NEWS IN BRIEF – REST OF THE WORLD

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17 June 22. China launches new domestically designed and built Fujian aircraft carrier, increasing fleet to three.

China has launched its third aircraft carrier, the first such ship to be designed and built entirely within the country.

The 003 new-generation aircraft carrier, christened Fujian, left its dry-dock at a shipyard in Shanghai in the morning and tied up at a nearby pier, state media reports said.

State broadcaster CCTV showed assembled navy personnel standing beneath the massive ship as water jets sprayed over its deck and multi-coloured streamers flew and colourful smoke was released.

The launch comes as China seeks to extend the range and power of its navy. Equipped with the latest weaponry and aircraft-launch technology, the ship’s capabilities are thought to rival those of Western carriers, as Beijing seeks to turn its navy, already the world’s largest, into a multi-carrier force. (Source: News Now/https://www.abc.net.au/news/2022-06-17/china-launches-fujian-aircraft-carrier/101162552)

 

16 June 22. Burkina Faso: Capture of ISGS senior member will likely impede the group’s short-term tactics in Gourma and Oudalan. On 15 June, the French army announced that troops operating under Operation Barkhane arrested a senior figure of the Islamic State in Greater Sahara (ISGS), Oumeya Ould Albakaye, at the Niger-Mali border on 11 June. Albakaye was the head of the ISGS in Burkina Faso’s northeastern Gourma and Oudalan provinces. The French army claim that Albakaye led the coordination of implementing improvised explosive devices (IEDs). It is a realistic possibility that the capture of Albakaye could impede ISGS jihadists’ coordination and tactics, including their use of IEDs, reducing the threat of their expansion in the short term. However, the capture of Albakaye is unlikely to prevent ISGS operations resuming in Gourma and Oudalan in the medium-long term. The capture also highlights the significance of Operation Barkhane in the region, particularly indicating the loss of aerial capabilities impeding counter-insurgency efforts once the operation withdraws in the coming months. (Source: Sibylline)

 

17 June 22. Iran: Israeli-US military and government personnel will remain vulnerable to Tehran’s phishing attacks amid tensions over the stalled nuclear deal. On 16 June, industry reports claimed that the Israeli government and its military personnel were being targeted by an ongoing Iran-backed phishing campaign. These Tehran-linked hackers have reportedly used compromised accounts from known contacts to send malicious emails to high-profile targets, such as Israel’s former Foreign Minister Tzipi Livni. The threat actor is also using social engineering tactics, including messaging within existing email chains, to avoid detection and trick their victim into opening malicious documents. It is assessed with “medium” confidence that the campaign is being launched by the Iranian state-linked hacking group Charming Kitten (also known as Phosphorus) based on the tactics, techniques, and procedures (TTP) observed. Phosphorus is historically known for conducting politically motivated and socially engineered phishing attacks to gather intelligence that can help Tehran assess geopolitical developments in the Middle East region. With tensions over issues such as Iran’s stalled nuclear deal set to persist, further such phishing campaigns are likely to emerge in the coming weeks. Israeli and US government agencies and their private sector partners, such as defence firms, will remain the prime targets for such activity. (Source: Sibylline)

 

16 June 22. Democratic Republic of Congo: Possible rejection of regional force will sustain M23 conflict, disrupting overland cross-border movement. On 15 June, thousands of people protested in Goma and looted Rwandan-owned shops after the government reiterated claims that Kigali backs the M23 rebel group. Regional tensions between the countries have been increasing in recent weeks, with the DRC military accusing Rwanda of an invasion on 13 June. It is possible that rising anti-Rwandan sentiment will pressure authorities in the DRC to reject the support of the regional force, made up of members of the East African Community (EAC), with preparations set to be finalised on 19 June. It is also a realistic possibility that, given the recent protests, Rwanda will withdraw its commitment from the force. This will likely to impede counter-insurgency efforts. Sustained conflict in the border zones is likely to elevate threats to the overland movement of goods across borders which will likely disrupt supply chains in the country. (Source: Sibylline)

 

15 June 22. Australia, Japan to ramp-up defence cooperation.

The regional partners have agreed to increase the frequency and magnitude of joint military engagements across all warfighting domains.

Deputy Prime Minister and Minister for Defence Richard Marles has announced a new commitment to strengthening defence ties between Australia and Japan amid mounting tensions in the Indo-Pacific.

A joint statement was issued following a meeting between Minister Marles and Japanese Minister of Defense Kishi Nobuo in Tokyo, outlining plans to “elevate defence cooperation” under the Japan-Australia Reciprocal Access Agreement.

Other measures include:

• increasing the sophistication of exercises and activities across all warfighting domain to improve interoperability;
• advancing cooperation on science and technology, and strategic capabilities, while also accelerating work on the development of a framework to promote cooperation between the Acquisition, Technology & Logistics Agency and Defence Science and Technology Group;
• increasing cooperation across space and cyber;
• strengthening mutual industrial bases through collaboration on supply chains; and
• enhancing coordination of activities alongside Pacific and ASEAN partners.

“The ministers resolved to continue their close bilateral coordination in regional engagement, with the aim of contributing to a free, open, secure and prosperous Indo-Pacific and maintaining the rules-based international order,” the joint statement read.

The bilateral meeting followed a Trilateral Defense Ministerial Meeting during the recent 2022 Shangri-La Dialogue.

