#usforces

NATO – 19 nations may hit 2% promise 18 years after committing to do so

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It is a farce. In 2006, NATO Defence Ministers agreed to commit a minimum of 2% of their Gross Domestic Product (GDP) to defence spending. This guideline, according to NATO,  “principally serves as an indicator of a country’s political will to contribute to the Alliance’s common defence efforts.” In 2017, only 5 of the 28 members outside the US have met the 2% threshold – Greece, Estonia, UK, Romania & Poland in that order. Despite Greece’s economic problems elsewhere, it manages to honour the deal. NATO Secretary General Jens Stoltenberg said “the majority [not all] of allies now have plans to do so by 2024.” 3 more are expected to hit the target in 2018. So for all the good will in the world, is POTUS wrong to call the other 19 members slackers that ride off the US taxpayer when so many of them are only likely to hit the target 18 years after ‘committing’ to it?

NATO commitment in 2017 can be seen as follows.

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Although all credit to the Europeans and Canadians for getting away with it for so long. Previous US presidents have obviously not concerned themselves with getting a fair deal on mutually agreed commitments. Although in what world would American taxpayers be upset to see the rest of the team pick up the slack?

Naturally the media are getting mileage out of the insensitive bully attacking his supposed allies. In fact Stoltenberg said last month on record that, “burden sharing will be a key theme of our summit next month, and I expect all allies to continue their efforts.” He reiterated that to Trump yesterday.

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To be brutally honest, how effective can a NATO force truly be if words aren’t put into action? What good is a promise if it is to be honored 18 years later. Imagine if that is the mindset should NATO be forced to act militarily. Would those meeting their obligations feel within their rights to have a bigger say in how NATO should work?

The problem with such a lack of commitment is that over the 12 years where 23 nations have not come close to meeting their obligations, the sum total of the actual defence capabilities suffers for the duration. The US is 67% of total NATO spend and the UK, France  & Germany make up half of the remainder. Yet building a sustainable capability in defence does not come through half measures or poorly thought out procurement. What is missed on many is that over 70% of defence budgets are allocated to soldier pay, housing, healthcare, training and so forth. Procurement and RDT&E get funded out of the balance. Have a skirmish somewhere and yet more money is chewed out of buying new equipment for the sake of logistics (feeding 10,000 troops and servicing hardware in a foreign land). Then there is the subject of terribly managed procurement programs.

Take the French disaster that is the aircraft carrier Charles De Gaulle. Despite delays because of problems with a retrofit for radiation shields, the naval brass had to add 14 feet of deck because it realized that the E2-C Hawkeye surveillance planes it purchased couldn’t take off and land in its original build spec. Even now the flight deck is not long enough to conduct simultaneous launch and recovery operations. Even worse the blueprints for the CdG‘s propellers had been lost in a fire, which meant that the ship had to be refitted with hand-me down screws from carriers Foch and Clemenceau which meant her speed was cut from 27 knots to about 24 knots—which was unfortunate since her predecessors steamed at 32 knots. Speed to war zones is kind of important to gain a decisive edge. All of the spend to fix poorly thought out designs cuts from being able to procure other equipment and materiel. Scary to think Australia is buying 12 subs from the French! The problems are already revealing themselves despite not one boat having hit the dry dock.

History tells us many things of how NATO type organisations have failed in the past.The Peloponnesian Wars (431BC – 404BC) highlighted how things can change when allies do not keep up commitments and capabilities aren’t maintained.

Athens required her Delian League member states (consisting of city states mainly along the Ionian Sea) to pay tributes (phoros) to the treasury which was used to build and maintain the naval fleet led by Athens. Yet over time the member states relied too much on the wealth of Athens and over the course of the draining war and the costly campaign to Sicily, failed to honour the ever increasing demands to fund the league with the appropriate level of tributes which drove Athens into massive debt. Defence spending by the Athenians had been cut to around 30-60% of the average over the previous decade. The Delian League’s capabilities dwindled as a result and the Spartans, funded by Persia, took advantage of this and crushed it for good, in the very art of war that Athens was renowned for – the navy.

It is not hard to think of Trump feeling like a modern day Pericles. NATO is the Delian League and its projected enemies chip away all the while members dither over commitments, forcing the US to sustain the limited capability. Like the Athenians, the US has the most powerful navy in the world with a fleet bigger than the next 11 countries combined but even it has pared back the number of ships to less than 10% of what it had in WW2. Enhanced capability is one factor in cutting the surface fleet but even the US DoD realised that the conventionally powered US Kitty Hawk consumed 2% of the entire US military fuel bill annually so it was taken out of service to save money.

