Jack Devine’s Winter 2020 Intelligence Report

TAG President Jack Devine’s Winter 2020 Intelligence Report includes his current assessment of Iran, the fault lines within the Middle East, the dilemma for Kim Jong-un in regards to testing nuclear weapons and a potential U.S. response, the current respite of the U.S.-China struggle, Putin’s maneuvering with a government reshuffle, and Latin America’s protests and unrest.

Iran – the Road Ahead

We noted in January 2017 in our first Intelligence Report of the Trump administration that Iran would become the trickiest foreign policy issue President Trump would have to confront. Iran certainly has lived up to that billing and is likely to continue to be the greatest foreign policy challenge in the decade to come.

Iran’s surrogates crossed an unspoken red line when they attacked the U.S. embassy in Baghdad. It was a serious miscalculation on their part in failing to understand Trump’s willingness to use force when American personnel are directly attacked. With the lethal attack on Iranian Quds Force commander, General Qassim Suleimani, that message was received loud and clear. The Iranian leadership was under immense internal political pressure to respond with visible force. Knowing a war with the U.S. would be unwinnable, they needed to find a response that would look tough, but at the same time ratchet down the crisis.

Ultimately, firing nearly a dozen ballistic missiles at two Iraqi bases housing U.S. personnel, after forewarning the Iraqi authorities, was smart and well-calibrated. It flexed Iranian muscles, while avoiding fatalities, and it enabled an almost immediate deescalation.

In his remarks after the counterattack, President Trump put down another critically important marker when he said Iran would not be allowed to have nuclear weapons during his Administration. Coming after the strike on Suleimani, the Iranians will take this statement seriously, and it may even get them back to the bargaining table.

At the same time, there are a number of factors that could derail this potential opening. Shia terrorist groups, like Hezbollah, receive significant financial and military support from Tehran, but are not totally under Iranian control and could strike out against American targets, despite Tehran’s wishes. Also, Iran’s Revolutionary Guards unwisely might attempt clandestine, cyber assaults and terrorist attacks on global U.S. and allied targets imagining they have deniability. Our intelligence agencies will have to perform at the top of their game, which they have been doing in recent years, to sort out the instigators of such attacks. Iranian leadership will try in the near term to keep a lid on the situation, but that is easier said than done.

One very important factor that works in favor of preventing another major crisis is the high importance given in the Middle East to the exercise of power. This is often what is understood best, and the Iranians will be careful not to misread Trump’s resolve a second time. However, Iranian leadership just cannot walk off into the night. The next move is theirs to make, and the risk of misjudgments on both sides is high. For now, we remain in a high risk and unpredictable environment.

Middle East Fault Lines

Even before the strike on General Suleimani, Iran was embattled on multiple sides. Protests against economic hardships and corrupt and ineffective leadership in Iraq and Lebanon are also animated by widespread anger toward Iran which is rightly viewed as a destabilizing force in both countries, including by the Iraqi Shiite community. The 2019 protests in Iran were brutally quashed, but force cannot extinguish the underlying problems. Following the unprecedented acknowledgement that the Revolutionary Guard inadvertently shot down the Ukrainian airliner last week, protesters were back out in the streets.

2019 was a clarifying year for Saudi Arabia; in September the country temporarily lost 50% of its crude production in just 17 minutes of sustained attack from Iranian drones and cruise missiles. Although he sent additional troops and imposed sanctions, President Trump decided against a retaliatory attack. In contrast, Trump’s recent response to the Iranian inspired attack on U.S. citizens at the embassy in Iraq could not have been clearer. The combination of the two has served to increase the risk level for U.S. allies in the region such as Saudi Arabia and Israel, while signaling that the United States’ most forceful response will come when our citizens are threatened. The Saudis have wisely taken steps to deescalate their confrontation with Iran, particularly in Yemen. It is likely that those efforts will continue in 2020.

