Arrias on Politics: McGuffey and the Federal Reserve

Editor’s Note: Arrias takes on the bureaucracy this morning.

– Vic

McGuffey and the Federal Reserve

Without looking it up: what are the differences between Alexander Hamilton’s and Thomas Jefferson’s perspective on the role of the federal government?

Pundits often question the efficacy of Pentagon strategies, whether it’s Vietnam, tanker escort operations in the Persian Gulf, containing the Soviet Union, liberating Kuwait or fighting Islamic terrorist. And as a participatory democracy they have every right to question the DOD.

In fact, such questioning is important, and editorial remarks have caused meaningful review of strategies. Sadly, there is much less of this kind of questioning taking place outside the national security arena.

I was involved in discussions this past week that suggested that such questioning is long overdue across government. Consider 3 topics (though there’s a long list of possible subjects): the War on Drugs, Education, and the Federal Reserve.

President Nixon declared the War on Drugs in June 1971, after concerns were voiced about the rise in drug use on college campuses, as well as concerns about the number of GIs returning from Vietnam with severe addictions.

A University of Michigan study showed that, among high school seniors, 31% had used illicit drugs in 1975, this peaked at 39% in 1979, dropped steadily to 15% in 1992, then climbed to 25% in 1996 and has remained at approximately 25% since.

Various drugs came into and out of fashion during the past 46 years; cocaine use, for example, peaked in the 80s, fell steadily through the 90s, leveled off in the last dozen years, and now may be on the verge of increasing again; recent reports note the rise in opioid usage across the US. Since 1999, according to the CDC, drug poisoning deaths from illegal drugs has climbed from 8,000 to 32,000 – 11,000 from new opiates.

The US is currently spending (per the Drug Policy Institute) $51 billion annually on this “war,” but we seem no closer to winning now then we did in 1975.

What about education? The Department of Education was founded in 1979 to improve student performance. And, in 1981, for the first time in 18 years, average SAT score didn’t decline. But, by 1992 the average SAT score was still 5% lower than in 1960, though it’s risen slightly since 1992.

An American Institute for Research study in 2005 showed that 20% of college graduates had “only basic quantitative literacy,” meaning they would be “unable to estimate that their car had enough gas to get to the next station.”

Yet, the US spends more on education than any other nation, and also spends more per capita than any other nation. Since 1980 the average cost of a US college tuition has risen 1120% (as of 2012), twice the increase in healthcare costs.

What about the Federal Reserve?

Following bank panics in the late 1890s and early 1900s, the Federal Reserve was created to provide stability in bank credit, the goal being that by so doing, there would be fewer panics and value of the dollar would stabilize.

Between the founding of the republic and 1834 (58 years) there were 11 recessions, lasting on average just over 2 years. From 1834 until 1913 (79 years – there was no national bank), there were some wide swings in credit, and there were 20 recessions, each lasting a bit under 2 years. Since 1913 (104 years) there have been 17 recessions (the two worst in the nation’s history) lasting on average a bit over a year.

However, the value of the dollar, which grew fairly steadily from 1776 until 1913 has been falling since, and has lost some 90% of its value in the last 100 years.

The point is this: the United States has spent a great deal of time and effort – and money – on these three endeavors: illicit drug usage, education, a stable economy. The general goals are sound: end illicit drug use, improve education, and stabilize the economy. There are similar grand goals for every federal department and agency. But, as with DOD strategies, each should be questioned as to their output. It’s a grand idea to improve education. But maybe the federal government is the wrong organization to tackle the problem. What we’ve been trying for the last 40 years isn’t working. Maybe it’s time we try some different strategies.

As for the question at the beginning of the article: it’s in essence the heart of the ongoing debate in American politics. And it was a question on the 6th grade “graduation test” from McGuffey’s Eclectic Reader from 1836.

Copyright 2017 Arrias
www.vicsocotra.com

Arrias on Politics: Gas Attacks and Cyber Hacking

Ypres, April 22nd 1915: the Germans launch a gas attack on the Western Front. Germany had twice attempted to use gas (October 1914 and January 1915), but both efforts failed to produce the desired results. At Ypres results were consistent with German hopes; along the 4-mile front where chlorine gas was used effects were so severe the Germans were shocked and failed to fully exploit the results.

After Ypres both sides used gas, and equipped their troops (eventually) with gas masks; all-told some 30,000 thousand died, and perhaps 500,000 were exposed. But gas didn’t turn the tide.
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During WW II all belligerents had gas stockpiles, but troops also had protective gear. The nature of combat – fast tactical operations covering large areas of terrain – also militated against gas and there was little use (Italy in Ethiopia, Japan in China). The Nazis gassed millions in the death camps, an evil beyond imagination, the one horrific exception.

Since then, except in three cases (Yemen – 1960s, Iran – Iraq War (1980-88), Syria’s civil war), gas hasn’t been used; for most of the world the threat of gas attacks has faded away.

