10 July 2015

Why China's Stock Markets Matter


The Shanghai Composite Index fell 6 percent on July 3, rounding out a 28 percent decline since June 12, when the country's stock markets peaked. The deterioration occurred despite intensive government efforts to stabilize prices and revive investor sentiment.

Overt attempts by Beijing included cutting benchmark interest rates and reserve requirement ratios and loosening restrictions on investor access to margin loans, in addition to less overt moves, such as direct interventions to prop up the market with government-backed purchases of blue chip stocks. On Friday, in a clear bid to win investor confidence in its oversight abilities, the securities regulator announced it would investigate signs of potential market manipulation. Yet so far, Beijing's efforts have failed to achieve the desired effect of stimulating, or at least stabilizing, China's leading stock markets.

In the days and weeks ahead, Beijing will not meekly accept the natural winding down of the past year's stock boom turned bubble. Rather, it will continue to work, both overtly and covertly, to prevent prices from collapsing outright - all while seeking to reshape investor sentiment and expectations through investigations, like those recently announced. The question of why Beijing feels compelled to take action remains, especially when any intervention risks exacerbating whatever financial and political fallout may come from an eventual market decline or crash. The answer to this question lies in understanding the role of stock markets in China's economy and Beijing's broader policy priorities, as well as evaluating the potential effects of a stock market crash on both.
Nurturing Consumer Growth

The Chinese government's core policy goal - the crux of its entire economic reform and rebalancing program - is to cultivate a domestic consumer base capable of supporting nationwide growth that is stable, sustainable and less exposed to fluctuations in external demand. To do this requires a boost in average incomes to a level where non-essential purchases become feasible for ordinary people. Additionally, China needs to instill in its citizens a sense of financial security adequate enough to convince them to spend - rather than save - their disposable income.

China has struggled on both fronts over the past two decades. Until recently, China was a country of near-universal poverty. Its post-1978 economic growth model, grounded as it was in low-cost exports and state-led investment into infrastructure construction, necessitated two policies: the systematic repression of manufacturing wages to maintain the competitiveness of exports and the suppression of interest rates on savings deposits. Keeping interest rates low ensured cheap financing for China's state-owned sector, which was responsible for the vast majority of infrastructure development and which survived on credit from state-controlled banks. These factors, more than any supposed cultural inclination to save, explain China's extraordinarily low levels of private household consumption relative to other parts of its economy - and compared to consumption levels in other countries.

Respect and Armed Forces

By Lt Gen Prakash Katoch
09 Jul , 2015

Much has been written and spoken about Defence Minister Manohar Parrikar’s statement; one of the reasons that respect of the armed forces has diminished is because for the last 40-50 years we have not fought a war. Our unbridled presstitutes went berserk raking in loads of moolah with TRP’s shooting up while opposition politicians cried blue murder. Not without reason MK Dhar, former Joint Director IB wrote in his book ‘Open Secrets – India’s intelligence unveiled’, “The susceptibility of the fourth estate to the intelligence community had tied our hands down. They are one of the too many holy Indian cows. Some of them, as described by a senior member of the fourth estate, are ‘taxi on hire’. Any paymaster can hire this particular brand.”

But getting back to Parrikar’s statement, wonder how many noticed that Parrikar’s this particular comment was preceded by saying “In the past, when there was a letter from a military commanding officer to an IAS officer or any other authority, it received attention of the highest order. Today, that respect has diminished”.

Like many others who have prostituted the profession of Journalism, Will probably be nominated to Rajya Sabha”.

Bureaucratic Mischief with the Military!

By Air Marshal RK Nehra
09 Jul , 2015

When India became free, one of the first tasks was to evolve a new structure for management of the Defense set-up. Therefore, it would be relevant to enumerate the broad principles on which the defense structure of a democratic country needs to be built:

In a democracy, there has to be ‘civil’ control over military; But the word ‘civil’ means political (and only political) and not bureaucratic.

War is the most complex and specialized activity that a man engages in. What makes a soldier give his life (for the country) is an issue far more complex than even understanding the nature of God.