Minister Marles and Minister Kishi joined US Secretary of Defense Lloyd Austin III to reaffirm their continued support for the rules-based order and the UN Charter. (Source: Defence Connect)

 

15 June 22. DoD performance plan not bullish on declining defence budget. Parliamentarians were told there are nine “broad implications” of a declining defence budget when the Department of Defence (DoD) presented its latest annual performance plan to the Portfolio Committee on Defence and Military Veterans (PCDMV).

Among words used to illustrate the situation the national defence force finds itself in are “non-implementation”, “non-compliance”, “inability”, “reduction” and “cancellation”.

Top of the list, according to the PCDMV presentation is non-implementation of the Defence Review 2015 plan to arrest the decline in the SA National Defence Force (SANDF). This, the presentation has it, is needed to ensure sustainability of defence capabilities.

Number two concerns the national security strategy and notes non-compliance with it as regards the border safeguarding requirement – Operation Corona – for 22 sub-units (companies) and establishing “a cyber warfare capability”.

An inability to modernise and sustain prime mission equipment (PME) as well as the DoD’s inability to “modernise, digitally transform and secure the organisation and South Africa” are implications three and four.

Defence facilities also come under the inability microscope because they are nor maintained and refurbished leading to further deterioration of among others, bases across the four services, as well as buildings on them.

“Reduction and/or cancellation of formal courses (training) and joint inter-departmental, agency and multi-national exercises adversely impact on safety of troops during deployments and combat readiness,” is listed as implication number seven preceded by an inability to establish “adequate organisational structures and undertake human resource staffing”.

Implication eight goes to what is needed to keep a national defence force going. Again, an inability to maintain set stock levels is cited which leads to outsourcing as a high cost alternative. The presentation specifically names ammunition, rations, pharmaceuticals, medical consumables and spares as problem areas.

Number nine is given as “reduction” in the SDA (Special Defence Account). This, the presentation has it, is a potential loss of sovereign defence industry and litigation on contracted projects.

“In future the DoD may be required to make use of external defence industries at a huge cost. In a situation of war or external aggression, South Africa will not have its own defence industry for weapon, PME and ammunition modernisation and manufacturing”. (Source: https://www.defenceweb.co.za/)

 

14 June 22. Global Nuclear Arsenals Are Expected to Grow as States Continue to Modernize–New SIPRI Yearbook Out Now. The Stockholm International Peace Research Institute (SIPRI) has launched the findings of SIPRI Yearbook 2022, which assesses the current state of armaments, disarmament, and international security. A key finding is that despite a marginal decrease in the number of nuclear warheads in 2021, nuclear arsenals are expected to grow over the coming decade. The nine nuclear-armed states—the United States, Russia, the United Kingdom, France, China, India, Pakistan, Israel, and the Democratic People’s Republic of Korea (North Korea)—continue to modernize their nuclear arsenals and although the total number of nuclear weapons declined slightly between January 2021 and January 2022 (see table below), the number will probably increase in the next decade. Of the total inventory of an estimated 12 705 warheads at the start of 2022, about 9440 were in military stockpiles for potential use. Of those, an estimated 3732 warheads were deployed with missiles and aircraft, and around 2000—nearly all of which belonged to Russia or the USA—were kept in a state of high operational alert. Although Russian and US total warhead inventories continued to decline in 2021, this was due to the dismantling of warheads that had been retired from military service several years ago. The number of warheads in the two countries’ useable military stockpiles remained relatively stable in 2021. Both countries’ deployed strategic nuclear forces were within the limits set by a bilateral nuclear arms reduction treaty (2010 Treaty on Measures for the Further Reduction and Limitation of Strategic Offensive Arms, New START). Note, however, that New START does not limit total non-strategic nuclear warhead inventories. (Source: glstrade.com)

 

11 June 22. United States-Japan-Australia Trilateral Defense Ministers Meeting (TDMM 2022 Joint Vision Statement). Australian Deputy Prime Minister and Minister for Defence Richard Marles, Japanese Minister of Defense Kishi Nobuo, and U.S. Secretary of Defense Lloyd Austin III, convened a Trilateral Defense Ministerial Meeting in Singapore on June 11during the 19th International Institute for Strategic Studies (IISS) Asia Security Summit (2022 Shangri-La Dialogue) in Singapore.  This was the tenth meeting among the defense leaders of the three nations.  The leaders exchanged views on the regional security environment and committed to work together to take concrete, practical steps to ensure the security, stability, and prosperity of the Indo-Pacific region.  With the TDMM having affirmed this strategic alignment among the three leaders, the respective ministries plan to continue to enhance trilateral defense cooperation in the interest of regional security, buttressing the important work of their nations’ diplomats.

The Ministers oppose coercion and destabilizing behavior that undermine a rules-based international system. They continue to stand against unilateral attempts to change the status quo by force, as demonstrated by the united response against Russia’s unprovoked, unjust, and illegal aggression against Ukraine. This aggression is a brazen violation of international law, including the Charter of the United Nations, and the Ministers have reason to believe that Russia has committed egregious war crimes across Ukraine.  They call on Russia to immediately withdraw its forces and cease its attack on Ukrainian territory, and to comply with the legally binding order of the International Court of Justice of March 16.

The Ministers are concerned about the increasingly severe security environment in the East China Sea, which undermines regional peace and stability.  The Ministers are strongly opposed to any destabilizing or coercive unilateral actions that seek to alter the status quo and increase tensions in the area.

