Daily SITREP: Yellen: The U.S. Can Afford a Two-Front War (Tue, 17 October 23) – Forward Observer

Daily SITREP: Yellen: The U.S. Can Afford a Two-Front War (Tue, 17 October 23)


Good morning. Here’s your Daily SITREP for Tuesday, 17 October 2023.


  • Inside the Beltway
    • (1) Biden Heading to Israel to Contain Wider War
    • (2) Biden Admin Pushing Countries to Stop Cyber Ransom Payments
    • (3) Israel Aid Puts Pressure on GOP to Pick Speaker
  • Domestic INTSUM
    • (4) Yellen: The U.S. Can Afford a Two-Front War
    • (5) UAW Strategy Shift: Strikes Can Happen “Any Place, Anytime”
  • Global SITREP
    • (6) Iran: Preemptive Action Imminent
    • (7) The Global Food Chain is at Risk
    • (8) Citigroup Hoards Aluminum and Zinc
    • (9) U.S. Navy Positions for War With Iran


  • (1) BIDEN HEADING TO ISRAEL TO CONTAIN WIDER WAR: President Joe Biden is expected to meet with Israeli Prime Minister Benjamin Netanyahu ahead of a planned Israeli offensive into Gaza this week.
    • According to people familiar with the planning, the trip is intended to signal support to Israel and preempt the escalation of the conflict into a regional war.
    • Why It Matters: The Biden administration’s position on the conflict seems all over the place. The State Department ordered officials to avoid any talk of de-escalation or ceasefire while the White House is pushing, with little apparent success, regional actors and former regional partners to de-escalate. – R.C.
  • (2) BIDEN ADMIN PUSHING COUNTRIES TO STOP CYBER RANSOM PAYMENTS: Deputy National Security Advisor Anne Neuberger said the Biden administration will push a group of 45 countries to publicly commit to not paying cyber ransom payments during a summit in Washington D.C. later this month.
    • Neuberger added, “it’s a hard policy decision,” and if countries cannot agree to the statement before the summit, it will only be included as a discussion point.
    • Why It Matters: The Biden administration will attempt to pressure international partners to stop paying ransomware attackers to cut off funding for ransomware gangs but is not offering a true alternative to paying in the case of ransomware attacks on critical infrastructure. This is likely to not go over well with countries that do not have a robust cybersecurity infrastructure. – R.C.
  • (3) ISRAEL AID PUTS PRESSURE ON GOP TO PICK SPEAKER: House Judiciary Chair Jim Jordan (R-OH) picked up the support of key opponents in his race for Speaker ahead of a floor vote today at noon, including Armed Services Chair Mike Rogers (R-AL).
    • “We are preparing to get back to work for the American people and helping out our dearest and closest friends, the State of Israel,” Jordan said.
    • Why It Matters: Jordan’s “bullying campaign” has successfully flipped some naysayers, including Armed Services Chair Mike Rogers (R-AL), but Jordan hasn’t closed the gap he needs to secure the Speakership as at least five Republicans still oppose his bid. If Jordan is able to get them on his side, the next hurdle he will face is a fight over spending ahead of the 18 November deadline for the current Continuing Resolution (CR). As a Freedom Caucus founding member, and based on his voting record in the House, he could push spending cuts more aggressively than Rep. Kevin McCarthy (R-CA) and be less willing to cross the aisle on another clean CR. – R.C.


  • (4) YELLEN: THE U.S. CAN AFFORD A TWO-FRONT WAR: U.S. Treasury Secretary Janet Yellen said the U.S. can afford wars on two fronts, as the Israel-Hamas War threatens Middle East stability, and the Biden administration continues to support Ukraine’s fight against Russia.
    • “America can certainly afford to stand with Israel and to support Israel’s military needs, and we also can and must support Ukraine in its struggle against Russia,” Yellen said.
    • The U.S. Treasury Department could engage in diplomatic conversations to pressure Iran from getting involved in the Israel-Hamas War, but Yellen didn’t reveal any details.
    • Why It Matters: Yellen’s comments are indicative of the Washington D.C. establishment’s out-of-touch perspective. The U.S. national debt is over $33 trillion, the Biden administration is running $2 trillion annual deficits, and some members of Congress still support more war funding for Ukraine. This week’s House Speaker vote is key, as a fiscally conservative Speaker could at least limit America’s funding of the war in Ukraine. – H.B.
  • (5) UAW STRATEGY SHIFT: STRIKES CAN HAPPEN “ANY PLACE, ANYTIME”: United Auto Workers (UAW) Union President Shawn Fain announced a tactical shift by the UAW from announced walkouts on Fridays to unannounced strikes that could happen at any time, with the intent to make strikes less predictable and more economically damaging.
    • Fain said, “We’re not messing around… If they’re not ready to move, then we’re going to give them a push in a language they understand: dollars and cents.”
    • Why It Matters: This shift in strategy may be a sign that UAW leadership expects their strike fund to drain faster than the supply of vehicles and spare parts held by automakers, and they feel the need to ramp up the pressure on the “Big Three” before they lose the advantage. – R.C.


