#usforces

The Wolf who cried “Boy”

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North Korea’s threat to fire a nuclear missile at Guam should the US try anything to jeopardize the hermit kingdom’s nuclear programme is more the domain of an hysteric media for now. He is the wolf crying boy – “I will eat your sheep when I wish, what are you going to do about it?” Of course, no sane government can dismiss his threats. The 33-year old leader has assassinated subjects and relatives who he feared might pose a challenge to him. He taunts his enemies in full knowledge the collateral damage the West may suffer would likely be factor fold higher than he stands to lose. North Korea’s GDP is estimated to be around $12 billion annually. Tokyo’s GDP is estimated to be around $1.5 trillion, 125x larger. Seoul’s GDP is around $780 billion (65x North Korea) but is located in shelling distance. From a purely militaristic standpoint, North Korea doesn’t stand a chance. The US has spy satellites parked permanently over North Korea surveilling troop movements, missile test sites and US submarines will have constant watch over Pyongyang’s naval activity. Mutually Assured Destruction (MAD) is not a bargaining chip in this case. While it does raise the ‘risk’ factor, it is not enough to exclude war on the peninsula.

The problem is that all the while no action is taken, PyongYang’s arsenal grows more sophisticated. Kim has no plans to halt his development. In 1994 then President Bill Clinton came closest to taking action against its nuclear capability but in the end chose diplomacy. We are 23 years on and the capabilities are such that this game has increasingly limited life span. Trump made his thoughts clear in a 1995 interview. Try to talk him out and if all else fails take the military option

The more advanced his arsenal becomes, the more weight his demands carry. Kim is in his 30s. Assuming the West does nothing, there is another three decades of threats and bellicose to consider. Over time its weapons programme will be sufficiently credible to hit Washington DC. Just like Russian missiles in Cuba, America will not allow a condition which could threaten it to exist.

North Korea has 3 main nuclear missile launch sites (Musudan-Ri,  Punggye-Ri and Tongchang-Ri) among the fourteen nuclear facilities ranging from R&D, power generation,  mining and refined fissile material production. A surgical strike would be difficult to achieve without North Korea getting away a few missiles itself.

Why Guam? Of course one can view his threat in several ways. One, Guam is the current realistic technical capability of his nuclear weapons, two; Kim hasn’t said he’ll strike Washington DC which should be interpreted as evidence that he is not completely deranged and bragging about capabilities he does not yet have, three; he could theoretically bomb the US military installations in Okinawa which is closer than Guam and more likely to score a relative hit but he has been careful not to drag Japan into this contest (yet) and finally; his nuclear programme is his only bargaining chip. Were Kim to cease his atomic aspirations, he would literally be a sitting duck. He knows – as did his father and grandfather before him – the regime survives on the will of the Rest of the World to appease it. If he has no trump card, the RoW can ignore it.

On April 10th this year, China’s special envoy on the North Korean nuclear programme, Wu Dawei, visited Seoul with the idea of pushing a harder UN resolution in case of another nuclear test. In the short term China is hoping a short term halt to coal imports will bring Kim Jong-Un to heel they have not ruled out removing him entirely. It is the least preferred option but Trump’s moves will only mean China is being forced to up the ante. However China has been lamenting that it can’t force Kim to come to heel. Once again this is partly China testing the will of Trump versus his predecessor. Do not think for one second that China hasn’t been channeling Sun Tzu as to how it can pull off a geopolitical masterstroke by bringing Kim to heel and the US to back down. This is becoming harder to achieve, even more so with an unpredictable president.

Let us not forget the strategic benefits of North Korea to China. It provides a buffer to the US friendly South Korea and keeps furthering China’s status as a dominant force (economically and militarily) in the region. One of the last things China wants is the equivalent population of Australia (24 million) as refugees on its northern border. Best it remains contained inside a regime presiding over a tiny economy. Even less desirable is a US invasion/strike which puts a US protectorate on China’s doorstep.

