The Buzz

The New Battleground in the U.S.-Iranian Covert War

The Buzz

The emergence of cybersecurity as a global problem reveals that states are harnessing cyber technologies in the service of their respective national security and foreign policy interests. One question arising from this phenomenon is how the embrace of cyber means and methods might affect strategic and geopolitical competition among rival powers. Will the increasing exploitation of cyber technologies destabilize power politics given the technologies’ unique qualities? Or will these technologies become just another tool rivals use jockeying for international influence?

David Sanger’s story in the New York Times on February 22 about the “growth of cyberwarfare between the U.S. and Iran” provides some food for thought concerning how rival states are using cyber means. The story analyzes an April 2013 NSA document published by The Intercept, courtesy of Edward Snowden, that contained talking points about Iran for then-NSA director Keith B. Alexander.

Sanger emphasizes “the striking acceleration of the use of cyberweapons by the United States and Iran against each other” and the “computer competition between the United States and Iran.” Sanger quotes David Rothkopf as arguing that, in U.S. strategic decision-making, the cost of using cyber weapons is sufficiently low that U.S. officials seem to believe that “we can’t afford not to use them.” That certainly appears to be the attitude with respect to Iran, with the document highlighting NSA’s successful cooperation with Britain’s GCHQ on “multiple high-priority surges” against Iran that allowed NSA to “maximize our target coverage.”

Based on Sanger’s analysis and the NSA document, it looks as if Iranian officials have reached the same conclusion. The document describes Iranian cyberattacks against U.S. financial institutions and Saudi Aramco in retaliation for cyber attacks Iran experienced, including the Stuxnet operation and a cyberattack on its oil industry. The NSA notes Iran’s “clear ability to learn from the capabilities and actions of others” and its “striving for increased effectiveness by adapting its tactics and techniques to circumvent victim mitigation attempts.”

Here, competition is taking place in two contexts. First, the United States and Iran are engaged in cyber-centric competition, with each side playing offense and defense in cyberspace. According to the NSA, Iran developed and used cyber means and methods to retaliate against cyber attacks it suffered. The retaliation involved unsophisticated DDoS attacks in response to Stuxnet, and cyberattacks to destroy data on Saudi Aramco computers “after having been a victim of a similar attack against its own oil industry.” In this cyber-on-cyber context, Iran is increasing its capabilities and demonstrating its willingness to use them.

The second context involves the larger strategic and geopolitical relationship between the United States and Iran. The U.S. government faces multiple challenges with Iran, including—as the NSA document mentions—the negotiations on Iran’s nuclear program and Iran’s efforts to “extend [...] its influence across the Middle East.” Neither of these are specific to, or dependent on, cyber technologies. The NSA document reveals the U.S. government bringing its cyber capabilities to bear on these challenges, including cyber espionage designed to support U.S. negotiators in the nuclear talks and integration of cyber inputs into crisis contingency planning for Iran. In this cyber-in-realpolitik context, the United States applies its cyber capabilities, in parallel with other sources of material power, to advance its overarching strategic and geopolitical interests vis-à-vis Iran.

Sanger characterizes the NSA document as evidence of expanding cyberwarfare between Iran and the United States, which implies that cyber-on-cyber competition between the two has the potential to destabilize the broader strategic and geopolitical relationship. I read the document differently.

In the cyber-on-cyber context, the Iranian actions described in the document are retaliatory and do not appear to involve escalation from the attacks it experienced. In that sense, the Iranian counter-strikes look calibrated to respond in kind, signal commitment and capabilities to compete in this realm, and perhaps deter future attacks. Presently, neither DDoS nor destruction-of-data attacks constitute warfare. The United States has not treated them as such, as evidenced by its labeling of the North Korean cyber attack on Sony, which included the destruction of data, as “cyber vandalism.”

The destabilizing strategic factors for the United States in the NSA document—Iran’s nuclear program and its attempts to spread its influence in the Middle East—do not arise from cyber-on-cyber competition. The strategic nightmare of Iran developing a nuclear weapons capability is what led the United States to deploy its cyber power against Iran in the Stuxnet operation. Even in this cyber-in-realpolitik context, neither the Stuxnet attack nor the escalating “cyberwarfare” has stopped the two countries from continuing to negotiate a possible nuclear deal, which demonstrates how subordinate the cyber elements of this rivalry are in the broader scheme of things. The expansion of Iranian influence in the Middle East also has nothing to do with cyber-on-cyber competition, and this geopolitical problem is not one the United States will manage effectively by focusing on cyber power.

In addition, the U.S. attempt to use a cyber attack to address its strategic concerns about Iran’s nuclear program did little, it appears, to mitigate that threat, but, according to the NSA document, contributed to Iran’s ability to compete more effectively in the cyber-on-cyber context. This boomerang effect suggests that using cyber attacks as leverage for strategic and geopolitical interests might be counterproductive because they have little impact on the balance of influence and advantage but can help the adversary, in the NSA’s words, “learn from the capabilities and actions of others.”

One leaked two-page document does not, of course, tell us everything about how cyber technologies affect power politics now or in the future. Cyber-on-cyber competition might, one day, prove sufficiently disruptive to upset strategic and geopolitical calculations among rivals. But, based on the NSA document in question, that is not what is happening between the United States and Iran.

David P. Fidler is a Visiting Fellow for Cybersecurity at the Council on Foreign Relations and is the James Louis Calamaras Professor of Law and a Senior Fellow at the Center for Applied Cybersecurity Research at Indiana University and an Associate Fellow with the Centre on Global Health Security at Chatham House.

This article originally appeared on CFR's Net Politics blog here.

Image: Flickr/ Chairman of the Joint Chiefs of Staff

TopicsSecurity

Martyrs Wanted: ISIS' Devastating Defector Problem

The Buzz

As the pressure on the Islamic State (ISIS or ISIL) mounts against the backdrop of coalition attacks and a Kurdish offensive in Syria’s Raqqa region, militant recruitment has become a pressing matter for the radical organization, which has lost many fighters in clashes around Iraq and Syria. According to the Syrian Observatory for Human Rights (SOHR), out of 1,800 people killed during the Kobani battles, 70 percent belonged to ISIS. On February 14, 132 fighters died across Syria, including forty-four ISIS militants. Given mounting losses, ISIS expansion has relied on a two-pronged recruitment approach: targeting foreigners looking to join the new caliphate and enlisting members of the local population. While the foreign recruitment strategy appears successful, local recruitment faces growing obstacles in Syria and Iraq.

