In Other News: China Launches Ballistic Missiles into South China Sea, Mexico’s President Seeks to Expose Past Corruption & More – August 28, 2020

August 28, 2020

China launched four medium-range “aircraft carrier killer” ballistic missiles into the South China Sea during military exercises on Wednesday, which has been widely interpreted as a warning to U.S. aircraft carriers in the area, and to U.S. military bases in the Asia-Pacific. China’s territorial claims in the South China Sea have long been a point of contention in U.S.-China relations (and in China’s relationships with Southeast Asian countries whose territorial waters it lays claim to). Up to this point, however, the U.S. has pursued a policy of neutrality in regional territorial disputes, limiting its actions to freedom of navigation exercises and naval support for countries whose claims to the South China Sea overlap with China’s, and whose commercial ships have been harassed at sea by Chinese vessels. In recent weeks, however, the U.S. approach to the conflict has taken a more aggressive turn. Secretary of State Mike Pompeo called China’s claims to the South China Sea “completely unlawful” in a speech on July 13, echoing the 2016 ruling of an international tribunal at the Hague. That same month, the U.S. stepped up military presence in the area by deploying two new aircraft carriers in waters that fall within the boundaries of China’s territorial claims. And this week, the U.S. announced new sanctions on 24 Chinese companies in connection with their contributions to China’s build-up of artificial islands in the South China Sea for military purposes. As the U.S. ups the pressure on China, it will have to carefully calibrate its actions to stay the course without crossing a line beyond which Beijing feels compelled to respond. We do not think either side is seeking outright conflict, but as this cycle of response and counter-response continues, the margin for error will continue to shrink.

Mexican President Andrés Manuel López Obrador (AMLO) seeks to expose past corruption in Mexico as the economy shrinks to Great Depression levels and Covid-19 deaths continue to climb. This week, AMLO proposed the possibility of a popular referendum to decide if five past presidents should be charged with corruption. If the Supreme Court deems it constitutional, the National Electoral Institute will organize the referendum on former presidents Enrique Peña Nieto, Felipe Calderón, Vicente Fox, Ernesto Zedillo, and Carlos Salinas. The move would be unprecedented in Mexico and, coming ahead of the country’s 2021 midterm elections, could have political consequences. AMLO came into office in 2018 with a pledge to weed out corruption in Mexico, and his referendum proposal is part of a recent escalation of his anti-corruption campaign. It also comes less than a week after Emilio Lozoya, the former head of Mexico’s state-owned oil company Pemex, accused 17 former Mexican officials (including Peña Nieto and Calderón) of corrupt dealings worth millions. While AMLO has support from his political party Morena to go after his predecessors, critics believe his anti-corruption campaign is politically motivated and an attempt to distract from his handling of the economy and the pandemic. Mexico’s economy could shrink as much as 13% in 2020, according to the central bank, and Covid-19 deaths have surpassed 62,000.

Russia has rejected international calls for an investigation into the poisoning of opposition leader Alexey Navalny on a flight from Moscow to Tomsk, Russia last week. German doctors have determined that Navalny, who is currently in a medically induced coma in a hospital in Berlin after being evacuated from a hospital in Omsk, was poisoned with cholinesterase inhibitors. Russian doctors who treated Navalny claim no evidence of poison was found. Cholinesterase inhibitors are sometimes used for military purposes, such as in nerve agents like Novichok, which was used in the poisoning of former Russian spy Sergey Skripal in 2018. Skripal’s poisoning is just one of a string of high-profile poisonings believed to have been carried out by Russian security services, which featured prominently in attacks on opponents of the Kremlin in the Soviet era (and before), and more recently against people like Russian defector Alexander Litvinenko in 2006 and former Ukrainian president Viktor Yuschenko in 2004. While firm proof has not yet emerged that Navalny’s poisoning was state-sanctioned, it fits a well-established pattern, and is cementing the perception in the international community that the Russians are willing to engage in reckless extralegal assassinations – both in Russia and abroad – without fear of punishment. While it is true that the international community has limited options for a formal response, this incident will likely further isolate Russia from its western allies whose markets it will need to pull the country out of a deep Covid-19-induced recession. The World Bank has forecast that the Russian economy could contract by as much as 6% this year.

