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16 Feb 23. Balloon Incident.
Key Points
• Surveillance balloon incident has undermined bilateral trust and communication, likely hampering efforts to remediate strained US-China relations.
• Domestic political pressure is likely to drive an increasingly hawkish posture ahead of 2024 elections.
• Deteriorating relations will possibly drive decoupling efforts, especially for sensitive sectors.
• Risk of Chinese counter-sanctions is elevated, likely targeting politically-sensitive industries.
Context
A Chinese high-altitude surveillance balloon was identified in US airspace over the Aleutian Islands (Alaska) by North American Aerospace Defence Command (NORAD) on 28 January and was later tracked through the continental US before being shot down on 4 February. US officials also confirmed an additional Chinese balloon was transiting over Central and South America. A declassified memo indicated that U-2 spy planes were dispatched to observe the balloon before it was shot down and verified the presence of signals intelligence capabilities. The US Navy also recovered the remnants of the balloon and confirmed that it had capabilities to locate electronic devices, including mobile phones and radio signals.
Between 10-12 February, the US military also shot down three unidentified objects in US and Canadian airspace. According to reports citing intelligence officials as of 15 February, the three items are unlikely to have been linked to Chinese surveillance efforts. Nevertheless, the incidents have garnered significant media coverage and increased speculation that US-China relations may significantly deteriorate.
Forecast
Bilateral relations
The balloon incident occurred days before Secretary of State Blinken was scheduled for a visit to Beijing on 5-6 February. China initially apologised and claimed that the balloon was for weather research, however, in recent weeks the Chinese government has also accused the US of having made 10 similar incursions into Chinese airspace. The Foreign
Ministry spokesperson also stated that the unanimous, bipartisan Congressional measure condemning China for its ‘brazen violation’ of American airspace was an act of ‘political manipulation’. Despite bipartisan cooperation, Republican lawmakers have criticised President Biden’s handling of the incident, asserting that the administration has adopted a dovish foreign policy stance towards China. Thus, the incident is expected to impact how US government officials engage in diplomatic efforts vis-a-vis China in the near term, forcing them to adopt a more hawkish approach in order to push back against domestic allegations that the administration is not applying sufficient pressure. In the medium term, the elevated tension and volatile domestic political environments are likely to exacerbate any further incidents or crises that may occur. These events are also likely to persist until a diplomatic relationship “floor” is reached between both countries and communication protocols are established in order to avoid diplomatic and security crises. Secretary Blinken’s trip, which was initially meant to define a diplomatic détente and begin efforts to establish a diplomatic “floor”, is supposed to be rescheduled in the near term, however, no further details have been provided. In the medium to long term, a significant diplomatic de-escalation remains unlikely. This is in part due to both political and economic perceptions of China among the American populace, which are reflected in the behaviour of elected officials. Ahead of the 2024 electoral period in particular, it is likely that administration officials will adopt an increasingly hawkish approach towards China due to the domestic political dividend and to avoid further suggestions that the government has adopted a dovish stance. A 2022 survey conducted by Pew Research found that a majority of Republican, Democratic, and independent voters perceive China as a critical threat. The ongoing war in Ukraine has also underscored public concern over the so-called ‘no limits’ partnership between Russia and China, stoking voters’ fears over perceived efforts by Beijing to destabilise Western security.
Military implications
The balloon’s incursion into US sovereign airspace is likely to raise concerns within the US defence establishment over the Chinese military’s appetite for risk and scope of operations. Intelligence assessments have suggested the balloon was launched by a global surveillance programme operating out of Hainan Island in the South China Sea, which is responsible for carrying out similar high-altitude surveillance operations over more than 40 countries including India, Taiwan and the Philippines. Administration officials have also suggested that China’s People’s Liberation Army (PLA) may be seeking to override and undermine efforts by Chinese diplomats to engage in détente with US officials.
Outside of the Asia-Pacific region, it is likely that other American adversaries may pursue a similar strategy in terms of probing surveillance of US air space by leveraging non-traditional military technologies, as well as testing the speed and intensity with which the armed forces respond to homeland threats. Reports that previous balloon incursions went undetected during the Trump administration may likewise inspire other actors to leverage similar surveillance techniques for routine intelligence operations.