ISIS has relied on a powerful branding strategy, diffusing violent images on social media, YouTube and Twitter. The organization has released several documentaries boasting its military exploits such as the Flames of War featuring heroic-looking militants and gruesome footage of bombings and executions. This systematic glamorization of violence has allowed the terror group to attract foreign recruits. In January, a new study by International Center for the Study of Radicalization and Political Violence estimated that the number of foreign fighters in Iraq and Syria had reached about 20,000.

ISIS’s local recruitment approach has been described in Idarat al Tawahosh (The Management of Savagery), a book written by Abu Bakr Naji in 2004, which ISIS has adopted. Naji argues that the first step for recruitment is “the creation of organizations to improve the management of the areas under our control.” ISIS applied this technique initially following its surge in June. The groups managed everything from bakeries and banks to schools, courts and mosques in Raqqa. One activist admitted at that the time that the organization had been doing “massive institutional work.”

A second recruitment tool imagined by Naji was the manipulation of tribal antagonism in favor of the organization. ISIS attempted to mobilize Arab crowds ahead of the battle of Tel Hamis in Syria last year using flagrant anti-Kurdish discourse. In accordance with Naji’s recommendation to use money or power as incentives, activists in Raqqa report that ISIS offered cash and sabaya (female slaves) to local tribal leaders to encourage them to swear allegiance.

Indoctrinating local populations and its youth was another cornerstone to Naji’s manifesto. Since its inception, ISIS has imposed religious and military training on children in the Raqqa province. The same activists report that the group uses two training camps—Sharea Ashbal and Maahad Ashbal al-Khilafa—to indoctrinate and train children. According to a Syrian Human Rights Committee report in August, at least eight hundred children under eighteen had been recruited by ISIS. Other reports highlight the more than thirty kids fighting with ISIS in Kobani. An ISIS defector said that militants targeted the young to “[break] down traditional authority structures: the alliance to the family and to the tribe.”

While these strategies succeeded initially, they appear more difficult to maintain in the wake of the continuous coalition, Kurdish and Shia militia attacks on ISIS. The counteroffensives have killed many militants and disrupted the transfer of goods between regions under the organization’s control. Naji’s governance tool appears to be faltering as residents in ISIS-controlled areas increasingly complain of rising food and fuel prices and declining services. The price of staples such as bread has also risen significantly and basic products have become scarce.

ISIS has since resorted to aggressive means for youth recruitment, triggering resentment in some areas. One Iraqi activist notes that the organization often recruits children without the knowledge or approval of their families, leading to a drop in school attendance. A wave of conscription among youth in Mosul, Hawija and Kirkuk in Iraq has in some cases led to kidnappings to coerce families to provide them with fighters (although reports could not be independently confirmed). ISIS militants also arrested forty ex-fighters in the Nusra Front and rebel factions from the village of Abriha and town of al-Sahil and trained them in sharia camps before sending them to battlefronts. Syrian activists said that ISIS also began forcing male members of foreign families that had come to live in the Islamic State, but did not want to fight, to participate in battles.

As a result, ISIS has suffered increased defections in Syria, particularly after the fall of Kobani. Militants have tried to return home or join other groups. ISIS executed one hundred jihadists who attempted to defect. Defections have left the organization possibly facing a shortage of willing martyrs. Other reports point to ISIS police arresting four hundred fighters in Raqqa for not reporting for duty. The same Iraqi activist reported that the organization banned truck drivers from transporting ISIS fighters to limit desertion. In both Raqqa and Mosul, the transit of residents in and out of the city has been closely monitored.

Decreasing human resources may account for ISIS repositioning across areas under its control. ISIS had to transfer in late December eight hundred Chechens, Afghans and Syrians with their families to the city of Tel Affar (50 km west of Mosul), which was the scene of heavy fighting. The number of Islamic State checkpoints and patrols also dwindled in the Syrian border town of al-Bokamel in January, with troops possibly funneled into Iraq.

ISIS relies heavily on the loyalty of both its muhajireen (foreign fighters) base and ansar (local supporters). While the organization’s successes bolstered its appeal among foreign fighters, warlords and tribes, whether in Syria or Iraq, new losses may be starting to chip away at its aura of power. The rate of recruitment has dropped by more than half in February (only fifty-four recruited) compared to January 2015. Compare this figure to June 2014, when nearly six thousand fighters had joined ISIS.

Growing defections, rising tensions and declining local recruitment puts added pressure on ISIS and provides the U.S.-led coalition and the Baghdad government with a window of opportunity to degrade the organization. But in Iraq, other social, political and economic reasons account for local support of ISIS. Naji’s tactic using tribal antagonism to breed organizational loyalty may not have had enough time to sink in, but for many Sunnis—particularly in Iraq—no credible alternative to ISIS has emerged. The Iraqi government will need to take concerted steps to diffuse sectarian tensions and present itself as that alternative. ISIS also benefits from the use of both Syrian and Iraqi territory according to its military needs. The anti-ISIS coalition will need a more comprehensive approach in Syria if it hopes to win the day.

Mona Alami is a Nonresident Fellow with the Atlantic Council’s Rafik Hariri Center currently reporting from Iraq. She is a French-Lebanese journalist and based in Beirut. Follow her on Twitter @monaalami. This piece originally appeared here, on the Atlantic Council’s MENASource blog.

Image: Wikimedia Commons/Magharebia/CC by 2.0

TopicsSecurity

Has ISIS Invaded Afghanistan?

The Buzz

The growing geographic spread of ISIS has lately been part of the news chatter in tabloids and respected papers alike.

We know ISIS has tried to spread its propaganda to Pakistan and Afghanistan since late 2014 and proclaimed its leadership of that region in early January, with members of the Pakistani Taliban claiming loyalty to the group. One of ISIS's Afghan commanders who was in a recruitment video aimed at the region was killed at the end of January, and another was allegedly arrested by the Afghan Taliban.

