Wednesday, 27 April 2016

Sitrep - 27 April, 2016

A submarine launched ballistic missile (SLBM) was detected flying over North Korean waters at the end of last week, prompting the UN, US and Japan to formulate new sanctions on Pyongyang’s evolving missile programme. Footage of the missile shows it is likely powered by solid fuel, rather than liquid, with a new motor similar to the prototype tested a few weeks ago.

Following the missile test, a North Korean negotiator told media Pyongyang was willing to suspend its nuclear programme if the US and South Korea ceased their annual enormous combined arms exercises. The US rejected the offer immediately, but noted that its intelligence suggests North Korea may conduct its fifth nuclear test sometime in the next few weeks.

All this shows that geopolitical stasis regarding the hermit kingdom remains the most preferred outcome for all sides. Provocations aside, the major interests around North Korea – Russia, China, South Korea and the US – will tolerate the existence of the regime so long as it doesn’t cross the line from a potential to a viable nuclear state.

A dangerous collapse of the Iraqi government may be imminent as reports emerge of the ruling political group of the Council of Representatives (CoR) splitting, creating a parallel – and illegal – government structure. Various sit-ins, boycotts and demonstrations have increased both in frequency and intensity this year and may be reaching an inflection point where the government is no longer viable.

The divisions in Iraq reflect not only sectarianism and ethnicity separating the Kurd, Shia and Sunni populations, but also a drive to secure as much physical territory in the shattered country regardless of Baghdad’s claims to sovereignty. Essentially, the only group still fighting for a repair of a contiguous Iraq is the US and its coalition. The Iraqis have clearly moved beyond that goal.


Whether by parliamentary means, protests, or force the possibility of a toppled government is increasing by the day. What emerges from a collapse is unknown, but the Islamic State (IS) will take advantage of the chaos. An unrecognised government would also undermine the international effort against IS, indicating that retaking the northern city of Mosul will not be achieved in 2016.

Tuesday, 26 April 2016

Saudi Arabia’s storm approaches

Saudi Arabia is not in a good space, geopolitically speaking. Of the four major powers in the Middle East-North Africa (MENA) region, Saudi Arabia is the weakest and getting weaker. Iran, Israel and Turkey all outstrip the kingdom militarily and in stability, although perhaps not in oil wealth.

Yet even as oil reaches a new 2016 high this week of $US44 on the West Texas Intermediate (WTI) benchmark, that price is nowhere close to what Saudi Arabia needs to maintain its heavy social spending and to fund its foreign policy. The above sum is the delivered price. The actual price a producer receives is even less. And now, more than ever, Saudi Arabia needs the money.

According to official figures, the country ran a deficit of 21.6% of GDP in 2015, a drastic rise from only 3% the previous year. Riyadh hopes the IMF’s forecast of a 20% deficit in 2016 is wrong, and is aiming for 13% instead. To cover the shortfall, it has already spent $US100 billion in cash over the last few years – another US$100 billion will disappear in 2016 if the IMF’s forecast is correct. Cash reserves now stand at $US650 billion, and at this rate could run out by 2020.

Saudi Arabia is attempting to raise capital by selling off portions of its most valuable asset, the nationally-owned Saudi Aramco – perhaps the world’s largest company – in a potential 5% IPO. The company’s total worth is unknown, but estimates range between $US1.25 and $US10 trillion, so it might be just the lifeline Riyadh needs (if it can find the buyers).

The company is an artefact of Saudi Arabia’s history of domination by the US and British when it emerged from the Ottoman Empire. The relationship created the Arabian-American Oil Company – Aramco – and earned the kingdom plenty of money in the 1980s when it was nationalised. Now, it seems, the US and British are about to pick up where they left off. Time really is like Schopenhauer’s flat circle.

The US has already retaken the mantle of world’s-largest oil producer, a privilege it hasn’t had in over a century. In fact, one cause of the low oil price is the introduction of new oil plays in the US. Some even speculate the Saudi-dominated OPEC cartel purposefully forced down oil prices to drive competitive US producers from the market, although that conspiracy theory doesn’t fit all the facts.

Nevertheless, Riyadh has bills to pay. It funds free healthcare, education and public pensions for all its citizens. It subsidises their water and electricity, and there is no income tax because nearly 90% of Saudis are employed by the government, often at higher wages than the private sector offers. If oil prices remain low, it will need to cut these spending requirements which will risk fomenting unrest.

Outside of its painful fiscal troubles, Saudi Arabia has been begrudgingly involved in proxy wars in both Syria and Yemen, supplying weapons to rebel groups in Syria and using its own ground and air forces in Yemen. Neither war is going the way Riyadh wants and that fact is beginning to take a toll.

In Syria, whether Saudi Arabia ever funded jihadist groups such as al Qaeda and the Islamic State (IS) is largely irrelevant because rebel forces haven’t been able to unseat the Syrian regime. And now IS is turning its attention to the kingdom itself, conducting a growing number of terror strikes in both Sunni and Shia majority regions, trying to stir the aforementioned unrest. Riyadh’s security services may struggle to contain IS’ expansion.

In Yemen, a year-long intervention by Saudi Arabia against a former president and his Iranian-backed tribal allies’ attempt to retake the government has stalled. Despite requesting military help from Egypt and Pakistan, both countries declined and Saudi Arabia was compelled to conduct the fighting with only a handful of smaller Gulf allies. Power-sharing negotiations are now taking place but that is not the outcome for which Riyadh hoped.

On a broader geopolitical level, Saudi Arabia’s regional adversary Iran is shaking off crippling sanctions, bringing its own oil production back online and unsettling the already unsettled dynamics across the Middle East. A nuclear deal last year between Iran and the US also warned of a change in the special relationship Saudi Arabia has enjoyed with Washington, which flustered the regime.

If this isn’t a storm, it’ll suffice until the storm gets here. Should Riyadh be unable to fund its domestic expenses (let alone its foreign policy and proxy war commitments) and its pending leadership transition doesn’t go smoothly, the kingdom’s troubles could spill over and become global trouble.

The other three regional powers do not want Saudi Arabia to dangerously collapse, but they would appreciate a weaker Riyadh so they won’t do much to prop it up either. Iran may soon take serious control of Iraq’s political structure and its Yemen proxies are bleeding Saudi Arabia in the south. Turkey has its own emerging plans for the region and Israel will be looking for openings too.

