25 AUG 2017 – Executive Intelligence Summary

EXECUTIVE INTELLIGENCE SUMMARY – 25 August 2017 🔒

In this EXSUM… (4330 words)

Mauldin: U.S. enters a recession within 12-18 months
We are the most socially and economically divided since 1937
Russia, China, North Korea, and Middle East Situation Reports (SITREPs)
Defense in Brief
Revered Leftist intellectual calls Antifa “a major gift to the Right”
Professor sees Antifa and left wing growing into a larger movement
Domestic Conflict Indicators
And more…

ADMIN NOTE: Jon and I will be making some changes to the EXSUM format. This week’s change is combining Priority Intelligence Requirements (PIR) 1 and 4 into PIR1, which will now include both indications of systems disruption and economic/financial disruption. That will leave this report with just three PIRs, but the same reporting requirements. Next month we expect to make another significant change, and I will include an update about the change.

Priority Intelligence Requirements:

PIR1: What are the current indicators of systems disruption or instability that could lead to civil unrest or violence.

PIR2: What are the current indicators of an outbreak of global conflict?

PIR3: What are the current indicators of organized political violence and domestic conflict?

PIR1: What are the new indicators of systems disruption that could lead to instability, civil unrest, or violence?

Mauldin: U.S. enters a recession within 12-18 months

Another economist is predicting that the U.S. will plunge into a recession within the next 12-18 months. John Mauldin of Mauldin Economics says that “broad economic conditions” are a major factor to watch in terms of stock valuation and other macroeconomic measures within the economy, a complex but necessary process in order to understand what may be coming. History is also a guide, of course, but most of the time we have found that overlaying historical events with today’s bigger picture hasn’t been too accurate of late. Nevertheless, Mauldin says while consumer spending is up, it’s not up as much as it should be in the current cycle. Part of the reason for that could be debt; we know from separate reporting recently that the vast majority of Americans are living paycheck-to-paycheck and, thus, don’t have much disposable income. But debt today is close to where it was before the last recession, the “great” one of 2008-09. Bottom line: There’s a lot of economic modeling to be considered, and it’s worth a look if you have the time, though in the end, this is just another prediction in a long line of many recently. [source] Oh, and consumer debt is also soaring like it did before the Great Recession. [source]

An income tax fight and the pension mess

U.S. pension systems around the country are broke or headed that way, and it’s likely many of them will collapse without substantial injections of cash – as in bail outs — by taxpayers. But a fight over an income tax in Seattle highlights the issue of underfunded taxes. Seattle City Council officials passed a measure imposing a 2.25 percent income tax on “rich” residents; the law is being challenged in court because it may violate the state provisions regarding income taxes. But one of the issues not being mentioned is that the tax would, in part, go to fund Seattle’s vastly underfunded pension system, which helps explain why the city would go to the mat to keep it. “Like many cities and states, Seattle guaranteed its workers generous pensions based on optimistic assumptions that have proved faulty,” says one analyst. (Analyst Comment: Samuel here. Many of these pension systems were and continue to be predicated on seven percent growth per year. That’s not only unrealistic over the long term, but is a critical vulnerability during the next recession. The bottom line is that several state and numerous municipal pensions are going to ask for a bail out if attempts to increase mandatory contributions from current employees, delaying benefits after retirement, or raising taxes doesn’t work out. This is something I pointed out previously and my conclusion today is the same as last year: the federal government is going to seriously consider bailing out these pension systems.) Seattle’s pension fund, despite a dramatic rise in recent years in the city’s budget, is only funded at 68 percent, the ninth-worst among the country’s 40 largest cities. Based on the city’s own calculations it will take until 2042 to retire its current pension debt. We say, “Good luck with that.” [source]

We are the most socially and economically divided since 1937: Analyst

In a recently published essay, Ray Dalio — head of financial firm Bridgewater Associates, compared the current U.S. social and economic climate to that of 1937, when the country was still recovering from the Great Depression and just a few years before America found itself embroiled in the second global conflict of the 20th century. And he seemed to be pointing to the election of Donald J. Trump as president as a sign — not a good one — of things to come. “During such times conflicts [both internal and external] increase, populism emerges, democracies are threatened and wars can occur. I can’t say how bad this time around will get. I’m watching how conflict is being handled as a guide, and I’m not encouraged,” he wrote. “[D]emocracies are threatened when the principles that divide people are more strongly held than those that bind them and when divided people are more inclined to fight than work to resolve their differences. Conflicts have now intensified to the point that fighting to the death is probably more likely than reconciliation.” He said despite the recent gains in the stock market, a low unemployment rate, and third-quarter growth expected to be 3.8 percent, those benefits are skewed. “In other words, the majority of Americans appear to be strongly and intransigently in disagreement about our leadership and the direction of our country,” Dalio wrote. “They appear more inclined to fight for what they believe than to try to figure out how to get beyond their disagreements to work productively based on shared principles.” This doesn’t remind us of 1937, it reminds us more of 1857. [source]

PIR2: What are the current indicators of an outbreak of global conflict?

