Bannon’s dark valley

Former White House chief strategist Steve Bannon offers a perspective on the great geopolitical issue of our time:

But what he really wanted to discuss what how the obsession with Russia was a giant red herring from the bigger looming threat of China’s economic dominance. He pointed to Australia as ‘an object lesson to Great Britain and the United States’ for what happens to a country when it lets itself be dominated by China’s economic might.

He said: ‘The people in Australia thought they were playing by the rules, and what they found out ten years later is that the Chinese had gone in and bought minority stakes in companies and bought natural resource companies – next thing you know, with the investments they made in real estate and real assets et cetera, they took control of companies. Next thing you know they’ve got political power – they’re being politicians. And now Australia is in a situation of creeping control by an independent Republic like China – it’s dangerous. That’s happening in the United States and it’s happening in Britain.’ […]

But Russia, he argued, is distraction from the great evisceration of America, Britain and Europe’s power, which is down to the ‘axis of the 21st century’– China, Persia, Turkey, or ‘the Asian landmass’ and China’s one belt one road.

Is it too late for the west, though? Has China’s economic power now grown so great, and our economies so weak, that the Chinese takeover is inevitable?

‘Up until Donald Trump came on the scene, we were told by everybody in the city of London and on Wall Street that the inexorable rise of China is the second law of thermodynamics. It is the physics of the universe.’

But Trump, he insisted, through the threat of tariffs, and the aggressive limiting of Chinese investments in western countries, can reverse the advance of China’s economic advance: ‘If we were to go full on, and pull the trigger on that, you bring ‘em to their knees.’

What are the chances of America actually doing that, even with Trump? ‘Low,’ he says, ‘but the stakes are too great not to try.

‘We are going through a dark valley. People say I’m apocalyptic – I just look at facts, and I’ve been saying this for years and now it’s all coming to fruition. That’s why with Russia, the kleptocracy are not good guys, but eventually, we have to end the Cold War and we have to bring Russia into some sort of alliance or rapprochement with the west.’

If the west allows Russia to partner ‘with this [China-led] axis, the 21st century will be quite different.’

Even if you’re not inclined to agree with Bannon, it’s a fascinating interview and I recommend listening to the whole thing.

The rare earths Achilles’ heel

Rare earths production in Russia

Nice rare earths you’ve got there. Be a shame if something… happened to the supply chain:

Despite an abundance of minerals reserves, America has become increasingly dependent on imports to meet demand. The U.S. Geological Survey reports that America is now 100 percent import-reliant for 21 minerals, and at least 50 percent import-reliant for another 29. Most troubling is that the U.S. is now 100 percent import-dependent for all of the 17 minerals that constitute the rare-earth minerals group. And China, which controls more than 95 percent of global rare-earth minerals production, has a monopoly.

Whether it’s cellphones, electric motors, batteries, aircraft, wind turbines or MRI machines, rare earths play an essential role. But it’s not just commercial manufacturing assembly lines that are vulnerable to an embargo; it’s also military hardware.

Whether it’s the advanced electronics and control systems in F-22 and F-35 aircraft, night vision devices, guidance, targeting systems, or dozens of other critical defense technologies, they’re all built with rare earth components. While the U.S. has a small strategic reserve of some of these minerals — to provide a short-term supply for our military supply chain — we have allowed ourselves to become unnervingly comfortable in China’s vise.

The executive order President Trump signed Friday ordering a government-wide review of America’s defense industry aims to help fulfill Trump’s promise to “rebuild” the military, a top U.S. trade official says.

Just a few decades ago, the U.S. was the world’s largest rare earths producer. The erosion of our production and its shift to China is a complex story, but the common thread across our growing minerals-import dependence is a regulatory approach to mining that has seen investment flee despite world-class resources. For example, the U.S. possesses 13 percent of global rare-earth minerals reserves, with significant deposits in California, Alaska, Idaho, Montana and Missouri. Yet increased import reliance has become a national security issue.