However, police in Afghanistan's Ghazni province, where ISIS was reported to be fighting, recently denied the group had a presence there.

Nevertheless, many Afghan Government officials, Afghan analysts with links to Government, and some civil society activists I spoke to last year are set on making the case that ISIS is operating in Afghanistan. Their counterparts across the border in Pakistan seem to be less concerned, even if the link between the Pakistani Taliban and ISIS is ostensibly stronger.

Others however, remain skeptical, and the Taliban website has been suspiciously silent on the matter. Australia's Foreign Minister has been cautious about acknowledging an ISIS presence in Afghanistan (possibly because there is about as much evidence for its presence in Australia, considering the Sydney siege and two individuals arrested before they could strike), though the Australian Government continues to warn that ISIS may expand its operations to Afghanistan in the future.

The question is, why should we even bother looking for ISIS in Afghanistan?

Afghanistan is in enough trouble already, and for what it's worth it has had an “Islamic state” for much longer than Syria or Iraq. After all, the Taliban officially goes by name Islamic Emirate, and has thus long laid claim to the “Islamic state” brand. The fact that ISIS called itself the “Islamic State of Iraq and al-Sham” might actually be a nod of acknowledgment from one quasi-state to another that such an ambition is already established in Afghanistan.

Though much has been made of the similarities between ISIS and the Taliban, such as their focus on conquering territory, maintaining an army and governing structure (all trademarks of states), they are not the same.

The Afghan Taliban still draws the majority of its recruits from within Afghanistan's Pashtun tribal structure, though it is known to also collaborate with many other ethnic and terrorist groups such as the Islamic Movement of Uzbekistan. There have been suggestions of Arabic trainers and mentors in Afghanistan, but generally Afghans have not liked them. Sunni Muslims have long been a majority in Afghanistan (no underdog status as in Iraq) and any sectarian problems have been predominantly of an ethnic nature, involving the Shia Hazara minority group.

Rather than looking for ISIS, I worry more about Afghanistan's other problems, which provide ample space to breed more extremist and criminal groups, and should be addressed both by the Afghan Government and the international community.

The Afghan Taliban is losing command and control, and its self-financing structure has seen it morph more into a criminal group than an insurgency. A recent UN report argued that the Taliban was acting more like a 'godfather' than a 'government in waiting', something Gretchen Peterson argued in 2009 when she compared the Taliban to the Sopranos minus the chianti. The Taliban leadership has long denied fragmentation and emphasized its unwavering command and control. On the ground however, the story is different, and many Afghans resent the fact that some fighters no longer practice as their leadership preaches.

There is a lesson here for counter-terrorism as an answer to the problem of ISIS. Much of what the Taliban has become today can be linked to the 'kill and capture' policy of the US military, which not only alienated the local population but also eliminated a lot of older, mid-level commanders with allegiances to the old Taliban leadership and belief system. Forced to continuously refill their ranks, the Taliban fighters and commanders have become younger, many with a rather basic understanding of Islam and Taliban rules (such as the laheya).

Thus, the very counter-terrorism policy designed to defeat the Taliban – which recently was quietly reinstated – has made the group into the different beast we are now dealing with; one that is far less likely to be reconciled into the Afghan Government. This should cause us to pause and consider if similar counter-terrorism approaches elsewhere might not also backfire.

Another way to understand the appeal of groups such as the Taliban, or ISIS, is to recognise what I would call the enabling environment that breeds extremism.

In addition to rising poverty and unemployment in Afghanistan, high dowry prices have forced young men to delay marriage and seek work abroad, or even engage in crime or jihad to afford a wife. This creates frustration, so much so that the Taliban has tried to lower dowry prices in areas they control. ISIS's response to the same problem has been somewhat more 'creative'. Either young women are encouraged to volunteer to marry fighters or ISIS sanctions their rape, enslavement and forced marriage. The importance of this 'sexual conquest' or 'primitive gratification' in ISIS's strategy, and the attraction for many young men struggling to find their place in more modern societies, has been little analysed in trying to understand the group's universal appeal.

In many ways, what ISIS offers is what young marginalized men across the world, including in Afghanistan, seek: adventure, violence, power, sex and a sense of self and community.

If we analyze the appeal of extremists groups from this angle, then the international community needs to adjust its narrative of “all is going well in Afghanistan” and ensure a longer-term development strategy. The Afghan government needs to get serious about its reform agenda and address corruption within its ranks. Not an easy task, which is perhaps why some stick to the seemingly more straightforward promise of counter-terrorism, which in my opinion only fans the fire of groups like ISIS and the Taliban.

This article originally appeared on the Lowy Interpreter.

TopicsSecurity

Al-Shabaab Threatens U.S. Attacks: Should You Be Worried?

The Buzz

Al-Shabaab, the al Qaeda-linked militant group in Somalia, has sympathizers in the United States, but likely does not have the ability to strike targets in the West, despite its recent threat to do so, according to Atlantic Council analyst J. Peter Pham.

“Shabaab has always had a transnational reach, but it has never struck transnationally beyond the region,” Pham, Director of the Atlantic Council’s Africa Center, said in an interview.

“There has also been no evidence of an active sleeper cell, but there has been more than sufficient evidence of sympathizers,” he added.

A small number of Western citizens, including Americans, joined the ranks of al-Shabaab. Shirwa Ahmed, the United States’ first suicide bomber in the modern era, came from the Somali-American community in Minnesota.

Shabaab’s leadership is betting on inciting anyone among a small minority of Shabaab sympathizers in the United States to carry out a terrorist attack, said Pham.

“It would be a feather in their cap coming at a time when militarily they are weak and really the third tier among terrorist groups in Africa behind Boko Haram and the Islamic State in Libya,” he said.

In a video posted online on February 21, al-Shabaab called for attacks on shopping malls in Canada, Britain, and the United States. The video lists the Mall of America in Bloomington, Minnesota, as a target. Minnesota is home to the United States’ largest Somali community.

