Tuesday, January 7, 2020

US-Iran Crisis: Trump’s Political Brass Balls

According to numerous news reports, President Trump was provided several options by the intelligence community with respect to potential action(s) against commander General Soleimani, head of the Islamic Revolutionary Guard Corps (IRGC). Supposedly the US president is given an extreme option so as to make the other options more operationally reasonable and politically palatable. However this time around Trump selected [allegedly] the most extreme.

Despite one’ s opinion about Trump, I believe he reviewed the US intel and made the most logical and plausible decision because this was an outrageously exceptional opportunity that was unavailable to previous administrations and may never occur again.

Moments before the drone attack General Soleimani was riding in a convoy with Iraqi Abu Mahdi al-Muhandis, deputy head of the pro-Iranian Shiite group Popular Mobilization Unit (PMU). The PMU has been modeled closely after the IRGC and reportedly has 100,00 men under arms and 200,000 in reserve. He also heads his own personal militia called Kataib Hezbollah (KH) responsible for the export of weapons and men throughout the region.

The question begs: what is an Iranian general doing in Iraq riding along with the deputy head of the PMU? The so-called “optics” aren’t encouraging. It recalls the infamous question Captain Kirk in Star Trek asks an image who considers himself God, “Why does God need a spaceship?”

Statements from around the world claim that Trump’s kill decision will escalate tensions throughout the Middle East. However tensions were already escalating and poised to do so rather rapidly in the near future. With Iran’s increasingly aggressive movements in Iraq including possible “embassy hostage taking part 2” these tensions would eventually reach a point of no return which would be far most costly, especially in American lives. For years Iranian IEDs have killed and maimed thousands of Americans. As Walter Matthau as Pentagon advisor, Professor Groeteschele, in an infamous scene in the movie Fail Safe proposed, a first strike alternative is the best move, better sooner than later and cut multiple heads from the hydra dragon.

It was 1 AM near the Baghdad Airport and no other vehicles near the convoy. Soleimani’s ego and arrogance got the best of him by assuming the US would do nothing. In other words they were isolated for that brief window of time. US intel at its finest.

Both were hands-on who worked extraordinarily closely with a tight relationship in a region where strong relationships are the difference between life and death. Literally. Replacing their experience and skill sets is almost impossible.

Politically from afar it seems as if Trump made a boneheaded decision by selecting the extreme choice. I believe that the extreme was not the choice, rather the international political fallout. A bad choice would have been to do nothing and face more severe consequences in the future. Imagine if it was discovered in the future that the US had the chance to prevent an attack and instead decided not to. Politically, since “the buck stops here” Trump is the so-called fall guy while US intel appears as a voice of restraint and reason when in fact I believe it was a neat collaboration.

No government could possibly admit that a kill order was a logical possibility, merely an extreme one. For this reason US intel and military were, as the saying goes in Casablanca, “Shocked, shocked” that Trump selected the kill option.

Additionally many conveniently forget that there’s still residual fallout with respect to former President Clinton’s decision not to kill Osama bin Laden who orchestrated the 9/11 attacks. Inaction is sometimes more lethal than taking action.

Since his inauguration Trump has fervently tried to extract the US from the Middle East. If this action expedites the US withdrawal or additional reduction in military personnel, it could work. Shortly after the killings the Iraqi parliament passed a non-binding resolution requesting the expulsion of all foreign forces. On one hand this provides the US administration an “invitation” to leave. Because a resolution, unlike a law, is non-binding, politically it’s a face-saving way for the Iraqi government to request foreign military departures but secretly (and needs) their military presence.

On the other hand, the Iraqi government can then pass this resolution into law requiring the departure of foreign forces.  Should this occur with almost no coalition forces in Iraq, potential US casualties specifically in Iraq will drop precipitously.

Even though Iran has been degraded economically through sanctions and militarily through leadership losses, they are compelled to “save face” and strike somewhere but this price may be far less than if the kill order was not given.

Copyright 2020 Indo-Brazilian Associates LLC. All rights reserved.

Indo-Brazilian Associates LLC is a NYC-based advisory service and think-tank that provides geopolitical investment and security assessments.

