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The Crisis of the Middle Class and American Power – Stratfor

This article from George Friedman of Stratfor is a follow up to his recent one on Europe’s current problems, especially unemployment.

The  Crisis of the Middle Class and American Power is republished with permission  of Stratfor.”

Read more:  The Crisis of the Middle Class and American Power | Stratfor

By George Friedman Founder  and Chief Executive Officer, Stratfor,

Last week I wrote about the crisis of unemployment in Europe. I  received a great deal of feedback, with Europeans agreeing that this is the core  problem and Americans arguing that the United States has the same problem,  asserting that U.S. unemployment is twice as high as the government’s  official unemployment rate. My counterargument is that unemployment in the  United States is not a problem in the same sense that it is in  Europe because it does not pose a geopolitical threat. The United States  does not face political disintegration from unemployment, whatever the number  is. Europe might.

At the same time, I would agree that the United  States faces a potentially significant but longer-term geopolitical problem  deriving from economic trends. The threat to the United States is the persistent  decline in the middle class’ standard of living, a problem that is reshaping the  social order that has been in place since World War II and that, if it  continues, poses a threat to American power.

The Crisis of the American Middle Class

The median household income of Americans in 2011 was $49,103. Adjusted for  inflation, the median income is just below what it was in 1989 and is $4,000  less than it was in 2000. Take-home income is a bit less than $40,000 when  Social Security and state and federal taxes are included. That means a monthly  income, per household, of about $3,300. It is urgent to bear in mind that half  of all American households earn less than this. It is also vital to consider not  the difference between 1990 and 2011, but the difference between the 1950s and  1960s and the 21st century. This is where the difference in the meaning of  middle class becomes most apparent.

In the 1950s and 1960s, the median income allowed you to live with a single  earner — normally the husband, with the wife typically working as  homemaker — and roughly three children. It permitted the purchase of modest  tract housing, one late model car and an older one. It allowed a driving  vacation somewhere and, with care, some savings as well. I know this because my  family was lower-middle class, and this is how we lived, and I know many others  in my generation who had the same background. It was not an easy life and many  luxuries were denied us, but it wasn’t a bad life at all.

Someone earning the median income today might just pull this off,  but it wouldn’t be easy. Assuming that he did not have college loans to pay off  but did have two car loans to pay totaling $700 a month, and that he could buy  food, clothing and cover his utilities for $1,200 a month, he would have $1,400  a month for mortgage, real estate taxes and insurance, plus some funds for  fixing the air conditioner and dishwasher. At a 5 percent mortgage rate, that  would allow him to buy a house in the $200,000 range. He would get a refund back  on his taxes from deductions but that would go to pay credit card bills he had  from Christmas presents and emergencies. It could be done, but not  easily and with great difficulty in major metropolitan areas. And if his  employer didn’t cover health insurance, that $4,000-5,000 for three or four  people would severely limit his expenses. And of course, he would have to have  $20,000-40,000 for a down payment and closing costs on his home. There would be  little else left over for a week at the seashore with the kids.

And this is for the median. Those below him — half of all households —  would be shut out of what is considered middle-class life, with the house, the  car and the other associated amenities. Those amenities shift upward on the  scale for people with at least $70,000 in income. The basics might be available  at the median level, given favorable individual circumstance, but below that  life becomes surprisingly meager, even in the range of the middle class and  certainly what used to be called the lower-middle class.

The Expectation of Upward Mobility

I should pause and mention that this was one of the fundamental causes of the 2007-2008 subprime lending  crisis. People below the median took out loans with deferred interest with  the expectation that their incomes would continue the rise that was traditional  since World War II. The caricature of the borrower as irresponsible misses the  point. The expectation of rising real incomes was built into the American  culture, and many assumed based on that that the rise would resume in five  years. When it didn’t they were trapped, but given history, they were not making  an irresponsible assumption.

American  history was always filled with the assumption that upward mobility was  possible. The Midwest and West opened land that could be exploited, and the  massive industrialization in the late 19th and early 20th centuries opened  opportunities. There was a systemic expectation of upward mobility built into  American culture and reality.