Why?

The Geneva treaty of 1925 outlawing its use didn’t eliminate gas warfare; Italy and Japan both used gas in combat in the 1930s, as did others later (noted above). What changed was the two-fold realization that: 1) using gas against a well-prepared adversary would be of little overall tactical benefit, and 2) using gas would receive universal opprobrium. Even as Germany collapsed in 1945, they wouldn’t risk using chemical weapons against Allied troops.

They understood, intellectually and viscerally, that using chemical weapons would mean the nation, and the generals and politicians who ordered its use, would be held collectively and individually responsible. Use in combat had effectively ended; deterrence had worked. When deterrence failed, it was because the governments involved thought the world community would ignore them, or that they could hide their own involvement.

What has this to do with Cyber Warfare?

Actually, everything.

The recent large-scale malware attack affected people and organizations in at least 99 countries, with scary consequences; in England, for example, hospitals suspended admissions and in some cases delayed operations.

Interestingly we’ve had recent pronouncements from members of the national security community, to include leadership of the Intelligence Community, calling for cyber deterrence.

But that waters-down the concept of deterrence. Deterrence is NOT about proportional and “like” response; effective deterrence is a product of disproportional response. Deterrence works in a fairly simple way: “If you do ‘X’ to me, I’ll do X, Y and Z and maybe A, B and C to you.” You must demonstrate the capability and the will to do far more to the other guy than he can possibly do to you. He controls only the initial action, he does NOT control the nature or scope of the response. You must ensure he understands that your response will far exceed any benefit he might ever hope to receive.

In cyber that means that, whether a dozen Leninist radicals or a nation-state, if someone conducts a cyber attack against the US, the US will respond with:

1) A larger and more aggressive cyber attack, and

2) Something else: freezing their bank accounts, seizing all foreign holdings, perhaps 12 Tomahawk cruise missiles into their headquarters, perhaps some SEALs visiting them in the night; perhaps all four.

What can we learn from Ypres?

1) We need an international agreement that says simply cyber attacks will not be tolerated; the potential disruption from cyber is so severe that any group or nation that engages in such attacks, except under a declaration of war and inside the parameters of the accepted laws of war, is the enemy of all.

2) We need a stated policy: the US will retaliate against any cyber attack – swiftly and massively, far beyond the scale of the attack.

3) We need to make the investments to protect our key infrastructure from attack, just as nations equipped their armies with defenses against gas.

4) We need to make the investment in intelligence to provide rapid and reliable identification of the source of any cyber attack.

The various malware and cyber attacks we experienced in the recent past are the tip of the iceberg of what’s possible. We can protect the nation. But we need to stop studying the problem – as we have for the last 10 years – and act, and act now.

Copyright 2017 Arrias
www.vicsocotra.com

Arrias on Politics: Afghanistan, Libya and the Coral Sea

Editor’s Note: Seventy-five years ago, the analysis of what had happened in the Coral Sea in the first carrier-vs.-carrier encounter of the Pacific War. Nearly half the survivors of the oiler Neosho were still adrift, Lady Lexington was on the bottom and Yorktown was gravely wounded. Against that stark backdrop, Australia had been spared the depredations of the invading Japanese, and the Yanks were feeling a new surge of confidence after months of reeling defeat. Arrias shares some perspective on the art of strategic planning, and how it can go disastrously wrong. As always, Arrias is a real live human being and he comments from Tidewater VA.

– Vic

Afghanistan, Libya and the Coral Sea

Every week articles ricochet around Washington calling for a “new strategy,” especially for the Middle East. Last week was the 75th anniversary of one of the strategically significant battles of World War II, perhaps we could draw some lessons from it.

The Battle of the Coral Sea (May 7-8, 1942) pitted two US Navy carriers against two Japanese carriers. In the end, the Japanese lost most of their aircraft (and pilots), but both carriers survived, one seriously damaged. The US lost one carrier (Lexington), another (Yorktown) was damaged. It was tactically a draw from the US perspective.

The Japanese strategy had originally been to: 1) seize islands in the central and south Pacific while neutralizing the US Navy; 2) consolidate their gains; and 3) defeat the expected US – Allied attack from within their strengthened perimeter. But, after their victories of 1940 and 1941, they’d modified the plan and extended the perimeter to include seizing Midway Island and all of New Guinea and all of the Solomons.
However, the loss of their aircraft and aircrew, and the damage to one of their carriers, made the move into southern New Guinea questionable and showed the strategy’s overall fragility.

