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• Catastrophic scenarios for the Middle East - 7 December 2006

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  SPECIAL BULLETIN

  TO: All Strategic Intelligence Forum members

  FROM: JKC de Courcy, Chairman, Strategic Intelligence Forum

  DATE: 7 December 2006
  
  SUBJECT: Catastrophic scenarios for the Middle East

  The Iraq Study Group Report, published earlier this week, is both an astounding mea culpa by the US and an exercise in fantastic wishful thinking.  Nevertheless, it does represent a necessary last-ditch attempt to mitigate a catastrophic situation.

  With regard to the motives for going into Iraq, we have always argued that nations, no less than individuals, do from time to time act irrationally, and the US's decision to invade Iraq was an irrational lashing out in the aftermath of 9/11. Nonetheless, the Bush administration did try to rationalize the invasion, and it did so on the following grounds:

  1.  Saddam Hussein had weapons of mass destruction which he might either use or pass on to terrorists for their use.  This threat had to be neutralized.

  2.  Saddam Hussein was either an ally or would become an ally of al-Qaeda.

  3.  Removing a brutal dictator and introducing free-market democracy would be salutary for the whole of the Middle East.

  Everyone now knows that the weapons of mass destruction did not exist.  Nor did any serious link to al-Qaeda exist before the invasion.  As for post-Saddam Iraq providing a beacon of political and economic advancement for the rest of the Middle East to follow, precisely the opposite has occurred.  Iraq has been fractured, and whether or not it is in a state of civil war, more than 3,000 civilians are being killed each month.  According to the ISG: "Violence is increasing in scope, complexity, and lethality.  There are multiple sources of violence in Iraq: the Sunni insurgency, al-Qaeda and affiliated jihadist groups, Shiite militias and death squads, and organized criminality."  Some 1.6m people are displaced within Iraq, and up to 1.8m have fled the country.

  This is bad, but it could get worse, and so frightened has the US become of a further downward spiral in and around Iraq that it will now support any regime throughout the region that provides stability, signalling a region-wide retreat from not an advance towards democracy.

  THE SOLUTION?

  The ISG knows that there is no miracle cure to hand, but what it does propose at least has the merit of being sensible if it is achievable.  Its key recommendations are to hasten national reconciliation through the establishment of provincial democracy and good governance; to counter centrifugal forces by ensuring that oil revenue remains a central government asset, the benefits of which would be distributed on a per capita basis; to enlist the good offices of all Iraq's neighbours, including Syria and Iran, and other interested parties; and to start a renewed push for an Arab-Israeli settlement.

  The ISG report specifically eschews "devolving Iraq into three semiautonomous regions with loose central control", but in reality that is where the suggested policies seem to be heading, with the proviso that control of oil revenues remains with Baghdad as this would provide a means of holding the disparate parts of Iraq together.

  In our view, the ISG is correct in seeing Iraq's neighbours as the key to the crisis, but the problems are enormous and include:

  1.  Turkey has to be persuaded that strong autonomy for Kurdistan (and possibly letting the Kurds take control of Kirkuk) is not a danger to Turkey's own stability.  This is probably the easiest of the neighbourly concerns to allay in that an Iraqi Kurdish (and US) commitment not to tolerate Turkish PKK guerrillas operating from Kurdistan would go a long way towards appeasing Ankara.

  2.  Iran needs to be persuaded that trying to tie down the US indefinitely in Iraq is not in its best interests.  This won't be easy.  Iran's current government is arguably the least pragmatic since the revolution, and it is virulently anti-US.  Besides, not only is the US losing global credibility on a daily basis due to its blunderings in Iraq (which benefits Tehran as it tries to divide international opposition to its nuclear programme), it is also doing Iran's dirty work for it in fighting the Sunni insurgents.  The ISG seems to think that Iran could be persuaded to ease the US's pain in Iraq in return for a deeper US commitment to fight the Taleban in Afghanistan, but this is unlikely.  There is also a tacit threat within the ISG report, where it says: "Iran's interests would not be served by a failure of US policy in Iraq that led to chaos and the territorial disintegration of the Iraqi state.  Iran's population is slightly more than 50% Persian, but it has a large Azeri minority (24% of the population) as well as Kurdish and Arab minorities.  Worst-case scenarios in Iraq could inflame sectarian tensions within Iran, with serious consequences for Iranian national security interests."  Tehran is unlikely to be persuaded by this implied threat.

  3.  Syria provides the most interesting case.  There is undoubtedly an opportunity - and an imperative - to separate Syria from Iran.  That way, at least, whatever additional influence Iran acquires in Iraq will not extend through Syria to Lebanon.  But the price may be too high for the US to pay.  It would include the continuing power of the minority Alawite regime in Damascus (ie no democracy), a return of Syrian influence to Lebanon, and (above all) a return of the Golan Heights - which may not be within the US's power to deliver, certainly not quickly.  Another potential problem is Syria's perennial habit of missing opportunities.

  4.  The Sunni Gulf States all share concerns over the rise of Shia power in Iraq and will not be happy with any new constitutional settlement that would lead to the persecution of Sunnis or an unfavourable distribution of oil revenues.  Squaring the Gulf States, therefore, is dependent on the acquiescence of Iran and the Iraqi Shias in a settlement that is fair to Iraq's Sunni Arabs - but see point 2 above.

  CONCLUSION

  The ISG report is brutally honest in its assessment of the current position, which is a good start.  Its proposals are also as sensible as can be expected in the circumstances.  There is no magic wand.

  The keys are establishing responsible provincial government (while containing centrifugal forces through the control and distribution of oil revenues from the centre) and enlisting the support of Iraq's neighbours.  If both things can be achieved, then a positive outcome is indeed possible.  But there must be the gravest doubts - some of which we have outlined above - as to whether these things can be achieved.

  And if they are not?  In the ISG's assessment, the dangers that now face the region, the US, and the wider international community are as follows:

  "Continuing violence could lead to greater chaos...A humanitarian catastrophe could follow...

  "Other countries in the region fear significant violence crossing their borders.  Chaos in Iraq could lead those countries to intervene to protect their own interests, thereby perhaps sparking a broader regional war...[There would be] the distinct possibility of Sunni-Shia clashes across the Islamic world...Such a broader sectarian conflict could open a Pandora's Box of problems - including radicalization of populations, mass movements of populations, and regime changes - that might take decades to play out.  If the instability in Iraq spreads to other Gulf states, a drop in oil production and exports could lead to a sharp increase in the price of oil and thus could harm the global economy...

  "Terrorism could grow...The global standing of the United States could suffer...at a time when pressing issues in North Korea, Iran, and elsewhere demand our full attention and strong US leadership of international alliances..."

  These are frightening scenarios, but they are by no means unthinkable - and it would not be difficult to articulate further catastrophic escalations.  The only positive is that the US now recognizes this.  It is something at least.

  JdeC

  The full report can be downloaded from: http://www.usip.org/isg/iraq_study_group_report/report/1206/iraq_study_group_report.pdf

• Somalia at centre of regional power struggle - 2 November 2006

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  SPECIAL BULLETIN

  TO: All Strategic Intelligence Forum members

  DATE: 2 November 2006
  
  SUBJECT: Somalia at centre of regional power struggle

  Members of the Strategic Intelligence Forum will be fully aware of our concerns about Somalia.  Most recently we looked at the regional rivalries fuelling the conflict in a briefing in the 26 October issue of Strategic Intelligence Review - "Deterioration in the Horn of Africa".

  Earlier this week, the BBC Monitoring Service's research department produced an analysis entitled "The Arabs and the Great Game in Somalia", which in turn draws heavily on a report prepared for the US State Department by the former US ambassador to Ethiopia and Somalia, Professor David Shinn entitled "Somalia: Regional involvement and implications for US policy".  It provides many of the details that space precluded us from including in our 26 October briefing.

  The key points are:

  * Somalia is at the epicentre of a regional power struggle, fuelled by a complex mix of political, geostrategic, and religious rivalries, that threatens to spark a war that could involve as many as 12 countries.

  * The principal actors in the regional rivalry are Ethiopia, Egypt, and Saudi Arabia - each of which wants to ensure that Somalia is an obedient satellite state. A supplementary role is being played by Djibouti, Eritrea, Kenya, Yemen, Iran, Libya, Tanzania, Uganda, and the United Arab Emirates (UAE).

  * Egypt's interest in Somalia is part of its national security strategy to gain influence over Ethiopia, one of the principle sources of the Nile. Relations between Cairo and Addis Ababa have been worsening in recent years, mainly because of the dispute over how the Nile waters should be utilized more equitably between the Nile Basin states.  Ethiopian officials have gone so far as to claim recently that the Egyptian armed forces are being trained in jungle warfare in preparation for a possible future military intervention in the Nile Basin.

  Egypt on the other hand suspects Ethiopia of being behind the regional campaign to renegotiate the treaty on the usage of the Nile waters drawn up in the late 1950s. The campaign has attracted support in the Great Lakes region and in east Africa, forcing an increasingly isolated Cairo to abandon its hard line stance.

  To rally wider Pan-Arab support for its policies, Egypt has sought to portray Ethiopia as a threat to Arab national security intent on undermining any peace effort in Somalia by encouraging regionalism and arming the warlords.

  An editorial by the semi-official Egyptian daily Al-Ahram on 14 June entitled "Next Stop Somalia" called on Arabs not to forget the conflict unfolding in the "southern front".  It warned: "It is high time the Arabs start focusing on the southern front, not just the eastern one [Iraq]."

  * Although Egypt says it recognizes the Somali Transitional Federal Government (TFG), it is opposed to the TFG's pro-Ethiopian president, Abdullahi Yusuf. The TFG president is largely viewed in Arab circles as an Ethiopian puppet - a perception that was enhanced by a recent speech to the parliament in Baidoa in which Abdullahi Yusuf dismissed the Islamists in Mogadishu as "Arabophiles frothing at the mouth".

  * It was reported on 29 October that Cairo had officially invited the de facto head of the Somali Islamist movement, Sheikh Hasan Dahir Aweys, for talks. Aweys frequently visits Arab states like the UAE and Saudi Arabia despite the fact he is on the UN Security Council's targeted sanctions list in accordance with Resolution 1267 of 15 October 1999.

  * Egypt was unhappy with the IGAD (Inter-Governmental Authority on Development) process that led to the creation of the Somali Transitional Federal Government in Kenya in October 2004 because of the influence wielded over the process by Ethiopia. It now wants to ensure the Arab League keeps a control of the talks in Khartoum so that any deal struck between the Islamists and the TFG is one that would not disadvantage Egypt's geostrategic interests in Somalia.

  * Egypt is also opposed to the recognition of the breakaway state of Somaliland, and there have been suggestions that Egypt is behind the move by Saudi Arabia to maintain the debilitating ban on the import of livestock from Somaliland. The ruling elite of Somaliland is strongly pro-Addis Ababa and is thought to have conducted secret negotiations with Israel.  They may even have signed a secret military pact with the Jewish state according to local reports.

  * Saudi Arabia has two primary geostrategic interests in Somalia. One of the consequences of Saudi financial and educational aid to Somalia following the oil boom of the 1970s was the rapid growth of Wahhabism, which in pre Al-Qaeda days the Saudi authorities encouraged.  Now Saudi Arabia is engaged in a bitter struggle with "the deviant group" and fears that Somalia may become a haven for Saudi Wahhabi militants who could use it as a base for anti-regime activity.  The respected Middle East commentator, Adel Darwish, in a commentary published by Al-Sharq al-Awsat on 12 August warned about the "Afghanization of Somalia".

  * The other Saudi Arabian objective is to counter the growing influence of Iran in the Horn and the Red Sea regions, particularly given Iran's already strong influence in Sudan. Comoros, a traditional Saudi ally, is now ruled by a cleric trained in Iran and could also be moving towards the Iran camp. Saudi Arabia's current strategy is to support the Union of Islamic Courts (UIC), and Sheikh Hasan Dahir Aweys is a regular visitor to the Kingdom. Aweys is thought to have established links with prominent Saudi business leaders and officials.

  * Libya, the UAE, and Yemen each have their own reasons for involvement in Somalia.

  * Yemen is said to be currently backing the TFG, largely because of its concern over Eritrean influence over the UIC. Eritrea and Yemen fought a brief border war over the disputed Hanish Islands in December 1995, and though the dispute was settled after arbitration in The Hague the enmity remains. Yemen's formation of the Sanaa Cooperation Forum with Ethiopia and Sudan in 2002 was seen in Asmara as intended to further isolate Eritrea.

  * The UAE is primarily motivated by money. It is the main hub for Somali-run telecom and money transfer businesses, and many of the profitable telecom and money transfer agencies with offices in Dubai and the other emirates are run by supporters of the UIC. UAE investors are also keen on Somalia's untapped oil and mineral potential and to invest in the country's infrastructure like the main port of Mogadishu.

  * Libya's alleged support for the UIC appears to owe less to genuine strategic calculations that to Colonel Gaddafi's predilection for backing militants groups overseas irrespective of their ideological leanings.

  END

• North Korea after the bomb - 19 October 2006

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  SPECIAL BULLETIN

  TO: All Strategic Intelligence Forum members

  DATE: 19 October 2006
  
  SUBJECT: North Korea after the bomb

  The Asia Intelligence Service (part of the same group as the Strategic Intelligence Forum) has just published in its October AsiaInt Political & Strategic Review an excellent analysis of the options now facing the international community with regard to North Korea.  Stratint Forum members may download this report in full from:

  http://www.asiaint.com/arl/arl11752.asp

  In our view this report provides a near-faultless analysis of the current position in North Korea, and the options open to the international community.  It looks at recent intriguing speculation about China's hopes for post-Kim North Korea, and it makes the point that little has in fact been changed by the North Korean nuclear test.

  Our one caveat is that while little might have changed on the Korean peninsula, there might be severe implications for the Middle East where Israel will view any weakness in dealing with Pyongyang as a signal that it will not be able to rely upon anyone else to deal with the menace of a nuclear-armed Iran.  As we have argued in detail in the last two issues of Strategic Intelligence Review, Israeli unilateral action against Iran has been brought closer by events on the Korean peninsula.

  END

  JKC de Courcy
  Chairman
  Strategic Intelligence Forum

• North Korea's first nuclear test, 9 October 2006

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  SPECIAL BULLETIN

  TO: All Strategic Intelligence Forum members

  DATE: 9 October 2006
  
  SUBJECT: North Korea's first nuclear test
  
  DEVELOPMENT: On 9 October North Korea carried out its first nuclear test. South Korea and US confirmed the test on the basis of seismic activity at the believed test-site, a mountain in the remote northern province of North Hamgyong. South Korea says that at 10.36am local time it detected a tremor inconsistent with natural phenomena. The detonation, measuring 3.6 on the Richter scale, was equivalent to roughly 550 tonnes of TNT.
  
  ANALYSIS: North Korea has become the world's eighth nuclear power and is the least predictable of the octet. Very little is known about the workings of the North's military government, which is still technically at war with South Korea and the US. On a daily basis Pyongyang's propaganda promises the annihilation of the North's enemies, chief among them the US and Japan.
  