Business implications
Deteriorating relations between the US and China, and their perceived knock-on effects, may drive firms which continue to operate in both markets to adopt more aggressive attempts at decoupling. However, such efforts will likely be limited to specific sectors deemed important to national security and are not expected to impact other sectors such as consumer goods. In 2022, the US and China achieved record exports and imports totalling over USD 690 billion. High trade volumes, supply chain interconnectivity and market access will impose challenges for firms seeking to near-shore or re-shore in an attempt to shield themselves from risks derived from operating in China.The sectors which may be impacted by sanctions include firms manufacturing or distributing dual-use technologies, including those used in high-altitude balloons used for research or commercial purposes. According to reports citing a classified briefing of Congress by the Biden administration, components used in the Chinese surveillance balloon were reportedly western made and included inscriptions in English. Firms found responsible for the manufacture of these parts are highly likely to face reputational risks as well as sanctions. Export controls of such components may likewise be possible.
Chinese officials have warned the US against implementing sanctions, which will increase the risk of retaliatory measures. In the past, China targeted firms located in politically-sensitive areas or swing states, in an effort to pressure elected officials in Congress to reverse a particular policy. This increases the risk of retaliatory sanctions to agricultural firms in particular, which rely heavily on Chinese demand for grain and pork products. Other retaliatory responses, such as arbitrary detentions targeting business travellers, have precedent and may arise as a result. (Source: Sibylline)
16 Feb 23. The Pentagon is reviewing its weapons stockpiles and may need to boost military spending after seeing how quickly ammunition has been used during the war in Ukraine, the most senior US officer said. General Mark Milley, chair of the joint chiefs of staff, said the return of 20th-century ground warfare tactics in Europe was forcing US planners to reconsider assumptions made in recent decades that had led military strategists to retool capabilities for counter-terrorism and irregular combat in theatres such as Iraq and Afghanistan. “One of the lessons of this war is the very high consumption rates of conventional munitions, and we are re-examining our own stockages and our own plans to make sure that we got it right,” Milley said in an interview with the Financial Times. “We’re trying to do the analysis so that we can then estimate what we think the true requirement would be. And then we have to put that in the budget,” he added. “Ammunition is very expensive.” Any review may result in an increase of the military’s $817bn annual budget. Milley’s comments come on the heels of a high-profile tour of allied capitals last week by Ukrainian president Volodymyr Zelenskyy, who made repeated requests for the west to increase its supply of armaments. Ukraine has received more than $29bn in either arms or defence spending from Washington since the conflict began. The joint chiefs chair was in Brussels on Tuesday, meeting other countries allied with Kyiv to co-ordinate massive amounts of lethal assistance ahead of a planned Ukrainian counter-offensive in the spring. Milley’s remarks, which come a week before the first anniversary of Russia’s full-scale invasion of Ukraine, reflect a broader reckoning among western allies about the possibility of the war dragging on indefinitely. The quantity of munitions required by the conflict has exposed vulnerabilities in the US defence industry, which is trying to pivot from peacetime production levels, and has also been beset by pandemic-related shortages in parts and labour. On Monday, Nato secretary-general Jens Stoltenberg warned that Ukraine was using ammunition at a rate “many times higher” than countries in the alliance could produce them, straining their defence industries. Ukrainian forces are estimated to be firing more than 5,000 artillery rounds daily, while Russia is estimated to be consuming four times that amount as it pushes to take more territory in the east. The increased urgency over ammunition supply comes as Kyiv is planning a major counter-offensive that will rely on billions of dollars’ worth of western weapons, including main battle tanks, infantry fighting vehicles and heavy artillery.