In Other News: Situation in Belarus, U.S. Seizes Iranian Fuel Heading to Venezuela & More – August 21, 2020

August 21, 2020

The EU has announced plans for targeted sanctions on officials believed to have been involved in rigging recent presidential elections in Belarus, which delivered yet another victory to strongman president Aleksandr Lukashenko, who has held the office since 1994. Lukashenko claimed to have won with more than 80% of the vote, triggering widespread protests that lasted for more than a week before he ordered security services to put down the uprising, which is ongoing. Since protests began on August 9, two have died and nearly 7,000 have been imprisoned, with many alleging beatings and other forms of abuse by security services. The EU also plans to sanction officials involved in repressing protests. Lukashenko has sought to pin blame for the demonstrations on foreign influence and funding and has called for tighter border controls to prevent movement of fighters or weapons into the country and heightened scrutiny of NATO movements in Poland and Lithuania. The EU’s narrow, targeted sanctions are seen as an attempt to avoid accusations of meddling on the protesters’ behalf. Russia has echoed Lukashenko’s concerns about foreign interference and has pledged it will not engage in direct military intervention, but if Moscow stays true to form it will likely find less conspicuous ways to intervene to prevent Belarus from tilting towards Europe, (propaganda, funding, cut-rate energy supplies, etc).

The U.S. government seized 1.1 million barrels of Iranian fuel heading to Venezuela last week. The high stakes at sea operation to enforce U.S. sanctions involved negotiations with a Greek shipping magnate, George Gialozoglou, to forfeit the fuel without the use of force. A U.S. judge issued the warrant for the seizure, considering the shipment of Iranian fuel on four Greek-owned tankers to be in violation of U.S. sanctions against Iran. In the legal opinion of the United States, oil sold by the Iranian National Oil Company helps to fund Iran’s Islamic Revolutionary Guard Corps, which was designated as a terrorist organization by the United States in 2019. Reportedly, the seized fuel will be sold on the open market and the money will go to a victims of terrorism fund. Meanwhile, Venezuela, which supposedly paid for the fuel up front, will not receive anything. Venezuela has been suffering from extreme gasoline shortages due to its own ailing oil infrastructure, the current economic crisis brought on by the pandemic, and U.S. sanctions on Venezuela’s oil sector, which were imposed in 2019 as well. Earlier shipments of Iranian fuel did make it to Venezuela in late May and early June despite U.S. warnings.

Mali’s president Ibrahim Boubacar Keïta was ousted in a military mutiny on Tuesday after months of anti-government demonstrations over corruption, economic mismanagement, growing insecurity, and allegations of electoral malfeasance. The U.S. has expressed concern that an increasingly unstable Mali could become a hub for violent extremists throughout the region. A prior coup, in 2012, led to a rebellion that allowed militant jihadist groups to expand throughout large parts of the country. Mali’s West African neighbors (particularly Burkina Faso and Niger, which have also been subject to increasing militant attacks) fear that Mali could once again be forced to cede territory to militants and are seeking to mitigate the risk that those forces grow unchecked at their borders. While the military has announced plans for a transitional government, the Economic Community of West African States (ECOWAS) has called for Keïta’s reinstatement and plans to send envoys to continue negotiations which began prior to the military incursion. ECOWAS is also concerned about setting a precedent where military takeovers become the norm in lieu of negotiated political solutions. France has been spending heavily to help stabilize Mali since the 2012 coup – shelling out nearly $1 billion a year – with some drone support from the U.S., but these efforts have thus far failed to mitigate the problem. West Africa is not at the forefront of U.S. policy priorities at present, but a collapsed state that is at the center of transnational extremist activity will eventually become a global problem.