Homeland Security Secretary Jeh Johnson called on visitors to the Minnesota mall to be “particularly careful.”

Al-Shabaab is trying to “inspire a copy cat event” similar to the attack in Nairobi, and they’re “trying to wreak economic havoc” in the United States by threatening to strike malls, Atlantic Council Chairman Jon M. Huntsman, Jr. said on MSNBC.

Al-Shabaab has rarely carried out major attacks outside Somalia, but in September of 2013 it attacked the Westgate Mall in Nairobi, Kenya, killing more than 60 people and injuring hundreds.

The United States is well prepared to foil such an attack, said Huntsman.

“I don’t think the nation has ever been better prepared… for these kinds of scenarios. We’re a whole lot better than we were before 9/11,” he added.

The State Department designated al-Shabaab a foreign terrorist organization in 2008.

In February of 2012, al-Shabaab leader Ahmed Abdi Godane pledged allegiance to al Qaeda leader Ayman al-Zawahiri. Al-Shabaab also has ties to two al Qaeda affiliates — al Qaeda in the Arabian Peninsula (AQAP) and al-Qaeda in the Islamic Maghreb (AQIM).

Al-Shabaab has suffered significant setbacks in Somalia in 2011 and 2012, including losing control of the strategic port city of Kismayo.

Al-Shabaab is “a good example of being a victim of your own success,” said Pham, referring to the setbacks the group has suffered following natural disasters in areas that were under its control and under pressure from African Union and U.S. military operations.

Pham spoke in an interview with New Atlanticist’s Ashish Kumar Sen. Excerpts below:

Q: Is al-Shabaab transforming from a regional threat to a transnational one?

Pham: Al-Shabaab has changed dramatically in the last several years and is increasingly primarily a terrorist group and less of an insurgency, which it was for a good number of years.

It is a good example of being a victim of your own success. A combination of the famine and drought, Shabaab’s mishandling of those calamities, its overreach in trying to impose an alien ideology on the Somali people, the efforts of the better trained and equipped African Union Mission in Somalia (AMISOM), the marginally increased capacity of the Somali central government, and interventions by Somalia’s neighbors has contributed to the Shabaab being severely degraded as a military force. It has lost a lot of the territory it once held; its conventional forces have either surrendered or defected; and US special operations strikes in Somalia have decimated the senior leadership, including al Shabaab’s extremist emir Ahmed Godane who was killed last September.    

The result of this degradation is that Shabaab’s nationalist factions have largely melted away, but the hardcore jihadist element has remained and now represents the preponderant force. This minority within Shabaab has asserted itself in ongoing terrorist attacks in Somalia and low-intensity attacks in parts of Kenya, especially the northeastern areas.

Shabaab has always had a transnational reach, but it has never struck transnationally beyond the region. There have been US citizens, Canadians, Europeans who have joined Shabaab as fighters, including America’s first suicide bomber who came from the Somali community in the Twin Cities. There have been Americans who have been charged by the US government with material support for Shabaab.

So there has always been a small niche — a minority within the Somali American community — that has responded to Shabaab. They have primarily responded to the fight in Somalia, but Shabaab’s current leadership is betting that somewhere within this minority there might be a person that they could incite to violence. If they succeed in that it certainly would be a major feather in their cap.

It would be a feather in their cap coming at a time when militarily they are weak and really the third tier among terrorist groups in Africa behind Boko Haram and the Islamic State in Libya.

Q: Does al-Shabaab have the ability to attack targets in the U.S.?

Pham: There does not seem to be any evidence of direct command and control. The video seems to be more of incitement and giving specific suggestions. It doesn’t seem to be an order to an existing group, but inciting someone who is sympathetic to do so.

There has also been no evidence of an active sleeper cell, but there has been more than sufficient evidence of sympathizers. There is a niche they are appealing to. While only a few, it only takes, in a situation like this, one of them to act.

Q: What success has al-Shabaab had in recruiting among the Somali-American community?

Pham: It is only a very small minority that has been sympathetic and an even smaller group that has actually done anything. We are talking about several dozen young men who have gone over as fighters.

We’re dealing with a network of active sympathizers in maybe the low hundreds. We’re not dealing with a great number of people. As within any large minority group there will be some people who will be disaffected and they are the problems.

The key to rooting those out is having good relations with the community as a whole so it can become the first line of defense.

Q: Al Qaeda in the Arabian Peninsula (AQAP) was behind the recent terrorist attacks in Paris. What sort of relationship exists between AQAP and al-Shabaab?

Pham: Shabaab and AQAP have had a long-standing history of helping each other when they were down and out. After the Ethiopian intervention in Somalia in 2006 when Shabaab was on its heels it was the al Qaeda-linked militants in Yemen that later became AQAP that provided a lifeline to Shabaab in terms of training and weapons.

Later when Shabaab acquired territorial dominion in Somalia it hosted training camps for militants who later filled the ranks of AQAP.

In 2012, AQAP facilitated Shabaab’s declaration of allegiance to al Qaeda and Ayman al-Zawahiri.

AQAP and Shabaab have had links, there is coordination and, if you will, good neighborliness between terrorists. But I don’t think there is any AQAP command and control in Shabaab’s recent declaration.

Ashish Kumar Sen is an editor with the Atlantic Council. This article originally appeared on the New Atlantist, an Atlantic Council blog

Image: Flickr/Albany Associates

TopicsSecurity

5 Things You Need to Know about Low Oil Prices

The Buzz

The Council on Foreign Relations hosted a symposium yesterday on the causes and consequences of the oil price crash. Our three panels tackled the reasons for the crash and the future of oil prices; the economic fallout from the crash in the United States and around the world; and the geopolitical consequences of the oil price crash, both to date and going forward. (These links will take you to video of each session.) I trust that everyone took distinct conclusions away from the day. Here are five things I learned or hadn’t properly appreciated before:

Don’t believe what financial markets tell you about long-run oil prices.