The Japanese knew – strategically – US “directions.” Between 1940 and early 1942 the US had: ordered the construction of 7 Essex class carriers, (5 ordered before the attack on Pearl Harbor, that would’ve been common knowledge in the Japanese embassy in Washington); 10 new US battleships recently commissioned or under construction; 18 submarines launched in the previous two years; 6 more under construction in early 1942. The US had a much larger population, a much larger economy and far more natural resources. Japan was unlikely to win a war of attrition (as Admiral Yamamoto had pointed out). The only hope Japan had for victory was to break our will. Yet 5 months after the attack on Pearl Harbor the US had conducted a reprisal attack on Tokyo (the Doolittle Raid) and fought the Japanese Navy to a draw in the Coral Sea. US production efforts were in high gear and accelerating. This should’ve convinced Tokyo that US will was unbroken and Japan’s strategy wasn’t working. It didn’t.

Perhaps they could’ve sued for peace, perhaps not. There are a thousand ‘what ifs.’ But the lesson for us is that it’s important to recognize when a strategy fails. Colin Powell was famous for reminding those around him: “don’t fall in love with the plan.”

Consider: What was the original US goal in Afghanistan? Find and destroy Al Qaeda. That quickly evolved into find and destroy Al Qaeda and the Taliban. 15 years later Usama bin Laden is dead, Al Qaeda has changed, grown and spread, and the Taliban controls much (perhaps half) of Afghanistan.

In Iraq, the goal was to unseat Saddam Hussein and eliminate his WMD programs. Saddam is gone, the WMD are gone. But the goal changed (almost as soon as the invasion began), becoming not simply “nation building,” but rather: “Western Style Democracy building.” Iraq nearly fell apart, ISIS rose from the ashes, sectarian violence increased. Iraq is holding together. But with a pseudo-independent Kurdistan, and the presence of significant Iranian forces, Iraq is a different country then the one we were attempting to build.

In Libya we tried to eliminate a dictator and create another Western Style Democracy; we produced a failed state.

In each case US strategy unraveled, in some cases fairly quickly. Central to that failure is the disconnect between goals and strategies; in each case our leadership “fell in love” with the plan.

Three points can help clarify strategic thinking; we should keep them in mind as we move forward, in the Middle East, in East Asia, and elsewhere.

1) The Goal must be crystal clear – Everyone thinks they know what the goal is: they don’t.

2) The Goal must be achievable – Napoleon had a “great” plan for invading Russia. It didn’t work. It couldn’t work. The corollary here is that great goals always require great assets.

3) The Goal must be supported by most of the population – By 1945 War Bond sales were falling; polls showed many Americans were willing to negotiate with Japan.

As the new Administration tries to address the problems it’s been handed, the place to start is clearly defining what we’re trying to achieve, whether in north Korea, the South China Sea, Afghanistan, Iraq, Syria, or the Middle East. The last several administrations failed to do so. Let’s not repeat the lessons of the past.

Copyright 2017 Arrias
www.vicsocotra.com

Arrias on Politics: A Bigger US Fleet

Editor’s Note: Arrias is a distinguished Nay veteran, and has been to this rodeo before in his distinguished career. His views do not necessarily reflect those of Socotra House LLC management, nor that of the Hong Kong Fireworks Co, Ltd.

Happy May Day!

– Vic

01 May 2017

A Bigger US Fleet

President Trump wants to expand the Navy to 355 ships. The Congressional Budget Office estimates it would cost $27 billion more per year. The professional hand-ringers are already working themselves into a lather, the naysayers warn we can’t afford it, and cynics sneer that 355 ships won’t really change anything.

Hmmmm…

Some numbers:

The DOD will spend about $600 billion this year, not including specific appropriations for wars in Afghanistan, northern Iraq and Syria, and elsewhere (Yemen, Somalia, etc.) US GDP for 2016 was about $19 trillion, so $600 Billion works out to 3.2%. The Navy will receive $165 Billion (0.85% of GDP). Increasing the Navy budget by $27 billion per year would bring Naval spending up to 1% of GDP; overall we’d still be spending less than 4% of GDP on national security.

For some perspective, in 1984, the height of the Reagan defense buildup, the US spent $430 billion on defense (5.8% of GDP), $99 billion on the Navy (1.3% of GDP).

What do we need these ships for? The Navy mission is to protect the nation’s interests and, outside of actual combat, engage in what’s called “strategic presence,” shaping the international geo-political environment to benefit our interests; the Navy does this by establishing a forward presence, the more extensive and more capable the fleet, and the more persistent the presence, the more effective the shaping. Done properly, strategic presence not only protects and promotes national interests, it does so peacefully.

Problems arise when another great power builds a navy and engages in its own strategic shaping, attempting to change the international scene to support their national interests. This is the situation we now find ourselves in vis-à-vis China.

China is expanding its navy at a prodigious rate; their navy now has more combatants than the US Navy. China’s navy will continue to expand and reportedly has a target size in excess of 500 ships, to include – within the next 10 years – at least two more aircraft carriers (for a total of 4).

