decentralization

Sanctions and Financial Warfare in the 21st Century

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In July of this year, China’s first regiment of S-400 surface-to-air missile (SAM) systems was delivered by Russia and accepted into PLA service. The following month, Russia confirmed that the last 10 Su-35s of an order for 24 would arrive by the end of 2018. The deals were originally signed, respectively, in 2015 and 2014, with S-400 negotiations having started as far back as 2011.

Now, some months later, the United States has decided that sanctions are the appropriate tool to “punish” China for violating other sanctions against Russian entities including Rosboronexport, under the 2017 “Countering America’s Adversaries Through Sanctions Act” (CAATSA). The Chinese CMC’s Equipment Development Department and its chief will be barred from conducting financial transactions in the United States.

Beijing, naturally, has no intention of putting an end to its weapons purchases from Moscow.

But leaving aside the inexplicable timing (and apparent ex post facto application) of such a decision, it would seem foolish on its face. Not only is the interstate arms trade something that the United States – given its position as the world’s largest arms dealer – would seem to want to leave relatively unregulated, but to try and interfere in a commerce arrangement between two Great Powers has historically not ended well for the interloper. Imposing CAATSA-related sanctions also ignores the existing Western arms embargo against China, dating back to the Tiananmen Square massacre, and which Beijing has managed to circumvent for years through various financial mechanisms and yuan-denominated transactions. Sanctions must be a limited tool in order to have effect, and applying them in this way further weakens their utility.

The possible Chinese and/or Russian countermoves are numerous: sanctions of their own against big US (and multinational) defense contractors; pricing their own arms as “loss leaders” to displace US primacy in various markets, particularly Southeast Asia and Eastern Europe; economic punishment of US client regimes (e.g., the UAE, South Korea, Egypt), etc. In fact, the latter can already be seen with China’s immediate critical reaction to the US sale of F-16 fighter equipment to Taiwan. The sale is hardly news—and consists mostly of sustainment material for existing platforms that were previously themselves protested—but the Chinese response represents the first step in an emerging economic counteroffensive; a second front in the ongoing trade wars.

Now, you might ask, might this not just be cutting off the nose to spite the face? After all, if China financially punishes Saudi Arabia or Turkey for buying American weapons, they make it so much less likely that those nations would consider turning to Chinese or Russian imports in the future. But arms sales themselves are more than purely transactional; they are potential tools of statecraft. Look at India’s attempt to “balance” between the United States and Russia: a few P-8Is and F-16s here, a few batteries of S-400s there (the latter, however, requiring a CAATSA waiver, which has so far been promised by the Pentagon but has yet to appear). Rarely does capability alone factor into a major international arms deal; see the long list of US arms deals facilitated by the Defense Security Cooperation Agency for an idea of their importance to Washington. When capabilities are the overriding reason to obtain a system, it can have geopolitical implications of its own – see Turkey’s ongoing acquisition of the S-400 for an example of exceeding the unwritten rules of acquisition.

Not only has a CAATSA waiver failed to materialize for India’s S-400s, but so too is there nothing resembling an exception to reimposed US sanctions on Iran, following the abandonment of JCPOA. This has had the potential of threatening Indian access to and “special privileges” at the Iranian port at Chah Bahar should India seek to replace its imports of Iranian oil (Chah Bahar itself a reaction to China’s development of the Pakistani Port of Gwadar). All is related; nothing in isolation.

But while it might seem, at least to the grinning faces in the Cabinet Room, that CAATSA represents a trump card (so to speak), it is in reality an unimaginative approach without any sort of backup plan. Should sanctions fail, then what? Unfortunately, the US overreliance on sanctions – as well as an insistence on mirroring rather than proportionality – has begun to generate a global financial regime wholly independent of the United States.