NATO-Russia SITREP

U.S. considering lethal arms for Ukraine, and that very well could make matters worse

This week U.S. Defense Secretary James Mattis visited Ukraine, which remains locked in a deadly war with Russian-supplied and Russian-backed “separatists” in the country’s east. Among other things, Mattis was said to have discussed providing lethal arms to the Ukrainian military. Mattis will be submitting his recommendations to President Trump and the Pentagon upon his return.

There are hawks in Congress — chief among them Sens. John McCain, R-Ariz., and Lindsey Graham, R-S.C. — who have advocated for providing lethal arms to Ukraine practically since the conflict began. They continue to do so, though Trump has not yet indicated which options he prefers.

Under consideration: A package of weapons that would include Javelin anti-tank missiles and various anti-aircraft weapons. At Mattis’ press conference with Ukrainian President Petro Poroshenko, the defense secretary said the U.S. had already agreed to provide an additional $175 million worth of non-lethal weaponry and supplies; that brings the total to around $750 million worth of non-lethal aid over three years.

Needless to say, if the U.S. decides to provide Ukraine with “defensive” weapons, it won’t sit well with the Russians. Alexander Mikhailov, a member of an influential Russian think tank in Moscow, the Council on Foreign and Defense Policy, said if Ukraine accepts advanced U.S. weapons, it would drive itself into a trap and provoke a Russian response. “Russia will respond in an adequate manner,” he said. “So long as Ukraine does not have modern foreign weapons, its strategic objects and settlements are out of the field of view of the Russian General Staff and our Strategic Missile Forces. Once weapons appear in the country that can pose a threat to Russia, Moscow can change its targeting parameters, putting Ukraine into the line of sight for our missiles… And if a powerful military formation is created, we will bring the corresponding forces to full combat readiness to repel any possible attacks.”

There is no reason to doubt that assessment. Russian President Vladimir Putin has already decided that keeping Ukraine within Moscow’s traditional zone of influence was worth risking military action — it was a gamble that has so far paid off. Would he up the ante if forces he was supplying began taking on new casualties? Probably.

There are a couple of mitigating factors. One, reports suggest that after multiple mobilizations, the Ukrainians are tiring of the war. Credible reports note that potential conscripts are doing whatever they can to avoid being drafted. [source] Also, the type of weaponry being considered by the U.S. would likely prove ineffective against a more determined Russian-backed force, which Putin is sure to muster if Washington goes ahead and provides Ukraine with weapons.

For those who support arming Ukraine, their thinking goes that Putin would back off if resistance became stiffer and more costly. That’s possible, given that Russians are no more eager to be sent to die in Ukraine than Ukrainians are. Plus, making the war more costly for Putin would likely negatively impact his popularity at home and could lead to new unrest, especially after Russian companies will be hit with new sanctions by the U.S.

But it’s a huge gamble to take with a nuclear-armed country whose leader has already decided keeping Ukraine within Russia’s sphere of influence is worth risking life and treasure.

South China Sea SITREP

New technology could help China ‘lock down’ the South China Sea

As the United States and China move ahead to forge a closer military-to-military relationship built on common ground and trust, a new technological breakthrough could someday may cooperation unnecessary for Beijing.

In June, the Chinese Academy of Sciences hailed a technological breakthrough [source]: A major upgrade in a kind of quantum device that measures magnetic fields. But oddly, the announcement quickly disappeared after a journalist noted that the technology could have major military uses and benefits: It could help the People’s Liberation Army Navy and Air Force lock down the entire South China Sea by giving both the ability to track U.S. and NATO submarines, which are virtually invisible to detection currently.