The Ministers share serious concerns about the situation in the South China Sea and oppose any unilateral attempts to change or influence the status quo through militarization of disputed features and coercive or intimidating actions.  They strongly object to China’s unlawful maritime claims and activities in the South China Sea that are inconsistent with international law, particularly as reflected in the United Nations Convention on the Law of the Sea (UNCLOS).  They reaffirm the 2016 South China Sea Arbitral Tribunal decision as final and legally binding on the parties to the dispute. The Ministers emphasize the importance of the peaceful resolution of disputes in accordance with international law, particularly as reflected in UNCLOS, including freedom of navigation and overflight and other lawful uses of the sea.  They also reaffirm their support for unimpeded lawful commerce.

The Ministers underscore the importance of peace and stability across the Taiwan Strait, and encourage the peaceful resolution of cross-Strait issues.

The Ministers reaffirm their unwavering support for the Association of South East Asian Nations (ASEAN) unity and centrality and its importance in promoting positive norms and behavior, contributing to regional security, and building consensus and practical regional cooperation, including through the ASEAN Defense Ministers Meeting-Plus (ADMM Plus).

The Ministers remain committed to international efforts to address the serious threats posed to the region by the Democratic People’s Republic of Korea (DPRK).  They condemn the DPRK’s destabilizing and unlawful nuclear weapons and ballistic missile development, including multiple intercontinental ballistic missile launches.  They underscore the importance of achieving the complete denuclearization of the Korean Peninsula in accordance with United Nations Security Council Resolutions (UNSCRs).  Their governments reaffirmed their commitment to enforce all relevant UNSCRs through cooperative efforts to deter and disrupt illicit ship-to-ship transfers and other illegal maritime activities. They call on the DPRK to immediately resolve the Japanese abductions issue, and cease its human rights violations.

The Ministers committed to deepening cooperation with Pacific Island countries to support a secure and prosperous Pacific region where sovereignty is respected, including by working with Pacific partners to support maritime security, respond to increased pressure from natural disasters, and address the impacts of climate change. The three countries will continue expanding regional engagement and strengthening cooperation with their Pacific counterparts, particularly through inclusive Pacific-centric architecture such as the Pacific Islands Forum, as well as acknowledging the importance of other forums such as the South Pacific Defence Ministers’ Meeting (SPDMM) and Japan Pacific Islands Defense Dialogue (JPIDD).

In recognition of the vital role of their respective forces in anchoring stability in the region, the Ministers confirmed a number of concrete meeting outcomes for the following areas:

Trilateral Activities and Exercises:

• Increase and strengthen trilateral exercises to enhance interoperability and readiness.
• Build on the Asset Protection Mission (APM) for the Australian Defence Force by Japan Self-Defense Forces in 2021 by conducting the first APM during a trilateral activity.
• Enhance training opportunities which will be facilitated by the Japan-Australia Reciprocal Access Agreement (RAA) andother alliance frameworks.
• Promote coordinated responses to regional disasters and crises, and deepen cooperation on maritime capacity building.

Expanded Cooperation:

• Direct departments to conduct the necessary coordination to create a Research, Development, Test and Evaluation (RDT&E) framework to advance trilateral cooperation.
• Explore and pursue trilateral cooperation on advanced technologies and strategic capabilities.

Seamless Coordination:

• Effectively leverage trilateral mechanisms of information exchange.

Inclusive Partnerships:

• Deepen Indo-Pacific engagement with European and likeminded partners and allies in upholding the values of democracy, transparency, and respect for international norms which find home in all corners of the world.

They recognize that their respective bilateral relationships provide a strong bedrock for deepening the trilateral partnership and upholding regional peace and stability.  Acknowledging the strength found in collective actions and sharing the view that no individual country can achieve this alone, the Ministers look to expand cooperation, build inclusive partnerships with other like-minded countries, increase the scope of defense cooperation in new and innovative fields, and work broadly to ensure a free, open, and prosperous future for the Indo-Pacific region. (Source: US DoD)

 

10 June 22. Colombia: Elections.

Key Takeaways

• The security situation in Colombia remains unstable despite a steady decrease of violent crime in most major cities. A shift away from the US would undermine intelligence gathering efforts, therefore improving the situation of criminal groups.
• Unrest risks will remain moderate in any scenario, with worsening socio-economic variables increasing the risk of low-impact protests, and necessary economic reforms elevating the risk of high-impact protests. Economic measures to reduce unrest risks will have a negative impact on the business environment in both scenarios.

Context:

On 19 June, the second round of the Colombian presidential elections will take place, with both potential presidents likely to worsen the security and political environment, negatively affecting investor confidence due to higher uncertainty. The policies proposed by both candidates are expected to hinder political and economic stability whilst their security endeavours remain unlikely to improve the situation. While the candidates’ policies are similar in several politically sensitive issues, their approaches to policy implementation differ drastically, with one candidate pursuing top-down policies that will strengthen the state, and the other being more keen on the role of free markets.

Gustavo Petro (Pacto Histórico) and Rodolfo Hernández (independent) passed the first round of the presidential elections. The first candidate is a former guerrilla fighter and is proposing an overhaul of Colombia’s current economic system, suspending new oil explorations, pushing for a green agenda —which will likely be closely developed with China, and a “root cause” approach to the issue of violence in Colombia. The second candidate is a populist who believes in free markets and is currently pushing a number of traditionally left-wing policies, promising a very limited agreement with the ELN, blaming violence on corruption and “the establishment”. Both have promised to impose tariffs on agricultural goods as the phase-out period of the US-Colombia FTA ends, increase governmental spending, and push forward fiscal reform to increase the government’s tax take.