The Great Depression was a shock to the system, and it wasn’t solved by the  New Deal, nor even by World War II alone. The next drive for upward mobility  came from post-war programs for veterans, of whom there were more than 10  million. These programs were instrumental in creating post-industrial America,  by creating a class of suburban professionals. There were three programs that  were critical:

  1. The GI Bill, which allowed veterans to go to college after the war, becoming  professionals frequently several notches above their parents.
  2. The part of the GI Bill that provided federally guaranteed mortgages to  veterans, allowing low and no down payment mortgages and low interest rates to  graduates of publicly funded universities.
  3. The federally funded Interstate Highway System, which made access to land  close to but outside of cities easier, enabling both the dispersal of  populations on inexpensive land (which made single-family houses possible) and,  later, the dispersal of business to the suburbs.

There were undoubtedly many other things that contributed to this, but these  three not only reshaped America but also created a new dimension to the upward  mobility that was built into American life from the beginning. Moreover, these  programs were all directed toward veterans, to whom it was acknowledged a debt  was due, or were created for military reasons (the Interstate Highway System was  funded to enable the rapid movement of troops from coast to coast, which during  World War II was found to be impossible). As a result, there was consensus  around the moral propriety of the programs.

The subprime fiasco was rooted in the failure to understand that the  foundations of middle class life were not under temporary pressure but something  more fundamental. Where a single earner could support a middle class family in  the generation after World War II, it now took at least two earners.  That meant that the rise of the double-income family corresponded with the  decline of the middle class. The lower you go on the income scale, the more  likely you are to be a single mother. That shift away from social pressure for  two parent homes was certainly part of the problem.

Re-engineering the Corporation

But there was, I think, the crisis of the modern corporation. Corporations  provided long-term employment to the middle class. It was not unusual to spend  your entire life working for one. Working for a corporation, you received yearly  pay increases, either as a union or non-union worker. The middle class had both  job security and rising income, along with retirement and other benefits. Over  the course of time, the culture of the corporation diverged from the realities,  as corporate productivity lagged behind costs and the corporations became more  and more dysfunctional and ultimately unsupportable. In addition, the  corporations ceased focusing on doing one thing well and instead became  conglomerates, with a management frequently unable to keep up with the  complexity of multiple lines of business.

For these and many other reasons, the corporation became increasingly  inefficient, and in the terms of the 1980s, they had to be re-engineered —  which meant taken apart, pared down, refined and refocused. And the  re-engineering of the corporation, designed to make them agile, meant that there  was a permanent revolution in business. Everything was being reinvented. Huge  amounts of money, managed by people whose specialty was re-engineering  companies, were deployed. The choice was between total failure and radical  change. From the point of view of the individual worker, this frequently meant  the same thing: unemployment. From the view of the economy, it meant the  creation of value whether through breaking up companies, closing some of them or  sending jobs overseas. It was designed to increase the total efficiency, and it  worked for the most part.

This is where the disjuncture occurred. From the point of view of the  investor, they had saved the corporation from total meltdown by redesigning it.  From the point of view of the workers, some retained the jobs that they would  have lost, while others lost the jobs they would have lost anyway. But the  important thing is not the subjective bitterness of those who lost their jobs,  but something more complex.

As the permanent corporate jobs declined, more people were starting over.  Some of them were starting over every few years as the agile corporation grew  more efficient and needed fewer employees. That meant that if they got new jobs  it would not be at the munificent corporate pay rate but at near entry-level  rates in the small companies that were now the growth engine. As these companies  failed, were bought or shifted direction, they would lose their jobs and start  over again. Wages didn’t rise for them and for long periods they might be  unemployed, never to get a job again in their now obsolete fields, and certainly  not working at a company for the next 20 years.

The restructuring of inefficient companies did create substantial value, but  that value did not flow to the now laid-off workers. Some might flow to the  remaining workers, but much of it went to the engineers who restructured the  companies and the investors they represented. Statistics reveal that, since 1947  (when the data was first compiled), corporate profits as a percentage of gross  domestic product are now at their highest level, while wages as a percentage of  GDP are now at their lowest level. It was not a question of making the economy  more efficient — it did do that — it was a question of where the value  accumulated. The upper segment of the wage curve and the investors continued to  make money. The middle class divided into a segment that entered the  upper-middle class, while another faction sank into the lower-middle class.