War is the most complex and specialized activity that a man engages in. What makes a soldier give his life (for the country) is an issue far more complex than even understanding the nature of God. Over the ages, millions have claimed to understand the concept of God. But those who understood the motivation behind the soldier’s willingness to die would be in thousands, may be only hundreds. It is not claimed that all generals understand these issues, but some of them do. We have to identify them and bring them up. In short, issues of war have to be left to the generals. They must be listened to with respect directly by the politicians, not through the via media of bureaucrats. In any set up, lot of space must to left to the generals to plan and maneuver.
Each cog in the defense structure which has some degree of power must have an equivalent amount of responsibility and accountability; and that must be defined in very precise terms leaving no room for ambiguity, and manipulability to escape responsibility.

Is the Modi Government's Moment of Reckoning Here?

A series of scandals have hit India’s BJP government and the prime minister continues to remain silent.
Politics is all about perception and credibility, and nowhere is this truer than in today’s India. If the Narendra Modi-led Bharatiya Janata Party (BJP) fails to address the political crisis that has hit the government, it may lose its steam altogether early into its term.

One of the reasons why Modi struck a chord with the Indian masses was his promise to deal with rampant political corruption. He promised to deliver a scam-free India and usher in a new era of economic and political reforms. People trusted his words blindly and he received a historic mandate.

It’s the time for him to live up to the pledges he made to the nation not so long ago.

India Inks New Nuclear Deal with Kazakhstan

The recent deal will see Kazakhstan supply India with 5,000 metric tons of uranium between 2015 and 2019.
In an agreement reached while Indian Prime Minister Narendra Modi visited Kazakhstan July 6, Central Asia’s largest economy and the world’s largest producer of uranium will supply India with 5,000 metric tons of nuclear fuel in the 2015-2019 period. Between 2010 and 2014, Kazakhstan supplied India with 2,100 metric tons of uranium. While expressing pleasure at the “much larger second contract,” Modi noted that Kazakhstan was “one of the first countries with which we [India] launched civil nuclear cooperation.”

The increase in uranium supply is a boon to Modi’s energy plans. India, which has increasingly faced an energy-deficit, dealing with blackouts and leaning heavily on coal has begun to focus on building up its nuclear power capabilities in recent years. India has seven nuclear power plants, which operate a total of 21 nuclear reactors.Six more nuclear reactors are under construction. India’s aim is to supply a quarter of its electricity from nuclear power by 2050, an ambitious goal. Last summer, Modi directed the Department of Atomic Energy totriple India’s nuclear capacity to 17 GWe by 2024.

Counter- vs. Second Strike – Clarifying India’s NFU Policy

June 17th, 2015

New Delhi’s no-first use nuclear policy compels India to strengthen her ability to retaliate against adversaries in a way that is irrespective of the range and yield of the nuclear weapon used by the adversary. This is to say that, whether the adversary uses tactical nuclear weapons or strategic nuclear weapons, the response from India’s side would be massive retaliation.

India has been a responsible nuclear weapon state (NWS) by adopting a no-first use policy. However, India’s no-first use doctrine has been viewed by its immediate nuclear weapons possessing neighbours, Pakistan and China, with suspicion. As New Delhi has ventured into developing a ballistic missile defense (BMD) system, and also into offensive multiple independently targetable re-entry vehicles (MIRVs) which can be fitted on nuclear-capable ballistic missiles, it has become even more crucial for India to ensure that its immediate neighbours do not develop any mistrust of India’s no-first use nuclear doctrine. India needs to make public the rationale behind its BMD. From a realist perspective, missile defense systems can be offensive as well as defensive tools for states possessing nuclear weapons. States can choose to launch a nuclear first strike against adversaries and aim to wipe out their retaliatory capability. Missile defense could then be used as a shield against any remaining retaliatory capability of the adversary that the attacking state could not eliminate with its first strike.

Watch Out, India: Pakistan Is Ready to Use Nuclear Weapons

July 8, 2015

Pakistan is ready to use nuclear weapons against India, a senior Pakistani official confirmed on Monday.
Appearing on the Pakistani television channel “Geo,” Pakistan’s Defense Minister Khawaja Asif said that Islamabad is willing to use nuclear weapons to ensure its survival.

“We should pray that such an option never arises, but if we need to use them (nuclear weapons) for our survival we will,” Asif said, according to Geo’s website. His remark was widely reported by Indian media outlets.