One can argue the $750 billion annual defence budget is plentiful but the US realises that power projection is an expensive business. Even Japan understands it can’t stay nestled in the bosom of US stationed forces forever without taking a proactive stance to defend itself. That is the same message to the 19 members NATO failing to pull their weight.

Who will get the Nobel Peace Prize for helping end the Korean War – Kim, Moon & Xi or Trump?

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Will President Donald Trump be awarded the Nobel Peace Prize for getting Kim & Moon to the peace table? It is unlikely in so far as the Norwegian Nobel Committee would fear the full weight of international opinion (aka mainstream media) for doing so. Surely they wouldn’t risk making a mockery of such a coveted award? Then again a one Barack Obama was handed one less than 9 months into his first term on the stated basis of a noble quest for the Holy Grail of world peace rather than anything actually achieved. In 2016 alone, the Obama administration dropped 26,171 bombs on enemies. Not bad for a serial appeaser. A Nobel prize has even been awarded to a multi billion dollar embezzling terrorist of a self appointed authority, so Kim Jong-un is in with a shot.

Will Trump receive any credit (even without a Nobel) for pushing ‘Rocketman/The Fat Kid’ to the negotiating table? Probably not. How come no other administrations were able to achieve something that was relatively easier when the state of the North’s arsenal was considerably less lethal? Kim threatened Guam less than half a year ago. Trump didn’t back down and the North Korean dictator clearly realized from Twitter that the most powerful man in the world wasn’t all bluster. President Xi may well have played a solid hand in pushing Kim to sue for peace negotiations. In the interests of President-for-life Xi, his foe Trump has a maximum 7 years left to meddle. If Korea gets a peace deal, Xi can play hardball on the peninsula if a softer President enters the White House thereafter. Then he can take a stab at Taiwan. Xi can afford to wait.

We should not forget that Kim Jong-Un travelled to China on his first ‘overseas’ visit earlier this year. Best get the approval of a real dictator before progressing. Kim was there to get Beijing’s blessing to ensure North Korean sovereignty come what may so as to maintain the desired geographical buffer to pro-US nations.

Noone said peace isn’t desirable. The question is what price must one pay to get it? There are too many incidents in the past where signing peace treaties with dictatorial regimes have ended in disaster. Hitler/Chamberlain (Munich Agreement), Hitler/Stalin (Pact of Steel), Putin/Merkel/Macron (suggestion of UN in Ukraine), Le Duc Tho/Kissinger (Paris Peace Accords over Vietnam), Xerxes II/Leonidas (Greece) etc.

Will part of the denuclearization ‘deal’ call upon a withdrawal of US Forces from the Korean Peninsula? Would the US go for that? Highly unlikely. Would Moon be so gullible as to suggest a (slow) withdrawal? Of course he has the right to demand a foreign garrison pack up and go home. Trump may have pushed China and NK to act but he’d prefer the status quo than to roll over and vacate the premises. China wins in either scenario. America certainly doesn’t want to pay for the same real estate twice. Some quarters in South Korea must surely want the US military to stay as an insurance policy. Afterall how can one trust someone who comes from a dynasty that kills its own people and assassinates family members? Worryingly Moon looks to have a certain ring of Chamberlain about him.

It was clear that North Korea was dictating the moves at the Winter Olympics. It was South Korea who funded the $3mn in travel costs for the cheer squad. Anything that looked to mock the North Koreans was swiftly dealt with. It spoke volumes about which Korea was calling the shots. Anyone impersonating any other world leader could do so with reckless aplomb. Anything resembling Kim Jong-un  was quickly removed from sight. Tyrannies rarely do humour and sadly not enough democracies defend it. Still it is hardly an encouraging sign for even handed peace talks when one side looks to appease in this way.

Kim Jong-un is smart enough to realize at such a youthful stage in his life that he probably has another 40-50 years left in him. Reunification only works if he is given sanctuary. Idi Amin saw the beauty of a life in exile in Saudi Arabia. If Kim Jong-un can relax in Sichuan Province it maybe a dignified way out. One can bet his ‘some are more equal than others’ inner sanctum would rather the two stay separated. They would stand to lose way more than Kim.  It would be ridiculous to assume that Kim could be a major cog driving a reunification process with such an abysmal human rights record. Name a despot who would willing cede authoritarian rule much less without a deal which would exonerate him from any international criminal court that he would be held accountable for under a functioning democracy?