American society on the whole was never egalitarian. It always accepted that  there would be substantial differences in wages and wealth. Indeed, progress was  in some ways driven by a desire to emulate the wealthy. There was also the  expectation that while others received far more, the entire wealth structure  would rise in tandem. It was also understood that, because of skill or luck,  others would lose.

What we are facing now is a structural shift, in which the middle class’  center, not because of laziness or stupidity, is shifting downward in terms of  standard of living. It is a structural shift that is rooted in social change  (the breakdown of the conventional family) and economic change (the decline of  traditional corporations and the creation of corporate agility that places  individual workers at a massive disadvantage).

The inherent crisis rests in an increasingly efficient economy and a  population that can’t consume what is produced because it can’t afford the  products. This has happened numerous times in history, but the United States,  excepting the Great Depression, was the counterexample.

Obviously, this is a massive political debate, save that political debates  identify problems without clarifying them. In political debates, someone must be  blamed. In reality, these processes are beyond even the government’s ability to  control. On one hand, the traditional corporation was beneficial to the workers  until it collapsed under the burden of its costs. On the other hand, the  efficiencies created threaten to undermine consumption by weakening the  effective demand among half of society.

The Long-Term Threat

The greatest danger is one that will not be faced for decades but that is  lurking out there. The United States was built on the assumption that a rising  tide lifts all ships. That has not been the case for the past generation, and  there is no indication that this socio-economic reality will change any time  soon. That means that a core assumption is at risk. The problem is that social  stability has been built around this assumption — not on the assumption that  everyone is owed a living, but the assumption that on the whole, all benefit  from growing productivity and efficiency.

If we move to a system where half of the country is either stagnant or  losing ground while the other half is surging, the social fabric of the United  States is at risk, and with it the massive global power the United States has  accumulated. Other superpowers such as Britain or Rome did not have  the idea of a perpetually improving condition of the middle class as a core  value. The United States does. If it loses that, it loses one of the pillars of  its geopolitical power.

The left would argue that the solution is for laws to transfer wealth from  the rich to the middle class. That would increase consumption but, depending on  the scope, would threaten the amount of capital available to investment by the  transfer itself and by eliminating incentives to invest. You can’t invest what  you don’t have, and you won’t accept the risk of investment if the payoff is  transferred away from you.

The agility of the American corporation is critical. The right will argue  that allowing the free  market to function will fix the problem. The free market doesn’t  guarantee social outcomes, merely economic ones. In other words, it may give  more efficiency on the whole and grow the economy as a whole, but by itself it  doesn’t guarantee how wealth is distributed. The left cannot be indifferent to  the historical consequences of extreme redistribution of wealth. The right  cannot be indifferent to the political consequences of a middle-class life  undermined, nor can it be indifferent to half the population’s inability to buy  the products and services that businesses sell.

The most significant actions made by governments tend to be unintentional.  The GI Bill was designed to limit unemployment among returning serviceman; it  inadvertently created a professional class of college graduates. The VA loan was  designed to stimulate the construction industry; it created the basis for  suburban home ownership. The Interstate Highway System was meant to move troops  rapidly in the event of war; it created a new pattern of land use that was  suburbia.

It is unclear how the private sector can deal with the problem of pressure on  the middle class. Government programs frequently fail to fulfill even minimal  intentions while squandering scarce resources. The United States has been a  fortunate country, with solutions frequently emerging in unexpected ways.

It would seem to me that unless the United States gets lucky again, its  global dominance is in jeopardy. Considering its history, the United States can  expect to get lucky again, but it usually gets lucky when it is frightened. And  at this point it isn’t frightened but angry, believing that if only its own  solutions were employed, this problem and all others would go away. I am arguing  that the conventional solutions offered by all sides do not yet grasp the  magnitude of the problem — that the foundation of American society is at risk  — and therefore all sides are content to repeat what has been said before.

People who are smarter and luckier than I am will have to craft the solution.  I am simply pointing out the potential consequences of the problem and the  inadequacy of all the ideas I have seen so far.