What can 355 ships do against 500 that we can’t do with 275? First, the goal isn’t to match China’s navy ship for ship; our fleet is different than theirs, and arguably, more capable. And the goal is to deter war. But strategic presence does require presence, the more the better. More ships means more presence, and we’re also buying improved combat capability, all of which strengthens the resolve of our allies, and translates directly into deterring potential adversaries. As Reagan observed, no one was ever attacked for being too strong.

Could this be done by other means? Not without a great deal more effort and expense. A guided missile cruiser is easily stationed off a hostile coast, positioned to engage a ballistic missile (if the President directs), without seeking anyone’s approval. And if the threat goes away, the ship is easily moved; a land-based system must be negotiated in, and negotiated out.

From an accounting perspective, this larger fleet will mean 1 or 2 more carrier deployments each year, several more countries provided ballistic missile defense by a US destroyer, and another 1 or 2 Marine Expeditionary Units deployments each year.

But, more importantly, the issue isn’t, as some would suggest, that there’s a right number versus a wrong number.

Under President Reagan the fleet grew to almost 600 ships. That was enough to, in concert with other forces, deter war and bring a peaceful end to the Cold War.

Now we face China, with its large and growing navy; a nuclear-armed North Korea; a possible nuclear Iran; and Russia still armed to the teeth. And there is the issue of Al Qaeda, ISIS, other terrorist organizations around the world and whatever comes next in the “war on terror.” None of them really wish us well.

What a larger fleet really means is the United States intends to protects its interests, and protect its friends and allies. It means the US is willing to make the investment to ensure the seas remain free – for our shipping and that of our friends. It means the US is paying attention. Is 355 the magic number? We won’t know until we get there. But Mr. Trump has signaled that he’s willing to defend our interests. That may eventually require more than 355 ships. Mr. Trump is saying that we must and will do whatever it takes to defend US interests.

Copyright 2017 Arrias
www.vicsocotra.com

Arrias on Politics: Civil Ignorance and Common Interests

Editor’s Note: Standard disclaimer. Arrias is a real person with a distinct and discerning mind of his own.

– Vic

Civil Ignorance and Common Interests

A frenzied press “revealed” that after President Trump publicly stated he was moving an aircraft carrier towards Korea, the carrier actually departed port and headed south – the opposite direction – for two days. The President didn’t know where the carrier was, the President lied, the President was incompetent. Perhaps a combination of all the above.

To anyone who spent any time in the Navy, the reporting rang false; ignoring the complexities of ship schedules and agreements with allies; planning, logistics, chains of command and a hundred other items. Perhaps the reporters just wanted to make the President look bad; they understood but didn’t care that no President really knows all details, even major details, relying on those close to him to get him the facts.

That would be the Secretary of Defense, and beneath him a long chain of commanders, all of whom need to get involved. And while SecDef can issue orders directly to a carrier, bypassing the chain of command, he’s unlikely to do so.

Did someone mess up and not get word down the chain of command in a timely fashion? Did someone also mess up by not passing word up the chain to the White House in a timely manner? I have no idea.

But here’s what I do know: reporters covering this incident either understood how this process works and were deliberately sniping at the White House because they’re not concerned with the truth, they just wanted to make the President look bad; or, they’re truly ignorant of how the military really works.

Given the breathless reporting of other events, I’m guessing many reporters are simply ignorant about most things military. Consider the MOAB (Mother Of All Bombs – the GBU-43B). To listen to the news it would seem DOD uncovered some new laws of physics and these really big bombs will now solve all our problems.

And the White House was using the weapon to “send signals.”

Not really. As later revealed, the weapon release was approved by the theater Air Force Commander without any higher approval. And to a certainty, the weapon use was a result of weaponeers studying the intended target and determining this particular weapon provided the highest “Pk” – Probability of kill.

Which leads to this: the majority of the reporters filing these stories, and most of those listening, have no idea what they’re talking about.

Beginning in 1861, until a generation after WWII (perhaps the mid 1980s), most Americans had either first hand knowledge of the military, or a family member had served. They’d seen or heard scores of stories about the Army, Navy, Marines Corps, and later the Air Force. They knew – or had a family member who could explain – “what it meant.” They’d experienced how some things are far more complicated than they appeared; they’d experienced good commanding officers – and bad ones; they’d met a brilliant admiral, and a general who was so stupid as to defy the imagination. Everyone knew many senior officers provided nothing of great value to any problem, and that some were worth their weight in gold.

When a politician, well intentioned or not, suggested that some certain thing be done, or that money be spent on some weapon, there was some common comprehension of the problem. And when a politician suggested going to war, there was a personal understanding of what that really meant. It also meant politicians were less easily swayed by generals in dress uniforms.

More than that, these common experiences brought us together; they made and kept us a nation. Whether you were now stocking shelves or you were the CEO, odds were you’d eaten Army chow, been yelled at by a larger-than-life drill sergeant, cleaned latrines and polished boots, shot a rifle and been in a bar fight. It not only built common ground, it also gave us insights into how some seemingly momentous decisions were made and implemented.