Futures markets are good at predicting near-term spot oil prices. They’re even good at telling you what smart people think oil prices will be in a few months or a year. But when it comes to their predictions for oil prices five years from now? Forget about it. Markets for long-dated futures – say, for February 2019, where Brent crude last settled at $76 a barrel – are idiosyncratic and reflect the needs of a small number of players. Better, then, to rely on fundamental analysis. Unfortunately – as Citi’s Ed Morse, CIBC’s Catherine Spector, and the EIA’s Howard Gruenspecht all confirmed on our first panel – there’s little agreement on what those are. Still, if you’re uncertain, at least you won’t be wrong.

Consumer spending hasn’t yet responded to the oil price drop.

The oil price drop is supposed to act like a big tax cut – with all the stimulus that entails. As Mark Zandi of Moody’s Analytics noted on our second panel, a one dollar drop in the price of a gallon of gas should translate into a thousand dollars in annual household savings, which in turn should boost consumer spending, turbocharging the economy. Yet, as both he and Harvard’s Jim Stock observed, while we’ve seen some increased saving, we haven’t seen the expected boost in consumer spending yet. Part of the explanation might be that people wait a few months for savings to pile up before going out and spending. Neither Zandi nor Stock was particularly nervous yet – but Zandi warned that if consumer spending didn’t pick up soon, he’d start to get more anxious.

Falling oil prices have been a big help to emerging market economic policymakers. Emerging market oil importers obviously benefit from falling import costs. And I’ve written before that falling oil prices have allowed some emerging market policymakers to cut fuel subsidies. Charles Collyns of the Institute for International Finance (IIF) pointed out a third big dividend during our second panel: falling oil prices have eased inflation pressures and thus allowed emerging market central banks to cut rates and juice their economies. It’s easy to overlook this when you’re focused on the big developed economies; Europe and Japan are worried about deflation, not inflation, and the United States doesn’t have room to cut rates (though it can delay raising them). But when you’re more like India – with an inflation rate that hit eight percent in July of last year but now stands closer to five – this matters a lot.

Watch out for geopolitical fallout in the big oil exporters’ backyards.

As oil prices have plummeted, all eyes have been on the Russia-Ukraine conflict and on the Iranian nuclear negotiations, as observers have looked for signs that Moscow or Tehran might change tack. On our third panel, Georgetown’s Angela Stent and former U.S. ambassador Michael Gfoeller reported little change on either front, and warned not to expect much. But both of them – along with former State Department energy envoy David Goldwyn in his remarks on Venezuela – told people to look in the three big oil exporters’ backyards. As Russia faces budget and economic challenges, there will be economic and political spillovers in Central Asia; as Iranian revenues slide, Iran’s ability to support Hezbollah and other Shiite allies will decline; and as Venezuela tumbles, its ability to support others in the region through Petrocaribe will weaken, a dynamic that some have already argued played a role in U.S. rapprochement with Cuba.

Even the good geopolitical news often comes with a downside.

It might look like Egypt and Jordan – both energy importers – might benefit from falling oil prices. But, as Michael Gfoeller pointed out, both also receive support from a now-less-flush Saudi Arabia. It might also seem that climate change efforts could get a boost due to falling natural gas prices in Asia and Europe (gas and oil prices there are linked to varying degrees) – but, as David Goldwyn warned, the politics of falling oil prices could actually sap some of the sense of urgency from climate discussions. And as Angela Stent observed, economic turmoil for U.S. adversaries doesn’t necessarily lead to political change – something she noted for Russia but that applies more broadly.

This only skims the surface of what I took from the panels – and I’m sure others gleaned different things. You can watch all the three panels (priceseconomicsgeopolitics) at CFR.org, and add your own takeaways in the comments.

Michael A. Levi is the David M. Rubenstein Senior Fellow for Energy and the Environment at the Council on Foreign Relations. This piece originally appeared on CFR’s Energy, Security, and Climate blog.

Image: Flickr/miracc

TopicsEconomics

A Global Popularity Contest

The Buzz

Is Russia making a global comeback in spite of Western sanctions and political pressure from the United States and Europe? On the surface, it certainly seems like it.

Earlier this month, Russian president Vladimir Putin paid a very public two-day visit to Egypt, cementing the burgeoning strategic partnership he has diligently cultivated with the regime of Abdel Fatah al-Sisi. The lavish reception he received—complete with street placards bearing his likeness and wall-to-wall coverage in the Egyptian press—left no questions about Cairo’s attitudes toward the Kremlin. New political forces on the Old Continent, like Greece’s recently elected left-wing Syriza government, have likewise embraced an increasingly pro-Russian outlook. And the Russian leader apparently enjoys massive popularity in China, where his biography is a bestseller and his authoritarian political style is the subject of serious study. All of which led Foreign Policy magazine to dub Putin the “new model dictator,” and the gold standard for autocrats everywhere.

Perhaps he is. But look a bit closer, and you’re liable to find that Russia’s recent geopolitical advances are very much the exception rather than the norm. A year into the Kremlin’s asymmetric campaign in Ukraine, its global image—and its alliances—is much the worse for wear.

The problems begin close to home. Last month’s summit of the Eurasian Economic Union—a bloc that ranks as Putin’s premier regional initiative—was a decidedly lackluster affair. Against the backdrop of the Ukraine crisis, the Union’s constituent members (Belarus, Armenia and Kazakhstan) are increasingly wary of Moscow’s regional policies and of the possibility that they, too, could become the targets of the Kremlin’s territorial acquisition. Additionally, Western sanctions and a plunge in global oil prices have hit Russia’s economy hard, making Moscow increasingly unable to bankroll its political and economic vision for the region.

As a result, there’s growing dissension in the ranks. "Those who think that the Belarusian land is part as what they call the Russian world, almost part of Russia, forget about it!" Belarusian president Alexander Lukashenko recently told reporters in Minsk. "Belarus is a modern and independent state." That Belarus—once Russia’s staunchest ally in the region—feels empowered to take such a stance speaks volumes about the Kremlin’s plummeting regional cachet.

Belarus, moreover, isn’t the only one. Neighboring Kazakhstan has also begun distancing itself from Moscow—albeit more quietly. Last year, the Moscow Times notes, Kazakhstan’s imports to the Russia-led Eurasian Customs Union fell to just 6.1 percent, roughly half of what they were in 2010. That’s as telling a sign as any that Kazakhstan’s leaders no longer have much confidence in Russia’s political and economic projects.