  Although alarming, North Korea's emergence as a nuclear power is no surprise. Its government has publicly committed itself to nuclear weapons, and a test is a necessary step in the process. North Korea stresses its pursuit of such weapons is for defensive and deterrent purposes only. On 3 October, when Pyongyang confirmed speculation that it intended to carry out a test, its foreign ministry pledged no first use of a nuclear missile.
  
  But North Korean pledges are not taken very seriously, and a regional arms race could now ensue. Japan can rely on the US to pulverise North Korea should the North attack Tokyo or Seoul, but nevertheless it might now seek a nuclear capacity of its own. Any suggestion of Japanese rearmament enrages China and South Korea, but in the light of the North's test such opprobrium becomes less justifiable or important.
  
  The test could thus reverse a new, positive trend in neighbourly relations. On 8 October Prime Minister Shinzo Abe became the first Japanese leader to travel to Beijing in five years, as he attempted to repair the damage done to ties by his predecessor Junichiro Koizumi. Abe and China's President Hu Jintao agreed that a North Korean nuclear test would be intolerable.
  
  This consensus will not last. Both countries have condemned the test but they will diverge when the matter goes to an emergency UN Security Council (UNSC) meeting later today. Japan will join the US in pressing for a resolution based on to Chapter 7 of the UN charter, which would facilitate sanctions and even force against North Korea. China will oppose this.
  
  The UNSC has to pass something stronger than Resolution 1695, which it ratified in July after the North's missile tests and from which China successfully purged any mention of Chapter 7. If Japan and the US refuse to let Beijing again excise Chapter 7 deep divisions will appear in the UNSC and the resolution might be vetoed altogether.
  
  Beijing, which described the nuclear test as "flagrant", would take no pleasure in vetoing a Chapter 7 resolution but realpolitik demands it do so. If a UN resolution paved the way for the overthrow of President Kim Jong-il then the 30,000 US troops currently defending South Korea would be free to focus on Washington's major rival in the region: China. The US would be much better placed to defend Taiwan, for example.
  
  China is more likely to impose other forms of punishment on Pyongyang. North Korea relies on China for fuel and food, and Beijing will almost certainly restrict supplies of both unless the North returns promptly to six-way talks on its nuclear programme (with South Korea, China, the US, Japan, and Russia).
  
  Less likely, though still possible, is that China might seek some regime change. Rumours suggest that Kim is losing influence to military hardliners, who successfully pressured the president to sanction the missile and nuclear tests. Beijing could exploit these divisions (the Chinese and North Korean militaries have close ties) to reassert its influence over Pyongyang. The only proviso is that the changes should not create mass upheavals: Beijing is fearful of what might ensue should thousands of North Korean refugees head for the Chinese border.
  
  Whatever the UNSC decides, North Korea is more vulnerable economically and politically than it was before the test. But the North now boasts the ultimate bargaining chip: the power to destroy Tokyo or Seoul in a matter of minutes. Recent stories from Pakistan suggest the US does not necessarily object to attacking nuclear powers, but Pyongyang will feel that a proven nuclear capacity makes it safer from attack than, say, Iraq.
  
  Whoever is in charge of North Korea believes that the short-term pain of economic sanctions, the brunt of which is borne by a long-suffering people, is worth enduring for the longevity of the regime. Ultimately, the international community has no choice but to engage with North Korea. When it does so, Pyongyang will be in a stronger position.
  
  END

• Coup in Thailand, 19 September 2006

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  SPECIAL BULLETIN

  TO: All Strategic Intelligence Forum members

  DATE: 19 September 2006

  SUBJECT: Coup in Thailand

  Thailand has been in constitutional limbo since King Bhumibol Adulyadej, Thailand's powerful monarch, intervened to have the results of the April general election quashed. The election had been called by Prime Minister Thaksin Shinawatra to extricate himself from the scandal surrounding his sale of Shin Corp, the company owned by his family, to Singapore for US$1.87bn, a deal worth more than 1% of Thailand's entire economy and which many critics said undermined national security.

  Since the king's intervention over the election, which due to an opposition boycott was convincingly won by Thaksin's party, the prime minister's relations with the monarch, and by extension the king's circle in the top echelons of the military, have become steadily more tense. In June Thaksin launched a libel suit against one of his political opponents, despite the king ordering him publicly to desist from such actions six months earlier. The same month Thaksin wrote a letter, later leaked, to US President George W Bush warning of a "charismatic person with extra-constitutional powers" who was planning a coup.

  We suggested* at the time that the person alluded to was probably General Prem Tinsulanonda, a former prime minister who currently chairs the king's privy council, but it is possible Thaksin was referring to the monarch himself. In July General Prem began to redeploy officers friendly to Thaksin to outlying areas away from Bangkok, apparently with the agreement of his friend General Sonthi Boonyaratglin, the head of the army. Thaksin had been inserting his classmates from military college in key commands as a means of shoring up his position within the military, a tactic known to have irritated the general staff, and we noted that the redeployments could be the precursor to a coup.

  On 19 September at 10pm Bangkok time (4pm GMT) Channel 5, an army-controlled television station, issued a statement from the army saying that a "Reform Council", to be headed by the king, had assumed Thaksin's powers. Tanks fitted with loudspeakers patrolled the city warning people to stay off the streets and surrounded government buildings and the royal palace. Thaksin, in New York for the UN General Assembly, used a TV broadcast to call a state of emergency and sack Sonthi as head of the army, before being cut-off after 10 minutes.

  Local sources report that Sonthi's forces have seized the prime minister's offices, declared nationwide martial law, arrested senior ministers, banned unauthorized troop movements, annulled the constitution, and silenced pro-Thaksin and English-language media outlets. Thaksin's advisors in New York have retracted his initial promise to return to Thailand tonight.

  Thailand has suffered 19 military coups since 1932, most recently in 1991, and the latest shows how superficially the country's elite has embraced Western-style democracy. The traditional power structures - centred round the army, the police, and the civil service - remain in place. All politicians with aspirations to high office retain close links to the military and many leaders are former generals. Politics is seen as merely another path to enrichment, as exemplified by Thaksin's use of his position to further his business interests.

  The crucial factor now is the approach to the coup of the king, who is revered by Thais. The king is thought to dislike Thaksin but he has also advocated democratic practices. Whatever his decision, a return for Thaksin looks highly unlikely, despite the prime minister's enduring popularity among rural voters. Metropolitan voters are overwhelmingly opposed to him, a fact that makes coup-related violence in Bangkok unlikely.

  * [http://www.asiaint.com/arl/ARL10691.asp]

• China's relations with North Korea and Iran, 18 September 2006

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  STRATEGIC INTELLIGENCE FORUM SPECIAL BULLETIN
  
  To: All Strategic Intelligence Forum members
  
  Date: 18 September 2006
  
  From: JKC de Courcy, Chairman, Strategic Intelligence Forum
  
  Subject: CHINA'S RELATIONS WITH NORTH KOREA AND IRAN

  Long-standing Strategic Intelligence Forum (formerly Courcy's Intelligence Service) members will know that we follow closely the proceedings of the US-China Economic and Security Review Commission.  Last week the commission looked at China's relationship with North Korea and Iran.  Our reading of the testimony is as follows:

  1.  The US considers China to be "a keystone" of the administration's efforts to stop the proliferation of weapons of mass destruction and related technology throughout the world.

  2.  Chinese entities continue to involve themselves in proliferation activities despite China's formal adherence to non-proliferation treaties and agreements.  According to Paula A DeSutter, Assistant Secretary of State for Verification, Compliance, and Implementation, China's violations of its commitments include:

  * The transfer of missile-related technology and material to missile programmes of concern in Iran and North Korea, thereby making "considerable contributions to the development of ballistic missiles in these countries".

  * Research activities and the development of dual-use capabilities that indicate "the possibility that sophisticated BW [biological weapons] and CW [chemical weapons] work could be underway".

  * The maintenance of "some elements of an offensive BW capability in violation of its BWC obligations".

  * The likely existence of a "CW production mobilization capability".

  * Transfers of Australia Group (AG) chemical control list items and technology "to countries of concern".

  In his testimony, Ehsan M Ahrari, CEO of Stratetegic Paradigms Consultancy, added: "China has also supplied nuclear knowledge to Iran to manufacture nuclear weapons.  It has been training Iranian nuclear engineers.  In addition, Chinese nuclear experts have travelled to Iran to help that country build uranium conversion facilities..."

  Ilan Berman, vice-president for policy for the American Foreign Policy Council, added that a decade on from the Pentagon's 1996 designation of China as "a principal supplier of nuclear technology to Iran", this aspect of the Sino-Iranian strategic partnership "is still going strong".

  Berman said: "China has reportedly been a major focus of Iranian procurement activities, with Iranian front companies successfully acquiring nuclear-related materials from the PRC in recent years.  Iranian opposition elements have also charged that Chinese experts are employed at multiple nuclear facilities inside Iran, including the Saghand uranium mine and a uranium centrifuge facility outside Isfahan."

  Berman concluded: "As a practical matter, China's record of proliferation to Iran is poor - and getting worse."

  3.  Despite Chinese denials, the administration believes that these violations are not simply the consequence of inefficient controls.  As DeSutter put it: "Evidence of recurring transfers by serial proliferators - some of which are state-owned enterprises - suggests that the problem is greater than one of inadequate resources."

  4.  China's motives for this behaviour are fairly straightforward - and rational, which makes countering its behaviour more complex.  Its motives include:

  a) with regard to Iran:

  * It is expected that China's energy reserves will be depleted by 2020.  Already, 40% of China's energy needs have to be met by imported oil - and Iran has the world's second largest reserves of natural gas (after Russia) and third largest reserves of oil (after Saudi Arabia and Canada).  Iran is China's single largest oil supplier, already accounting for 15% of the PRC's annual oil imports by 2002.

  * China and Iran share a mutual desire for the evolution of a multipolar world in which the dominance of the United States is considerably diminished.

  * China can use its relations with Iran as a means of applying pressure to the US over arms supplies and support to Taiwan.

  * The prevention (or at least delay) of regime-change in Iran and any subsequent rapprochement with the United States.

  * Iranian collaboration in maintaining stability in Central Asia and preventing the rise of Islamic fundamentalism and separatism.

  * The emergence of Iran as the new geopolitical centre of gravity in the post-Saddam Middle East.

  b) with regard to North Korea:

  * Strong "fraternal" ies with the communists of North Korea, which date back to the 1930s when Kim Il Sung fought against the Japanese in Manchuria.

  * The need to control the timing and terms of eventual Korean reunification, so that China can maintain a buffer between itself and South Korea for as along as South Korea remains more US-oriented that China-oriented.

  * The prevention of any sudden destabilizing collapse in North Korea.

  * The need to maintain influence over the unpredictable Kim Jong Il, in particular trying to prevent the open acquisition of nuclear weapons by North Korea which could lead to Japan and Taiwan going nuclear.

  END

  The full testimony from last week's hearings can be accessed via http://www.uscc.gov/

• Bomb plots & Mideast mayhem: the strategic context - CIS 12 August 2006

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  COURCYINT SPECIAL BULLETIN
  
  To: All Courcy's Intelligence Service members
  
  Date: 12 AUGUST 2006
  
  From: JKC de Courcy, Chief Executive, Courcy's Intelligence Service
  
  Subject: BOMB PLOTS & MIDEAST MAYHEM: THE STRATEGIC CONTEXT

  Since the failure to find weapons of mass destruction in Iraq, blaming President George Bush and the UK's Prime Minister Tony Blair for the parlous state of relations between the Western world and the Muslim world has become so commonplace as to have attained the status of unquestionable received opinion. The present combination of a major terror plot in the UK and the Israeli onslaught in Lebanon (which is supported by Bush and Blair) has added a touch of panic to the charge. Where are these two taking us, is the question on most people's minds.

  But it is the very seriousness of the present situation that demands a return to the basic facts. The war between Islamic jihadists and the Western powers did not begin as a consequence of the invasion of Iraq, let alone Israel's assault on Hezbollah. What is true is that the West's treatment of post-Kuwait Iraq has always been used as a pretext by the jihadists for their militancy, despite the fact that Saddam Hussein was an enemy not a friend of Islamism, as has the very existence of Israel.

  The definitive statement on jihadists motives and goals was made on 23 February 1998. The founding statement of Osama bin Laden's World Islamic Front for Jihad against the Jews and Crusaders (published in the Arab nationalist al-Quds al-Arabi) listed America's three crimes as the occupation of the lands of Islam in the Arabian peninsula, the devastation inflicted upon the Iraqi people (through sanctions) by "the Crusader-Jewish alliance", and its support for the Jews' "petty state" and the occupation of Jerusalem.

  The statement said that these crimes amounted to "a clear declaration of war by the Americans against God, his prophet, and the Muslims". It then went on to declare, in the form of a fatwa attributed to Osama bin Laden, that "to kill Americans and their allies, both civilian and military, [is] and individual duty of every Muslim" anywhere and at anytime.

  Backing these words with actions, a simultaneous terrorist attack was launched on 7 August 1998 on the American embassies in Nairobi and Dar al-Salam, killing 258 people and wounding 5,000 others.

  It was only after these attacks, on 21 August 1998, that the then US secretary of state Madeleine Albright declared a "war on terrorism". Even then, it was not until more than three years later, following the 11 September 2001 attacks on New York and Washington, that the US invaded Afghanistan and then Iraq.

  The attacks on America came after it had helped oust the Soviets from Afghanistan (1989) and after it had supported the Muslim cause in the Balkans against the Serbs (1992-1999), and they came after the Oslo I (1993) and Oslo II (1995) peace accords between the Israelis and the Palestinians (not to mention the 1978 Camp David accords with Egypt) and the slow but steady retreat by Israel from its 1967 conquests that they represented.  And they came before the US invasion of Afghanistan (2001) and before its move to oust Saddam Hussein from power (2003).

  The point is this: jihadism is not a response to current events; it is a deep-seated phenomenon resulting from the failure of the Arab and wider Muslim world to keep pace with the West and other rival civilizations such as India and China.

  The evidence suggests that restraint on the part of the Western powers or Israel will have no discernible impact on jihadism. But that is not the same as saying that unrestrained counter-aggression is therefore justified. Each action needs to be weighed on its merits, and in our assessment, the following are the key points at this stage in the war against jihadism. They are:

  1. Al-Qaida remains incapable of mounting a sustained terror campaign in the West. This point is reinforced by the failure of the recent terror plot in the UK. Unfortunately it is not possible to move from that assumption to the conclusion that threat perceptions should be downgraded. The possibility that jihadists could acquire the capability (they certainly have the will) to use weapons of mass destruction against Western civilian targets ensures that they retain a strategic significance far beyond their conventional capabilities.

  2. Al-Qaida's weakness is in part a consequence of no longer having a safe-haven within a friendly sovereign power. The invasion of Afghanistan was fully justified on these grounds, and vigilance over Somalia and other potential future havens (including Afghanistan again) is necessary.

  3. The question of Iran needs to be divorced from the war on terror and al-Qaida. The contest with Iran is one against an inimical sovereign power determined to increase its influence in the Middle East at the expense of its Arab neighbours. Conflating it with the war on terrorism is a mistake. The Israeli assault on Hezbollah has to be seen in the context of containing Iran (and justified or not on those grounds) not in the context of the war on terror.