Asif went on to accuse India of supporting anti-Pakistani terrorist groups in a proxy war against Islamabad. “Fuelling terrorism directly or indirectly is India’s proxy war in Pakistan,” Asif said. He singled out Tehreek-e-Taliban Pakistan (TTP), the Pakistani Taliban, and Baloch separatists as two of the groups that India is allegedly supporting.

The U.S. needs to keep troops in Afghanistan

By David Petraeus and Michael O'Hanlon 
July 7

U.S. troops arrive at the site of a suicide bomb attack in Kabul on Tuesday. (Omar Sobhani/Reuters)

David Petraeus, a retired Army general who commanded coalition forces in Afghanistan from 2010 to 2011, is chairman of the KKR Global Institute. Michael O’Hanlon is a senior fellow at the Brookings Institution.

For a leader who has been criticized for trying to rush out of wars to satisfy campaign promises, President Obama has been relatively resolute in Afghanistan. To be sure, he reduced U.S. forces there faster than some (including us) believed optimal starting in July 2011 — but only after havingtripled the number of troops there during the first two years of his presidency. And the drawdown did not begin until he worked with coalition partners at the 2010 NATO Summit in Lisbon to extend the mission from 2011 to 2014, a horizon extended again last year. Beyond that, while he declared an end to the NATO combat mission in Afghanistan at the end of last year, he also authorized Americans to continue to participate in numerous difficult and dangerous operations, including counterterrorism activities in support of Afghan forces, when needed. Some 10,000 U.S. troops continue the fight in support of what is principally now an Afghan-led and Afghan-dominated mission.

China's Big South China Sea Gamble

July 8, 2015

Several Southeast Asian countries have expressed concern over Beijing’s belligerent behavior and aggressive posturing in the South China Sea. A litany of complaints of harassment of innocent fishermen by Chinese Coast Guard vessels has been reported by Vietnam and the Philippines, who are visibly angry with China. These incidents have led to stand-offs between maritime security forces, shadowing and buzzing by aircraft, including obstruction of exploration ships and rigs. Issues such as freedom of navigation and the possibility of China announcing an ADIZ over the South China Sea have also unnerved regional countries. If these trends continue, these could potentially result in deterioration of relations between China and the Southeast Asian countries and Beijing may soon lose friends.

The Chinese Investment That Really Matters

The ups and downs of China’s stock markets might be dominating headlines, but they are not the Chinese investment that matters most to the world. China’s investments overseas matter more.
China’s stocks rule the headlines this summer, but they are not the Chinese investment that matters most to the world. China’s investments overseas matter more, such as ChemChina’s $7.8-billion buyout of Italy’s Pirelli or Hua Capital and CITIC’s $1.9-billion acquisition of America’s OmniVision.

Chinese investment at home may slump but its global spending is set to top $100 billion this year, and keep rising. This offers sizable benefits, and poses important questions for recipient countries. Is there such a thing as too much investment? Can Chinese firms be trusted to follow the rule of law, when there is none at home?

The Great Chinese Financial Meltdown of 2015?

July 9, 2015
"China’s authoritarian and opaque political economy under the Chinese Communist Party is about to be tested in its most severe way since Tiananmen Square in 1989."

The Chinese stock market has been much like a giant casino in 2015. Chinese investors, many of them using their hard-earned savings, have placed their bets and watched the wheel of fortune spin. Through much of 2015, this was the right bet. The returns were substantial—according to the Financial Timeson July 6, 2015, China’s equity market has doubled since June 2014.

For a population looking for yield, the rising stock market has had a siren-like appeal, sucking in Chinese investors’ money and roaring along—even as economic activity cooled. Since mid-June 2015, however, the stock market boom now appears to be going bust and small investors who came late to the party are likely to be caught by the old saying, “the devil takes the hindmost” (those who lag behind will receive no aid).

One of China’s hottest markets, the Shenzhen Stock Exchange Composite Index, hit its peak on June 12, hitting 3140.66 points, up from 1436.86 at the beginning of the year. The Shenzhen Index is now under 2000.00 and the trend-line is down. According to Bloomberg, the July sell-off in Chinese equities wiped out $3.2 trillion in market value in three weeks. As of July 8, 1,476 companies, more than half of China’s 2,808 listed companies, have suspended trading in their shares. Foreign investors are fleeing. For President Xi Jinping and the ruling Chinese Communist Party this is not good news.