Both candidates will face an unstable security situation with moderate risks of escalation. The behaviour of Transnational Criminal Organisations (TCOs) over the past year is particularly concerning as Q2-2021 registered a spike of homicides, reaching 2013 levels, and terrorist attacks also spiked amid TCO’s power projection tactics and a process to rebalance power. The recent killing of the FARC dissident leader, alias Gentil Duarte, and the extradition of the Gulf Clan leader, alias Otoniel, will likely destabilise the existing criminal balance in the Norte de Santander and Antioquia Departments, elevating physical threats to staff.

The underlying drivers of unrest in the middle and lower-middle classes remain unchanged, signalling moderate risks of unrest after the electoral process due to political or economic triggers. In this sense, violent protests after fraud claims by a candidate are likely to cause disruptions in major cities, and economic reforms such as a tax reform could prompt demonstrations similar to 2021.

The election will very significantly affect the political, economic and security environment of Colombia over the next four years, generating geopolitical tensions with the US, affecting the business environment for several industries, and weakening the security outlook. This report will analyse the security scenarios post-election.

Criminal Outlook The security environment is expected to follow a similar trend if either candidate wins, with higher risks in rural areas for the Petro scenario as the ELN is more likely to consolidate control, and a similar trend in both cases for urban areas.

Violent crime in major cities remains unlikely to further expand, except in Cali where organised crime will likely continue to grow. This is particularly likely if the government takes a “root cause” approach to security as the incentive to engage in violent criminal activity in Colombia is mostly linked to cocaine trafficking, thus driven by external factors. The candidates’ policies and other factors, such as the detention of alias “Otoniel”, the killing of alias “Gentil Duarte”, and the killing of alias “Matamba”, will likely weaken the security environment, with rural areas likely to register severe spikes of violence due to Transnational Criminal Organisations (TCAs) splintering; and security forces actions more limited because of political constraints imposed by the president.

Ultimately, while elections will drive the escalation of terrorism and political violence, a reshuffle of the existing power structures will likely destabilise criminal networks, creating spikes of homicides in Antioquia, Norte de Santander, Chocó, and Arauca. Similarly, an overhaul of the ruling political networks will further destabilise organised crime, increasing violent crime risks and terrorism risks in rural areas, and marginally affecting major cities.

Colombia Security Scenarios

1st Scenario: Petro is Elected (46%)

Security

Policies

• Leaks of videos and journalist investigations have reported that the Petro campaign is attempting to reform the extradition conditions to the United States to incentivise less violence between armed groups.
• The government would push for a reform of the Armed Forces, calling for the redefinition of its purpose from a national security approach to a national defense approach, largely limiting the Armed Forces operations to sovereignty protection.
• Petro has repeatedly called for the end of the “death policy”, arguing that the current US-led effort to win the drug war failed and the new approach should address the root causes of violence, promoting negotiations with the ELN, a land reform, and the reduction of poverty.
• Petro would likely limit US intelligence operations in Colombia, including SIGINT on Venezuela, reducing its capacity to launch counter narcotics operations and maintain constant monitoring of the Maduro regime.

Impact

• A change in the extradition agreements would not only incentivise violent expansion campaigns by criminal organisations, but it would also weaken incentives to demobilise. This trend would severely weaken the security environment in the country.
• The Armed Forces reform is likely to pass through Congress despite resistance in the Senate. The reform eliminates mandatory military service, removes the National Police from the Defense Ministry, changes the name of the ESMAD but fails to eliminate the public order component of the police. The reform of the Security and National Defense Law is not expected to pass through the Senate.
• The administration shifts the objective of the Armed Forces, effectively limiting their armed operations across the country. Although operations continue to take place, these are carried out to a much lesser extent to achieve more limited goals.
• The shift limits the role of US intelligence and assistance in Colombia’s defense apparatus. Tensions lead to a gradual separation of the US and the Colombian Armed Forces, particularly limiting SIGINT and other intelligence operations.
• A more lenient approach against armed groups in Colombia could lead to a further consolidation of the ELN, strengthening their position in the negotiations. Furthermore, as a decentralised entity, the number of dissidents will likely be significant, reducing the positive impact of the deal. Less US intelligence and support will ultimately hinder intelligence gathering, further strengthening armed groups. This will disproportionally impact the borders of Colombia (South to Ecuador, East to Venezuela, West to the Pacific and North to Panamá and the Caribbean).
• The security shift would likely follow a more gradual adjustment than other issues. However, the direction is very likely going to be towards a less US aligned security policy with less security integration with the US, ultimately hindering DEA efforts to curb drug trafficking.
• The extradition of the Gulf Clan leader, alias “Otoniel”, and the detention of other high-level criminals with direct participation in the armed conflict could provide the Petro administration with an opportunity to reshape the defense leadership. In this sense, the administration could use corruption and human rights violations’ accusations in the Special Peace Jurisdiction (JEP) to force a change in the Defense Ministry and other Armed Forces entities. This shift would further weaken US influence in the country while strengthening Petro’s position domestically.

Social Unrest

• Low-impact protests in urban and rural areas will continue to cause minor to moderate disruptions as socio-economic health indicators remain weak.
• High-impact protests triggered by socio-economic conditions are likely to increase as the president’s approval decreases. High energy, food and fuel prices will continue to weaken the president’s approval ratings, increasing the risk of a major strike or protest from taking place. The levels of 2021 remain unlikely to be reached.
• A fiscal reform could trigger moderate protests in urban areas as Petro would likely increase indirect taxes, affecting consumption and hindering the vulnerable middle class. Still, a narrative of taxing international corporations will likely reduce the risk of unrest.
• Petro declared that the lack of a majority in Congress could be bypassed with “street pressure”. These statements reflect that Petro would likely call for nationwide demonstrations to force Congress to approve certain bills, severely increasing the risk of unrest as the campaign pledged to modify a number of pivotal legislations.