  4. Ousting Saddam Hussein might have been justified on humanitarian grounds, but it was irrational to see Saddam Hussein as an enemy in the war on terrorism. And the ousting of Saddam Hussein led to two unfortunate consequences. The first was that, rather than advancing the fight against jihadism, it brought jihadism to the heart of the Middle East, providing al-Qaida with a significant boost and a popular cause for which to recruit.

  The second was that it significantly improved the strategic position of Iran, compounding the already existing problem of how to contain an expansionist-minded power. It brought Iranian influence deep into Iraq, strengthening its linkages with Syria and southern Lebanon to the extent that Jordan's King Abdullah could warn accurately of the creation of a threatening "Shia crescent".

  5. Iran is pursuing a two-pronged strategy. First, it is developing nuclear weapons to provide it with a deterrence against the US and Israel (and with which to threaten its Arab neighbours). Secondly, it is using militant support for the Palestinian cause (through Hezbollah and the Palestinian radical groups) as a means of courting street-level Arab opinion and thus neutralising establishment-level Arab enmity.

  6. If the ousting of Saddam Hussein (arguably a humanitarian necessity) was a strategic catastrophe, it cannot now be undone. Even if it were desirable (which it isn't), the reimposition of a Sunni-Arab dictatorship is not possible. The emergence of a Shia-Arab ascendancy, on the other hand, is possible, but with Iran in its current mood it would be an extremely undesirable outcome. The United States has tried - is still trying - to achieve a civilized rapprochement between the rival parties and a stable democratic outcome, but this was always the longest of long shots and now seems utterly unattainable.

  The end result is likely to be a growing acceptance of the views expressed by former US ambassador to Croatia Peter Galbraith. In an article explaining his views in the New York Times on 25 July, he wrote:

  "Since it [the US] cannot unify Iraq or stop the civil war, it should work with the regions that have emerged. Where no purpose is served by a continuing military presence - in the Shiite south and in Baghdad - America and its allies should withdraw.

  "As an alternative to using Shiite and American troops to fight the insurgency in Iraq’s Sunni centre, the administration should encourage the formation of several provinces into a Sunni Arab region with its own army, as allowed by Iraq’s Constitution. Then the Pentagon should pull its troops from this Sunni territory and allow the new leaders to establish their authority without being seen as collaborators.

  "Seeing as we cannot maintain the peace in Iraq, we have but one overriding interest there today - to keep al-Qaida from creating a base from which it can plot attacks on the United States. Thus we need to have troops nearby prepared to re-engage in case the Sunni Arabs prove unable to provide for their own security against the foreign jihadists.

  "This would be best accomplished by placing a small "over the horizon" force in Kurdistan…"

  Galbraith is nearly right. But there are two overwhelming goals, not one. If the first is to prevent al-Qaida establishing a base in Iraq, the second is to curtail Iran's advance. Skirting over the fact that neither issue was a problem before the ousting of Saddam Hussein, both goals can be served by his proposal.

  7. Which brings us back to Israel's assault on Hezbollah. As a means of curbing Iran's expanding influence in the region (which, given the current mood in Tehran, is a necessary and desirable policy objective), it will be successful only if it leads to two developments. The first is the establishment of the Lebanese government's writ throughout Lebanon (albeit with substantial assistance from outside powers); the second is a re-engagement with Syria - leading in the most-positive scenario to a severing of Damascus's alliance with Iran and a dropping of its support for Hezbollah in return for a role for Syria in Lebanon's reconstruction and renewed negotiations with Israel over the Golan Heights and a peace agreement. If that were to happen, then the price in Lebanese blood (whilst forever beyond justification to those personally involved) might just begin to look a little bit more proportionate.

  CONCLUSIONS

  We have four main conclusions. They are:

  First, the al-Qaida jihadist phenomenon is exacerbated only at the margins by Western policies. Its causes go much deeper.

  Second, al-Qaida's weaknesses (illustrated by its inability to mount a sustained bombing campaign in the West) is compensated for by one overwhelming strategic advantage: its perceived willingness to kill as many Western civilians as its capabilities permit, allied to the possibility that these capabilities could soon encompass biological and chemical terror weapons.

  Third, the invasion of Iraq led to a strategic own goal, but there are now signs that the US is beginning to work towards a way of neutralising, if not reversing, the consequences of that own goal.

  Fourth, it is necessarily to divorce the struggle to contain Iran from the fight against al-Qaida-led jihadism. The assault on Hezbollah is part of the former not the latter, and there is still a chance that a successful outcome could mitigate the disastrous immediate consequences of that assault - but this will happen only if Damascus (with a lot of help from Israel) can be persuaded to come in from the cold.

  END

• Putin has Washington in sights during annual address to Russian parliament - CIS 11 May 2006

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  COURCYINT SPECIAL BULLETIN
  
  To: All Courcy's Intelligence Service members
  
  Date: 11 MAY 2006
  
  From: JKC de Courcy, Chief Executive, Courcy's Intelligence Service
  
  Subject: PUTIN HAS WASHINGTON IN SIGHTS DURING ANNUAL ADDRESS TO RUSSIAN PARLIAMENT

  On 10 May, Russia's President Vladimir Putin made his annual "state-of-the-nation" address to parliament.  Reporting on the address, the BBC said that it "had a less heavy international focus than had been predicted by Kremlin sources".  But although there was only the shortest overt mention of Russia's relations with the world's main powers, concern over Russia's international standing suffused almost the entire speech.  We were also struck by the extent of the criticism of the United States - although, of course, without mentioning the US by name.

  If this interpretation is right, it could have important immediate implications.  Also on 10 May, the US Deputy Secretary of State Robert Zoellick made it clear to the US House of Representatives Committee on International Affairs that it is Russia, not China, that is blocking agreement on how to proceed against Iran.  He said that China "will not be an obstacle" to efforts to stop Iran's nuclear ambitions if the US can convince Russia of the need to support tough action.  He added that China has "been given a little bit of a cushion because of Russia" and that "if we can bring Russia along with some of this, my own sense is that China will not be an obstacle in the process".

  Putin's speech was prefaced with the remark that "our main efforts are directed at those very areas which directly determine citizens' quality of life".  However, the real driving force behind Putin's speech and the measures he announced seemed to be contained in a passage where he said: "We must be capable of responding to attempts by anybody whatsoever to exert foreign policy pressure on Russia, including attempts with the aim of strengthening their own standing at our expense."

  Even the section devoted to Russia's demographic problems (its population is declining "by nearly 700,000" a year), was introduced not as primarily an economic issue but as a defence issue.  Putin said: "And now the main thing.  What is the main thing for us? ...At the Ministry of Defence they know what the main thing is for us.  I really am going to talk about love, about women, about children..."

  And it really did seem to be the United States that was causing Putin most concern.  Although there was obvious ambiguity as to whom the criticism was aimed at, he appeared to criticise the US over the WTO negotiations, disarmament, Russia's response to domestic terrorism and ethnic conflicts, the use of force to resolve disputes, and unilateralism and hypocrisy over human rights.  These are the key passages:

  *** ON WTO NEGOTIATIONS: "We continue to hold negotiations on joining the World Trade Organization.  We will conduct these only under conditions that fully correspond to Russia's economic interests.  It is obvious that our economy is even now more open than the economies of many members of that respected organization.  And talks on Russia's admission to the WTO must not become a bargaining tool on issues that have nothing to do with that organization's activities."

  *** ON DISARMAMENT: "Against the background of the acute threat posed by international terrorism, the key issues of disarmament have virtually fallen off the global agenda.  It's premature to speak of the end of the arms race...It's gaining momentum and is approaching a new technological level, threatening to create a new arsenal of the so-called destabilizing types of weapons.  There is still no guarantee that weapons including nuclear ones, will not be deployed in space.  There is the potential threat of the creation and proliferation of low-yield nuclear charges."

  *** ON RUSSIA'S RESPONSE TO DOMESTIC TERRORISM AND ETHNIC DISPUTES: "Terrorism remains a considerable danger.  Local conflicts, often ethnically fuelled and sometimes accompanied by interfaith conflicts...still remain a significant support base for terrorists, a source for their weapons and a field for them to use force...I know that some would be glad to see Russia mired in these problems and, by way of consequence, unable to resolve any of its development issues."

  *** ON THE USE OF FORCE TO RESOLVE DISPUTES: "Let me stress that we unequivocally favour strengthening the non-proliferation regime, without any exception, on the basis of international law.  It is known that the use of force rarely brings the desired result, and its consequences are often worse than the original threat."

  *** ON UNILATERALISM AND HYPOCRISY OVER HUMAN RIGHTS: "Just where does all the rhetoric on the need to fight for human rights and democracy disappear when it comes to the need to realize one's own interests.  It turns out that everything is permitted, there are no restrictions whatsoever."

  As to what should be done about all this, Putin said: "In the coming five years, the strategic nuclear forces should be substantially better equipped with modern aircraft for long-range aviation, submarines, and launch installations for the strategic missile troops.  Even today, work is being successfully carried out to create unique precision weapons and highly manoeuvrable warheads that present an unpredictable trajectory to a potential foe.  Along with the air defence penetration systems that we already have, new types of weaponry will allow us to maintain what is undoubtedly one of the most significant guarantees of world stability, namely the preservation of the strategic balance of forces.  We must take into account plans and trends in the development of other countries' armed forces.  We must know about possible developments.  But we must not try to keep up in terms of quantity, we must not spend money in vain.  Our response must be based on intellectual superiority.  It will be asymmetrical and less cost-intensive, but will undoubtedly increase the reliability and effectiveness of our nuclear triad."

  He concluded: "Russia needs an army that has all the resources to respond appropriately to modern day threats.  Our armed forces must be capable of simultaneously fighting in global, regional and, if necessary, several local conflicts.  It must be able, under any circumstances, to ensure Russia's security and territorial integrity."

  THE FULL TEXT OF PUTIN'S STATE-OF-THE-NATION SPEECH CAN BE ACCESSED VIA THE FOLLOWING LINK:

  http://www.courcyint.com/crl/crl9896.asp

• Japan's East Asian Strategic Review - 30 March 2006

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  COURCYINT SPECIAL BULLETIN
  
  To: All Courcy's Intelligence Service members
  
  Date: 30 MARCH 2006
  
  From: JKC de Courcy, Chief Executive, Courcy's Intelligence Service
  
  Subject: EAST ASIA STRATEGIC REVIEW 2006

  Japan's National Institute for Defence Studies has just released its East Asian Strategic Review 2006.

  The report notes that while a full-scale attack on Japan as envisaged during the Cold War is now inconceivable, "there is a mounting necessity to provide against new threats and diverse situations such as ballistic missile attack or an invasion of Japan's offshore islands".  Key points in the report include:

  CHINA

  China's strategy in East Asia "is not entirely clear".  It is pursuing "neighbourly diplomacy" aimed at cultivating cooperative relations with neighbours, however its policy towards Japan is "increasingly stalemated".

  The report notes that China is continuing to modernize its nuclear and missile capabilities and its naval and air forces to enable it to prevent Taiwan from becoming independent.  For instance, it has acquired Sukhoi fighters from Russia to secure command of the air over the Taiwan Strait, and it has increased the number of short-range ballistic missiles deployed in the coastal area bordering the Strait.  Since 1996, the PLA has repeatedly carried out military exercises with an invasion of Taiwan in mind, including a first-ever large-scale bilateral military exercise with Russia in August 2005.

  China is also pressing ahead with research and development on technologies for building missiles with multiple warheads and submarine-launched ballistic missiles (SLBM) to counter the missile-defence capability of the United States.  It test launched an SLBM with an estimated range of 8,000km  in June 2005.

  NORTH KOREA

  North Korea is believed to have nuclear weapons and chemical and biological weapons - and it is developing missiles to deliver these weapons, including the 3,500-6,000km range Taepo Dong-2.

  SOUTH KOREA

  The report makes an interesting point about South Korea.  It says that Seoul is frightened that it might "become entrapped in the US policy toward China".  There are discussions about assigning a regional role to the US-South Korea alliance, and "should this happen, South Korea would have to cooperate with the United States in deterring China, making it difficult for Seoul to play the role of mediator envisaged in the Balancer of Northeast Asia Initiative."  The report notes: "Being an ally of the United States is not easily compatible with being a regional mediator among great powers."

  NON-CONVENTIONAL THREATS

  In addition to these conventional threats, the report identifies a number of unconventional threats in Southeast Asia such as terrorist activities, separatist and independence movements, and maritime piracy in areas surrounding the Malacca Strait.

  THE UNITED STATES

  A section of the report looks at the East Asia role of the United States.  It notes that the US-Japan alliance is growing stronger, but, on the other hand, it also notes that "a movement for creating an East Asian Community excluding the United States is gathering pace".  It says the question for Japan of "how to get involved in the process of forming such a community in the face of China's ambition to exclude the US presents a difficult challenge".

  It also notes that US forces in the region are undergoing a major change, with the US moving from a military posture geared to deterrence to one that places more emphasis on the capability to undertake expeditionary operations.  The report says that "US forces in the region have to meet two competing requirements, namely, a reduction in troop numbers and maintenance of deterrence and rapid reaction capability" - and it adds the realignment of US forces in East Asia "will have a great impact on Japan's security".

  JAPAN'S EXPANDING ROLE

  The report notes that one characteristic of Japan's new defence posture is "the emphasis it places on cooperation with Japan's ally the United States and the international community, and more active involvement in global security problems".  It concludes: "In a highly globalized world [Japan's Self-Defence Forces] specializing only on the defence of the homeland can hardly defend Japan's overall security.  The SDF must expand and deepen international cooperation and deal with regional and security problems."

  
  AN ENGLISH-LANGUAGE EXECUTIVE SUMMARY OF THE EAST ASIAN STRATEGIC REVIEW 2006 CAN BE DOWNLOADED FROM THE FOLLOWING LINK:

  http://www.nids.go.jp/english/dissemination/east-asian/pdf/east-asian_e2006s.pdf

• The South China Sea - 23 March 2006

  LatinNews 08 September 2011 Hits: 1

  COURCYINT SPECIAL BULLETIN
  
  To: All Courcy's Intelligence Service members
  
  Date: 23 MARCH 2006
  
  From: JKC de Courcy, Chief Executive, Courcy's Intelligence Service
  
  Subject: THE SOUTH CHINA SEA

  The US government's Energy Information Administration (EIA) has just released its latest report on the SOUTH CHINA SEA.

  The key highlights are as follows:

  * Ownership of virtually all of the South China Sea remains contested, and the disputed areas often involve oil and natural gas resources.

  * Between now and 2025, oil consumption in developing Asian countries is expected to rise by 3.0% annually on average, with more than one-third of this increase coming from China.  If this growth rate is maintained, oil demand for these nations will increase from about 15.1m barrels per day in 2002 to nearly 33.6m barrels per day by 2025.

  * Currently the South China Sea region has proven oil reserves of about 7.0bn barrels and oil production of around 2.5m bpd.  Chinese estimates suggest that potential oil resources for the South China Sea could be as high as 213bn barrels, with the Spratly and Paracel Islands accounting for 105bn barrels.