Sunday, January 5, 2020

US-Iran: Dr. Strangelove in the Middle East

It appears “art imitates life” as President Trump has enthusiastically embraced the role of Jack D Ripper brilliantly by Sterling Hayden in the iconic movie Dr. Strangelove. The ultra-nationalist and fervent anti-communist General Ripper illegally and unilaterally issues a special “go” code that sends US nuclear armed bombers to attack the USSR in the hopes that the US government will have no choice but to follow suit with additional support bombers to smash communism and “protect our way of life.”

Like General Jack D. Ripper, Trump’s deliberate order to kill a high-ranking government official he has placed the US in an “all in, all or nothing at all” position that is designed to provoke a violent Iranian response. Of course actions on both sides will escalate. How they will play out is conjecture however any diplomatic resolutions will be all but impossible for the Iranians to agree to based on the Trump’s administration’s hyper-aggressive actions that began with withdrawal of the Joint Plan of Action (JPOA) agreement (the Iranian nuclear arms deal) to which Iran was abiding to draconian economic sanctions.

Ironically Iran’s response may be delayed for one simple reason: profound psychological shock. The Trump administrations has worked diligently to avoid military conflict or direct action that included the last minute cancellation of a drone attack on Iranian assets last summer. The deliberate targeting and killing of a top general was considered unfathomable which meant the sudden action shocked the world.

The Middle East situation with Iran becomes murkier and even more complicated including domestic risks without General Soleimani for several reasons:

New Leader, New Profile
Intelligence services had a tome-thick operational and psychological profile of the general and his relationships with his associates and contacts on which to successfully monitor, predict and possibly prevent terrorist activities. Intelligence services now have nothing more than a pamphlet-thin profile on his replacement deputy commander Brigadier General Esmail Ghaani. This one of many reasons previous US administrations, despite ample opportunity to eliminate him, decided that the blowback of killing a sovereign government official was not worth the risk.

Though Iranian policies will be carried out under General Ghaani, the relationships with forces under him are not as developed and their ability to be as operationally efficient as under Soleimani. In this part of the world relationships are everything which is the crux of Iran’s ability to project its power through its proxies throughout the Middle East. Deep relationships and trust are impossible to replace immediately with a new figure who has the political and revolutionary fervor but not the operational “chops” required.

Terrorist Proxies and Domestic Lone Wolves
Not only will the US have a problem Iran’s retaliation against expected targets but it has probably already inspired anti-US (not necessarily pro-Iranian) international and domestic groups, specifically lone wolves without any direct instruction from a group.

Increase in Anti-Semitic Attacks
Sadly expect an explosive increase of anti-Semitic attacks globally.

Historic Date for Iranian Retaliations
A frightening possibility is the use of one date - January 20 which is the month & day in 1981 that the 444 US embassy hostages were freed - that could be selected by Iran for some sort of retaliatory attack.

Iran’s menu of retaliatory responses will take asymmetrical warfare to a new level:

·         Inspiring their proxies to intensify their attacks on military and civilian targets globally.
·         Cyber-attacks on any number of targets globally.
·         Drone and missile attacks on Saudi and other oilfields in the region. Patriot missiles need to be heavily concentrated at a specific oil facility to provide good protection. However if a preponderance of missiles and drones are launched then it will overwhelm the Patriot system. Additionally there are many petro-targets throughout the region without such defenses which are extraordinarily expensive to purchase and maintain.

Of course one must conspiratorially consider the unusual timing of the killing. A robust stock economy, blistering market and a highly divided Democratic Party with respect to promoting a specific presidential candidate for the 2020 presidential election already give the administration electoral leverage. However with the impeachment process gaining steam, this looming and long-term crisis automatically throws a monkey-wrench in this political process.

With respect to a US response against an Iranian retaliatory attack, hopefully it never reaches the point in which the powers at the highest levels ask someone like General “Buck” Turgidson played by George C. Scott to provide his expert assessment on a successful bombing run on Iran.

What we may never know is the internal Iranian power struggles behind the scenes. One possible scenario is as follows:

As happens throughout history regardless of the political system, when a charismatic military leader gains too much power militarily and politically, his influence and actions result in the “tail that wags the dog.” He proactively initiates even dictates his own policies that the governmental political body tacitly (yet unofficially) approves.