Nothing says that sanctions beget sanctions, or that tariffs must be exchanged tit for tat. One needn’t respond with identical measures so long as the response is proportional, unless escalation is the goal. Consider the “side-principle” rule articulated in Unrestricted Warfare:

Other means…supplement, enrich, or even replace military means, so as to achieve objectives which cannot be achieved by military force alone. This has been the most important episode of the side element’s modifying the principal element in relation to war on the basis of a conception of war … The side-principal rule is opposed to all forms of parallel placement, balance, symmetry, being all-encompassing, and smoothness, but, instead, advocates using the sword to cut the side. Only by avoiding frontal collisions, will it be possible for your sword to cut apart things without being damaged. This is the most basic grammar of victory for the ancient article of war [emphasis mine].

For instance, in reference to the ongoing trade war, Dean Baker has done an ample job illustrating that China could do far worse than simply retaliate with their own tariffs: US corporations stand to lose tens if not hundreds billions of dollars of intellectual property if the CCP were to opt out of enforcing copyright law. (Indeed, some version of this has already begun, albeit incidentally, as a thriving Chinese market in imitation/”homage” goods goes unchecked.)

Focusing on the trade war as a binary loses sight of the global picture, and as in so many other realms, the United States is no longer “indispensable” when it comes to international finance, either.

Indeed, on 25 September, the foreign ministers of Russia, China, Germany, France, and the UK (the latter three representing the EU) issued a joint statement committing them to continued adherence to JCPOA, and more importantly, to establishing a “special purpose vehicle,” a separate payments system to allow them to process transactions without touching US financial institutions. The SPV, according to Federica Mogherini, would “allow European companies to trade with Iran in accordance with EU law and could be open to other partners in the world.” Essentially, the SPV is a new means of subverting US sanctions on a multilateral basis, and should it prove successful in allowing the EU (and possibly India) to continue supporting the JCPOA and doing business with Iranian companies, could portend a future of decreasingly effective unilateral sanctions.

The rise of economic sanctions has been well-traced, and in the era of imperial presidencies, have been an easy way for Congress to reinsert itself at least somewhat into foreign policy-making. But the ensuing American way of war – airpower, special operations forces, and sanctions – has not been a productive one. Overreliance on sanctions leading to the development of a US-less financial system would be an own goal, indeed. Coupled with the rise of other shadow economies, like cryptocurrencies, dark pool trading, and alternative international settlement mechanisms (not to mention the already-challenging problem of nested shell corporations and beneficial owners), unilateral sanctions will continue to lose their effectiveness as targets increasingly find ways around them.

As Peter Harrell and Elizabeth Rosenberg argued in Foreign Policy earlier this year, “the reckless use of U.S. sanctions could speed the migration of China, Russia, and other U.S. adversaries away from U.S. markets and currency. The Trump administration needs a major new effort to understand and adapt to potential risks that threaten to reduce the power of U.S. sanctions.” No such effort was undertaken. And the migration has indeed sped up.

US grand strategy in the twenty-first century has been almost entirely counterproductive. Adversaries like Russia and China were likely to pursue alternatives to the US-dominated financial system at some point, but by multilateralizing opposition to that system (and ensuring that even our allies want an alternative) we have made our position more tenuous even sooner. The seeds the foreign policy establishment has planted over the past few decades are starting to fruit, and we will find the taste not at all to our liking.

What’s Scots for “Nuclear Weapons?”

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No Cross of St. Andrew here

This is the year. 2014 will mark the historic referendum in which Scotland, yet again, votes whether or not to secede from the United Kingdom and go it alone. Having read Halting State, Charlie Stross‘ fantastic novel set in the nation of Scotland in 2018, there’s a whole realm of aesthetic and imagination and possibility associated with the prospects of an independent Edinburgh. Others are just as interested: Tyler Cowen makes one of the economic arguments against Scottish independence, and Tom Ricks asks all the questions, But part of my interest lies in more prosaic matters: namely, where do the nukes go?

Scotland’s defense policy would likely align much more closely with those of Norway and Denmark than with its southern neighbor. Between North Sea oil and Arctic issues, Holyrood’s posture and attention would be directed entirely upwards. And of all the realms in which nuclear weapons might not have such great utility (especially not as large submarine-borne countervalue weapons), the Arctic is probably #1. If NATO plays it cool and avoids major engagements, then a single brigade might just cut it. But otherwise that might be wishful thinking.