All that made us better citizens.

There’s a great deal that’s worrisome about a draft. It can seem an advanced form of slavery, forced labor for Uncle Sam. But, it provided us with a united citizenry that was both more educated about how the nation really worked and at critical times more concerned about common interests than common differences.

Maybe we don’t need a draft, maybe we shouldn’t have universal conscription. But we do need a national dialogue about how we get back to common values and common interests. And how we rid ourselves of so much common ignorance.

Copyright 2017 Arrias
www.vicsocotra.com

Arrias on Politics: North Korea’s Weapons: Whose Money?

Editor’s Note: It is Easter Sunday, a day of joy throughout Christendom for the resurrection of the Risen Christ. Have the very best holiday possible! And remember, Arrias is a real person, not the Easter Bunny.

– Vic

North Korea’s Weapons: Whose Money?

They held a parade in Pyongyang on Saturday… It’s worth searching the internet and looking at the pictures to grasp just how much effort they placed in the parade — and how much gear was on display. In particular, three different long-range missiles were on display, one completely new, never seen before.

With just 25 million people, north Korea (per the International Institute for Strategic Studies) has an active duty military force of 1.2 million, 2,400 tanks, 21,000 pieces of artillery, more than 70 submarines, and more than 850 combat aircraft and helicopters. True, many are very old systems, far less effective than similar systems used by the US or the Republic of Korea; and the average soldier in the north Korean army is paid nearly nothing. But, with a nominal GDP of less than $25 billion (and perhaps only half that), how is north Korea paying for this weapons program?

In 1995 north Korea, following negotiations with the US, agreed to end its nuclear programs (the US-North Korean Agreed Framework), and several years later agreed to adhere to the Missile Technology Control Regime (MCTR). But, by 2000 it was clear they were violating the MCTR, and by 2003 it was clear that they were also violating the Framework.

Nevertheless, nuclear weapon development was slow, and development of long-range missiles was only a bit less difficult, with one long-range missile tested in 1998, and a longer-range version of the same missile tested (unsuccessfully) in 2006. Seven other missiles were successfully tested at that time.

Late in 2006 they detonated an atomic “device,” clearly demonstrating they’d been secretly working on the program despite the Framework signed with the Clinton administration.

In 2009 they successfully tested a long-range missile and a second atomic device. In April 2012 they launched another ICBM, but it failed 90 seconds after lift-off. They tried again and succeed in December 2012.

They have since conducted three atomic “weapon” tests (Feb. 2013, Jan. 2016, Sept. 2016) and appear to be preparing a 6th test.

In 2014 they conducted 2 test launches of medium-range Nodong missiles, and 30 short-range (battlefield) missiles.

In 2015 they conducted 3 developmental tests of a submarine launched ballistic missile, and 5 short-range (125 miles) missiles.

In 2016 they launched a long-range ballistic missile, 8 intermediate-range ballistic missiles (7 of which failed), 2 KN-11 submarine launched ballistic missiles, a medium-range Nodong ballistic missile, and 3 other medium-range ballistic missiles.

So far in 2017 they’ve tested a new ballistic missile, the Pukguksong-2, a solid-fueled, medium-range missile, utilizing a fairly advanced “cold-launch” technology, meaning the missile is ejected from its canister using compressed gas, and the new missile on April 15 – which apparently failed. They also simultaneously launched 4 ballistic missiles that flew about 625 miles and landed in Japan’s economic exclusion zone, about 180 miles off Japan.

Which leads to a simple question: Who is funding this? Developing and testing missiles, and especially developing and testing atomic weapons, is expensive. For more than a decade north Korea conducted no developmental missile launches. But since 2009 they’ve conducted more than 20 tests of medium and long-range missiles, while also increasing the effort on their nuclear weapon program.

All this taking place while maintaining a huge military force that includes roughly 5% of the total population.

Obviously, part of this funding comes from Kim’s budget preferences: missiles and warheads before people. But, even assuming Kim’s willingness to starve his people while accepting lower quality, lower reliability weapons; weapons development requires cash and technology. So, in a country that’s had a stagnant economy for more than two decades, is it a reasonable suspicion someone is providing funds, and perhaps some key technology, to help accelerate the programs?

What country would possibly be interested in developing a nuclear weapon and a missile capable of delivering the weapon?

Interestingly, on January 29th of this year, Iran launched a missile that was, according to a Pentagon spokesman, an Iranian produced or assembled version of a north Korean Musudan intermediate range missile. You remember Iran… That country was able to access some $150 billion after sanctions had been lifted following the signing of the ‘Iran nuclear deal’ in 2015. In a mystery novel those might be called clues.

A bad agreement in 1995 helped create the current crisis in north Korea. In 2015 we signed arguably a worse agreement with Iran. Are we going to face a similar crisis with Iran in 10 or 20 years?