An existential crisis in Saudi Arabia has not yet happened, but it is a risk. Internal dissent will weaken an already fragile regime, outside state and non-state influence will wish to encourage dissent and civil conflict in the kingdom is possible. All of this was unthinkable a few years ago, but any country built by history’s most volatile commodity was always playing with fire.

Wednesday, 20 April 2016

Sitrep - 20 April, 2016

Brazil’s President Dilma Rousseff is this week one step closer to impeachment following a successful vote of 367 to 137 by the lower house of parliament on April 17. The process for impeachment now moves to the Senate where a simple majority to accept the impeachment case would force Ms Rousseff to step down for 180 while it is evaluated.

The President’s problems may be compounded if the criminal case of manipulating government budgets in 2014 and her participation in the corruption scandal at state-owned energy company Petrobras prove true. The investigation – named “Operation Carwash” – was so blatant and implicated such prominent figures it shocked Brazil, a country familiar with high-level corruption.

Should Ms Rousseff’s complicity in the scandal be proven, then it may also nullify the entire previous election procedure if some of the funds will be associated with the scandal. This could mean Vice President Michel Temer would not replace Ms Rousseff and the decade-long rule of the Worker’s Party would end, forcing early elections and a tense political atmosphere.

In the Baltics, a Russian Su-24 fighter plane flew within 9 metres of a US guided missile destroyer operating on exercise in the Baltic Sea. The event – known as “buzzing” – is not uncommon around the world. Military aircraft can legally intercept foreign vessels or jets within a nation’s airspace or exclusive economic zone.

The US reacted strongly to the Russian move, with Secretary of State John Kerry calling it “dangerous” and said it simulated an attack. This is probably rhetoric because in a combat situation, modern aircraft launch missiles from dozens of kilometres away from a target and modern destroyer radar would likely register a threatening aircraft at 100 kilometres.

However, the Russians cleverly used the American reaction for propaganda purposes on the internet. Russian state media claimed the aircraft used an unknown electronic warfare device to paralyse the destroyer, but this too is not credible since such a system would be highly secret and the US vessel didn’t appear to be affected electronically. Both sides have nevertheless taken their pound of political flesh from the incident.

Tuesday, 19 April 2016

NZ, China and Xi Jinping’s emerging dictatorship

New Zealand Prime Minister John Key visited China as part of a 40-strong trade delegation this week, hoping to boost ties to Asia’s largest economy.

Chinese media, including Xinhua and the Global Times, warned any mention of the territorial disputes in the South China Sea during Mr Key’s stay could put at risk the improvement of trade ties. While Mr Key dismissed the media’s caution, it highlights China’s strengthening of state press control and helps obfuscate exactly what is happening in its economy.

The New Zealand delegation will hope its trade with China isn’t threatened by such propaganda, but it is nevertheless intriguing to watch the central two major trends in the country buffet the economic dreams of a country thousands of kilometres away in the South Pacific. In the future, New Zealand business will be dealing with a far different China than in the past decade, both economically and politically.

The official data helps paint the outlines for the first of the trends. The Chinese economy expanded 6.7% year-on-year for the first quarter, down from 6.8% in the final three months of 2015 and the country’s slowest quarterly growth since 2009. However, China’s Bureau of Statistics registered an 11.5% year-on-year increase in exports after nine straight months of decline.

According to a statement from the bureau, the economy saw “sound development” and showed “positive changes on major indicators.” Indeed, China's home sales jumped 71% in March from a year earlier, the country’s largest monthly year-on-year increase since at least 2015.

Already the numbers are being described as evidence of a stabilising economy. Yet in March 2015, the bureau registered a 15% contraction in exports compared with March 2014. So placing these figures together shows an increase of 11.5% this year doesn’t repair the total downturn of a 15% decrease 12 months ago. The overall trend actually shows a slowing economy, which isn’t what investors want to hear.

What probably encouraged the New Zealand delegation to visit China was that although the Chinese economy isn’t faring as it was five years ago, the growth numbers are still much rosier than any other country of equivalent size. Europe, for instance, would love a growth rate of 6%. There is also an illusory belief amongst New Zealand business that China’s problems are temporary and it is only a matter of time before the economic engine returns to 2005-7 levels.

But this is the new normal. Currency reserves are dwindling, capital flight is increasing, unemployment is higher than the government is willing or able to admit and – as a result – the dangerous threat of non-performing loans is becoming a real danger to the integrity of the wider system. This is not yet doomsday, but it will be important to heed former trade minister Tim Groser’s policy action of not over-relying on China for New Zealand’s growth ambitions.

New Zealand can count itself lucky it has products the Chinese middle class desire, because as a country’s wealth rises its demand for protein increases, but imagine how Australians feel now that China’s factories aren’t demanding as much coal or iron ore. The 2008 tightening of Western consumer belts was always going to take time to trickle across the world, but exporting countries, including both Australia and China, are now slowing down as a result of low US and EU demand.

The other major trend stems from the first, which the New Zealand delegation felt on the edges. It is the increasing paranoia of the Chinese elites. To adapt to the rapidly changing economy, President Xi Jinping and the ruling Chinese Communist Party (CCP) won’t be able to rely on the existing model, that much is already certain. So altering economic policies is understandable. But it is Mr Xi’s movements to alter the status quo political structure that concerns many China watchers.

Mr Xi is positioning himself more as a dictator every day. He has ruffled the military by disbanding hundreds of thousands of personnel, removed some of his most dangerous political rivals and ramped up an anti-corruption campaign that looks very much like a purge. And as Mr Key’s delegation found out, an effective tool for political machinations is to leverage even more control over an already heavily controlled state media.

A discussion about the effects on social cohesion due to increased internet usage is important, but the traditional media is still how most Chinese citizens consume information. And media is not escaping a paranoid Beijing. An official investigation into seemingly innocuous editorial mistakes in the Southern Metropolis Daily newspaper found Chinese characters forming a non-dissenting sentence in the horizontal but became dissenting when read in the vertical. Editors deny any malevolence.

Mr Xi knows he may not be able to complete the necessary changes to the wider Chinese economy without greater control and unwavering loyalty in its politics, so he cannot allow dissenting voices – not at this crucial moment. Yet as he and the CCP attempts this transition it will only feed the paranoia, and the risk of inappropriately warning a friendly foreign leader and potentially imprisoning editorial staff for design mistakes may compound the problem rather than fix it.

There is a noticeable level of pushback from editors, along with rumours that some of Mr Xi’s rivals are still hiding in plain sight, but the way he is shifting the political reality to line up behind only himself appears to be unstoppable. Whatever lessons the trade delegation brings back from China, those doing business in the country must monitor these two trends as they start to merge into one.