China's Navy Just Got Better at Detecting and Taking Out Submarines

July 09, 2015
With the commissioning of the Gaoxin-6, the PLAN’s anti-submarine warfare capabilities receive a major boost.
After years of development, China’s Gaoxin-6, a four-engine, fixed-wing, anti-submarine patrol aircraft, was commissioned into the People’s Liberation Army Navy’s (PLAN) North Sea Fleet. The aircraft will be a major boon to the PLAN’s anti-submarine warfare (ASW) capabilities, a neglected area despite China’s broader naval modernization. The Gaoxin-6 is, in essence, a heavily modified Shaanxi Y-8 transport aircraft and reports over the years have noted that China’s goal with this aircraft was to emulate the form and function of the United States’ Lockheed P-3C Orion patrol aircraft, the most widely deployed anti-submarine aircraft in the world. The Gaoxin-6′s commissioning, along with China’s growing fleet of anti-submarine corvettes (specifically, the Type 056 Jiangdao-class), marks a milestone in the PLAN’s ASW capabilities.

China's New Killer in the Sky: Japan's Submarines Beware

July 7, 2015

China has developed and deployed a new, advanced fixed-wing, anti-submarine patrol aircraft in waters near Japan and South Korea, local media outlets are reporting.

The reports said that several four-engine Gaoxin-6 anti-submarine aircraft were delivered to the People’s Liberation Army Navy late last year, four years after the first prototype of the aircraft was unveiled. Chinese media and foreign outlets have long compared the Gaoxin-6 to Lockheed’s P-3C Orion, which Washington and its allies have long used to patrol waters near China.

However, some experts dispute the assertion. For instance, Li Jie, a Beijing-based naval expert often quoted by Chinese media, told the Hong Kong-based South China Morning Post that “there is still a certain gap between China's Gaoxin-6 and the American P-3C, especially in terms of its flight and reconnaissance ranges.”

South China Sea: Korea is Silent, and That's a Good Thing

July 7, 2015

Last month on The Diplomat, Van Jackson made an important argument about South Korea's increasingly notable silence on freedom of navigation in the South China Sea (South China Sea).

Jackson, like many analysts, recognises growing Chinese misbehaviour there, most obviously the destabilising island-reclamation strategy and expansive sovereignty claims it fuels. Jackson would like to see greater South Korean engagement (actually, any at all). He rightfully notes that the more unified the Asian front regarding rules in the Western Pacific, the more likely China is to moderate its actions. 

Where is the ROK in the South China Sea?

South Korea is a US ally. As a trading state heavily dependent on open, safe sea lanes, it has a strong interest in freedom of navigation rules. As a proximate neighbour of China, it has a similarly strong interest in China's socialisation into a rules-bound regional community. Countries around China's periphery, from Japan to India, worry that if China is not rebuffed in the East and South China Seas, a sense of hegemonic dominance in the region may grow in Beijing. These minor conflicts are widely seen as the leading edge of the larger question of China's regional intentions as it grows ever stronger.

A Tale of Two Disputes: China’s Irrationality and India’s Stakes

June 29, 2015

Disputes in Asia, be they in the maritime or territorial spheres, are usually complex. Their nature or connotation may vary from issue to issue and from one sub-region to another and may have different sets of implications. Also, they tend to expand beyond their original context and become somewhat byzantine when they are connected with ‘national interests’, which involves both the quest for resource exploration and national pride. An assessment of China’s continued reservation on India’s oil and energy exploration in the South China Sea (SCS) and India’s concerns over China’s infrastructural development in Pakistan-Occupied Kashmir (POK) under the China-Pakistan Economic Corridor (CPEC) project – which is a vital part of Beijing’s ‘One Belt, One Road’ initiative – underline these complexities. Both oil exploration in the SCS and infrastructure development in the POK may be two different issues involving different sub-regions; but the Chinese and Indian approaches and reactions and their pursuit of ‘national interests’ in these matters compels the drawing of a parallel.

This Policy Brief analyses the complexity introduced into India-China relations by these two issues as well as the resultant fallout. The assessment here indicates the irrationality of the Chinese approach to which India must respond cogently. All the more so when China has released the document,Vision and Actions on Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road, in March 2015,1 and Beijing desires India to join and support its ‘One Belt, One Road’ initiative.
II. Issues of Sovereignty and the ‘Historical’ Context

London-Based Syrian Observatory for Human Rights Website Hacked by ISIS Supporters

July 8, 2015

Syrian Activists Say IS Supporters Hacked Their Website

BEIRUT — Hackers claiming to be supporters of the Islamic State group on Wednesday hacked the website of the Britain-based Syrian Observatory for Human Rights, the head of the monitoring group said.