Read more:  The Crisis of the Middle Class and American Power | Stratfor

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Europe in 2013: A Year of Decision – Stratfor

 

By George Friedman Founder  and Chief Executive Officer Stratfor

The end of the year always prompts questions about what the most important  issue of the next year may be. It’s a simplistic question, since every year sees  many things happen and for each of us a different one might be important. But it  is still worth considering what single issue could cause the world to change  course. In my view, the most important place to watch in 2013 is Europe.

Taken as a single geographic entity, Europe has the largest economy in the  world. Should it choose to do so, it could become a military  rival to the United States. Europe is one of the pillars of the global  system, and what happens to Europe is going to define how the world works. I  would argue that in 2013 we will begin to get clarity on the future of  Europe.

The question is whether the European Union will stabilize itself, stop  its fragmentation and begin preparing for more integration and expansion.  Alternatively, the tensions could intensify within the European Union, the  institutions could further lose legitimacy and its component  states could increase the pace with which they pursue their own policies,  both domestic and foreign.

The Embattled European Project

It has been more than four years since the crisis of 2008 and about two years  since the problems spawned by 2008 generated a sovereign debt crisis and a  banking crisis in Europe. Since that time, the crisis has turned from a  financial to an economic crisis, with Europe moving into recession and  unemployment across the Continent rising above 10 percent. More important, it  has been a period in which the decision-making apparatus created at the founding  of the European Union has been unable to create policy solutions that were both  widely acceptable and able to be implemented. EU countries have faced each other  less as members of a single political entity than as individual  nation-states pursuing their own national interests in what has become  something of a zero-sum game, where the success of one has to come at the  expense of another.

This can be seen in two ways. The first dimension has centered on which  countries should bear the financial burden of stabilizing the eurozone. The  financially healthier countries wanted the weaker countries to bear the burden  through austerity. The weaker countries wanted the stronger countries to bear  the burden through continued lending despite the rising risk that the loans  will not be fully repaid. The result has been constant attempts to  compromise that have never quite worked out. The second dimension has been  class. Should the burden be borne by the middle and lower classes by reducing  government expenditures that benefit them? Or by the elites through increased  taxation and regulation?

When you speak with Europeans who support the idea that Europe is in the  process of solving its problems, the question becomes: What problem are they  solving? Is it the problem of the banks? The problem of unemployment? Or the  problem of countries’ inability to find common solutions? More to the point,  European officials have been working on this problem for years now, and they are  among the best and brightest in the world. Their inability to craft a solution  is not rooted in a lack of good ideas or the need to think about the problem  more. It is rooted in the fact that there is no political agreement on who will  pay the price geographically and socially. The national tensions and the class  tensions have prevented the crafting of a solution that can be both agreed upon  and honored.

If the Europeans do not generate that sort of solution in 2013, it is time to  seriously doubt whether a solution is possible and therefore to think about the  future of Europe without the European Union or with a very weakened one. If,  however, Europe does emerge with a plan that has general support and momentum  behind it, then we might say that Europe is beginning to emerge from its crisis,  and that, in turn, would be the single most important thing that happens in  2013.

At this point, a reasonable person will argue that I am ignoring the United  States, which has different but equally significant economic problems and is  also unable to generate consensus on how to solve them, as we have seen during  the recent “fiscal cliff” affair, which will have many more iterations. But as  valid as the comparison is on the financial level, it is not valid on the  political level. The  United States does not face the dissolution of the republic if it follows  contradictory policies. The United States is more than two centuries old and has  weathered far worse problems, including the Civil War and the Great Depression.  The European Union is only about 20 years old in its current form, and this is  its first significant crisis. The consequences of mismanaging the U.S. financial  system are significant to say the least. But unlike Europe, the consequences are  not an immediate existential threat.

The Other Costs of the Crisis

It is the political dimension that has become the most important, not the  financial. It may well be that the European Union is in the process of dealing  with its banking problems and might avoid other sovereign debt issues, but the  price it has paid is both a recession and, much more serious, unemployment at a  higher rate than in the United States overall, and enormously higher in some  countries.