  * China's optimistic view of the South China Sea's hydrocarbon potential is not shared by most non-Chinese analysts.  However, the South China Sea is important regardless of its potential as a source of energy.  More than half of the world's annual merchant fleet tonnage passes through the Straits of Malacca, Sunda, and Lombok, with the majority continuing on into the South China Sea.  Virtually all shipping that passes through the Malacca and Sunda straits must pass near the Spratly Islands.  More than 80% of the crude oil supplies for Japan, South Korea, and Taiwan flow through the South China Sea from the Middle East, Africa, and South China Sea nations such as Indonesia and Malaysia.  LNG is also shipped via this route, and as a result about two-thirds of South Korean energy supplies and almost 60% of Japan and Taiwan's energy supplies flow through the Sea.

  * The UN Law of the Sea created the potential for overlapping claims in semi-enclosed seas such as the South China Sea.  Claims to an Exclusive Economic Zone (EEZ) could be extended by any nation which could establish a settlement on the islands in the region.  South China Sea claimants have established (mostly military) outposts on the islands in order to conform with Article 121, which states that rocks that cannot sustain human habitation or economic life of their own shall have no exclusive zone or continental shelf.

  The full report can be downloaded using the following link: http://www.eia.doe.gov/emeu/cabs/South_China_Sea/pdf.pdf

  END

• Challenge of China driving US-Japan strategic alliance - 31 October 2005

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  COURCYINT SPECIAL BULLETIN
  
  To: All Courcy's Intelligence Service members
  
  Date: 31 OCTOBER 2005
  
  From: JKC de Courcy, Chief Executive, Courcy's Intelligence Service
  
  Subject: CHALLENGE OF CHINA DRIVING US-JAPAN STRATEGIC ALLIANCE
  
  On 29 October, Japan and the United States issued an interim report on the "Transformation and Realignment" of the US-Japan Alliance.  At a press conference in Washington, US Secretary of Defence Donald Rumsfeld said: "I think it would be difficult to overemphasize the importance of today's meeting and progress that has been made in our alliance."

  The source of Rumsfeld's enthusiasm for developing the US-Japan alliance is not hard to find.  Only 10 days earlier, during his 18-20 October visit to China, Rumsfeld publicly rejected Beijing's denials that it was spending up to three times more on defence than its declared $30bn annual defence budget.

  He had been even more outspoken at the Shangri-La conference in Singapore in early June, where he made the same point about China's military spending and then added: "China appears to be expanding its missile forces, allowing them to reach targets in many areas of the world, not just the Pacific region, while also expanding its missile capabilities within this region.  China also is improving its ability to project power and developing advanced systems of military technology.  Since no nation threatens China, one must wonder: Why this growing investment?  Why these continuing large and expanding arms purchases?  Why these continuing robust deployments?"

  The motivation for Japan's enthusiasm for an expanding alliance with the US is equally clear.  In its annual defence white paper, released in early August, Japan said that it was "exceedingly concerned" about the activities of Chinese vessels in waters near Japan.  It said: "Regarding the pick-up in China's maritime activity, the trends need to be watched since...it has also been pointed out that the Chinese navy is aiming in the future to become a so-called blue-water navy."

  The same white paper expressed concerns over the passing in March by Beijing of a law authorizing the use of force to re-unify with Taiwan.

  The full-text of the interim report on the "Transformation and Realignment" of the US-Japan Alliance (which we reproduce in full below) does not actually mention China, but that China's growing military capabilities are a prime consideration is hardly concealed.  The agreement states:

  "The Security Consultative Committee (SCC) members reaffirmed their shared view of the security environment, in which new and emerging threats have emerged as common challenges that can affect the security of nations worldwide, including the US and Japan.  They also re-emphasized the persistent challenges in the Asia-Pacfic region that create unpredictability and uncertainty and underscored the need to pay attention to modernization of military capabilities in the region." [Our emphasis added].

  The report also emphasizes the need to prepare "responses to situations in areas surrounding Japan", and it emphasizes in particular the threat from ballistic missiles.  "Several specific areas of cooperation" are listed as requiring special attention, including air defence, ballistic-missile defence, and "mine-sweeping, maritime interdiction, and other operations to maintain the security of maritime traffic".  Intelligence, surveillance, and reconnaissance (ISR) operations are also listed as primary areas for increased cooperation.

  The report adds: "Emphasizing that BMD [Ballistic Missile Defence] plays a critical role in deterring and defending against ballistic missile attacks, and can dissuade other parties from development and proliferation of ballistic missiles, both sides stressed the value of closely coordinating improvements in their respective BMD capabilities."

  JKC de Courcy
  Chief Executive
  Courcy's Intelligence Service

  FULL TEXT

  The following is the full text of "US-Japan Alliance: Transformation and Realignment for the Future", an interim report on the realignment of US forces in Japan, adopted on 29 October by Japan and the United States at "two-plus-two" top security talks among their foreign and defence affairs ministers in Washington.

  I. Overview

  The US-Japan Alliance, with the US-Japan security arrangements at its core, is the indispensable foundation of Japan's security and of peace and stability in the Asia-Pacific region. A close, cooperative relationship based on the alliance also plays an important role in effectively dealing with global challenges, and must evolve to reflect the changing security environment. Therefore, following the December 2002 meeting of the Security Consultative Committee (SCC), the US and Japan intensified consultations on respective US and Japanese security and defence policies in order to examine the direction of the US-Japan alliance, and to develop options to adapt the alliance to the changing regional and global security environment.

  At the February 19, 2005 meeting of the SCC, the Ministers reached an understanding on common strategic objectives, and underscored the need to continue examinations of the roles, missions, and capabilities of Japan's Self-Defence Forces (SDF) and the US Armed Forces in pursuing those objectives. They also decided to intensify their consultations on realignment of US force structure in Japan and directed their staffs to report expeditiously on the results.

  Today, the SCC members reaffirmed their shared view of the security environment, in which new and emerging threats have surfaced as common challenges that can affect the security of nations worldwide, including the US and Japan. They also reemphasized the persistent challenges in the Asia-Pacific region that create unpredictability and uncertainty and underscored the need to pay attention to modernization of military capabilities in the region. In this context, both sides reiterated their commitment to work closely together to pursue the regional and global common strategic objectives identified in their February 19, 2005 Joint Statement.

  The SCC members approved findings and recommendations on roles, missions, and capabilities. They also approved recommendations for realignment, as reflected in this report. These measures are designed to enhance the alliance's capability to meet new threats and diverse contingencies and, as a whole, will reduce burdens on local communities, thereby strengthening security and ensuring the alliance remains the anchor of regional stability.

  II. Roles, missions, and capabilities

  Both sides recognized recent achievements and developments in security and defence policies related to the roles, missions, and capabilities of the US and Japan, to include: bilateral cooperation in international activities such as the fight against terrorism, the Proliferation Security Initiative (PSI), assistance to Iraq, and disaster relief following the tsunami in the Indian Ocean and the earthquake in South Asia; Japan's December 2004 National Defence Programme Guidelines; progress in ballistic missile defence (BMD) cooperation; Japan's legislation to deal with contingencies; the SDF's planned transition to a new joint operations posture; and the transformation and global posture realignment of US forces.

  1. Primary Areas In this context, the US and Japan examined bilateral roles, missions, and capabilities, particularly those of the US forces and the SDF, for responding to diverse challenges in the contemporary security environment, placing primary emphasis on the following two areas: - Defence of Japan and responses to situations in areas surrounding Japan, including responses to new threats and diverse contingencies; - Efforts to improve the international security environment, such as part icipation in international peace cooperation activities.

  2. Basic Concepts of Roles, Missions, and Capabilities Both sides confirmed several basic concepts relevant to bilateral defence cooperation. Related to defence of Japan and responses to situations in areas surrounding Japan, these concepts include: Bilateral defence cooperation remains vital to the security of Japan as well as to peace and stability of the region.

  Japan will defend itself and respond to situations in areas surrounding Japan, including addressing new threats and diverse contingencies such as ballistic missile attacks, attacks by guerilla and special forces, and invasion of remote islands. For these purposes, Japan's defence posture will be strengthened in accordance with the 2004 National Defence Programme Guidelines.

  The US will maintain forward-deployed forces, and augment them as needed, for the defence of Japan as well as to deter and respond to situations in areas surrounding Japan. The US will provide all necessary support for the defence of Japan.

  US and Japanese operations in the defence of Japan and responses to situations in areas surrounding Japan must be consistent so that appropriate responses will be ensured when a situation in areas surrounding Japan threatens to develop into an armed attack against Japan or when such a situation and an armed attack against Japan occur simultaneously.

  Japan will continue to provide host nation support including facilities and areas for US forces (hereafter referred to as "US facilities and areas"). Japan will also take appropriate measures to provide seamless support to US operations as the situation evolves, including support based on Japan's legislation to deal with contingencies. Both sides will work with local communities to ensure stable support for the presence and operations of US forces in Japan.

  US strike capabilities and the nuclear deterrence provided by the US remain an essential complement to Japan's defence capabilities in ensuring the defence of Japan and contribute to peace and security in the region.

  Both sides also confirmed several basic concepts relevant to roles, missions, and capabilities in the area of improving the international security environment, to include: Bilateral cooperation in improving the international security environment to achieve regional and global common strategic objectives has become an important element of the alliance. To this end, the US and Japan contribute as appropriate based on their respective capabilities, and take necessary measures to establish effective posture.

  Rapid and effective response requires f lexible capabilities and can benefit from close US-Japan bilateral cooperation and policy coordination. Regular exercises, including those with third countries, can improve these capabilities.

  The US forces and the SDF will strengthen cooperation with other partners to contribute to international activities to improve the international security environment.

  In addition, both sides emphasized that the increasing importance of addressing new threats and diverse contingencies and improving the international security environment compels both sides to develop their respective defence capabilities, and to maximize the benefits of innovations in technology.

  3. Examples of Operations in Bilateral Security and Defence Cooperation to be Improved Both sides reconfirmed that the entire spectrum of bilateral cooperation must be strengthened, consistent with relevant national security policies and laws, and with agreements between the US and Japan. Through their examination of roles, missions, and capabilities, they emphasized the importance of improving several specific areas of cooperation:

  Air defence.

  Ballistic missile defence.

  Counter-proliferation operations, such as the Proliferation Security Initiative (PSI).

  Counter-terrorism.

  Mine sweeping, maritime interdiction, and other operations to maintain the security of maritime traffic.

  Search and rescue operations.

  Intelligence, surveillance and reconnaissance (ISR) operations, including increasing capabilities and effectiveness of operations by unmanned aerial vehicles (UAV) and maritime patrol aircraft.

  Humanitarian relief operations.

  Reconstruction assistance operations.

  Peacekeeping operations and capacity building for other nations' peacekeeping efforts.

  Protection of critical infrastructure, including US facilities and areas in Japan.

  Response to attacks by weapons of mass destruction (WMD), including disposal and decontamination of WMD.

  Mutual logistics support activities such as supply, maintenance, and transportation. Supply cooperation includes mutual provision of aerial and maritime refueling. Transportation cooperation includes expanding and sharing airlift and sealift, including the capability provided by high speed vessels (HSV).

  Transportation, use of facilities, medical support, and other related activities for non-combatant evacuation operations (NEO).

  Use of seaport and airport facilities, road, water space and airspace, and frequency bands.

  Both sides emphasized that other areas of operations not explicitly listed above remain important to alliance capabilities; this list highlights key areas for further enhancement but is not intended to be an exhaustive list of possible areas of cooperation.

  4. Essential Steps to Strengthen Posture for Bilateral Security and Defence Cooperation Based on the examination of roles, missions, and capabilities described above, both sides further identified the following essential steps that can be taken in peacetime to strengthen the posture of bilateral security and defence cooperation to deal with diverse challenges in the new security environment. Both sides also emphasized the importance of continuing examinations of roles, missions, and capabilities, based on the progress made thus far, to ensure effective bilateral cooperation.

  Close and Continuous Policy and Operational Coordination.

  Both sides recognized that regular policy and operational coordination will improve the alliance's timely and effective response to future changes in the strategic environment and to contingencies. Close and continuous polic y and operational coordination at every level of government, from unit tactical level through strategic consultations, is essential to dissuade destabilizing military build-ups, to deter aggression, and to respond to diverse security challenges. Development of a common operational picture shared between US forces and the SDF will strengthen operational coordination and should be pursued where possible. Closer cooperation between defence and other pertinent authorities is also increasingly necessary. In this context, both sides reaffirmed the need to improve the effectiveness of the comprehensive mechanism and bilateral coordination mechanism under the 1997 Guidelines for US-Japan Defence Cooperation by streamlining their functions.

  Advancing Bilateral Contingency Planning.

  Recalling that the 1997 Guidelines for US-Japan Defence Cooperation provide a basis for bilateral defence planning and mutual cooperation planning, both sides affirmed the continual requirement for such planning while taking full account of the changing security environment. This planning will reflect Japan's legislation to deal with contingencies, which provides a strengthened basis for contingency use by US forces and the SDF of facilities, including airports and seaports, in Japan. Both sides will expand their planning by adding specificity, coordinating closely with relevant government agencies and local authorities, enhancing bilateral mechanisms and planning methods, conducting detailed surveys of civilian and SDF air and seaports, and validating their planning work through strengthened bilateral exercise programmes.

  Enhancing Information Sharing and Intelligence Cooperation.

  Recognizing that common situational awareness is a key to well coordinated cooperation, both sides will enhance information sharing and intelligence cooperation in the whole range from unit tactical level through national strategic level. To facilitate this interaction, both sides will take additional necessary measures to protect shared classified information so that broader information sharing is promoted among pertinent authorities.

  Improving Interoperability.

  To ensure smooth cooperation as the SDF transitions to a joint operations posture, US forces and the SDF will maintain regular consultations to maintain and strengthen interoperability. Continued cooperation in planning for bilateral operations and exercises will strengthen connectivity between the headquarters of US forces and the SDF and will benefit from improved secure communications capabilities.

  Expanding Training Opportunities in Japan and the United States.

  Both sides will expand opportunities for bilateral training and exercises to improve interoperability, improve capabilities, enhance readiness, more equitably distribute training impacts among local communities, and advance the effectiveness of bilateral operations. These measures will include increasing mutual use of US and SDF training facilities and areas throughout Japan. The training of SDF personnel and units in Guam, Alaska, Hawaii, and the US mainland will also be expanded.

  In particular, the US plan to expand its training infrastructure in Guam will provide increased training opportunities for the SDF in Guam.

  Additionally, both sides recognized that US forces and SDF participation in multinational training and exercises will enhance their contribution to a better international security environment.

  Shared Use of Facilities by US Forces and the SDF.

  Both sides recognized that shared-use of facilities between US forces and the SDF contributes to closer bilateral operational coordination and improved interoperability. Specific opportunities for shared use of facilities are described in the force posture realignment recommendations ( see section below).

  Ballistic Missile Defence (BMD).

  Emphasizing that BMD plays a critical role in deterring and defending against ballistic missile attacks, and can dissuade other parties from development and proliferation of ballistic missiles, both sides stressed the value of closely coordinating improvements in their respective BMD capabilities. To support these BMD systems, they emphasized the critical importance of constant information gathering and sharing, as well as maintaining high readiness and interoperability in light of the minimal time available to respond to a ballistic missile threat. The US will deploy additional complementary capabilities in and around Japan when appropriate, coordinating their operations to support Japan's missile defence operations. Close coordination between respective BMD command and control systems will be critical to effective missile defence operations.