A recent report by the Center for Strategic and International Studies, a Washington think-tank, found that the US defence industrial base was “not adequately prepared” for the security environment and the munitions requirements of another major conflict such as a war with China in the Taiwan Strait was likely to exceed current Pentagon stockpiles. However Mark Cancian, a senior adviser at CSIS’s international security programme, said he was confident the Pentagon was taking steps to address any readiness shortfalls and that its stockpiles were adequate for now. “I’m moderately concerned but also optimistic that we are putting in place the fixes that we need,” he said. Recommended Rachman Review podcast20 min listen Ukraine series: how long will the war last? 3 HOURS AGO Milley has been one of Washington’s most prominent advocates for a negotiated settlement between Kyiv and Moscow. While he did not tie the depletion of stockpiles to his support for peace talks, he said he still believed the war would end at the negotiating table, with neither side likely to achieve their military aims. “It will be almost impossible for the Russians to achieve their political objectives by military means. It is unlikely that Russia is going to overrun Ukraine. It’s just not going to happen,” Milley said. “It is also very, very difficult for Ukraine this year to kick the Russians out of every inch of Russian-occupied Ukraine,” he added. “It’s not to say that it can’t happen . . . But it’s extraordinarily difficult. And it would require essentially the collapse of the Russian military.” When asked if the moment for diplomacy between Moscow and Kyiv had passed, Milley said: “We’re weeks away from the beginning of spring, but it’s a rolling window. There’s opportunities at any moment in time.” Recommended Global InsightHenry Foy A year of war in Ukraine has left Europe’s armouries dry However, he said, both sides were “dug in pretty hard on their objectives” and unwilling to negotiate. Milley said the conflict echoed a lesson from the second world war that aggression must be stopped “with firmness, deterrence, military power”, though he noted that with Russia’s nuclear arsenal the stakes were now higher. “In this particular case, it’s against a country that is large and is nuclear-armed,” he said. “So you have to be very, very conscious about managing escalation. At the same time, you have to uphold the principles for which the United Nations was founded and which the international order is resting on.” (Source: FT.com)
15 Feb 23. Readout of Deputy Secretary of Defense Dr. Kathleen Hicks’ Meeting With the Reserve Forces Policy Board.
Pentagon Spokesman Eric Pahon provided the following readout:
Deputy Secretary of Defense Dr. Kathleen Hicks spoke during an open session of the Reserve Forces Policy Board quarterly meeting on February 15, 2023.
During the session, she briefed board members on the strategic importance of reserve forces in Secretary Austin’s National Defense Strategy, to include their unique role as “citizen soldiers” – critical to bridging the military / civilian divide.
“While the geopolitical landscape has changed, the role of the reserve component is as important as ever,” said Deputy Secretary Hicks. “A return to strategic competition does not mean we’re returning to a strategic reserve. To the contrary, the reserves remain a vital operational component for our force. Our reserve component gives us an asymmetric advantage over our global competitors.”
During a question-and-answer period, board members asked the deputy secretary about the role of reserve forces in homeland defense, advice on attracting and retaining the best talent, and insight on translating civilian skills to military occupational specialties to enhance mission readiness.
The board also met with Deputy Undersecretary of Defense for Personnel and Readiness Ashish Vazirani, Deputy Assistant Secretary for Military Personnel Policy Stephanie Miller, Under Secretary of the Navy Erik Raven, Under Secretary of the Army Gabe Camarillo, Under Secretary of the Air Force Gina Ortiz Jones, Assistant Commandant of the Marine Corps Gen. Eric Smith, and Senior Enlisted Advisor to the Chairman of the Joint Chiefs of Staff SEAC Ramón Colon-Lopez.
The Reserve Forces Policy Board is, by law, a federal advisory committee within the Office of the Secretary of Defense. As mandated by Congress, it serves as an independent adviser to provide advice and recommendations directly to the Secretary of Defense on strategies, policies, and practices designed to improve and enhance the capabilities, efficiency, and effectiveness of the reserve components.
The 20-member Board has a civilian chairman and includes a non-voting Military Executive and Senior Enlisted representative, a member or former member of each of the seven reserve components of the armed forces, and ten U.S. citizens with significant knowledge and experience in national security and reserve component matters. Board members represent a wide range of industry, business, professional, and civic experience, in addition to their military expertise, which combined provide the Secretary of Defense with a unique and independent body of senior officials to review and comment on Reserve component programs and policies.