But the now-likely demise of the Eurasian Union could end up being the least of Putin’s problems. Increasingly, Russia is losing ground globally.

Just how much can be seen in a mid-2014 poll of global attitudes toward Russia carried out by the Pew Research Center. That study found that anti-Russian attitudes had skyrocketed among the majority of the forty-four countries surveyed. More than half of Middle Eastern countries polled now see Russia negatively, anti-Russian sentiment is on the rise across Latin America, and Europe is unified in its anti-Russian position as a result of the Ukraine crisis.

Indeed, of all the nations polled by Pew, Russia’s global image had improved in just nine. And only in two—China and the Palestinian Territories—did it grow by double digits.

In other words, countries like Egypt and Greece—which are now making common cause with the Kremlin—are political outliers, rather than representatives of an emerging global consensus. And Russia’s increasingly frenetic global activism isn’t a sign of strength or defiance. Rather, it should be seen for what it truly is: a desperate attempt to stave off deepening international isolation.

Ilan Berman is Vice President of the American Foreign Policy Council in Washington, DC.

Image: Wikimedia Commons/Agência Brasil/Roberto Stuckert Filho​/CC by 3.0 br

TopicsPolitics

Sorry, Al Jazeera: A Leaked Mossad Cable Doesn’t Reveal Netanyahu Lied to the UN

The Buzz

Qatari television network Al Jazeera has obtained a cache of secret intelligence cables, apparently from South Africa, and they’re eagerly promoting them as “the largest intelligence leak since Snowden.” Yet one of the first baubles plucked from this alleged treasure trove is fool’s gold—even with their attempts to represent it otherwise.

The Qatari-government-funded station argues that the cables reveal that Israeli prime minister Benjamin Netanyahu “misled” the United Nations in his famous September 2012 address to the United Nations General Assembly—that Israeli intelligence had an assessment of the Iranian nuclear program that “appears to contradict the picture painted by Netanyahu of Tehran racing towards acquisition of a nuclear bomb.” There were plenty of things wrong with that Netanyahu speech, and there’s plenty of evidence that Netanyahu and his intelligence services don’t always see eye to eye on Iran. But what the network has uncovered doesn’t contradict Netanyahu, and offers little that wasn’t already known to the public.

A cable from October 2012, apparently from the Mossad, assesses the state of Iran’s nuclear program. Al Jazeera notes that the document says that “Iran at this stage is not performing the activity necessary to produce weapons,” but “is working to close gaps in areas that appear legitimate such as enrichment, reactors, which will reduce the time required to produce weapons from the time instruction is actually given.” They contrast this with “Prime Minister Benjamin Netanyahu's 2012 warning to the UN General Assembly that Iran was 70 per cent of the way to completing its ‘plans to build a nuclear weapon’” and (in their video report) with his line that “by next spring, at most by next summer at current enrichment rates, they will have finished the medium enrichment and move on to the final stage.”

The Mossad report doesn’t actually contradict this.

Making nuclear weapons is complicated. A working warhead is the result of several distinct lines of technical development. You need enough enriched uranium to sustain a rapid chain reaction (the core of the bomb), and you need a way to induce that chain reaction (the mechanism of the bomb). (You’ll also probably want a way to deliver the bomb, a third line of technology.) Netanyahu’s argument rested on this distinction: he said that the world must draw a red line on Iran’s activities that could be useful for making a core because those activities are much harder to hide than those for making the mechanism:

For Iran, amassing enough enriched uranium is far more difficult than producing the nuclear [detonation mechanism]....it takes many, many years to enrich uranium for a bomb. That requires thousands of centrifuges spinning in tandem in very big industrial plants. Those Iranian plants are visible and they’re still vulnerable. In contrast, Iran could produce the nuclear detonator...in a lot less time, maybe under a year, maybe only a few months. The detonator can be made in a small workshop the size of a classroom. It may be very difficult to find and target that workshop...So in fact the only way that you can credibly prevent Iran from developing a nuclear weapon, is to prevent Iran from amassing enough enriched uranium for a bomb.

Bibi was, in other words, not asserting that an Iranian nuclear device was coming soon—he was saying that Iran was approaching the end of the phase in which its nuclear program would be easiest to interrupt. The Mossad’s statement that Iran “is not performing the activity necessary to produce weapons” doesn’t contradict that, particularly when read with their line that Iran’s activities at the time would “reduce the time required to produce weapons from the time instruction is actually given.” Iran was taking steps that made weaponization easier, even if it wasn’t weaponizing. A closer reading of the speech, and a better understanding of the underlying technical issues, would have revealed the harmony between the two positions.

That closer reading also would have answered the question the presenter asks at the end of the video report: “The ‘Spy Cables’...begs [sic] the question: where did [Netanyahu] get this information?” As Netanyahu said at the time: “What I told you now is not based on secret information. It’s not based on military intelligence. It’s based on public reports by the International Atomic Energy Agency. Anybody can read them. They’re online.”

So the Qatari-backed press might not be the best source for news on Israel. But there are still two interesting points of tacit discord between Netanyahu and his spies, points which Al Jazeera does not acknowledge.

The first: Netanyahu says that “by next spring, at most by next summer at current enrichment rates, [the Iranians] will have finished the medium enrichment and move [sic] on to the final stage. From there, it’s only a few months, possibly a few weeks before they get enough enriched uranium for the first bomb.” In other words, enriching to weapons grade will follow the accumulation of enough medium-enriched uranium—Iran will take the next step as soon as it is able. The Mossad document is agnostic on that—it has Iran taking the next steps “when the instruction is actually given” by its leaders. Netanyahu’s Iran is in a mad dash to the bomb; technical obstacles are the only things slowing it down. It will only respond to the threat of force—to the declaration of a red line. Mossad’s Iran is more cautious—it’s taking steps to reduce the time it needs to build a weapon and to “preserv[e]” and “retain” its old weaponization infrastructure. But the choice to actually weaponize has not been made. There’s no mad dash and perhaps no inevitability.

