Good morning. Here’s your Daily SITREP for Tuesday, 29 August 2023.
TODAY’S BRIEFING:
- READ TIME: 4 Minutes, 37 Seconds
- Inside the Beltway
- (1) House Fight Over Trump Could Fuel Gov Shutdown
- (2) DOD Planning Replicator Initiative to Overcome Chinese Advantage
- (3) Supporters Swarm After Trump Disqualification Proposal
- Domestic INTSUM
- (4) Goldman Sachs: King Dollar Reigns
- Global SITREP
- (5) China’s Evergrande Shares Drop 79%
- (6) Poland and Baltics Threaten to Close Border with Belarus
- (7) Israel Bombs Syrian Airport
- (8) Niger Orders French Ambassador Out; Macron Says No
INSIDE THE BELTWAY
- (1) HOUSE FIGHT OVER TRUMP COULD FUEL GOV SHUTDOWN: House Freedom Caucus member Rep. Andrew Clyde (R-GA) said he would push amendments to the Commerce-Justice-Science appropriations bill to defund federal and state prosecutors for indicting former President Donald Trump, setting up a fight in the Appropriations Committee when Congress returns from its August recess.
- Reps. Andy Biggs (R-AZ) and Matt Gaetz (R-FL), also members of the Freedom Caucus, introduced separate bills to defund federal and state prosecutors for indicting Trump.
- Why It Matters: House Freedom Caucus Republicans are poised to force a government shutdown before the 01 October appropriations deadline. When Congress returns in September, there is only a two-week period with both chambers in session to get 12 spending bills across the finish line. Freedom Caucus members have already announced they will fight to include drastic spending cuts against a Continuing Resolution that doesn’t meet their demands. They could add the effort to defund federal and state prosecutors to that list of demands, increasing the likelihood of a shutdown on 01 October. – R.C.
- (2) DOD PLANNING REPLICATOR INITIATIVE TO OVERCOME CHINESE ADVANTAGE: Deputy Secretary of Defense Kathleen Hicks said the Department of Defense (DOD) Replicator Initiative will focus on fielding small and cheap autonomous weapons systems in multiple domains to overcome China’s military production advantage.
- Hicks said scaling production would be the biggest hurdle to fielding systems under the initiative in the planned two-year time frame.
- Why It Matters: The Ukraine war has demonstrated that peer versus peer or near-peer conflict is still dependent on military-industrial capacity, and the U.S. defense manufacturing base is at its weakest in decades due to consolidation and supply chain issues. A new doctrine that relies on ramping up industrial capacity will likely fall flat on its face, even more so if critical supply chains still rely on China. – R.C.
- (3) SUPPORTERS SWARM AFTER TRUMP DISQUALIFICATION PROPOSAL: Supporters of former President Donald Trump flooded New Hampshire Secretary of State David Scanlan’s office with phone calls after news broke that Bryant Messner, a Trump-endorsed candidate for Senate in 2020, proposed disqualifying Trump from New Hampshire’s 2024 ballot.
- Scanlan said he is not seeking to remove any names from the ballot, only that he wanted to be prepared to decide on any qualification challenge.
- Why It Matters: Any push to disqualify Trump from a state ballot in 2024 will meet with this same level of enthusiasm and could lead to violence if state Secretaries of State move forward with any plans. No other states have announced plans to disqualify Trump from their ballots. Still, California is the state to keep an eye on as Governor Gavin Newsom is setting up a presidential run, possibly in 2024. – R.C.
DOMESTIC INTSUM
- (4) GOLDMAN SACHS: KING DOLLAR REIGNS: Better economic growth in China and Europe plus low U.S. inflation would weaken the dollar – an unlikely scenario, according to Goldman Sachs analysts.
- Goldman’s economic team expects no Fed rate hike in September unless upcoming U.S. employment, inflation, and manufacturing data come in stronger than expected.
