered after the election.

Spain: A Failed Budget Portends an Election

2019-02-14T11:46:00Z

The Big Picture

When Pedro Sanchez became Spain's prime minister in June as part of a minority government, Stratfor predicted that his government would struggle to pass legislation amid constant calls to hold an early election. The government's defeat in a budget vote, along with the imminent prospect of snap polls, confirms that forecast.

What Happened

Spain is getting closer to calling an early general election. On Feb. 13, the Spanish Congress of Deputies rejected Prime Minister Pedro Sanchez's budget plans for 2019, 191-158, with one abstention, meaning a snap election is all but certain. Holding just 84 of 350 seats in the Congress of Deputies, Sanchez's Socialist government has long been rickety, requiring support from other parties, including pro-independence parties from Catalonia, to pass the budget. The Catalan parties, however, voted against Sanchez's budget to protest the start of a trial this week against a dozen secessionist leaders. A spokesperson for the Spanish government said Madrid would make an announcement about its future plans on Feb. 15 amid media speculation that a general election could occur on either April 28 or May 26 (the latter of which would coincide with European Union parliamentary elections).

Why It Matters

The Socialists' trouble comes at a time of political fragmentation. Opinion polls show that Spain's four main political parties, the Socialists, the center-right People's Party, the centrist Ciudadanos and the left-wing Podemos, possess relatively similar levels of political support — entailing that at least two parties would need to join together to form a government. Spanish parties, however, are finding it increasingly difficult to agree on coalitions. An inconclusive general election in December 2015 precipitated another vote just six months later because the parties failed to cobble together a coalition. And with polls suggesting that the fragmentation of the electorate will continue, a similar scenario is in the offing after the next general election. Meanwhile, prolonged political uncertainty could take its toll on the Spanish economy, which is currently posting one of the fastest growth rates in the eurozone.

Opinion polls also suggest that Vox, a nationalist party that obtained just 0.2 percent of the vote in 2016, could now receive around 10 percent. Vox vociferously opposes Catalonia's push for secession and wants to abolish the current system of autonomous regional governments in favor of a more centralized state. Vox's sudden rise in popularity has also pushed the People's Party and Ciudadanos to toughen their position on Catalonia. Last month, Vox helped the People's Party and Ciudadanos form a government in the southern region of Andalucia, which shows that Spain's mainstream conservative parties are willing to make deals with the formerly fringe party.

Considering the probable fragmentation in Spain's next parliament, Vox could become kingmaker in a right-wing coalition government, scuttling the chances of rapprochement between Madrid and Barcelona. Moreover, a central government including Vox could prompt Catalonia's secessionist parties to abandon their current disputes and circle the wagons against a common rival. While Vox's electoral program mostly focuses on domestic issues, it also has Euroskeptic positions, which means that a government that includes the party might experience friction with Brussels.

What Happens Next

In the probable event that the Spanish government announces an early election, Catalonia will play a central role in the campaign, with conservative parties likely to propose a tougher stance on secessionism as center-left and left-wing parties insist on the need for dialogue with Barcelona. Other issues, such as Spain's high levels of unemployment, depressed salaries and the fate of controversial reforms from earlier in the decade (such as labor reform) will also dominate any electoral campaign. And even if Sanchez decides not to call an early election this week, the writing is still on the wall for his government, as it has little chance of limping on until the legislative term ends in July 2020.

Nigeria's Election Will Threaten Its Security, Regardless of Who Wins

2019-02-12T11:45:00Z

Highlights

The political flux surrounding Nigeria's upcoming election has created space for regional and sectarian conflicts to flare up.

The country's northeast region will face increased violence from Islamic State supporters, while a peace arrangement that has previously kept conflict quiet in the Niger Delta region is being put to the test.

While Islamic militants' expansion attempts could pose security threats to Abuja and Lagos, protests and political unrest following the election are far more likely to disrupt major urban areas.

Nigerians are preparing to head to the polls to either re-elect incumbent President Muhammadu Buhari or replace him with Buhari's lead challenger, Atiku Abubakar. The Feb. 16 presidential election has thrown the country into a state of political flux, risking the relative stability Nigeria has achieved since returning to multiparty democracy in 1999. But in addition to having direct political implications, growing unrest across the country also creates an environment for Nigeria's many regional and sectarian security threats to fester and spread leading up to and following the election. With the Islamic State insurgency in the northeast, the resurgence of militants in the oil-rich Niger Delta in the south and sectarian clashes over land rights in the country's center, Africa’s most populous country is in for a turbulent few weeks.

Opposition in the South

The religious rift between Nigeria's predominantly Muslim north and its predominantly Christian south is one of the oldest and most significant conflicts in the country. In recent decades, Nigerian leaders have avoided major conflict through an informal agreement to alternate control of the presidency every two terms (or every eight years). Under this agreement, the presidency still belongs to the north for the next four years. And indeed, both presidential candidates are northerners. But that doesn't mean regional tensions won't threaten the peace.

A current trial involving Nigeria's chief justice and prominent southerner, Walter Onnoghen, will be a major point of contention heading into the election. In January, Onnoghen was dismissed from office after being charged with multiple corruption-related crimes — a move many southern Nigerians took as a governmental attempt to reduce their regional influence on national policy. The event has already resulted in disruptive demonstrations in Abuja and across the south. Onnoghen’s court date is just three days before the presidential election. And while his trial is not directly linked to the election, its timing — combined with its undertones of regional divisions — could spur more protests that would overlap with the election, exacerbating political unrest.

An additional challenge linked to Nigeria's divisive regional politics is the enduring threat to national oil production in the Niger Delta. Accounting for about 9 percent of total gross domestic product (GDP) and 85 percent of exports, oil is Nigeria’s most valuable natural resource. However, it also happens to be geographically concentrated in southern Nigeria’s Niger Delta region, giving a handful of southern states a disproportionate level of influence on the nation’s economy and during disagreements over control of oil revenue.

Over the past decade, militant groups in the south have essentially extorted both foreign oil companies and the Nigerian government for a greater share of oil wealth using attacks against oil installations and personnel. Attacks in 2009 and 2016, in particular, took hundreds of thousands of barrels per day out of production — threatening not only the revenue of foreign oil companies and the local government, but the lives of personnel. The maze of creeks that make up the Delta and the area's lack of infrastructure make security operations in the region expensive and ineffective. The landscape also favors guerilla warfare, and the sprawling networks of pipelines and pump stations are notoriously difficult to defend.

Since 2016, the current Nigerian government's policy of either paying off past militant leaders or hiring them to secure the oil industry in the Delta region has largely kept oil (and revenue) flowing steadily. And as a result, the area has been relatively quiet. But this strategy is unlikely to provide a solution for much longer, as signs emerge that new militants are becoming active in the Niger Delta. In January, a group calling itself the Koluama Seven Brothers claimed responsibility for a minor pipeline attack. And while the attack appears to be an isolated incident, the transition following the election could still lead to an increase in militant activity by testing the political status quo.

Violence in the North-East and Central Regions

Meanwhile, in the North-East region, the Islamic State West Africa Province (ISWAP) has put Nigeria on the map of the international jihadist movement. Formerly known as Boko Haram, the long-running insurgency has survived years of Nigerian military efforts to push it back: The al-Barnawi faction continues to launch deadly attacks against security forces, while the Shekau faction has focused more on soft targets. Kidnappings are also regular occurrences, frequently targeting international aid groups.

ISWAP has a strong interest in breaking out of the northeast and conducting more attacks in Nigeria’s capital of Abuja, though it has struggled to do so in recent years. Abuja was a fairly regular target of deadly ISWAP bombing campaigns from 2011 to 2015, including attacks against a UN building, shopping centers and transportation hubs. But since then, the Nigerian jihadist organization has struggled to overcome the distance between its geographic base and the centrally-located capital — much less the distance to Lagos on the polar opposite side of the country. However, the desire to attack higher profile targets outside the North-East remains, and militants continue to threaten attacks in Abuja.

The upcoming election gives ISWAP an opportunity to inflict political damage by undermining the democratic process that the Islamic State ideology opposes. The fact that ISWAP attacks have persisted — despite claims from the Nigerian military that the group has been defeated — has become a political liability for Buhari, and it will remain a burden regardless of who wins on Feb. 16. Even a modest attack on Abuja would be enough to undermine the next administration.

Finally, the deadliest current conflict in the country is the combination of violence and land disputes between predominantly Muslim herders and Christian farmers in Central Nigeria. Though clashes between the opposing sides are more geographically isolated and less threatening to national security than the actions of Niger Delta militants, Islamic State insurgents and general political protesters, the conflict does bring collateral damage and is a major threat to anyone traveling through the states of Benue, Taraba, Plateau or Kaduna. (The region is also rife with kidnappings by ransom gangs.)

Threats to Major Cities

When it comes to Nigeria's major metropolitan areas, protests and political rallies surrounding the election will likely pose the biggest and most direct threat to those in Abuja and Lagos. If the election is delayed (as was the case in 2015 when election materials were not ready in time) or ends up being too close to call, or if the results are disputed due to irregularities, the risk of violence will increase. However, most violence will target opposing political parties and government offices, meaning individuals and organizations who are not directly implicated in election disputes should be able to stay safe by keeping a low profile and avoiding major public gatherings.

In the southern oil-producing region of the Niger Delta, emerging threats such as the Koluama Seven Brothers have not demonstrated the kind of sustained, frequent attacks that have caused significant disruptions in the past. However, the oil industry remains a pressure point that southerners can push if they take issue with the election results — or, more likely, the trial of suspended Chief Justice Walter Onnoghen. Following the election, any attempts to change up the current informal peacekeeping political arrangement could also trigger a resurgence of attacks against oil infrastructure and personnel.

Islamic State fighters are all but guaranteed to carry out attacks on election-related activity in the North-East, but a true test of their capabilities will be whether they can break out of the northeastern states of Yobe, Borno, Gombe and Adamawa and strike in urban areas like Abuja. ISWAP has not proven to have a significant network of operatives outside the northeast that can support regular attacks, meaning militants must risk long treks by land with their weapons to strike against other targets. This mode of operating gives authorities and civilians ample opportunities to recognize and confront unusual activity, such as pre-operational surveillance, in order to stop an attack in the making.

Regardless of which candidate wins the presidency on Feb. 16, a climate of political instability in Nigeria will persist after the votes are tallied and the final results are announced. And during this time of transition and uncertainty, the fragile factors that have kept Nigeria’s diverse threat environment at bay in recent years will be put to the test.

After a Challenging Decade, Egypt Resumes Its Regional Role

2019-02-07T11:31:00Z

Highlights

After years of focusing inward to stabilize its economy and internal political situation, Egypt is feeling confident enough to reassert itself as a stronger regional actor.

Egypt is focused primarily on preserving its leadership over the Nile, the Red Sea, the Eastern Mediterranean and the eastern Sahara, where it increasingly will butt heads with other regional powers competing for influence.

Its importance as a strategic regional power increases Egypt's value to greater powers like the United States, Russia and China as they pursue their competing goals in the Middle East.

In 2019, Egypt will mark 150 years since the completion of the Suez Canal. The waterway linking the Mediterranean and Red seas and providing a global shipping shortcut attests to the country's highly strategic location. But controlling a key chokepoint has not sufficed to ward off Cairo's declining significance on the global stage.

While Egypt's importance in the global system may be debatable, few in the Middle East would dispute its pivotal role in the region. Its willingness to involve itself in regional affairs, however, waxes and wanes according to how stable it is at home. Today, after years of political chaos since the Arab Spring and the return of the military to power, Egypt's internal politics have stabilized.

Under this renewed approach, Egypt's parliament is even debating relaxing presidential term limits, a sign of the government's confidence that it is immune to domestic challenges. And the economy is also back on track, with macroeconomic indicators stabilizing after the near-completion of an ambitious three-year International Monetary Fund (IMF) program. So while the last decade has been a time of internal focus for Egypt, the country is now positioned to return to its historic role as a middle power.

Egypt's Regional and Global Strengths

For much of its modern history, Egypt has acted as a strategic middle power in the Middle East, participating in or mediating various conflicts and providing diplomatic support to allies seeking to benefit from the country's heft. Egypt occupies a pivotal position in the Arab and Muslim worlds, with ample coastline along three key waterways, the Red Sea, the Mediterranean Sea and the Nile River. It also has the largest Arab military force, including a sizable navy and a sophisticated diplomatic corps.

While Saudi Arabia and the other Gulf states have tended to be the most visible Arab states in public diplomacy in recent years, Egypt's government was a regional leader well before the modern Gulf states even existed — and before they found the oil that now fuels their power. Culturally, Egypt — which has the largest population in the Arab world at more than 100 million and rapidly growing — is a touchstone in the Arab and broader Muslim world. Cairo's al-Azhar Mosque and religious institute, for example, is widely acknowledged as the global center of Sunni Islamic education.

Egypt's Regional and Global Strengths

Periods of intense internal political and economic struggles in Egypt, however, have periodically undermined its ability to act as respected power and mediator between regional states. But they have not altered Egypt's primary regional imperatives. First, it will defend its population core along the lower Nile River and Delta from any security threats that risk bleeding over its borders. Second, it will fight anything, whether political or material, that threatens its access to the water, fuel and economic supplies it needs for its rapidly growing population. Third, it will fight to preserve its freedom to decide who it engages with or what conflicts it becomes involved in (which now often involves supporting friendly governments that reject Islamist movements).

Stabilizing the Home Front

The Arab Spring protests marked a rare moment of democratic optimism in Egypt, with the overthrow of longtime president Hosni Mubarak in 2011 followed by the presidential elections in 2012 that ushered in a Muslim Brotherhood government. It also marked the beginning of a tumultuous period that would see Egypt retreat from its historic regional role as part of a unique moment of democratic optimism for the entire Arab world. However, the Supreme Council of the Armed Forces (SCAF), the military body that dominates Egyptian affairs, viewed 2011-2012 as a period of frightening volatility.

The military coup in 2013, the drafting of the current Egyptian Constitution and the election of President Abdel Fattah al-Sisi in 2014 represented SCAF-led efforts to calm the turbulent political waters — even if that meant a violent crackdown on the opposition. As a result, al-Sisi's administration easily won a second term in 2018, giving him the next four years to solidify his legacy — and the SCAF plenty of time with a leader it approved of, along with a government it could both readily and discreetly control.

Meanwhile, Egypt's fragile economy improved, though it remains the country's Achilles' heel. Its continued weaknesses include high levels of debt, a hefty public wage bill, high subsidies that the government has struggled to reduce, high unemployment, dependence on a weakening agriculture sector, and a poor educational system unequipped to train a labor force for the country's future needs. Moreover, the Egyptian currency is weak and will likely continue to weaken, reducing the already paltry purchasing power in the country.

But at the macroeconomic level, Egypt's economy is emerging stronger than it has been in years, due in part to Cairo's commitment to the IMF program. The country has achieved its highest levels of growth in a decade and the most inbound foreign direct investment of any country in Africa in 2018, along with rising tourism numbers. Cairo's progress in stabilizing its economy and its internal political system means it is now comfortable enough to resume a more active role as mediator and leader in some regional conflicts.

Reaching Outward Once More

While Egypt has begun playing a more assertive role in the region, its focus remains on protecting its core at the Nile River and Delta. Over the past year, Egypt sought to lessen tensions with its southern neighbors Sudan and Ethiopia over the Grand Ethiopian Renaissance Dam that straddles the Nile. The need for solutions that ensure Egypt maintains access to sufficient water for irrigation and drinking has driven this more pragmatic approach. Historically, Egypt was the dominant player on the river despite being a downstream country. But lately, its upstream neighbors have proved more willing to use their leverage over the Nile against Egypt. During recent unrest in Sudan, Egyptian support for embattled leader Omar al Bashir testifies to Cairo's efforts to make peace with its Red Sea neighbors, though tensions over the allotment of the Nile's waters will undoubtedly persist.

Egypt's next priority is defending against militancy, most of which emanates from the vast expanses of desert on both sides of the Nile. Its western neighbor, Libya, has lately been a hotspot for militancy. For several years, Egypt has given military and diplomatic support to Libyan National Army leader Khalifa Hifter. Working quietly in conjunction with the United Arab Emirates, the Egyptian air force has also bombed Islamist militias in eastern Libya as it seeks to stop militancy from bleeding over the porous Libyan-Egyptian border. Differences over engaging with certain Islamist factions will eventually strain the Egyptian-UAE alliance, while deeper Egyptian involvement in Libya risks rousing the opposition of Saharan powers such as Algeria and Morocco.

Egyptian leaders have begun pragmatically re-engaging with the militant group Hamas in the Gaza Strip to boost security in the Sinai Peninsula after years of diminished engagement with the Palestinians. Egypt has also re-established itself as a primary actor helping Israel, the United States and Arab states negotiate between feuding Palestinian parties. Although the limits of these efforts are clear, since the latest reconciliation deal between Hamas and Fatah now appears to be failing, Egypt at least hopes to diminish the security threat that the Gaza Strip poses.

In its pursuit of reasserting itself as a Mediterranean power, Egypt has also become a key player in the oil and gas rush in the eastern Mediterranean Sea, where sizeable recent discoveries have given Cairo hopes of finding even more hydrocarbons. Eager for greater energy security and to be able to better fuel its manufacturing sector, Egypt has carefully sought to align itself closely with Greece and Cyprus, meeting with its Mediterranean neighbors in multiple summits throughout the year. Aligning with Greece and Cyprus, as well as with Israel and Italy, better positions Egypt to challenge chief rival Turkey in any disputes over future oil and gas discoveries in the eastern Mediterranean (where territorial lines often blur and overlap). The more Egypt pushes, however, the more likely it is to spark tensions with Turkey.

All of this activity in Egypt's immediate sphere of influence has increased under al-Sisi's presidency. This risks creating dissidence with other regional powers such as Saudi Arabia, Turkey, Iran and the United Arab Emirates, which have been active in the region during the time that Egypt's focus was largely turned inward. Cairo believes its disinterest in the affairs of countries farther afield in the region, such as Syria and Iraq and on the Arabian Peninsula, will mitigate these tensions. In areas that do not border Egypt, Cairo is interested in helping work toward stability, but not without careful consideration.

Egypt's participation in the partial blockade of Qatar is telling in this regard. Cairo is broadly aligned with the priorities of the Gulf Cooperation Council members and depends on their economic aid. Plus, it resents Doha for sheltering the Islamist movements it opposes. But even then, it has been the quietest of the four states that initiated the blockade. Likewise, Egypt has avoided significant involvement in the Syrian civil war, fearing it'll get drawn into a quagmire that would generate significant blowback. However, it has also swiftly warmed again to the prospect of a Bashar al Assad-led Syria — a reflection of Cairo's enthusiasm for stable Arab governments with little space for Islamists.

While Egypt may be emerging as a more solid Middle East middle power, it still faces significant political and economic headwinds. The more Egypt involves itself beyond its borders, the more it will meet complications with regional and global powers that do not share its priorities. The United States already objects to Egypt's close relationship with Russia, with Congress particularly opposed to Cairo's purchases of Russian arms. Increasing Egyptian economic cooperation with China will similarly become an issue in Washington, especially if Egypt increases its purchases of Chinese technology. But while domestic political opposition and economic fragility remain ongoing challenges, as long as Cairo feels more confident at home, Egypt will play a more active role in the Middle East.

An Arrest at Apple Shows How Corporate Spies Worm Their Way Into the System

2019-02-05T22:28:00Z

Highlights

Two cases in which engineers working on Apple's autonomous vehicle program allegedly stole trade secrets show that corporate espionage will continue to be a major threat to companies.

Nevertheless, the prosecution of an insider may not necessarily discourage future employees from following the same path.

The differences in the tactics in the two cases demonstrate that corporate spies will learn from the mistakes of predecessors, and adapt to changes in security policy.
Chen Jizhong was all ready to head for China on Jan. 22 when FBI special agents swooped in on the Apple engineer. Chen's alleged crime, according to a complaint filed in the U.S. District Court for the Northern District of California, was to have stolen trade secrets relating to the company's autonomous vehicle program. In doing so, Chen appeared to be following in the footsteps of Zhang Xiaolang, a Chinese compatriot and Apple colleague whom authorities also nabbed as he prepared to flee to China in July 2018. In both cases, the men were planning to start employment with Apple's Chinese competitors in the driverless car market.

The Chen and Zhang cases bear some striking similarities but also feature some intriguing differences. Together, they illustrate that the threats to in-demand intellectual property will persist even after a successful prosecution and that agents will alter their tactics in response to efforts by corporate security departments to better protect their company's critical information.

Photos of a Computer Screen

Apple's investigation into Chen began Jan. 11, after an alert co-worker reported that he was taking pictures in a restricted area of the company's driverless car division. A subsequent search of the suspect's personal electronic devices revealed that he had loaded 2,000 files containing sensitive schematics and design details onto his personal laptop and to an external hard drive, and that hetaken hundreds of pictures of other sensitive documents using his cellphone. Apple immediately suspended Chen and denied him access to the firm's facilities and additional company information. After that, the firm contacted the FBI.

Chen told the FBI he recorded the files as an insurance policy because he was afraid he would lose his job after company officials placed him on a performance improvement plan in December 2018. Apple investigators, however, found evidence that the suspect had been storing proprietary material on his personal laptop since he began working there in June 2018. Chen also stated that he wanted to use the information to help him apply for other positions at Apple, only for the company probe to discover that he had applied for a job with a Chinese company planning to produce driverless cars.

When Apple security confronted Chen, they found that his personal cellphone contained around 100 photos taken inside the company's secure facility — a violation of the firm's security policy. Subsequent investigation also discovered that his laptop featured hundreds of other photos of sensitive information that he had photographed on his computer monitor. It is unclear whether Chen had downloaded the images directly from the phone to the computer using a cable, or if he sent the images from his office to an email address, text account or cloud location before deleting the original pictures from his phone. Using such a method would allow an employee to send photos outside the workspace without keeping them on the phone, reducing the possibility that authorities would apprehend the employee in possession of incriminating photos. In Chen's case, however, he appears to have engaged in sloppy tradecraft by keeping the photos on his personal computer. (It is unclear at this point if he ever sent them elsewhere.) As a result, those photos will now provide ample evidence against him in court.

Updating the Tradecraft

Perhaps one of the biggest differences in the Chen and Zhang cases is that the latter succeeded in downloading over 20 gigabytes of technical specifications and other proprietary data from restricted Apple databases. Zhang subsequently transferred the data without authorization to his wife's computer shortly before resigning from the company. Reviews of logs and surveillance footage also demonstrated that Zhang had removed hardware, including a server and circuit boards, from his laboratory.

Chen, by contrast, is accused of using an external hard drive to make a complete copy of the contents of his work laptop — something that we have seen intelligence officers request in other corporate espionage cases.

According to complaint against Chen, Apple uses software to carefully limit access to its restricted databases (likely the ones Zhang downloaded from), as well as to monitor who is viewing them. Apple may have implemented stricter controls as a result of the Zhang case, or perhaps the company had just become more vigilant following the revelations that Zhang had succeeded in downloading so much protected data.

Indeed, given that Chen — who had access to some of the protected databases in line with his job responsibilities — took photos of information displayed on his computer monitor using his smartphone, it appears that he was either unable to download the necessary critical data or was afraid of doing so due to internal controls. In the end, the changes to company security procedures in the wake of the Zhang case apparently altered Chen's access to information, thereby forcing him to resort to the comparatively low-tech solution of snapping photos of data displayed on his computer monitor.

Whipping out a camera to take photos of sensitive documents in the workplace is old-school espionage tradecraft. During the Cold War, generations of agents recruited by intelligence agencies in both the East and West used miniature Minox cameras smuggled into their workplaces to capture classified documents. That, however, was only half the battle: In such operations, the agents then had to smuggle the exposed film out of the workplace in a variety of clever ways — using everything from hidden compartments in lipstick tubes to hollowed-out shoe heels.

Today, of course, the story is different. Instead of a special Minox camera, every agent (along with nearly everybody else) has a smartphone that can photograph sensitive documents, equipment or, as in Chen's case, sensitive information on a computer screen. Indeed, because of the obvious espionage threat posed by smartphones, many government offices require employees to check their cellphones at the door. Many corporate facilities that handle classified government information have also adopted the policy, while corporations that process business-critical research and development or other sensitive intellectual property may also consider doing the same.

Evolving Espionage

So far, little information has emerged detailing Chen's interactions with the Chinese vehicle company, and it is unclear whether he established his relationship with them before taking the job with Apple or only after December 2018, when he began to fear for his employment due to the performance improvement plan. Equally unclear is whether he received any instructions on how to acquire information or direction from the Chinese company about which specific information to obtain. The fact that he was amassing sensitive information from the beginning of his employment also raises the possibility that he was an intentional plant inside the company. Whatever the case, if Chen had received instructions, he likely would have taken better care to send the photos to the cloud or a specified contact rather than retaining so much incriminating evidence.

Ultimately, just as Chen adopted new tactics as a result of the Zhang case, it is very likely that future corporate spies will sharpen their tradecraft in response to the mistakes that got Chen caught — as well as in response to any new security procedures established in the wake of his case. Beyond that, Chen's case highlights just how persistent the threat of corporate espionage is. Companies that develop technologies or other intellectual property of interest to competitors had best be on their guard — even if they manage to apprehend a corporate spy or two in their midst.

The U.S. Is Fighting a 21st Century Trade Battle Armed With a 1930s Mindset

2019-01-31T11:39:00Z

Highlights

The United States may score some successes in persuading its trade partners to reduce their tariffs, but its current strategy fails to address the fact that tariffs are not the biggest limiters of U.S. exports.

Ultimately, nontariff barriers such as health and safety regulations and intellectual property rights present greater obstacles to trade in the contemporary world than tariffs do.

With the United States focused on tariffs, its exporters could soon face greater difficulties as competitors in Canada, the European Union, Asia and elsewhere gain access to more markets thanks to comprehensive free trade deals that eliminate more important nontariff barriers.

Can turning back the clock to the 1930s achieve a 21st-century trade win? That might be the question on everyone's lips as the White House aims to significantly increase presidential authority over U.S. tariffs by asking Congress during next week's State of the Union address to pass the Reciprocal Trade Act. The name of the bill itself echoes perhaps the single most consequential trade act in U.S. history, the Reciprocal Trade Agreements Act, which President Franklin D. Roosevelt signed in 1934 to help the United States recover from the Great Depression.

Congress is certainly in no mood to give the current occupant of the White House, Donald Trump, more power to impose tariffs on other countries, but Trump's strategy and aims in using the existing act highlight the White House's focus: balance trade through bilateral negotiations and tariffs. The problem for Washington is that the situation in the 21st century is not that of the 1930s, as tariffs are no longer the most important barriers to modern trade. Instead, everything else is: investor rights guarantees, health and safety regulations, intellectual property protections, digital trade regulations, and voluntary standards. And focusing on tariffs as a policy goal may mean that the United States misses the boat on concessions on those issues.

More importantly, the Trump administration's push for increased trade barriers has spurred the rest of the world to strive for comprehensive agreements that avoid dallying on tariffs in favor of addressing more significant nontariff barriers. This raises the next question: By focusing simply on bilateral trade balances, tariffs and obstructing imports, does the United States risk losing out?

Reciprocity: A Carrot and a Stick

The concept of reciprocity in trade has been around for centuries; whereas feudal lords once offered access to their markets in exchange for "reciprocal" access to another market, now countries do. Over time, this concept has become inextricably linked to that of "most favored nation," in which a country extends any concessions it makes to a third country to its "most favored" partners as well on a conditional or unconditional basis. For example, if the United States granted the United Kingdom most favored status as part of a trade deal before proceeding to sign a more expansive trade agreement with France, it would then have to extend similar concessions to London (subject to the exact nature of their bilateral deal).

For most of history, reciprocity and most-favored-nation clauses have centered on one thing: tariffs. In the trade wars of the 19th and early 20th centuries, average tariff rates would often run above 50 percent. When Roosevelt signed the 1934 trade act, he ended Washington's postwar economic isolationism and made it a vanguard of trade liberalization in an otherwise protectionist global environment. In so doing, the United States offered to liberalize its tariffs for any country that was willing to do the same for Washington.

By 1940, the United States had signed deals involving 21 countries. After World War II, Washington helped enshrine this concept — and unconditional most-favored-nation deals — in the General Agreement on Tariffs and Trade and, eventually, the World Trade Organization (WTO). The United States encouraged other countries to join these pacts for strategic purposes, dangling the prospect of access to the U.S. (and Western European) markets to lock them into the U.S.-led world order. Since the end of the 1980s, however, this strategy has no longer proved politically tenable amid the aftermath of the Cold War, a ballooning U.S. trade deficit and the decline in U.S. manufacturing jobs.

With his focus on trade deficits and tariffs, Trump's view on reciprocity reflects this. Unlike many of his predecessors, the president has explicitly sought to disconnect trade deals from a global, strategic point of view, arguing that such perspectives have hurt American workers. On the Reciprocal Trade Act, the White House's operative perspective is trade protectionism, rather than trade liberalization; as a result, it's very much a case of "lower your tariffs, or I will raise mine." Accordingly, the act would allow the president to increase a tariff on another country's good to the same level that that country charges for the same U.S. product. Ultimately, Trump's dominant view of reciprocity is focused on the details, the actual tariffs and the outcome, all in a bid to ensure equal trade volumes in both directions.

Bipartisan legislation to reduce Trump's power is currently winding its way through Congress, meaning the Reciprocal Trade Act is almost certain to be dead on arrival in the lawmaking body, yet the president can still utilize other tools to realize more of his vision of reciprocity.

So far, the White House has creatively used Section 232 of the Trade Expansion Act of 1962 and Section 301 of the U.S. Trade Act of 1974 to pursue his goals on the matter, explicitly linking a Section 232 investigation on cars to the European Union's tariffs on vehicles. (Brussels charges 10 percent on imported vehicles, while Washington maintains a 2.5 percent tariff on foreign-made automobiles.)

Globalization: 60 Years On

But pursuing this strategy will be a tall order in a world that has been transformed since World War II. Prior to the 1950s, most international trade centered on raw materials, agriculture or some light industrial goods. Supply chains were not deep; while global multinational corporations existed, they were active in only a handful of industries and regions. Furthermore, government regulatory bodies were generally weak, exercising only a modicum of oversight over safety, sanitary and environmental issues. In such a world, tariffs dominated trade negotiations.

Today, however, tariffs are no longer the key issue. Supply chains are globalized, complex and deep. Multinational corporations have obtained investment protection, while multilateral treaties are becoming increasingly important. Technical barriers to trade resulting from health, safety and other regulatory standards have become increasingly sophisticated. Meanwhile, digital and e-commerce trade, as well as electronic privacy, are front and center in trade discussions — particularly between developed countries — but forcing countries to harmonize these issues has proved difficult since it necessitates amendments to domestic laws on regulatory issues.

In terms of global trade, tariffs are hardly an issue anymore. In 2017, the average applied tariff rate (weighted by goods imported) was just 2.59 percent worldwide. The European Union's average was just 1.79 percent, while the U.S. rate was 1.66 percent. Exceptions do exist, as evidenced by the European Union's higher tariff on cars than the United States, but Washington also charges a lot more on trucks than Brussels does. By squabbling over a few decimal points to obtain a lower tariff for certain industries, politicians certainly score a few points at home, but their measures are hardly bringing down nontariff barriers.

Still, U.S. tariff threats have succeeded in driving other countries to the negotiating table, although it is not clear how long Washington intends on negotiating new deals. Trump clearly wants trade victories before 2020 elections to show that his heavily criticized trade strategy is working. As a result, he is likely to pursue two avenues — one that increases barriers on imports to protect U.S. workers, and the other that reduces tariffs on U.S. exports — even if that could tie the hands of American negotiators who want to address more difficult structural issues. In the end, reducing others' nontariff barriers is a pertinent goal, but it's not an aim that lends itself to a tweet.

As I've argued before, Trump's end goal is to reduce the trade deficit, primarily by restricting imports. Thus far, he has not lifted a single tariff that's been imposed on his watch — including the steel and aluminum tariffs on Canada and Mexico, even though Ottawa, Washington and Mexico City have signed a new continental free trade deal. This means that America's trading partners are likely to limit their concessions simply to tariffs and certain exports, eschewing any compromise on more important structural issues. To be sure, there will be some focus on nontariff barriers and some deals on sector-specific agreements, but they won't be as comprehensive as possible. On this front, the European Union provides a good case in point: In an effort to avoid a 25 percent tariff on its automobiles, the bloc is offering a trade deal in which it removes tariffs for the industrial sector instead of reopening more comprehensive Transatlantic Trade and Investment Partnership (TTIP) talks that would have reduced nontariff barriers on both sides. The union is willing to ultimately discuss nontariff barriers, but Trump wants a quick win, and time is not on his side. Whatever the case, the United States under Trump is unlikely to make significant strides in gaining market access — and allowing market access — on a host of issues.

Protectionism in a Globalized World

Although multilateral talks to reduce trade barriers involving all WTO members have slowed to a crawl, countries other than the United States have shown a renewed interest in signing more trade deals to compensate for Washington's current protectionism. A trade pact between the European Union and Canada went into effect last year, while a similar deal between the European bloc and Japan will go into effect on Feb. 1. On a multilateral level, the Trans-Pacific Partnership might have failed because of the U.S. withdrawal, but the defunct deal's remaining members — including Japan, Mexico and Canada — signed their own agreement, which came into force at the end of 2018. These deals not only tackle tariffs but also touch on many of the deeper issues beyond them.

The upshot is that the United States is worse off than many of its competitors when trying to access key markets. Take, for example, its immediate southern and northern neighbors; as a result of the new United States-Mexico-Canada Agreement (USMCA), companies that set up shop in Mexico or Canada can export via preferential trade agreements to the United States, the European Union and Japan — three of the four largest markets in the world. Firms operating solely in the United States, however, don't have easy access to either the European bloc or Japan. Washington is discussing trade deals with both Brussels and Tokyo, but Trump's focus on restricting imports and reducing tariffs suggests that the White House will prioritize concessions on those issues, meaning that U.S. companies will still face nontariff barriers in those markets, even if the countries finally sign trade deals. And given the complexity of the contemporary, globalized world's supply chains, those nontariff barriers and labeling harmonization issues will loom ever larger.

Naturally, U.S. trade lawyers and career professionals at the Office of the U.S. Trade Representative are well-aware of the significance of these nontariff barriers. What is unclear, however, is whether they will have sufficient time to negotiate complex agreements on these issues or whether they will receive orders to deliver a quick — if pyrrhic — political victory. The U.S. political system has driven the president to focus on trade deficits and tariffs, but the United States is likely to find that such a focus is incompatible with the structure of modern trade deals. The conundrum thus leaves Washington with a trillion-dollar question: Can it adapt its trade strategy before it's too late?

Tracking Mexico's Cartels in 2019

2019-01-29T11:10:00Z

Editor's Note

Since 2006, Stratfor has produced an annual cartel report chronicling the dynamics of the organizations that make up the complex mosaic of organized crime in Mexico. When we began, the landscape was much simpler, with only a handful of major cartel groups. But as we noted in 2013, the long process of balkanization — or splintering — of the groups has made it difficult to analyze them the way we used to. Indeed, many of the organizations we had been tracking, such as the Gulf cartel, imploded and fragmented into several smaller, often competing factions. Because of this fracturing, we changed our analysis in 2013 to focus on the clusters of smaller groups that emanate from three main geographic areas: Sinaloa state, Tamaulipas state and the Tierra Caliente region.

Surprisingly little has changed over the past year in terms of cartel dynamics. Various leaders and lieutenants have been arrested or killed, and additional splintering has continued for some already fractured groups, but by and large, 2018 was characterized by a stasis in the conflict zones of the assorted factions. In the past, periods of stasis often entailed that cartel groups were staying within their areas of control and that violence would be lower. However, in the current period, large and bloody struggles are continuing unresolved, and cartel groups remain locked in nasty turf wars. This environment means that most of these clashes will rage on well into 2019.

This violence has been reflected in the murder statistics, as the homicide figure for 2018 hit 33,341 — far surpassing the 2017 tally of 29,168. While Mexico's homicide rate of about 27 per 100,000 people is higher than that of the United States (which is expected to come in at about 5 per 100,000 people for 2018), it is still considerably lower than the rates for other countries in the region, including El Salvador (about 82 per 100,000), Honduras (about 56 per 100,000) and Jamaica (about 47 per 100,000).

As for drug smuggling, synthetics such as methamphetamine and fentanyl continued to impact cartel dynamics heavily in 2018. The huge profits that can be reaped from manufacturing synthetic drugs dwarf those of traditional drugs. Trafficking cocaine has long been a lucrative criminal enterprise for Mexican criminals, but they must purchase the drug from Andean producers. By making methamphetamine themselves, however, they can reap the lion's share of the profits.

Opium poppies are another profitable criminal enterprise in Mexico, whose heroin now accounts for more than 90 percent of the U.S. market for the drug. However, raising poppies and processing opium gum into heroin costs more and takes longer than producing fentanyl. The synthetic opioid is more profitable than heroin, which explains why criminals have been passing fentanyl off as heroin. Record levels of poppy planting and the low cost of fentanyl have led to a collapse in the price of opium gum. With Colombian coca production also running at historically high levels, Mexican cartels are likely to continue to traffic a wide variety of drugs to meet U.S. and domestic demand.

But drug trafficking is not the only criminal activity that Mexico's organized crime cartels engage in. The fracturing of the formerly powerful cartels has led not only to a record number of murders but also to heavily armed cartel gunmen becoming involved in a host of other criminal enterprises, from kidnapping and extortion to the theft of cargo and fuel. It is no coincidence that the pilfering of cargo and fuel have reached historically high levels as balkanization blossomed over the past half-decade.

Tierra Caliente-Based Organized Crime

Last year's forecast highlighted the powerful Valencia smuggling family as the driving force behind the Cartel de Jalisco Nueva Generacion (CJNG). This fact has not been lost on the Mexican and U.S. governments or their allies, who have continued to target the family. Despite efforts to cripple the group by going after its finance and logistics apparatus (the Valencia family), the CJNG has shown no signs of running short on cash or suffering any disruption in its operations due to the arrests of high-ranking members. Indeed, it remains the most aggressive cartel in Mexico, and its efforts to expand its area of control are largely responsible for the persistent wave of violence racking Tijuana, Juarez, Guanajuato and Mexico City.

But the past year also revealed some emerging problems in the CJNG camp. Nueva Plaza, a splinter group of former members led by Carlos "El Cholo" Enrique Sanchez, has begun to contest the CJNG for control of Guadalajara. The violence has resulted in significant bloodshed, including the high-profile murders of three art students who were mistaken for cartel members.

Due to their aggressive nature, the CJNG and its leader, Nemesio Oseguera Cervantes (aka El Mencho), remain at the top of the priority target list for U.S. and Mexican authorities. However, the Mexican government will have to be careful what it wishes for. Past operations to decapitate cartels such as the Guadalajara cartel, the Gulf cartel, Los Zetas and La Familia Michoacana have led to fracturing and greater violence.

Sinaloa-Based Organized Crime

The Sinaloa cartel weathered 2018 in pretty good shape — especially considering that one of its senior leaders, Joaquin "El Chapo" Guzman Loera, has been on trial in a Manhattan court for more than two months. Guzman Loera did not plead guilty and cooperate with the U.S. government, meaning that he is likely to spend the rest of his life in an American prison with no hope of escape. The witnesses called to testify against him have shed a great deal of light upon the logistics of the cartel's drug trafficking.

While the trial continues in New York, the work of operating a multinational logistics and manufacturing business continues in Sinaloa. Ismael "El Mayo" Zambada and Guzman's sons, Ivan Archivaldo and Jesus Alfredo Guzman Salazar, who are often referred to as Los Chapitos, have fended off several internal challenges to assume control of the lucrative illegal corporation that is the Sinaloa cartel. They have also been able to hold their own against the incursions of the CJNG in places such as Tijuana and Juarez, and their successful resistance is in fact a big reason for the current stasis in the battle lines.

Both organizations have the resources to continue fighting for those cities through their local proxies for the foreseeable future. A significant crisis could weaken either and lead to victory for the other side. But until that happens, Tijuana and Juarez are likely to remain bloody.

Tamaulipas-Based Organized Crime

An array of Gulf cartel fragments is continuing to battle for primacy in Tamaulipas. Jose Alfredo Cardenas, aka The Accountant, has been able to consolidate control over the drug-smuggling corridor, known as a plaza, in Matamoros. He has also sent some of his forces to help his local ally in Reynosa, but they have been unable to take total control there. Despite heavy losses, including several leaders, the faction of Los Metros continues to oppose Cardenas. Some rumors hint that it is being kept alive through CJNG support, which would signal that group's entry into yet another struggle for control of a border plaza.

At Nuevo Laredo, the Cartel del Noreste (CDN) is the remnant of the Los Zetas cartel that controls that important crossing — the busiest point of entry along the border and the one that leads directly up the Interstate Highway 35 corridor. The CDN is led by Juan Gerardo Trevino Chavez, also known as El Huevo; he is a member of the old-school Trevino smuggling clan, which has a long history in Nuevo Laredo — and in the Los Zetas cartel. The CDN is locked in a vicious fight against another Los Zetas remnant, the Zetas Vieja Escuela (ZVE) — the Old School Zetas — that is playing out across the state, but particularly in Ciudad Victoria.

For 2019, it appears that there is little hope that Cardenas will be able to impose any sort of pax mafiosa over Tamaulipas state and the wider region. Even if he and his allies are able to finally take control of Reynosa in 2019, they will still face significant hurdles from other Gulf cartel and Los Zetas remnants in the region.

Implications

Cartel violence in Mexico has affected almost every part of the country, including areas that are considered generally safe, such as upscale neighborhoods and tourist resorts and zones. Indeed, many cartel leaders live in upscale homes or apartment buildings, and this increases the risk of violence being dragged into such areas when rivals target them for assassination or when authorities go to arrest them. Most of the violence has been cartel on cartel or government on cartel, but with the cartels using automatic weapons and military ordnance, such as grenades and anti-tank weapons, bystanders are at considerable risk of injury or death.

And as the cartel balkanization continues, so will their expansion into criminal activity unrelated to narcotics, such as extortion, kidnapping, and cargo and fuel theft. In light of these various risks, it is important for companies and organizations operating in Mexico to pay careful attention to shifts in cartel dynamics. Travelers and expatriates in Mexico should practice the appropriate level of situational awareness, even in areas considered to be generally safe. They should also be prepared to act if they are caught in a violent incident, and they should carry an emergency kit to treat themselves or others who may be injured.

Venezuela's on a Road to Nowhere Good

2019-01-24T11:28:00Z

Highlights

The United States and Venezuela's government opposition will increase pressure on the administration of President Nicolas Maduro in an attempt to further divide the country's ruling elites.

U.S. punitory measures, such as an oil import ban, will drive some military officers and key officials to consider pushing Maduro from office to avoid heavier sanctions and ease internal competition for scarce revenue.

The severity of Washington's approach, combined with the Venezuelan government's reluctance to voluntarily step down, make a violent exit for Maduro increasingly likely.

Venezuela is heading toward a chaotic, violent transition of power. The government is fighting a losing battle against declining oil output and its own voracious political elites. Low oil prices, high government spending and extreme corruption destroyed Venezuela's energy sector — the country's sole source of export revenue. Without vast sums of oil money to line their pockets — and fund populist social programs — Venezuela's powerful political leaders have no choice but to compete for what's left of the revenue. And what's left will not be enough to keep all of them happy for long. Irreconcilable differences are fast emerging. Impelled by U.S. sanctions and more intense opposition protests, divisions among the country's rulers are widening. The key questions to ask at this stage are how will members of the Venezuelan government settle their differences — and when.

We follow Venezuela closely at Stratfor for a variety of reasons. But chief among them is a simple fact: The nature of the current government's fall from power will greatly influence how important the economically isolated, deeply impoverished country will be to the outside world. How and when the country's elites settle their differences matters because Venezuela stands to suffer serious damage — both political and physical — as it transitions away from President Nicolas Maduro.

At this point, it will be almost impossible for Maduro to avoid a chaotic outcome. Allowing free elections — as the United States and Venezuela's opposition demand — is now off the table. Maduro is rightfully afraid the opposition, bolstered by former allies, will put him on trial for presiding over Venezuela's descent into dictatorship and economic crisis. Therefore, he will resist attempts to push him from power, raising the odds of a violent transition. The Trump administration's stance on Venezuela is key to the timing of Venezuela's transition of power. The White House is considering an oil import ban that, if enacted, would virtually guarantee deeper splits within the ruling party. But an oil import ban and even heavier sanctions are not inevitable — there are arguments within the U.S. government for and against such action. But a punitive scenario is worth exploring because it would drive Venezuela's relationship with the United States down a more complicated path.

A Consensus That Maduro Must Go

If there is one thing that the United States and its Latin American allies can generally agree upon, it's that Maduro must go. The Venezuelan political opposition, other Latin American states and the rest of North America all see Venezuela as a tinderbox awaiting a spark to force a regime change. The consensus is that Venezuela's social crisis has reached a point where applying more diplomatic and financial pressure will eventually force the Maduro government from power.

Venezuela's long-marginalized opposition made its intentions for 2019 quickly known. Its plan hinges on nationwide protests to try to force Maduro from power. Drawing on a clause in the country's constitution that allows Venezuelans to rebel against an illegitimate government, Juan Guaido, the president of Venezuela's opposition-controlled National Assembly, earlier this month said he was the legitimate heir to political power in Venezuela. On Jan. 23, he declared himself interim president. U.S. President Donald Trump quickly issued a statement recognizing Guaido as Venezuela's interim leader. Brazil, Colombia and other Latin American countries soon followed suit.

The conditions for Guaido's announcement were set on Jan. 4, about a week before Maduro was set to begin a heavily contested second term, when almost all Latin American states refused to recognize the Maduro government as Venezuela's legitimate governing body. Of more concern to Caracas, however, was news that the White House was seriously mulling the possibility of an oil import ban. While not a new consideration for the White House — officials have talked about an oil import ban for more than a year — the timing was particularly bad for Maduro. Though the ruling government could quickly look for (and likely find) buyers for some of its oil elsewhere, major producers — fearing a tougher sanctions regime is just over the horizon — would flee the country, worsening Venezuela's oil production decline. The Venezuelan government's only source of revenue would shrink further, placing more pressure on Caracas to find alternate sources of income to keep military commanders loyal and political alliances within the ruling party intact.

But Washington did not arrive at this strategy because Maduro's removal holds strategic significance. Venezuela is a geopolitical small fry, located on the southeastern periphery of the Caribbean and of low importance to the outside world until the discovery of oil there in the early 20th century. The country's relevance to global oil markets and lenders peaked in the late 1990s, as its daily oil output hit more than 3 million barrels per day, enough to cement a position as a relatively important member of OPEC. As former President Hugo Chavez increased public spending to curry favor with voters to ensure the survival of his government, public finances and oil output suffered. Foreign investment dried up as expropriations, currency allocation mechanisms and corruption made Venezuela a riskier place to do business. Venezuela faded from the world scene as its oil output declined.

When it comes to Venezuela, the Trump administration's policies are shaped primarily by events on the ground and disparate security concerns. The country matters to the United States only in niche terms. One specific area of interest involves the bondholders, arbitration claimants and creditors trying to keep Venezuela on track with payments owed. The other key concern is monitored by tactically focused agencies and officials in Washington. The Venezuelan government's less salubrious activities — which include drug trafficking, funding of militants in Colombia, human rights abuses and disastrous economic policies that drive mass emigration into neighboring U.S. allies — place it on a collision course with policies espoused by different parts of the U.S. government. These tactical-level interests serve to prod the Trump administration in a certain direction, namely the one that could drive Maduro from power.

The Risk of Creating Bigger Problems

The concern motivating the administration's position is that left alone, the Maduro government will endure in a shaky political form in which political elites continue to profit from illicit activities. It would take years for Venezuela's competing elites to turn on one another in this scenario. Members of the White House who espouse rapid regime change, such as national security adviser John Bolton, see Maduro's government as being weak and likely to fall sooner if more pressure is applied. The rationale behind this is simple. If the military and political allies buttressing Maduro's rule perceive a more immediate future where oil revenue is scarce and they are left to compete over scraps, they will turn on the president and remove him. The remaining elites would then be more likely to open negotiations with the United States to achieve a form of political coexistence.

But the most serious sanctions being considered by the Trump administration to raise the stakes for Maduro and his allies run the risk of making Venezuela more unstable in the long run, all but ensuring that the United States or other outside powers will play a much larger role in administering Venezuela and funding its reconstruction in the 2020s. Weakened by years of economic mismanagement, any Venezuelan government that succeeds Maduro would be incapable of fulfilling basic governance functions. It would face deficient public infrastructure and a destroyed private sector. And with the country's oil production greatly reduced, it would have a diminished tax base. Washington would sink billions of dollars into Venezuela's reconstruction, but political and economic stability would not quickly emerge. The publicly owned energy sector would require billions of investment dollars to simply maintain oil production. A new government would inherit the problems of the old, and the very issues that irk Washington — such as endemic cocaine trafficking — probably wouldn't improve.

Successfully turning the military against Maduro also risks creating bigger problems for Venezuela and its neighbors. Maduro's political survival — and that of his accomplices — depends on opaque alliances with key military commanders who uphold the status quo out of self-interest. Some of them profit directly from illicit activities and others are monitored heavily to ensure their loyalty. A tougher sanctions regime would significantly weaken key alliances, but if the military were to turn on the state, the situation would quickly devolve into a violent, messy confrontation between factions of the armed forces. Even a short conflict risks damaging roads, bridges, government buildings and electric infrastructure. A prolonged conflict would drive even more Venezuelans into Brazil, Colombia, Ecuador and Peru, raising the financial burden on these governments as they struggle to monitor and assist hundreds of thousands of new arrivals.

No Soft Landing Ahead

The Trump administration's eventual course of action will largely come down to the White House personalities driving policy as it pertains to Venezuela. Whichever officials argue most effectively for or against heavier sanctions will sway Trump's eventual decision on how and when to put Venezuela in a tighter spot. Domestic political factors — such as concerns from Gulf Coast legislators about the effects of sanctions on U.S. refiners, their employees and domestic fuel consumers — will also weigh on Trump. But the mounting tension inside Venezuela will also determine how the outside world reacts. The opposition is ready to stage more protests against the government. Even if these demonstrations fail to unseat Maduro, they will keep the issue of Venezuela on Washington's radar. Events on the ground will also feed back into U.S. officials' perception of what needs to be done about Venezuela. For example, if security forces kill hundreds or even thousands of demonstrators in a short period of time, Venezuela hawks in the Trump Cabinet will immediately make the case for heavier sanctions, and, if the situation is bad enough, military intervention.

Even with heavy sanctions and insurrection looming, Venezuela's leaders can't easily change course to please their opponents. They are too deeply involved in wildly profitable illicit businesses and too well-established in powerful state institutions. Two decades of authoritarian rule have created unresolvable animosity between all concerned. The costs of leaving power voluntarily are far higher than the country's leadership can tolerate. Imprisonment at home or extradition to the United States are likelihoods for many. So they cling to power in the face of massive external and internal disapproval. In this volatile environment, neither the Venezuelan opposition nor the United States can facilitate a soft landing for the Maduro and his supporters. The conditions for a relatively uncomplicated change of government passed years ago. Exactly how and when Venezuela's transition of power comes is an open question, but it's going to be soon and it's going to be a disorderly and potentially violent process.

Tracking Jihadist Movements in 2019: Al Qaeda

2019-01-22T11:30:00Z

Editor's Note

With the arrival of the new year, Stratfor's unique protective intelligence team has once again presented its assessment of the state of the worldwide jihadist movement. In this condensed excerpt from Stratfor Threat Lens, a unique protective intelligence product designed with corporate security leaders in mind, we've split our discussion of the jihadist movement into three sections: the al Qaeda pole, the Islamic State pole, as well as the Taliban and the grassroots jihadist threat – the last of which takes its inspiration from al Qaeda, the Islamic State – or both. We'll be exploring the recent past and future prospects of each component in a three-part series, starting with Part 1: Al Qaeda.

The jihadist movement is a global insurgency – not just a terrorist phenomenon. Today, most of the world's jihadist groups have affiliated themselves with one of two poles: al Qaeda or the Islamic State. This seeming unity, however, belies numerous disagreements about how to pursue jihad. Much of this fractiousness stems from the many mergers of earlier extremist groups who have brought their own histories and philosophies into the new larger groups of al Qaeda and the Islamic State. This contentiousness is perhaps most vividly illustrated by the relationship between al Qaeda and Jamaat al-Tawhid and Jihad, the group led by Abu Musab al-Zarqawi that joined the al Qaeda movement in 2004 – only to split from it in 2014 to form the Islamic State, creating a competing pole in the jihadist movement.

Given these differences, it is little surprise that there is a great deal of variance among different groups – even among those under the same al Qaeda or Islamic State umbrella. In this, some "franchises" stick close to the philosophies and guidance provided by the nominal parent organization, while others stray further afield.

Let's take a look at how al Qaeda's various franchises fared in 2018 and what we can expect from them in the year to come.

Al Qaeda Core

Status

The leadership of al Qaeda's core continues to provide ideological guidance for the group's branches and grassroots followers around the globe. While its core failed to conduct any major terrorist attacks in 2018, that does not mean it has forsaken such planning and operations. Indeed, British Security Minister Ben Wallace said in December that al Qaeda remains focused on major plots targeting the West and apparently wants to reprise the success of the iconic 9/11 attacks through another aviation attack. Wallace also noted that al Qaeda is attempting to develop new methods and tactics to smuggle explosives aboard aircraft and attack airports.

Forecast

After predicting the fall of the Islamic State's self-declared caliphate in Syria and Iraq, al Qaeda's core will continue to call on individual militants and groups to return to their fold. Al Qaeda's leaders believe that the group's gradualist approach, which we often refer to as "bin Ladenism," is a more effective way to advance the global jihadist insurgency. With this philosophy, al Qaeda will work to wear down Western powers and their Middle Eastern allies. The West will be its primary target, as it plans spectacular attacks and hopes to inspire grassroots militants to conduct such operations. At the same time, Stratfor believes that al Qaeda's core leadership will direct franchise groups to confront their rivals from the Islamic State, as well as encourage seasoned fighters, local groups and new recruits to join – or, in some cases, rejoin – al Qaeda. And with its fixation on aircraft and the discovery of grassroots jihadists among airport staff, al Qaeda is bound to succeed in an aviation-related attack again – it just remains to be seen whether it does so in 2019.

Al Qaeda Franchises

Al Qaeda in the Islamic Maghreb (AQIM)

Status

AQIM remained active with sporadic attacks in North Africa, even if some of its subordinate groups in the Sahel upstaged the core in Algeria. AQIM has focused mostly on conducting an insurgency in mountainous and rural areas as it focuses more on surviving and integrating into the local population, rather than conducting flashy operations. Over the past year, the group came under heavy pressure from local security forces, meaning its efforts centered on ambushing and fighting security forces rather than attacking civilian targets. AQIM's Uqba Ibn Nafi brigade in Tunisia is in a similar situation as the main group in Algeria.

Forecast

Under heavy pressure from security forces, AQIM is unlikely to significantly increase the number of attacks in 2019. Nevertheless, because it is so intertwined with the local population, security operations are unlikely to eradicate it. But if North Africa does witness political upheavals, such as large, destabilizing protests in Tunisia or instability that would arise from the death of Algerian President Abdel Aziz Bouteflika, AQIM is well-positioned to take advantage of any ensuing chaos, particularly if security forces are redeployed from the fight against AQIM.

Jamaat Nusrat al-Islam wal-Muslimin (JNIM)

Status

JNIM effectively marshaled manpower, resources and communications to maintain operational tempo in 2017, allowing it to degrade the capability of local security forces and remain the dominant jihadist group in the Sahel. The group shifted its focus from hotel attacks to more hardened targets in 2018, conducting kidnappings, ambushes, attacks on foreigners and raids on U.N. and French forces in Timbuktu and Ouagadougou. Most of JNIM's propaganda targets the French, while the group has advocated attacks on French assets in the Sahel and in France itself.

Forecast

JNIM will remain the primary security threat to government and civilians in the Sahel. It will retain steady streams of recruits and money, while it will also mount attacks against hardened targets. At the same time, the Sahel could re-emerge as another theater for clashes between al Qaeda and the Islamic State, as has occurred before, when militants with a JNIM forerunner, al-Mourabitoun, killed several former members who defected to the Islamic State in the Greater Sahara (ISGS). If the ISGS begins asserting itself directly against JNIM or infringes upon JNIM's financial operations, it could provoke retaliation from the al Qaeda franchise.

Al Qaeda in the Arabian Peninsula (AQAP)

Status

In 2018, AQAP focused primarily on Yemen, while the group's operational activity declined as it faced setbacks from increasing drone strikes, problems with local recruiting and other factors (the United Arab Emirates reportedly cut deals with AQAP militants to prevent them from attacking Emirati forces). AQAP also engaged in direct clashes with the Islamic State's Yemen province. But even if 2018 was a quiet year for the group, AQAP still has robust resources and battle-hardened fighters, and it possesses deep local connections to boot. Still, the United States conducted 36 airstrikes against the group last year, most of which targeted AQAP leaders and facilities. And on the first day of 2019, Jamal Ahmed Mohammed Ali al-Badawi, a key operative in the attack on the USS Cole in 2000, was killed in an airstrike.

Forecast

AQAP will continue to focus on cultivating local relationships and fighting against its local enemies, including the Houthis, foreign forces and the Islamic State. While this may not result in a surge in attacks against targets in Yemen or beyond, it will lay the groundwork for the group to recover its strength. The group will likely intensify its efforts against the Islamic State, while retaining focus on internal efforts rather than attempts to project terrorist capability abroad. Ultimately, AQAP will continue to benefit from the ongoing instability in Yemen's civil war, allowing it to remain stronger than its regional, Islamic State rival.

Al Qaeda in the Indian Subcontinent (AQIS)

Status

AQIS directed its energies last year to assisting the Taliban in military operations inside Afghanistan, meaning it engaged in little to no activity outside the country. Aggressive measures by local security forces also limited its capabilities outside the Afghanistan-Pakistan border region.

Forecast

AQIS shows no signs of emerging as a significant force on the Indian subcontinent. It will struggle to marshal adequate resources or manpower, while aggressive actions by security forces (particularly those in India and Bangladesh) will also hamper it. An attack against a significant or foreign target is possible, but the group is unlikely to become an operational security threat in 2019.

Al Shabaab

Status

Al Shabaab remained the most powerful militant force in Somalia in 2018, conducting kidnappings, ambushes and complex attacks throughout the country, including Mogadishu. It succeeded in overwhelming security measures in the Somali capital, staged numerous cross-border raids along the Somali-Kenyan border and even attempted an attack in Nairobi. The group acknowledged the Islamic State, its rising competitor, for the first time in December 2018 following an attack by a local Islamic State franchise on al Shabaab fighters.

Forecast

Al Shabaab will remain a powerful force within Somalia for the foreseeable future. With al Shabaab's revenue streams showing no signs of drying up and security forces unable to eradicate it, the group will continue to conduct attacks and kidnappings throughout the country. Mogadishu will be vulnerable to al Shabaab operations, including bombings that cause mass casualties and complex attacks. Attacks further afield are also possible, because the group has the intent, capability and resources to stage attacks against neighboring countries such as Kenya, as demonstrated by an assault on the Dusit Hotel in Nairobi on Jan. 15. Al Shabaab will also retain an interest in attacking targets associated with the United States, which has conducted a number of drone strikes against the group.

Al Qaeda in Syria

Status

Al Qaeda's franchises in Syria faced major setbacks as the government of President Bashar al Assad retook most of the territory where they once operated. The remaining units of al Qaeda such as Tanzim Hurras al-Deen are now bottled up in Idlib province, and Hayat Tahrir al-Sham (HTS) – the latest incarnation of Jabhat al-Nusra – has pulled out of al Qaeda's orbit. The group reportedly sought to project its ability to launch attacks from Syria, but it was too busy focusing on internal problems to successfully do so.

Forecast

Al Qaeda's Syrian affiliates will face mounting pressure from Syria, Turkey, Iran, Russia and other militant groups in the country. The group will attempt to exploit any chaos that may ensue from the U.S. withdrawal, as well as from any potential clashes among the state actors (Syria, Turkey, Israel, Russia and Iran) in Syria. The group is unlikely to launch attacks overseas because it will be too focused on local dynamics (and survival) to dedicate time or resources to attacks elsewhere.

Ansar al-Islam and Jund al-Islam

Status

The operational activity of al Qaeda's two affiliated groups in Egypt (Ansar al-Islam in the Sinai Peninsula and Jund al-Islam in the Western Desert) ground to a near-halt in 2018, as both groups proved incapable of conducting either large or small attacks against civilians or security forces. Jund al-Islam began to build up manpower in early 2018, amid reports that it was recruiting former army officers. However, the arrest of prominent leader Hisham Ashmawy in October 2018 represented a significant setback for the group.

Forecast

2019 will be a litmus test for the durability of al Qaeda's Egyptian branches. While the core group often plays the long game, the near-complete absence of operational activity, combined with the loss of a key leader, bodes ill for its prospects. Al Qaeda will attempt to rebound in Egypt with attacks against security forces or foreigners, but the Islamic State will nevertheless continue to overshadow the group in the country.

Zimbabwe: How Currency Shortages Are Fueling a Crisis

2019-01-15T11:24:00Z

What Happened

After months of hardship caused by a deepening currency crisis, protests in Zimbabwe have started to heat up. The cost of gasoline and diesel in Zimbabwe more than doubled overnight – sending prices for consumer goods skyrocketing as well – after the government suddenly hiked fuel prices. In response, the Zimbabwe Congress of Trade Unions called for citizens to strike by staying at home for three days starting Jan. 14. While the strike was largely limited to the country's two largest cities, Bulawayo and the capital city of Harare, a number of altercations between protesters and security forces have raised the situation's intensity by several degrees.

Civilians have erected barricades to disrupt the daily commutes of those who ignored the call to strike, leading to faceoffs with security forces. In some locations around Harare, police even resorted to the use of live ammunition, leading to several fatalities and numerous injuries. Still, the protests seem relatively contained, and security forces appear to be in control of the situation.

Why It Matters

Zimbabwe's currency crisis continues to pressure the government of President Emmerson Mnangagwa, who overthrew longtime strongman Robert Mugabe to gain power a little over a year ago. The Zimbabwean economy is inherently weak, but the decision to raise fuel prices in an effort to stave off energy shortages has focused citizens' anger on Mnangagwa and his administration. The government is actively searching for a solution to the crisis, but its severe lack of foreign currency means there is little it can do.

Meanwhile, the hike in fuel prices is pushing up the costs of consumer goods, further reducing the purchasing power of Zimbabwean citizens and causing unrest. These price increases have already led to panic buying, and several stores were looted during protests on Jan. 14. As the population's access to basic necessities continues to shrink, the Zimbabwean government will face increasing difficulty in trying to control them.

Background

Zimbabwe's economy has continued to deteriorate over the past two years, largely reversing the initial recovery that occurred after the country overcame its problems with hyperinflation in 2009 by abolishing the Zimbabwean dollar. Since then, Zimbabwe has used various foreign currencies to conduct business — primarily the U.S. dollar and the South African rand, as well as others. However, the country simply doesn't have sufficient reserves of foreign currencies to continue purchasing necessary imports and paying out wages.

In September 2018, Zimbabwe's foreign currency reserves amounted to a mere $200 million, which is significantly less than the buffer the country needs to comfortably continue essential operations. What's more, that amount is far less than the country's growing backlog of foreign payments, which ballooned to $700 million in October 2018. Zimbabwe's use of foreign currencies — as well as its dependence on foreign markets for fuel, food and other necessary goods — has led to a longstanding negative trade balance. Over time, that trade deficit has strained the government's finances beyond their limits, causing the country's economy to spiral out of control.

Europe's Four Big Challenges in 2019

2019-01-10T11:08:00Z

Highlights

Domestic constraints in the eurozone's four largest economies will limit their ability to cooperate at the Continental level.

2019 will test the health of nationalist and populist political movements, which represent the main threat to the continuity of the European Union in its current form.

This year, the bloc will face three sources of economic risk: trade disputes with the United States, Brexit and economic fragility in Southern Europe.

The European Union will be under domestic and external pressure to limit Chinese access to strategic technology and resist Beijing's investments in infrastructure.

2019 is just over a week old, but it's already shaping up to be a busy one for Europe, which has a long to-do list to address as it grapples with political turbulence, slowing economic growth and tense relations with the world's superpowers. European leaders will contend with a host of issues, including Germany's unstable political coalition, the staying power of populism, Italy's economic woes, and concerns about China and Russia's looming presence over the European Union. Here are four trends that will shape Europe's political, economic and social agenda this year.

Trend 1: Trouble in the EU's Top Four

In 2019, the governments of the eurozone's four largest economies will encounter a raft of political troubles that will limit their room to maneuver at home, as well as their ability to offer cohesive leadership in the bloc as a whole. In Germany, Angela Merkel's decision not to run for re-election in 2021 will force the members of her coalition government to prepare for a political environment without her. Even if Merkel manages to complete her term, her authority within the center-right Christian Democratic Union (CDU) will progressively weaken as the party plans for her succession. In the meantime, the center-left Social Democratic Party (SPD) will seek to distance itself from the CDU, its coalition partner, in a desperate bid to improve its popularity. This could make Germany's government increasingly dysfunctional, reducing Berlin's desire to introduce structural reforms at the EU level. As a result, proposals to establish a common deposit insurance scheme for eurozone banks or create a large eurozone budget to stabilize countries in financial distress (both of which require strong German backing) are unlikely to move forward anytime soon.

The French government, for its part, is entertaining a number of ideas to enact domestic and European reforms, yet it also faces significant limitations. At home, the yellow vest protests have served notice to all that French citizens are more than willing to hit the streets to protest any economic policies they oppose. Seeking to avoid new demonstrations, President Emmanuel Macron's government will likely take a more cautious approach to reform this year. This could mean watering down plans to simplify the country's pension system and tighten the eligibility criteria for unemployment insurance. At the EU level, meanwhile, opposition from Northern European countries proved strong enough last year to dilute Paris' proposals for greater risk-sharing and higher spending in the eurozone. In the end, another year marked by domestic constraints will restrict Paris' ability to influence the European Union's policy direction.

Italy will be another country to watch in 2019. Late last year, the Italian government acceded to pressure from financial markets to tone down its criticism about the euro and reach an agreement with the European Commission over its budget plans. But the combination of a heavy debt burden, fragile banks and meager growth means the Italian economy is not out of the woods. Moreover, the governing League and Five Star Movement parties find it hard to conceal their ideological differences on a host of issues ranging from immigration to infrastructure projects — a trend that will continue in 2019. Unsurprisingly, an early election would only increase uncertainty about Italy's future. Meanwhile, the eurozone's fourth-largest economy, Spain, suffers from too many domestic problems (ranging from a minority government that struggles to get things done to persistent separatist rumblings in Catalonia) to even consider shaping the bloc's future direction.

These domestic problems are occurring at a time when the European Union must take decisive action on policy. One of the Continent's most heated debates this year will revolve around the European Union's next seven-year budget, which must enter force in 2021. The discussions, which will focus on the size and distribution of agricultural subsidies and development funds, will lay bare the competing strategic interests within the union. The bloc's members that are net recipients of funds (most of which are in Eastern Europe and, to a lesser extent, Southern Europe) will push to increase or at least preserve the current levels of spending, while the net contributors (most in Northern Europe) will drive for spending cuts. The negotiations to appoint the new members of the European Commission and the new presidents of the European Central Bank (ECB) and the European Council will also lead to ideological and strategic disputes among EU governments. These negotiations are worth following closely, because the future of the European Union's economic, foreign and monetary policies will be on the table.

Trend 2: Populism Is Here to Stay

In recent years, populist and nationalist forces have made serious inroads in many member states. In 2019 — and beyond — such forces will continue to exert influence on the bloc's politics for a simple reason: The factors that contributed to their rise are still present. Issues such as low economic growth, skepticism about the ostensible benefits of globalization, rising wealth inequality, anxiety about immigration, demographic changes and concerns about the loss of national sovereignty will continue to provide fertile ground for political forces that question the current political and economic order in Europe.

Naturally, these forces face significant limitations. Most voters still want their countries to remain in the European Union and the eurozone — even if in many cases this desire stems not from any innate love for the Continental project but from the fear of the unforeseeable consequences of leaving it. The same applies to politicians, who often tone down their anti-European rhetoric once they assume power and have to make concrete policy choices. Nevertheless, the rise of populist and nationalist forces is the single greatest threat to the survival of the European Union in its current form. Ultimately, the union cannot count on fear of the unknown or on institutional restrictions to perpetually prevent these parties from winning an election or, if they do, soften their Euroskepticism. Compounding the issue is the fact that the emergence of populist and nationalist forces has made many moderate political parties adopt similar stances in order to compete with the upstarts.

2019 will present a stern test for these political movements. The good news for the European Union is that there aren't that many general elections scheduled on the Continent this year. In late May, however, the entire bloc will hold elections to appoint lawmakers to the European Parliament. This will give voters a low-risk opportunity to punish their national governments and support anti-establishment parties. Pro-EU forces will retain control of the Parliament, but the legislature will become more fragmented, meaning policymaking could become more difficult. The elections will also have domestic repercussions, as political parties (both in government and in the opposition) will convene to map out their political futures after the vote. The Europe-wide polls could precipitate early general elections in places with weak governments (like Spain) or awkward coalitions (like Italy and Germany). One particular vote to watch will be Poland's general election in November, when voters will have to decide whether to re-elect the current government, which is one of the loudest critics of the European Union's federalist efforts.

Trend 3: Economic Risk Isn't Going Away

The eurozone will also have to deal with at least three sources of economic risk in 2019. The first stems from trade issues with the United States. U.S. President Donald Trump's administration is still considering whether to introduce higher tariffs on European automobiles. A report by the U.S. Department of Commerce on whether automobile imports represent a threat to national security in the United States is due by mid-February; once released, the White House will have 90 days to decide on what action to take. As the main producer of vehicles in Europe, Germany stands to lose a lot if that threat materializes, but so do the many of the EU countries that constitute Germany's supply chain. In the end, the European Union will find it difficult to sign a comprehensive free trade agreement that includes agriculture — which is what the White House will likely seek in exchange for not introducing higher tariffs on European cars. Moreover, should the White House introduce higher tariffs on EU-produced vehicles, Brussels would retaliate with its own countermeasures, resulting in an overall reduction of bilateral trade between two of the three largest economic players in the world.

Brexit poses the second big source of economic risk in Europe. The British government can avoid a disorderly exit from the European Union even if the House of Commons rejects the plan that Prime Minister Theresa May's government negotiated late last year with Brussels because it can request an extension of the negotiation period (which would require unanimous support from the rest of the European Union) or withdraw its request to leave (which London can do unilaterally). But suspending the United Kingdom's exit will have little meaning unless London drafts a strategy to follow that delay. This could take the form of an early election, a new exit agreement or even a second referendum on European Union membership (especially if the Labour Party takes over the government). While any of these options would postpone Brexit, they would also create new sources of uncertainty and anxiety, both in the United Kingdom and abroad.

The final source of risk is an old one: Southern Europe's economic fragility, which will manifest itself in many ways in 2019. One cause for concern is a vicious circle, known as a "debt doom loop," between countries with high levels of debt and the banks that hold that debt. Over the past decade, lenders have purchased more and more public debt from eurozone countries, but the banks holding these bonds suffer if debt prices fall. Once more, the main country to watch in 2019 will be Italy. Even if Rome has reached a truce with the European Commission, it has failed to assuage the doubts about the sustainability of its public finances, while some banks still own billions of euros in sovereign Italian debt, as well as large amounts of non-performing loans.

But there are additional issues that complicate the economic picture in Southern Europe. Now that the ECB has ended its bond-buying quantitative easing program, there will be one less source of demand for eurozone debt this year, meaning borrowing costs, especially for weak economies in Mediterranean Europe, could go up without the central lender's intervention. At the same time, countries like Italy, Spain and France have announced budget plans for 2019 that will lead to higher deficits. This is a risky move for countries with already high levels of public debt. When the next recession comes — and many eurozone economies are already slowing — these countries will have little fiscal room to deal with the problem.

Trend 4: Ambiguous Ties With China and Russia

In addition to the trade disputes with the United States, the European Union will have its hands full with the other two key powers in the international system, China and Russia. At present, the trade war between China and the United States creates an opportunity for the European Union, since Brussels can increase pressure on Beijing to open its market to European investment. Europe wants China to grant European investors an equal footing with its domestic companies and remove subsidies for Chinese businesses. While China is unlikely to significantly alter its economic model, any further downturn in U.S.-Chinese relations could make Beijing more receptive to Brussels' pressure.

But the European Union is also worried about China's increasing presence on the Continent. Brussels is especially concerned about Beijing's investment plans in Central and Eastern Europe, arguing that some of the proposals flout EU rules on public procurement and state aid in addition to lacking a sound cost-benefit analysis. The bloc also fears that Beijing's rising economic clout will ultimately translate into political influence — something that would only exacerbate the union's political fragmentation. To some extent, these fears are already coming true, as rich EU countries, wary of Chinese investment, have begun to clash with poorer ones, which welcome whatever foreign investment they can get.

At the same time, the bloc is wary about Chinese investment in sensitive technologies. Germany, France and others have already introduced mechanisms to screen foreign — that is, Chinese — investment on critical technology and infrastructure, although the union has failed to introduce a common mechanism at the Continental level. At the same time, the United States is increasing pressure on its European partners to introduce stronger barriers to Chinese investment, which will affect research and trade in areas including artificial intelligence and the development of 5G networks.

Likewise, ambiguity will mark Europe's relations with Russia this year. The European Union recently extended its economic sanctions against Moscow until mid-2019, and it will probably do so again before the end of the year given that the prospects for a resolution to the conflict in eastern Ukraine appear dim; if anything, frictions could even escalate as the rivals compete for control around the Sea of Azov. Countries in Central and Eastern Europe will continue their demands to maintain a tough stance on Russia, while regional leaders like Poland will look to strengthen political, military and economic ties with the United States, which they see as the region's ultimate protector against potential Russian aggression. Poland, Romania and others will also seek ways to diversify their sources of energy through measures such as infrastructure projects and purchases of liquified natural gas. But not all European countries perceive a Russian threat at their doorstep. Germany, for one, defends the controversial Nord Stream 2 pipeline, which will bypass Ukraine in transporting Russian natural gas to Europe, while several other EU member states have also insisted on pursuing a detente with Moscow so as to foster trade and find common ground on issues ranging from Syria to Iran.

A Confluence of Problems

The European Union is not facing the same types of immediate threats that it did during the height of the financial crisis earlier this decade, when the economic woes of Greece, Ireland, Portugal and others put the continuity of the eurozone in question. The threats facing the union today are more structural in nature, including shortcomings in the eurozone's setup, the lingering social and political repercussions of the recent financial and migration crises, and the ongoing competition among the global superpowers. This might mean that Europe's problems are not as urgent as they were a few years ago, but that doesn't make them any less dangerous for the Continental bloc.

The Curious Story of an American Arrested by the Kremlin

2019-01-09T00:11:00Z

Highlights

Russia has arrested an American corporate security director, Paul Whelan, but he doesn't have the profile befitting a non-official cover intelligence officer, even though there are elements in his background that would bring him to the attention of the Kremlin's security services.

Russian authorities arrested Whelan not long after Russian citizen Maria Butina pleaded guilty in a U.S. court to being an unregistered foreign agent, but it doesn't appear that Moscow is seeking a prisoner swap.

The Kremlin could try to hold Whelan to exchange him in the future for any "illegal" Russian operative caught operating in the United States.

The holiday season was less than merry for one Paul Whelan. On Dec. 28, 2018, the U.S. citizen (and bearer of additional passports from Canada, Ireland and the United Kingdom) was arrested by officers of the Russian Federal Security Service (FSB) in his room at Moscow's Metropol Hotel. His family said the former Marine was in Moscow to play tour guide for the family of a fellow service member who was marrying a Russian woman, according to the Detroit Free Press. The Russians, naturally, have a different story. For them, Whelan is an intelligence officer who was using "non-standard methods for intelligence gathering," as well as social media to target Russians with access to classified information. In fact, the FSB claimed they arrested Whelan shortly after a contact gave him a flash drive that contained a list of employees at a classified Russian government agency.

The Western press was quick to tie his arrest to the high-profile case of Maria Butina, a Russian citizen who pleaded guilty in a U.S. court on Dec. 13 to being an unregistered foreign agent. But the more I learn about Whelan, the more I become convinced that he was not an intelligence officer. Moreover, I am also fairly certain that his arrest is not linked to Butina's guilty plea. That, however, doesn't mean that the Russians don't have their reasons for detaining him.

An Odd Duck

In the wake of Whelan's arrest, former CIA official John Sipher said the agency would never use non-official cover officers (NOCs) — operatives who have no official ties to the government that employs them and, importantly, no diplomatic immunity — in Russia. Now, it is understandable that Sipher and others would want to downplay the CIA's use of NOCs in dangerous places, but I remain somewhat skeptical of such claims — although I admittedly have no direct knowledge of CIA operations in Russia. Nevertheless, a simple fact remains: If the CIA or some other U.S. intelligence agency were planning to deploy a NOC in Russia, Whelan would patently not be fit for the job.

First, his current position — corporate security director for an auto parts manufacturer — is a poor choice for a NOC. In many cultures, the terms security and intelligence are interchangeable, meaning many do not view them as separate functions as in the United States. Corporate security personnel generally come from backgrounds in law enforcement, the military or both (like Whelan), which would make them subject to additional scrutiny and suspicion — certainly too much scrutiny for a NOC trying to operate comfortably, especially in the exceptionally hostile environment of Russia. Whelan reportedly made his first tourist trip to Russia while serving on active-duty tour in Iraq with the U.S. Marine Corps, something that likely raised the FSB's eyebrows. What's more, given the perilous state of Russia's auto industry, I am highly skeptical that Whelan was using his position at the car parts manufacturer as a means to engage in any sort of industrial espionage.

Second, Whelan received a court-martial in 2008 for larceny on 10 counts of passing bad checks, along with other charges, while serving on active duty in the Marines. According to news reports, he also had a history of not paying his rent while on active duty. The New York Times also published a court-martial document indicating that military authorities had reduced his rank from staff sergeant (E-6) to corporal (E-4) and discharged him from the military. The record also shows that Whelan was sentenced to a bad conduct discharge, only for a military judge to suspend the ruling.

An FSB officer told the Rosbalt news service that he believed the court-martial may have been cover to allow Whelan to serve as a NOC, but that explanation simply does not add up. A Marine staff sergeant who is experiencing financial problems, passing bad checks and failing to pay his rent is more of a counterintelligence problem — someone who could be recruited by a foreign power — than an ideal candidate for a highly secretive assignment as a NOC.

And according to Whelan's family, he had engaged in a competition with his sister to see how many passports each could acquire — extremely unusual behavior for an intelligence officer. While such officers do often use passports from third countries to travel, these additional documents are in the name of cover identities, not the officer's true name, as in Whelan's case. Moreover, intelligence agencies, rather than officers themselves, are responsible for obtaining these secondary passports. Indeed, possessing multiple passports all in the same name is terrible intelligence tradecraft. It would put any operative more in the league of mall cop Paul Blart than agent extraordinaire Jason Bourne.

Whelan's social media profile, especially on the popular Russian social media platform VKontakte, is also quite odd. Quite frankly, I believe it's simply far too amateurish to be the profile of a professional intelligence officer seeking to use social media to recruit sources, especially because he was using his true identity rather than a covert one.

I shared some of these observations with friends who are former CIA clandestine service officers, and we all agree that Whelan is simply too much of an odd duck to be a NOC. Nevertheless, the more I look at the case, I can certainly see why Whelan's profile and odd activities might have raised the suspicions of the FSB, which might have interpreted them as signs that he was an intelligence officer, particularly in the current environment.

The Importance of Context

I have long advised people about the need to develop a good understanding of their destination's environment when planning a trip abroad. This pertains not only to criminal and terrorist trends but also to the intelligence environment, as well as how growing tensions between nation-states can increase scrutiny on travelers who come from ostensibly hostile countries.

Last March, I discussed how the Sergei Skripal assassination attempt and the U.S. operations against Wagner mercenaries in Syria were increasing tensions between the West and Russia. I specifically noted:

But these incidents and their fallout will no doubt make Russia's Federal Security Service (FSB) and Foreign Intelligence Service even more aggressive toward Westerners living or traveling in Russia.

Then, following the expulsion of Russian intelligence officers from the West and vice versa, I noted how the expulsions of intelligence officers operating under official cover would increase the West's use of NOCs and Russian intelligence's use of "illegals" as both sides sought to pick up the operational slack left by the expelled officers and recruit new agents. I noted that:

Civilians caught in the middle of this growing intelligence war can expect to be increasingly scrutinized, especially business travelers, tourists, nongovernmental organization workers and journalists. Security services in the West will place further emphasis on travelers from Russia, and those in Russia will do the same for Western travelers.

I also stated the following:

Individuals suspected of being intelligence officers will be heavily surveilled and their electronic communications will be monitored. The local counterintelligence agency may also interview suspects directly, in an overt attempt to either rattle them or place them on notice that they are under the microscope. Suspected intelligence officers or anyone else of interest to Russian intelligence can expect to be approached by people attempting to honey-trap them, no matter their gender and orientation. And Western visitors to Russia will likely have their hotel rooms wired for video and audio.

This was the kind of morass that Whelan waded into. With his periodic journeys to Russia, strange affect, long-standing contact with Russian guys on social media and apparent uninterest in FSB honey traps — the security service told Rosblat that it was suspicious of him because he was more interested in drinking with Russian friends (male acquaintances he had met online) rather than in "pretty Russian girls" — it is no wonder why Whelan would have elicited the FSB's suspicions.

Throughout my travels, I have frequently encountered intelligence-officer wannabes: people who have watched too many Hollywood movies and believe that they can become self-styled "spies." I don't know enough about Whelan to say whether this could apply to him, although his passport collection could be an indicator of this type of profile. If he did style himself as an intelligence officer, it could explain the flash drive with classified information — another example of sloppy tradecraft for a real intelligence officer. (although it must also be noted that the FSB could have easily planted such evidence to entrap or frame Whelan.) Nevertheless, it is not difficult to see how the FSB would take a dim view of a corporate security director who is a former cop and Marine, who travels to Russia for personal rather than company business, and who likes to hang out with Russian soldiers.

Trade Bait?

Many in the media have speculated that the FSB might have nabbed Whelan as trade bait for Butina. That was also my initial thought, but on further reflection, she is unlikely to be sentenced to much more than the time she has already served, meaning she could soon be on a plane home to Russia. Thus it makes little sense to frame and arrest an innocent man to exchange for her. Besides, Butina's guilty plea and decision to cooperate with prosecutors stands in stark contrast to past Russian intelligence officers, such as Rudolf Abel (true name Willie Fisher), who was extremely stoic — admitting nothing and denying everything — even when caught red-handed.

But while Whelan might emerge to be a hobbyist who styled himself as an intelligence officer, I can state with a fair degree of certainty that he is no NOC and that the FSB did not detain him as trade bait for Butina. That is not to say, however, that Whelan might not yet prove useful in a swap. With the Russians increasing their use of "illegals" in the wake of the West's expulsion of intelligence officers using diplomatic cover, Whelan — and perhaps other Americans caught in the wrong place at the wrong time — might come in handy if and when the United States gets its hands on a Russian illegal.

Why Washington's Foes Won't Welcome a Quick U.S. Pullout From Afghanistan

2019-01-03T22:17:00Z

Highlights

Although the Taliban has welcomed the prospect of a U.S. withdrawal from Afghanistan, the group will have to decide whether to press for a greater advantage after the pullout or pursue a deal out of fear of a growing Islamic State.

Pakistan, Iran, China and Russia might not like having U.S. troops on their doorstep, but they worry about the implications of any rapid withdrawal of U.S. forces.

Because no neighboring country can assume the United States' mantle in Afghanistan, each will seek to guarantee only a modicum of stability in their areas of interest in the country.

U.S. President Donald Trump's announcement late last month about the imminent withdrawal of U.S. forces from Syria grabbed all the headlines, but it wasn't his only notice about a coming pullout. According to reports, Trump has also ordered the withdrawal of half of the 14,000 American forces in Afghanistan. Although the White House subsequently contradicted the reports on Dec. 28, Trump has made no secret of his distaste for the long U.S. involvement in the country. What's more, Washington's current efforts to reach a peace deal with the Taliban highlight its increasing impatience with the enduring war in Afghanistan and its desire to leave the conflict.

While the Taliban and the Afghan government will celebrate and bemoan, respectively, a big reduction in U.S. troops in Afghanistan, the pullout will force regional neighbors Pakistan, Iran, China and Russia to weigh their options and consider their strategies in an Afghanistan with few or no American forces. Their differences notwithstanding, all these countries have a significant stake there, yet none is likely to adopt a significant, on-the-ground presence in the wake of an American withdrawal. Instead, they are all likely to enhance their ties with Afghanistan's various dominant actors and carve out zones of influence in the country to promote their interests and insulate themselves from the scourge of transnational terrorism.

The Taliban's Choice

Afghanistan's war is currently locked in a stalemate. The Taliban dominate large swaths of the countryside while the U.S.-backed government holds the urban areas. Meanwhile, the Islamic State maintains a small but dangerous presence, frequently clashing with both the Taliban and the central government. International forces assisting Kabul, including the 14,000 U.S. troops and smaller NATO and other allied contingents, are indispensable to the government. While a significant drawdown or outright withdrawal of these forces would not necessarily prompt the immediate collapse of the Afghan security forces, there is little doubt that a pullout would allow the Taliban to seize and maintain the initiative and gradually capture ever more territory.

Washington remains especially critical to Kabul's security operations, because it provides much-needed air power, logistics and training. The United States also conducts the lion's share of strikes and special operations raids on key Taliban targets, often at night. Critically, the Western presence in Afghanistan also brings in desperately needed funding that foots most of the bill for the Afghan security forces, as well as the wider Afghan economy. The cessation of such funding would deal an even bigger blow to Kabul than the withdrawal of U.S. forces.

It is little surprise, then, to read that the reports of a U.S. drawdown have shaken and dismayed many Afghan government and security officials. In contrast, Taliban social media accounts erupted in jubilation at the news. Although the Taliban have yet to formally enter peace talks with Kabul, any withdrawal could harm the chances of an end to hostilities because the militant group might withhold concessions in the hopes of waiting Washington out. At the same time, the Taliban might be more amenable to a transition deal with the United States due to their concerns about the growing strength of the Islamic State and other more radical extremist groups. Regardless of how a drawdown occurs, it is clear to all concerned that the Taliban will remain a pivotal political player in the future of the country.

As the United States signals its intention to leave Afghanistan — at least partially — neighbors such as Pakistan, Iran, China and Russia will have to develop their own strategies to deal with the vacuum. For all their critical differences with the Washington, none will be particularly happy to see the United States leave, especially since they all lack the desire and, in some cases, the capability to deploy a replacement force. Instead, the foursome will focus on building influence with key Afghan actors while placing a special emphasis on securing the areas that abut their territory.

Pakistan: Taking Care of Imperatives

Islamabad's overarching goal in Afghanistan is to ensure that Pakistan does not become encircled by India and a hostile government in Kabul, although it also wishes to convince any post-conflict Afghan administration to renounce its territorial claims to Pakistani soil. To this end, Pakistan has long cultivated its ties with the Taliban as a relatively friendly force to counter the emergence of a more India-aligned Afghan government. Pakistan has also been loath to sever its support for the Taliban, even at the cost of harming its wider relationship with the United States. For Islamabad, securing its northern front from potential threats is simply more urgent.

Even so, Pakistan's differences with the United States do not mean that a rapid U.S. withdrawal will please Islamabad. It would prefer to see a methodical, negotiated drawdown that ensures its preferred Afghan factions retain a significant stake in Kabul. This preference is driven by increasing concerns over the emergence of radical transnational forces such as the Islamic State, which would likely grow in strength if a vacuum emerges in Afghanistan.

As a result, Islamabad will likely encourage the Taliban to engage in negotiations while attempting to maintain its own seat at the table so it may advance its interests. But to the United States' likely chagrin, Pakistan won't sever its ties with the Taliban when the group is on the cusp of acquiring an even more pivotal role in Afghanistan's future — a development that would certainly help insulate Pakistan from threats from the north.

Iran: Shifting Sands

Even before the United States invaded Afghanistan in 2001, Iran had to contend with threats from its eastern neighbor varying from spillover fighting to drug trafficking. In 1998, Iran even came close to invading Afghanistan after Taliban forces murdered 10 Iranian diplomats after they seized the Afghan city of Mazar-e-Sharif. At the time, Tehran largely backed the anti-Taliban Northern Alliance, which eventually partnered with the United States to remove the Taliban from power. But their ties have since shifted. Iran has begun supporting certain factions of the Taliban in recent years to gain more traction and influence in western Afghanistan amid an increasingly tense standoff with the United States.

Tehran will be somewhat relieved to see Washington leave Afghanistan, if for no other reason that it would eliminate a possible staging post for an American attack on Iran. (A U.S. RQ-170 spy drone that crossed over into Iran in December 2011, for instance, reportedly departed from a base in Afghanistan.) Still, Tehran will also harbor worries about a quick U.S. pullout, because that would elevate the risk of Afghanistan's instability spilling over into Iran. Tehran's previous enmity with the Taliban aside, Iran has suffered a number of high-profile Islamic State attacks, meaning it is keen to insulate itself from such a threat as much as possible. Accordingly, Iran will likely work to expand its influence in western Afghanistan and pursue closer ties with Pakistan in the aftermath of a U.S. withdrawal.

China: Worried About a Spillover

China's primary interests in Afghanistan relate to its concern over militancy, especially in relation to the wider unrest in its Xinjiang region, as well as how instability in the country could complicate its Belt and Road Initiative. Beijing is already alarmed at the growing strength of the Turkistan Islamic Party in northwestern Syria, where the group has acquired significant combat experience and has also amassed a powerful arsenal of weapons. China fears that members could end up closer to home in a place such as Afghanistan if they are pushed out of the Middle East. Militants in both Afghanistan and Pakistan have already attacked Chinese interests, meaning Beijing will be apprehensive that a U.S. withdrawal from Afghanistan will provide room for extremist groups to develop and eventually launch cross-border attacks in China proper.

Fearful of such a prospect, China will likely accelerate its security involvement in northeastern Afghanistan, particularly in Badakhshan province, whose Wakhan corridor borders China. The People's Armed Police has been conducting patrols in the corridor, while Beijing has reached agreements with Kabul to train mountain troops for the Afghan security forces. In such a situation, China is likely to be receptive to strengthening its ties with the Taliban if it emerges as a dominant player in the northeast that can keep transnational extremist groups at bay.

Russia: Hedging Bets

Russia is another country that, despite significant tensions and adversity with the United States, would be alarmed by a hasty U.S. pullout on its southern front. Although it does not directly border Afghanistan, Russia harbors deep concerns about the robust drug trade there, as well as the threat from terrorist groups such as the Islamic Movement of Uzbekistan (IMU) and, more recently, the Islamic State. The Kremlin had previously supported the U.S. involvement in Afghanistan, especially during the first decade of the war, when the aftermath of the invasion effectively crippled the IMU. Russia provided logistical support to the U.S. effort through the Northern Distribution Network, assisted in the establishment of the Counter Narcotics Police of Afghanistan and provided military equipment to Afghan government forces.

In recent years, however, Russian actions have increasingly challenged the U.S. mission there. These moves, in part, reflect the increasingly acrimonious ties between the two countries, but they are also tied to Russian concerns about growing Afghan instability and the potential for spillover into Central Asia. While the United States continues to focus on bolstering the central government, for instance, Russia's fears that it could lose significant strength — or see a collapse — have led it to hedge its bets by fostering ties with the Taliban and perhaps even provide the group with weapons and funding. A U.S. withdrawal would galvanize Russia into solidifying its security presence in neighboring countries such as Tajikistan in an attempt to insulate Central Asia from any spillover. At the same time, Moscow would look to strike up ties with a number of other groups in northern Afghanistan in addition to the Taliban, as well as former strongmen from the Northern Alliance, such as the Uzbek Abdul Rashid Dostum.

Band-Aid Solutions

Although they don't see eye to eye with Washington on many things, Afghanistan's neighbors have relied upon the long U.S. presence in the country to limit spillover from the conflict. Whether this has worked remains a topic of debate, because drug production has exploded over the past decade and dangerous transnational terrorist groups such as the Islamic State have established a foothold in the country. But there is a real possibility that these threats will only worsen if the United States withdraws hastily, leading Pakistan, Iran, China and Russia to brace themselves to engage more actively with Afghanistan. None of these countries is willing or, in some cases, even able to assume the U.S. mantle, but they hope to maintain a strong enough buffer on their respective borders by establishing relationships with various powerful local groups. Such action, however, might be little more than a cosmetic solution — if not a cause of greater problems down the road — as Afghanistan continues to come apart at the seams.

Syria: The Pros and Cons of a U.S. Withdrawal

2018-12-20T20:30:00Z

What Happened

The United States has resolved to pull its forces out of Syria. On Dec. 18, U.S. President Donald Trump reportedly made the decision despite arguments from the Department of Defense and the State Department that U.S. troops should remain in the country. Trump's choice appears final, but this is not the first time he's considered such a withdrawal. Earlier in 2018, Trump reportedly ordered the Pentagon to begin planning for an exit, but he was dissuaded by his advisers. Rather than prepare for a departure, the United States expanded its goals in Syria to include an indefinite stay and a renewed strategic focus on countering Iran's presence there.

The Good

The United States again appears headed for the exits, which would affect U.S. interests in several ways. On the positive side, a pullout would free up about 2,000 troops — mostly from elite units — for deployment elsewhere. Moreover, a departure would dramatically reduce the risk that the United States will find itself in a dangerous, unplanned clash with any of the many powers in Syria's crowded battle space. The greatest positive, however, would be a clearer path toward improved relations with Turkey, which is a critical partner in the U.S. security strategy for the Middle East and Europe. Ankara has been gunning for an opportunity to launch a direct operation against the People's Protection Units (YPG) — a Kurdish militia that has enjoyed U.S. support — but the U.S. presence has insulated the YPG from attacks by the Turkish and Syrian governments.

The Bad

On the negative end of the spectrum, a U.S. departure and the likely Turkish assault on YPG positions thereafter would have a detrimental effect on the campaign against the Islamic State. The YPG forms the bulk of the Syrian Democratic Forces (SDF), which is at the forefront of the fight against the Islamic State in eastern Syria. The Islamic State has lost significant ground, but the group is far from defeated, and U.S. intelligence believes that about 15,000 fighters remain in Syria, as of August 2018. If the SDF becomes distracted by a U.S. withdrawal and a confrontation with Turkey, the Islamic State will seize the opportunity to rebuild.

The Syrian government and its primary allies, Iran and Russia, would also welcome a U.S. pullout from Syria. Iran would celebrate the reduced pressure on its presence there, particularly on its vulnerable supply lines in eastern Syria. Meanwhile, the Syrian government would likely attempt to reclaim the territory that the United States vacates, regardless of whether it would mean directly clashing with the SDF. After a U.S. departure, the SDF would likely attempt to strike a deal with Damascus.

The Ugly

The United States could lose credibility as a reliable ally if Washington suddenly withdraws, leaving its partners in the SDF open to an attack from Syria or Turkey. Washington has invested significant resources and time into building ties with the SDF and providing support for the organization. Moreover, Washington has repeatedly promised not to abandon its Kurdish allies in Syria. If the United States chooses to walk back that promise, onlookers in the Middle East and beyond could lose trust that the United States will stand by its commitments and may search for alternative partners. If the United States chooses to leave Syria, Russia, Iran and others will be all too eager to fill the space Washington leaves.

How Iran's Cyber Game Plan Reflects Its Asymmetrical War Strategy

2018-12-18T19:54:00Z

Highlights

In response to sanctions and other measures taken by the United States, Iran will look to retaliate in cyberspace.

Iran's strategy on the use of physical force provides a gauge of how it will employ cyberattacks.

Iran will pursue asymmetrical operations instead of a full-on cyberwar, using proxies and sending subtle messages about U.S. vulnerabilities.

As discord between the United States and Iran continue to rise in 2019, Tehran will reach deeper into its bag of deadly tricks to counter pressure from Washington. While the huge imbalance of power will restrain Iran from engaging in direct military conflict with the United States and its allies, it will retaliate with its asymmetrical arsenal. These weapons include cyberattacks, terrorism and support for its regional militant allies, and they pose a threat to companies and organizations in the Middle East and beyond. But what is most notable is how Iran's strategy for handling conflict in cyberspace mirrors its game plan for physical clashes.

Cyberwarfare and Harassing Skirmishes

Just as Iran is unlikely to challenge the United States in a large-scale military confrontation, it is also unlikely to wage a direct war on it in cyberspace. The United States is simply too strong in both arenas. A comparison of the complexity of the malware tools Stuxnet – tied to the United States and Israel — and Shamoon – linked to Iran — illustrates the difference in capabilities. While the United States is vulnerable to cyberattacks — defense is always more difficult than offense – its overwhelming power could be devastating if unleashed wholesale on Iran.