The issue of Iranian caution points us to a second dissonance. Netanyahu argues that Iran is on the brink of “finish[ing] the medium enrichment” phase along the path to having enough weapons-grade uranium for a bomb. “Finishing” this phase, and being ready to move on to the next one, has two inputs: centrifuges and medium-enriched uranium. With enough of both, you can quickly get to weapons grade—and speed is essential, since taking this final step would remove many doubts about what Iran’s nuclear program is for. Yet, as the Mossad report notes, Iran’s stockpile of medium enriched uranium was not expanding at the time, “as some [of it] is being converted to nuclear fuel for [the Tehran Research Reactor].”

This was widely perceived as an attempt to reduce tensions by limiting the size of the most threatening part of its nuclear stockpile. This is not behavior we’d expect from Netanyahu’s mad-dashing Iranian fanatics. In Bibi’s defense, there was debate at the time on how meaningful conversion was—the Institute for Science and International Security, for example, would complain a year later that “although conversion of uranium hexafluoride into uranium oxide and fabrication into fuel elements does limit Iran’s ability to quickly use this material in a breakout scenario, the only iron-clad way to prevent further enrichment is for an outside country to hold this material in escrow prior to irradiation” in a reactor. But it is worth noting that the Mossad report does not seem to take such concerns seriously: it flatly states that “the amount of 20% enriched uranium is...not increasing,” citing the conversion activity.

Netanyahu’s speech was far from perfect. But his most questionable statements were about Iran’s intentions and motivations, not about the details of its nuclear program. His apparent divergences with the Mossad on that matter are largely a matter of framing, not of fact.

John Allen Gay, an assistant managing editor at The National Interest, is coauthor of War with Iran: Political, Military, and Economic Consequences(Rowman and Littlefield, 2013). He tweets at @JohnAllenGay.

TopicsNuclear Proliferation RegionsIranIsrael

3 Issues Poisoning U.S.-Israeli Ties

The Buzz

Much of the punditry regarding the current state of the U.S.-Israeli alliance has focused on the volley of slights and insults between Jerusalem and Washington. A small number of former Obama administration insiders, such as Derek Chollet, have pushed back, pointing to the personal ties between American and Israeli defense ministers. The alliance is not breaking up, but we would be in serious denial to keep saying ties are not strained (or that they are stronger than ever). The problem is not (entirely) personal. For all of our shared interests, America and Israel diverge on three key topics: Iran, Syria, and Qualitative Military Edge (QME).

Yes, recent U.S. and Israeli defense ministers have had excellent relations. This did not stop the Obama White House from snubbing Israeli Defense Minister Moshe Ya’alon’s request for meetings with everyone from Vice President Biden to Secretary of State John Kerry after he made a series of insulting remarks. But this misses a more fundamental point. Relationships matter, but they aren’t everything. When former Prime Minister Yitzhak Rabin was Ambassador to Washington, Henry Kissinger was his mentor. When Rabin succeeded Golda Meir as Prime Minister after his stint in Washington, Rabin’s personal ties did not stop Kissinger from threatening to “reassess” the relationship unless Israel moved forward with the peace process with Egypt.

Today, Israel and the United States have divergent interests on three fronts: Iran, Syria, and the maintenance of the Jewish state’s QME.

On Iran, America is from Mars and Israel is from Venus. Many Israelis have been apprehensive about a U.S.-Iranian rapprochement since the end of the first Gulf War for fear that Iran would displace Israel as America’s lead ally in the region. Today, the mistrust between the Netanyahu and Obama administrations is palpable. The Netanyahu government is angry that it is being cut out of key decisions; the Obama administration is fearful of Israeli leaks that could encourage a hawkish Congress and spoil any deal with Iran. An Iranian nuclear breakout (or sneakout) poses an existential threat to Israel. For the United States, a nuclear Iran is an unwelcome but deterrable threat.

The Obama administration hopes that it will be able to clinch a deal that would halt Iran’s potential march to a bomb and bring about a rapprochement between Washington and Tehran. For both the Netanyahu government and its challengers in the Zionist Camp, even if Iran is a year away from nuclear breakout, that is twelve months too short. A nuclear Iran would limit Israel’s ability to project force in the region and could set off a series of nuclear dominoes among Jerusalem’s quasi-allies in the Gulf.

The differences over Syria are an extension of the divide over Iran. For now, the United States is focused on rolling back the Islamic State’s (IS) advance. For Israel, Hezbollah, not IS, is its biggest concern because it is the long arm of the Pasdaran, the Iranian Revolutionary Guards. As a result, the United States and Israel are actually on opposite sides in Syria. As the United States bombs targets with the tacit approval of the Assad regime, Israel reportedly worked with the Nusra Front during the fight for Quneitra in order to safeguard the Golan Heights.

The Obama administration has been quick to point out that Israel has been the recipient of the most advanced weapons in the United States’ arsenal. However, this may change as Congress debates the future of QME. While the United States has made commitments to maintaining Israel’s qualitative military superiority over the rest of its neighbors, some in Congress feel that the threat from IS necessitates expanding the program to Arab states on the frontline.

For some, expanding QME to other states is premature and risky. The Islamic State’s recent ascendance was fostered by its capture of U.S. military equipment abandoned by a fleeing Iraqi army. Should another state fall after receiving QME, it would be déjà vu all over again.

The U.S.-Israeli alliance is not over. However, our interests diverge on three key points: Iran’s nuclear program, the civil war in Syria, and QME. We are in a state of willful ignorance when we deny it.

Albert Wolf is an Analyst for Wikistrat. He can be followed on Twitter @albertwolf82

Image: Whitehouse.gov 

TopicsDiplomacyPolitics RegionsUnited StatesMiddle East

Time Bomb: China's Debt Is Out of Control

The Buzz

“Once you start thinking about growth, it's hard to think about anything else,” remarked the economist Robert Lucas, who won the Nobel Prize for his work on the topic. Policymakers in China agree.

Since 1979, GDP growth has symbolized the nation's dynamism, determination and confidence, and China's growth machine has spawned an industry of forecasters who jostle over decimal points.