Geopolitical Tensions

Policies

• The government would very likely re-establish relations with the Maduro regime to promote cooperation on several issues, such as trade, border security, counter terrorism operations, and counter narcotics. The relation between the two governments would likely follow the Argentina-Venezuela pattern or the Cuba-Mexico pattern, with Petro regularly meeting with and defending the strategic interests of the Maduro regime.
• The energy transition agenda is a priority for Petro, making financing and access to sustainable technology a key issue to analyse. In this sense, China would likely finance a large number of projects as it remains the country with more complex and at-scale sustainable energy technology and has a strategic interest in controlling Colombia’s critical infrastructure.

Impact

• Re-establishing relations with Venezuela will create diplomatic tensions, weaken intelligence sharing efforts, and reduce the barriers of crossing the border for armed groups, weakening the security outlook in Cúcuta and Norte de Santander.
• Chinese investment in critical infrastructure related to the energy transition will likely reduce FDI in complex industries from the US, reducing domestic economic growth and knowledge transfer. This dynamic would likely elevate tensions between the two countries, potentially leading to intelligence sharing limitations over the next 3-4 years, particularly if a Republican president is elected in 2024. Less engagement and military support would further open the doors for China, and weaken US presence in the region.

2nd Scenario: Hernandez is Elected (54%)

Security

Policies

• The security policy argues that all violence is related to corruption and poor socio-economic health. The government is unlikely to change its current security policy with regards to US cooperation, but negotiations with the ELN and the application of the 2016 FARC Peace Accords are possible.
• The Colombian security policy and strategy will remain largely unchanged.

Impact

• No major shift in the current security policy leads to no breakthroughs against armed groups.
• The ELN negotiations likely fail to make a significant change in the security outlook. Armed groups presence in drug-trafficking territories remains elevated (South to Ecuador, East to Venezuela, West to the Pacific and North to Panamá and the Caribbean).
• The President’s approval will likely remain the primary driver for all state actions, creating a hard limit to politically controversial operations. The dynamic ultimately allows criminal groups to exploit the conduct and strengthen their control of territories.

Social Unrest

• As the second round election will likely yield a close result, Petro is very likely to denounce an electoral fraud triggering significant protests in urban areas, with particularly violent confrontations in Bogotá, Medellín, and Cali. The ESMAD responds violently against protesters.
• Low-impact protests in urban and rural areas will continue to cause minor to moderate disruptions as socio-economic health indicators remain weak.
• High-impact protests triggered by socio-economic conditions are likely to increase as the president’s approval decreases. High energy, food and fuel prices will continue to weaken the president’s approval ratings, increasing the risk of a major strike or protest from taking place. The levels of 2021 remain unlikely to be reached.
• A fiscal reform could trigger moderate protests in urban and rural areas as it would likely increase indirect taxes, affecting consumption and hindering the vulnerable middle class.

Geopolitical Tensions

Policies

• Hernández’ electoral programme recognised that his administration would re-establish relations with the Maduro regime to promote trade. The relation between the two governments would likely be more limited, but diplomatic recognition of Maduro would worsen the relations with the US. Furthermore, an often aggressive stance against Venezuelan migrants would likely trigger violent episodes against migrants, elevating reputational risks for government-affiliated firms and prompting negative remarks by the United States.
• The administration would likely follow a purely transactional logic, limiting the advantages of the major non-NATO ally designation. Chinese investment would likely increase during the Hernández administration, with Chinese investment into critical industries facing a limited number of barriers, particularly on defense and telecommunications.

Impact

• Re-establishing relations with Venezuela will create diplomatic tensions, weaken intelligence sharing efforts, and reduce the barriers of crossing the border for armed groups, weakening the security outlook in Cúcuta and Norte de Santander.
• Chinese investment in some critical infrastructure will increase tensions between the two countries, but it will likely remain limited.
• Closer relations with Venezuela and China would weaken the relation between the US and Colombia. While the relations with China and Venezuela will likely be based on a transactional logic, the geopolitical risks for the United States are likely to remain limited. Separately, a risk of confrontational populist narrative exists with Hernández, in which the administration would follow the AMLO pattern, obtaining political gains for negative US responses while cooperating on key issues. Hernández’s right-wing economic stance limits the risk of a protectionist and nationalist economic policy, but presidential approval and job creation are expected to be prioritised before economic growth and strategic relations. (Source: Sibylline)

 

10 June 22. Pakistan boosts defense budget by nearly 6%. Pakistan’s government is giving the military a nearly 6% funding increase for the incoming fiscal year as part of the budget unveiled Friday. A combination of inflationary pressure, unpaid bills and falling foreign currency reserves drove the Defence Ministry to request the funding increase to avoid shortfalls that would otherwise have hindered operational capabilities. Though mainly covering salary increases, some of the extra money is earmarked for infrastructure such as the continued development of Jinnah Naval Base in Ormara, the Navy’s main operational base, and a naval air base in Turbat.

Official figures state the 83bn rupee (U.S. $412m) increase pushes the defense budget up to nearly 1.45trn rupees (U.S. $7.19bn). That implies the 2021 defense budget was about $7.49bn.

The Stockholm International Peace Research Institute, a Sweden-based think think, found that Pakistan’s military-related expenditures for 2021 came to $11.3bn. However, the difference could come down to how the procurement budget is created.

Pakistan’s official figure amounts to approximately 2.2% of its gross domestic product — a drop from 2.45% of its GDP compared to the fiscal 2021-2022 time frame.