  Both sides committed to strengthen and improve the effectiveness of bilateral cooperation under the 1997 Guidelines for US-Japan Defence Cooperation and, as appropriate, in additional areas not currently addressed by the Guidelines.

  III. Force posture realignment

  Both sides reviewed the posture of US forces in Japan and related SDF forces, in light of their shared commitment to maintain deterrence and capabilities while reducing burdens on local communities, including those in Okinawa. Both sides recognized the importance of enhancing Japanese and US public support for the security alliance, which contributes to sustainable presence of US forces at facilities and areas in Japan.

  1. Guiding Precepts In their review, taking full account of the examination of bilateral roles, missions, and capabilities, both sides established several precepts to guide force posture realignments in Japan.

  The US military presence in the Asia-Pacific region is a core capability that is indispensable to regional peace and security and critical to both the US and Japan. Japan contributes capabilities that are additional and complementary to those provided by the US forces, while taking the leading role of providing for its own defence. The presence of US forces and the SDF must evolve as the regional and global security environment changes and as both sides assess alliance roles and missions.

  Capabilities will be strengthened through realignment as well as adjustment of roles, missions, and capabilities; these capabilities underpin the credibility of US commitments to the defence of Japan and peace and security of the region.

  Enhanced coordination and improved interoperability between headquarters for flexible and responsive command and control is a core capability of critical importance to the US and Japan. In that context, both sides recognized the continued importance of Headquarters, US Forces Japan for strengthened bilateral coordination.

  Regular training and exercises, as well as availability of facilities and areas for these purposes, are essential to ensure readiness, employability, and interoperability of forces. When consistent with military missions and operational requirements, dispersal of training can provide greater diversity of training opportunities and can have the ancillary benefit of reducing burdens of training on local communities.

  Shared military use of both US and SDF facilities and areas is valuable in promoting effectiveness of bilateral cooperation and increasing efficiencies.

  Adequate capacity of US facilities and areas is necessary, and the capacity above typical daily peacetime usage levels also plays a critical and strategic role in meeting contingency requirements. This capacity can provide an indispensable and critical capability towards meeting local emergency needs such as in disaster relief and consequence management situations.

  Particular attention will be paid to possible realignment of force structure in such regions where US facilities and areas are concentrated in densely populated areas.

  Opportunities to introduce civil-military dual-use of US facilities and areas will be studied, where appropriate. Implementation of such dual-use must be compatible with military missions and operational requirements.

  2. Recommendations for Realignment Based upon intensive consultations conducted thus far and in keeping with these basic precepts, domestic and bilateral coordination should be conducted for the following initiatives in a timely manner, consistent with the US-Japan Security Treaty and its related arrangements. The Ministers committed themselves to completing local coordination, and directed their staffs to finalize these specific and interrelated initiatives and develop plans, including concrete implementation schedules no later than March 2006. These initiatives represent elements of a coherent package, which will begin to be implemented upon agreement on the overall package. Both sides emphasized the importance of taking necessary measures required for the prompt implementation of these initiatives.

  Strengthening Bilateral and Joint Operational Coordination.

  Recognizing the Government of Japan's intention to transform the SDF into a joint operations posture, the Headquarters, US Forces Japan will establish a bilateral and joint operations coordination centre at Yokota Air Base. The shared use of this centre will ensure constant connectivity, coordination, and interoperability among US forces in Japan and the SDF.

  Improvement of US Army Command and Control Capability.

  The capabilities of the US Army Japan's command structure in Camp Zama will be modernized to a deployable, joint task force-capable operational headquarters element. The transformed command structure will provide an additional capability to respond rapidly for the defence of Japan and other contingencies. Adjustments to US facilities and areas will be made to accommodate the new Army command structure and integral capabilities. The establishment of the headquarters of a Ground SDF Central Readiness Force Command, which will operate units for nation-wide mobile operations and special tasks, will be pursued at Camp Zama, thereby strengthening the coordination between the headquarters. In relation to this realignment, possibilities of more effective and efficient use of Camp Zama and Sagami General Depot will be explored.

  Collocation of Air Command and Control.

  Japan's Air Defence Command and relevant units, currently located at Fuchu, will be collocated with the headquarters of the US 5th Air Force at Yokota Air Base, strengthening the coordination between air and missile defence command and control elements, and sharing relevant sensor data through the bilateral and joint operations coordination centre described above.

  Yokota Air Base and Air Space.

  Measures to facilitate movement of civilian aircraft through Yokota air space will be explored, bearing in mind the planned expansion of nearby Haneda Airport in 2009. Possible options to study will include reducing the air space under US control and collocation of Japanese air traffic controllers at Yokota Air Base. In addition, both sides will take into account development of the process of transferring the Kadena radar approach control. The specific conditions and modalities for possible civil-military dual-use will be studied, while noting that dual-use must not compromise the military operational capabilities of Yokota Air Base.

  Missile Defence.

  The optimum site for deployment in Japan of a new US X-Band radar system will be examined. Through timely information sharing, this radar will support capabilities to intercept missiles directed at Japan and capabilities for Japan's civil defence and consequence management. In addition, as appropriate, the US will deploy active defences, such as Patriot PAC-3 and Standard Missile (SM-3) to support US treaty commitments.

  Regional Realignment of US Marine Forces for Flexible Crisis Response.

  As part of its global posture realignment effort, the US is making several changes to strengthen its force structure in the Pacific. Among these changes are a strengthening of Marine Corps crisis response capabilities and a redistribution of those capabilities among Hawaii, Guam and Okinawa that will provide greater flexibility to respond with appropriate capabilities according to the nature and location of particular situations. These changes will also enable increased theatre security cooperation with countries of the region, thereby improving the overall security environment. In connection with this realignment, both sides identified an integrated set of interrelated measures that will also substantially reduce burdens in Okinawa.

  Acceleration of Futenma Relocation: Both sides, bearing in mind the strong request from r esidents of Okinawa for early return of Marine Corps Air Station (MCAS) Futenma, as well as the preference that any Futenma replacement facility (FRF) be located outside of Okinawa prefecture, considered options to satisfy these requests while maintaining the deterrence capabilities that will remain necessary in the future. They determined that the rapid crisis response capabilities provided by the presence of Marine Corps forces constitute a critical alliance capability that both sides desire to maintain in the region. Moreover, they recognized that sustaining those capabilities, which consist of air, ground, logistics and command elements, remains dependent upon the interaction of those elements in regular training, exercises and operations. For this reason, both sides concluded that the FRF must be located within Okinawa prefecture where rotary wing aircraft currently stationed a! t ! Futenma Air Station will be near the other elements with which they operate on a regular basis.

  Both sides, recognizing the extensive delays in Futenma relocation resulting from the many problems related to the 1996 Special Action Committee on Okinawa (SACO) plan for relocation of Futenma Air Station to a civil-military facility located on a coral reef in deep waters, examined numerous other possible options for relocation within Okinawa prefecture that could accelerate return of Futenma Air Station while maintaining operational capabilities. Both sides considered several factors in this work, including: Safety of neighbouring communities and military personnel.

  Noise impacts on local communities, taking into account future housing and commercial development patterns that might occur in the vicinity of the FRF.

  Minimization of adverse environmental impacts.

  Ability of the FRF to support operational and mission requirements in peacetime and in contingencies.

  Inclusion of necessary operational support, billeting and related facilities in the FRF, to avoid creation of traffic congestion and related irritants that might otherwise detract from the quality of life of local residents.

  Bearing such factors in mind, both sides will locate the FRF in an "L"-shaped configuration that combines the shoreline areas of Camp Schwab and adjacent water areas of Oura Bay. The runway portion of the facility will cross Henoko-saki, extending from Oura Bay into the water areas along the south shore of Camp Schwab. The lower section of the facility, oriented in a northeast-southwest direction will include a runway and overruns, with a total length of 1800 meters exclusive of seawalls. Hangers, maintenance, fuel supply pier and related infrastructure, and other aviation support activities required for the operation of the new facility will be located on the areas of the FRF to be constructed within Oura Bay. Furthermore, facilities in the Camp Schwab area will be reconfigured as necessary to accommodate the relocation of Futenma-related activities. (Reference: Initialed concept plan dated 26 October 2005.) Both sides concurred that other capabilities now present at Futenma Air Station would be relocated and maintained as provided for in the SACO Final Report, with the following adjustments: With regards to the KC-130's, which are to be relocated from Futenma Air Station to Iwakuni Air Station under SACO Final Report, alternative facilities will be considered with priority consideration given to Maritime SDF Kanoya Base. The final basing configuration will be determined by both sides based on ongoing operational and engineering studies.

  Strengthened contingency use of the Air SDF bases at Nyutabaru and Tsuiki will be provided for US forces. Improvements to operational facilities at these bases will be made to support this contingency use. These improved facilities, when completed, will also support the expanded bilateral training activities described in the Roles, Missions and Capabilities section of this report.

  Improved contingency use of civilian facilities for long runway operations that cannot be replicated at the FRF will also be provided for US forces.

  Both sides recognized that early realization of the foregoing measures, in addition to enabling the long-desired return of Futenma Air Station, is an essential component of the realignment of the Marine Corps presence in Okinawa.

  Force Reductions: In conjunction with the realignment of US Marine Corps capabilities in the Pacific region outlined above, the headquarters of the III Marine Expeditionary Force (III MEF) will be relocated to Guam and other locations and the remaining Marine units in Okinawa will be realigned and reduced into a Marine Expeditionary Brigade (MEB). This realignment in Okinawa will include the transfer of approximately 7,000 Marine officers and enlisted personnel, plus dependents out of Okinawa. These transferred personnel will come from units in each of the elements of Marine capability (air, ground, logistics and command), including portions of the Marine Air Wing, the Force Service Support Group, and the 3d Marine Division.

  The Government of Japan, recognizing the strong desire of Okinawa residents that such force relocations be realized rapidly, will work with the US Government to examine and identify appropriate financial and other measures to enable the realization of these relocations to Guam.

  Land Returns and Shared-Use of Facilities: Recognizing that successful relocation of Futenma Air Station and the force reductions described above will make further consolidation of forces and return of land possible, both sides discussed the concept of consolidation of those Marine Corps units that remain in Okinawa into a smaller total land area. This would enable the return of significant land in the densely populated areas south of Kadena Air Base. The US stressed its willingness to develop and implement a concrete programme for this concept in cooperation with the Government of Japan.

  Furthermore, recognizing the limited access that the SDF have to facilities in Okinawa, most of which are located in urbanized areas, the US also underscored its willingness to implement shared-use of Kadena Air Base, Camp Hansen, and other US facilities and areas in Okinawa in cooperation with the Government of Japan. Both sides consider that such shared use could facilitate bilateral training and interoperability between their forces, as described in the Roles, Missions and Capabilities section of this report, and thereby strengthen overall alliance capabilities.

  Steady Implementation of SACO Final Report: Both sides validated the importance of steady implementation of the recommendations of the Special Action Committee on Okinawa (SACO) Final Report unless otherwise changed by the recommendations in this document.

  Relocation of Carrier Air Wing from Atsugi Air Facility to Iwakuni Air Station.

  To ensure the viability of a long-term forward-deployment of the US aircraft carrier and its airwing, the carrier jet and E-2C squadrons will be relocated from Atsugi Air Facility to Iwakuni Air Station, which will have the necessary facilities and training airspace for safe and effective operation of the aircraft in a less intrusive manner after the current construction of the replacement runway is completed. To alleviate the impact of the increased operations at Iwakuni Air Station, the following related measures will be taken.

  Relocation of Maritime SDF E/O/UP-3 squadrons and other aircraft from Iwakuni Air Station to Atsugi Air Facility.

  Adjustment of training airspace for all US Navy and US Marine Corps aircraft to ensure adequate readiness levels are maintained.

  Identification of a permanent field-carrier landing practice (FCLP) facility. In the interim, th e US will continue to conduct FCLPs at Iwo Jima in accordance with existing temporary arrangements. The Government of Japan reiterates its commitment to provide an acceptable permanent FCLP facility for US naval aviation forces.

  Development of necessary facilities at the Maritime SDF Kanoya Base to accommodate KC-130 aircraft. These facilities will also be available to support rotations of additional SDF or US C-130 or P-3 aircraft from elsewhere in Japan to increase alliance capabilities and flexibility.

  Development of necessary additional facilities, infrastructure, and training areas required to support US Navy and US Marine Corps units based at Iwakuni Air Station, as well as civil aviation operations.

  Training Relocation.

  Consistent with the necessity of improving bilateral interoperability discussed in this report, and with reference to the goal of reducing the impact of training activity, renewed attention will be given to expanding the distribution of training from US air facilities such as Kadena Air Base as well as Misawa Air Base and Iwakuni Air Station to other military facilities.

  Efficient Use of Capacity at US Facilities in Japan.

  Opportunities to strengthen US cooperation with the Government of Japan and local communities regarding efficient use of capacity at US facilities in Japan will be pursued when consistent with operational requirements and safety. For example, both sides will explore possibilities for utilizing the capacity of Sagami General Depot for meeting local emergency needs such as in disaster relief and civilian consequence management.

  Future changes in US facilities and areas and force structure not addressed elsewhere in this report will be addressed in accordance with existing practices under the US-Japan Security Treaty and its related arrangements.

  Source: Kyodo News Service, Tokyo, in English 0021 gmt 30 Oct 05

• US fear of China coming through loud and clear - 28 July 2005

  LatinNews 08 September 2011 Hits: 3

  COURCYINT SPECIAL BULLETIN
  
  To: All Courcy's Intelligence Service members
  
  Date: 28 July 2005
  
  From: JKC de Courcy, Chief Executive, Courcy's Intelligence Service
  
  Subject: US FEAR OF CHINA COMING THROUGH LOUD AND CLEAR
  
  Considerable publicity has been given to the publication last week of the annual report to Congress by the US Secretary of Defence on “The military power of the People’s Republic of China”. Less has been given to the equally interesting hearings of the US-China Economic and Security Commission.
  
  The hearings covered the following topics: China’s Future Energy Development and Acquisition Strategies; Factors Driving China’s Global Strategy and US Policy Responses; China’s Approach to Africa; China’s Approach to Latin America; China’s Approach to Europe; China’s Approach to Northeast and Southeast Asia; China’s Approach to South Asia and Former Soviet States.
  
  We reproduce below the agenda for the 21-22 July hearings, links to the key speeches, and short summaries of each testimony.
  
  Of all the testimonies, the one that most struck us was that concerning China’s approach to Southeast Asia given by Dr Marvin C Ott, Professor of National Security Policy at The National War College. This testimony reads particularly interestingly alongside the main briefing in this week's Courcy's Intelligence Review ("US sends uncertain signal to Asia"), and it reinforces the main thrust of that briefing even though, in the event, China's Foreign Minister Li Zhaoxing pulled out of the ASEAN Regional Forum meeting at the last moment.
  
  Dr Ott claims in his testimony that China ’s geopolitical ambitions “focus on Southeast Asia , where Beijing is intent upon establishing a pre-eminent sphere of influence”. According to Ott, China has pursued this ambition “with a very skilled diplomatic campaign designed to ultimately bind the region to China – politically, economically, and militarily”. He says: “In effect, a contest for the future of Southeast Asia and the peripheral seas is already underway.”
  