Kim Jong-un’s Dilemma

Kim Jong-un’s takeaway from the killing of General Suleimani is likely to be a mixed one. He now has a vivid illustration that Trump will use force when vital U.S. interests are on the line, but in the North Korean context it may not be entirely clear to Kim where that line is. Kim recently announced at the Workers’ Party Central Committee meeting at the end of December that he was ending his moratorium on nuclear and ballistic missile testing and referenced a “new strategic weapon.” Post-Suleimani, however, Kim will take care in determining exactly how provocative he can be in pushing for sanctions relief. For example, Kim ignored his year-end deadline for U.S. movement on negotiations. It is likely that Kim will quietly continue to produce nuclear material and conduct missile tests, but for now will refrain from testing the type of long-range ballistic missile or nuclear device tests that could provoke a U.S. response and signal an end to negotiations. As Kim’s demands for sanctions relief continue to go unmet, however, the likelihood of a destabilizing movement on his end increases.

Momentary Respite in U.S.-China Struggle

The U.S.-China trade war is at an inflection point.The first-phase trade agreement signed by Trump this week, is a positive development which puts further escalation on hold but resolves, at least for now, few of the major issues of contention. Most critical to the U.S. in phase one is China’s pledge to increase the purchase of U.S. goods and services by $200 billion in the next two years over 2017 levels. The actual target may prove beyond China’s capacity, but progress is measurable and perfect for public messaging. In contrast, a second phase agreement will focus on trickier issues that are much harder for the public to grasp and for China to implement domestically, such as intellectual property protections and state support for industry. Progress will be slow.

U.S. concerns about the vulnerability of its networks, institutions, and companies to Chinese espionage and theft are justified – they are key components of China’s drive for economic and cultural dominance – but bilateral economic, political, and cultural activity create strong incentives to preserve stable relations. Longer-term, as the U.S. and China seek to carve out economic futures independent of the other, the shift away from competitive interdependence may impact both sides’ motivation to take a measured approach to long-standing conflicts in other areas, such as South China Sea navigation rights and arms sales to Taiwan. Looking out over the horizon, we anticipate an intensifying struggle between two major global powers.

Putin’s Maneuvering Continues

Russia’s recently announced government reshuffle is the first in a series of steps that will keep Vladimir Putin at the country’s helm long past the end of his presidential tenure. We can expect Putin to continue Russia’s campaign of meddling in the internal politics of foreign democracies. Russia’s interference in the 2016 U.S. presidential election will continue in 2020, although the extent of it remains to be seen. Meanwhile, as the U.S. has undertaken large policy pivots in the Middle East – removal of troops from Syria, the attack on Iranian General Qassim Suleimani, and the potential withdrawal of troops from Iraq – Russia is stepping in to take advantage of this and enjoying newfound leverage in an area of the world it has long wanted to dominate. Putin may attempt to broker a peace between the U.S. and Iran if there’s an opening. He also appears to be gaining an edge in Ukraine, having secured key concessions from President Volodymyr Zelensky in the two countries’ dispute over natural gas payments, and with Ukraine’s western allies having declined to put up lethal resistance to its invasion of Crimea. But the reality at home is that Russia is contending with a weak economy and a broad global shift away from fossil fuels, which form the core of its exports. The situation appears stable for now, but further deterioration could lead to internal unrest and ultimately hobble Russia’s global ambitions.

Latin American Protests & Unrest Likely to Continue

Latin America was rocked by violence and protests in 2019, and 2020 does not look much calmer. Already, Venezuela started the new year with a showdown at the National Assembly when opposition leader Juan Guaidó had to scale a fence to get in. The stand-off between Venezuelan President Nicolás Maduro and Guaidó has dragged on for a year now. Unfortunately, Guaidó’s support will continue to wane as the opposition splinters and Maduro takes the upper hand. Even with U.S. oil sanctions and calls for more street demonstrations, the Maduro regime is determined to stay in power. Unlike Bolivia’s President Evo Morales, Maduro will not be whisked off to Mexico anytime soon.

The protests that erupted in Chile in late 2019 were another example of unrest in Latin America and underscored a growing sense in the region that elected leaders are not addressing the social concerns of the people or meeting their expectations for economic opportunity and social mobility. Chilean President Sebastián Piñera proposed a set of social reforms in response to the violent protests, but it is unlikely we have heard the last from Chile where persistent inequality is far from resolved.