Despite that reality, both sides will continue preparing for cyberwar. The Iranians, as well as other state cyber adversaries (and some non-state actors), have been conducting surveillance on critical infrastructure in the United States and the West for many years now. And the Americans and their allies have been conducting similar reconnaissance of Iran’s infrastructure. At the Aspen Security Forum in July 2018, U.S. Director of National Intelligence Dan Coats noted that Iran was making preparations to target electrical grids, water plants, and health care and technology companies in the United States, Europe and the Middle East.

But this surveillance doesn't mean that an attack is certain to follow. In much the same way that countries make plans in case of a war, they also prepare for combat in cyberspace by looking for vulnerabilities and possible pathways for attack. Like any war plan, cyberwar plans must be updated to account for changes in operating systems and security measures, because vulnerabilities can disappear. This cyberattack surveillance is reminiscent of how the Iranians and their proxies such as the Hezbollah militant group scrutinize targets and then keep the information handy for "off the shelf" terrorist attacks later.

While a cyberwar remains unlikely, lower-level Iranian attacks against government targets and private companies and organizations are likely to increase. Just this past week, the Italian oil services company Saipem announced that it had been hit in a tailored cyberattack that employed a variant of the Shamoon malware, indicating an Iranian connection. Saipem's largest client is the national oil company of Iran's archrival, Saudi Arabian Oil Co., which is likely why the Italian firm was targeted.

In addition, the London-based cybersecurity firm Certfa, which specializes in tracking Iranian activity in cyberspace, published a report Dec. 13 documenting the efforts of "Charming Kitten," an Iranian advanced persistent threat (APT) group, to launch a phishing attack against the U.S. financial infrastructure. These APT groups are turning their sights on such targets because of U.S. sanctions and the recent expulsion of Iran from SWIFT, the Brussels-based organization that facilitates global financial transactions. (SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication.)

Sending a Message and a Threat

The Iranians have a history of using detectable physical surveillance of sites that could come under possible terrorist attacks as a way to send a message — most frequently during times of heightened tension with the United States. In such operations, Iran dispatches known members or suspected associates of its Islamic Revolutionary Guard Corps, Ministry of Intelligence and Security, or Hezbollah to conduct not-so-subtle surveillance of U.S. targets abroad or even in the U.S. homeland itself as a way of flexing its terrorism muscle. By being seen photographing or videotaping a dam, U.S. electrical substation or embassy abroad, Iran is letting the United States know that Tehran can make retaliatory terrorist strikes on a host of vulnerable targets if Washington attacks Iran with its superior military power.

This same strategy may also apply to Iranian probes of critical U.S. infrastructure in cyberspace. Those actions are useful for planning off-the-shelf attacks, and if (perhaps, more aptly, when) they are detected, they also serve as a way to demonstrate that the Iranians can conduct cyberattacks against crucial systems if they become desperate and have little left to lose.

Cyber Proxies and Mercenaries

Iran frequently uses militant proxies such as Hezbollah to do its dirty work and to provide Tehran with a degree of plausible deniability. And just as Iran has provided its regional proxies with weapons as well as training in terrorist tradecraft, it will continue to supply them with hacking tools and cyberwarfare training. Such support is reflected in the Hamas and Hezbollah campaigns against Israeli military and other targets, and the assistance from Tehran is likely to increase. Using proxies allows the Iranians to pressure regional and global rivals while masking their involvement.

Besides using proxies, the Iranians — like the Russians and Chinese — can also be expected to employ mercenaries as a way to increase their reach and punch in cyberspace. By hiring criminals to design malware or to launch attacks, Iran can also make it more difficult to trace such attacks back to itself.

Again, while outright cyberwar with Iran is unlikely, Tehran can be expected to escalate its current lower-level operations. Iran has rapidly improved it cyberwarfare capabilities over the past year and looks to continue that trend in 2019. As it responds to greater U.S. sanctions and other efforts to weaken its government, it will be important not to underestimate those capabilities.

A Journey Into the Russian Enigma

2018-12-13T22:25:00Z

Highlights

The Russia-West standoff is likely to intensify in the coming year, as Moscow will be largely unwilling to make the kinds of concessions that the United States and European Union are seeking in order to end their sanctions and military buildups.

Russia's ties with China have strengthened and will continue to grow, but any sustainable Moscow-Beijing alignment will ultimately face limits due to the Kremlin's deep-seated concerns about China's rise as a major power.

Russian President Vladimir Putin will face growing economic and political challenges on the home front, but these challenges will be manageable for the leader in the coming year.

It was October 1939, and Winston Churchill was on BBC radio, describing Russia: "It is a riddle, wrapped in a mystery, inside an enigma." Of course, World War II had just begun, and the question regarding the intentions of the Soviet Union — and particularly its relations with Nazi Germany — was of paramount importance to the United Kingdom, Europe and the world at large.

Bookending Churchill's characterization of Russia was the following: "I cannot forecast to you the action of Russia … but perhaps there is a key. That key is Russian national interest." This quote has unique relevance to the work that we do at Stratfor. We produce forecasts, and driving our forecasts is a geopolitical methodology that considers first and foremost the broader national interest above the subjective considerations of individual leaders, decision-makers and ordinary citizens. But that does not mean that such people and their subjective considerations don't matter at all. Driven by geography and a state's geopolitical imperatives, the national interest provides the framework in which the trajectory of the nation plays out over the long term. But in the short term, people — from politicians to business leaders to blue-collar workers — do have an impact on shaping the policy and trajectory of their nation.

With these principles in mind, I recently set off for a visit to Russia. Having just completed work on Stratfor's 2019 Annual Forecast, I wanted to test our forecast at ground level and see how it stacks up against the perspectives of Russian citizens themselves. Of course, Russia is a big and diverse place, and it's impossible to capture a comprehensive picture in a country as vast and complex as Russia. But my visit — which included stops in my birthplace of Moscow, as well as St. Petersburg, Kazan and some small towns in between — and discussions with citizens from a diverse array of backgrounds and professions provided an excellent opportunity to test our forecast against realities and views on the ground.

A Russian Take on the Russia-West Standoff

Headlining our Eurasia forecast is the enduring standoff between Russia and the West. Ever since Ukraine's Euromaidan revolution in 2014 — along with Russia's resulting annexation of Crimea and provision of support to separatists in eastern Ukraine — Moscow and the West have been locked in a confrontation that has run the gamut from military buildups to economic sanctions, cyberattacks, propaganda dissemination and political meddling. Russia's strategic interest in keeping Ukraine and the rest of the former Soviet periphery within its sphere of influence, in contrast to the West's desire to deny Russia this sphere of influence, has provided a backdrop for this standoff, which has now spread from the European borderlands to Syria and North Korea. In 2019, this standoff is only likely to intensify, as arms control treaties collapse and sanctions expand.

According to the prevailing view among the Russians I spoke with, the tensions between Moscow and the West are here to stay. Rightly or wrongly, Russians view their country as a great power that deserves a major voice on the world stage. Many citizens believe the West, especially the United States, is actively trying to undermine Russia, both in terms of its role in the world and its domestic stability and cohesiveness. On several occasions, people described Russia as a country that does not respond well to pressure from the outside; many also depicted it as a "besieged fortress." The more Moscow faces this pressure — again, especially from the United States — the more it will double down on its position and strive to protect what it deems to be its rightful strategic interests.

The Ukrainian conflict is a case in point. Russia's standard line is that the Euromaidan uprising was a Western-backed (if not organized) affair whose primary goal was to weaken Russia at the most strategic and sensitive point in its immediate periphery. To many Russians, Moscow merely acted defensively in annexing Crimea and supporting pro-Russian separatists in eastern Ukraine. For them, Ukraine was simply the West's latest move in a decades-old campaign of encirclement and containment that has previously included such actions as NATO's expansion into Central and Eastern Europe, as well as U.S. support for color revolutions across the former Soviet periphery. After Russia extracted itself from the chaos and instability of the 1990s, it could scarcely stand idly by as these events unfolded, as it was not clear how far the West would go in its ostensible campaign against Russia.

Because of this, I was told that Russia is not in the business of making major concessions to the West, even when it faces significant pressure in the form of military buildups or economic sanctions. And while the West may have imposed sanctions only in response to Russia's actions in Crimea and eastern Ukraine, Moscow's foes have now broadened the measures to encompass many more aspects of Russian behavior, including everything from meddling in Western elections to North Korea and Syria. This expansion in scope has convinced Russian decision-makers that the West will not ease the sanctions or pressure in any significant manner, even if Moscow did offer concessions. As a result, more Western sanctions will likely only prompt greater resistance and greater retaliation from Moscow.

Although this confrontation now appears lasting, its start was not inevitable, according to Moscow. Indeed, Russian officials and foreign policy experts emphasized to me that during President Vladimir Putin's first term as president in the early 2000s, Moscow made serious efforts to integrate with the West — going so far as to consider joining the European Union and NATO, albeit on equal terms. This, obviously, never occurred, and by the end of Putin's second term — by which time the European Union and NATO had expanded into Central Europe and the Baltic states and disregarded Russia's position on Kosovo — it was clear to the Kremlin that Russia had to go it alone, even if that entailed direct conflict with the West and its allies. Confrontations duly ensued, first in the Russia-Georgia war(2008), and later in the battle over Crimea and eastern Ukraine (2014).

The Ukrainian conflict has reinforced the Russian perception that it is impossible to cooperate with the West on equal terms, resulting in Moscow's quest for partners and influential roles elsewhere in the world. One such role has been Russia's involvement in the Syrian conflict in support of Bashar al Assad's regime against the Islamic State and Western-backed rebels. My interlocutors told me that Russia doesn't really care about al Assad per se, but that Moscow felt it had to draw a red line on regime change imposed from abroad (that is, the United States). Russia was uniquely positioned to delve into Syria given its historical ties to the country and its strategic location, while Moscow also wanted to send the message that it, too, could be a major player in the Middle East — as well as in other theaters like Afghanistan and Africa — both militarily and diplomatically.

The Russia-China Alignment and Its Limits

Another key aspect of our annual forecast for Eurasia touches on Russia's aforementioned quest to expand its ties around the world to scale back Western hegemony and challenge the U.S.-led world order. The key to this is China, which also has its own interest in challenging the U.S.-dominated world order in the context of great power competition. Moscow and Beijing have enjoyed burgeoning ties in recent years, just as Russia's relations with the West have frayed. The two countries have bolstered their cooperation on trade and military drills, as well as their political coordination on issues such as North Korea.

Most Russians I spoke with acknowledged that ties between Moscow and Beijing have grown, particularly on security. Nevertheless, many cautioned that a sincere alliance is not emerging between Moscow and Beijing. Deeply mistrustful of China's rising clout and intentions, many Russians fear — justifiably or not — that Beijing has designs on Russian land in the Far East and the Arctic. China may not challenge Russia's political model in the way that the West does, I was told, but it may one day challenge its survival. It's perhaps an exaggeration, but it's a fear that gnaws at the back of the mind for many Russians. At the same time, many told me that Chinese investment in Russia isn't all it's cracked up to be, and one businessman who frequents Russia's large investment forums in St. Petersburg and Vladivostok told me that only around 5-10 percent of the multibillion-dollar deals between the countries actually come to fruition, mostly in the energy sector.

The Challenges From Within

On the domestic front, our forecast also pointed to a number of economic and political challenges for Putin, including a sanctions-weakened economy, public discontent over unpopular pension reforms and pressure to reform the country's powerful security organs. Our forecast noted that these challenges will test Putin as he enters his fourth — and perhaps final — term, although the long-serving leader will ultimately succeed in managing them this year.

Within Russia, the views on Putin himself are decidedly mixed, with those against the leader citing everything from corruption to unpopular plans to raise the retirement age as reasons for their opposition, while those in favor base their support on the president's track record of fostering stability, as well as the dearth of credible alternatives to his rule. But whether for or against Putin, nearly everyone agreed that there will be no significant changes or upheavals to Russia's political system so as long as the president remains at the helm. The more the Kremlin feels pressured — whether externally or from within — the more Moscow will centralize control, meaning security organs like the National Guard will only accumulate greater power.

From a macroeconomic perspective, most finance and business professionals believe that the Kremlin has the tools to cope with the economic challenges posed by sanctions, as the government has padded its foreign exchange reserves and wealth funds and taken measures to prevent currency volatility by decoupling the ruble from the price of oil. On the ground, however, it is clear that sanctions have taken their toll. Almost everyone lamented rising prices and stagnant wages, while foreign travel has become more expensive and difficult for some — and virtually impossible for others. Overall, however, my impression is that Russia is not on the verge of a major economic crisis.

But when it comes to Russia's longer-term outlook, there may be more cause for concern. According to one financial journalist, Moscow can manage economic shocks for 2019 or for a few years, but the long-term economic prognosis, particularly in regards to Russia's continued dependence on oil and natural gas and the brain drain of young professionals, is poor. Russia's anticipated demographic decline (the country is projected to lose 10 percent of its population by 2050) and looming social changes as a post-Soviet generation emerges could one day create more acute pressure and increasingly test the Kremlin's ability to maintain stability across the vast country.

The viewpoints that Russians from all walks of life expressed to me aligned, in many ways, with our forecast; in other certain respects, they added nuance to our thoughts for the year to come. Nearly 80 years on from Churchill's speech, Russia may still be "mysterious and enigmatic," but the combination of studying its national interests from afar and listening to the perspectives of its people from up close certainly offers important clues as to what to expect for the country moving forward.

The Long-Term Implications of France's 'Yellow Vest' Protests

2018-12-11T19:31:00Z

Highlights

The French government's comfortable majority in the National Assembly makes it possible for President Emmanuel Macron to implement his pro-business reforms agenda, but resistance from volatile grassroot movements, right- and left-wing political opponents and labor unions will constrain the government's room for action.

A plan to reform the pensions system in 2019 will open the door to new street protests, while a plan to amend the French Constitution will give opposition parties the chance to weaken the government.

Resistance from Northern European countries and institutional turnover in 2019 will make it hard for France to achieve its plans of deeper risk-sharing and greater money transfers within the European Union.

Since mid-November, tens of thousands of protesters in France have rallied against the government in a cause that has become known as the "yellow vest" movement, a reference to the safety vests that French drivers keep in their cars. While large political protests are nothing new in France, the intensity of the yellow vest protests has not only led to some of the worst rioting in Paris in decades and forced authorities to shut down parts of the city, but also forced President Emmanuel Macron to back down on a policy decision for the first time in his 18-month presidency. The French government announced on Dec. 5 that it would scrap the controversial fuel tax increase that prompted the yellow vest protests in the first place. The protests come at a time when Macron's popularity has fallen to record lows. The situation is threatening to weaken Macron's authority at home and reduce France's influence in European Union affairs.

Since becoming president in May 2017, Macron has tried to make the French economy more competitive by cutting taxes on companies, reducing public spending and easing the tax burden on the wealthy. These policies, which were meant to send the message to domestic and foreign investors that France is open for business, damaged Macron's image, and his critics now refer to him as "the president of the rich."

The yellow vest movement quickly evolved from opposition to the fuel tax increase into a broader demand to improve the purchasing power of middle-class families. Combined with demands to roll back Macron's pro-business agenda, this shows that there is a large sector of the French electorate that is vocally disappointed with the president's policies. Despite Macron's reformist push, the recovery of the French economy remains slow and uneven. France's unemployment rate is around 9 percent, which is one point lower than it was when Macron took office but is still the fourth-highest in the European Union — and more than twice Germany's unemployment rate. According to the European Commission, France's economic growth will slow to 1.6 percent in 2019, from an estimated 1.7 percent in 2018. Moreover, the French Economic Observatory, an independent think tank, has warned that Macron's policies have reduced the purchasing power of the bottom 5 percent of French households while increasing that of the top 5 percent.

Persistent Protests

The emergence of the yellow vests, a movement with no direct connections to any political parties, non-governmental organizations or trade unions, is not a new phenomenon in France. Similar grassroots movements, like the "red caps" (who protested a tax on trucks in 2013) and the "nuitdebout" (who protested labor reforms in 2016), have emerged in recent years. The arrivals of such movements show that France's traditional channels of representation are failing to absorb the whole spectrum of social discontent. To some extent these grassroots movements tend to represent a temporary challenge for the French government, because movements without a clear leadership and organization tend to fade away quickly. But these movements are also problematic because they don't have a clear leadership the government can negotiate with. Social unrest can escalate quickly and incite other groups to join the protests, which is what has happened with the yellow vests.

Macron's rivals, including left- and right-wing political parties and trade unions, will try to co-opt these social forces and use the movements' demands to their own political advantage. Echoing the yellow vests' demands for higher standards of living for the middle class, the combative General Confederation of Labor recently announced its own anti-government protests. For their part, the right-wing National Rally (formerly known as the National Front) and the left-wing Unsubmissive France have used the yellow vests' proposals to ask for the government's resignation. Next year's elections for the European Parliament, scheduled for May, will show whether these parties can capitalize on the ongoing social discontent.

The more Macron's popularity erodes, the more emboldened his rivals will feel to challenge his policies. Over time, the combination of an unpopular government, modest economic growth, social protests and an increasingly active opposition could make it harder for Macron and his allies to move forward with their reformist agenda. Macron's party, La Republique En Marche! (Republic on the Move!) controls a comfortable majority in the National Assembly, which means it can pass reforms without the support of other parties. But lingering social discontent could make the French government warier of promoting structural reforms, while lawmakers in the National Assembly could become more cautious in their support for Macron. As a result, Macron's reform agenda could be compromised.

The next big challenge for the French government will be to reform the country's pensions. Macron's administration wants to replace France's multiple pension systems with a single system and to change the way that pension payments are calculated, which could lead to payment reductions in some cases. The French government wants to present a formal pension reform proposal in mid-2019 and put it to a vote in the National Assembly by the end of the year. This reform would affect multiple sectors of French society, which means it will generate strong resistance and set the conditions for further protests. In 2019 the French government also plans to cap increases in family benefits below the inflation rate, tighten the eligibility criteria for unemployment insurance, and reduce the number of employees in the public sector. This means that the ground will remain fertile for social unrest in France next year, regardless of the fate of the yellow vest movement.

The French government is also planning to reform the French Constitution to reduce the number of parliamentarians by a third, introduce faster legislative procedures and make it illegal for public officials to hold multiple positions. Unlike the pensions reform, the constitutional reform probably will not generate significant protests. But Macron will need opposition support in the Senate to amend the constitution, and his adversaries may block the president's proposals in order to weaken him. In the past, Macron has threatened to put the constitutional reforms to a referendum should the Senate reject them. But in the current political climate, the government will think twice before calling for a vote it could lose or, worse, become an unofficial referendum on Macron's presidency.

France's Northern Rivals

France's domestic issues will constrain its ability to influence developments at the European level. France wants deep reforms in the eurozone, including the introduction of a separate budget for the currency area, the strengthening of its bailout fund, and the completion of the banking union. But these reforms require a broad consensus at the EU level, and France will struggle to find it.

France's main partner in the European Union, Germany, is dealing with political problems of its own that reduce Berlin's ability to make concessions to Paris. At the same time, the countries in Northern Europe that oppose France's proposals are becoming increasingly assertive. These countries, commonly known as the New Hanseatic League, want to limit, and if possible abort, France's plans for eurozone reform. The fact that Italy has a euroskeptic government that is challenging the EU's fiscal targets is giving ammunition to those northern countries that oppose increasing financial risk-sharing in the eurozone.

There are early signs that this resistance to France's proposals is working. Germany and France recently agreed to create a budget for the eurozone. But, contrary to France's original proposal, it will be a part of the broader EU budget, which means its approval will require unanimity. Moreover, Berlin is pushing for a small budget, contrary to Paris' request of a budget that represented "several points" of the European Union's GDP. France also wanted to turn the European Stability Mechanism into a European Monetary Fund with full powers to assist countries in financial distress. However, EU finance ministers meeting on Dec. 4 only agreed to grant the mechanism a greater participation in the design and monitoring of financial assistance programs in coordination with the European Commission. And plans to introduce a deposit insurance scheme for eurozone banks were kicked down the road.

To make things more complicated, new members will be appointed in 2019 to key EU institutions such as the European Commission and the European Central Bank. The appointments will require significant negotiations among EU member states and will be another source of friction between Northern and Southern Europe over the future of EU policy. France's rivals will try to take advantage of Macron's domestic weakness to contain Mediterranean Europe's influence on the future of the European Union. Even if EU governments manage to keep the discord within tolerable margins, the mere process of appointing new officials will slow policy process at a continental level and put a limit on France's ambitions.

A Constrained Government

France's next presidential election is in 2022, and Macron is likely to remain in power despite the destabilizing attempts by his rivals. The president has several tools at his disposal to deal with political crises. He can, for instance, appoint a new prime minister in charge of a new Cabinet, to try to regain popular support. He can also call for an early legislative election to let voters express their opinion on policy, but that would be a last-resort decision considering that Macron's party controls a majority of seats in the National Assembly and it would be risky to threaten that majority with a new vote.

In other words, growing social unrest and a more active opposition probably will not threaten the continuity of Macron's presidency. However, such factors are likely to constrain the government's room for action when it comes to introducing meaningful reforms. And a disappointing presidency could threaten Macron's chances for reelection and open the door for right- and left-wing political parties to improve their performance in the next presidential election.

The U.S. Supersizes Its Sanctions

2018-12-06T19:24:00Z

Highlights

The United States has already imposed some of the broadest economic sanctions ever against Iran, but it is likely to turn up the heat even more in the year to come.

Given the United States' proclivity to go it alone in imposing sanctions under the current administration, the country could eventually impose significant unilateral sanctions on countries other than Iran.

Increasingly unilateral action by the United States is leading others, like the European Union, to explore ways to dilute the U.S. push, but as long as the U.S. financial system remains at the heart of the global financial system, that pushback will have limited success.

Nearly a century ago, U.S. President Woodrow Wilson laid out the case for economic sanctions as he defended the League of Nations. "A nation that is boycotted is a nation that is in sight of surrender," he argued. "Apply this economic, peaceful, silent, deadly remedy and there will be no need for force. It is a terrible remedy. It does not cost a life outside the nation boycotted, but it brings a pressure upon that nation, in my judgment, no modern nation could resist."

To Wilson, it was the economic aspect of World War I that had helped defeat Germany. Moreover, it was the United States — now truly a global military and economic power — that had to take a seat at the international table so that it could use its economic heft to help prevent another crisis. Ironically, of course, Wilson's own country never joined the League of Nations, as it was not yet ready to play an active role on the global stage. After World War II, however, the United States began to engage with the world, capitalizing on its status as a global superpower to impose economic sanctions in lieu of armed conflict, thereby aiding it in achieving its foreign policy objectives. But since the 9/11 attacks, the United States has transformed economic sanctions into a weapon that Wilson could scarcely have imagined. And as the country uses such measures in an increasingly unilateral fashion, the rest of the world has been left trying to figure out a way of blunting Washington's blows.

Sanctions: A Checkered History

Economic sanctions, of course, are not an American invention, but date back to at least ancient Greece, when Pericles banned the Megarians from trading at Athenian markets. Naturally, questions as to the efficacy of such measures are just as old; after all, Pericles' interdiction helped spark the Peloponnesian War, which did not end well for Athens when the Megarians' ally, Sparta, came to dominate Greece. In fact, Washington's first major use of economic sanctions was the Jefferson trade embargoes, in which the United States banned all exports to France and the United Kingdom in the hopes of pressuring them to cease their attacks on neutral American merchant ships during the Napoleonic wars. The sanctions were nothing short of a disaster, as Europe could source enough supplies that it could forego U.S. imports, ultimately costing the southern states their main agricultural export market and the wider union an estimated 5 percent of its gross domestic product.

In the end, economic sanctions are just one potential tool to achieve a strategic goal. Undoubtedly, France and the United Kingdom felt some sort of economic impact as a result of Jefferson's economic embargo, but it caused too little economic pain for the United States to achieve its strategic goal. Getting the dosage of economic sanction — in concert with other measures — just right has always proven to be a challenge for the United States and, indeed, any other country.

After World War II, the United Nations sought to formalize a method of managing global security through its Security Council, and since then, it has managed to impose broad multilateral sanctions. The success of such efforts, however, is questionable. The 1990s sanctions against Iraq, for instance, destroyed the country's economy — and the health of the nation's citizens in the process — yet failed to achieve their desired political goal: force Saddam Hussein to alter his behavior. If anything, Saddam's personal wealth and power even increased during the period. What's more, the measures engendered a popular resentment against the United States that continues in some parts of the country to this day.

Hitting Them in the Pocketbook

As a result of its experience with Iraq, the United States has sought to refine its economic sanctions so that they actually hit the leaders of a country and their source of revenue, rather than the population at large. But as 9/11 and the war on terrorism forced Washington to rethink its foreign policy, the United States quickly realized that its centrality to the global financial system — and the global power of the dollar — gave it a unique opportunity to strangle terrorist groups through the banking sector.

The backbone of international trade, finance and oil trade, the U.S. dollar is the reserve currency of choice for countries the world over. International banks, moreover, need access to the U.S. financial system to function and clear U.S. dollar transactions. Thus, simply by throwing its weight around in the financial sector, the United States can create structures with global impact such as the Patriot Act and Executive Order 13224, which force banks to comply with Washington's dictates. As a matter of practice, the United States typically designates a foreign bank or group as a money-laundering entity or as a terrorist group. Technically, U.S. law only directly applies to banks with U.S. operations, but because other foreign banks do not wish the United States to blacklist them because of their association with the designated bank or entity — which would thus cut them off from the U.S. financial system — they will also sever ties with the entities that have been proscribed by Washington. This gives U.S. financial sanctions an inherently long reach, ensuring that U.S. designations can make a bank toxic on the international scene.

But beyond al Qaeda and other related groups, U.S. policymakers soon realized that they could exploit the United States' pre-eminent role in the global financial system to pursue state actors as well through sanctions that far exceeded the previous measures of freezing the assets of political actors and restricting their travel. Concerns about North Korean and Iranian nuclear proliferation in the 2000s provided a test case for the United States to capitalize on its role in the financial markets to develop new types of sanctions — albeit with varying degrees of success.

In the case of Pyongyang, the task has been difficult. North Korea has fewer economic linkages to the rest of the world than most countries, and the Kim regime is so deeply entrenched that internal economic upheaval is unlikely to force it to alter its behavior. The United States' initial effort to sever North Korea's access to the international banking system forced several key financial lenders in China to close North Korean accounts. But since then, North Korea has upgraded its strategy so that it is both less dependent on the global financial system and more easily masks its involvement. Instead of moving cash through lenders that the United States could sanction, North Korea has used shell companies that are harder to track, particularly in China, to move money and goods. Beijing, which has shielded Pyongyang politically, has become North Korea's most important economic and trade partner, meaning that Washington would have to resort to drastic measures, like directly sanctioning large Chinese banks — an act that would result in a substantial economic blowback for the United States — if it is to sever North Korea's links with China and ultimately force it to halt its nuclear program.

Iran, by contrast, presents an easier target for U.S. sanctions that focus on the banking sector. Unlike their North Korean counterparts, Iranian authorities do not wield the same iron fist over their domestic population, forcing them to be more responsive to popular demands. Iran, too, is historically a trading empire and is today dependent on international commerce, particularly for oil. And unlike the East Asian hermit kingdom, Iran views itself as a regional power that wishes to strengthen ties with other states — all of which exposes Iran more to the global economic and financial system than North Korea.

Until 2012, the United States did its best to target all banks that helped Iran offer financial support to its Middle Eastern proxies; starting that year, however, Washington also began targeting Tehran's oil customers using so-called secondary sanctions, which explicitly target foreign companies. Instead of sanctioning Iran directly, the United States imposed sanctions on foreign firms that invested in the country's oil sector, facilitated oil purchases, provided insurance for oil tankers or engaged in other types of business. And because oil companies like France's Total, China's CNPC and others are so dependent on international finance, the sanctions were effective. Moreover, unlike the shell companies that do business with North Korea, many of the firms operating in Iran's oil and other sectors are easily traceable and easier to sanction. Naturally, Iran has succeeded in circumventing some sanctions, but the U.S.-led measures inflicted significant harm on the country's economy between 2012 and 2015. The Iranian rial collapsed, investment in the country plunged and oil exports fell by more than half. Ultimately, the sanctions compelled Tehran to return to the table with Washington and other world powers to negotiate the Iran nuclear deal.

Supercharging the Sanctions

In moving against the United States' foes, Presidents George W. Bush and Barack Obama were content to largely act in a multilateral fashion, usually under the auspices of the U.N. Security Council. But President Donald Trump — who has taken the same tools crafted under the previous two administrations and supercharged them — has made it abundantly clear that he is willing to go it alone in pursuing America's enemies. And given Trump's unilateral approach when it comes to pressuring China, the World Trade Organization and others on trade, as well as his distaste for multilateral institutions, it is not inconceivable that his administration will eventually push for unilateral sanctions on someone other than Iran.

In abandoning the nuclear deal and reimposing sanctions on Tehran without international backing, Trump is testing the extent to which Washington can achieve a result on its own. The early results, however, suggest that he will be successful. In the lead-up to the anticipated sanctions, the Iranian rial collapsed on the black market, going from about 40,000 Iranian rials to the dollar in September 2017 to more than 140,000 last month. Many of the Western companies like Total and Daimler that had planned to invest in Iran's auto, oil and other sanctioned sectors quickly withdrew from the country after Washington announced the sanctions.

The jury is still out on the United States' efforts to restrict Iran's oil exports. The United States granted waivers to eight countries to continue importing Iranian oil for six months at a time when oil prices had eclipsed $85 per barrel and Washington wished to keep oil prices in check. Since then, oil prices have fallen by roughly a third, while rising oil production in the United States next year could give the country the room to press Iran's oil customers further. Ultimately, for any company deciding whether to prioritize access to the Iranian oil market or the U.S. financial system, there is only one answer, and it is not Iran.

The United States is certainly not done in sharpening the edge of its sanctions. In October, the Treasury Department's Office of Foreign Assets Control (OFAC) sanctioned 20 more individuals and entities for their role in a network providing financial support to the Basij, a paramilitary outfit that falls under the Islamic Revolutionary Guard Corps (IRGC). OFAC routinely issues these kinds of decisions when it uncovers a new network or ring that supports a group the United States has designated a terrorist organization. In this case, OFAC has turned up the heat to the maximum level by even sanctioning Parsian Bank — perhaps Iran's most important private bank and a key facilitator of humanitarian and medical trade during the last round of sanctions against the Islamic republic — not because it supported the Basij's activities directly but because it provides services to a company that has a remarkable six degrees of separation from the Basij. Effectively, OFAC has served notice to any global firm considering business with Iran that it could fall afoul of the broad secondary net of U.S. sanctions. Unsurprisingly, this will have a chilling effect on global financial institutions mulling whether to work with Iran.

The sanctions have driven a wedge between the United States and the rest of the world, particularly Europe. Given that Trump has promised more measures to come, this divide will only grow. In an effort to challenge Washington, Brussels has proposed the creation of a special purpose vehicle (SPV) that could potentially facilitate transactions with Iran by avoiding the U.S. financial system and, accordingly, U.S. sanctions. Washington, however, has emphasized that it will move against the SPV if it violates U.S. sanctions. So far, no European country has stepped up to host the SPV, although France and Germany are now exploring a way to jointly back it — potentially calling the United States' bluff. But even if the SPV manages to facilitate transactions, the game of cat and mouse will continue. In an effort to outflank the European Union and its SPV, the United States could simply shift its sanctions strategy to not only target the banks facilitating transactions but also the end consumers of Iran's oil itself.

Ultimately, however, the United States' demonstrated desire to go to the maximum degree to punish Iran has left the rest of the world, especially Europe, scrambling to find ways of hindering Washington's plans. At present, the globe has few options, but the United States' constant resort to unilateralism could eventually result in others chipping away at the predominance of the U.S. financial system. Already, China, Russia and others have called on the world to use a wider basket of currencies for foreign exchange reserves. And each time the United States tries to sanction another country using financial sanctions, other countries are establishing ad hoc mechanisms to circumvent them, whether through currency swaps, trading in local currencies or something like the SPV. The rise of China's role in the global oil market could also break the dollar’s dominance in that market. At the same time, new technologies like distributed ledger technologies and cryptocurrencies could also revolutionize and replace the global payment system.

Together, all of these forces are slowly blunting the sharp edge of Washington's sanctions. Of course, none of them can realistically halt the measures in the immediate or even intermediate future. For the moment, the United States' unilateral sanctions against Iran will thus provide a good test case of Washington's success in not only hurting the Iranian economy but also in forcing the Islamic republic to come back to the table to negotiate a new deal on its nuclear program — as well as its regional activities. In the meantime, however, the rest of the world can do little to impede the United States as its bowls over everyone in its path.

When Geopolitics and Business Collide

2018-12-04T20:03:00Z

Highlights

Businesses tend to feel geopolitical tensions more acutely in areas of territorial dispute.

China has used leverage over market access to force companies to effectively recognize Taiwan as its territory, even if they would prefer to avoid taking sides.

Given that territorial disputes around the world force companies into awkward foreign policy conflicts, companies would be wise to understand the nature of such geopolitical disagreements.

From Israel to China to Spain, companies are becoming increasingly embroiled in foreign policy disputes in the countries in which they operate. Territorial squabbles and ambiguous legal statuses are turning business decisions into foreign policy positions whether those companies like it or not. From Airbnb listings to maps of China, those decisions can create security and continuity concerns for companies caught in the middle. In response to these challenges, corporations need to gain a greater understanding of the disagreements so they can anticipate and head off any disruption to operations.

Airbnb Listings in Israel

Last month, the online short-term leasing service Airbnb announced that it would delist 200 properties in Israeli settlements in the West Bank. Within days, the announcement triggered lawsuits claiming that the popular vacation rental website was discriminating against Jewish property owners. Airbnb said its decision was based on safety concerns, an assessment of the larger dispute that the settlements played a part in, and how the company's involvement affected that dispute. Later, its representatives noted that major international hotels had also chosen to avoid the area. Though operating there is legal under U.S. and Israeli law, the Palestinian Authority and the United Nations contest the legality of the settlements.

Critics felt that Airbnb had singled out the West Bank settlements, pointing to its listings in other contested areas, such as Cyprus and Tibet. In its West Bank announcement, Airbnb claimed that it had removed properties in Crimea and that it was reviewing its policies on other contested areas. Human Rights Watch has lobbied both Airbnb and Booking.com intensely to end their offerings in Israeli settlements in the West Bank, yet Booking.com continues to work with local accommodations in the area.

China or Taiwan?

Though the West Bank dispute is the most recent example of the challenge facing companies, the clash over Taiwan's independence has generated far more headaches for businesses during 2018. Most notable was a letter circulated among international airlines in April by China's Civil Aviation Administration; it advised them to clarify on their route maps and list of destinations that Hong Kong, Macau and Taiwan were Chinese territory. The airlines had a tendency to omit "China" as part of the location description and use map stylings that suggested those territories were separate from the People's Republic of China, much to the displeasure of Beijing. The letter went on to warn those airlines that if they did not comply, they would be referred to the "relevant cybersecurity authorities." In February, authorities shut down Chinese-language websites associated with Marriott Hotels after the company used location maps suggesting that Tibet and Taiwan were separate countries. The airlines saw the letter as a threat to their own websites and, by extension, to their access to customers in China. The country's unprecedented control over domestic internet connections allows authorities to rapidly block or censor content, so the threat had teeth.

The letter kicked off a monthslong debate over how to respond. Most non-U.S. based carriers complied with Beijing's demands, clearly labeling cities such as Taipei as being in "Taiwan, China." Seeking assistance from the U.S. Department of State, U.S.-based airlines such as United and American arrived at a different solution. They simply labeled the contested locations with their city name and airport code, without any broader national designation. Taipei, Taiwan, became simply Taipei. It wasn't necessarily a win for China, but it was a loss for Taiwan.

Taking a more defensive posture, Taipei raised the prospect of punishing airlines that labeled it as China. However, there has been no indication that those airlines that did change the location designations have faced any kind of official punishment. But one hotel owner in Taiwan did cut its ties with Marriott after the company complied with Beijing's demands and labeled Taiwan as part of China (even though the change was only visible on Chinese sites).

And airlines were also not the only targets. Shortly after those companies fought out their stalemate with Beijing, Chinese consumers called for boycotts of Ikea for using product packaging that designated Taiwan as an independent country. Around the same time, Chinese food delivery services refused to work with the Taiwan-based coffeehouse 85C Bakery Cafe after Taiwanese President Tsai Ing-wen visited one of the chain's outlets in Los Angeles. The stock of the bakery's parent company fell 9.8 percent as a result of the brief visit and the Chinese reaction.

China has effectively been applying the same pressure on companies that it has been placing on countries with diplomatic relations with Taiwan. Beijing is gradually persuading those countries to switch from the Republic of China to the People's Republic of China, and it is pushing private companies to do the same. Companies are even more susceptible to economic pressure, so threats to cut access to Chinese markets have a serious impact on international airlines, hotels, retailers and others. By leveraging market access for official recognition, China is slowly changing the map to reflect a world in which Taiwan is under its control. Beijing's ultimatum is forcing companies to take a foreign policy stand when they may prefer the status quo — or to remain uncommitted.

Western Pressure

In the U.S.-China rivalry, the United States and its allies have been pushing to block Chinese telecom equipment-maker Huawei from infrastructure upgrades to new 5G (fifth-generation) cellular data networks. New Zealand's intelligence agency blocked the company from a major project on Nov. 28, following a similar move by Australia in August. Germany, the United Kingdom and the United States have also voiced deep concerns over using Huawei equipment, citing the potential national security vulnerabilities that could arise from using a Chinese company for such sensitive projects. As espionage activity (and the U.S.-China rivalry in general) appears likely to intensify in 2019, Stratfor has noted that private companies are more and more likely to become caught up in the conflict and forced to choose one side or the other.

Other territorial disputes also threaten to force companies into awkward foreign policy positions. During the 2017 Catalonia secessionist crisis, companies in Barcelona made it clear that it was in their best interests for the region to stay united with Madrid. However, they risked the ire of the Catalan independence movement, whose supporters comprised a significant share of their market. While that movement seems to have died down for now, the bid for independence is far from over and could force another crisis in the near future. And the escalation of the conflict between Russia and Ukraine in the Kerch Strait has had a chilling effect on shippers reliant on the Sea of Azov, as abiding by either set of competing authorities will inevitably alienate the other and lead to punishments that hurt business.

In the Airbnb announcement about its delisting of the West Bank properties, the company acknowledged that it was not an expert on the matter and sought outside help on the decision. Considering the complexity of the Israeli-Palestinian conflict, the company was wise to seek assistance. Few conflicts are clear-cut, however, and the details of the disputes involving Taiwan, Ukraine, Spain and dozens of other territorial conflicts are complex. Business decisions also carry ramifications for companies operating in the midst of those clashes — as illustrated by how the designation of a destination on an airline website can affect its access to China's marketplace of 1.4 billion people. Developing a deep understanding of the disagreements — and the factors that shape them — allows companies to foresee how they may intersect with their operations and devise plans to maintain business continuity. Economics and commerce cannot be divorced from politics, meaning this type of strategic vision and planning is even more critical as connections in the global economy continue to multiply.

Japan Has Carefully Paved the Way for Trade Talks With the U.S.

2018-11-29T23:01:00Z

Highlights

In its trade talks with the United States, Japan's main priority will be to maintain access to the U.S. market for its automotive exports. In exchange, it can offer numerous concessions on automotive non-tariff barriers and on trade in the Japanese agricultural market.

On agriculture, Japan's recent trade deals have already opened up political room to ease protectionist measures. However, if the United States pushes beyond those limits, the Japanese government risks a political backlash from farmers.

Japan will push back against U.S. attempts to impose limits on future deals with China, although such a proposal would not entirely derail talks.

Editor's Note: This assessment is part of a series of analyses supporting Stratfor's upcoming 2019 Annual Forecast. These assessments are designed to provide more context and in-depth analysis on key developments in the coming year.

Japan will need to make some tough decisions on trade in 2019. This past year has been one of successes for Tokyo with the completion of its long-hoped-for Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) agreement and the signing of an economic partnership with the European Union. Both will take effect in 2019. But just as these kick in, Japan will enter potentially contentious bilateral talks with the United States, Japan's largest export market and its second-largest trading partner overall.

At issue is the U.S. trade deficit in goods with Japan ($61 billion in 2017), which has come under fire as the administration of President Donald Trump pushes for broader protectionism. Automotive trade accounts for about two-thirds of this deficit, making it the prime target for U.S. negotiators who will brandish the threat of tariffs against the sector. Washington's secondary focus will be on further prying open Japan's agricultural market, where U.S. imports dominate but still must contend with Japanese domestic protectionism and competition from the European Union, China and Australia. Third, the U.S. hopes to shape the deal so it serves as a counterweight to China's economic heft in the region.

Trade, Talks and Tariffs

The Trump administration has long pushed Japan to enter bilateral talks, but Tokyo rejected the idea and urged the United States to return to a multilateral trade arrangement. It wanted to get the United States back into the CPTPP to help counterbalance China and to reshape the regional trade structure in Japan's favor. The U.S. tariffs on steel and aluminum in March did not shake Japan, because the United States wasn't a critical market and Japan retained a proportion of its high-grade steel exports through individual carve-outs.

However, the announcement of potential 25 percent U.S. tariffs on all automobile and parts imports changed the equation for Japan. In September, Prime Minister Shinzo Abe and Trump signed a joint statement on starting talks for a bilateral agreement addressing goods, services and earlier proposals for concessions, known as early harvest deals. Once this agreement is completed, discussions on additional trade and investment items can begin. Their statement specifically mentioned that access to the U.S. automotive market would be tied to increasing U.S. jobs and production and stipulated that Japanese concessions on agriculture would not exceed those of previous economic agreements. In exchange, the United States said it will refrain from imposing tariffs on Japanese autos as long as these negotiations proceed. The talks could begin as early as mid-January, while the U.S. investigation necessary for the imposition of automotive tariffs is due in February at the latest.

Japan's No. 1 Goal

In these negotiations, Tokyo's main objective will be to protect its access to the U.S. auto market, which receives 40 percent of its vehicle exports and 5 percent ($40 billion) of its total exports. As a whole, its automotive sector accounts for 11 percent of total exports, contributes about 3.3 percent to its gross domestic product and employs 5 million people. And Japan has even more reasons to guard its access to U.S. consumers. In October 2019, it will raise the consumption tax from 8 percent to 10 percent. Meant to shore up government revenue, the increase has been delayed since 2015 out of concern that it could hurt the economy — the last hike, in 2014, tipped the country into recession. With the tax increase set to deal a blow to consumer spending and with Japan facing long-term demographic decline, external markets will become even more critical. Though China has lowered barriers to Japanese autos, the European Union and the CPTPP countries will help it to diversify its markets further, but the United States remains the single most important export destination.

But unlike the European Union (which has 10 percent duties), Japan has no tariffs on car imports, so negotiations with the United States will need to center on Japan's non-tariff barriers, which the United States has long criticized. Luckily for Japan, the two countries had already reached a degree of understanding over the automotive sector before the United States abandoned the Trans-Pacific Partnership. And those earlier talks would have addressed U.S. concerns about the onerous requirements of Japanese safety standards, the lack of transparency in regulations, the barriers to distribution networks and other non-trade barriers. Additionally, TPP negotiations covered a proposed U.S. safeguard against a surge in Japanese auto imports and mechanisms for consultations between the two sides.

These previous negotiations have helped to lay the groundwork for Japan to offer concessions that would mollify the Trump administration's calls for greater access; South Korea successfully pursued a similar strategy in the recent reworking of the U.S.-Korea Free Trade Agreement. Washington could still push for some sort of limit on Japanese automotive exports, but this is an eventuality that Japan has faced before (1981-94) and has partly adapted to by building up its manufacturing within the United States.

Agriculture: Small but Mighty

Agriculture will be a stickier issue. It accounts for slightly over 1 percent of Japan's GDP and employs about 3.5 percent of the working-age population, serving as the backbone of the economy in many rural areas. Japan's agricultural sector is largely oriented inward — making up only 1 percent of exports. All told, domestic production meets only about 44 percent of domestic demand; imports make up the balance. In 2017, the country was among the top global importers — and the fourth-largest destination for U.S. agricultural products, topped only by Mexico/Canada and China. But the Japanese agriculture sector operates behind steep protections, which have long limited the market share for imports and provoked complaints from Japan's trade partners. And now the United States faces even stiffer competition from countries in the CPTPP (namely Australia) and the European Union, which are poised to gain greater access to the Japan in 2019.

Before the United States pulled out of the TPP, Washington identified Japan as the top agricultural market priority due to its high levels of protection, high per capita GDP and large population. In 2014, Washington estimated that the treaty would boost U.S. agricultural exports $7.2 billion (2.6 percent), with Japan accounting for $3.6 billion. During TPP talks, the United States had already secured concessions for greater access to the Japanese market with tariff and quota changes on beef, pork, dairy, corn, soy, wheat, rice and sugar. In the upcoming talks, the United States will likely begin by pushing for the inclusion of these provisions in a bilateral deal or as early harvest concessions. Washington will also probably push for the same access for U.S. pork as the European Union secured, gaining unprecedented tariff cuts in its recent deal.

If the United States holds to its September commitment on agriculture, Japan's government should be able to deliver on a deal. However, agriculture has long been a sensitive political issue in Japanese politics — with the power to make or break political fortunes. A long-term trend sees this influence waning with rural demographic decline and the graying of the agricultural workforce. Despite these trends, and efforts to undermine its clout, the powerful agricultural lobby, JA-Zenchu, still has a strong hand in politics. Protections in the EU deal and the CPTPP reflect the ruling Liberal Democratic Party's (LDP) concerns about pushing farmers too far. And in November, Japan suspended trade negotiations with South America's Mercosur trade bloc after just six months — reportedly over agricultural issues.

So a hard line by the Trump administration on agriculture would force the LDP to choose between facing a backlash at the polls and giving in to steeper U.S. demands for access. In July, half of the lawmakers in Japan's upper house will be up for election. JA-Zenchu's influence could cause some LDP lawmakers to balk out of concern for their seats. However, the government now has greater insulation from such a backlash because of reforms that lowered the clout of rural voters, the LDP's supermajority in the Diet, and Abe's strong internal position and penchant for overruling rank-and-file party members. The U.S. threat to the automotive sector, as long as it remains workable, will make the negotiations on agriculture easier.

But the United States and Japan could clash if a clause putting up barriers to a future Japan-China trade deal were included. The recently signed U.S.-Mexico-Canada Agreement included a provision that required the parties to submit a special notice if they intended to enter trade talks with a nonmarket economy — clearly referring to China. Given that China is Japan's largest trading partner, Tokyo would like to reserve the right to forge an agreement with it in the long term, possibly including South Korea in a multilateral deal. However, Japan might allow such a provision if it didn't bar Tokyo from a China deal but simply meant that such talks would trigger re-examination of the agreement with United States — and not kill it.

Why Ukraine Challenged Russia at the Kerch Strait

2018-11-27T21:36:00Z

The Big Picture

Stratfor has noted that Ukraine-Russia skirmishes like the recent clash at the Kerch Strait would become more likely and that the Sea of Azov remains a flashpoint between the two countries. In addition, Ukraine is emerging as a key battleground between the United States and Russia as part of the wider great power competition.

What Happened

The Russian-Ukrainian dispute over maritime access through the Kerch Strait escalated on Nov. 25 when paramilitary forces from the Russian Federal Security Service (FSB) disabled, boarded and captured two small Ukrainian naval vessels and a tugboat attempting to pass through the strait. Six of the 24 Ukrainian crew members detained by Russia were injured in the forced boarding. The strait, positioned at the eastern end of Crimea, connects the Sea of Azov with the Black Sea. The Ukrainian government in Kiev immediately denounced the Russian actions and accused Moscow of military aggression. Ukrainian President Petro Poroshenko also declared that a state of martial law would begin Nov. 28 and last for 30 days (but could be subsequently extended). Ukraine and Russia requested an urgent meeting of the U.N. Security Council.

A Treaty, Crimea and Trade

According to Russia, its annexation of Crimea in 2014 invalidated the 2003 agreement with Ukraine over the use of the Sea of Azov and the Kerch Strait. With control of the Crimea, Russia argues that the waters around the Kerch Strait are effectively its territorial waters. However, Kiev and most of the rest of the world does not recognize the Russian takeover of Crimea, and Ukraine insists on its right to pass through the strait and the sea without interference. A few months ago, Ukraine announced that it would build a naval base on the Sea of Azov by the end of the year, raising tensions. Recently, Russia has intensified its interference with Ukrainian maritime traffic in the area. For Ukraine, access to the Sea of Azov is critical for economic and security reasons. Without unhindered traffic through the strait, it would effectively lose maritime access to key ports such as Mariupol.

Why It Matters

The biggest current risk is the escalation of this skirmish into a broader military confrontation between Russia and Ukraine. Both countries are already embroiled in a semifrozen conflict in the Donbas region of eastern Ukraine, so escalation there is already a distinct possibility. Given Ukraine's limited naval capabilities, however, Kiev can do little in response to Russia at sea — any attempt by Ukraine to force its claim on the Sea of Azov and the Kerch Strait would fail. And the threat of wider escalation appears relatively contained because the Ukrainians haven't shown any signs of preparing a military riposte.

But other motives — both global and domestic — could lie behind Ukraine's latest naval foray into the disputed waters. Given its military weakness in comparison to Russia, especially on the seas, it is in Kiev's interest to highlight Russian aggression to the rest of the world — and particularly to the European Union and the United States. A U.S. rapprochement with Russia that leaves it in control of Crimea and leaves Russian-aligned forces in control of much of the Donbas in eastern Ukraine would be a disaster for Kiev. And mere days before U.S. President Donald Trump is expected to meet with Russian President Vladimir Putin at the G-20 summit in Argentina, Ukraine is pressing its maritime claims and highlighting Russia's belligerence. However, it might not have expected Russia to go so far as to board its vessels and capture its sailors. Declaring martial law also serves to intensify the spotlight on Russia's actions and Ukraine's position.

For Ukraine, the payoff from this maritime move could lead either to additional EU and U.S. pressure on Russia through new sanctions or to new direct assistance, especially in the form of military equipment or increased NATO forays into the Black Sea. NATO could also step up efforts to build up the Ukrainian navy, but given the force's current state, that would entail providing support, training and equipment for years. And the degree to which Russia enforces its claims also matters in the Western response — the more belligerent it appears in denying Ukrainian access and the firmer it responds to Ukraine's attempts to press its claims, the risk of drawing more EU and U.S. pressure rises.

In addition, domestic motivations could be playing a part in the Ukrainian gambit and the subsequent declaration of martial law. Presidential elections are set for March 2019, and Poroshenko, who doesn't appear to be doing too well in the polls, is at serious risk of losing. Some in the opposition have decried the declaration of martial law as a ploy by the president to either delay or manipulate the election. The extent of martial law restrictions is unclear so far, and not every measure possible under the law will necessarily be enacted. Some provisions allow the government to limit and regulate media, including telecommunications, radio and the press. They also permit a postponement of presidential elections, creating the possibility that martial law could be used for political advantage. The measures the government enforces, therefore, will indicate whether a domestic political agenda, as well as national security interests, are motivating it to magnify a skirmish with Russia.

Whatever Kiev's reasoning, the weekend's events are taking their toll on the fragile Ukrainian economy. Its currency, the hryvnia, dropped as much as 1.6 percent against the U.S. dollar on Nov. 26, and the country's borrowing costs rose to their highest level since a bond sale last year. Yakiv Smoliy, governor of Ukraine's central bank, reportedly met with representatives from the country's major banks on Nov. 26 to reassure them about Ukraine's financial stability. The country has been under an International Monetary Fund reform program since 2015. So far, the IMF has not indicated that martial law would put the program in jeopardy. However, it will probably keep a close eye on the economic policy decisions that Kiev makes while under martial law to see whether they deviate from the IMF program.

China Looks at U.S. Tech-Limiting Measures and Sees Gunboat Diplomacy

2018-11-20T20:06:00Z

Highlights
As China attempts to achieve technological parity for reasons of national security, the U.S. government will continue to deploy a wide array of tools against these efforts, particularly Beijing's attempts to obtain trade secrets illegally.

These U.S. actions, however, will merely convince Beijing to break its dependence on Western technology by any means possible, since they vividly remind China about how a technologically superior West victimized it during the days of gunboat diplomacy.

Fearful for its own future in the wake of Washington's actions, Russia will also strive to obtain technology by any means possible.

The last Opium War ended 176 years ago, but Beijing remembers the battle well — particularly the West's penchant for gunboat diplomacy. Memories of Western coercion and blockades have already prompted China to bolster the country's navy and take aggressive steps in the South China Sea to fulfill two of its overriding strategic imperatives: prevent any encroachment on the eastern coast and secure maritime trade routes.

Beijing, however, is now preparing to respond to another type of blockade. Late last month, the U.S. Commerce Department announced that it was adding Fujian Jinhua Integrated Circuit Co. to the list of entities facing restrictions, essentially declaring that the firm poses a significant risk to U.S. national security or foreign policy. A December 2017 indictment accused the firm of illegally obtaining trade secrets for the production of DRAM chips from U.S. company Micron. With the action, the Commerce Department has barred the export, re-export or transfer of U.S.-origin technology, commodities or software to Fujian Jinhua without a special export license — which the department is unlikely to grant anyone.

The action against Fujian Jinhua is tantamount to a blockade on the company, because Washington is using lawsuits to prevent it from selling its chips in overseas markets and imposing technology transfer bans to prevent it from obtaining the components it needs to produce chips. Because of this, the measures are certain to provoke an emotional response among China's leaders, who will see them as an attack on its future development — and perhaps more fundamentally — its sovereignty. And far from persuading China to desist from its efforts to acquire technology by any means necessary, the robust U.S. action is ikely to only encourage more of it.

In Hot Pursuit of Chinese Companies

Three days after Fujian Jinhua was added to the list on Oct. 29, the U.S. Department of Justice filed a civil suit to prevent the firm from selling DRAM chips made by it or its Taiwanese partner, UMC, inside the United States. The suit also applies to other devices that include chips made by Fujian Jinhua and UMC, meaning that foreign companies that wish to sell to the U.S. market will have to get their DRAM chips elsewhere.

The measures against Fujian Jinhua come amid a raft of recent U.S. efforts to halt technology transfers to China, as well as Beijing's industrial espionage. On Nov. 12, The Wall Street Journal reported that in addition to judicial action to counter Chinese spies, the U.S. government will also use tools such as export controls to combat China's theft of trade secrets from American companies. Then, on Nov. 19, the Commerce Department launched a 30-day public comment period to obtain feedback from the technology sector on legislation that would impose restrictions on the exports of dual-use U.S. technology to China if it could pose a national security risk to the United States.

The Response to a 21st-Century Blockade

Taken together, all the U.S. steps are likely to hit Fujian Jinhua extremely hard. In fact, The Wall Street Journal even suggested that they could kill the company, because it relies on U.S. technology and components to produce its chips. (Compounding the issue, Micron filed a civil lawsuit against Fujian Jinhua in December 2017, which continues to wind its way through the courts. Fujian Jinhua subsequently filed a countersuit in a Chinese civil court in July 2018.) From the U.S. government's perspective, damaging or even destroying Fujian Jinhua for stealing Micron's intellectual property would represent a major victory. Contrastingly for China, Fujian Jinhua's demise would represent a significant blow to the country's efforts to become self-sufficient in semiconductor production, including DRAM chips. As a state-owned enterprise, the firm received $5.7 billion in state funding from the Fujian provincial government to build a production plant for DRAM chips, illustrating the government's focus on the importance of developing the technology.

But in its rush to obstruct China's efforts to develop domestic technology, the U.S. government's proclivity for measures to ban knowledge transfers are, ironically, only going to convince Beijing of the need to accelerate its efforts to end its reliance on Western technology. And technology transfers are not the only means of ending such dependence — the acquisition of coveted technology by any means necessary is another method of ultimately ensuring that Beijing can fulfill its national security goal of achieving technological parity with the West. Faced with such U.S. measures, the hard-liners who have been urging Chinese intelligence agencies to acquire the technologies on the shopping list associated with the "Made in China 2025" initiative by hook or by crook are now likely to redouble their clandestine efforts.

However, as these efforts increase, Chinese companies and intelligence agencies will naturally need to adjust their tactics. This will be especially true as they target trade secrets that are only available from a small number of companies, which will be on guard after high-profile incidents such as the Micron case and theft attempts by Chinese spies seeking the designs for jet engine components. These efforts will involve the use of every tool in the espionage toolbox, including cyberattacks and the recruitment of human sources.

While some of the recent, highly publicized Chinese espionage efforts may appear amateurish, Western governments and companies would underestimate them at their peril. A variety of Chinese agencies and actors will often conduct simultaneous efforts to collect the desired information or technology using multiple approaches — some of which are more sophisticated than others. Because of this, botched or thwarted efforts should not lull potential targets into a false sense of security, because other, more effective operations using sophisticated tradecraft may already be in motion.

China will also use other tools at its disposal. On DRAM chips, China launched a domestic antitrust investigation in June, alleging that the world's leading producers, SK Hynix, Samsung and Micron — which together control about 95 percent of the DRAM market — had conspired to fix prices. On Nov. 19, the trio's stock prices tumbled after the Financial Times reported that China's investigation was making progress. Needless to say, Chinese officials will have even more incentive to press their antitrust case if Fujian Jinhua suffers as a result of the U.S. measures.

Espionage in the Great Power Struggle

Watching on with great interest is Russia, which has its own list of 77 technologies that it wishes to develop indigenously in order to break its dependency upon the West. Without question, the U.S. government's use of virtual gunboat diplomacy against Fujian Jinhua will strengthen the Kremlin's resolve to ensure that it is not on the receiving end of similar actions in the future — especially given Washington's current sanctions against Moscow. This will also result in increased Russian corporate espionage in concert with the Kremlin's efforts to sow discord within the United States, various European countries and the European Union, as well as between Washington and Brussels.

In the end, great power struggles involve every facet of national power, with the military, diplomatic, legal and commercial angles of the struggle obvious for all to see. But lurking in the shadows, battles between intelligence agencies to procure or protect technology may, in the long run, prove to be every bit as significant as those higher-profile struggles.

When Human Rights Become a Handicap to U.S. Foreign Policy

2018-11-08T21:58:00Z

Highlights
The degree to which a U.S. president will emphasize human rights in foreign policy is as much a product of the geopolitical climate as it is personal ideology.

In addition to exposing the lengths to which the White House will go to maintain a strategic relationship, the slaying of Saudi journalist Jamal Khashoggi revealed a broader defiance developing among authoritarian allies over Western human rights criticism.

In an era of great power competition, in which the Chinese model of digital authoritarianism is a direct challenge to the Western liberal order, human rights abuses are bound to grow more frequent and blatant.

Despite the cautionary tale of the Arab Spring, the United States and other Western powers will not be able to avoid the risk of entangling strategic imperatives with strongman personalities.

"We must seek partners, not perfection."

These were perhaps the most tantalizing words U.S. President Donald Trump could offer to the more than 50 leaders of the Islamic world who attended his speech in Riyadh, Saudi Arabia, in May 2017. And perhaps no one was listening more intently to that message than an excitable young prince, Mohammed bin Salman, who was merely days away from kicking his older cousin out of the line of succession while preparing to take the reins of the kingdom.

The shock surrounding the grisly killing of Saudi journalist Jamal Khashoggi all comes back to that sublimely surreal summit in Riyadh. The royal carpet at the now legendary Ritz-Carlton was rolled out for America's new, gilded president, cementing a powerful personal bond between the young prince and the Trump family dynasty. Less than a month later, Saudi Arabia and the United Arab Emirates, expecting a wink and a nod from the Trump White House, launched an aggressive diplomatic offensive against Qatar over Doha's ties to the Muslim Brotherhood and Iran. By November, high-powered CEOs flocked to the Ritz in Riyadh to pledge billions of dollars in investment at the kingdom's inaugural "Davos in the Desert" conference. Two months after that, the same palatial digs became a temporary prison for hundreds of Saudi royals charged with corruption.

Crown Prince Salman was on a roll, and he was not about to let anything get in his way. So long as he had the seemingly unwavering support of a White House fixated on crippling Iran and so long as he could count on Bloomberg, Financial Times and other major platforms to boost his image as the poster boy of reform in the Middle East, his strategy was clear: ruthlessly remove rivals from his path at home, squeeze regional partners to bend to his foreign policy priorities and double down on any foreign governments or corporations that dare to voice an opinion on his questionable methods.

But strategy by itself does not necessarily translate into strategic results. Placing Lebanese Prime Minister Saad al-Hariri under house arrest and having him show up in selfies with the crown prince a few months later does not change the fact that any Lebanese leader will need a working relationship with Hezbollah to avoid paralyzing a deeply fractured country such as Lebanon. Cutting ties with Qatar will only give Doha more cause to shore up alliances with like-minded regional powers such as Turkey to avoid getting swallowed up by Saudi Arabia's shadow. And pursuing dissidents at any cost, including significant diplomatic and corporate fallout, could end up giving more space and credibility to the crown prince's rivals as questions over succession continue to swirl in the Saudi kingdom.

This was supposed to be the lesson of the Arab Spring for the United States and other powers in the Western world: Beware of getting overly attached to strongman personalities, keep your options open and focus on building up credible institutions in countries of interest to avoid getting caught in a lurch if and when a prized ally bites the dust. Perhaps that's easier said than done, especially when dealing with seemingly indestructible political dynasties or when democratic votes have the potential to produce unpleasant results.

The Blurry Line

That unavoidably blurry line around human rights and its role in U.S. foreign policy also tends to get a lot more contentious in a period of great power competition, and it can fluctuate widely between White Houses. In the Nixon-Kissinger era during the Cold War, the White House battled Congress to keep a tight lid on human rights concerns, from Chile's Pinochet to the Shah's Iran. As Kissinger said during his confirmation as secretary of state in 1973, "I believe it is dangerous for us to make the domestic policy of countries around the world a direct objective of U.S. foreign policy," insisting on a "pragmatic policy" in which the United States would have to determine whether or not "the infringement is so offensive that we cannot live with it” in managing the United States' bilateral relationships.

That ruthlessly realpolitik approach by the White House compelled a much more assertive Congress in 1976 to mandate annual reports from the secretary of state on the condition of human rights in countries that receive U.S. aid. President Jimmy Carter endorsed that track and made institutionalizing human rights oversight and cutting military aid to offending states a key feature of his foreign policy. President Ronald Reagan's administration returned to a more strategic approach, using human rights issues to rhetorically seize the moral high ground in its ideological crusade against communism, all while dealing much more pragmatically with unsavory allies in practice. President George H.W. Bush broadly continued with that approach, taking care to avoid a rupture in the Sino-U.S. relationship after the Tiananmen Square massacre, but he also gambled on interventions on humanitarian grounds in Panama and Somalia.

As great power competition waned and globalization took hold of the 1990s, human rights arguments gained more prominence in policy debates and U.S. foreign policy grew more experimental in practice. Under President Bill Clinton, the United States made humanitarian interventions in Haiti and the Balkans and held the prevailing, albeit mistaken, belief that China's entry into the World Trade Organization would be the long-term antidote to authoritarianism. President George W. Bush and his neoconservative camp combined the liberal idea of democratic peace promotion with military activism to capsize Iraq in an amorphous global war on terrorism. President Barack Obama, in trying to unbury the United States from its all-consuming wars in the Islamic world and prepare for rising competition from Russia and China, practiced a far more restrained approach to foreign policy overall, all while rhetorically championing democratic ideals abroad.

The Trump Approach

Like several of his predecessors, Trump follows a dualistic and selective approach to human rights issues, albeit in much blunter terms. Depending on whether a country is on the White House's friend or foe list, human rights will either be used as a Get Out of Jail Free card to reinforce strategic ties or as a hammer to whack problematic governments over the head. The White House approach to Saudi Arabia illustrates the former: A strategic partnership fueled in large part by a common agenda to weaken Iran and stabilize energy markets will overwhelm the near-term awkwardness over the Khashoggi affair or any other human rights spectacle that emerges from the kingdom. An overwhelming U.S. imperative to avoid a costly military conflict in Northeast Asia has largely omitted human rights from the U.S. diplomatic agenda on North Korea. But in the case of Iran's protest crackdowns, Turkey's detention of American evangelical pastor Andrew Brunson and China's treatment of the country's Uighur minority, the Trump White House has wielded human rights abuses and the threat of punitive measures as one of several pressure tactics to try to coerce these governments into meeting U.S. demands.

Some level of hypocrisy is expected from any president trying to steer U.S. foreign policy around human rights issues. But how foreign governments interpret the White House's general approach toward the subject from the onset will have a profound impact on their behavior. As journalist Tamar Jacoby described in a 1986 Foreign Affairs article on "The Reagan Turnaround on Human Rights," abuses in El Salvador, Haiti and South Korea soared just between Reagan's election and his inauguration. His rebuke of Carter for allowing human rights to get in the way of U.S. interests in Nicaragua and Iran brought a sigh of relief to authoritarian Cold War allies eager to shrug off Carter's human rights obsession. Similarly, the Saudi crown prince — along with a number of other regional players — interpreted Trump's message from the May 2017 summit as a clear-cut sign that the White House would not make human rights a fixture of Trump foreign policy.

Authoritarian Defiance

So it's little wonder that the Khashoggi affair has appeared to have little impact so far on the crown prince's royal clout. Not only does the crown prince remain in the public limelight and retain an array of powerful economic and security portfolios with the king's blessing, but he is also heading up the investigation and internal intelligence restructuring triggered by a crime that he is widely believed to have commissioned. And even as Saudi Arabia continues to face the threat of sanctions and investment curtailments in the wake of the slaying, Riyadh is staying the course and holding business ties hostage over their meddling in Saudi affairs (Saudi Arabia has reportedly frozen a $2 billion Egyptian-German defense deal that it helped finance in response to Germany's freeze on arms exports licenses to Riyadh).

And that defiance is by no means limited to Saudi Arabia. In an incredible display of Gulf solidarity after the Khashoggi crisis, Bahrain and the United Arab Emirates called for boycotts of companies that threaten to pull out of Saudi Arabia, including Virgin and Uber, two critical investors for Saudi Arabia's Public Investment Fund expansion strategy. What would compel these Gulf neighbors to jump on a bloodstained bandwagon and risk tarnishing their reputation among investors when the Khashoggi fallout could have been just as easily confined to the Saudi kingdom? The opportunity to underscore a deeper message: that foreign governments and companies are not allowed to have an opinion on how they run their domestic affairs.

In this era of great power competition, that message has a powerful endorser. China, in harnessing and exporting its technological prowess in running a surveillance state, offers a compelling alternative to a number of politically paranoid regimes that are no longer convinced that the Western liberal order is the inevitable organizing principle of the international system. China's emulative model of digital authoritarianism and its growing challenge to the United States as a peer competitor will encourage a number of governments to spurn human rights lectures with the growing confidence that Western strategic interests will trump their humanitarian concerns in the end. Can Germany, for example, really afford a major breach with Turkey or Poland over human rights when these front-line states serve a core, strategic interest in balancing against Russia? Would the United States harangue Philippine President Rodrigo Duterte over human rights when China is actively chipping away at the United States' alliance network in Southeast Asia?

A cycle thus emerges: As competition intensifies among the great powers, the maintenance of strategic ties will outweigh humanitarian concerns in managing U.S. foreign relations. Illiberal allies will gain more confidence to crack down on dissidents and curb freedoms in a bid to consolidate power. The more power consolidated under a single personality or clan in a repressive climate, the more vulnerable that political system is bound to grow over time. In the face of rumbling dissent, authoritarian personalities will resort to more extraordinary measures to hold on to their dynasties. More and more egregious human rights abuses will be exposed, and Congress and the White House will spar over the handling and interpretation of matters of security. And the United States will ultimately find itself in an all too familiar dilemma: U.S. strategic imperatives hanging by a thread from the hands of despotic and arguably indispensable allies.

China's Corporate Espionage Looms Large in Its Battle With the U.S.

2018-11-07T02:44:00Z

Highlights
A series of court documents and statements by U.S. government officials have highlighted China's corporate espionage efforts once more, suggesting that Beijing will continue to prioritize the theft of trade secrets.

Building on their work in monitoring the activities of Chinese intelligence officers and hackers, U.S. agencies like the FBI and others are redoubling their efforts to oppose Beijing's spying activities.

As the espionage/counterespionage battle grows between the United States and China, U.S. companies and organizations operating in China could suffer the consequences, even if they do not consider themselves to be targets of spying.

Concerns about Chinese corporate espionage are rising to the fore in the United States. Late last week, senior officials in the U.S. Department of Justice announced an initiative to counter the major threat posed by Chinese spying that has raised alarm in both Washington and farther afield. The espionage (and counterespionage) struggle between the great powers spans a number of areas, including those falling into traditional national security categories such as intelligence collection efforts that target military plans and preparations, not to mention diplomatic initiatives and stances, sanctions and trade negotiations. The U.S. government's recent release of court documents and statements has shined a light on Chinese efforts to acquire critical technologies, as well as the U.S. efforts to counter them. Such counteractions are just the latest salvo in the brewing battle between China and the United States, and given that Beijing is likely to alter its strategy in response, they won't be the last.

China's Push for Parity

The National Defense Strategy, published at the start of 2018, indicated that the U.S. military was attempting to pivot away from the global war on terrorism to focus on peer-to-peer conflict with China and Russia. Naturally, the struggle between the great powers is not limited to the military arena alone, but also involves other tools of national power, such as diplomacy, trade and espionage. And for China, espionage has increasingly come to encompass trade secrets, rather than just state secrets.

China has long strived to obtain the technologies it believes it needs to achieve commercial and military parity with the West. This desire has been formally spelled out in the 863 Program in 1986 and, more recently, a 10-year plan released in 2015 called Made in China 2025, which publicly listed the technologies that the Chinese government has identified as critical for the future development of its economy and national strength. While Beijing funds research to develop these technologies indigenously, China has found that it is often cheaper and quicker to simply steal what it needs.

One priority identified by the Chinese government is the acquisition of jet engine technology, for both domestic and military use. Three weeks ago, I discussed Chinese efforts to obtain fan blade technology integral to jet engine design. In that case, Xu Yanjun, a Chinese intelligence officer from the Sixth Bureau of China's State Security Ministry (MSS) in Jiangsu posed as an official of the Jiangsu Science and Technology Promotion Association in an attempt to recruit an engineer working for a U.S. company. In that case, the company cooperated with the FBI, which lured Xu into a sting operation, resulting in his arrest in Belgium and extradition to the United States.

A June 2017 indictment that the U.S. Department of Justice unsealed Oct. 30 provides additional details regarding MSS efforts spanning from January 2010 to May 2015 to obtain fan blade technology, predating the Xu case and even the launch of the Made in China 2025 initiative. According to the indictment, ministry officials in Jiangsu targeted a variety of companies involved in the manufacture of jet engine turbine fans, including U.S. aerospace companies based in Arizona, Massachusetts, Wisconsin, Oregon and California; a technology company in San Diego; and French and British aerospace companies. The indictment details how the ministry employed a team of hackers who used a variety of techniques against the targeted companies: spear-phishing campaigns, watering hole attacks – an assault in which hackers plant malware on a specific website to infect visitors – and domain hijacking. The hackers not only stole information but also took advantage of their access to the system to send additional spear-phishing emails to employees of other companies and conduct further watering hole attacks.

The ministry, however, did not confine its activities to mere remote hacking attacks. It also recruited two Chinese employees at the Suzhou, China, office of a French aerospace company to serve as agents. The ministry provided the first agent, a product manager at the company, with a USB drive that contained the Sakula malware (the same virus that hackers used in an attack on the U.S. government's Office of Personnel Management in 2015) and instructed him to plug it into a company laptop to install the malware on the company's network.

The second agent, the company's IT security manager, worked to keep the ministry informed about the company's awareness of the breach and its efforts to investigate it. In one instance, he relayed a company warning regarding a phishing attempt, thereby alerting the ministry that the firm had detected a particular scheme. He also notified the ministry when the company inquired about a particular domain that was communicating with the Sakula malware; as a result, the ministry altered the domain in an attempt to throw investigators off their trail.

The case highlights how cyberattacks are just one of the tools in the spy's toolboxand that spy agencies can supplement their activities with human intelligence or other methods, if necessary. Indeed, intelligence agencies can and will use multiple tools simultaneously in pursuit of their objectives.

Putting a Spoke in China's Wheel

In addition to lifting the lid on some of China's corporate espionage efforts, the recent flurry of statements from the U.S. Department of Justice shines a light on U.S. efforts to blunt China's pernicious and aggressive efforts to steal proprietary data and techniques from corporate targets.

Taken together, these actions represent a shot across the bow of the MSS and other intelligence agencies. But in addition, the details of the Oct. 30 indictment reveal how closely the FBI had been monitoring the ministry's infiltration efforts. The indictment clearly shows that the FBI was watching as the malware entered the French company's network, came to life and began to ping – prompting the agency to alert its French counterparts. Naturally, this degree of vigilance will send a strong message to China's intelligence services.

This case illustrates that there are no geographic constraints to intelligence operations – a fact that intelligence officers learned decades ago, as it is often easier to recruit agents in a third country where the level of awareness may be lower. Indeed, the events outlined in the indictment spanned four countries, as well as eight U.S. states.

The global nature of the Chinese efforts is the impetus behind recent U.S. work to spread awareness of the threat of Chinese corporate espionage to friendly countries beyond the members of the "Five Eyes" intelligence-sharing alliance (the United States, Canada, the United Kingdom, Australia and New Zealand). Recent discussions with both government and private-sector contacts has made it apparent that concern over Chinese intelligence activities is increasing in Europe. Worries about China extend even to countries that, due to proximity, are generally more heavily focused on Russian intelligence operations. The collaboration with the French, as well as Belgium's assistance in detaining Xu, vividly illustrate this growing awareness and collaboration.

What Comes Next

While Chinese intelligence officers may change some techniques and tradecraft thanks to their awareness of U.S. efforts to blunt their espionage efforts, Washington's actions will do nothing to slow or halt Beijing's quest. The overriding imperative to obtain information and technology is driving the espionage efforts forward, as Beijing believes that such knowledge is essential if China is to achieve parity with the West and ensure the security of the government and the supply routes that are vital to China's economic survival.

More than that, the U.S. actions will inevitably provoke a response. China is likely to retaliate over Xu's arrest and other American actions. They may do this through formal, reciprocal channels, or through less direct, asymmetrical activities. As a result, U.S. businesses and organizations operating in China could end up bearing the consequences – even if they don't possess the information or technology on China's shopping list.

Trump and the WTO's Uncertain Future

2018-11-01T21:49:00Z

Highlights
The Trump administration will maintain its pressure on the World Trade Organization in an effort to undermine the body's dispute settlement process, arguing that it has obstructed the range of U.S. action.

Because the United States believes the WTO's rules-based order has failed to give the country the tools it needs to challenge China, Washington will continue to exert pressure on Beijing from outside the organization.

Efforts to reform the WTO, as well as persuade the United States to ease its pressure on the body, will struggle under the Trump administration.

In the long run, U.S. administrations are likely to push for new global trade rules that are geared more toward a 21st-century struggle with China, rather than a 20th-century fight with the Soviet Union.

U.S. President Donald Trump has his guns trained on China today, but a bigger war is brewing at the World Trade Organization — where the future of the global trade system is at stake. For the past two years, the United States has blocked new appointments to the WTO's Appellate Body, the organization's de facto supreme court over trade disputes. And unless new appointments are made by Dec. 10, 2019, the body's membership will fall below the number needed to rule on cases.

In effect, the United States is threatening to sideline the WTO's crowning achievement — a strong dispute-resolution mechanism — giving the rest of the world just one year to offer concessions on reform to the United States, to seek other options or to face a world where the mechanism disintegrates. With the ascendance of a new global power — China — the Trump administration may have already decided that this trade tool, a relic of the Cold War era, isn't worth upgrading.

A Victim of Its Own Success?

The current U.S. administration might be at odds with the WTO today, but the body itself was the product of more than 40 years of U.S. pressure on the international community. At the Bretton Woods Conference in 1944, delegates proposed the creation of three institutions to lay the foundation of a rules-based global system to counter the Soviet-led East bloc. Two of those institutions, the International Monetary Fund and the World Bank, remain in existence, but the third — the International Trade Organization — never materialized because U.S. proponents of its establishment couldn't force its charter through the U.S. Senate. In its place, policymakers created the General Agreement on Tariffs and Trade (GATT) to govern trade.

For the United States, a land that derided countries that did not promote free market ideals, the benefits of a rules-based trading order were clear. Essentially, the United States promised other countries access to its market, the most important one for exporters around the world, if they would agree to play by Washington's rules. The problem, however, was enforcement. Although GATT reduced tariffs, it failed to decrease non-trade barriers, including regulations and standards, and suffered from a weak dispute-settlement function. Aggrieved countries could trigger the dispute resolution mechanism, but any decision by the resultant independent panel would only go into effect after the entire GATT council unanimously approved the ruling — an unlikely prospect given that the defendant country could veto the panel's findings. Unsurprisingly, the result was a mechanism that was slow, inefficient and powerless to resolve major disputes.

The United States pushed to strengthen this function, but angst surrounding growing imports and a sluggish domestic manufacturing sector pushed it to take matters into its own hands in the 1980s. After seven years of negotiations and U.S. pressure, the Uruguay Round of multilateral trade talks finally created the WTO in 1995 — five decades after the birth of the World Bank and the IMF.

And unlike GATT, the WTO also boasted a powerful dispute-settlement mechanism, the Dispute Settlement Understanding. Instead of the unanimous approval of a panel's decisions on trade disputes, the new WTO stipulated the adoption of all rulings unless every member agreed to reject a panel report — a clause that effectively guaranteed the approval of a panel's findings. The Uruguay Round also established the Appellate Body, a council whose seven members would be appointed, on a consensus basis, by WTO members every four years to review the legal interpretations of the organization's panels.

Ever since, however, the United States has shifted away from backing a powerful dispute mechanism — going so far as to lambaste it. Although Washington wanted to create a powerful organization to govern global trade rules, it did not want the body to effectively supersede the United States as the pre-eminent entity setting those rules. The United States has argued that the Appellate Body has exceeded its mandate and failed to follow the rules established during the Uruguay Round. It has also complained that the Appellate Body uses previous decisions as precedents in future cases, effectively creating new rules that WTO members have never approved. Moreover, Washington has alleged that the settlement mechanism has curtailed the United States' ability to challenge other countries' practices, including their use of state-owned enterprises (SOE), through its interpretations of WTO rules.

The Challenge of China

The WTO emerged amid the collapse of the Soviet Union. It was a product of the Cold War and also came to represent the new liberal world order, at least for trade matters. As my colleague Rodger Baker has noted, such a world was never inevitable. And as China soon superseded even the Soviet Union in challenging the United States economically, Washington quickly learned that its Cold War-era creation was ineffective at countering Beijing, which many complain is ignoring the rules that it promised to follow when it joined the WTO in 2001.

The most glaring example of the lack of U.S. success was a case it lodged against China's SOEs. Washington argued that China's SOE banks constituted "public bodies," meaning that the cheap loans they provided to enterprises were tantamount to subsidies. The United States, however, lost the case in 2014, when the WTO panel ruled that the Chinese government's mere ownership of a controlling stake did not make the banks a public body. Instead, the panel told the United States that it had to prove that the SOEs were performing government functions.

The most seminal case now on the docket — and perhaps the most important case for the future of the WTO — is whether or not the United States (and others) can continue to classify China as a nonmarket economy. A preliminary decision on one relevant case involving the European Union and China could come in early 2019. If the WTO rules in China's favor, it would threaten Washington's ability to counter Beijing's trade practices through anti-dumping and countervailing duties, because WTO rules make it easier for the United States and others to prevent nonmarket economies from engaging in dumping. Such a ruling, naturally, would only harden U.S. resolve to work outside the WTO to target China.

The Trump Effect and U.S. Goals

As the United States complains that the Appellate Body is overstepping its bounds — and Beijing and Washington hurtle toward an economic collision — it was inevitable that U.S. leaders would take a long look at the global trading system and seek ways of reforming it to counter China. Although the underlying trend may last beyond his presidency, Trump has outshone all others in his aggression against the WTO, threatening to withdraw from the organization.

Realistically, a U.S. withdrawal is not in the cards: Doing so would result in severe economic hardship at home while, more importantly, the act that conferred U.S. ascension to the WTO explicitly gives Congress a chance to overrule the executive. Nevertheless, the current U.S. administration will continue to ignore the body and attempt to undermine it. As far as Trump is concerned, the settlement mechanism is hampering his preferred negotiating style: implement tariffs — or at least threaten to do so — to force concessions from his trading partner. In essence, U.S. Trade Representative Robert Lighthizer, Trump and the protectionists in the White House view GATT as a golden age in which the United States could throw its economic weight around to get what it wanted from others, whether friend of foe.

The ideological argument from the current administration may be unique to Trump, but the other U.S. demands — namely, to amend WTO working rules and procedures to weaken the settlement mechanism, as well as implement better enforcement mechanisms and rules to counter nonmarket economies like China — are likely to outlast the 45th president.

Looking beyond Trump, the United States must strategically reform the WTO so it can better challenge China. As the SOE ruling shows, the WTO has weakened the U.S. ability to challenge China. America will almost certainly feel a need to resort to other mechanisms beyond the one provided by the WTO to apply enough pressure on China — and the global trading system — to achieve what it wants.

The Search for Appeasing Reforms

The Trump administration's aggressive unilateralism and threats against the WTO have prompted major global economies to enact concrete reforms to appease the United States and salvage the global trade body. The European Union and Canada have both submitted proposals for change that address some of the United States' concerns on developing countries, nonmarket economies, and working rules and procedures, as well as enforcement and monitoring. Brussels has called for tighter regulations, so WTO rules will apply to SOEs, as well as clarifications on the definition of a "public body" — the crucial point that sealed the U.S. loss in the China SOE case.

It should be no surprise that Western countries are backing some of these proposals. From a strategic point of view, they have the same grievances against China and developing countries as the United States. But in order to reform the WTO, the European Union, Canada and other like-minded countries need others to come on board. After all, the changes will require a strong consensus, and China will find plenty of allies in the developing world to counter them.

But despite their agreement on certain issues, the United States and its allies remain far apart on the topic that matters most to the Trump administration: the Appellate Body. The European Union has proposed measures to strengthen the WTO Secretariat and the Appellate Body, as well as expand the jurisdiction of the latter, but this is a non-starter in Washington. "Our view is that (the EU proposal) means less accountability for the Appellate Body," U.S. WTO Ambassador Dennis Shea said. "We cannot support something that makes the Appellate Body less accountable."

Simply put, no one is in a position to compel the United States to reverse its pressure on the Appellate Body, which currently has just three members. At best, the Trump administration might be willing to give the body a stay of execution in December 2019 by agreeing to the appointment of two new members when the terms of two current ones end. But it could maintain the pressure on the body by threatening to withhold its support for another appointment when the term of the other current member ends in November 2020. By then, however, the administration could decide that the current consensus system is too slow and too broken to achieve internal reform, meaning the United States might need to demolish the Appellate Body in order to reform it.

Some have proposed ways to circumvent the U.S. gridlock, but none has won widespread support. One proposal would permit countries to use WTO Article 25, which covers a variety of international arbitration processes to settle disputes, but it would not oblige them — namely, the United States — to do so. Under another proposal, the WTO would amend the working rules of the Appellate Body so it could not assume more cases when it does not have a full complement of members to rule on issues. This would effectively sideline the Appellate Body and prevent it from reviewing WTO panel decisions, meaning rulings would go straight to the organization's general body — where they would pass unless they were unanimously rejected. Ultimately, the WTO would incite even more U.S. aggression if it changed its rules to avoid Washington's obstructions.

Eventually, the dispute settlement process is likely to grind to a halt, yet this does not mean that the global trading order will collapse overnight. Upon entering the WTO, countries made concessions, such as relatively low tariffs and promises to refrain from export subsidies, that would technically continue even after the dispute settlement process collapses. But its destruction would eventually allow larger countries such as the United States, as well as China, to bully smaller countries on trade. Over time, this will almost certainly lead to proposals for more holistic reform of the global trading order, even if a new agreement includes far fewer of the current 164 members.

Given the Trump administration's disdain for multilateral trade deals, his government is unlikely to pick up the pieces of a broken WTO. But just because the United States feels the system is unworkable does not mean that Washington will never return to a rules-based system. In the end, a system grounded in rules might offer the United States its best chance of challenging China in the current global order. At present, the WTO lacks the correct rules Washington needs to suitably counter Beijing — meaning the U.S. trade tussle with China will cause trade ripples around the world for years to come.

Sri Lanka: A Prime Minister's Dismissal Throws Colombo Into Chaos

2018-10-30T18:56:00Z

Highlights
The dismissal of Ranil Wickremesinghe will usher in a volatile period in Sri Lankan politics in the upcoming months.

New Prime Minister Mahinda Rajapaksa's ascension to power will worry India given his perceived tilt toward China.

India has traditionally viewed Sri Lanka as its backyard, but it is likely to watch its influence continue to wane in the area as China grows in strength.

A dramatic shakeup in the highest ranks of Sri Lanka's leadership has thrown the South Asian country into turmoil as a former strongman returns to power. On Oct. 26, President Maithripala Sirisena dismissed Prime Minister Ranil Wickremesinghe and installed Mahinda Rajapaksa, a former rival and president, in his place. And to forestall some of the political fallout from the decision, Sirisena suspended parliament until Nov. 16 as part of a purported move to amass the support of at least 113 lawmakers to survive a likely vote of confidence.

Wickremesinghe, who refused to vacate the prime minister's residence, has called for an immediate parliamentary vote to prove his majority. Sirisena, meanwhile, addressed the nation on Oct. 28, justifying Wickremesinghe's dismissal by portraying him as selfish, impatient and corrupt. The president, who was allegedly the subject of a recent assassination plot, also upped the ante by accusing one of the erstwhile prime minister's Cabinet loyalists of complicity in the attempt on his life. But it won't only be Sri Lankans looking on as the country's politicians do battle — China and India will also be monitoring the developments with interest.

A Three-Way Power Struggle

The ouster marks the climax of long-standing tensions between Wickremesinghe and Sirisena — although it is not the first time the latter has made an about-face. In November 2014, Sirisena was serving as health minister under then-President Rajapaksa, a Sinhalese nationalist who became head of state in 2005, during which time he led the government to a decisive victory against the Liberation Tigers of Tamil Eelam, a militant group commonly known as the Tamil Tigers that waged a 26-year insurgency for a homeland for the ethnic Tamil minority. Sirisena, however, suddenly broke away from the government that winter and joined the opposition — then led by Wickremesinghe — to challenge Rajapaksa for the presidency in January 2015. After succeeding, Sirisena expressed his gratitude to Wickremesinghe by naming him prime minister. Then, following parliamentary elections in August 2015 in which Rajapaksa failed to recapture the prime minister's post, Sirisena's center-left Sri Lanka Freedom Party and Wickremesinghe's center-right United National Party formed a tenuous unity government.

The coalition finally came crashing down on Oct. 26. A spate of challenges, including six consecutive quarters of economic growth falling below 4 percent, a Central Bank bond scam, slow progress on reconciliation and the administration of justice to Tamils displaced by the war, as well as a generally mixed governance record, suggests that Sirisena calculated that remaining in the alliance would hurt his chances for re-election in 2020 — especially after Rajapaksa's own Sri Lanka Podujana Peramuna party won 68 percent of local council seats in February elections.

Stuck Between India and China

Sri Lanka's geopolitical significance stems from its location astride key shipping lanes in the Indian Ocean. Monitoring Sri Lankan politics has become increasingly important to neighboring India, as it provides a bellwether about Colombo's attitudes toward Beijing. In July 2017, mounting debts forced Sirisena to sign over a majority stake in the country's Hambantota port to the China Merchants Port Holdings company under a 99-year lease that was initially negotiated by Rajapaksa. The move raised New Delhi's fears that Beijing, its principal strategic rival in Asia, was poised to snap up strategic assets in cash-starved nations around India's periphery, including Pakistan, Bangladesh, Nepal and the Maldives — all signatories to China's vast Belt and Road Initiative.

More recently, Wickremesinghe met Indian Prime Minister Narendra Modi to discuss the status of India's housing projects in Sri Lanka, a key component of India's soft power push across South Asia, following Colombo's decision to reassign a housing contract from a Chinese firm to an Indian one.

Several questions remain in what is sure to be a volatile month for Sri Lankan politics. As India and China seek to avoid any diplomatic flare-ups, how will the two position themselves in response to the Sri Lankan crisis? Rajapaksa's return, meanwhile, will undoubtedly unnerve the Tamil population, which sees him as a standard-bearer of virulent Sinhalese nationalism. This could reduce New Delhi's standing in Colombo given the historical connections between Tamils and southern India. Whatever the outcome, the island nation of 21 million people is emblematic of the wider contest for influence between India and China across South Asia and the Indian Ocean, in which India's internal obstacles and inability to match China's access to deep pools of capital will result in New Delhi's "hegemony by default" gradually weakening in the region.

Japan's Relationship With China Evokes Cold War Memories

2018-10-26T00:28:00Z

Highlights
The histories and fortunes of Japan and China have mutually defined geopolitics in the Western Pacific for the past two centuries.

The U.S.-Japan Cold War alliance dictated the degree to which Japan could reach out to China. With China-U.S. tensions on the rise once more, Japan risks being caught in the middle again.

Prime Minister Shinzo Abe's landmark state visit is part of an effort to separate China-Japan relations from China-U.S. relations, allowing Japan to address its tensions with China without being entirely beholden to U.S. goals.

"Red or white, China remains our next-door neighbor. Geography and economic laws will, I believe, prevail in the long run over any ideological differences or artificial trade barriers."

Former Japanese Prime Minister Shigeru Yoshida spoke those hopeful words while in office in January 1951, as the Cold War was beginning in earnest in the Pacific and China had already entered the Korean War. Japan-China relations were fizzling, as China adopted Communism alongside the Soviet Union while Japan was still aligned with the United States and the broader Western world. The two rival ideological blocs settled into their respective postures, leaving Japan with little space to form its own diplomatic relationships. The United States eventually compelled Japan to sign a peace treaty with fellow U.S. ally Taiwan, further complicating any Japanese outreach to the mainland until Washington itself began a rapprochement with Beijing in 1972.

Fast forward to 2018, and Japan finds itself once again embroiled in a great power competition between China and the United States. Japan is trying as best it can to manage its own relationship with China outside of China-U.S. relations, and this effort is aided by U.S. trade pressure on both countries, which is driving the two to defend the liberal economic order from which they have immensely benefited.

A Major Anniversary

This week, Japanese Prime Minister Shinzo Abe makes a landmark trip to China — the first Japanese state visit to the country in seven years. The summit that Abe is attending will likely showcase memorandums of understanding for Belt and Road infrastructure cooperation, agreements for naval exchanges, cooperation on artificial intelligence and long-stagnant joint East China Sea energy explorationplans.

Abe's visit to China coincides with the 40th anniversary of the 1978 Treaty of Peace and Friendship between Japan and China, which sparked a multi-decade relationship in which Japan provided development assistance, technical aid and investment that enabled China to grow into an economic powerhouse. But over the past decade, China's gross domestic product (GDP) has surpassed that of Japan and the Chinese military has begun aggressively expanding in the region, once again causing friction between Tokyo and Beijing. Indeed, on entering office in 2012, Abe lamented that Chinese-Japanese relations were at their worst since World War II, and he has strived to thaw their frosty relationship despite setbacks.

A Complicated History

The Japan-China dynamic of recent years bears a strong resemblance to the countries' slow process of resuming a positive relationship in the 1970s. In the immediate wake of World War II, Japan had pinned its hopes for rehabilitating its economy on access to China's enormous markets. But the 1949 communist victory in China — as well as the Korean War and zero-sum questions about Beijing's rival, Taipei — made it risky for Japan to forge amicable relations with China. For Beijing, fresh memories of Japanese imperial aggression and a tightening Soviet alliance also made such relations difficult. Japan's ties with the U.S. became increasingly vital, while at the same time limiting any Japanese efforts to strike a balance with China. Regardless, Japan sought as best it could to forge economic links with China within this straitjacket beginning in the mid-1950s, succeeding in making nascent business and trade connections.

After U.S. President Richard Nixon announced his country's plans to normalize relations with China in 1971, with the goal of deepening the rift in China-Soviet ties, Japan was left scrambling to sort out its own rapprochement with the country it had long been trying to get closer to. Japan immediately began talks about improving diplomatic relations with China, switching allegiance from Taiwan back to China in 1972 and eventually signing the friendship treaty, which went into effect Oct. 23, 1978.

For China, Japan was just a small part of a larger picture, in which normalizing relations with the United States was the ultimate goal. By the early 70s, the People's Republic was being pressured by Russia at the same time that it was reeling amid the intense political turmoil of the Cultural Revolution. With the Chinese-Soviet rift deepening, China was eager to break out of its international isolation and diversify its outreach. China's dialogue with Japan — a key U.S. ally and potential spoiler to better U.S.-China relations — was one part of a broader process of rebalancing toward the United States and away from the Soviets.

But for Japan, outreach to China was itself the goal, representing the opportunity for Japan to free itself from the strictures of a heavy reliance on the United States. Japan was pushing to gain greater shutaisei, or autonomy, and diversify its foreign policy across Cold War lines. The month before the Nixon announcement, Japan had at long last concluded a treaty with the United States that restored Japanese sovereignty over Okinawa — a momentous occasion for Japan in regaining a level of autonomy. Meanwhile, Tokyo had already begun reaching out to partners outside of the U.S. sphere. In early 1971 Japan reached out to North Vietnam, in February 1972 it normalized relations with the Mongolian People's Republic and it also began World War II peace talks with the Soviet Union. (These remain unfinished). A better relationship with China was a critical next step.

After the 1978 agreement, China began opening and reforming its economy with the help of major Japanese investment, expertise and official development assistance. The Japanese aid fueled China's booming growth in the years after, making up for shortfalls in Chinese domestic capital and support infrastructure, electrification and industrialization. Japan's goal in providing official development was to modernize China and incentivize it to maintain cooperation with the West, because a collapse of the China-West dynamic would again put Japan in a disadvantageous position.

Cold War Echoes

Today, Japan is once again trying to gain some degree of latitude in the broader power competition between the United States and China. As Washington steadily ratchets up pressure on China using trade, Taiwan ties and other means, Japan is worried that its China foreign policy could be held hostage to U.S. interests. This is concerning for Japan, which could be left holding the bag as the United States moves toward a period of inward orientation and seeks to devolve responsibility in the Pacific to its allies in the region.

At the same time, U.S. trade pressure is not just bearing down on China but on Japan, an export-oriented economy that needs globalization to sustain itself. In its protectionist push, the United States has even threatened to slap tariffs on Japan's auto exports. Already Japan's largest trading partner, China will become increasingly critical, particularly as Japan adjusts to demographic decline.

Thus, in their current outreach to one another, China and Japan are focusing on a common cause: they both face the challenge of surviving an eroding liberal world order that has benefited them. And both face risks from a rapid, U.S.-driven shift in the Korean Peninsula that could sideline them.

But this does not mean that Japan-China frictions will ever be put completely to rest. China's ongoing transition from an inwardly focused continental power to a dynamic maritime power butts up against Japan's imperatives as an island nation. In fact, it was a purely bilateral dispute over ownership of the Senkaku Islands that sunk Abe's hopes of strengthening Japanese-China relations in 2012.

What to Watch For

As in the 20th century, the China-U.S. competition will play out across the broader Indo-Pacific, and it will now expand to the further reaches of Africa and Central Asia. China's continued rise will also challenge Japan's own geopolitical interests, namely maintaining trade and a strong hand in the maritime sphere. But even as Japan tries to maintain a somewhat strong front toward China, it also wants to channel competition into cooperation. This will mean ensuring that Japan and China's relationship does not deteriorate even if U.S.-China relations do. Japan does not want to chasten China as the United States does; rather, it wants to shape China's rise in the Pacific to benefit Japan and keep it out of any U.S.-China firing lines. Fortunately for Japan, its current economic heft and its inevitable movement toward military renormalization, which will come with enhanced autonomy from the United States, mean that Tokyo is better able to shape its own bilateral relationships than it was during the Cold War.

In the broader context of the U.S.-China great power competition, Japan is complicating Washington's strategy with its drive to improve ties with China while maintaining its security alliance with the United States and deepening ties with players like India, Australia and others. The complex balancing act undermines U.S. attempts to firm up its alliance network in the region to counter China. This scenario, which works to Beijing's advantage, is a key reason why China is using primarily economic cooperation and joint development projects as a means of connecting with Japan and other middle powers.

How the Globalization of Mexican Business Helped Spread Crime

2018-10-23T19:47:00Z

Highlights
The same factors that attracted globalized business to Mexico make the country attractive to globalized organized crime.