The Observatory, which has been tracking Syria’s conflict since it started in March 2011, has been aggressively reporting over the past year on atrocities committed by the Islamic State extremists.

The cyberattack reflected the growing use of Internet — often a sophisticated tool used by the Islamic State and the Sunni militants’ backers — since the IS declared an Islamic caliphate on the territories it captured in June 2014 in Syria and neighboring Iraq.

The Observatory chief, Rami Abdurrahman, said the hacking will not deter him from reporting on the violations carried out in Syria. He added that his activist group had received threats in the past from President Bashar Assad’s government, as well as the Islamic State group and al-Qaida’s affiliate in Syria, the Nusra Front.

A Frightening Thought: When Terrorism 'Works'

Under certain conditions, terrorism can strengthen organizations that employ it; drive the death or spread of ideas; and provoke disruptive population flows that remake states and societies.

ISIS and its ever-expanding record of extreme violence may be on the march, but a growing number of academics suggest that terrorist attacks generally failto achieve their stated strategic goals, especially maximalist objectives like ending foreign occupations and challenging the very foundation of theWestphalian system with the establishment of a “caliphate.” We should not let these claims—which often reflect the perspective of scholars and governments rather than the perpetrators and victims themselves—mislead us into thinking that terrorism is an ineffective tactic with singular and unattainable goals. Terrorism can in fact be effective in a number of ways overlooked by academics and policymakers, all of which are relevant for understanding the intentions and impact of groups that utilize terrorism—including ISIS. Under certain conditions, terrorism can strengthen organizations that employ it (as with the IRA); drive the death or spread of ideas (as with attacks on Sony’s The Interview and Charlie Hebdo); and provoke disruptive population flows that remake states and societies (as with Al-Qaeda in Iraq and Shia militias in Baghdad). As observers try to anticipate whether the terrorist attacks of ISIS and other organizations will succeed (and how to prevent them from doing so), considering such outcomes should be paramount, lest policymakers not see the forest for the trees.

7/7 Attacks and the New Type of Terrorism

Ten years after the 7/7 London bombings, ISIS has once again transformed the terrorist threat to the West.
Ten years ago today, four young British men strapped bombs to their backs and wrought terror and carnage on London’s transport network. This was the worst terrorist attack that Britain had ever witnessed.

As the smoke and debris cleared, the event was quickly and presciently branded 7/7—Britain’s own pivotal 9/11, a foreboding allusion to an event that would change our security landscape forever. Britain was, of course, no stranger to terrorism, having finally put to rest the violence of the Troubles less than a decade earlier. Indeed, more than a hundred years before the 7/7 attacks, the very same London Underground transport network had also suffered a wave of terrorist bombings at the hands of another group of young violent radicals inspired by a heady religo-political cause. They were the infamous Irish Republican Brotherhood who equally shocked and appalled contemporary audiences at the time, with their Fenian dynamite campaign of 1881-85.

John McCain Accuses President Obama of Failing to Stop ISIS


Sen. John McCain, R-Az., lashed out at the Obama administration's anti-ISIS strategy on Tuesday, saying it was failing and risked leaving the next president with a "disaster."

McCain, chairman of the Senate Armed Services Committee, made the remarks to Defense Secretary Ash Carter in a hearing on ISIS, the terror group that is trying to establish an Islamic caliphate in Syria and Iraq and has inspired attacks elsewhere in the Middle East, Africa and the West.

"Our means and our current level of effort are not aligned with our ends," McCain said. "That suggests we are not winning, and when you are not winning in war, you are losing."
U.S. Secretary of Defense Ashton Carter answered questions from committee chairman Sen. John McCain during a hearing held by the Senate Armed Services Committee. Win McNamee / Getty Images

Is Iraq An Artificial State? Princeton's Sara Pursley

July 7, 2015

Whenever Iraq runs into trouble people start talking about it being an artificial state. The argument goes that the European powers after World War I divided up the Middle East into spheres of influence with the Sykes-Picot treaty, which ignored local interests causing the present day problems in Iraq and the region. This is an ahistorical argument as Sykes-Picot did not create the modern borders. Princeton’s Sara Pursley dissected this history in a two part series for Jadaliyya entitled “Lines Drawn on an Empty Map: Iraq’s Borders and the Legend of the Artificial State.” This is an interview with Pursley to discuss how exactly Iraq’s borders were determined, and how that has been interpreted.