Mexico did not experience the same kind of political protests in 2019, but persistent security challenges made it the deadliest year on record with 37,000 murders. The leftist President Andrés Manuel López Obrador (“AMLO”) has maintained his popular support among the people, but his “hugs not bullets” approach to security has left much of Mexico in the hands of the violent drug cartels. At the same time, AMLO has alienated the business community and done little to boost economic growth or dismantle systemic corruption. Still, AMLO has deftly managed his relationship with the United States, and the USMCA trade agreement, which is ready for Trump’s signature, is an example. The “Remain in Mexico” program allowing Central American migrants to stay in Mexico as they await immigration proceedings in the United States was a good temporary solution to the caravan crisis, but thousands of jobless migrants in northern Mexico will only exacerbate the significant economic and security challenges that already exist. As Mexico is our top trading partner, more attention must be paid by Washington to these developments.

If you or your firm would like an individualized consultation or information, please contact The Arkin Group.

“Trump’s Iran Strike Was A Huge Win for the U.S,” Jack Devine on Bloomberg Radio, January 2020

Jack Devine, former chief of CIA’s worldwide operations, and founding partner and President of The Arkin Group, discusses the Iran situation. Hosted by Lisa Abramowicz and Paul Sweeney.

Trump’s Iran Strike Was A Huge Win for the U.S.

Jack Devine’s Summer 2019 Intelligence Report

TAG President Jack Devine’s Summer 2019 Intelligence Report includes his current assessment of domestic politics, Iran, North Korea’s missile tests, China, Putin’s use of power to stay in control in Russia, the rise in risk of terrorist attacks in India, the Brexit situation, the deteriorating relationship with Turkey, and Mexico.

Domestic Politics

When Congress returns from its summer recess and election season begins in earnest, President Trump will view virtually all political, economic, military and foreign policy issues almost exclusively through the lens of the 2020 Presidential Elections. While there is too much time between now and election day to predict the outcome with certitude, the Democrats are likely to put forth a candidate with a very pointed progressive agenda, and President Trump will respond with a rigorous attack against that agenda and its candidate. Starting in the new year, we can expect that Trump will use in an unprecedented fashion the full power of the presidency to try to shape the economy and foreign affairs in his favor. If the economy remains strong, the electoral college outcome will be close, with most states almost predestined to replicate their 2016 outcome. Currently, a recession is further off in the future than media commentary suggests. The three states most likely to make the difference in the electoral outcome are Michigan, Wisconsin and Pennsylvania. For those watching the early returns, how Pennsylvania goes at the polls, so will the Presidency! It is the bellwether state this time around, and no doubt will be hotly contested.

On the foreign policy front, China and the United States will continue to arm wrestle over trade, and relations with Russia will remain largely unchanged. There won’t be a major breakthrough on the North Korean nuclear front, and we won’t go to war with Iran, despite a lot of expected posturing and activity, including by proxies in the region. While the European Union could well see Britain leave in October, either way the outcome will be less stark than many observers suggest. There will be plenty of flak around all these issues, including the continued global trend of eroding support for democracy. However, in the end they are unlikely to have a significant impact on the US election.

Iran

The current US posture toward Iran is designed to exert the greatest amount of financial pressure and diplomatic isolation to undermine the country’s nuclear ambitions and, in all likelihood, to force regime change. The result is an ever more desperate Tehran, who is abandoning its wait-and-see policy with regard to the nuclear agreement and instead has deliberately breached agreed enrichment limits and escalated its saber-rattling in the Strait of Hormuz. With a quick series of alarming incidents from seized tankers to burning pipelines and downed drones, there is an ever-increasing risk of direct conflict with Iran and its proxies in the region. Neither Trump nor Khamenei seems predisposed to temper their policies and rhetoric, and we shouldn’t expect help from Israel, Saudi Arabia, or the UAE, whose interests seem aligned to marginalize Iran as much as possible, eclipsing other areas of discord. What’s more, it is doubtful the Europeans will be able to make meaningful progress in ameliorating the issue. Looking forward, this means that for the foreseeable future a military conflict with Iran, especially in the Persian Gulf remains a real, but unlikely, possibility.