As a result, organized criminal activity has come to mirror and even piggyback off Mexico's legitimate transport infrastructure and logistical nodes.

The growing power of organized crime and its diversified criminal activity has led to widespread violence, negatively impacting the legitimate economy.

Recently, I found myself explaining to a client how illicit goods flow into and through Mexico and then onward to the United States, and it occurred to me that there are many logistical similarities between Mexican transnational criminal organizations and the countless manufacturers operating in Mexico. After further consideration, it became clear that many of the factors that make Mexico an attractive destination for foreign businesses also make it attractive for criminal enterprise. It is no mistake that the pieces of real estate that Mexican criminal groups fight over often directly overlap with major logistical and production nodes of the traditional economy. In many ways, Mexico's globalized criminal landscape is a mirror of its globalized legitimate economy — and they have both been growing in power.

The Market

The U.S. consumer goods market is the largest in the world. The United States has a gross domestic product of over $19 trillion, and U.S. household spending is the highest on Earth, accounting for nearly a third of global household consumption. The strong demand for consumer goods — such as automobiles, electronics and other items — combined with the economic benefits of various free trade agreements triggered a massive expansion of the manufacturing industry in Mexico. Thanks to Mexican law and trade agreements, foreign-owned manufacturing facilities in Mexico, known as maquiladoras, can import components, raw materials and equipment free of duties. Furthermore, because of deals such as the North American Free Trade Agreement (NAFTA), maquiladoras and other manufacturers can export goods to the U.S. market without paying typical duties. Additionally, the cost of labor in Mexico is only 15 to 25 percent of what it is in the United States.

The U.S. market for illicit drugs is also the largest in the world. And while there is no free trade agreement that permits the flow of drugs and precursor chemicals into Mexico, the huge number of legitimate components and raw materials flowing through Mexico's ports presents ample opportunities for smugglers to conceal finished drugs and chemical precursors. Unfortunately, pervasive corruption facilitates the relatively free movement of contraband once it enters Mexico.

Transportation Networks

The ability to manufacture items in Mexico would not be as attractive if there were not quick and efficient ways to transport those finished goods into the United States. Fortunately for producers operating in Mexico, the country's transportation networks have evolved in such a way as to sync-up almost seamlessly with the rest of North America. This connected highway infrastructure has resulted in the U.S.-Mexico border becoming the busiest land border in the world. Some $1.45 billion in legal trade crosses it every day. Approximately 6 million cars, 440,000 trucks and 3.3 million pedestrians transit from Mexico to the United States every month, utilizing any one of 27 land crossing points that exist between the two countries.

And, despite the political rhetoric surrounding border security, the vast majority of narcotics flow through legitimate ports of entry, hidden within streams of legal cargo inside tractor-trailers and cars rather than being hauled through remote areas of the desert. The importance of border crossings for moving narcotics is illustrated by the way the cartels expend blood and effort to seize and maintain control of them. They are worth fighting for because of the economic gain that comes from controlling what flows through them. As well as being able to regulate and smuggle homegrown illegal goods, cartels levy a tax (called a "piso") on others who want to move contraband through the border crossings they control. That is why we continue to witness bloody fights for control of the Tijuana, Juarez and Reynosa plazas.

Of course, this illicit commerce flows both ways across the U.S.-Mexico border, and the stream of auto parts, raw materials and other goods coming south from the United States and Canada to Mexican manufacturing centers provides an opportunity for criminals to smuggle bulk cash and weapons from the United States into Mexico.

Meth Maquiladoras

One industry that has fully embraced the maquiladora concept is the electronics manufacturing sector, specifically from the Asia-Pacific. In the maquiladora system, electronic components manufactured overseas flow through Mexico's ports and are transported to factories where companies such as Sony, Sanyo, Samsung, Foxconn and others assemble them into finished products that are then shipped north for sale in the United States.

Mexican manufacturers of illicit synthetic drugs and their Chinese partners have copied this system. Precursor chemicals are shipped from China to Mexican ports where they are then forwarded to criminal organizations such as the Cartel de Jalisco Nueva Generacion (CJNG) and the Sinaloa cartel, who then use these chemicals to synthesize methamphetamine and fentanyl in makeshift factories. The drugs are then smuggled into the United States for retail sale. In the case of methamphetamine, it wasn't a free trade agreement that led to an increase in the manufacture of the drug in Mexico, but a series of law enforcement and regulatory actions in the United States that resulted in the shuttering of large-scale meth labs in California's central valley, while also making meth precursor chemicals more difficult to obtain in the United States.

The import of precursor chemicals provides an additional reason for criminal organizations to control the ports. The groups that have profited most from the synthetic drug trade, such as the CJNG and Sinaloa cartel, have a strong presence on Mexico's Pacific coast where the important ports of Manzanillo and Lazaro Cardenas are located — in fact, the CJNG first came to our attention when it made a heavy push to establish control of the port of Veracruz. This has given the coastal organizations a distinct advantage over their competitors.

Beyond Maquiladoras

Of course, maquiladoras and other manufacturers aren't the only industry that has an illicit twin. There is an interesting parallel between the Mexican avocado industry — primarily based in Michoacan, Jalisco, Nayarit, Guerrero and other Tierra Caliente states — and the Mexican opium poppy production in those parts of the country. Although opium poppies actually have a wider growing range, and production of opium gum extends farther up the Sierra Madre Occidental, the flow of processed opium is similar to that of the avocados and we have observed instances of drugs being smuggled in shipments of avocados.

There has always been crime, and organized criminal groups, in Mexico. However, the globalization of crime over the past four decades has provided Mexican criminal groups with the resources to become the extremely powerful and dangerous organizations they are now. The influx of cash Mexican criminals received from partnering with Colombian organizations to traffic South American cocaine into the United States was the impetus that began the dramatic growth of the Mexican cartels. It provided them with the cash to buy properties, vehicles and front companies to assist their smuggling operations. It also afforded them the opportunity to hire professional enforcer groups and purchase military-grade weapons and equipment. The vast amount of money the Mexican cartels made in the drug trade also provided them with the ability to weave an intricate web of corruption that has impacted all levels of government in Mexico.

Later waves of crime globalization happened when Chinese criminals began to ship massive quantities of precursor chemicals to Mexican organizations producing methamphetamine. These same connections would later help Mexican criminal groups dramatically expand their production of fentanyl. Another opiate-related example of criminal globalization was the emergence of Colombian chemists and agronomists who helped Mexican organizations improve and dramatically expand their heroin production. Today, the Drug Enforcement Administration estimates that Mexican heroin accounts for more than 90 percent of U.S. supply.

But the cartels are not involved only in drug production and trafficking. They are also involved in a wide array of crimes, many of which impact the legitimate economy. Cargo theft from trucks and trains and illegal petroleum siphoning are growing at an alarming and exponential rate in Mexico. Like the growing violence between Mexican criminal groups, other forms of criminal activity are serving to constrain the growth of the Mexican economy. While the effects of the globalization of legitimate business have resulted in an economic boom in Mexico, globalized criminals are having an adverse impact on the Mexican economy. While it is difficult to find accurate numbers to quantify the toll that kidnappings and extortion are taking, it is significant — as is the cost of security to protect against such threats. The Mexican Employers' Confederation (COPARMEX) estimates that 40 percent of its member companies have been victimized by crime and that members spend between 10-12 percent of their corporate earnings on security. It is also hard to quantify all the investment that has not happened because of the criminal threat. However, the crimes that we can better quantify — petroleum theft is costing the state-owned oil company Pemex some $1.6 billion a year and road and rail cargo theft totaled over $4.7 billion in 2017 — are clear indicators of the adverse impact crime is having on Mexico's economy.

How the U.S.-China Power Competition Is Shaping the Future of AI Ethics

2018-10-18T18:25:00Z

Highlights
As artificial intelligence applications develop and expand, countries and corporations will have different opinions on how and when technologies should be employed. First movers like the United States and China will have an advantage in setting international standards.

China will push back against existing Western-led ethical norms as its level of global influence rises and the major powers race to become technologically dominant.

In the future, ethical decisions that prevent adoption of artificial intelligence applications in certain fields could limit political, security and economic advantages for specific countries.

Controversial new technologies such as automation and artificial intelligence are quickly becoming ubiquitous, prompting ethical questions about their uses in both the private and state spheres. A broader shift on the global stage will drive the regulations and societal standards that will, in turn, influence technological adoption. As countries and corporations race to achieve technological dominance, they will engage in a tug of war between different sets of values while striving to establish ethical standards. Western values have long been dominant in setting these standards, as the United States has traditionally been the most influential innovative global force. But China, which has successfully prioritized economic growth and technological development over the past several decades, is likely to play a bigger role in the future when it comes to tech ethics.

The field of artificial intelligence will be one of the biggest areas where different players will be working to establish regulatory guardrails and answer ethical questions in the future. Science fiction writer Isaac Asimov wrote his influential laws of robotics in the first half of the 20th century, and reality is now catching up to fiction. Questions over the ethics of AI and its potential applications are numerous: What constitutes bias within the algorithms? Who owns data? What privacy measures should be employed? And just how much control should humans retain in applying AI-driven automation? For many of these questions, there is no easy answer. And in fact, as the great power competition between China and the United States ramps up, they prompt another question: Who is going to answer them?

Questions of right and wrong are based on the inherent cultural values ingrained within a place. From an economic perspective, the Western ideal has always been the laissez-faire economy. And ethically, Western norms have prioritized privacy and the importance of human rights. But China is challenging those norms and ideals, as it uses a powerful state hand to run its economy and often chooses to sacrifice privacy in the name of development. On yet another front, societal trust in technology can also differ, influencing the commercial and military use of artificial intelligence.

Different Approaches to Privacy

One area where countries that intend to set global ethical standards for the future of technology have focused their attention is in the use and monetization of personal data. From a scientific perspective, more data equals better, smarter AI, meaning those with access to and a willingness to use that data could have a future advantage. However, ethical concerns over data ownership and the privacy of individuals and even corporations can and do limit data dispersion and use.

How various entities are handling the question of data privacy is an early gauge for how far AI application can go, in private and commercial use. It is also a question that reveals a major divergence in values. With its General Data Protection Regulation, which went into effect this year, the European Union has taken an early global lead on protecting the rights of individuals. Several U.S. states have passed or are working to pass similar legislation, and the U.S. government is currently considering an overarching federal policy that covers individual data privacy rights.

China, on the other hand, has demonstrated a willingness to prioritize the betterment of the state over the value of personal privacy. The Chinese public is generally supportive of initiatives that use personal data and apply algorithms. For example, there has been little domestic objection to a new state-driven initiative to monitor behavior — from purchases to social media activity to travel — using AI to assign a corresponding "social score." The score would translate to a level of "trustworthiness" that would allow, or deny, access to certain privileges. The program, meant to be fully operational by 2020, will track citizens, government officials and businesses. Similarly, facial recognition technology is already used, though not ubiquitously, throughout the country and is projected to play an increasingly important role in Chinese law enforcement and governance. China's reliance on such algorithmic-based systems would make it among the first entities to place such a hefty reliance on the decision-making capabilities of computers.

When Ethics Cross Borders and Machine Autonomy Increases

Within a country's borders, the use of AI technology for domestic security and governance purposes may certainly raise questions from human rights groups, but those questions are amplified when use of the technology crosses borders and affects international relationships. One example is Google's potential project to develop a censored search app for the Chinese market. By intending to take advantage of China's market by adhering to the country's rules and regulations, Google could also be seen as perpetuating the Chinese government's values and views on censorship. The company left China in 2010 over objections to that very matter.

And these current issues are relatively small in comparison to questions looming on the horizon. Ever-improving algorithms and applications will soon prompt queries about how much autonomy machines "should" have, going far beyond today's credit scores, loans or even social scores. Take automated driving, for example, a seemingly more innocuous application of artificial intelligence and automation. How much control should a human have while in a vehicle? If there is no human involved, who is responsible if and when there is an accident? The answer varies depending where the question is asked. In societies that trust in technology more, like Japan, South Korea or China, the ability to remove key components from cars, such as steering wheels, in the future will likely be easier. In the United States, despite its technological prowess and even as General Motors is applying for the ability to put cars without steering wheels on the road, the current U.S. administration appears wary.

Defense, the Human Element and the First Rule of Robotics

Closely paraphrased, Asimov's first rule of robotics is that a robot should never harm a human through action or inaction. The writer was known as a futurist and thinker, and his rule still resonates. In terms of global governance and international policy, decisions over the limits of AI's decision-making power will be vital to determining the future of the military. How much human involvement, after all, should be required when it comes to decisions that could result in the loss of human life? Advancements in AI will drive the development of remote and asymmetric warfare, requiring the U.S. Department of Defense to make ethical decisions prompted by both Silicon Valley and the Chinese government.

At the dawn of the nuclear age, the scientific community questioned the ethical nature of using nuclear understanding for military purposes. More recently, companies in Silicon Valley have been asking similar questions about whether their technological developments should be used in warfare. Google has been vocal about its objections to working with the U.S. military. After controversy and internal dissent about the company's role in Project Maven, a Pentagon-led project to incorporate AI into the U.S. defense strategy, Google CEO Sundar Pinchai penned the company's own rules of AI ethics, which required, much like Asimov intended, that it not develop AI for weaponry or uses that would cause harm. Pinchai also stated that Google would not contribute to the use of AI in surveillance that pushes boundaries of "internationally accepted norms." Recently, Google pulled out of bidding for a Defense Department cloud computing project as part of JEDI (Joint Enterprise Defense Initiative). Microsoft employees also issued a public letter voicing objections to their own company's intent to bid for the same contract. Meanwhile, Amazon's CEO, Jeff Bezos, whose company is still in the running for the JEDI contract, has bucked this trend, voicing his belief that technology companies partnering with the U.S. military is necessary to ensure national security.

There are already certain ethical guidelines in place when it comes to integrating AI into military operations. Western militaries, including that of the United States, have pledged to always maintain a "human-in-the-loop" structure for operations involving armed unmanned vehicles, so as to avoid the ethical and legal consequences of AI-driven attacks. But these rules may evolve as technology improves. The desire for quick decisions, the high cost of human labor and basic efficiency needs are all bound to challenge countries' commitment to keeping a human in the loop. After all, AI could function like a non-human commander, making command and control decisions conceivably better than any human general could.

Even if the United States still abides by the guidelines, other countries — like China — may have far less motivation to do so. China has already challenged international norms in a number of arenas, including the World Trade Organization, and may well see it as a strategic imperative to employ AI in controversial ways to advance its military might. It's unclear where China will draw the line and how it will match up with Western military norms. But it's relatively certain that if one great power begins implementing cutting-edge technology in controversial ways, others will be forced to consider whether they are willing to let competing countries set ethical norms.

U.S. Naval Update Map: Oct. 11, 2018

2018-10-12T05:25:00Z

The Naval Update Map shows the approximate current locations of U.S. Carrier Strike Groups (CSGs) and Amphibious Ready Groups (ARGs), based on available open-source information. No classified or operationally sensitive information is included in this weekly update. CSGs and ARGs are the keys to U.S. dominance over the world's oceans. A CSG is centered on an aircraft carrier, which projects U.S. naval and air power and supports a Carrier Air Wing, or CVW. The CSG includes significant offensive strike capability. An ARG is centered on three amphibious warfare ships, with a Marine Expeditionary Unit embarked. An MEU is built around a heavily reinforced and mobile battalion of Marines.

Carrier Strike Groups

The USS Carl Vinson is underway in the Pacific Ocean.
The USS Ronald Reagan is underway in the Pacific Ocean in support of security and stability in the Indo-Pacific region.
The USS Harry S. Truman is underway in the Atlantic Ocean in the U.S. 6th Fleet's area of responsibility while on a deployment.

Amphibious Ready Groups/Marine Expeditionary Units

The USS Wasp is underway in the U.S. 7th Fleet AOR.
The USS Essex is underway in the U.S. 5th Fleet AOR in support of naval operations to ensure maritime stability and security in the Central Region.
The USS Boxer is underway in the Pacific Ocean conducting routine operations.
The USS Bonhomme Richard is underway in the Pacific Ocean after participating in Fleet Week.
The USS Iwo Jima is underway in the Atlantic Ocean conducting routine operations.

Ironically, the GRU Gets Bitten by the Internet

2018-10-10T05:55:00Z

Highlights

Seven Russian intelligence officers have been indicted in the U.S. in connection with hacking operations against a variety of targets in several countries.

These officers have also received a great deal of embarrassing attention from activists on the internet and social media.

This case illustrates how technologies such as social media, often used as a weapon by intelligence agencies, can also be turned against them.

Last week was a rough one for Russia's military intelligence service. On Oct. 4, the U.S. Department of Justice announced the indictment of seven officers of the Main Intelligence Directorate (known as the GRU by its Russian acronym) in connection with hacking operations. At the same time, Dutch intelligence services released a report on the April arrest of four of the men that included their passport information and photos of their hacking equipment. Then independent investigators, using the internet and social media, dug up additional information on the GRU's cyberwarfare unit, confirming the identity of one of the suspects in a nerve agent poisoning in the United Kingdom and identifying the second suspect for the first time.

These developments emphasize how social media and open-source information on the internet — though inherently neutral — can be used for either good or ill. It is highly ironic that the GRU, which has been quite successful in using social media to stir up discord inside the United States and Europe, also has been embarrassed by open-source reporting. These recent developments also show how technological innovation is changing the spying game, and intelligence services are moving — sometimes not so quickly — to adapt.

GRU: Busted and Exposed

Last week, a federal grand jury in western Pennsylvania indicted seven GRU officers in connection with hacking operations against the World Anti-Doping Agency, Westinghouse Electric Co. and the Organization for the Prohibition of Chemical Weapons (OPCW). In a coordinated move, the Dutch Military Intelligence and Security Service (MIVD) revealed evidence from the April 13 arrest of four of the men in The Hague; they had been attempting to hack into the OPCW wireless data network. The Dutch had questioned them and then expelled them from the Netherlands; they had been traveling on Russian diplomatic passports. The Dutch report contained photos of the men and other items of interest, including a receipt from one, Aleksei Morenets. It showed that he had taken a taxi from GRU headquarters to Sheremetyevo International Airport in Moscow (yes, it appears that even GRU officers need to save receipts for their travel vouchers).

Sadly for Morenets, the receipt was not the end of his woes. A student in an intelligence seminar reportedly found an online dating profile for him, which happened to contain a selfie profile picture that showed the GRU building in the background. The student sleuth was associated with Bellingcat, an organization that uses open sources and social media to conduct online investigations. Working with the citizen journalism organization The Insider Russia, Bellingcat was able to confirm that Morenets was his real name, and not a pseudonym. They also discovered that his vehicle was registered to Komsomolsky Prospekt 20 in Moscow; that address is associated with Unit 26165 of the GRU, which U.S. and Dutch law enforcement say is its cyberwarfare department. Bellingcat reported that a search for other vehicles registered at that address turned up 305 names, potentially providing an extensive list of GRU cyberwarfare personnel — an embarrassing breach of operational security for the intelligence agency.

But the bad news for the GRU doesn't end there. On Oct. 2, Radio Liberty had reported that photos of Anatoly Vladimirovich Chepiga, a GRU officer who had been awarded the Hero of Russia, his country's highest medal, had indeed been featured in a Russian military museum, belying a Kremlin claim. Earlier in September, Bellingcat and The Insider had identified Chepiga as the true identity of Ruslan Boshirov, one of the two GRU officers that the British government has accused of poisoning former Russian agent Sergei Skripal and his daughter Yulia with the nerve agent Novichok in Salisbury, England. On Sept. 26, Kremlin spokesman Dmitry Peskov had claimed that President Vladimir Putin had never awarded the Hero of Russia to someone with that name, but Radio Liberty's reporting appears to support the assertions made by The Insider and Bellingcat.

And on Oct. 9, Bellingcat revealed the real name of the second Skripal suspect. The website reported that Alexander Petrov is actually Dr. Alexander Yevgenyevich Mishkin of the GRU. The report included a photo of his 2001 Russian passport and a brief history of his life.

These revelations by Bellingcat, The Insider and Radio Liberty demonstrate the power of open-source information available on the internet and through social media, and how such groups can serve as powerful force multipliers when governments release information on suspects in high-profile cases, including clandestine operations conducted by intelligence agencies.

Adapting to Technology

While these revelations have proved embarrassing for the GRU, they also illustrate the power of social media and the internet and demonstrate how neutral technologies can be weaponized. This principle, which can be applied to any technology, has repeatedly influenced intelligence operations for decades. The intelligence business has long had to adapt to technological advancements that challenge tradecraft practices. The advent of photography, for instance, allowed intelligence officers to record events and document items such as military equipment; it also allowed counterintelligence forces to take and distribute photos of the intelligence officers and their operations. The inventions of the telegraph, radio, automobiles, airplanes, satellites, cellphones, night vision and thermal imaging equipment have all handed useful tools to intelligence officers, while also creating hurdles for them to overcome as they practiced their clandestine duties.

In recent years, the proliferation of digital closed-circuit television (CCTV) coverage in many cities and venues has proved to be a test of an officer's abilities. This tradecraft vulnerability was perhaps first widely noticed by the public when CCTV video was released of the assassination team that killed Hamas leader Mahmoud al-Mabhouh in a hotel in Dubai, United Arab Emirates, in January 2010. Now, it is possible in many cities to track a subject using only cameras, without needing to have a surveillance team nearby. This means that intelligence officers need to beware of cameras as well as physical surveillance.

And recent advancements in digital media storage and retrieval have made CCTV a powerful investigative tool. Facial recognition software is being married to many CCTV systems, making the monitoring of people of interest — such as intelligence officers — even easier. Indeed, it was CCTV coverage that allowed British authorities to connect the GRU officers to the Skripal residence in Salisbury, and then track their activities back to their hotel and even their arrival at the airport.

But what is so remarkable about the Skripal case and the Dutch hacking arrests — besides the use of CCTV — is how open-source investigators were able to find additional information on the suspects. In the Skripal case, citizen journalists dug up the true identities of the GRU officers based on their photos and aliases. Russian nationalist netizens could potentially also dig up similar information on Western intelligence officers caught operating in Russia, and foreign intelligence officers could find themselves in similar predicaments in other countries.

Indeed, in the current atmosphere, it is more difficult than ever for intelligence agencies to construct robust cover identities (legends), including a false history of employment, schools, credit and relatives, for their officers. It may seem prudent for intelligence officers to abstain from any internet activity, but anyone who doesn't have a significant internet footprint is also suspect. The difficulty also extends to setting up front companies to backstop intelligence officers. It is no longer acceptable to merely open a post office box and use a receptionist to answer a listed phone number and say, "Acme Widgets." Front companies need to have deep links and digital footprints to be believable. As portrayed in the movie "Argo," the CIA showed true ingenuity in getting a group of U.S. diplomats out of Tehran in 1979 under the guise of filming a movie, but such subterfuge would be far more difficult in the internet age.

But none of the obstacles presented by new technologies are likely to prove insurmountable for intelligence agencies. They will undoubtedly require work and ingenuity to counter — likely through the advent of new technologies and techniques. The agencies are certainly conducting significant research on ways to spoof or jam CCTV cameras and developing techniques to fool facial recognition software and biometric screening systems. Those agencies are also certainly perfecting ways to forge convincing digital footprints for cover identities. Just as in the past, new technologies will present challenges to intelligence officers, but they will also find ways to use them to their own advantage. They will surely need to practice more care and concern for their operational security than the GRU has shown in recent operations.

The Baltic Nations Look Abroad and See Problems

2018-10-05T01:52:00Z

Highlights

Membership in the European Union and NATO will remain the cornerstone of Lithuania's, Latvia's and Estonia's foreign policy strategies.

Friction in the Atlantic alliance, as well as political fragmentation in Europe, will continue to pose a threat to the Baltic states, because these countries depend on their international alliances for their security.

While NATO membership is an important factor deterring a formal invasion, the Baltic countries will remain under threat from other forms of aggression, including cyberattacks and disinformation campaigns.

2018 is a symbolic year for the Baltic republics of Lithuania, Latvia and Estonia, because it marks the centenary of their independence from the Russian Empire. The last century has been less than easy for the trio of small countries, because independence was quickly followed by occupation, first by the Nazis and then the Soviets. The three republics spent five decades under the USSR, only regaining independence between 1990 and 1991. When I visited the region last month, I couldn't help but think that the past few years have probably been the best in their troubled century as republics, because they have never been so prosperous, so democratic and so open to the world. Nevertheless, the ghosts of the past have not completely vanished, and the Baltic states are once again looking at the world around them with concern.

Threats on the Doorstep

When listening to government officials, academics, business leaders and think tank experts from the Baltic countries, one common theme rapidly emerges: Russia is still widely seen as a threat. This fear is the result of history and geography, because Lithuania, Latvia and Estonia are small, flat and easy to invade. Their position by the Baltic Sea, and their strategic location at the crossroads of the European, Nordic and Russian markets have made these lands an attractive place for invaders, which explains why they have spent so many centuries under foreign rule. Regional powers such as Germany and Sweden invaded the region in the past, but the freshest memories obviously stem from the Soviet occupation after World War II.

The late 1990s and early 2000s offered temporary relief to the region, as the three states joined the European Union and NATO, and Russia — for the first time in decades — did not look as aggressive as it used to. But the Russia-Georgia war of 2008, and especially the Russian annexation of Crimea and its backing of separatist forces in eastern Ukraine in 2014, reignited the Baltic region's traditional fears of Russian aggression. Those fears do not necessarily stem from a potential invasion, but from other forms of aggression, including cyberattacks, disinformation campaigns and support for subversive domestic groups.

In recent years, the Baltic countries have increased their military spending and sought to reduce their dependence on Russian energy. Still, these countries continue to import significant amounts of its natural gas and conduct a great deal of trade with it. At the same time, Russian money is present in their banking sectors, and in the case of Estonia and Latvia, ethnic Russians represent about a quarter of the population. And while NATO membership ostensibly protects the region from any formal military attack, the leaders of the Baltic states are fretting about the challenges of preventing and deterring other forms of economic, political and social aggression.

Tensions Between Friends

Questions about Russia's intentions tie into a second concern in the Baltic region: the stability of the Atlantic alliance. The election of Donald Trump as U.S. president created uncertainty in the region, especially after he criticized Europe's low levels of military expenditure and, at least for a while, raised doubts about the White House's commitment to NATO's principle of collective defense. But what America does is more important than what it says, and the reality on the ground is that the United States remains committed to Baltic security. For example, U.S. fighter jets remain an important part of NATO's air policing mission in the area, and U.S. forces periodically participate in military exercises in the region.

In early September, Trump even said the White House was contemplating a permanent military base in Poland. Even if the idea never materializes, the musings provide a clear message of support to the region. This, however, does not mean that there's a whole lot of warm sentiment between the United States and Europe these days. In fact, relations between the United States and Germany have deteriorated since Trump took office, as the White House has denounced Germany's massive surplus in bilateral trade while also accusing Berlin of spending too little on defense. The war of words puts the Baltic states in an awkward situation, since their main military ally, the United States, is sparring with one of their main economic and political partners, Germany.

In addition, Germany's foreign policy is ambiguous when it comes to Russia. While Berlin has spearheaded economic and political sanctions against Moscow due to the conflict in Ukraine, it has also defended the controversial Nord Stream 2 pipeline project, which would transport Russian natural gas to Germany across the Baltic Sea — thereby bypassing Ukraine as a transit state. German officials insist that Nord Stream 2 is a purely economic project, but history has taught the Baltic countries to be skeptical of pacts between Berlin and Moscow.

There are additional factors complicating the picture for the Lithuanian, Latvian and Estonian governments. For one, relations might be good between the Baltic states and the European Union, but the same does not ring true for some of the Baltic nations' allies. Poland and Romania share the trio's sense of urgency regarding Russia, including a desire to reduce the region's dependence on Russian energy and keep NATO as engaged as possible in the region, but Warsaw — and to a lesser degree, Bucharest — are currently experiencing tension with the European Commission because of what Brussels perceives as the deteriorating rule of law in those countries.

Brussels has threatened to cut development funds and agricultural subsidies for countries that fail to respect its principles and values, while the French government has suggested that the next stage of continental integration could include a smaller group of countries rather than the entire bloc. Even if Lithuania, Latvia and Estonia are not directly affected by such initiatives, a potential downturn in relations between the Baltic countries' main allies would only increase their sense of insecurity.

Finally, Brexit is also a source of concern for the region, especially because the United Kingdom is a key ally in deterring Russia and often acts as a bridge between the United States and Europe. To be sure, the United Kingdom is only leaving the European Union — not NATO — and London wants to retain close defense and security ties with the Continent, but the country's divorce from the European Union compounds the problems in the political, economic and military structures that have kept the Baltic region safe for the past two decades.

Hopes and Fears

This intricate geopolitical environment creates challenges and opportunities for the Baltics. Among the difficulties is the fact that Russia can exploit tensions within Europe, as well as between the Continent and the United States, to its own advantage. From the Kremlin's perspective, if Moscow can't make NATO and, to a lesser extent, the European Union, go away, then it must ensure they remain as fragmented as possible, lest they threaten Russia.

The Baltics, however, have the opportunity to harness these tensions to attract American interest to the region, such as through the Three Seas Initiative. Created in 2016, it is a discussion forum for 12 countries from the Baltic, Black and Adriatic seas, and its goal is to increase economic and political cooperation in the region, especially on infrastructure projects. The group has sought American approbation from the start. Trump was the guest of honor during last year's summit, while U.S. Secretary of Energy Rick Perry attended the summit in 2018.

So far, America's support for the forum is mostly symbolic, but Germany is becoming increasingly worried that itcould become a framework for cooperation between the United States and Central and Eastern Europe that bypasses Western Europe. German Foreign Minister Heiko Maas duly attended this year's summit, noting that Berlin wanted to become a formal member of the group. The request is a reminder that, at the end of the day, Germany is a Central European power with interests that lie in both the east and west of the Continent.

The debate over whether to accept Germany as a member will be intriguing to follow. German involvement entails political support and financing for infrastructure projects (after all, the forum's members are small economies that would be happy for every penny), but it would also provide Berlin with a means to steer the region's agenda. Germany's actions present a particular challenge for Poland, which aspires to consolidate its own sphere of influence in Central and Eastern Europe.

One hundred years have passed since Lithuania, Latvia and Estonia declared their independence, but the countries' external challenges — as well as their strategies — in 2018 are much the same as they were in 1918. For small countries surrounded by powerful neighbors, developing as many international alliances as possible is essential. NATO and EU membership will remain the cornerstone of their foreign policy, and keeping the United States (which they see as the ultimate guarantor of their security) engaged in the region will be key. By the same token, friction within the Atlantic alliance and the political fragmentation in Europe represent serious threats to their security. Faced with such challenges, the Baltic nations will continue to develop as many political, economic and military partnerships as possible to ensure their hard-earned independence becomes the norm — instead of the exception — in a history marked by so much turbulence.

Why Understanding Is Key to Thwarting Social Media Threats

2018-10-02T20:01:00Z

Highlights

Like any other technology, social media is neutral, meaning it can be used for good or bad purposes.

Social media monitoring tools are helpful in combing through mountains of data on social media feeds for items of interest, but human judgment and understanding are essential to provide context for the data.

Because social media will only become more pervasive, those wishing to protect their organizations from attack on social media, or wishing to monitor it for signs of danger, must become familiar with how its various applications work.

How times change. Thirty years ago, the task of recruiting someone for intelligence purposes involved a lot of legwork and a lot of vulnerability for the operative. Now the process is a whole lot simpler thanks to the internet and, more importantly, the ubiquity of social media. These two topics — intelligence and social media — were front and center last week at the ASIS Global Security Exchange in Las Vegas, where I had the honor of participating in a panel discussion on how social media is affecting threat intelligence. In an age when social media is so pervasive, protecting oneself or one's organization requires a total understanding of how such platforms can be used for attack. Only then is it possible to mount a defense.

First Things First

In assessing the effects of social media on threat intelligence, it is important to understand that the technology, like any other tool or weapon, is inherently neutral. A person can use an online platform to aid or degrade an organization just as much as a soldier can wield a sword to either attack or parry. As in all such cases, however, one must acquaint oneself with the offensive capabilities of a weapon before learning how to deploy it defensively.

In terms of social media, that means that anyone seeking to understand the threats posed by the platforms — as well as the opportunities they present — must first become familiar with how they operate. Sadly, some people who are directing efforts to monitor social media have never used it. Social media (and the dark web, for that matter) remain a mystery to some people, which leaves them vulnerable to snake oil salesmen who will make impossible claims while selling social media monitoring solutions. Don't get me wrong; there are some good tools out there for such monitoring, but all have limitations and none is a magic bullet that can serve all functions across all platforms — no matter what salespeople may claim.

Expanding the Attack Surface

One of social media's largest impacts (obviously in conjunction with the internet) is that it has dramatically expanded the "attack surface" — the breadth of the physical and, perhaps more significantly, the "virtual points" where an organization or individual is vulnerable. In the 1980s, if adversaries wanted to recruit a person inside your organization to gain information — say Joe in information technology — they had to conduct most of their recruitment cycle — namely, spotting, assessing and pitching — close to your location. If the operative was at a remote location, it was fairly difficult to identify who was in IT and, more importantly, who was vulnerable to recruitment.

Granted, some accomplished hackers and intelligence officers operating three decades ago were more than capable of using social engineering and other techniques from afar to identify people in target departments, but it was generally an exhausting and time-consuming endeavor. And even if such recruiters had zeroed in on a few candidates, they still had to determine the best person to approach, had to develop a relationship with him or her and, ultimately, had to make a pitch while in more or less plain view, opening them up to the risk of detection.

Today, homing in on a potential target is as simple as conducting a quick search on social media platforms such as LinkedIn, viewing an organizational chart on the targeted company's website or searching for other mentions of the person's name and function on an array of other internet sites. Once operatives have compiled a list of persons of interest, a quick perusal of the targets' social media accounts can provide indicators regarding who is vulnerable to recruitment. Personal issues such as financial difficulties, marital problems, discontent with work, and alcohol or drug abuse are not difficult to spot when people vent on social media, and nearly all social media users have seen incidents of people posting information that could assist someone looking to compromise them — if they haven't posted such information themselves. That's why it's always critical to be conscious of what one is posting on the internet for the world to see.

In today's world, it is possible to conduct the entire cyberattack cycle through social media, as North Korean hackers have proved. The Mia Ash case, in which Iranian hackers successfully conducted a virtual honey trap operation, is another excellent example. In other attacks, hackers have used information gleaned from social media to assist their spear-phishing attacks, while assailants use information obtained on social media to help facilitate physical attacks.

The attack surface has increased considerably to include smartphones, computers, cars or other employee-owned devices that corporate IT security has no ability to monitor. In other words, the threat area now extends well beyond the company's firewalls.

But this expansion of vulnerable information can also prove useful for defensive purposes. By monitoring social media, companies and organizations can become aware of people who utter threats or otherwise indicate that they could pose a physical or reputational threat, allowing them to alert law enforcement, security personnel and employees. And these potential threats don't just come from an external source. By monitoring social media, organizations can become aware of their own employees who make threats or provide clues that they are becoming mentally unstable or vulnerable to recruitment.

Other threats to business continuity such as labor strikes and activist protests are also often organized on social media. Because of this, identifying and monitoring the social media accounts of key organizers can provide a great deal of actionable intelligence. Again, social media monitoring tools are helpful in this defensive role, because they can comb through massive amounts of data. In the end, however, they still require a human to direct them at the best sources, sort through the results and place them in context. And at the same time, real people also serve an important role in tweaking the search settings on such tools to further refine what the tools are seeking and monitoring.

To the Past, Present and Future

Back at the panel in Las Vegas, the moderator asked whether we thought social media was most useful for studying past attacks, monitoring current threats or forecasting future issues. I emphatically answered "all of the above." As many cases have demonstrated, looking back at social media posts has often proved useful at helping to identify the motive behind an attack. Of course at Stratfor, we are very focused on how attacks unfold as an assailant progresses along his attack cycle, and we believe that studying past assaults facilitates efforts to identify current threats. Beyond that, expanding the investigation of the tradecraft used in past attacks to include social media can help analysts determine trends and identify or forecast emerging threats.

Social media has become an integral part of global culture — and not just in the United States or the West. I've seen impoverished people who do not have running water in their homes, but they do have smartphones and use any number of social media applications. Such applications are only going to become more pervasive, and those seeking to protect their organizations against criminals, terrorists, spies and other malefactors must understand social media and learn to properly use it to their advantage in their defensive efforts.

Taiwan, Central America and Jerusalem at the Heart of Great Power Intrigue

2018-09-27T18:08:00Z

Highlights

With great power competition on the rise again, small states have a unique opportunity to push their interests in high-stakes bidding wars over sovereignty.
Although China is clearly dominating the diplomatic battle over sovereignty against Taiwan, the United States could complicate Beijing's efforts by reinforcing Taipei, especially in its own backyard.
U.S.-Central American ties are already under great strain due to aid cuts and deportations, but U.S. demands regarding Taiwan and Jerusalem will give these small states a rare chance to name their price for cooperation with their northern neighbor.

It's that time of year again: Journalists are stalking foreign leaders in midtown Manhattan hotel lobbies, flag-bearing motorcades are jamming up traffic and diplomats are carefully choreographing their walkouts and applause for the long lineup of speeches at the U.N. General Assembly in New York. Whether you're a faithful believer in the United Nations' mission to uphold international law or a Hobbesian skeptic who sees the global body as mere pageantry for nation-states pursuing their own self-interests, that slender green glass building on the East River is still the world's busiest diplomatic bazaar.

Chief among the biggest commodities hawked at the United Nations is diplomatic recognition, where even the tiniest and poorest of sovereigns are courted for their vote in the hopes of turning the tide at the head table, the U.N. Security Council. The big powers compete to set the global agenda on the main stage, while little powers haggle their way through the corridors, looking to entice the big boys to start a rare bidding war for smaller nations' favor. The struggle for recognition can be long and hard for those weaker powers, but if they carry enough geopolitical value, it can pay big to be small in an era of renewed great power competition.

Recognition for Sale, Sovereignty at Stake

Israel and Taiwan are more than familiar with this dynamic. Both are small states living in hostile neighborhoods, and both recognize the importance of economic dynamism and diplomatic agility for survival. Both, moreover, need a great power patron — preferably one that is powerful enough to come to their aid in a time of crisis, yet far enough away that it's not constantly meddling in their affairs. For Israel and Taiwan, as well as for many other small states caught in a similar geopolitical predicament, the United States is still that patron.

What the United States decides in terms of diplomatic recognition can thus carry great weight on the U.N. stage. In 1948, at a time when the United States had effectively inherited its great power status from the crumbling British Empire, it understood Israel's usefulness in balancing the Soviet-leaning Arab states, leading U.S. President Harry Truman to recognize the state of Israel on the same day that David Ben-Gurion proclaimed the Jewish state. Taiwan, by contrast, had the opposite luck: When the United States perceived a geopolitical opportunity to split the Sino-Soviet axis during the Cold War, it normalized relations with Beijing and severed relations with Taipei in 1979 by formally acknowledging that "there is but one China and that Taiwan is a part of China." The Republic of China — that is, Taiwan — lost its seat on the U.N. Security Council to the People's Republic of China in 1971 and has been sitting on the sidelines at the global body ever since.

Now, the international system is once again evolving from its Cold War days, and with that evolution comes an adjustment in great power relations. The United States is preparing for a much more intense era of competition with China. In order to do so, however, it requires allies to manage other volatile parts of the world, like the Middle East. It's no coincidence, then, that both Taiwan and Israel are factoring heavily into U.S. foreign policy today. U.S. support for Taiwan is a critical tool of pressure that Washington intends to apply against Beijing. And as the United States works to contain Iranian regional influence, Israel is all too eager to help steer U.S. policy on Tehran in its favor, all while extracting political concessions in the process.

For a better look at the diplomatic frenzy surrounding Taiwan and Israel, look no further than the Central American isthmus, where questions over the recognition of Beijing instead of Taipei, as well as the relocation of embassies to Jerusalem, are putting these tiny states right in the center of great power intrigues.

Taiwan's Uphill Battle

In its bid to roll back global recognition of Taiwan, Central America is one of the few remaining areas on China's to-do list. China maintains unequivocally that the island of Taiwan is a province of China, meaning that the rest of the world must choose between recognizing the People's Republic of China or the Republic of China, whose leaders fled to Taiwan in 1949 following their defeat in the Chinese civil war. Ever since the United States revoked its official recognition of Taiwan in 1979, the island has learned the hard way that loans and economic aid will only go so far in securing diplomatic loyalty from developing states, particularly in dealing with autocratic states in Africa. After Beijing picked off Taiwan's diplomatic allies one by one during the 1990s — overcoming a concerted push by Taipei to buy allies — Beijing and Ma Ying-jeou's friendly Kuomintang (KMT) government in Taipei reached an unspoken truce in 2008 in which they agreed to avoid poaching a country's diplomatic recognition from the other. That truce, however, collapsed in 2016 when Tsai Ing-wen and her pro-independence Democratic Progressive Party (DPP) won elections, prompting Beijing to ramp up its efforts to isolate Taipei. Today, Taiwan has just 17 diplomatic allies remaining, eight of whom are in the Western Hemisphere.

This is where the United States comes in. The White House is more than aware that Beijing wields the overwhelming advantage in this diplomatic scramble. Nevertheless, Washington recognizes the need to keep Taiwan in the game as part of its broader containment strategy against China. In this, its efforts to push the limits on the One China policy in the diplomatic realm, increase weapons sales, bolster overall defense cooperation, grant high-level visits to Taiwanese officials and suss out subtle ways to upgrade its de facto embassy in Taipei are all part of a deliberate strategy to hit Beijing in its Achilles' heel.

The Scramble for Central America

As the Taiwan specter grows in the U.S.-China relationship, the White House will naturally take a hard look at what Beijing is doing in its own backyard to scoop up Taiwan's remaining diplomatic allies. As one would expect, Central American states have a heavy economic dependency with their northern neighbor when it comes to remittances, economic aid and trade flows. The United States also has a direct security interest in keeping Central America stable enough to prevent a mass influx of migrants across the U.S.-Mexico border and maintain a barrier against drug flows. But many of these small and economically strapped states are tempted by Beijing's big offers of infrastructure projects and aid, especially since it also provides them with the opportunity to receive funds under the table. More than that, Beijing is offering all these goodies for a comparatively small price: the cessation of diplomatic relations with Taiwan — which stands in stark contrast to the heavy complaints and conditions the United States attaches to its relationships in Central America on issues such as corruption, narco-politicians, gang violence and human rights. And at a time when the United States is cutting aid to Central America and stripping migrants of asylum status, Beijing sees an opportunity to drive a deeper wedge between Uncle Sam and his southern neighbors.

Panama and the Dominican Republic took the plunge with Beijing in June 2017 and this past May, respectively, when they cut ties with Taiwan. In August, El Salvadorbecame the latest to join Team China following reports that Beijing promised to invest billions of dollars in the country's La Union port and a special economic zone. Unlike previous U.S. reactions to diplomatic swaps in the hemisphere, El Salvador's move prompted the Trump administration to recall Washington's ambassadors to not only El Salvador, but also to Panama and the Dominican Republic. Ominously for San Salvador, White House spokesperson Sarah Huckabee Sanders said its decision to switch allegiance would have implications for decades as the United States "re-evaluates its relationship" with the Salvadoran government.

This puts Taiwan's remaining allies — Guatemala, Honduras and Nicaragua — in the crosshairs of both Beijing and Washington. Each of these states have their beef with the United States: U.S. foreign aid to all three combined has declined by more than a third to $195 million since 2016, the White House is terminating temporary protected status for hundreds of thousands of Central American migrants and all three want the Trump administration to butt out of their messy domestic affairs. Guatemalan President Jimmy Morales is trying to kill off a U.S.-backed anti-corruption probe before it takes him down like his predecessor. Honduran President Juan Orlando Hernandez wants to neutralize another U.S.-backed anti-corruption body and prevent Washington's drug-related extradition demands from upsetting his hold on power, while Nicaraguan President Daniel Ortega is fending off U.S. human rights condemnations in the midst of a violent crackdown on anti-government protesters.

This is where U.S. demands on Taiwan intersect with Israel as well. Beyond requiring these states to stick to Taiwan, the United States is also looking for other countries to follow in its footsteps and recognize Jerusalem as Israel's capital. Cue a new round of haggling: Guatemala, for example, scored points with the Trump White House by relocating its embassy to Jerusalem and voting against a recent U.N. resolution that called on Washington to withdraw its recognition of Jerusalem. Guatemala is also, for now, saying it will continue to stand by Taiwan (despite heavy pressure from domestic business lobbies to side with Beijing). With the White House seemingly satisfied with these diplomatic favors, Guatemala's president seized the opportunity on Aug. 31 to surround the headquarters of the International Commission Against Impunity in Guatemala (CICIG) with U.S.-donated army vehicles, booted the commissioner out of the country and officially ended the mandate of the U.N.-sponsored anti-corruption commission. The White House barely batted an eye in response, with U.S. Secretary of State Mike Pompeo simply tweeting, "We greatly appreciate Guatemala’s efforts in counternarcotics and security."

Honduras is watching both the El Salvador and Guatemala examples in weighing its next move. Tegucigalpa also voted against the U.N. resolution on Jerusalem in a nod to the United States, but the government is also making it abundantly clear that it requires more incentives to stick with Taiwan. In a not-so-subtle message to the White House at the United Nations, Hernandez lamented U.S. aid cuts to Honduras and framed China's outreach to the region as an "opportunity" that could lead other (unnamed) countries to follow in El Salvador's footsteps.

Nicaragua, meanwhile, has a much testier relationship with the White House. The present government has attracted heavy scrutiny from Washington because of its violent crackdowns, while it has long been on Washington's radar for its links to Iran and Venezuela (although it did restore relations with Israel last year). Nicaragua reaffirmed its relationship with Taiwan in the wake of El Salvador's switch, but it could yet waver.

Farther south, Paraguay is the only country left in the southern cone that has stayed loyal to Taiwan, but there's no guarantee that it will continue to do so. President Horacio Cartes also followed in the United States' footsteps by opening a new embassy in Jerusalem — only for his successor, Mario Abdo Benitez (the grandson of a Lebanese immigrant), to move Asuncion's embassy back to Tel Aviv in August, proving that diplomatic deals are no more lasting than the person in power at the time.

Advantage China?

China, in turn, is making notable progress on a long-anticipated deal to normalize relations with the Vatican. The two states recently announced a provisional agreement on the appointment of bishops, but the deal could ultimately pave the way for the Vatican, Taipei's last remaining European ally, to drop recognition of Taiwan. As China tries to mop up the remaining holdouts in Latin America, the Vatican's influence over predominantly Catholic Latin America could serve Beijing well in its diplomatic isolation campaign against Taipei.

The diplomatic tide is clearly in China's favor when it comes to Taiwan. But will the United States be able to stem Taiwan's downward diplomatic spiral, and even stand a chance of reversing it, now that great power politics are coming into play? Only time will tell whether U.S. action against Central American countries that ditch Taiwan will extend beyond rhetoric to threaten a cutoff to aid, remittances, trade or other vital links. At present, bipartisan support in Congress is building for a stronger White House push against Beijing through the Taiwan Allies International Protection and Enhancement Initiative Act (or TAIPEI Act), which could cut foreign assistance to countries that sever ties with Taiwan. By the same token, the White House's broader push to restrict immigration and cut development aid could backfire and draw the swing states deeper into Beijing's orbit. That is, unless the United States is compelled to soften its policies and moderate its tactics as a concession in negotiations.

Big opportunities await small powers when sovereignty is at stake on the periphery of great power competition. Taiwan is getting a critical boost from the United States at a time when it's on the verge of falling into diplomatic no man's land, while oft-overlooked states in Central America have the rare opportunity to push against their giant neighbor to the north and name their price in high-stakes bidding wars. These may not be the stories that dominate the headlines, but these quiet and expensive diplomatic battles are increasingly central to great power intrigue.

What Happens When a Major Mexican Cartel Leader Falls?

2018-09-25T18:27:00Z

Highlights

As the most powerful and aggressive cartel in Mexico today, the Cartel de Jalisco Nueva Generacion (CJNG) will continue to drive record levels of violence as it battles rivals for control around the country.

Because of the high levels of violence perpetrated by the CJNG, Mexican authorities will ultimately capture or kill the cartel's leader, Nemesio Oseguera Cervantes – also known as "El Mencho."

The removal of Oseguera Cervantes, however, is likely to provoke more violence if the CJNG implodes into a host of competing smaller criminal groups.

The attack was almost cinematic: Just over a week ago, gunmen dressed as mariachi musicians shot dead five people at a restaurant in Mexico City's Plaza Garibaldi, a place of attraction for locals and tourists alike. The latest violence to grab the headlines illustrates how cartel figures are now dragging violence with them into the tourist areas and upscale neighborhoods they frequent and inhabit. In fact, an American tourist on her honeymoon was killed by a bullet meant for someone else outside a palatial Mexico City restaurant on July 7.

In Plaza Garibaldi, La Union Tepito — a "narcomenudinsta" (local drug gang) supported by the Cartel de Jalisco Nueva Generacion (CJNG) — was attempting to assassinate Jorge Flores Concha "El Tortas," the leader of a rival gang, following a successful hit on his predecessor in May. Concha's organization "La U," or "La Fuerza Antiunion," split from La Union Tepito over a leadership dispute following the murder of the group's founder and leader in October 2017. Since the division, the two have engaged in often brutal violence, mirroring the savagery that has characterized the previous implosions of larger Mexican criminal organizations as the remnants battle for primacy — a phenomenon we've previously described as the Balkanization of Mexican organized crime.

The recent incident is just the latest act of violence that has occurred as the CJNG has expanded its presence throughout the length and breadth of Mexico. As a result of the group's atrocities, CJNG leader Nemesio Oseguera Cervantes (El Mencho) has become public enemy number one. Amid the violence, however, the bigger question for Mexican authorities is not how to capture or kill Cervantes, but a far more distressing one: What happens the day after?

Mapping the Violence

Mexico registered a historic number of homicides last year, but it is already on pace to beat that record this year. On Sept. 20, the Executive Secretariat of Mexico's National System of Public Security (SNSP) reported that murders from Jan. 1 to Aug. 31 rose 17.6 percent over the same period in 2017. In all, there were 18,835 murders in the first eight months of 2018 compared to 16,013 in the first eight months of 2017.

The violence has enveloped every corner of the country, including the capital. The CJNG's aggressive expansion is fueling most of these conflicts, apart from the one in Tamaulipas, in which the violence stems from infighting among various components of the Gulf Cartel. In Mexico's far northwest, the homicide rate in Tijuana has spiked. As in Mexico City, the CJNG has partnered there with a local criminal organization, a remnant of the Arellano Felix Organization (also known as the Tijuana Cartel) that has begun calling itself the Cartel de Tijuana Nueva Generacion, in an effort to establish control over smuggling corridors into the United States.

The Sinaloa Cartel, which did not control any turf along the border, made a successful push from 2007 to 2010 to wrest control of the Tijuana Plaza from the Arellano Felix Organization — in part because the cartel managed to co-opt a faction of that group. Displaced by the Sinaloa faction, the other faction made willing partners for the CJNG as they turned on Sinaloa and began a bloody offensive to seize control of the area from them. The battles resulted in a high homicide rate in 2010, but even those numbers paled in comparison to the figure from 2017. And one year on, the death toll from the first half of 2018 is even 44 percent higher than the numbers from last year. At present, the state of Baja California (which includes Tijuana) currently has a murder rate of 87.4 per 100,000, the highest of any state in Mexico.

Further east along the border, a similar dynamic has led to a spike in violence in Juarez and Chihuahua state. There, the Sinaloa cartel launched a major effort to seize control of the Juarez plaza from the Vicente Carrillo Fuentes Organization (also known as the Juarez cartel) that lasted from 2008 to 2012. In Chihuahua, the CJNG is working with a remnant of the Juarez Cartel, the Nuevo Cartel de Juarez, along with La Linea and Los Aztecas. On the other side are the Sinaloa Cartel and its allies — Los Salazar, the Cartel Del Tigre, Los Mexicles and the Artistas Asesinos. Amid such conflict, Juarez's murder toll for this year (840) has already passed the figure for all of 2017 (767) — and there are still more than three months remaining in 2018.

Down in Mexico's far south, authorities arrested 30 members of the CJNG on Aug. 15 at a hotel in the Chiapas town of Tapachula. This settlement resides on Mexico's border with Guatemala and is a key link in the overland smuggling routes for migrants, narcotics and other contraband coming from South and Central America. Then there is Guerrero, a state that is not only home to the port and resort of Acapulco but also rugged mountains that are prime terrain for opium poppy and marijuana cultivation. Dozens of criminal groups are vying for control of poppy-growing areas, including the CJNG, remnants of the Beltran Leyva Organization and La Familia Michoacana/Knights Templar. In addition to producing and trafficking narcotics, such groups engage in numerous other criminal activities including kidnapping, cargo theft, extortion and carjacking. The extortion demands by a wide array of criminal groups have persuaded FEMSA/Coca-Cola, PepsiCo and several other companies to suspend operations in Guerrero.

The CJNG has also been working to seize control of the lucrative fuel theft trade in Guanajuato state. The city of Salamanca is home to Mexico's fourth largest refinery, making it, unsurprisingly, the epicenter of fuel theft in the area. Local gangs, such as the Santa Rosa de Lima cartel, have long dominated fuel theft in Guanajuato, where they have struggled to fight off incursions from the CJNG and factions of Los Zetas.

Late last month, the CJNG issued a propaganda video in which it vowed to vanquish the Santa Rosa de Lima cartel from Salamanca and the rest of Guanajuato. The CJNG simultaneously posted five identical narcomantas, or posters containing a warning, at various locations around Salamanca.

The video featured footage of around 100 members of the CJNG wearing matching uniforms and tactical gear — although their rifles were not all of the same type. The video also included footage of a Browning M-2 .50-caliber machine gun, four Browning 1919 .30-caliber medium machine guns, two .50-caliber sniper rifles and an RPG launcher. The CJNG's show of force is reminiscent of the videos it published on social media outlets in 2011 prior to its very bloody incursion into Veracruz, and Santa Rosa de Lima will undoubtedly struggle to counter the entrance of such a large and well-armed force into Salamanca and Guanajuato.

Be Careful What You Wish For

The sheer range of the CJNG's aggressive operations illustrates why the group has become a major enemy for both the Mexican and U.S. governments. Since the beginning of 2018, Mexican authorities have arrested a number of senior CJNG members, including Rosalinda Gonzalez Valencia, the wife of the CJNG leader who is alleged to be a major money launderer for the group. Although Gonzalez Valencia — herself a member of the powerful Valencia smuggling family — will face trial for alleged money laundering, authorities dropped organized crime charges against her and allowed her to go free on bail on Sept. 6.

Nevertheless, the recent arrests, as well as the United States and Mexico's deep concerns about the CJNG's activities, suggest that it is only a matter of time until Oseguera Cervantes is either caught or killed. His removal will certainly weaken the hierarchy of the CJNG organization, reduce the threat it poses to the Mexican government and diminish the ability of the group to expand its control over various regions of Mexico. At the same time, Oseguera Cervante's incapacitation could cause the CJNG to fragment, leading to a renewed spasm of violence as various subcommanders and groups jockey for turf and control of the group's various enterprises.

Indeed, it appears that the significant pressure upon Oseguera Cervantes has already led to one split, as a group calling itself the Nuevo Plaza Cartel has begun to fight the CJNG in its home turf of Guadalajara, inevitably raising the homicide rate in the city. If the CJNG ultimately implodes, there will be an uptick in violence throughout its areas of operations, as internal factions struggle for power and the cartel's foes seek to hit the group while it's down. Regardless of what the Mexican state does to "El Mencho," its streets are unlikely to find peace for some time to come.

Why Russia and China Are Expanding Their Roles in Afghanistan

2018-09-06T16:06:00Z

Highlights

The shared threat of an Islamic State affiliate in Afghanistan will drive Pakistan and Russia into a closer partnership as Moscow strengthens its leverage over the Afghan negotiations.
Pakistan's national security imperatives mean it will always choose to promote a sympathetic government in Kabul, even if this choice means relations with the United States deteriorate.
China's expanding diplomatic and economic profile make it likely that Beijing will establish a limited and localized military presence in Afghanistan.

Editor's Note: This assessment is part of a series of analyses supporting Stratfor's upcoming 2018 Fourth-Quarter Forecast. These assessments are designed to provide more context and in-depth analysis on key developments in the coming quarter.

As the great powers deepen their presence in South Asia, all eyes are on Afghanistan. A year has passed since U.S. President Donald Trump unveiled his Afghan war strategy in August 2017, seeking to break the stalemate in America's longest-running conflict. But the Taliban's sustained assault on the city of Ghazni demonstrates that the addition of a few thousand U.S. troops under operations Resolute Support and Freedom's Sentinel has failed to decisively swing the pendulum in Kabul's favor. What's more, Afghanistan's Interior Ministry blamed Pakistan for planning the Ghazni attack, denting prospects of an improvement in relations after Afghan President Ashraf Ghani telephoned Imran Khan to congratulate him on becoming Pakistan's new prime minister.

This relapse was to be expected. The fate of the Afghan conflict is shaped to a significant degree by Pakistan. And its grand strategy of maintaining internal unity by thwarting external aggression dictates that Islamabad's military-dominated foreign policy will always seek a sympathetic government in Kabul — particularly one that recognizes the disputed border and that chooses to keep India at arm's length to assuage any concerns of strategic encirclement. Pakistan's current strategy to achieve this goal is to support the Taliban. This support, however, is deepening the antagonism between Islamabad and Washington under Trump, the latest U.S. president pressuring Pakistan to abandon its support for militant proxies. But forced to choose between satisfying its strategic imperatives or appeasing the United States, Pakistan will always choose the former.

Pivoting to Russia

Still, Islamabad has options, and the logical response to its deteriorating relationship with one great power is to forge stronger relations with another. Enter Russia. While Pakistan's relationship with China has a deep history, born in 1963 out of a mutual enmity to India, its relationship with Russia was openly hostile, devolving into a proxy conflict during the Soviet-Afghan war. After the Red Army's 40th division crossed into Afghanistan in December 1979, the CIA and Pakistan's Inter-Services Intelligence coordinated the shipment of arms to the Afghan resistance movement known as the mujahideen. What followed was a harrowing nine-year conflict that saw Islamabad and Moscow on opposite sides in what amounted to the final proxy battle of the Cold War.

Today, however, these roles are shifting. The United States is distancing itself from Pakistan while building a Sinocentric defense partnership with India, Russia's key partner during the Cold War in South Asia. Moscow is responding to Pakistan's overtures by building a stronger partnership with Islamabad. Russia's interests stem in large part from concerns about Afghanistan. The advent of the Islamic State's Khorasan chapter in 2015 stoked Moscow's fears of the transnational extremist group using Afghanistan to launch attacks into Russia's Central Asian periphery. For Pakistan, the threat from the Islamic State's Khorasan affiliate hits even closer to home: On July 6, the group claimed a bombing that killed 149 people in Balochistan, the second deadliest act of terrorism in the country's history.

Unsurprisingly, Moscow's and Islamabad's concerns about the Islamic State are driving them closer while the two countries are experiencing tense relations with Washington. For Russia, its deepening relations with Pakistan overlap with its growing attempt to involve itself as a mediator in Afghanistan. Beginning in December 2016, Moscow hosted the first of several conferences aimed at jump-starting talks between Kabul and the Taliban. Although the Taliban did not attend any of these gatherings, they have accepted Moscow's invitation to take part in an upcoming conference; that acceptance is a sign of the movement's desire to elevate its diplomatic profile by positioning itself as a serious political actor. Initially scheduled for Sept. 4, Moscow has postponed the conference on behalf of Ghani, who wants more time to prepare for what he insists should be Afghan-led negotiations. If Russia succeeds in bringing both Kabul and the Taliban to the same table, the accomplishment would heighten President Vladimir Putin's leverage over negotiations to end a NATO-backed conflict that Washington has failed to resolve.

China Eases In

Finally, China is deepening its role in Afghanistan. Beijing's involvement in Afghanistan after the start of the war was limited to resource extraction, including a $3 billion agreement to develop the Mes Aynak copper mine. But the prospects of persistent Afghan instability after the NATO drawdown in 2014 awakened China — which borders Afghanistan — into playing a more active role. Bigger promises of foreign aid followed, while Beijing used its diplomatic heft to push for talks between Afghanistan and Pakistan, and to try to do the same between the Taliban and Kabul. China has also invited Afghanistan to join the China-Pakistan Economic Corridor. This involvement now is rumored to even include a proposed military base in the Wakhan Corridor. Although Beijing has denied it is planning a military base in Afghanistan, China's expanding diplomatic and economic profile means it will be forced to establish a localized security presence in various theaters. And Afghanistan is a logical starting point, given Beijing's two core concerns regarding the country — namely, Afghanistan's ability to disrupt neighboring Belt and Road Initiative projects and the ability of Uighur militants to use Afghan territory to plot attacks in neighboring Xinjiang province.

Ultimately, the growing involvement of Russia and China with Pakistan will limit Washington's ability to bend Islamabad toward its own strategy in Afghanistan. Although the shared threat posed by the Islamic State's Khorasan affiliate provides a rare unifying purpose for the disparate external actors involved in Afghanistan, the geopolitical tensions inherent in great power competition mean that coordination on resolving the conflict will be intermittent, at best, as the war goes on through 2018.

The Benefits of Traveling 'Gray'

2018-09-04T16:27:00Z

Highlights

Being gray, or not drawing attention to oneself, on trips can help reduce the chances of being targeted by criminals and terrorists or singled out for untoward government attention.
Presenting a neutral facade is not just a matter of racial or ethnic appearance. It also involves demeanor, dress and possessions.
Being gray while traveling abroad means fading into the crowd, appearing neither valuable nor vulnerable.

Before I took a recent vacation trip to Beirut, a friend asked whether I was concerned about being targeted by jihadists or Hezbollah during my visit to the "pearl of the Middle East." I had done my due diligence research, so I wasn't worried. Besides, I explained, I was going to "be very gray" as I traveled. I first became aware of this concept, which dictates that travelers should blend in with the local environment, during my work at the U.S. State Department. The techniques of traveling gray can benefit other travelers who visit potentially hostile regions.

The Shadow Course

In the Counterterrorism Investigations Division of the State Department's Diplomatic Security Service, agents were often assigned to provide protective countersurveillance for people and events at high risk. We learned about "being gray" in a course on surveillance techniques, given by another government and often referred to as "the shadow course." For us, countersurveillance involved covert agents looking for hostile surveillance against a person or place our agency was protecting. This including keeping watch on any suspects until they could be identified. To be effective, countersurveillance agents needed to operate without drawing attention to themselves.

My instructors taught us that being gray meant fading into the environment so well that when the target of your surveillance noticed you — and if you were doing your job correctly, you would occasionally be seen — he or she would not recognize you as hostile. This did indeed mean avoiding bright or distinctive clothing — hence the term gray — but in the larger sense, it meant fitting into the environment in terms of visual impression and flow so an observer would not see you as anomalous.

In the decades since learning these techniques, I have discovered that there are many other benefits to being neutral and bland. In the case of a potential terrorist or criminal act, being gray means not only fitting in with the environment, but also appearing to be an unappealing target. The idea is to influence the person following the attack planning cycle so he or she sees another target as more attractive, thus diverting the threat away from yourself. Being gray means you do not want to appear to be either vulnerable or valuable and can fade into the crowd.

Acting and Looking 'American'

When in a Northern European city, my phenotype — genetically determined skin, eye and hair color — makes it easier for me to blend in than if I were in Guatemala, Uganda or Lebanon. I am pleased when people on the street in Berlin or Rotterdam ask me a question in the local language. It clearly means they have not pegged me as an American. However, being gray is not just a matter of one's race or external appearance. Several other factors can help make someone appear gray even when not part of the area's dominant ethnic group.

Perhaps the most important is demeanor, or the way a person behaves. During my travels, I have found that it is usually easy to spot the Americans in a crowd. They often fit the stereotype: boisterous and loud. You can often hear them before you see them, and their volume also seems even higher when alcohol is involved. Then, when you do see them, they tend to stand out due to their mannerisms and swagger. This is the opposite of being gray. Being aware of cultural differences can also play into one's grayness. One activity Americans take for granted, jogging, can be a dead giveaway in places where people simply don't run for exercise. Although working out by using a treadmill or running the stairs in the hotel can be boring, it is preferable to attracting attention as the only person running on the street.

Tied to demeanor is one's level of situational awareness. Criminals or terrorists watching for targets will be drawn to people appearing oblivious to their surroundings. A proper level of situational awareness can help deter attacks by making a person appear to be too difficult a target. However, hypervigilance is arguably as dangerous as a lack of awareness. Anyone using surveillance detection gimmicks to unmask possible government surveillance not only stands out from the crowd but is also at risk of being perceived as a possible intelligence officer, thus attracting far heavier scrutiny. This is especially risky in places such as Russia and Turkey, where the host country is carefully watching for Western intelligence officers operating under nonofficial cover.

You shouldn't flash cash or valuables — criminals will take far more risk for a Rolex than a Timex.

What one wears is also important. I love my tactical clothing, and I feel comfortable wearing one of my 5.11 Tactical shirts during a visit to the Stratfor office in Austin. But I leave those clothes at home when I head overseas. Very little draws the attention of a government operator more quickly than wearing tactical or military clothing. While more people seem to be wearing camouflage abroad, I avoid it, as well as bright, eye-catching colors. Even in places where hot colors are common, they still have been shown to draw the eye and trigger memory. In addition, wearing clothing that features U.S. flags or carries culturally insensitive statements is another good way to draw unwanted attention. It is important to dress in a culturally aware manner, as well. If people don't wear shorts in a certain locale, for instance, it is a good idea to follow suit.

These same considerations also apply to accessories. My 5.11 Tactical briefcase with an American flag patch stays at home when I travel abroad, as does my backpack with the MOLLE (modular lightweight load-carrying equipment) panel on it. I'm also careful about where I wear my Oakley sunglasses. In some places, such as the sugar cane bateys in the Dominican Republic, they are worth over a month's wages, making them a tempting target. Obviously, this means you shouldn't flash cash or valuables — criminals will take far more risk for a Rolex than a Timex.

Going Gray Digitally

High-end electronics can also catch the eye of criminals. Carefully safeguard any devices you take. For business executives, the information on the phones or computers in your possession is worth far more than the devices themselves. Carrying a large amount of data can increase one's profile and value as a target. Besides, remember that there is absolutely no expectation of privacy when you cross an international border. Any device or data you carry is subject to inspection, and encryption is no protection because you can be required to decrypt any file in your possession. Because of this, I recommend that travelers practice good digital hygiene. Limit the number of devices and amount of data you take to only what is mission-essential. Know local laws affecting electronics before traveling: Some countries do not permit foreigners to possess satellite phones and GPS devices, for instance. Likewise, do not attempt to use software that is illegal in the country you are visiting.

While planning your trip, it is important to be cognizant of your electronic profile. It can be dangerous to provide too many details of your travel plans or other personal data on social media. Sharing that information can make it easier for anyone interested in targeting you. Posting travel details after you return will help you be far grayer than posting before or during your trip.

And finally, where you stay can also affect your degree of grayness. Thieves often stake out high-profile hotels looking for promising victims. Western-branded hotels have also been hit repeatedly by terrorist attacks. I prefer to stay in a lower-profile hotel off the main drag if I can find one with appropriate security for the threat environment.

Remember that being gray during your travels involves more than not wearing bright and distinctive clothing. In the larger sense, it means fitting into the local environment so well that you don't seem anomalous. It also includes exhibiting conservative and culturally sensitive behavior and leaving some of your typically American possessions at home.

Mexico's President-Elect Works to Solidify Power

2018-08-30T15:56:00Z

Highlights

After coming to power on Dec. 1, the new Mexican government's main domestic aim will be to cement its dominance of Mexico's political system.

To continue attracting voters at the polls, the government will enact popular policies such as anti-corruption measures and greater social spending, while also expanding control over key political networks at labor unions to maximize the number of votes it can count on at election time.

Mexico's new administration will also mull more ideologically motivated policies to roll back energy reforms by tightening the government's control over upstream resources.

With a transfer of government just over the horizon, Mexico's domestic political scene is in for some monumental changes. On Dec. 1, power will pass to President-elect Andres Manuel Lopez Obrador — known almost universally by his nickname "AMLO" – and his political alliance. The coalition, led by AMLO's National Regeneration Movement (Morena), has never previously held the presidency but now controls it, as well as both houses of Congress. Despite the presence of ideologues within the incoming coalition, it will first focus its considerable resources on the more mundane task of cementing its power as the foremost political force in Mexico. But such outsized domestic power will ultimately give the new government a chance to turn its attention to matters of ideological interest — and that could create difficulties for some investors, especially in the energy sector. In its quest to remake Mexico, the AMLO government may accordingly consider action that hurts the private sector as it amends parts of a relatively unpopular energy reform to suit its own priorities.

Pursuing Three Policy Goals

For the coalition, the immediate domestic political concern is the next election. Despite winning the presidency by a landslide on July 1 and gaining clear control of Congress, the president-elect and his allies are aware that their victory stemmed in part from a deep — but possibly temporary — anti-establishment sentiment. Accordingly, Morena might not repeat its landslide unless it first consolidates power before lower-house midterm elections in 2021.

The AMLO government's drive to safeguard its political gains while it wields overwhelming political power will produce three distinct policies in 2019. First, the administration will attempt to solidify its alliances with, or exert direct control over, key political networks, such as the public sector oil and gas unions and the country's educational unions. Second, the government will strive to implement an anti-corruption policy in line with AMLO's central campaign promises. Finally, it will explore avenues to establish more permanent social spending mechanisms for Mexico's poor.

Greater influence over Mexico's key unions will assist AMLO in mobilizing voters at election time. To this end, his government plans to amend the previous administration's 2013 education reform, which proved highly unpopular among teachers' unions, such as the National Coordinator of Education Workers, because it legally imposed evaluation requirements on teachers. The AMLO administration will begin consultations to determine possible changes to the education reform and could eventually submit the evaluation requirement — or the reform itself — to a national vote. Successfully reversing the reform (or at least severely weakening it) would likely net Morena hundreds of thousands of votes in future legislative, gubernatorial and presidential races.

The incoming government also seems poised to expand its influence over Mexico's main oil and gas union, the National Union of Mexican Oil Workers (STPRM). This move is two-pronged: It would likely build political networks that could transform the union into a powerful network that brings voters out in favor of AMLO and mitigates the risk of strikes while also sidelining the Institutional Revolutionary Party (PRI) from exerting any direct control over the union. The STPRM is currently led by a PRI senator, Carlos Romero Deschamps, who has been accused of corruption and illicit enrichment during his two decades at the head of the union. Accordingly, the new government may choose to investigate such allegations more seriously if it intends to remove Deschamps and eliminate direct PRI influence over the STPRM.

Although the fight against corruption was front and center in AMLO's drive for the presidency, the new government's action on graft might not ultimately match the campaign rhetoric. The centerpiece of AMLO's reforms in 2019 will likely focus on amending legislation to increase criminal penalties for activities related to corruption, such as illicit enrichment, theft of hydrocarbons from the federal government and tax evasion. Even if the Mexican government has the will to stamp out corruption, its drive to do so could suffer because of the administration's simultaneous quest to increase public spending and cut down on waste and generous wages in the federal government, since the creation of new monitoring bodies or increased resources for existing institutions will require far greater funding. AMLO may build new anti-corruption institutions in the end — but only after most of his six-year term has finished because of the slow pace at which the administration might obtain greater funding and approve, train and pay people for such institutions.

Finally, the new administration will begin exploring ways to increase social spending, which will be a key pillar of Morena's future popularity among voters. What concerns the private sector is the extent to which AMLO intends to raise social spending. The new government has the tools at hand to impose mandatory social spending increases by earning revenue through greater federal austerity, taking on more federal debt and possibly raising private sector taxes. The question now is whether the government will push for broad spending targets or requirements that could quickly foment political controversy or whether it will only pursue a modest raise in spending to avoid a political conflict with Mexico's private sector. At present, the administration has signaled that it will raise spending by only a relatively modest amount during its first year in office in addition to doubling pension payouts to retirees — albeit while also enacting laws to increase the retirement age.

The incoming government's moves against upstream investment are more motivated by ideology — namely the notion that the Mexican government must take a more active role in managing upstream oil and gas resources.

Reversing Energy Reforms

But apart from these more electorally minded moves, AMLO could issue decrees in concert with congressional legislative action to roll back parts of the relatively unpopular 2013 energy reform whenever possible. The new government will contemplate serious changes that will dramatically alter the attractiveness of Mexican upstream oil and gas resources to foreign investors. The public is not exerting overwhelming public pressure on the incoming administration to dismantle energy reform, but polling suggests that around 40 percent of voters have an unfavorable view of the reform. Instead, the incoming government's moves against upstream investment are more motivated by ideology — namely the notion that the Mexican government must take a more active role in managing upstream oil and gas resources. To this end, the government will consider implementing far-reaching changes to make state energy company Petroleos Mexicanos (Pemex) the dominant player in the upstream sector, as well as limit avenues for private investment from abroad.

If the next government chooses to go down this route, it will likely suspend bidding rounds, allow Pemex to directly award blocks to investors, allow the company to partner with foreign investors without a bidding process and force producers operating under production-sharing agreements to sell their production to Pemex, which would then sell that production abroad. Such changes would severely reduce the influence of Mexico's National Hydrocarbons Commission (CNH), an entity formed with the specific purpose of increasing transparency and impartial oversight in the allocation of upstream resources to investors. If the CNH loses its influence, foreign companies could harbor doubts about the fairness of the allocation process, worry about an increase in corruption and develop fears that Pemex will refuse to relinquish lucrative upstream areas. As for the downstream sector, AMLO has not yet signaled his policy intentions, apart from announcing measures to limit the impact of rising fuel prices on potential voters.

For AMLO, the next six years will be his sole opportunity to enact broad changes to right what he perceives to be Mexico's historical wrongs. The coming three years will be the only period in which the next president and his alliance can implement wide-scale legislative changes without concerns about losing control in either house of Congress. Given this time frame, the incoming leader and his Cabinet are likely to roll up their sleeves to push through legislation they deem urgent between December and 2021. As AMLO embarks on the first half of his term, his administration will focus on ensuring the president and his alliance retain their popularity while also satisfying certain ideological concerns within the ranks. Not all such reforms will affect investors doing business in Mexico, but some, like energy reform and public spending, certainly might.

Understanding Terrorism Is More Than a Numbers Game

2018-08-28T16:09:00Z

Highlights

Statistical measurements are crucial to assessing terrorist and militant threats, but they provide only a starting point.

Beyond the numbers, it is essential to assess the ultimate objective of attacks, the specific threats of terrorists' tactics and even the novel tactics that can amplify the political impact of nonlethal attacks.

Focusing on such qualitative aspects, rather than on merely the quantitative, can temper overreaction to deadly events and highlight emerging threats before an attack.

A report on global terrorism grabbed attention recently with a striking statistic: The number of terrorism-related deaths in North America jumped by a whopping 70 percent in 2017 compared with the previous year. And the source of the report, the Global Terrorism Database (GTD), is not one to pull a number out of thin air either; on the contrary, it is an authoritative resource on terrorist and militant attacks. Shocked as we were by this ostensibly massive increase in deaths from terrorism, we dug further into the report. It turns out that the GTD classified the 2017 Las Vegas attack, a massacre that left 59 dead, as an incident of terrorism. We've already put in our two cents about why the mass shooting was not an act of terrorism — even if it was one of the deadliest attacks in American history — since it lacked any political or ideological motive.

Removing the Las Vegas attack from the list radically alters perceptions of the year, revealing that there was actually a 10 percent decline in the number of terrorist-related deaths from 2016 to 2017. The bigger issue here, however, is not what constitutes a terrorist attack (we've covered that before), but how statistics can be misleading when it comes to measuring terrorist and militant activity. Statistical analysis might break down what are ultimately highly complex events into discrete numbers, allowing analysts to chart data on a graph or run figures through a statistical modeling program, but examining quality — rather than quantity — will ultimately lead to a better understanding of terrorist threats.

The Numbers Never Lie?

Statistics are certainly helpful when assessing terrorist threats, because a sudden spike in attacks or a decline in overall casualties can help focus attention on changes in trends. Where is more security needed to counter a growing threat? Where is the threat subsiding, creating more hospitable environments for investment and development? But answering key questions like these requires more than a knowledge of the number of attacks and fatalities attributed to a certain group over a certain period. Assuming that a rising death toll stems from an increasing threat can trigger overreactions, just as waiting for a group to mature into a lethal threat leaves one vulnerable. So why wait for bodies to start piling up before determining that there is a threat?

In analyzing terrorist and militant attacks, aggregated death tolls and the frequency of attacks make for good supporting evidence, visuals and, most certainly, headlines, but they alone cannot determine the strength and staying power of a terrorist or militant threat. For that, it's necessary to take a critical look at terrorists' objectives, tactics and even creativity.

Assuming that a rising death toll stems from an increasing threat can trigger overreactions, just as waiting for a group to mature into a lethal threat leaves one vulnerable.

Objectives

When it comes to assessing the current and future threat of a terrorist or militant group, words matter — particularly in terms of measuring the objectives of the group or individual against their actions on the ground. The five-month siege in Marawi City, Philippines, in 2017 undoubtedly represented a tactical success for the militants who launched it, but the leaders of the operation weren't just trying to kill people and destroy property — the assault was supposed to trigger a wave of jihadist attacks across the southern Philippines akin to the Islamic State's seizure of Mosul in 2014. Since Philippine security forces were able to contain the uprising to Marawi City and destroy 20 to 33 percent of the jihadist forces in the region in the process, their gambit was ultimately a strategic loss. Indeed, jihadist activity in the southern Philippines, including kidnappings of foreigners, has decreased dramatically in the 10 months since the siege ended.

In the end, terrorism is propaganda of the deed: Without a clear political motive, attacks are mere violence. Due to the political element of terrorist attacks and militant campaigns, leaders and soldiers tend to identify explicitly what they wish to achieve. Whether it is the Islamic State intending to establish a caliphate, jihadists in the Philippines seeking to emulate them or anarchists in Berlin battling commercial globalism, the violence they perpetrate is undergirded by a (generally) public explanation of their reasons. Studying these communiques is crucial in determining an objective, for only then do the numbers of attacks and casualties, as well as the types of attacks, targets and tactics, acquire proper context.

Tactics

While databases and statistical analysis can help track weapons, targets and tactics, slotting individual attacks into specific categories typically results in overgeneralization. As we've noted before, overgeneralizing the nature of explosive attacks has led to an exaggeration of the threat that Islamic State fighters returning from Syria and Iraq posed to the West. The construction of improvised explosive devices in the Middle East tends to involve repurposed military ordnance — high-grade, weaponized explosive material. Such ordnance is not readily available in Europe or North America, where explosive attacks tend to involve homemade explosive materials, such as TATP, or triacetone triperoxide — a highly volatile material that leaves many telltale signs. Conducting explosive attacks in the West requires a different skill set than what is required in the Middle East, so the threat does not translate as seamlessly suggested by an analysis of the number of returning fighters and the tactics they employed in a war zone.

Another tactical variable that is more important to assess than death toll alone is targeting. Casualty rates are a function of target types, because softer, civilian targets are more vulnerable than hardened, secure targets such as military bases or sensitive government buildings. A purely quantitative analysis of the two competing factions fighting under the umbrella of the Islamic State West African Province (once known as Boko Haram) in Africa's Lake Chad region might suggest that the Shekau faction is the greater threat due to the higher death tolls associated with its attacks. The Shekau faction, however, tends to attack civilian areas such as markets and mosques, while the Barnawi faction focuses on military and government targets. Attacking harder targets tends to produce fewer casualties but arguably poses a greater threat to government control over territory.

The “X” Factor

A final element to consider in the qualitative assessment of terrorist and militant groups is their creativity and ability to devise new tactics and angles of attacks. Ibrahim Hassan Tali al-Asiri, the chief bombmaker for al Qaeda in the Arabian Peninsula (AQAP) in the late 2000s and early 2010s, may not have succeeded in several attempts to use creative bomb designs to target Saudi leaders and international flights, but his innovations helped his organization punch above its weight when it came to international terrorist attacks. The ubiquity of full-body scanners at airports across the United States stems in part from al-Asiri's bombs and the perceived threat of AQAP, even though the group has never managed to kill anyone on American soil.

The ubiquity of full-body scanners at airports across the United States stems in part from al-Asiri's bombs and the perceived threat of AQAP, even though the group has never managed to kill anyone on American soil.

The emergence of charismatic leaders such as Venezuela's Oscar Perez, who used a helicopter to throw hand grenades at government buildings in Caracas in 2017, is another example of creativity amplifying the threat of an attack without necessarily causing casualties. And perhaps Perez inspired opposition groups to launch an equally creative attack at a rally headed by President Nicolas Maduro using explosives strapped to drones on Aug. 4. The attack only injured a few people (more likely due to the ensuing stampede than the explosions themselves), but the image of soldiers breaking formation and fleeing in front of Maduro's dais was invaluable to the opposition in terms of anti-government propaganda. Novel and innovative terrorist tactics do not necessarily need to kill people in order to have the intended psychological impact. Terrorism is part theater, and the ability to attract attention while embarrassing the government is the sign of a creative operator who knows how to leverage violence for political change. A handful of such nonlethal or low-casualty attacks can erode government control faster than a grinding terrorist campaign that kills civilians and only further entrenches partisan divides.

The Case for Qualitative Analysis

As in all fields, statistics can be just as helpful as they can be misleading. Because of that, the significance of the numbers is the crucial ingredient in reaching any proper conclusion. When assessing terrorist and militant threats, statistical analysis tends to exaggerate the significance of attack rates and casualty figures simply because those variables translate most easily into numeric values. But such numbers alone reveal little about whether a group is meeting its objectives, employing tactics that threaten specific interests or using creativity to amplify the political impact of their attacks. Qualitative analysis, accordingly, can help temper the reaction to an alarmingly high death toll — or highlight an emerging threat before the headlines confirm it.

In Europe, a Growing Push To Escape the Shadow of the U.S.

2018-08-23T15:30:00Z

Highlights

The German foreign minister's bold demand to create independent financial and defense mechanisms will lend greater political weight to France's earlier call to reclaim Europe's sovereignty from the United States.

In addition to earlier moves, the European Union could go further by formalizing an economic bailout fund to lower dependency on the International Monetary Fund and expanding the scope of an EU-centric payment and settlements system to insulate itself from U.S. secondary sanctions over Iran.

More consequentially over the longer term, the European Union could pursue discussions with China and Russia to create a global, blockchain-based financial payment and settlements system that would severely erode the United States' financial clout.

On Aug. 21, German Foreign Minister Heiko Maas took to German daily Handelsblatt to pen a candid op-ed that boldly called on Europe to re-evaluate the trans-Atlantic partnership and bolster its own autonomy in response to U.S. unilateralism. Maas, a member of the Social Democratic Party (the junior partner in Germany's ruling coalition) dismissed policy prescriptions that simply advise Europe to wait out the Donald Trump presidency. Instead, he argued that the forces that have led to the chasm in the trans-Atlantic relationship have been long in the making and that a more strategic approach to rebalance the relationship is required. Specifically, Maas called for a separate payment system to SWIFT (a Brussels-based company that facilitates global financial transactions) that would be insulated from U.S. secondary sanctions. He also proposed a European Monetary Fund (EMF) that would act independently of the International Monetary Fund (IMF), as well as a European Security and Defense Union — since European members of NATO "cannot rely on Washington" as much as they used to.

Maas' proposals prompted a more cautious and nuanced response from his boss, Angela Merkel. The German chancellor stressed the necessity of maintaining good security cooperation with the United States and the great importance of SWIFT, even as she acknowledged the problems the European Union is facing with the United States as Brussels seeks to continue conducting financial transactions with Iran. Merkel's caution understandably stems from her tense relationship with the White House and pending trade negotiations with Washington, during which she will aim to neutralize a U.S. threat to impose auto tariffs on the European Union — a development that would particularly hurt Germany. Nonetheless, the chancellor endorsed Maas' overarching message, describing it as "an important contribution as it expresses in other words what I have said, that the trans-Atlantic relationship is changing, we need to take more responsibility, Europe has to take its fate into its own hands."

A European push for greater autonomy was bound to result from an intensifying wave of U.S. unilateralism on tariff policy and secondary sanctions, as well as U.S. quarrels with European partners over defense and energy matters. In May, French Economy Minister Bruno Le Maire argued that Europe needs to reclaim its "economic sovereignty" after Washington withdrew from the Iran nuclear agreement. Germany's voice adds considerable firepower to this broader appeal.

The Path to Parting Ways

In practice, greater European autonomy can assume several forms. On defense matters, France is already leading the way in its attempts to strengthen the Continent's strategic autonomy through defense cooperation pacts. Such initiatives include the Permanent Structured Cooperation agreement (PESCO) for the development of joint defense capabilities, as well as the European Intervention Initiative, which is designed to increase Europe's ability to project force abroad side-by-side with non-member countries, as well as non-NATO members. While these initiatives predate the Trump presidency and address long-standing challenges of how to pool EU resources and increase efficiency across the bloc's militaries, France's proposals have gained momentum thanks to Trump's open quarrels with the NATO alliance.

On economic matters, the Greek financial crisis spurred the European Union to lessen its dependence on the IMF, in which the United States carries significant influence. Instead, Europe seeks to develop its own bailout mechanism through the European Stability Mechanism. Paris wishes to take matters a step further by creating a new entity that would give the bloc greater financial firepower and more discretion in designing assistance programs for countries in distress. But the proposal for an EMF has triggered unease in more fiscally stringent countries such as Germany — a country that is wary of creating a "transfer union" in which large fiscal transfers would flow from north to south. In contrast, Berlin wishes to ensure that any such fund has strong technocratic enforcement mechanisms. The German-French debate over governing the EMF is a reminder of the internal divisions with which the union must still contend, even as it feels more emboldened to band together in defiance of the United States.

Attempting to preserve its economic ties to Iran in the face of U.S. secondary sanctions, the union imposed a blocking statute on Aug. 7 to ban EU companies from complying with U.S. demands to sever ties with Iran. Le Maire also called for a European agency that would mirror the functions of the United States' Office of Foreign Assets Control to independently track whether European companies are complying with sanctions. The blocking statute, however, is largely symbolic, because any U.S. fines imposed on EU companies for trading with Iran would likely exceed the penalties stipulated by the statute. Most private companies will thus limit their business with Iran and rely on loopholes within the EU legal text to insulate themselves from both U.S. and EU punitive measures.

Far more consequential in the long term would be a European move to team up with other major powers, like China and Russia, on global financial reform proposals that include the adoption of a global blockchain-based financial payment system.

The Blockchain Alternative

Perhaps more significant is Maas' call for an independent payment system to insulate Europe from U.S. secondary sanctions. Washington has threatened to sideline Iran from SWIFT as part of its maximum-pressure tactics to isolate Tehran from the global financial system. SWIFT, however, is a Belgium-based private company subject to EU laws, and Europe's present leaders largely oppose any new actions against the Islamic republic's banks, unlike their decision to participate in sanctions against Tehran six years ago. The United States could still try to sanction individual board members of SWIFT to punish the company for noncompliance, but this could harm a critical artery of the global financial system — not to mention ignite a serious diplomatic crisis with the European Union.

But a mere U.S. threat to that effect could spur the bloc to expand the scope of existing European-centric payment and settlement systems like TARGET2 to preserve its financial ties with countries like Iran. Far more consequential in the long term would be a European move to team up with other major powers, such as China and Russia, on global financial reform proposals that include the adoption of a global blockchain-based financial payment system. Private banks the world over are already experimenting with the technology as a way to improve efficiency, enhance security and reduce the cost of cross-border transaction fees. Among the many implications of such a system is the diminished ability of any one player, such as the United States, to financially insulate a country through secondary sanctions. The pre-eminence of the dollar as a reserve currency could also slowly erode over time in such a system, which would greatly facilitate the trading of other currencies.

To be clear, it would take years for such a global financial payments system to reach scalable viability, and even then, a thorny regulatory maze awaits. Nonetheless, the shorter-term geopolitical catalysts that are driving a major global pillar like Europe toward reclaiming economic sovereignty could play an important role in slowly carving out a new — and far more disruptive — reality for the international system.

Russia Considers Its Next Moves in Syria

2018-08-21T15:36:00Z

Highlights

To reap the rewards of its investment in Syria and to stabilize the conflict before it escalates further, Russia will try to implement a risky multi-pronged plan, the success of which is far from certain.

As part of that plan, Moscow will try to secure help from the United States and European Union in funding a reconstruction effort in Syria, though Russia's desire to keep Syrian President Bashar al Assad in power will be a sticking point.

Moscow will also try to prevent the conflict in Syria from giving way to an international war by mediating between Israel and Iran and by balancing the priorities of the Syrian and Turkish governments in Idlib province.

The Syrian civil war has entered a new phase since the government takeover of Daraa and Quneitra in the country's southwest. Now, for the first time in the conflict's seven-year history, all meaningful territory in Syria is either under the direct control of loyalist forces or subject to a significant foreign presence. The Syrian Democratic Forces and allied U.S. troops control the northeastern portion of the country, while Turkish troops are embedded in northern Aleppo province and Idlib province, where the last of the rebel forces are holding out.

It is President Bashar al Assad's government, however, that controls most of Syria, with help from allies such as Iran, Russia and Hezbollah. Each of these partners has a different vision for the country's path forward. But Moscow — having already achieved its primary goal of securing its position, and that of al Assad's government, in the country — is eager to stabilize the war and reap the rewards of its involvement in the conflict. To that end, Russia has crafted a multi-pronged plan, one that is full of risk and whose success is far from certain.

An Improbable Reconstruction

The first step in Russia's plan is to secure the reconstruction funding necessary to keep al Assad peacefully in power in Syria for the long haul. Without significant efforts to rebuild and stabilize the country, simmering dissent could once again boil over into rebellion. Russia's role in pacifying and rehabilitating Syria, moreover, would simultaneously cement its influence with and boost the legitimacy of the Syrian government, perhaps enough to encourage the West to lift its sanctions on Damascus. The process won't be cheap, though; estimates put the cost of reconstruction at about $400 billion. Because Russia can't possibly afford to foot the bill on its own, it is turning to other countries, namely the United States, China and EU member states, for help.

So far, it has met with mixed results. While China has signaled a desire to invest in the effort, the United States and the European Union are not on board with Russia's plan. Some EU countries, such as France, have already undertaken humanitarian aid deliveries to Syria alongside Russia, but their activities are a far cry from the reconstruction plan Moscow has in mind. To try to entice EU members to support its vision, Russia has raised the prospect of returning refugees to the reconstructed Syria. The European Union, however, is skeptical of Russia's intentions and still unwilling to work directly with al Assad's government. Convincing the United States of the plan's merit is proving even more difficult. Not only will Washington not work with the Syrian government, barring a political transition, but it is also looking for ways to cut its spending in Syria. The U.S. State Department announced Aug. 17 that instead of spending the $230 million earmarked for stabilization efforts in the areas under the Syrian Democratic Forces' control, it would ask its Arab allies to put up the money.

Avoiding an Israeli-Iranian Escalation

As Moscow continues to look for ways to assure the longevity of the al Assad administration, it is also working to keep the conflict in Syria from escalating into a war between the states involved there. Israel has been ramping up its attacks on Iranian troops in Syria over the past year to try to prevent Tehran from entrenching itself in the country. The attacks, if left unchecked, could give way to a full-blown conflict between Iran and Israel that could both hurt the Syrian government's capabilities and draw Russia in. To head off a further escalation, Russia has persuaded Iran to withdraw its heavy units from southwestern Syria for the time being and elevated its communications with Israel to avoid accidental clashes between Russian and Israeli forces.

Even so, the risk of an Israeli-Iranian confrontation remains. Iran could always decide to send its forces back to the area near the Golan Heights. Furthermore, as long as Iran has a presence in Syria, Israel is likely to continue its attacks. Russia has neither the ability nor the will to drive Iran entirely out of Syria; the Islamic republic is too entrenched in the country and its influence with Damascus too vast. In addition, Moscow still needs Iranian forces in Syria for the counterinsurgency missions that will continue long into the future in the remote corners of the war-torn country.

The Idlib Question

But the most pressing issue that Moscow has to deal with is Idlib. The rebel stronghold technically falls under a "de-escalation" agreement that Russia reached with Turkey and Iran during peace talks in Kazakhstan last year. The deal's claims to de-escalation have been nominal, though it did pave the way for Turkey to dispatch forces to establish a dozen observation points along Idlib's provincial borders. And now that al Assad's government has reclaimed its control of southwestern Syria, Damascus is eager to launch an offensive on Idlib to recover more territory. Loyalist forces have been moving north toward the province for the past several weeks in preparation for such an operation, putting Russia in a tight spot.

On the one hand, Moscow wants to debilitate the rebel forces in Idlib — particularly those behind the makeshift drone attacks on Hmeimim Air Base in Latakia — to ensure that they won't pose a further threat to the government in the future. On the other, doing so could put Russia in a direct conflict with Turkey, which opposes pulling back from Idlib for fear of losing its buffer zone in Syria and unleashing a wave of refugees over its border. Moscow has no intention of provoking a confrontation with Ankara. A conflict between them, after all, could sever their ties and drive Turkey back to the United States' side while also encouraging the country to redouble its support for the rebellion against al Assad's government.

Russia's strategy in Syria is ambitious but risky, and implementing the full plan will be easier said than done.

Taking these factors into account, Russia will take an evenhanded approach to the Idlib question. The country is pressuring Turkey to take a tougher stance on the rebel forces' jihadist contingent, including groups such as Hayat Tahrir al-Sham and the Turkistan Islamic Party in Syria (which, as an offshoot of a Uighur insurgent group, is a major concern for China, too). At the same time, though, Russia is also managing Damascus' expectations by making clear that it will not back a full military offensive to retake Idlib so long as Turkish forces are still in the province. Rather than a full-fledged operation, a series of Russian-backed loyalist attacks will probably begin in the next few weeks, along with a widespread propaganda campaign to persuade rebel groups to lay down their arms.

Yet even such a carefully calibrated approach will entail significant risk. Russia has never before supported a large-scale military operation in a rebel-held part of Syria with a foreign troop presence. If it decides to do so in Idlib, it would run the risk of causing Turkish casualties or inviting retaliation and escalation. Although al Assad's government has largely regained its hold on power, Russia will probably find that implementing the rest of its strategy in Syria is easier said than done.

The War on Drugs: A Conflict as Old as Humanity

2018-08-16T15:48:00Z

Highlights

Along with the physical and psychological changes they induce, drugs have profound sociological effects, differentiating between classes based on their use.

The rampant opioid addiction plaguing the United States today is the latest in a series of drug abuse crises throughout human history.

The social and economic changes that helped curb gin consumption in England in the mid-18th century offer insight into how modern societies may cope with their own drug epidemics.

"'Tis impossible to be sure of any thing but Death and Taxes," the novelist Christopher Bullock observed in 1716, 73 years before Benjamin Franklin borrowed the sentiment. To that list, we can probably add drugs. Ancient Peruvians were using the San Pedro cactus, which contains mescaline, 9,000 years ago. Excavators suspect that the oldest evidence of bread production, at Shubayqa in Jordan about 13,000 years ago, was a byproduct of brewing beer, and archaeologists have long speculated that Ice Age cave painters made their marks, some dating back 40,000 years, under the influence of hallucinogens. ("No wonder they called it the Stone Age," says British newspaper The Daily Mail.) Given the difficulties of detecting drug use in the archaeological record and the fact that fully modern human behavior began only 60,000 years ago, it's probably safe to say that drugs have always been with us.

Drugs can make our bodies do things they otherwise would not do. Under their influence, we can endure pain, see visions, hear God's voice, experience ecstasy, fall asleep, stay awake, feel happy, see farther, run faster, be more sexually potent — the list goes on and on. In the process, though, drugs can also ruin our health or make us reckless, aggressive, listless, dishonest or lazy. They can leave us too addled to do anything at all, even breathe. More than 63,000 Americans died from opioid overdoses in 2016, chiefly because the drugs sedate the parts of the brain that control breathing, leading to respiratory failure and suffocation. Since then, opioids have been the leading cause of death for Americans under the age of 50. More Americans die from opioid overdoses each year than died in the Vietnam War in its entirety.

The reason drugs have always been with us, of course, is that they deliver things we want as well as things we hate. Used with care, opioids are miracle workers, able to dull the agonies of disease and trauma; much of the world, especially its poorer parts, needs more of the drugs, not less. (And like so many other drugs, opioids can fuel great art. One critic has hailed Nico Walker's Cherry, published this week, as "the first great novel of the opioid epidemic.") Drugs provide magic and misery in equal measure. They have driven some of history's most positive transformations but have also been the focus of some of its most aggressive campaigns of social control. For millenniums, they have been both expanding and undermining the potential of the human body, bringing wonder and joy into millions of lives while ruining millions more. We might learn a thing or two about the challenges posed and opportunities offered by drugs in the 21st century by looking at our tens of thousands of years of experience with them.