1. After the fall of Mosul the Islamic State talked about ending the 1916 Skyes-Picot agreement with many western commentators agreeing with them. This deal was made between the French and English after World War I to create spheres of influence in the Middle East. Many point to that as the creation of the modern borders of Iraq and other countries in the region. You dispute that story. What exactly did Sykes –Picot look like?

America Punts on Nuclear Security in Asia

"Better locks are not what is most needed now, especially if they serve to legitimize the accumulation of ever larger quantities of plutonium."

There are hearings in Congress this week dealing with two agreements that set the terms for nuclear cooperation with China and South Korea. They could well bear upon our next strategic surprise: plutonium leaking from the energy sector of some country and ending up in a terrorist’s nuclear weapon.

As the Obama administration frets over Russia’s apparent decision not to attend next year’s Nuclear Security Summit, the real issue is the U.S. failure to address the threat posed by growing stockpiles of plutonium. Indeed, the president’s approach to nuclear security may well make matters worse.

America's Trillion-Dollar F-35: Lethal Super Weapon or Super Bust?

July 7, 2015

Last week there was a real flurry in the press and the blogosphere about the performance of the F-35 Joint Strike Fighter. Or, more accurately, about the lack of maneuver performance in a trial against an F-16—a design that dates back to the 1970s. War is Boring has been running hard on the issue, with writer David Axe—a frequent critic of the F-35—leading the charge. The story was picked up by the mainstream press, including an ‘exclusive’ in The Australian today.

The story is based on a leaked test pilot’s report (PDF) of an air-to-air exercise in January this year. (Note: the report is marked Export Controlled Information FOUO. For ASPI Strategist readers inside government, this is one to access at home.) The crux of the story is that the F-35 was beaten because it couldn’t outturn the F-16, and suffered from “energy disadvantage for every engagement.” To those who have been strident F-35 critics for years, such as Aviation Week’s Bill Sweetman, this was the news they’d been expecting.

Angela's Ashes: How Merkel Failed Greece and Europe

By Peter Müller and René Pfister
Angela Merkel relishes her reputation as queen of Europe. But she hasn't learned how to use her power, instead allowing a bad situation to heat up to the boiling point. Her inability to take unpopular stances badly exacerbated the Greek crisis.

Angela Merkel was already leaving for the weekend when she received the call that would change everything. The chancellor had just had a grueling day, spending all of it in meetings with Greek Prime Minister Alexis Tsipras -- sometimes as part of a larger group, and others with only him and French President François Hollande.

They discussed debt restructuring and billions of euros in additional investments. When it comes to issues important to him, Tsipras can be exhaustingly stubborn. In the end, though, Merkel was left with the feeling the EU summit was the milestone that could quite possibly mark a turn for the better.

The next Greek crisis: gas shortages

The Greek government’s hunger for cash has stripped the state-run gas company of most of its reserves, raising doubts about how long the country can pay for imports.

The DEPA gas company, along with all other public companies and pension funds, was ordered to place its cash reserves with the country’s central bank in April. Whether the government decides to replenish DEPA’s reserves remains unclear, but the government has already defaulted on a repayment to the International Monetary Fund and is, by all accounts, almost out of money.

As European leaders restart talks Tuesday on a potential third bailout package for Greece, DEPA isn’t sure of what it will do next. If its coffers aren’t replenished soon, DEPA may have to ask its largest gas seller, Russia’s Gazprom, to revisit its terms of delivery.

“Nobody knows at this moment, nobody can give you the answer now,” a source in the company said Monday. “Try to ask next week, because all of us have to see what happens this week. This week is very important.”

New Jordanian Border Surveillance System Becomes Operational

July 9, 2015

Raytheon helps bolster Jordan’s border security

DULLES, Va., July 8 (UPI) – A Raytheon-built system to help Jordan secure its borders with strife-torn Iraq and Syria is now operational.