We can divide the European Union into three categories by measuring it  against the U.S. unemployment rate, which stands at about 7.7 percent. There are  five EU countries significantly below that rate (Austria, Luxembourg,  Germany, Netherlands and Malta). There are seven countries with unemployment  around the U.S. rate (Romania, Czech Republic, Belgium, Denmark, Finland, the  United Kingdom and Sweden). The remaining 15 countries  are above U.S. unemployment levels; 11 have unemployment rates between  10 and 17 percent, including France at 10.7 percent, Italy at 11.1 percent,  Ireland at 14.7 percent and Portugal at 16.3 percent. Two others are  staggeringly higher — Greece at 25.4 percent and Spain at 26.2 percent. These  levels are close to the unemployment rate in the United States at the height of  the Great Depression.

For advanced industrialized countries — some of the most  powerful in Europe, for that matter — these are stunning numbers. It is  important to consider what these numbers mean socially. Bear in mind that the  unemployment rate goes up for younger workers. In Italy, Portugal, Spain  and Greece, more than a third of the workforce under 25 is reportedly  unemployed. It will take a generation to bring the rate down to an  acceptable level in Spain and Greece. Even for countries that remain at about 10  percent for an extended period of time, the length of time will be substantial,  and Europe is still in a recession.

Consider someone unemployed in his 20s, perhaps with a university degree. The  numbers mean that there is an excellent chance that he will never have the  opportunity to pursue his chosen career and quite possibly will never get a job  at the social level he anticipated. In Spain and Greece, the young — and the  old as well — are facing personal catastrophe. In the others, the percentage  facing personal catastrophe is lower, but still very real. Also remember  that unemployment does not affect just one person. It affects the immediate  family, parents and possibly other relatives. The effect is not only financial  but also psychological. It creates a pall, a sense of failure and dread.

It also creates unrooted young people full of energy and anger. Unemployment  is a root of anti-state movements on the left and the right. The extended and  hopelessly unemployed have little to lose and think they have something to gain  by destabilizing the state. It is hard to quantify what level of unemployment  breeds that sort of unrest, but there is no doubt that Spain and Greece are in  that zone and that others might be.

It is interesting that while Greece has already developed a radical right  movement of some size, Spain’s political system, while experiencing stress  between the center and its autonomous regions, remains  relatively stable. I would argue that that stability is based on a belief  that there will be some solution to the unemployment situation. Its full  enormity has not yet sunk in, nor the fact that this kind of unemployment  problem is not fixed quickly. It is deeply structural. The U.S.  unemployment rate during the Great Depression was mitigated to a limited degree  by the New Deal but required the restructuring of World War II to really  address.

This is why 2013 is a critical year for Europe. It has gone far to solve the  banking crisis and put off a sovereign debt crisis. In order to do so, it has  caused a serious weakening of the economy and created massive unemployment in  some countries. The unequal distribution of the cost, both nationally and  socially, is the threat facing the European Union. It isn’t merely a question of  nations pulling in different directions, but of political movements emerging,  particularly from the most economically affected sectors of society, that will  be both nationalist and distrustful of its own elites. What else can happen in  those countries that are undergoing social catastrophes? Even if the  disaster is mitigated to some degree by the shadow economy and  emigration reducing unemployment, the numbers range from the painful to the  miserable in 14 of Europe’s economies.

Europe’s Crossroads

The European Union has been so focused on the financial crisis that it is not  clear to me that the unemployment reality has reached Europe’s officials and  bureaucrats, partly because of a growing split in the worldview of the European  elites and those whose experience of Europe has turned bitter. Partly, it has  been caused by the fact of geography. The countries with low unemployment tend  to be in Northern Europe, which is the heart of the European Union, while those  with catastrophically high unemployment are on the periphery. It is easy to  ignore things far away.

But 2013 is the year in which the definition of the European problem must  move beyond the financial crisis to the social consequences of that crisis.  Progress, if not a solution, must become visible. It is difficult to see how  continued stagnation and unemployment at these levels can last another year  without starting to generate significant political opposition that will create  governments, or force existing governments, to tear at the fabric of Europe.