Erecting Psychedelic Megalithic Cemeteries

One of the first signs of the significant effect drugs may have had on society dates back about 5,000 years, when people now unknown built a series of spectacular monuments along the European shores of the Atlantic, from Portugal to the Orkneys. Archaeologists call these structures "megalithic," from a Greek word for "giant stones." Most were tombs, pillars or circles of standing stones, and many were carefully aligned on astronomical principles. The tomb at Newgrange in Ireland, for instance, was marked by a mound 100 meters across and 20 meters high, made from more than 180,000 metric tons of dirt and rock, faced with stone slabs inset with chunks of white quartz that could be seen from kilometers away when they caught the sun. At its center was a stone burial chamber, accessed by a 15-meter passage aligned so that for one week on either side of the winter solstice, the first rays of the rising sun shone down it to light up in gold a triple spiral carved on the chamber's back slab. The tomb of Knowth, just a few minutes' walk from Newgrange, had two passages of this kind, aligned to catch the rising sun on the spring and autumn equinoxes.

Drugs provide magic and misery in equal measure. They have driven some of history's most positive transformations but have also been the focus of some of its most aggressive campaigns of social control.

The tombs look like celestial hotspots, linking their glorious dead (whoever they might have been) to the power of the sun at the most meaningful moments of the year. But it is their decoration that has led many archeologists to think drugs played a big part in their construction — the swirling carvings of mazes, zigzags and spirals painted in garish colors like so much psychedelic art of the 1960s. Several psychologists have likened the designs to images produced in the eyes and brain by "flickering light, hallucinogenic fungi, and migrainous syndromes," as one scholar rather soberly puts it.

Stonehenge, the most famous of these cemetery monuments, offers another indication. Virtually the only goods buried with the dead there are a single polished stone mace head — possibly a symbol of authority, like the mace used in British coronations to this day — and an odd little stand for burning something. Archaeologists decorously call it an "incense burner," but the most common interpretation is that it was for drugs (though chemists have not been able to extract any identifiable residues). The only close parallel for this "incense burner" in prehistoric Britain turned up at a site [I think naming it might be helpful] that is also the closest parallel for Stonehenge — surely no coincidence.

The Nectar of the New Elite

The oldest European poppy seeds in Europe come from Italian sites dated to around 6000 B.C., and direct evidence of opium use begins with a fragment of opium poppy lodged in the teeth of a Spanish skeleton around 4000 B.C. Even some of the soberest archaeologists suspect that by 3000 B.C., a new elite was emerging along the Atlantic coast, expert in combining narcotics, emotionally intense solar ceremonies and otherworldly art not only to alter their awareness but also to mobilize their communities to build magnificent monuments as portals to another world. Drugs, they propose, drove the rise of inequality.

Much about this story is necessarily speculative, but we are on firmer ground by the first millennium B.C., when written sources augment archaeology. One of the biggest social changes in the Mediterranean during this period was the spread of Greek culture from east to west, creating the broad classical civilization that was eventually united as the Roman Empire. Historians have long considered this process, called "Hellenization," a major turning point. And in the 1980s, archaeologists realized that drugs initially inspired it.

When Greek traders started showing up in the West Mediterranean, only one thing about them really interested the locals: wine. Residents typically began importing Greek wine immediately, replacing the mugs and bowls used for consuming local beverages (mostly beer and mead) with Greek-style wine cups, and often planting their own wine grapes too. By contrast, other Greek goods typically took more than a century to catch on, while Greek-style dress, lifestyles and institutions were even slower to gain prevalence. Drugs were the leading edge of the ancient version of globalization, and learning to drink wine like the sophisticated Greeks seems to have been a crucial first step for local notables who wanted to assimilate themselves to the cosmopolitan Mediterranean elite. Around 200 B.C., one Greek scholar who spent time in what is now France noted that chiefs would buy wine from Greek traders at the rate of one slave per 30-liter jar.

Drugs were the leading edge of the ancient version of globalization, and learning to drink wine like the sophisticated Greeks seems to have been a crucial first step for local notables who wanted to assimilate themselves to the cosmopolitan Mediterranean elite.

Correct drug use was critical for these Davos Men of their day, marking them as members not only of an international set but also of a class above the commoners of their own communities. In Greece itself, poets waxed lyrical about the contrast between their practice of mixing their wine with water and that of the boorish barbarians who drank wine neat. The behaviors also distinguished upper-class Greeks, who drank moderately and told morally uplifting stories at their refined parties, from lower-class Greeks, who drank to excess, broke wind and molested slave-girls. There are few surer ways for a man to betray his social standing than to drink too much of the wrong kind of wine.

The Social Side of the Drug Schedule

We cannot be certain that drugs set cosmopolitan elites apart from the vulgar herd at Stonehenge and Newgrange, but since the first millennium B.C., social differentiation has been one of the most visible side effects of drug use. The classic case, because it is so well-documented, is early modern Britain. Since before the Romans came, wine-drinking had helped separate the elites from the ale-drinking commoners. People drank a lot of both, because water was not always safe, but around 1700, gin began gaining ground. Wine's French associations seemed politically incorrect while England was at war with France. On the other hand, anything Dutch — including gin — looked good now that England had a soundly Protestant Dutchman on its throne. When an ill-judged tax reform in 1720 suddenly slashed the price of gin, however, the poor began drinking vast quantities of it too; the thirsty masses bought some 35 million liters of gin in 1735.

The scale of addiction horrified elite Londoners, and high-profile drug crimes galvanized reformers. In 1734, one Judith Defour was hanged after taking her two-year-old child to the workhouse, where he received a new set of clothes, then returning to reclaim the baby, strangling it and selling its new clothes to buy gin. When Parliament restored the duties on gin in 1736, violent riots broke out, and the well-established market for the spirit went underground. One reformer counted 8,659 gin joints in London in 1750. Another wrote that "young creatures, girls of 12 and 13 years of age, drink Geneva [gin] like fishes and make themselves unfit to live in sober families ... [T]here is no passing the streets for 'em, so shameless are they grown."

Finding a New Fix

As soon as gin became a street drug, society types abandoned it, turning instead to new drugs that had been coming into England since the mid-17th century. Most were mild stimulants that fit into a new fashion for "politeness," distinguishing modern middle classes from both the "enthusiasts" of the previous century's religious wars and the disorderly contemporary plebeians. Coffee, the first of these drugs to take off, had been around for a while: The first public coffee shop was opened in Oxford in 1650. Hundreds more quickly followed, and realizing that their sober, perky customers would need more amenities than gin-drinkers in a bar (one ad for an infamous dive in London said "Drunk for a penny, dead drunk for twopence, clean straw for nothing"), coffee sellers began providing free newspapers. Soon coffee houses were centers of political and intellectual debate.

Through the late 18th century, alcohol abuse in the United Kingdom declined, less because of aggressive prohibition drives than because of a growing desire among the poor to be "respectable."

From there, tea joined the mix. The first Englishman to describe drinking tea was part of a flotilla attacking Canton in 1637, but within the next 20 years London coffee houses were selling the new drug as well. Samuel Pepys, a naval administrator and diarist, recorded in 1660 having "a Cup of Tee (a China drink) of which I had never drunk before." By the 1690s everyone in society was using it, with some aficionados apparently downing 50 cups per day. Predictably, there were critics, one of whom warned women in 1717 that tea would cause "a Diminution of their prolifick Energy, a Proneness to miscarry, and an Insufficiency to nourish the Child when brought into the World," but society ladies were unimpressed. The United Kingdom, which imported under 10 metric tons of tea each year in the 1690s, brought in about 2,000 metric tons in 1760.

Tobacco, which took off in the 1610s, and sugar, which similarly boomed in the 1650s, rounded out the package of new stimulants. Though both relied almost from the beginning on thousands of slaves being shipped across the Atlantic, they are powerful drugs and, as many of us know, powerfully addictive. In the 1730s, as anxiety over gin peaked, the upper classes had a ready-made bundle of "polite" alternatives. Over the next 40 years, alcohol abuse declined, less because of aggressive prohibition drives than because of a growing desire among the poor to be "respectable." Reformist campaigns, especially by Methodist ministers, had a lot to do with the change, but so did the economy, which offered better-paid jobs to sober, reliable workers who did not need to take a "St. Monday" holiday to sleep off Sunday's bender.

From Martinis to Marijuana

Many of our modern drugs are more powerful than those of earlier times, able to do both more good and more evil. But in a lot of ways, not much about the modern encounter with drugs is new. For two centuries, a package of mild stimulants — coffee, tea, sugar and tobacco — combined with the limited use of alcohol defined respectable drug-users relative to the dissolute, who abused alcohol, and the puritanical, who rejected drugs altogether.

The last 50 years have brought dizzying changes that once again altered the social order of drug use. Tobacco has been demonized, the three-martini lunch has become a thing of the past, a war has been declared on sugar (especially in soft drinks), and people keep telling me to drink less coffee. Marijuana, meanwhile, has moved in the other direction: When I was a teenager, possession regularly meant jail time, but in California nowadays I am more likely to be arrested for drinking a Bud Light on the street than for lighting up a joint. Crack, crystal meth and opioids are what now define the members of an untouchable class, shortening their lives and visibly marking them as outsiders to polite society. At the other end of the spectrum, multimillionaire tech gurus experiment with micro-doses of hallucinogens to boost their creativity. This kind of shift has happened countless times before and will doubtless repeat itself in the future.

But the certainty of drug use, along with death and taxes, is not an argument for ignoring its costs. Patterns of drug use are not immutable; just look at 18th-century England. The lessons the example provides are clear: Rather than curbing drug abuse, banning it only drives it underground, into a world of hardened criminals. And lecturing addicts about their weakness and wickedness only makes them more inclined to turn their backs on polite society. The rate of gin abuse dropped after 1750 primarily because incentives changed as economic expansion made a majority of the English public feel that the gains of sobriety outweighed those of intoxication. At the same time, reformers worked hard to advertise the attractions of respectability, while a new set of addictive mild stimulants became available to fill part of the gap left by liquor. Whether such a package is possible in our rapidly changing 21st-century economies remains to be seen.

Violence, Security and the Next Mexican President

2018-08-14T17:15:00Z

Highlights

Despite the fears of some, the incoming administration of President-elect Andres Manuel Lopez Obrador appears less radical than many had predicted.

The campaign promise of an amnesty for narcotics crimes appears be quite limited and will not apply to those who have been involved in violent crimes.

Mexico may decriminalize marijuana and may attempt to regulate the cultivation of opium poppies.

Removing the military from the war against the cartels will remain difficult.

In just over three months, Andres Manuel Lopez Obrador will be inaugurated as the next president of Mexico. He will be armed with a public mandate to tackle corruption and drug violence. His party, the National Regeneration Movement, will also enjoy a majority in both houses of Congress. That control will give him an opportunity that presidents Enrique Pena Nieto, Felipe Calderon and Vicente Fox did not have – a strong chance to carry out his political agenda.

Tackling Mexico's endemic corruption is one important part of that program. Another closely related topic is the country's security challenges, which have dominated the agendas of several recent administrations, consuming their attention and political capital. Indeed, in November 2012, I analyzed Pena Nieto's plans to address security, and in 2017, I examined some of the limitations that the next president was going to face. Now that we know the names of some of the people in Lopez Obrador's national security Cabinet and some of its proposals, it's time to take a closer look.

National Security: People and Preparations

Though there were concerns that Mexico might skew hard to the left due to Lopez Obrador's nationalist and populist rhetoric, two of the president-elect's early security picks are decidedly mainstream. One selection is Olga Sanchez Cordero, Lopez Obrador's candidate for secretary of the interior. President Ernesto Zedillo initially appointed Sanchez Cordero to Mexico's high court, the National Supreme Court of Justice, where she served two terms from 1995 to 2015.

Another significant pick is Alfonso Durazo, who worked in the administrations of both Fox and Carlos Salinas. Durazo has been tapped to lead the Secretariat of Public Security, which was a Cabinet-level organization created under the Fox administration in 2000. The agency was dissolved under the Pena Nieto administration in 2013, and its functions were folded into the Interior Ministry in the form of the National Security Commission. The commission now oversees the federal police, the federal protection service and the federal prison system. Lopez Obrador also plans to restore the public security ministry to a Cabinet-level agency.

Amnesty for Narcos?

On the campaign trail, Lopez Obrador vaguely discussed the possibility of somehow working a deal with cartel leaders to reduce violence. He also ambiguously talked about offering amnesty for narcotics crimes, producing a great deal of controversy. However, since the election, the details of the proposed amnesty have begun emerging, allaying the fears of many.

At a July 7 news conference, Durazo and Sanchez Cordero said women and children coerced into working for criminal organizations or farmers forced to grow illegal drugs would be the primary beneficiaries of pardons. Those involved in violent crimes such as homicide, kidnapping, extortion, human trafficking and sexual assault would not be eligible. Sanchez Cordero also said some repentant drug traffickers might receive amnesty if they help solve serious crimes and locate the bodies of victims.

This definition of amnesty is clearly not a blanket that will apply to all cartel figures. In fact, most Mexican cartel groups and street gangs are involved in violent crime against people – it would be hard to find a Mexican criminal group that has not been part of the brutality wracking the country. Therefore, the number of criminals who would qualify for the amnesty will be quite limited – if any are even interested in applying for it to begin with (or think they would survive the process).

Hot wars among Mexico's cartel groups are feeding the country's record number of homicides. The carnage can be found in border towns such as Tijuana, Juarez and Reynosa; in drug production areas such as Guerrero state; at retail drug sales points such as Mexico City and Cancun; and at hot spots for petroleum theft such as Guanajuato. It will clearly take more than an offer of amnesty to people involved in nonviolent crime to solve this array of problems – especially given the lucrative nature of these illegal acts. It appears that the amnesty proposal was just a campaign promise that is now being given lip service, rather than a broad program to help criminals return to civil society.

Legalization: Marijuana and Opium

Sanchez Cordero has also stated that with marijuana now legal or decriminalized in Canada and several U.S. states, it doesn't make much sense for Mexico to continue to spend so much time and resources prosecuting cannabis cases and eradicating such crops. At the same time, the Lopez Obrador administration will consider decriminalizing the recreational use of marijuana in Mexico, she said. While such a move would certainly cause angst for the U.S. federal government, it would be difficult for the United States to place too much pressure on Mexico since it would follow decriminalization measures by Canada and several U.S. states.

The new administration will consider the legalization and regulation of the opium trade, perhaps permitting the sale of opium gum to pharmaceutical companies.

Sanchez Cordero also said the legalization and regulation of the opium trade would be considered, perhaps permitting the sale of opium gum to pharmaceutical companies. That policy shift would create a legal market for the country's gomeros, as opium farmers are called, and perhaps relax the grip of the drug cartels over the trade. It could also help decrease the amount of Mexican heroin shipped to the United States. In addition, legalizing the trade could help quell the intense fighting over the control of opium-growing areas such as Guerrero state.

But such a move would not strike a fatal blow to Mexican cartel groups or end the U.S. opioid crisis. In recent years, the cartels have learned that fentanyl is cheaper and easier to produce than heroin, and they have increased production of the potent synthetic opioid. Indeed, record poppy crops and the transition to fentanyl have produced a glut of opium gum in Mexico, dropping the price from upward of $1,250 per kilogram to just $250 per kilogram. In a search for a better return on their efforts, some farmers have switched from producing the labor-intensive opium gum back to growing marijuana.

But the United States is not the only country being plagued by the drugs trafficked by the cartels. Mexico's internal drug markets have grown at an alarming rate, and cocaine, meth and opioids also present a significant public health threat there. These developments would therefore make it difficult for the Mexican government to relax enforcement on hard drugs or the organizations that produce and sell them.

Pulling the Military Out of the Drug War

Like the Pena Nieto administration before it, the Lopez Obrador administration has promised it will remove the military from the war on drugs. Durazo has said the public security ministry can be expanded to assume the law enforcement role being performed by the military. This is not unlike Pena Nieto's plan to create a 40,000-strong paramilitary police force or gendarmerie. Durazo has also mentioned a plan to create a new border police force to help keep illegal immigrants and illegal weapons out of the country.

The past several administrations have recognized that soldiers and marines do not make ideal police officers.

The past several administrations have recognized that soldiers and marines do not make ideal police officers and have sought to end the military's role in providing basic security. Pena Nieto attempted a bold move with his plan for a gendarmerie, but various political and economic factors led to the demise of his vision for the new police force. Perhaps Lopez Obrador will have the political muscle to succeed were Pena Nieto failed, but such a program will be particularly expensive. Given the number of other political initiatives Lopez Obrador has announced, including expansions of many social spending programs, it may be difficult to find the funding to finally create a force that will allow the military to return to its intended role.

On Dec. 1, Lopez Obrador will be sworn into office for a single, six-year term. Mexican voters have given him a free hand to take on the endemic graft and the brutal cartel violence that are hampering the country's economic growth. And for the first since 1997, a single party will control the presidency and both houses of Congress, giving Lopez Obrador a rare opportunity to make a real difference in Mexico's future. But having power doesn't always guarantee success; that, instead, will depend on how well the new administration executes on its promises and on how well its proposals actually reduce the violence.

Without a Motive, the Las Vegas Shooting Remains a Mystery

2018-08-09T15:44:00Z

Highlights

While the shooter clearly wanted to kill as many people as possible, why he wanted to do so remains a mystery.
Absent a statement, a link to a radical cause or group, or a live suspect to tell us his motive, we are left to speculate.
Media attention aside, workplace violence and customer grievances remain a far more pervasive threat to corporate America and the general public.

The Las Vegas Police Department released a detailed report Aug. 3 on the Oct. 1, 2017, Las Vegas mass shooting. The 187-page report provides extensive details on the shooting, including lists of the firearms used, witnesses interviewed and investigative leads pursued. But most noteworthy is that after 10 months and countless hours of investigative effort, the authorities have failed to determine a motive for the shooter.

By contrast, his intent was clear: to kill as many people as he could. The large number of guns and ammunition he brought into his hotel room, many of which were not fired, expose this. His internet search history also reveals this intent. Forensic examination of his computer showed that on May 18, 2017, he entered queries such as:

"summer concerts 2017"
"grant park functions"
"La Jolla Beach"
"open air concert venues"
"biggest open air concert venues in USA"
"how crowded does Santa Monica Beach get"

That same day, he also used Google Maps to study Venice Beach and Fenway Park. His search history justifies the assumption that he chose to attack the Route 91 Music Festival, not because of a specific grudge against it, but because it offered him a large crowd of people he could shoot down into. Not only did the Mandalay Bay casino offer him an elevated shooting position into a densely packed crowd, it was familiar turf given his status as a professional gambler.

It is important to recall that not all mass homicides are terrorism, and without a motive, we cannot categorize this shooting as a terrorist attack.

Intent aside, why he wanted to kill as many people as possible remains a mystery. Based on comments before the shooting, some suggest anti-government sentiments or Second Amendment concerns motivated him. But in stark contrast to other anti-government attacks, an exhaustive investigation could not establish this.

Alternatively, some have suggested that declining financial fortunes motivated him. Indeed, before the shooting, his savings had dwindled from over $2.1 million to $530,000 — $95,000 of which was spent on guns and ammunition. But again, no clear evidence suggests finances — rather than, say, deteriorating mental health — was the primary factor.

While it can take time before claims or manifestos surface — the Unabomber case comes to mind — we are at a loss to think of another such significant attack where the perpetrator was known but where the motive remained unknown. Absent a statement, a link to a radical cause or group, or a live suspect to tell us his motive, we are left to speculate.

The Mandalay Hotel is the gold building on the left. South Las Vegas Boulevard runs from the bottom left corner of the picture, from south to north. The gunman fired northeast at the Las Vegas Village concert venue.

Not Terrorism

Without a motive, we cannot categorize this shooting as a terrorist attack. Certainly, it generated terror via carnage. But by definition, terrorism is a violent form of political or ideological communication, or propaganda of the deed. When no such message or statement is conveyed through a violent attack, it cannot be categorized as terrorism. The distinction matters. If we are to study and understand terrorism, we must carefully guard how we define it. If everything that causes terror becomes terrorism, then the term has little value.

It is important to recall that not all mass homicides are terrorism. In fact, the majority are not terror-related. As we have previously noted, just 25 percent of all the mass public attacks in 2017 were politically or ideologically motivated. Indeed, neither of the two deadliest attacks in 2017 — the Las Vegas shooting that killed 58 people and the Sutherland Springs, Texas, church shooting that killed 26 — was terrorism.

Workplace violence and customer grievances, like the one that resulted in the April 4, 2018, YouTube shooting, remain a far more pervasive threat to corporate America and the general public. While terrorism continues to punch above its weight when it comes to garnering media attention, these other threats must not be overlooked.

Why an Attack by Grassroots Jihadists in Tajikistan Matters

2018-08-07T15:57:00Z

Highlights

The July 29 attack on a group of cyclists was clearly conducted by grassroots jihadists and not by a professional terrorist cadre.
Despite its proximity to Afghanistan, Tajikistan has managed — with Russian assistance — to keep the jihadist threat in check.
Beneath its relative stability, Tajikistan is significantly divided, and it will be important to watch for signs of increasing radicalization, specifically among younger members of the population.

For a group of seven international cyclists, the trip through breathtaking Tajikistan following a section of the ancient Silk Road was a dream come true. But that dream turned into a nightmare July 29, when, in a deliberate act, a dark sedan smashed through the group. The men inside got out and attacked the cyclists with knives. Four of the tourists — an American couple, a Swiss citizen and a Dutch national — were killed; the others — one Swiss, one Dutch and one French — were injured. On July 30, the Islamic State claimed responsibility for the assault through its Amaq news service. In a statement, it said the attackers "were soldiers of the Islamic State and carried out the attack in response to calls to target the citizens of the coalition countries."

On July 31, Amaq released a video that it claimed featured the five young Tajik attackers claiming allegiance to the Islamic State and its leader, Abu Bakr al-Baghdadi. Although the video made no specific mention of the bicyclists, the youths denounced the Tajik government, said the country was "occupied by unbelievers" and made vows to attack. Tajik authorities played down the Islamic State claim and blamed the attack on the exiled Islamic Renaissance Party of Tajikistan. Authorities say they have found the damaged vehicle and have arrested or killed several suspects. However, the poorly planned and executed attack appears to be the work of grassroots jihadists, and not trained operatives.

Youth, Poverty and Terrorism

Outside their country, Tajiks have been active participants in jihadist struggles and suicide bombings. Tajik officials say that about 1,400 of their citizens have traveled to Iraq or Syria to fight with the Islamic State. And research from the International Center for Counterterrorism at The Hague for 2015-16, indicated that Tajik involvement in suicide bombings was disproportionately high when compared with other nationalities. Tajik jihadists have joined Islamic State's Wilayat Khorasan in Afghanistan and have taken part in suicide bombings in Kabul. They have also been involved in plotting terrorist attacks in Russia and Europe. Despite all this, terrorist acts, especially those directed against foreigners, are relatively rare inside Tajikistan. Indeed, despite its shared border with Afghanistan, the low amount of terrorist activity inside the country has led Stratfor to rate the country as only a medium threat for terrorism.

However, Tajikistan remains a fragile and vulnerable state. It is a poor country in a bad neighborhood awash with weaponry and radical ideologies. Of the former Soviet states, it has the lowest per-capita gross domestic product and the highest percentage of people living in poverty. Many Tajiks travel to Russia or elsewhere abroad to find work, and remittances account for over 30 percent of GDP. Drug smuggling is also a significant part of the economy. Tajiks are heavily involved in processing Afghan opium gum into heroin and in smuggling Afghan heroin into Russia and Europe — often working with the Afghan Taliban to do so. On top of this, the country's growing population is skewed heavily toward youth — over half of its people are younger than 25.

Autocratic President Emomali Rakhmon, who has ruled the country since 1992, has suppressed opposition since the brutal civil war ended in 1997, but significant regional, clan and religious divisions remain. Rakhmon has imposed a degree of stability by applying pressure to keep those divisions from splitting open. But his ability to do so indefinitely remains in doubt. The government's heavy-handed approach to stifling opposition and religious activity has created a strong sense of resentment among certain segments of the population.

Many Tajiks, as well as the Islamic Movement of Uzbekistan (IMU), have joined the Khorasan Province, the Afghan affiliate of the Islamic State. Meanwhile, the power of the Taliban in Afghanistan is growing. These developments raise concerns about the possibility that militants could take root in Tajikistan, developing into a threat to the government. So, was the July 29 attack a sign of a growing movement? The answer lies in looking closely at the assault itself.

Examining the Attack

The tactics in the assault seem to be consistent with those typically used by grassroot jihadists. Evidence that it was a grassroots effort can also be seen in the wording for the Islamic State's claim for the attack, which said the men were soldiers who had responded to its call. This language is typically used for jihadists inspired by the Islamic State or directed by its members through online forums. The language it uses for operatives from franchise groups or for members sent out to conduct attacks, such as the cell responsible for the Paris and Brussels attacks, is different.

In addition, the assault itself had not been planned or executed well. It's hard to imagine a more vulnerable target than a group of bicyclists on a rural stretch of highway. Yet, the attack succeeded in killing only four of them. Furthermore, it was carried out before an array of witnesses, including one who recorded it on a cellphone video.

The method of attack, a vehicular assault followed by an armed attack, corresponds exactly to tactics that the Islamic State has encouraged its grassroots supporters to employ. Similar assaults have taken place in London and in Barcelona. The choice to carry out this type of attack in the United Kingdom or Spain, where it is somewhat difficult to get firearms, makes logical sense. But weapons are much easier to obtain in Tajikistan, especially for any professional operative with connections to either the Islamic State or the Taliban.

Finally, the assault doesn't reflect the capabilities of trained operatives. Many of the Taliban's older operational leaders have been at war since 1979, and the younger ones have known warfare all their lives. They have survived 17 years of combat with U.S. and NATO troops, probably the best trained and equipped forces on the planet. That combat experience has honed the Taliban's military capabilities, including a sophisticated ability to carry out armed assaults and ambushes. They have also become quite adept at terrorist attacks, including assassinations. The Taliban and Islamic State militants in the region are capable killers and would be able to plan a much more effective attack against a group of foreign cyclists, choosing a moment of greater vulnerability, such as when they were asleep in their tents, to strike.

Keeping a Lid on Tajikistan

Within Tajikistan, jihadist activity has remained weak for several reasons. First, the Taliban remain focused on Afghanistan and do not have a larger regional agenda. Second, the Tajik government has created a pervasive security apparatus that aggressively pursues any perceived opposition, including religious extremism. Thousands of Russian troops stationed at the 201st military base back up those domestic security forces. Third, Tajikistan's long secular communist tradition also means that jihadism does not hold the same widespread appeal that it does in Afghanistan. These factors make Tajikistan a hostile operating environment for jihadists, especially those operating in formal hierarchical groups. In many ways, this has created an operational environment similar to those seen in Europe or North America — where grassroots terrorists working alone or in small cells are better able to avoid the government's attention than professional cadres linked to groups.

In some ways, Tajikistan resembles Libya under Moammar Gadhafi. The strongman was able to suppress dissent, including that by jihadists, and to keep regional and tribal fractures in check through the use of force. Once Gadhafi's control slipped, the country spiraled into civil war. Like Libya, Tajikistan is quite brittle. Government oppression, combined with a young and impoverished population, could eventually result in an increase in jihadist adherents inside the country. And if Tajikistan were to fracture, it could open up another space for extremists to operate in Central Asia.

Syria: For Israel, an Iranian Withdrawal From the Border Doesn't Go Far Enough

2018-08-02T15:51:00Z

The Big Picture

Russian and Iranian support for Syrian government forces has been vital to their success in the country's civil war, giving both countries substantial influence in Damascus. The continuing presence of Iranian forces inside its neighbor, however, has put Israel on edge, prompting it to ask Russia to intervene. Although Russia's pull with the Syrian government is considerable, it is not enough to persuade Damascus to evict a valuable ally.

The Latest Development

Alexander Lavrentiev, the Russian special envoy to Syria, indicated Aug. 1 that the Iranian forces who had helped the Syrian government overcome pockets of rebel and Islamic State resistance near the Israeli border would be moving their heavy weapons at least 85 kilometers (52.8 miles) from the Israeli-controlled Golan Heights. But the announcement did little to mollify Israel, which has called the buffer zone insufficient and continues to push Russia to pressure Iran into leaving Syria altogether.

Why It Matters

The Russians have long been building connections to both Israel and Iran, seeking to capitalize on their position as a diplomatic great power by virtue of their intervention in Syria. But there are limits to how much Russia can do. While the Iranian pullback will cut down the risk of short-range attacks on Israel, that is not the only challenge that the Israelis see coming from Iran. Its supply corridor to Hezbollah in Lebanon also presents a powerful threat. And despite the withdrawal, Iranian missile forces in Syria could strike Israel even beyond the 85-kilometer buffer zone, or could quickly be sent back inside it, joining the Iranian troops that remained behind as advisers. So for Israel, any significant Iranian presence in Syria is a threat, not merely one near its Golan border.

That perception has propelled Israeli strikes as far afield as the Iraqi-Syrian border, central Homs and northern Aleppo. Israel continues to take advantage of a window of opportunity to disrupt and mitigate Iranian entrenchment in Syria, even as it welcomes whatever diplomatic gains Russia can offer.

The Iranians, too, have confounded the Russians' attempts to flex their diplomatic muscle. Iran is able to maintain its position in Syria independent of Moscow; it is a major economic and security partner for Damascus and will pursue its own agenda for a postwar settlement. Moreover, it's not in Russia's interests to wholly evict Iran from Syria. Iranian troops and associated militias help maintain order on the ground, and they do much of the fighting that Russia, which is looking for a graceful way to exit the Syrian conflict, wishes to avoid. At the same time, Russia does not want to risk being drawn into a clash with Israel, so it has not extended protection to Iranian forces from Israeli airstrikes.

Russia will struggle to create a settlement that will prevent further clashes between Iran and Israel inside Syria.

That's left Russia to attempt a diplomatic balancing act. It wishes to be seen as credible by both sides, but it is unable to fully deliver to either country's satisfaction. Local deals may be cut, but Russia will struggle to create a settlement that will prevent further clashes between Iran and Israel inside Syria.

What's at Stake?

Israel and Iran's first direct exchange came in early May when Iran fired short-range rockets into the Golan Heights as retaliation for an Israeli airstrike. That led Israel to come back with significant airstrikes targeting both Iranian and Syrian targets. While those strikes damaged Iranian forces, they did not prompt Tehran to leave the country, or to retaliate beyond Syria. Before that, an Iranian drone broke into Israeli airspace in February, prompting a counterattack on the Iranian drone base in Syria, which resulted in the shootdown of an Israeli F-16 by Syrian forces.

Israeli officials have repeatedly stressed their intolerance of Iranian forces in Syria, and Israel has carried out a campaign of airstrikes to disrupt Iran's buildup and its supply lines to the anti-Israeli militia Hezbollah inside the country. A series of high-level talks between Israeli and Russian leaders has not led to a resolution, meaning that continued Israeli action is likely.

When It Comes to Cyberattacks, Iran Plays the Odds

2018-07-31T15:53:00Z

Highlights
While Iran is capable of carrying out conventional military action, cyberspace is the more likely theater for its current conflict with the United States.
Iran's cyber threat groups tend to use unsophisticated yet tried-and-true tactics while targeting many individuals.
Awareness, knowledge and preparation are the best tools to defend against such tactics.

The war of words between the United States and Iran appears to be heating up in cyberspace. In recent weeks, the tension has grown palpable as the United States leads the drive to reimpose sanctions on Iran beginning Aug. 6. U.S. President Donald Trump and Secretary of State Mike Pompeo have traded heated threats with Iranian President Hassan Rouhani and Maj. Gen. Qassem Soleimani, the leader of the Islamic Revolutionary Guard Corps' Quds Force.

Though both sides are certainly capable of direct physical attacks, conventional warfare is not in their immediate interests. Iran has embraced cyberattacks as part of its asymmetric response to its Middle Eastern rivals and the United States, and this latest round of belligerence will likely be played out through cyber actions. And even though Iran doesn't pose as great a threat as China or Russia, its persistence and reliance on unsophisticated, yet tried-and-true tactics allow it to be successful in both cyber espionage and disruptive cyberattacks.

Digital Over Physical

On July 25, Houthi militants backed by Iran successfully attacked a Saudi Arabian Oil Co. tanker, leading the state-owned energy giant to halt shipments through the strategic Bab el-Mandeb strait. However, nothing suggests that this attack was remarkably different than numerous similar Houthi assaults. And though a plot by Iranian intelligence to bomb an opposition rally outside Paris at the end of June demonstrated Tehran's intent to conduct extraterritorial attacks, its failure also showed the Islamic republic's limitations. The physical threat posed by Iran and its proxies to Western interests and to Saudi Arabia, the United Arab Emirates, other Gulf Cooperation Council members and Israel shouldn't be forgotten, but the asymmetric nature of the conflict between Iran and the United States means that Tehran is likely to rely heavily on cyber threats in an effort to strengthen its position.

On July 20, unnamed U.S. security officials warned NBC News that Iran was preparing to launch distributed denial of service (DDoS) attacks against U.S. infrastructure. And on July 25, Symantec Corp. reported on a new Iranian hacker group it called Leafminer. The group relies on well-established tactics to target hundreds of public and private organizations across the Middle East, Azerbaijan and Afghanistan. Given the increased risk of hostile cyber activity in the current environment, it is worth reviewing hallmark tactics associated with Iranian groups.

Trust Us

Iran has a well-documented history of using phishing (broad) and spear-phishing (targeted) attacks. Phishing involves persuading a target to open a corrupted file in an email, thus introducing malware to a particular device or entire network and granting the attackers access or control. In 2016, Iran unleashed a second round of attacks using the Shamoon malware, which in 2012 led to the destruction of thousands of Saudi Aramco computer terminals. The malware destroyed data and disrupted organizations across the Middle East. An IBM review of the attack in 2017 revealed that the malware was introduced to many of those organizations through the dissemination of resumes, cover letters and other job application materials, which concealed malicious scripts within seemingly innocuous Microsoft Word documents.

Also in 2017, an Iranian group dubbed APT33 (an acronym for advanced persistent threat) flipped the script, sending job recruiting materials to employees within Saudi Arabia's aviation sector. The materials included links that loaded malware onto the users' devices and granted access to their companies' networks. Iranian groups play the numbers game when it comes to phishing attacks. According to a March 2018 U.S. federal indictment, one hostile cyber campaign compromised 8,000 of an estimated 100,000 targeted academics. Though an 8 percent success rate is certainly low, it can yield high numbers when the target set is large enough. In that case, academics from 21 countries received emails expressing interest in their work; the messages contained links to websites mimicking their university's login page. Any credentials entered went straight to Iranian agents, who could use them to gain access to the legitimate university websites, revealing emails, research and contact lists.

But the attacks can be highly tailored to fit a situation. In 2016, a suspected Iranian operative posed as "Mia Ash," who was depicted on a fake Facebook page as an attractive young woman, struck up a relationship with an employee at a major U.S. consulting firm. After establishing trust, "she" sent the worker some documents to review as a favor. The malware they contained allowed the operative to gain access to records on several of the firm's clients.

Mitigating these attacks requires employee training and discretion when it comes to opening links or documents from unknown or untrusted contacts. But even a single successful attack can give hackers access to proprietary accounts and networks. Email screening and anti-malware programs can block known malicious software even if employees take the bait, but as long as humans are behind the keyboard, they will continue to be the weakest link when it comes to new scripts and exploits.

That Password Won't Do

Brute password attacks are much easier to defend against. The same group that was indicted for targeting academics also successfully compromised accounts at 36 U.S. and 11 foreign companies by simply scanning the internet for corporate email accounts and using some of the most common passwords to essentially guess their way in. It worked at least 47 times, meaning that at least 47 employees were using extremely weak passwords (think 123456789, or even "password"). The Leafminer group also used this tactic. A slightly more sophisticated spin on this tactic involves scanning databases for previously breached usernames and passwords and trying those passwords with similar usernames on other accounts. This practice yields access often enough. To strengthen security for usernames and passwords means not allowing the most common combinations and not allowing password recycling. Password management software can generate complex combinations and store them securely.

Infecting Everybody Who Visits

One of Iran's most active cyber groups goes by the name Charming Kitten and has been associated with at least two so-called watering-hole attacks, which target website visitors, this year. In July, the group disguised a malware file as a link to a cybersecurity conference on a Los Angeles Jewish community newspaper's website. Small organizations with low or nonexistent security budgets such as this website are more susceptible to this tactic. However, the Leafminer group proved more sophisticated, compromising websites owned by the Lebanese government, a Saudi health-care service and an Azerbaijani university in order to infect visitors. Charming Kitten has also concocted websites with addresses that mimic legitimate ones. It added ".net" to the domain name for the German news service Deutsche Welle (www.dw.com) and created the fictitious British News Agency to persuade inattentive targets to click links that download the malware.

A History of Mass Attack

There is good reason to heed the July 20 warning by U.S. security officials about a DDoS attack. From 2011 to 2013, Iran carried out a series of successful DDoS attacks against major financial institutions, disrupting their online services and costing them tens of millions of dollars. It even tried to shut down a hydroelectric dam in New York. DDoS attacks attempt to overwhelm networks with fraudulent requests designed to block legitimate users from accessing the services. The 2011-13 attacks served as a kind of wake-up call to companies of the disruptive threat that such attacks can pose to businesses whose customers have grown to rely on instantaneous, 24/7 connectivity. Even a few hours of downtime can lead to millions in lost revenue and reputational damage. While many services have cropped up in recent years to identify and block these attacks, the proliferation of connected devices — through the internet of things — means that attackers have more potential weapons to use. One such company dedicated to blocking DDoS attacks, Dyn Inc., was itself successfully targeted in a massive 2016 attack, which harnessed hundreds of thousands of unprotected devices.

As geopolitical tensions rise, Iranian cyber groups will continue — and likely increase — their targeting of public and private organizations.

But not all attacks are aimed directly at the end targets. The cyberattack cycle is defined by a continuous effort to increase access and authority in order to get closer to the intended target. In Iran's case, the prey includes the governments of the United States, Saudi Arabia and other Gulf countries as well as their private-sector partners. An attack might start by targeting an academic or private-sector employee who may have nothing to do with Iran but whose email account carries more legitimacy and is therefore more likely to persuade a follow-up target to open a corrupted document or click a malicious link. In intelligence parlance, a compromised email account can be used as the attacker's cover for status. Multiple campaigns attributed to Iran (as well as to other state-backed and criminal groups) have exhibited this behavior, highlighting the importance of always using discretion when opening files or clicking links, even when sent by seemingly legitimate accounts.

As geopolitical tensions rise, Iranian cyber groups will continue — and likely increase — their targeting of public and private organizations. The good news is that the tactics they have traditionally used can be defended against with awareness and knowledge of how their deceptions work. Iran plays the numbers game, but most people can avoid having their ticket punched.

Deciphering the War of Words Between the U.S. and Iran

2018-07-26T13:42:00Z

Highlights

The White House's bellicose threats against Iran are not simply a foreign policy diversion to distract from growing scrutiny over the Russia and North Korea portfolios; they are part and parcel of the Trump administration's blunt drive for regime change in Tehran.
As economic and social pressure in Iran intensifies under the White House's hard-line sanctions policy, the Iranian government will lock public anger onto external threats to curtail popular unrest.
Iranian President Hassan Rouhani will steadily lose political ground to hard-line conservatives as his government is forced to increasingly rely on the security apparatus to contain dissent and circumvent sanctions.
The probability of Iran attempting to shut the Strait of Hormuz remains low for now, but potential Iranian moves to harass naval vessels in the area, target Gulf energy infrastructure and ramp up parts of its nuclear program could risk inviting a U.S. military response.
A serious U.S. military escalation against Iran will hinge on the White House's willingness and ability to keep North Korea on a negotiating track. Russia will likely reemerge as an additional complicating factor to U.S. policy on Iran.

As the White House forges ahead with a "maximum pressure" sanctions policy against Iran, threats of war and regime change were bound to follow. In a not-so-subtle all-caps tweet late on July 22, U.S. President Donald Trump warned Iran it "will suffer consequences the likes of which few throughout history have ever suffered before" if it continues to threaten the United States. U.S. national security adviser John Bolton echoed Trump's doomsday threat the next morning, saying Iran "will pay a price like few countries have ever paid before." U.S. Secretary of State Mike Pompeo meanwhile took lead on the regime change angle. In a July 22 speech to a largely Iranian-American audience in Los Angeles, Pompeo railed against the "hypocritical holy men who amassed vast sums of wealth while allowing their people to suffer." He accompanied those remarks with tweets in Farsi addressed to the Iranian people expressing American solidarity with them against "40 years of tyranny."

Reviewing the Trump Playbook on Iran

The combative rhetoric fits neatly with the White House's Iran strategy to date. Similar to its handling of North Korea, the Trump administration, now stacked with Iran hawks, believes that in a best-case scenario a maximum pressure campaign — one that involves ditching the Joint Comprehensive Plan of Action, snapping back all sanctions against Iran and denying waivers to Iran's trading partners while threatening military action — could eventually drive the Iranian government back to the negotiating table to rewrite the nuclear deal. Short of that highly dubious outcome, at least during the Trump presidency, the White House has been remarkably open about its intent to use a combination of economic turmoil, propaganda efforts and potentially covert activity in collaboration with Israel and Saudi Arabia to create the conditions for regime change from the ground up.

The latter outcome, too, appears far-fetched. The Iranian economy is already under enormous strain, and that pain will be compounded when sanctions snap back in August and November. From the point of view of the White House, widespread protests early in the year in poorer parts of rural Iran, along with more recent demonstrations in Tehran among the merchant class, were signs of revolutionary potential. But it remains to be seen whether the forces behind those protests can converge into a mass movement, especially as U.S. bellicosity provides the regime with ample fuel to rally its people against enemy forces and justify a rising tide of crackdowns.

By design, Trump's Iran policy does not leave space for nuance in dealing with Iran's leadership. This in turn leaves little room for negotiation, at least with the current U.S. administration. Even though Iranian President Hassan Rouhani belongs to a more pragmatic faction and has a proven record of engaging with the West and pushing back against his conservative opponents, the White House's move to remanufacture a confrontation with Tehran has weakened Rouhani's position while favoring his hard-line rivals. While conservative media in Iran routinely seeks to discredit their moderate president, the same hard-line media outlets have been praising Rouhani ever since he more recently joined in their threats to block oil exports through the Strait of Hormuz. One such outlet even referred to Rouhani as the "Lord of the Strait" and Maj. Gen. Qassem Soleimani, commander of the Islamic Revolutionary Guard Corps (IRGC) Quds Force, warmly embraced the president in a recent letter as "the same Dr. Rouhani whom we knew and know, and who must be." Rouhani is at the same time facing heavy pressure in parliament over the deteriorating state of the economy and could be forced to rebalance his Cabinet soon with members of the conservative camp as his political capital continues to decline.

Weighing the War Threat

Whether the war rhetoric will translate into military conflict will depend on several factors:

Rouhani's political weakening and growing reliance on the IRGC to rebuild covert channels to circumvent sanctions risks steering Iran toward riskier behavior. The IRGC's navy, for example, could harass U.S. or allied military vessels, tankers carrying Saudi or Emirati crude oil, Saudi or Emirati offshore production platforms, or Iraqi or Kuwaiti loading platforms. Iranian cyber activity against regional economic targets is also more likely in this threat environment. The threat to close the Strait of Hormuz — and cripple the roughly 30 percent of seaborne trade and 18 million barrels of oil that transit the strait daily — is a loaded one. Not only would Iran be shooting itself economically in the foot by paralyzing its own energy trade, such a move would guarantee U.S. military action. Iran's Kharg oil terminal, which exports 95 percent of Iran's oil, would likely come under attack by U.S. and allied forces in such an extreme scenario.

On the nuclear front, Iran has been cautious so far in expanding its enrichment capacity within the bounds of the JCPOA while trying to maintain its economic channels with Europe. But as European options remain limited in the face of U.S. secondary sanctions, Iran could take formal steps to withdraw from the nuclear deal as well as the Additional Protocol to the Nuclear Non-Proliferation Treaty while ramping up parts of its nuclear program. The risk associated with all options is that they could invite a credible U.S. military response at a time when the United States is in tight collaboration with both Israel and Saudi Arabia, and all are bent on applying maximum pressure on Iran. Where the Iranian leadership tries to draw the line between pushing back against the U.S.-led pressure campaign and avoiding a clear path to war will depend heavily on the political balance and degree of policy coherence in Tehran and how much risk the leadership is willing to tolerate in the remaining years of the Trump administration.

The United States has the ability to surge military assets into the Persian Gulf and credibly threaten a military reaction to hostile acts by Iran. The main arrestor to a U.S. military response in dealing with Iran in the coming months stems from Washington's troubled negotiating track with North Korea. The White House's move to engage in diplomacy with North Korea has given space to China, South Korea and Russia to reestablish economic channels with Pyongyang, thereby complicating any attempt to return to maximum pressure tactics. U.S.-North Korean talks have predictably hit a logjam as Pyongyang tries to secure firmer political concessions and as the White House pursues a basic blueprint on denuclearization. While the current jam does not portend a collapse of the negotiating track just yet, it does expose just how raw North Korea remains on the Trump foreign policy agenda — at the same time as the administration attempts to ramp up its confrontation with Iran. The White House's fear of a spike in oil prices, the limitations on Saudi Arabia in balancing the oil market and the growing trade war threat to the global economy are additional constraining factors that could influence the pace of U.S. military threats against Iran.

Russia will also intersect with the U.S.-Iran escalation. As Trump expends heavy political capital in trying to keep talks alive with Moscow, Russian President Vladimir Putin is also trying to leverage his influence in the Middle East to steer Trump toward a broader bargain. To that end, Putin has recently tossed up a proposal in which Russia would attempt to contain Iranian military activity in southwest Syria and provide a buffer to Israel on its northern frontier. The plan is riddled with complications, including limits on Russia's ability to control Iranian actions on the ground. When the U.S.-Russia negotiation inevitably stalls, Russia can just easily pivot back to its spoiler role and further complicate U.S. and allied efforts in Syria. Russia could also float sales of advanced air defense system to Iran in its time of need to try and undermine U.S.-led military threats against Iran.

Back Under U.S. Sanctions, Iran Looks for a Plan B

2018-07-24T13:32:00Z

Highlights

Iran's strategy to get the European Union and other economic partners to push back against unilateral U.S. sanctions will fail.
As sanctions hit Iran's economy, the country will eventually have to resume negotiations with the United States, but it will try to wait until President Donald Trump leaves office.
In the meantime, Tehran will consider restarting its nuclear program as leverage in talks with the United States to keep other more important issues off the table.

The question of Iran's changing its response to the United States' withdrawal from the nuclear deal is no longer whether but when. Iran initially took a pragmatic approach to the news, predicated on other countries' willingness to push back against Washington and continue purchasing oil from the Islamic republic after U.S. sanctions go back into effect Nov. 4. But that outcome now looks unlikely. As a result, Iran will shift to a more aggressive response, including perhaps pulling out of the Joint Comprehensive Plan of Action (JCPOA) and even restarting its nuclear program to gain leverage in future talks with the United States.

The Sting of Sanctions

For Iran, the writing is on the wall. The U.S. sanctions against it have teeth, and so far, most U.S. allies seem reluctant to defy them. During a trip to the Continent early this month, Iranian President Hassan Rouhani couldn't get the guarantees he wanted for continued connection to the European banking sector. Then on July 12, two Japanese banks — including Japan's largest, Mitsubishi UFJ — announced that they would stop processing Iranian transactions once sanctions go into effect. Furthermore, Washington shows little interest in granting waivers to allow countries to import Iranian oil at reduced volumes. That means Iran's oil exports to U.S. allies such as Japan, South Korea and some EU countries could drop to zero. Japanese refiners indicated that they would stop importing oil from the Islamic republic by early October, while other countries such as India have begun reducing their shipments. Iran's oil exports fell from 2.6 million barrels per day to 2.3 million bpd in June.

Although the United States has yet to rule out waivers, it's becoming increasingly clear that Washington is following a maximalist strategy against Iran and that oil is a critical part of that strategy. The United States has already decided not to issue waivers for the European Union. (The bloc, however, is considering letting member states' central banks work directly with that of Iran to maintain some incentive for Tehran to stay in the JCPOA.) A U.S. delegation visited Turkey and India last week to push for their compliance as well. And now that Libya's oil production is coming back online, the United States has more room than ever to deny its allies' requests to keep importing Iranian oil. Even China — a rival of the United States — has not committed to maintaining oil imports from Iran. If the trend continues, Iran's oil exports could drop by as much as 1.6 million bpd by the middle of next year — far more than initially expected.

The pressure will likely be more than Iran can take in the long run. Its economy was already in rough shape before the United States left the JCPOA. From October to late June, the market rate for the Iranian rial went from 40,000 to the dollar to as much as 90,000 to the dollar. Steep increases in food prices at the end of 2017, moreover, sparked protests that carried into the new year. As the country's oil revenue dwindles, the discontent will doubtless mount. Iran, keenly aware of this risk, recognizes that sooner or later, it will have to come back to the negotiating table or else suffer economic collapse.

Negotiating on Tehran's Terms

When it does, though, the Iranian government will want to make sure its regional and defense policies, including its support for regional militias such as Hezbollah, are off limits in talks with the United States. Tehran managed to get assurances from Washington during discussions over the JCPOA between 2013 and 2015 that the United States would not pursue regime change in Iran. Nor did it have to give up its ballistic missile and cyber programs, its activities in the Persian Gulf or its support of proxy groups. Iran will resist conceding on these issues in future negotiations with the United States, despite the fact that U.S. President Donald Trump's administration is focused on curbing its regional strategy.

To that end, Tehran will consider resuming its long-range ballistic missile tests, its harassment of foreign vessels, including U.S. ships, in the Persian Gulf, and parts of its nuclear program. Developments on these fronts have already started emerging; the Islamic Revolutionary Guard Corps (IRGC) has recently threatened the Strait of Hormuz, while Supreme Leader Ayatollah Ali Khamenei has ordered the expansion of Iran's uranium enrichment capacity. Restarting these programs would give Iran something tangible to offer the United States in negotiations over sanctions without sacrificing more important aspects of its defense strategy. And by doing so, Iran won't necessarily violate the terms of the JCPOA, since it can argue that the goals of its nuclear program are peaceful and that its other activities are aimed at self-defense. Tehran still must tread lightly to avoid heavier punishment from the United States or the return of EU sanctions. But as the U.S. measures restrict Iran's economy and its options to trade with the European Union, Iran will have less reason to worry about alienating the bloc. While it will probably take care not to flagrantly breach the conditions of the JCPOA, Iran is looking increasingly likely to get at least some aspects of its nuclear program back underway.

The challenge for Iran is that any action on its nuclear program will give the Trump administration more ammunition against it and could even prompt U.S. or Israeli airstrikes on Iranian tactical targets. On the other hand, if Tehran goes into negotiations without the bargaining chip of renewed nuclear activity, it may have to yield to further U.S. demands on its nuclear program, such as higher limits on uranium enrichment, to safeguard its regional strategy.

Waiting for the Next Elections

For the Iranian president, this predicament will be difficult to navigate. The JCPOA's failure and Rouhani's inability to fulfill the economic promises he campaigned on in the 2013 and 2017 elections already have forced the president to take a more conservative line to fend off criticism from Iran's hard-liners. Knowing that Tehran will eventually have to return to talks with the United States, the IRGC and other conservative factions will try to expand their political influence in Iran to ensure they have a seat at the table. The Foreign Ministry and moderate politicians took the lead in previous rounds of discussions in 2013 and 2015, sidelining the Supreme National Security Council — a body dominated by the intelligence and military apparatus — all but excluding the IRGC.

To stake its place in future talks, the IRGC will keep trying to discredit and marginalize Rouhani in parliament, in Iran's unelected institutions and on the streets. It has even threatened to impeach the president, though removing Rouhani from office would leave the conservatives to take responsibility for the country's economic problems, perhaps to their detriment in the next elections. Should their efforts win the hard-liners the presidency in 2021, the next round of negotiations with the United States will play out much differently from the last two.

Regardless, the Iranian government will probably try to postpone negotiations with the United States until after the next U.S. presidential election in 2020 in hopes that Trump does not win a second term. A president from the Democratic Party would likely be less aggressive toward Iran and may even emphasize the nuclear issue, ignoring some aspects of regional strategy — as former President Barack Obama's administration did. The trick, of course, will be withstanding the Trump administration's pressure in the meantime. If economic conditions in Iran continue to decline, more large-scale protests like the ones that happened earlier this year or like the 2009 Green Movement could erupt. The IRGC will, in turn, try to suppress public unrest — all the while trying to gain control of the political system. But if it fails, the threat of a popular uprising may be enough to force the government to compromise in negotiations with the United States on the issues it once considered red lines.

U.S., Russia: What to Make of the Trump-Putin Summit in Helsinki

2018-07-17T15:39:00Z

U.S. President Donald Trump met with Russian President Vladimir Putin in Helsinki on July 16. The meeting was the first official summit between the two leaders and included a one-on-one session as well as a group-level discussion with senior Cabinet officials from both sides.

As Stratfor anticipated, no major agreements came out of the summit, though some of the key topics of discussion were highlighted in a joint press conference following the meeting.

Addressing Nuclear Arms Control

Arms control is a major point of contention between the United States and Russia, and the matter was high on the agenda. As expected, both leaders called for closer cooperation. Putin publicly stated his country's support for New START (a revamped Strategic Arms Reduction Treaty) as well as addressing Russian and American differences over the Intermediate-Range Nuclear Forces treaty. Moscow has reportedly handed a list of proposals to Washington addressing nuclear arms reduction, though actual progress hinges on meaningful political and military talks between both. Follow-up meetings, especially between senior figures with defense portfolios, will be a key indicator of progress on this issue.

Raising Syria and Ukraine

The conflicts in Syria and Ukraine inevitably came up, though specific details were sparse. On Syria, Trump referenced working with Israeli Prime Minister Benjamin Netanyahu — and it is worth noting that ahead of the summit, Putin met separately with Israeli and Iranian leaders. Beyond talk of working together to manage the conflict, it is important to see whether anything more substantive comes out of the Trump-Putin dialogue, such as Russia stepping up efforts to contain Iranian activity in southwestern Syria. It is also important to gauge what Washington could potentially offer in exchange. On Ukraine, the conflict in the divided country was not mentioned beyond a recognition of the need to implement the Minsk peace accords. Putin did say, however, that Russia would not seek to eliminate Ukraine's role as a transit state for the controversial Nord Stream 2 pipeline and that Moscow would honor contracts in accordance with Stockholm arbitration rulings.

Talking Economics

The issue of U.S. sanctions against Russia was not addressed directly, but Putin said that a high-level working group would be established, involving economic and business leaders from both countries. Russia's president also pointed out the notable participation of U.S. businessmen at the recent St. Petersburg Economic Forum. The easing or lifting of U.S. sanctions against Russian aluminum giant Rusal is possible and currently up for negotiation with the U.S. Department of the Treasury. However, the U.S. president is likely to face significant constraints from Congress when it comes to lifting broader sanctions against Russia.

Russia's Alleged Interference in U.S. Elections

The matter of Russia's inference in the U.S. 2016 presidential race took up a substantial part of the meeting, with Putin defending the election and stating outright that he wanted Trump to win. As well as condemning the ongoing special investigation by Robert Mueller, Putin offered joint cooperation in the investigation and suggested forming a group to battle cybersecurity threats. Such statements are unlikely to assuage those critical of Russia's meddling in the electoral process in the United States and could even have the opposite effect.

To wrap up the press conference, Putin referenced the recently concluded 2018 World Cup in Russia and offered his counterpart a soccer ball, saying as he did so: "The ball is now in Trump's court." While this memorable line capped the inaugural summit between the two leaders, it raises the question: What substantive exchange in concessions can actually take place?

Trump, Putin and a Contentious State of Affairs on the Continent

2018-07-12T13:33:00Z

Highlights

U.S. President Donald Trump's return to the NATO summit will bring with it a repeat of a set of familiar negotiating tactics, which are more likely to deepen the chasm between the White House and some security allies.
While U.S. relations with the Western European powers will remain strained, Eastern European allies will try to deepen their energy and security ties with Washington in hopes of muddying a potential U.S.-Russia rapprochement.
While negotiations with Moscow on a host of issues could serve a strategic purpose, that strategy would be greatly undermined if the White House inadvertently plays to the Kremlin on dividing the West.

With another NATO summit underway, the news media will go wild again this week in search of another iconic image to add to U.S. President Donald Trump's scrapbook on trans-Atlantic relations. Will the president top the 2017 shot of his shoving aside the leader of a tiny Balkan country? Will there be public outcry when he avoids endorsing another generic joint statement? After a handful of summits like these, Trump's "shock and awe" tactics on his European partners are getting awfully predictable. And no leader will take more delight in the stressed trans-Atlantic relations than Russian President Vladimir Putin, who will be meeting with Trump on the heels of the NATO summit.

Step 1: The Numerical Fixation

A familiar pattern will play out in Brussels when NATO convenes. As a set of tweets from the American president has already shown, there will be an excessive fixation on a particular measurement, which will be distorted in an attempt to make a valid strategic argument. Just as the Trump White House has obsessed over trade deficit figures to justify tariffs — while disregarding the substantial and growing trade in services — the U.S. president will harangue his European security partners again over their failure to spend at least 2 percent of their gross domestic product on defense. That demand is rooted in an old and reasonable American argument that European allies should be shouldering more of the security burden in NATO. That burden includes not only overall defense expenditures but also contributions of troops and materiel to conflict zones of common interest, as well as participation in U.S.-led ballistic missile defense systems, logistical support and investments in emerging technologies.

But the fixation on a single, noncommittal figure largely misses the point. By that measure, an economically weak country such as Greece, whose military budget largely covers pensions and salaries that are of little use to the bloc's collective defense, gets a pass from Uncle Sam for exceeding the 2 percent threshold. Meanwhile, France, which has taken the initiative in streamlining European defense for greater efficiency and power projection overseas and which has painstakingly made arrangements for the United Kingdom to remain a key piece of European defense despite exiting the union, would technically fall below the 2 percent mark. European NATO members will grit their teeth as the American president lectures them on defense spending as they try their best to steer the discussion toward a more comprehensive view of the bloc's defense integration and priorities.

Step 2: Hyperbolic Threats

The president can also be expected to bandy about inflated threats to try to jolt the Europeans into meeting his narrow demands. Last year, NATO members were thrown into a tizzy over Trump's tardy endorsement of the Article 5 principle on collective defense; this year, paranoia over the U.S. commitment to European defense has been fueled by leaks that the president is questioning the purpose of a 35,000-strong U.S. troop presence in Germany. To be clear, the United States is not about to abruptly pull its forces from a critical hub in Europe. However, it has been reducing its military footprint in Germany steadily since the end of the Cold War. Washington recalibrated the drawdown in the wake of Russia's annexation of Crimea in 2014. Rather than maintain a rigid force structure through large, permanent bases, the United States has been shifting to what is known as a heel-to-toe model, which would forward-deploy forces on a rotating basis to maintain an agile permanent presence on Europe's eastern flank. Only, persuading countries such as Germany, which has been more cautious in its relationship with Moscow as well as in its own defense spending, to carry the burden of these deployments has not been easy. Meanwhile, more vulnerable countries on the front lines with Russia, such as Poland and Lithuania, have persisted in their appeals for permanent U.S. basing. Poland, cleverly appealing to the White House's cost-burden sensitivities, is even offering to shoulder most of the expense of a permanent U.S. base. As the United States evaluates its options for adapting its force structure in Europe to maintain a check on Russia and potentially reward its more enthusiastic security allies there, a further consolidation of its forces in Germany would logically factor into those considerations.

Even so, Trump's characterization of the U.S. military presence in Europe as an overgenerous favor to so-called deadbeat allies such as Germany will only add to the complaints he is piling up against Berlin. German Chancellor Angela Merkel's softer approach toward managing European migration has earned her rebuke from the U.S. president and nearly cost her the survival of her own government. And the list of near-existential threats to the Merkel government doesn't end there. Trump has frequently disparaged Germany for maintaining trade surpluses in a captive EU market. His threat to impose 25 percent tariffs on automobiles and auto parts would deal a particularly hard blow to German manufacturers, who enjoyed a $16.7 billion surplus in the auto trade in 2017. According to the Ifo Institute of Munich, U.S. auto tariffs would saddle Germany with roughly $5 billion in losses. Even if Germany wanted to defuse the threat by offering to lower EU tariffs to match U.S. levels, Merkel faces an uphill battle in gaining the bloc's consensus on a limited trade deal when countries such as France, Spain and Italy see little need to make such concessions to the United States.

Step 3: Negotiate … Maybe?

An unrelenting fixation on simplistic measurements paired with big threats could, in theory, lay the groundwork for an ultimately constructive negotiation. But here is where things get especially worrisome for U.S. security allies. The White House's abrupt withdrawals from the Paris climate accord and Iran nuclear deal, along with its decision to drop exemptions and slap steel and aluminum tariffs on its allies, point to the severe limits on bargaining for a moderate outcome with the Trump administration when ideological convictions are at stake. And even as retaliatory tariffs are pounding the U.S. farm belt in the final stretch before congressional midterm elections, it is still an open question about how much economic pain the White House is willing to absorb in staying true to Trump's campaign pledges. The United States' European allies can take some comfort in the still-robust institutional bonds between the United States and its NATO partners that will prevent the president from pulling the rug out from under a critical trans-Atlantic security alliance. But on trade, where the president is wielding an extraordinary amount of executive power and where congressional checks have been slow to emerge, the economic foundation to U.S. security relationships will remain wobbly.

The Russian Enigma

As Trump plods across Europe, Russian President Vladimir Putin will be patiently waiting beyond NATO bounds in Helsinki, where the two are scheduled to meet on July 16. Sowing divisions in trans-Atlantic relations to prevent a united Western bloc from challenging Moscow is a core component of the Russian geopolitical playbook. And the U.S. president's willingness to openly quarrel with Western European allies naturally aids Moscow's strategy.

An unconventional president in the White House will not be the cure-all for Russia's geopolitical ills.

But an unconventional president in the White House will not be the cure-all for Russia's geopolitical ills. Its fitful quest for security on the European continent cannot be satisfied, leaving Moscow in a perpetual state of paranoia about Western intentions. That deep insecurity is all the more consuming because it faces intensifying challenges at home from a generation dubious of the need to satisfy Putin's demand for absolute control. At the same time, geopolitical dynamics in Eurasia are giving Moscow a bit of breathing room to deal with those challenges. To Russia's west, Europe continues to fragment — with the encouragement of the American president. To Russia's east, China is amassing significant economic, military and technological prowess to challenge the U.S.-led order. Despite historical animosity between the Eurasian powers, China and Russia are finding common cause to counterbalance the United States in an emerging multipolar world order.

Irrespective of who is leading from the White House, it is in the United States' geopolitical DNA to prevent the rise of a Eurasian hegemon. Since China is clearly the more enduring threat, it makes sense for the United States to do what it can to file down an emerging axis between Moscow and Beijing. So, for all the crowing over Trump's upcoming sit-down with Putin, there is a strategic angle to a U.S.-Russian dialogue on a variety of issues, including repairing and updating critical arms control agreements, setting mutual limits on military buildups, setting boundaries in Syria around Iran, breaking an impasse over eastern Ukraine, charting a denuclearization path for North Korea and specifying the price for easing sanctions. Even though each of these topic areas is riddled with constraints, from congressional and other institutional checks on the president to the sheer limits of Russia's influence in theaters like Syria, not all are condemned to remain at a deadlock.

The U.S. strategy to deal with Russia will remain inextricably linked to how it manages a balance of power on the European continent, however. And here is where Trump's playbook runs into problems. The United Kingdom is too consumed with its divorce from the bloc to assume its traditional balancing role for the Continent. That knocks out the third leg of the triad of great European powers, leaving an uneasy pair in France and Germany to prevent the Continent from descending into an all-too-familiar pattern of conflict. The ambitious union that was designed to erase conflict from the Continent remains under siege from a range of Euroskeptic forces trying to reclaim sovereignty from an embattled bureaucracy in Brussels.

Any astute observer of European history understands well that bureaucracy alone cannot unify a continent riven with rivalry and snuff out nationalist impulses. But it is one thing for the U.S. president to recognize and operate within the limits of an uncomfortable reality without losing sight of its core imperative: maintaining a balance of power in Europe is still essential to the United States' ability to manage growing competition with Russia and China and any peripheral distractions that may emerge. It is another thing to actively stoke nationalist embers on the Continent and encourage the unraveling of an imperfect bloc through trade assaults and transactional security threats. The latter is playing with fire.

The Balkan Wars Revisited at the World Cup

2018-07-10T13:23:00Z

Highlights

The World Cup brings national sentiments to the fore among even casual fans, especially in countries whose teams have qualified for the tournament.
Switzerland is home to thousands of Albanian refugees who fled the former Yugoslavia during its brutal and devastating conflicts two decades ago.
The politics of the Balkans' lingering ethnic tensions manifested on and off the pitch in the Swiss match against Serbia.

By Thomas M. Hunt and Austin Duckworth

I just returned from teaching a monthlong study abroad program in Lausanne, Switzerland, the home of the International Olympic Committee and myriad other athletic organizations. The city's international sporting institutions make it ideal for studying legal and political issues in sports. But events outside the formal classroom environment, such as the commencement of World Cup play, also proved meaningful to the students.

Watching the World Cup abroad is a special experience. For the monthlong duration of the event, whole cities come to a standstill, especially as their countries' teams compete. Waiters at cafes at times seem almost unable to take orders because they are so transfixed on what's taking place on the field of play. In Lausanne, my favorite spots to watch the matches were inevitably communal in nature: The terrace of a bar at the base of the nearly 800-year-old Lausanne Cathedral called the Great Escape or a craft brewery in an industrial section of the city called La Nebuleuse. Indeed, it was here that my teaching assistant Austin Duckworth and I watched what surely will be remembered as the most politically meaningful match in the group stage of this year's competition, the one pitting Switzerland against Serbia. Nationalism and the memory of Balkan conflict were on strong display.

How, one might wonder, did that most neutral country of Switzerland become involved in such a display? The answer has to do with the legacy of the old Yugoslavia. First pieced together as a monarchy in 1918, the nation became a socialist federation at the conclusion of World War II. Its authoritarian leader, Josip Broz Tito, kept the ethnically diverse (and notoriously quarrelsome) Balkan population under control using tactics that included setting up six regions, each with a distinct ethnic and historical character. Among those, Serbia was unique in that it possessed a set of self-ruling provinces, one of which was Kosovo.

After Tito's death in 1980, long-suppressed discord among Bosnian Muslims, Croats, Serbs and Kosovar Albanians threatened to explode. In terms of the latter two groups, the 1988 rise to power of Serbian President Slobodan Milosevic signaled a dramatic escalation in tensions. Determined to assert Serbian control over Kosovo, he introduced a series of measures designed to reduce the province's powers of self-governance. This, in turned, catalyzed sentiments for Kosovar independence among the ethnic Albanian population. Although the populace of the former Yugoslavia had been embroiled in civil conflict for years, it was not until February 1998 that outright warfare erupted over the issue of Kosovo.

By that point, thousands of residents already had fled the former Yugoslavia in droves, many making their way to Switzerland. Today, over 200,000 ethnic Albanians live in the country (most of whom came from Kosovo). Switzerland has in the main had a complicated experience with its Balkan immigrants. I was in the country back in 2016 when a Euro cup match between Switzerland and Albania occurred as anti-immigrant sentiments — encouraged by the conservative Swiss People's Party (the strongest in the country) — was intensifying. Even though the Swiss won that night, the Albanian expatriates were jubilant: This was the first time that their ancestral home country had qualified for a major international competition. I remember lying awake at night as a seemingly endless stream of honking cars driven by jubilant Albanian fans circled the city.

Things seemed different this time around. The Swiss national football team featured two players of Albanian descent — midfielder Granit Xhaka and forward Xherdan Shaqiri. As it happened, they scored Switzerland's only goals in the team's 2-1 victory over Serbia. During their goal celebrations, Xhaka and Shaqiri both made hand gestures representing the Albanian eagle, a nationalist symbol, in a clear dig at their opponents and an echo of the Balkan wars. In the end, each was fined the equivalent of more than $10,000. Moreover, team captain Stephan Lichtsteiner, a Swiss native who joined them in making the hand gesture, received a lesser fine.

In an interesting twist to the case, the Serbian football federation was punished to the tune of nearly $55,000 for the behavior of its fans at the event, which, according to FIFA, included the "display of discriminatory banners and messages by Serbian supporters as well as for throwing objects during the match." Serbian coach Mladen Krstajic was also sanctioned for a series of provocative post-match remarks comparing the referees' handling of play to the manner in which post-conflict human rights cases were conducted at the Hague's International Criminal Tribunal for the Former Yugoslavia — proceedings that Serbs overwhelmingly believe were one-sided and unfair. The focus of Krstajic's ire was a no-call (that did not draw even a video review) midway through the second half when Serbian striker Aleksandar Mitrovic was virtually tackled in the penalty area by a pair of Swiss defenders. "We were robbed," he said. "I wouldn’t give him [the offending player] either a yellow or red card, I would send him to the Hague. Then they could put him on trial, like they did to us." In a follow-up post on Instagram, the coach again invoked the theme of judicial bias at the tribunal. "Unfortunately," he said, "it seems that only the Serbs are condemned to a selective justice, once [at] the damned Hague and today in football."

The Swiss-Serbian match is unlikely to spark fresh debate on the actual record of human rights abuses in the former Yugoslavia. But it does help to illuminate several geopolitical realities. Migration patterns may have changed the face of modern Europe, but ethnic and religious tensions still bubble just under the surface. Indeed, they present steep challenges on a range of issues — security monitoring, law enforcement, and the provision of public services, to consider but a few. On the other hand, a number of advantages accrue to those countries that serve as major recipients of new population groups. Among them are younger demographics, greater cultural diversity and higher rates of societal innovation. In Switzerland's case, its once moribund national soccer team has even been transformed with the infusion of outside talent.

Is North Korea Balking at Denuclearization?

2018-07-05T16:51:00Z

Highlights

The political framework for North Korean denuclearization has been worked out at the top level, but the technical details still need to be fleshed out.
Even if North Korea continues to overhaul parts of its nuclear program, the lack of any concrete agreement means that there will not necessarily be a return to the heightened tensions of 2017.
The current situation is a continuation of the negotiation dynamic between the two countries in which the United States signals it is aware of all the details of North Korea's activities. As there is more disclosure, this dynamic will continue.
As long as the political framework precedes the technical concerns, there will be hope for a lasting breakthrough.

The Key Takeaway

It appears that North Korea has, at least until recently, been conducting activities that contribute to the development of its nuclear and missile programs. However, with no agreements yet in place, such activities do not necessarily signal unwillingness to reverse course in exchange for trade-offs from the United States. Signs will emerge in the coming negotiations between Pompeo and his North Korean counterpart that will show whether Pyongyang is truly committed to denuclearization – namely, through the disclosure of sites and clearer public statements by North Korea.

What Happened

According to recently released satellite imagery acquired by the Middlebury Institute for International Studies, North Korea appears to have expanded one of its missile manufacturing plants, the Chemical Material Institute located in the city of Hamhung, between April and June.

The plant produces solid-fueled ballistic missiles and warhead re-entry vehicles, both of which are essential components in North Korea's development of a credible nuclear deterrent. The imagery, released July 2, shows the construction of several new buildings on the site, which North Korean leader Kim Jong Un visited in August 2017 to review expansion activities. It also revealed construction at two facilities nearby; a new entry road was built at one and demolition work was completed at the other.

Some Background

At the historic June 12 summit between Kim and U.S. President Donald Trump, Washington and Pyongyang agreed to cooperate toward the eventual goal of ensuring the total denuclearization of North Korea. But they didn't establish any formal details or agreements.

In the weeks following the Trump-Kim meeting, speculation – especially in the U.S. media – has been mounting over whether North Korea truly intends to denuclearize and what exactly the process of denuclearization would look like.

The first of the lower-level post-summit meetings between the United States and North Korea began July 1, when officials from both countries met in the village of Panmunjom in the demilitarized zone. U.S. Secretary of State Mike Pompeo is also rumored to be preparing for a trip to North Korea soon, perhaps as early as July 6. This negotiation phase will be critical in determining whether the two sides can make real progress or whether they will fall back into the well-trodden territory of enmity.

The Broader Picture

The July 2 satellite imagery comes after a week of other reports that North Korea is continuing its missile and nuclear development program. The country has reportedly upgraded facilities around reactors at the Yongbyon Nuclear Scientific Research Center and, according to U.S. intelligence leaks, maintained the operation of secret uranium enrichment sites while continuing to manufacture Transporter Erector Launchers for medium-range missiles. The U.S. Defense Intelligence Agency is also reportedly circulating an internal assessment that North Korea does not intend to engage in full denuclearization.

What Really Matters

In the wake of these reports, the media has speculated that North Korea's construction activities indicate a lack of dedication to the denuclearization process. But as Stratfor noted even before the June 12 summit, the most difficult part of making progress in an outreach effort such as this is always the technical details. And those concrete details can't even be arranged without the greater political will and open communication of those at the top.

This will be a back-and-forth process, in which North Korea attempts to bluff and the United States uses a variety of tools to call Pyongyang out.

The United States and North Korea have provided evidence of that political will, and they are beginning the process of hammering out the details. And since no formal deals have yet been made, the North Korean actions between April and June cannot be construed as violations of any agreement.

The first concrete action in the process of denuclearization will be for North Korea to disclose the full scope of its weapons program and facilities. Washington is worried that Pyongyang may try to obfuscate that information. And indeed, it's possible that the week of media leaks about North Korean actions may be an organized attempt by the United States to show that it already has a deep knowledge of the country's weapons program.

The Attack on a Maryland Newspaper Shows the Need for Vigilance

2018-07-03T17:10:00Z

Highlights

The attack on a newspaper in Annapolis, Maryland, showed many of the characteristics seen in other mass public assaults.
Since 2011 the suspect had made threats on social media against the newspaper and several employees, who no longer worked there at the time of the attack.
The case highlights the challenges of monitoring persistent threats and the obligation of companies to warn employees and prepare them in the event of an attack.

At just after 2:30 p.m. on June 28, a man armed with a shotgun blasted through the glass front door to the newsroom at the Capital Gazette in Annapolis, Maryland. Stepping through the shattered door, he began to methodically shoot the newspaper's employees, pausing only to reload. He killed five and seriously wounded two others before police arrived and he surrendered. Without the quick police response — the first unit on the scene reportedly arrived within a minute — he probably would have killed many more.

The suspect (who I am intentionally refusing to name) is a 38-year-old man who had made threats against the newspaper for several years. The assault shows many of the characteristics of other mass public attacks, including warning signs on social media. His long history of taunts and threats also show that companies must stay vigilant and design plans to help employees survive such deadly attacks.

Grievances and Early Warning Signs

While the investigation is in its early stages, there were more than a few red flags. For the Capital Gazette, the trouble began after reporter Eric Hartley wrote an article about the suspect's conviction in 2011 for criminal harassment; the case involved a former female high school classmate the suspect had contacted on Facebook. He sued the newspaper for defamation in 2012, and the lawsuit was dismissed in 2013. He appealed, but an appellate court eventually upheld the dismissal in 2015. He also filed lawsuits against the county judge who ruled against him in the newspaper case and the woman he pleaded guilty to harassing.

In 2011 the suspect had opened a Twitter account — @EricHartleyFrnd — using the reporter's name and demonstrating his early fixation with the newspaper, its staff and people tied to his court case. He had made a number of veiled threats on the account until June 2016 and was silent except for one brief, vulgar Tweet shortly before he launched his attack. That Tweet pointed to another account — @JudgeMoylanFrnd — which also appears to have been set up by the suspect and likely refers to appellate Judge Charles Moylan Jr., who presided over his case. Given the timing of this post, the Moylan account appears to have been a sort of "legacy token" prepared beforehand to memorialize and claim credit for his attack.

Several photos on the Twitter accounts show Moylan, Hartley and former Capital Gazette Editor Thomas Marquardt with a threatening symbol superimposed on their foreheads. One of my Twitter followers helped me identify the symbol as the "brand of sacrifice" from a Japanese dark manga series called "Berserk." A wiki on the series says, "The lives of those who bear the Brand, from the last drop of blood, to the last moment of your agonizing death, will feed life to the new Child of Darkness." The Moylan account also has a photo of Hartley with a gun pointed to his face and a picture showing the phrase "But don't forget the grief" written on Marquardt's hand.

Marquardt kept a file on the suspect's threats and behavior, and in a June 28 Los Angeles Times interview, he said, "I said during that time, 'This guy is crazy enough to come in and blow us all away.'" Clearly the suspect's animus toward the newspaper continued after he stopped posting on the Hartley account.

It is quite clear that — as in most active shooter cases — there were numerous signs that in retrospect point to the attacker's intent to do harm. Indeed, media interviews with Marquardt and statements by the woman who was stalked indicate that they were fearful of the suspect and made those fears known to local law enforcement.

The Attack in Context

In this assault, the motivation was a personal grievance — the most common motive for mass public attacks — and not some sort of ideological or racial motive. Also, the attacker and the assault exhibit many of the features of this type of attack, as does the public and media reaction to it.

Among these mass-public-shooting characteristics are indications of mental health problem. The suspect, in this case, demonstrated obsessive behavior by stalking and harassing a former classmate, and through his court case and taunts against the Capital Gazette. This behavior was combined with an elevated sense of being wronged. A second feature of the attack was the site; the assault occurred at a business, the most common location for a mass public attack. Third, the suspect clearly communicated his violent intent on many occasions. Aside from the one vulgar Tweet, there is no indication yet that he leaked his intent to others immediately before the attack, but that could change as more evidence is uncovered. Finally, while there is no indication yet that the suspect had experienced a significant life stressor ahead of the attack, investigators are almost certain to find one, if not more.

As for the suspect himself, he matches the typical demographic profile for a mass shooter. He is male, which about 94 percent of mass shooters are, and is white, which 64 percent of such shooters are. An FBI study on the pre-attack behaviors of active shooters in the United States from 2000 to 2013 found that 40 percent of attackers used firearms they purchased legally, and in this case the suspect reportedly purchased his pump-action shotgun about a year ago. His stalking conviction was a misdemeanor, so did not preclude him from purchasing a firearm, and neither did the fact that the court ordered him to undergo counseling as part of his sentence. Incidentally, the FBI study also found that 62 percent of active shooters have a history of acting in an abusive, oppressive or harassing way.

Questions and Corporate Responsibility

At this point, many things about this attack aren't publicly known, but numerous questions about it need answering. First, did Marquardt pass on his file on the suspect to the current management of the newspaper when he left? Were the suspect and his communications ever analyzed by a forensic psychologist or a psycholinguistics specialist? The content and tenor of the private communications to the newspaper could be revealing. Finally, were the authorities and newspaper management aware of the meaning of the "brand of sacrifice" symbol placed on the photos of the people he was angry with?

Also, the suspect would have been bound to the attack cycle, meaning he would have conducted certain activities before he could launch his attack. The most obvious of these steps is the pre-operational surveillance of the Capital Gazette's offices. In his assault, he knew about the construction and configuration of the front doors and had a plan to defeat them, which could have come only through direct observation. And before approaching the front doors, he had barricaded the newsroom back door.

Companies have a legal "duty of care" responsibility to warn employees about potential threats.

Did anyone see the suspect near the building in the days and months ahead of the attack? He has a fairly recognizable face and wears his long hair in a ponytail. Such attackers also frequently possess an awkward or hostile demeanor. Reports are likely to eventually surface showing that employees had noticed him outside the building and could even include closed-circuit TV footage of him. Were Capital Gazette employees warned about him? Or if they had been at one point, had such warnings been updated? Educating employees about potential threats is an important practice. Corporate security is a companywide responsibility, and the employees have far more eyes than the security staff does.

Furthermore, not all attacks manifest themselves immediately after a threat is made. Some are months or even years in the making. The FBI study suggests that in 56 percent of mass shootings, people observe concerning behaviors at least 25 months before the attack. Maintaining awareness of longtime threats and tracking their communications for increasing aggression or worsening mental stability can be tedious and time-consuming. Unfortunately, many organizations discard the communications from known troublemakers without monitoring them for signs of escalation or deterioration — especially if a considerable time has lapsed without the person taking action.

Companies have a legal "duty of care" responsibility to warn employees about potential threats. They also have a responsibility to continue monitoring communications from potential attackers. These important protective intelligence roles can be ignored, but companies do so at their peril.

In an age of increasing mass public attacks, it is incumbent upon company leadership to design plans to help mitigate such threats. A preventive plan is not complete without providing employees with active shooter training that includes some practical exercises in the office so they know what to do in their specific workspace location. And such training must include information on what to do when a possible exit is blocked.

What's at Stake as the U.S. Considers Recognizing Israel's Claim to the Golan Heights

2018-06-28T12:43:00Z

Highlights

Israel is lobbying the United States to recognize the Golan Heights, occupied since 1967, as Israeli territory.
If the United States agrees, it will be recognizing territory captured by military means for the first time since World War II.
That move would add to a growing trend of America reshaping its relationship with post-World War II norms, possibly prompting more international instability.

Under President Donald Trump, the United States has been rapidly refashioning its approach to many of the established norms of the post-World War II world. It has withdrawn from the Paris climate accord and the Iran nuclear deal, challenging the expectations of how countries handle their involvement in international agreements. And it has begun using trade tariffs against not just rivals but also allies, reinterpreting the global trade norms meant to pool economic resources and deter war.

Now, Washington is contemplating yet another bold rejection of international standards. Rumors have emerged that Israel is lobbying for the United States to recognize the Golan Heights, occupied since 1967, as Israeli territory — and the United States is reportedly considering the move. Should Washington decide to recognize Israel's claim to the disputed area, it would mark the first time since 1945 that the United States has acknowledged the validity of land taken by military force. And it would have major implications on the current world order.

Establishing Postwar Norms

After World War II, the Allied powers declared that it was an illegal use of power for countries to gain territory by military conquest, and since 1945, international consensus has rejected this form of territory acquisition almost across the board. By breaking the norm of accepting land won by the spear, the Allies hoped to forestall a third world war by funneling tensions and competition into international institutions and rules of law instead of tanks and rifles. Indeed, this approach shaped many aspects of the 20th century's international environment, helping constrain Soviet-American competition to battles of influence rather than territory.

Of course, the norms did not go unchallenged. Turkey's invasion of Cyprus in 1974, Indonesia's invasion of East Timor in 1976, Iraq's invasion of Kuwait in 1990 and Russia's annexation of Crimea in 2014 are postwar examples of states attempting to claim territory through military force. In each of these cases, the United States — alongside most other great powers — held steadfast in the belief that such expansions were illegal, unjustified and to be reversed as soon as possible.

Global Implications

If the United States decides to recognize Israel's claim to the Golan Heights, it would be drastically changing course. The decision would have a different meaning than its other recent diplomatic decision in Israel: moving its embassy from Tel Aviv to Jerusalem. For Israel, having the United States recognize Jerusalem as its capital was a major symbolic victory, given its sacred status. But Israel has held the Golan since 1967, annexed it in 1981 and at this point has nearly 20,000 settlers and well-entrenched troops there. On the ground, the U.S. recognition of the Golan would change almost nothing. But globally, it would be a major shift, because the area was taken by military conquest rather than being designated to Israel before the end of the British mandate in 1948.

By undercutting the well-recognized norm of invalidating land taken by force, the United States would be taking yet another step toward distancing itself from diplomatic tradition, and the move could have major implications not only for how other disputed territories are handled, but also for what nations can expect from one another at this point in history.

Not all states would — or could — interpret the U.S. recognition of the Golan Heights as an invitation to return to a time before the 1648 Treaty of Westphalia, when kings and emperors took what land they managed with any sword their soldiers had. But Washington's decision would no doubt complicate other ongoing border disputes. Russia already hopes it can legitimize its occupation of Crimea through a grand diplomatic bargain with the West; it will see that approach as even more likely to succeed should the United States go ahead with a recognition of the Golan Heights. And China has rejected international rulings against its island-building in the South China Seas, arguing that international institutions are under the influence of powers hostile to Beijing's rise. Seeing the Golan officially change hands could encourage China to believe that if it waits long enough in the South China Sea, its claims will be recognized.

Additionally, some countries would be emboldened to take more aggressive military actions, because they would be less fearful that the United States would intervene. The opportunity to avoid U.S. involvement would be appealing to leaders who believe military force can resolve their territorial disputes, distract from problems at home or produce diplomatic leverage to resolve other disputes. (This is what prompted Iraq's Saddam Hussein to invade Kuwait in 1990, after he concluded that the United States would not intervene in such an invasion.)

The U.S. Driving Changes

America is increasingly approaching international affairs from a transactional perspective. And in the Middle East, it sees Israel as the most powerful partner to help it achieve its goals. It has thus sought to strengthen Israel — and, to a lesser extent, Saudi Arabia — in exchange for its loyalty to the United States. That was, in part, what drove the Jerusalem embassy decision, and could drive a decision on Golan, as well.

If the United States continues to embrace a transactional attitude to diplomacy by recognizing the Golan Heights as Israeli territory, it would be clearly indicating that it believes land can be traded and swapped as the situation warrants — that is, that the integrity of borders is not a principal with a potent enough return.

This will leave the enforcement of post-World War II norms largely in the hands of the Europeans, and the internal struggles of the European Union suggest that the Continent simply is not strong enough right now. Europe has failed in its efforts to halt tariffs or force countries to abide by treaties. Should the United States abandon the accepted norm of refusing to recognize land taken by force, the strongest of European states — Germany, France and the United Kingdom — will need to react. But despite their efforts, they may not be powerful enough to prevent other countries from rewriting the post-World War II order.

In the World Cup, 'Nationality' Is a Relative Term

2018-06-26T14:58:00Z

Highlights

Nearly 10 percent of the athletes competing in the 2018 FIFA World Cup are playing under the flag of a nation they weren't born in.
The issue seems to be drawing more attention in the current tournament than it has in years past as athletes born in France or Germany, for example, compete for countries from which their parents or grandparents emigrated.
Despite the buzz, the practice is not a recent phenomenon and traces back at least to the 1934 World Cup in Italy.

The intersections of sports and geopolitics generally fall into three categories: sports as soft power vehicle, sports as nationalist symbol and sports as metaphor for the global system. The ongoing FIFA World Cup in Russia, unsurprisingly, offers plenty of each; the quadrennial soccer tournament is second only to the Olympic Games in terms of geopolitical implications and imagery. Little more than a week into the tournament, we can check some boxes. Soft power may be the hardest to quantify while events are still unfolding, but we can keep the analysis simple. Just look at the range of political leaders and global power brokers who will be in Russia this month and will inevitably break bread with one another, debating a controversial goal from the evening's matchup before inevitably moving on to more pressing matters. Or, if that's too fanciful, note that one of the most viral images from the opening week of the tournament was not of an athlete, but of the VIP box handshake between Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman.

If the soft power dimension is subtle, the symbolic dimensions are not, and in the internet era, they make for easy content, often bordering on tropes. Country X is playing for redemption and national pride after an absence of Y years – 36 years, in Peru's case. Or country Z's diverse squad represents the changing face of its populace and the future to come, as is true of France and Belgium. African teams get a particularly reductive treatment: From Tunisia to Senegal, each national soccer team is "the hope" of a continent. (And when the African teams come up short, some erudite pundit will be there to connect their countries' colonial legacies to the current corruption and instability in African soccer governance. The analysis won't be wrong, but that doesn't make it any more scintillating.) Of the many geopolitical narratives running through the World Cup, the use of foreign-born players seems to be getting more attention than usual this time around, especially in the American press, which has been scrambling for content in the absence of the U.S. team from the tournament.

Grandfathered In?

Much has been made of the fact that almost 10 percent of the players in the tournament are competing under the flag of a nation they weren't born in. Only seven of the 32 teams competing are fielding squads whose players are all native sons. On Morocco's team, meanwhile, only six of the 23 players were born in the country. Unlike in other sports, where many countries have taken to naturalizing total foreigners for competitive glory, in the world of World Cup soccer, most foreign-born athletes are the children or grandchildren of immigrants from the country they represent. Their birthplaces reflect post-colonial relationships and globalized labor flows. France offers a case in point: You could assemble an entire 23-man soccer squad (plus four extra reserves!) of French-born players who are competing in the World Cup for countries that are not France. Germany, however, has spread its wealth of talent around the most, providing at least one German-born player to each of five potential opponents.

These patterns reflect not only the geopolitical metanarratives I've outlined, but also the realities of world soccer and global business. Player development is the forte of robust, bureaucratic soccer governing bodies like those in France and Germany. That a player of Tunisian heritage who was born and raised in Marseille would receive better training opportunities in the French system than he would have had he grown up in Tunisia is no surprise; neither is the fact that the same player might not make the cut for the superior French national squad. As a bit of a soccer obsessive, I find this sort of thing fascinating, and I have enjoyed seeing coverage of the trend, which certainly seems to be the new normal in world soccer. That said, I have also been amused to see this type of player movement portrayed as a relatively recent phenomenon, when the strategy traces back as far as 1934.

I've written in previous installments of this column that Adolf Hitler and his 1936 Berlin Olympic Games are generally considered the tipping point for the politicization of world sport. Though I tend to support this consensus, I would argue the 1934 World Cup in Italy must be part of this conversation as well. Eager to show the world the power and prowess of fascist Italy, Benito Mussolini scored a major victory when he secured the right to host the 1934 tournament. Simply hosting wouldn't be enough, of course, so Il Duce threw his weight behind two efforts. An ambitious construction program to build world-class stadia would demonstrate the nation's industrial and economic might. But more important, putting together a championship team, one that could work together to dominate the opposition in an almost militaristic fashion ... well, what better symbol of fascist ideology could there be?

Italian Enough to Play

To understand just how seriously Mussolini took soccer as a political tool, we need to go back even further, to 1926, when he installed fascist leader Leandro Arpinati as the head of Italian soccer. (Arpinati would later serve as undersecretary of the Interior Ministry and as head of the Italian National Olympic Committee as well.) The new soccer chief oversaw a plan to consolidate the previously scattershot Italian soccer system with the clear goal of developing talent. A set of rules known as the Charter of Viareggio established the modern Italian league system, made professionalism legal and barred all foreigners from playing in the country. But as John Foot writes in his excellent history of Italian soccer, Winning At All Costs:

"Like many Italian laws and rules, the charter's procedures contained a big loophole. Who was Italian, and who was a foreigner? Banned from buying Hungarians and Austrians, the top Italian clubs began to look for 'Italians' amongst the millions of their fellow citizens who had left the country to find fortune elsewhere in the world. The hybrid category of the Italian oriundo (a person of Italian extraction) became part of the footballing parlance."

By the time of the 1934 tournament, the notion of the top oriundi playing for the national team was a foregone conclusion. On the surface, this arrangement would seem to contradict Mussolini's desires to showcase the forza of the Italian populace, but it didn't take much imagination to put a proper nationalistic spin on the inclusion of one Brazilian- and four Argentine-born oriundi. These men were not cheap imports; they were the living proof of the Italian people as an imperial, global force. Observers likened the foreign-born players to soldiers donning military uniforms – an apt connection, given Italy's conscription rules at the time. Histories of the squad always include a famous quote from the legendary manager Vittorio Pozzo, who suggested that men who could die for the country should be able to play for it as well.

A Winning Strategy for Italy

With the oriundi ensconced in important roles on the squad, the Italian team eventually lifted the championship trophy. Whether they earned it fair and square is a historical debate for another day. Plenty of evidence seems to suggest that Mussolini did his best to influence the referees and that several decisions in the Italian matches were questionable. To their credit, though, many of the squad's players also claimed victory in the 1936 Olympics and in the following World Cup in France in 1938.

The veracity of the 1934 title notwithstanding, Mussolini's negotiation of Italian identity and citizenship in the service of sport and nationalism is telling. The global system may look quite different today than it did between the world wars, but the normalization of player movement in pursuit of sporting success suggests that this beautiful, maddening game is still about more than the final score.

Bending the Internet: China Weighs Commercial Growth Against Government Control

2018-06-21T13:24:00Z

Highlights

China's government will try to drive economic growth with the Internet Plus initiative, a plan to integrate innovations such as automation, big data, artificial intelligence and the internet of things into all aspects of the country's economy.
In doing so, Beijing will maintain a firm hand over the internet using an array of strict laws and interventions.
The Chinese state, however, will also try to avoid restricting tech companies to the point of discouraging the innovation it needs to bring Internet Plus to fruition.

From a Western perspective, the internet in China is as locked-down as it gets. The country's massive firewall has been filtering global content for decades, and the Communist Party is as committed as ever to centralizing control of the internet and the information it transmits. To achieve that end, the Chinese government uses every trick in the book, deploying bots on social media platform Weibo — where the automated accounts make up an estimated 40 percent of the user base — devising rules to govern internet use and arresting violators.

Yet Beijing considers the internet an opportunity as much as a threat. The economic incentive to keep it free enough to foster innovation is huge for China. Some of the world's most technologically proficient internet and tech firms, in fact, operate behind the "Great Firewall." The rise of companies such as Baidu, Alibaba and Tencent has helped sustain China's economic growth, and their continued success is a central component in the country's long-term online strategy, dubbed Internet Plus by Chinese Premier Li Keqiang.

Launched in 2015, Internet Plus is a five-year plan to integrate technologies such as automation, big data, artificial intelligence and the internet of things into nearly every aspect of China's economy. The government will maintain a firm hand over the process and is even using its internet monitoring to build a social credit system for evaluating its citizens. Since the internet will be central to China's economic growth from now on, striking the right balance between control and innovation in its internet policy will be crucial for Beijing.

As President Xi Jinping relies on China's formidable cybersecurity laws in his quest to centralize power and cement the Communist Party's supremacy, he will also have to weigh the effect of Beijing's bureaucracy on innovation. The question won't be so much what freedoms citizens have online, but rather how much the hoops Chinese businesses have to jump through limit the connectivity they need to thrive. So far, the government has left domestic internet companies to grow practically unchecked while ensuring that the Communist Party and its support play a central role in their success. But if the interests of the tech sector diverge from those of the Party, the state will be able to step in as needed, thanks to its control over the internet, and the assortment of tools Beijing has cultivated to enforce it.

The U.S. and China Escalate Their Trade Tiff With Tit-for-Tat Tariffs

2018-06-19T13:22:00Z

Highlights

Soon after the United States announced that it would move forward with tariffs on about $50 billion worth of Chinese imports, China responded with a $50 billion tariff announcement of its own.
The tariffs would not come into effect for a few weeks, giving negotiators on both sides time to sit down. But the atmosphere between the two economic juggernauts has only grown testier.
The United States is apparently mulling tariffs on a further $100 billion worth of Chinese imports, risking a further escalation in their trade dispute.

The latest exchange of tariffs between the United States and China has increased the risk of a full-blown trade war that would have wide-ranging effects on the global economy. After the White House announced June 15 that the United States would move forward with 25 percent tariffs on $50 billion worth of Chinese imports, Beijing announced reciprocal tariffs on an equivalent amount of U.S. goods.

The administration of U.S. President Donald Trump has indicated it is no longer willing to tolerate what it sees as unfair investment practices from Beijing, particularly as China's technological development begins to threaten U.S. supremacy. In addition to the tariffs, the United States is considering placing significant restrictions on Chinese investment into certain U.S. sectors. This is in addition to limiting the number of Chinese researchers and students allowed to come to the United States. Specific measures are expected to be announced in the coming weeks.

The new U.S. tariffs focus primarily on Chinese industrial sectors such as aerospace, vehicles, chemical products, industrial machinery, semiconductors and others related to the country's Made in China 2025 program, through which China hopes to become a world leader in advanced technologies. Commonly used consumer goods are largely absent from the list, but if the United States chooses to follow through with plans to pursue additional tariffs, those products could well become targets.

But first would come the recently announced U.S. measures, which will be instituted in two phases. Starting July 6, tariffs will be slapped on 818 Chinese goods (roughly $34 billion worth of imports) drawn from a list published in April. After that, will come a 60-day period during which tariffs on an additional 284 products (worth around $16 billion) will be subject to review and public hearings before they could take effect.

On top of this, the Trump administration is reportedly preparing another list of tariffs that could apply to an additional $100 billion worth of Chinese imports.

Soon after the U.S. announcement, the Chinese Ministry of Finance issued a list of retaliatory measures that could be implemented as soon as July 6. And like the U.S. tariffs, China's measures would be instituted in two phases. Notably, the list of targeted products includes ones such as soybeans and vehicles that could hit political nerves in the United States. And in a show of apparent frustration over what Beijing perceives as the United States abandoning the trade framework it had agreed to in May, China has warned that it will not fulfill an earlier promise to increase imports from the United States.