Saturday, 16 April 2016

If God is dead, what did you replace Him with?

The way I see it, atheism is an answer to a question - nothing more. "Do you believe a God exists?" If the answer is no, then you're an atheist. It is not an ideology, it does not inform anyone else about what the person believes and it most certainly isn't a religion. But that's not what most people mean when discussing "atheism." I was linked this video by YouTube agitator Stefan Molyneux because it summed up my friend's views on atheism. Watch it if you want, but I do need to tease out the misconceptions.

Here's the rub: almost everything we consider to be the institutions of the modern world haven't really changed since the Romans and before them, the Greeks. The only reason we're still talking about Christianity in 2016 is because it moved north from the Levant, picked up the tools of logic and rationalism thanks to a guy named Paul before being chosen at a whim by the Roman emperor Constantine -  an action which he thought helped secure him the throne.

Once Christianity became the official state religion of Rome, the structure of the church replaced (not introduced) the institutions already extant across the empire and into antiquity. Taxes became tithes, priests became clerics, emperors became popes, temples became churches, etc. In other words, nothing changed - only the hands controlling the puppet strings were switched.

As history moved on, Christianity splintered and atomised into thousands of sects, some of which were quite powerful. But the old regime of Greco-Roman social structure remained and evolved. At only a few points in time were a handful of new institutions introduced into the Western process of government. Essentially, lawmakers in Rome would understand exactly how to run USG or any Western government, even if their language skills might need a little updating. Today, the current iteration of Western government/social structure is conducted and organised by a group of people adhering to the ideology known as 'progressivism'. Almost the entire developed world (and many of the developing nations) structure government in pretty much the same pattern.

The legacy of Christianity has proven to be an incredibly effective coordinating ideology for humans, but the institutions of government were not formed by its adherents, they were only inherited. To understand the modern world, and to see how Stefan comes close but misses the critical truth, is to know that progressivism and modern atheism are simply the latest versions of Christianity.

If you unpack all the goals for both and overlay them , you might be surprised how well they match. In other words, progressivism is actually a post-Christian idea. Humanism and atheism are best understood as non-spiritual sects of Christianity. I would even go as far to say that ONLY Christians can become atheists. Other religious believers may lose their religion, but they will not become atheists or secularists. That occurrence can only be formed within a Christian context.

So, Stefan's threads don't quite pull together. On the one hand he complains about atheists and leftists, without comprehending that these are actually modern iterations of Christianity. However, he appears to appreciate standard Christianity - he uses examples of charity and compares killing records of both the official church and the state of the 20th century. But this is a contradiction, the two are the same - although one is an atavism of the other. He likes standard Christianity because it has no power today, but he wouldn't have liked it (I assume) in the past when it did have power and was connected to the institutions of the state. Today, the latest iteration of Christianity (progressivism) is in control of state institutions, which is why he identifies his hatred in this direction. But it is still Christianity.

Although I can sense he might notice something's wrong with his thinking and may soon pull his ideas together, the target of atheism here is not accurate for his goals. And deeper than this, his inability to frame the problem outside of politics is the cause of his myopia. The first step, if he wants to enact change, is to identify the problem. Otherwise he is probably only gaming for power and shouldn't be trusted.

To fix this, he needs to understand that there is no such thing as a benign form of Christianity. Then he must be prepared to question the necessity of the nation state structure itself and all its institutions. And finally (but before any of the other steps are taken) he must ask what he will replace those systems with. Remember, the institutions are the problem, not the force which governs or coordinates them.

Other than that, he appears to be sceptical of atheism because he's unconvinced that trying to bring about Nietzsche's "superman" for most people is a good idea. That's something few people are capable of or should even attempt. The reclusive German once said, "God is dead and we have killed him". But he was only half right. I prefer to add on one last piece to that sentence: God is dead and we have killed him, but what did you replace Him with?

This is what Stefan notices when he talks about the state as a proxy for God. It isn't a proxy for God, it is a proxy God. Humans, it seems, cannot live without some concept of the "omnipotent other." If it can't be found in church, then we make a new building to house it.

The key driver of this madness comes from a deep drive to never face a moment where we sit alone with our thoughts and truly contemplate how alone we really are. The "omnipotent other" gives us someone to blame/love/burden/command. So it's not surprise that people choose to believe the version of God that most aligns with what they already feel is true about the world. But the test for a true view of the world must be: if you kill Him, what will you replace Him with?

Thursday, 14 April 2016

In Iraq, IS war effort is broken but fixable

Last month the tanks were rolling in the Iraqi desert. Yet now the Iraqi army’s offensive to retake the northern city of Mosul from the militant group Islamic State (IS) is paused.

Major General Najim Abdullah al-Jubouri says Iraqi forces are waiting for federal police units and local tribal fighters. Once they arrive, government forces will continue the offensive but the city’s recapture will be long and slow. The offensive has had only limited success since it was launched March 24. Government troops have retaken only three villages from IS so far. Nevertheless, it highlights how difficult dislodging IS will be.

This is because the war is a “level of effort” campaign, in which coalition forces are directed to act within tight regulatory and political boundaries. While in normal combat theatres this may be workable, coalition officials are not working backward to sufficiently resource or govern the war effort based on the desired outcome of the destruction of IS. Hence the slow progress.

The pace and the level of effort in Iraq is disappointing. For instance, the air campaign is like a fine Irish mist when it should be like a thunderstorm. Striking targets at the rate of 20 a day is modest at best. A low tolerance for collateral damage may be desirable but passing up opportunities for multiple strikes is a less moral position if the enemy's capacity to do harm to innocents is not suppressed.

Now, these are always hard choices and it's unfair to second-guess combat commanders. It has to be remembered, however, that this war is not solely kinetic – there is a significant ideological component. A battlefield defeat of IS directly undercuts its jihadist narrative. IS is considered popular because it is successful, with every victory proving the will and the hand of God. And nothing weakens that narrative like battlefield defeat.

Mosul will be important to retake but Western forces have almost no effect on the broader ideological dynamics. The West is less successful at breaking the overarching narrative than it is at killing people. And ultimately, coalition forces cannot kill their way out of this problem. If that were possible, this fight would have been over 15 years ago.

The Western-led coalition is far more dependent on allies in the Islamic world to influence the ideological battle. Yet to begin that conversation, the developed world must get over the fantasy that the fight has nothing to do with Islam. The general response is that all Muslims hate the West. Both of those positions are wrong but there needs to be an adult conversation.

