networks

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.

Intelligence Collection and Systems Thinking

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Methods of intelligence collection

Methods of intelligence collection

Not performing enough human intelligence collection is a standard refrain these days. As the saying goes, “we’ve traded spies for satellites.” A golden age of honeypots and tradecraft and dead drops had been left behind at the dawn of the digital age. This is, purportedly, in keeping with the military establishment’s general overreliance on technology, stretching back to Rumsfeldian “transformation,” the ill-fated “revolution in military affairs” (RMA), and earlier. Conventional wisdom has it that this shift in emphasis was proven correct in the 1991 Gulf War, but it could also be argued that this was the war that the US military—especially the “armor guys”—had been itching to fight since the partition of Germany. Rather than the harbinger of a new era, the Gulf War was instead the last gasp of the Cold War.

But what does this have to do with human intelligence?

Contrary to the emphasis placed on the “spy games” aspect of Cold War diplomacy, intrigue, and espionage, the period between 1936 and 1989 saw a vast increase in technical methods of intelligence and relative devaluing of  human collection (analysis, as always, has remained a predominantly human province). Some of these technical methods and their operators became lore unto themselves—Francis Gary Powers in his U-2 (imagery intelligence, or IMINT) and the codebreakers at Bletchley Park (signals intelligence, or SIGINT) come to mind—but most operated in a behind-the-scenes way. And they certainly continue to do to this day, recent disclosures notwithstanding.

The intelligence community has additionally seen a change in the way it structures its collection and analysis missions. During much of the Cold War, capabilities were duplicated throughout different agencies. Thus, in addition to the Defense Mapping Agency that preceded the National Imagery and Mapping Agency and today’s National Geospatial-Intelligence Agency (NGA), the Central Intelligence Agency (CIA) had its own IMINT people in the form of the National Photographic Interpretation Center, the National Reconnaissance Office did its own thing with satellites, and so forth. While all of these organizations persist in one form or another, their functions have been streamlined, such that we have most IMINT running through NGA, much of the SIGINT community operating at the National Security Agency (NSA), et cetera. Gaps do exists, as do split missions, and the joint responsibility of the Defense Intelligence Agency (DIA) and CIA for HUMINT is one such example. But in general, we now have standardized methods and practices of intelligence gathering, processing, exploitation, collection, and analysis. The very concept of “all-source intelligence” during the Cold War would have been unthinkable—and still seems a novelty to many analysts in the intelligence community—because it would have meant someone was driving in your lane, and that would be unacceptable. Fortunately, this is no longer the case.

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Resilience Through Incompetence

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The electric grid of the United States.

 

Overall, it’s hard to tell whether this story comes as a relief or not. Short version: the illogicality and inconsistency with which the national power grid has built – that is to say, there isn’t a national grid – means that we are in fact more immune from a Robbian-style global guerrillas attack. The grid is too shitty to be vulnerable.

Which is good for our security short-term, but bad for long-term nationwide electricity. The real question is how do you duplicate the success of of an unplanned system? How do you engineer unpredictability? Answering that will be one of the major challenges of the 21st century.

Via io9.

Freedom™: A Review

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This author, with Suarez' duology at a London pub, May 2010.

After cruising through Daemon in about 2 days, Freedom™ was even quicker: I blew through it in about 24 hours (back in May). That’s no knock against it, though; rather, I just couldn’t put it down at all.

This review will be brief, even though it’s taken me almost three months to get around to finishing it. Basically, if Daemon was the end of the beginning, Freedom™ is the beginning of the end. Or at least of the next step. It lays out the climactic struggle much more succinctly, a titanic clash between people and business, corporate and individual. I found this particular passage most instructive:

You, sir, are walking on a privately owned Main Street—permission to trespass revocable at will. Read the plaque on the ground at the entrance if you don’t believe me. These people aren’t citizens of anything, Sergeant. America is just another brand purchased for its goodwill value. For that excellent fucking logo … No conspiracy necessary. It’s a process that’s been happening for thousands of years. Wealth aggregates and becomes political power. Simple as that. ‘Corporation’ is just the most recent name for it. In the Middle Ages it was the Catholic Church. They had a great logo, too. You might have seen it, and they had more branches than Starbucks. Go back before that, and it was Imperial Rome. It’s a natural process as old as humanity.

Of course, overreach leads to retreat and retrenchment, et cetera, et cetera. Even if the message seems a little obvious (and by no means subtly presented), it’s an important one, and it’s framed in an interesting new way. It’s that presentation that makes this not only legible, but well worth your time, if not just to see what the traditional cries of anticonsumerism and Adbusters-type activism look like in the digital age.