In Other News: Israel-UAE Deal, Lebanese Prime Minister Resignation & More – August 14, 2020

August 14, 2020

Israel and the UAE reached a potentially historic deal yesterday that will begin the process of normalizing relations and temporarily suspend Israeli annexation of territory in the West Bank, while also angering Palestinians and further isolating Iran in the region. The two countries will send ambassadors and establish some commercial ties, including flight connections, making the UAE the first Gulf country and the third country in the region to establish diplomatic ties with Israel after Egypt (1980) and Jordan (1994). One of the key drivers behind the rapprochement appears to have been mutual mistrust of Iran, which is also shared by other Gulf neighbors, and the world is watching to see whether more of them follow suit. Additional deals could start the process of formalizing an alignment of Israel and its neighbors on the need for security cooperation to counter Iran’s aggression by proxy in the region. Iran and Turkey have slammed the deal as a betrayal of Muslims, and Palestinians have also been sharply critical of the deal, which excluded them from negotiations and undermined long-held unity among Arab neighbors in support of Palestine. One of the biggest impacts will be political – this is a major coup both for Israeli Prime Minister Benjamin Netanyahu and President Trump, whose administration helped broker the deal. An official signing will take place at the White House.

The government of Lebanese Prime Minister Hassan Diab resigned Monday amid public anger and consecutive days of protests after a massive port explosion that killed more than 200 people, injured thousands more, and displaced hundreds of thousands. Protests turned violent, with demonstrators throwing stones and other objects, and police responded with what has been described as excessive force, including the use of tear gas and rubber bullets. The country’s president, Michel Aoun, has asked the government to stay on in a caretaker capacity until a new cabinet can be formed. Parliament is now charged with selecting a new Prime Minister, which is likely to be a long process complicated by jockeying among the country’s competing sectarian (and other) factions. Furthermore, the resignation did little to quell protests, which continued into Monday night. Lebanon was contending with economic crisis and protests even prior to the Covid-19 outbreak and last week’s explosion. Few expect a change in cabinet makeup to effect any real change, and many fear endemic corruption will hamper efforts to effectively deploy much-needed aid. Continued failure on the part of Lebanon’s political class to govern effectively, especially in a crisis, is likely to prolong social unrest.

Russia has registered the world’s first Covid-19 vaccine (and called it Sputnik V), sparking widespread global concern about the potential impact of administering inoculations that have not undergone sufficient testing. The vaccine has not yet completed a “phase three” trial, in which thousands of participants are tested. Thus far, it has only been tested on 76 people. Regardless, it will be available to select groups of vulnerable individuals, such as Russian medical personnel by the end of August. Use in the general population is not expected until January 2021. The development has been welcomed in some quarters – a Brazilian institute expects to start producing it in the second half of 2021, and the Philippines will host a Russia-funded phase three clinical trial scheduled to start in October. Philippine President Duterte reversed course after initially offering to be a test subject, saying that he would wait until May 2021, after the phase three trial is over. A major requirement of a successful vaccine is that people trust and accept it – if not, few will agree to be inoculated. Beyond the obvious risk that an untested vaccine could have unintended negative health impacts, if it is widely administered and found to be ineffective, that could undermine public confidence in any future vaccines with greater potential to protect against the virus. Furthermore, Putin is taking a substantial political risk, given his push to return Russia to its Soviet-era global standing. While first place in the vaccine race can be a source of both prestige and national pride, failure, and the embarrassment that would entail for the country, could severely dent his popularity.

Tensions in Bolivia are boiling over again as anti-government protesters demand elections. Labor unions and indigenous groups who support former Bolivian President Evo Morales have mounted demonstrations and highway blockades over the last two weeks in an effort to pressure the current government of President Jeanine Áñez to move forward with presidential elections in September. Áñez came into office as a caretaker president last November when Morales fled the country in response to mass protests and ire over marred elections which gave him a narrow victory. Many Bolivians and international observers believed the vote was fraudulent due to widespread irregularities in the process. New presidential elections were supposed to take place in May 2020, but they have been postponed twice now due to the pandemic. The new proposal is for an October 18 election, but protesters want Áñez to honor the September 6 date. The unrest in Bolivia is not surprising, however, given that the pandemic renewed economic grievances among Bolivia’s poor, many of whom are fervent Morales supporters. Morales was Bolivia’s first president of indigenous descent, and although he remains in exile, he still wields influence in the country.