The fighting does have something to do with Islam. The king of Jordan says there is a civil war within Islam, while the president of Egypt waggles his finger at that country’s respected theological faculty. While perhaps hyperbolic, the following is not without truth: the West may be merely collateral damage in a war within one of the world's great monotheisms. So the world cannot resolve the conflict by pretending it’s not happening. Therefore, empowering voices within Islam will be the best answer, not just for ourselves, but for Islam.

So while the fighting continues in Iraq, how far out should the metal detectors be placed from airports? A useful metaphor is perhaps football. After the attacks in Brussels and Paris the conversation immediately switched to the need for better or stronger goalies. How come police didn't know this guy? Why didn’t they arrest him sooner? This is all still penalty kicks. And with so many ways to kick the ball in the back of the net, terrorists will always find ways to score.

While practising defence is fine, it’s not a winning hand. The extended metaphor is to control the midfield. Move the game up and undertake necessary tasks such as espionage and collecting metadata – all the tasks about which Europeans wring their hands. After Brussels, it might be a good time for Europe to have a conversation about electronic surveillance to control their midfield.

Because after the midfield is controlled, terrorism can be blunted before it strikes airports. Spinning the metaphor one more revolution: why doesn’t the developed world think about scoring goals? In other words, aggressively take this fight to where the enemy resides.

That means getting tough in Raqqa and Mosul and across the Islamic State. That would require an international understanding that the world is a battlefield – which is another adult conversation in desperate need.

To get the tanks moving again near Mosul, alongside ramping up airstrikes one idea may be to use social media – or even traditional leaflets – to blanket that part of the earth with the notification that, if you move oil, you are going to die. Period. Even between the tight boundaries, that would be a legitimate act of armed conflict. It must be made perfectly clear this coalition is serious.

Whether all this happens or not, the point is that the real answers are deeper. They require both a change within Islam, which may take generations. But it also requires a maturing of the domestic security debate within industrialised countries. As it stands, the necessary political will to coordinate each of these fronts is weak at best and non-existent at worse.

Russian aircraft buzz US warships and the Ukraine connection

Two Russian Su-24 fighter jets made extremely close passes over a US naval ship operating in international waters in the Baltic Sea.

The jets made 11 simulated attack passes near the guided missile destroyer USS Donald Cook, coming so close to the ship that they caused waves in the water as sailors looked on. A Russian Ka-27 helicopter also made seven passes around the US ship, taking photos. According to an anonymous US official, Russian pilots did not answer attempts by US sailors to contact them via radio.

The incident on April 12 followed another on the previous day, when two Russian jets made 20 passes over the ship, coming within about 914 meters. The ship had recently left the Polish port city of Gdynia with a Polish helicopter on board.

Imagery of Russian Su-24 over USS Donald Cook
The same US official told Reuters the ship's commanding officer called the incident unsafe and unprofessional, which is a bit of an understatement. Military tension between Russia and the West continues to grow in what both sides appear to view as a long-term standoff. To understand these manoeuvres, they must all be read within the framework of the Ukraine conflagration.

Recently, US Secretary of State John Kerry travelled with former-National Security Advisor Henry Kissinger to Moscow for talks with the Russians on the fate of Ukraine.

Later reports suggest the negotiations fell apart. The Americans are playing hardball over Ukraine because Washington is in a far stronger position than Moscow. The ideal scenario for both the US and Russia is a Ukraine that is at least neutral, rather than aligned to either power. But Kiev and the majority of its population wants closer ties to the EU and US, so is pressuring Washington to back it in negotiations.

There appear to be two schools of thought within the State Department about the final outcome of Ukraine: back its Western integration no matter what, or force Russia to accept limitations on influence in Ukraine. Neither option will result in the US pulling away from the region, which is clearly a goal for Moscow.

Buzzing US warships therefore not only signals to Washington that the Baltics is Russia’s backyard (US aircraft would do the same to Russian warships operating in the Gulf of Mexico), it shows that Russia is falling behind the US around the Ukraine table.

Russia considers the encroachment by NATO and other Western institutions into Former Soviet Union countries as an existential threat. So it pushes back, every time ratcheting up the aggression to send that message to Washington and Brussels.

Will its aggression lead to war? This is precisely the question Pentagon planners are asking. Such a threatening military show of force probably required sign-off from the Kremlin, and was unlikely to have been a local commander’s decision (if it was, dissent inside Russia is darker than previously thought). But with so many moving parts – some of which are nuclear – Eastern Europe runs a real risk similar to the South China Sea where a single mistake by a sailor, soldier or airman could escalate tensions into a shooting war.

Ultimately, the Russian aircraft must be viewed in the context of negotiation tactics centred on Ukraine. The process is standard: negotiators arrive, make demands, these demands are rejected and the parties go home. The cycle rinses and repeats. All of it is theatre until one side either loses its strategic initiative in the physical world or a mutually agreeable situation is reached.

By the way things are going, it appears the Americans believe they can leverage greater concessions from the Russians over Ukraine. And if the price of oil, the Kremlin’s shrinking coffers and the EU/US sanctions are all taken into account, Washington is probably correct in this estimation. Hence why it is playing tough at the table.

Russia isn’t in a good spot strategically or financially, so buzzing a guided missile destroyer while it prepares to ramp up its support for Ukraine separatism in the summer are two ways it can signal its intentions and limited power. Moscow still has some options to force its own set of concessions from Kiev and Washington, but those are dwindling. And as they dwindle, the Russians may get more desperate.

One more thread needs to be considered. Russia’s partial extraction from Syria last month was timed to assist the looming next round of Ukraine negotiations. From Washington’s perspective, the Russians did it a favour by assisting Syrian President Bashar al Assad. But the help hasn’t boosted Moscow’s position as much as it thought.

Since the US announced it wouldn’t support the Syrian regime, in late 2015 it faced a potential scenario in which the Islamic State (the strongest non-state group in Syria) was poised to take advantage of the failing regime to control the entire Syrian state. That was unacceptable for both the US and Russia.

So the Russians stepped in to assist their long-time ally Mr al Assad and avoid the regime’s collapse. Russia had its own reasons to make this move, but the cold facts of geopolitics were the true driving force. The Syrian regime was subsequently strengthened and even retook key strategic towns and roadways, pushing rebel and IS forces back. All with help from Russian advisors, special forces and airpower.

Whether the US and Russia came to an understanding about this is known only to those operating in the shadows. To discover exactly what was spoken between the two powers, the public will have to wait 50 years until the intelligence files are declassified – if they ever are. Yet geopolitically, Russia’s intervention gave the US breathing room and meant it wouldn’t need to intervene in Syria after all.