The rapid removal of the announcement startled season China technology watchers. “I was surprised” by it, said Stephen Chen of the South China Morning Post, who initially raised the issue. “I have been covering Chinese science for many years, and it is rare.” [source]

Magnetometers have been used for decades — since World War II — to detect submarines, but they are close-in systems, effective at short ranges. They work by sensing and measuring an anomaly in the Earth’s magnetic field, like one caused by a massive submarine. Currently, magnetometers are used by navies to hone in on subs once they’ve already been located via radar. But the Chinese invention may involve the use of SQUID — Superconducting Quantum Interference Device.

In that past, researchers found that using SQUID in the real world was highly impractical because they are overwhelmed by even minuscule background noise. But the new magnetometer, which was built by Xiaoming Xie and colleagues at the Shanghai Institute of Microsystem and Information Technology, uses an array of SQUIDs; the notion is that by comparing their readings, researchers can cancel out some of the extra artifacts generated by motion. This “would be relevant to an anti-submarine warfare device,” according to one expert.

The breakthrough involves an airborne device that can be deployed to detect submarines from much greater distances — much farther than current magnetometer technology, which is only effective for a few hundred yards. Some experts believe this new technology would enable China to detect subs from as far away as several miles.

This development fits with China’s desire to much more closely monitor submarine activity in the South China Sea, all of which it claims. The “Underwater Great Wall,” which is a line of submerged sensors, buoys and drone subs is said to be nearing completion. Meanwhile, Beijing recently drafted new laws requiring any foreign submarine to get Chinese approval before entering any Chinese waters and, once on station, remain afloat flying their national flag, so Chinese vessels can monitor them. [source]

If this new device can be effectively deployed, it would enable the Chinese navy to effectively control all waters it sought to control, be they international or legitimate Chinese territorial waters. What’s more, Beijing could use the devices to provide intelligence to its allies — namely North Korea.

A China that is in full situational awareness of all U.S. naval assets is one that would have an opportunity for the first time to negotiate with the United States from a legitimate position of strength when it came to navigation in the disputed South China Sea.

“I am surprised they made such an announcement,” one expert said. “Usually this kind of information is not revealed to the public because of its military value.”

China may or may not be leading the world in this technology (Germany is also said to possess it, and the U.S. may have it already as well). But if so, Beijing now possesses a huge technological advantage in naval warfare.

Korean Peninsula SITREP:

Talk of ‘preventative war’ against North Korea is rising at the White House

As we have noted on several occasions recently, President Donald Trump looks at North Korea’s mounting nuclear and ICBM capabilities much more differently than his three predecessors — Bill Clinton, George W. Bush, and Barack Obama.

That could be due to the fact that Trump, not a politician before winning the November election, is of a completely different mindset than those three. It could be due to the fact that the North Korean nuclear and ICBM programs are maturing (and fast) on his watch. It could be a combination of both.

But make no mistake, President Trump remains adamant about “solving” the North Korean “issue,” as his top national security advisor, Army Lt. Gen. H. R. McMaster made plain again recently. In fact, McMaster and other Trump national security figures have openly discussed “preemptive war” aimed at preventing Pyongyang from fielding a weapon system capable of threatening any part of the United States.

In fact, such discussion, it is said, has not been so pervasive since the Bush administration began discussing preemptive war in 2002 as it built its case for invading Iraq.

No one should be thinking that the Trump White House and the Pentagon are not clear-eyed about the risks involved in any preemptive strike against North Korea. And no one should believe that the administration does not prefer a diplomatic solution; it’s just that there likely isn’t one that is acceptable to either party. The North Koreans are not likely to give up the one thing that guarantees the continuance of the Kim dynasty — nuclear weapons; and the Trump administration is not likely to suddenly find it can live with a nuclear-armed North Korea capable of threatening not only U.S. allies in the region but also the American homeland.

Also, there is not much chance that China is going to prove to be useful to the Trump administration in getting North Korea to come to the negotiating table. Right now having North Korea serve as a buffer between a U.S.-occupied South Korea, as well as a foreign policy distraction, as China continues to advance its own agenda in the South China Sea, is likely preferable to Beijing.

Still, it seems clear that the administration is clearly moving towards a military option if at some point Trump deems it in the country’s national security interests. “Are we preparing plans for a preventative war?” McMaster said in a recent TV interview in which he defined the term as “a war that would prevent North Korea from threatening the United States with a nuclear weapon.” In answering his own question, he reminded the audience of Trump’s resolve: “The president’s been very clear about it. He said he’s not going to tolerate North Korea being able to threaten the United States.”