Deputy Secretary Hicks’ full comments are available here.
https://www.defense.gov/News/Speeches/Speech/Article/3299109/deputy-secretary-of-defense-dr-kathleen-hicks-remarks-at-the-reserve-forces-pol/
(Source: US DoD)
15 Feb 23. Hundreds of tankers, recon jets grounded in hunt for faulty tail pins. The Air Force is speeding up its hunt for a faulty component on hundreds of KC-135 Stratotankers that, if it failed in flight, could cause an aircraft’s tail to fall off.
Air Force Materiel Command on Tuesday directed maintainers to inspect the entire KC-135 aerial refueling fleet, as well as the RC-135 family of reconnaissance planes and the WC-135 Constant Phoenix radiation‐sensing jet, for potentially faulty tail pins before their next flight.
As of Sunday, 24 of the 90 KC-135s that were inspected had noncompliant pins, the Air Force said. Planes with the proper parts have been cleared to fly.
The components, formally known as “vertical terminal fitting pins,” help attach an aircraft’s tail fin — its “vertical stabilizer” — to the rest of the fuselage. The tail gives pilots control over a plane while turning.
“We’re taking this action out of an abundance of caution, after consulting with our engineering experts,” said Col. Michael Kovalcheck, senior materiel leader in the Air Force Life Cycle Management Center’s legacy tanker division. “We are working closely with Air Mobility Command and all operational users and anticipate all potentially affected aircraft will be inspected.”
Checking the pins takes about half an hour, AFMC said Wednesday. An earlier order, issued Feb. 10, called for the aircraft to be inspected within 15 days.
The service owns about 360 KC-135s, plus around three dozen RC-135 and WC-135 variants that are based on the same Boeing-built fuselage. The Stratotanker fleet entered service in 1956, followed by the RC-135s in 1964 and the WC-135s in 1965.
KC-135s with problematic pins are allowed to fly to a repair shop that will replace the part, AFMC said. The KC-135 program office said the fix can happen within a day, and most will take place at the Oklahoma City Air Logistics Complex, which is where the Stratotanker undergoes depot maintenance.
A leaked memo that was posted to the unofficial “Air Force amn/nco/snco” Facebook page Feb. 9 first said 207 KC-135s may have had faulty pins installed. The Air Force confirmed the memo’s authenticity to Defense News.
The memo noted that the faulty pins may have been installed during planned depot maintenance between June 2020 and December 2022. Each KC-135 has a pair of pins, one on each side of the vertical stabilizer, and they are replaced during every round of heavy maintenance.
Metallurgical analysis conducted on two nonconforming pins in January found several discrepancies. They were too small, made of the wrong material, and had insufficient plating, the memo said.
If even one were to fail in flight, the results would be catastrophic, the Air Force said.
“Should one pin fail, the other would not be able to carry the remaining load and the vertical stabilizer would depart the aircraft,” the memo said.
The Air Force is in the process of retiring its KC-135s to make way for the new KC-46 Pegasus tankers. Active duty Stratotankers are based around the world at Beale Air Force Base, California; RAF Mildenhall, England; MacDill AFB, Florida; Kadena Air Base, Japan; McConnell AFB, Kansas; Joint Base Andrews, Maryland; Seymour Johnson AFB, North Carolina; Altus and Tinker AFB, Oklahoma; Fairchild AFB, Washington; and nearly two dozen Air Force Reserve and Air National Guard installations.