This needs to be fixed ASAP. It’s really not that hard. Some ideas from a previous article:

The first step to a whole-of-market approach to spur innovation in minerals production is removing regulatory hurdles that dissuade would-be investors. Most notably, the United States must accelerate its mine permitting process. The current seven to 10 year timeline is simply untenable. Australia and Canada adhere to similarly stringent environmental guidelines, yet maintain permitting processes that average just two years. […]

The Pentagon must also focus on existing Department of Defense programs designed to support the U.S. defense industrial base. Each branch of service has a ManTech program intended to improve the productivity and responsiveness of the industrial base and to enable manufacturing technologies. In the president’s fiscal 2019 budget request, the Army, Navy, and Air Force are only requesting approximately $60 million each for ManTech. Furthermore, the Pentagon only requested $38 million for Defense Production Act (DPA) purchases—a defense-wide program focused on expanding and restoring domestic production capacity. This is down from the $63 million requested for DPA in FY2018. With a $700 billion defense budget, dedicating just 0.025 percent of the budget to the next generation of manufacturing technologies is nowhere near enough to catch up to China and shore up domestic capabilities.

Pathetic, is it not? This goes back to what I was saying about the need for an industrial policy. Securing the minerals supply chain should be one element (heh) of a technology-focused economic strategy designed to restore American self-sufficiency and maintain America’s military edge.

China aims to overtake “slower vehicle” US

China has big plans for enhancing its military power around the globe, is bracing for increased frictions with Japan and other neighbors, and sees the US as a power in decline, according to a leaked document:

China’s military reforms are aimed at expanding its military might from the traditional focus on land territories to maritime influence to protect the nation’s strategic interests in a new era, according to an internal reader of China’s Central Military Commission obtained by Kyodo News.

If the reforms progress, the reader points to intensifying friction with neighboring countries, including Japan, in the East and South China Seas and elsewhere. It also suggests the willingness of China to overtake the United States in military strength. […]

“The lessons of history teach us that strong military might is important for a country to grow from being big to being strong,” it said. “A strong military is the way to avoid the ‘Thucydides Trap’ and escape the obsession that war is unavoidable between an emerging power and a ruling hegemony.”

A Thucydides Trap is a phrase used to refer to when a rising power causes fear in an established power that escalates toward war.

Military reforms are therefore a significant “turning point” for any given emerging country to “overtake a slower vehicle on a curve,” it said, suggesting that the United States is in its decline.

Watch the subs

The broad outlines of the next world war are beginning to take shape:

The world’s three largest naval powers are all developing the next generation of their nuclear submarine fleets, accelerating the underwater arms race between the United States, China and Russia.

For now, at least, analysts say America remains by far the most dominant submarine force, even as its chief rivals work feverishly to overcome the U.S. advantages. Each country appears to have different strategic goals, with the U.S. bent on gaining greater cost and operating efficiencies while the Chinese and Russian are keenly focused on technological advances and achieving greater stealth.

I’m no military expert, but focusing on cost and operating efficiencies, rather than overwhelming technological dominance, seems like a sure path to losing the next war.

SSBNs, or “boomers,” hide in the ocean and can launch nuclear ballistic missiles at an enemy anywhere in the world even if the rest of a nation’s nuclear triad of air- and ground-based missiles is destroyed. They are the guarantors of mutually assured destruction in the event of nuclear war.

Some analysts say that these boomers will be increasingly crucial to the national security strategy of all three nations in the coming decade.

“There is no higher priority for the U.S. Navy than SSBN recapitalization,” said J.D. Williams, a retired Marine Corps colonel and senior defense researcher at RAND Corporation, who said SSBNs play a major role in the Navy’s big-picture decision making.

Now, why might that be? I thought the specter of global nuclear war was mostly a thing of the past.

Looks like we could be in for a fun century.

A shift in rhetoric

North Korea propaganda poster

Source: libertyherald.co.kr

Another sign that the move toward a US-North Korea rapprochement may be more than just “a triumph of showbiz over substance,” as some would have it:

Nix the nuclear warheads, cue the doves.

The North Korean government is erasing much of its anti-U.S. propaganda following dictator Kim Jong-un’s forays onto the world stage.

Gone are the posters depicting the U.S. as a “rotten, diseased, pirate nation” and promising “merciless revenge” on American forces for an imagined attack on the totalitarian country.

In their place are cheery messages touting praising the prospects for Korean reunification and the declaration Kim signed in April with South Korean President Moon Jae-in promising “lasting peace,” according to reports.

Too early to tell where this may lead, of course, but it’s certainly a welcome development.