Why It Matters

The July 6 implementation date leaves room — but not much — for both sides to return to the negotiating table. China has already offered incentives to the United States to bring it back to trade talks, although they apparently were insufficient to ward off punitive U.S. measures But as China moves forward with its tit-for-tat retaliation and bolsters its negotiating position, it risks escalating the spat, especially if the United States chooses to further expand its own list of tariffs, a measure Washington has signaled that it is considering. If further U.S. action leads to a matching response from Beijing, the cycle of retaliation could grow even larger.

While the newly announced tariffs on Chinese products will have a relatively modest impact on the Chinese economy, it remains in China's best interests to avoid a full-blown trade war with the United States, especially as its efforts to rebalance its domestic economy enter a difficult phase.

What to Watch For

Will China and the United States choose to resume trade negotiations? Their willingness to talk — or not — will be a key indicator of their future trade relationship.
Will the United States move forward with tariffs against another $100 billion worth of Chinese products?
Who will win the factional struggle among White House trade and economic advisers? While U.S. Treasury Secretary Steven Mnuchin and U.S. Secretary of Commerce Wilbur Ross favor dialogue with China, U.S. Trade Representative Robert Lighthizer and trade adviser Peter Navarro have pushed for harsher measures.

Can Japan's Prime Minister Win a Third Term?

2018-06-14T16:41:00Z

Highlights

Japanese Prime Minister Shinzo Abe is up for a third term as the ruling Liberal Democratic Party (LDP) president this September.
If Abe is voted out, Japanese politics could enter a period of frequent leadership changes and instability, jeopardizing the LDP's economic reform and military normalization agendas.
It would also cause diplomatic challenges at a time when rivalry among global great powers is heating up and neighboring Asia-Pacific leaders are gaining power.
The LDP, which determines the outcome of the election through an internal party leadership vote, will need to calculate whether it's more of a liability for Abe to remain in power or for his departure to open up space for political weakness and uncertainty.

In Japan, Prime Minister Shinzo Abe is in for a major test over the next couple of months. At the end of September, he'll be up for a third term as head of the ruling Liberal Democratic Party (LDP), and thus another term as prime minister. Led by Abe, the LDP pulled off a solid victory in October 2017 snap elections, scoring a supermajority and leaving the opposition marginalized and in disarray. But with members of his party in full control of whether he stays on, the outcome will be either the end of Abe's political career or the final step toward his becoming the country's longest-serving prime minister.

The Recent Political History of Japan

The Liberal Democratic Party has ruled Japan for much of the post-World War II period, holding power in the Diet for all but three of the past 63 years. (That brief period of rule under the now-defunct Democratic Party of Japan ended in 2012, when Abe took the reins of the LDP and led the party to victory.) Since then, there has been only one LDP presidential election, which Abe won in 2015. It was the first uncontested LDP presidential victory since 1997.

Since 1989, the average length of a prime minister's tenure has been under two years, and Abe's six-years-and-counting have broken the trend. In March 2017, Abe even managed to secure a change to party bylaws that allowed him to serve for a third term. But this will only happen if his party decides it wants him to.

Why Abe Might Go

Despite presiding over the LDP's victory in October, Abe is by no means guaranteed to retain power. Numerous scandals that began in 2017 have proved stubbornly persistent, flaring up again in recent months and bringing Abe's approval ratings to the lowest levels of his tenure.

On the foreign policy front, things are worse. The prime minister is struggling to keep Japan from becoming irrelevant in the North Korea negotiations, while also facing stubborn U.S. trade pressure in the form of tariffs as well as a stagnating outreach effort to Russia.

Since Japanese politics dictate that the ruling party votes on its next leader — who then becomes the nation's prime minister — in an internal election, the LDP has the fate of Abe in its hands. And party members will need to decide whether they want to retain their longtime leader and gamble that he can revive himself, or take the risk of moving in an entirely new leadership direction and invite a return to the trend of constantly rotating prime ministers that characterized the past three decades.

Why Abe Might Stay

But there are a number of reasons why the LDP may decide that retaining Abe through 2021 is worthwhile, even considering his recurrent scandals and low approval ratings.

Right now, Japan is working on countering China, returning its military to its normal status as a tool of foreign policy, reviving its stagnating economy and dealing with demographic decline. And Abe's uniquely long tenure has allowed him to make major strides in Japan's long-term goal of again being an active player in the Pacific, after a half-century of pacifist foreign policy. In 2015, Abe secured landmark security legislation that enabled Japanese troops to deploy overseas as peacekeepers and to participate in select support missions for U.S. activities in the Pacific. And under his rule, Japan has forged deeper links with Southeast Asian nations in the maritime balance against China. Tokyo even managed to complete the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), a multilateral trading bloc in part meant to shape or contain China's economic rise.

On the domestic front, completing this deal meant overcoming powerful political interest groups. Abe's other goals are to finally reform the article in Japan's Constitution that ensures a pacifist foreign policy, to make concrete strides in renormalizing the military and to involve Japan as the United States develops a network of alliances and security partnerships throughout the Indo-Pacific region. Losing Abe would put many of the items on the LDP's agenda in jeopardy.

A new prime minister would also threaten Japan's political stability at a time when its neighbors are set for years of relatively stable leadership. In China, President Xi Jinping recently secured an open-ended term in office, which will allow policy continuity both on the foreign and domestic fronts. In South Korea, President Moon Jae In will remain in office until 2022. Russian President Vladimir Putin recently won another term in office, which may or may not be his last but will leave him in power through 2024. And, of course, North Korean leader Kim Jong Un is set to remain in his post for as long as his regime endures. If the LDP removes Abe, Japan may not have a leader with Abe's staying power for some time, and it could easily return to the cycle of shuffling through less influential prime ministers every couple of years.

Finally, the main opposition parties are in disarray, still reeling from last year's losses and lacking any potential champion or unifying force. In fact, the persistence of Abe's scandals is in part a manifestation of opposition efforts to retain some leverage from their weak position, by calling witnesses to the Diet, boycotting votes and keeping the scandal in the public eye.

Facing the Factions

So although Abe's poll numbers overall have been low (his Cabinet disapproval rating was 50.3 percent in May), his political career still has legs. Among LDP members, 45.8 percent favor Abe. And the upcoming contest for the next LDP president/Japanese prime minister will be an internal affair, contingent on party power dynamics and members' individual calculations.

As of 2014, the LDP election involves a total of 810 votes among two groups of party stakeholders: LDP Diet members and members of local party chapters. The 405 Diet members each get one vote, and the results of the party chapter votes are distributed proportionally. If that process fails to secure a winner, lawmakers and the LDP's 47 prefectural chapters will decide on a victor in a second round of voting. (The last runoff was in 2012, when Abe nearly lost to former party Secretary-General Shigeru Ishiba but won in the second round.) This means that politicking among the LDP grassroots will be important, but securing the support of as many lawmakers as possible will be key.

When it comes to winning lawmaker support, it will be important for Abe and any potential competitor to court the LDP's official internal factions. For much of its history as a monolith in Japanese politics, the LDP ensured internal competition and connection to the grassroots by establishing several official factions that constituted a "party system within a party." Up until 1994, these factions doled out money to lawmakers for campaigns in a sort of patronage system and held strong influence over candidates. But since the passage of transparency laws and electoral reforms almost 25 years ago, the factions have played a much less essential role.

However, the factions will matter in terms of mobilizing the votes of lawmakers in support of a party president. The faction heads, should they choose to step up, also serve as potential candidates with built-in constituencies. The LDP is currently divided into seven factions made up of the LDP Diet members and party leadership. Abe himself heads his own faction. His Hosoda faction is the largest, with 94 members, followed by the Aso faction (59) and the Takeshita faction (55). For now, Abe appears to enjoy the backing of the Aso faction and of the fifth largest group, the Nikai. The third largest faction, led by Minister for Reconstruction Wataru Takeshita, has yet to commit to Abe.

The list of Abe's potential challengers is short, leaving faction leaders with few alternatives to rally behind. Although others may yet emerge, there are two main contenders, though neither is a strong bet to defeat Abe at the moment. The first is Shinjiro Koizumi, the LDP's chief deputy secretary-general and son of long-ruling Prime Minister Junichiro Koizumi. Koizumi is popular with the public, but at 36, he would risk a potentially long and fruitful political career if he ran too soon. The second major potential competitor is Ishiba, who almost bested Abe six years ago. Ishiba's faction, Suigetsu Kai, has 20 members, and while that's enough to earn him an endorsement to run in the election, it's not influential enough to sway other factions.

Ultimately, even with Abe's popularity in jeopardy, the ruling LDP still has many reasons to keep him in his post. The prime minister's sustained tenure has allowed for a degree of continuity in both domestic and foreign policy, more important than ever given the continued rise of China and the changing dynamics in Korea. With the opposition on its back foot, few internal ruling party challengers to Abe and elections far off, the party has more leeway to stick with Abe. However, with months still to go before the vote, it will still be important for Abe to focus on ways to increase his popularity and score some foreign policy wins.

China Grows Anxious About Taiwan Reunification

2018-06-12T18:05:00Z

Highlights

Tensions between China and Taiwan have reached a decade high, but Beijing is unlikely to take military action unless Taipei declares independence.
The changing strategic picture in the region and increased tension between Washington and Beijing will only boost Taiwan's importance in the coming decade.
A younger, more independence-minded Taiwanese generation could clash with China's goal of achieving national reunification.
China has played a long game of carrot-and-stick with Taiwan, alternating between military threats and economic sweeteners, but the clock may be ticking down to a confrontation.

One of the biggest obstacles to China's campaign for "national rejuvenation," President Xi Jinping's plan to guide the country to world prominence, lies across 180 kilometers (112 miles) of water on the island of Taiwan. The mainland's drive to return China to a position of global strength — which it hopes to complete by 2049 — includes reunification with Taiwan. The remnants of the Nationalist Party that fled to the island during the civil war waged in China in the 1940s remain there, creating a situation that the conflict's Communist victors cannot accept. While successive governments in Beijing have tried without success to reclaim or to reintegrate the island, they did prevent it from pulling away. Their efforts to draw Taiwan closer have yielded mixed results, but over the past few decades, Taiwanese nationalism has continued to rise. Today, with the island's younger generations displaying an increasing desire for independence, the United States is showing signs of greater support for Taiwan. These factors have helped to push tensions across the Taiwan Strait to their highest point in a decade.

The Push and Pull Over Taiwan

Over the decades, Beijing has alternated between military intimidation and economic sweeteners to try to keep the government in Taipei in line. Recently, the mainland's elevated military posture along with increasing diplomatic coercion and heated rhetoric about reunification have strained relations with Taiwan. A growing willingness by both Taipei and Washington to break cross-strait protocols has aggravated tensions. As it applies increasing strategic pressure on China, the United States has moved to increase official communication and defense cooperation with Taiwan while boosting arms sales to the island. The current U.S. administration is not the first to challenge the "One China" principle — mainland China's view that it has sovereignty over Taiwan — but the changing balance of power between the mainland and island is heading into a pivotal period.

The growth in military and political might that has accompanied China's economic rise has transformed the geopolitical landscape in the Asia-Pacific while increasing Beijing's willingness to assert its will on its periphery. For China, Taiwan is a last holdout to its long-awaited national reunification and a critical missing piece in its strategic attempts to break through the first chain of islands off East Asia's coast. By securing Taiwan, China would gain a direct route into the wider Pacific unencumbered by geographic chokepoints, and it has shown a growing willingness to use its burgeoning power to achieve that objective.

The United States, in response, is increasingly pushing back against Beijing's assertiveness. It is challenging China's economic rise with threats of punitive economic measures, but countering Beijing's growing naval power may be more difficult. Taking on China's maritime expansion will require greater U.S. naval engagement in the Indo-Pacific as well as closer collaboration with regional allies. Taiwan is a key cog in such a strategy, given its location along the first island chain as well as its potential role as an "unsinkable aircraft carrier" within striking range of the mainland.

Rejuvenation and Reunification

During its history, China has ruled Taiwan indirectly for long spans. But the island has also been home to European and Japanese colonies. Today, Beijing remains resolute in achieving reunification. While it has historically been willing to bide its time in regards to Taiwan, its urgency to end the separation is growing. Three trends are fueling this drive. First, China has a self-imposed deadline to "achieve national rejuvenation" by 2049 — the 100th anniversary of the establishment of the People's Republic of China — and the country's leaders may want to make tangible progress toward reunification with Taiwan sooner than later. With term limits on the Chinese presidency removed, Xi could attempt to address reunification during his tenure.

Second, previous attempts at unity have not borne fruit. After several failed tries over the past few decades, including conducting intimidating offshore missile exercises in 1995 and 1996, Beijing primarily has sought to use economic interdependence as a tool. China's leaders had hoped that closer economic ties would convince the Taiwanese that their interests are interwoven with the mainland's, decreasing the popular appeal of independence. But Taiwan's generational change and a rapidly shifting strategic environment have upended that effort. Between the push for independence and the willingness of rivals to elevate the island's stature, China's ultimate concern is that Taiwan will only drift farther out away.

Finally, Beijing is increasingly concerned that the understanding of the "One China" policy — under which the United States recognizes Beijing as representing China — could be at risk. The United States could move closer to recognizing Taiwanese independence or could adopt a more assertive and visible military presence on the island. A direct U.S. military presence would not only greatly complicate China's options on unity but also ensure that China would find itself at war with the United States if it tried to use its military to force reunification.

Between Two Giants: Taiwan's Future

Taiwan's path ahead is uncertain and risky. It sits between two giants locked in a great power competition, and its limited international clout and increasingly outmatched military puts it at a disadvantage. Washington's attempts to elevate its ties with Taiwan and improve its military capabilities are certainly welcome in Taipei, especially because they allow the island to access military technology and equipment that previously had been denied. Still, U.S. guarantees for Taiwan remain ambiguous and untested.

Taiwan remains rightfully suspicious of the depth of U.S. commitment and aware that the United States could reverse course and bargain away their relationship as part of a grand settlement with China. Furthermore, Taipei is caught between the growing sentiment both within the ruling Democratic Progressive Party and among the younger generations for independence and the deepening resolve in Beijing to prevent it. Taiwan's freedom to maneuver is limited and at perpetual risk of spilling over into conflict. These conditions are forcing Taiwanese President Tsai Ing-wen to tread carefully, lest her country become embroiled in the broader U.S.-China confrontation.

And despite China's increased urgency to act on reunification, the current level of its military capabilities still limits its options. Right now, any Chinese military operation against Taiwan, from a blockade to a direct amphibious assault, would be exceedingly difficult and risky, especially if the United States intervenes. Given the expectations that China's military capabilities, particularly in comparison to Taiwan's, will continue to increase, it would make more sense for China to wait for its armed forces to grow more powerful before even considering a military operation against Taiwan.

The tension between the wisdom of waiting and the urgency of acting is expected to weigh heavily on China in the years ahead. Still, absent a sudden and pivotal event such as a Taiwanese declaration of independence, it is unlikely that Beijing would resort to any military option before at least 2030, by which point Chinese military strength is forecast to have grown significantly. The only certainty is that reunification will remain a core objective for Beijing.

Motive Matters: Why the Austin Bomber Wasn't a Terrorist

2018-03-27T15:25:00Z

In the Austin case, Conditt left a lengthy recording in which he reportedly confessed to the bombing spree and even outlined how he constructed each of the devices he deployed. However, what he did not provide in that message was any indication of motive based on ideology, hate or politics. In fact, according to an account of the recording published by the Austin American-Statesman, authorities have noted that Conditt felt no remorse for the killings, describing himself as a psychopath.

The fact that Conditt's first three bombs killed or wounded four members of racial minority groups led many (including myself) to initially suspect that the bombing campaign was being conducted by a white supremacist. However, the fact that his fourth bomb was planted in an area of the city populated mostly by white residents (two of whom were hurt) and that at least one of the bomb-laden parcels he shipped via FedEx was being sent to a white woman show that Conditt was not targeting minorities exclusively. Before he was stopped, Conditt was also reportedly searching addresses in Cedar Park, a predominantly white Austin suburb, to find more victims. After the first three explosions, many people ascribed an anti-minority motive to Conditt's actions, and it has been difficult for some to abandon that theory.

The bottom line is that despite the fact that a white bomber killed two people who were racial minorities and wounded two others, there is no evidence to suggest that this was a hate crime or an act of domestic terrorism. It is quite possible to terrorize a city without being a terrorist, which brings us to the key question: Just what is terrorism?

The Nature of Terrorism

At its heart, terrorism is a form of communication — violence that sends a message. As I've written before, early terrorism proponents like anarchist Johann Most considered terrorism to be a powerful form of propaganda. Most famously, he referred to terrorism as "propaganda of the deed."

Violence has always been a part of the human condition, and communities of people have frequently been terrorized by the application of violence: consider the terror created by Viking raiders, the Mongol hordes or various waves of Hunnish conquest. However, by definition, terrorism is a specific type of violence that is applied for a specific political purpose, usually to express opposition to a government, or the policies of that government.

For example, the anarchists who invented the modern concept of terrorism in the Victorian Era sought to overthrow both monarchies and capitalist democracies and attacking royalty, industrialists and even assassinating U.S. President William McKinley. Since then, a wide variety of anarchist, Marxist and Maoist groups have practiced terrorism in an attempt to foment revolution and overthrow regimes. A variety of nationalist and separatist groups, like the Irish Republican Army and the Basque ETA, have also used terrorism in pursuit of their independence.

Within the United States, in addition to anarchist terrorism, there is also a modest history of Marxist terrorism by groups seeking to cause an uprising to overthrow the U.S. government, or force the United States to grant independence to Puerto Rico. There has also been a long, bloody history of white supremacist terrorism in the United States that involved groups such as the Ku Klux Klan, the Order, and the Covenant Sword and Arm of the Lord. Among other things, white supremacist terrorist groups have sought to oppress minorities, inspire a race war and overthrow the U.S. government. Indeed, until the 9/11 attacks, the April 1995 Oklahoma City bombing was the deadliest terrorist attack in U.S. history.

Defining Terrorism

There is a narrative currently circulating that white males are never considered terrorists, only Muslims are, but for the life of me I don't understand how people who lived through the Oklahoma City bombing, the hunt for serial bomber and domestic terrorist Eric Rudolph or the investigation, trial and execution of white supremacist serial murderer Joseph Paul Franklin could ever buy that narrative. Even more recently, white supremacist Buford Furrow was charged with terrorism after a 1999 shooting spree and Jerad and Amanda Miller thought they could spark a revolution against the United States by murdering police officers in June 2014.

As I've said before, it is entirely possible to terrorize a city — or even a country — without being a terrorist.

Now, in some cases, even where there is a political motive for a killing, it is simply easier to charge a suspect with capital murder than it is to attempt to prove the elements required for terrorism. Federal terrorism charges can also be difficult in cases where the person who carries out an attack is not tied to a designated terrorist organization. This was the case with Mir Amal Kansi, who murdered two CIA employees and injured several others in a shooting at a gate to the CIA compound in January 1993. He was tried and executed on state capital murder charges in Virginia.

But additionally, while the Patriot Act provided a definition for domestic terrorism as:

an attempt to "intimidate or coerce a civilian population; to influence the policy of a government by intimidation or coercion; or to affect the conduct of a government by mass destruction, assassination, or kidnapping."

There simply is no domestic terrorism law, and no one can be charged under federal terrorism statutes unless they are linked to a designated terrorist organization. State terrorism laws vary widely, and some states do have the ability to charge someone with terrorism, even if there was no political or ideological motive.

However, this does not mean that federal prosecutors go easy on domestic terrorist subjects, even when they are white. Charleston church shooter Dylann Roof was sentenced to death in January 2017 after being convicted on a 33-count federal indictment, including nine counts of using a firearm to commit murder and 24 civil-rights violations. Federal prosecutors went forward with the capital case against Roof despite the fact that he had pleaded guilty to murder charges in state court and was handed nine consecutive life sentences.

I am certain that if there was evidence that Conditt conducted his bombing spree for some ideological motive that the federal, state and local government would have shared that information with the public. Considering that he's dead, there would be very little reason to hide such information.

As I've noted, it is possible to terrorize a city or even a country without being a terrorist. Some notable examples of this include David Burkowitz, the "Son of Sam" killer who terrorized New York for more than a year in the 1970s; the "Zodiac Killer" who operated in Northern California in the 1960s and 1970s; Jack the Ripper in Victorian London; and George Metesky, the "Mad Bomber" who conducted a spree of deadly bombings in New York that lasted 16 years in the 1940s and 1950s. In 2017, Stephen Paddock conducted what was perhaps the deadliest lone, armed attack on U.S. soil ever when he murdered 58 people in Las Vegas, but he did not appear to be driven by politics or ideology. This is an important point: Despite the severity of his crime, Paddock's attack highlights that the classification of a crime as terrorism is not based on its scale, but rather on the intent behind it. What propaganda of the dead was Paddock attempting to create? Indeed there have been several far less spectacular attacks — and even many failed attacks - that have been properly labeled as terrorism because of the attacker's political or ideological motive or affiliation with or support of a terrorist group.

Until evidence surfaces that proves otherwise, Conditt is merely the latest in a long line of twisted people who sought to kill and terrorize for a reason other than terrorism.

This article originally appeared on Stratfor.com

Why Peru's Impeachment Vote Won't Rock the Boat

2018-03-22T18:26:00Z

Editor's Note:

After this assessment was penned, Peruvian President Pedro Pablo Kuczynski resigned March 21 over allegations he bribed opposition lawmakers to support him during an upcoming impeachment vote. His resignation produces the same outcome that impeachment would have.

Peruvian President Pedro Pablo Kuczynski has gone from the frying pan to the fire. Just three months ago, Peru's embattled president survived impeachment proceedings over allegedly illegal payments, and now his legislative foes are circling again in a bid to unseat him in a March 22 session. But regardless of the short-term political fallout surrounding Kuczynski, instability is unlikely to blight Peru in the long term: Even if the president is impeached, the economic road ahead for the world's second-largest copper producer appears smooth — a few short-term bumps notwithstanding.

The Bell Tolls for Kuczynski

The opposition Popular Force is again leading the charge against Kuczynski, having previously failed to dislodge him in a December 2017 impeachment vote. This time, the president is facing accusations that he failed to report consulting payments received from Brazilian construction giant Odebrecht before entering office.

If two-thirds of the 130-member Congress vote to impeach Kuczynski in the March 22 session (lawmakers could debate and approve the proceedings on the same day), a weak government under Vice President Martin Vizcarra would assume the reins of power until elections in 2021.

But even if Kuczynski's foes succeed in ousting him, the direct political effects of the impeachment on Peru will be temporary. Compared to other countries' leaders, Peruvian presidents are exceptionally weak. Congress is unicameral and parties coalesce around individual presidential candidates whose popularity (and share of Congress) declines throughout their careers. As in neighboring Brazil, their ability to remain in power relies on their deftness at managing a divided Congress in which their party is likely to form a minority in the legislature. In such a system, it is difficult for any single party or bloc to gain a congressional majority, even if its leader is popular enough to capture the presidency. Accordingly, Peru's divided political scene severely complicates a party's ability to simultaneously control both the legislature and the presidency — unlike neighboring countries in which populist leaders can rapidly gain momentum in Congress.

Strength in Division

The fragmented political scene that enabled Kuczynski's impeachment will be the main reason for Peru's stability in the long run. Aside from the immediate ramifications and recriminations of Kuczynski's possible impeachment, Peru is an unlikely place for a populist challenger to emerge against an existing political order; the deep political divisions effectively negate the possibility of a swing away from the country's overwhelmingly centrist politics over the next decade. Peru's poverty makes it fertile ground for populism, but the sheer number of parties in the system espousing divergent political views will blunt the intentions of any leader seeking to upset the apple cart.

The absence of an effective political left in the country also eliminates another potential source of change to the status quo. Peru's economic inequalities could incubate a leftist populist challenge to the established political order, but the country remains largely hostile to ideas from that side of the political spectrum. The insurgency by the Shining Path in the 1980s and 1990s stigmatized leftist and pro-Communist political figures, while Alberto Fujimori's long, authoritarian rule in the 1990s hindered the rise of any strong socialist parties after the end of the Cold War. Today, the far-left holds just 20 seats in Congress, although internal feuding resulted in a split into two parties in 2017.

A version of right-wing populism could triumph in Peru in 2021, although it is unlikely to alter the country's current political foundations. The conservative-leaning Popular Force is the largest political party in Congress, and its likely candidate, Keiko Fujimori — daughter of the aforementioned 1990s president — remains highly popular. Fujimori, who lost the 2016 election to Kuczynski by only 40,000 votes, stands a good chance of winning the presidency in 2021 and — if the stars align — of even gaining a legislative majority. But even if Popular Force scored a double success, Fujimori is an established political figure whose political orientation holds few surprises for the private sector or foreign investors. Although she commands significant approval ratings in Peru's poor, rural periphery, Fujimori's brand of populist politics is mild by regional standards, and she is more interested in earning votes for the next election than in upending the country's political stability with controversial proposals.

With so many splits, Peru's political system is always likely to produce day-to-day political drama, simply because there are few impediments to Congress turning on weak presidents. The country's current leader could depart on March 22 or stumble along amid the ever-looming threat of new impeachment proceedings, yet neither alternative will impinge upon Peru's stability. Political divisions in the country might leave presidents struggling to keep Congress content, but they also ward off populist attacks on the underlying political order that has guaranteed longer-term political and economic stability. March 22 might determine the fate of Kuczynski, but certainly not that of Peru.

This article originally appeared on Stratfor.com

To Russia With Caution

2018-03-20T19:01:00Z

Tensions between the West and Russia are ratcheting up in the wake of the nerve agent attack on Sergei Skripal.
The heightened hostilities will make day-to-day operations more challenging for foreign companies, nongovernmental organizations and journalists working in Russia.
In addition to the threat of government surveillance and harassment, foreigners will likely be the targets of increased violence from nationalists and nationalist gangs.

Just when it looks like relations between Russia and the West have hit rock bottom, they manage to reach a new low. It's a pattern we've been tracking for the last decade as Russia's security services have grown more aggressive in their tactics. And sure enough, tensions have flared once again following the attack on Col. Sergei Skripal, a former Russian military intelligence officer who, along with his daughter, was poisoned with a rare nerve agent in London on March 4. The British government has since announced that the nerve agent used in the attack was a novichok, Russian for "newcomer" — a substance Russia's chemical weapons program reportedly developed to bypass the restrictions of the Chemical Weapons Convention, which Moscow signed in 1993. The compound's use was likely meant as a calling card, a warning from the Russian government to current intelligence officers not to turn against the homeland as Skripal had.

After the novichok revelation, British Prime Minister Theresa May announced the expulsion from London of 23 Russian diplomats believed to be intelligence officers. The British government is also discussing the possibility of imposing new sanctions on Moscow, with the support of the United States and other NATO allies. But the Kremlin won't take these punishments lightly. Moscow already has kicked 23 British intelligence officers out of Russia and will doubtless snap back at new sanctions with measures of its own, as it did in response to sanctions over the invasion of Crimea in 2014. The escalating hostilities stand to make working and traveling in Russia even more difficult for Western companies and their employees.

Hostile Hosts

Relations between Russia and the West have chilled considerably since President Vladimir Putin's election in 2000, and the enmity is becoming palpable. A friend who has traveled all across Russia in his frequent trips to the country recently recounted how on a visit earlier this month, he sensed unusual hostility from ordinary Russians on the street. When he asked a security officer why the locals were treating him this way, the officer replied that it was because the Americans had killed more Russians in Syria than they did during the entire Cold War. He was referring, among other things, to reports that U.S. airstrikes in Deir el-Zour province killed dozens, if not hundreds, of Russian military contractors Feb. 7 when forces aligned with the Syrian government attempted to seize an oil field.

Though the accuracy of the security officer's statement is questionable — especially if one accounts for U.S. support to the mujahideen during the Soviet-Afghan war — the conflict in Syria does seem to explain some of the hostility. Russian state media seized on the bloody fight, and the U.S. contribution to the body count, to stir up nationalism and galvanize support for Putin in the runup to his re-election. The sanctions Washington slapped on Moscow in response to the death of Russian lawyer Sergei Magnitsky, to Russia's invasion of Crimea and to its interventions in the 2016 U.S. presidential election have only fueled the Russian public's rancor. And it's not just directed at the U.S. government or military, as my friend's anecdotal account illustrates.

Business as Usual?

For a variety of reasons, including corruption, confusing and sometimes conflicting laws and regulations, and organized crime, Russia has long been a challenging environment for foreign businesses. The blowback over Western sanctions and battlefield deaths in Syria will add yet another wrinkle for overseas companies and nongovernmental organizations active there. Beyond the repercussions for day-to-day operations, the mounting strain between Moscow and the West could have unpleasant consequences for the estimated 1 million spectators, corporate sponsors and athletes who will flock to Russia this summer for the World Cup. Many of these visitors, after all, will hail from the West.

Well before the attack on Skripal, and the subsequent death of a Russian businessman and government critic in London, we warned of the threat industrial espionage will pose to Western companies and executives during the World Cup. But these incidents and their fallout will no doubt make Russia's Federal Security Service (FSB) and Foreign Intelligence Service even more aggressive toward Westerners living or traveling in Russia.

Throughout its history, and increasingly over the last several years, Russia often has been a difficult place for companies from abroad to do business.

In 2016, Russian lawmakers passed the Yarovaya Law, requiring tech companies operating in the country, such as Twitter and LinkedIn, to store user data, limit encryption and help the FSB decipher encrypted messages. Regulators in Russia have since used the law to clamp down on virtual private networks, or VPNs, which foreign companies often use to protect proprietary data. In light of these restrictions, visitors to the country need to be careful about what data they bring in with them. They can assume that whatever they do bring in will be compromised. Tourists or business travelers may also consider using burner phones or computers — prepaid, disposable devices that will never be connected to a corporate or home network — for the duration of their stay. In addition, visitors should be aware that most high-end hotel rooms in Russia are wired for sound and video.

A Dangerous Fervor

Beyond increased intelligence attention, Western companies and travelers will probably face a greater threat of violence from Russian nationalists and nationalist gangs. Minorities and obvious foreigners in Russia have long been the targets of attacks from nationalist groups and individuals. The surging hostility toward the West will only encourage these kinds of incidents. One of the reasons Putin acts so aggressively on the global stage is that his demonstrations of bravado — like the annexation of Crimea — meet with overwhelming support from the public. In fact, the more brazenly he behaves, the higher his approval rating seems to climb. The international backlash over his actions, moreover, helps reinforce the narrative that other countries want to hold Russia back, which, in turn, perpetuates suspicion and antipathy toward foreigners.

Throughout its history, and increasingly over the last several years, Russia often has been a difficult place for companies from abroad to do business. But the latest developments between Moscow and the West are only going to make things worse — especially for British and U.S. companies, NGOs and journalists.

This article originally appeared on Stratfor.com

Pompeo and Circumstance: A 'Rexit' State of Affairs

2018-03-15T14:26:00Z

Highlights

The rise of loyalists in the White House risks weakening a critical check on President Donald Trump's foreign policy agenda.
CIA Director Mike Pompeo, tapped to be the next U.S. secretary of state, has backed a last-ditch diplomatic effort with North Korea as a long-term containment strategy against China.
Though the risk of failure in the dialogue with North Korea is high, Pompeo's push for denuclearization stems in part from the proliferation threat between North Korea and Iran.
As the Iran nuclear deal weakens and as sanctions pressure climbs again, Tehran will expend more energy on defending a regional sphere of influence.

The long-rumored "Rexit" has finally transpired and CIA Director Mike Pompeo has been tapped to replace Rex Tillerson as U.S. secretary of state. With a high-stakes diplomatic gamble with North Korea looming, an economic assault against China underway and an Iran nuclear deal on life support, U.S. President Donald Trump has switched out a cautious corporate outsider with a hard-line Washington insider to head up the diplomatic arm of the United States at a particularly frenetic time for U.S. foreign policy. So, what now?

Go for the Gold on North Korea

As CIA director, Pompeo has developed a deep understanding of North Korea's nuclear progression and understands better than most the tyranny of the timeline in trying to find a viable nonmilitary route that would prevent North Korea from threatening the United States with nuclear weapons. With no better options at hand, and with the clock ticking, Pompeo has firmly backed Trump's gamble to negotiate directly with North Korean leader Kim Jong Un in a last-ditch effort to find some semblance of a resolution. There are, of course, massive constraints wrapped around this diplomatic venture. For North Korea, a deal on denuclearization would have to encompass the United States' troop presence on the Korean Peninsula and perhaps even its own nuclear umbrella in the region. And, judging by the fate of former Libyan leader Moammar Gadhafi and the White House's current assault on the Iran nuclear deal, Pyongyang is rightfully skeptical of the White House's keeping its word in any big bargain and thus will be leery of making a big sacrifice on a nuclear deterrent this late in the game.

At the same time, Pompeo is part of a broader camp in Washington that believes that the United States needs to focus on its peer-to-peer competition with China. Pompeo has supported the White House's pushback against China in the economic realm, arguing that this kind of pressure is needed to ultimately create a more stable relationship with Beijing. Normalization of ties with North Korea and the potential for Korean reunification under a U.S. umbrella is a key ingredient to a long-term containment strategy against China. Nonetheless, that outcome is far from assured. Should the attempt at dialogue fail, it is unclear whether Pompeo would advocate a costly preventive strike against North Korea in the name of denuclearization or favor a shift toward a containment policy against a nuclear North Korea. And while much attention has been paid to Pompeo's comments about separating the regime from the weapons program in North Korea, any desire for regime change by Washington will be fraught with risk, especially considering the visible decline of Chinese leverage in Pyongyang.

The 'Pernicious Empire' of Iran

While Tillerson worked to prevent Trump from ripping up the Iran nuclear deal outright, Pompeo's hawkish views on Iran are much more in sync with the president's. Pompeo believes that if the United States has a North Korea nuclear problem, it also has a big Iran problem. During his time at the CIA, Pompeo focused on the proliferation threat from North Korea, noting that it was a "Wild, Wild West exercise" in tracking dollars, expertise and technology exchanged between the two countries. The linkage between the North Korean and Iran nuclear threats has, in part, framed the White House's urgency to double down on pressure on Iran. Pompeo views Iran as a holistic threat in the Middle East. As he colorfully described, "Iran's Ministry of Intelligence and Security and the Islamic Revolutionary Guard Corps are the cudgels of a despotic theocracy, with the IRGC accountable only to a Supreme Leader. ... They're the vanguard of a pernicious empire that is expanding its power and influence across the Middle East."

Pompeo believes that if the United States has a North Korea nuclear problem, it also has a big Iran problem.

The question outstanding is how Pompeo advises Trump to manage the Joint Comprehensive Plan of Action (JCPOA) in particular and the Iran threat in general. Pompeo has echoed Trump's comments on Iran violating the "spirit" of the JCPOA, likening Iran to a "bad tenant" who doesn't pay the rent until the landlord demands it and whose checks then bounce. With that view, the Trump administration has blurred the terms of the nuclear deal with other complaints against Iran that fall outside the scope of the agreement, including Iran's ballistic missile program. The European parties to the deal were trying to work through Tillerson to ensure that the White House avoids rupturing the JCPOA directly, even as it layers sanctions on issues that were not addressed in the deal. Even if the nuclear deal survives on European life support, Iran can clearly see that the pragmatists in the administration advocating a more balanced approach to the JCPOA are on the decline while hawks like Pompeo and U.S. Ambassador to the United Nations Nikki Haley are on the rise. That rise in U.S. pressure on Iran is not going to fundamentally shift Iran's behavior in the region. On the contrary, as Iran's vulnerabilities grow, it will expend more energy on defending a sphere of influence across the region via its militant proxies, political agents of influence and economic linkages.

Keeping Russia on the Radar

Pompeo is unlikely to represent a shift on Russia policy. While he has defended the president against allegations of collusion with Moscow (comments that no doubt inspired the president's trust in Pompeo), he still belongs to the traditional national security camp in Washington that views Russia as a revisionist power "bent on returning the former Soviet Union to its greatness and glory." To that end, like Tillerson, Pompeo will advocate the maintenance of a strong containment policy against Russia that defends U.S. allies and reinforces the U.S. role in NATO.

Restoring Order at State

Ironically, Trump complained that Tillerson was "too establishment" when he described his reasons for removing him — a corporate outsider who had ambitious plans to apply his experience running a global energy supermajor to wholly restructuring the State Department. Though Tillerson didn't get very far in that goal, his aversion to delegation and apparent distrust toward the department resulted in a drop in morale and a hollowing out of the department. Judging by Pompeo's experience at the CIA, he could play a big role in restoring structure and order in the United States' foreign policy arm. Pompeo drew from his own private sector experience in running the CIA by focusing on delegation at all levels to create more agility within the agency. As he put it, "we need to have a bias towards being as nimble as our adversaries. If we don't, we will serve America poorly." Unlike Tillerson's strained relationship with Trump, Pompeo's close personal relationship with the president and his experience in briefing Trump in person every day is likely to bring the positions of the State Department more closely in sync with the White House.

At the same time, Pompeo's placement in a top policymaking role, the latest in a series of White House turnovers, illustrates the president's frustration with those who disagree with him and a seemingly growing penchant for surrounding himself with loyalists. The rise of protectionist trade hawk Peter Navarro and the parallel ousting of Gary Cohn as the president's chief economic adviser when the time came to make a decision on steel and aluminum tariffs is a case in point. Moreover, rumors persist over the fate of national security adviser H.R. McMaster and Secretary of Defense Jim Mattis, who have played a critical role in buffering the president's foreign policy agenda. As Trump seeks out policymakers who conform to his worldview, the constraints within the administration to his more contentious policies could weaken, putting more of the onus on Congress to keep a check on the president on certain issues while further unnerving U.S. allies and adversaries trying to navigate the global collateral damage from White House policy.

This article originally appeared on Stratfor.com

Cheeseburgers in the Workers' Paradise

2018-03-13T13:39:00Z

Circumstances have changed around the Korean Peninsula, creating room to break out of the decadeslong cycle that has defined the conflict.
North Korea may be just as surprised as the rest of the world that U.S. President Donald Trump has accepted its offer of a summit — meaning it may not have the intention of giving up its weapons program and may have been looking to stall for time.
There are still many extremely tangled issues to unwind before the promised summit.

The easy part is agreeing to a summit. The hard part is solving the problem. But that doesn't mean we should be entirely cynical.

Some say insanity is doing the same thing over and over again and hoping for a different result. That could apply equally to talking with North Korea and to trying to isolate it into submission. But circumstances change, and sometimes the same action in a different context has different results.

I will admit that at Stratfor, we were a bit surprised at the March 8 announcement of a forthcoming summit between U.S. President Donald Trump and North Korean leader Kim Jong Un. It is not that we thought such a meeting was impossible — far from it. Trump's defining characteristic is that he bucks conventional wisdom and the establishment, and he has said he'd be happy to sit down over burgers with the North Korean leader. But the timing seemed a bit too soon. The U.S. campaign of "maximum pressure" was supposed to force North Korea to the negotiating table and give the United States the upper hand while leaving Pyongyang desperate for relief. North Korea is nowhere near the desperate mark. Thus, accepting a summit at this time may leave Pyongyang with the advantage — at minimum it gives North Korea time without a significant increase in sanctions.

But just as we must exercise extreme caution when assessing the likelihood of any significant outcome from these talks, we also need to admit that we, like many others, argued that constraint without an avenue for dialogue had a pretty limited chance of success. Rather, it was more likely to lead to an accident that could escalate fairly rapidly into higher levels of conflict. Talks of any sort at least provided a space for understanding and de-escalation.

If North Korea has not yet reached the point of desperation — or demonstrated the final proof of its nuclear deterrent — then why offer talks at this time, particularly ones that appear to go against its own imperative for a strong deterrent force? The cynical answer, of course, is that the North Koreans have no desire to give up their weapons, and instead are once again just stalling for time. They threw a Hail Mary pass and figured if Trump declined their offer of a meeting with Kim it would still fit Pyongyang's near-term strategy of painting the United States as the intransigent party, potentially cracking the global consensus around tight sanctions. If that is the case, Trump's unexpected reception of Pyongyang's offer is perhaps as surprising to the North Koreans as it appears to be to the rest of Trump's administration.

As "only Nixon could go to China," perhaps "only Trump could go to North Korea."

But there is another element to consider. The North Koreans may have seen Trump as the outlier president, as someone unconstrained by traditional politics, someone who would call Kim Jong Un "Little Rocket Man" against all diplomatic conventions. Thus, as "only Nixon could go to China," perhaps "only Trump could go to North Korea." Pyongyang's pursuit of nuclear weapons always has been a means to an end, not the end in itself. The "end" is to break the North out of its isolation without giving up its political system, to reshape relations with South Korea, establish diplomatic relations with the United States and end the sense of siege of the Peninsula by U.S. forces. North Korea has always been serious when it said it was willing to trade its nuclear deterrent for the removal of threat to the regime, but the removal of the threat comes either from the withdrawal of U.S. forces or, at the other extreme, from an alignment with the United States itself.

New Leadership, New Pressures

One other difference in North Korea is the new leadership structure. Kim Jong Un is part of the third generation of leaders (he is almost young enough to be in the fourth generation). The first generation, Kim Il Sung and the other revolutionaries, earned their place in the echelons of power through their fight against the Japanese and later against the United States. They were the revolutionary founders. The second generation, represented by Kim Jong Il, claimed power and authority merely from their parentage. They were trained as technocrats in Eastern Europe, the Soviet Union and China — if they were trained abroad at all — and were heavily linked to North Korea's terrorism of the 1970s and 1980s. In any confederation or unification scenario, in any North Korean opening, these leaders were the ones likely to lose out and be sidelined, imprisoned or executed. But there is a new generation emerging in North Korea. This third generation may also claim power because of family connections, but its members were often trained in Western Europe, are largely disconnected from the policies of the 1970s and '80s, and have the potential to remain in power and keep influence in a more open North Korea.

A second factor is the continued rise of China and Japan, and Korea's increasingly narrow space in between them. When China and Japan tangle, Korea is the proverbial minnow between whales. A divided Korea is ripe for exploitation by the larger rivals. A unified Korea, however, or even a Korea with less internal stress, has a better ability to assert its own interests in a fractious Northeast Asia. Both North and South Korea are seeing these pressures, and each, while not ready for the complexities and costs of unification, is being drawn toward accommodation with the other. It is in this context, with the return of a progressive president to South Korea, that North Korea has made this overture.

Changed Circumstances

From the U.S. perspective, North Korea has always been a bit of an outlier. It is a nation that disproportionately attracts U.S. interests, complicates Washington's overall Asia-Pacific strategies and locks up tens of thousands of U.S. forces in a cold conflict. Washington's policies since the early 1990s have basically been predicated on an expectation that the North Korean regime would collapse any day, and thus the core of U.S. strategy was to wait them out. It was not a very proactive strategy, and it has clearly been based on a false assumption about the longevity of the North Korean leadership. Waiting around no longer seems a viable policy, given the stage of North Korea's nuclear and missile development. Even if Pyongyang can't strike Peoria, its weapons program can alter the security dynamic in Northeast Asia. If that can be altered, if North Korea can be resolved or at least mollified, perhaps it can create a new challenge for Washington's more significant strategic competitor in the region — China.

So, on the U.S. side, we have a very different president, we have a clear need to alter a decades-old basic policy that has failed to deliver and we have an opportunity. On the North Korean side, there is a new leader, a last shot before risking a major war with the United States and a potential opportunity. While we shouldn't be too excited about the prospect of peace in our time, we should also not be entirely cynical. This is an excessively complex problem, a Gordian knot of strategic, economic, historical, cultural and personal contentions. But there are deeper elements at play that present a different context for this round of talks.

To paraphrase Eisenhower: The world moves, and things that were not good once may be good now. At best, the summit results in a Korean Peninsula that is largely free from the threat of imminent war, a Northeast Asia that is no longer under the fear of nuclear proliferation and a stronger U.S. strategic position in the Asia-Pacific. At worst, it is another delay, North Korea ultimately goes back on the nuclear path and the United States is forced to either accommodate or attack. But then, that latter option is where we already are today.

This article originally appeared on Stratfor.com

In Nuclear Dialogue, North Korea Leaves U.S. With the Next Move

2018-03-08T15:12:00Z

Highlights

North Korea will continue to use inter-Korean dialogue to break out of the constraints of the U.S. relationship.
But Pyongyang's apparent outreach to the United States could be contingent on changes to U.S. forces in the Korean Peninsula — concessions the United States is unlikely to give.
While China and Russia will push for a continued easing of tensions, U.S. ally Japan will be wary of a sudden shift in the U.S. position.

North Korean leader Kim Jong Un has set late April as the date for the third inter-Korean summit, to be held in Panmunjom. Kim said he would be willing to hold talks with the United States geared toward normalization of relations and the denuclearization of the Korean Peninsula, and is willing to suspend nuclear and ballistic missile tests while engaged in dialogue. Kim said denuclearization was his father's dying wish, and something for which he also strived.

This is not the first time North Korea has used a near brink-of-war moment to try and break out of the constraints of its contentious relationship with the United States. The North used the 1993-94 nuclear crisis to obtain the Agreed Framework, and there were plans for the first inter-Korean summit before Kim Il Sung died that summer. After the North's 1998 attempted satellite launch, which overflew Japan, the North ultimately pressed for a diplomatic breakout, hosting then South Korean President Kim Dae Jung in the first inter-Korean summit and significantly expanding diplomatic relations around the world. The North's first nuclear test in 2006 led to a brief breakout and the second inter-Korean summit in 2007. In each case, the North used the crises to find a way to expand its operational space, to ease sanctions and to change the dynamic around the Peninsula, even if only briefly.

It is important to understand just what North Korea is and is not saying. Denuclearization of the Korean Peninsula is not merely about the removal of North Korea's nuclear potential. It is also about the U.S. force structure in the Peninsula, and potentially even the U.S. nuclear umbrella over South Korea. Kim said the removal of the North's nuclear weapons would be contingent on the guaranteed safety of his government and the removal of threats against the North — but the North frequently refers to the U.S. military forces in the South as being a threat against the North. The suspension of missile and nuclear tests may not include shorter range systems (the North debuted what appeared to be variants of the Iskander missile system at its most recent military parade, but hasn't yet tested these systems), and it also may not include satellite launches, something North Korea claims it has the international right to carry out.

Denuclearization of the Korean Peninsula is not merely about the removal of North Korea's nuclear potential. It is also about the U.S. force structure in the Peninsula.

What the North has done is place the United States in a situation where it must make the next move. The South has already agreed to the summit, and there are unconfirmed reports that the South also told the North that the April joint military exercises with the United States would still happen. But Washington will have to see if it is ready to re-enter dialogue with the North. So far, the official U.S. conditions were that talks must be about denuclearization of the North, and that the North would need to show its sincerity through the suspension of nuclear and missile tests. Pyongyang has offered each of these conditions. But Washington was waiting to engage in dialogue until North Korea was in much worse shape from sanctions and isolation. U.S. President Donald Trump's administration does not want another round of dialogue that leads simply to another delay, that leaves the North's weapons program largely intact, and pushes any resolution — or conflict — farther down the road rather than resolving the problem now.

North Korea has set the stage for a U.S. response. The South will strongly push for the dialogue to carry on, and for the inter-Korean tensions to ease so Seoul can focus on its domestic economic troubles. China and Russia will come out and demand the United States respond in the affirmative. Washington has been adamant that it wants to pursue a maximum pressure campaign, and has rolled in its key allies, including Japan, which will be wary of any sudden shift in the U.S. position. If the United States re-engages now, it risks a repeat of past efforts. If it fails to engage, it risks undermining the relationship with South Korea and a shift in international cooperation for the continued containment strategy. Like his father and his grandfather before him, Kim Jong Un has proven — at least for the moment — to be adept at reading the international situation, and is making the effort to exploit these differences to gain time and space. The next move will be from Washington.

This article originally appeared on Stratfor.com

How Putin Needs His Russian Opposition

2018-03-06T18:19:00Z

Highlights

Though Vladimir Putin is all but certain to win a fourth term in office, he will face pivotal challenges — particularly demographic and economic — in that term, which will force the Kremlin to plan reforms for the longer term.
With Russia facing difficulties, opposition factions will gain importance and advance viewpoints that the Kremlin cannot ignore.
The government will mold new relationships with some opposition factions, while allowing other prominent groups to provide safety valves to release pressure from a dissatisfied population.

The result is not in doubt: Russian President Vladimir Putin will win a fourth term in office when voters go to the polls later this month. After close to two decades in power, the head of state enjoys a significant degree of popular support, and most opinion polls give him at least 40 to 60 percent of the popular vote. These days, however, not everything is going the Kremlin's way — from increasing social tensions to rising poverty, Moscow is facing a host of challenges whose solutions do not lie in flashy patriotic stunts or propaganda. And with a number of opposition viewpoints likely to become an even greater thorn in the Kremlin's side, Putin will have no choice but to address such concerns after his latest coronation.

Problems at Home, Problem Abroad

The recent discontent on Russia's streets is profound, but the Kremlin is struggling to address the issue. Moscow faces a string of demographic changes, including a decline in the ethnic Russian population and a rise in the number of Muslims, which has led to increased social tensions. Generational change is another factor of contemporary Russia. Nearly one-third of Russians were born after the collapse of the Soviet Union, and the generation presently coming of age knows no national leader other than Putin. The new generation has lived under a relatively prosperous and stable Russia. Savvy in social media, they have access to information and news well beyond the state messaging machines. With a majority of Russian youths (those in their teens and 20s) desiring the ability to change the political scene, they have increasingly filled the protests, in contrast to the profile of previous demonstrators, who were were markedly older.

The other major crisis facing the Kremlin is a stagnant economy. Russia plunged into recession between 2014 and 2017 due to low oil prices, Western sanctions and a decline in industry. In response, Moscow initially whipped up nationalist sentiment by annexing Crimea, by allegedly sending soldiers into eastern Ukraine in 2014 and by launching a military intervention in Syria in 2015. As the latter two military campaigns drag on with no tangible end in sight, some in Russia are voicing increasing disapproval of the foreign adventures, demanding instead a solution for the foundering economy. Impoverishment, pensions and salaries are the top concerns among many of the electorate. Poverty is rising at its fastest level since 1998, as roughly 5 million Russian have fallen below the poverty line in the past three years. Half the country's citizens have also witnessed cuts in their wages or only received their salaries intermittently, while pensioners have sounded the alarm after the Kremlin began dipping its hand into the state retirement fund.

70/70 Vision

With few solutions to address these issues, the Kremlin decided in 2017 to move this year's elections up from September to March in an effort to forestall the worst of the expected economic stagnation and outflank the opposition. The Kremlin's initial plan was to run a “70/70 election,” in which Putin would garner 70 percent of the votes of the 70 percent of the electorate that deigned to cast a ballot. The government was forced to abandon such hopes, however, after the Russian leader's approval ratings began to dip and some opposition groups launched a campaign to persuade voters to stay home. The Kremlin does not harbor any fears that someone else could possibly defeat Putin, but a low turnout would cast a shadow over his presidency and undermine his mandate to retain power in the eyes of citizens, elites and the rest of the government. Such a mandate is a prerequisite in Russian politics to take decisive action, counter dissidence and remain the premier arbitrator among elites.

Accordingly, the Kremlin has launched a campaign to inject some excitement into the elections, announcing plans to hold rock concerts at key polling stations, to stage fairs and to dole out cash and prizes — all typical tools in the Kremlin toolbox. And in marked contrast to past years in which the same faces graced the ballots and stages, authorities are seeking to shake up the political landscape by running a variety of influential candidates. The tactic, however, has provided a platform for increased political discourse and is changing how the Kremlin will manage opposition factions in the future.

Creating a Constructive Opposition

Russia's opposition hails from the right, left and in between, although the most pertinent differentiation between those arrayed against the Kremlin is whether they operate within the system or outside it. Members of the first group, which consists of parliamentary parties and regional governments such as the Communist Party, Liberal Democratic Party and Just Russia, rarely challenge the status quo defended by the pro-Putin United Russia. Those outside the system are generally more direct in their antagonism toward Putin and tend to work on the fringes of Russian politics. In recent years, anti-corruption campaigner Alexei Navalny has had pride of place in this second group, though many others have also returned to the stage, such as the liberal party Yabloko.

With the Kremlin facing stiff challenges and a disillusioned electorate, the various opposition groups have succeeded in molding a political discourse by raising the level of debate in the press, spreading their messages nationwide via social media and threatening United Russia's hold on other levels of government. All these developments would have been unthinkable a decade before. Although no candidate stands between Putin and a fourth term in office, the opposition's ideological debates have risen to a level that the Kremlin can no longer ignore. The Kremlin is thus attempting to craft a strategy to release the pressure created by widespread societal dissatisfaction, while converting the systemic and nonsystemic opposition into a so-called "constructive" opposition — meaning they would work with the Kremlin to mold policies for Russians in the next term. One presidential candidate who seems to be part of the constructive opposition, Ksenia Sobchak, even coined the slogan: “We’ll oust Putin through evolution, not revolution.

The Trio Who Would Challenge Putin

Of the main figures challenging Putin (whether as official candidates or not), three have emerged as faces of movements that could cause problems for the Kremlin in the post-election landscape: The Communist Party's Pavel Grudinin, Yabloko chief Grigory Yavlinsky, as well as Navalny.

Grudinin emerged in December 2017 as a peculiar candidate for the Communist Party after the party's longtime leader, Gennady Zyuganov, declined to run a third time against Putin. In contrast to his predecessor, Grudinin has managed to appeal to broad swaths of the population. Grudinin is also a former member of the Putin-backed United Russia and is — somewhat ironically — friendly with ultranationalist Vladimir Zhirinovsky and his Liberal Democratic Party. Grudinin operates the Lenin strawberry collective outside of the capital, which marries Soviet ideals and capitalist business ethics and has duly offered high salaries and posted high productivity. In recent years, the Communist Party has attempted to revamp its stodgy, Soviet-era image, promoting Communist iconography, humorous slogans (such as a Vladimir Lenin who wears blue jeans) and embraced members of the new generation within its top tier.

Initial reports suggested that the Kremlin approved Grudinin's candidacy against Putin with an eye to enticing residents in Moscow suburbs to come to the ballot box. In recent weeks, however, the Kremlin has seemed to change its tune on Grudinin, particularly after a poll from Vesti radio indicated that he commanded a great deal of support against Putin. Admittedly, the number might have been skewed due to its polling of an unrepresentative sample, but the figure was still worrying for the Kremlin. Accordingly, Grudinin became the target of a state-backed smear campaign in recent weeks that revealed his foreign assets, even though he divested himself of them when he registered himself as a candidate. Nonetheless, the optics of a Communist candidate possessing foreign financial and estate holdings has tarnished him going into the elections.

Yavlinsky re-emerged on the Russian political scene after years of dabbling on the fringes of opposition groups. His Yabloko party once held seats in the Duma and enjoyed strong popularity in the 1990s and early 2000s, but its ultraliberal policies have attracted little support during Putin's nationalistic tenure. Now, Yabloko has made inroads among many in the new generation who support its liberal politics, which range from a capitalism without cronyism to improved ties to the West and its rejection of Kremlin corruption and authoritarianism. In September 2017, Yabloko sent tremors through Russia's political establishment when it won a majority of districts in legislative elections in the highly coveted Moscow region. Yabloko is even bullish on its chances of unseating Moscow's mayor, Putin ultraloyalist Sergei Sobyanin, in September elections.

The Kremlin would like to co-opt both Grudinin and Yavlinsky and convert them into constructive opposition. Speculation is rife that the Kremlin is mulling dialogue with both parties to help shape its future policies. Grudinin could assist the Kremlin in shaping reforms on pensions and poverty. Yavlinsky, meanwhile, has been vocal about changing Moscow's approach on Ukraine and the need to temper relations with the West to attract investors and international capital once more. In November 2017, Putin unexpectedly met with Yavlinsky. According to Echo Moscow Editor Alexei Venediktov, Putin challenged Yavlinsky to draw up a better plan for Ukraine — which is not to suggest that Putin is prepared to embrace liberal approaches to Russia's foreign policies but does indicate that Moscow is soliciting opposition views in an effort to temper anti-Kremlin sentiment.

The third figure, however, is unlikely to come in from the cold. Navalny's anti-corruption campaign against Russian elites — the Kremlin included — has exposed the pressure that is building among the Russian population. The politician's platform has expanded vastly in recent years, as his team has opened 80 offices across the country that have organized and promoted many of the largest protests in recent years. Navalny was barred from running for president in February 2017 after authorities charged him with embezzlement, but the Kremlin has yet to incarcerate him since he serves as a useful figurehead for public protest without posing a direct threat to the Kremlin (yet). Nevertheless, Navalny and much of his countrywide team are likely to spend a few weeks in jail during the upcoming elections, lest they cause a nuisance to the Kremlin by organizing mass protests.

The Kremlin is tinkering with various strategies to manage the growing discontent in the country and to address the increasing importance of opposition voices, because the days when Moscow could ignore dissenting voices are rapidly coming to an end. In the months and years to come, Russian authorities face tough decisions on how to respond to poverty, economic woes and the different expectations of a new generation of citizens, as well as calls for reforms. By bringing some dissident figures into its orbit as a "constructive opposition," the Kremlin can neutralize the threat of some of its detractors, while dialogue with such figures will help Putin shape his fourth term. And even if the Kremlin cannot co-opt all opposition voices, the dissenters who refuse to play ball on Moscow's terms will still play an important role in Putin's management of strife on the streets. In the end, a bit of opposition might never have been so important to Putin as it is now.

This article originally appeared on Stratfor.com

Echoes of the Past in the Debate Over Europe's Future

2018-03-01T17:02:00Z

Highlights

The debate over reforming the European Union will once again expose the rifts among member states' priorities and strategic imperatives.
At the heart of the discussion is the enduring question about whether the bloc can overcome history and geography to become a federal superstate.
In the long run, the European Union's main challenge will be to keep its internal divisions from paralyzing it, as challenges in and beyond the bloc multiply.

The European Union is thinking about the kind of bloc it wants to be. As EU members consider a range of reforms — including measures to help the eurozone better withstand crisis and to make European institutions more efficient — the underlying question is whether the bloc should become a federal superstate. The conversation isn't a new one for the Continent. But given the many challenges facing the bloc, and the differing priorities among its members, the latest iteration of the federalism discussion could deepen the divides among the European Union's constituent states.

Overcoming Geography and History

Europe's divisions are a product of its geography. The mountain chains, unconnected rivers and peninsulas that characterize the Continent have enabled multiple economic centers to emerge and thrive. Over the centuries, these various hubs have given rise to dozens of nation-states, each with its own strong identity, and many with expansionist ambitions. European history offers several examples of the integration of small political entities into larger units, but the process usually happened by conquest. In that sense, the European Union represents a radical departure for the Continent, because it seeks to unite Europe's many components by consensus instead. Whether the bloc's bold political experiment can overcome the Continent's natural tendency toward fragmentation is far from settled.

Germany's own experience with integration may provide some insight into the question. In 1871, several small entities came together to form the German Empire after a decadeslong unification process that included the elimination of trade barriers and the establishment of a customs union not unlike the EU single market. The country became a modern nation-state within just a few years despite the cultural, linguistic and religious differences among its constituent territories. German unification, however, didn't come about solely because of political negotiations and freer trade; it took a series of wars to bring the country together and to forge a national identity.

Defenders of European integration argue that the Continent, likewise, endured its foundational conflict during World War II. But an event that took place seven decades ago may not be enough to drive the bloc's members together and build a common European identity in the 21st century. Though many Europeans see themselves both as citizens of their country and as citizens of the European Union, their primary identities and loyalties lie at the national or even the local level. For that reason, issues such as transferring financial resources from wealthy to poorer EU member states or creating a common European army are still controversial.

Getting Back to the Question

That's where the idea of federalism comes in. Proponents of a federalist model for the Continent argue that drawing Europe's many states together under a central authority is the way to overcome its divisions. Under this system, member countries would cede their sovereignty to strong, centralized institutions. Some of the reforms currently under discussion — such as a common deposit insurance for eurozone banks and the integration of Europe's capital markets — promote greater federalization, a process that supporters maintain has already begun anyway and will strengthen the European Union.

Detractors, however, hold that Europe is too diverse to become a federal superstate and that the problems in the bloc trace back to its insistence on reconciling the differences of countries with varying interests and priorities. Some even argue that the European Union has federalized against the will of its members states' people in a bid to replace national identities with an artifical pan-European one. Rather than constantly trying to accommodate the disparate needs of countries such as Germany and Greece, anti-federalists contend, the European Union should simply accept that its members are intrinsically different and adopt a simpler model to reflect that reality. They do not necessarily want to do away with the bloc but would prefer it to function as a loose association of sovereign nations that cooperate on matters of mutual interest.

The future of European federalism has proved a divisive topic among, and within, EU member states. Although at first glance eurozone members may seem more amenable to federalism, having already abandoned their national currencies in the interests of integration, founding states such as France, Italy and Germany are home to large Euroskeptic movements. Plenty of voters in states outside the eurozone, such as Poland and Hungary, on the other hand, want to forge closer ties with the bloc, notwithstanding their governments' Euroskeptic policies.

The Debates to Come

As EU leaders try to hash out a future for the bloc, the enduring divisions among the Continent's various countries will complicate the negotiations. Apart from their diverging views on federalism, the European Union's members also vary in their political and economic beliefs. The countries of Southern Europe tend to favor protectionist trade policies, tolerate inflation and embrace increased spending and risk sharing in the bloc. By contrast, Northern European states typically defend their national wealth, oppose protectionism and insist on greater oversight of their southern peers' finances before the bloc moves forward with integration.

Once the European Union has settled on what reforms to implement, moreover, it will still have to determine which countries to include in the measures. France — which along with Germany forms the core of the bloc — has suggested that a small group of member states can move ahead with integration even if others are unwilling or unable to join them. Germany, however, wants to ensure the broadest possible consensus behind the reforms, even if achieving it means slowly enacting modest changes. Since most of the countries that France is willing to exclude from the next stage of EU integration are in Central and Eastern Europe, Berlin is concerned that Paris' plan will cause a rift between these states and Western Europe. The fracture could gradually reduce the European Union's influence in the region, perhape leading to political instability and economic stagnation that, in turn, could enable outside powers such as Russia or China to increase their sway there. Yet the alternative is far from ideal. While France's proposal could break the European Union apart, Germany's could lead to inefficient compromises for the sake of unity.

The countries of Central and Eastern Europe, meanwhile, are pondering questions of their own. Many of these states are outside the eurozone and exempt from several of the reforms under consideration. Even so, the entire region will face an existential dilemma: to join Western Europe in its quest for deeper integration, perhaps at a greater expense to their national sovereignty, or to resist, perhaps at the risk of isolation.

Even if the European Union emerges from these negotiations intact, the debates that come next will prove still more challenging for the bloc. The European Union, for example, will have to look for ways to remain relevant in global affairs in the years ahead. Issues such as immigration from sub-Saharan Africa and the Middle East, trade competition from East Asia, China's growing influence and Russia's growing assertiveness highlight the bloc's vulnerability to economic, political and social developments beyond its control. Political fragmentation could hinder the bloc's ability to confront these challenges and shape its own future.

What's more, the Continent will have to tackle these concerns while also dealing with a range of internal problems, including aging populations, low economic growth and steadily decreasing defense spending. And in the meantime, the European Union will weather the upheaval of losing a member, the United Kingdom. The Brexit will leave the bloc with a smaller economy and without one of its few truly global powers.

More than a half-century since its creation, the European Union is again facing a quandary that has plagued the Continent throughout its history: how to negotiate the differences among its many countries. The bloc probably won't become a federal superstate anytime soon. Nevertheless, its leaders will continue to spend considerable time and energy looking for ways to stay together. And as the bloc confronts more novel challenges in the coming years, achieving this perennial objective will become increasingly difficult.

This article originally appeared on Stratfor.com

Play-By-Play: Does the Korean Olympics Detente Have Staying Power?

2018-02-27T15:01:00Z

Predictably, this month in the geopolitics of sports was all about the Pyeongchang Olympics. The Winter Games have just wrapped up, but it's not too early to reflect on some of the key storylines that emerged from South Korea.

Wait and See

With North Korean and South Korean athletes marching in the opening ceremonies under a unified flag and playing together on the joint women's hockey team, the thawing of their countries' relationship was positioned as a key feature of these games. Even the International Olympic Committee (IOC) was on board with the openly political tone that the unity flag set. While the IOC usually pretends that politics and sports are mutually exclusive, associating the Olympics with any tangible diplomatic gains would be quite the public relations coup, especially in the wake of the Russian doping scandal. So, with the Olympic flame now extinguished, can we claim any sort of victory for sports diplomacy? Of course, it's too soon to tell, especially as the largely symbolic effects of such soft power efforts are so difficult to quantify in the short term. The reaction from the mainstream media and the viewing public in the West over the Olympics detente has been predictably positive, especially when celebrating the fighting spirit that the Korean women's hockey squad displayed, despite failing to tally a win during the tournament.

Meanwhile, policy commentators' evaluations range from the extremely cynical to the only somewhat cynical. For the former group, soft power is a nonstarter, with little reason to believe that either side has much at stake beyond some public relations gloss. After all, if this unity was about sending a message to the citizens of the two Koreas, it would have helped if the average North Korean could have actually watched the Olympics (very few could). It’s also unclear whether either side will come out much ahead from the public relations perspective. Given that the United States and South Korea have made it clear that their joint military drills will resume and North Korea inevitably will continue its ballistic missile tests, both sides will continue pointing fingers at each other, but now they also will be able to accuse one another of violating the spirit of Olympic unity.

The United States has — of course — been a semi-silent partner in this milieu, with the White House grumbling a bit about the apparent softening of the South Korean position as far as North Korea goes. Vice President Mike Pence embodied these feelings with his well-publicized aloof presence during the opening ceremonies, where he appeared to deliberately ignore Kim Jong Un's sister, Kim Yo Jong, in the dignitary's box. In the past few days, reports have emerged that Pence and Kim Yo Jong had been scheduled to meet secretly on Feb. 10 in Seoul but that the North Korean delegation canceled the meeting at the last minute. Pyongyang allegedly was offended by Pence's comments to reporters about standing strong against North Korea's Olympic propaganda effort.

For those slightly more optimistic analysts who hold out some hope for the potential of sports and other soft power initiatives, there is at least some history to cling to. Even the vaunted "Ping-Pong diplomacy" that invigorated U.S.-Chinese relations in the early 1970s didn't seem like much more than friendly symbolism at the outset, but the table tennis competitions led to a variety of real-world outcomes, including President Richard Nixon's state visit to Beijing. Almost a year elapsed between the first table tennis match and Nixon's 1972 trip, so it is certainly too early to evaluate the success or failure of this most recent sporting effort.

The Digital Threat

In the buildup to the Pyeongchang Olympics, safety and security concerns centered on the potential actions of North Korea. While game theorists smarter than myself found a move by Pyongyang unlikely, the aforementioned diplomatic effort seemed to curb the public's fears of an attack by the North. The games not only were free of major incidents, but there also were hardly any reports of even minor issues of safety and security. With the exception of some drunken and rowdy fans, the biggest hiccup in the events appears to have been the Donald Trump and Kim Jong Un impersonators who had to be removed from the opening ceremonies.

In what is surely the new normal when it comes to such mega-events, there apparently was a massive onslaught of cyberattacks on the games and those responsible for their production.

However, in what is surely the new normal when it comes to such mega-events, there apparently was a massive onslaught of cyberattacks on the games and those responsible for their production. According to South Korean authorities, thousands of such attacks were attempted, although it is unclear how many succeeded. One that did succeed targeted the opening ceremonies, bringing down the official website, preventing many fans from using digital tickets for entry and leading to the cancellation of a live drone display.

In January, cybersecurity firm CrowdStrike reported heightened intrusions targeting South Korean and Olympic servers, noting that the majority of the activity pointed to North Korean and Russian hackers. Around the same time, the Russian hacking collective "Fancy Bears" (assumed to be the former "Fancy Bear") released a trove of emails stolen from the IOC, U.S. Olympic Committee and related organizations, ostensibly in retaliation for the IOC ban of Russia from the Winter Games. The opening ceremony attack came in the form of a malware program called Olympic Destroyer, a program that both CrowdStrike and Cisco’s Talos intelligence unit say points to Russian involvement. Although it is unclear whether Fancy Bears is specifically implicated, sports appear to be an increasingly popular target for the group, which released medical information about tennis stars Venus and Serena Williams and U.S. gymnast Simone Biles last year. Of course, it is also important to note that Fancy Bears appears to enjoy some amount of support or involvement with Russian military intelligence.

Empty seats and the associated loss of prestige appear to be the biggest damage caused by Olympic Destroyer, but it’s clear that the cyberthreat to these types of events has arrived. In our interconnected era, the real fear is that such threats can easily go beyond the digital domain. I can’t help but think of last month’s false missile warning sent out through Hawaii’s emergency notification system and the public panic that such a system could produce if hacked, especially in the tense and tightly packed environs of an international sporting event.

And, of Course, Russian Doping

In what feels like a bleak joke from the annals of Russian literature, two of the "unaffiliated" Olympic Athletes from Russia came under investigation for doping. Bobsledder Nadezhda Sergeeva tested positive for trimetazidine, a medication used to treat angina that is banned by the World Anti-Doping Agency because it affects metabolism. Earlier, Alexander Krushelnitsky, a curler who was part of a bronze medal-winning team, tested positive for traces of meldonium, a heart medication banned by the World Anti-Doping Agency for its ability to increase blood flow. Krushelnitsky and Sergeeva were two of only four athletes to be flagged on a doping test during the games. On Feb. 22, the Court of Arbitration for Sport formally disqualified Krushelnitsky, and he returned his medal. On Feb. 24, the court disqualified Sergeeva's 12th-place finish in the women's bobsled competition after she admitted the anti-doping violation. For Russia, the timing was unfortunate, as the IOC had been considering allowing its athletes to march under the Russian flag during the closing ceremonies. For those critics who chafed at that IOC compromise to allow the "Olympic Athletes from Russia" to compete at all, there is a smug sense of satisfaction that the positive tests confirm their worst suspicions about the Russian sports system.

Some Russian officials were quick to claim tampering or sabotage in Krushelnitsky's case, claims that we might not want to write off as quickly as usual. Why give Krushelnitsky the benefit of the doubt? First, as many have joked online, it's unclear what sort of advantage a curler could reasonably expect from doping. Second, as one of the Russian curling coaches noted, meldonium seems like a particularly stupid substance to risk a positive test on. Not only are its supplementary effects dubious, but the drug has been under widely publicized scrutiny since it was banned in 2016. In other words, an athlete could be all but sure he would be tested for the substance. If we are to connect this current case to the remnants of the elaborate state-sponsored doping machine, it does seem like a clumsy, amateurish way to cheat. Of course, this hasn’t stopped people in the past. There remains something about the quest for victory that can make a fool of the best of us.

This article originally appeared on Stratfor.com

Russia's Business Leaders Prepare For U.S. Sanctions

2018-02-22T17:02:00Z

Highlights

The possibility that Washington will retaliate with sanctions against Russian meddling in U.S. elections has prompted many wealthy Russians to consider how they will protect their wealth.
One prominent metals tycoon has begun distancing himself from the firms he once ran, prompting questions about how many others will do the same.
If many of Russia's wealthiest influencers begin stepping out of leadership roles in their firms, the power-balance among the business elite will shift — and this could have political repercussions.

As Washington increases pressure on the Russian elite, one of Russia's most wealthy oligarchs is stepping down from two of his most prominent positions in a likely bid to save his empire. On Feb. 23, metals tycoon Oleg Deripaska will officially leave his presidential posts at RUSAL, the world's second largest aluminum firm, and En+ Group, a private Russian energy firm; Deripaska's representatives told Russian newspaper Kommersant that he will continue to hold controlling stakes in the two firms. By withdrawing from two of his most important posts, Deripaska is likely attempting to insulate his firms from coming U.S. sanctions, a move that other business leaders in the country may soon follow.

The prominent oligarch has long been on Washington's radar, and his name has been raised during various U.S. investigations into Russia. In January, Deripaska unsurprisingly appeared on the U.S. Treasury Department's list of prominent Russian elites and oligarchs that the United States is considering sanctioning. And he became a more of a target in early February after Anti-Kremlin activist Alexei Navalny published video and audio evidence of Deripaska discussing U.S. election meddling with Deputy Prime Minister Sergei Prikhodko. The meeting reportedly took place after Deripaska met with Paul Manafort, the former campaign manager to U.S. President Donald Trump.

If the United States decides to expand sanctions against prominent Russian figures, it's not clear how severe the restrictions would be. But even limited personal sanctions could sour Western business and investment sentiments, damaging the financial health of Russia's business class and the country at large. En+ is a publicly listed company that will attempt to rally $1 billion in new shares in the coming months. Meanwhile, RUSAL carries more than $7 billion in net debt and is considering borrowing more to financially settle Deripaska's battle for control of shares of Norilsk Nickel, the world's largest nickel firm. If Deripaska is sanctioned, Western banks and investors may be wary of taking part in future dealings with his firms, so he is distancing himself ahead of time.

Deripaska was once Russia's wealthiest man, worth $28 billion before the 2008 financial crisis and worth an estimated $5.2 billion now. The tycoon is also one of the old-school, post-Soviet elites who has played Russian President Vladimir Putin's games most successfully over the past several decades, allowing the Kremlin to co-opt his foreign business ties and opening his wallet when Russia faced financial struggles. His clear move to protect his firms from sanctions by stepping down from leadership positions thus inspires the question of how many other major Russian elites — even ones who may have previously seemed unflappable — will follow suit.

Already, Russian oligarchs seem to be preparing themselves for the financial hurdles that will come with U.S. penalties. The country's wealthiest traditionally hold their fortunes abroad, wary of banks over which the Kremlin and Russian security services have eyes. But several Russian elites have begun moving billions of dollars back into Russia, so that they have tighter control over their wealth. The Kremlin has also been assisting in this effort, hoping to protect its countries' most powerful business peopleand to prevent any massive drain on their fortunes. Starting in March, the Kremlin will even enact a tax holiday to encourage the return of Russian cash. But an influx of billions of dollars could either give the stagnant Russian economy a bump or, conversely, bloat the country's economic system and contribute to inflation. Additionally, the return of so many elites' fortunes to the country could provide the Kremlin with an opportunity to dive into a new round of anti-corruption investigations and crackdowns.

Moreover, if many of Russia's wealthiest influencers begin stepping out of leadership roles in their firms, the power-balance among elites may shift, testing their priorities and their loyalty to the Kremlin in the face of external pressure.

This article originally appeared on Stratfor.com

Trump's Trade Challenges

2018-02-20T16:38:00Z

U.S. President Donald Trump has a chance to pursue protectionist trade measures that could be his most significant trade restrictions yet. After an investigation launched in April 2017, the Commerce Department has found that steel and aluminum imports threaten to impair U.S. national security. To counter that threat, it has recommended a wide range of remedies, including a global tariff on steel imports of at least 24 percent and quotas restricting imports to just 63 percent of their 2017 volume. Trump and his administration now have until April 11 and 19 to decide what measures to take on steel and aluminum imports, respectively.

If implemented, the restrictions could be the start of a series of trade measures advancing the White House's protectionist agenda. Though the implications of these measures would be significant, legal challenges and domestic division could prevent them from being effective. Stratfor will be watching for the following in the lead-up to Trump's decision and immediately after.

Divisions Within the West Wing

The Trump administration has been long-divided between a protectionist wing that backs more aggressive measures to increase trade enforcement and protect U.S industries, and a globalist wing that has pushed back against trade restrictions. While Trump has regularly called for trade deals that benefit the United States more strongly, other voices from within the White House have argued, for example, that several of the United States' largest trading partners in steel are close U.S. allies with important defense treaties. The division has played out significantly in trade investigations, with the globalist wing — led by Treasury Secretary Steven Mnuchin, Secretary of State Rex Tillerson and a chief economic adviser, Gary Cohn — often butting heads with the protectionist camp — led by U.S. Trade Representative Robert Lighthizer, Commerce Secretary Wilbur Ross and the director of the National Trade Council, Peter Navarro.

Although Trump requested the Section 232 investigation that brought about the newly recommended measures in June 2017, this break between the protectionist and globalist wings caused a delay until the legally mandated deadline in January 2018. And this division has also played out between businesses. The steel industry and its unions have called for Trump to follow through on his campaign promises by enacting the measures, but other industries, particularly those reliant on steel, will doubtless push back. And this debate could temper whatever action — if any — that Trump takes.

Whatever the result, the recommendation will provide important information on the balance of power between the two camps in the administration. Moreover, it will test the extent to which Trump is willing to go against certain business interests.

Legal Loopholes

The Commerce Department's investigation has already come under criticism from trade experts who claim it uses national security as a pretext for clear-cut protectionism. While it's difficult for Trump to unilaterally change U.S. trade policy in other areas, such as NAFTA, a Section 232 trade investigation provides a potential avenue toward Trump's trade goals. However, domestic opposition and legal precedents mean that court challenges are likely. Challengers could claim, for example, that the United States is throwing out decades of standard practices in similar investigations and casting aside previous definitions of what constitutes a threat to U.S. national security.

This is not the first time the steel and iron ore sector has been the subject of such an investigation. In 2001, an investigation into imports of iron ore and semifinished steel determined there was no evidence that such imports threatened U.S. national security. And if it can be successfully argued that protectionist measures were the Trump administration's goal all along, the United States could face a legal argument that Section 232 is not being put to its intended use.

Anger Abroad

Challenges to any new U.S. trade measures will also come from abroad. U.S. trade partners could respond with direct retaliation, and China and the European Union have already begun considering responses. China has launched its own investigationinto trade dumping of U.S. sorghum, and it has floated the possibility of targeting U.S. soybean exports or the U.S. agricultural sector as a whole. The European Union, meanwhile, has reportedly launched investigations into its own trade measures on Wisconsin dairy products and on Kentucky bourbon.

In addition, U.S. tariffs could be challenged through the World Trade Organization (WTO). South Korea's trade ministry said Feb. 19 that it would consider filing a WTO complaint if the United States follows through on the suggested tariffs or quotas. Though there is technically an exemption for national security under WTO rules, it has never been through a full WTO litigation. Creating a legal precedent by allowing the United States to claim national security could open the floodgates for other countries to use the same argument in situations where it is even less applicable. But litigating the national security exemption would be a lengthy process, and the United States would continue implementing the tariffs in the short term.

For now, the most important outcome of the ongoing U.S. trade investigations hints at what is to come. The investigation into China's intellectual property rules and technology transfers will be completed later this year, and there are signs that the White House seems to have internal divisions over how aggressively to go after China. Should Trump accept the Commerce Department's recommendations and put significant trade measures into place, that could be a harbinger for even more significant action against China later this year.

This article originally appeared on Stratfor.com

The Cracks in Trump's Infrastructure Plan

2018-02-15T16:45:00Z

Highlights

The Trump administration's recently released infrastructure plan emphasizes private-public partnerships, but such areas as water infrastructure will struggle to attract the private sector.
The plan's proposal to increase state and local funding will be difficult given the trend of decreased state spending.
The plan is unlikely to be implemented as written, because a two-year federal budget has already been put in place.

For several years now, concerns about the United States' crumbling infrastructure have garnered cross-party support within the country's government. There is no question that U.S. roads, bridges, airports and water pipes all need fixing, but how to do that is a different story. On Feb. 12, the White House put forward its much anticipated $1.5 trillion plan to revitalize the country's infrastructure. It specifies that $200 billion will come from the federal government, with the rest of the money coming from a combination of state and local funding and the incentivization of private-public partnerships. A strong infrastructure is essential to the economic well-being of the country, providing jobs and supporting supply chains, and there is potential for the administration's strategy to succeed in some areas. However the plan will struggle to prevent further deterioration of some of the most deficient areas of infrastructure, such as drinking and wastewater treatment.

The Nitty Gritty

The 53-page document follows the spirit of less specific proposals put forth by President Donald Trump both on the campaign trail and during his first year in office, emphasizing the goal of reducing government regulations and oversight. Over the next 10 years, the federal government intends to distribute half of the $200 billion to projects in the form of incentive grants, and it will evaluate applications based largely on how the programs will be funded and will generate profits. The grants will also be conditional on the federal government providing only 20 percent of the total project costs. The other half of the $200 billion will go to a variety of other projects and initiatives, with $50 billion earmarked for rural infrastructure. The remaining $1.3 trillion is expected to come from investment using state and local funds and private-public partnerships.

Because Congress has already approved a two-year budget, there will probably be major adjustments to the final infrastructure plan, and any agreed-upon plan will likely take several more years to enact. But the U.S. infrastructure problem isn't going away in the meantime. The current gap between the amount of infrastructure funding needed and the amount available is $1.4 trillion, and infrastructure throughout the country recently earned a failing score from the American Society of Civil Engineers (ASCE). The group expects that federal spending will need to be at 3.5 percent of GDP by 2025, up from the past decade's average spending of 2.4 percent of GDP. According to the ASCE, a failure to improve U.S. infrastructure will cost each household $3,400 annually. At a national level, the country will lose $4 trillion in GDP growth and 2.5 million jobs by 2025.

The recently released plan to put a majority of the funding burden on state and local governments and on private companies isn't actually that different from the current situation. State and local governments already account for the majority of public spending on nondefense infrastructure. But over the past decade, public spending, which has stagnated since the 1980s, has fallen even further as states have started cutting their own spending as part of their gross state product. At present, most infrastructure investment capital comes from bond proceeds, dedicated fees and surpluses.

This new proposal outlines a number of strategies to promote private investment, which currently makes up a small percentage of overall infrastructure spending and is concentrated in the rail sector. Plans include increasing tolling flexibility, which allows states more freedom over where they can apply interstate tolls and how much they can charge, and expanding programs that enable easy access to credit. However, even with major incentives, it can — and will continue to be — hard to sell some infrastructure projects to the private sector.

Water, Water Everywhere

It's difficult to recoup funds and to profit from infrastructure projects, which tend to require significant upfront capital. Some projects, such as toll roads, come with obvious solutions for getting a return on investment (though rural areas with lower traffic still struggle more than urban areas with higher traffic). But water infrastructure is the sector that will have the hardest time attracting private investment if the Trump administration's plan goes into effect. Currently, water and sewage only account for 2.6 percent total private investment in infrastructure throughout the world.

In the United States specifically, barriers such as high liability costs and inaccurate water pricing make it extremely hard to get investors on board. Developers did not always have long-term economic feasibility in mind while building the infrastructure to distribute much-needed water throughout the geographically varied United States, and it has long been in need of maintenance or replacement. The much-publicized water crisis in Flint, Michigan, is still fresh in people's minds, and though the incident made it clear that U.S. water infrastructure is in desperate need of repair, it also highlighted certain risks. Should something go wrong, investors may be asked to shoulder the blame in arguably a more public way than ever before.

Furthermore, water throughout much of the country is not priced at its full value, with government funds typically supplementing the costs of infrastructure, operation and maintenance. At current rates, state funds for both drinking and wastewater treatment are not sustainable, and the most obvious solution of pricing water at its actual value is a difficult proposition, especially in an election year. Few countries, the United States not among them, treat water as a true commodity.

Water prices in the United States have been increasing over the past several years; the largest 30 cities saw a rise of 4 percent over the past year, according to global resource tracker Circle of Blue. However, this increase often doesn't reflect the true value of water, which varies greatly depending on the source. Municipalities have looked toward less contentious options such as dedicating sales taxes for water and sewage projects. But even creative solutions like that won't make it easy to make a profit off water management.

There is still a long way to go before a new infrastructure plan is implemented, and it will likely look different from the one the White House recently proposed. But whatever form the new plan takes, it does have the potential to increase investment in a number of areas by incentivizing public-private partnerships. However, though there is arguably the most need for improvement in water infrastructure, that area will have the most difficulty attracting investment.

This article originally appeared on Stratfor.com

The Atlanta Olympics: A Reminder of What Can Go Wrong

2018-02-13T19:46:00Z

I've found that while routine days can fade into the past, the days when something goes wrong often produce the most vivid recollections. Thinking about the upcoming Winter Olympics in South Korea brought back a memory, and not a pleasant one, of my involvement in providing the security for the Atlanta Olympics in 1996.

That summer, I was on the ground, running protective intelligence operations for the State Department's Diplomatic Security Service (DSS). The security plan for those games had been months in the making. As anyone in the business knows, protecting large-scale events requires a massive undertaking — and given their international participation and high-profile attendees, protecting the Olympics is an especially complex task. Every agent who has ever worn an earpiece and stood watch during those types of events is aware of the terrorist attack brilliantly executed by the Black September Organization during the 1972 Munich Games. The tragedy left 11 Israeli athletes and a German police officer dead and forever changed how Olympic athletes were protected.

In the lead-up to the Atlanta games, the DSS's Threat Analysis Division had its hands full as agents assessed the event venues, noting possible vulnerabilities and factoring in visits by high-profile personages. When big names attend specific events, they can "drag" the threats that they always face along with them, raising the risks to the venues. The security preparations that year included countless meetings with the FBI, the Georgia Bureau of Investigation, the National Guard and the Atlanta Police Department. The U.S. intelligence community was on point, alert for chatter that would indicate a threat was developing. As the opening ceremonies approached, we believed that everything that could be done to make the games safe had been done.

At least, until the phone call.

“We’ve just had a bombing in Centennial Park,” the voice on the other end of the line intoned in the wee hours of July 27, 1996. I took some measure of comfort in my realization that the park, the site of an evening concert that had attracted thousands of revelers, was not within our secure zone on the campus of Georgia Tech. But I immediately wondered whether more attacks were coming. Ten days earlier, a similar notification had rippled through the U.S. intelligence community after TWA Flight 800 exploded and crashed into the Atlantic after taking off from New York. Many signs at the time pointed to terrorism as the cause of that tragedy.

The thought that there may have been a nexus between the plane crash and the Centennial Park attack troubled many of us that night in Atlanta. The eyes of the world were on the United States, and what better way to disrupt the Olympic Games, and strike a blow at America, than to captivate the global media with a major terrorist attack? Having worked plane crash investigations and bombings, I also knew that the investigations into both the plane crash and the park bombing would take time. (Later, it was determined that an electrical short in a fuel tank likely caused the TWA explosion and that a domestic terrorist, Eric Rudolph, had planted the Centennial Park pipe bomb.)

Since the Atlanta Games, the role of the DSS in security preparations has changed: It is now the lead U.S. agency for overseas events such as South Korea's Winter Olympics. I understand that the DSS began coordinating more than three years ago with the U.S. Olympic Committee, the U.S. Pacific Command and South Korean officials to develop a security plan for the Pyeongchang Games. During the games, the agency will be fully integrated with the U.S. intelligence community, scanning for indications of threats. Every nation sending athletes to South Korea will have a vested interest in passing along "adverse intelligence" of threats. It's a sure bet that Israeli intelligence raised the Munich attack with the South Koreans and the DSS as a grim reminder of what can go wrong. More than 90 DSS special agents and support staff will be on the ground in South Korea covering all the venues and the U.S. delegation, which includes Vice President Mike Pence.

Security agents in South Korea will be briefed on Atlanta, although for many of them, it will be ancient history. The focus will be on keeping eyes peeled for emerging threats on the ground and staying alert in case current terror threats suddenly develop — including any new twists in the North Korean crisis. On a practical level though, agents on protective duty live in the moment, always laser fixated on the 3 to 6 feet around them, scanning for a weapon or studying body language and faces as they look for possible assassins.

In Atlanta, the bomber struck outside our secure zone, demonstrating the biggest challenge in protecting wide-ranging events such as the Olympics — you can't cover every gap.

This article originally appeared on Stratfor.com

Bloody Noses and Black Eyes: What's in a Limited Strike on North Korea?

2018-02-08T17:10:00Z

Highlights

Support is building within Washington for a limited strike against North Korea over its pursuit of nuclear arms.
A U.S. strike could have serious ramifications but inaction is not without its risks.
Because of the lack of firm knowledge on North Korea's inner workings, it is impossible to deduce how Pyongyang would react to a so-called bloody nose strike.

Numerous stories are circulating once again, both in the media and in the halls of policy and punditry in Washington, Seoul and Beijing, that the United States is considering a "bloody nose" strike against North Korea. By some accounts, the U.S. administration withdrew backing from its candidate for ambassador to South Korea, Victor Cha, because of his opposition to a limited strike against Pyongyang. Other reports suggest there is an emerging cadre of "hawks" on North Korea who are expanding their influence over U.S. foreign policy, raising the likelihood of at least some form of military action. The challenge in deciphering the signals is that, with or without a planned strike, there is strong logic not only in keeping the option on the table, but also front and center in the minds of all actors in Northeast Asia.

In our 2018 Annual Forecast, we identified the myriad risks of military action on the Korean Peninsula, asserting that the longer-term risks of the North's nuclear weapons program are unlikely to outweigh the costs of military action in the near term. Our baseline assessment is that the United States ultimately will establish a more robust management structure on and around the Korean Peninsula to contain Pyongyang but that it will not strike North Korea this year. But, as we have noted several times, this is ultimately a political decision that rests upon advice from different quarters, as well as cost and benefit assessments, force structure, risk perceptions, the balance of long-term strategic considerations and nearer-term political and security concerns.

The Benefits of a Bloody Nose

A bloody nose strike, however, is something that conceivably could straddle both options — military action and enhanced containment. According to this idea, Washington needs to demonstrate its clear and unwavering willingness to use military means to achieve its goal to convince the North Koreans of the seriousness of the U.S. position on nuclear proliferation. This does not negate dialogue or containment; instead, it's a way to ensure North Korea is not misreading U.S. signals — either willfully or inadvertently. For nearly three decades, Pyongyang and Washington have engaged in an on-again, off-again standoff over North Korea's nuclear and missile programs.

But Pyongyang has crossed several "red lines" by launching satellites, testing intermediate and long-range missiles and conducting six underground nuclear tests. It is clear that North Korea's leadership questions the U.S. willingness to use force to stop the nuclear weapons program, and Pyongyang continues to see the program, at least in part, as a means of ensuring Washington never overcomes its reticence to pursue another Korean War. Unlike Syria, Libya or Iraq, North Korea has pursued weapons of mass destruction for decades, and the international community has offered only stern words and imposed limited (until recently) economic constraints in response.

To U.S. proponents of the bloody nose strategy, Pyongyang has dealt Uncle Sam a black eye by undermining Washington's credibility.

U.S. proponents of the bloody nose strategy often cite Pyongyang's continuing WMD program as proof of the weakness and ineffectiveness of U.S. policy toward North Korea. To them, Pyongyang has dealt Uncle Sam a black eye by undermining Washington's credibility internationally, brushing off U.S. threats and cajoling and, in the process, proving that the United States is weaker than it tries to appear. In addition to repaying a black eye with a bloody nose, advocates of a limited strike against North Korea's missile and nuclear infrastructure argue that Kim Jong Un and the rest of North Korea's leaders are rational actors who know they could never win a war against the United States, ensuring that any U.S. strike would, at a bare minimum, force the North Korean government to cease its missile and nuclear tests. In the best-case scenario, proponents suggest a limited strike would so shock the North Korean elite that they would rebel against Kim to save their own skins or that it would persuade China to take physical action to effect "regime modification" and halt the North's confrontational attitude out of fears of unmanageable conflict and destabilization on the Korean Peninsula.

Opponents, however, posit that such a strike is just as likely to trigger an all-out war on the peninsula as it is to persuade the North to retreat from its confrontation with the United States. North Korea is a small country surrounded by larger powers, and much of Pyongyang's defensive posture lies in a combination of striking first before falling back into the mountains to try and outlast the larger opponent. A strike against a North Korean missile or nuclear facility, for example, could convince the North that it must strike out with all available systems to disrupt any U.S. facilities and logistics to complicate any further U.S. action. Even in the absence of a full escalation, North Korea may feel compelled to respond to a limited U.S. strike with similar action to re-establish a sense of deterrence. As a result, tit-for-tat responses to aggression could precipitate a larger conflict. In either case, the North could respond to a limited strike by firing at U.S. bases in South Korea, the port infrastructure in Pusan (from which the United States would likely bring additional materiel into Korea) or even Japan, Guam and Hawaii.

Grappling With the Unknown Unknowns

Perhaps more than in other cases, the problem is that it is nearly impossible to accurately intuit the North's likely response, although expecting North Korea to act as a "responsible" nuclear weapons state is equally difficult. Repurposing former Defense Secretary Donald Rumsfeld's maxims for a new conflict, there are perhaps even more unknown unknowns in North Korea than there are known unknowns. This situation heightens the risks of any course of action — as well as inaction. Known unknowns include the quantity, range and accuracy of the North Korean missiles (even though some of these are known knowns). Other known unknowns include the hierarchy of authority to use tactical and strategic systems (and it remains unclear whether a so-called decapitation strike that kills or disrupts the leadership would automatically trigger a military response instead of dissuading one). Regardless of a possible U.S. strike, the known unknowns certainly also apply to the assumption of North Korean leaders' rationality — and just what form of rationality that is.

Unknown unknowns are, by their very nature, unquantifiable. They may relate to apparently known assumptions or questions but they rest on faulty or outdated logic, as well as on intentional or natural misinterpretations and misunderstandings. There may be aspects of North Korea's internal leadership organization, flow of information and intent that few have explored, largely because of the paucity of knowledge of the North Korean government's inner workings. And then there are the assumptions regarding the relation between the North Korean people and their leadership, between the military commanders and the forces, and, more concretely, between the basic elements of production and consumption. For decades, the United States has grounded its core North Korea policy on the idea that the regime is on the brink of collapse. This may have been wishful thinking or completely inaccurate — or maybe the country really is a mere accident away from complete implosion.

Repurposing former Defense Secretary Donald Rumsfeld's maxims for a new conflict, there are perhaps even more unknown unknowns in North Korea than there are known unknowns.

North Korea has been a notoriously difficult intelligence target because of linguistic difference, the closed system that limits operatives' ability to hide in plain sight, the outdated communications system and infrastructure, as well as the intentional misinformation campaigns often propagated by South Korea, China, Japan, Russia or the United States. Near-term intelligence assessments on the pace of North Korea's nuclear and missile programs, for example, proved woefully insufficient until very recently (and may now risk swinging too far in the opposite direction). There are also many questions about the future of North Korea's relations with China, its economic activities and its ability to provide domestic services. It is, quite simply, a tall order to gather meaningful intelligence about the North, leaving many unknown unknowns to accompany the known unknowns.

All this brings us back to the debate over whether to deal North Korea a bloody nose. One could make the case that a North Korean leadership acting rationally could respond to a bloodied nose with two diametrically opposed reactions: It could reasonably seek conciliation or it could reasonably put all hands on deck in preparation for a major war. Each has its own logic, and it may be that even Kim doesn't know which way he would sway if push came to shove. But inaction is just as clearly problematic. Economic sanctions and political isolation appear to have little coercive effect on Pyongyang. In fact, they may even be reinforcing the perception that the leadership must swiftly complete the nuclear and missile programs — and even demonstrate their capacity in a live-fire test over the Pacific. There are reports that some members of the elite are feeling the pain of sanctions, but it is unclear whether they have the intent or capability to alter the regime's course, particularly as North Korea is so close to achieving the technical aspects of its goals after so many sacrifices.

If the United States conducts a targeted strike against some aspect of North Korea's nuclear or missile infrastructure (and even some Chinese scholars and strategists have advocated such a move) and the strike triggers a change in behavior — if not regime — in North Korea, it not only would lead to a more stable situation in Northeast Asia, but also remind the rest of the world of the United States' intent to stem nuclear proliferation and willingness to take risks to counter challenges. Even if the North doesn't come to the negotiating table, a demonstration of military action would further reinforce Washington's containment strategy against Pyongyang. The minimum cost of miscalculation in such action, however, is war on the Korean Peninsula — if not a larger conflagration that would draw in Japan, China and Russia, disrupt the global technology supply chain, result in mass casualties and damage much infrastructure. Few models of a new Korean War offer anything less than major destruction and death, even if the United States ultimately emerges victorious.

The Cost of Inaction

But the cost of inaction is not trivial. If North Korea completes and demonstrates its nuclear missile program, it would seriously undermine the reliability of the United States in halting proliferation, perhaps encouraging others, whether opponents or allies, to race down the nuclear path themselves. Even if there isn't a nuclear domino effect, trust in U.S. assurances may diminish rapidly, weakening the United States' security posture. In addition, North Korea is not merely pursuing nuclear weapons to secure the government from U.S. military action; it is doing so to exploit such a situation to shift the strategic calculation in South Korea. Pyongyang has made no secret of the fact that it considers its nuclear capability the precondition to reshaping the overall security situation in Northeast Asia and ultimately undermining the U.S. alliance structure. A North Korea with nuclear arms may not lash out with such weapons, but it could feel more confident using conventional weapons against South Korea to demonstrate Washington's unwillingness to back its allies through thick and thin.

In the end, the question of a bloody nose strike is not so simple. U.S. credibility is on the line, and that credibility is the backbone of Washington's global security posture. After all, despite its military might, the United States is outnumbered no matter where it goes. If the willingness of others to host U.S. forces and be the first line of defense begins to wane, the United States ultimately may find itself forced to retreat all the way to its own coasts. That is, of course, a rather far reach from the current North Korean standoff, but in strategic terms (and looking at past global powers) it is not an unreasonable fear. The debate now is whether to give North Korea a bloody nose in return for the black eye it has given the United States, or whether Pyongyang can simply be bottled up — even if it is too great a nuisance for any powers, China included. Because after all, Beijing is sporting a bit of a shiner from the North too.