Copyright 2017 Arrias
www.vicsocotra.com

Arrias on Politics: Cruise Missiles and Courtrooms

Standard Socotra House, LLC, Disclaimer: Arrias is his own guy. I happen to agree.

It was an interesting week:

The Supreme Court received its latest judge – one with a decidedly traditional view of the Constitution; Judge Gorsuch believes it means just what is says, and if you want to change that, there is a specific path to do so: amend it. Otherwise, it is as it stands.

That as strict an interpreter of the Constitution as Judge Gorsuch was nominated by President Trump is a strict fulfillment of Mr. Trump’s campaign promise to move the court towards a more literal interpretation. Which is significant relative to what happened in Syria.

In Syria, civilians in the town of Khan Sheikhoun were attacked using nerve agent. According to intelligence sources, the Syrian government was responsible. Mr. Trump, clearly incensed, asked for some options; apparently the intelligence was clear enough to identify a specific facility from which the attack was conducted; a while later USS Porter and USS Ross launched 59 Tomahawk Land Attack Missiles (TLAM) and roughed up the airfield.

From an operational perspective, this wasn’t hard. It is, if you will, what the four uniformed services do. In particular, the Navy is very good at the handling and “special delivery” of TLAMs. That 58 of 59 appear to have hit their intended targets is a fairly good demonstration of that capability.

But there are several issues here that are more significant than the rather straight-forward (if a bit sophisticated) process of building, training with, and successfully employing TLAMs.

First, the US will not be constrained by previous policies. This has been shortened to “there’s a new sheriff in town,” but it’s more than that. There has been, since the 1990s, a clear position that the US will not act unless there’s international consensus. Over the past 8 years this expanded to the point that it was virtually a given that any crisis that threatened regional peace or US interests would first be debated in some international forum before any action could be taken. No more.

Second, the President has made a definitive statement to anyone who might be considering using chemical weapons specifically, or any WMD in general: If you do, we will retaliate. We will choose the time, place, and method; we will choose the level of destruction; we will choose the means of destruction. It will be more than you can possibly do to us.

This is the essence of deterrence: If you do “A” to us – or anyone else, we will do “A, B, and C,” to you. And rather than words with little action, the President chose action with few words.

North Korea and Iran should be taking notes (and China too).

Third, President Trump ordered the attack on the Syrian Air Force Base at the same time he was hosting President Xi of China. Led by a president (Xi) who wishes to establish himself as the dominant power in Asia and the world, China has a large (very) and increasingly aging population; an economy that isn’t doing as well as advertised, and is slowing; an increasingly powerful military; and an increasing thirst for energy.

China also wishes to replace the dollar with their Renminbi as the international oil currency, but that is now looking doubtful, given the rise of the US energy sector. Trend lines suggest the oil and gas market will be dominated for years to come by the US. And the largest net importer of energy will likely be, for years to come, China.

So, Xi visited the US while trying to balance these major issues – and others. And no sooner does he settle down in Trump’s house, then the US struck Syria. There are a host of messages China (and north Korea) should take from this action, but here are three:

– There’s going to be less dithering and more action. If you think you can slow roll the US for the next 4 years, as in the last 8, you should rethink your policies.

– President Trump is fully intent on keeping his campaign promises. Pay less attention to his tweets and daily ramblings; review what he definitively said, and what he has done so far; he means what he says.

– Finally, there is, indeed, a new sheriff in town. President Trump is most decidedly not President Obama. US interests will be aggressively protected. What you thought you could get away with needs to be reexamined… You need to be very careful from here on out.

Copyright 2017 Arrias
www.vicsocotra.com

Arrias on Politics: West Texas Foreign Policy

Editor’s Note: Remember, Arrias is a real human being and he writes powerfully.

Under the hard country of West Texas and eastern New Mexico, Comanche country, lies a 70,000 square mile geological formation called the Permian Basin. Since the first commercial oil well in the Basin in 1921, approximately 30 billion barrels have been pumped, and nearly 75 trillion cubic feet of natural gas. Current production is 2 million barrels per day. How much more is in the ground is a subject of debate, with estimates running from several tens of billions to nearly 100 billion barrels.

How much is recoverable? In 2007 the US Geologic Survey (USGS) estimated there remained approximately 1 billion barrels of recoverable oil. By 2012 that number had climbed to 2.7 billion barrels. In 1980 the USGS estimated there were 5.7 billion recoverable barrels if prices reached $40 per barrel, roughly $150 per barrel today.

But, figures released in the last few weeks suggest 20 billion barrels or more of recoverable oil, at prices between $20 and $40 per barrel.

This lower cost (and the increase in the amount that can actually be recovered) is, obviously, the result of improved technology to recover oil (and gas) from shale and other rock formations. The implications are obvious: gasoline prices, and natural gas prices will remain low; production costs for fertilizers will also remain low; shipping costs will remain low: all good news for farmers and average families. For the US as a whole (and Canada), this technology, coupled with huge oil and gas reserves in shale oil and tar sands, means the US could soon dominant the world energy market.

