Global SITREP for Thursday, 07 December 2023 – Forward Observer

Global SITREP for Thursday, 07 December 2023

Good morning, and welcome to the Global Situation Report for Thursday, 07 December 2023

  1. CHINA RAMPING UP WHEAT PURCHASES AGAIN: China has reportedly purchased over 1 million tons of wheat from American farmers this year and just completed the largest single-purchase buy since 2020.
  • China experienced a loss of wheat production quality this year due to heavy rains, which may have also destroyed part of the country’s wheat storage due to spoilage. China’s wheat yields are projected to remain flat this year.
  • China’s agricultural land has also been decreasing in size and quality over the last 35 years, according to Karen Mancl of The Ohio State University. Additionally, Mancl says they lose about 9% of their grain crop each year due to mishandling.
  • Chinese policymakers believe their country depends on food imports for the foreseeable future as policymakers have elevated food security to a top national priority.

Why It Matters: China’s last major grain buying spree occurred in 2021. Total grain imports more than doubled from 2019 to 2020 and more than doubled again from 2020 to 2021. It raised questions about whether China was preparing for a breakdown in global agriculture due to the COVID outbreak and then due to the Russian invasion of Ukraine. China remains the world’s top wheat producer, top wheat importer, and top wheat holder. As of last year, China was expected to have nearly 70% of the world’s corn reserves, 60% of the world’s rice, and about 50% of the world’s stored wheat. China may be ramping up purchases again because commodities prices have fallen from the previous year’s highs, or because they have over a billion people to feed, or because their own wheat production quality has fallen, or because they expect more difficult global trade conditions ahead of diplomatic and military action against Taiwan next year, or more likely because of a perfect storm of all four. – M.S.

  1. ITALY WITHDRAWS FROM BRI: Italy announced yesterday that they will not renew their membership in China’s Belt and Road Initiative (BRI) when it expires next year.
  • Prime Minister Giorgia Meloni campaigned on leaving the Belt and Road Initiative, which is part of a broader effort to relook at ties with China.
  • “The decision to join the Silk Road was an improvised and atrocious act that multiplied China’s exports to Italy but did not have the same effect on Italian exports to China,” Italian Defense Minister Guido Crosetto said over the summer.

Why It Matters: Leaving the BRI could allow Italy to further “de-risk” from China, which is becoming a line of effort among some European countries. – J.V.

  1. USN SHOOTING MISSILES FASTER THAN REPLACEMENT RATE:The U.S. Navy fired another missile to kill another Houthi drone yesterday. The Navy currently shoots missiles faster than it can replace them while fighting a subpar, low-activity force.
  • The U.S. Navy is estimated to be firing one surface-to-air missile every one to three days.
  • Missile production rates are not published, but based on previous orders from Raytheon and their delivery timelines, a new SM-2 missile is produced about every four days.

Why It Matters: The U.S. defense industrial base cannot keep up with a group that the Department of Defense has said isn’t even targeting the Navy and is shooting low-speed, low-maneuverability munitions. We are demonstrating to the world that we cannot supply a naval war under what are effectively laboratory conditions. This puts the Navy in the unenviable position where it may have significant constraints on ammo before the next real war even starts. – J.V.

  1. SVR: UKRAINE WILL TURN INTO A “SECOND VIETNAM”: Russia’s Foreign Intelligence Service (SVR) chief Sergei Naryshkin warned that Russia will turn “Ukraine… into a black hole, absorbing more and more resources and people.”
  • “Ultimately, the U.S. risks creating a ‘second Vietnam’ for itself, and every new American administration will have to try to deal with it,” Naryshkin continued.
  • Earlier this week, U.S. President Joe Biden warned that if Congress doesn’t come up with more money for Ukraine, Russia would eventually roll into NATO territory, pitting “American troops fighting Russian troops.”

Why It Matters: We expect Congress to remain split next year, with Democrats controlling the House and Republicans controlling the Senate, which means skeptical Republicans are likely to hold out on funding for the Ukraine war. Meanwhile, Ukraine is facing severe constraints on manpower, and its leaders are warning they’ll run out of weapons and equipment unless the U.S. and NATO countries provide more. And NATO countries themselves remain split on how much support they can offer to the Ukraine war, especially now that the Ukrainian counteroffensive is widely considered a failure. Due to the limitations of an unwinnable war, Naryshkin is almost certainly correct that Russia can turn Ukraine into a second Vietnam. – M.S.

THAT’S A WRAP: This does it for today’s edition. Thank you for reading. If you know folks who would also like to receive this email, would you please forward it to them? We appreciate you spreading the word. – M.S.

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