The Firth of Clyde is of major importance to the Royal Navy. But the shipbuilding contracts there are likely to depart along with UK forces. These could be repurposed by Scotland for new construction to augment its few unarmed fishery protection vessels (this, of course, depends on what Edinburgh is able to successfully wrest away from London). But more importantly, the Clyde is the heart of the British nuclear deterrent.

Right now, the UK’s four Vanguard-class Trident SSBNs are based at HM Naval Base Clyde at Faslane in the Clyde, with additional support coming from RNAD Coulport. And this is no abberration; Scotland has been critical to the UK deterrent from its inception. In 1963, when the Royal Navy was looking into acquiring Polaris from the United States, it drew up a short list of ten candidate sites for basing nuclear submarines. Of the ten, six were in Scotland. But what about the others? Would they play host to an atomic arsenal in the 21st century?

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Visegrad Redux

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This is old news, but worth pointing out anyways. Back in April, the Benelux countries (Belgium, the Netherlands, and Luxembourg) signed a tripartite defense agreement that, among other things, will allow for greater interoperability and joint training between the Belgian and Dutch navies and various paratroop/air mobility units of the two. Luxembourg is, well, involved somehow.

So for those of you keeping score, that makes at least three fairly comprehensive subregional defense compacts within the EU: the Benelux compact, the Anglo-French Entente, and the Visegrad group. The Baltics also have some jointness going on, including a collective military unit. Here’s a little map of the regional groupings:

Subregional Defense Agreements in Europe

But, uh…who’s Germany partnering with? And I’m assuming I’ve missed some other subregional partnerships/alliances – what’s Scandinavia doing? And whether this is a supplement to EU/NATO membership or something more, well, if it weren’t already clear how politically fragmented Europe is, this just reinforces that.

(Via Scott Hielen)

Visegrád

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The four constituent nations of the "Visergrád Four."

Apparently, this alliance exists, and as of May, now includes a military component. I like it. As a bloc in the EU and NATO of otherwise somewhat ignored countries, it allows for a little more interdependence without relying on the “big boys.” The history behind the group, which dates back to 1335(!) is just awesome, and I believe was designed for the sole purpose of fascinating me.

Originally a meeting between the King of Bohemia, the King of Poland, and the King of Hungary and Croatia, the “Visegrád Three” (so-named for the Hungarian castle town in which the meeting was held) was intended to create new routes of commerce, bypassing what was then the center of European commerce, Vienna. Replace “Vienna” with “Berlin and Paris” – and possible even “Moscow” – and one gets a decent idea of what the Visegrád revival is all about. Of course, as post-Communist countries, the Visegrád Four (with the split of Slovakia and the Czech Republic) were concerned with maintaining their own sphere of influence without Russian interference.

As for the Visegrád Battlegroup, it is expected to become fully operational by 2016. It is intended to be a separate force from NATO, though elements will begin exercising with the NATO Ready Response Force. Poland is taking the lead militarily, as befits its size and spending relative to the other members.

Aside from the practical nature of the undertaking, the symbolism of this alliance is not to be underestimated. The four countries involved are all European Union members, but not in the Euro-zone (they are the westernmost non-former Yugoslav countries to not adopt the Euro). They represent a strange hybrid between EU membership and existing outside it, and with the Euro looking shakier every day, actual entrance into the common currency may be an increasingly remote possibility. This would solidify the status of the Visegrád Four as, if not second-class member-states, then at least as junior members in an IGO whose legitimacy is derived from the equal status of its constituent nations.