As tip of the spear he probes, pushes and sometimes exceeds the mandates and boundaries of the country’s foreign policies. In other words his actions have by de facto established the country’s foreign policies without formal orders. And if these are successful in achieving the country’s aims, often ahead of schedule, then the political body increasingly “trusts” his decisions and gives him freer reign by default.

On the other hand some high-level government officials may have realized too late of Soleimani’s outsized power endangered Iran’s positions particularly against the draconian sanctions that have placed enormous economic pressure and provoked social unrest but he held too much political influence, allies and power to challenge him.

[No copyright infringement is intended with respect to the cartoon of Trump riding the bomb which appeared 18 September 2019 edition of The Independent and submitted by Sean Delonas].

Copyright 2020 Indo-Brazilian Associates LLC. All rights reserved.

Indo-Brazilian Associates LLC is a NYC-based advisory service and think-tank that provides geopolitical investment and security assessments.

Wednesday, December 11, 2019

Oil Prices’ Hard Landing Initializing Descent

The recent OPEC+ meeting resulted in nothing more than creative production accounting. The estimated new oil production sources coming on-line and Venezuela’s phoenix-like production rise interestingly neatly matches the OPEC+ quota agreement. However even if the additional production estimates fall short, the combination of weakening compliance by OPEC+ members and flat global demand will add severe downward pressure on oil prices as early as 2020.

For additional particulars please refer to the 11 December 2019 article published on Seeking Alpha  Oil Prices’ Hard Landing Initializing Descent.

Wednesday, November 20, 2019

Oil Prices Heading Towards a Hard Landing

Image result for plunging oil pricesOil prices have been exceptionally stable through most of 2019 establishing itself comfortably at about $60/bbl (Brent) with little deviation except briefly in the aftermath of the attack on the Saudi oil facilities this summer.

However oil prices are about to experience a hard landing as a result of a gusher of oil from several new sources coming on-line against the back-drop of slowing global economic growth as articulated in the following published article:

Wednesday, November 6, 2019

Investing in Hong Kong | Strategic Considerations

As the intensely incessant turmoil has accelerated its rapid descent into recessionary territory Hong Kong will remain a vital financial hub for all businesses, particularly those from mainland China whatever, the final outcome of the protests. For this reason because of its limited land commercial and residential property values will eventually become more reasonably priced which will offer buying opportunities that will be more competitive than other important financial centers elsewhere in Asia.

Please access this in-depth perspective at Investing in Hong Kong | Strategic Perspectives.

Sunday, September 29, 2019

China’s King Kong Sized Hong Kong Dilemma

As the 70th anniversary of Communist China approaches October 1st, the Hong Kong protestors are ratcheting up their intensity in a bold “media smackdown” to determine whether they or the Peoples Republic of China (PRC) receives the most attention. It’s a powerful symbolic battle between a parade of military trophy weapons and inexperienced soldiers in Beijing vs parade of effective and proven weaponry and battle-hardened Hong Kong citizenry.

The endless aggressive protests particularly the images of protestors flaunting waving of the former colonial flag of the UK and the so-called “black hand” behind the protests of the US, creation of an anthem (Glory to Hong Kong) and desecration of the PRC flag represents a political and psychological “thousand cuts” to President Xi and his hardliners.

Possibly even more disturbing for the PRC leadership is that Hong Kong residents are not a minority racial or ethnic group, disenfranchised or poor, rather of the same ethnic background (Han), middle class and highly educated. They don’t demand food or water which China could provide and “buy” peace, rather a more precious commodity - self-determination - a concept that for the PRC is non-negotiable. The now ingrained motivation of the Hong Kong citizenry fuels its energy to conduct a high-level of intensity for months may represent a harbinger of things to come – an inspiration to aggrieved groups within the PRC borders should their economy weakens to the point of recession.

The PRC missed its unique window of opportunity to squash the protests during its embryonic stages but choose for various reasons not to and instead relied (and probably guided) the Hong Kong government and its law enforcement to settle the matter. For this reason any PRC intervention in Hong Kong will be due to the failure of the Hong Kong government, not the success of the protestors.