North Korea

Kim Jong-un has brashly followed his brief meeting with President Trump in the demilitarized zone with a series of missile tests – the latest on 6 August 2019. The tests were a protest of joint US-South Korean military exercises, and they indicate that Kim will continue to push the envelope to advance his military capabilities as much as possible, short of provoking conflict with the US. What’s more troubling is that the security environment in the Korean Peninsula has degraded significantly because of a flare in a historical spat between Seoul and Tokyo over WWII reparations. The resulting trade war between the two countries and Seoul’s decision today to withdraw from a 2016 intelligence-sharing agreement with Japan, provides opportunities for China and Russia to exploit the perceived rift within a longstanding security pact between these countries and the US. Further, these tensions undermine any US leverage to move forward with a North Korean nuclear deal that must include security guarantees for both Seoul and Tokyo.

China

Peaceful protests in response to Hong Kong Chief Executive Carrie Lam’s extradition initiative have grown into a wider, and at times more defiant, movement for a return to the “one country, two systems” principle that formed the basis of Britain’s exit from Hong Kong. Beijing has ratcheted up the nationalist rhetoric, comparing the protesters to terrorists, and is staging troops near the border, clearly hoping this will intimidate protesters into vacating the streets. At the same time, Beijing is exerting economic pressure on vital Hong Kong businesses like Cathay Pacific to bring Hong Kong employees back into line. While Beijing wants to avoid direct intervention and the inevitable bloodshed and international black eye that would follow, China won’t let the situation fester indefinitely. Once the dust settles, it is highly likely that Hong Kong’s civil liberties will be more restrained going forward. But Beijing must tread carefully in its response. A harsh crackdown on Hong Kong could trigger severe capital flight, crippling the island’s capacity to serve as an international financial hub and source of offshore financing for Chinese companies, and derail any progress toward a trade deal with the US.

Russia

As Russia’s economy continues to falter and blatant corruption continues unabated, Putin appears more resolved than ever to stifle any sort of dissent and to quash any opposition. Protests denouncing the disqualification of scores of opposition candidates at the end of July were met with a very heavy hand, including the attack on opposition leader Alexei Navalny. Many Russia observers see this as part of an ongoing strategy to degrade the opposition in order to make it easier for Putin to stay in power when his fourth and supposedly last term is up in 2024. On the international stage, Russia appears uncowed by its domestic troubles. Following the United States withdrawal from the Intermediate-Range Nuclear Forces (INF) Treaty, Russia has said that any deployment of short and intermediate-range missile in Europe would trigger a deployment of Russian hypersonic nuclear missiles on ships or submarines near US territorial waters. Based on the mysterious incident on 8 August at a Russian missile testing facility, it appears that Russia is moving full speed ahead on its ambitions to develop a new and innovative arsenal. Without immediate efforts to construct a new international treaty, there are very few barriers to a new arms race.

Finally, if we are to take anything away from Special Counsel Mueller’s testimony, it is that Russia’s efforts to interfere in our political system continue unabated. Without a significant and resolved response from the US, Russia will persevere to our detriment.

India

In a surprise move, on 5 August Prime Minister Narendra Modi stripped Jammu and Kashmir of their seven-decade-old special constitutional status of autonomy. In so doing, Modi has fulfilled a long-standing Hindu nationalist goal and garnered widespread popular support for the move, but he has also further destabilized an already volatile region. To head off a likely uprising, Modi has placed the region on lock-down, cutting all communications, putting local politicians under house arrest and sending in thousands of security forces who have quelled protests with a heavy hand. Pakistan’s call for mediation has been rebuffed. In the short and medium term, the risk of terrorist attacks has increased throughout the whole of India, as has the possibility of armed conflict with Pakistan. In the longer term, Modi’s vision to “colonize” majority-Muslim Kashmir with ethnic Hindus raises the question of what Indian democracy will look like and suggests that volatility will remain for some time in Kashmir and possibly other areas of India, with minorities politically and socially marginalized.