That fabric is not old enough, worn enough or tough enough to face the  challenges. People are not being asked to die on a battlefield for the European  Union but to live lives of misery and disappointment. In many ways that is  harder than being brave. And since the core promise of the European Union was  prosperity, the failure to deliver that prosperity — and the delivery of  poverty instead, unevenly distributed — is not sustainable. If Europe is in  crisis, the world’s largest economy is in crisis, political as well as  financial. And that matters to the world perhaps more than anything else.

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The Benghazi Report and the Diplomatic Security Funding Cycle – Stratfor

The  Benghazi Report and the Diplomatic Security Funding Cycle is republished  with permission of Stratfor.”

By Scott Stewart Vice President of Analysis

On Dec. 18, the U.S. State Department’s Accountability Review Board released  an unclassified version of its investigation into the  Sept. 12 attack on the U.S. Consulate in Benghazi, Libya. U.S. Ambassador to  Libya Christopher Stevens and three other Americans were killed in the attack,  so the report was widely anticipated by the public and by government officials  alike.

Four senior State Department officials have been reassigned to other duties  since the report’s release. Among them were the assistant secretary of state for  diplomatic security; two of his deputy assistant secretaries, including the  director of the Diplomatic Security Service, the department’s most senior  special agent; and the deputy assistant secretary responsible for Libya in the  State Department’s Bureau of Near Eastern Affairs.

The highly critical report and the subsequent personnel reassignments are not  simply a low watermark for the State Department; rather, the events following  the attack signify another  phase in the diplomatic security funding cycle. The new phase will bring  about a financial windfall for the State Department security budgets, but  increased funding alone will not prevent future attacks from occurring. After  all, plenty of attacks have occurred following similar State Department  budgetary allocations in the past. Other important factors therefore must be  addressed.

Predictable Inquiries

The cycle by which  diplomatic security is funded begins as officials gradually cut spending on  diplomatic security programs. Then, when major security failures inevitably  beset those programs, resultant public outrage compels officials to create a  panel to investigate those failures.

The first of these panels dates back to the mid-1980s, following attacks  against U.S. facilities in Beirut and Kuwait and the systematic bugging of the  U.S. Embassy in Moscow. These security lapses led to the formation of the  Secretary of State’s Advisory Panel on Overseas Security, chaired by former  Deputy CIA Director Adm. Bobby Inman. The law that passed in the wake of the  Inman Commission came to be known as the Omnibus Diplomatic Security and  Antiterrorism Act of 1986, which requires that an accountability review board be  convened following major security incidents.

There are a few subsequent examples of these panels. Former Chairman of the  U.S. Joint Chiefs of Staff Adm. William Crowe chaired an Accountability Review  Board following the bombings of U.S. embassies in East Africa in 1998. And after  the Benghazi attacks, an Accountability Review Board was chaired by former U.S.  Ambassador Thomas Pickering. The Dec. 18 report was the findings of the  Pickering board.

Predictably, the review boards, including Pickering’s, always conclude that  inadequate funding and insufficient security personnel are partly to blame for  the security breaches. In response to the reports, Congress appropriates more  money to diplomatic security programs to remedy the problem. Over time, funds  are cut, and the cycle begins anew.

Funding can be cut for several reasons. In times of financial austerity,  Congress can more easily cut the relatively small foreign affairs budget than it  can entitlement benefits budgets. Cuts to the overall State Department budget  generally result in cuts for security programs.

Moreover, rivalries among the various State Department entities can affect  spending cuts. The Diplomatic Security Service’s budget falls under the main  State Department budget, so senior diplomats, rather than Diplomatic Security  Service agents, represent the agency’s interests on Capitol Hill. Some within  the security service do not believe that senior diplomats have their best  interests at heart when making the case for their budgets — at least until a  tragedy occurs and Congressional hearings are held to air these problems. For  their part, others in the department resent the Diplomatic Security Service for  the large budgetary allocations it receives after a security failure.

More than a Matter of Funding

With Congress and the presumed next Secretary of State John Kerry now calling  for increased spending on diplomatic security, the financial floodgates are  about to reopen. But merely throwing money at the problems uncovered by the  accountability review boards will not be enough to solve those problems. Were  that the case, the billions of dollars allocated to diplomatic security in the  wake of the Inman and Crowe commission reports would have sufficed.