  • (6) IRAN: PREEMPTIVE ACTION IMMINENT: Monday evening, Iranian Foreign Minister Hossein Amir-Abdollahian told Iranian state-backed media that a preemptive action would soon be taken against Israel in order to stop its attacks on Hamas.
    • Amir-Abdollahian was quoted as saying, “Leaders of the Resistance will not allow the Zionist regime to take any action in Gaza. … All options are open, and we cannot be indifferent to the war crimes committed against the people of Gaza.” 
    • Western analysts expect Iran and its proxy militia Hezbollah will enter the conflict against Israel shortly.
    • Why It Matters: Iran has denied ties to Hamas, although publicly available statements by Iranian officials indicate that it is its primary patron, behind Western NGOs and governments. It is apparent that Iran has a planned strategy to intervene on behalf of Hamas in order to justify an attack on Israel. Iranian government statements regarding the conflict between Hamas and Israel are most likely performative measures designed to lead to the regime’s eventual direct involvement in the conflict. This will place the Biden admin in a difficult position of following through on defense commitments to Israel to attack third-party intervention in the conflict or continuing to pursue regional realignment with Iran and its proxy militias. – M.M.
  • (7) THE GLOBAL FOOD CHAIN IS AT RISK: An expansion of the Israel-Hamas War to the greater Middle East and North Africa (MENA) region would severely impact the global fertilizer and agricultural markets.
    • The MENA region accounts for about 30% of the world’s nitrogen fertilizer exports and almost half of global phosphate fertilizer exports.
    • MENA countries import 20% of the world’s live cattle, 12% of global dairy, and 7% of global meat, according to Rabobank analysts. 
    • Why It Matters: A limited Israel-Hamas War would not have much impact on global food prices. But the conflict could spread to the greater Middle East and North Africa (MENA) region, impacting farmers and consumers around the world. Severe food shortages in developing countries could accelerate global instability and lead to revolutions and military conflicts. – H.B.
  • (8) CITIGROUP HOARDS ALUMINUM AND ZINC: Citigroup bought 100,000 tons of aluminum and 40,000 tons of zinc on the London Metal Exchange over the last few months, according to Bloomberg.
    • The purchases worth $300 million are for Citi’s trading book and are part of a metal financing play, said anonymous sources who are involved in the deal.
    • Citi will store the metals with at least one warehousing company in Kaohsiung, Taiwan, and intends to ship metal there from London Metal Exchange warehouses in South Korea and Singapore.
    • Why It Matters: This deal makes Citi one of the biggest global players in metals speculation and raises concerns about potential supply disruptions as war with China becomes more probable. Storing the metals in Taiwan seems questionable, but Citi may have a deal with the Taiwanese or Chinese governments to sell needed metals for wartime production. – H.B.
  • (9) U.S. NAVY POSITIONS FOR WAR WITH IRAN: Last week, the U.S. Navy pulled the Bataan Amphibious Readiness Group (ARG) out of an exercise with Kuwait to respond to the Israel-Hamas War. As of yesterday, they have split the ARG and positioned it to shut down the Strait of Hormuz.
    • The USS Mesa Verde crossed into the Mediterranean to support the Gerald Ford Carrier Strike Group.
    • The USS Bataan and USS Carter Hall, the remainder of the ARG, are in a holding pattern in the Gulf of Oman, which is at the mouth of the Strait of Hormuz.
    • Why It Matters: The Bataan ARG’s remaining ships, and likely a couple of undeclared independent steaming destroyers, are more than enough to shut down the Strait and cut off Iran’s naval bases in Chah Bahar and Bandar Abbas. Additionally, it is well known that any large naval group stuck in the Gulf when war with Iran kicks off are essentially lost assets. This move allows the ARG to stay in the fight and receive quicker support. The Navy has not done this since Operation Praying Mantis, the last time we engaged Iran in open combat. – J.V.


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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