Amid the ongoing threat of domestic terrorism and the need to maintain a credible deterrent against India, the fate of Pakistan’s economy does not bode well, according to Pakistan expert Claude Rakisits, who teaches at the Australian National University.

“Pakistan’s economic situation is in dire straits. This makes it difficult for the government to buy new hardware or even plan ahead for new acquisitions,” he said.

Brian Cloughley, an analyst and former Australian defense attache to Islamabad, has tracked developments in Pakistan for decades, and he doubts the government’s fiscal approach will be different from previous ones that failed to address underlying issues, including the country’s elite effectively ruling for their own benefit, leading to Pakistan’s cycle of economic woes.

“It is likely, however, that there will be announcement of deferment of expenditure plans for at least some acquisitions, if only to try to convince the [World Bank and International Monetary Fund] that their present, fairly benevolent policy on Pakistan should be maintained,” he said.

But he also believes Pakistan can likely rely on its allies and other friendly nations to carry the load. “The Chinese and the Saudis will probably continue to support Pakistan’s military posture and plans, and the current — most serious — economic crisis will have little effect on the military overall.”

Rakisits agreed that Pakistan might rely on China, although Beijing will likely step in for its own benefit.

“China has a vital interest in ensuring that not only does Pakistan’s economic situation not get worse, which could threaten the overall stability of the country and the viability of its CPEC project, but that it is in a position to maintain its defense capability,” Rakisits said, referring to the China-Pakistan Economic Corridor, which is meant to improve infrastructure to strengthen trade between the two countries.

“Accordingly, It’s almost certain that Beijing will assist Pakistan financially in one way or another, especially in light of the West’s increased interest in selling military hardware to India,” he added. (Source: Defense News)

 

11 June 22. Naval Group receives compensation for Attack Class cancellation. The Commonwealth government has reached a settlement with the French shipbuilder to compensate for the cancellation of the former $90 bn Attack Class submarine contract.

Prime Minister Anthony Albanese has announced €555m (AUD$830m) would be paid to Naval Group after completing negotiations to compensate for the termination of the former SEA1000 contract to deliver 12 diesel-powered Attack Class submarines to the Royal Australian Navy.

The former Morrison government had scrapped the deal in favour of a nuclear-powered alternative promised under the AUKUS agreement.

The decision received bipartisan support from the then Labor opposition, but caught the ire of French President Emmanuel Macron, who temporarily withdrew French ambassadors from Canberra.

When asked by an Australian journalist if he felt misled by former prime minister Morrison, President Macron famously replied, “I don’t think, I know”.

Prime Minister Albanese has described the settlement as “fair and equitable”, adding he looks forward to “moving forward” with Australia’s relationship with France.

“Australia and France share deep historical ties of friendship, forged in common sacrifice in war,” he said.

“We are both vibrant democracies, committed to upholding human rights and fundamental values.”

Prime Minister Albanese stressed the importance of the enduring relationship between the nations, particularly amid mounting tensions in the Indo-Pacific.

“We deeply respect France’s role and active engagement in the Indo-Pacific,” the prime minister added.

“Given the gravity of the challenges that we face both in the region and globally, it is essential that Australia and France once again unite to defend our shared principles and interests: the primacy of international law; respect for sovereignty; the rejection of all forms of coercion; and taking resolute action on climate change.”

Prime Minister Albanese has accepted an invitation to meet with President Macron in Paris.

“I look forward to taking up President Macron’s invitation to visit Paris at an early opportunity, and to continuing to work closely with him as we deepen the strategic partnership between our nations,” he said. (Source: Defence Connect)

 

10 Jun 22. South Asia: Anti-Indian sentiment.

EVENT

Today (10 June), protests broke out in New Delhi, Maharashtra, West Bengal, Telangana, Jharkhand, Kashmir and Uttar Pradesh over ex-spokesperson for the ruling Bharatiya Janata Party (BJP), Nupur Sharma’s derogatory comments towards Prophet Muhammad. Protests over the same issue have also been organised in several cities across Pakistan, while Bangladesh experienced protests on 9 June in Dhaka.

SIGNIFICANCE

• In India, nearly 1,500 protesters in New Delhi took to the streets around the Jama Masjid mosque after Friday prayers. Protests were largely peaceful, and the police have stated the situation is under control. Demonstrators are demanding the arrest of Nupur Sharma as well as former BJP media chief of New Delhi, Naveen Jindal. Indeed, both have been summoned for questioning by the Mumbai police as part of an investigation. Protests also broke out in the state of Uttar Pradesh (UP), in Lucknow among other areas, prompting authorities to impose Section 144, that prevents the gathering of more than four people. This is a precautionary measure in light of recent violent clashes in Kanpur between Hindus and Muslims on 3 June. Authorities in Jammu and Kashmir have also imposed a curfew in Bhaderwah and Kishtwar and temporarily suspended mobile and internet connections following protests on 9 June.
• Protests have also been organised in Pakistan today across several cities, including Karachi, Lahore, Multan, Muzaffrabad, Peshwar, Quetta, Rawalpindi, and Sargodha by several right-wing Islamic groups such as Jamaat-e-Islami (See Sibylline Daily Analytical Update – 10 June 2022). The Indian government has pushed back against Pakistan’s condemnation by highlighting Islamabad’s inability to prevent attacks against minorities and their property domestically, including the recent vandalism of a Hindu temple in Karachi. Protests only add to the already volatile domestic conditions in Pakistan, with former Prime Minister Imran Khan also threatening protests in the capital demanding early elections.
• In Bangladesh, during a rally organised by right-wing Islamic group Hefazat-e-Islam on 9 June, speakers called for the boycotting of Indian products. The US embassy in Dhaka also issued a protest warning in the capital for today, asking citizens to avoid areas around the Bashtola Mosque, the Indian High Commission, and Jamuna Future Park in Vatara.
• India has also faced substantial diplomatic pressure from several Islamic countries in the Middle East, as well as Southeast Asia (See Sibylline Global Weekly Review – 8 June 2022). #BoycottIndiaProducts and #Stopinsulting_ProphetMuhammad were trending on Twitter and Facebook in several Gulf states with netizens from Saudi Arabia, Kuwait, and Bahrain calling for a complete boycott of Indian products. The Indian government has said that Sharma does not represent the official stance of the BJP. However, New Delhi is likely concerned over the growing animosity among Gulf populations as the Middle East accounts for 65 percent of India’s crude oil imports. Ms of Indian workers who send home bns of dollars in remittances, with local reports of some having received threats from local employers and co-workers.