Global markets are not reacting too erratically to this crisis. They are collectively taking the path of most common scenario vis-a-vis history to date. Minor risk on. Even Korean CDS spreads, at 14 year highs (61) remain well down on GFC and the death of Kim Jong-Il. However a president who wants to reassert US foreign policy after 8 years of willful abuse under his predecessor may be more than willing to take decisive action and put an end to the North Korean problem. He won’t risk it unless his generals can give a very high level of assurance the collateral damage will be minimal

While some media want to believe that Trump is itching for a war in North Korea or Iran to resurrect his sliding poll numbers, that is an obtuse way of thinking. North Korea is a growing threat. Pure and simple. If North Korea gets a capability to potentially hit the US mainland then that is untenable. Any country that threatens to attack another puts itself on a geopolitical chess board of its own making. This is dragging China into a game it would rather not play but inevitably Beijing realizes that it has to take control before Trump takes it from them leaving them in the worst of all worlds.

Cooler heads to prevail? Maybe but something suggests that North Korea is brewing beyond what markets are currently pricing.

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What did people expect? Understanding Middle Eastern politics

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One would have to be as isolated as a Japanese Imperial Army soldier discovered 40 years after the war ended to be surprised at Trump’s strike on Syria after a gassing. Do people honestly think drawing criticism from Iran or Russia is some mysterious happening? This is sadly the result of 8 years of impotent foreign policy which made America a laughing stock to despots. From Michelle Obama hashtagging Boko Haram on Twitter to release kidnapped school girls to allowing China to build man made islands in disputed territories.

Blowing up infrastructure in another sovereign nation is always going to create its own set of problems and questions. However the response from bully nations who have been used to running the school yard in recent times are naturally going to feel precious when given a taste of their own medicine.

As mentioned in the previous dispatch, geopolitical jigsaws aren’t first derivative. They’re usually 2nd,3rd and 4th interconnections.

Iran has long used Syria as a ‘highway’ into Lebanon to maintain influence in the region. Russia has only been too glad to be its arms supplier of choice. The Iranian Revolutionary Guard has been present in Syria for decades and ever since the Arab Spring has been making sure Assad keeps the highway open to Lebanon. Does it surprise you that Iran has been active in Yemen with the Houthi tribe to overthrow the Saudi loyal government in Sana’a and create instability in Riyadh?

When the US pulled out of Iraq in 2011 they left a huge power vacuum which was filled with pro-Iranian elements. Then Shi’ite Iraqi Prime Minister Nouri Al-Maliki had worked with the US to clean out pro-Sunni Saddam- loyalists and when Obama withdrew al-Maliki sold them out. He then accused the US of backing ISIS to reestablish a military presence in Iraq in 2014.

For Russia, Syria gives it a naval port and access to geopolitical weapons to exploit against the West. If the US puts missile defenses in Poland or the Czech Republic, Putin can flare up a crisis in the Middle East.

Saudi Arabia values Israel. Not on any religious grounds but as a buffer against Iran.  Far better to have a strong power act on their behalf than risk direct confrontation. It makes sense. Iran use Syria and Hizbollah to supply Palestine with rockets to nip at the heels of Israel and make them look like oppressors. That brings worldwide condemnation and led the likes of Obama to abstain from a vote to undermine a loyal ally.

So people need to separate fact from fiction. Trump is keen on reestablishing American dominance on the world stage. Foreign policy is never a pleasant or easy business when dealing with nations who have long histories and longer memories. The missile strikes in Syria were multi faceted. On one hand to counter chemical attacks. On the other to put Russia back in its box showing a new kid is on the block and Putin will gain far more being inside the tent pissing out than on the outside pissing in.

Of course the foreign ministries are sending strong messages of anger, condemnation and a halt to cooperation. That is page 1 section 1 of the manual. Cooler heads prevail and countries move to working out how to turn an ugly situation that allows Russia to keep skin in the game, the US to look tough again and the overthrow of Assad (he can live in Zimbabwe) without leaving a huge vacuum. In case you were wondering most of the pro-Iranian Syrian  Army top brass are Sunni. To them the luxuries they are afforded as elites outweighs their religious preference.

Markets will react. The mainstream media will dig up conspiracy theories and predict we’re on the brink of war but this is Trumps’s first message to the world – That guy you had for the last 8 years is no longer around. Things are different under new management.

Trump is unpredictable and whether we like it or not that actually makes the best leader to tackle such crises. One always has to second guess the real intentions of someone who can change on a whim.