Of course, money can be useful, but injecting large sums of it into the  system can create problems if the money provided is too much for the bureaucracy  to efficiently metabolize. Government managers tend to spend all the money  allocated to them — sometimes at the expense of efficiency — under a “use it  or lose it” mentality. Since there is no real incentive for them to perform  under budget, managers in a variety of U.S. government departments spend massive  amounts of money at the end of each fiscal year. The same is true of diplomatic  security programs when they are flush with cash. But the inevitable reports of  financial waste and mismanagement lead to calls for spending cuts in these  programs.

If the U.S. government is ever going to break the cycle of funding cuts and  security disasters, the Diplomatic Security Service will need to demonstrate  wisdom and prudence in how it spends the funds allocated to them. It will also  be necessary for Congress to provide funding in a consistent manner and with an  initial appropriation that is not too big to be spent efficiently.

Beyond money management and a consistent level of funding, the State  Department will also need to take a hard look at how it currently conducts  diplomacy and how it can reduce the demands placed on the Diplomatic Security  Service. This will require asking many difficult questions: Is it necessary to  maintain large embassies to conduct diplomacy in the information age? Does the  United States need to maintain thousands of employees in high-threat  places like Iraq, Afghanistan and Pakistan at the expense of smaller  missions, or can the critical work be done by hundreds or even dozens? Is a  permanent U.S. presence even required in a place like Benghazi, or can the  missions in such locations be accomplished by a combination of visiting  diplomats, covert operatives and local employees?

At the very least, the State Department will need to review its policy of  designating a facility as a “special mission” — Benghazi was designated as such  — to exempt it from meeting established physical security standards. If the  questions above are answered affirmatively, and if it is deemed necessary to  keep a permanent presence in a place like Benghazi, then security standards need  to be followed, especially when a facility is in place for several months.  Temporary facilities with substandard security cannot be allowed to persist for  months and years.

Host Countries

As they consider these issues, officials need to bear in mind that the real  key to the security of diplomatic facilities is the protection provided by the  host country’s security forces as dictated by the Vienna Convention. If the host  country will not or cannot protect foreign diplomats, then the physical security  measures mandated by security standards can do little more than provide slight  delay — which is what they are designed to do. No physical security measures  can stand up to a prolonged assault. If a militant group armed with heavy  weaponry is permitted to attack a diplomatic facility for hours with no host  government response — as was the case in Benghazi — the attack will cause  considerable damage and likely cause fatalities despite the security measures in  place.

The same is true of a large mob, which given enough time can damage and  breach U.S. embassies that meet current department security standards. The U.S.  Embassy in Tripoli, a state-of-the-art facility completed in 2009, was heavily  damaged by a mob of pro-Gadhafi supporters in May 2011 and rendered  unserviceable.

In another example, a  large crowd caused extensive damage to the U.S. Embassy in Tunis and the  adjacent American School just three days after the Benghazi attack. In that  incident, Tunisian authorities responded and did not provide the attacking mob  the opportunity to conduct a prolonged assault on the embassy. Though the mob  caused millions of dollars worth of damage to the compound, it was unable to  breach the main embassy office building. Without host country security support,  there is little that can be done to assure the safety of U.S. diplomats, no  matter what happens to security budgets.

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In Pakistan, Mixed Results from a Peshawar Attack from Stratfor

In  Pakistan, Mixed Results From a Peshawar Attack is republished with  permission of Stratfor.”

By Ben West

The Pakistani  Taliban continue to undermine Pakistan’s government and military  establishment, and in doing so, they continue to raise questions over the  security of the country’s nuclear arsenal. On Dec. 15, 10 militants armed with  suicide vests and grenades attacked Peshawar Air Force Base, the site of a third  major operation by the Pakistani Taliban since May 2011. Tactically, the attack  was relatively unsuccessful — all the militants were killed, and the perimeter  of the air base was not breached — but the Pakistani Taliban nonetheless  achieved their objective.