  Ott is in no doubt as to the motive forces driving China ’s foreign policy, they are “geopolitical ambition and nationalism”. He says that Maoism/Marxism is dead and has been replaced by a strident nationalism that is reminiscent of late-19th century Europe and is being given added edge by “ China ’s acute sense of historic grievance against the West and Japan ”.
  
  Ott concludes: “There is a strategic contest (a Great Game) underway and one player has developed a sophisticated strategy and has already collected a number of chips; the other player does not have a strategy and acts like it is unaware the game has started. So far, the US is losing the game.” 
  
  Taken altogether, and with very few individual exceptions, if we had to use one word to sum up the testimony before the US-China Economic and Security Commission it would be fear.
  
  Details of the hearings follow:
  
  Hearing on China ’s Growing Global Influence: Objectives and Strategies 
  
  Hearing Cochairs: Commissioners Carolyn Bartholomew, June Teufel Dreyer and Michael R Wessel 
  
  July 21-22, 2005, 124 Dirksen Senate Office Building, 1st Street and Constitution Avenue, NE, Washington , DC 
  
  
  
  OPENING STATEMENTS
  
  * Opening Statement by Chairman RICHARD D'AMATO
  
  EXTRACT:
  
  “China ’s influence - diplomatic, economic, and military - is growing on nearly every continent. China’s quest for energy and commodities is a central reason for that country’s increasing activities and presence around the globe, and a part of this Commission’s mandate is to assess how China’s growing economy is affecting the world’s energy supplies and demand driven behaviour...It is imperative for Washington to understand China’s global objectives, the resulting implications for the U.S., and how, as a nation, we should respond. In particular, it is vital for Congress to make knowledgeable, informed decisions. Our purpose here is to collect and help Congress evaluate the information it needs in this respect.”
  
  FULL TEXT: 
  
  www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/damato_richard_open.pdf 
  
  
  * Opening Statement by Vice Chairman ROGER W ROBINSON, Jr.
  
  EXTRACT:
  
  “Like the Chairman, I am also concerned about some of the downside risks for U.S. interests associated with a rising China . China ’s presence is growing in many parts of the world, and at a high velocity. China is strengthening ties with traditional U.S. allies – such as Germany , Israel and Australia . Such ties could in the future require those who have been our friends and supporters to choose sides between the US and China on certain issues. We must gain a better understanding of China ’s global economic and security strategy and, at the same time, persuade our allies not to sacrifice long-term security interests for short-term economic and financial gain.”
  
  FULL TEXT:
  
  www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/robinson_roger_open.pdf 
  
  
  * Opening Statement by Hearing Co-Chair JUNE TEUFEL DREYER
  
  EXTRACT:
  
  “China’s large purchases of weapons systems and arms from Russia have strategic implications not only for the US but for other nations in close proximity to China as well. Some of these are part of America’s alliance system; all are important for the maintenance of Asian stability.” 
  
  FULL TEXT:
  
  www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/dreyer_june_open.pdf 
  
  
  * Opening Statement by Hearing Co-Chair MICHAEL R WESSEL
  
  EXTRACT:
  
  “China is pursuing an entirely different strategy on energy acquisition than the US, or its major allies are pursuing. Our actions are market based – no one questions that our major oil companies intend to sell their products to the highest bidder. The major oil companies are engaging in a free market approach.
  
  “China, on the other hand, wants to own oil and other energy assets, at the wellhead. Their energy acquisition strategy is mirrored in their efforts to acquire other resources such as iron ore, nickel and other commodities. They are willing to pay a premium for these assets now to ensure captive supplies for the future.
  
  “China views this as a national security issue and has linked its military, diplomatic and political efforts in the world to their energy acquisition strategy. They have entered into energy acquisition deals with Iran, Sudan and other nations to ensure their access to energy. In return, they have transferred military equipment, technology, and cash and have agreed to support the political aims of those and other countries. Their efforts extend to blocking action at the United Nations for the call for action against the genocide in Sudan. They have transferred, and been sanctioned for, their shipments of advanced missile technology to Iran. They are reaching out to countries across the globe – many of which have serious implications for US security interests.”
  
  FULL TEXT: 
  
  www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/wessel_michael_open.pdf 
  
  
  PARTICIPANTS and TESTIMONY:
  
  Thursday, July 21- Location: Senate Dirksen 
  
  9:00–9:45 am Panel I: CONGRESSIONAL PERSPECTIVES 
  
  * Senator RUSSEL FEINGOLD
  
  N/A
  
  
  * Senator JAMES INHOFE
  
  EXTRACT:
  
  “I have outlined in my earlier speeches how China is a threat. I believe it is. But this is a threat that can be addressed and enable a healthy, mutual growth for both our countries. A primary step toward this end is addressing the shortcomings of the CFIUS [Committee on Foreign Investment in the United States] review process.” 
  
  FULL TEXT:
  
  www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/inhofe_james_wrts.pdf 
  
  
  * Congressman J RANDY FORBES
  
  EXTRACT:
  
  “If I could summarize our greatest concerns at this time, they would be the following:
  
  1. There is an enormous void in our knowledge of China which must be filled. We have few analysts who read or speak Chinese or fully understand their culture. On the contrary, many of their leaders including their generals speak English and many were educated in America.
  
  2. At every briefing we attend, no matter how high ranking the participants, we are told that there is no coordinated approach to analysing the multi-faceted complex nature of the China problem and the communication between agencies is inadequate at best. This must be remedied as soon as possible.”
  
  FULLTEXT: 
  
  www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/forbes_randy_wrts.pdf 
  
  
  9:45-11:30 am Panel II: CHINA'S FUTURE ENERGY DEVELOPMENT AND ACQUISITION STRATEGIES
  
  * Dr GAL LUFT, Executive Director, The Institute for the Analysis of Global Security
  
  EXTRACT:
  
  “Though there is always a chance that China’s pursuit of energy could present an opportunity to enhance cooperation, integration and interdependence with the US, I believe that it is more likely that aggressive competition over access to energy sources will ensue. With global reserves of cheaply recoverable oil and gas being depleted China is already competing with the U.S. over the same oil reserves in some of the world’s most unstable areas. Former Secretary of State Henry Kissinger warned recently that the global battle for control of energy resources could become the modern equivalent of the colonial disputes of the 19th century."
  
  FULL TEXT: 
  
  www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/luft_gal_wrts.pdf 
  
  
  * Mr FAREED MOHAMEDI, Chief Economist, PFC Energy
  
  N/A
  
  11:30 am–1:00 pm Panel III: FACTORS DRIVING CHINA'S GLOBAL STRATEGY AND US POLICY RESPONSES
  
  * Mr RANDALL SCHRIVER, Armitage International
  
  N/A 
  
  
  * Dr STEVEN TSANG, Director, Asia Studies Center , St. Anthony’s College, Oxford 
  
  EXTRACT:
  
  “In general terms while China is building up its ‘comprehensive national strength’ it needs a stable and peaceful international environment to ensure rapid growth under the leadership of the Communist Party.
  
  “In national security terms, China’s main focus is Taiwan, and until this ‘principal contradiction’ has been resolved to its satisfaction, it is China’s policy to reassure the rest of the world that China has no territorial or aggressive ambitions.
  
  “In the long term and when China is ready it will assert its ‘rightful place’ in the world, which may require appropriate changes being made to the international system...
  
  “If the nature and disposition of the Communist Party leadership and the political system remain essentially unchanged when China reaches a state of development that it can afford to assert its ‘rightful place’ in the world, such a turn of events will almost certainly not be as peaceful as Chinese propaganda today portrays. It will involve a contest of strength and diplomacy between the established superpower and the new emerging one.”
  
  FULL TEXT: 
  
  www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/tsang_steve_wrts.pdf 
  
  
  * Dr AVERY GOLDSTEIN, Professor of Political Science, University of Pennsylvania 
  
  EXTRACT:
  
  “China’s strategy reflects its attempt to play a weak hand well. The US, by contrast, holds most of the high cards; we need only be sure that we don’t play our strong hand poorly. A rush to judgment about the nature of the China we are likely to face several decades from now is not only unwise, it is also unnecessary.”
  
  FULL TEXT: 
  
  www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/goldstein_avery_wrts.pdf 
  
  
  * Dr CHARLES MCMILLION, President and Chief Economist, MBG Information Services
  
  N/A
  
  
  2:00–3:30 pm Panel IV: CHINA'S APPROACH TO AFRICA 
  
  * Ambassador PRINCETON LYMAN, The Ralph Bunche Senior Fellow in Africa Policy Studies, The Council on Foreign Relations
  
  EXTRACT:
  
  “It is not only protecting its clients from strong punitive measures by which China’s investments are attractive to Africans, but also because they come with no conditionality related to governance, fiscal probity or other of the concerns that now drive western donors.”
  
  FULL TEXT:
  
  www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/lyman_princeton_wrts.pdf 
  
  
  * Ambassador DAVID SHINN, Adjunct Professor of International Affairs, The George Washington University 
  
  EXTRACT:
  
  “There will inevitably be an element of competition between China and the US in Africa over access to natural resources, winning of commercial tenders, and even African support for occasional different positions on political, economic, and social issues in international forums. There will be disagreements, for example, on human rights issues in certain African countries, the priority and pace of democratization and the sale of military equipment to African countries engaged in conflict.” 
  
  FULL TEXT:
  
  www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/shinn_david_wrts.pdf 
  
  
  3:30-4:30 pm Panel V: CHINA'S APPROACH TO LATIN AMERICA 
  
  * Dr CYNTHIA WATSON, Professor, The National War College 
  
  EXTRACT:
  
  “While I do not believe that Chinese involvement [in Latin America] currently indicates a serious threat to the security of the United States, I believe that Beijing seeks to establish networks which will benefit its interests for the long term, possibly to the detriment of US security.” 
  
  FULL TEXT:
  
  www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/watson_cynthia_wrts.pdf 
  
  
  * Dr CLAUDIO LOSER, Senior Fellow, The Inter-American Dialogue
  
  EXTRACT:
  
  “Trade between China and Latin America will continue to grow at a rapid pace over the coming years. Despite that, China’s share in Latin American trade will remain relatively small, compared to the share of the United States and European Union. Taking into account China’s economic bottlenecks and uncertain investment promises, Latin America probably cannot rely on China, as the source of trade expansion.” 
  
  FULL TEXT: www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/loser_claudio_wrts.pdf 
  
  
  * Mr AL SANTOLI, President, The Asia-America Initiative
  
  EXTRACT:
  
  “Chinese geo-strategic practices of asymmetrical warfare, using both ancient techniques and modern 'war by other means' targeting the 'weak exposed sides' of the United States have been steadily and effectively growing during the past decade in Latin America . Chinese tactics are being used to gain political and economic influence, as well as military alliances and bases for cyber-electronic warfare. These developments are a critical challenge to the United States in a vulnerable resource-rich area on our doorstep that we have too often taken for granted.” 
  
  FULL TEXT:
  
  www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/santoli_albert_wrts.pdf 
  
  
  Friday, July 22 - Location: Senate Dirksen 106 
  
  9:00-10:15 am Panel VI: CHINA'S APPROACH TO EUROPE 
  
  * Dr ROBIN NIBLETT, Executive Vice President and Director of the Europe Program, The Center for Strategic and International Studies
  
  EXTRACT:
  
  “There is little doubt that China’s current leaders would like to draw Europe and the EU into a multi-polar world order in which the transatlantic alliance would be weakened and in which China’s ability to manoeuvre between Washington, Brussels, and EU member state capitals (as well as between Moscow, Delhi, and other key capitals) on its policy priorities would be maximized. From a zero-sum perspective, a weakening of the transatlantic bond would be a net plus in terms of the Chinese government’s freedom of action domestically and on the world stage.” 
  
  FULL TEXT:
  
  www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/niblett_robin_wrts.pdf 
  
  
  * Dr CHRISTOPHER DENT, Professor, University of Leeds 
  
  EXTRACT:
  
  “The ‘China threat’ does not resonate in Europe in the same way that it does in the United States.” 
  
  FULL TEXT:
  
  www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/dent_christopher_wrts.pdf 
  
  
  10:15 – 11:45 am Panel VII: CHINA'S APPROACH TO NORTHEAST AND SOUTHEAST ASIA 
  
  * Mr DANIEL BLUMENTHAL, Resident Fellow, The American Enterprise Institute
  
  EXTRACT:
  
  “There are three elements to China’s strategy: First is to build up what it calls ‘comprehensive national power’; second is to reassure the region that it does not have revisionist or aggressive aspirations; third, by necessity, is to displace the United States as the pre-eminent power, hopefully, in their minds, peacefully.”
  
  FULL TEXT:
  
  www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/blumenthal.pdf 
  
  
  * Dr MICHAEL CHINWORTH, Director of The Center for US-Japan Studies and Cooperation, Vanderbilt University 
  
  EXTRACT:
  
  “With China’s economy assuming greater importance to Japan, I wonder if some in Japan fear the possibility that they will be forced essentially to make a choice between China and the United States to assure its own economic and perhaps territorial security. For a country that often views its own security in economic terms, the question is whether the value of Japan’s economic ties with China - or its economic dependence on China - will some day outweigh the benefits of its economic and military relationship with the United States.”
  
  FULL TEXT: www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/chinworth_michael_wrts.pdf 
  
  
  * Dr MARVIN C OTT, Professor of National Security Policy, The National War College 
  
  EXTRACT:
  
  “There is a strategic contest (a Great Game) underway [in Southeast Asia] and one player has developed a sophisticated strategy and has already collected a number of chips; the other player does not have a strategy and acts like it is unaware the game has started. So far, the US is losing the game.” 
  
  FULL TEXT:
  
  www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/ott_marvin_wrts.pdf 
  
  
  * Mr BRONSON PERCIVAL, Senior Advisor, The C.N.A. Corporation
  
  EXTRACT:
  
  “Although Washington has appropriately focused on countering terrorism, the ‘rise of China’ may eventually prove to be a second challenge for the United States in the region. Washington’s current response has been ambivalent and ambiguous. Southeast Asia tends to be treated as a footnote to larger issues in the US-Chinese relationship. Most experts agree that an American attempt to portray Southeast Asia as a battleground in a zero-sum contest with China is misleading and could turn into a self-fulfilling prophecy. But the United States has so long seen itself as the unchallenged, benign superpower in the region, that there is a whiff of complacency in the air.”
  
  FULL TEXT: www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/percival_bronson_wrts.pdf 
  
  
  
  11:45 am-1:00 pm Panel VIII: CHINA'S APPROACH TO SOUTH ASIA AND FORMER SOVIET STATES
  
  
  * Dr JOHN GARVER, Professor, The Sam Nunn School of International Affairs, The Georgia Institute of Technology
  
  EXTRACT:
  
  “China’s broad strategic objective is to persuade India to look benevolently on an open-ended and expanding Chinese economic, political, and military presence in South Asia and the Indian Ocean, to eliminate suspicion in Sino-Indian relations, and to transform India into China’s partner. In this way the rise of China in Asia will not lead to Indian efforts to countervail China in coalition with the United States. But the conversion of India to friendship with China is to be done without making concessions to India on the status of Tibet, the Sino-Pakistan strategic link, or by restricting China’s expanding military, security, and transportation ties with other South Asian nations.” 
  