Again, this must be framed along the negotiations unfolding over Ukraine, since that country’s fate is in Moscow’s core interest, not Syria. Mr Putin thought the temporary stabilisation of Syria bought him some goodwill or at least better negotiating terms. Yet judging by the heat of the talks and the buzzing of US warships this week, Mr Putin will now be looking for more effective options to bolster Russia’s stance.

Wednesday, 13 April 2016

Sitrep - 13 April, 2016

Ukraine’s Prime Minister Arseniy Yatsenyuk announced his resignation over the weekend, a result of continued factional infighting in Kiev. More political instability is expected as the country now enters an early election cycle. In a post-revolution environment, alliances often fall apart while bureaucracy takes the place of fervour, so while the infighting is painful it is not surprising.

However, a weak Kiev will slow the country’s path towards integration with the West and may give Russia a chance to increase influence. While much of Ukraine’s population is pro-Western and wary of Russia, given the latter’s annexation of Crimea and separatism in the eastern Donbas region, Ukraine’s politicians and oligarchs are hoping to balance the West and Moscow.

In pictures released on April 9, a new North Korean rocket engine test is worrying the arms control community. The images show a clustering of two engines together in a new configuration, burning cleaner fuel and mounted on a structure mimicking one of Pyongyang’s intercontinental ballistic missiles (ICBM). It also appears to be working.

The test is not good news as it proves the regime’s claims about delivery capability are not a hoax. It shows a surprising level of engineering sophistication and new flight tests are likely within a year. The new engines boost the North’s potential ICBM range and payload curve towards the upper estimates, placing New York and Washington DC within range.

Meanwhile the financial and geopolitical world is measuring the impact of the so-called Panama Papers leak. Up to 11.5 million sensitive client documents exposing various heads of state and 214,000 offshore shell companies were released to media a year ago. Journalist reports have been trickling into headlines over the last week.

While shell companies are not illegal, they could be involved in illegal activities. Already the heads of state with accounts at the law firm are facing domestic pressure to answer prickly questions. An overrepresentation of developing countries suggests the broader impact will be muted, as corruption is both endemic and dissent quashed in those countries. However, as China ramps up its anti-corruption campaign, the leaks could introduce unwanted new targets on the ruling party.

Sunday, 10 April 2016

Australia’s delicate strategic balancing act

Australia’s government has been stable over the past decade, but its leadership has changed so many times that anyone would be forgiven for thinking a purge was in process. Yet while politics is ever-changing, grand strategy demands consistency and Australia is balancing a tough choice.

Its next election must be held before 14 January, 2017. However, if a double dissolution (a procedure resolve deadlocks between the House of Representatives and the Senate) is necessary, the election could be scheduled for mid-2016.

Although it remains the 12th largest economy, 2016 will be a struggle for the Lucky Country. As the slowdown in Chinese manufacturing became unavoidable in 2015, Australia’s coal and iron ore industries were hit hard. The heyday of incredible Chinese growth is probably not returning, so Australia’s government is encouraging new industries to compensate.

But whatever the formation of the next parliament, Australia will increase its regional engagement in the Asia Pacific, using its own strengthened military and warm friendship with the US military. Two recent examples point in that direction. This week, the Royal Australian Navy (RAN) will participate in military exercises with the US and the Philippine navy while a recent poll suggests overwhelming voter support to build a new fleet of submarines in South Australia.

The RAN is also receiving pressure from the US Navy to join in its “Freedom of Navigation Operations” (FONOPs) in the South China Sea. The US continues its quarterly FONOPs near a controversial series of islands claimed by China. Washington isn’t impressed by China’s attempts to control those sea lanes but wants the RAN to assist in upholding international sea law to give the appearance of multinational unity.

Australia’s military has the capability to assist the US in maintaining this regional security. Presently the RAN has 47 warships including frigates, submarines, patrol boats and auxiliary craft based from two primary naval bases in Sydney and Perth. The largest are two Canberra class Landing Helicopter Dock (LHD) ships. These vessels displace 27,500 tonnes and can carry up to 18 helicopters, 1000 troops and 110 vehicles.

But Australia isn’t wealthy enough to defend its own security interests, which is why it works closely with the US Navy. While the RAN has some sizeable ships, Australia is essentially an island nation with thousands of nautical miles to defend. Only very wealthy nations can afford a blue water (ocean-going) navy, and Australia is not rich enough. Which means central to Australian grand strategy is the necessity of partnering with whichever nation presently controls the world’s oceans.

The same fundamental dynamics affect New Zealand. Both South Pacific nations will never become wealthy selling products and services to themselves. Instead, goods must be shipped over sea to far away markets which requires friendly and open sea lanes and lines of communication. Of course, that dependence has certain inescapable foreign policy choices.

Before the US Navy took control of the world’s nations after World War II, the Royal Navy upheld maritime security in the South Pacific. As a result, when the British Empire fought its wars, Australia and New Zealand were compelled by their debt to assist the Crown. Australia participated in the Second Boer War and both World Wars while New Zealand also joined the fighting.

Today, Australia’s relationship with the US follows the same pattern. In recent years, it joined the international effort in Afghanistan, Iraq and against the Islamic State. It has also increased its participation in maritime security across the Asia Pacific region alongside the US Navy. It does this not because of ideology – often in spite of it – but because geography always has the final say. And while Australia may look secure on a map, losing access to the oceans would be disastrous.

New Zealand’s weakness allows it to ride the coattails of Australia and choose to participate in US war requests. Wellington was compelled to fight in Afghanistan, but not in Iraq, and sent only non-combat troops to fight the Islamic State. Australia has much more to lose and often can’t deny sharing maritime patrolling burden and other commitments.

For instance, the US is presently in talks with Australia to deploy more strategic bombers at Royal Australian Air Force Base Darwin. In 2011, Canberra agreed to a deployment of US troops on Australian soil that would reach 2,500 by 2017. The bombers in Perth will be out of range of Chinese long-range missiles, but also places Australian cities in harm’s way should a hot war break out between China and the US.

Yet that is the reality of Australia’s geography. It must balance its grand strategy and assist the US but not hurt its relationship with its most important trading partner. China’s economy may be slowing down, but it is still deeply important to Australia’s business community. As its elections proceed, a balance will need to be found that meets both its economic and defence necessities.