Brexit

Anti-Brexit lawmakers will return from their holidays on 3 September, determined to stymie Downing Street’s autumn Brexit agenda. Labour leader Jeremy Corbyn plans to call a no-confidence vote against Prime Minister Boris Johnson who holds the slimmest of majorities, in order to form an interim government that will seek from the EU an extension of the 31 October deadline, and then call for elections and run on a platform of holding a new Brexit referendum. The minefields are many, starting with Corbyn’s own unpopularity with critical factions. For his part, Johnson plans to urgently lobby European leaders to renegotiate the withdrawal agreement, particularly the Irish backstop provision. He is unlikely to succeed. With Johnson holding fast to the 31 October deadline, a full break from the EU becomes more likely, although Johnson, like his predecessor, could well end up kicking the can down the road.

Turkey

What was once a difficult but stable relationship with Turkey has now badly deteriorated. Turkey’s recent acquisition of Russian surface-to-air missiles is alarming because in the past, pressure exerted by us and other NATO members would have caused Turkey to reconsider. However, President Erdogan-having fully consolidated power at home-seems less interested in pursuing democratically-minded agendas domestically and abroad and has his eye directed toward Russia and China. The country’s dwindling economy will ensure that Turkey doesn’t gain the regional prowess it craves. However, the US and other NATO members have hard decisions ahead on how to treat Turkey’s role in the alliance.

Mexico

Mexican President Andrés Manuel López Obrador continues to stoke fears in the Mexican business community, but he has maintained his high approval ratings among average Mexicans. López Obrador has also cleverly managed to appease President Trump with his decision to send Mexican troops to the southern border with Guatemala and with the “Remain in Mexico” plan to keep Central American migrants in Mexico as they await immigration proceedings in the United States. The United States and Mexico exchange approximately $671 million in goods and services every year. With the USMCA trade agreement not passing through the US Congress this year, López Obrador does not want to risk border closures, tariffs, or problems in Congress. The problem for López Obrador is that tensions with the Mexican people are likely to rise as the Central American asylum seekers waiting to get into the United States eventually start to compete for jobs and resources in a weakening Mexican economy.

If you or your firm would like an individualized consultation or information, please contact The Arkin Group

“They wanted to send a message” Jack Devine discusses Russia’s use of assassination as a tactic on Newt Gingrich’s podcast, April 2019

Jack Devine, 32-year veteran of the CIA, and Newt Gingrich discussed Russia’s history of assassination including the recent attempt on Sergei Skripal. Putting the attempted murder of Skripal in a larger context, Jack says that Russia has long seen murder as a legitimate way to deal with dissidents and other “enemies of the state.” Jack suggests that Putin’s KGB experience drives his decision making, and, despite some short-term operational success, his Cold War tactics have led to a poor overall strategy which has weakened Russian’s economy and isolated it on the international stage. Going forward, Jack says that resetting relations with Russia is futile while Putin continues to use “the old playbook.”

Newt’s World Ep 13: Russia – Death by Poison
Note: Jack’s segment begins at the 59-minute mark.

Jack Devine’s Spring 2019 Intelligence Report

TAG President Jack Devine’s Spring 2019 Intelligence Report includes his current assessment of the 2020 U.S. presidential campaign, North Korea, trade with China, the situation in Venezuela, the new government in Mexico, elections in Ukraine, and continuing troubles for Saudi Arabia.

Mueller Report and Democrats’ 2020 Hopes

Special Counsel Robert Mueller’s definitive conclusion that there was no “collusion” between the Trump Campaign and the Russian government in the 2016 presidential election has put wind back in President Trump’s political sails and rattled many of his opponents. However, Attorney General Bob Barr’s write-up of the Mueller report won’t end the assault on Trump’s past financial dealings. On the contrary, investigations will continue in the Democrat-controlled House and at the federal and state level-most importantly in New York, D.C., and Virginia. While these efforts are unlikely to produce tangible results during Trump’s term in office, these inquiries will play a key part in many candidates’ narratives during the 2020 Presidential campaign.

There is a growing concern in some Democratic quarters that the continuing investigation and the party’s seeming lurch to the left might backfire and extend Trump’s tenure in office. The 2020 election will likely be closer than most political observers realize, and much political and economic turmoil surely lies ahead. Moreover, if history is any gauge, a potentially destabilizing international crisis might well appear on the landscape. Venezuela, North Korea, Iran, and Ukraine would be good bets. How these crises are handled will greatly affect the ultimate outcome of the election as well.