  FULL TEXT: www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/garver_john_wrts.pdf 
  
  
  * Dr MADHAV NALAPAT, Professor, Manipal Academy 
  
  EXTRACT:
  
  “Although China has taken a strident tone against US ‘unipolarity’, the reality is that the objective of the CCP is itself to create a unipolar Asia with the PRC at its core. This would in time enable the PRC to displace the US as the global unipolar power. In Asia, early on, the CCP saw Japan and India as the two major obstacles towards primacy in the continent, thus setting in train a series of policies - including strategic assistance to North Korea and Pakistan - designed to weaken the ability of the two Asian democracies to reach a level where they could overwhelm the 'Comprehensive National Power’ (CNP) of China.” 
  
  FULL TEXT:
  
  www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/nalapat_md_wrts.pdf 
  
  
  * Dr PAUL GOBLE, Professor, University of Tartu 
  
  EXTRACT:
  
  “The underlying interests of the Russian government and the underlying interests of the Chinese government will both push them together toward cooperation in certain areas and drive them apart in others, a situation which means that we must be prepared to navigate between them rather than concluding as we have sometimes sought to do in the past all that we should back one of these countries against the other once and for all.”
  
  FULL TEXT:
  
  www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/globe.pdf 
  
  
  * Mr HERMAN PIRCHNER, Jr, Founding President, The American Foreign Policy Council
  
  EXTRACT:
  
  “Far more than any discomfort caused by American bases in Central Asia , or American support of the new government in Georgia, the successful and correct American support in the election of a Western-leaning Ukrainian president over his Kremlin backed-opponent has had a profound effect in Moscow. Ongoing cooperation in the War on Terror and nuclear issues non-withstanding, a consequence of the most recent Ukraine election will be to increase Russian cooperation with China - especially through efforts that are, at least partially, aimed at reducing American involvement in the territory of the former Soviet Union…
  
  “What is the future of this relationship? In the short term it may grow - especially if anti-democratic forces continue to be ascendant in Russia. But there are many reasons to believe that Russian-Chinese cooperation may lack durability.”
  
  FULL TEXT:
  
  www.uscc.gov/hearings/2005hearings/written_testimonies/05_07_21_22wrts/pirchner_herman_wrts.pdf
  
  
  
  END

• The London bombings - 13 July 2005

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  COURCYINT SPECIAL BULLETIN

  To: All Courcy's Intelligence Service members

  Date: 13 July 2005

  From: JKC de Courcy, Chief Executive, Courcy's Intelligence Service

  Subject: The London bombings

  A week on from the London terror bombings of 7 July a number of key points are becoming clearer.  They include:

  1.  Al-Qaida still has the capacity to launch major operations in even the most sophisticatedly policed cities that have long expected such an attack.  There was nothing remotely surprising about bomb attacks on London's transport network, yet the combined resources of the Metropolitan Police, MI5, and Britain's Secret Intelligence Service (SIS) were unable to prevent the attacks.

  2.  The pattern of about 15-24 months between major attacks continues (the last major attack was on 11 March 2004 in Madrid).  Whether this is a consequence of a deliberate al-Qaida policy to induce a false sense of complacency or a reflection of its natural "reload" capacity, the end result is one of reduced vigilance (see the main briefing in 7 July Courcy's Intelligence Review: "Security experts battling complacency" - http://www.courcyint.com/crl/crl6620.asp).

  3.  The invasion of Iraq is NOT the cause of the anti-Western jihadist terror campaign, as clearly the campaign pre-dates the invasion of Iraq.  Nevertheless, the invasion of Iraq has had an effect that is analogous to poking a wasps' nest with a stick.  For the moment the consequences are mostly being felt in Iraq, but increasingly two adverse consequences of the invasion will be felt elsewhere.  Recruitment to the Islamist cause has been and will continue to be boosted, and, eventually, veterans of the Iraqi resistance, like the Afghan veterans before them, will return to cause difficulties in their homelands or in other jihadist theatres of war (see item in our 30 June issue: "Italian intelligence chief on changing face of Islamic terrorism" - http://www.courcyint.com/crl/crl6584.asp).  It is still an open question as to whether the benefits of ridding the world of Saddam Hussein outweigh these clear disadvantages.

  4.  Our analysis of the cause of Islamist terrorism remains that it is rooted in the failure of the Islamic world to match the political and economic advances of the rival civilizations of Europe, Europe-abroad, and (more recently) Asia.  The frustrations bred of this failure have been festering and accumulating since at least the collapse of the Ottoman empire and cannot easily be removed or neutralized.  Even the Arab-Israeli conflict (seen by many as the principal cause of Islamist radicalism) is a symptom not the source of Islamic failure - and hence of Islamic terrorism.

  We highlighted the difficulties of reversing the relative economic failure of the Arab world in the main briefing in our 21 April issue: "Mideast & North Africa still lagging on reform" - http://www.courcyint.com/crl/crl5962.asp.

  5.  One of the most pernicious aspects of jihadist terrorism is the fact that a low-cost sporadic campaign can force the Western world into such colossal expenditure, changes in behaviour, and other defensive measures that curtail traditional freedoms.  We have often pointed out how relatively small scale the direct impact of terrorism actually is - certainly when compared with natural disasters and health crises.  Nevertheless, the reaction to the jihadist threat is not irrational because the possibility that the jihadists could one day resort to weapons of mass destruction is not one that can be ignored - even if that means that the jihadists can gain as much from maintaining the threat of using such weapons as from actually using them.

  6.  We have in the past taken comfort from the fact that the Islamist cause, unlike the earlier threat to the Western democracies posed by communism, has almost no resonance beyond its core constituency.  The children of the white Western middle classes are not potential recruits to jihadism in the way that some of their parents were to the communist cause.  The London bombings, however, have shown that seemingly well-adjusted children of Asian immigrants in Britain can be recruited as suicide bombers - and if that is the case in Britain then it is likely to be the case in other Western countries with substantial Muslim immigrant communities.  Post-London, the fact that jihadism appeals only to Muslims is less comforting than it was if the type of Muslim who can be induced to carry out suicide attacks includes Western-educated youths.

  7.  If the causes of anti-Western jihadism are as deep-rooted and intractable as we believe them to be, it is logical to assume that this is going to be a long war.  In the meantime, President Bush has put much emphasis on bringing democracy to the Middle East as the long-term antidote to jihadism.  It has to be acknowledged, however, that the London bombers lived in a democracy, and that did not prevent them becoming terrorists.

  For us, however desirable bringing democracy to the Middle East might be, there is a danger that this is putting the cart before the horse.  We have already stated how crucial economic advancement is in the fight against extremism, but even before that the primary target of Western pressure on Middle Eastern governments should be on reforming ignorance-reinforcing education systems.  As we pointed out last week, compared with India’s 4.3% and the US’s 5.0%, Pakistan spends just 1.7% of its GDP on education. The slack is taken up by an estimated 15,000 religious schools, which educate about 700,000 Pakistani boys between the ages of six and sixteen in little but Urdu, Arabic, and the Koran and indoctrinate them in the creed of jihad.  Parallel with the need to reform education is the need to muzzle the hatred-inducing mullahs - and not just in the Middle East, but in London and elsewhere.

  END

• Pointers to Mideast radicalism - 21 April 2005

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  COURCYINT SPECIAL BULLETIN

  To: All Courcy's Intelligence Service members

  Date: 21 April 2005

  From: JKC de Courcy, Chief Executive, Courcy's Intelligence Service

  Subject: Pointers to Mideast radicalism

  DEVELOPMENT:

  On Sunday (17 April), the World Bank published what is to be the first in an annual series of reports on "Economic Developments and Prospects" in the Middle East and North Africa (MENA).

  ANALYSIS:

  We reviewed the World Bank's 2005 Economic Developments and Prospects for the MENA region in the 21 April issue of Courcy's Intelligence Review.  We highlighted some of the positive aspects of the report (such as average economic growth of 5.6% in 2003 and 2004), but we also drew attention to some serious negatives.

  Most seriously, 100m new jobs will be needed over the next 20 years to keep pace with new entrants to the job market and to absorb the current unemployed, and to achieve this target MENA will need average annual growth rates of 6%-7%.  This will not be achieved without reforms (the current boom is almost entirely attributable to the high price of oil), yet the World Bank reports that MENA has been "the weakest [region] in the world" with regard to reforming the business environment.

  We concluded that the World Bank's new annual series on economic developments and prospects in the Middle East and North Africa could, amongst other things, provide an important pointer to the future of radicalism in the region.  In view of this, subscribers might like to read the whole report in full.  The report can be accessed via the following link:

  http://siteresources.worldbank.org/INTMENA/Publications/20451730/MENA%20Economic%20Developments%20and%20Prospects%202005.pdf

  END

• China preparing for death of Zhao Ziyang - 14 January 2005

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  COURCYINT SPECIAL BULLETIN

  To: All Courcy's Intelligence Service members

  Date: 14 January 2005

  From: JKC de Courcy, Chief Executive, Courcy's Intelligence Service

  Subject: China preparing for death of Zhao Ziyang

  DEVELOPMENT:

  On Wednesday (12 January), the Chinese authorities introduced new regulations under which visitors to Beijing's Tiananmen Square now have to be escorted by police to watch the daily flag-raising ceremony.  The move has been widely interpreted as an attempt to pre-empt any major protest in the square on the death of the former Communist Party chief Zhao Ziyang, now 85 and in hospital with - it is thought - a serious respiratory illness.

  ANALYSIS:

  Zhao was removed from public view on 19 May 1989 when he urged students to end their protest in Tiananmen Square.  Martial law was declared the next day, and on 3-4 June the army crushed the student protests in Tiananmen Square.  Beijing now fears that Zhao's death could spark mass demonstrations - as happened with the deaths of premier Zhou Enlai in 1976 and party chief Hu Yaobang in April 1989.

  In addition to the increased security measures in Tiananmen Square, sources say that the reports in the Hong Kong media on Tuesday that Zhao had died on 8 January could have been deliberately placed by the Beijing authorities, first as a trial balloon in order to gauge the reaction, and secondly in order to diminish the effect of Zhao's death when it does eventually take pace.  A similar exercise took place in 2003 when reports of Zhao's death appeared in the Japanese media.

  Beijing's evident nervousness over the forthcoming death of Zhao needs to be seen against the background of growing civil unrest in the form of riots, protests, and demonstrations.  Last year it was revealed that in 2003 some 3m people took part in 58,000 mass protests, almost 160 every day, and the number of high-profile disturbances in the last three months shows that civil unrest continues to be geographically widespread and regularly involves tens of thousands of people.

  CourcyInt's sister service - the Asia Intelligence Service (http://www.asiaint.com) - published a special report on "The growing threat of civil unrest" in China in the January edition of the AsiaInt Political and Strategic Review.  In view of the present situation in China I am pleased to enclose a complimentary copy of this report.  Please just click on the following link for access:

  China: The growing threat of civil unrest - http://www.asiaint.com/arl/arl5262.asp

  END

• The threat of terrorist attacks on nuclear facilities - 23 July 2004

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  COURCYINT SPECIAL BULLETIN

  To: All Courcy's Intelligence Service members

  Date: 23 July 2004

  From: Joe de Courcy, Chief Executive, Courcy's Intelligence Service

  Subject: The threat of terrorist attacks on nuclear facilities

  
  SUMMARY

  The threat from radiological and nuclear terrorism can be divided into three main categories:

  * Terrorists detonating nuclear weapons, either by stealing weapons or by stealing nuclear material and constructing their own device.

  * Terrorists dispersing radioactive material by means of a 'dirty bomb'.

  * Terrorists dispersing radioactive material by means of sabotage of a nuclear installation or a shipment of radioactive materials.

  Following the House of Commons Defence Select Committee's July 2002 report on Defence and Security in the UK, it was determined that not enough was known about the last category - that is "sabotage of a nuclear installation or a shipment of radioactive materials", and the Parliamentary Office of Science and Technology (POST) was asked to investigate further.  It has just issued its report.

  Although the report - Assessing the risk of terrorist attacks on nuclear facilities - is largely based on already published material, it is helpful for three reasons:

  First, the authors of the study have done a thorough job of bringing together all the relevant information currently in the public domain.

  Second, while they have ostensibly confined themselves to reviewing already publicly available information, the report makes clear that "the UK nuclear operators, regulators, and other official bodies have assisted POST by providing staff with access to sensitive inner areas at Sellafield and with classified background briefings".  In other words, while this report does not provide any information that is not already in the public domain, it is informed throughout by "classified background briefings" and it can be taken as read that the report's assumptions and conclusions reflect those briefings.

  Third, most of what is currently in the public domain has been generated (and placed in the media) by groups that either have a pro-nuclear or anti-nuclear stance and their conclusions are therefore often driven by these biases rather than by the desire to provide an objective assessment.  This report, on the other hand, does provide an objective assessment of the risks.

  Although the report concentrates on nuclear facilities in the UK and nearby in Europe, its conclusions have relevance beyond the UK.  As of March 2004, there were 440 commercial nuclear power reactors in operation in 31 countries worldwide, with 166 in Europe.  There are additionally 284 research reactors in operation in 56 countries, and some of these research reactors use highly enriched uranium (HEU) which may be suitable for use in nuclear weapons.

  Transport of radioactive material is an additional point of vulnerability, and the report has a section dealing with this.

  The full 148-page report can be downloaded using the following link: http://www.parliament.uk/documents/upload/POSTpr222.pdf

  A four-page summary is available at: http://www.parliament.uk/documents/upload/POSTpn222.pdf

  KEY POINTS:

  The following are some of the key points in the POST report:

  * The Safety Assessment Principles for nuclear plants are not specifically designed to address security threats such as terrorism.  However, many of the measures taken to enhance safety also provide defence against terrorist attack.  For example, because of the "defence in depth" principle on which modern nuclear plants are based, terrorists would have to damage several systems or components in order to bring about a significant release of radioactive material.  Damage to any individual system would not be enough to cause a release.

  * Although some commercial reactors have been designed to withstand the accidental impact of light aircraft, no reactors have been designed specifically to withstand the impact of a large commercial aircraft.  Structural damage could be caused not only by the impact of the aircraft itself, but also as a result of the blast and fire from burning aviation fuel and by parts of the aircraft acting as projectiles.

  * Some analyses suggest that although newer plants are much less vulnerable than older plants, the risk of radiological risk cannot be ruled out in either case.

  * Some of the UK's older Magnox plants have design characteristics which may make them more vulnerable to terrorist attacks.  However, the report adds, "POST has been requested not to discuss these to avoid highlighting sensitive information which might be of use to terrorists".

  * Gas-cooled reactors (the UK is the only country where this design in prevalent) might be more likely to sustain physical damage in the event of an aircraft impact because they are not housed in external containment buildings.  The only protection surrounding the reactor core is the concrete pressure vessel/biological shield, which is not fully hermetic, and the reactor building is a normal industrial building and not comparable with a PWR containment.  The UK has 12 first generation Magnox gas-cooled reactors operating in five power plants, and it has 14 second-generation Advanced Gas Cooled Reactors at seven plants.

  * It is not possible to retrofit existing power plants to withstand attacks such as large aircraft impact.

  * The only detailed study on the potential impact of a truck bomb attack in the public domain was carried out almost 20 years ago by Sandia National Laboratory in the US.  This concluded that a truck bomb attack could cause "unacceptable damage to vital reactor components" even if the truck bomb were detonated offsite.