The PRC faces its own version of the Great Wall. Hong Kong itself is the Great Wall to protect them from the red dragon. Instead of threatening giant ape which shares Hong Kong’s surname – Kong – it’s Hong Kong’s physical profile of hyper-density of skyscrapers and narrow streets which makes it extraordinarily difficult for a large red dragon to navigate and control.

In a discussion entitled “US-China Relations -Where to Next?” held by the Hong Kong Association of New York on 16 September 2019, former Australian prime minister (and fluent Mandarin speaker), Kevin Rudd, provided three reasons why he believes why Hong Kong is a “no go” for PRC intervention:

1.    Logistically impossible because of its hyper-density and overall urban layout.
2.    The result would be bloody – far worse than Tiananmen because of the radicalization of HK residents.
3.    Any occupation would then be Beijing’s problem instead of the Hong Kong government’s.

I believe that there’s an unspoken fear amongst the People’s Liberation Army high command that Hong Kong residents are now highly experienced, battle-savvy, tactical street fighters utilizing improvised weapons and savvy use of technology to organize and form attack groups at a moment’s notice.

The ultimate humiliation and loss of face would occur if the PRC’s People’s Armed Police (PAP), the more likely force to intervene instead of the People’s Liberation Army, takes heavy losses or is defeated by, ironically, a counterpart people’s army. Can the PAP motivated by communist political dogma successfully mute a well organized, disciplined Hong Kong citizenry on their own turf which they know intimately, motivated by freedom and willingness to die for their cause? Ultimately the issue is will: who wants Hong Kong more?

Nonetheless the shear weight of political pressure may compel President Xi to take direct action despite all operational warnings that intervention would be an unmitigated catastrophe. The cost in lives would be, at minimum, in the hundreds, more likely in the thousands and economically cost China billions of renminbi to maintain a large and permanent occupational force which would be subject to unending guerilla warfare. It’s a cost that China can ill-afford with a slowing economy.

Despite the obvious history has proven that governments have made disastrous decisions. President Xi would simply follow the missteps of both the former military superpower Soviets in Afghanistan during the 1980s and US during the 2000s also in Afghanistan in a politically divisive and economically draining perpetual war which results in perpetual debt.

For those seeking a comprehensive financial and political perspective on this crisis, you may refer to a series of articles on our website entitled Hong Kong Perspectives.

Copyright 2019 Indo-Brazilian Associates LLC. All rights reserved.

Indo-Brazilian Associates LLC is a NYC-based advisory service and think-tank that provides geopolitical investment and security assessments.

Wednesday, August 28, 2019

Hong Kong | Red Tide to Break Mexican Standoff

The escalating violence in Hong Kong will definitively reach its tipping point this upcoming Saturday. According to the 28 August 2019 article in the South China Morning Post the Hong Kong government has banned a scheduled mass demonstrations for this Saturday citing security concerns particularly to prevent the continued use of potentially lethal weapons such as the use of bricks and petrol bombs by the protestors.

Such a ban will certainly not deter the ever increasing number of active, on-the-street protestors encompassing a wide demographic of ages and professions.

The mass demonstrations have taken a powerful life of its own amongst a wide demographic and professional levels including the humble civil servants. So even if the Hong Kong law enforcement identified the leaders, there’s nothing they can do to prevent continued and increasingly violent demonstrations. The Hong Kong protestors represent the most dangerous adversary because they feel that they have nothing to lose. The voracious beast, perhaps the ying-yang counterpart to mainland China’s, is out the cage and is leading a dynamic – for lack of a better word - insurrection.

For this reason the decision by the Hong Kong government to request assistance by the People’s Republic of China’s (PRC) People’s Armed Police (PAP) will be far easier legally under these extreme circumstances. Additionally, because of the high-alert security threat, this would also legally allow the PRC to act unilaterally and intervene the day and/or night before the Saturday demonstrations manifest.

With respect to the PAP according to the National Institute of Strategic Studies “China’s Other Army: The People’s Armed Police in an Era of Reform” executive summary on the PAP, a paramilitary force, 16 April 2019, the PAP is now under direct military control Central Military Commission whereby before it was a dual civilian/military control.

The PAP has three objectives: domestic stability, wartime support and maritime rights protection and deals with “domestic unrest and opposition.” Hong Kong is an internal matter so it “qualifies” for PAP intervention which is already operationally pre-positioned at the Shenzen Bay Sports Center.