Talk about burning your bridges

Actually, “nuking your bridges from orbit” might be a better characterization of this hectoring statement by the Chinese ambassador to Canada, Lu Shaye, after the Canadian government blocked the acquisition of Canada’s third-largest construction firm by a Chinese state-owned enterprise (emphasis mine):

I regret that the Canadian government rejected the acquisition of the Canadian construction company, Aecon, by China Communications Construction Company (CCCC) on national-security grounds. China does not agree with politicizing and wantonly using the concept of national security and opposes adopting discriminatory policies against Chinese enterprises. Canada’s rejection of Aecon shows that Chinese enterprises are suffering from unfair treatment – and it’s not the first time.

The rejection will result in much greater loss for Canada than China. The acquisition offered by CCCC at a premium of $1.5-billion was definitely good news for Aecon. It would not only greatly improve Aecon’s international competitiveness and tap into its development potential, but also help increase employment opportunities and employee welfare, from which its shareholders would also benefit. Yet, the Canadian government made this impossible, leaving the employees and shareholders of Aecon disappointed. But for CCCC, a world construction giant, the Canadian construction market is insignificant and being rejected for acquiring Aecon may only mean that it has saved $1.5-billion.

We have noticed that since CCCC reached an acquisition agreement with Aecon in October last year, the Canadian media have repeatedly hyped CCCC as one of the state-owned enterprises of China, which they described as monsters. These reports are neither objective nor fair. I have always stressed that China has no objection to Canada’s security review of acquisitions by foreign enterprises. But we oppose demonizing Chinese state-owned enterprises and abrasively smearing them. I have said that slandering Chinese state-owned enterprises in this way is immoral.

Still, some people are so full of imagination that they claim China’s development depends on stealing technologies from western countries. I’d like to advise them to keep calm and think: How could a country such as China – with a population of more than one billion – develop by solely stealing technologies from other countries? It would be too arrogant for someone to think that innovation capacity is exclusive to western countries.

In fact, China has long been a major powerhouse of independent innovation. According to data released by the World Intellectual Property Organization, China was the largest holder of newly registered patents in the world in 2016 and 2017. These people are advised not to believe that developing countries will always lag behind the West. At present, it is an inevitable trend for countries to carry out international technological co-operation in the era of globalization. Being complacent and conservative are not only against the international trend, but also bound to be left behind. To maintain the leading position in technology fields, western countries must run faster, instead of tripping other countries up and making dirty tricks. Some people also attack CCCC’s participation in construction on islands and reefs in the South China Sea. But this just proves that CCCC boasts advanced technology in the infrastructure field. Perhaps what they are really afraid of is the strong competitiveness of China’s state-owned enterprises.

And some people have said that western standards are global standards in terms of investment, trade and protection of intellectual-property rights. Such logic seems domineering and centres around the idea that westerners have the final say on international rules. On the contrary, I think that global standards are by no means western standards. Using standards defined by the West to ban or suppress the progress of developing countries is futile, and runs counter to international morality.

The world is colourful – and Canada has always boasted diversity and multiculturalism. I hope Canadians can embrace China as simply a different country and not regard China as a threat just because of our differences. Only by getting rid of such kinds of demons can Canada relieve the burden, co-operate with China and come aboard the express train of China’s development.

Pretty astonishing language from China’s top diplomat in Canada, even by the Chinese government’s usual swaggering, self-righteous standards. It’s amazing that Beijing would consider this an appropriate response to a rebuffed corporate takeover bid. This statement is more of an angry, narcissistic lashing-out than a considered diplomatic response by a great power. And could China do more to vindicate the critics of the Aecon deal than this blithe and insulting dismissal of their concerns?

We have heard a lot about China’s “soft power” offensive, but all the Confucius Institutes and newspaper advertorials in the world cannot undo the damage done by this sort of grandiose approach to foreign relations. From the standpoint of China’s national interest, it makes no sense to alienate a potential partner this way.

I assume this episode will be remembered the next time a Chinese company bids on a sensitive Canadian asset. The US is watching, too.

He’s not buying it

The former head of the British navy is less than impressed by the evidence that has so far been produced for Assad’s complicity in the gas attack near Damascus. No doubt he will be dismissed by many as an “appeaser” comparable to Neville Chamberlain:

Retired senior Naval Officer Lord Alan West has questioned whether the chemical attack in Syria was the work of President Assad’s troops.

“We need unequivocal proof that this attack was done by Assad’s forces – I’m not at all convinced at the moment,” he told Julia Hartley-Brewer.

“All of the reports are coming from people like the White Helmets, who have a history of doing propaganda for the opposition forces in Syria. The WHO reports are coming from doctors who are also part of the opposition.