  * A ground-based attack could be mounted with a view to damaging parts of the plant or gaining access to the plant controls.  However, such an attack would have to overcome security guards and physical security barriers to reach vital areas of the plant - and British Energy states that even if intruders gained access to a plant control room "its reactors are designed such that it is not possible to override safety systems and to intentionally disable enough critical systems to cause a large release".

  * Research reactors are not as well protected as power plants and therefore might make attractive targets.

  * Many research reactors use highly enriched uranium (HRE) as fuel, which could potentially be used to construct crude nuclear weapons as well as dirty bombs.

  * Reprocessing plants extract re-usable uranium and plutonium from used reactor fuel and handle a range of radioactive material.  High level liquid radioactive waste (HLLW) is the focus of most public attention.  The largest inventories are at Sellafield, with smaller quantities in storage at Dounreay in Scotland and Cap de la Hague in France.  As of July 2004, there are between 1,000 and 1,500 cubic metres of HLLW in storage at Sellafield.  Certain radioactive isotopes are present in quantities several hundred times greater than in a typical reactor core, and a worst-case scenario release of 10% of the total inventory (following for instance the impact of an aircraft or internal explosion) could result in hundreds of thousands of long term cancers.

  It should be noted, however, that British Nuclear Fuels (BNFL) has disputed the above, issuing a statement saying: "We are concerned that POST has referred to public-domain reports that predict very serious consequences for the public if High Level Liquid Waste Tanks at Sellafield were to be targeted by a hijacked aircraft.  None of the authors of these reports have access to the current engineering and construction information that is necessary to undertake a credible study of the likely consequences.  For that reason BNFL considers that their conclusions are unsubstantiated, entirely speculative, and significantly exaggerate the consequences."

  MAIN CONCLUSIONS

  The report's main conclusions are:

  1.  Nuclear power plants are not designed to withstand attacks such as large aircraft impact, however existing safety and security regimes do provide some defence.

  2.  An assault on a nuclear facility would not be guaranteed to cause a large release of radioactive material, and even if it did there would not be a large number of instant fatalities, partly because nuclear facilities are generally located away from major population centres.  However, such an event could lead to significant numbers of long term cancers - and even an unsuccessful attack could have economic and social repercussions and affect public confidence in nuclear activities such as power generation.

  3.  Despite the difficulties of launching a successful attack on a nuclear facility, the high symbolic value of such a target could be attractive to a terrorist group trying to heighten its profile.

  4.  Notwithstanding the above, the detonation of 'dirty bombs' is seen to be an easier and therefore potentially more likely mode of radiological attack.

  END

• Inflation - 1 July 2004

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  COURCYINT SPECIAL BULLETIN

  To: All Courcy's Intelligence Service members

  Date: 1 July 2004

  From: Joe de Courcy, Chief Executive, Courcy's Intelligence Service

  Subject: INFLATION

  SUMMARY

  The Fed's decision to increase interest rates to 1.25% marks a key turning point in the world economic cycle.  Since June 1981, when US interest rates came down from their peak of 19%, each successive cyclical peak in interest rates, and each successive trough, has been lower than the one before.  That cycle has now ended.

  ANALYSIS

  Since its inception in 1934, Courcy's Intelligence Service has been identifying, tracking, and analysing risks to the free flow of international commerce.  For the most part our principal concern has been with non-economic risk factors, and we have generally left economic crystal-ball gazing to others; but the turning point signalled by the increase in US interest rates is so significant that it warrants special attention.

  As attentive subscribers will know, the international economist we follow most closely is Anatole Kaletsky of The Times of London, and his analysis in today's edition cannot be bettered.  He says:

  * The Fed should have begun raising interest rates earlier - cutting rates to 1% last June when the economy was already booming was a mistake.

  * US interest rates, notwithstanding yesterday's increase, are far below the appropriate level for this stage of the economic cycle and will need to rise much farther and faster than financial markets currently assume.

  * Now that the Fed has started raising interest rates, this upward trend has a long way to go.

  * The combination of ultra-lax monetary policy with a rapidly falling dollar is reminiscent of the great inflation that started with the expansionary Keynesian and "guns-and-butter" policy in the mid-1960s when the Vietnam war was getting into its stride.

  * There are seven trends in the US all pointing to higher inflation: lax monetary policy with a central bank concentrating on job creation rather than stable money; ballooning budget deficits; a depreciating currency; an expensive war paid for by printing money; protectionism; rising oil prices; and a big-spending administration.

  * To counter these inflationary pressures, the Fed needs to raise interest rates quickly to at least 5%, but there is no sign that Alan Greenspan has any intention of doing so.  He has already misjudged the inflation outlook by declaring in his annual report to Congress that it would average between 1% and 1.25% this year.  It is now running at 2.5%.

  * The problems will be compounded by the costs of caring for an ageing population (the equivalent of the growth in the welfare state in the 1960s) - and, Kaletsky concludes, "if history is any guide, politicians and voters will decide that inflation is the only way to spread the burden of these ever-growing social costs".  This in turn means that interest rates and inflation "will continue to point upwards for years, or even decades".

  END

   

  END

• Shia-Kurdish relations in Iraq- 19 February 2004

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  COURCYINT SPECIAL BULLETIN

  To: All Courcy's Intelligence Service members

  Date: 19 February 2004

  From: Joe de Courcy, Chief Executive, Courcy's Intelligence Service

  Subject: SHIA-KURDISH RELATIONS IN IRAQ

  SUMMARY

  The leader of the Patriotic Union of Kurdistan (PUK), Jalal Talabani, is putting a positive spin on his meeting with Shia leader Ayatollah Ali al-Sistani in Najaf last weekend.

  ANALYSIS

  In this week's Courcy's Intelligence Review we underlined the importance of Kurdish-Shia relations in the manoeuvrings for control of post-Saddam Iraq.  Since that report was published late yesterday, we have received the reactions of Kurdish leader Jalal Talabani to his meeting last weekend with Shia leader Ayatollah Sistani.

  According to Talabani, the meeting was a great success.  In Talabani's own words "Sistani has promised me his support for all Kurdish claims".  Asked specifically if that meant that Sistani, who until now has been considered to be an opponent of Kurdish ambitions, supports "far-reaching autonomy for the Kurds", Talabani replied: "Indeed.  Al-Sistani is no Ayatollah Khomeini, he is moderate, he wants no Islamic regime, and he wants no clerics in ministerial posts..."

  On the subject of Kirkuk and de-Arabization, however, Talabani is more evasive.  Asked specifically about the differences over Kirkuk, he just reiterates the Kurdish position, saying: "The Arabs, settled there under Saddam, must leave again, and the Kurds who were driven out at that time must  return."  Talabani also continues to dismiss the idea of an "Iraq identity", saying that there is no such thing "and there will be none".  However, according to Talabani, there can still be a united Iraq "in which the different peoples live".

  END

• Does al-Qaida have a nuclear capability? - 12 February 2004

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  COURCYINT SPECIAL BULLETIN

  To: All Courcy's Intelligence Service members

  Date: 12 February 2004

  From: Joe de Courcy, Chief Executive, Courcy's Intelligence Service

  Subject: DOES AL-QAIDA HAVE A NUCLEAR CAPABILITY?

  SUMMARY

  The London-based Arabic-language al-Hayat newspaper is continuing to assert that al-Qaida acquired a nuclear capability from the Ukraine in the late 1990s.

  ANALYSIS

  In this week's Courcy's Intelligence Review we alerted subscribers to reports alleging that al-Qaida had acquired one or more tactical nuclear weapons from Ukraine.

  On Sunday, al-Hayat quoted sources close to al-Qaida as saying the group bought the weapons in suitcases in a deal arranged when Ukrainian scientists visited the Afghan city of Kandahar in 1998.  The report was linked to claims made by the former Russian National Security Adviser Alexander Lebed that up to 100 portable suitcase-sized nuclear bombs had gone missing following the break-up of the Soviet Union in 1991.

  The Lebed claim was denied at the time, with Russia saying that no such weapons had ever existed; and the present claim that such weapons have been sold to al-Qaida by Ukrainian scientists have been dismissed by the Ukrainian foreign ministry as "totally groundless".

  Yesterday, however, al-Hayat returned to the story.  Reporting from Islamabad in Pakistan, the paper's correspondent Ahmad Muwaffaq Zaydan wrote:

  "Reliable sources in Islamabad yesterday confirmed to al-Hayat the information that a Ukrainian national had sold nuclear technology to the al-Qaida organization.  The sources said that a Ukrainian nuclear scientist - whose name is believed to be Viktor - visited the former Taleban stronghold of Kandahar in 1998 and played the role of intermediary in this deal.  The same sources said that the Americans learned about the affair and were able to immediately track the deal all the way to the Ukraine.  The sources added [that] the matter remained secret and its details were not revealed.  The sources were referring to the purchase by al-Qaida of briefcases containing nuclear weapons which it stored in safe places when it was a guest of the Taleban movement..."

  As to how al-Qaida might use such a capability, in its earlier report al-Hayat quoted its source as saying that the group would use the weapons only inside the United States or if it faced a "crushing blow" which threatened its existence, such as the use of nuclear or chemical weapons against its fighters.

  We are unable to verify the truth or otherwise of this report, and we do not have access to al-Hayat's source.  Nevertheless, we would make five points:

  1.  Alexander Lebed was in a position to know about missing nuclear weapons, if there were any.

  2.  Al-Qaida has certainly sought such a capability.

  3.  The alleged method of acquisition is reasonably plausible.

  However,

  4.  Al-Qaida clearly has an interest in talking up its capabilities, and

  5.  Pakistan itself might have an interest in diverting attention from its proliferation misdeeds with such a smokescreen.

  Our conclusion?  We verge towards the view that this is a fabrication, and, besides, to mount such an attack in the US (which is the declared target) looks to be beyond the group's capability at present given that it has been unable to mount another spectacular attack within the United States since September 2001.

  But anything is possible, and on the negative side there can be no questioning the fact that al-Qaida has survived the post-9/11 onslaught; that it or its affiliates have successfully attacked targets in Indonesia, Morocco, Turkey, Kenya, Pakistan, and Saudi Arabia since 9/11; that the group has begun to have an impact within Iraq; that it clearly has no qualms about inflicting mass deaths; that the post-9/11 generation of al-Qaida militants has a desire to surpass the "achievements" of their predecessors; and, as the head of Germany’s BND foreign intelligence agency Rudolf Adam said earlier this week, that "pressure is mounting on al-Qaida to reassert its effectiveness and its ability to strike another really high-value target".

  END

• Al-Qaida makes strategic gain - 21 November 2003

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  COURCYINT SPECIAL BULLETIN

  To: All Courcy's Intelligence Service members

  Date: 21 November 2003

  From: Joe de Courcy, Chief Executive, Courcy's Intelligence Service

  Subject: AL-QAIDA MAKES STRATEGIC GAIN

  SUMMARY

  On Thursday 20 November, al-Qaida inspired (and a local affiliate carried out) twin bomb attacks on the British consulate and the London-based HSBC bank in Istanbul.

  ANALYSIS

  The twin attacks in Istanbul have confirmed a trend in post-9/11 al-Qaida tactics that has been apparent for some time, namely the launching of attacks on Western and Israeli interests mostly in Muslim countries and with the help of local affiliates.

  Major al-Qaida-inspired attacks since 9/11 which conform to this pattern include the following:

  * 11 April 2002. A truck bombing in Djerba, Tunisia, near a synagogue, killing 20.

  * 8 May 2002. A car bomb attack on a bus carrying French defence technicians in Karachi, Pakistan, killing 14.

  * 14 June 2002. A car bomb attack on the US consulate in Karachi, Pakistan, killing 11 and wounding 45.

  * 12 October 2002. Bomb attacks on a nightclub district and outside the US consulate in Bali, Indonesia, killing 202.

  * 28 November 2002. A failed missile attack on an Israeli airliner and a car bomb attack on a hotel frequented by Israelis in Mombassa, Kenya, killing 15.

  * 12 May 2003. Four suicide bombs detonated in an expatriate residential area in Riyadh, Saudi Arabia, killing 35.

  * 16 May 2003. Five bomb attacks on Jewish and Western targets in Casablanca, Morocco, killing 45 and wounding 60.

  * 7 June 2003. A car bomb attack on a busload of German peacekeepers in Kabul, Afghanistan, killing five.

  * 5 August 2003. A car bomb attack on the Marriot Hotel in Jakarta, Indonesia, killing 10 and wounding 150.

  * 19 August 2003. A truck bomb attack on the UN headquarters in Baghdad, Iraq, killing 22.

  * 9 November 2003. A suicide bomb attack on a residential compound in Riyadh, Saudi Arabia, killing 17.

  * 15 November 2003. Car bomb attacks on two synagogues in Istanbul, Turkey, killing 24 and wounding 300.

  The obvious conclusion to be drawn from the above is that the supposedly fatal setback suffered by al-Qaida in Afghanistan in November 2001, when the Taleban regime was driven from Kabul and the group’s bases were destroyed by US military power, was only temporary.

  The group’s leaders and many key operatives survived and continue to find refuge in the border areas of Afghanistan and Pakistan. It has also re-established its network of affiliated groups throughout the Muslim world, while the US-led attack on Iraq has provided it with a potent new cause and a boost to recruitment. An additional bonus for al-Qaida has been the split in the Western alliance produced by the Iraq war.

  On the other hand, it is still the case that since the Iranian revolution of 1979 only two countries (Sudan and Afghanistan) have succumbed to Islamic fundamentalism and that the position has now been reversed in both countries. Elsewhere, the Islamist assault on Algeria and Egypt has long since been seen off and has not been rekindled, while in Indonesia, the world's most-populous Muslim country, only this week Amien Rais, one-time leader of Indonesia’s 30m-strong Muhammadiyah Muslim group, declared: “Political Islam is not selling in this country. If I based my political support only on Muslims, there is a foregone conclusion that I would lose [next year’s presidential election].”

  It might, therefore, be concluded that while al-Qaida has shown remarkable resilience over the past two years, it has not actually made any strategic advances - but for at least two good reasons we are not so sure.

  First, the present al-Qaida assault on Turkey could set back Turkey’s drive to become a member of the European Union, either because it could reinforce the European view that Turkey is just too different from the rest of Europe to be allowed in as a full member and/or because it will spark a draconian crackdown by Turkey’s secularist army on the country’s Islamist tendency thus restoring to the EU its longstanding let-out on Turkey, namely Turkey’s less-than-pristine human-rights record. The effects of a final rejection of Turkey by the European Union should not be underestimated.

  Second, there is the question of Israel. The one incontestable fact about Israel is that the Arab states are unable to defeat it militarily. But Israel is nevertheless vulnerable to external pressure from the West, and al-Qaida’s hope is that its terrorist campaign against Western interests will increase Western pressure on Israel to give up the fruits of its 1967 military victory.

  This is an entirely rational strategy for al-Qaida to follow, and there is evidence that it is working. In Europe anti-Israeli sentiment is reaching heights unknown in recent times; in America the usually pro-Israel Bush administration is beginning to show its frustration with the Sharon government; and even in Israel itself influential calls for a unilateral retreat are increasing.

  If al-Qaida's strategy is rational, and if it is working, then it stands to reason that there will be more of the same.

  
  END