The Trump administration is viewing North Korea substantially different ways than previous administrations. [source]

If the North Koreans miscalculate, the Trump administration seems to be preparing contingencies to make Pyongyang pay one way or another.

Mideast SITREP

U.S. ally Israel moving closer to ‘red lines’ in Syria

There are a great many players involved in keeping the Syrian civil war hot — some in support of the Syrian government, some in support of various militant factions opposed to the Syrian regime. But two state actors that are lending the government of President Bashar al-Assad invaluable, and deadly, assistance could someday soon find themselves in America’s crosshairs: Iran and North Korea.

Regarding North Korea, a confidential United Nations report has surfaced claiming that a pair of shipments have been intercepted from the Stalinist state to a Syrian government agency that is responsible for the country’s chemical weapons program. The report, which was written by a panel of UN experts, was submitted to the UN Security Council earlier this month; it did not provide details as to where the shipments were interdicted or what they contained. But the panel nevertheless said it “is investigating reported prohibited chemical, ballistic missile, and conventional arms cooperation between Syria and the DPRK (Democratic People’s Republic of Korea).” [source]

Now, Iran. Photographs newly obtained by members of Congress, compliments of a Washington, D.C.-based think tank, show that Tehran is shipping militants to Syria via commercial air carrier Iran Air, which is a violation of the nuclear deal negotiated by the Obama administration. Iran Air is the country’s flagship commercial carrier; the militants are believed to be joining forces aligned with Assad, and against U.S. forces battling militants loyal Damascus. The uncovering of this damning photographic evidence comes as U.S. airplane manufacturer Boeing is in negotiations with Iran Air to upgrade and modernize most of its fleet; several members of Congress are pushing the Trump administration to nix the deal. [source]

Looking at this in the context of what motivates each of these governments to act in the manner they do, we can make a few deductions.

For North Korea, selling weapons is a way to bring in much-needed cash to fund its own nuclear and missile developments, especially as new sanctions on its principal trade partner and benefactor, China, have just been imposed by the U.S. And shipping weapons to Syria also has the additional benefit of agitating and complicating Trump administration goals and objectives. Pyongyang doesn’t have a dog in the Syria fight; weapon sales are pure self-interest.

The Iranians, however, are playing a long game. The nuclear deal negotiated during the Obama administration essentially kicked that can down the road — it did nothing to prevent Tehran from developing nuclear weapons at some point, on their way to becoming the dominant regional power and hegemon. Everything Iran does in the region is aimed at achieving that singular objective; bolstering its presence and influence in Syria furthers that goal, even as it impedes U.S. objectives.

While the U.S. has legitimate national security concerns regarding North Korea and Iran, another nation could wind up becoming the tripwire that engulfs the region in a new war that may very well include U.S. forces: Israel.

The Israelis can ill afford to allow Iran to obtain regional dominance, as Israeli leaders, correctly, believe their survival depends on it. In talks with Russian President Vladimir Putin this week — Russia has also helped prop up Assad — Israeli Prime Minister Benjamin Netanyahu reportedly made it clear he’s not comfortable with Iranian forces and proxy militants on his border with Syria, and that the Jewish state is prepared to act “when necessary according to our red lines…” [source]

That’s a signal that Israel does not fear Russian interference. And it’s a sign indicating that Netanyahu will not allow Iran to turn Syria into another South Lebanon.

With North Korean missiles and Iranian-supplied proxies, Israel could soon find its hands full in a way that may require direct U.S. assistance. And since the United States already has forces in the region, they could quickly be tasked to assist Israeli forces against Iranians and Iranian-backed militias.

With Russian and Iranian help, the Syrian government has turned the tide in the six-year civil war and is now poised for victory. But the country will remain a powder keg so long as the North Koreans continue to supply the Assad regime and Iran continues to press forward with its quest to become the dominant regional power.

Defense in brief

U.S. Navy conducts first successful test of new long-range anti-ship missile

The U.S. Navy, in conjunction with defense contractor Lockheed Martin, have conducted the first successful test flight of the new Long Range Anti-Ship Missile, which as launched from a B1-B Lancer bomber. Officials said that test has proven the weapon’s ability to both identify and guide itself toward a moving target at sea. Navy officials said the LRASM successfully navigated all waypoints, transitioned to mid-course guidance and flew toward its target. The missile was able to positively identify and target the appropriate vessel amid a group of ships. Director of the LRASM program, Capt. Todd Huber, noted that the successful test meant the Navy could receive a critical surface warfare capability by next year. [source]

The Navy has been working on developing longer-range cruise missiles for its fighters to carry due to the increased range of enemy missiles designed to keep U.S. Navy battle groups out of range of the main theater of operations. Weapons like this are vital if U.S. naval power projection well into the future continues to center primarily on the aircraft carrier, which seems likely.