The system, worth $79 million, was funded by the U.S. Defense Threat Reduction Agency and achieved operational capability three months ahead of schedule, Raytheon said. It includes key command, control, communications, and surveillance, or C3/S, capabilities.

“Raytheon delivers border security capabilities across the globe that help protect countries from a wide range of threats,” Dave Wajsgras, president of Raytheon Intelligence, Information and Services said at a ribbon-cutting ceremony at the Border Security Operations Center in Jordan. “This work is vital in the Middle East, and we are particularly pleased that we were able to deliver these critical security capabilities to Jordan ahead of schedule.”

The ceremony was attended by His Royal Highness Prince Faisal bin Hussein, the U.S. Ambassador to Jordan, DTRA leaders, Raytheon executives and other Jordanian officials.

New Threat Unleashed on the Internet: Hacking Team Says It Has Lost Control of Its Spyware System

July 8, 2015

Surveillance Company Loses Control of Flagship Spy Program

LONDON — Italian surveillance company Hacking Team said Wednesday that it had lost control of its custom-built spy software, unleashing a new threat onto the Internet and depriving the company of its top selling point.

In a statement, Hacking Team said it believed anyone could now deploy its RCS software “against any target of their choice.”

“We believe this is an extremely dangerous situation,” the company said.

Hacking Team’s statement is confirmation that its program’s source code was in the mountain of data pilfered when the company was breached Sunday night. That means that the program — once limited to paying customers — is available to just about anyone who can pick it up and knows how to use it.

The Biggest Myth about North Korea

A million lives and a trillion dollars. Experts in the 1990s predicted that the costs of war with North Korea would reach at least this magnitude. While this is probably true of a worst-case scenario, and estimates would doubtless be even higher today, pundits and officials alike have allowed it to cloud reasoned judgment about North Korea. A strawman argument has taken hold that any actions against North Korea will lead to cataclysmic death and destruction.

This is wrong. Alliance military actions against North Korea will not automatically trigger a nuclear holocaust or the annihilation of Seoul. Fear, risk aversion and a misunderstanding of North Korea have allowed the most dangerous scenario to be conflated with the most likely one. Rather than being paralyzed by the fact that anything is possible, alliance policy and military planning needs to recognize a simple reality: no matter what North Korea threatens, it will assiduously seek to avoid war-triggering actions. North Korea’s own historical behavior and its widely presumed goal of regime survival confirms as much.

Resignation Casts Further Doubts Over Khmer Rouge Tribunal in Cambodia

July 09, 2015
The international co-investigating judge at the Khmer Rouge tribunal, Mark Harmon, has resigned casting further doubts over whether fresh trials will proceed at the United Nations-backed war crimes court, now in its ninth year.
Harmon had built himself an enormous reputation for hard work and dedication in his pursuit of justice for the victims of Pol Pot’s regime and attracted his fair share of critics who claimed he had expanded the remit of the tribunal beyond the court’s initial scope.

He said it was “with considerable regret that I have tendered my resignation, for strictly personal reasons.”

“It was an honor to have been selected to serve … along with my international and Cambodian colleagues, to pursue justice on behalf of the many victims who suffered at the hands of the Khmer Rouge,” he said.

The resignation will become effective once his successor has been sworn into office.

Are the BRICS Building a Non-Western Concert of Powers?

This week’s gathering of the leaders marks the transformation of the BRICS club into a nascent non-Western concert of major powers that focuses on their priorities.

A decade after the Kremlin pinched the BRICS idea from Goldman Sachs and reinvented it as a diplomatic club for emerging regional powers to challenge Western dominance of global economic institutions, the skeptics have been proven wrong. These BRICS are not made with straw and have not fractured from their considerable diversity or economic ups and downs. This week’sgathering of the leaders of Brazil, Russia, India, China, and South Africa for their 7th BRICS Summit in Ufa, Russia shows more than the fact that Russia is not isolated by Western sanctions. This summit marks the transformation of the BRICS club into a nascent non-Western concert of major powers that focuses on their priorities, not those of Washington or Brussels. Concerts are known to involve deep international cooperation among major powers, but they are distinct from alliances and don’t eliminate competitive power politics.

How To Break Into theCIA’s Cloud on Amazon

Looking to steal America’s spy data from Amazon? Hope you’re up for a challenge. 