“If I’d been advising the opposition, I’d have said ‘get a barrel of chlorine, at some stage there will be bombs dropped on you – blow it up and we can blame them, because what we really want is the allies coming in’.”

Lord West added that if proof is provided: “we do need to be part of a coalition,” but that we should wait for evidence.

The widening vortex

That Richelieu feeling

In light of the swirling chaos in the Middle East, which will most likely be intensified by today’s strange “punitive” bombing of Syria, it’s instructive to consider how another great religious and ethnic conflict played out in Europe:

The Thirty Years’ War started in May 1618 when the Protestant Estates of Bohemia revolted against the Catholic Emperor Ferdinand II. They threw his envoys out of the windows of the palace at Prague. Fortunately for them, the moat into which they fell was filled with rubbish and nobody was killed.

Had the revolt remained local, it would have been suppressed fairly quickly. As, in fact, it was in 1620 when the Habsburgs and their allies won the Battle of the White Mountain. Instead it expanded and expanded. […]

The similarities with the current war in Syria are obvious and chilling. This war, too, started with a revolt against an oppressive ruler and his regime. One who, however nasty he might be, at any rate had kept things more or less under control. […]

With so many interests, native and foreign, involved, a way out does not seem in sight. Nor can the outcome be foreseen any more than that of the Thirty Years’ War could be four years after the beginning of the conflict, i.e. 1622. In fact there is good reason to believe that the hostilities have just begun. Additional players such as Lebanon and Jordan may well be drawn in. That in turn will almost certainly bring in Israel as well. […]

As of the present, the greatest losers are going to be Syria and Iraq. Neither really exists any longer as organized entities, and neither seems to have a future as such an entity. The greatest winner is going to be Iran. Playing the role once reserved for Richelieu, the great 17th century French statesman, the Mullahs are watching the entire vast area from the Persian Gulf to Latakia on the eastern shore of the Mediterranean turn into a maelstrom of conflicting interests they can play with. Nor are they at all sorry to see Turks and Kurds kill each other to their hearts’ contents.

It’s mildly reassuring that US Defense Secretary Mattis is calling this missile strike a “one-time shot” (for now), but I don’t think anybody believes that we’ve seen the end of US military involvement in Syria. To the contrary, it has probably only just begun — and nobody knows when or how it will end, and at what cost.

“America hand”

Wang Qishan fire brigade chief

Wang Qishan is known in China as the party’s “fire brigade chief”

Fascinating nuggets from a recent FT article about Wang Qishan’s appointment as vice president of the PRC, just five months after he “retired” as China’s anti-graft czar (and the country’s second most powerful official):

The Chinese Communist party’s most trusted crisis manager has returned to front-line politics just in time to face one of the biggest challenges of his long career — managing the fallout from what is likely to be the most dramatic deterioration in Sino-US relations in 30 years. […]

“Wang Qishan has forgotten more about our country than many of our senior people know,” said Steve Bannon, US President Donald Trump’s former political adviser who met Mr Wang in Beijing in September. “The level of detail he knew about the US was stunning — the economics of regions, the economics of cities, American infrastructure, the workings of the American economy.” […]

But with the recent departures of Mr Cohn and Mr Tillerson, there are very few senior Trump administration figures to argue for moderation in dealing with China. “Trump is going to be quite confrontational,” said Mr Bannon. “But the Chinese absolutely think the American establishment is going to bail them out and why wouldn’t they, it did in the past.

“The Chinese are going to play for time, engage in dialogue,” he added. “They owned us in Mar-a-Lago, no doubt about it. The globalists were in the ascendancy then, agreed to two ‘strategic’ dialogues [with China] and nothing got done, just more talk.”

I noted the FT piece about Wang’s meeting with Bannon here.

On the Skripal poisoning

Richard Sakwa, a Russia expert at the University of Kent, has some thoughts about the nerve agent attack on Sergei Skripal and his daughter:

These are the circumstances and the consequences, but the whole affair raises many troubling questions. Is the case so clear-cut that the authorities in Moscow, and possibly Putin personally, ordered the assassination? After all, Skripal, a former GRU (Russian military intelligence) officer who had been recruited by the British intelligence agency, MI6, and had then worked as a double agent, had been part of a prisoner swap in 2010, and had lived openly in Salisbury every since. Why would the Russian authorities want to kill him? How would it benefit them, especially in conditions where relations are so bad anyway? If they wanted him killed, there are easier ways – unless of course it was for the demonstration effect, and to alienate the British government even more. These may well be considerations among parts of the Russian security elite, angry at Skripal’s betrayal of a reputed 350 Russian agents. As well as motive, there is also the question of timing. Why now, just weeks before the Russian presidential election of 18 March, when Putin won by a landslide for a fourth term. […]