FORECAST

The BJP has expelled Jindal, while suspending Nupur Sharma who has also been given additional security cover after she and her family began receiving death threats. Muslims across the country continue to take to the streets and social media to condemn Sharma, while several Hindus have conversely shown support and/or sympathy for her online. The fallout of this controversy has aggravated the deep-seated communal fissures within the country. This comes at a time of elevated ethno-religious tensions over the last few months that has sparked clashes between Hindus and Muslims around the time of festivals (See Sibylline Daily Analytical Update – 11 April 2022) and the Gyanvapi mosque controversy polarised the population further (See Sibylline Daily Analytical Update – 19 May 2022).

Sharma’s remarks will lead to further protests across India, but particularly in Muslim dominated states and localities, likely leading to security authorities imposing snap lockdowns, or Section 144 notices, as well as suspending local internet connections. All these measures will disrupt supply chains and business operations. There is also an elevated threat for bystanders in the coming weeks as counter-protests by Hindu right-wing groups, as well as clashes at protests sites are likely. It is most likely anti-India/BJP protests will also take place in Pakistan and Bangladesh particularly after prayers, with Fridays being a key day in the week.

Indian authorities will be concerned over threats of suicide bombing attacks by Islamist terrorist groups such as Al-Qaeda, targeting key cities such as New Delhi, Mumbai and Gujarat (See Sibylline Daily Analytical Update – 8 June 2022) in retaliation to Sharma’s remarks, though Indian intelligence agencies have improving counter-terrorism capabilities and will be monitoring the situation closely. Al-Qaeda has also threatened an attack in Bangladesh for its close ties with India. The group has managed to make inroads into both Bangladesh and India through propaganda campaigns and affiliated groups including a dedicated South Asia cell. The ongoing row will likely support ongoing radicalisation efforts. However, the capabilities of Al-Qaeda in comparison to other local militant organisations in recent years remain limited.

India has taken a reputational hit from Sharma’s comments, particularly at a time when there have been increasing concerns by several of its partners, including the United States, over the state of human rights regarding religious minorities in the country. India will be particularly wary of the reaction of several Gulf countries, which includes not only reactions by governments but also by local populations as it puts Indian workers and nationals at risk of harassment or attacks. With India sharing close energy trade ties with the Gulf, escalating diplomatic fallout could lead to supply disruption, which will undermine India’s socio-economic health at a time when it is facing an energy crunch and inflation that has truncated growth forecasts. While the growing boycotting of Indian products will also be a rising concern for India-based manufacturers though there have been no reports of a significant tangible impact to India’s exports as of now.

As for India’s neighbours, the threat of cross border attacks between India and Pakistan remain limited however, the issue will likely escalate bilateral tensions between the two nuclear neighbours at a diplomatic level. Bangladesh and India share close diplomatic and economic ties, however, Hindus and their temples in Bangladesh may be targeted by mobs as there is precedent for this at times of increased ethno-religious tensions (See Sibylline Alert – 15 October 2021). Furthermore, the government of Bangladesh will come under significant pressure to take a firm stance against India. (Source: Sibylline)

 

10 June 22. Iran-Region: Maritime Insecurity.

Key Takeaways

• A partial Iranian blockade of key shipping lanes in the Arabian Gulf, which is likely in the coming weeks if geopolitical tensions worsen, will compound existing regional and global oil shortages, driving energy insecurity and living costs. Regional governments will face heightened pressures to advance structural reforms and state subsidies, with failures to appropriately address long-term socio-economic grievances undermining political stability.
• Elevated geopolitical tensions amid stalled nuclear negotiations between Iran and other signatories threaten to drive an uptick in maritime assaults, namely against Western-linked vessels. Regional fissures between Iran, Israel and Saudi Arabia also sustain the risk of low-level strikes on critical infrastructure and associated ships, either via proxy networks or direct military action.
• Logistics and transportation companies will face rising costs associated with elevated physical security threats particularly if additional maritime government agencies warn against using certain naval routes. Increased insurance premiums and bystander risks will threaten to destabilise market dynamics and exacerbate existing supply chain disruptions.

Context:

On 27 May, Iran’s Islamic Revolutionary Guard Corps (IRGC) intercepted two Greek-flagged oil vessels and arrested crew members on accusations of smuggling. The ship was reportedly destined for the US, after having loaded the crude oil at Basrah ports in Iraq. The incident took place in the Arabian Gulf in retaliation for the US-ordered seizure of an Iranian-flagged oil vessel near the Greek coast in April.