On its own, the Visegrad Group is not particularly powerful or a threat to European unity, but when seen as part of the larger pattern of sub-regionalization it becomes indicative of a larger trend. Even where formal ties do not exist, developments like the emerging German leadership of the EU or the newly-signed Anglo-French defense treaty point to a Europe losing coherence. And in Eastern Europe these new subregions are gaining prominence and a sort of global autonomy. The customs union between Belarus, Kazakhstan, and Russia that came into being in 2010 harkens back to the collapse of the Soviet Union, when a similar union (with the addition of Ukraine) was seen as a means to preserve much of the structure of the USSR while maintaining the multinational state. That customs union has abolished border controls as of this month, creating another subnational and even subregional entity.

There seems to be growing disenchantment not just with the universal United Nations, but even with the regional variants: the European Union, UNASUR, African Union, SCO, ASEAN, etc. In a world where nations themselves are tending towards autonomy and fragmentation, it should not come as a surprise that some countries would turn to a more specific alternative than the grand regional frameworks that attempt to address an incredible array of problems and cooperative issues.

Also, the conflation of military and economic drivers of an alliance like Visegrád should not be overlooked as a key development. While the two are often treated as completely separate realms – NAFTA certainly does not include a military component, NATO’s economic requirement is that members adhere to capitalism, more or less, and the EU’s EDC unified European military force has been discussed for sixty years without ever coming to fruition. Military power and the economy, however, are inextricable, and it is perhaps for this reason that these microalliances are coming into being. For a group of four, maybe it’s just more manageable that way.

In general, though, keep an eye out for these subregional and some day soon even subnational alliances. The New England Six? The League of Extraordinary PIGS? Flanders? Coming soon to a world map near you.

Encouraging Signs from Britain

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A LibCon unity government poster from the National Coalition Government of 1940-45.

Much as I despise the term ‘statism’, which like ‘socialism’ has been overused into a meaningless oblivion, you’d be hard-pressed to find a more suitable term for the Labour Party’s approach to governing Britain. For better or worse, Labour’s solution to just about every problem that popped up between 1997 and 2010 involved some kind of state intervention.

Most troubling (to my mind) has been the encroachment on civil liberties as evidenced by the dramatic rise in CCTV and the extrajudicial legal system created by various anti-terrorism acts since 9/11. The absence of handgun-bearing police officers has merely softened the gradual, insidious reach of the government. Thankfully, that era may be coming to an end.

The fledgling Liberal Democrat-Conservative coalition government has a number of fundamental disagreements, but one of their shared values is that of civil liberties, and gradually they aim to begin rolling back the state (Guido Fawkes would also like to see the Labour Party crushed for all eternity, but that’s not a preordained outcome). None of the Labour policies have been making us any safer, and it seems like this country is coming around to that conclusion.

Nick Clegg, the Deputy Prime Minister, will shepherd a “Great Repeal” bill through the House of Commons. Under the bill, the National ID Card program will be scrapped. A whole host of other Labour programs are due to be severely curtailed if not outright canceled, including DNA retention, anti-terror laws, databases, and the omnipresent CCTV. Details include:

:: New legislation to restrict the scope of the DNA database, probably reducing the length of time innocent people’s details are held to three years as is the case in Scotland.

:: Changes to ensure members of the public can protest peacefully without fear of being branded a criminal.

:: Overhaul draconian and unpopular counter-terrorism laws to strike a fresh balance between protecting the public and civil liberties.

:: New laws to better regulate the use of CCTV, particularly by local authorities and to ensure internet and email records are only stored when necessary.

It’s a good start.

Jumping to Conclusions

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Well, um, whoops. Not so much the teabagging type, but rather “a Connecticut man, a naturalized United States citizen from Pakistan” named Faisal Shahzad.

So yes, mea culpa. Though the white guy in his 40s remains a ‘person of interest’, clearly he’s not the focus of the investigation, and for that I apologize. But I do think we’re overdue for a reckoning with the enemies of a domestic variety, as all the commentary spouted that subtly sympathizes with them might even serve to legitimize their cause. It certainly increases the likelihood of a right-wing Times Square bomber, though there probably aren’t enough government buildings there to hold their interest for long.