Furthermore, according to the report the PAP has “gaps in special operations forces and helicopters.” Such a shortfall would be provided by the People’s Liberation Army (PLA).

The specific trigger for the PAP to intervene will probably be the unsustainable and untenable role played by the Hong Kong police. Not only has the Hong Kong police reached the breaking point, according to the Financial Times article 30 August 2019 “Hong Kong Police Furious Over Government Handling of Protests”, they feel abandoned by the Hong Kong government with respect to support. Both Hong Kong Chief Executive Carrie Lam, who has been largely absent during these protests, and the PRC have refused to open any dialogue with the protestors. The Hong Kong police are in the proverbial “between a rock and a hard place.”

PRC President Xi is loath to open any dialogue because the demonstrations have focused on self-determination and pro-democracy issues which the PRC considers as separatist and political terrorism. For this reason this gives them justification in adhering to the policies of many democratic and autocratic countries, “We don’t negotiate with terrorists.”

Additionally President Xi is aware of the Tiananmen Square crisis in which there was a fierce debate whether the PRC should open a dialogue and negotiate with the protestors. The hardliners successfully argued that any dialogue and negotiations to loosen policies would only prompt the protestors to later demand even more concessions.

This is exactly what has played out recently in which the Hong Kong government, under pressure from the citizens, withdrew (but didn’t cancel) the extradition law. Even with the withdrawal, the demonstrations metastasized resulting in demands for greater autonomy.

Politically the PRC has primed and pre-loaded the narrative by consistently using the word “terrorism” as the justification for any intervention. The focus has been on the handful number of radicals who have deceived and misled the hundreds of thousands to engage in “terrorist” acts. The arrest of three alleged protest leaders is merely a beau geste because the demonstrations, particularly the violent elements, have operated independently for weeks.

The PRC has indeed shown patience and constraint by non-law enforcement support of the Hong Kong government and local law enforcement and applied pressure on Hong Kong tycoons, the wealthy, celebrities and foreign business entities to denounce the violence.
In the medium term, the PRC is determined that the upcoming 70th anniversary on 1 October must proceed without a hitch or distractions.

The actual interventionalist operations and objectives will most likely follow in this sequence:

  1. A preemptive, pre-dawn incursion into Hong Kong.
  2. Severing all civilian communications which includes mobile phone and internet access just prior to the arrival of PAP vehicles.
  3. Arrival in overwhelming force and secure critical government buildings, the financial sector, infrastructure and logistical chokepoints.
  4. Establish a state of emergency including a strict curfew.
  5. Establish checkpoints throughout the city requiring official ID (and required facial recognition) for civilians to move from one sector to the other.
  6. Occupation of Hong Kong in full force until after the 1 October 70th anniversary celebrations and gradually scale back but maintain enough of a presence to discourage large demonstrations.
In other words the PAP will put Hong Kong under lock down wrapping in high-tech bird cage.

There are two fundamental questions once the PAP enters Hong Kong:

  1. How will the initial operation will play out in the first 24-72 hours with respect to casualties?
  2. How successful will the PAP be during the aftermath in maintain “law & order” and prevent sabotage?

With the PRC’s foreign reserves estimated at $3.1 trillion sanctions won’t make a dent. Expect the politically obligatory strong diplomatic denunciations worldwide but the cost of not continuing to do business with the PRC is too overwhelming for most countries, especially Europe, to go beyond verbal jousting. It certainly didn’t discourage these same corporations from increasing their investments after the Tiananmen affair.

On the other hand, the PRC loses Hong Kong forever as a financial conduit to conduct business particularly with western investors under a highly credible legal system. With an economy dependent on services everyone loses including mainland Chinese corporations.

For a more comprehensive assessment of this unfolding crisis Indo-Brazilian Associates LLC has created an on-going report entitled Hong Kong Outlook that includes a series of published articles encompassing the political and economic dynamics of this on-going crisis.

Copyright 2019 Indo-Brazilian Associates LLC. All rights reserved.

Indo-Brazilian Associates LLC is a NYC-based advisory service and think-tank that provides geopolitical investment and security assessments.