The South Koreans have had a think tank in Berlin researching the effect of reunification in Germany. The former West is still heavily subsidizing the former East. Depopulation (-15% between 1989 & 2013), unemployment rates (higher today that 1989) and inferior GDP per capita (27% less) are all a feature of the former communist state vs the federal republic over the last three decades.

How easily could South Korea absorb the North? West Germany had a population of 63mn in 1989 vs 16mn in East Germany or 4:1. South Korea has 53mn vs North Korea’s 24mn or 2:1. West Germany had a 2.3x GDP/capita ratio to the East in 1989. South Korea has a 52x GDP/capita ratio to the North. Reunification for Korea isn’t an apples to apples comparison with Germany. While Samsung might relish the prospects of tapping a cheap labour pool to build washing machines, the South would likely face far higher integration costs than the Germans. Even 30 years ago East Germany had a GDP/capita 17x that of North Korea.

In any event the only sure outcome of peace on the Korea Peninsula is that President Trump will get next to zero credit in the media. Wailing about the reckless diplomacy of an unhinged dictator will be the main with a few conceding it was at best a fluke.

Highways to Hell. Railways to Ruin

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Zero Hedge has an interesting expose on a report that China is expediting the construction of a 6 lane highway toward North Korea’s border. It makes perfect sense and supports what CM has said about China taking action on North Korea and replacing Kim Jong Un with a puppet they can control. Forget the WW3 rhetoric. It is far cleaner to have China deal with the problem. The constant jaw-boning from Trump is to get China to hurry up. Of course there is a limit to the patience. The so-called G1112 Ji’an–Shuangliao Expressway is under construction. China’s Jilin province has even upgraded road infrastructure inside some parts of North Korea. It would be useful in getting tanks and troops to the border quickly. There is method in the madness and it is quite a common infrastructure to put in place for obvious reasons. North Korea is hugely strategic to China’s border security – a buffer from the US backed South Koreans.

Probably many are unaware that Mongolia which divides China and Russia has a railway developed by the Russians which runs on a Russian rail gauge. Mongolia is rich with resources so any raw materials exported to China must change bogeys at the border. It is the same with the Kazakh-China border. Russian rail gauges. So in the event of war, troops and supplies can be efficiently transported. Sure an enemy can bomb a railway but in terms of transporting lots of equipment and heavy armaments quickly rail is very efficient.

While the news looks startling it is nothing more than business as usual for the Chinese. Before the highway is completed the Chinese still have around 150,000 troops stationed near the border.

Kim sends more firecrackers across Japan that could hit Guam

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This cannot continue. Another missile fired across Japan’s shores. This missile flying 3,700km. Guam is technically in range by that measure. As I said on The Bolt Report, Kim’s technology will get to a point where he can become a serious threat. Taking out the threat before it gets even more capable is the only credible option. Even more biting UN sanctions haven’t stopped his quest to launch more missiles in utter defiance. My key thought is that China will be coerced into forcing regime change. It cannot afford to lose the strategic buffer North Korea provides but it can even less afford US military action on its back door. Unilateral action by China will not be frowned on by the majority of the rest of the world if Kim Jong Un is neutered.

Some discussions have also questioned whether he lobs missiles over Tokyo airspace. The danger here is a failure through dense commercial air traffic lanes. In any event the world community can’t sit by and let this oppressive regime continue a weapons program to use for extortion. Trump was on a morning breakfast program yesterday discussing North Korea where he effectively said for “China to start taking action”.

As I wrote last week, Japan’s entire Aegis destroyer fleet from Maizuru is at sea. They carry the SM-3 anti-ballistic missile system. Japan cannot take North Korea’s actions as anything other than the gravest threat to national security.

This crisis has to have an ending. It can only be Kim Jong Un’s. Watch China’s movements closely from here. They’re reaching breaking point on strategy.

Forget North Korea. Japan is more worried about China & Russia

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What many are probably unaware of is the changing nature of Japan’s threats in the region and how it isn’t just North Korea. Russia and China have aggressively stepped up their activity in aand around Japan’s territorial waters. In June last year I noted the sharp jump in aircraft and naval activity here.

If you refer to the Japanese Self Defence Force (SDF) White Papers it is clear that the current softly softly approach is completely incompatible with its defence needs. Unbeknownst to many Japan converted its SDF from an agency reporting to the PM to a full blown ministry which can apply for its own funding.

Japan is quickly developing its SDF to be ‘dynamic’ as opposed to ‘passive’. It’s security issues demand it. The latest SDF White Paper can be found here.

 

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.