Michael Sheehan has a perfect analysis of this in the New York Times, as well as suggestions on how to stave off ‘lone wolf’ or ‘home grown’ terrorists:

Law enforcement has to focus on preventing sophisticated terrorist organizations from establishing a presence within the United States. The good news is that we know how to do this. The bad news is we aren’t doing it enough. No other American city even attempts to do what New York has accomplished.

[…]

For society as a whole, paying for a handful of detectives at the local level is far more efficient than spending billions inside the Beltway on bloated bureaucracies and large-scale defensive measures that will most likely have little practical effect. And while issues of civil liberties are important, they can be managed with close legal oversight of terrorism investigations.

Attacks won’t come from the center, but from the fringes. You can’t centralize national security, nor can you completely disperse it.

Until then, keep following. And keep following afterward. Remain vigilant.

Urban Jungle Warfare

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An American solider in Sadr City, Iraq, 2008. Photo: Zoriah.

Geoff Manaugh at the ever-fantastic and always impressive BLDGBLOG has a post up about Stephen Graham’s Cities Under Siege: The New Military Urbanism and urban warfare in general.

The city is obviously going to be the defining social construct of the 21st century, but whether that happens in the benevolent, ‘new urbanist’ way that’s all the rage these days seems increasingly unlikely. From Mike Davis’s Planet of Slums:

The cities of the future, rather than being made out of glass and steel as envisioned by earlier generations of urbanists, are instead largely constructed out of crude brick, straw, recycled plastic, cement blocks, and scrap wood. Instead of cities of light soaring toward heaven, much of the twenty-first-century urban world squats in squalor, surrounded by pollution, excrement, and decay.

One is reminded of John Robb’s take on cities and the coming urban warfare, along with his prescription against urban conglomerations. Cities are immensely important nodes in a country’s system, and taking them down is easier, more profitable, and much more effective than as was practiced in the first half of the twentieth century.The will to besiege a city that continued up through the World Wars at Leningrad, Liege, and Namur is no longer there, but that brute force method is no longer needed. And the material rewards – not to mention the political and social effects of urban devastation – are more promising than ever.

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Nodes, Swarms, and the Risk Society

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Christopher Albon takes on John Arquilla and addresses “The Limits of Netwar” in Current Intelligence:

Arquilla is correct: a netwar-enabled military would be powerful. Swarms of small American units could be perfectly suited for dismantling irregular terrorist networks in Afghanistan and elsewhere. However, America will never have a netwar military. Why? One reason: the political cost of casualties.

While a network of small swarming units represents substantial capacity, it also increases the risks to individual units on the battlefield. Operating quasi-independently and at speed, netwar’s small units are vulnerable to being flanked, isolated, and overrun. The network is resilient, but individual nodes are exposed.

Albon also cites the Battle of Wanat – with an American contingent of the same  ‘small unit’ size advocated by Arquilla – as an example of how this particular conception of ‘netwar’ is in fact precisely wrong for waging war in a democracy.

That is what truly determines the US military’s ability to conduct prolonged operations in a given theater: public support. And the easiest way to undermine it is to kill lots of American soldiers, preferably all at one time. This strategy is particularly effective within the node-centric system Arquilla calls for:

The attack left nine U.S. soldiers dead and the outpost was quickly abandoned. If the Taliban’s attack had been successful, the loss of this one node would have had little detrimental effect on an Arquillan network of small units.

Still, the military already seems to be considering the idea, with exercises scheduled for this summer to determine the feasibility of a company-sized Marine landing team. Of course, then logistics become the primary problem (plus the lack of battalion C3I, etc), which in turn leads to more deaths, which of course is the whole point for the enemy.

Leaving aside the issues of media control and information handling (because I still keep the faith), how then could a node-centric strategy utilizing smaller units actually function? Obviously, one key component to coming wars is UAVs and other unmanned weapons platforms. Most of these systems are currently more mobile than needed to be effective in a node-centric system. Automated sentry guns and the like, coupled with appropriate surveillance equipment and on-call air support – manned or unmanned – would be enough to maintain a network of observation posts without risk to American lives.