This article originally appeared on Stratfor.com

Russia's Security Forces Prepare for a Power Grab

2018-02-06T17:14:00Z

Highlights

After Russia's March presidential election, the country's government is planning to implement a series of reforms across all sectors.
One of the most impactful reforms would be a restructuring of the country's powerful security services, whose various organizations have historically been extremely competitive.
Restructuring the security sector puts competing factions in the position to grab critical investigative powers, which could tip the balance of power among the organizations.

With President Vladimir Putin's victory in Russia's March election a near certainty, Kremlin power brokers are already thinking beyond election day. Russian media and politicians expect that after securing his fourth term in office, Putin will exercise a freer hand to implement economic reforms, political reshuffles and updates to Kremlin social policies. And a recent report from the New Times, a Russian media outlet, claims that, after the election, the Russian government will also begin the process of restructuring its many rival security services. Security organizations form the backbone of the Kremlin and have long influenced Russia's overall stability. And while power struggles among these groups are nothing new, increasing unrest within Russia's borders gives these reforms even more significance.

A Fierce Competition

Russia currently has multiple government security organizations, including the Federal Security Service (known by its Russian acronym as the FSB), the Foreign Intelligence Service (SVR) and a relative newcomer, the Russian National Guard (Rosgvardiya), created by Putin personally in 2016. These security entities have always engaged in competition, but in recent years the FSB and Rosgvardiya in particular have fought an escalating turf war. The FSB has historically been one of the most powerful organizations within the Russian government, but Rosgvardiya has begun to challenge the its authority, steadily pilfering responsibilities, forces and talent from the Ministry of Internal Affairs (MVD), military intelligence (GRU), the Federal Protective Service (FSO) and other internal security agencies.

According to a report from the New Times, which is linked with the Russian opposition, Putin has grown increasingly unhappy with the FSB over the past year as the security service attempted to limit Rosgvardiya's power, engaged in confrontations with Chechen President Ramzan Kadyrov and failed to prevent the April 2017 terrorist attack in St. Petersburg. Reports from the Daily Journal, an independent anti-government Russian news source, indicate that Putin's administration has pushed FSB members out of key roles in big state agencies and had some of its high-level members arrested for their roles in U.S. election interference, which plunged Moscow's relationship with Washington to a post-Cold War low. Rosgvardiya, meanwhile, has made major power grabs. In addition to taking control of Russia's elite special forces, the organization has attempted to set up its own cybersecurity units, take over protection duties for regional leaders from the FSO and FSB, and participate in foreign security relations.

Restructuring Influence

Several possible configurations for restructuring the security services are rumored to be under consideration, each of which has the potential to swing the balance of power in the direction of either the FSB or the Rosgvardiya. One proposal on the table is to break out the unit of the FSO that directly reports to Putin — the Presidential Security Service (analagous to the U.S. Secret Service) — effectively positioning the FSO outside both the Rosgvardiya and the FSB. Indeed, that possibility may be what prompted Rosgvardiya to try to take over protective duties for regional leaders, giving it a new means of projecting power across Russia.

Perhaps the most influential proposal for the future of the country's security services is the possibility of reviving the Ministry for State Security, a bureau originally organized by Josef Stalin and operated between 1945-1954. Such a structure would strengthen the FSB by uniting several internal security services to create a conglomerate controlling espionage, counterespionage, protection and policing activities. Throughout the summer and fall of 2016, as Rosgvardiya slowly began consolidating power, the FSB had floated the idea of bringing back the security ministry, but spats among various security services caused talks to fizzle. Now, the possibility of a reconstituted Ministry for State Security is back on the table, and if realized, it could dramatically strengthen the FSB's position in the Russian government.

Whoever controls Russia's investigative and prosecutorial powers will wield the most influence.

The Power to Investigate

However, even if the FSB transforms itself into an overarching security agency, it would still need to compete with Rosgvardiya for control over perhaps the strongest security tools within the entire Kremlin: the powers of investigation. Russia's Prosecutor General's office and its Investigative Committee have the ability to investigate and prosecute even the most influential of Russian elites on the basis of real, exaggerated or fabricated criminal accusations, and internal security services have long fought for control over these powerful investigative offices.

In theory, the current Investigative Committee is a neutral body, but in practice its loyalty has swung between power players since its 2011 inception. Most recently, the chief of the Investigative Committee, Alexander Bastrykin, has been expressing partiality to the FSB and its alumni, helping prosecute some of that organization's chief rivals. The most prominent case involves the likely orchestration by influential oil czar Igor Sechin of the prosecution of Economic Development Minister Alexei Ulyukaev, the first major minister arrested since the Soviet period. But any restructuring of the investigative arms could indicate a shift in power. One rumored proposal is the creation of an independent entity, the Federal Investigative Service. It would ostensibly be a neutral body, but history suggests that the FSB and Rosgvardiya would compete just as eagerly for influence over any new entity as they have over existing ones. Another possibility is that the government could divide investigative authority among the various security services. This would create a free-for-all, likely sparking reprisal arrests and tying up judicial prosecutions.

Taking a broader view, one can see that Russia's current political climate provides fertile ground for security spats to increase. Putin and various elites are facing protests and dwindling support from a population that is increasingly demanding accountability and seeking anti-corruption investigations. The Kremlin will eventually have to engage in some sort of anti-corruption campaign to placate the electorate. And that means that whoever controls Russia's investigative and prosecutorial powers will wield the most influence, able to shape how the campaign unfolds and control which of Russia's elites retain or lose assets as the country's economy stagnates. In that context, the FSB and Rosgvardiya are likely to butt heads with increasing frequency, possibly compromising the stability of Russia's political system at the same time.

This article originally appeared on Stratfor.com

Unraveling the Mess in North Korea

2018-02-01T16:32:00Z

As a Stratfor contributor, I generally avoid prescribing policy. But today I can't resist, having found myself in a position to report a policy prescription available nowhere else in English. Philip Bobbitt has come up with a novel proposal for managing the mess in North Korea, which BBC China published in Chinese on Jan. 28. Having access to the English original, as well as five other essays Bobbitt has published in English, I'll use this column to do two things. First, I'll summarize professor Bobbitt's proposal. Second, I'll suggest in ways that its author could not, modesty forbidding, why it's so important that the proposal comes from Philip Bobbitt and why we should listen to him.

A Chinese Nuclear Umbrella Over North Korea

At the center of Bobbitt's solution is the proposal that China extend its nuclear umbrella over North Korea as the United States extends its nuclear umbrella over its allies in the region. This arrangement could reduce Kim Jong Un's incentive to further develop his own country's nuclear capabilities, thereby freeing up resources to bolster North Korea's weak economy. While the plan is not without its own risks — would such a scenario set up a new rivalry between two superpowers that could spark proxy conflicts around the world? — Bobbitt develops it by first critiquing the alternatives and then exploring the motivations of each of the major players to accept this counterintuitive idea. The main alternatives are three: doing more of what we've been doing — diplomacy backed by sanctions; resorting to military force; or allowing North Korea to continue its nuclear buildup in a context of containment and deterrence. Bobbitt is not alone in seeing problems with each.

The first option almost refutes itself. More of the same pressures will produce only more of the same ineffective results. Some proponents hope that more of the same could buy time for a coup or an assassination to unseat Kim. But playing the waiting game is dangerous in a race against North Korea's increasing command of the relevant technologies. China, too, has a lot to lose no matter what scenario a waiting game produces.

If the first option is bland, the second is insane. As Bobbitt put it in an essay last year in Time magazine, "The consequence of a US preemptive strike" against North Korea would leave "Seoul in ruins." Further, it may "well unravel both the system of US alliances and US non-proliferation efforts in the region for which our deterrent has been responsible." Finally, the consequences of such an attack would be disastrous for China in several ways, unleashing a flood of refugees across its border and giving rise to the prospect of a unified Korea backed by the United States right next door.

The third option, containment, has defenders among those who say the strategy worked with Russia and China. Why not North Korea? Bobbitt's reply is to point out the major differences between the three nations and their interests:

"North Korea's paramount goal is to unite the Korean Peninsula. There is no geostrategic ambition so compelling as the unification of societies that have been rendered asunder by war. And while the US deterrent would doubtless protect the US homeland, striking the US homeland is not the North Korean objective. Rather its objective is to put South Korea in the position of asking the United States to leave the Peninsula so as to avoid a conflict that would destroy both North and South Korea."

Further steps in that scenario would surely involve South Korea and Japan developing nuclear capabilities once Seoul had expelled the United States from the Korean Peninsula. Here again, China would find itself more endangered, not less.

A Complex of Initiatives

Having dismissed each of the main options currently on the table, Bobbitt makes the case for his own: "A nuclear guarantee for the inviolability of the North Korean regime from China is the basis for this option, although it sits inside a larger complex of initiatives." And it is this larger complex of initiatives that gives Bobbitt's proposal the plausibility it might otherwise lack. He reminds us that the Korean War never really ended. "Legally, the (conflict) is merely in abatement and has not terminated because no final peace settlement has been agreed upon." He recalls that, after World War II, it was not until 1975 that the Helsinki Accords finally sealed a peace agreement between the Soviet Union and Western states.

Bobbitt continues, and for the sake of precision, I want to quote his own words: "I propose a similar conference, convened by the UN, to include North Korea, South Korea, Japan, China, the US and Russia with the objective of finally ending the Korean War and recognizing the borders of both Koreas. Roughly speaking, the US and China would be in the position of the US and the Soviet Union at Helsinki."

What could motivate China to extend its nuclear umbrella over North Korea, and what would motivate North Korea to accept such an offer?

For China, both carrots and sticks could help make the deal seem more appealing. The sticks are the incalculable consequences of the other three scenarios. The carrot? "It would secure for China a diplomatic role as a great power that its economic growth alone cannot achieve."

North Korea's motivation, meanwhile, stems from a deep distrust of assurances by China or the United States that regime change is not the endgame. "Only the capability to deploy hydrogen warheads launched by long-range ballistic missiles that could destroy American cities can provide an ironclad guarantee for the regime." And right now, China has that capability.

North Korea might gain long-range nuclear capability and might believe that such a capability would assure its safety. Look at Libya and Iraq for counterexamples that demonstrate the need for nukes. But Bobbitt sees a flaw in this logic that could lead to the destruction of Kim Jong Un's government:

"Changes in technology derived from the revolution in rapid computation that is still accelerating will decisively erode North Korea's retaliatory capabilities. Techniques like hardening and concealment that currently protect the North Korean arsenal are rapidly being made obsolete by advances in accuracy, the timing of detonation and remote sensing devices. New guidance systems, rapid data processing and communications, artificial intelligence and many of the other byproducts of the computer revolution are driving this development. Absent the new North Korean threat to the American homeland, the US might well forgo the pursuit of such damage limiting capabilities because the acquisition of this capacity brings with it other risks, like launch-on-warning protocols. But North Korea's maneuvers to secure its future have made it now so deadly to the US that its eventual destruction is sealed."

The Value of Expertise

I quote professor Bobbitt again at some length because in matters of nuclear technology, I am out of my depth but he is not. In addition to serving as the Herbert Wechsler professor of federal jurisprudence and the director of the Center for National Security at Columbia Law School, he is the author of Democracy and Deterrence: The History and Future of Nuclear Strategy and the editor, with Sir Lawrence Freedman and Dr. Gregory Treverton, of U.S. Nuclear Strategy: A Reader.

And that's just the beginning. He has written another six books, including the monumental The Shield of Achilles about the succession of different constitutional orders since the Treaty of Westphalia; Terror and Consent: The Wars for the Twenty-First Century; and, most recently, The Garments of Court and Palace: Machiavelli and the World That He Made. (For a summary of these three books, see my column introducing Bobbitt.)

As if that were not enough to make him a voice of authority, he has served as associate counsel to the president; as the counselor on international law for the Department of State; and as the director for intelligence programs, the senior director for critical infrastructure and the senior director for strategic planning at the National Security Council. He also put in a stint as senior fellow in war studies at Kings College, London, and another as research fellow at Nuffield College, Oxford.

Throughout his career, Bobbitt has thought long and hard about how constitutional law, war and strategy relate to one another. The peace treaties that conclude great wars establish the ground rules for successive constitutional orders. Strategies for carrying large institutions into the future need to shake off obsolete social contracts and craft new contracts in light of the new constitutional order. We can no more go backward in history than an old man can become young.

I know that it is a mark of modernity and the Enlightenment's scientific revolution that we are no longer supposed to accept arguments from authority. Something is not true just because Aristotle said it; arguments, like science, should stand on their own merits. I also know that in the current environment, a distrust of authorities and their vaunted expertise is deepening. But sometimes real authority, backed by learning and experience, exists. Philip Bobbitt knows whereof he speaks. We, and the Chinese, could do a lot worse — a whole lot worse — than listen to him.

This article originally appeared on Stratfor.com

Addressing the State of the World

2018-01-30T16:25:00Z

U.S. President Donald Trump is preparing to deliver his first State of the Union address. The speech, scheduled for Jan. 30, will carry all the usual pomp and ceremony: the flurry of autographs and handshakes as the president enters the U.S. House chamber; the vice president and speaker of the house's awkwardly intense gazes on the president as he gives the address; the contrived anecdotes about special guests in the audience designed to underscore the president's populist image; the opposition party's coordinated acts of protest by refusing to stand and applaud. Political theater aside, however, the president will be addressing his country — and, by extension, the world — in a year in which anxiety over the future of trade and the prospect of great power conflict tempers tepid optimism toward global growth. As an accompaniment to this year's State of the Union address, I'll take a stab at summarizing the State of the World.

Self-proclaimed globalists, patriots and nationalists of the world:

We find ourselves in an age in which technology is advancing at a relentless pace, and many nations — under mounting economic and social strain — are resorting to desperate measures to try to keep up.

The United States is trying to find its footing in the emerging world order. Given the country's outsize influence on the global stage, the transition has been understandably raucous. Yet while the current administration regularly leers at multilateral institutions in prioritizing its interests above those of other nations, the United States is not about to tear down the global trading order or leave long-standing allies in the lurch. Checks and balances will continue to moderate the more sensational impulses of the White House as it tries to crack down on so-called economic predators and demand more of its partners.

Bracing for Uncertainty

And while the United States has no qualms about broadcasting a protectionist agenda, it is hardly alone in this position. India and China will tout open markets as they carefully guard their own industries. Even France's zealous young leader has adopted a protectionist stance, which he cleverly masks with globalist rhetoric. Growing protectionism will not overpower pragmatism in global trade, however. In fact, alarm over U.S. trade policy has spurred Latin American, Asian and European powers to bend in trade negotiations, reviving the Trans-Pacific Partnership and pushing to expand into new markets.

In some parts of the world, a race against the clock for economic reform will feed authoritarianism. Chinese President Xi Jinping already is using his absolute control over his country to take on entrenched local interests with an eye toward shuttering unprofitable "zombie" enterprises, sealing up risky financial channels and driving more sustainable growth. Saudi Arabia's intrepid Crown Prince Mohammed bin Salman has amassed an array of portfolios, sidelined relatives and shaken down important princes in a bid not only to increase his power but also to remove any obstacles that could hinder development of a dynamic private industry. Egypt's military establishment, meanwhile, is making arrangements to ensure that President Abdel Fattah al-Sisi emerges victorious from this year's election with many more politically risky economic reforms to come. Though power grabs may be a pre-requisite for economic repair in some cases, they will create more vulnerabilities for each of these governments down the line.

At the same time, the world is entering a more dangerous age in nuclear deterrenceand proliferation. Unwilling to wait around for renegotiations over arms treaties that are riddled with violations anyway, the United States will be taking more active steps to modernize and expand its nuclear arsenal in competition with China and Russia. Nuclear rivals India and Pakistan are lowering their threshold for conflict as New Delhi promises devastation should Islamabad try to deploy tactical nuclear weapons. North Korea is on the verge of proving to other aspiring nuclear powers that decades of hardship, manipulation and resource investment can yield a viable nuclear deterrent under the nose of "responsible" nuclear stakeholders. As things heat up in the east, South Korea and Japan may eventually entertain obtaining nukes of their own if they come to doubt the reliability of the U.S. security umbrella. And while Iran works with Europe to try to salvage its nuclear deal with the West, a concerted effort by the United States, Saudi Arabia and Israel to destabilize the Islamic republic will reinvigorate a debate in Tehran on the merits of pursuing a nuclear deterrent.

The greatest challenge that lies ahead is also the most nebulous.

History is repeating itself across Eurasia. In Iraq and Syria, Turkey is trying to shove the Russians and Americans out of its way as it sweeps through the lands of its former empire. In Europe, an age-old division between north and south has resurfaced in the debate over eurozone reform. Germany faces pressure from its neighbors in Northern Europe to stand its ground and fight for financial prudence, while from the south, Italy is badgering France to boost spending and loosen fiscal rules. Russian President Vladimir Putin, meanwhile, is battening down the hatches at home as he looks for partners in China to help his country compete with the United States and in Saudi Arabia to keep it relevant in the energy sphere.

The Tech Revolution Expands

But the greatest challenge that lies ahead is also the most nebulous. As the world naturally succumbs to the economic pressures that come with aging demographics, we will rely ever more on technological innovation to keep us moving, trading, communicating and competing efficiently. Even so, the joints holding our society together will creak with every leap of progress we make. If adopting robotics in the manufacturing industry over the past three decades has created the intense level of social angst we are experiencing today, imagine what will happen when algorithms replace entire industries of middleman services, such as insurance and health care. We're on a timeline that leaves little space for politicians to gamble with the expectation that economic benefits will eventually trickle down to the masses. And blunt attempts at banning technological platforms, including social media and cryptocurrency exchanges, can only buy so much time.

This is a world that requires nations, corporations and individuals to think not in terms of quarterly reports or midterm elections, but in decades. For it is within this century that nations will have to rewrite a social contract with their citizens, whether that day of reckoning comes by force or by political will.

This article originally appeared on Stratfor.com

Hacking: Another Weapon in the Asymmetrical Arsenal

2018-01-25T17:24:00Z

Iran's Islamic Revolution could play out, in part, online. On Jan. 4, the Carnegie Endowment for International Peace published a report describing the country as a "third-tier cyberthreat." The report's authors note that despite Iran's success with cyberattacks such as Shamoon and a spear-phishing campaign that hit Deloitte and several other companies, Iranian attacks generally feature poor tradecraft. As a result, investigators haven't had much trouble tracking cyber operations back to the Islamic republic, whether because the attack code contained Farsi terms or because its associated IP address traced to Iran. Iranian spear-phishing attacks, likewise, frequently suffer from their perpetrators' poor command of the English language.

But even if its capabilities pale in comparison with those of Russia or China, Iran is still a cyberthreat, albeit a third-tier one. The Carnegie Endowment's report about the country's adoption and use of an asymmetrical weapon such as hacking called to mind the way governments and their agents have come to embrace and employ terrorism. Looking at the manner in which state sponsors, proxies and non-state actors have practiced terrorism can offer a useful framework for understanding how countries could turn hacking into a more dangerous tool of asymmetrical warfare.

Augmenting, Not Replacing, Terrorism

Before we begin though, I want to be clear: Hacking will not replace terrorism as an asymmetrical weapon. Terrorism is not going anywhere, and it remains a popular tool for state and non-state actors alike, as a glance at the battlefields in Syria, Afghanistan and Libya will attest. Instead, cyberattacks are a supplement to terrorism — just another wrench in the toolbox of Machiavellian statecraft. Many of the features that make terrorism attractive as a conduit for state power also apply to cyberattacks.

Both tactics offer the state employing them plausible deniability, for example. Iran exemplifies this strategy with its robust support of a global network of militant organizations. Among them, the Lebanese paramilitary group Hezbollah executed attacks throughout the 1980s under the banner of the Islamic Jihad Organization, the Revolutionary Justice Organization and the Organization of the Oppressed on Earth. By operating variously under so many different names, Hezbollah managed to create confusion while deflecting blame from its senior leaders and clerics and while hiding the role of its benefactors in Iran and Syria. Pakistan has taken a similar approach, throwing its support behind militant groups in India and Afghanistan and sheltering senior al Qaeda figures within its own borders. The shadowy operations of their terrorist proxies largely keep these sponsor states free from blame, though not necessarily suspicion, for attacks. And even when evidence reveals a country's role in terrorism — such as Iran's involvement in the Israeli Embassy bombing in Argentina in 1992 or Pakistan's part in the 2008 attack in Mumbai, India — the repercussions are usually too slight to offset the perceived benefit of this asymmetrical weapon.

So far, state-sanctioned cyberattacks have met with even less blowback. Though the exploits have caused significant disruptions for their targets — many of them major corporations — the state actors behind them have gotten off scot-free. More troubling is the lack of consequences for hacks against government and political targets. Authorities have implicated nation-states in high-profile attacks on institutions such the U.S. Office of Personnel Management and the Democratic National Committee. Yet despite the preponderance of evidence against them, the countries behind these hacks have faced little in the way of punishment. The low costs associated with cyberattacks doubtless will encourage more states to use this tactic, like terrorism before it.

Beyond the legal and political price, the financial cost of hacking, like that of terrorism, is also far more affordable than the cost of traditional warfare. A successful terrorist act or cyberattack, moreover, can have a disproportionate effect on its target, relative to the time and effort required to conduct it. Consider the staggering number of people affected by the attack on the credit reporting agency Equifax, for instance, or the enduring fallout of Russia's cyber meddling in foreign elections. In the realm of cyberattacks, a small investment can yield an outsize return.

The Tool Is Only as Good as the Craftsman

But a weapon is only as effective as the person (or country) wielding it. Just as levels of terrorist tradecraft vary widely from one state-sponsored militant group to the next, the skills and abilities of state-backed cyber operatives differ. Concerns are growing that as cyberattacks mature as an asymmetrical weapon, countries will emerge as state sponsors of hacking that can help propagate the technique. Along with the conventional weapons it sells to Iran and Syria, for example, Russia may one day supply them with cyber tools and training. Signs suggest that the United States and Israel have already collaborated on a cyber operation: the Stuxnet attack that debilitated Iran's uranium enrichment site in 2010.

Like state sponsors of terrorism, state hacker-backers could provide operatives with training and protection to carry out attacks. They might even arm proxy groups with cyber tools, much as Libya trained, sheltered and equipped terrorist groups such as the Abu Nidal Organization. Transferring knowledge in this way could enhance the skills and abilities of cyber operatives the world over. The Soviet-trained bombmakers of the Provisional Irish Republican Army, after all, passed their know-how on to fellow militant groups, including the Revolutionary Armed Forces of Colombia, and former Russian weapons scientists have helped nurture North Korea's nuclear program. In much the same way, cybermercenaries who have worked with Russian or Chinese hacking groups could provide training and tools to client states and proxy organizations far and wide. Countries such as Russia provide legal cover for patriotic criminal hackers as it is. The rise of state-sponsored proxy hackers could also make the world of cyberattacks even murkier.

To develop advanced cyber capabilities, though, a state needs many of the same assets necessary for building a first-tier military: a robust higher education system, investment in research and development, public-private cooperation, and scalability among them. Countries like Iran and North Korea, which fall short in some of these areas, will have a hard time cultivating or attracting world-class cyber talent as a result. But what they lack in resources, these states make up for in ambition and drive, as they have demonstrated in their quest for nuclear weapons. With a little outside expertise, this relentless focus could help them overcome their constraints and turn a third-tier cyberthreat such as Iran into a far more serious menace.

This article originally appeared on Stratfor.com

Addressing Nigeria's Trade Disparity With China

2018-01-23T17:11:00Z

China's economic cooperation with Africa has been exceptional as reflected in its economic engagements with nearly all the 54 countries on the continent. Within Africa, Nigeria is an important country for China, if we take into consideration the population and natural resources of Africa's largest economy.

Although Nigeria-China trade has grown exponentially over the last few decades, the two countries' trade relations have remained disproportionately in favour of China. Nigeria is a perennial importer of Chinese goods, thus giving rise to capital flight and the weakening of the Nigerian manufacturing sector. The key question is how this trade imbalance can be remedied.

Historical Trend

Nigeria's trade with China had existed long before diplomatic normalization took place in 1971. Since then, economic ties between the two countries have continued to wax stronger. However, Nigeria's trade deficit with China has been a knotty issue since the 1970s. For instance, between 1972 and 1974, Nigeria exported USD 14 million worth of goods to China, while imported goods from the Asian country were worth USD 249 million.

Following the normalization of diplomatic relationship, the two governments began to work out modalities to mitigate the trade imbalance. In September 1974, a five-man delegation of the Nigerian government, led by the head of state, General Yakubu Gowon, went to China to discuss trade between the two countries. Unfortunately, nothing tangible came out of the trip, because ten months after that visit, General Gowon was overthrown by (late) General Murtala Ramat Muhammed.

Subsequent efforts were made by General Olusegun Obasanjo in 1978 and 1979. According to Nigerian former diplomat and political scientist, Alaba Ogunsawo, negotiations between Nigerian officials and then-Chinese Vice Premier, Geng Biao, along with other Chinese officials, did bring only a limited aid package for Nigeria.

As an initial step towards remedying the trade imbalance between the two countries, China signed agreements of cooperation in the fields of agriculture, industry and trade, and further pledged commitments in a number of other areas. Some of these areas included sending medical personnel and agricultural experts to assist in the development of new model farms. China also agreed to buy Nigerian palm kernels, cocoa, cashew nuts and cotton. A further agreement involved manufacturing Nigeria-focused farming tools in China. Notwithstanding the above agreements, the trade imbalances between the two countries persisted and widened.

At the turn of the millennium, Nigeria renewed its economic diplomacy. Much effort was put into enhancing economic cooperation with China. To give impetus to the cooperation, in 2001 and 2005, former President, Olusegun Obasanjo, visited China. In 2004 and 2006, Chinese President, Hu Jintao, reciprocated both visits. These visits culminated in the signing of more agreements and Memorandum of Understanding, key among which is the strategic partnership of 2006. The focus of the partnership was trade expansion, investments in agriculture, telecommunications, energy and infrastructure development.

If a country is not buying much of Nigeria's oil, this would affect Nigeria's trade balance with that country. This is the case with Nigeria-China trade.

By 2005, bilateral trade between the two countries reached USD 2.8 billion. That year, China's exports to Nigeria were valued at USD 2.3 billion and its imports from Nigeria were estimated at USD 527.1 million. And by 2010, Nigeria-China trade was USD 7.700 billion, making Nigeria China's fourth biggest African trading partner, and the second largest Chinese export destination on the continent. However, China's exports to Nigeria and imports from Nigeria were USD 6.737 billion and USD 962.5 million, respectively.

In 2014, trade volume between the two countries had reached a whooping USD 18.1 billion, thus, making Nigeria China's third largest export destination in Africa, after South Africa and Angola. Nigeria-China trade cooled to USD 14.94 billion and USD 13 billion in 2015 and 2016, respectively. Latest trade data has shown further deterioration in trade between the two countries.

According to the National Bureau of Statistics, between 2013 and 2016, Nigeria's trade deficit with China was USD 16.9 billion. Although the balance of trade is skewed in favour of China, Nigeria-China trade accounts for 8.3% of China's total trade with Africa, and 42% of China's trade with the Economic Community of West African States (ECOWAS).

During a state visit to China in 2016, Nigerian President, Muhammadu Buhari, while acknowledging the tremendous successes in bilateral trade between Nigeria and China, reiterated the large gap in trade in favour of China. The challenge is how to substantially reduce the deficit.

Mitigating the Trade Imbalance

Solving Nigeria's trade deficit with China would have to go beyond rhetoric and diplomatic meetings. In fact, much of the solutions lie with Nigeria, although not without commitments from China. There are four key factors that need to be addressed.

First, Nigeria must address its problem of industrialization. Industrialization is a sine-qua-non for development and favourable balance of trade. Highly industrialised countries have undue advantage over their less industrialised counterparts in the area of trade. Lack of industrialisation has perpetually kept developing countries underdeveloped and with diminished living standards.

Lack of industrialisation is what has perpetually kept Nigeria as an exporter of commodities and importer of manufactured goods from China. Hence, the resulting trade deficit. For Nigeria to improve its balance of trade with China, it must focus on increasing its technology adoption and industrialisation. In other words, Nigeria needs to cut down its dependency on importation of manufactured goods from China and other more industrialised nations.

The second factor entails escaping the commodity trap. Nigeria only exports about 10 percent of its manufactured goods as against 90 percent of crude oil and other raw materials. The ramification of this is two-fold. First, any negative fluctuation in the prices of the commodities at the international markets would drastically affect Nigeria's trade balance, not just with China, but also with some of its trading partners. Second, if a country is not buying much of Nigeria's oil, this would affect Nigeria's trade balance with that country. This is the case with Nigeria-China trade. China's crude oil import from Nigeria has been negligible. It accounted for 2% of Nigeria's total crude oil export in 2014 and 3% in 2015. What the Nigerian government should do is to diversify its economy to boost exports.

A third critical factor to be addressed is the lack of productive infrastructure in Nigeria. According to the World Bank's Ease of Doing Business Report 2018, part of the reason Nigeria ranks 145th out of 190 countries is the country's huge infrastructural deficit. Infrastructure is critical for business to thrive.

For Nigeria to benefit from international trade and to bring its trade deficit with China to a minimum, the country must revamp its infrastructure, especially its railways, roads and aviation networks. This will provide easy accessibility to areas of production and markets.

The fourth and final factor that needs to be addressed to improve Nigeria's balance of trade with China is for the Chinese government to declare its readiness to encourage Chinese companies to "outsource and off-shore" to Nigeria.

Conclusion

Trade remains a core interest of many countries and by far an exceptional external condition for economic growth and development. For Nigeria to curtail its trade disparity with China and to further maximize the benefits of international trade for economic development, the Nigerian government must do the needful. It must move away from the commodity trap, industrialize, build its infrastructure and make its trade policies with China and other countries a core interest of the state.

The country also needs astute policies to guide all its engagements in international relations.

This article originally appeared on Stratfor.com

Going Viral: The Geopolitics of the Flu

2018-01-18T16:48:00Z

Highlights

On the 100-year anniversary of the 1918 flu pandemic, the Northern Hemisphere's flu season is poised to be a rough one.
Medical advances and technology have helped people effectively combat a multitude of diseases, but the risk of a flu pandemic remains.
Technological innovations in data analytics could help prevent the spread of disease, but they could face policy roadblocks.

One hundred years ago on the plains of southwestern Kansas, a storm was brewing. But it was not one bearing rains to support the area's residents, nor would it bring the winds and dust that would ravage the same land less than two decades later. Instead, a microscopic clump of proteins, genetic material, fats and carbohydrates was shaping up to cause the worst global disease pandemic in modern history: In the span of about a year from 1918 to 1919, the Spanish influenza killed an estimated 20 million to 50 million people around the world. Many factors that contributed to the outbreak's severity were unique to their time. The wartime world was more connected, allowing the virus to spread faster than ever, but the still-nascent understanding of how diseases worked meant that sanitation guidelines and treatment methods were lagging. Meanwhile, World War I had ravaged economies and populations across the globe and contributed to media censorship that limited the dissemination of information about the disease.

Since then, vaccines and medicines have been developed to fight diseases of all sorts. Moreover, people now can more closely monitor the spread of disease through social media and the 24-hour news cycle. And yet, the influenza virus, with its ability to rapidly mutate and adapt, remains one of the world's greatest disease threats. Each year, the flu virus kills thousands and poses tens of billions of dollars in treatment costs and equivalent amounts in economic losses in the United States alone. Countries and corporations have long been working to develop a universal vaccine that targets all strains of the flu, and in the coming years, these efforts will continue alongside the increased focus on data sharing, social media and blockchain — all key tools for disease outbreak control. In this way, the flu exists at the intersection of geopolitics and disease. Indeed, as countries continue trying to regulate developing technological sectors, they will also, perhaps inadvertently, effect how diseases are monitored, controlled and contained.

A Lesson 100 Years Long

As December 1917 faded into 1918, World War I raged on, providing perfect breeding grounds for multiple diseases. Training camps and hospitals brimmed with soldiers from around the world, while those on the front lines languished in deplorable conditions. Yet author of The Great Influenza John M. Barry suggests that what would become known as the Spanish flu first emerged in the civilian community of Haskell County, Kansas, in January 1918. Historians may never be certain of its exact origins, but Barry postulates that the disease spread to the nearby Camp Funston military training grounds in the spring, before U.S. troop deployments took it global. The flu did not acquire its moniker until it hit the shores of Spain, a country not at war and therefore more open about recording the presence of the disease in its media. By the fall of 1918, the war was nearing its end, but the flu was at full force, targeting the healthy as well as the very young and old. It had infected hundreds of millions by the time it waned in 1919.

Vaccines, antiviral medication, improved sanitary measures and generally better medical care have dramatically decreased the threat of the flu in the last century. However, the race against evolution continues: None of these advances have been able to completely combat the rapidly evolving nature of the disease. The flu that hit in 1918 was a strain of H1N1, but there are dozens of possible flu types that can arise from combining the proteins on the outside of the virus called hemagglutinin (H) and neuraminidase (N). So far, scientists have identified 18 types of hemagglutinin and 11 types of neuraminidase — any combination of which yields a new and unique flu, from H2N2 to H3N2 to H5N1 to H7N9. Mutations can alter the severity of the illness and limit the effectiveness of existing treatments year after year.

To cause a new pandemic, the virus would need to mutate into a form that makes it transmittable among humans, easily spread and very deadly. The emergence of a flu strain with this trifecta of traits is unlikely, but given the interconnectivity of the current world, if one did, the risks of widespread contagion would be high. And even the most pedestrian flu seasons exact a death toll in the thousands.

The CDC recently changed the topic of its Jan. 16 meeting from nuclear war preparedness to the flu.

A Flu Season Fit for an Anniversary

While unlikely to reach pandemic levels, the 2017-2018 flu season has gotten off to an early and vigorous start. Australia, where the flu season typically runs from April to September, has historically been a harbinger of the severity of each year's emergent strain of influenza elsewhere. This year's vaccine did little to prevent the spread of the virus in the country, leading many to accurately predict a brutal 2018 flu season for those north of the equator. In the United States, a high number of infections has prompted schools to close in some places and hospitals to institute visitation limits; so far, only Hawaii has not experienced a widespread number of flu cases.

The U.S. Centers for Disease Control and Prevention (CDC) reports that this year's flu vaccine has been effective in only 32 percent of the population. Additionally, the type of virus that is dominant in the United States this year, H3N2, typically causes more severe symptoms than other common strains. These factors together have caused mortality rates for this year's outbreak to reach epidemic levels throughout the country, according to the most recent CDC update. In response, the CDC recently changed the topic of its Jan. 16 meeting from nuclear war preparedness to the flu.

One hundred years removed from the global pandemic, there is still work to be done in the fight against the flu. While current vaccines typically target the parts of the flu virus that change year to year, firms such as the Alphabet Inc.-funded Vaccitech are working to develop a "holy grail" vaccine that targets the parts that do not easily mutate. Vaccitech hopes to have a universal vaccine, which would boost efficacy rates over current approaches, ready by 2025. In December, the National Institutes of Health (NIH) removed a three-year ban on funding for "gain of function" studies, in which researchers study mutations that change how viruses work, including those that cause Severe Acute Respiratory Syndrome (SARS), Ebola and influenza. Funding from an institution as large as the NIH is another major factor in helping scientists stay one step ahead of viruses, and it could eventually aid in the creation of flu vaccines or treatments for new strains.

New Rules for New Tools

Developments in technology — particularly in the area of data science, which can allow researchers nonmedical avenues for tracking diseases and preventing their spread — are crucial in the ongoing fight against disease outbreaks. A recent paper in the Journal of the Royal Society Interface, for example, outlined how Facebook could be used to track and target human bridges of transmission. By identifying individuals who act as hubs for the spread of disease, medical professionals could more effectively and efficiently distribute limited vaccines in the event of a widespread outbreak. Other social media outlets all have the potential to play a similar role. Meanwhile, blockchain technology, which allows for the storage of massive amounts of personal data, also offers opportunities for tracking the spread and risk of diseases such as the flu. It would not only allow the efficient transmission and sharing of data — it would enable users to maintain privacy standards, a quality that will become increasingly valuable in the future.

The use of these and other technological advancements to help with disease control may face policy roadblocks, as data sharing and data privacy become key topics of political discussion. As the world becomes ever-more digital, and the amount of available data to analyze increases, governments will diligently focus on developing regulations for how that data is shared. Already, countries the world over are prioritizing intellectual property and digital rights in trade negotiations.

Data sharing and collection is vital for the understanding of disease; indeed, some experts attribute the severity of the SARS outbreak in 2003 to a lack of communication between Beijing and the rest of the world. But in the future, strict regulations developed by countries trying to protect their citizens' privacy may hamper communication efforts. In 2016, for example, the European Union instituted the General Data Protection Regulation, which gave its citizens greater control over how their personal data is shared and distributed. Perhaps more importantly, this new privacy law also permits countries to fine companies found in violation. Of course, the intent of such laws is not to prevent helpful medical communication, but rather to prevent the distribution of private information. But they could still delay the global implementation of these kind of technologies for epidemiological purposes, as governments try to sort out how and when to make exceptions for the medical community.

In the 100 years since the Spanish flu reached even the most remote corners of the globe, society has made countless improvements as it learns more about the science of disease. But though people are better equipped to treat victims and limit the spread of viruses with vaccines and other medicines, the risk of a global pandemic remains. Emerging technologies provide valuable tools for advancing disease control, but policy and regulation have the potential to limit or delay their impact. At the intersection of health, technology and geopolitics, the regulation of data policies have the ability to stir up storms that can spread far beyond Silicon Valley.

This article originally appeared on Stratfor.com

Turkey Reaches the End of Its Rope in Syria

2018-01-16T17:00:00Z

Highlights

Tired of holding back against the Kurdish People's Protection Units, Turkey could soon unilaterally launch an offensive on Afrin canton and possibly Manbij.
Up to this point, Turkey has pursued military operations in Syria only after gaining Russian or U.S. support.
If Turkey departs from this approach, it will inevitably harm its relationship with both Russia and the United States and will considerably increase the risk of a dangerous accident.

Active U.S. and Russian engagement in Syria over the past few years has crowded out Turkey's ambitions for and pursuits in the country, but now its patience is wearing thin. Turkey's primary goal in Syria is to make sure that the two cantons controlled by Syrian Kurdish People's Protection Units (YPG) remain isolated from each other. Turkey had halted military operations toward this goal to avoid clashing directly with U.S. and Russian forces embedded with the YPG, but now evidence is mounting that it is planning a full-out military assault on the YPG, which would undoubtedly damage its relationship with both Russia and the United States.

Turkey had been hoping to wait out the American presence in Syria and to gain Russian authorization for a military assault on the YPG. In exchange it was willing to compromise on its desire to oust Syrian President Bashar al Assad and to work with Russia on a diplomatic solution to the Syrian civil war through peace talks known as the Astana process. But now after several years of waiting and amid a battlefield flare-up that has pitted Russian-backed forces against Turkish-supported rebels, Turkey looks to be abandoning this plan.

War With Friends

Now that the Islamic State has been degraded as a conventional fighting force in Syria, the focus of the war has shifted to the west, where Russian- and Iranian-backed loyalist forces are attempting to eradicate the last of the rebel groups, which Turkey still supports even as it engages in diplomatic talks. Over the past few months, Syrian government forces backed by Russia and Iran have launched a series of interconnected offensives to drive rebels from key terrain in the northwestern provinces of Aleppo, Hama and Idlib. Rebel forces, including several groups heavily armed and supported by Turkey, have met the latest offensive, spearheaded by the Syrian army's Tiger special forces unit to capture the rebel-held airport at Abu al-Duhur, with a fierce counterattack.

The offensive and counteroffensive have heightened tension in the Turkey-Russia relationship. Idlib, after all, is supposed to be part of a de-escalation zone according to parameters set out by Russia, Turkey and Iran during the Astana talks in Kazakhstan. Turkey blames the Syrian government for violating the de-escalation agreement most often and has demanded that Russia do more to prevent further loyalist attacks. Russia argues that the operations in Idlib target terrorist groups and are necessary, and it blamed Turkey for a drone attack on its air base in Latakia.

To confront the deteriorating relationship, Turkish President Recep Tayyip Erdogan spoke by phone with his counterpart, Vladimir Putin, on Jan. 11. After the call, Putin announced that Turkey was not guilty of the drone attack and that it was staged to frame Turkey and undermine its relationship with Russia. Despite how adamant the two leaders are to put their differences aside and work together, the Syrian conflict will strain their relationship. As Turkey-backed rebels engage Russia-backed loyalist forces in vicious battles in northern Syria, it is clear that Russia and Turkey are engaged in a full-blown proxy war.

War With Enemies

A major reason Turkey signed on to the Astana process was to reach an understanding with Russia to exert more pressure on the YPG, but Russia has been uncompromising on the issue. Far from allowing Turkey to wage a military attack on the YPG, Russia has maintained forces in positions blocking Turkish access to Kurdish positions in Afrin and has demanded that the political party representing the YPG, the Democratic Union Party (PYD), be involved in future peace talks in Sochi, Russia. The Kremlin believes that the YPG must buy into any peace agreement for Syria, considering that the group has emerged as a key stakeholder in the conflict and has U.S. support.

Turkey, however, is just as uncompromising on the issue and is growing increasingly impatient with the strengthening of the YPG along the border with Syria. It is growing so impatient, in fact, that it may be ready to move against the YPG without Russian consent. Turkish artillery fire directed at YPG positions in Afrin increased over the weekend, and signs that Turkish forces are moving from other parts of the border to Afrin have been reported. Meanwhile, the United States has announced that it will help train and establish a Syrian border force of 30,000 fighters, including many members of the YPG. Turkey is furious at the prospect of a U.S.-YPG collaboration even after the conventional defeat of the Islamic State and will not idly accept it.

As Turkey prepares for an attack, concerns are rising that an errant Turkish strike could cause Russian or American casualties and lead to a dangerous escalation of the conflict. This danger and the assumption that U.S. support for the YPG was temporary have prevented Turkey from waging full-out war on the YPG. But now as the United States bolsters its support for the YPG and the relationship between Turkey and Russia tightens, Turkey is appearing more and more willing to assume the risks inherent in a strike.

This article originally appeared on Stratfor.com

China's Increasing Security Buffer on Its Western Frontier

2018-01-11T17:29:00Z

An increasingly important component of Beijing's Belt and Road Initiative can be found in the Central Asian corridor that connects China and Afghanistan. China has been expanding its economic and security cooperation in Central Asia in recent years. Reports this week that China plans to build a military base for Afghanistan's armed forces in the northeastern province of Badakhshan suggest that the strategic yet perennially unstable country is quickly following through on the plan.

Forging Plans for a New Base

Afghan defense officials reportedly discussed plans for a base in Badakhshan during a visit to Beijing in December. The two sides agreed to "deepen pragmatic cooperation in various fields including anti-terrorism operations, and push forward the state and military relations between the two countries," according to Afghan Gen. Dawlat Waziri on Jan 7. China will supply the base with "weapons, uniforms for soldiers, military equipment and everything else needed for its functioning," and it will move military vehicles through Tajikistan to Afghanistan, since China's small border with Badakhshan is too rugged for most military vehicles to pass through.

The exact location and size of this military base remain unknown. Chinese and Afghan officials have reportedly set up a special commission to work out such details. But from a broader perspective, a military base fits in with China's growing security ties with and presence in Afghanistan and Central Asia. China's increased economic cooperation with Afghanistan and the region — the latter of which is an important component of Beijing's Belt and Road Initiative — and China's security concerns about Uighur militants in the area have been driving forces behind Beijing's increased focus on the region.

(Stratfor)

Beijing has long been concerned about smuggling through Badakhshan's narrow passes and with Uighur fighters using them to return from Syria, Iraq and other war zones. Patrols of the Chinese People's Armed Police Force have crossed into Afghanistan repeatedly over the past year to conduct missions in the Wakhan corridor, the fingerlike strip of land that extends toward China's Xinjiang province, with Tajikistan to its north and Pakistan to the south. Plans for a new military installation in Badakhshan thus signals continued Chinese interest and security investment in the area.

Tajikistan also has played an important role within China's security strategy in Afghanistan and Central Asia. The country has a long and porous border with Afghanistan, more than half of which is shared with the Badakhshan province. Tajikistan also has had its own problems with militancy, and China has agreed to finance and build outposts on the Tajik-Afghan border. It also has increased the pace and scope of counterterrorism exercises with Tajikistan to bolster the government's counterterrorism capacity. What's more, Tajikistan has served and can continue to serve as a logistical hub for China to transport military supplies into Afghanistan, given the difficult terrain and poor infrastructure of China's border with Afghanistan via the Wakhan corridor.

Factoring In the Presence of Others

Supporting a new Afghan base in Badakhshan, which has come under increased pressure from both the Taliban and the Islamic State in recent months, makes a great deal of sense for China. However, Beijing will have to factor in the interests and presence of other countries in Afghanistan as it moves forward with building and supporting a base in Badakhshan. One is the United States. While the U.S. military presence is far lower than its peak levels in the early to mid-2000s, U.S. and NATO military operations are an important factor in China's security strategy in Afghanistan. Indeed, China prefers to have the United States bear most of the security burdens in Afghanistan. China is unable and unwilling to entangle itself too much in the country, and its overall security presence in Afghanistan, while it has increased in recent years, remains relatively marginal. In essence, China is interested in building up a security buffer in Afghanistan to protect itself, but it isn't interested in having too much responsibility for Afghanistan's internal security issues.

Another country that China must consider — and one that has become increasingly active in Afghanistan — is Russia, which has a large military presence in Tajikistan and Kyrgyzstan, as well as historical ties to Afghanistan because of the Soviet occupation of the country from 1979 to 1989. Russia's significant interests in Afghanistan have been on display via Moscow's ties to the Northern Alliance, which was instrumental in overthrowing the Taliban after the 9/11 attacks, and Russia's logistical support for U.S. and NATO military operations by way of the Northern Distribution Network. While the network has not been used since 2015, Russia has developed connections into Afghanistan in other ways, including hosting numerous rounds of talks aimed at jump-starting negotiations on the Afghan war, as well as reportedly offering financial and weapons support to the Taliban.

Despite overlapping spheres of influence in Central Asia and Afghanistan, Russia and China have largely worked to cooperate rather than compete in these areas. Moscow and Beijing appear to have arranged an informal division of labor in Central Asia, with Russia focusing on military matters while China concentrates on the economic realm. Even where China has chosen to increase its security activities, it has done so seemingly in tacit agreement with Russia, which is in line with Beijing's emphasis on avoiding unilateral engagement in contested areas. This consideration can be seen in joint military exercises between Russia and China, both on a bilateral level and also in a multilateral context via the Shanghai Cooperation Organization, which has included Central Asian states in military drills. China also has backed off pursuing unilateral security initiatives with Central Asian states such as Tajikistan, putting plans to launch a counterterrorism center in the country on the back burner, quite possibly to placate Russian concerns. China's plans to build a base for Afghan units in Badakhshan are similarly likely to have come with a quiet understanding — if not coordination — with Russia.

Ultimately, such basing plans are in line with China's strategy to contain the spillover of militancy from Afghanistan and broaden its security presence beyond its borders as it deepens its economic involvement in Afghanistan and the broader Central Asian region. While Afghanistan has long been and continues to be a source of geopolitical competition among external powers, such powers — including the United States, Russia and increasingly China — actually have a shared interest in containing the spread of militancy and in cooperating to undermine such transnational elements as the Islamic State. Beijing, as is the case with many other involved parties, is concerned about the future of Afghanistan if the United States and NATO eventually withdraw, so China is working to set up a limited buffer ahead of that a possible outcome. The United States is well aware China is in Badakhshan and does not view its presence there as a threat.

Furthermore, as ties between the United States and Pakistan worsen, China has an opportunity to deepen its already heavy influence with Islamabad, but it needs the United States to manage most of the security burden in Afghanistan. So, while China works closely with Pakistan, Beijing is still going to be following through on these measures, such as the Badakhshan base, to mitigate any fallout from Afghanistan. Therefore, as long as China pursues security cooperation with the Afghan National Security Forces and does not include cooperation with Russia in a way that harms U.S. security interests, then the limited but growing Chinese presence in the area will be a net benefit to the overall U.S. security mission.

This article originally appeared on Stratfor.com

Trump May Push, but Pakistan Won't Budge

2018-01-09T16:41:00Z

The new year has brought renewed troubles for the already faltering relationship between the United States and Pakistan. On New Year's Day, U.S. President Donald Trump issued a tweet accusing Pakistan of "lies & deceit" despite receiving $33 billion in U.S. aid for its cooperation in the war in Afghanistan. The next day, the White House announced that it would continue to withhold the $255 million worth of aid that had been earmarked for Pakistan in 2016, citing insufficient action against anti-NATO militants. And on Jan. 4, the White House said it would suspend $900 million in security assistance promised in 2017 and place Pakistan on a list of countries violating religious freedom.

These measures are part of a more aggressive strategy that Trump had laid out during a speech in August 2017 detailing the U.S. approach to South Asia designed to force a shift in Pakistan's behavior in Afghanistan. They also demonstrate that, beneath the tumultuous flow of politics, an enduring strategic logic has shaped U.S. foreign policy. Trump may have campaigned against his predecessor, Barack Obama, who in turn campaigned against his predecessor, George W. Bush, but all three U.S. presidents shared a recognition of the importance of Pakistan to the U.S. war in Afghanistan. Courting Pakistani support, whether through blandishment or coercion, will be key to initiating the long and complicated process of extricating the United States from its longest-running conflict.

Because Pakistan hosts the Taliban leadership and the Haqqani network that spearhead the insurgency, its cooperation is crucial to U.S. efforts in Afghanistan. The government in Islamabad supports the insurgency in part to fufill its longtime strategy to project power into Afghanistan in pursuit of two overarching objectives: First, to install a government in Kabul friendly to its interests that would accept the colonial-era Durand Line as their shared border. Second, to shape a government in Kabul that would be hostile to India, thereby preventing an encirclement by its nuclear archrival.

Because Pakistan considers these objectives vital to its continued existence as a state, the coercive U.S. measures will do little to sway it from its course. But another reason for Pakistan's steadfastness in the face of U.S. pressure is the support it receives from the two strongest military powers in Asia: China and Russia. China is a close ally of Pakistan, having invested in the $62 billion China-Pakistan Economic Corridor, a critical node in China's Belt and Road Initiative aimed at integrating Eurasia with China. The day after Trump's tweet, the Chinese Ministry of Foreign Affairs came to its ally's defense, lauding Pakistan's contributions to counterterrorism operations.

Russia and Pakistan, on the other hand, have historically been enemies. In the 1980s, Pakistan joined the United States and Saudi Arabia in arming the mujahedeen to bloody the Soviets during their decadelong military occupation of Afghanistan. But a few decades later, the roles are changing. In the growing rift between United States and Pakistan, Russia sees an opportunity to gain advantage. By investing in Pakistan's North-South pipeline, conducting joint military exercises and hosting four conferences aimed at jump-starting negotiations in Afghanistan, Moscow is cozying up to Islamabad to forge a relationship with the Taliban. One of Moscow's goals is to support the militant organization to counter transnational extremist groups, such as the Islamic State, which threaten to spill into the Central Asian states bordering northern Afghanistan. But Moscow's outreach is also aimed at gaining a point of contact in Kabul's post-conflict government, as the Taliban are widely expected to someday join a power-sharing agreement designed to end the war.

The United States ultimately has limited tools to alter Pakistan's behavior without turning to more extreme measures.

Even without Chinese and Russian support, Pakistan has sticks of its own to wield against the United States. Pakistani army spokesman Maj. Gen. Asif Ghafoor struck a tone of resistance and restraint in response to Trump's rhetoric, highlighting Pakistan's right to self-defense against unilateral American actions, but also emphasizing the need for Washington and Islamabad to cooperate as allies. Should Trump eventually reach for harsher punitive measures, such as revoking Pakistan's status as a non-NATO major ally or cutting off all aid (including economic), Pakistan will counter by threatening to throttle NATO's supply line reaching from the port of Karachi on the Arabian Sea into landlocked Afghanistan.

To counter such a measure, Washington could preemptively try to breathe life into the dormant Northern Distribution Network, a web of roads and railways crossing through Kazakhstan, Kyrgyzstan, Uzbekistan and Tajikistan that from 2009-15 provided the Pentagon with an alternative route to supply troops in Afghanistan. A hint that the United States may be considering this option could include any increased shuffling of U.S. diplomats to those countries. But because Russian support would be required to pursue this option, the ongoing impasse in relations between Russia and the United States makes it unlikely. If it loses Islamabad's help, Washington likely would be forced instead to create a more expensive and challenging air transport corridor.

Ultimately, though, short of turning to extreme measures to try to alter Pakistan's behavior, U.S. options are limited. Although a cooperative partnership has benefited both, the fact remains that Islamabad's strategic imperatives in Afghanistan clash with Washington's. While neither side is willing to walk away, neither is willing to compromise on its key strategic goals, either. These fundamental differences will keep the antagonism between the two countries alive as 2018 unfolds.

This article originally appeared on Stratfor.com

The Promise and the Threat of AI

2018-01-04T16:37:00Z

High-level problem-solving isn't just for humans anymore. As computers gain speed and accomplish dazzling feats like defeating the world's masters at games of chess and Go, some of the planet's brightest minds — Elon Musk and Stephen Hawking among them — warn that we human beings may find ourselves obsolete. Further, a kind of artificial intelligence arms race may come to dominate geopolitics, rewarding the owners of the best AI mining the biggest pools of "big data" — most likely, as a result of its sheer size, China.

Or consider another dire consequence: As AI-driven robots replace more and more workers, from truck drivers to insurance adjusters, loan officers and any number of other white-collar occupations, unemployment will rise. How will economies adjust? Should we imagine a utopia filled with gratifying leisure activities or a feudal dystopia in which a wealthy elite hold the few precious jobs unsuitable for computers?

The stakes are high. But the terms of the debate thus far are confused. The recent advances in AI are impressive, and the future prospects for the technology are truly amazing. Even so, between artificial intelligence and truly human intelligence lie a host of differences that much of the literature on the subject has failed to adequately address. In this column I'll try to sort fact from fiction.

Thinking About Thinking Machines

In a rich anthology of short essays, What to Think About Machines That Think, William Poundstone, author of Are You Smart Enough to Work at Google?, begins with a quote from the computer science pioneer Edsger Dijkstra: "The question of whether machines can think is about as relevant as the question of whether submarines can swim." Both a whale and a submarine make forward progress through the water, but they do it in fundamentally different ways. Likewise, both thinking and computation can come up with similar-looking results, but the way they do it is fundamentally different.

On the other hand, Freeman Dyson, the acclaimed physicist at Princeton's Institute for Advanced Study, dismisses the question. His is the shortest of all the essays in the anthology, edited by John Brockman. It reads in full: "I do not believe that machines that think exist, or that they are likely to exist in the foreseeable future. If I am wrong, as I often am, any thoughts I might have about the question are irrelevant. If I am right, then the whole question is irrelevant."

Before being quite so dismissive, though, let's take a deeper look at what the alarmists are saying. By the end of his short essay, after all, Poundstone comes around. Having opened with Dijkstra's apt aphorism about submarines that don't swim, Poundstone closes on a cautionary note: "I think the notion of Frankensteinian AI — AI that turns on its creators — is worth taking seriously."

The Dangers of Ultraintelligence

The case for concern is nothing new. All the way back in 1965, British mathematician Irving Good wrote:

"Let an ultraintelligent machine be defined as a machine that can far surpass all the intellectual activities of any man however clever. Since the design of machines is one of these intellectual activities, an ultraintelligent machine could design even better machines; there would then unquestionably be an 'intelligence explosion,' and the intelligence of man would be left far behind. Thus the first ultraintelligent machine is the last invention that man need ever make, provided that the machine is docile enough to tell us how to keep it under control."

The last provision is key. While the sorcerer's apprentice may not be as malevolent as Frankenstein's monster, even the best-intentioned "apprentice" can get out of hand. Hence the increasing attention to two different issues in debates over AI. First there is the question of how soon, if ever, machines will achieve or surpass human intelligence. Second is the debate over whether, if they do, they will be malignant or benign.

In his book Life 3.0: Being Human in the Age of Artificial Intelligence, Max Tegmark distinguishes five different stances toward AI based on these two dimensions. The categories come in handy for grouping the many contributors to the Brockman volume, as well as the many participants Tegmark pulled together for a conference on AI three years ago:

Those who believe that AI will exceed human intelligence "in a few years" — "virtually nobody" these days, according to Tegmark.
The so-called digital utopians, who hold that AI will pass up human intelligence in 50-100 years and that the development will be a boon for humanity. Kevin Kelly belongs in this category, along with Singularity Is Near author Ray Kurzweil.
People who think that, on the contrary, the achievement of superior intelligence by machines will be a bad thing, whenever it happens. Tegmark calls adherents to this idea "luddites." The contingent includes Martin Rees, the Royal Society's former president, and American computer scientist Bill Joy, who wrote a famous cover story for Wired titled "Why the Future Doesn't Need Us."
A group between the luddites and the utopians, "the beneficial AI movement," which contends that AI is likely to arrive sometime in the next hundred years, and that we'd better get to work on making sure that its effects are benign, not malignant. Oxford philosopher Nick Bostrom, author of Superintelligence: Paths, Dangers, Strategies, is a prominent voice in this camp, as are most of the people who took part in the January 2015 conference, largely to launch the beneficial AI movement.
Finally there are the "techno-skeptics," as Tegmark calls them, who believe AI will never rival human cognition. Along with Dyson, Jaron Lanier — the inventor of virtual reality — belongs in this group, as does neuroanthropologist Terrence Deacon.

If you accept the taxonomy, then the main questions about AI are how soon it will overtake human intelligence, whether that event will have beneficial or deleterious effects, and what we should do now to prepare for those effects. Sounds reasonable enough.

Mistaking Computation for Cognition

But there is a problem with Tegmark's taxonomy. It assumes that AI is trying to overtake human intelligence on the same racetrack, as it were. As with the whale and the submarine, however, computers and human minds achieve similar ends through vastly different means, though at first glance they may appear to be doing the same thing — calculating.

Computers are built to be precise. Enter a given input, and you get the same output every time — a behaviorist's dream. Brains, on the other hand, are messy, with lots of noise. Where computers are precise and deterministic, brains are stochastic. Where computers work by algorithmic sequences that simulate deterministic patterns of mechanistic cause and effect, minds aim at meanings. Where computers run on hardware using software that is unambiguous — one-to-one mappings called "code" — brains run on wetware that is not just a circuit diagram of neurons but also a bath of blood and hormones and neurotransmitters.

To be fair to those who buy into the computational metaphor for mind — and all of the digital utopians do — AI might easily be confused with human intelligence because, however much we may know about AI, we know shockingly little about how the brain works, and next to nothing about how subjective consciousness emerges from that bloody mess. But we do know that the brain is not a hard-wired circuit board.

Techno-skeptic Deacon deconstructs Silicon Valley's adoption of the computational metaphor for mind in his book Incomplete Nature:

"Like behaviorism before it the strict adherence to a mechanistic analogy that was required to avoid blatant homuncular assumptions come at the cost of leaving no space for explaining the experience of consciousness or the sense of mental agency ... So, like a secret reincarnation of behaviorism, cognitive scientists found themselves seriously discussing the likelihood that such mental experiences do not actually contribute any explanatory power beyond the immediate material activities of neurons."

Deacon uses the mythical figure of the golem to capture the difference between computers and human intelligence. In Jewish folklore of the late Middle Ages, golems were imagined as clay figures formed to look like a man but to have no inner life. A powerful rabbi then brought them to life using magical incantations.

"Golems can thus be seen as the very real consequence of investing relentless logic with animate power. ... In their design as well as their role as unerringly literal slaves, digital computers are the epitome of a creation that embodies truth maintenance made animate. Like the golems of mythology, they are selfless servants, but they are also mindless. Because of this, they share the golem's lack of discernment and potential for disaster."

So even if we agree with Deacon that computers and brains are doing very different things when they calculate, AI may still carry the "potential for disaster." Elon Musk and Stephen Hawking aren't crazy. It's just that in articulating the nature of the potential disaster, we should constantly keep in mind the artificiality of artificial intelligence.

In the eyes of Adriana Braga and Robert Logan, authors of a recently published paper, "The Emperor of Strong AI Has No Clothes: Limits to Artificial Intelligence," the danger of AI has less to do with some potentially ill-intentioned superintelligence overtaking us and more to do with our misconstruing the nature of our own intelligence. They explain:

"What motivated us to write this essay is our fear that some who argue for the technological singularity might in fact convince many others to lower the threshold as to what constitutes human intelligence so that it meets the level of machine intelligence, and thus devalue those aspects of human intelligence that we (the authors) hold dear such as imagination, aesthetics, altruism, creativity, and wisdom."

Virtual reality creator Lanier, who is deeply suspicious of the computational metaphor for mind, makes a similar point in his important book, You Are Not a Gadget: "People can make themselves believe in all sorts of fictitious beings, but when those beings are perceived as inhabiting the software tools through which we live our lives, we have to change ourselves in unfortunate ways in order to support our fantasies. We make ourselves dull."

In our headlong quest for bigger, better, faster artificial intelligence, we run the risk of rendering our own intelligence artificial.

This article originally appeared on Stratfor.com

A Year of Tough Talks Awaits the EU and U.K.

2018-01-02T16:28:00Z

Highlights

The United Kingdom and the European Union probably will reach an agreement on a post-Brexit transition period in 2018.
A free trade agreement will be more difficult to negotiate, considering the conflicting strategic interests of Britain and the European Union.
A trade agreement between London and Brussels would have to be ratified by the European Union and the United Kingdom, which could create further complications and delay its enforcement.

The new year will be one of intense negotiations between the United Kingdom and the European Union. On Dec. 15, the European Council decided that the first phase of Brexit talks, which focused on the terms of the United Kingdom's departure from the European Union, had progressed enough to move to the next phase, which will focus on Britain's future relationship with the bloc. The EU-U.K. divorce talks were complex; the negotiations about their future ties will be even more difficult. Britain's desire to regain sovereignty in areas such as trade and immigration will clash with the European Union's goal of protecting the unity of the single market, the area where goods, people, services and capital move freely.

In the coming months, the negotiations between them will focus on two main topics: a transition period and a trade agreement. During the transition period, which would last about two years beyond Britain's departure from the European Union in March 2019, the United Kingdom would no longer be a member of the European Union but probably would still be a part of the single market. It would not have a say on EU policies but would still contribute to the EU budget and be under the jurisdiction of the European Court of Justice.

Some hard-line members of the British government oppose a transition period, because to some extent it would continue the status quo for two more years. However, the European Union and the United Kingdom will likely reach an agreement on a transition period in 2018, because it would give companies and households in both Britain and the European Union time to adapt to the post-Brexit economic environment. Moreover, it would buy the governments in London and Brussels extra time to discuss the truly difficult problem: their future trade agreement. Trade is where the two parties have conflicting priorities and where negotiations will have to deal with several complex issues.

Conflicting Views on a Trade Agreement

The European Union wants the future trade agreement with the United Kingdom to respect the unity of the single market. The European Union opposes a deal that would allow goods, capital and services to move freely between Britain and the bloc but deny the free movement of people. This opposition is connected to a basic EU concern: Brussels wants to make sure the EU-U.K. agreement is less comprehensive than EU membership, out of fear that other countries will try to imitate Britain in the future and leave the bloc.

From the European Union's perspective, Britain could remain a member of the single market, and accept its four freedoms regarding goods, capital, services and people, or it could leave the single market and sign a trade agreement that covers most goods but not many services. The first option is known as the "Norway model," as the Scandinavian country is a member of the single market without being a member of the European Union. The latter option is the "Canada model": Canada and the European Union recently signed an agreement that covers 98 percent of the goods they trade but only a short list of services.

But the United Kingdom wants a comprehensive trade agreement that allows the free movement of goods, services and capital but leaves London free to have an independent immigration policy and sign trade agreements with non-EU countries. During the Brexit campaign, the "leave" camp promised that Britain would no longer accept EU workers, and that the country would sign trade agreements with allies such as the United States. The United Kingdom also wants a deal that allows its massive financial sector to continue trading freely with Europe. As a result, London has proposed a "creative" agreement that goes beyond the Norway and Canada models.

Switzerland offers another model the parties could try to emulate. The Alpine nation uses a hundred or so ad hoc bilateral agreements to manage its relationship with the European Union. Through these deals, Switzerland follows EU norms and regulations on issues ranging from agricultural standards to public procurement in exchange for access to EU markets. But that model presents a problem for the United Kingdom in that Switzerland is required to accept EU workers, and Swiss financial institutions face restrictions to access the EU market (which forces Swiss firms to have offices in the European Union). This likely would make a similar arrangement not an acceptable solution for the British economy, which is heavily dependent on financial services.

Beyond the Existing Models

Because of the conflicting strategic goals between the United Kingdom and the European Union, the negotiations probably will be long and complex. The United Kingdom will push to include services in the free trade agreement, but the European Union will refuse to agree unless the United Kingdom accepts EU workers. Should the negotiations linger, the United Kingdom could soften its position and offer to pay the European Union to access its services sector, to mention one possibility, or accept an annual quota of EU workers. Brussels, however, would still be skeptical of signing an agreement that could inspire other countries to leave the bloc. Moreover, some member states like France and Germany hope to attract companies in Britain's financial sector to relocate parts of their operations to the Continent because of Brexit.

The United Kingdom also will have to decide whether it wants to remain in the EU customs union, which imposes a common external tariff on all goods entering it. If it leaves the customs union, Britain would be free to sign trade agreements outside the European Union, something London is interested in doing. But British exports entering the customs union would then be subject to border controls to determine their origin. Exports from Norway, which is not in the customs union, entering Sweden, which is, are subject to random controls at some border crossings, for example. At other crossings, cameras are used to recognize the plates of trucks carrying goods.

Britain has promised to keep the border between Northern Ireland and the Irish Republic open. Should the United Kingdom leave the customs union, controls of some kind probably would have to be introduced at the border between Northern Ireland, which would leave the customs union with the rest of the United Kingdom, and the Irish Republic, which is in the customs union.

Even if London and Dublin solved the political part of the problem, there would be logistical issues to address, as the Irish border is more active than the Norwegian border. There are roughly 200 border crossings between Northern Ireland and the Republic, versus 80 border crossings between Norway and Sweden. Roughly 180,000 heavy vehicles carry goods across the Irish border every month; 118,000 such crossings occur at the Swedish-Norwegian border. The Swedish-Norwegian border is a favorite for smugglers illegally importing goods into the European Union. More vehicles traversing more crossings could make the Irish border an even more attractive illicit entry point. This concern could prompt the European Union to push Britain and Ireland for more effective border controls.

Time Constraints

Two additional factors still would delay a trade agreement's enforcement even if the United Kingdom and the European Union solved all the political, economic and logistical issues between them in 2018. First, the European Union cannot sign a free trade agreement with a member state, which means any arrangements that London and Brussels reach in 2018 would have to wait until the time of Britain's formal exit from the European Union to be signed.

Second, the EU Council, the European Parliament and the British Parliament would each need to ratify the agreement. Depending on the content of the deal, it may also have to be ratified by national, and in some cases regional, parliaments in each of the remaining 27 EU member states. (According to a recent ruling by the European Court of Justice, trade agreements that include provisions such as the creation of special mechanisms to settle disputes between companies and governments must be ratified in each EU member state.) This requirement would open the door for delays and challenges both in the United Kingdom and in the European Union, as British or EU lawmakers could object to the deal. Should this happen, the parties probably would have to return to the negotiating table.

At the end of the day, the United Kingdom and the European Union are interested in reaching a trade agreement. But the multiplicity of issues involved means that 2018 will be a year of intense discussion, but not necessarily one of agreement.

This article originally appeared on Stratfor.com

Stratfor 2018 Annual Forecast Overview

2017-12-28T20:08:00Z

Overview

Reckoning With North Korea: Though the threat of war on the Korean Peninsula can't be ruled out, the United States will probably try to avoid a costly preventive strike against the North's nuclear weapons program that would plunge the global economy back into recession. Instead, Pyongyang's demonstration of a viable nuclear deterrent next year will spawn a new and more unstable era of containment.

Hedging All Around: Deepening collaboration between China and Russia will pose a strategic threat to the United States, spurring Washington to try to check the budding partnership by reinforcing its own allies in the Eurasian borderlands. The fluidity of alignments among great powers will increasingly define the international system as Moscow and Beijing balance against each other, just as many U.S. allies hedge their relationships with Washington.

Putting Trade Ties to the Test: The White House will forge ahead with an aggressive trade agenda that targets China, Mexico, South Korea and Japan. While the U.S. trade agreement with South Korea hangs by a thread, congressional and legal checks on U.S. executive power will have a better chance of keeping the North American Free Trade Agreement intact. The United States' increasing unilateralism in trade will expose the weaknesses of the World Trade Organization, but it won't shatter the bloc or trigger a trade war.

Revisiting Iran: North Korea's nuclear weapons achievements will fuel a hard-line U.S. policy toward Iran, jeopardizing the Joint Comprehensive Plan of Action. As the United States, Saudi Arabia and Israel close ranks against Iran, proxy battles across the Middle East will intensify. But Iran won't walk away from its nuclear deal with the West. Russia will nevertheless exploit the tension mounting between Washington and Tehran, as well as its advantage on the Syrian battlefield, to expand its influence in the Middle East at the United States' expense.

Managing an Oil Exit Strategy: Major oil producers hope to stay on track to rebalance the global oil market in 2018. As the expiration of their pact to limit production and draw down inventories approaches, compliance will slip among OPEC and non-OPEC participants alike. Even so, Saudi Arabia and Russia may be able to work together to counteract an expected uptick in U.S. shale output.

The Next Phase of China's Reform: Chinese President Xi Jinping will take on entrenched local interests as the central government tackles the next phase of its reform agenda: wealth redistribution. A slowing property sector and corporate debt maturities will compound financial pressures on China's northeastern rust belt in 2018, but Beijing has the tools it needs to prevent a systemic debt crisis.

France Finds Its Voice: France will find itself on more equal footing with Germany next year as it defends Southern European interests and debates eurozone reform. The possibility of a more Euroskeptic government emerging in Italy will send jitters through financial markets, but the country won't leave the currency zone.

Populism Persists in Latin America: Popular frustration with the political establishment will make for a more competitive election season in three of Latin America's biggest economies: Mexico, Brazil and Colombia. Should a populist president take office in Mexico, Congress will block him from enacting any sweeping policy changes. Meanwhile, Brazil and Argentina will have a narrow window in which to implement domestic reforms and push ahead with trade talks in the Common Market of the South before political constraints start piling up against them.

This article originally appeared on Stratfor.com

Pakistan: Treating Terrorism Like Any Other Crime

2017-12-21T17:03:00Z

Salahuddin Khan Mehsud is one tough cop. He has to be, working in Pakistan's Khyber-Pakhtunkhwa province, a tribal region that the U.S. government calls a lawless hotbed of jihadist terrorism. Yet he assured me when we met recently in the town of Kohat that the province had "not had one major incident of terrorism" this year. That was no small achievement, but Mehsud spoke too soon. On the night of Dec. 1, just a week after our meeting, Pakistani Taliban militants staged a massive terrorist attack in the provincial capital, Peshawar. Assailants disguised as women in face-covering burkas broke into the Agricultural Training Institute. By the time police and army commandos gunned the terrorists down, nine students were dead and 18 had suffered bullet wounds. Only the fact that most undergraduates were away celebrating Eid-e-Milad, the Prophet Muhammad's birthday, prevented a higher death toll.

The attack was the area's worst terrorist incident since 2014, when militants killed 132 children and nine adults at a primary school in Peshawar. Outrage over the children's deaths proved to be, in the words of Pakistani BBC analyst Aamer Ahmed Khan, "a watershed for a country long accused by the world of treating terrorists as assets." The newly elected provincial government, under a reformist party called Pakistan Tehreek-e-Insaf (PTI), or "Movement for Justice," struck back. It did not use drones or massive assaults to deal with the crime. Instead, it used old-fashioned police work.

Cleaning Up the Force

In 2014, the inspector general police, as police chiefs are known in Pakistan, of Khyber-Pakhtunkhwa province was a veteran law officer named Nasir Khan Durrani. His brief was to rein in the twin scourges of terrorism and corruption. Along with Mehsud, his deputy, Durrani purged 1,400 officers from the police department for allegedly taking bribes or abusing their power. A recruitment drive brought replacements, male and female, with college degrees. Things began to move. "The police were demoralized before 2013," explained PTI leader Imran Khan. "There were 700 killed. The police were protecting themselves, so they could not protect the people."

The province's police department partnered with U.N. agencies and the Red Cross to train the new recruits in modern investigation techniques and human rights law. They built new user-friendly police stations to entice people to bring complaints about everything from property disputes to police brutality. They established arbitration panels, called Dispute Resolution Councils, made up of volunteer jurists — including one former Supreme Court chief justice — to hear cases without lawyers and deliver verdicts within hours. If the parties reject the result, they can turn to the lengthy Jarndyce and Jarndyce-style deliberations of the Pakistani justice system.

Mehsud, who succeeded Durrani as inspector general last March, told me that his and Durrani's strategy was to change the culture of popular engagement with the police from one of fear to one of trust. The first step in the process entailed improving the image of the police with starched uniforms, shining belt buckles, polished shoes and lessons in deportment. Traffic constables, often the first responders at terrorist attacks, learned how to deal more sensitively with the public. Cynics dismissed the police experiment in Khyber-Pakhtunkhwa, but citizens soon started coming forward with information on Taliban, al Qaeda and Islamic State cells. Terrorist arrests shot up 400 percent from 294 in 2014 to 1,203 three years later. At the same time, suicide attacks dropped from 26 in 2013-14 to just six in the past year. Deaths from the attacks fell, too, from 185 to 23 over the same time period. Still, as the Agricultural Training Institute attack showed, the police have a long way to go.

The End of a Legacy

In the United States, meanwhile, President Donald Trump's administration has taken little notice of the changes in Khyber-Pakhtunkhwa, while blaming Pakistan for the lack of progress in the war in Afghanistan. Police reform doesn't fit the "war on terror" doctrine, which prizes drone assassination over solid police work. But to Mehsud, the terrorists are not warriors — they're criminals. It was former British Prime Minister Margaret Thatcher who said of the Provisional Irish Republican Army's militancy, "Crime is crime is crime." And Mehsud is more motivated than most: Two of his sons died, along with more than 30 other people, in a terrorist bombing in Peshawar in December 1995.

The drive to rid Pakistan of terrorists and corrupt politicians, to impose law and order, and to establish a fairer society needs international support. With it, the country has the chance to escape a legacy of theft, religious fanaticism and debilitating inequality. Without it, the goal of a state worthy of its citizens' loyalty is beyond reach. Pakistani leaders' legendary corruption thrives on bribes, shady arms deals and money-laundering services from outside the country.

Bringing Corruption to Light

When the Panama Papers surfaced last year, then-Pakistani Prime Minister Nawaz Sharif was among the many world leaders whose dubious schemes to hide their wealth came to light in the leaked documents. Though he maintained his innocence, Sharif failed to provide an adequate explanation for how he had amassed his wealth on a prime minister's salary. In a unanimous decision last July, the Pakistani Supreme Court forced the three-time prime minister out of office to await indictment. Finance Minister Ishaq Dar avoided arrest by removing himself to London for medical treatment. (The prospect of years in a Pakistani prison would make anyone ill.) Sharif, whose daughter is married to Dar's son, must fear that the former finance minister's return to Pakistan would come with a plea bargain that might incriminate him.

The Panama Papers scandal might have led nowhere but for a massive campaign of street protests led by the PTI's Khan, the former cricket champion who founded the party in 1996. Even his enemies, who are numerous, concede that Khan's determination and public rallies forced the Supreme Court to hear the case against Sharif. Here I have an interest to declare: Khan and I have been friends for 30 years. As Pakistani journalist Mohammed Hanif, whose work I admire, wrote in the Guardian, "Visiting foreign journalists have profiled Imran Khan more than they have profiled any living thing in this part of the world." I apologize to Hanif for adding yet another story to the collection, but like Sgt. Joe Friday of "Dragnet," I'm sticking to the facts, ma'am, just the facts.

Khan told me that the link between corruption and the disillusionment that leads some young men into jihadist groups should be obvious. "It's your money he's stolen," he explained. "Because they take money out of the country, we go to the (International Monetary Fund). They raise taxes to pay the IMF." Pakistan could, he believes, repay the national debt if all the criminal funds sent abroad were repatriated. Then it could afford to build schools, hospitals, roads and sports centers.

Against the Odds

Although the PTI won the elections in Khyber-Pakhtunkhwa in 2013, it lost the lower house of the national legislature to Sharif's Pakistan Muslim League-Nawaz. "I'm glad we didn't come to power in 2013," Khan said. His party had no experience of government at any level, while Sharif had been prime minister twice. Now, Khan and his advisers are learning the art of government in the laboratory of Khyber-Pakhtunkhwa, which even his critics say is one of the hardest regions to govern. "I'm lucky we got this province," he said while we were on a tour of the area. "If they believe you are not corrupt and not a coward, they will stand by you. You would not have been able to come here before 2013."

Khan's party will run again for the national parliament in 2018, and he expects to win. It's a long shot, but he's succeeded in the past against steeper odds: coming out of retirement to lead Pakistan's national team to victory in the 1992 Cricket World Cup; building the first cancer hospital in South Asia in 1994, then another cancer hospital and a university. The hard part won't be winning the election, though. It will be governing a country that has resisted governance since its creation in 1947.

This article originally appeared on Stratfor.com

The Echoes of Reagan in Trump's National Security Strategy

2017-12-19T16:51:00Z

"For tradition tends to invest accepted policy with the attribute of permanency, which only exceptionally can be predicated of the circumstances of this changing world."

A.T. Mahan, 1900

"The world moves, and ideas that were good once are not always good."

Dwight D. Eisenhower, 1956

Geopolitics teaches us that countries have core interests and imperatives, and that their relative importance can shift with time and circumstances. Geopolitics does not dictate the response. This is where politics and policy assert themselves and where personalities become important. If one steps back from the current (contentious) political discourse, it's hard to find a significant gap between the administration of former President Barack Obama and that of President Donald Trump when it comes to identifying the risks to American interests and security posed by North Korea, Iran, the Islamic State or even China. This is not to say that there are no differences, but rather that it's often less about identifying what represents a challenge to U.S. strategic interests than about how to deal with them. In this, the difference between the two administrations appears rather stark.

Obama entered office with the intent to rehabilitate what he and others saw as a damaged U.S. image abroad. They believed that U.S. influence and thus power had been undermined by the Iraq War and by the general impression that the United States was an unrestrained cowboy nation. They saw that United States had lost the cushion of global sympathy that followed the attacks on Sept. 11, 2001. The Obama administration pursued a foreign policy framed in terms of international cooperation and collaboration. It was a policy that the current administration argues led to weaknesses in the overall U.S. strategic position abroad and at home. The Trump administration is calling for a revival of American power, economically and militarily, under a mantra of America First.

The approaches are rather different, though perhaps not quite the polar opposites some would argue. Nor is this a unique situation in American history. While not a perfect parallel, it is instructive to look back a few decades to the 1970s, when U.S. power was seen to be waning due to the failure in Vietnam, domestic social instability and the political crisis of Watergate and the resignation of President Richard Nixon. Under the administration of President Jimmy Carter, the United States pursued a policy of detente with the Soviet Union and sought to rehabilitate the international U.S. image through a reduction of military forces abroad. Cooperation and collaboration were seen by the administration as the best policies to preserve American influence and international security, particularly given the social and economic problems at home.

The Call of Neoconservatives

But detente was certainly not universally accepted as the "right" path. Both within and on the fringes of the "establishment," there were rising voices warning that detente, that the reduction of U.S. military forces and that arms control agreements with the Soviets were not securing peace, but were weakening U.S. power and giving the Soviets time and space to outpace the United States. Washington was being duped into giving up its military strength, for little reward. This counter to detente was voiced strongly by many of those from the neoconservative movement, driven by the so-called neocons seeking to revitalize America's military, economic and political might, and to reclaim a place for U.S. primacy in the world system.

It was Ronald Reagan who capitalized on this, characterizing Carter as weak, calling for a revival of American greatness and urging a more robust military and stronger nuclear deterrent and ballistic missile defense. The Iran crisis was seen as proof that America had grown weak, that there was little respect for American military might and thus that overall U.S. security was now at risk abroad because others were more willing to challenge and directly confront the United States. Inside the U.S. intelligence community, another contrary line was also underway, and assessments of Soviet missile and nuclear capabilities were radically revised, setting off alarm bells about the pace and scale of Soviet advancements.

U.S. President Jimmy Carter and challenger Ronald Reagan debate during the 1980 presidential election campaign.

(Liaison)

There certainly were counterarguments and warnings (in some cases, ultimately proved correct) that these new assessments were far more dire on paper than in reality and that there was a major overestimation of Soviet strength and American weakness. But Reagan and the neo-conservative camp won out, and the response was a fairly significant shift in U.S. international policy, in defense budgets, in trade policies and in Soviet relations. The transition from Carter to Reagan was stark. Rather than offer them detente to ease nuclear tensions, Reagan labeled the Soviets the "evil empire." Rather than further reduce military forces abroad, the United States increased defense spending and attention to nuclear and missile programs. Rather than be a cooperative power, the United States reasserted its own interests, challenged institutions such as the United Nations and set an agenda based on realist views of U.S. national security.

The Carter-Reagan Swing

And the Carter-Reagan transition, with its significant shift in national security focus and in defining the ways to deal with key issues, was in some ways a repeat of a similar dynamic after the discovery of the so-called missile gap with the Soviets two decades earlier. In that case, John F. Kennedy claimed that it was Dwight D. Eisenhower (a general, of all people) who was weak on defense and who had let American power slip. Kennedy came in seeking to shake things up and to invigorate America, launching into the space race as a way to avoid falling further behind the Soviets. It's a recurring pattern in American history, where leaders blame their predecessors for policies that ultimately led to weakening U.S. power and influence. Obama argued that America was less respected because of the perceived unilateralism of the administration of President George W. Bush. Trump has argued — and did so again Dec. 18 in his national security speech — that America is less respected because of the perceived capitulation of the Obama administration to other country's interests and desires.

The Carter-Reagan analogy holds, at least superficially, with the tradition when moving from Obama to Trump. And Trump has, not coincidentally, drawn on many of the same slogans, the same imagery and the same concepts as did Reagan. There is attention to American manufacturing, to tax reform, to the Make America Great Again slogans, to calls for updated and expanded nuclear arms, to questions of the viability of arms control treaties with Russia, to a push for increased military spending and to challenges to global institutions and agreements that appear to disadvantage the United States. Trump has surrounded himself with the new version of the neocons, has taken a more assertive stance toward North Korea and Iran, and has targeted trade agreements that he and his advisers see as constraining U.S. interests.

The Trump Way

With Trump's speech Dec. 18 on national security, his administration will in many ways be following an expected path. His administration identified an overall weakening of U.S. global security, standing and strength, blamed it on the previous administration's focus on global cooperation to the detriment of U.S. military might, and proposed to redress it. North Korea, Iran and terrorism (Islamic State/al Qaeda) are critical immediate concerns, but the strategic "gap" with the Chinese and Russians is the deeper concern. If there is a view that this gap needs to be narrowed and that past more diplomatic and cooperative efforts contributed to the gap, then we can expect further shifts in how the United States deals with these countries, with its partners, with friends or with just passing acquaintances on the periphery of Russia and China. And perhaps this view will shift how the United States sees the responses of some of its more reticent partners, such as Europe.

At a time of extreme media polarization and of cries of imminent Armageddon, it's a good moment to step back and consider strategically, and to think about the many alternative voices that have been raised over the past eight to 24 years about the direction of U.S. policy and priorities and about how to remedy them. Consider all the cries of too few ships in the Navy, the arguments against additional nuclear missile agreements or the challenges to "appeasement" policies. These voices were always there; they now have a champion in Trump. Assertions that the actions of the current administration go against the national security establishment or against the foreign policy establishment miss the reality that neither of these "establishments" has a singular voice, nor have they historically. There are always dissenting voices, counterarguments and challenges to the accepted methods to address policy challenges.

This is neither a critique of nor an argument in favor of the current administration's assessments of priorities or ways to deal with them. Rather it is a call for sober reflection and for recognizing that the way things were done for the past eight years, or 20 years, or 50 years are not necessarily the only way to do things. Presidents and administrations are often seeking to change things, to differentiate themselves, to refocus the priorities of the nation. And the world system around the United States is constantly evolving. The trick is not to criticize because things are different but to step back and assess policies for what they are, for their risks and opportunities and for their implications at home and abroad. If modern U.S. history teaches anything, it's that change is the norm and that the policies of today may create the problems of tomorrow. But it also shows the overall resilience of the United States and of its underlying political and social systems, even amid wrenching changes.

This article originally appeared on Stratfor.com

In the Middle East, Russia Seems to Be Everywhere

2017-12-14T16:02:00Z

Russia's growing prominence in the Middle East was on full display Dec. 11 when Vladimir Putin visited three key Middle Eastern countries in one day. The Russian president followed a surprise trip to Syria with a quick stop in Egypt before ending his day's travels in Turkey. He met with his presidential counterparts in all three countries, and the economic deals, military agreements and political settlements he discussed highlighted Russia's role in the region. While Russia has its own reasons for bolstering its relationships with Syria, Egypt and Turkey, it also benefits from being visible where its regional rival, the United States, is not.

Russia's diplomatic reach in the Middle East varies significantly per country. Its fair-weather relationship with strategic powers such as Iran goes back centuries, while its pursuit of a strong relationship with Saudi Arabia is developing, for example. Russia's relationship with Turkey has yielded friction and fruit over the decades, depending on which way the pendulum has swung. But what is striking about Russian diplomacy over the past couple of years is how Moscow's diplomatic presence has saturated the region. Its activity in such areas as the Palestinian territories, Libya, Israel, Lebanon, Qatar, the United Arab Emirates and Saudi Arabia is in some ways reminiscent of the Soviet Union's broad presence across the region. The juxtaposition with a United States that seems to want to draw down its regional commitments and focus on other issues, such as turning at long last to Asia instead of attending to fires in the Middle East, is noticeable, and it is heightened by Russia's appearing to be everywhere at once.

In all three of the countries Putin visited, Russia's goals contravene those of the United States, or the relationship is more pragmatic where Washington's is less so, and more heavily weighted toward a couple of specific names. In Syria, the United States plays a strong counterterrorism role but has stepped away from the civil conflict almost entirely, which gives it less leverage to bring about any sort of political solution aligned with U.S. interests. Meanwhile, Russia will be bringing Turkey, Iran and the Syrian government to the table to pursue a political settlement. In Turkey, Russia's warming relationship stands in contrast to the coldness currently plaguing U.S.-Turkey ties (although the U.S.-Turkey relationship goes through peaks and valleys). While the Syrian policies of both the United States and Russia have disappointed Turkey, Russia has made itself more indispensable to achieving what Ankara wants: a political settlement that denies the Syrian Kurds a federal state. By nature of Moscow's tight relationship with Damascus, clear in the multiple tete-a-tetes between Putin and President Bashar al Assad in recent months, there is a possibility of Russia offering Turkey what it needs from the Syrian conflict.

Russia's relationship with Turkey is important beyond its contrast with the U.S.-Turkey relationship, but Russia relishes bolstering its image as a mediator, interlocutor and friend as the United States struggles to be the same. The United States also has struggled to pressure Turkey and other Middle Eastern powers to improve their human rights behavior while relying on them to carry the weight of its regional policy. European Union countries drive an even tougher bargain on human rights with their Middle Eastern allies. Russia ignores the issue, much to the relief of its regional partners.

Russia has used its strategic footprint in Syria to deepen its relationships across the region. Egypt, which has a long-standing pattern of turning alternately to the United States or Russia for external security and economic agreements, is swinging toward Russia again. A plan to build a Russian nuclear power plant in Egypt is in the works, and Putin said in Cairo on Dec. 11 that Russia was ready to resume civilian flights to Egypt after a two-year disruption. An accord to allow Russia the use of Egypt's military bases, if finalized, will solidify Egypt's importance to Russia's military posture in the region.

Increased visibility and diplomatic energy don't mean, of course, that Russia can achieve whatever it wants in the Middle East. Moscow has scant history of exercising soft power to fully achieve its ends in the region, and despite Russia's solidifying position in Syria, the U.S. military and diplomatic presence across the Middle East still dwarfs Russia's. The timing of Putin's whirlwind day trip is also linked to Russian domestic politics, with presidential elections approaching in March 2018. Putin uses Russia's successes in Syria to promote Moscow's global role as the standoff with the United States continues, and to bolster the Russian image in the wake of the Winter Olympics doping scandal. Russia will discover limits as it seeks to deepen its presence in the Middle East — the Syrian peace process likely will stall, for example. In Iran, Egypt and Turkey, the pendulum will no doubt swing again to a less cordial place for Moscow. But Russia is building a deeper economic component into these relationships to help mitigate any limitations.

To Middle Eastern states, Russia is angling to portray itself as a benevolent mediator — a superpower that does not interfere domestically but can provide diplomatic, economic and security assistance. In this way, Russia benefits from the void left by a U.S. Middle East strategy skewed decidedly in favor of Saudi Arabia and Israel.

This article originally appeared on Stratfor.com

Latin America's Sugar Producers Sweat the Sweet Stuff

2017-12-12T15:51:00Z

Highlights

The European Union's decision to end its sugar production quota will prompt producers in Latin America and the Caribbean to look for ways to deal with the growing sugar supply.
To that end, Brazil will bet on its ethanol industry, while Mexico will focus on trying to keep its access to the U.S. market.
Despite its efforts to liberalize other sectors of the economy, Argentina will keep high import tariffs in place to protect its sugar domestic market from external competition, and countries in the Caribbean will follow suit.

The world's major sugar producers recently got a bitter surprise. In October, the European Union lifted restrictions on its sugar production that had been in place to keep prices stable since 1968. The European Commission estimates that the bloc's annual sugar imports will fall from 3 million metric tons (3.3 million tons) to 1.8 million metric tons by 2025. European sugar exports, meanwhile, will nearly double from 1.3 million metric tons per year, where they have been capped for half a century. The end of the EU production quota, coupled with the bloc's enduring tariffs on imported sugar, will force traditional sugar exporters in Latin America and the Caribbean to look for ways to deal with the heightened competition.

If You Can't Eat It, Burn It

For Brazil, the world's largest sugar exporter, the solution may lie in ethanol. The European Union isn't the main market for Brazilian sugar. Nevertheless, its decision to ramp up sugar production could impede the South American country's efforts to boost exports to the bloc and erode its market share in places like Africa, which imported nearly $3 billion worth of sugar from Brazil last year. The growth in EU sugar production, moreover, could cause sugar prices — down more than 20 percent this year — to drop further. Should the decline continue, Brazil's ethanol industry can absorb part of the country's sugarcane production, as it has in the past when the price of refined sugar was down.

The Brazilian government has been taking steps to bolster its ethanol industry over the past two decades. Vehicles manufactured in Brazil since 2003 come equipped with flex-fuel engines that can run on a blend of gasoline and ethanol, and lawmakers have gradually increased the proportion of ethanol in blended fuels to 25 percent. In addition, the lower house of the country's National Congress approved a bill in November that aims to reduce carbon emissions in accordance with the Paris Agreement by requiring fuel distributors to rely more heavily on ethanol and biodiesel. (Private consulting company Datagro believes the legislation could drive production of these alternative fuels from 27 billion liters per year in Brazil to 40 billion liters annually by 2030.) The government also has implemented measures to make ethanol more competitive, for instance by taxing the import and sale of gasoline. Brasilia's efforts could enable the Brazilian sugar industry to maintain its edge as the European Union tries to increase its share of the international market.

Like Brazil, Mexico is betting on the growth of its ethanol industry. The country's state-owned energy company, Petroleos Mexicanos, has been buying ethanol blend gasoline since 2015, though Mexico's ethanol consumption pales in comparison with that of Brazil, and it plans to start purchasing fuel with a higher ethanol content. Still, relative to Brazil, Mexico has less cause to worry about its sugar industry. The country, after all, exports far less of the commodity as the world's fifth-largest exporter. What's more, its geographic proximity to and free trade agreement with the United States gives Mexico an advantage over the European Union in the U.S. sugar market. Sugar, in fact, is one point in the negotiations to revise the North American Free Trade Agreement over which Mexico City and Washington have agreed. As competition heats up in the international sugar market in the coming years, Mexico will try to preserve its privileged access to the U.S. consumers.

Keeping Out the Competition

Argentina, on the other hand, will look to protectionism to see its sugar industry through. Because the country's sugar production occurs mainly in its poorer northern provinces, the Argentine government is reluctant to open up the industry to foreign competitors, even as President Mauricio Macri has pushed to liberalize Argentina's economy. The economic and social risks for the sugar-producing provinces would be too great. For that reason, Argentina — which exports only around 10 percent of the roughly 2.2 million metric tons of sugar it produces yearly — maintains an 18 percent tariff on imported sugar, along with another tariff that fluctuates with global sugar prices. Buenos Aires refuses to even discuss establishing sugar import quotas with its fellow members in the Common Market of the South (Mercosur). The issue has become a sticking point in Mercosur's trade negotiations with the European Union, as well.

Despite pressure from Brazil to lower its trade barriers around sugar, Argentina probably will keep its import restrictions in place as more European sugar hits the market. It also plans to boost ethanol production from sugarcane by upping the required amount of ethanol in its blended gasoline from 12 percent to 25 percent. The Argentine ethanol industry, however, is in its infancy: Buenos Aires has yet to approve any ethanol-burning engine technology for the domestic market, even though the country's automotive industry produces engines with flex-fuel capabiliites for export. Consequently, the government will continue to rely on trade barriers to shield Argentine sugar producers from external competition.

And the 15 countries of the Caribbean Community (CARICOM) trade bloc will follow suit. Caribbean producers stand to take a big hit as the European Union works to become a net sugar exporter; last year, over 60 percent of CARICOM's sugar exports went to the Continental bloc. Even before Brussels lifted its production quota, the European Union's demand for CARICOM sugar was starting to decline, falling by nearly 40 percent in 2016. For CARICOM members, some of which already have unemployment rates in the double digits, the trend bodes ill for their economic futures.

To cope with its dwindling exports and the recent dip in sugar prices, CARICOM has entertained a variety of solutions. One proposal, floated by the bloc's Council for Trade and Economic Development last month in Guyana, suggested a 40 percent common external tariff for all sugar imported from outside the trade area. The measure aims to enable CARICOM's four main sugar exporters — Jamaica, Guyana, Belize and Barbados — to shift their production to meet demand within the bloc.

Elsewhere in the Caribbean, the EU decision to lift the sugar production cap will make less of a splash. Cuba, another major sugar exporter in the region (though not a member of CARICOM), has been steadily losing ground in the market since the fall of the Soviet Union, historically its biggest customer. The island nation produced less than 2 million metric tons of sugar last year, compared with an annual 8 million metric tons throughout the 1970s. Furthermore, it sends more than half its sugar exports to China and Russia, meaning that the end of the EU production restrictions pose less of a threat to the Cuban sugar industry.

Yet for most sugar producers in Latin America and the Caribbean, the prospect of a new competitor vying for market share spells a change on the horizon. Countries such as Argentina and CARICOM's members will respond by maintaining or raising import tariffs to try to protect their domestic markets and avoid job losses. States such as Brazil, by contrast, will divert more of their sugar production activities to support their burgeoning ethanol industries.

This article originally appeared on Stratfor.com

The Defeat and Survival of the Islamic State

2017-12-07T16:39:00Z

Several people have asked me lately whether I thought the Islamic State will become a "virtual caliphate" now that it has lost most of the terrain it once held, including the strategic cities of Mosul and Raqqa. At the same time, I've talked with people who claim that the Islamic State has been destroyed. Both viewpoints have some truth to them, but neither is the whole truth. Both miss where the Islamic State is really headed.

Charting the Islamic State

When attempting to chart the trajectory of the Islamic State pole of the jihadist movement, it is important to recognize that the group is more of a movement than an organization. As we see it, the Islamic State has three main components: the Islamic State core in Iraq and Syria; the Islamic State franchises in Libya and other parts of the world; and grassroots jihadists who are not connected to the core or to the franchise groups. While each element swears allegiance to Caliph Ibrahim, also known as Abu Bakr al-Baghdadi, they are all distinct and will respond differently to the Islamic State's losses on the battlefield.

The core organization, of course, has taken the biggest hit from the coalition efforts against it in Iraq and Syria. In addition to losing huge stretches of terrain, the group has lost vast numbers of troops and heavy weapons systems, along with significant sources of funding. In this sense, it's true that the physical caliphate as it existed in 2014 has been destroyed. That doesn't mean, however, that the Islamic State core organization has been destroyed. The group has weathered defeats before.