Let us assess the various theories in turn. The official British government position, outlined by prime minister Theresa May in the House of Commons on 12 March, is that either the Russian state was responsible, or that the authorities had lost control over the nerve agent, identified now as part of the Novichok family of nerve agents. These, May insisted, were the only two plausible explanations. Later, British foreign secretary, Boris Johnson, on 16 March alleged that Putin had personally ordered the killing, and then on 18 March he told the British media that Russia had secretly accumulated chemical and biological weapons. He hinted that the British government had information that the order had come directly from the Kremlin. […]

Although the public sphere is full of accusations, none of these cases [Alexander Litvinenko, Boris Berzovsky and Boris Nemtsov] has been demonstrated to lead back to the Kremlin. In fact, the argument could be made that these deaths, and others, were ‘provocations’; in the sense that they reflected factional fighting in Moscow and the regions (notably Chechnya), and were ways of signalling threats to the Kremlin to force it to adopt certain policies and not others. […]

Unless serious evidence to the contrary emerges, I would be deeply sceptical that Putin took a personal interest in killing Skripal. What would he gain! Such a version only makes sense if two conditions hold: that Putin has nothing better to do than go around killing opponents who long ago have lost any relevance; and the Russian state is out to subvert the West. As the British foreign office put it in a propaganda video, Russia was out to ‘undermine world order’. This of course is the version repeated in the British mass media, including from some formerly respectable newspapers – but it is nonsense. […]

Novichok [the nerve agent] had been developed in Shikhany in central Russia, and according to the whistle-blower Vil Mirzayanov, it was then tested in Uzbekistan. In the early 1990s controls of weapons stores had been notoriously lax, and social media have repeatedly suggested that some could have found its way to Kazakhstan and Ukraine. The material could have been smuggled out of the country by unknown parties, possibly criminals. It is also not too difficult to reconstitute the agent in a laboratory. Britain sent a sample of the Salisbury material to the OPCW, but Russia also requested a sample, as it is entitled to do under the Chemical Weapons Convention (CWC), which came into force in 1997. The British refused.

And here is an excerpt from Prime Minister Theresa May’s official statement:

Mr Speaker, on Monday I set out that Mr Skripal and his daughter were poisoned with a Novichok: a military grade nerve agent developed by Russia. Based on this capability, combined with their record of conducting state sponsored assassinations – including against former intelligence officers whom they regard as legitimate targets – the UK Government concluded it was highly likely that Russia was responsible for this reckless and despicable act. And there were only two plausible explanations. Either this was a direct act by the Russian State against our country. Or conceivably, the Russian government could have lost control of a military-grade nerve agent and allowed it to get into the hands of others.

A number of things jump out at me here:

  • The PM did not conclusively blame the Russian government, but rather said it was “highly likely” that Russia was responsible. The statement allows for the possibility that Russia had simply lost control of its stockpile of Novichok. That’s, again, the official position of the British government. By that logic, some other actor could have conceivably carried out the attack, without Putin’s knowledge.
  • Sakwa offers an additional four or five possible explanations for the attack, most of which seem plausible to me.
  • The French government was initially skeptical of the idea of Russian culpability, accusing May of “fantasy politics.” That’s pretty interesting.
  • The British summoned the Russian ambassador and demanded an explanation for the poisoning, but refused to provide the Russians with samples of the nerve agent so they could conduct their own investigation. This is a bit like asking someone when he stopped beating his wife. Imagine how this would be perceived by the Russian side if, in fact, they did not order the attack.
  • The question of motive remains unanswered. It’s hard to see what Putin would have to gain by carrying out a chemical weapons attack on British soil, and thereby significantly ramping up tensions with NATO. That would not appear to be in Putin’s or Russia’s interests. It could be argued that Putin wanted to “send a message” — but then, what message? Don’t mess with us? If so, the ploy has backfired miserably, as Britain seems to have decided to mess with Russia a whole lot more.

It’s very easy to give in to hysteria on this issue, and jump to conclusions before all the relevant facts are in. Given the stakes involved — potential war with a nuclear power — I would suggest that it’s very dangerous to do so.