Don’t believe the hype.

Any idea how much military medical spending has grown?

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The news is out that President Trump is looking to spend $54bn more on defence On a $600bn odd military budget (China c. $250bn). I’m sure the press will be moaning about how this is about being bent on waging new wars. Looking at the most recent Quadrennial Defence Review (2014) medical related spending for the military has jumped from $19bn in 2001 to $49bn in 2014. The sad thing is most people do not understand defence budgets. Let’s start with some fast facts in no particular order in the US.

-The US defence budget has been slashed from over 4.2%~4.7% of GDP under previous administrations over the last 30 years to around 3.5%~3.7% under Obama. Trump’s plan would aim to get it back in the 4% range, nothing out of line with predecessors.

-80% of the defence budget is spent on wages, housing, education and maintenance of the war machines. The remaining 20% is spent on RDT&E (reseearch, development, testing and evaluation) and procurement.

-If a budget is cut and you want to maintain force numbers you can’t procure as much. Simple maths. If you cut force size you risk reducing it to levels that may impact capability.

-War is bad for defence budgets. Transporting 100,000 troops, feeding, housing, providing medical care, maintaining hardware on the ground takes huge wedges out of what can be left to “procure” new equipment. Bullets, bombs and missiles aren’t replaced 1 for 1. They have stockpiles which are calculated on likely usage projections.

-the US Navy is larger than the next 11 navies combined despite a surface fleet 1/20th of what it was 70 years ago and the smallest number for a century.

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-The US Forces are the single biggest consumer of oil period. Retiring the USS Kitty Hawk saved 2% of the gross fuel budget.

-War today is more about capability than raw numbers of equipment. Cyber warfare can switch off an enemy’s basic utilities and crush a country without dropping ordinance. Fighters that can see you before you can see them have the advantage but that costs a fortune to stay at the head of the pack. A US tank battalion in the first Iraq War took out 250 Iraqi tanks from a hidden position because satellite imagery pinpointed where they needed to fire. US losses were zero.

-To date most wars have been conventional. Now they are asymmetrical. Fighting terrorism does not require ballistic missile submarines (SSBNs). It needs agile fast reaction capability (i.e. V-22 Osprey) which can land a special unit in an inaccessible hot zone. However defence forces have to target what engagements they will face and what is required to defeat it. That requires a radical overhaul of defence forces – in equipment, development and training. Development can take 10-15 years to meet threats that may or may not exist in 25 years often with technology that doesn’t yet exist.

Just ask the Quadrennial Defence Review 2014‘s General Mark E. Dempsey:

“My greatest concern is that we will not innovate quickly enough or deeply enough to be
prepared for the future, for the world we will face 2 decades from now. I urge Congress—
again—to move quickly to implement difficult decisions and to remove limitations on our
ability to make hard choices within the Department of Defense. The changes required for
institutional reform are unpleasant and unpopular, but we need our elected leaders to work with  us to reduce excess infrastructure, slow the growth in military pay and compensation, and retire  equipment that we do not need. Savings from these and other reforms will help us modernize,  will add to research and development investments, and will provide needed funds to recover  readiness. The lack of will to do what is necessary may drain us of the will to pursue the more  far-reaching ideas promised in the QDR.

The true risk is that we will fail to achieve the far-reaching changes to our force, our plans, our  posture, our objectives, and our concepts of warfare. I believe that dramatic changes will be  needed in all of these by 2025. Some of these changes are well-known and outlined in the  QDR. Some of these changes are only dimly perceived today and need encouragement and  direction. Innovation is the military imperative and the leadership opportunity of this  generation. It’s a fleeting opportunity.

When we commit America’s sons and daughters into combat, we must ensure that they are the  best-trained, best-equipped, and best-led fighting force on the planet. That takes time, it takes  money, and it is perishable.”

Make no mistake. The increase in spending would have occurred under any GOP president. The sad thing is that because of the budget cuts, the military forces have relied more on operational leases from the defence contractors. In order to have a military capability the defence arms have had to “borrow” because the budget cuts have been too deep. So there we have it – not only is the private and public sector debt at record levels, we now have the military filling in credit forms…