But that might not be very good news for others.

Oil wells need constant maintenance; all the associated pieces must be maintained: pipelines, pumping stations, port terminals, refineries, distribution networks, etc., etc. It’s a very capital intensive industry and simply because a well is producing oil and has been for several years, and still has good pressure, maintaining the well (and the pressure) and all the other pieces of the industry is expensive, and will reflect current prices, not the price when the well was drilled. Prices go up, all the other costs go up; prices go down, the other costs go down – but more slowly.

For OPEC and others, falling oil prices mean that once profitable wells may no longer be profitable. For many OPEC countries oil revenue is essential not only in funding the basic functions of government, but also in supporting every sector of their societies. Schools, houses, food are often paid for by oil dollars. In some cases the price of gasoline is subsidized, keeping prices low so that everyone can “fill their tank,” and kill time driving around. The concept is simple: give young men something to do and a way to do it; give them gasoline for their cars at low cost so that they can drive around, meet their friends, socialize; in short, it’s a social “release valve.” This activity was – and is – important in nations where there is little real business not related to oil and where unemployment rates among men under 35 are believed to be above 20% (the actual numbers aren’t revealed by many nations).

Unfortunately, as oil production costs rose, gross revenues increased, but net revenues declined as production costs rose in a number of countries. OPEC countries are trying to diversify their economies. But this is difficult and slow, and low oil prices will make it slower still. And meanwhile, populations have grown, as have the costs of maintaining the rest of society.

And this changed market will affect more than just OPEC. Consider this one point: China is a net importer of energy, currently importing more than 7 million barrels of oil per day (some estimates suggest 8 million barrels per day). As prices drop it would seem that that would be a good thing for China. But, as prices drop, some of China’s own oil production will become too expensive, boosting imports, and their would-be suppliers in the Middle East (in particular Iran) will see declining production, due to no-longer profitable wells falling off line. And that would mean China would need to buy oil from a market increasingly dominated by the US.

A rising Asian power buying oil from an international market dominated by the US… That happened before – in 1941… And it didn’t end up well.

Copyright 2017 Arrias
www.vicsocotra.com

Arrias On Politics: North Korea

Editor’s Note: Arrias is the pen name of a real human being with superior analytic and communications skills. It is not me. The thoughts and opinions expressed are his, and not necessarily those of Socotra House LLC, the Department of Defense, or the Hong Kong Fireworks Co., Ltd. His commentary is provided for the exclusive use of Socotra House readers.

Thanks!

– Vic.
North Korea: A Final Thought

Begin with this: Kim Jong Un, the murderous dictator of North Korea, must be told that if he attacks South Korea, or if he detonates a nuclear weapon anywhere outside the borders of North Korea, we’ll wipe his regime off the planet, we’ll wipe out his military, and most especially, he will die. That message needs to be sent, in that language.

That said, what’s next? Sanctions haven’t worked; China isn’t helping and isn’t going to help; negotiations and agreements haven’t worked; and we certainly don’t want to pay the horrible cost of war, especially a nuclear war.

Is there any option that might peacefully end the situation, after 64 years of uneasy, crisis-laden ceasefire? Various estimates have suggested that a war in Korea would result in more than 1 million dead (to include most of the 25,000+ US troops in Korea), and the total cost would easily exceed $1 trillion. And that was before the North had nuclear weapons.

As North Korea’s nuclear arsenal grows, those numbers will climb. And soon, other countries will be involved, as the North continues to develop its missile forces along with its nuclear arsenal.

So, is there any other option? A friend asked me that very thing last week. The answer is: “Yes. But it’s an answer that would require everyone to take a deep breath and then swallow hard.”

Simply put, let Kim Jong Un “Win.”

What Kim Jong Un (and his father, and his grandfather) wanted was to rule a united Korea. Okay, let’s do that.

Make Kim Jong Un the president emeritus for life of “Korea” (a unified Korea), give him a pile of money (let’s say $10 billion a year for life), give him two brigades of security forces, three or four palaces, and make him the ceremonial head of Korea until his death. Ambassadors would present him their bona fides, he would preside at major public ceremonies, perhaps he’d attend UN General Assembly meetings. Maybe give one member of his family a permanent seat in the Senate.

Kim could legitimately claim that he was responsible for the re-unification of Korea. He would have accomplished his family’s dream, accomplished what his father and grandfather were unable to do, even though they had the full support of China and the Soviet Union. And, Kim would have a position of great honor and respect, President Emeritus of Korea.

In exchange, the nation is unified, Seoul assumes actual control over the entire peninsula, the ROK economy moves north, ROK businesses move into the north and free market economics, which has made the ROK an economic powerhouse, replaces the madness of the world’s most perfect command-driven economy. The North Korean military is demobilized, the nuclear weapon program is passed over into the hands of the ROK government, and we begin a transition to a unified, peaceful, free Korea.