Papers in Panama aren't the problem, you are

Everyone likes to know the secrets of the game and I bet the journalists who worked on the Panama Papers are feeling happy with themselves.

Last week, the nasty, corrupt elites were exposed hiding money in offshore trusts using shell companies in a tiny Central American country no one really cares about. Now we get to feel vindicated that our economic pain and suffering isn’t our fault after all. Phew. “See, it was Big Business and the 1% the whole time! Didn’t we say so?”

Well, no, actually, we didn’t. Having a vague hatred of rich people doesn’t qualify as a reason for action, nor even as a coherent ideology. In fact, from the outside, it just looks like jealousy. And from my experience, nothing substantive is ever done to fix the underlying problem (if there is a problem) in scandals such as this. I can already see the firm at the centre of the scandal being scapegoated, so the rest of the grey system avoids the public spotlight.

Think about how no one remembers any of the bankers in 2008 aside from Bernie Madoff. Even worse, without jumping on Wikipedia, I bet the reader can’t name a single person Mr Madoff stole from in all his years of pyramid scheming. So why did we hear about him? More importantly, why were we given the play-by-play of his arrest and trial? That was the whole point – to throw us a carcass so other bankers could move their assets to Panama. Oh, the irony.

This present scandal reeks of politics. This doesn’t mean I agree with Russian President Vladimir Putin about a conspiratorial attempt by Washington to break his international reputation. A bunch of other high-profile world leaders’ sneaky assets were found in the files too, not just his. What truly smells funny is how perfectly these papers fit the narrative that the 1% are to blame for every ill in the world. I didn’t buy this line in 2008 and I still don’t buy it today.

Some of the complaints are legitimate, however. The hiding of potentially trillions of dollars and taxes approaches an existential threat for the nation state concept. If a government cannot fund its projects, then it will cease to exist.

But all of those hidden trillions were gathered over decades, and over that time, governments compensated for this missing money by printing more cash. In fact, in only the past 10 years the world has added more money than has ever existed. All that new money flowed somewhere, because what’s the point of money if it isn’t used to buy goods and services?

This leads me to think that maybe the people we should be blaming aren’t (just) the trust-funders. I don’t see security camera footage of St Heliers residents peeling on balaclavas and walking into state treasuries to steal trillions of dollars of cash and bonds. It actually appears they earned their riches.

Sure, some are legacy accounts, while some accounts are illegally syphoned money from developing states (no one should be surprised that Mr Putin and others possess billions of dollars). Yet the majority of elites are people who built their fortunes the old-fashioned way: with business.

II

Of course, that process isn’t popular in the modern world. But understand that fortunes can’t be made if no one buys goods and services. Which brings all of us into the firing line too.

Some of the blame must go to advertisements training us to want things we don’t need, and to the propaganda of debt. Yet none of that is reason enough to blame the financial troubles on the Panama rich whose only role was being on the front end of the long economic conveyor belt. Just because most people’s role is to buy useless goods or to have really cool iPhone apps (“look, this one turns my face into your face!”), doesn’t absolve us of blame for our indebtedness by lumping it all on the few who sell us those products.

In fact, I’d suggest the consumer is more to blame for the current economic malaise than Apple or Nike. (Apple is used here as a placeholder for “large multinational”). Those companies only churn out plastic junk because people buy it. So Apple takes our money and – since the whole point of capitalism is to find clever ways to pick other people’s pockets – Apple executives figure out how to avoid the government picking their pockets by funnelling the earnings through Panama. And the only response the public can muster is complaining that some people are rich while others are poor?

No one asks whether their desire for an iPhone helped make this happen. Instead, we get calls to tighten laws, send the Feds to Panama and vote in better politicians to stop it happening again.

Well, how did that work out the last time? These havens have been known to the general public forever. They are not a secret. People have been lobbying for stricter laws against them for decades, and yet, here we are. Tax havens now have more money on their books than at any time in history. And the panacea, apparently, is to make new rules and laws? Madness.

So we want to change the rules? Ok, who's going to make those rules? Politicians? Judges? You? Seriously, how'd that work last time? And the time before that? And before that ...? If the solution is to increase taxes the result will not be that the rich pay 6-10% more from their estate. The result will be that the rich will pay nothing extra because they will spend money to find legal ways to avoid paying more tax.

And then what? The problem isn’t solved. We’re just moving problems around. If citizens keep handing power to someone else, they will always lose because rules are made by the elites. The game is stacked so if something needs changing, why don’t you do it yourself?

“Yeah? You and whose army, buddy?” That’s exactly my point. The mistake is to think you can TAKE power. This is going to sound strange, and you probably won’t like it, but, if you try to win against this system using force, nothing will change because the old system will simply be under new control. And guess what the new people will do? It won’t be redistribution.

III

"So the answer is change, then?" How can the answer be change when we don’t even know what the question is.

If we want change, the only thing to do is refuse to play AT ALL. That means stop voting, stop activism, no more new laws and don’t try to get anyone arrested. Not voting is a vote – against the system. Do nothing to encourage the system, or you will be to blame when all that changes is the paint job. This process is called "passivism" (the opposite of pacifism: it doesn’t take control of the system, it wishes to replace it). This is the only way out of this mess.

“Actually, that sounds like the perfect way to let the mess carry on”. You don't understand. When a few elites make the rules, it becomes impossible to use the system against itself. Only very stupid people think elites are stupid. Of course, redundancies will be created to avoid the system being changed from within. But the answer is that YOU have to stop. Because, if everyone individually stops, then the system loses oxygen.

I get that people are mad about Panama but if you do not stop, what will we say when it all happens again? "Oh, we just need better politicians/judges." How many times does this have to happen before we realise that the entire system of democracy and financial economics is built precisely to allow this outcome? Again, it's not bad politics – politics is the problem. The only way to win is to not play.

Before we get too angry about Panama and demand John Key make amendments, think about how hard true change would actually be. Starving the current system by standing still and refusing to participate is the only way out. That’s really hard. Are you sure you want this “change”? Are you prepared for the second- and third-order effects?

But no one is thinking this far ahead because, for it to work, we’d have to find a replacement politico-economic system while avoiding the trap of creating the same damn thing again by accident. Yet the above is the only way out: if enough people practice passivism, the system starves. The power to create a better system will then flow away from it and toward the passive. If this path isn’t taken, then you don’t really want change.

IV

Most people’s problem with the Panama Papers scandal stems from a mercantilist view of the world. They think there is a fixed amount of wealth so, when someone has inordinate wealth, then logic suggests others have less. But this is incorrect. Currencies have a built-in failsafe called the “printing press.” And I don’t mean the machines churning out $100 notes. The real safety is the media.