“CIA Legend Jack Devine on Challenges to the U.S. Intelligence Community,” Network 20/20 – August 12, 2020

TAG President Jack Devine spoke on Network 20/20 about the challenges facing the U.S. Intelligence Community and his experiences in the CIA. According to Jack, one of the biggest threats to U.S. interests is the rise of nationalism, populism, and the authoritarian “strongman” and the diminution of democracy around the globe. Russia’s Vladimir Putin is an example. Jack said he thinks “people are underestimating just how aggressive his operations are” and how much of a national security threat Putin poses to the United States. Regarding China, Jack believes tensions between the United States and China are likely to intensify given that China sees itself becoming the number one power in the world over the next 50 years. According to Jack, this makes China a longer term challenge for the United States.

You can watch Jack’s Network 20/20 interview here:

CIA Legend Jack Devine on Challenges to the U.S. Intelligence Community

In Other News: Beirut Explosion, Argentina Debt Deal & More – August 7, 2020

August 7, 2020

An explosion in Beirut this week that killed at least 135 and wounded another 5,000 appears to have resulted from gross incompetence by Lebanese officials, raising the specter of more political instability in an already troubled region. The blast, which registered on seismographs at the level of a 3.3-magnitude earthquake, destroyed commercial and residential sections of eastern Beirut and cut off electricity across vast swaths of the city. Officials say it was triggered by a warehouse fire that ignited thousands of tons of ammonium nitrate that arrived in the Beirut port in 2013 on a dilapidated Russian cargo ship and remained there, despite multiple requests for guidance from Lebanese customs officials as to how to dispose of it safely. Mass protests erupted in Lebanon last year, a reaction to a struggling economy and poor (sometimes corrupt) governance by Lebanon’s political class. The unrest led to the resignation of Prime Minister Said Hariri in October of last year, and this latest incident is sparking renewed anger at the country’s political leadership – on Wednesday, protestors reportedly attacked Hariri’s convoy. The International Monetary Fund has forecast that Lebanon’s economy could contract by as much as 12% this year as a result of Covid-19 lockdowns. That, coupled with outrage over this port tragedy, could mean more protests ahead.

Argentina restructured $65 billion in debt with creditors, including BlackRock Inc., in a deal that provides significant debt relief to the country, according to Argentina’s Ministry of Economy. Argentina’s President Alberto Fernández has made it his mission to restructure debt with private creditors as well as with the International Monetary Fund (IMF), which provided a $56 billion bailout to Argentina in 2018. Fernández defeated the market-friendly incumbent President Mauricio Macri last year in elections and took office in December 2019. He believes debt restructuring is crucial to stabilizing Argentina’s economy, which suffers from a weakened peso, inflation of around 45%, and a possible GDP contraction of 12% in 2020 due to the pandemic. The deal allows Argentina to change the payment dates for some new bonds and paves the way for Fernández to now negotiate with the IMF. Argentina has suffered nearly two decades of strife dealing with debt and the specter of default, ever since 2001, when its debt reached $160 billion and the country declared bankruptcy.

U.S. Health and Human Services Secretary Alex Azar will make an official visit to Taiwan, marking the first visit from a cabinet-level U.S. official in six years and another significant step to assert U.S. policy priorities in an already tense bilateral relationship with China. Azar’s visit was carefully calibrated by the Trump administration to send a clear signal to Beijing in support of Taiwan, but to send a cabinet member with relatively little political heft. For comparison purposes, a Taiwan visit by Secretary of State Mike Pompeo, who recently called attention to Taiwan’s “vigorous democracy” in a speech railing against China’s censorship, human rights abuses, and theft of U.S. intellectual property, would have likely crossed a red line. China will feel compelled to respond, though its response is likely to be proportional (e.g. ratcheting up threats against Taiwan or taking limited punitive action against Lockheed Martin, which recently participated in an arms sale to Taiwan). As with a number of recent small U.S-China dust-ups, we see little immediate risk of escalation from this episode alone. However, the U.S. announcement of a coming ban on popular apps TikTok and WeChat (the latter is a critical component of both communications and business for any firm operating in China) along with threats (that will likely be made good) to delist Chinese companies from U.S. exchanges and reports that the administration may sanction Hong Kong Chief Executive Carrie Lam will add fuel to the fire. Too many of these incidents – or just one that misses the mark – could tip the relationship over the edge into something more confrontational.