No one would like this. (And presumably no one is going to accept this.) But it’s perhaps the only path that would prevent a war AND allow a controlled economic transition that wouldn’t destroy the south’s economy.

It would be very difficult. And the people of the Republic of Korea would need to agree. And the actual implementation (beginning with trusting Kim Jong Un) would be horribly complex and difficult and emotionally and culturally painful. And the Chinese would object – strenuously.

And it would be especially horrible to see Kim “win;” to, in essence, get away with it.

But it would end the threat of war, and it would unify the peninsula, and it would provide the social and economic relief the people of North Korea need, and it would end this 67 year war – the real longest war in American history.

The options are all bad, and all run what are now becoming a fantastic risk: attacks with nuclear weapons. Buying off an enemy is rarely a good idea. But it is an idea. And, maybe, it would work.

But short of that, one thing is clear: Kim Jong Un poses a great, and growing, risk to Korea, Japan and increasingly, the United States. We’ve been able to maintain an uneasy armistice for 64 years. That may soon change. We need to be ready to defend our interests. But we might also want to examine all the options.

Copyright 2017 Arrias
www.vicsocotra.com

Arrias on Politics: China and North Korea

China, that is, the ruling elite in Beijing, isn’t helping things. Talking heads can be heard opining that the only way to solve the mess in North Korea is with China’s help. But, the truth is a bit more complicated.

Beijing wants to carve out a larger piece of the pie (the world). How big is a good question, but as Cicero was fond of saying: “Deeds, not words.” Despite regular words of peace, they’re engaged in a rapid expansion on all fronts, seeking to stake out a real, and dominant, presence across the globe. They’re staking out control of the South China Sea, are flexing their muscles in the East China Sea (over Japanese islands), and are working on establishing a real presence in Central Asia and the Horn of Africa.

And North Korea can play a role in that global endeavor.

China is far and away the largest trading partner of the North Koreans, counting on China for the overwhelming majority of the oil it consumes, as well as filling annual shortfalls in food production.

So, why can’t China do something about the North Korean nuclear weapon and missile development programs?

As has been widely reported, North Korea is engaged in an aggressive program– what’s known in the US as “RDT&E,” Research, Development, Test and Evaluation – of missiles, weapons, and associated gear. (Just this past week there was press speculation that a new tactical missile launcher for a North Korean missile is a Chinese made truck, a possible violation of international agreements.) In the last several years the number of tests conducted by the North has increased, one public estimate being that during his 5 years in office Kim Jong Un has conducted 4 or 5 times as many missiles launches as his father conducted in 17 years as dictator.

The nuclear weapon development program continues as well, and the UN has reported that North Korea is now producing Lithium-6, a radioactive isotope of lithium that, per numerous defense experts, is a necessary material in the manufacturing of tritium, a key component of a hydrogen (fusion) bomb.

Here’s the thing: this is expensive. With a GDP of less than $30 billion, more than a million people in their army, perennially facing food and energy crises, where does Pyongyang find the money, and the technology, to pursue these weapons and systems? While we can speculate that Iran, flush with cash following the easing of sanctions, is a partial source, it’s simply not credible that this activity would be taking place without the explicit knowledge and at least implicit agreement of the leadership in Beijing.

Imagine South Korea, or Japan, were known to be developing a nuclear weapon. Beijing would be apoplectic; we could expect a continuous stream of invective from their leadership, and loud and aggressive military posturing, tied to vociferous demands in the UN for draconian sanctions. But, while Beijing will occasionally call for North Korea to end testing, and will announce it intends to adhere to existing sanctions, in fact it continues to trade with Pyongyang.

The reality is this activity by North Korea suits Beijing. Beijing may not particularly revel in the idea that Kim Jong Un will someday soon have nuclear weapons, but it doesn’t worry them; Beijing knows those weapons will never be used against Beijing. Further, there’s no desire in Beijing, no matter what they might say, for a unified Korea. Such a Korea would be, even under the rule of Pyongyang, a thorn in China’s side. Under the rule of Seoul, it would mean a US ally with a common border to China, an unacceptable situation; a unified Korea is simply not something Beijing wants to see.

But the continued rule of Kim Jong Un? Prolonged crisis just short of war? That represents problems, and costs, to the US, the ROK, and to Japan. And increased US commitments of forces into Korea means forces not available elsewhere. All that benefits Beijing. China will talk a good game, but there’s nothing that China has done in the recent past, nor anything it is now doing, that suggests Beijing will in any way work to resolve the situation in North Korea. In fact, Beijing likes it just as it’s developing. Solutions might be found working with the Republic of Korea and Japan.

But China is not on our side.

Copyright 2017 Arrias
www.vicsocotra.com