Anything written is canon because a journalist says it is. The more complicated an infographic on bonds, derivatives or liquidity, the less likely the reader will verify its figures. Readers take the writer’s word because who has the time to research with all these cool apps to play with! Yay, Angry Birds.

As a result, no one hears the true extant amount of money. And that is key. Judging by crime movies, trillions of dollars is probably buried or sitting at the bottom of lakes after drug deals went wrong. Not to mention all the notes and coins burned, crushed, trapped or melted over the years. It’s probable that not even central banks know how much money exists.

So talking about inflation or deflation keeps people believing that money actually exists and has an effect. But it doesn’t. Prices are set by supply and demand and manipulated by economists who also have no clue about how much money there is. If enough people knew that money doesn’t exist, then the whole game comes crashing down.

Besides, governments don’t really care about tax havens. They’ll just print more money. It doesn’t matter who grabs the cash, the new money eventually must be spent on goods and services. Billionaires want to live in mansions, right? Well, the IRD can tax the purchase of a house. Lots of loopholes in real estate? Ok, the IRD will tax vehicle, carpet or swimming pool purchases. Loopholes here, too? Then no one avoids paying taxes on utilities. And what about the staff salaries? My point is, the IRD knows taxes aren’t only drawn from earnings. It will get tax, even if it takes more time.

And with national debt mountains across the developed world growing every day, taxing the top 1% another fraction won’t help. In fact, by my count if tax havens are thrown at the mountain it wouldn’t scratch a single year’s social expenditure. The problem at the heart of the modern economy isn’t paying back debt, it’s figuring out how to keep the money coming so no one grows desperate enough to tear down the power structures. Visa is happy to keep that game going, and $100 notes never stop printing.

That’s why the Panama leaks aren’t good for our sanity. It maintains the illusion that money is the measure of all things. If some people have lots of money, then their lives must be important, and we begin thinking of ways to pick their pockets. While I appreciate the sentiment, the problem is the framing. If money is the only measure of a good life, what happens when we get enough? Will there ever be enough? And what sort of ethics will we utilise to justify taking money from others? Would that make us better people or worse? How do you know?

V

The Panama Papers dangerously reinforce in our broken brains that personal financial failures aren’t really our fault. And if we could only find ways to compel billionaires to redistribute their money, then everything will be alright. Do you see? You are being lied to, by yourself.

The public has demonstrated clearly that it knows absolutely nothing about economics, government finance or personal finance. So even if redistribution happens, New Zealand still won’t be producing a sufficient amount of goods the rest of the world wants to buy. Seriously, other than dairy, finance, legal services and real estate, what does New Zealand export that anyone wants? That’s the true problem. If we produced more real products, then no one would care about the Panama rich.

The Panama Papers supply us only with a fresh excuse not to fix our own problems by blaming everything on the 1%. I can’t think of anything more damaging or perpetuating.

If you think your wage is set at $35,000 because a bunch of rich people steal money and yet, instead of learning how they earned so much by studying tax loopholes, all you do is sit on the couch and play video games, then the problem isn’t tax havens, the problem is you.

The gender debate asks the wrong questions

It seems everyone wants to hear that boys and girls are really the same, and that the problem is adults enforcing society's gender roles on children.

What we never hear in this debate is that roles can be a force for good. Why do we assume that gender roles for women are negative and positive for boys? Mothers allow infant boys to climb steeper inclines than girls even though they're both physically capable of climbing. So the implication is that mum is being overprotective of the girl because most people are trained to interpret any difference in sex treatment as automatically disadvantaging girls. Logic suggests that a better result would be for mum to be as reckless with the girl as she is with the boy. But that's poor logic.

The question we should be asking is, given the maternal instinct to protect children, why are mothers more reckless with boys? Why do they encourage boys to take above-average risks compared to girls? Doesn't that disadvantage the boy?

Furthermore, people shouldn't be treated the same when all advantages - physical, social, intellectual - accrue to the specialist, not the individual. Humans need specialisation to survive. It is important to have some members of society trained to be more physical, some to be more social and others to be more empathetic. Rather than have every member being mediocre at many things.

The gender debate is annoying because the framing reinforces people's dumb preconceived notions. Boys are encourage to play sports in which players routinely break bones and suffer concussions but the game in which nothing of value is at stake continues. Somehow women are disadvantaged because they aren't treated as carelessly. That logic doesn't fly.

Friday, 8 April 2016

How to legalise drugs (this is not an article about how to legalise drugs)

Perhaps all this recent talk about marijuana, Peter Dunne and the “War on Drugs” is best left to the mainstream media, but I don’t think so. The calls drip-drip-dripping to legalise drugs is a long-term play and the media is happy to make piles of money in the meantime by stirring the conversation.

But then the New Zealand MP the Hon Peter Dunne said:

“Above all, sensible drug policy is about a prudent and balanced response. It should address the supply and distribution issues through the law, as well as ensuring good health services are available to assist those suffering from the misuse of drugs.”

And I start to think there’s a business angle worth teasing out. Because the profit motive can’t be removed from the drug trade simply by legalising everything because it wouldn't eliminate the trade aspect and therein lies the profit for commerce. There is a reason why the government gets involved in the legalisation of products and services.

(“Narcotics” is used here to denote any illegal drug for which there is a sizable and organised black market. Not for its medical/chemical properties.)

Let’s get one thing out of the way first. Prohibition doesn’t cause people to use drugs. People try exotic substances because they are stupid. And I mean that literally: they suspend the normal-functioning of their brain.

Would a functioning human buy a hamburger from a guy selling them in a damp alley? No. But somehow that aversion disappears when it’s a chemical that alters brain chemistry because people are stupid. Everyone knows using drugs may result in a fatal overdose, yet they take them anyway. They know not to mix prescription drugs with alcohol, yet street drugs are routinely consumed with unhealthy quantities of alcohol.

And the debate isn't just about rights either. The public pays to clean up drug corpses and hospital visits, not the drug user. And when a user’s nasty addictive behaviour ruins the lives of everyone around them, that person is no longer an island. The government has a legitimate interest in maintaining a civil society where people act like people, instead of like animals.

Criminalising street narcotics isn’t the maaann harshing your buzz. Has anyone ever tried suing a drug dealer for product liability because the cocaine was cut with crushed glass or the heroin was actually detergent? And are those little bags child-proof? What about the needles, are they clean?