Some observers say they see the Islamic State entering a second phase, or Islamic State 2.0. But looking back at the organization's history — first as a group called Jamaat al-Tawhid wal-Jihad operating in Afghanistan and in Iraq, then as al Qaeda in Iraq, as the Islamic State in Iraq, as the Islamic State in Iraq and al-Sham, and, finally, as the Islamic State — I see the next phase more as version 7.0 at least.

In June 2006, the group's founder, Abu Musab al-Zarqawi, was killed in a U.S. airstrike in Iraq along with one of his key lieutenants. Al-Zarqawi's death was the beginning of a long line of serious losses the group suffered in subsequent years, such as the killings of then-Islamic State in Iraq leader Abu Omar al-Baghdadi and his Egyptian deputy in April 2010. Their deaths caused many people, including me, to wonder whether the group could rebound.

It did. The Islamic State in Iraq began to re-emerge and grow after U.S. forces completed their withdrawal from Iraq in December 2011, aided by sectarian violence against Sunnis. The group put its mantra, "baqiya wa tatamaddad" or "remain and expand," into practice, burrowing into the human terrain of Iraq's Sunni areas and waging a terrorist campaign before returning to insurgent operations.

Long-War Theory

Despite its losses from 2006 to 2010, the Islamic State never abandoned its struggle. Instead, it shifted from attempting to wage conventional battles and hold terrain, as it had done in places such as Fallujah and Ramadi, to fighting an insurgent campaign. Launching terrorist operations or even hit-and-run insurgent attacks takes considerably less resources than do holding and governing territory — especially a large city such as Mosul. Furthermore, the fighters and materiel the group could lose in a single conventional battle against coalition forces could otherwise conduct a host of smaller attacks over a long period of time. The insurgency had three essential goals. First, the group needed to survive, the primary goal of all insurgencies. Second, it aimed to attack coalition forces to make their involvement in Iraq unbearable. Third, it wanted to attack Shiite targets and Iraqi state institutions to provoke Shiite government forces to retaliate against Sunnis, thereby escalating sectarian tensions.

The group's long-war strategy worked. Prime Minister Nouri al-Maliki and his government in Baghdad responded to the insurgency with a heavy hand, and the Islamic State in Iraq — which had alienated the Sunni population in the mid-2000s with its brutal and austere version of Islam — was able to position itself as a protector of Sunnis. This approach enabled the group not only to remain but also to expand. The Islamic State in Iraq began to plan and prepare to launch a strategy to take control of Iraq's Sunni areas. By 2014, the group had seized large portions of Syria and Iraq and declared itself the return of the Islamic caliphate.

Now that the self-proclaimed caliphate is crumbling, the Islamic State's history bears revisiting. I see strong parallels between today and 2010. Coalition strikes have seriously weakened the Islamic State over the past three years. But if sectarian tensions persist in Iraq and Syria, and if Sunnis are left feeling persecuted and disenfranchised, the stage will be set for the group's remnants to embed themselves again in the Sunni populations. There, they can remain and develop plans to expand their control once more. The Islamic State has lost much of the caliphate's territory, and, in time, Abu Bakr al-Baghdadi will meet the same fate that his predecessors did. Even so, sectarianism could sustain the group. Iran's growing influence in Syria and Iraq — and the fear its role is engendering among the region's Sunnis — only enhances the possibility.

The Islamic State core will retain a physical, real-world presence long after it loses control of the territory it once governed. It is far from becoming merely a virtual organization.

The Ends of the Earth

Notwithstanding the caliphate's physical collapse, the Islamic State's affiliate organizations retain an insurgent and terrorist presence across a large portion of the globe. It's important to recognize that almost all of these groups already existed, either as jihadist groups or as splinters of jihadist groups, before they pledged their allegiance to Abu Bakr al-Baghdadi. The Islamic State's West African wilayat, or province, for example, was previously known as Boko Haram; its Sinai province was an Egyptian group called Ansar Beit al-Maqdis; and its branches in Yemen were defectors from al Qaeda in the Arabian Peninsula. Though these groups generally try to follow the Islamic State's philosophy and guidance, they are franchises: They use the Islamic State brand but remain under local ownership and management. The Islamic State core has provided funding and training to some of its franchises, but most of them fend for themselves in terms of financing and logistics, recruiting and training, and weapons acquisition.

As long as the Islamic State's ideology survives, it will continue to attract recruits, just as older radical ideologies such as anarchism and national socialism still do to this day.

Consequently, the core group's losses in Iraq and Syria won't have much bearing on the local or regional activities of the franchises. Their fate hinges more on their own capabilities, on the capacity of the governments they're fighting against and on the international support those governments receive. The United States and other coalition members have conducted airstrikes against Islamic State targets far and wide in places such as Yemen, Somalia, Mali and Afghanistan.

The concept of the "virtual caliphate" is most relevant for the grassroots jihadist element of the Islamic State movement. Grassroots operatives aren't members of the Islamic State core or a franchise group, and their connection with the movement's other two components range from exposure to propaganda to direct communication with and logistical assistance from them. Their independence from the core will shield the grassroots operatives, like the franchise groups, from the Islamic State's battlefield losses, though the defeats have tarnished the movement's appeal. By retaking the Islamic State's territorial holdings, after all, coalition forces have disproved the claims that the group is an inexorable force and its caliphate a paradise on Earth.

Nevertheless, as long as the Islamic State's ideology survives, it will continue to attract recruits, just as older radical ideologies such as anarchism and national socialism still do to this day. The hope is that the rate of recruitment will decline to the point that jihadism, too, can be relegated to the dustbin of history as a radical fringe ideology. Until that happens, however, the Islamic State will pose a very real threat in the physical world, both as an insurgent force and as a terrorist group.

This article originally appeared on Stratfor.com

A Vote on the Future of Chilean Copper and Lithium

2017-12-05T15:54:00Z

Highlights

The rise of leftist political coalition Broad Front may force center-left candidate Alejandro Guillier to include some of its proposals in his platform as the deciding ballot in the presidential election nears.
If Guillier wins, the coalition's economic proposals may define the future of Chile's lithium and copper industries over the next four years.
Argentina and Bolivia are best positioned to benefit if the Broad Front's ideas are incorporated.

In less than two weeks, Chilean voters will make a decision that could affect the country's crucial copper and lithium extraction industries, buttresses of Chile's economy and a key area for future growth. In a Dec. 17 election, voters will choose between center-right candidate Sebastian Pinera and center-left candidate Alejandro Guillier, the top two finishers in the first round of balloting, to become the country's next president. The first-round results also included an unexpectedly strong showing by Beatriz Sanchez, the candidate representing the left-wing Broad Front coalition, elevating the group's political stature during the contest's deciding round. While capturing Broad Front's support could boost Guillier's chances of victory, to win the coalition's backing, he would have to incorporate its economic proposals, which could have a major effect on the country's energy and mining industries.

In the initial round of the presidential election on Nov. 19, Pinera won 36.6 percent of the vote, well short of the majority he would have needed to capture the presidency on the first ballot. Guillier, meanwhile, secured a spot in the second round with 22.7 percent. Sanchez fell just shy of moving on with 20.2 percent. No other candidate received more than 10 percent of the vote. The fact that Sanchez came so close to a spot in the second round, demonstrating Broad Front's growing political clout, did not sit well with Chilean investors. The day after election results were announced, Chile's stock market dropped almost 6 percent, while the peso fell almost 1 percent against the dollar. Investors prefer Pinera, who served as president from 2010-2014 and has proposed cutting corporate taxes as well as public spending. Guillier, on the other hand, has called for increasing public spending, additional state intervention in Chile's lithium extraction industry and retaining the corporate tax increase put in place by outgoing President Michelle Bachelet. However, as Guillier moves left in an attempt to secure the Broad Front's support, his proposals on state intervention and public spending may go beyond what he already has articulated.

For Guillier to enact the Broad Front's goals on education and health care ... he would have to find new sources of tax revenue. The country's copper and lithium industries could offer that.

The Broad Front, a coalition of leftist political parties and social movements that was created early this year, has actively pushed for free universal education and health care in Chile. The student movements that are active in the coalition are the same ones that drove public protest during Pinera's previous term as president with demands for free education at all levels for all citizens. For Guillier to enact the Broad Front's goals on education and health care, which would necessitate an increase in public spending, he would have to find new sources of tax revenue. The country's copper and lithium industries could offer that. Copper production provides about 25 percent of Chile's national revenue, and its lithium industry is growing increasingly more important as the element's use in battery production expands worldwide.

An Agreement on Copper

Both Pinera and Guillier agree that the government should end a law passed in 1958 that hands 10 percent of the revenue from Chile's copper exports directly to the country's armed forces. A lack of transparency surrounding the use of those funds has built momentum for rescinding the measure. A look at its spending in 2016 showed mismanagement in the military's use of the money to build new offices and accommodations instead of increasing the country's military power, as the law had intended. Over the past 12 years, figures show, the country's state-owned mining company Codelco alone has transferred around $13 billion in copper revenues to the armed forces.

Where Pinera and Guillier differ is in deciding what to do with the revenue made available by ending the military allocation. Pinera would like to allow Codelco to use the money to increase its investment capacity. That idea falls in line with his economic agenda of cutting corporate taxes as a way to resume economic growth. The continued weakness in prices for copper has relegated growth in Chile's gross domestic product to less than 2 percent over the past four years, and Pinera argues that the tax on copper exports coupled with the price decline have limited Codelco's capacity to start new mining projects. The company's mining investments, for example, dropped over 40 percent in 2016. It is less clear, however, what Guillier would propose to do with the extra money. While he agrees that the copper export tax hurts Codelco's finances, he would likely divert the funds freed by ending the law into the country's general coffers rather than allowing it to be used to increase Codelco's investment capacity.

The Future of Lithium

Chile's lithium production is another issue that the presidential election will decide. Chile is the world's second-largest producer of the metal behind Australia, according to U.S. Geological Survey data. The Chilean government already restricts how much lithium each producer can exploit, but Guillier has proposed to tighten those restrictions even further by creating a state-owned company to control lithium production. Basically, the government would limit the amount of raw lithium that could be exported while the new state-owned company would focus on industrializing its production. That process could take years to develop and put Chile behind other lithium-rich nations in the race to increase capacity as demand for lithium continues to grow.

A decision to limit exports of raw lithium from Chile could only help increase investment in other lithium producers elsewhere, such as Argentina. The Argentinian government, for one, has been trying to develop its own lithium industry. Earlier this year, Argentinian mining company Exar announced planned investments of more than $700 million in lithium exploration in the next two years. This sort of investment could help the country reach its goal of increasing its annual lithium production from 50,000 tons to almost 200,000 tons by 2021.

Bolivia's lithium industry could also benefit from political changes in Chile. The country is still far from becoming a major lithium producer despite its vast reserves. Bolivian law limits extraction of lithium to state-owned firms, which lack technical expertise in the field. Additionally, the country is landlocked, which increases the costs of exporting the lithium it produces. This is where the political influence of the Broad Front, in the event of a Guillier victory, could make a difference by easing negotiations over granting Bolivia sovereign access to a Chilean port. The coalition's agenda for this presidential election included a negotiated solution with Bolivia over the long-standing dispute in exchange for removing restrictions on Bolivian natural gas exports to Chile.

The final margin of the Chilean presidential race is expected to be narrow, and the two candidates will be looking for every edge to ensure victory. For Guillier, that might mean adopting, at least partially, the economic proposals put forth by the Broad Front. If they are enacted, those policies, in turn, could have far-reaching effects on the country's mineral extraction and energy sectors and determine the amount of foreign investment that flows into Chile.

This article originally appeared on Stratfor.com

The Surveillance Operative Lurking in the Living Room

2017-11-30T16:35:00Z

The holiday shopping season is here once again. And this year, surveillance and espionage products have made it to the top of a surprising number of wish lists in the guise of digital home assistants. The devices already have brought microphones into as many rooms of our houses as we're willing to allow. Now, many of them come equipped with cameras as well. Despite concerns about the threat to privacy that earlier generations of the devices have posed — one product from Amazon's Alexa line carried the unfortunate name of Dox — enhanced video capability appears to be the next big thing in digital home assistants.

In the grand scheme of things, the jump from audio to video is a marginal advancement in the gadgets' ability to collect information. But for those thinking about following the products to their next frontier, this is a good opportunity to explore the relationship between service and surveillance and to take sober stock of the risks inherent with home assistant devices.

A Tried-and-True Tactic

As the next generation of home assistants hits the market, the line between service and surveillance is becoming fuzzier. The issue isn't unique to electronic devices, though. Service has long provided an ideal cover for surveillance. A plausible purpose is essential to conducting surveillance without raising suspicion. Posing as a tourist, student, businessperson or jogger provides a reasonable explanation for why someone might be taking pictures of a sensitive building, requesting sensitive information, attending a conference or running on the treadmill next to you at the gym. Far more often than not, the tourist, student, businessperson or jogger is just what they appear to be. But depending on where you are, the person in question could also be an operative conducting surveillance, perhaps for a law enforcement or government-backed intelligence operation, or perhaps as part of a criminal venture or a terrorist plot.

Arguably the most common example of service as a cover for surveillance is the guard force that host countries typically deploy to protect embassies. In June 2016, a member of the Russian Federal Security Services guarding the U.S. Embassy in Moscow blew his cover when he tackled a U.S. diplomat trying to enter the building. (The diplomat, likewise, was probably using his post at the embassy to conceal his role with an intelligence agency.) Another service often used as cover for surveillance is that of the minder. Acting as a tour guide, escort or part of a protective detail, a minder helps keep tabs on foreign visitors. North Korea, for instance, is notorious for sending English-speaking security agents along with tourist groups to guide and monitor their activity.

Most examples of service as a form of surveillance are subtler, however. One of the classic covers for action is a maintenance worker who enters your home or workplace under the pretense of repairing or checking on a problem. I witnessed this tactic firsthand while I was living in Southeast Asia: Technicians working for the building where I lived would visit my apartment almost every week to look into some real or imagined malfunction. Air conditioning maintenance was the most common excuse, but members of the staff also claimed variously that lightbulbs were out, drains were clogged or the tile grout in the bathroom needed resealing. Half the time the problems they were reportedly investigating didn't even exist. Still, the alleged issues gave them a pretext to enter my apartment and offered them a good cover to conduct comprehensive surveillance, if that was indeed their objective.

Alexa, Gather Intelligence

Similarly, consumer electronics such as digital home assistants give the companies that market them a covert way to surveil their customers. The devices, after all, are capable of collecting vast amounts of data through tried-and-true intelligence tradecraft. Just as state-backed intelligence agencies gather information to serve their strategic, military and industrial interests, companies gather information to hone their marketing and boost sales. The ends may be different, but the means are more or less the same.

Digital home assistants make no secret of the fact that they offer surveillance as a service. In their case, though, the intention behind the surveillance is mostly innocuous. The better these systems are at anticipating our needs, the more consumers will buy them, and the more companies such as Amazon, Google and Apple Inc. will profit. Although their intended purpose is benign, however, home assistant devices could be exploited for other aims. As the events of the past several years have demonstrated time and again, electronic data channels get crossed and corrupted as interests compete for access to information. Consider the legal standoff that unfolded in the wake of the 2015 San Bernardino attack when the FBI insisted that Apple break the encryption on one assailant's iPhone. Outside the United States, some governments have even purchased software tailor-made to let them to access and monitor their citizens' smartphones. Criminals, too, have come up with myriad schemes to get their hands on data from personal electronic devices. Home assistants are no different; in fact, their level of access makes them all the more attractive to intelligence collectors.

As essential as good cyber hygiene is for our laptops and smartphones, it's even more crucial for our digital home assistants.

A Trove of Mundane, but Valuable, Information

A common retort to this warning is that so long as you watch what you say or do in the presence of a digital home assistant, then you have nothing to worry about. That argument, however, fails to account for the value of surveillance in detecting everyday patterns and routines. More and more assailants are using online intelligence collection to plan and execute physical attacks. By gaining access to a home assistant device, a criminal could determine when a family will be out of town — or even just out of the house — and use that information to commit a burglary. Alternatively, a thief could take advantage of a household's purchasing habits to mask fraudulent credit card charges. Hackers managed to steal $81 million from Bangladesh's central bank last year by following a similar strategy: The attackers mimicked the normal communication patterns between the bank and its affiliates to arrange the illicit transfers. Even the most mundane details of a household's operations could be paydirt for a scheming criminal.

By outlining the risks lurking in digital home assistants, I don't intend to condemn the technology or to incite paranoia. The underlying threats that these gadgets present are nothing new; the 24/7 microphone and video access home assistants offer merely amplify them. Service is a good cover for action when conducting surveillance, whether electronically or in person. Nevertheless, as home assistant devices make their way into more homes, it's important to recognize that their advancing capabilities cut both ways. A powerful tool can easily become a potent weapon in the wrong hands. As essential as good cyber hygiene is for our laptops and smartphones, it's even more crucial for our digital home assistants.

This article originally appeared on Stratfor.com

Negotiating the EU's Future on Even Ground

2017-11-28T16:12:00Z

From its very inception, the European Union has depended on the alliance between France and Germany. The bloc's predecessor, the European Economic Community, formed with the principal goal of binding the two countries together so closely that another war on the Continent would be impossible. And from the 1950s on, a tacit agreement underlay their partnership: France was the main political and military power in the bloc, and Germany was the main financial supporter (paying for, among other things, onerous subsidies for French farmers). After German reunification in 1990, France even pushed for the creation of the euro as another way to strengthen Paris’ links with Berlin.

Over the past decade, however, that relationship has shifted. Germany emerged in the wake of the 2008-09 financial crisis as the European Union's most important political and economic power, while France struggled with a weakening economy and a string of ineffective, unpopular leaders. Berlin didn't want to be seen as Europe's hegemon, in light of its history, and made sure to keep Paris involved in decisions over how to deal with the problems in the eurozone. Even so, Germany pressured its peers in Southern Europe into introducing painful economic and institutional reforms that may not have happened had France been in charge.

Ten years after the crisis began, France has come to terms with Germany's higher profile in European affairs. But accepting a position as Europe's co-leader is not the same thing as accepting the role of second in command. As the leaders of the European Union begin hashing out the bloc's future in the coming year, Paris will push to negotiate with Berlin on more equal terms. The question is whether the Franco-German alliance that managed to keep the bloc together in the past will be enough to preserve its unity in the future.

Unequal Footing

France traditionally has been worried about an ascending Germany. In the 19th and 20th centuries, its concerns stemmed mainly from the military implications of Germany's rise. In the 21st century, by contrast, they are mostly related to economic and political issues. Since the creation of the eurozone, France's trade balance has turned from surplus to deficit, while Germany's trade surplus has broken one record after another. France's gross domestic product grew by an average 0.8 percent each year from 2007-2016, fully half a percent lower than Germany's average annual growth rate for that period. Unemployment in France, meanwhile, is twice as high as it is in Germany, and French voters are more dissatisfied with the political and economic status quo and less content with the European Union than their German neighbors are. (Their discontent explains why Euroskeptic and anti-globalization parties on the left and right alike performed so well in the French presidential election.)

France's economic trouble is due in part to the country's difficulty introducing reforms to become more competitive, but the problem also has a European dimension to it. To enact the policies in the bloc that Paris believes will help its economy, France needs Germany's support. But unlike France, which tends to favor public spending to stimulate growth through consumption, Germany prefers fiscal discipline, low inflation and modest labor costs.

An Opportunity Arises

Now, for the first time in a decade, Paris may be in the position to pursue a more balanced relationship with Berlin. France's economy is growing again, and French President Emmanuel Macron, whose party has a solid majority in the National Assembly, has demonstrated his willingness to introduce the measures necessary to make that growth more sustainable. His vision for reforming the European Union has won the support not only of the French electorate but also of Southern European countries. On top of Macron's plans to increase public spending by introducing a separate budget for the eurozone with a finance minister to manage it, Italy and Spain added their own proposals, including common unemployment insurance and deposit insurance systems across the bloc. As the United Kingdom, a country whose views on the economy are close to those of Northern European states, prepares to leave the European Union, these southern countries will have a chance to increase their influence in the bloc.

Germany's current political upheaval could also be an opportunity for France. If talks to form a coalition government fail and Germany holds an early election, the process of eurozone reform would be delayed by several months since the bloc can't make any big decisions without Berlin. At the same time, though, Germany's focus on domestic issues has created a temporary power vacuum in Europe that France is trying to fill. Macron has been on a diplomatic offensive in recent months pitching his ideas for the European Union's future to leaders across the Continent. With Germany temporarily out of the picture, Paris will be able to intensify this strategy.

Compared with its recent predecessors, the current French government is more willing and ready to push its proposals for the European Union. Paris can argue that, unless the bloc implements significant reforms in the next few years, anti-EU forces could win the French presidency in 2022 and threaten the bloc's continuity. From Germany's perspective, moreover, a more balanced relationship between Berlin and Paris would placate Southern Europe after a decade of austerity policies.

Enduring Challenges

Nevertheless, France faces several obstacles to its agenda. To begin with, Paris' allies in Southern Europe are in no position to reshape the European Union. Italy will hold a general election in early 2018, and the vote could bring to power parties more willing to clash than to negotiate with the bloc. Though Spain has one of the fastest-growing economies on the Continent, the minority government in Madrid is too focused on preserving the country's territorial integrity to have a strong voice at the EU level. Portugal is too small to influence the bloc's affairs, despite its decent economic growth rate, while Greece is still under a bailout program.

What's more, Germany's temporary absence from the Continental debate won't change the strategic priorities of countries in Northern Europe. Member states such as the Netherlands, Austria and Finland are wary of measures that would distribute financial risk across the eurozone and transfer resources from Northern to Southern Europe. Like Berlin, the governments of these countries believe risk-sharing measures can be introduced only if the Continent has also devised more efficient methods for monitoring its member states' fiscal policies. Many Northern European leaders believe the bloc's fiscal rules are too often bent and that the institutions tasked with enforcing them are too politicized. (With that in mind, Germany's former finance minister, Wolfgang Schaeuble, recently proposed turning Europe's permanent bailout fund into a European Monetary Fund so that technocrats — and not politicians in the European Commission — would oversee members' fiscal policies.) Southern European countries, on the other hand, believe the bloc's fiscal requirements are arbitrary and unnecessarily rigid and see public spending as a tool to stimulate growth and keep social unrest under control.

Germany's focus on domestic issues has created a temporary power vacuum in Europe that France is trying to fill.

Because of these challenges, France will not get everything it wants. Many of its proposals will be watered down or adapted to appease Germany and its northern allies, while others still will be postponed. Regardless, the debate next year to reform Europe could be the closest a discussion of the bloc's future has gotten to a negotiation between equals since the start of the financial crisis. Germany and France are already on the same page on some issues, such as proposals to close tax loopholes for internet companies, plans to harmonize the tax systems among member states and measures to increase vetting for non-EU investors purchasing companies in the bloc. Considering their diverging strategic interests, however, it's unclear how long Berlin and Paris can keep up their alignment.

Unity or Fragmentation?

Beyond their differing views and economic disparity, the growing diversity among the European Union's members is working against the Franco-German alliance, too. The bloc has become much more complex and interconnected but also much more heterogeneous over the past decade and a half. In turn, the challenges to Continental unity have multiplied. The return of economic growth in the eurozone doesn't mean the disappearance of risk from the currency area. Italian banks still have large numbers of nonperforming loans in their balance sheets, and Greece will need help to alleviate its debt burden. As a result, future initiatives to deepen integration in the eurozone could exclude some of its members, focusing instead on a select group of countries.

Outside the eurozone, meanwhile, EU members in Central and Eastern Europe face a dilemma. They must decide whether to deepen their ties to Western Europe at a cost to their national sovereignty or to resist its attempts at centralization and risk isolation. France already has suggested that it would be willing to lead a coterie of countries toward greater integration while other members stay behind. But Germany wants to keep the European Union as united as possible, even if this comes with compromises and half-measures. As an export-driven economy, Germany can't afford to endorse measures that could eventually cause the EU single market to fall apart.

Without question, the partnership between Germany and France remains the most important strategic alliance in Europe today. It is also a synthesis of the political and economic disagreements that divide the bloc's northern and southern members. There was a time when an understanding between Paris and Berlin would be enough to get things done in the European Union. In the coming years, though, they will deal with issues that go beyond their shared interests and their perennial divides. Franco-German cooperation will continue to be crucial for the future of Europe. Whether it will be enough to keep the Continent united may be another story.

This article originally appeared on Stratfor.com

In Afghanistan, the U.S. and Pakistan Fight a Conflict of Interests

2017-11-21T15:56:00Z

The ravages of a seemingly endless war have kept the United States mired in South Asia for over 16 years. In August, U.S. President Donald Trump proposed a new solution to the intractable conflict in Afghanistan. The new strategy would focus not on meeting a specific deadline but rather on achieving the conditions necessary to bring peace to the war-torn country. To that end, Trump urged India to play a greater role in Afghanistan's economic development. He also had a few choice words for Pakistan.

The president took the large nuclear power, home to more than 200 million people, to task for continuing to harbor militant groups such as the Taliban and the Haqqani network. To compel a change in Islamabad's behavior, the Trump administration has threatened to revoke Pakistan's non-NATO major ally status and withhold more of the billions of dollars in aid that the United States has given the country each year since 2002. But the threats aren't working. On Nov. 9, NATO commander Gen. John Nicholson said Pakistan is still offering haven to militants. And even if Washington takes harsher punitive action toward Islamabad, it won't achieve the results it's hoping for. Militancy isn't the only enemy in Afghanistan; the United States is also fighting against the basic forces of geopolitics.

The Struggle for Survival

The foundations of geopolitics lie in the assumption that all nations are trying to survive and that to do so, they employ strategies based on the resources they have available to them. For Pakistan, the fight for survival dates back to its very birth as a country. Just two months after gaining independence in the partition of the British Raj in 1947, Pakistan was embroiled in its first war with India over the disputed territory of Kashmir. Pakistan's founder and first leader, Muhammad Ali Jinnah, was acutely aware that some circles in India expected their fledgling neighbor state to collapse and began diverting resources away from development to national defense. In the process, he bestowed unrivaled power on the Pakistani army. An ineluctable principle soon emerged that guides Pakistan's foreign policy to this day: India is the enemy.

Tempting as it may be to accuse Pakistan of paranoia, it's important to consider the country's position. Pakistan already shares one border with its archrival. The last thing it wants is to have to contend with New Delhi along its western border — an area whose ethnic and linguistic diversity has given rise to unrest and insurgency — as well. With that in mind, Pakistan must keep New Delhi from establishing a presence along the Afghan border, while working to forge friendly ties with the government in Kabul. (India, likewise, uses development funding to try to buy influence with the Afghan administration.)

Bequeathing a Strategy

After the Soviet-Afghan war began in 1979, the United States helped Pakistan project power into Afghanistan through proxy forces as part of its wider struggle against communism. The CIA, along with Saudi Arabia, funneled money and arms to Pakistan's Inter-Services Intelligence agency to train, arm and dispatch the mujahideen, a motley crew of religious and nationalist warriors, against the Soviets. Eager to destroy the godless ideology of communism — which in their view had no place in the devoutly Muslim country — the mujahideen eventually prevailed. The Soviets, beleaguered after a decadelong counterinsurgency war in unforgiving terrain, withdrew from Afghanistan in 1989. Washington soon followed suit, leaving the rival mujahideen to vie for control of Afghanistan. The ensuing civil war paved the way for a new fundamentalist movement known as the Taliban to rise to power in southern Afghanistan in 1994.

For Pakistan, which had grown frustrated backing the mujahideen parties, the Taliban presented an opportunity. By supporting the organization, Islamabad could try to stabilize Afghanistan and to use the country as a conduit for energy from neighboring Turkmenistan. Pakistani Prime Minister Benazir Bhutto's administration began funding the Taliban, helping the group's take control through its conquest of Kabul in September 1996. That's where Islamabad's interests in Afghanistan started to conflict with those of Washington.

The Taliban played host to Osama bin Laden and his organization, al Qaeda. From the mountains in Afghanistan, bin Laden plotted the 9/11 attacks that prompted the United States to invade in October 2001. The Pentagon's main objective in Afghanistan was to prevent militant groups from using the country as a base for launching transnational attacks. Pakistan, meanwhile, maintained its links to its proxies in the Taliban to keep its stake in Afghanistan.

The Limits of Power

More than a decade and a half later, the intransigence of the United States' longest-running war has compelled the Trump administration to reassess Washington's relationship with Islamabad. By every measure, the United States is more powerful and influential than Pakistan is. It boasts the mightiest military in the history of the world along with an $18 trillion economy. Pakistan, by contrast, is a poor country, and its military — though a formidable fighting force — is no match for the U.S. armed forces. Despite the disparity, however, Washington has failed to coerce Islamabad into cutting ties with the Taliban.

The United States' own cost-benefit calculation is partly to blame for this failure. Consider, for instance, bin Laden's discovery in 2011. Finding the world's most wanted man in Abbottabad, a garrison town in northeastern Pakistan, doubtless raised questions in Washington about the Pakistani army's ties with the militants. Nevertheless, the United States continued its aid to Islamabad, which totals $33 billion to date. The Pentagon concluded that the benefits of a security partnership with Pakistan, including access to critical supply routes and help flushing out al Qaeda operatives seeking refuge in the Federally Administered Tribal Areas, outweighed the costs of Islamabad's selective ties with militants. Neither President George W. Bush nor his successor, Barack Obama, would risk jeopardizing those benefits.

That may change under Trump. His administration so far has shown a willingness to question long-standing conventions in U.S. foreign policy as the United States takes a step back from global affairs to focus instead on domestic issues. Washington's alliance with Islamabad could be one of them. But even if Trump and his generals follow through on their threats to punish Pakistan, they are unlikely to change its behavior. So long as the country's survival is at stake in the war in Afghanistan, Pakistan will bear the costs of the United States' rebuke and probably seek alternative sources of funding, namely China. And from Islamabad's perspective, the resurgence of Hindu nationalism in India under Prime Minister Narendra Modi is an existential threat. The movement's hard-line factions, after all, have never reconciled themselves to Pakistan's statehood and still regard it as an affront to their country's territorial integrity. Should Modi win a second five-year term in office in 2019, as he is expected to, his victory would strengthen Islamabad's desire to keep New Delhi from gaining a foothold in Afghanistan — and, by extension, its support for the Taliban.

The View Ahead

Pakistan's actions in Afghanistan derive from the same quest for survival that underlies any country's foreign policy. Ironically, Washington encouraged the very behavior that so vexes it today by helping Islamabad refine its strategy for proxy warfare in Afghanistan during the Cold War. But geography is the real culprit. Even if the last NATO soldier were to vanish from the desolated Afghan landscape tomorrow, Pakistan and India's imperatives to deny each other a space in the land known as "the graveyard of empires" would continue as before.

As part of that mission, the Pakistani army is currently sharpening its country's territorial contours by building a fence along the border with Afghanistan. The initiative is part of a plan to pacify and fully absorb the Federally Administered Tribal Areas, which have defied governance since at least the colonial period, so the army can turn more of its attention toward India. The army has also sponsored a proposal to start giving militants an outlet in mainstream politics as a way to exert greater control over them. (The backlash that the creation of the new Milli Muslim League party inspired from Pakistan's Ministry of the Interior suggests, however, that the effort will be yet another source of contention between the country's military and civilian institutions.) And so, as the United States mulls more serious measures to try to weaken Pakistan's support for the Taliban, it will probably only weaken its partnership with Islamabad instead.

This article originally appeared on Stratfor.com

Parliament Joins the Battle Over Brexit

2017-11-16T16:59:00Z

Highlights

The EU Withdrawal Bill that will transfer EU rules and norms into British law, a crucial part of the Brexit process, has entered the lower House of Commons for debate and is scheduled for final approval in early 2018.
Lawmakers in both the governing Conservative party and the opposition Labour party are criticizing the bill and will need to address various controversial topics before the end of the year.
Political infighting could lead to the appointment of a new prime minister, though replacing British Prime Minister Theresa May with another Conservative politician won’t heal party divisions.

The British Parliament has begun answering important questions about the United Kingdom's departure from the European Union. On Nov. 14, the EU Withdrawal Bill, which will repeal the European Communities Act of 1973 and transfer EU rules and norms into British law, entered the committee stage in the lower House of Commons. The lower house will debate and vote on hundreds of amendment proposals until late December, when the bill will be sent to the upper House of Lords for discussion and approval in early 2018.

The bill has a simple goal: Ensure legal continuity after Britain leaves the bloc. Over time, British authorities will have the chance to decide what to keep, what to amend and what to scrap. But lawmakers in both the governing Conservative party and the opposition Labour party are criticizing this crucial step of the Brexit process. Although the government managed to agree on several proposed amendments during the first day of debate, the most controversial topics remain and will need to be addressed before the end of the year.

Criticism From All Sides

Broadly speaking, there are three main areas of disagreement over the Withdrawal Bill. The first criticism is that it gives British Prime Minister Theresa May's Cabinet too much power over how EU norms will be transferred to the United Kingdom. The British Parliament wants more say in deciding the future of EU norms affecting a variety of issues, ranging from agriculture and energy to employment rights and banking rules. The governments of Wales, Northern Ireland and Scotland are also criticizing the bill, arguing that some repatriated powers should be transferred to regional governments, with the Scottish government being particularly vocal. May has promised the central government will eventually transfer attributions to the regional governments, but so far the promises remain vague.

The second criticism is over May's decision to have the Withdrawal Bill specificy a time and date for Britain's departure from the bloc. Currently, the bill states that the United Kingdom will cease to be an EU member at 11:00 pm on March 29, 2019. May's decision is meant to appease hardline Brexit supporters, who fear that negotiations with the European Union could go on indefinitely and are demanding concrete indications that Britain is committed to leaving. But some lawmakers, both in the Conservative and Labour parties, believe setting a specific departure date closes the door for a negotiation extension. Brexit negotiations are supposed to last two years according to the EU treaty, but that period can be extended if EU members unanimously decide to provide additional time to negotiate a mutually beneficial agreement. According to British media, at least 15 Conservative lawmakers are already willing to vote against May on this issue.

The debate over Brexit comes at an already difficult time for May, who is leading a fragile and divided minority government.

The third criticism concerns the British Parliament's role in finalizing the agreement between London and Brussels. The British government has said that Parliament will only vote after the agreement is signed in a "take it or leave it" vote which would leave no room to first modify the deal's contents. The rationale for this strategy is that, should Parliament reject the deal, Britain would leave the European Union without an agreement to govern their future bilateral relationship. To avoid such an outcome, Parliament would be under significant pressure to ratify whatever deal London reaches with Brussels. As a result, Conservative and Labour lawmakers want Parliamentary influence over the agreement before it's signed.

Divisions That Won't Heal

These debates come at an already difficult time, with May leading a fragile and divided minority government. A worse-than-expected performance by the Conservatives in the June general elections did little to smooth the frictions. Some sectors would like the United Kingdom to remain as close to the EU single market as possible, arguing in favor of a long transition period after Brexit to allow companies and households to prepare. Other sectors seek a clean and fast break with the European Union, and have expressed veiled criticism of May's leadership.

The rank and file in Parliament — both Conservative and Labour — are divided on Brexit as well. This means that even if some Conservative lawmakers stage a rebellion against the law, May could garner enough votes from Labour lawmakers to push the law through regardless. And May's difficulties in guaranteeing the votes she needs are unlikely to disappear, as the Conservatives aren't interested in another gamble that could result in political defeat. Although the appointment of another prime minister cannot be ruled out, replacing May with another Conservative politician won't heal the party's divisions given the current political environment.

Nevertheless, the Withdrawal Bill will offer clarity on several aspects of the Brexit process. Though battles will continue regardless. The United Kingdom and the European Union have so far failed to conclude the first part of the Brexit negotiations — which focuses on the terms of Britain's exit — and move to the second part — which focuses on the future trade agreement. EU member states will assess the status of the negotiations during a summit on Dec. 14-15, but with key issues such as Britain's financial contributions to the bloc still unresolved, progress will be slow.

This article originally appeared on Stratfor.com

Latin America's Two Trade Blocs Get a Little Closer

2017-11-14T16:59:00Z

Highlights

The Pacific Alliance and Mercosur have put aside their political differences as both blocs seek to reduce trade barriers.
The Pacific Alliance will continue to face challenges in increasing trade within its bloc as its members continue to trade more with countries outside the bloc than with those inside it.
The Pacific Alliance will speed up its trade negotiations next year with Mercosur and countries that are part of the Trans-Pacific Partnership.

Latin America's two largest trade blocs, the Common Market of the South (known by its Spanish acronym, Mercosur) and the Pacific Alliance, are taking small steps on the path to convergence. The fall of the left in Mercosur's two largest economies, Argentina and Brazil, and the U.S. decision to renegotiate NAFTA with Mexico have provided the organizations an opportunity to put aside their differences and move forward on their own trade negotiations.

Of Trade and Ideology

The Pacific Alliance is composed of Mexico, Peru, Chile and Colombia, whose combined gross domestic products top $2.2 trillion and whose populations total more than 220 million. Their economies are more open to free trade, and they have sought to take advantage of their location on the eastern edge of the Pacific Ocean to expand commerce with Asia. But the bloc wasn't created just to gain bargaining power in trade negotiations with Asian countries. The alliance was first envisioned in a meeting in Lima, Peru, in 2011, when geographic barriers such as the Andean Mountains were not the only impediments to deeper trade integration in Latin America. The region had clear ideological divisions. On one hand, there were the countries led by Venezuela's Bolivarian revolution and Mercosur. On the other hand, there was a group led by Mexico and Peru that tried to counter this ideological influence by forming a trade bloc.

The Bolivarian revolution and Mercosur shared some left-wing characteristics, such as anti-U.S. sentiment and trade protectionism. The high point of that relationship came in 2012, when Mercosur included Venezuela as a full member. That was the same year that the Pacific Alliance signed its first agreement. Mercosur countries perceived the creation of that organization by the closest allies of the United States in Latin America as a counterbalance to Mercosur and the Bolivarian revolution. Brazil criticized the bloc frequently and didn't see its formation as a way to promote trade integration.

Freedom in the Pacific

Mercosur was created to form a common market with a common external tariff where all full member countries have a veto power in trade negotiations. But this wasn't the idea behind the Pacific Alliance. It was based on a free trade agreement among its members, giving them more freedom to negotiate bilateral deals with other countries and economic blocs. And negotiating as a bloc is also easier because the Pacific Alliance doesn't have Mercosur's rules on consensus. That's why the alliance's expansion, for example, doesn't necessarily lead to more constraints on the foreign trade policies of its members because no rule prevents a country from pursuing a bilateral deal. And the Pacific Alliance is growing. Costa Rica and Panama want to join as full members, and other countries, including some Mercosur members such as Paraguay, have been admitted as observers. In addition, Chile, Peru and Colombia have agreed to integrate their stock markets through the creation of the Latin American Integrated Market (MILA). This is Latin America's second-largest stock market, behind Brazil's. The goal is to incorporate Mexico's stock market as well and make MILA the largest stock market in the region.

However, the Pacific Alliance hasn't been able to foster more trade among its members because most of its economies, with the exception of Mexico, are dependent on commodity exports. And no member has another as a main trade partner. Mexico and Colombia are tied to the United States, and exports to China drive trade for Chile and Peru. In Mercosur, Brazil is the main partner for Argentina and Paraguay. Despite this lack of connection, the Pacific Alliance occasionally pulls together to negotiate as a bloc when that gives it an advantage. It is currently holding two major trade negotiations: with Mercosur and with countries in the Trans-Pacific Partnership.

On Dec. 21, the Pacific Alliance will meet with Mercosur in Brasilia, Brazil, where they will discuss the reduction of trade and non-trade tariffs. These talks have benefited greatly from the political and economic changes underway in Argentina and Brazil that have helped reduce the old ideological tensions between the two blocs. In Argentina, President Mauricio Macri has announced a series of economic reforms covering taxes, labor, pensions and trade, while Brazilian President Michel Temer will implement an ambitious plan next year to privatize about 60 state-owned companies. In addition, Mercosur distanced itself from Venezuela by expelling it from the bloc. Member countries argued that Venezuela no longer respected the organization's democratic principles.

Powered by the NAFTA Renegotiation

Another factor helping the Mercosur negotiations gain steam was the U.S. decision to renegotiate the North American Free Trade Agreement (NAFTA). The threat of losing some trade with the United States has forced Mexico, the Pacific Alliance's largest economy, to look elsewhere. Mercosur is by no means a comparable alternative because the United States is a much larger market and absorbs about 80 percent of its exports. Nonetheless, Mexico could use the bloc to gain leverage in NAFTA renegotiations by threatening to find other sources of agricultural imports, such as corn and soybeans.

In fact, Mexican agribusiness companies and government officials have visited Argentina and Brazil this year to negotiate importing such crops as wheat, soybeans and corn. These negotiations have made some progress. In a first for Argentina, it will export wheat to Mexico in December. The first shipment will be just 30,000 tons, however, as Mexico wants to start with small amounts and examine its quality. However, the goal is to gradually increase the volumes.

The Pacific Alliance is also negotiating with Australia, Canada, New Zealand and Singapore. After the United States withdrew from talks on the Trans-Pacific Partnership (TPP) earlier this year, the Latin American bloc has been trying to open talks with the remaining TPP countries. All the members of the Pacific Alliance, except Colombia, were part of the TPP negotiations. Last month, a round of negotiations with Australia, Canada, New Zealand and Singapore was held in Colombia in which participants reached agreements on services, government procurement and the rules of origin. Another round is set for the first quarter of next year in Australia. These negotiations haven't included Japan, because it already has trade agreements with Mexico, Peru and Chile and is concluding one with Colombia.

While U.S. decisions on NAFTA and TPP have created new opportunities for the Pacific Alliance, the bloc will continue to face major challenges in fostering trade within the association, because most of their economies depend on exporting commodities to China and the United States. However, the bloc will continue to take advantage of its geographic location and of its economic and trade openness as it strengthens ties in 2018 with other countries that border the Pacific Ocean as well as with those belonging to its counterpart in Latin America, Mercosur.

This article originally appeared on Stratfor.com

For the U.S., Venezuela Simmers on the Back Burner

2017-11-09T16:39:00Z

A major economic crisis is unfolding in the United States' backyard as Venezuela's recession stretches into its third year. The South American nation is now in dire straits. The country's oil sector shrank by nearly 13 percent as a share of gross domestic product in 2016 alone, and its immediate future looks grim. The ruling United Socialist Party of Venezuela, meanwhile, is more concerned with staying in power than it is with addressing the catastrophic problems facing its people. Venezuela's leaders don't want to surrender power in free elections because they don't trust their political opponents — whether in Washington or in Caracas — not to try to jail them on a litany of criminal charges. Day by day, the country seems to lurch from one milestone of misery to another while foreign analysts struggle to keep up.

Yet the United States probably won't take direct action anytime soon to alleviate the suffering of the Venezuelan population. When viewed through the wider lens of geopolitics, the crisis that appears so singularly urgent in everyday life recedes to the margins of global affairs. Furthermore, pushing President Nicolas Maduro's administration out of power in Caracas isn't in Washington's immediate interest. Any attempt to achieve that end would come with too many drawbacks, and any change in the country's administration will be the result of domestic rather than international developments.

The Difference Between Strategic and Important

Venezuela is located at the southernmost edge of a region of massive strategic significance, albeit little immediate importance, for the United States. The Caribbean basin is vital for U.S. strategic security; had it never attained de facto control over its near abroad, the United States couldn't entirely rule out a threat from foreign powers. But by the time it had cemented its authority over the Caribbean basin in the early 20th century, Europe's imperial powers had mostly given up their colonial holdings in the Americas, leaving behind a hodgepodge of weak states, Venezuela among them. Today, the country poses no strategic threat to the United States, and its slow drift toward one-party rule isn't reason enough for Washington to intervene decisively in its affairs. For that reason, Washington's attempts at influencing the outcome of Venezuela's crisis have been minimal to date. The U.S. government, in fact, has yet to formulate a clear policy toward Venezuela, contrary to Venezuelan propaganda claiming the United States is behind an "economic war" against it.

Rather than crafting a comprehensive strategy for dealing with Venezuela, U.S. President Donald Trump's administration has taken a piecemeal approach, focusing on those areas of Venezuela's operations that interest various government agencies. The Drug Enforcement Administration, for example, cares about drug trafficking in Venezuela, a major transit state for U.S.-bound cocaine whose leadership is believed to profit from the industry. The State Department consistently warns Venezuela about mistreating political dissidents and demands that it hold free elections. The Department of Homeland Security probably worries the country's economic troubles will encourage more Venezuelan citizens to overstay their visas in the United States. And the Treasury Department is concerned with the financial crimes, including money laundering, that members of the Maduro administration and their front men have been involved in. Venezuela simply isn't the kind of foreign policy issue that can bring the U.S. government together toward a common goal. Compared with the other foreign policy problems weighing on the United States, moreover, the country is a low priority. Between North Korea's nuclear weapons development, the struggle to stabilize Syria and Iraq, and Russia's efforts to undermine the United States around the world, Washington has too much on its plate to get more heavily involved in Venezuela.

From Bad to Worse

What's more, pressuring Venezuela's government, for instance by prohibiting U.S. companies from doing business with Caracas or by imposing a ban on imports of Venezuelan oil, would only create more problems. Washington already has hamstrung the country's state-owned oil company, Petroleos de Venezuela (PDVSA), by forbidding it from issuing new debt in the United States. The measure is a serious blow to the firm, but it still leaves the U.S. government room to gradually up the ante with Venezuela. Slapping direct sanctions on PDVSA, by contrast, would kick off an even bigger catastrophe. Without money coming in from U.S. refineries, the Venezuelan government's cash flow would dry up. The worsening economic conditions probably would drive Venezuelans by the thousands to try to leave the country, and some emigrants would doubtless opt to enter the United States illegally. Back home, U.S. companies, such as the Gulf Coast refiners that purchase oil from and sell gasoline to Venezuela, would likely lobby against heavier sanctions on PDVSA and the Maduro administration, too.

The United States could easily take a harder line on Venezuela to push the country toward a change, but the government has neither the need nor much incentive to do so. The political movement to crack down on Caracas consists of a group of hawkish lawmakers, including Republican Sen. Marco Rubio of Florida, and a cottage industry of Venezuelan lobbyists. Although the Trump administration regards Venezuela as an undemocratic country that is no friend to the United States, that assessment won't drive Washington to try to remove the government in Caracas. Venezuela's political opposition, after all, is in no condition to take the reins of power in the wake of the country's current leaders. The movement, which controls few government institutions, has been deeply fragmented since its decisive defeat in regional elections in mid-October. In addition, the government has jailed, exiled, co-opted or otherwise intimidated the most powerful dissident leaders. To regain the political relevance it would need for Washington to take further action against the current administration, the opposition will have to associate itself with a major protest movement or rise to power in the aftermath of a coup. For the moment, however, neither event seems likely.

A Grim Outlook

Considering that the country's economy rests on oil production, Venezuela's prospects for recovery are dim. PDVSA is at risk of defaulting on its foreign debt in the next year, an outcome that would add to the misery the company's decadelong decline has created. Ever since former President Hugo Chavez purged its technocrats and replaced them with loyalists after a strike in 2003, top-notch technical talent has been hard to find in the company. More than a decade of overspending followed the purge and contributed to a sustained decline in oil production. After peaking at 3.5 million barrels per day in the late 1990s, Venezuela's crude oil output has dwindled to only about 1.9 million bpd today. And production will keep falling if PDVSA defaults. In that event, foreign oil services companies could become concerned about future payments and cut back their operations in the country or pull out altogether, taking with them Venezuela's last life preserver.

Yet the country's precipitous economic decay alone won't guarantee the current administration's collapse, so long as the opposition is weak and marginalized. Whether Maduro and his acolytes remain in power depends in large part on how well they can fend off challenges. Along with its opponents outside the ruling party, the government has hostile factions within the United Socialist Party of Venezuela and within the armed forces to worry about. It's still possible that segments of the military will eventually try to overthrow the government or that a wave of anti-government protests will sweep the country again, as it did in 2014 and earlier this year. Regardless of who is in power, though, Venezuela will face a long and difficult path to economic stability.

The future looks decidedly bleak for Venezuela. Its financial and political conditions already have forced millions of Venezuelans to uproot their lives and flee, while millions more have stayed behind, struggling to afford or even find basic necessities such as food and medicine. Shortages have also ravaged Venezuela's public health system, and diseases once eradicated in the state, such as malaria, have become more prevalent as a result. These conditions probably will get worse before they get any better as the government tries to ride out the country's deepening economic plight. Recovery will take decades, and in the meantime, public services will keep disintegrating. And as the economic situation worsens, the United States will stay on the sidelines, stepping in selectively to pressure the Maduro administration with sanctions.

This article originally appeared on Stratfor.com

In Russia, a Social Contract Built on Bravado

2017-11-07T16:13:00Z

The understanding of the social contract seems to be shifting around the world. But for Russia, at least, the phenomenon is nothing new. The country has tried any number of variations on the social contract over the more than 1,000 years of its history. Leaders traditionally have resorted to autocratic rule to keep the unwieldy nation together, periodically introducing institutions, such as the secret police forces of Ivan the Terrible and Czar Alexander III, or reforms — like Alexander II's measure to emancipate the serfs — to maintain order. Over the past century, Russia's social contract has endured one experiment after another as the Russian Revolution, the Cold War and the collapse of the Soviet system transformed the country. The system has undergone so many permutations that today it is all but obsolete, and no rule is too fundamental to break.

The Soviet Social(ist) Contract

The past 100 years have been a rollercoaster for Russia. The Bolsheviks came to power championing equality and a better life for workers and peasants. In turn, they expected the support and acquiescence of the Soviet people as they embarked on the economically and politically demanding task of building a new society. Josef Stalin changed the rules when he took control of the country, dispensing almost entirely with personal rights in the name of developing the Soviet Union. After Stalin's death, Nikita Khrushchev offered a new social contract that purported to relax the repressive rule of the previous two decades. The Soviet government gave citizens back some of the rights Stalin had stripped away and pursued policies to increase security, guarantee a basic standard of living for the population and maintain peace in exchange for the public's compliance.

Khrushchev's promise of peace was fundamental to the new social contract. As traumatic as Stalin's infamous purges were for the Soviet people, the harrowing events of World War II — in which more than 20 million Soviet soldiers and civilians died — quickly overshadowed them. The memory of the war was still fresh, and it weighed heavily on nearly every family in the Soviet Union. My grandmother would often say, "No matter what, the main thing is to avoid a war." And no matter how many tanks and missiles the Soviet Union produced, its leaders held fast to that conviction, even when the Cold War reached its hottest points. The public was well aware of the danger of a nuclear strike. Yet Soviet leaders were cautious to avoid incendiary threats, though a state propagandist might mention that the Soviet Union's nuclear arsenal was deep enough to turn any country into a pile of dust. (Today, by contrast, the threats are more brazen; Dmitri Kiselyov, whom President Vladimir Putin named as head of one of Russia's state-run news agencies, proclaimed on national television in 2014 that his country could turn the United States to "radioactive ash.")

A New System Emerges

By the late 1980s, the Soviet government had exhausted its social contract. Mikhail Gorbachev, the final leader of the Soviet Union, introduced the liberalizing policies of perestroika and glasnost in a last-ditch effort to keep the massive state together, but the reforms proved to be too little too late. The Soviet Union collapsed.

The ensuing chaos was as liberating as it was terrifying. In the 1990s, the Russian state had neither the will nor the ability to uphold its previous social contract. The Russian people, meanwhile, felt a growing desire for freedom and economic independence. The 1993 Constitution struck a compromise between the old and new elite, describing Russia as both a liberal and a social state that simultaneously maintained the separation of powers and bestowed its president with practically boundless authority. Two social contracts vied for dominance in the emerging country, one that promised social services in exchange for the public's support and one that offered freedom.

The Gangster's Rule for Governing

Neither side won. And so, as it entered the 21st century, Russia introduced a new model that would provide its citizens a reliable standard of living so long as they paid their taxes. Professor Alexander Auzan described the setup in an article about social contracts in Russia:

"Taxes are payment for social goods. But the saying, 'pay taxes and sleep well' is the typical motto of a stationary bandit who understands taxes as rent: You pay us rent and we leave you alone.'"

What Auzan outlines is a gangster's rule, but a rule nonetheless.

At some point, people started to ask what their taxes were getting them. The justice and safety they were theoretically paying for, after all, were in practice a privilege of the social and political elite. But for many Russians, even the prospect of security was worth the price, as long as the threat of attacks like the Beslan school siege and the Moscow Metro bombing loomed over the country. Skyrocketing oil prices, moreover, gave the government economic leverage over the public: Provided citizens agreed to sign over their political rights to the country's leaders, the administration would guarantee their financial security and prosperity. In this way, Putin's government bought the loyalty and support of the Russian people.

Since 2008, the situation in Russia has evolved, not only economically but also geopolitically. The same year that the global financial crisis hit, Russia went to war with the neighboring republic of Georgia. The timing was perfect. The United States was preoccupied with its own wars in Iraq and Afghanistan, while Europe — dependent as it was on Russian energy exports — wasn't prepared to challenge the country in its traditional sphere of influence. Though the conflict lasted only a matter of days, it was enough to re-establish Russia as a world power. When the country, emboldened by its success in Georgia, annexed Crimea a few years later, its actions came as a shock to the rest of the world. Even so, the move was a logical next step in Russia's brash new strategy for dealing with the international system. The country's newfound power was intoxicating for its leaders.

Because We Can

For the Russian people, the idea of belonging to a great power was equally intoxicating. By standing up to the West, Putin framed himself as the only world leader who would dare to challenge the United States' ascendancy. He even gained the respect of some Western libertarians, who saw him as a brave individual, unafraid to buck the global economic system, its overregulated banks and its greedy governments, regardless of the authoritarian measures he favored at home. Defying the global trends toward tolerance, human rights — including rights for women and members of the LGBTQ community — and freedom of expression, Russian authorities have instead played by their own rules, sanctions and international opinion be damned. The political firestorm surrounding Russia's alleged electoral meddling has only reinforced this strategy by confirming the country's status as a dominant power and fueling the administration's machismo. For years, the Russian government and its propaganda machine have worked to foster among their public a hatred and aggression toward the rest of the world. Having acted out that hostility on the international stage, the Putin administration now can sit back and watch the United States rage.

At some point, however, bravado may not be enough to ensure the Russian public's continued loyalty, and tax payments. A survey from independent pollster the Levada Center conducted in April revealed that 53 percent of respondents claimed to be fulfilling their obligations to the state, compared with 39 percent in 2001. But in a poll conducted the previous month, 31 percent of respondents said they received so little from the state that they felt they owed it nothing, and 32 percent said they could demand much more.

Putin's administration has demonstrated that the social contract no longer serves as the basis of a government's legitimacy. (Furthermore, the reconsideration of social contracts around the world suggests that Russia's disrespect for long-standing rules and conventions may be spreading like a virus.) A growing number of Russians are catching on to the one-sidedness of the current social contract under which they pay into a system that gives them little or nothing in return. And though Putin's macroeconomic policies have managed to keep economic disaster at bay despite the burden of sanctions, low oil prices and capital flight, his administration hasn't undertaken the structural reforms necessary to sustain the country in the long run. Gone are the days when the government could build a social contract on the promise of prosperity.

Still, as long as state-run outlets dominate the media, as long as Russia opposes the United States and decries the Western notion of tolerance, and as long as Russians can cover their expenses with risky but readily available microloans, the arrangement will endure. Opinion polls suggest that most Russians are delighted their country and their president are exerting international influence. The government and state-run media will continue to seize on Russia's national pride and geopolitical bluster — along with the discord plaguing Western powers such as the United Kingdom, European Union and United States — as next year's presidential election approaches.

This article originally appeared on Stratfor.com

When Foreign Fighters Come Home and Bring Terrorism With Them

2017-11-02T15:20:00Z

The threat posed by foreign fighters returning from Syria and Iraq has been the subject of a lot of discussion lately. Indeed, my news feed has been full of media reports about the danger to country X, country Y or the world in general. Some good studies have been produced on the topic, such as the one recently released by Richard Barrett of the Soufan Group.

But the concern about foreign fighters is not new. Indeed, in April 2014 I wrote a piece assessing the danger, and it has aged pretty well. Like then, I believe that returning foreign fighters pose a real threat, but it is being mitigated by several factors — the most significant of which is the fact that the world has become aware of them. But other elements can also help lessen the threat.

Building Blocks of Security

As we've noted previously, several building blocks contribute to solid personal security. These same principles are also applicable on a wider scale to national security. The first block is mindset, which has three aspects: recognizing that there is a threat, accepting responsibility for one's security and using the available tools to protect oneself. It is not difficult to see how these tenents can be readily translated into a national security context and used to respond to the threat of returning jihadists.

Clearly, the fact that we are discussing this topic demonstrates widespread recognition of the risk, and there is little indication that governments are in denial or ignorant of it. Being aware of the threat from returning jihadists is vastly different from what I experienced after the Soviet withdrawal from Afghanistan in 1989. First, there was little discussion about the threat from fighters returning from Afghanistan. Some people even foolishly predicted the end of terrorism after the dissolution of the Soviet Union in 1991, because the Soviets had been one of the major sponsors of political violence around the globe. But sadly, terrorism was not just a tool of Marxist revolutionaries, and it was picked up and wielded by believers of other ideologies.

When I traveled with an FBI colleague to Yemen to investigate the attacks on U.S. Marines in Aden in December 1992 and a rocket assault on the U.S. Embassy in Sanaa in January 1993, we suspected that Libyans were behind them. They had a history of striking U.S. military and diplomatic targets in the region, and they had made previous attacks in Yemen. However, our investigation determined that jihadists, who had been trained by the CIA's Office of Technical Service in Afghanistan and had returned to Yemen, had done the bombings.

Shortly after I got back from Yemen, I was sent to New York to help investigate the World Trade Center bombing of February 1993. Excellent forensic work quickly determined that the truck had been rented by a group of jihadists who had traveled to Afghanistan. The FBI had previously investigated the group, but unfortunately it was determined that they did not pose a threat despite the fact that one member had assassinated ultranationalist Rabbi Meir Kahane at a midtown Manhattan hotel in November 1990. The World Trade Center bombing — along with the connected 1993 New York landmark bomb plot — combined with the Yemen attacks to help raise awareness that jihadists could be a transnational threat to the United States and its interests abroad. However, while awareness was rising, it would still be a couple of years before we knew these jihadists were part of an organized network called al Qaeda.

Perhaps the best illustration of the ignorance of the threat in the 1990s was the case of Sgt. Ali Mohamed. He is a former Egyptian special forces officer who moved to the United States in 1984 and received his citizenship after marrying an American. He enlisted in the U.S. Army and served as an instructor in Arabic culture at the Special Warfare Center at Fort Bragg, N.C. While on active duty with the Army, and with the knowledge of his supervisors, Mohamed traveled to Afghanistan, where he reportedly fought the Soviets and trained al Qaeda jihadists. He pleaded guilty in October 2000 to helping plan the August 1998 attacks against the U.S. embassies in Nairobi, Kenya, and Dar es Salaam, Tanzania. Clearly, no military in the world would condone, or even ignore, this type of jihadist tourism today. Unlike the '90s, no government is ignorant of the threat these extremists pose.

Situational Awareness

Another building block that is closely related to recognizing the threat is situational awareness. In a personal security context this means using one's senses to scan the environment for dangers. In a national security context, it means using intelligence and law enforcement agencies to monitor for threats — in this case, returning jihadists. But beyond the government, the wider society needs to pay attention and be proactive in notifying the authorities when a threat is perceived.

Muslim communities have become an important component of society's situational awareness monitoring, in part because it is predominantly Muslim children who are being radicalized and used as cannon fodder by jihadists. In recent years many families have approached the authorities to report children who have left home without permission intending to fight or travel to a jihadist theater such as Syria and Iraq. Some of these children have been caught at the airport before departure or in a transit country. In some cases, investigators have been able to identify the jihadist recruiters. Some of these extremists have been arrested or killed in airstrikes.

In a threat environment in which jihadist groups are recruiting members in cyberspace and encouraging grassroots fighters to adopt the leaderless resistance form of terrorism, grassroots defenders must supplement the efforts of the security forces.

Environmental Baselines

To practice effective situational awareness — even collectively — one needs to have a good baseline understanding of the environment in which one is living or working. This is the next building block for personal and collective security.

In a personal context, an environmental baseline means understanding things such as the types of crimes being committed, the modus operandi of the criminals, and the most likely times and locations for crimes. The potential for natural disaster, terrorism and war should also be considered. Once this baseline has been established, one can then evaluate vulnerabilities based on the types of crimes and the tactics of the criminals.

In the context of national security when considering returning jihadists, a baseline means attempting to identify those who left and are returning, but also understanding the terrorist tradecraft that they might have learned overseas and how this will impact the way they approach the various steps in the terrorist attack cycle. Have individuals acquired advanced bombmaking or surveillance capabilities? Or were they front-line fighters, experienced with firearms and more likely to attempt an armed assault than a bombing?

The specific skills a fighter has learned overseas may well influence how they conduct jihad.

Indeed, looking at recent cases involving fighters returning from Iraq and Syria, they have tended to conduct attacks against soft targets instead of making more complex attacks against harder, more significant targets. Some examples include a Jewish museum and the soft side of the airport in Brussels; a concert in Manchester in the United Kingdom; and a cafe, concert venue and sports stadium in Paris. Understanding the capabilities of returning jihadists and their potential targets via a vulnerability assessment can help prevent such attacks.

Reacting to Attacks

The final piece in the building blocks of personal security series was an installment on reacting to danger, and this is also a critical element of collective security. In one sense this can refer to the quick realization that an attack is happening — attack recognition — and then suitably responding to armed assaults, knife attacks and vehicular assaults. Indeed, police departments all over the world are forming special units to quickly respond to, and end, such attacks. In the United Kingdom, an increasing number of police officers are now carrying firearms.

But beyond simply responding to an attack in progress, security forces are also studying past assaults and taking steps to prevent similar ones in the future. For example, after the rash of recent car and truck attacks, authorities in several countries and cities have placed vehicle barriers in high-profile locations that could be targets, More will likely follow suit in the wake of the Nov. 1 vehicular assault in New York.

The threat posed by returning jihadists will persist at a low level for the foreseeable future. It will also be augmented by grassroots jihadists who were unable or unwilling to travel abroad, and by those who will be released from prison after completing sentences for jihadist-related crimes. However, it does not take a great degree of skill to conduct a deadly, simple attack, and because of this, it is important to lessen the overall threat posed by grassroots jihadists.

This article originally appeared on Stratfor.com

Preparing for What Comes Next in North Korea

2017-10-31T16:03:00Z

Highlights

By moving carrier strike groups and stealth fighter jets into the region, the United States will enhance its force posture in and around North Korea.
The preparations do not necessarily suggest that the United States is getting ready to launch a war — though they will elevate the risk in the region.
Tracking U.S. military movements around the Korean Peninsula will offer insight into the standoff between Washington and Pyongyang.

North Korea is still racing to achieve a comprehensive nuclear deterrent. And the closer it gets to its goal, the less time the United States and its allies have to try to stop it. Depending on factors such as the strength of U.S. intelligence, the progress of North Korea's missiles and nuclear programs and how much risk Washington and its allies are willing to tolerate, the United States may already have missed its opportunity for preventive military action. Official assessments indicate that, at most, Washington has 18 months before the window closes; after that, the United States and its allies probably will have no choice but to adopt a policy of deterrence toward North Korea.

As the clock ticks down, we're constantly scanning the horizon for signs of an impending strike on North Korea, such as the evacuation of nonessential personnel from South Korea or a heightened alert level in the region. Most of these have yet to materialize, suggesting that military action is unlikely this year. Others, however, have already manifested.

The United States is enhancing its force posture in and around North Korea. Three U.S. carrier strike groups are en route to the Western Pacific, where they will conduct a combined exercise in mid-November. The gathering is a rare occurrence — the last time three U.S. aircraft carrier strike groups convened for a combined exercise was in 2007 — and will give the United States a powerful force within striking distance of North Korea. The U.S. Air Force, meanwhile, has announced that, for the first time, it will send a squadron of a dozen F-35A stealth fighter jets to Kadena Air Base in Japan in early November for a six-month deployment. Stealth fighters would figure prominently in a potential U.S. strike on North Korea. The United States has also dispatched several submarines, including at least one nuclear cruise missile submarine, to Korean waters. And finally, the U.S. military recently revealed that it increased its stockpile of munitions in Guam by about 10 percent between late August and late September. The small island in Micronesia is a major fuel and ammunition storage area for the U.S. military in the Pacific region, and it would play a central role in a conflict with North Korea.

Taken together, these developments suggest that the United States is preparing for a confrontation. But that doesn't necessarily mean that Washington is gearing up to start a war with Pyongyang. The United States and it allies are in a precarious standoff with North Korea. Military preparations, exercises and movements like the ones underway near the Korean Peninsula may simply be a part of the United States' effort to keep its options for handling North Korea open. Not every deployment is a prelude to military action.

Nevertheless, these types of developments give an idea of what a prospective military campaign would look like, while also raising the risk in the region. Consequently, tracking them is critical. North Korea, after all, will be watching out for the same kinds of military movements and preparations from the United States. If it concludes that a strike is imminent, Pyongyang will be more likely to resort to pre-emptive action. And even if both sides manage to avoid a war, buildups and exercises to contain and deter North Korea may well be the new normal.

This article originally appeared on Stratfor.com

In China, Innovation Cuts Both Ways

2017-10-24T14:59:00Z

China is in a bind. The heavy industry that propelled the country's economy through three decades of dizzying growth has reached its limits. To escape the dreaded middle-income trap, China will need to shift its focus from low-end manufacturing to other economic industries, namely the technology sector. Beijing has put tech at the center of its long-term economic strategy through campaigns such as Made in China 2025 and Internet Plus. But these initiatives alone won't push the Chinese economy past its current plateau. The tech sector is notorious for relentless innovation. And innovation requires flexibility.

For the Chinese government, flexibility is an unsettling prospect. Giving tech companies the leeway they need to keep up with — and, ideally, get ahead of — their competition is the only way Beijing can achieve its goals for economic growth and development. However, granting tech firms and their influential leaders the autonomy required to compete on the global stage could undermine the central government's power over the economy and set an uncomfortable precedent for the rest of China's industries. Faced with the seemingly incompatible tasks of promoting innovation and maintaining control over the economy, the Communist Party of China is struggling to figure out how to regulate the tech sector without stifling it.

A Brave New World

China's economy has come a long way during the past 30 years. In addition to the giant state-owned enterprises for which the country is famous, or perhaps infamous, a growing number of private companies operate in China today. Companies that are at least partly private, in fact, dominate the Chinese tech sector, though many of the firms still have deep political and financial ties to the government. Beijing's level of involvement and influence varies from company to company, often in inverse proportion to a firm's capabilities.

Many of the most capable and effective technology companies in China are variable interest entities, private firms that have managed to skirt regulations prohibiting foreign investment and list their stock overseas. By following the so-called Sina model — named for the telecommunications company that first exploited the regulatory loophole — China's most successful technology firms have secured the funding and resources they need to get ahead. Listing their shares abroad not only offers tech companies opportunities for financing beyond the Chinese system, which Beijing often uses to influence private firms, but it also gives them greater access to foreign talent and expertise. That said, the companies that have followed this pattern, such as Alibaba Group, Baidu Inc., Tencent Holdings Ltd. and, of course, the namesake Sina Corp., had already established themselves on the Chinese market before setting off overseas.

Beyond the handful of giants at the top of Chinese tech, the rest of the sector is wildly diverse. The vast majority of the country's small firms lack the financing and flexibility to hold their own outside tech hubs such as Shenzhen. Perhaps the most prominent exception is Huawei Technologies Co. Ltd., founded 30 years ago by Ren Zhengfei. The company has made a name for itself not by courting investment abroad but through its sheer performance, which, coupled with China's steadily growing research and development budget, enabled it to attract world-class engineers. Today, it is one of the country's most proficient tech companies. Most state-owned enterprises, by contrast, have struggled to make their mark in the tech sector, regardless of whether a central, provincial or local authority operates them.

With such a variety of companies in the field, China's tech sector has become highly competitive. The largest firms — much like their U.S. counterparts, Google, Apple Inc. or Amazon — have to adapt continuously to stay on top of their competition. In the process, they have become leaders in innovation. Huawei Technologies, for example, started its own semiconductor subsidiary to distinguish itself from other Chinese smartphone manufacturers, many of which rely on foreign suppliers for their circuits. And Alibaba ranked seventh among the world's most innovative companies in a recent KPMG survey, beating even Samsung Electronics.

Losing Control

All the while, Beijing has used a combination of incentive structures and informal ties to the industry to guide, rather than command, the tech sector. By giving or withholding procurement contract opportunities, tax breaks and access to state investment funds, financial institutions and subsidies, the central government tries to steer the sector as a whole, even if it doesn't directly control the individual companies. Its primary aim in this endeavor is to preserve the social order and to keep possible threats to stability, such as unemployment or inequality, at bay. If a company goes against its policies, Beijing isn't too concerned because it can always intercede should the need arise to prevent bankruptcy or layoffs from jeopardizing the stability it prizes. If, however, a company comes to dominate a certain sector, China's central government starts to worry. A firm that strong, after all, is harder to control with the same old incentives and could brush up against or even break the bounds that Beijing has set for businesses operating in the country. And if left unchecked, it could gain enough financial clout to challenge the current political system.

As China's tech giants have become more powerful, the variable interest entity model has come under greater scrutiny. The system has been a point of contention for China's leaders since Sina first used it back in 2000, but closing the loophole behind it is easier said than done. Because so many of China's most lucrative companies rely on the Sina model, cracking down on its use would invite serious social and economic repercussions. In fact, nearly three years after China's Finance Ministry proposed legislation to ban the practice for new companies, Beijing has instead opened up more sectors to direct foreign investment.

The Ties That Bind

But the failed legislation is only one part of Beijing's efforts to reassert control over the tech sector. China has also tried to give the Communist Party a stronger role in private business. As it is, every Chinese company with more than 50 employees is required to have a Communist Party secretary, and many executives in the country's biggest tech firms have established themselves in China's political sphere as well. (To be fair, though, several of China's most prominent entrepreneurs reached the top of their industries because of their political connections.) Baidu, Tencent and consumer electronics company Xiaomi Inc., for example, all have members of parliament among their employees. Furthermore, a growing number of private Chinese companies are drafting their charters to give the Party a formal role in their operations. Beijing has created a system in which Chinese firms have a vested interest in the Communist Party's future.

Besides politics, several tech companies are also heavily involved in the country's military and strategic industries. Baidu, for instance, has a long-standing relationship with China's security, intelligence and military apparatuses. These companies understand that going against the Chinese government's wishes would jeopardize their business ties with Beijing, while also potentially getting them blacklisted on the domestic market, depriving them of valuable contracts and putting their executives in legal trouble. Even so, outside the country, many Chinese companies are trying to distance themselves from the government. As the country's foreign technology investments draw scrutiny from Western governments, many private firms are trying to downplay their connections to Beijing. The companies will try to keep the central government at arm's length, at least in their activities overseas, as they look for new opportunities to increase their market share abroad.

The tech sector's success is a double-edged sword for Beijing. On the one hand, its companies' continued competitiveness is crucial to the country's economic growth. On the other, the stronger the firms become, the greater their threat to the Communist Party's authority will be. Beijing's interests align with those of the tech sector for the time being, but that won't always be the case. Between now and then, the central government will need to find a way to reconcile its need to control private industry with its need for innovation in technology.

This article originally appeared on Stratfor.com

China's Latest Dynasty Fights for Survival

2017-10-19T15:36:00Z

Editor's Note

The 19th Chinese Communist Party Congress runs Oct. 18-24. The convention marks the start of a transition as delegates name new members to lead China's most powerful political institutions. But the change in personnel is only part of a larger transformation underway in the Party and in the country — a process that began long before the party congress kicked off and will continue long after it ends. This is the final installment in a four-part series examining how far China has come in its transition, and how far it has yet to go.

Perhaps the most defining feature of China's political history has been the cyclical expansion and collapse of its dynasties. The country's first unified dynasty, which emerged more than 2,000 years ago, set what would come to be a familiar pattern: A central power rises and expands its rule until a challenge — be it a corruption scandal or a natural disaster — erodes its authority. The imperial court steps in to remove or reinforce the dynasty, and the process repeats. Each subsequent dynasty followed the same trajectory, struggling against China's geopolitical diversity, as well as the competing forces it produces, to justify their continued rule and fight internal weakness. The Communist Party is no exception.

Though modern China has changed considerably from its imperial origins, it retains an authoritarian system of governance reminiscent of an earlier era. The Communist Party's imperative to defend and sustain its monopoly on power — what was known in imperial China as the "mandate of heaven" — scarcely differs from that of the dynasties that ruled the country for millenniums prior. Throughout its 68 years in power, the Communist Party of China has demonstrated resilience and adaptability, qualities that enabled it to outlive numerous other communist movements around the world. The Party transformed itself from a revolutionary organization that fought Japanese occupation and helped reunify China into the architect of the country's economic miracle. Along the way, it endured several disturbances, including the Cultural Revolution, the Tiananmen Square protests, the rise of globalization and the development of the private economy. Now that the Chinese economy has started to slow after 30 years of unprecedented growth, the Party must once again adjust course to weather the profound changes ahead. But the rampant corruption, socio-economic inequality and ideological divisions troubling the country have cast doubt on whether the Party can rise to the challenge again.

The Quest for Legitimacy

As general secretary, President Xi Jinping shoulders most of the responsibility for seeing the Chinese Communist Party through. His first priority to that end is to restore the Party's legitimacy as the guardian of the Chinese state. Over the past five years, Xi has spearheaded the most ambitious initiative to reorganize and reorient the Party since the days of Mao Zedong, launching an anti-corruption drive that spans China's sprawling political apparatus. The campaign, which transcends a mere political purge, has brought down more than a million officials across the Party, the government and the military ranks. It has even deposed top brass from the once-sacrosanct Politburo Standing Committee.

Over the past five years, Xi has spearheaded the most ambitious initiative to reorganize and reorient the Party since the days of Mao Zedong.

Alongside the anti-corruption campaign, Xi has taken steps to firm up the Party's beliefs and institutional rules and to unite the bureaucracy and public behind a uniform ideology. He has also tried to bring the Party's core beliefs, which for years had taken a back seat to economic development, again to the fore. All the while, Xi has worked to engender a sense of nationalism among the public in hopes of reinforcing the Party's role as the defender of China's unity and the key to its continued ascent.

The president's efforts to create a more disciplined and capable Communist Party are starting to bear fruit. Party morale is up, or at least it appears to be improving. Furthermore, China's maritime expansion in the South and East China seas and its revival of overland trade corridors along the ancient Silk Road route have been received well at home. The popularity of these initiatives — bids to boost the country's international influence — has been a boon for the Xi administration and the Communist leadership as they grapple with the weakening economy.

Testing the Strategy

Still, Xi's moves to preserve the Party's authority will face numerous tests in the long run. The problems in China's political system are too large for a reorganization or a more assertive foreign policy to solve. After decades of single-party rule, China's Communist Party is locked in a persistent battle against its own weakness. Widespread corruption and entrenched patronage networks continue to tarnish the Party's reputation and undermine the attempts to restore its legitimacy. With that in mind, Xi and the Party will try to make their anti-corruption campaign a more institutional effort.

The president's appeal to nationalism, moreover, is a risky endeavor. History has repeatedly shown that the sentiment is easy to stoke but hard to contain; the nationalism that China's leaders have inspired in their public may well backfire if it grows beyond their control. On top of that, China has yet to fulfill one of its fundamental geopolitical goals, that of bringing Taiwan back under its control. Combined with the disputed territories, unsettled maritime boundaries and volatility in the surrounding region, this unrealized goal could contribute to a sense of vulnerability in China that could damage the Party's image.

Breaking the Dynastic Cycle

Today, of course, China is far less susceptible than ever to internal and external shocks. Expansive infrastructure connectivity, along with deep political and fiscal ties to local governments — even those in autonomous territories such as Xinjiang and Tibet — have enabled Beijing to achieve its basic imperative to unify the country. Even so, the Communist leadership seems acutely aware of its own vulnerability. As part of his effort to enshrine the Party's role in governing China, Xi has worked to stifle political discourse and silence dissent. The Party has co-opted or quashed factions that espouse a different political or moral ideology, and it has grown increasingly sensitive to, and intolerant of, perceived slights. At the same time, Beijing has tuned up its propaganda machine to ensure ideological conformity throughout China. The crackdown extends to civil society as well as the legal system, both of which the central government has in a stranglehold. More than any of his predecessors, Xi has focused on giving the Communist Party the tools to maintain control over the country.

Nearly 70 years after founding the People's Republic of China, the Communist Party is approaching another crossroads. Xi and his cohorts, like their dynastic counterparts before them, have many imperatives to fulfill to secure their country's status as a world power, including forging trade routes to protect its crucial exports. But achieving these objectives abroad will require stability at home. To keep its position in power, the Communist Party will have to keep fighting its internal deficiencies while suppressing its rivals or else overhaul China's political institutions to better support its aims. Either way, the clock is ticking.

This article originally appeared on Stratfor.com

America the Beautiful, but Divided

2017-10-17T15:37:00Z

For nearly a year the world has worked to adapt to recent changes, both real and perceived, in U.S. foreign policy. But as the globe responds to the new priorities of its only superpower, Americans themselves remain divided over how best to engage with their surroundings.

Much like the members of the European Union, each of America's states has its own needs to fulfill. Technological progress has given some states an edge in pursuing their goals, but it has also left behind regions that were once among the most prominent forces in U.S. politics — including the country's flourishing breadbasket, the American Midwest. And as the socio-economic gap between different parts of the country has widened, so have their policy preferences.

By design, political discourse and debate are woven into the very fabric of American governance. But rarely do rifts among states spill into foreign policy and global issues in a substantial way. That may not be the case for much longer, however, as U.S. President Donald Trump's populist appeals attract strong allies — and even stronger opponents — to the White House.

Scraping Off the Rust of the Midwestern Belt

History is littered with examples of periods when "national values" meant something different to every U.S. citizen. The electoral cycle acts as a rough gauge of the extent of these differences, swinging the pendulum of partisanship back and forth along the political spectrum with each vote. The magnitude of this arc tends to broadly coincide with the level of discord in the country at any given point in time. During the moments of deepest division, states dominated by the minority party often try to use the degree of self-determination that the U.S. Constitution grants them to seek even greater autonomy.

Until now such moments — at least those triggered by economic issues — have been largely absent from U.S. history since the end of World War II. Throughout much of the 20th century, the U.S. steel industry's heyday, states with long traditions of manufacturing such as Ohio, Indiana and Michigan thrived. The booming region, coupled with the prosperous agricultural corridor that rests along the Greater Mississippi River Basin, fueled the United States' rapid ascent among the ranks of the world's nations.

But on the eve of the 21st century, the success of these steel giants began to wane amid the rise of container shipping, industrial automation and globalization. Factories closed and production stalled across the region now known as the Rust Belt, which had lost the competitive advantage afforded by the Industrial Revolution to the technological revolution sweeping throughout the globe. A crisis of the American middle class followed, rallying support for federal policies that promised to turn back the clock to better times. The voices of those who felt forgotten by the administration of former President Barack Obama, which prized globalization and multilateral trade deals, grew louder and louder. Last year, their collective strength pulled the political pendulum back toward them with the election of a candidate who vowed to put their needs first.

California Takes Up the Banner of Autonomy

This reversal of fortunes did not sit well with California, the country's most populous state. Unlike its Midwestern peers, California didn't hit its economic stride until the end of the 20th century. Prior to the advent of container shipping, it had no means of tapping into the economies of scale in manufacturing that allowed states along the Great Lakes and Mississippi River to flourish. So when American industry began to decline in the 1970s, California emerged relatively unscathed, eventually becoming the world's sixth-largest economy and a leading tech hub. Now home to some 10 million immigrants and a culture that embraces innovation, California's political stances are much different than those of Trump's constituents in the American Midwest, particularly on matters related to the environment, energy, immigration and the tech sector.

California and its governor, Jerry Brown, have led the charge to advance climate change policy under the Trump administration. After the president announced his intention to abandon the Paris Agreement on climate change, Brown — along with a handful of other state leaders, cities and corporations — pledged to maintain his state's participation in the deal by creating cooperative partnerships and enacting or enforcing state laws in line with the accord's goals. Not long after the announcement, the governor traveled to China to attend a clean energy forum and hash out plans for informal collaboration between California and Beijing on green energy and environmental protection.

Meanwhile, states like California have gone head-to-head with White House over the tabling of another Obama-era initiative on the environment: the Clean Power Plan. Scott Pruitt, the chief of the Environmental Protection Agency, announced on Oct. 9 that he had officially begun the process of repealing the bill, which has been stalled in court battles with numerous red states since its passage. Ironically, blue states will likely use the same tactics to block the progress of any replacement regulation that Republican lawmakers propose. Either way, the economic and technological considerations that inform states' decisions on utilities, power generation and energy use will gradually push them to adopt policies that are in line with both the Paris accord and the Clean Power Plan, regardless of the United States' formal participation in them.

Legal disputes between state and country haven't been confined to environmental issues, either. Over the past year, immigration has proved a serious point of contention between the White House and a handful of states, including California. (Perhaps this is unsurprising, since nearly a third of California's residents were born on foreign soil.) Wielding the power of the executive order, Trump has placed travel restrictions on citizens of nine different countries while bolstering the enforcement of immigration laws, resulting in an uptick in arrests this year. At the same time, disruptions to visa programs and the Deferred Action for Childhood Arrivals policy have led to an outcry from the tech and business communities. Should the visas that enable these sectors to recruit the world's best and brightest remain uncertain inroads into the country, the innovative tech sector may dig its heels in deeper against the president's immigration policies.

California has already taken its protection of migrants a step further, declaring its status as a sanctuary state in early October. The move will limit the extent to which Californian officials, by law, must cooperate with federal immigration enforcement officers. The Trump administration has threatened to withhold all federal funds from such sanctuaries, though some commentators have argued that doing so would be tantamount to coercion by the federal government (and therefore would not be permitted). The final verdict will likely rest with the country's nine Supreme Court justices.

A Flaw in the White House's Foundation

Though immigration and environmental issues have certainly grabbed the most headlines, Trump's trade policies have best exposed the competing interests that have long driven a wedge between rural and urban states. At first glance, one might expect states that are heavily reliant on foreign trade to balk at the protectionist rhetoric, renegotiations and punitive economic measures that have characterized the first 10 months of Trump's presidency. But many of the states whose exports and imports make up the largest share of their gross domestic product are also the onetime manufacturing behemoths of the American heartland, such as Michigan, Tennessee, Kentucky and Louisiana, that steered Trump from the campaign trail to the Oval Office.

Trade is thus the issue that could cause cracks to form in the White House's support base. By default, the president's constituents — some of whom favor free trade, while others prefer protectionism — will be impossible to fully please. But more to the point, no amount of negotiation over the trade policies of China, South Korea, Canada and Mexico will reverse the technological progress that has weakened the American middle class and manufacturing sector. And if, after four years, Trump's allies are unsatisfied with the results of his tenure, they may shift their support to another party yet again.

As the United States' policies toward North Korea, Afghanistan and Syria have made clear, geopolitics imposes formidable constraints on the actions of even the most powerful of nations. But at times, the pull of domestic forces against the current of national policy can also temper decision-making across all levels of government. And for the first time, the degree of divisiveness over the global issues now at the center of the U.S. political debate threatens to have consequences that reach far beyond America's borders.

This article originally appeared on Stratfor.com

Puerto Rico Won't Be the 51st State Anytime Soon

2017-10-12T15:41:00Z

Highlights

Popular opinion in the overseas U.S. territory of Puerto Rico has trended toward statehood, with about 97 percent of voters backing that option in a June referendum.
Admitting Puerto Rico into the Union would alter the composition of the U.S. Congress, and House and Senate members could resist adding extra legislators who could sway close votes.
Aside from political representation, statehood does not hold many material benefits for Puerto Ricans, because they are already U.S. citizens and have the right to work and to travel freely in the United States.

The destruction wrought by Hurricane Maria on Puerto Rico has renewed attention on the island's relationship with the United States. During the late 19th and early 20th centuries, the U.S. overseas territory was a key part of the United States' drive to secure the Caribbean against hostile foreign powers. But as European powers declined while the United States grew to become the globe's dominant force, the Caribbean's immediate importance to U.S. foreign policy waned. Still, the region remains indispensable to U.S. national security, mainly because of its proximity to the mainland. No foreign powers are capable of making meaningful inroads into the Caribbean, although Russian and Chinese influence in such places as Cuba and Venezuela will continue to concern the United States.

Taken From Spain

Dominance over the Caribbean is essential to the United States, but the country's direct political control of Puerto Rico is more a legacy of how the United States set about achieving this foreign policy imperative. The United States wrested control of the island from Spain during the Spanish-American War in 1898. (Compared with fighting in other Spanish possessions such as Cuba and the Philippines, Puerto Rico was a relatively minor part of the conflict.) And while Cuba and the Philippine islands came under U.S. control, only Puerto Rico, which was smaller and lacked the strong pro-independence movements of Cuba and the Philippines, remained directly administered by the United States.

Since the early 20th century, the issue of independence — or a change in the island's relationship with Washington — has arisen periodically. In 1917, Washington laid the groundwork for Puerto Rico's present relationship. It was made into a self-governing, unincorporated territory whose citizens have the rights of those on the mainland United States. However, the island has no political representation in Congress, and its citizens are not able to vote in U.S. presidential elections (although they do vote in presidential primaries). Its governors were appointed by the U.S. president until 1947, when Luis Munoz Marin, the first democratically elected governor, took office.

Beginning in the mid-1930s, an independence movement steadily grew in Puerto Rico, although it was never widespread enough to meaningfully threaten U.S. control. In 1950, the Puerto Rican Nationalist Party, a pro-independence political movement, fomented a series of revolts that the United States put down by deploying the National Guard. Also that year, Puerto Rican separatists attempted to assassinate President Harry Truman. While separatists later injured five congressmen during an assault on the U.S. Capitol in 1954, the independence movement was seriously crippled after its main leader, Pedro Albizu Campos, was arrested during the 1950 revolts. From the 1960s through the 1980s, the United States continued to break up various cells advocating and carrying out violence in support of independence.

Congress Holds the Key

Because of Puerto Rico's status as a territory, the island's political future rests in the hands of the U.S. Congress. Puerto Rico's political scene is roughly divided between political figures who intend to uphold the status quo relationship with the United States and those who want to shift toward statehood. There is no serious movement toward independence. Since 1968, the island's status has been put to a vote five times in separate, nonbinding referendums. And the statehood option, which would make Puerto Rico the 51st state, has steadily gained ground. During the last referendum, held on June 11, 2017, that alternative won with 97 percent of the ballots — although turnout was less than 25 percent of registered voters.

Still, such referendums do not ensure that the island's status will change. Since Puerto Rico is a territory, any changes in its standing depend on the president and the legislature of the United States to execute them. And any referendums must be perceived as valid by U.S. authorities. But the main sticking point for U.S. authorities is political representation in Congress: Granting Puerto Rico two senators and several House representatives would prove controversial, as those seats could shift vote tallies in the legislative branch and benefit one party in federal elections. And those possibilities would reduce the will of Congress to even entertain a vote on statehood after a Puerto Rican referendum.

Meanwhile, despite recent referendums suggesting a shift toward statehood, there are no major economic or political drivers pushing Puerto Ricans themselves to a prompt resolution. While some parties and political figures have touted the benefits of statehood, Puerto Ricans have long been able to live, travel and work freely in the United States. Statehood would come with few material benefits for the average Puerto Rican, making it harder to drum up popular support to pressure Congress. Moreover, the recovery from Hurricane Maria will probably delay any attempts for a new vote, given that the island's authorities are overwhelmingly focused on rebuilding and need U.S. financial support to do so.

Thus, the storm, while a tragic humanitarian crisis, will have little impact on the future relationship between the United States and its island territory. With no serious push from Washington and no pressing motivations on the island, Puerto Rico is unlikely to seek statehood anytime soon.

This article originally appeared on Stratfor.com

NAFTA's Members Head Back to the Table

2017-10-10T18:30:00Z

Highlights

Over the next few rounds of negotiations on the North American Free Trade Agreement, Canada, Mexico and the United States will present more drafts of proposals to revise the deal than they have during previous discussions.
The United States will propose the most contentious reforms, such as measures to increase the amount of U.S.-produced content in products imported from Mexico and Canada under NAFTA.
The negotiations are unlikely to break down, despite the controversial issues the next round of talks will cover, though they probably will take awhile to reach their conclusion.

Canada, Mexico and the United States are drawing their battle lines for the fourth round of negotiations to revise the North American Free Trade Agreement. And the differences in their priorities for the talks, scheduled for Washington during Oct. 11-15, are becoming even clearer. The negotiations will reach their apex in the fourth round, but they will hit plenty of bumps along the way. As the signatory countries address the most difficult items on their agendas, they will run up against one another's imperatives, making compromise all the more challenging.

Getting in Gear

For U.S. President Donald Trump's administration, the main focus of the talks will be on reducing the United States' bilateral trade deficit with Mexico and boosting its exports to the rest of the bloc. The United States is expected to propose increasing regional content requirements, the rules that govern the percentage of a product's added value that must come from within NAFTA, from 62.5 percent to 85 percent to close the gap between its imports and exports. It is also expected to propose a new stipulation — the first of its kind in a multilateral trade deal — requiring that 50 percent of a good's content come from the United States to qualify for NAFTA benefits.

The automobile sector, which accounts for $54 billion of the $66 billion U.S. deficit, is the chief target of these proposals. But the vast majority of U.S.-based automotive companies will object to implementing the measures. The automotive supply chains in the United States, Canada and Mexico, after all, are so closely integrated that suddenly changing regional content requirements would cause major problems across the bloc. Furthermore, it's unclear whether higher content requirements will help the U.S. automotive sector in the long run. American-made cars and components aren't as competitively priced as they once were. Many firms may sooner forgo the perks of NAFTA and pay the modest 2.5 percent tariff the United States applies to many light-duty vehicles than take on the expense of complying with the revised rules.

And automakers won't be the only ones grumbling in the United States. Others already have criticized U.S. Trade Representative Robert Lighthizer for ignoring the procedure for raising issues to address in the negotiations. Though Lighthizer has the lead in the trade talks, his office must clear the U.S. position with other government agencies before presenting it to Mexico and Canada. Lighthizer has responded to the complaints that he has bypassed the proper channels by saying that the government eventually will come together on the various issues at stake. So far, however, some of Lighthizer's demands, such as proposals to institute a sunset clause or an automatic renegotiation trigger in NAFTA and to change its investor-state dispute settlement mechanism, are still points of contention in the United States.

On the Other Sides

Outside the United States, many of the proposals the White House has or is expected to put forth in the fourth round will be no less controversial. Canada and Mexico, for example, probably will object to the sunset clause if it comes up again, having shot it down when the United States first floated the idea. The U.S. administration's plans for the agricultural sector are bound to raise some hackles, too. Talk of imposing seasonal trade barriers on certain crops during their harvest season to protect U.S. agriculture could be worrisome for Canada and Mexico should their harvests coincide with those of the United States. In addition, Canada will probably bristle at Washington's demands on its closely guarded dairy sector.

Ottawa has several concerns about Washington's agenda going into the talks, though, compared with Mexico City, it won't take much heat from the United States over trade deficits. Besides its desires to keep the supply controls on its dairy sector in place, the Canadian government wants to preserve the current dispute resolution mechanism under Chapter 19. The provision enables companies to avoid domestic courts when appealing anti-dumping and countervailing duty cases. And considering the 220 percent duty the United States levied on some Canadian airplane exports last month — to which it added an additional 80 percent tariff earlier this month — maintaining the mechanism is a big priority for Canada.

Mexico, meanwhile, is getting ready to stand up to the United States. On Oct. 5, a group of senators from President Enrique Pena Nieto's Institutional Revolutionary Party outlined the six items that they will refuse to agree to in the new NAFTA. Most of the issues they highlighted are measures the United States has proposed to add or alter, including the sunset clause, the content level requirements, the Chapter 19 dispute mechanism and the seasonal protections on produce. Mexico's threat to vote against an agreement that addresses these provisions will make for contentious negotiations. The Pena Nieto administration is trying to reach a deal on NAFTA before the next administration takes power and a new crop of legislators enters the Congress of the Union late next year. If the United States pressures Mexico to accept an agreement that crosses its six red lines before the power transition takes place, the deal could die in the Mexican legislature. That puts the negotiators in a tough position heading into the fourth round.

No matter how heated they get, however, the next round of talks won't break down. Mexico, Canada and the United States all agree on at least one thing: that NAFTA's collapse would be devastating for all parties involved. But reaching a compromise won't be easy with so many disparate priorities to navigate, nor will it be quick. The talks could extend deep into 2018, at which point they would risk complications not only from the Mexican elections slated for next summer but also from U.S. midterm elections in the fall. In the meantime, the extent of the differences between NAFTA's three members will come to light as the fourth round of negotiations gets underway.

This article originally appeared on Stratfor.com

The Las Vegas Attack Will Inspire Copycats

2017-10-05T16:57:00Z

As the closing act of the three-day, open-air Route 91 Harvest Music Festival took the stage the evening of Oct. 1 on the Las Vegas Strip, a 64-year-old man used a sledgehammer to smash out two windows in his suite at the adjacent Mandalay Bay hotel. His perch on the 32nd floor gave him a clear field of fire on the 22,000 or so concertgoers below. He took aim with one in the arsenal of guns in his room and opened fire. The shooter's intent was clear – he wanted to create as much carnage as possible. The crowd below remained oblivious to the threat 100 meters (328 feet) above and 400 meters away until bullets began raining down.

The attack, which left 59 people dead and more than 500 hurt, was certainly well-planned. The shooter, who had occupied the suite on Sept. 28, had methodically ferried in weapons concealed in luggage until he had amassed 23 guns, including several rifles with high-capacity magazines, and thousands of rounds of ammunition. Photographs from the scene indicate that at least two of the rifles were semi-automatic AR-platform guns that had been equipped with legal "bump fire" stocks that allowed them to operate at a rate mimicking automatic gunfire.

The massed crowd offered an easy target. Indeed, recruits in the armed forces are trained to shoot at human-size targets at 400 meters using iron sights, so targeting the throng below at that distance did not require advanced marksmanship. Given his elevated position, unobstructed view of the crowd and large arsenal, it is not surprising that the attacker was able to inflict such mayhem, whatever his motive for doing so might have been. Moreover, the bloodbath that followed provided a blueprint for other killers to follow, providing many important lessons for security professionals and ordinary citizens alike to heed.

Expect Copycat Attacks to Follow

Given the high death toll in Las Vegas, copycat attacks are bound to follow. One of the factors that drives terrorism, after all, is the success of past attacks.

Early anarchist ideologues saw terrorism as a form of propaganda. In 1885, Johann Most famously declared, "we preach not only action in and for itself, but also action as propaganda." Indeed, in many ways, it seems as if successful attacks are able to influence future attacks more than simple propaganda does. For instance, even though al Qaeda began calling for grassroots jihadists to conduct vehicular assaults in the second edition of its Inspire magazine, published in 2010, and despite the ease of conducting such attacks, only six were recorded outside Israel between 2010 and 2016. However, since the deadly and well-publicized Bastille Day attack in Nice, France, in 2016, at least 10 vehicular assaults have been committed by jihadists in North America and Europe (as well as two others not connected with jihadists). Success, and the heavy media coverage that accompanies it, clearly breeds imitation.

Because of this, we can expect to see more attempts to shoot at crowds from elevated positions. The tactic does not pose a threat just to music festivals like the one in Las Vegas, but rather to any large crowd, whether gathered for parades, sporting events, rallies, protests or celebrations — or even at a tourist site. Indeed in many cities, even everyday commutes create a large, vulnerable crowd at major intersections and travel hubs.

Can the Threat be Mitigated?

Security planners for large events, especially official high-profile ones designated national security events because they are at high risk of being targeted by terrorists or criminals, may have the resources to conduct extensive pre-event preparations, including sweeping for potential threats and positioning countersniper teams. However, even the federal agencies in charge of securing such events will have to rethink some of their standard assumptions to now account for snipers inside buildings with windows not designed to open. Furthermore, the concert attack presented a wrinkle that even one standard protective method probably would have missed. A review of the Mandalay Bay's guest registry in a search for potential threats likely would not have flagged the shooter, as there was little in his history to indicate he might take such an action.

But outside major events, most security managers simply do not have the resources to devote to those kinds of arrangements. In the Las Vegas case, the crowd, and not the concert itself, was the target. In similar situations, there may be absolutely no link, such as a previous threat, between an attacker and an event, increasing the difficulty of anticipating that kind of trouble. In a typical city, there are simply too many events during an average week for law enforcement at the local, or even state, level to cover with enhanced security. Even if tight security can be provided at some events, a determined attacker could simply shift to a softer target.