One aspect of the Mueller investigation which is not getting sufficient attention is how aggressive Russian intelligence was during the 2016 campaign in a deliberate effort to undermine our democratic system. Additionally, Russia has become intent on trying to block our interests around the globe, for example in Ukraine, Venezuela, and Syria. There is no sign that this will change in the near to mid-term, making a return to Cold War dynamics increasingly likely, particularly given Putin’s old KGB mentality.

North Korea Negotiation in Trouble

After President Trump cut short his summit with Kim Jong-un in Vietnam, the North Koreans doubled down on both their aggressive rhetoric and their nuclear development program. Trump’s response has been somewhat unclear at least to the public eye. He reportedly towed a very hard line in Vietnam when he called for a full dismantlement of North Korea’s nuclear infrastructure, chemical and biological warfare program, and related dual-use capabilities as well as its ballistic missiles, launchers, and associated facilities. Trump then surprisingly attempted to cancel a new round of sanctions by the U.S. Treasury Department. It is quite possible his hard line in Vietnam inspired a behind the scenes move by the North Koreans to reopen negotiations. Time will tell if anything fruitful comes from it. Trump and South Korean President Moon Jae-in will meet at the White House next week to recalibrate.

China Trade and 5G Competition

Ahead of the next leg of trade negotiations this week, both China and the U.S. have sought to soften their starting positions signaling that both sides hope to reach some kind of trade deal, which would put a welcome end to the greatest tensions and damaging tariffs of this trade war (even if it would still not resolve some longstanding issues). However, the U.S.’s effort to block the Chinese dominance of 5G infrastructure in Western democracies on the basis of key national and regional security concerns has met with surprising resistance from traditional European allies. While some might see a disturbing European pivot toward China, especially with Italy’s embrace of China’s Belt and Road Initiative, recent statements from the European Union suggest that Europe still sees China as a strategic rival with its restrictions to market access, its human rights abuses, and its rule of law.

Venezuela Sinks Further

Venezuela continues to sink into further chaos and decline. President Nicolás Maduro hangs on to power with the backing of the country’s military high command as well as financial support from Russia and China. Simultaneously, opposition leader and head of the National Assembly, Juan Guaidó, continues to proclaim himself as the legitimate interim president of Venezuela. More than 50 countries including the United States now recognize Guaidó, even as he has thus far been unable to oust Maduro.

The Trump administration is looking to turn up the heat on Maduro, including issuing additional sanctions. Administration officials have also said “all options are on the table.” Judging by President Trump’s recent comparison of Venezuelan socialism to the policy positions of Democrats in the US Congress, he can be expected to keep the heat on Maduro which also will play well to a domestic audience.

Mexico under AMLO

Clouds seem to be forming over Mexico’s economy. There was the threat of a U.S.-Mexico border shutdown by President Trump and the recent cut in Mexico’s economic outlook for 2019. Since Mexican President Andrés Manuel López Obrador (aka AMLO) was elected in July 2018, Mexico’s economy has slowed. Oil production fell 6.9 percent last year, leading the rating agencies to downgrade PEMEX in January.

Many thought AMLO might be more pragmatic when he gave his blessing to the re-negotiated NAFTA 2.0 deal last fall. However, he is at heart a leftist and nationalist who is skeptical of corporate interests. He threw out the $13 billion airport project, and recently announced an end to oil joint ventures between private companies and the state-owned PEMEX-a hallmark of Mexico’s 2013 energy reforms.

At the border, AMLO will need to demonstrate that he’s doing more to address the migrant crisis. He should take President Trump’s threats seriously even as the US president has now backed off his original threat to close the border, saying instead that he would give Mexico a year to stem the flow of drugs and migrants. In this year, AMLO has a tough balancing act to perform: he will need to handle the issue with diplomatic finesse to avoid damaging the U.S.-Mexico relationship or further eroding Mexico’s overall economic forecast, while at the same time maintaining his image and base of support at home.