Carriers are becoming vulnerable to longer-range missiles that are being fielded by near-peer and competitor militaries; the Navy’s LRASM gives the service a means of attacking enemy targets while still keeping carriers out of range of those longer-range enemy munitions.

Will the next great war be in space?

Though the great powers have publicly stated they do not seek, nor should anyone seek, to militarize space, that appears to be what all parties are attempting to do, and that’s especially true of China. Advances in technology are helping Beijing, which was already well on its way to becoming a legitimate space power, develop dual-use systems for civilian and military applications. In 1967, the US, UK, and the Soviet Union signed the Outer Space Treaty, which has been signed by 105 countries (including China); the treaty set in place international laws banning countries from stationing nuclear, chemical or biological weapons in space. But one loophole in the treaty is that it doesn’t prevent countries from placing conventional weapons in space, such as kinetic bombardment (attacking a target on earth with a projectile). Some believe North Korea has taken a page from the former Soviet Union playbook and has placed two satellites in orbit that can threaten the U.S. with an electromagnetic pulse. Meanwhile, the Chinese believe a commanding presence in space is their best chance to match U.S. military capabilities. “Rather than trying to match the US navy and air force, China believes it can gain an advantage through the production of specialized missiles, spacecraft and platforms to send to the moon.” [source]

New nuclear cruise missiles on tap for U.S.

The Air Force has awarded $1.8 billion to a pair of defense contractors to develop a new nuclear-capable, air-launched cruise missile. Called the Long Range Standoff weapon (LRSO), plans are to incorporate it into the nuclear bomber fleet, which would presumably include the B-21 Raider, which is currently under development. “Deterrence works if our adversaries know that we can hold at risk things they value,” Air Force Secretary Heather Wilson said. Lockheed Martin and Raytheon each won $900 million to develop and demonstrate the new missile over the next four and a half years. “LRSO will provide the next generation strategic deterrent missile for the air-launched portion of the nuclear triad,” said David Helsel, Lockheed’s program director. [Source: Jaime McIntyre’s Daily on Defense newsletter via the Washington Examiner]

PIR3: What are the new indicators of organized political violence and domestic conflict?

Revered Leftist intellectual calls Antifa “a major gift to the Right”

In an interview with the Washington Examiner, Noam Chomsky describes Antifa as a small but particularly destructive element of the Left. “As for Antifa, it’s a minuscule fringe of the Left, just as its predecessors were. It’s a major gift to the Right, including the militant Right, who are exuberant.” He continues: “[W]hat they [Antifa] do is often wrong in principle – like blocking talks – and [the movement] is generally self-destructive… That’s quite apart from the opportunity costs – the loss of the opportunity for education, organizing, and serious and constructive activism.”

“When confrontation shifts to the arena of violence, it’s the toughest and most brutal who win – and we know who that is,” Chomsky said, referring to right wing movements.” [source]

Professor sees Antifa and left wing growing into a larger movement

Mark Lance, a professor of justice and peace at Georgetown University sees Antifa and other left wing groups growing into a larger movement. “I’m seeing more concrete productive discussion between anti-fascists and others on the Left these days than ever before in my life… There is reason to think that it will become integrated into an emerging coalition that includes Sanders supporters, democratic socialists, dreamers, the Movement for Black Lives, environmentalists, [and] Native American organizers,” he said. [source]

Left-Wing Roll-Up:

Petition to declare Antifa a terrorist organization now requires a White House response

Author of Antifa handbook defends antifascist violence

Georgetown professor: Antifa ‘preserving the fabric of America’

Shadowproof: Field Guide for Antifa Organizing

University professors form Campus Antifascist Network

BLM Founder: Where did it go? [interview]

Some BLM activists preparing for armed defense

CA: Free Speech activists and Antifa scheduled to clash in Bay Area this weekend

CA: Yreka residents clean up Antifa graffiti

GA: Savannah BLM planning protest

PA: Armed Antifa group calls for revolution