This reality puts even more emphasis on the need for the authorities to focus on the terrorist attack cycle, giving them the opportunity to detect when a would-be attacker is conducting surveillance on a target, acquiring weapons or getting ready to act, all points at which a plot is vulnerable to disruption before an attack proceeds. Further, the Las Vegas shooter, a white, 64-year-old millionaire, does not fit the profile most people picture when thinking about a terrorist or mass murderer. Therefore, this case presents a prime example of why counterterrorism efforts should focus on the "how" rather than the "who."

What Can Ordinary People Do?

Two weeks ago, I discussed how people can help protect themselves when they are in a crowd that is targeted for an attack. If you are in a vulnerable location, to increase your odds of escaping if an attack erupts, it is critical to remain aware of your surroundings, stay alert for trouble and quickly recognize if an assault is unfolding. But most important, you should already have mentally prepared yourself to take immediate action to get out of the kill zone once you are aware of the danger. Reviewing some of the videos of the Las Vegas attack, it was easy to see the difference between people who took immediate action after they recognized the threat and those who simply froze. Indeed, instead of running for cover, some people just stood there, shooting video with their cell phones. One person was shown actually jumping up and waving his arms as if to taunt the shooter. In another widely circulated video, a man made an obscene gesture at the attacker. Don't be these people: Get out of the kill zone immediately and find cover.

Even in media interviews of the survivors, there is a marked difference between the accounts of those who simply dropped to the ground immobile and those who ran to find cover — and those who repeatedly ran back into danger to grab the immobile or wounded and move them to cover.

Besides shock, first responders and others who came to the aid of the wounded had to deal with extensive bleeding. In fact, bleeding is the primary cause of death when people are hurt by gunshots or shrapnel in bombings. Beyond knowing how to administer basic first aid, it is important to have materials with which to effectively do so. I carry a tourniquet, hemostatic bandage and chest seal in a small bag in my briefcase every day. I also carry kits equipped with those items in each of my vehicles. While it is certainly possible to create an improvised tourniquet using shoelaces or a belt, why rely on makeshift methods when genuine emergency supplies are so inexpensive and light to carry? Being prepared will not only allow you to treat yourself or a member of your family if needed, but it will also perhaps save a life in the aftermath of an attack.

We do live in a dangerous world, but honestly, at no time in history has civilization been free of those who would hurt or kill others. It's a fact of life today that just as automobile accidents and disease pose a threat to life, terrorists and mass murderers will target innocents. Recognizing that these attacks are possible, however, does not mean that you must live in fear. In fact, paranoia is counterproductive to a healthy and sustainable level of personal security. However, by understanding the threats and developing the proper mindset, people can remain resilient in the face of them.

This article originally appeared on Stratfor.com

Catalonia's Bid for Independence Is a Zero-Sum Game

2017-10-03T15:56:00Z

When asked about Madrid's potential reaction to the independence process in Catalonia, many Catalans used to say, "as soon as they send the tanks, they will have lost the battle." On Oct. 1, the Spanish government didn't send in the military to block the independence referendum. But it did send the police, resulting in clashes that left over 800 people injured according to Catalan authorities. And images of policemen storming schools, seizing ballot boxes and using force against voters will resonate at home and abroad for years to come. Yesterday's events have not only exacerbated Spain's worst political crisis since democracy was reestablished four decades ago, they have given the independence movement serious momentum, which Madrid will struggle to stop.

In the weeks leading up to the vote, the Spanish government's strategy was to delegitimize the referendum by disrupting its organization. From a purely logistical point of view, it was a partial success. Several polling centers were closed and ballot boxes were confiscated, forcing people to vote under irregular circumstances, without a valid electoral roll and without any controls to prevent them from voting multiple times. Consequently, the referendum results — in which 90 percent of voters favored independence, with a voter turnout of roughly 40 percent according to the Catalan government — cannot be considered reliable.

But if the Spanish state obtained a partial logistical victory, it came at a high political cost. Though a judge authorized the police crackdown on voters (the Constitutional Court had banned the referendum), it still shocked Catalans and international public opinion. The resulting peaceful disobedience of hundreds of thousands of Catalans gave the independence process an appearance of legitimacy it did not have before. So even though many of the Catalan government's arguments for independence are dubious, Madrid's actions have now given Barcelona additional pretext to unilaterally declare independence.

From the start, Spanish Prime Minister Mariano Rajoy's strategy to deal with the Catalan situation has been controversial. Many opposition parties questioned Madrid's almost exclusive focus on the illegality of the referendum and requested that the government diffuse tensions and weaken the separatist movement by making political gestures like promising fiscal and institutional reforms. But while the Spanish government could have chosen a different strategy to deal with the Catalan crisis, there are still clear constraints limiting its room to maneuver.

Spain's mountainous geography has led to the emergence of strong regional identitiesthat are distrustful of the central government. For the past five centuries, successive Spanish governments have opted for a stick and carrot approach to prevent the country from disintegrating. The 20th century offers clear examples of both: While Francisco Franco's dictatorship from 1939-1975 tried to suppress Spain's regional identities by denying them political and cultural rights, the constitution of 1978 created one of the most decentralized political systems in Europe, giving Spanish regions high degrees of autonomy.

That system was meant to reduce Spain's natural tendency toward fragmentation, but it didn't eliminate it completely, and Spain today is still divided. The current conservative government in Madrid is unlikely to authorize a legal referendum in Catalonia, as it would open the door for other regions — most notably the Basque Country and, to a lesser extent, Galicia — to demand the same. Even a progressive administration would be skeptical of any decisions that could lead to the breakup of the country.

Then there is the issue of the emotional link between Catalonia and Spain, which has deteriorated over the past decade. An economic crisis, rising anti-establishment sentiments, recurrent corruption scandals and controversial political events, such as the Spanish Constitutional Court's decision to block parts of Catalonia's statute of autonomy in 2010, have all damaged the image of the Spanish state in the eyes of many Catalans. The Catalan government, in turn, has made consistent efforts to deepen nationalist and anti-Spanish sentiments in the region. A strong narrative has taken root in the region, presenting the Spanish state as something alien, distant and hostile to Catalonia. As a result, support for Catalonia's independence rose from roughly 20 percent to around 50 percent between 2007 and 2017.

Opinion polls before Oct. 1 suggested that a significant part of Catalan society would welcome institutional reforms to grant Catalonia a greater control of its taxes while keeping the region within Spain. Catalonia represents roughly 20 percent of the Spanish GDP and Madrid would be reluctant to give up substantial amounts of money it uses to run the state and to spend in other regions. But these reforms may prevent the country from breaking, though they are not currently on the table. That's because Madrid and Barcelona have presented their dispute as a zero-sum game in which one of the two parties has to be defeated.

Yesterday's events have only made things worse, because the Catalan government is now one step closer to declaring independence, which could force Madrid to react by suspending Catalonia's autonomy or calling for early regional elections. While either of these options would remove the current Catalan leadership — which Madrid doesn't consider valid — from the equation, they would only lead to additional social unrest and potentially new episodes of violence. Moreover, suspending autonomy or holding early regional elections without first introducing real institutional reforms at the national level would do little to resolve the crisis. Pro-independence sentiments are unlikely to go away anytime soon.

In this context, Rajoy's minority government could become fragile domestically and internationally. So far, two of the three largest opposition parties in Spain have supported Madrid's decision to block the Catalan referendum. But the images of the police cracking down on voters are making it difficult for unionist parties to side with Rajoy's government. The same goes for the European Union, which supported Rajoy before the referendum but chose to remain silent as events unfolded on Oct. 1. Should social unrest in Catalonia grow, the bloc will probably change its view of the crisis as a domestic issue and pressure Madrid to negotiate a compromise. After all, Brussels and many of the bloc's governments are unlikely to tolerate prolonged instability in the fourth largest economy in the eurozone. In fact, on Oct. 2, the EU Commission urged "all relevant players" in the referendum to "move very swiftly from confrontation to dialogue."

Things in Catalonia are likely to get worse before they get better. And even if the Spanish government manages to keep the country together, the crisis will leave long-lasting scars, which will shape Spanish politics for years to come.

This article originally appeared on Stratfor.com

A Vote of Contention in Iraqi Kurdistan

2017-09-28T15:44:00Z

For the past few decades, Iraq's Kurds have maintained a fragile but steady state within a state. Iraqi Kurdistan's relative security and stability — ensured as they are by the region's own military forces and government institutions — stood in stark contrast to the rest of Iraq after the U.S. invasion in 2003. The semi-autonomous territory, moreover, has slowly but surely managed to build partnerships with a diverse array of international investors to help protect its latitude to self-govern. But all the while, Iraqi Kurdistan has been, and is, legally a part of Iraq and still nominally subject to the country's federal government in Baghdad.

Voters in the region set out to change that on Monday, when the Kurdistan Regional Government (KRG) went ahead with a contentious referendum on the region's independence. As soon as the first results trickled in from the 27 districts of Iraqi Kurdistan's six provinces — three of which overlap with territory under Baghdad's governance — the call for full autonomy came in loud and clear. The historic vote will reverberate throughout the country and the Middle East in the months ahead, ushering in negotiations over greater autonomy for the Kurds and another period of conflict in Iraq. Whether the referendum achieves its objective, though, is probably another story.

Independence is a goal long overdue from the Kurds' perspective. After centuries under Ottoman rule, the ethnic group emerged from World War I empty-handed, having failed to secure a state for themselves in the mad dash to divvy up the lands of the former empire. Memories of their persecution under Iraqi leader Saddam Hussein's administration, and of the conflicts among their own political parties, militias and tribes, are fresher for the Kurds and no easier to forget. Officials from the KRG and Iraqi government still accuse one another of maintaining dangerous nationalist policies, highlighting the lingering mistrust between Iraq's Arab and Kurdish populations.

In 2005, Iraqi Kurdistan held an informal independence referendum. The results of that vote, like those of the latest referendum, overwhelmingly supported complete sovereignty for the region. Yet despite the calls for an official vote on the matter, a formal referendum never materialized — that is, until now — in large part because of the security problems facing Iraq and the KRG. The emergence of the Islamic State, for example, stayed discussions of a new independence vote. Now that Kurdish peshmerga fighters have helped clear the militant group from most of its strongholds in Iraq, including those in Iraqi Kurdistan, the timing seemed right to hold the long-awaited referendum.

But the Kurds' allies in the coalition against the Islamic State aren't so sure. The United States expressed concern with the referendum, even though it supports greater autonomy for the Kurds, because it worried that the independence vote would distract from the fight against the Islamic State. Washington also feared that the controversial referendum would draw yet another battle line in Iraq, this time between the country's Kurds and Arabs. The ensuing conflict could, in turn, give fresh fodder to bombastic, hard-line politicians such as former Prime Minister Nouri al-Maliki, who keeps close ties with Iran and welcomes Tehran's efforts to exert its influence in Iraq. So soon before Iraq's next general election in 2018, the referendum could give the politicians in Iran's pocket a talking point to curry favor with the many Iraqi voters who oppose Kurdish independence.

Part of the controversy surrounding the referendum centers on the inclusion of contested territories in the vote. The most important of these is Kirkuk, home to 15 to 20 percent of Iraq's overall oil reserves. The KRG and Iraqi federal government both are unflinching in their claims to the province, and neither side will easily concede in the dispute given the resources at stake. Further complicating matters, Kirkuk and the rest of the disputed territories are wildly diverse, and because the referendum was designed to tally votes by district rather than by ethnic group, its results could gloss over dissent. Arab or Turkmen voters in Kirkuk or Diyala who opted against independence, for instance, will go unheard if more than 51 percent of their districts' electorate voted "yes." Whatever the ethnic breakdown district by district, the KRG and Iraqi federal government alike will highlight the diversity and high voter turnout in the disputed territories to support their claims to the areas. While Baghdad will argue that Arab voters, for example, voted "yes" in the referendum only because they were coerced to do so, the KRG will insist that their support for independence simply reflects their preference for life under Kurdish rule.

Outside Iraq, meanwhile, countries that vehemently opposed the referendum, such as Iran and Turkey, will push to delay the region's independence now that the results of the vote are mostly in. The sizable demonstrations that broke out in Iran's northwest Kurdish region on the evening of the referendum illustrated the vote's influence beyond Iraq, confirming Tehran's fears that the event would spark unrest among its Kurdish population. In a show of force to quell the dissent, Iran has since deployed extra military forces to the region. Turkey, likewise, has sent troops to reinforce its border with Iraqi Kurdistan while also threatening to cut off the KRG's access to a crucial oil export pipeline and promising to downgrade its relations with Arbil in favor of working exclusively with Baghdad. Their mutual concern over the referendum, in fact, is bringing Turkey and Iran not only closer together but also closer to Iraq. Though their relations with the Iraqi federal government have soured in recent years, Ankara and Tehran will band together with Baghdad to work toward their common goal of thwarting the KRG's independence.

Iraq's Kurds, however, are fighting to ensure that their autonomy will be a foregone conclusion, a cornerstone of Middle Eastern politics that no one dare remove. By holding the referendum on Monday, the KRG took another step back from Baghdad — though Iraq won't let it go without a fight. Considering the diplomatic and political risks entailed, moreover, few foreign nations will be willing to recognize the region's independence, at least for now. And so begins a new era of ethnically charged instability in a land already rife with divisions as Arbil and Baghdad ramp up their tug of war in northern Iraq.

This article originally appeared on Stratfor.com

As the Word War With North Korea Escalates, So Does the Risk of Real War

2017-09-26T14:46:00Z

The United States has declared war on North Korea, according to North Korean Foreign Minister Ri Su Yong. In a brief news conference in New York on Sept. 25, Ri said that U.S. President Donald Trump's recent statements to the U.N. General Assembly were tantamount to a declaration of war and that all of the members of the United Nations clearly heard that it was the United States that first declared war on North Korea. Therefore, Ri argued, Pyongyang has a right to self-defense under the U.N. charter and would be justified if it were to shoot down U.S. strategic bombers, even outside North Korean territory.

Over the past week, the rhetoric between the United States and North Korea has rapidly escalated. North Korean leader Kim Jong Un responded to Trump's Sept. 19 U.N. speech by saying that Pyongyang was seriously considering the "highest level of hard-line countermeasures in history." The statement, accompanied by a picture of Kim sitting at a desk and looking intently into the camera — reminiscent of U.S. presidential addresses to the nation during times of crisis — was clarified later to suggest Pyongyang could carry out an atmospheric nuclear test in the Pacific Ocean.

Though much of the escalation has been rhetorical rather than concrete, both North Korea and the United States are inching closer to backing up their words with action to demonstrate their positions. The United States is openly discussing shooting down North Korea's next missile test, and North Korea has responded with what it considers to be an equivalent threat: the possibility of shooting down U.S. strategic bombers near the Korean Peninsula. Pyongyang has long equated the U.S. strategic bombers patrolling the peninsula to its own missile program and has warned that it could launch missiles to the U.S. coastline in a parallel show of range and force.

Trump's comments to the United Nations and the additional sanctions his administration recently imposed against North Korea could be seen as one step along the traditional path to U.S. military action. This path involves the U.S. making a strong case to the international community before resorting to unilateral action justified by the inability or unwillingness of the world to act. Washington has yet to take concrete action to suggest that it is preparing to strike. It has not changed its force posture or made moves to evacuate the 125,000-140,000 American civilians living in South Korea. Neither does North Korea appear to be significantly altering the positions of its forces, though it is exploiting increased U.S. threats to rally the North Korean population around the embattled government in Pyongyang.

Though neither the United States nor North Korea is making the formal movements that would suggest an imminent, purposeful military conflict, the fever pitch between the two and the increased shows of force do raise the likelihood that an accident or miscalculation could lead to conflict. North Korea and the United States have not agreed on basic rules of engagement for air encounters. So, should North Korea decide to scramble aircraft to intercept U.S. flights, even if it has no intent to engage, the potential for an accidental collision is high. North Korean aircraft have collided with U.S. aircraft in the past, last in 2001 off the Chinese coast, but military tension wasn't nearly as high then. U.S actions could be just as risky: If Pyongyang follows through on its threat to test a nuclear device in the Pacific, Washington could try to shoot down the launch, particularly if the weapon is on a trajectory that could bring it near the U.S. coast. In each scenario, tit-for-tat responses could lead to a rapid escalation unintended by either side.

Amid the intensifying standoff, signs of back-channel diplomatic efforts should be watched for, even if it appears that there is little space for a compromise that would satisfy both sides. Russia is working with North Korea diplomatically, and the North Korean Foreign Ministry official in charge of North America is in Russia this week, creating one such space for possible back-channel diplomacy. China's actions should also be watched closely. China's relationship with North Korea has been strained for the past several years, and many of the United States' warnings of military action could be meant more to convince China to take a stronger stand rather than to directly convince North Korea to change its course of action. Any changes in military postures will, of course, also be significant. These include the possibility that the United States could change the way it conducts its strategic bomber missions, by switching to stealth aircraft or expanding fighter escorts, for example.

The probability of intentional war is still relatively low without additional escalation, but the potential for accidental conflict is increasing. North Korea has threatened that in the near future it could test its missiles near the U.S. territory of Guam, test its missiles off the U.S mainland coast, intercept U.S. bombers near the Korean Peninsula and conduct an atmospheric nuclear test over the Pacific Ocean. The United States has been less specific in its threats, but it has increased its strategic bomber flights, has talked more openly about shooting down North Korean missiles and has discussed sending additional strategic assets to the region. And more physical action makes it more likely that accident and miscalculation could follow.

This article originally appeared on Stratfor.com

Iraqi Kurdistan Prepares for a Vote That Will Shake Nations

2017-09-21T15:28:00Z

In less than a week, the largest nation in the world without a state of its own — the Kurds — may finally hold a vote on whether to declare one. The approaching independence referendum, which Iraqi Kurdistan has planned for Sept. 25, marks the culmination of a long-running battle between the Kurdish government in Arbil and the central government in Baghdad. Thanks to the former's disarray and the latter's international backing, the vote seems doomed to fail in producing a distinct territory that the Kurds may call home. However, it could set Iraqi Kurdistan on a path toward greater autonomy, shaking the region from its stagnation and threatening further instability in the volatile Middle East.

A Cause That Unites and Divides

Though a familiar (and often futile) refrain throughout Iraq's history, calls for Kurdish independence have recently reached a crescendo. To most Iraqi Kurds, the referendum is a legitimate attempt to increase their autonomy from a central government that they believe to be unresponsive to their needs. Moreover, many within the Kurdistan Regional Government (KRG) believe that the promise of a vote — whether or not it is actually held — will help solve the troubled region's financial and political woes by giving Arbil leverage over Baghdad in the governments' negotiations over budget battles, the distribution of oil revenue and the status of disputed territories.

The rest of Iraq views the vote differently. Baghdad, along with citizens in the country's central and southern regions, has cast the plebiscite as a controversial and unconstitutional effort to destroy Iraq's territorial integrity and rob it of coveted land on the nation's fringes. The central government also worries about the precedent a Kurdish referendum might set for other regions of Iraq that have flirted with the idea of seeking more autonomy.

As history has shown, though, translating the referendum's likely "yes" result into action won't be easy. After a vote in favor of independence in 2005, Kurdish officials were thwarted in its implementation by a process rife with political and legal barriers. Many of those obstacles persist today, including infighting among Kurdish parties. Though many of Iraqi Kurdistan's factions support the plebiscite that the Kurdistan Democratic Party (KDP) has championed, they disagree with the ruling party's motives. After all, the KDP hopes to use the vote as a mandate to keep Kurdish President Massoud Barzani or his son in power, maintaining its control over the KRG's economy in the process.

For Arbil, an Uphill Battle

Aided by inertia and the country's distraction with the Islamic State's rise, the KDP has had little trouble keeping its grip on Iraqi Kurdistan for the past few years. In fact, Arbil's participation in the fight against the extremist group has helped sway public opinion in favor of allowing the president to extend his tenure in the name of security. At the same time, Kurdish and Iraqi officials have temporarily set aside their deep-seated differences to beat back their common enemy.

But as the campaign against the Islamic State comes to an end, sparring between Arbil and Baghdad has begun to resume, driven in part by the looming independence vote. And given the immense popular support behind the initiative, it will likely be tough to stop. Nevertheless, the Gorran party is determined to try. Prominent members of Gorran, the second-largest party in the Kurdish parliament, have spearheaded a campaign to stall the referendum in hopes of weakening the position of their longtime KDP rival at the head of Kurdish politics. Though in the past the opposition party has proved willing to negotiate with its political competitors on matters related to oil revenue-sharing and the payment of civil servants' salaries, it has consistently refused to budge in its dissent regarding Barzani's extended presidency. Unless an opportunity arises to install an alternate candidate, Gorran and its allies will continue to try to block many of the KDP's proposals.

Meanwhile, the Patriotic Union of Kurdistan (PUK) — the third-largest party in the Kurdish Parliament — has remained steadfast in its support of the referendum and the KDP. Just last week, the smaller organization backed the ruling party's play to reopen the shuttered Kurdish Parliament so that lawmakers could issue a decision on the vote in time for its scheduled kickoff on Sept. 25. The PUK, however, is so deeply fractured that it has become an unreliable partner. The party's divisions were on full display Sept. 16 when prominent PUK leader Barham Salih defected to form a new ticket ahead of the KRG's presidential and parliamentary elections on Nov. 1. These electoral contests will lay bare the rifts running throughout Kurdish politics, regardless of whether the independence referendum takes place as planned.

Baghdad, for its part, is exhausting every legal avenue it has to make sure the vote is canceled. A nonbinding resolution by the Iraqi parliament, a ruling by the Federal Supreme Court of Iraq and firm statements by the prime minister have all challenged the constitutionality of the referendum and have demonstrated the central government's willingness to wield its legislative and judicial power against Arbil. Baghdad will continue to use these tools, and others, to try to coerce the KRG into delaying the vote in exchange for economic and political concessions. Because the two governments boast loyal military forces, however, there is a considerable risk of clashes breaking out as each side defends its interests and the territories both claim as their own, such as Kirkuk.

A Local Vote With Regional Impact

Though only Iraqi Kurds are participating in the referendum, its consequences will extend well beyond the bounds of the KRG and into the Kurdish communities of Iran, Syria and Turkey. Estimated to number some 25 million to 30 million throughout the Middle East, the Kurds live on lands that stretch across several countries' borders, and the century-long quest for statehood has repeatedly galvanized them all. Because of the overlap in the region's Kurdish communities, two of the KRG's closest neighbors — Turkey and Iran — have watched preparations for the referendum with mounting trepidation. Though long-standing rivals, Ankara and Tehran grapple with Kurdish insurgencies and secessionism at home, and in trying to stop the approaching plebiscite, they have found common ground.

Of the two, Turkey has more reason to be concerned about the vote. Home to a larger Kurdish population spread over valued arable land and strategic territory, Turkey faces more severe ramifications within its borders than Iran does in the event that Iraqi Kurdistan declares independence. In fact, Ankara's determination to prevent the Kurds from carving out a space of their own was one of the primary motives behind its military intervention into northern Syria in August 2016. Turkey will continue to work toward this goal, maintaining its pressure on Syrian Kurds while pounding the Kurdistan Workers' Party (PKK) in northern Iraq. Ankara has already threatened to ramp up its military presence in Iraqi Kurdistan if the PKK, which has waged an insurgency within Turkey's borders, continues to threaten its security. Ankara could even increase pressure by using its position as one of Arbil's largest trade partners and as the host of a Kurdish oil pipeline to cut off energy revenues to the KRG. In addition, some rivers that feed into Iraqi Kurdistan flow through Turkey, giving Ankara the ability to curtail the region's water supplies.

While Iran has a smaller stake in events in Iraqi Kurdistan, it, too, has an interest in blocking the referendum. Tehran maintains a close relationship with Iraq's central government and strong ties to many of the Shiite militias that are loosely under Baghdad's control. Some of those groups have condemned the approaching vote for fear of losing the country's disputed territories to Arbil and have moved fighters into heavily contested areas, including Diyala and Kirkuk. On Sept. 17, Iran's National Security Council chief backed the militias by vowing to close Iran's border with the KRG, blocking the passage of goods and people across it.

The Kurds do enjoy the support — at least rhetorically — of one of the most powerful external actors with a foothold in Iraqi Kurdistan: the United States. Washington, long an ally of the KRG, is sympathetic to the Kurds' push for greater autonomy. But for the United States, timing is everything. An independence referendum could disrupt the international fight against the Islamic State, which will not end for several more months. Concerned about Tehran's attempts to gain influence over Baghdad, Washington would also prefer that Iraqi leaders have the ability to prepare for the country's 2018 elections without having to address the problem of a Kurdish referendum.

Over the past few years, the United States has funneled hundreds of millions of dollars to Kurdish peshmerga fighters combating the Islamic State. In theory, Washington could try to leverage some of this aid to persuade Arbil to postpone the vote. Since doing so could be detrimental to the coalition against the extremist group, however, U.S. officials will likely stick to less contentious tactics as it asks the Kurds for patience in their pursuit of independence. At best, they will acquiesce and use the specter of the referendum (or the mandate it yields) to revive stalled talks between Arbil and Baghdad. At worst, the Kurds will dig in their heels, worsening the conflict between Iraq's north and south while giving foreign players an excuse to intervene as they seek to protect their own interests.

This article originally appeared on Stratfor.com

The Amazon: Economic Gold Mine or Political Minefield?

2017-09-19T16:42:00Z

Forecast Highlights

Brazil will keep struggling to preserve the Amazon rainforest while also protecting its interests in the region, which borders seven other countries.
By allowing mining on the Renca reserve, the Brazilian government has laid the groundwork for expanding economic activity in the Amazon.
Industry in the Amazon will continue to grow despite international pressure on Brasilia to protect the rainforest.

The vast and impenetrable Amazon rainforest is the stuff of legend. It is among the world's most biodiverse places, hosting tens of thousands of plant and animal species in its 3.14 million-square-kilometer (1.21 million-square-mile) expanse. And for Brazil's government, it is a perennial challenge. Protecting the densely forested and sparsely populated area is as difficult as it is important for the country's leaders in Brasilia. The rainforest covers more than half of Brazil's territory, including its borders with seven other countries. Yet it is home to only about 12 percent of Brazil's population. Moreover, between its prohibitive landscape and the environmental protections in place there, the Amazon contributes little to the country's economic output.

Now, however, President Michel Temer's administration may be reassessing the rainforest's value. Temer issued a decree in August to allow mining in a 47,000-square-kilometer area of the Amazon formerly known as the National Reserve of Copper and Associated Minerals, or Renca. Environmentalists quickly condemned the measure, which they argued would pave the way for increased mining in the region and jeopardize Brazil's commitment to the Paris Agreement on climate change. (The accord itself largely lacks enforcement mechanisms to keep Brazil on target, but countries such as Norway have threatened to withdraw their financial support for the so-called Amazon fund should Brasilia fall short of its goals.) A judge subsequently suspended the decree's implementation, prompting the president to revise it to stipulate that mining in Renca may be conducted only if the activity protects natural resources and minimizes environmental damage. The regulatory dispute highlights the Brazilian government's perpetual struggle to assert its authority over the Amazon and tap into its abundant resources while still preserving its environmental integrity.

What's Mined Is Mined

Renca is a mineral reserve supposedly rich in gold, titanium and rare earth elements; Brazil's military dictatorship created it in 1984. To keep multinational companies from exploiting the area's mineral wealth, the government also established a state-owned company, the Geological Survey of Brazil (CPRM), and gave it the exclusive rights to conduct studies and coordinate mining activity in Renca. The CPRM never took advantage of its access to Renca, but its monopoly over the reserve nonetheless deterred foreign mining companies, as well as domestic firms, from undertaking projects there. Even after the military dictatorship collapsed in 1985, it was unclear whether companies could legally mine in the reserve.

Illegal mining, on the other hand, is a common practice in Renca. Though the exact number of illegal miners active in the area is unknown, some estimates put it at over 1,000. The rise of illicit mining in Renca was part of the reason Temer decided to do away with the area's protected status. By opening the land up to legal mining operations, the government hopes that it will displace the illegal ones. In addition, admitting companies to conduct geological surveys will give Brasilia a better idea of the untapped reserves still in the area.

Despite the controversy, Temer's decree would not give companies unrestricted access to Renca, portions of which would still be off limits to mining. Nor would the measure be without precedent; mining is nothing new for the Amazon. The rainforest, in fact, has been home to the Carajas Mine, one of the world's largest iron ore extraction facilities, since the 1970s, and Brazil exports over 140 million metric tons of iron ore from the mine each year. Brasilia's decision to expand mining in the Amazon is just the latest development in an effort to boost economic activity in the region that dates back to the 19th century.

An Economic Powerhouse

And mining isn't the only industry the Brazilian government has promoted in the Amazon. Former Presidents Luiz Inacio Lula da Silva and Dilma Rousseff both pushed to construct hydroelectric dams in the region, inviting their share of backlash in the process. During his tenure between 2003 and 2010, da Silva approved plans for the Belo Monte dam, which began operations in 2016 and is expected to become the world's third-largest hydroelectric dam when it comes fully online in 2019. (At the same time, his government managed to reduce the rate of deforestation in the Amazon by nearly 80 percent.) The project is one of about 30 dams that the government has built or started building over the past decade. Combined, the new infrastructure will add more than 38,000 megawatts of capacity to Brazil's electric grid.

Agribusiness is another burgeoning sector in the region. Though the government banned soybean production in the Amazon to curb deforestation, grain production is thriving. The region of Cerrado, on the Amazon's border, now accounts for more than half of the country's total grain production and is on track to harvest over 112 million metric tons this year. But the rapid growth of Cerrado's grain industry has outpaced the development of transport infrastructure in the region; most of the grain produced in Cerrado has to travel to ports in Southern Brazil for export. To streamline the shipping process, Brasilia is partnering with private companies to build a port complex in the Amazon, along with roadways leading to the facility. The venture, however beneficial for trade, likely will impinge on the rainforest and could reverse the gains da Silva made in halting deforestation. Between 2015 and 2016, the rate of deforestation increased by 29 percent, according to Brazil's National Institute for Space Research, thanks in large part to activities such as cattle farming, as well as illegal mining and lodging operations.

Along with these booming industries, the Amazon also boasts an industrial free-trade zone in the city of Manaus. The project, launched in 1967, began as a government initiative to develop and populate the area by promoting different industries there. Today, about 700 companies operate in the zone and benefit from the tax exemptions Brasilia offers them to produce a variety of goods, including motorcycles and electronics, for domestic consumption. The Manaus Free Trade Zone employed more than 85,000 workers and generated about $24 billion in revenue last year, an impressive figure considering its total output fell 6 percent from 2015.

Throughout Brazil's history, every administration has grappled with the challenge of governing the Amazon in one way or another, and every administration has tried to exploit the region's resources. Capitalizing on the Amazon's natural wealth, in turn, inevitably means degrading its environmental integrity — though some leaders, such as da Silva, manage to do so more slowly than others. Even Marina Silva, who will likely represent the environmentally conscious Sustainability Network in next year's presidential race, has plans for the Amazon's development on her agenda. The quest to project authority in the Amazon, coupled with the region's economic potential, will keep driving the Brazilian government's efforts to expand its economic activities there, creating new environmental challenges at every turn.

This article originally appeared on Stratfor.com

The Dirty Work of Russian Assassins

2017-09-14T15:53:00Z

At 6:08 p.m. on Sept. 8, the cacophony of Kiev's Friday evening rush hour was pierced by an explosion under a black Toyota Camry in the middle of heavy traffic near Bessarabska Square in the heart of the capital. The car's driver, Timur Mahauri, a Chechen with Georgian citizenship, was killed instantly. His wife and their 10-year-old child who were riding with him were hurt, but they survived.

Mahauri was reportedly a member of a Chechen militant group fighting with Ukrainian troops against separatist and Russian forces in eastern Ukraine. Media reports suggested that Chechen President Ramzan Kadyrov considered him an enemy. In addition to these two possible motives for his assassination, Kiev has recently become a hot spot for the assassination of Moscow's enemies, and opponents of the Chechen government are being killed in a worldwide campaign. Indeed, given Mahauri's enemies and location, it is surprising that he didn't check his car for bombs before he got into it. This case provides important lessons for others.

Moscow's Wetwork

As I've discussed elsewhere, Russia's intelligence agencies have a long history of involvement in assassinations, refered to by its intelligence officers as "wetwork" or "wet affairs." Indeed, they have pursued the enemies of the Russian government around the globe: Alexander Litvinenko was murdered in London in November 2006; and Mikhail Lesin died under mysterious circumstances in Washington, D.C., in November 2015. They are not the only examples. It should come as no surprise then that people considered to be enemies of the Kremlin — including opposition politician Boris Nemtsov — are being murdered in Russia itself as well as in adjacent countries.

However, there does seem to be a discernible difference in the tactics used in different geographies. For example, in Russia itself, targeted individuals tend to simply get shot. Although Russian agents will publicly deny any involvement in such activities, in domestic operations, they don't really take too much effort to cloak their hand. Indeed, they seem to relish flexing their muscle to intimidate opponents. But outside Russia, they attempt to be more discreet. Even though the Litvinenko case ended up becoming highly publicized because of sloppiness in the operation, the use of the rare and radioactive isotope polonium 210 to poison him was intended to create a slow and subtle decline so as to create an air of mystery around his death, like the shadowy fates met by Moscow opponents Badri Patarkatsishvili in 2008, and Boris Berezovsky in 2013, both also in the United Kingdom.

Danger Lurks in Kiev

But in Ukraine, the Russians and their Chechen surrogates have operated with a mostly unveiled hand. In July 2016, Belorussian journalist and Russia critic Pavel Sheremet was killed when a sticky bomb planted under his car exploded shortly after he left his home for his office. As we noted at the time, the Sheremet assassination was a precise and professional operation.

In August 2016, Alexander Shchetinin, a Russian-born journalist and prominent critic of President Vladimir Putin, was found dead on the balcony of his Kiev home with a gunshot wound to the head. On March 23, Denis Voronenkov, a former Russian Communist Party lawmaker and another a well-known Putin critic, was shot dead as he walked down a Kiev street on the way to a meeting in a hotel. The brazen assassination occurred at 11:30 a.m. in central Kiev, despite the fact that Voronenkov had been accompanied by an armed bodyguard who shot the assassin dead.

On June 1, Adam Osmayev, a critic of the pro-Kremlin Chechen government, narrowly escaped death when his wife, a Chechen militant, shot and wounded a would-be assassin, who had shot him twice in the chest. The assailant, Artur Denisultanov-Kurmakayev, a Russian national born in Chechnya, had posed as a French journalist and had arranged an interview.

On June 27, Col. Maxim Shapoval, a Ukrainian military intelligence officer, was killed in an assassination similar to the Sheremet hit. A small sticky bomb had been planted under Shapoval's car; it probably used a plastic explosive and was command-detonated as he was on his way to work. Kiev has clearly become a dangerous place for those perceived to be enemies of Putin and his Chechen vassal, Kadyrov.

Not Amateur Bombmakers

And this brings us back to the Mahauri assassination. The device used to kill him spared his passengers, indicating that it employed a small shaped charge, also likely a plastic explosive, judging from video of the explosion. It also looks as if it had been command-detonated. The assassination carried all the hallmarks of a professional, state-sponsored operation. The device that killed him almost certainly had been built by an experienced bombmaker who calibrated its explosive potential to kill without causing too much collateral damage. Although this attack happened in the evening rather than during the morning drive to work, it carried many similarities to the assassinations of Shapoval and Sheremet. Ukrainian investigators will certainly be looking for forensic evidence to conclusively link the three bombings.

In addition to his activities in Ukraine, Mahauri had fought with the Georgian military when the Russians invaded that country in 2008, Ukrainian press reports say. That would have put him in the crosshairs of Russian intelligence, which reportedly had attempted to kill him on three past occasions, including placing a bomb in the stairwell of his apartment building in Tbilisi in March 2009. Given that history and the recent spate of assassinations in Kiev, Mahauri would have been wise to have taken more precautions.

The best defense against a sticky bomb attack is to keep a vehicle locked in a secure area to prevent easy access. After the Sheremet killing, video emerged showing the assassins putting the bomb under his car as it sat by the curb outside his apartment. If a vehicle must be parked in an unsecured area, a small mirror with a light on a telescopic pole can be used to check the underside for sticky bombs. Given the tempo of Russian and Chechen activity in Kiev, it is hard to believe that Mahauri had grown complacent. Investigators will be attempting to reconstruct his schedule before the detonation to clarify where and when the bomb had been stuck under his vehicle.

A number of Russia's enemies remain in Kiev. Given the recent deadly events, it would not be surprising if more murders followed there. To escape Mahauri's fate, those who find themselves at odds with the Kremlin will need to be more careful.

This article originally appeared on Stratfor.com

Crossing the Line of Actual Control

2017-09-12T15:06:00Z

Forecast Highlights

Pakistan's involvement in Kashmir will make it harder for India and China to resolve their disagreement over the strategically significant territories of Aksai Chin and Arunachal Pradesh.
The enduring border dispute will further strain security ties between China and India and could spill over into other parts of their relationship.
Confrontations between the two nuclear powers will become more frequent along the Line of Actual Control as China asserts its claim to disputed territories more aggressively, and as nationalism gains traction on both sides of the border.

The Line of Actual Control (LAC), the 4,057-kilometer boundary that runs between China and India along the arc of the world's highest mountains, has caused its share of strife. Over the years, the LAC has sparked standoffs, skirmishes and war between the two expanding nuclear powers. To try to keep the peace, Beijing and New Delhi began a dialogue in 2003 called the Special Representatives Meeting on the India-China Boundary Question. Yet 19 rounds of talks later, China and India still disagree on the location of the border between them — and over which side rightfully controls the territories of Aksai Chin and Arunachal Pradesh.

Despite their enduring differences, India and China largely have managed to keep their border disputes from spilling over into other aspects of their relationship, such as trade. But that may start to change. As China forges deeper ties with India's nuclear archrival, Pakistan, and as each side of the LAC tries to emphasize its sovereignty along the contested border, New Delhi and Beijing could have a harder time avoiding conflict.

A Wolf in Sheep's Clothing?

For Beijing, control of Arunachal Pradesh boils down to a matter of national security. One of China's main geopolitical imperatives is to secure a buffer on its western flank that, along with the Pacific Ocean on the east, would protect its densely populated core territory. Annexing the Kingdom of Tibet in 1950 enabled Beijing to realize that goal, so long as it could maintain control over its western buffer by thwarting challenges to its sovereignty. The Dalai Lama presented one such challenge. The prominent monk participated in a failed uprising against Beijing in March 1959. (His role in the revolt doubtless is one of the reasons the Chinese government views the Dalai Lama not as a spiritual figure but as a separatist whom it often describes as a "wolf in sheep's clothing.") After that, he fled to India — the birthplace of Buddhism, no less — where he received a warm welcome.

The Dalai Lama's presence was a boon for India. Hosting the exiled religious leader, for example, enabled New Delhi to draw international attention to the issue of Tibetan sovereignty, a tactic it still uses today. But India's support for the Dalai Lama vexed China, all the more so because New Delhi has long held control of Arunachal Pradesh and, with it, the strategic town of Tawang. As an important site in Tibetan Buddhism, Tawang represents an essential piece of China's strategy to assert its sovereignty over Tibet. Beijing often cites the town's significance in Tibetan Buddhism to support its claim to Tawang, and it probably won't give up its quest for control of the town anytime soon. China, in fact, may be disputing India's claim to Arunachal Pradesh, a territory Beijing would likely struggle to control, as a bargaining tactic to secure Tawang. Yet considering that relinquishing the town would give China greater access to India's vulnerable Siliguri corridor, New Delhi would hardly entertain the idea.

Kashmir: The Crown of India

Along the Western reaches of the LAC, India has its own bone to pick with China in the 38,000-square kilometer territory of Aksai Chin. New Delhi claims the area as part of Kashmir, a region whose control it has contested with Pakistan, as well, ever since the Partition of 1947. Today, India's authority in Kashmir extends to the regions of Jammu, Kashmir and Ladakh, collectively known as Jammu and Kashmir, while Pakistan administers two other constituent territories, Azad Kashmir and Gilgit-Baltistan. (New Delhi also claims another territory, the Trans-Karakoram Tract, which Islamabad ceded to Beijing in 1963.) Recognizing China's authority over Aksai Chin is a dangerous prospect for the Indian government, since doing so could signal to Pakistan that New Delhi's claims to its portion of Kashmir were similarly negotiable. In response, Islamabad could increase the military pressure on New Delhi along the Line of Control, where India and Pakistan have been fighting intermittently for decades.

And Pakistan isn't the only factor preventing New Delhi from making a compromise in Aksai Chin. Renouncing India's claims to the region could come at a prohibitive cost for Prime Minister Narendra Modi's political career. Members of the opposition and of the ruling Bharatiya Janata Party alike would condemn the action as appeasement, a sign of weakness when India is trying to establish itself as a rising global power. The country, after all, is trying to exercise greater sovereignty in its border regions by building 73 new strategic roads to serve them. At the same time, China probably won't yield to India's demands over Aksai Chin, since it knows Pakistan would oppose the gesture and since a vital road, the G219 highway, runs through the region. Beijing would give New Delhi a portion of Aksai Chin at most as part of a border negotiation.

Succession, Not Secession

Because each side administers a territory that the other claims, compromise is the only solution to the dispute along the LAC. But neither Beijing nor New Delhi has much leeway to meet the other's demands. The situation likely will become even more tense as succession looms for the 81-year-old Dalai Lama. China has promised to observe the Tibetan Buddhist traditions to find a successor, which dictate that the reincarnated Dalai Lama must be born in Tibetan territory and approved by the central government. The process could come back to haunt Beijing if the 15th Dalai Lama is born in Tawang, thereby further shifting the spiritual center of gravity in Tibetan Buddhism to India. To try to weaken Beijing's power over his successor, meanwhile, the Dalai Lama has hinted that he may opt for emanation — that is, choosing the next Dalai Lama himself — rather than reincarnation.

In the meantime, relations between India and China seem to be entering a more contentious phase. Beijing continues to test its neighbors' limits and military responsiveness by asserting control over disputed territories, including those in the South China Sea and the Doklam Plateau, more and more brazenly. As China looks to hone its own military response, it may temporarily suspend its infrastructure projects as it has in the past. But once it resumes construction on these ventures — such as the road it was trying to extend through Doklam when its latest standoff with India began — China will provoke another confrontation. And the growing nationalist movements in both countries suggest that the next border dispute is not a question of if but of when.

This article originally appeared on Stratfor.com

Israel Prepares for What Comes After Syria's Civil War

2017-09-07T16:23:00Z

It appears the Syrian civil war is entering its final stages. On Sept. 5, Syrian loyalist forces, in close conjunction with Iranian and Russian military forces, broke the Islamic State's three-year siege on the loyalist forces in Deir el-Zour. The arrival of the relief force in the city is one of the biggest developments on the Syrian battlefield since the loyalists captured Aleppo city, and heralds the extent to which government forces have gained the upper hand in the Syrian civil war since a year ago.

On the same day the loyalists forces reached Deir el-Zour, Israel began its largest military exercise since 1998. The combined arms exercise focuses on preparing for a potential war with Hezbollah along Israel's northern border, and is set to run for 10 days and involves tens of thousands of Israeli troops. The exercise, though planned more than a year in advance, is not unconnected to developments in Syria. Israel has been keenly observing the Syrian battlefield, deeply concerned by the momentum the Iran- and Russia-backed loyalist forces have seized over the past year.

He Who Controls Syria (and Its Borders)

Israeli leaders are increasingly aware that the Syrian civil war has reached the beginning of its end phase. As the conflict draws down, with Syrian troops reasserting their control over much of the country, Hezbollah will no longer be overstretched and encumbered by its massive involvement in the fighting. Hezbollah would in effect be able to redeploy its forces to Lebanon, boosted by years of tough combat experience as well as increased arms and equipment backing from Syria and Iran.

The relief of the Deir el-Zour garrison also factors into the increased support Hezbollah is expected to receive going forward: Retaking the city presages the completion of the logistical supply line running from Iran through Iraq to Syria and then to Lebanon. The arrival of Syrian loyalists at the Iraqi border isn't imminent: The loyalists still need to consolidate control over the city, fend off Islamic State counterattacks and cross the Euphrates River. Still, with the Iraqi border located less than 100 kilometers (62 miles) east of Deir el-Zour through sparsely populated terrain, the arrival of the loyalist forces there is more certain than ever.

Contending with this loyalist advance eastward are tribal Arab fighters of the Syrian Democratic Forces (SDF), a few thousand of whom are positioned around al-Shaddadi to the north. These U.S.-backed forces have made their ambitions to drive southward clear, and may end up skirmishing with loyalist forces on their way to the Iraqi border. The area also has many critical natural gas and oil fields, which will drive competition — and fighting — further. But the balance of forces in the area is decisively tilted toward the loyalists. And absent direct and sustained U.S. military action in support of an SDF drive south that pushes back loyalist attempts to advance (with all the ramifications such a move would have with Iran and Russia), the loyalist forces should be able to seize the energy fields and reach the Iraqi border east of the Euphrates River. Even in the unlikely event that the loyalist forces are impeded, they will still be able to secure a supply line to Iran by seizing the road through al-Bukamal further to the south that runs into Iraq at a border location on the west bank of the Euphrates River.

A More Aggressive Approach

With a direct Iranian land route to Lebanon all but certain and with the militant group able to draw down its commitments in the Syrian civil war, Israel faces the increased prospects of having to again face off against a stronger Hezbollah. The window in which Israel could attack Hezbollah while it's still distracted and overstretched with its commitments in Syria is closing. So, as Israel conducts its largest military exercise in 20 years, it's worth remembering that the military preparations are not entirely defensive. Tel Aviv will likely adopt a more aggressive approach toward Hezbollah in the coming months.

The extent of this approach depends on the calculations Israeli leaders make. The response could range from simply intensifying strikes on Hezbollah convoys to launching an outright preventive war against Hezbollah's missile and rocket stockpiles in Lebanon. Even if Israel only increases the scope of its airstrikes on Hezbollah positions in Syria, the likelihood of a full Israeli-Hezbollah conflict is very high, if not inevitable, especially as an emboldened Hezbollah would find it necessary to retaliate to deter further Israeli attacks. The Syrian civil war, then, could lead to another regional conflict, even as it reaches its end stages.

This article originally appeared on Stratfor.com

Why North Korea Won't Stop

2017-09-05T16:20:00Z

North Korea has indeed conducted its sixth nuclear test. The U.S. Geological Service and the China Earthquake Administration recorded a 6.3 magnitude earthquake as a result of the detonation on Sept. 3, followed by a 4.1 magnitude quake due to a suspected cave collapse resulting from the explosion. It's unclear at this time how much radiation and other radionuclide (unstable atoms released with excess nuclear energy) indicators have escaped into the atmosphere, but U.S. and Japanese aircraft specialized in tracking nuclear radiation are already airborne. Numerous ground-based Comprehensive Nuclear-Test-Ban Treaty monitoring stations are attempting to collect sample data to further assess the test as well.

So far, all data points to a much larger explosion than any previous North Korean nuclear test. Based on the magnitude of the explosion, the yield of the device could easily surpass the 100 kiloton-level, underlying the strong likelihood that a much more powerful hydrogen bomb was tested.

The North Korean government in fact claimed that they had successfully tested a hydrogen bomb. It also said that the hydrogen bomb tested was specifically designed to fit into an intercontinental ballistic missile (ICBM). Prior to the test, North Korean leader Kim Jong Un and other officials were shown standing around what appeared to be a model of a miniaturized hydrogen device resembling a two-stage thermonuclear bomb. Finally, Pyongyang claimed that the device was yield-adjustable, or that it can be preprogrammed to detonate at variable explosive power levels. This implies that North Korea could mass produce a single design for multiple functions, and that they could have tested the bomb at a much higher yield setting. It's possible, then, that the North Koreans deliberately did not detonate a hydrogen bomb at a higher yield level setting to avoid collateral damage and emissions.

The United States may now calculate that North Korea cannot be deterred or that the risk of deterrence failing is too high. Washington could also determine that allowing North Korea to develop ICBMs is unacceptable because of the risk of nuclear proliferation. In such a case, the United States would resort to preventive military action to disarm the country.

Regardless, the United States is running out of time to stage such a preventative attack. Washington is already constrained by the technological sophistication of North Korea's missiles and warheads — mainly their ability to effectively reach, reliably detonate at, and significantly damage targets in the continental United States. The uncertain number of such missiles believed to be in North Korea's arsenal is equally problematic: The United States is more likely to risk a first strike to eliminate a few North Korean missiles, not a large arsenal. Although the U.S. intelligence assessment on the projected size of North Korea's ICBM arsenal is unclear, North Korea is already estimated to be on track to field a reliable one by the end of 2018. A powerful thermonuclear warhead would shorten the window for U.S. intervention further, as an ICBM equipped with a thermonuclear warhead doesn't need to be precise or possess reliable reentry technology to be a threat, enabling North Korea to rely on the weapon's sheer destructive power to compensate for deficiencies in other missile development areas. Even a high-altitude airburst with a megaton warhead would cause severe collateral damage and fallout across large swaths of the United States. The latest North Korean test, especially if confirmed as a thermonuclear one, could boost North Korea's ability to deter U.S. and allied military action.

The latest nuclear test would also appear to reduce the chance for dialogue with the North, despite past calls by China, Russia and South Korea to pursue engagement rather than isolation. South Korea has already said it will seek tighter U.N. sanctions to isolate North Korea, and the U.S. Treasury Department said it intends to pursue sanctions designed to cut all North Korean trade. China will continue urging caution to avoid escalating into a potential military scenario, but has argued privately that "crippling" sanctions against the North will only hurt the people of North Korea, not stop the government's pursuit of nuclear weapons and long-range missiles.

The latest test has solidified the positions of all the countries involved, and made the rift between Washington and Seoul even more apparent. South Korean President Moon Jae In has sought a policy of containment and engagement with North Korea, something U.S. President Donald Trump criticized in a tweet following the North's nuclear test. While U.S. and South Korean security officials held phone calls, it was reported that Trump would be calling Japanese Prime Minister Shinzo Abe, not the South Korean president. The strain between the allies leaves more room for North Korea to exploit, and highlights the concerns in Seoul that the United States may ultimately pursue a military path, despite the South's objections.

This article originally appeared on Stratfor.com

Can Brazil Trim the Fat From Its Bloated Political System?

2017-08-31T16:15:00Z

Highlights

Congress is tackling a series of proposals designed to gradually change Brazil's unstable political system.
Measures that will reduce the number of political parties and create a public fund to finance electoral campaigns will likely take effect next year.
Reforms to change Brazil's presidential system to a parliamentary system, however, won't come up for discussion until next year and, if approved, will take effect in 2022.

The number of political parties in Brazil's legislature has long been one of the government's biggest problems. Unstable, unreliable coalitions and corruption scandals have become regular features of the country's political system, thanks in large part to the more than 30 parties registered in Brazil today. Calls for a change in the system have grown louder in recent years, particularly in the wake of the latest corruption probe — the largest to date — and the government is starting to work toward reform. But progress will be slow and incremental.

An Unstable System

Unlike many other democracies, Brazil has few laws in place to limit the creation of political parties and doesn't require groups to win a minimum percentage of the vote to reach the legislature. The number of parties registered in the country has surged in recent years to reach 35, 26 of which are currently represented in the National Congress. For Brazil's executive branch, the state of affairs is becoming increasingly untenable.

On taking office, every new president immediately faces the task of forming a ruling coalition from among the legislative branch's myriad parties, each with its own motivations and objectives. It's a daunting undertaking, and one that often requires the executive branch to curry favor with political parties that have diverging views by offering them ministerial offices and posts in state-owned companies in exchange for their cooperation. The resulting coalitions are fragile and fickle. Their constituent parties, moreover, regularly use their posts for their own financial and political gain. And since it's not unusual for members of Congress to switch parties after they are elected, getting a clear read on the government's composition, and that of the ruling coalition, can be next to impossible.

Yet securing congressional support is essential for Brazilian presidents, not only to advance their agendas, but also to avoid impeachment. Every president who has served the country since 1985 has faced impeachment during his or her tenure; the process removed Fernando Collor de Mello from office in 1992 and ousted Dilma Rousseff just last year. Rousseff's case in particular offers a clear example of how tenuous Brazil's ruling coalitions can be. Going into her second term, the president had nine parties supporting her, and her coalition held a majority in Congress. After a recession hit, however, leaving Rousseff unable to adequately satisfy her allies' demands, the number of parties supporting her dropped to three.

Making Progress

Today, signs of change are slowly emerging in Brazil. President Michel Temer is working to get the legislature to pass an array of reforms, including a pair of proposals aimed at streamlining the country's political system. If passed by Oct. 7, both measures will take effect in 2018. The first reform would impose an electoral threshold that parties must reach to be represented in Congress — a critical step toward a more stable government. A similar proposal failed in the legislature more than a decade ago, but had it been enacted, only seven parties would be in the National Congress today.

The second measure is more controversial, although, like the electoral threshold legislation, it has the support of major parties such as the Brazilian Democratic Movement Party and the Brazilian Social Democracy Party. The bill proposes creating a $1.2 billion public fund to finance campaigns for next year's election, along with a $300 million government fund for political parties, in hopes of cutting down on corruption. But in light of the Brazilian government's growing fiscal deficit, debate in the legislature's lower house so far has focused on the amount of money that would be allocated to the fund. The upper house, meanwhile, has two counterproposals in the works. One bill would reinstate corporate financing for electoral campaigns, which the Supreme Federal Court outlawed in 2015, and the other would create a public fund half the size of the one envisioned in the lower house's legislation.

A Parliamentary Future?

If enacted, the reforms currently under discussion in the lower house would help tackle some of the recurring issues in Brazil's government. But it's doubtful that they would be enough to solve the problems entirely. To do that, the country may have to consider dispensing with its purely presidential form of government in favor of a parliamentary system.

On Aug. 21, Temer indicated that a parliamentary government may be in Brazil's future. (The country's current system isn't too far off as it is, given the legislature's influence; the sitting president, after all, must negotiate with Congress constantly lest he or she fall prey to impeachment.) Temer suggested implementing a semi-presidential system, in which the public would elect a president to serve as head of state, while Congress would vote on a prime minister. Many of Brazil's biggest political parties support the idea, as does the Supreme Federal Court.

Making the transition, however, will take years. Even adopting a proposal to switch to a parliamentary system will take at least until 2022. And in the meantime, Brazil will need to take smaller steps to alleviate its political troubles, such as implementing the reforms currently under debate. The most pressing concern is reducing the overwhelming number of political parties in Congress. Unless it does so, Brazil's political system — whether presidential or parliamentary — will continue to suffer at the hands of fragile coalitions based on nothing more than a quid pro quo arrangement.

This article originally appeared on Stratfor.com

Mexico Sees an Opportunity in Venezuela's Struggles

2017-08-29T15:53:00Z

Highlights

The Mexican finance and foreign ministries are considering a plan to step in and replace subsidized Venezuelan oil and fuel deliveries to Cuba, as well as to some Caribbean and Central American nations.
The plan is tentative, but if Mexican energy deliveries displaced Venezuelan ones to Cuba, it eventually could sever the 18-year alliance between Havana and Caracas.
Such an outcome would help the United States isolate Venezuela and open the door to heavier sanctions against the Venezuelan government. For Mexico, helping the United States pressure Venezuela would give it important leverage in its political relationship with Washington.

A steady drop-off in Venezuelan oil production may give Mexico an opportunity to increase its stature in the Caribbean. The Mexican government is considering a plan to replace subsidized Venezuelan oil and fuel shipments to Central American and Caribbean nations should the economically struggling country be unable to continue meeting regional demand, according to an Aug. 23 report. It is not yet clear under what payment mechanism that such shipments, which currently are provided at a discount through Venezuela's Petrocaribe program, would be sold if Mexico decides to implement the idea. Beginning in 2005, Venezuela exported crude oil, gasoline and diesel to Cuba and 13 other Petrocaribe beneficiaries under a pricing mechanism in which the up-front cost to buyers decreased as global crude oil prices rose. Under that program, recipients would repay the rest of the value of oil shipments, with interest, to Venezuela over a period of years. Since early last year, the Cuban government reportedly has been preparing to deepen its political ties with Mexico to access the countries' oil deliveries.

Mexico's decision to even consider assuming the role of energy patron is significant for three reasons. First, it clearly assists the U.S. aim of increasing political pressure on Venezuela. If Mexico displaces Venezuela as a provider of oil to Cuba, the Cuban intelligence and security relationship with Venezuela will decline. Second, the decision shows that Mexico is taking on a more active role in Latin American foreign affairs. For the past century, Mexico's diplomacy and trade policy has overwhelmingly been focused on the United States. Third, Mexico may gain leverage in its relationship with the United States if it appears its plan is capable of successfully displacing Petrocaribe. The United States would like to cushion the effect that a Venezuelan collapse would have on Petrocaribe member states while driving a political wedge between Cuba and Venezuela. Additional leverage with Washington would be important to Mexico as it renegotiates the North American Free Trade Agreement (NAFTA).

Replacing Oil Shipments, Severing an Alliance

Reports that Mexico was looking at supplying Cuba and Petrocaribe client states with oil followed an Aug. 17 trip to Cuba by Mexican Foreign Minister Luis Videgaray. A Mexican offer to supply Cuba with oil would have implications beyond displacing Venezuelan shipments. It could also displace Venezuelan influence in Cuba and sever Havana's 18-year alliance with Caracas, which was forged to ensure the survival of the cash-strapped Cuban government.

Cuba relies on diesel and fuel oil from Venezuela, which it uses to fuel electricity generation. Havana has stuck by Venezuela despite Caracas' declining ability to provide heavily subsidized oil simply because it has few other options. The Cuban government budgeted only around $2 billion in 2017 in central government revenue. Venezuela provides around 55,000 barrels, mostly of crude oil, per day to Cuba, which at current prices would approach $1 billion yearly. Cuba's leaders know the Venezuelan government can't supply oil at current levels over the long run, but they lack the government income or cash reserves to buy shipments from elsewhere. In return for the oil supplies, Cuba cooperates heavily with Venezuela's government and its intelligence and security services. Without Venezuela's oil, Cuba's long-term need for its alliance with Caracas will diminish.

Having Mexico begin to replace Venezuela's oil shipments in Petrocaribe would be a significant breakthrough for Washington as it tries to pressure the Venezuelan government not to cement one-party rule. Splitting the Cuban-Venezuelan alliance likely would reduce, if not end, Venezuela's wide access to Cuban government intelligence and deprive it of a crucial early warning system concerning potential risks from the United States. It also could sway the loyalties of other Caribbean states away from Venezuela and allow the United States to build support for heavier sanctions against Petroleos de Venezuela (PDVSA), Venezuela's state-run oil and gas company, by condemning Venezuelan actions as undemocratic in international forums such as the Organization of American States. States that receive oil from Mexico rather than from Venezuela may be less likely to resist Washington's moves against Venezuela in these international bodies. Supplying Petrocaribe client states with oil from Mexico also would help cushion the blow that U.S. sanctions against PDVSA would have. Haiti, for example, depends on Petrocaribe for more than half of the 19,000 barrels per day of oil and fuel it consumes. Certain sanction options against PDVSA, such as denying it access to the U.S. financial system, would become more plausible if small states attempting to repay Petrocaribe debts to PDVSA through U.S. banks were not at risk of suffering unintended consequences.

Weighing Benefits Against Risks

The steady decline of Venezuelan supplies through Petrocaribe over the past few years has opened this opportunity for Mexico and the United States. To displace Petrocaribe in its current form, Mexico would have to deliver 39,000 barrels per day to nations in the Caribbean and Central America, with 55,000 additional barrels per day to Cuba. Just five years ago, Venezuela was exporting about 120,000 barrels daily through Petrocaribe and about 100,000 barrels per day to Cuba. For Mexico, taking on the burden of Petrocaribe shipments would be an additional expense and may prove unpopular politically. Mexican state energy company Petroleos Mexicanos (Pemex) also likely would not be directly involved in this plan, since Mexico's 2013 energy reform intends for Pemex to focus on generating revenue for the state — and acting as energy patron to Latin America and the Caribbean would clash with that objective.

Instead, it's plausible the government would pay Pemex for oil and fuel at market prices and then deliver them to former Petrocaribe members. Petrocaribe customers frequently fell behind on their payments to Venezuela for the portion of purchases not paid up front. Although Mexico's public finances can absorb the expenses of late payments, these costs still are going to be a political concern, particularly if the Mexican government will be committing itself to supplying oil and fuel for several years.

Still, Mexico would benefit from gradually supplanting Venezuelan oil supplies. In the short term, offering to help the United States manage the regional economic impact of the Venezuelan crisis would give Mexico leverage in its ongoing renegotiation of NAFTA. Becoming an energy patron to Cuba and parts of Central America and the Caribbean also would dramatically expand Mexico's political influence.

Although Mexico jointly crafted an energy mechanism similar to Petrocaribe with Venezuela in 1980, the Latin American political landscape is much different today. Venezuela is on the decline, and Brazil not only is recovering from a damaging recession but is also too focused on its own domestic politics to entertain taking on a regional energy role. This leaves Mexico as the only country besides the United States capable of taking on the task of replacing Venezuela's oil shipments. If Mexico chooses to become the energy benefactor to Cuba and the 11 other Petrocaribe states now receiving oil under the program, Venezuela's decline will be a net gain for Mexico in terms of regional influence.

This article originally appeared on Stratfor.com

In Europe, France Leads the Protectionist Charge

2017-08-24T15:46:00Z

Highlights

France will call for changes to the EU internal market that better protect some sectors of the economy.
Paris wants the Continental bloc to further insulate itself from foreign competitors, and to guard France from competition with its fellow EU members.
France's economic proposals will meet resistance from several countries on various issues, which will likely require Paris to make compromises to see parts of its agenda through.

Since its formation in late June, France's new government has been sending mixed signals about its views on the economy. On one hand, Paris has offered up plans to make its economy more competitive by reforming labor laws and cutting public spending. On the other, it has proposed barriers to the acquisition of companies in strategic sectors by investors outside the European Union, has attacked a scheme allowing Eastern European laborers to work in France and has blocked an Italian takeover of a French shipyard. These moves have raised concerns, both within and outside France, that Paris will pursue the type of protectionist measures that Brussels has opposed from the United States. And as the debate about the eurozone's futurecontinues to unfold, the question of whether the European Union needs additional protection from external — and in some cases, internal — competition will shape the Continent's agenda in 2018 and beyond.

The Pull of Protectionism

President Emmanuel Macron is hardly the first French leader to promise to protect his country from competition from abroad. During the 19th century, France — a large agricultural producer — struggled to compete with heavily industrialized countries such as Germany and Britain, which made Paris more prone to safeguarding its economy than were its Northern European neighbors. To some extent, the French state's historically prominent role in the economy is also a legacy of its absolutist monarchy, when an omnipotent central government ruled the nation. Even after the French Revolution, the country continued to rely on the state for political leadership and economic guidance. The concept of popular sovereignty that the revolution introduced, moreover, remains a defining feature of the French political identity. As a result, many French voters are skeptical of globalization because it threatens to weaken the state, undermine the country's national identity and sovereignty, and erode democratic accountability by granting more power to private (and in many cases, foreign) actors.

These beliefs, in turn, influence French politics. Far-right and far-left political forces have called for the closure of the country's borders to foreign companies and the introduction of national preference mechanisms — stances that proved popular in France's presidential election earlier this year. Moderate forces, meanwhile, support the idea of a free market. But many believe that the French state cannot completely abandon its role in the economy and that the country's most vital sectors (including agriculture and other strategic industries) should be sheltered from rivals abroad.

Not only do these views shape national politics, but they also influence France's perspective on the European Union. To the far right and far left, Continental integration is just another form of globalization eating away at French sovereignty. Moderates, however, see it differently. To them the bloc is a tool with which to manage globalization, protect France from its negative side effects and increase Paris' clout in international affairs. Macron's recent vow to strengthen "the Europe that protects" reflects this standpoint, which guides the policy decisions of his government at large.

A Two-Layer Strategy

In pursuit of its economic goals, France is pushing for new regulations in the European Union's internal market, where goods, people, capital and services move freely, that would better preserve certain European (and at times, French) sectors. Paris' approach is twofold. First, it seeks greater protection from foreign competition for the Continent as a whole. To that end, the French government has suggested the introduction of a "Buy European Act," which would make it more difficult for companies outside the European Union to secure public contracts on the Continent. Furthermore, Macron has proposed a reform that would make it tougher for investors outside the bloc to buy companies in strategic industries. That measure is fueled by fears that countries such as China could gain access to sensitive knowledge and technology by purchasing European firms.

Though such regulations already exist in several EU states, France hopes to create a bloc-wide safety net that members can invoke in negotiations with foreign investors. The European Commission has begun studying ways to enact a tougher screening process for external buyers looking to acquire strategic European firms, and Brussels is even mulling the idea of blocking sales that involve foreign companies backed by state subsidies or that are motivated by political aims rather than market forces. The commission is expected to present its recommendations on the matter in September.

The second prong of Paris' strategy seeks to protect France from competition with its fellow EU members. The French government has called for Brussels to revamp the Continent's posted workers system, which permits laborers from EU states to temporarily work in other member states while paying taxes and social contributions to their home countries. Because of this program, employees from countries with lower wages, such as Poland and Romania, can work in higher-paying countries such as France and Austria for less money than citizens of the host country. From Paris' perspective, this encourages unfair competition and "social dumping" within the European Union.

Meanwhile, France is working to put an end to the kind of deals that allow high-tech companies to operate in countries such as Ireland and Luxembourg while paying low taxes. The European Commission has suggested the introduction of an EU-wide system for calculating firms' taxable profits, an idea Paris has backed. If approved, the system would enable companies to file a single tax return for all activities conducted within the bloc. But France has even bigger aspirations and hopes to enact a minimum corporate tax rate across the Continent. The move would certainly be controversial, though, because the power to collect taxes is a sovereign right that few member states would be willing to give up.

Allies and Opponents

Of course, France will find some partners in its efforts. Southern European states such as Italy, Spain and Portugal, whose economies are not as competitive as those of their northern neighbors, tend to have a favorable view of protectionist measures. These countries are likely to support calls to devalue the euro in order to boost exports, to keep subsidies in place in sensitive sectors and to protect agricultural industries in free trade negotiations with other nations.

Germany will back some of France's proposals as well. Berlin shares Paris' fear of outside investors making inroads into some of the Continent's most important companies. Last year, a Chinese firm's purchase of German robotics manufacturer KUKA ignited a debate in Germany about the future of the country's tech sector. Berlin is also eager to level the playing field for European businesses; the German government has complained that the Continent's firms have a harder time investing in and exporting to China than their Chinese counterparts do in Europe. Moreover, Germany has supported France's push to close EU tax loopholes. But Berlin's positions on some of these issues could change after German general elections on Sept. 24, especially if the pro-business Free Democratic Party joins the country's next ruling coalition.

The European Commission has shown itself to be willing to adopt a protectionist bent in the bloc as well, at least in certain areas. In June, Brussels slapped new anti-dumping measures on Chinese steel, accusing Beijing of unfairly aiding its exporters. This is not the first time Europe and China have gone head-to-head on the issue, either; Chinese solar panels and automobile parts have met similar pushback from Brussels in the past.

In addition to these potential allies, however, France is likely to find some challengers. Northern European countries such as the Netherlands and Sweden have historically endorsed market-driven initiatives and resisted protectionist measures. True to form, these states will probably object to France's quest for new regulations in the EU internal market. Early signs of this impending dispute began to emerge at an EU summit in June, when Macron asked for permission to include a call to increase control over foreign investment in the summit's written conclusions. The request triggered opposition from Northern European countries, as well as small economies like Greece and Ireland, that feared the move would undermine foreign investment. In fact, Macron's appeal generated so much controversy that the summit's conclusions merely vowed to discuss the issue again down the road.

The European Commission likewise has criticized France's Buy European Act, warning that it could disrupt the bloc's internal market. In May, commission Vice President Jyrki Katainen cautioned against the creation of "artificial rules" that would "force people or local authorities to only buy European products without a reason." Meanwhile, France's push to reduce "social dumping" within the European Union risks ratcheting up tension between Eastern and Western Europe. In principle, Eastern European countries do not have the power to block the overhaul of the posted workers system if their Western European peers unite behind it. Eager to keep the bloc's current tensions from escalating, however, Brussels will probably search for a compromise between the two camps. As a result, the posted workers scheme may be revamped to minimize its impact on labor markets, even if it is unlikely to be scrapped completely.

Little of France's vision for the future of Europe's internal market is new. But the United Kingdom's looming departure from the bloc means that future rounds of negotiations on the subject will take place in a much different context. London has long stood against protectionism and has criticized excessive regulation within the European Union. Without it, the bloc's free market faction will lose an influential voice in future debates. Even so, France does not have the power to reshape the bloc on its own, regardless of its political and economic prominence on the Continent. And while there is room for compromise on several of the issues it has brought to the table, the talks that ensue will carry the risk of widening the rifts already pulling the European Union apart.

This article originally appeared on Stratfor.com

The United States Sets Its Sights Beyond Afghanistan

2017-08-22T16:25:00Z

U.S. President Donald Trump reaffirmed his commitment to Afghanistan in an Aug. 21 address to the nation. His speech highlighted the familiar challenges associated with the Afghan theater, namely Washington's desire for Kabul to take on more responsibility for the war; Pakistan's role in providing sanctuary for militants; and a realization that a hasty withdrawal of troops could have dire consequences — such as Afghanistan becoming a base once more for transnational extremists.

At the same time, however, Trump's speech was a deviation from the norm. He remained deliberately vague about exact troop numbers and military deployments. He also singled out India — which is Washington's preferred partner in South Asia — in taking on greater responsibility in Afghanistan through providing economic assistance, while acknowledging New Delhi's role in promoting stability in the "Indo-Pacific region," which suggests that Washington already sees India as a potential ally against an increasingly dominant China. As important as Trump's invocation of India was the prospect of a negotiated settlement with the Taliban. Many in Washington realize that a conferred resolution is preferable to a never-ending, low-intensity conflict.

But looking beyond the political rhetoric, a number of critical factors inevitably define the U.S. approach to dealing with Afghanistan.

First, any enhanced commitment is squarely about conflict management as opposed to conflict resolution. In 2011, the United States had around 100,000 troops in Afghanistan, along with almost 10,000 British troops and 30,000 additional NATO personnel. But even this wasn't enough to defeat the Taliban insurgency, or even force the group — or its increasingly fractured leadership — to enter meaningful negotiations. Therefore, sending a few thousand troops now isn't expected to make a dramatic difference on the battlefield. Instead, Washington's goal is to tip the scales in Kabul's favor, ensuring a more favorable stalemate in which the Afghan government can maintain control over key urban centers and more capably manage the insurgency. The 2014 NATO drawdown exposed the organizational weaknesses of the Afghan National Security Forces, which in turn enabled the Taliban to resurge. In the years since the bulk of the International Security and Assistance Force thinned out, the Taliban have reportedly made territorial gains of around 40 percent — 11 percent captured for sure, and a further 29 percent contested. And even this number may underestimate the real extent of Taliban control of Afghan territory. The group even briefly captured the city of Kunduz in 2015, marking the first-time capture of a major urban center by the Taliban in the current war's history.

Second, the United States' strategic perspective on the way the war should be handled differs from other regional power brokers, namely Pakistan. The United States sees Afghanistan as the base used by al Qaeda to launch the 9/11 attacks on its shores, which shattered the illusion of American invincibility in a post-Cold War world. Though Washington disagreed with the political ideology of al Qaeda's patrons, the Taliban, the United States was willing to tolerate a Taliban government during the 1990s so long as it stabilized Afghanistan enough to turn the country into an energy bridge linking Central Asia with South Asia. But the Taliban lost favor with the United States because of the group's sheltering of al Qaeda and refusal to hand over Osama bin Laden, mastermind of the 9/11 attacks. This justified a military intervention with the goal of destroying al Qaeda and dismantling its Taliban supporters — a mission that continues to this day. Changes in U.S. military tactics notwithstanding, Washington's goal remains the same: to prevent Afghanistan from once again playing host to transnational extremist organizations capable of attacking the United States and its allies.

Third, Pakistan's strategic perspective on Afghanistan equally differs from the United States'. When Pakistan sees Afghanistan, it sees India. Unlike al Qaeda, which is a stateless organization that boasted less than a thousand core members at its peak, India is a country of 1.3 billion people and a competing nuclear power. The circumstances of the Partition of British India in 1947, which led to the birth of Pakistan, paved the way for several subsequent regional conflicts, including the 1971 war that resulted in Pakistan's own partition, when Bangladesh broke away — crucially, with Indian military support. From Islamabad's viewpoint, India represents an existential threat vastly superseding any danger posed by al Qaeda, or any other jihadist outfit that targets the Pakistani state, including the Tehrik-i-Taliban Pakistan and the Islamic State's Khorasan chapter. Islamabad's goal in Afghanistan, then, is to deny India a foothold by supporting the Taliban to extend its strategic depth as a means of hedging against a potential Indian military thrust. Pakistan's expectation is that in exchange for receiving its support, the Taliban will maintain an anti-India posture upon entering the power-sharing agreement widely expected to someday draw the war to a close. Ultimately, Islamabad wants to avoid the presence of what is perceived as a hostile power on both sides of its border.

But Pakistan also supports the Taliban for another reason. The Durand Line, as the Afghanistan-Pakistan border is known, has long been a spoiler in relations between the two countries, with Kabul claiming its true boundary through Pakistan's tribal areas. Periodically, Afghanistan leaders have even pushed for the creation of Pashtunistan, a homeland carved out of the Pashtun regions in both countries. Since Pashtunistan would pose a major threat to Pakistan's security, Islamabad's support for the Taliban is also based on the assumption that once in power, the Taliban will bury the specter of Pashtunistan once and for all by formalizing the Durand Line, thereby easing the task of border security and enabling Pakistan to shift more of its attention toward India. This is based on a historical strategy of Islamabad promoting religion over ethnicity in Afghanistan as a form identity to undermine ethno-nationalist movements capable of threatening Pakistan.

These factors will prevent an easy resolution to the conflict, something that Washington is well aware of. In some ways, it might be simpler to actually work out a deal with the Taliban, but even that option is seeded with problems now. The Taliban has gradually become a decentralized organization with a core leadership overseeing various — and occasionally competing — factions. This undermines the unified face needed for successful negotiations. Moreover, any attempts to pull India into a more active role in talks would only strengthen Pakistan's resolve to delay the start of meaningful negotiations until Islamabad feels it has achieved a more favorable outcome in Afghanistan. It could also push Islamabad even closer to China. Nonetheless, India will still try to use this opportunity to extract Washington's support in a growing trilateral alliance between the United States and Japan — especially as India is facing off with China on the Himalayan front. Neighboring powers including China and Russia, meanwhile, want a stable Afghanistan, but prefer Washington to manage the country's security. But to hedge against Washington's influence over a civilian administration in a post-conflict Afghanistan, Beijing and Moscow have an interest in backing elements of the Taliban, which explains their participation earlier in this year's conferences. So, for all the promises made by Trump, the prospect of an immediate solution to Afghanistan is illusory.

This article originally appeared on Stratfor.com

The Wary Eye of the FBI Watches for Homegrown Terrorism

2017-08-17T15:27:00Z

Shortly after midnight on Aug. 12, Jerry Varnell slid behind the wheel of a stolen van and headed for his chosen target, the BancFirst building in Oklahoma City. As he drove toward the bank, he nervously watched for police along his route, fearing that the 1,000-pound bomb in the back of the van would be discovered and his attack thwarted. However, Varnell's drive went without incident and he was able to park the van at a loading dock next to the bank and leave the area on foot without detection. He checked the device, armed it and then quickly walked to the parked car where an associate was waiting. After they had driven a safe distance away, Varnell used his partner's burner cellphone to dial the number that would activate the bomb and leave the bank building a smoldering pile of rubble. But to his disappointment, the device did not detonate after the first call, so Varnell dialed the number a second and then a third time – after which he was arrested. To Varnell's surprise, he learned that his associate was a member of the FBI and the huge bomb he had assembled in the back of the "stolen" van was an elaborate fake that was part of a sting operation.

Such sting operations are not unusual; the FBI has conducted dozens of them since 9/11. In this case, however, Varnell was not a grassroots jihadist radicalized by al Qaeda or Islamic State, or even an anarchist; he was a member of the anti-government militia movement, which has a long and deadly history of violence.

Echoing Other Stings

From the recorded conversations Varnell had with the FBI informant, it was clear that that he was a right-wing anti-government extremist who sought to damage the current political order and foment a revolution. This is very similar to the motive that drove Timothy McVeigh and Terry Nichols to bomb the Alfred P. Murrah Federal Building in Oklahoma City in April 1995. Varnell even told the informant that he wanted to bomb the Federal Reserve Building in Washington, D.C., as McVeigh had bombed the Murrah building. The FBI asserts in the criminal complaint against Varnell that this statement is what caused the informant to report Varnell to the FBI in December 2016.

From the criminal complaint it becomes readily apparent that Varnell was far more aspirational than capable. Indeed, this case has many parallels to the sting operations that have often been used to ensnare grassroots jihadists. Varnell was radicalized by material he was reading on the internet rather than interaction with competent individuals who possessed the terrorist tradecraft for such a complex attack. This dynamic is not at all unusual for the right wing. Indeed, it is important to remember that right-wing extremists embraced the leaderless resistance model of terrorism long before jihadists did. Figures such as Louis Beam and William Pierce began advocating leaderless resistance shortly after the Fort Smith sedition trial in 1988. This means that right-wing extremists have long struggled with the paradox created by the leaderless resistance model – it offers increased operational security but often radicalizes operatives with little terrorist capability.

Like many grassroots jihadists, Varnell sought to conduct a spectacular attack that was far beyond his capability rather than conduct a simple attack using the weapons he had readily at hand. Because of this, he had to seek help, and this led him to the FBI informant and ultimately the sting operation launched against him.

Mental Illness

While many have criticized the FBI's use of sting operations, it is clear that had Varnell succeeded in contacting a genuine terrorist facilitator with access to explosives rather than an FBI informant this case could have ended far differently — we could have witnessed a sequel to the 1995 Oklahoma City bombing. While Varnell clearly stated that he wanted to destroy a building connected to the government as a symbolic attack rather than to cause mass casualties, when asked by the informant about the possibility of killing or injuring innocents in the bombing of the bank building, he replied, "You got to break a couple of eggs to make an omelet."

Like many grassroots jihadists, Varnell has a prior criminal record. He was arrested and charged in 2013 with domestic assault and battery by strangulation for an assault on his then-wife. He also appears to suffer from mental health problems, which is also not uncommon with grassroots jihadists. In past cases, such as the September 2012 sting operation that ensnared Adel Daoud in Chicago, the suspects had significant mental problems. However, like Varnell, Daoud attempted to activate the device and would have killed people had he met a real terrorist facilitator. Radicalism and mental illness are not mutually exclusive, and mentally disturbed individuals can and do kill people. Terrorist facilitators have a long history of preying on such people.

To counter defense charges that Varnell was a mentally ill patsy unduly influenced or entrapped by the government, he was provided several opportunities to back out of the plot. For example, on July 13, an undercover FBI employee met with Varnell for pre-operational surveillance of potential targets in Oklahoma City. During their conversation the FBI employee asked Varnell if he was sure he wanted to go through with the attack and Varnell said that he didn't think the undercover FBI employee understood the depth of his hatred for the government. Varnell was also concerned about the Islamic State or another group attempting to take credit for his attack and wanted to produce a statement explaining the reason for the attack so its purpose would be clearly stated.

Threats From the Fringes

The Varnell case doesn't just present parallels to jihadist cases; it also echoes other domestic terrorist cases in the United States. For example, he told the informant that he identified with the ideology of the Three Percenters militia movement and criticized others in the movement for "lacking the balls" to conduct anti-government attacks. This sentiment is common among far-left and far-right extremists who grow dissatisfied and frustrated with the lack of progress through demonstrations and advocate more forceful action. This call for violence often isolates them and propels them further from the mainstream. It also moves them further along the road to violence because they are no longer constrained by associates in their movement who oppose violence.

Indeed, this is an established pattern among left-wing extremists in the United States. It is what caused the Weather Underground Organization to break away from Students for a Democratic Society. More recently this dynamic has been evident in the anarchist movement and other left-wing elements.

On the right wing, activists have also long been frustrated that all the white supremacist movement does is "meet, greet, eat and retreat" rather than engage in violent, aggressive activism that results in actual change. This frustration has led some radicals to strike out.

Ebb and Flow

As mentioned in previous columns, domestic terrorism has a cyclical nature with discernible ebbs and flows. Perhaps the highest levels of both left- and right-wing domestic terrorism ever seen in the United States happened in the 1970s and 1980s. There was also a significant spike in both far-left and far-right violence in the late 1990s. The summer of 1999 was labeled "the summer of hate" by the Anti-Defamation League and other organizations that monitor hate groups. The Nov. 30, 1999, meetings of the World Trade Organization in Seattle were met with an extensive show of anarchist violence that became known as the "battle of Seattle."

The 9/11 attacks seemed to take much of the wind out of the sails of the far right and far left for a short period, but over the past few years there have seen signs that both extremes are once again gaining momentum. Police officers have been attacked and even killed by both far-left-wing black separatists and far-right-wing sovereign citizen extremists. The occupation of Malheur National Wildlife Refuge in Oregon and the violent black bloc protest in Washington during the inauguration are further evidence of this trend. More recently, the June 14 attack against the House Republican baseball practice and the vehicular assault in Charlottesville, Va., on Saturday.

We are sure to see more domestic terrorist attacks in the near future as this cycle continues. These attacks pose a continuing threat to targets in the United States. The Varnell case demonstrates that the FBI is well aware of the threat posed by these various domestic actors and will continue to proactively target them just as they do plots involving jihadists.

This article originally appeared on Stratfor.com

In Latin America, Populism Is Alive and Well

2017-08-15T15:50:00Z

Populism is frequently diagnosed as the root cause of Latin America's greatest political and economic ills. But just as the human body reacts to an infection by entering a feverish state, many consider populism to be the public's response to a society in disarray. By understanding the underlying conditions that enabled the rise of strongmen like Argentina's Juan Domingo Peron or Venezuela's Hugo Chavez, we can more easily spot the early signs of populism flaring in the region once again.

Men of the People

In the centuries following its independence, Latin American history has been marked by economic cycles of boom and bust. Periods of political volatility and upheaval accompanied these ups and downs, further adding to the stress that financial uncertainty places on regional governments. It is little surprise, then, that powerful leaders gained a reputation in Latin America as the glue holding society together in times of great strain.

The first of these strongmen — known locally as caudillos — emerged after the region's decolonization during the 19th century, establishing a trend that was to become prominent in the 20th century. From Juan Manuel de Rosas in Argentina to Simon Bolivar in Venezuela, charismatic rulers proceeded to capture the public's attention and, more often than not, their support — a style of leadership today founded on populism.

Of course, the term "populism" is still open to debate in many circles. Some define populist leaders as demagogues who lack fiscal discipline, thus associating the label with a particular policy orientation. Others believe them to be politicians who understand the needs and demands of the people at a given point in time. These views have led to a tendency among economists to use the term to criticize leaders who overspend, who lack coherent economic policies or who overlook the long-term consequences of policies designed to appeal to the masses. But it would be a mistake to associate populists with a single policy approach.

Because populism is a political phenomenon, it is perhaps best viewed through the lens of political power. Rather than being champions of a particular economic vision, populist leaders are those who are able to capitalize on popular discontent with the status quo to take control of the government, where they stay by maintaining a direct connection to the masses.

Capitalizing on Discontent

And dissatisfaction isn't difficult to find. Some Latin American societies are among the most unequal, in terms of income, in the world. When hard times hit, governments in the region must carefully weigh the potential consequences of much-needed austerity measures against their citizens' ability — and willingness — to weather them.

Whereas more developed parts of the world can often rely on family savings and easy access to credit to pad individuals' pocketbooks until growth begins to pick back up, Latin America cannot. Even in the region's largest economies — Brazil, Mexico and Argentina — gross domestic product per capita is only a quarter of the United States'. Recession and poor fiscal discipline can easily lead millions of people back into poverty. Brazil's economic downturn over the past two years, for instance, has put nearly 14 million people out of a job.

Lack of upward mobility — along with high unemployment, income inequality, corruption and crime — makes for societies uniquely susceptible to the charms of populist leaders, especially those promising better prospects for all. Such was the case of Peron's Argentina in 1946, where people had abandoned the rural countryside for the cities in droves, causing the number of labor unions in the country to more than double from 1941 to 1945. As the secretary of labor, Peron found himself in an advantageous position to understand the political and cultural changes underway, particularly at a time when the rest of the ruling elite were in disarray, unable to channel the people's demands into action. Coupled with the cults of personality that rampant nationalism fostered at the time, this insight drove Peron's ascent to the head of the nation. His followers even adopted the mantra, "We are neither Yankees nor Marxists, we are all Peronistas."

The policies of early populist leaders like Peron created an image of Latin American populism that seemed to be centered on the state's intervention in the economy. But some of their successors strayed from this path. Peru's Alberto Fujimori, for example, followed a strategy that many dubbed "neo-populism." Elected in the 1990s from a non-traditional political party, Fujimori adhered to the approach of his populist predecessors by shutting down Congress, calling a new constituent assembly to draft constitutional reform, and directly communicating with the people. But he also used this political strategy to take a very different tack on the economy, opting for openness rather than protectionism in order to combat hyperinflation.

These reforms, known as the Washington Consensus, were measures the United States, World Bank and International Monetary Fund had advocated throughout Latin America as a solution to the climbing inflation plaguing the region. But while the reforms managed to bring down inflation, they came at a price, pushing unemployment into the double digits in Argentina and Brazil in the early 2000s. And as the region's citizens like to say, "Inflation may reduce purchasing power, but unemployment will destroy it."

A Dormant Condition

The turn of the millennium brought with it the rise of populist leaders who railed against the U.S.-led financial institutions that were responsible for overseeing Latin America's economic liberalization. Chief among them was former Venezuelan President Hugo Chavez, though he was certainly accompanied by anti-establishment leaders in Argentina, Bolivia, Brazil, Ecuador and Nicaragua.

The high commodities prices that financed these governments' generous spending programs have slipped over the past two years amid waning Chinese demand. The appeal of populism similarly declined at the same time. But the sentiment has by no means been stamped out completely. The political fate of Latin America's biggest economies will hang in the balance over the next year and a half as Brazil, Chile, Colombia and Mexico hold presidential elections. Meanwhile, Argentina will hold legislative elections in October, a crucial test of the government's plan to amass the congressional support needed to forge ahead with sweeping economic reforms.

Balancing the need for austerity measures with the public's willingness to shoulder the burden they carry is not easy, particularly in societies weakened by division and discord. Though the fall of Kirchnerism in Argentina and the collapse of the economy in Venezuela are only a few of the recent symptoms suggesting a gradual shift away from populism, there are still many factors ensuring that Latin America remains prone to its return in the future. Economic slowdowns, persistent unemployment, far-reaching corruption scandals and the uncertainty surrounding Argentine President Mauricio Macri's ability to see through economic reforms are all reason for pause in ruling out the possibility of a populist revival.

The same can be said of the tension mounting between the United States and Mexico. As the back-and-forth rhetoric grows more heated, it could inflame nationalism on both sides of the border, encouraging more Mexican voters to support populist candidate Andres Manuel Lopez Obrador for the presidency next year. Farther south, a corruption scandal engulfing Brazil's political parties, coupled with an unemployment rate of 13 percent, could likewise make room for a candidate outside the traditional elite to gain momentum.

Latin America will remain susceptible to the draw of populism as long as economic and political volatility persists throughout the region. And if history is any indication, politicians will keep trying to harness it when those in power are unable or unwilling to answer society's calls for change.

This article originally appeared on Stratfor.com

Russia Extends Its Reach to the West

2017-08-10T19:32:00Z

Editor's Note:

As tension between Russia and the West has mounted in recent years, Moscow has increasingly turned to hybrid warfare to gain and hold ground in their contest for power and clout. This is the fourth installment of a five-part series exploring the geopolitical context, targets and tools of that strategy, as well as the steps Russia's adversaries are taking to counter it.

Russia has breathed new life into the concept of war by other means. Using an increasingly diverse array of tactics, conventional and otherwise, the country has deftly wielded its political sway in the former Soviet Union and Eastern Bloc. But its reach extends well beyond its traditional sphere of influence to countries such as the United States, France and Germany. Moscow's dealings with these powers have showcased its hybrid warfare strategy, combining various techniques to try to create political chaos and undermine the leading members of the Transatlantic alliance.

To get to the countries in the third tier of its hybrid warfare target set — geographically distant military powers with few crucial economic ties to Russia — Moscow's options are limited. Political manipulation, electoral meddling, cyberattacks and information warfare are the only tools at its disposal, though its involvement in theaters of mutual interest to Washington, Berlin and Paris, such as Syria, also comes in handy. Yet given the importance of the United States, Germany and France in the Transatlantic alliance (and, for the latter two countries, in the European Union), along with their diverse and sometimes discordant societies, these tactics can pack a punch.

A Dramatic Display

Russia's interference in the 2016 U.S. presidential election, perhaps the most significant example of its hybrid warfare strategy in the West, is still wreaking havoc on the United States' political system. Without the conventional abilities to challenge the United States' power projection, Russia opted for other ways to try to undermine the country's geopolitical influence. The Kremlin knew that Hillary Clinton, as Barack Obama's former secretary of state, would continue — if not intensify — her predecessor's policies against Russia if she assumed the presidency. Considering the alternative, Moscow had an interest in supporting Donald Trump, the less-experienced and more sympathetic candidate who called to improve ties with Russia and questioned the efficacy of the North Atlantic Treaty Organization during his campaign.

And so, in a breach traced back to Russian intelligence agencies, hackers accessed Democratic National Committee servers and released thousands of emails in July 2016 at the height of the presidential race. The incident is widely interpreted as an effort to aid Trump's campaign in defeating Clinton and has become the focus of several investigations by Congress and the FBI. It wasn't the first time a government had tried to influence a foreign election; the United States itself has meddled in votes abroad. But the hack's high-profile target, and efficacy, raised global awareness of Moscow's hybrid warfare tactics to new heights.

Trump's presidency hasn't transformed the United States' policy toward Russia as Moscow hoped. Institutional barriers, including those in Congress and in the military and intelligence establishment, stand in the way of improved relations between Moscow and Washington. In fact, the United States has increased its sanctions against Russia since Trump's election, and Congress imposed additional checks and oversight to keep the president from removing the measures unilaterally. Even so, the controversy surrounding the election and Trump's alleged links to Russia has disrupted and destabilized U.S. politics. Moscow has used information operations against the Trump administration to intensify distrust between branches of the U.S. government and create greater confusion. It has also increased its involvement in theaters of strategic interest to the United States, including Syria, North Korea and Afghanistan, to gain leverage in its negotiations with Washington. And Russia's conventional military capabilities — particularly its vast nuclear arsenal — will continue to deter the United States from challenging its forces directly.

After Paris, the Deluge?

France is no stranger to Russia's intrusions, either. After its success in the U.S. vote, Moscow set its sights on the French elections in April and May of this year. Marine Le Pen, leader of the National Front, a right-wing, anti-immigrant party that Moscow had long backed, emerged as a leading contender for the country's presidency, advancing to face off against centrist candidate Emmanuel Macron in the run-off vote. Her victory would have been a huge boon for Russia in its efforts to undermine Western unity. Not only did Le Pen campaign to lift the European Union's sanctions against Moscow, but her pledge to withdraw France from the eurozone could have endangered the bloc's very existence. Russia provided political and financial support to Le Pen and her party. Investigations linked hacking attempts against Macron's campaign website in the lead-up to the elections back to Moscow. Russian media outlets such as Sputnik, meanwhile, ramped up their anti-EU propaganda, running articles reporting that a plurality of people in France believed more countries would follow the United Kingdom's example and pull out of the Continental bloc.

Macron won the vote by a wide margin despite Moscow's best efforts and dashed Russia's hopes of an existential crisis in the European Union. Following his victory, the president-elect called Russia out for its attempts to influence the election and referred to its state-run news outlets as "agents of influence and propaganda." Nevertheless, Le Pen's strong showing in the first round of the vote revealed the popularity of the Euroskeptic movement that Russia has worked hard to craft and promote in France.

Try, Try Again

In Germany, Moscow will soon have another chance to hone its techniques for electoral intervention. The country is gearing up for general elections in September, and Russia likely will throw its weight behind anti-EU groups such as Alternative for Germany (AfD), much as it did for the National Front. But as was the case in France, Moscow's attempts to sway the vote in Germany probably won't achieve their desired result. AfD has a much smaller support base, compared with the National Front in France. And its popularity is on the decline, falling below 10 percent in the latest polls.

The results of the election are unlikely to change Germany's position on NATO or the European Union. As a result, Russia can be expected to ramp up its disinformation campaign against the country. Moscow so far has focused on sowing discord among anti-immigration movements in Germany because of the large number of refugees it has admitted. Russia's state media outlets, for example, spread a false story that migrants had raped a Russian teenager in Germany, sparking protests in the country and prompting German officials to label the report "fake news."

So far, the middling results of Russia's bids to influence politics in the West haven't discouraged the country. The possible gains of extending its hybrid warfare strategy to Western powers outweigh the risks. And what its interferences have failed to achieve in policy, Moscow has tried to make up for in political upheaval.

This article originally appeared on Stratfor.com

Will Venezuela's Military Turn on the President?

2017-08-08T15:34:00Z

Highlights

By itself, the theft of arms from Fort Paramacay won't be the downfall of the Venezuelan government.
The incident does indicate, however, that parts of the military could be turning against Maduro.
The possibility of a coup isn't the only threat to the government. Steady military defiance could weaken it against the opposition and complicate its efforts to rewrite the constitution.
But the Maduro government won't go down without a bitter fight.

Something big happened at Venezuela's Fort Paramacay military base early Aug. 6, but the only clear thing about the event is that it's significant. Piecing together information from the Venezuelan government and independent media reports, we can gather that around 5 a.m. local time a group of people entered Fort Paramacay in Valencia. It's unknown how the individuals gained access to the base, but according to government reports they made their way to the armory and stole more than 90 AK-103 rifles and four rocket-propelled grenades. Security forces responded, and two of the intruders were killed in a shootout. Eight people, whom the government accused of being involved, were presented to the press later the same day.

At first it was unclear whether the event actually took place or whether it was merely a government public relations stunt. (All initial reports came from the embattled, increasingly authoritarian administration of President Nicolas Maduro.) However, as the day wore on, it became clear that a theft did occur at Fort Paramacay, and the central question became: What does it mean?

The obvious threat at the top of Venezuelan security planners' minds is the possibility that the stolen weapons will be used against loyalist forces. But by itself this wouldn't be enough to truly threaten the government's hold on power. Widespread military disloyalty, however, would. It's unclear how the group got into the base, but government reports say a first lieutenant at the base colluded with the raiders. And if this means broader dissent within parts of the military, the Venezuelan government is in trouble.

It's a critical time for the Maduro government. Already-rough conditions in Venezuela are rapidly deteriorating even further. The government could soon default, the United States is mulling sanctions on the country's oil sector, and at current rates, inflation could reach 4,000 percent year on year by 2020. As inflation worsens, an increasing number of military members and their families will experience food shortages and economic difficulty. Higher-ranking officials in the armed forces are insulated from the economic crisis, but thousands of lower-ranking members and their families are not. This decline in their standard of living raises the risk that they might openly defy the government, which would undermine its ability to rule without taking popular opinion or its political opponents into account.

And it couldn't be a worse time for the Venezuelan government. Maduro's loyalists are trying to plan a National Constituent Assembly meeting to rewrite the constitution in their favor and to delay elections — partly in the hope that oil prices will rise and provide the economy (and therefore the government) a needed boost. And the government is counting on the military's support. If enough members of the military become disillusioned, the possibility of a coup cannot be ruled out. However, that's not the only threat posed by a disloyal military. Instead of a sudden coup, groups of military dissenters lacking the ability to remove the government outright could begin a lengthy process of attrition, either through attacks or acts of defiance.

The Maduro government has shown that it intends to cling to power however it can, despite low approval ratings. But it has been able to do so this long only because of the military. Over the past year and a half, the government has successfully fended off an attempt to hold a recall referendum against the president and has virtually ignored the demands of the opposition-controlled congress. It has also pushed forward on a constituent assembly to rewrite the constitution and effectively turn Venezuela into a one-party state. But without the support of the military, Maduro will be unable to make progress with the assembly without risking rebellion. Put simply: The Venezuelan government needs a critical mass of loyalty from the military to survive.

Still, even if members of the military turn on Maduro and his government, the government will not abandon the constituent assembly without a fight. Challenges from the military will be met with force by parts of the military that remain loyal. And if enough dissidents pit themselves against the government, there could be a prolonged and possibly violent standoff. It's important to recognize that military dissidents would not necessarily be guided by or aligned with the political opposition, and their disloyalty could create a tangle of politically motivated violence that would have to be unraveled before the country's substantial economic problems could even begin to be addressed.

This article originally appeared on Stratfor.com