Comedian for Ukraine’s Masses

The first round of Ukraine’s presidential election provided much intrigue. The March 31 contest traditionally would’ve been between President Petro Poroshenko and former president Yulia Tymoshenko. Instead comedian, Volodymyr Zelenskiy, catapulted in the polls winning a large enough vote share to be considered the favorite in the April 21 second round. Like many around the world, Ukrainians appear to be so disillusioned by establishment politicians that they may put their hopes on Zelenskiy, a political novice whose TV character becomes Ukraine’s president by accident. Following the polls, Poroshenko appealed to young voters, touting his anti-Russian stance and promising to “listen” to their concerns. We should expect the Kremlin will attempt to influence the final election outcome in support of Zelenskiy. Putin may mount a disinformation campaign, tamper with the mechanics of the election, amplify military aggression as he did in the Sea of Azov last year, or recruit intelligence sources close to Zelenskiy.

Cloudy Skies Remain for Saudi Arabia

The international bond market’s warm reception to Saudi Arabia’s Aramco bond prospectus suggests that their $10 billion bond offering will be successful. We learned that the company is cash rich and hugely profitable with $111 billion of profit in 2018. For the Saudis, this is a welcome response given the extensive fallout from the murder of Jamal Khashoggi. Nonetheless, Saudi Arabia is not yet back in the good graces of the international community. The highly anticipated Aramco IPO has been indefinitely postponed, its Public Investment Fund embarrassingly saw the return of $400 million from Endeavour talent agency, and even the bond offering is far more modest than the $70 billion initially planned. On the political front, the situation for Riyadh remains suboptimal. Though the Trump Administration hasn’t leaned heavily on the Saudis, the US Congress is using its influence to sanction Saudi Crown Prince Mohammad Bin Salman (MBS). Furthermore, MBS’s strategic challenges remain, with less leverage and goodwill from the international community to resolve them, especially his ever unpopular war in Yemen.

Spring 2019 Intelligence Report

“A genuine crisis with no quick fix” Jack Devine discusses immigration on Bloomberg Radio, April 2019

Jack Devine, former chief of CIA’s worldwide operations, and founding partner and President of The Arkin Group, discusses the border crisis and the firings at DHS. Jack sees the upheaval at DHS as part of the larger process through which President Trump is finally getting people he trusts into place. He said that Trump’s initial hires were made out of necessity more than comfort, but time and experience has allowed him to identify people who he believes will support and implement has policies. “We’ve gone from the Trump presidency to the Trump government,” Jack said. Despite the government’s intense focus on immigration, Jack does not see any easy solutions as the drivers of the problem, including political and economic instability in parts of Central America, cannot be resolved quickly.

Jack also touches on Trump’s accusations of spying by the FBI.

Family Dimension Complicates Immigration Crisis

Venezuela, Mexico & Brazil: Rising Levels of Violence in Latin America

Dear Clients,

Many of you know my long-standing interest and experience in Latin America, going back to when I began my CIA career in Santiago, Chile in the 1970s. I had the good fortune of heading the Latin America Division at CIA and working in many countries in Latin America, including Venezuela. It is with that history in mind that I watch the political-economic crisis unfolding in Venezuela and the current struggle between the Venezuelan opposition leader, Juan Guaidó, and the authoritarian government of Nicolás Maduro. The struggle is familiar, but it is also an example of the rising levels of political violence and crime throughout Latin America that are affecting many of our clients as they seek to do business in the region.

Chaos & Collapse in Venezuela
A combination of poor economic policies, corruption, and a wholesale degradation of democratic institutions has led to the crisis in Venezuela. Venezuela has been in a death spiral of violent political protests and economic collapse over the last few years, as Venezuelans have taken to the streets against Nicolás Maduro and 3 million have fled for the borders to Colombia and Brazil. While the Venezuelan government has been unable and unwilling to rescue the country from devastation, ordinary Venezuelans suffer from soaring crime rates, rampant corruption, and endless lines to procure basic goods and services which are in short supply.

It is unclear whether Juan Guaidó has the capacity to lead Venezuela out of crisis and usher in a transition back to democratic rule with new elections, but it is clear Venezuela will not emerge from the violent chaos and turmoil until there is a change in government.