Last year, Amazon Web Services surprised a lot of people in Washington by beating out IBM for a $600 million contract to provide cloud services and data storage to the CIA and the broader intelligence community. But more money can bring more problems. Amazon, in essence, has turned itself into the most valuable data target on the planet. The cloud is completely separate from the rest of the Internet and heavy duty encryption is keeping the spies’ secrets relatively safe from outsiders — but what about an attack from within?

Patrick Tucker is technology editor for Defense One. He’s also the author of The Naked Future: What Happens in a World That Anticipates Your Every Move? (Current, 2014). Previously, Tucker was deputy editor for The Futurist for nine years. Tucker has written about emerging technology in Slate, The ...Full Bio

Will the Burqa Be Banned in Berlin?

JULY 6, 2015

BERLIN — IN the last few weeks, many Germans have come to know a young Muslim blogger in Berlin named Betul Ulusoy. Having obtained a law degree, Ms. Ulusoy applied for several jobs in Berlin’s city administration as a trainee, and was hired for a post in the city district of Neukölln.

But when she came to sign the contract in a head scarf, she says, she was informed that the administration would have to reconsider the decision because of the city’s “neutrality law.” Like several other German states, Berlin requires its employees in certain positions by law to refrain from wearing religious symbols or dressing in a way that makes them recognizable as members of a certain denomination.

Uncowed, she took her story public and set off a fierce debate about the place of the head scarf in German society.

Someone Just Leaked The Price List for Cyberwar

JULY 6, 2015

A controversial cyber arms dealer gets hacked, revealing sales to the US military and less savory customers around the world.

On Monday, the Italian company Hacking Team, which produces secret cyber weapons for law-enforcement and government clients around the world, became the victim of an embarrassing public disclosure: more than 400 gigabytes of internal data made its way online in a widely shared torrent file. The group Reporters Without Borders has labeled Hacking Team “an enemy of the Internet,” for the surveillance tools and malware products it provides, with little transparency or accountability, to governments. News of the disclosure brought forth the sounds of schadenfreude from the privacy and tech communities.

So far, the exposed documents have already revealed a few key things about the group, its clients, and the business of cyberwar for hire.

The Singapore Military’s New Armored Vehicle

On July 8, Singapore’s defense minister Ng Eng Hen commissioned new armored vehicles at a ceremony in the city-state.
The new Peacekeeper Protected Response Vehicle (PRV) was jointly developed by the Army and the Defense Science and Technology Agency, a body which supports Singapore Armed Forces (SAF) servicemen.

According to a statement released by the Ministry of Defense (MINDEF), seen by The Diplomat, The Peacekeeper is a marked improvement on the V200 armored vehicles which it is replacing. First, it boasts a remote control weapon system with three different weapons configurations – a 40mm automatic grenade launcher, a 12.7 mm heavy machine gun, and a 7.62mm coaxial machine gun. A remote control weapon system is important because it allows crew to engage targets accurately even when the vehicle is on the move.

US and Vietnam Should Boost Defense, Economic Ties, Says Communist Party Leader

General Secretary urges both sides to advance their relationship in a major policy speech.

The United States and Vietnam should look to boost their defense and economic ties, the leader of the Vietnamese Communist Party said today in a policy speech delivered in Washington, D.C.

Nguyen Phu Trong, the General Secretary of the Communist Party of Vietnam, told an audience at the Center for Strategic and International Studies, a Washington, D.C.-based think tank, that he hoped that Washington and Hanoi could advance their relationship further as they commemorate the 20th anniversary of the normalization of their ties.

“We have much to do,” Trong said in an address as part of his historic visit to the United States – the first of its kind since normalization – which included a meeting with U.S. President Barack Obama yesterday.

6 Most Powerful Armies of All Time

“Power grows out of the barrel of a gun.”

In an anarchical system like international relations, military power is the ultimate form of currency. A state may have all the culture, art, philosophy, and glitter and glory in the world, but it’s all for naught if the country doesn’t have a powerful military to defend itself. Mao Zedong put it bluntly when he stated: “power grows out of the barrel of a gun.”

Of all the types of military power, armies are arguably the most important for the simple fact that people live on land, and are likely to continue doing so in the future. As the famous political scientist John J. Mearsheimer has noted: “Armies, along with their supporting air and naval forces, are the paramount form of military power in the modern world.”