Do people really need to get high so badly that they’ll buy an unknown chemical from some idiot in a club and shoot straight it into their eyeballs before they even leave the bathroom? If the answer is yes, then it’s perfectly acceptable for the government to agree with that person’s own assessment that their brain is defective, and to separate them from the rest of society.

Want to know why there is a war on drugs? Here’s why: everyone cigarette smoker under the age of 40 knew that smoking causes fatal lung cancer before they lit the first cigarette. And yet they did it anyway. Why did they do it? For all the reasons people do other irrational stuff. They wanted attention, to be rebellious, or cool, whatever. But hey, it’s their right, right?

Wrong. You don't have the right to cook hamburgers and sell it on the street without a government magnifying glass looking at the cleanliness of your kitchen and ingredients before forcing you to wear a hairnet. Restaurants are regulated precisely because people will try to screw over their customers for a measly dollar, and we don't trust customers to determine for themselves what is safe to consume.

After all, what if beef were illegal? Would people be willing to sidestep established standards of health and cleanliness just to consume it? What if the illegal meat is riddled with bacteria or parasites? Would most people even know how to check? Does any of this seem rational?

Fundamentally, narcotics aren't safe because they make the brain operate abnormally. Panadol isn’t safe because it reduces the body's ability to feel pain, so it is regulated – not just a little bit, but by an incredible amount.

So after thinking about this, I've concluded that New Zealand won’t legalise narcotics until the following conditions are met. Furthermore, I predict that legalisation will occur soon after the last of these conditions is met (within one election cycle). The conditions are:

1. Narcotics become a low-margin commodity manufacturing process, similar to staple foods or low-end manufactured goods. This would require drug production to be legalised in the countries where narcotics are presently produced.

2. Profit margins become the widest within the distribution (wholesale) section of the supply chain. This will require multiple sourcing. For instance, cocaine must be sourced from a variety of countries and production cartels, not just Colombia under the control of whatever cartel succeeded Pablo Escobar's gang.

3. Medical research must demonstrate that health risks associated with drug use are often not due to the drug itself but to (a) poor dosage control from inconsistent or unreliable purity; (b) poor quality control by narcotics cut with toxic chemicals or dangerous contaminants; (c) or associating with violent criminals in the process of acquiring illegal narcotics.

4. Acknowledgment by government officials that the overall drug trade creates a grey-market underclass of non-drug traffickers whose income is derived indirectly from the drug trade (family members, friends, etc). This generates undeclarable cash incomes precluding these people from accessing legitimate banking, housing and healthcare industries.

5. Evidence showing that continuing to declare narcotics illegal deprives the local, regional and central governments of substantial corporate, payroll and personal income tax revenue that could be collected if an identically structured drug market was made legal.

6. Pharmaceutical companies convince governments that issues of quality control, dosage and other safety provisions can be satisfactorily addressed if they gain permission to sell narcotics alongside generic pharmaceuticals. Remember that (a) most street drugs were invented by pharmaceutical companies and (b) none of those drugs are covered by patents, so they could be sold just like generic prescriptions.

7. The pharmaceutical industry convinces the government that selling narcotics will lead to substantial investment in medical research which is presently woefully underfunded due to a lack of significant patented drug pipelines.

All these conditions are important because in a modern economy, profits are downstream from distribution. In most consumer markets the retailer controls the behaviour of the supplier, especially in markets where multiple suppliers offer identical products. In the narcotics trade, profits are concentrated in the supplier (the cartel) and the importer (the trafficker). Which means in a legitimate market these two functions would become low-margin commodity operations.

Assuming these conditions are met – either through the natural evolution of the drug market or forced legislation – then all kinds of drugs will eventually be legalised. Cocaine would probably be trademarked, branded and sold by Pfizer and Big Pharma would make all the money, but I think this is the most likely route to legalisation.

The key is to align different parts of the market so that all the powerful lobbying forces desire the same result, even if they do so for diverse and selfish reasons. If this doesn’t happen and Farm Boyz Growery in Waikato wants to produce marijuana on an industrial scale, well, FoodStuffs or Monsanto will probably lobby against that position. They will win and Farm Boyz Growery will lose.

Consumer product distribution is a massive decent-margin industry. It employs a lot of people, pays plenty of taxes and it is “politically active” – to put it mildly. If the above conditions are met and narcotics are distributed alongside aspirin, then we can expect a sudden and gigantic bottom line boost to every company with the necessary distribution infrastructure already in place.

Following this logic, business will eventually support legalisation because it will own distribution and can truthfully claim doing so will boost tax revenue and add paying jobs to a fragile economy. We’re yet to decide as a society whether this is a goal we want, but if narcotics are similar to every other industry, big business might decide that for us. Over to you, New Zealand.

Wednesday, 6 April 2016

Sitrep - 6 April, 2016

The frozen conflict between Armenia and Azerbaijan heated up over the weekend, killing dozens of soldiers in the disputed region of Nagorno-Karabakh. Fighting has since cooled after Azerbaijan, which is being blamed for starting the clash, declared a unilateral ceasefire.

The two countries fought a war after the collapse of the Soviet Union in 1991, ended by a ceasefire accord in 1994. Control over the borders was never resolved and skirmishes have been a fixture of the Caucasus region ever since. However, both sides have powerful patrons and a flare-up may draw those powers in.

Armenia is a Russian client-state and a Turkish enemy – given the latter’s genocide against Armenians in the early 20th century. Azerbaijan however is supported by Turkey and has political, ethnic and religious ties to Iran. The deterioration of relations between the three regional powers in the recent past makes this particularly deadly clash geopolitically important to watch.

Further west, the US announced an increased troop commitment in Eastern Europe of an extra armoured brigade by 2017. The new forces bring US strength in Europe to three brigades and airforce units totalling 60,000 servicemen. The troops are on rotation through a series of Eastern European countries as part of Operation Atlantic Resolve, a NATO rotational deployment organised to bolster US support in the region as a response to Russian aggression.

However, the US think tank RAND Corporation estimates seven brigades would at minimum be needed to slow a serious Russian advance into Former Soviet Union countries. The troops nevertheless form a tripwire, virtually guaranteeing US involvement in any larger war. Despite the increase, the new brigade doesn’t change the military status quo.

What may alter the dynamics are recently announced talks between Washington and Iceland to reopen an air station on the island. During the Cold War, controlling the strategic gap between Iceland and the UK ensured NATO Atlantic reinforcements wouldn’t be harassed by Russian submarines. Now, with increased Russian nuclear submarine activity, Iceland is becoming important once more.