John Robb’s ‘holons‘ take some big strides here too; Suarez has done an excellent job of envisioning the resilient community concept, and doing so in a way that makes them seem not only possible, but inevitable. A blueprint for the future? Not necessarily. But at the least, a realistic portrayal of the kind of decentralized communities that we’ll hopefully be migrating to in the future. Thanks to Daniel Suarez, they’re more than just a concept.

So read Daemon and then read Freedom™. Seriously, you won’t be disappointed. And even if you are, ignore the prose and focus on the message – it’s one we sorely need to listen to right now.

Buy Freedom™ at Amazon.com.

Daemon: A Review

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After hearing praise from my various luminaries like John Robb, Shlok Vaidya, and zenpundit, there’s no way I could not read Daniel Suarez’s Daemon. The tagline reads “Michael Crichton for the information age,” and in virtually all aspects the book lives up to such a lofty claim.

It’s hard to really explain the book (I found myself attempting to do just that to a drunk South African, and coming up short), but as simply as I can: super-brilliant computer genius who’s responsible for two of the best-selling MMORPGs of all time dies. He’s left embedded in the internet a program – the titular DAEMON, or Disk And Execution MONitor – that can respond and react to news items (such as said genius’ death, or the abortive raid on his house). Using the interconnectedness of the global economy, the daemon insinuates itself into daily life, capitalism comes up against the resilient community, etc, etc.

Anyways, if it sounds pretty far-fetched…it will certainly seem so at times. The prose is nothing particularly elegant or lofty, but that’s not why you read a book like this. The concepts, technologies, and overall contours of the plot are entirely engaging, and this is really a ‘page-turner’ in the tradition of Clancy or Crichton, though with a clear contemporary bent. While the story may come across as somewhat apocalyptic, that’s sort of the point – and at this point within the realm of comprehension.

In case the technology and concepts of Daemon are a little too mindblowing for the reader, Suarez has handily thought to include a quick rundown of recommended further reading, including John Perkins’ Confessions of an Economic Hit Man, P.W. Singer’s Corporate Warriors, and the ubiquitous Jared Diamond’s Collapse. For the more dedicated skeptic, there’s even a compendium of links at the book’s website directing the reader towards further information on the technologies depicted in Daemon. You can even subscribe to “The Daemon Technology RSS Feed,” which is updated infrequently but with an excellent selection of recent technology links.

In addition to being a great read – it’s always nice to take a break from the really dense stuff and read some fiction – Daemon can also help to understand a lot of the terms being thrown around in the 4GW and milblogosphere, especially in a global economic sense. System vulnerability, swarming and nodes, a global elite class, and 3D printer personal manufacturing all hold a prominent place in Daemon‘s world. Its sequel, Freedom™, deals far more heavily with themes of resilient communities and a new system, but that review will wait for another day. In the meantime, read Daemon right now.

Buy Daemon, by Daniel Suarez, at Amazon.

An Unpronounceable Volcano as Black Swan?

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Taken 10 km east of Hvolsvollur Iceland on April 18th, 2010. Lightning flashes and glowing lava illuminate parts of Eyjafjallajokull's massive ash plume in this 30-second exposure.

Way back in 2004, John Robb wrote a piece on scale-free networks:

Scale-free networks are everywhere. The can be seen in airline traffic routes, connections between actors in Hollywood, weblog links, sexual relationships, and terrorist networks. So what exactly is a scale-free network? A scale-free network is one that obeys a power law distribution in the number of connections between nodes on the network [emphasis mine].

Obviously, considering the plight of the airlines right now in the midst of an apocalyptic (yet curiously invisible) ash cloud is particularly fascinating to do in the context of Robb’s networks. In characterizing the nature of scale-free ones, he comes up with a positive and a negative:

  • Scale-free networks are extremely tolerant of random failures. In a random network, a small number of random failures can collapse the network. A scale-free network can absorb random failures up to 80% of its nodes before it collapses. The reason for this is the inhomogeneity of the nodes on the network — failures are much more likely to occur on relatively small nodes.
  • Scale-free networks are extremely vulnerable to intentional attacks on their hubs. Attacks that simultaneously eliminate as few as 5-15% of a scale-free network’s hubs can collapse the network. Simultaneity of an attack on hubs is important. Scale-free networks can heal themselves rapidly if an insufficient number of hubs necessary for a systemic collapse are removed.

Examining the fallout from Eyjafjallajokullin in this light does present an interesting dichotomy. If we consider the entire globe as one big air traffic system, then it definitely is showing resilient capabilities. Flights are diverted around the affected nodes and redistributed to areas unaffected by the ash cloud. It’s as if Europe was a tumor that has been surgically removed from the rest of the airborne world.