In recent years, the totemic 8 percent has been gradually guided down to 7-7.5 percent as “the new normal.” National GDP hit 7.4 percent last year, controversially missing the 7.5 percent official expectation. Policymakers are attuned to market reactions, so feel obligated to deliver “7-point-something.” Growth at all costs has become a dangerous obsession, without heed to prudent economic management. There is a law in economics stating that variables become meaningless once targeted; Chinese GDP might well qualify.

(Recommended: The Real China Threat: Credit Chaos)

Of course China's GDP isn't meaningless. It's huge, it's real, and it's merely slowing “from a very big base.” It represents a stunning 40 percent of total world growth and it seems churlish to question it. Still, there's always been something a little fishy about this dataset. It gets reported far sooner (in 19 days) than in any other major economy. In punctual Tibet they report even before quarter's end!

More advanced economies regularly revise growth data retroactively; China's GDP is suspiciously accurate and seldom corrected. And it seems no longer to correlate well with other underlying indicators, suggesting officials or statisticians may be smoothing the data.

Shanghai's recent removal of its target is likely to be followed by other provinces currently in thrall to “GDP-ism.” The economy's high and rising dependence on investment has been criticized as unsustainable. “7.X” growth, like the magic formula for Coca-Cola, is seen as contrived. There are a few cynics who mutter that the Chinese growth number is a fiction, too good and too stable to be true.

(Recommended: Tokyo Time Bomb: Japan's Looming Debt Disaster)

There is another explanation: Beijing really is delivering the reported number but is straining to do so.

China's national balance sheet is starting to look ragged. Goldman Sachs thinks China's industrial debt is, at 240 percent of GDP, approaching American levels, but at a much lower development stage. McKinsey reckons China has piled on 83 percent debt/GDP in 2007-14. In this period, total debt has quadrupled, certainly the world's largest ever credit buildup but also one of the fastest. This latter point is significant. By Goldman's count, China is coming off a “97th-percentile” episode of credit accumulation. Historically about half of such events have culminated in a banking bust. Since China “doesn't do crises,” it must eventually correct through rebalancing.

China has much going in its favor.

It has excess savings, which are captive. Although foreign borrowing has soared, external liabilities are less than 10 percent of GDP. There is large “catch-up” potential remaining. Goldman calculates cumulative capital return rate is 15 percent, double America's, meaning there is still much room to deploy investment. But as Greg Clark has noted, that doesn't mean it will be done efficiently in the future: “a manager of the Eastern Bengal State Railway, touring the United States in 1901, remarked that most American railways were not up to European or Indian standards.” Clark's point is that long-term growth is derived from the efficient use of railways (to take a germane example), not how “advanced” the locomotives are.

Much of China's capital is trapped in dud state companies that are all too capable of pursuing white-elephant projects. Many of these companies are local government entities, and stories of alarmingly leveraged municipalities (here and here) are surfacing. Undeterred, 14 provinces (of China's 31) have already unveiled US$2.5 trillion of new projects for this year “to bolster economic growth.”

For now, total debt continues to outpace nominal GDP growth by 6-7 percent annually, meaning that debt/GDP keeps piling up. There is an insouciant view, expressed once to me by a Japanese central banker when discussing quadrillions of yen of public borrowing, that debt is “just a bunch of zeroes.” It doesn't matter, since it's “owed to ourselves.” But Japan's experience actually informs otherwise. And Goldman's historical database suggests that a growth hiccup of at least 2-4 percentage points would normally ensue. The days of 7-point-something growth may be over soon.

Julian Snelder is a Kiwi who has resided in Asia for almost a quarter-century. This piece originally appeared on the Lowy Interpreter.

Image: Flickr/Premshree Pillai

TopicsEconomics RegionsAsia

U.S. Seeking Submarine-Launched Stealthy Anti-Ship Missile

The Buzz

Lockheed Martin is developing a submarine-launched stealthy long-range anti-ship missile for the U.S. Navy.

Last week Inside Defense reported that Lockheed Martin has begun work on an undersea-launched variant of its Long-Range Anti-Ship Missile (LRASM). The report, which is based on an interview Inside Defense conducted with a senior Lockheed official, said that the submarine-launched LRASM would utilize the same type of system that currently launches Tomahawk missiles. It went on to say that Lockheed is “working to integrate the missile with different targeting systems as well as different software and electrical interfaces.”

The report quoted Frank St. John, Lockheed's vice president of tactical missiles, as saying that “The primary work there is to just get it out of the sub, free of the water, and then once the engine starts it runs just as if it was dropped off a plane or shot off a ship." Testing is scheduled to start sometime in the third quarter of this year.

As previously noted, the LRASM has a reported range of 500 nautical miles and carries a 1,000-lb. penetrator and blast-fragmentation warhead. It is primarily designed to provide the U.S. Navy and Air Force with a precision-guided long-range stand-off capability that can survive in aggressive electronic warfare environments. To achieve this, it uses on-board sensors and a semi-autonomous guidance system to reduce its dependence on intelligence, surveillance and reconnaissance (ISR) platforms, network links and GPS navigation. It also employs “innovative terminal survivability approaches and precision lethality” to avoid advanced enemy countermeasures while still reaching its intended target.

The LRASM is being funded by the U.S. Air Force and Navy as a stop-gap measure because the existing Harpoon anti-ship missile has a limited range and cannot survive in contested anti-access/area-denial (A2/AD) environments. It underwent its third successful test earlier this month and is currently expected to reach early operational capability on the Air Force’s B-1s in 2018 and Navy’s F/A-18 Super Hornets the following year.

Lockheed Martin is using internal funds to conduct the ongoing research into the submarine-launched variant with an eye towards winning the second increment of the LRASM contract. Bidding for that contract is expected to begin sometime in the next few years. Inside Defense quoted St. John as saying that Lockheed has already invested $50 million in developing the three variants of the LRASM and expects to invest upwards of $100 million before all is said and done.

"All this is done on our own investment to prepare for an eventual Navy competition," he is quoted as saying in the report. “It's a significant, significant activity for us, it's one of our most important pursuits."

Image: U.S. Navy Photo

TopicsSecurity

Pages