The RC-135 and WC-135 fleets are headquartered at Offutt AFB, Nebraska. (Source: Defense News)
14 Feb 23. Nikki Haley, the former governor of South Carolina and Donald Trump’s one-time ambassador to the UN, has become the first Republican to challenge the former president for the party’s nomination for president in 2024. Haley announced her candidacy for president in a video posted on social media platforms on Tuesday morning. In the three-minute video, Haley, 51, did not mention Trump by name, but said it was “time for a new generation of leadership to rediscover fiscal responsibility, secure our border, and strengthen our country, our pride and our purpose”. Haley’s team said she would deliver an “announcement speech” in Charleston, South Carolina, on Wednesday. She is expected to then hit the campaign trail with town-hall style meetings with voters in New Hampshire and Iowa, two crucial early voting states. Haley’s campaign video emphasised her small-town upbringing as the daughter of Indian immigrants in Bamberg, South Carolina, and her experience as the state’s first female governor and as Trump’s ambassador to the UN. She warned that China and Russia were “on the march” and “think we can be bullied”. “You should know this about me: I don’t put up with bullies,” Haley said in the video. “And when you kick back, it hurts them more if you’re wearing heels.” Recommended Nikki Haley ‘First out of the foxhole’: Nikki Haley is first Republican challenger to Trump in 2024 AN HOUR AGO Republican elected officials and deep-pocketed donors have increasingly called for the GOP to find a new standard-bearer after the party underperformed expectations and several of Trump’s handpicked candidates came up short in last November’s midterm elections. But Haley faces an uphill battle if she is going to gain traction in what will probably be a crowded field of competitors, and at a time when Trump still commands the support of a plurality of the Republican party’s base of grassroots voters. A poll conducted last month by North Star Opinion Research, a Republican polling company, found that in a hypothetical 10-way ballot, Florida governor Ron DeSantis led with 39 per cent of the vote, followed by Trump on 28 per cent, former vice-president Mike Pence on 9 per cent, and Haley and former congresswoman Liz Cheney on 4 per cent each. (Source: FT.com)
14 Feb 23. Heightened scrutiny of objects in North American airspace; sanctions risk elevated for firms with ties to Chinese surveillance efforts. During a press briefing on 13 February, US officials confirmed that objects identified between 10-12 February were shot down due to their threat to civilian air traffic, adding that their utility for intelligence could not be ruled out. The initial intelligence assessment concluded that the objects could not be manoeuvred remotely, and there were no communication signals detected. However, the US military confirmed on 13 February that it had recovered critical electronic sensors, presumably used for intelligence gathering, from the Chinese surveillance balloon shot down off the coast of South Carolina on 4 February. It is likely that the US military and North American Aerospace Defense Command (NORAD) will sustain their heightened scrutiny of objects making incursions into US and Canadian airspace. Policymakers are likely to also scrutinise Chinese businesses linked to airship technology, as well as US firms with commercial ties. (Source: Sibylline)
13 Feb 23. Chinese Surveillance Balloons Global in Scope, Says Official.
When President Joe Biden came into office, he directed the U.S. intelligence community to do a broad assessment of Chinese intelligence capabilities, said John Kirby, coordinator for strategic communications at the National Security Council in the White House, speaking to the media today.
“We were able to determine that China has a high-altitude balloon program for intelligence collection that’s connected to the People’s Liberation Army. It was operating during the previous administration, but they did not detect it. We detected it. We tracked it. And, we have been carefully studying it to learn as much as we can,” he said.
“We know that these surveillance balloons have crossed over dozens of countries on multiple continents around the world, including some of our closest allies and partners,” he added.
The U.S. is consulting with allies and partners on the challenge of identifying aerial phenomenon, he said. The president has directed the secretary of state, secretary of defense and the director of national intelligence to engage with their relevant counterparts to share information and to try to gain their perspectives as well, Kirby said. Today, the president, through his national security adviser, has directed an interagency team to study the broader policy implications for detection, analysis and disposition of unidentified aerial objects that pose either safety or security risks, he said.
“Every element of the government will redouble their efforts to understand and mitigate these events,” Kirby added.
Efforts by Canada and the U.S. continue in recovering remnants of aerial objects shot down by fighter jets over the last several days, as well as the Chinese surveillance balloon downed on Feb. 4.
The objects in Alaska and Canada are in remote and wintry terrain, making the salvage operations difficult and the object shot down yesterday is probably in very deep water in Lake Huron, he said.
All of the operations to bring down the balloon were conducted in a safe and successful manner, he noted.
Slow-moving, high-altitude objects, even as large as the Chinese spy balloon, which was the size of three school buses, are difficult to track by radar, Kirby said, adding that tracking methods by North American Aerospace Defense Command radar are improving.
Also, the administration will continue to brief members of Congress and relevant state governors on what is being learned from salvage efforts, he said. (Source: US DoD)
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