Thus, of course most everyone can continue to fly whether or not Europe’s airports are open. The global network is continuing to function.

And in fact, it’s hard to conceptualize European airspace as an isolated network. At this point all air traffic to and from the continent is inextricably bound to the rest of world, and so it’s hard to imagine an inverse scenario in which the rest of the world ceases to fly while Europe muddles on.

However, this picture changes slightly if we consider the voluntary closure of most European airspace as an intentional attack. Robb gives the threshold as 5-15% of a system’s capability. Of the 30 busiest airports in the world in 2009, seven are in Europe, those seven with total passenger traffic of 268 million people a year. If 1.5 billion people travel by plane every year, that’s roughly 18% of world capacity (and that’s before taking into account all the other European airports that didn’t crack the top 30). For the rest of the world, it’s a relatively stable – if infuriating – situation. I suppose the real determining factor is that while the initial closures were shocks to the system, they didn’t begin on a Europe-wide scale, and by the time those in the east started closing, it was no longer a surprise.

Either way, the system is voluntarily taking at least a fifth of itself offline, which gives rise to an interesting third possibility that Robb doesn’t mention: how much of a system can turn itself off before collapse?

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.

Airwaves? What Airwaves?

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Just ahead of Oscar night, word comes that Disney is pulling the ABC channel from Cablevision – affecting about 3 million subscribers in the New York-New Jersey area. ABC is, of course, scheduled to broadcast the Academy Awards tonight.

I’m in no way affected by this, be it living in New York, a Cablevision subscriber, or a religious Oscar aficionado, but this is still pretty outrageous. If you subscribe to cable, you’re now denied access to a theoretically public access channel. ABC may no longer broadcast in analog, but it still does in digital – across frequencies in the public spectrum, which have been leased from the public (and which existing analog broadcasters were able to obtain licenses for without an auction).

Of course, the former obligations that stations using public airwaves were held – such as the “fairness doctrine” – have been allowed to lapse. No one is required to do much of anything anymore, save not broadcasting ‘filth’ and ‘obscenities’. But worse is that millions of people are denied access to a station in the public spectrum over a billion-dollar dispute. I know, I know, theoretically everyone could go out and buy an over-the-air broadcast converter, but how many of those do you think are in stock in the New York metro area?

Nobody at all wins here.

22 Bahman as COIN

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Crossposted at Secure Nation.

So in addition to using their Chinese-made riot trucks and gas attacks on the protesters, the Iranian security forces were able to quell much of the 22 Bahman uprising by simply relying on the weakness of the movement’s organizational structure. Letting the enemy defeat itself; very Art of War. The very lack of hierarchy in the green movement was both a blessing and a curse. From Foreign Policy:

Like many of the green movement activists, Sadeghi’s belief in the protests seems related to their “horizontal organization,” the fact that they were structured without hierarchies. This was supposed to be the great strength of the movement, but it is also an abiding weakness. A horizontal organization can’t clearly delineate different roles to different people according to their strengths; it can’t reward those who participate, or sanction those who hesitate. Facebook enabled many young Iranians to forget these points.

Now obviously the Taliban is not organizing via Facebook, but the principle of decentralization is the same. Avoid having a center of gravity, put together your demonstrations (attacks) at the last possible minute; coordinate, execute, and then melt away into the night. But if the Iranian green movement using the same principles was successfully put down, does this offer us a rubric for approaching insurgencies?

Mir Hossein Mousavi's Facebook page.

The short answer is probably not. The Taliban is not planning its operations through Facebook or tweets. But the reason the Revolutionary Guard so effectively shut down the protests was by blocking access to means of communications; that is to say the internet. No Gmail, no Facebook, no twitter meant that there was no coordination between demonstrators, nor was there a way to quickly spread the word of crackdowns in a particular area. The networks used by the Taliban for communication are more dispersed, making a system-wide shutdown more difficult. Walkie-talkies and satellite phones are the order of the day, and while we can intercept calls, we cannot easily end them. Even if we did, human couriers would merely proliferate further.

Also worth keeping in mind is the psychological element. The pushback given by the Iranian regime was demoralizing and a clear setback for the movement, slowing momentum and further progress. Presumably more than one green movement adherent changed his colors, or at least plans to lay low thanks to the IRG. But when ISAF and the United States attempt to stop the movement (the Taliban), it disperses them without costing the Taliban anything. Most of the Iranian protesters were relatively concentrated – do we need to herd Taliban fighters into a single killing zone? And is the Battle for Marjah a step in that direction?