Political Violence & Crime in Mexico & Brazil
Mexico and Brazil are not Venezuela, but these countries also suffer from increasing levels of political violence and criminality. Mexico’s homicide rate was the highest on record in 2018, as political violence increased sharply ahead of the July 1, 2018 election, which saw leftist nationalist Andrés Manuel López Obrador win the presidency with 53 percent of the vote. Indeed, López Obrador’s win could be attributed to the growing insecurity and violence in the nation, and a growing weariness of the population to tolerate it.

As in Mexico, it is the organized criminal groups, gangs, and drug trade that fuel the violent crime in Brazil too. Increasing levels of violence and insecurity also played a role in Brazil’s 2018 presidential election, and right-wing Jair Bolsanaro won 55 percent of the vote after campaigning on an authoritarian agenda against crime and corruption. Their leaders may be ideologically opposed, but both countries will have to address the issues of impunity and corruption while also going after the gangs, organized criminal groups, and drug cartels behind the violence.

Safeguarding your Business in Latin America
Despite the high levels of political violence and crime in Latin America, businesses can and do manage the risks that come with the operating environment. Corporate entities operating and investing in Latin America require ongoing risk management. Successful companies in the region invest in appropriate systems and protocols so they can mitigate the risks and seize the opportunities. They also turn to specialized firms, like The Arkin Group, that can help them navigate the security concerns and prepare for possible downside impacts as a result of the security situation – including anything from violent political protests disrupting supply chains to CEO and top management being targeted for kidnapping and extortion to criminal groups penetrating the organization for illegal gain. Political solutions and policy changes will not happen overnight, so businesses need to manage the risks while also taking advantage of the economic opportunities that Latin America presents.

To give a more detailed explanation for the rising levels of political violence and crime in Latin America and how to safeguard your business in the region, I have co-authored a chapter with Amanda Mattingly in The Guide to Corporate Crisis Management entitled, “Dealing with the Challenges of Political Violence and Crime in Latin America.” Published in January 2019 by Latin Lawyer, The Guide is designed to assist key corporate decision makers and their advisers in effectively planning for and managing corporate crises in the region.

I hope you will find the chapter useful and share with your colleagues. If you or your firm would like an individualized consultation or information, please contact me at The Arkin Group.

Sincerely,

Jack Devine

“Cold War Games in Venezuela?” Jack Devine on BizNews Radio UK, February 2019

TAG President Jack Devine recently discussed the complicated situation in Venezuela, the struggle between the Venezuelan opposition leader Juan Guaidó and the Venezuelan government of Nicolás Maduro, and how the struggle has split the international community. Jack noted that Venezuela could be seen as another proxy war between the United States and Russia, commenting, “When I look at Venezuela today with my background having spent so many years in the struggle with the Russians and the Cubans, I mean, this is a very familiar pattern …” BizNews Radio in London picked up Jack’s comments originally recorded for Bloomberg Radio.

Cold War Games in Venezuela?

“In the Long Game, Maduro Goes,” Jack Devine on Bloomberg Radio, February 2019

Jack Devine, former chief of CIA’s worldwide operations and founding partner and President of The Arkin Group, discussed Venezuela and the state of the CIA on Bloomberg Radio. He commented on the current crisis facing Venezuela and the struggle between Venezuelan opposition leader Juan Guaidó and the Venezuelan government of Nicolás Maduro, noting that “We tend to underestimate how far a country has to fall before there’s an eruption or a regime change … over the long play, Maduro goes.”

In the Long Game, Maduro Goes

“Should Mexican Troops Keep Fighting Cartels?” Amanda Mattingly, Latin America Advisor, December 2018

As the new Mexican President, Andrés Manuel López Obrador, took office December 1, questions about his security plan started to emerge with questions about the continued role of the Mexican military in the fight against the drug cartels and organized crime. In response to a Q&A in the Latin America Advisor, TAG Senior Director Amanda Mattingly noted that “involving the military in domestic law enforcement is a tricky thing and was always supposed to be temporary…”

“Should Mexican Troops Keep Fighting Cartels?”