According to Washington and Greek authorities, their seizure of the Iranian-linked vessel was intended to prevent Russian-linked oil smuggling and Moscow’s evasion of economic sanctions via the use of Iranian shipping containers. Reports suggest that the oil vessel was initially registered with a Russian company but renamed in an attempt to avoid interception. In response to the seizure, the IRGC has subsequently accused the Greek Navy of committing “piracy” and has threatened to effectively blockade some maritime shipping lanes.

Any form of Iranian blockade will compound global energy shortages and supply chain disruptions

Whilst the implementation of an Iranian blockade is likely to be partial, such as partially restricting access to routes such as the Strait of Hormuz, such actions will deepen existing energy insecurity. They will predominantly impact European and Western states who are seeking alternative crude sources to reduce dependency on Russia. This also represents a shift in rhetoric compared to March 2021, when Iran offered alternative routes for oil shipments when the Suez Canal was blocked, utilising naval sections of the International North-South Transport Corridor (INSTC) to transport goods. Moreover, the Strait of Hormuz is currently a transit point for at least a fifth of the world’s total oil exports or 17 m barrels per day, with international sanctions on Russian crude making this transportation route even more critical for the foreseeable future.

As part of efforts to manage hikes in global oil prices, members of the Organisation of Petroleum Exporting Countries (OPEC+) agreed to increase crude production as of 2 June, after months of resisting pressure from the US and Western states. However, volatile maritime routes in the Arabian Sea will undermine the ability of OPEC+ to ease global supply shortages, particularly Saudi Arabia, the UAE and Kuwait. Ultimately, the Strait of Hormuz is a critical waterway for Gulf states to transport oil to international partners, with tensions between Saudi Arabia and Iran therefore threatening crude exports. Moreover, Saudi Arabia and Iran have historically used long-range surface-to-surface missiles and loaded drones to target critical infrastructure. Such assaults have either been direct or via proxy networks, including the September 2019 attack on Saudi Aramco’s Abqaiq and Khurais oil facilities with US and Saudi intelligence attributing responsibility to Iran. Ultimately, direct strikes on oil facilities or vessels carrying Gulf crude will have direct implications on OPEC’s ability to address global energy security, sustaining volatile market prices and export volumes.

Persistent geopolitical tensions threaten the safety of maritime personnel

The trajectory of nuclear negotiations will have a direct impact on security in the maritime sphere, with rising geopolitical tensions often translating into naval hostilities, as illustrated by the retaliatory seizure of the two Greek-flagged oil vessels by the IRGC with personnel being held hostage. Efforts to revive the JCPOA will continue to stall in the coming one-to-three months (see Sibylline Special Report – 31 May 2022), as opposing sides fail to compromise on key sticking points. Notably, President Biden’s reluctance to remove the terrorist designation of the IRGC and lift Iran’s economic isolation remains a major point of contention.

Moreover, the uptick in cross-border assaults between Israel, Syria and Lebanon in recent weeks signals a revival of Iran and Israel’s “shadow war”, including tit-for-tat hostilities primarily using proxy forces across the region. Iranian state-backed military branches have historically used armed drones and hijacking. This includes the high-impact incident involving the Mercer Street Vessel on 29 July 2021, whereby an oil tanker managed by the Israeli-owned Zodiac Maritime was struck by suicide drones, killing a Briton and Romanian who were working onboard (see Sibylline Situation Update Brief – 4 August 2021). US and British intelligence suggested that Iranian drones were responsible for the attack, despite denial from Tehran, with similar escalations risking further low-level attacks and enhanced safety concerns to personnel and staff onboard.

The increased volatility of shipping lanes and staff security will have direct implications on insurance costs and company access to suitable coverage. For instance, the Greek Shipping Ministry has warned that the Strait of Hormuz is no longer safe for “Western-flagged” vessels. Logistics companies are already suffering from strains presented by rising global oil prices, inflation and the economic impacts of the Covid-19 pandemic, with firms having to reduce the frequency of their services and hike consumer prices to avoid equity losses.

Forecast

Flares in geopolitical tensions in the coming weeks will increase the likelihood of Iran placing a partial blockade on key strategic shipping lanes in the Arabian Gulf, particularly the Strait of Hormuz. Tehran will likely use maritime insecurity as political leverage in nuclear negotiations, as the leadership continue to express their intention to break off discussions if they do not align with the country’s strategic aims. Moreover, Iran’s economic isolation and inability to access the international market, coupled with Russia’s undercutting of Asian exporting partners by offering cheaper oil, represents a key driver of hostilities in the maritime sphere.

Commercial shipping lanes in the region will remain vulnerable to low-level attacks, with further escalations between Iran, Israel and Saudi Arabia continuing to pose enhanced safety concerns to personnel and staff onboard vessels. Logistics companies face increased insurance costs and disrupted distribution routes, as state aggression in the maritime sphere will negatively impact market certainty and long-term supply chain visibility. Moreover, disruptions to oil supplies, as well as shipments of other goods and commodities, will compound existing regional socio-economic difficulties and political insecurity, as countries face unprecedented rises in living costs. Finally, there will be an increase in military presence and activities in the maritime sphere, as the IRGC seeks to widen its naval presence whilst Gulf states and Israel also increase their frequency of naval exercises and drills. Whilst any Iranian blockade is likely to be partial and short-term, it is probable that heavily impacted regional actors, such as Israel and Saudi, would respond to any long-term disruption of oil flow with acts of aggression that stretch beyond the existing framework of tit-for-tat hostility. (Source: Sibylline)

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