Then again, perhaps it’s the concept of nodes as they currently stand that needs to be addressed. Obviously not all OPs could be replaced by drones and remote-controlled camera, but presumably some could be. The further goal of the OP; that is, contact and interaction with the native population, could just as easily be accomplished through means other than an isolated post. Albon might overstate the case for maintaining centers of gravity (“There is power in small, networked units, but there is security in massed forces and large fortress bases, both for servicemen and politicians”), but he certainly grasps the risks of not doing so.

Presenting an American war effort to the public, then, is a two-part project. One is to convince them that both the overall and the specific causes are just (why are we in Afghanistan? And why do we maintain a network of isolated observation posts)? Two is to make sure that American casualties are in line with the perceived goal of it. Perhaps nothing more than a good PR strategy is what’s needed, but I think the issues with netwar run a bit deeper.

“The Dropout Economy”

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Great article in TIME by Reihan Salam. It’s short, but provides a pretty good indicator of the future to come, particularly for my generation:

But what if the millions of so-called dropouts are onto something? As conventional high schools and colleges prepare the next generation for jobs that won’t exist, we’re on the cusp of a dropout revolution, one that will spark an era of experimentation in new ways to learn and new ways to live.

It’s important to keep in mind that behavior that seems irrational from a middle-class perspective is perfectly rational in the face of straitened circumstances. People who feel obsolete in today’s information economy will be joined by millions more in the emerging post-information economy, in which routine professional work and even some high-end services will be more cheaply performed overseas or by machines. This doesn’t mean that work will vanish. It does mean, however, that it will take a new and unfamiliar form.

Look at the projections of fiscal doom emanating from the federal government, and consider the possibility that things could prove both worse and better. Worse because the jobless recovery we all expect could be severe enough to starve the New Deal social programs on which we base our life plans. Better because the millennial generation could prove to be more resilient and creative than its predecessors, abandoning old, familiar and broken institutions in favor of new, strange and flourishing ones.

Only thing missing is the increasing incidence of a five-year plan (or even more) to graduate. Spreading out the experience isn’t necessarily a bad idea.

And at least this means we’ll be good at something. The alternative, of course, being to cryogenically freeze ourselves until the economy improves.

More analysis from Shlok Vaidya here and John Robb here.

Mexican Standoff

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Gunmen killed an American consulate worker and her husband in Ciudad Juárez. Their baby was found in the back seat.

News comes that the cartels in Ciudad Juarez have finally started targeting U.S. nationals, murdering three last night. One was a pregnant consulate worker and her husband, the other was the husband of another consulate employee. I’m suprised only that it took so long (and that only now is the violence in Mexico “provoking an angry reaction from the White House”).

If we don’t end the War on Drugs, the impetus and justification for organized crime and narcotics trafficking will only increase, as will the profitability of murder. As the Times reminds us, “more than 2,000 people were killed there last year, giving it one of the highest murder rates in the world.” American students are arriving in Acupulco now for spring break. And for the cartels, the risk-reward benefit right now is too large to ignore.

But violence itself isn’t the only thing to fear here. The cartels and gangs (this particular shooting was blamed on Los Aztecas, who only get more impudent) have effective control over much of northern Mexico. The crippling government weakness is now affecting the very legitimacy of the Mexican state. The catastrophic death toll has:

prompted the government to shift course after three years of its military-led crackdown on drug cartels and acknowledge that it has to involve citizens in the fight and deal with the social breakdown fueling the violence. [emphasis mine]

For now, those efforts will be government-coordinated. But in the future, who’s to say that the citizenry won’t take matters into their own hands, like in the favelas of Rio de Janeiro? Chirol thinks that the future of the border patrol will be a similiar, civilian, militia-style solution, at least on this side of the border. The key, though, is probably fixing that whole ‘social breakdown’ thing. Restore faith, restore legitimacy.

At least the problem is finally back on the radar again.