- Why It Matters: There won’t be a credible international challenger to the U.S. dollar anytime soon. Europe and China’s economic condition is worsening, and the BRICS+ common currency will take years to develop. – H.B.
Global SITREP
- (5) CHINA’S EVERGRANDE SHARES DROP 79%: After a 17-month trading halt, Evergrande, the world’s most-indebted property developer, lost $2 billion of market value when shares resumed trading on Monday.
- On Sunday, Evergrande reported a $4.5 billion loss for the first six months of 2023. The company’s combined loss in 2021 and 2022 was $81 billion.
- Evergrande filed for Chapter 15 bankruptcy protection earlier this month to protect its assets and restructure its finances.
- Why It Matters: China’s real estate sector accounts for 30% of the country’s Gross Domestic Product (GDP). Property developer defaults and bankruptcies could spill over into other sectors of China’s economy and even spark a global financial crisis. – H.B.
- (6) POLAND AND BALTICS THREATEN TO CLOSE BORDER WITH BELARUS: Lithuania, which already closed half its border crossings with Belarus, and Poland both said on Monday that if a “critical event” occurred they would close their remaining border crossings.
- Lithuania’s Interior said a credible threat to national security or a breakthrough of illegal immigrants from the Middle East and Africa would qualify as a critical event.
- Poland has already closed all but one of its border crossings with Belarus this year.
- Why It Matters: Poland and the Baltic nations are concerned over the presence of Wagner paramilitaries operating in Belarus. They are also concerned that Belarus purposely uses illegal immigration flows as a gray zone tactic to undermine the legitimacy of the Polish and its Baltic governments. Expect this friction at one of NATO’s most flammable hotspots – the Suwalki Gap – to continue to increase as the Russia-Ukraine conflict morphs into its next phase. – M.M.
- (7) ISRAEL BOMBS SYRIAN AIRPORT: Israeli forces conducted strikes on an Iranian ammunition depot at the Syrian Al-Nayrab Military Airbase next to Aleppo airport.
- The strikes, which destroyed the ammunition storage depot, shut down the Aleppo airport for operations.
- Iran often uses commercial aerial supply lines to deliver arms to its allies in Syria, including Lebanon’s Iran-backed Hezbollah.
- Why It Matters: The Israeli air strikes are part of an escalating battle with Iran and its proxy forces in Syria and Lebanon. Israel is likely using these strikes to conduct shaping operations against Iranian allies ahead of a possible attack to destroy Tehran’s nuclear weapons program inside Iran. Iranian proxy forces now control vast areas in eastern, southern, and northwestern Syria and in several suburbs around, Damascus. – M.M.
- (8) NIGER ORDERS FRENCH AMBASSADOR OUT; MACRON SAYS NO: Niger’s military junta ordered the French ambassador to leave the country within 48 hours on Friday.
- French President Emmanuel Macron said on Monday that France had refused the expulsion of its ambassador.
- Macron said Niger’s junta had no authority to give orders to France.
- Why It Matters: France is banking on being able to lead a military operation, along with the African political bloc ECOWAS, to restore the ousted pro-Western president. The U.S. has repeatedly cautioned against this path, but Macron appears to be on his own program. ECOWAS has already blown through its previous ultimatum without action, and it is unlikely that France would have the ability to lead such a military operation without assistance from NATO. Expect Niger to expel the French ambassador. -M.M.
— END REPORT
M.S. indicates analyst commentary from Mike Shelby
M.M. indicates analyst commentary from Max Morton
J.V. indicates analyst commentary from Jared Vaughn
R.C. indicates analyst commentary from Robert Cook
H.B. indicates analyst commentary from Harrison Burge
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Thank you FO team. This is the best briefing of it’s type out there. Bob Chapman’s International Forecaster was excellent and I learned a lot from him that helped me through some very difficult financial/life situations. He’s since move on to the great mil intel gathering agency in the sky 🙂