The attack began the night of Dec. 15 with a volley of three to five mortar  shells. As the shells were fired, militants detonated a vehicle-borne improvised  explosive device near the perimeter wall of the air base. Reports indicate that  all five militants inside the vehicle were killed. The other five militants  engaged security forces in a nearby residential area and eventually were driven  back before they could enter the air base. The next day, security forces acting  on a report of suspicious activity confronted the militants, who all died in the  resultant shootout.

Pakistani security forces came away from the incident looking very good. They  prevented a large and seemingly coordinated team of militants from entering the  confines of the base and thus from damaging civilian and military aircraft. Some  of Pakistan’s newly  acquired Chinese-Pakistani made JF-17s, are stationed at the air base, and  worth roughly $20 million each, they were probably the militants ultimate  targets.

Another reason the militants may have chosen the base is its location.  Peshawar Air Force Base is the closest base to the northwest tribal areas of  Pakistan, where Pakistani and U.S. forces are clashing with Taliban militants  who threaten Islamabad and Kabul. The air base is most likely a hub for  Pakistan’s air operations against those militants. The Dec. 15 attack killed one  police officer and a few other civilians, but it did no damage to the air base,  the adjacent civilian airport or their respective aircraft. Flights were  postponed for only a couple of hours as security forces cleared the area.

Tactics and Previous Attacks

Major military bases in Pakistan have been attacked before. In May 2011,  Pakistani Taliban militants armed with rocket-propelled grenades and firearms  destroyed two  P-3C maritime surveillance aircraft and killed 10 soldiers during an  attack on Mehran  Naval Air Base in Karachi. The militants entered the base by cutting through  the fence.

More recently, seven Pakistani Taliban militants scaled the walls of Minhas  Air Force Base in Kamra before killing a soldier and damaging a  Ukrainian transport aircraft. They were pushed back before they could damage the  squadron of F-16 fighter aircraft stationed at the base.

The Dec. 15 attack was not nearly as destructive as these other attacks,  probably because half the militants were killed immediately in the explosion at  the perimeter. Their deaths suggest the device detonated earlier than expected  or that they were not far enough from the device when it exploded. It is unclear  why they died, but the device could have detonated prematurely for several  reasons. There could have been a glitch in the construction or detonation  of the device. Otherwise, it could have been the result of the security  forces’ countermeasures (something officials have not yet claimed). Had the  militants survived the explosion and breached the perimeter, they might have  been more successful against security.

The Dec. 15 attack also differs from the previous two attacks tactically.  Whereas militants stealthily entered the bases in Kamra and Karachi, the  militants who attacked the base in Peshawar used mortars and explosives because  the wall — roughly eight feet high and topped with barbed wire — could not be  cut or climbed easily. These tactics are much more aggressive than the two  previous air base attacks, and therefore they immediately caught the attention  of security forces. Indeed, security forces in the vicinity would have heard  mortar shells and explosions. But just as important, mortar shells and  explosions create flames that security forces can use to pinpoint the attack and  respond quickly.

It is hard to say whether the combination and coordination of mortar fire,  explosives and a direct ground assault with firearms would have resulted in a  successful attack even if half the militants had not died in the initial  explosion. They certainly would have been greatly outnumbered. The few mortar  shells fired at the base may have suppressed forces momentarily, but the  militants did not sustain their indirect cover fire, which eventually allowed  security forces more mobility in responding. In any case, breaching the wall  with an explosion sacrifices the element of surprise too early — outside the  base rather than inside — reducing the amount of time the assailants have to  find their targets before security could respond.

A final reason the attack failed may have been the fact that the threat was  known about weeks earlier. In late November, authorities apprehended a would-be  suicide bomber and his handler entering Peshawar on a motorcycle. The suspect  later confessed that they were targeting the airport. Peshawar airport was  already on high alert after the attack on the Kamra base in August. The November  arrests heightened security, which lessened the militants’ chance of surprise.  Moreover, the arrests were made publicly available in open-source materials, so  the militants should have known that security forces were on high alert.

As for the security forces, the protective  intelligence available was obvious, and the attack came when they were  most prepared to repel it. Yet they benefited greatly when the explosion did  half their work for them. It appears that they just got lucky.

Strategic Value

The Dec. 15 attack appears to have been carried out by militants who intended  to replicate the damage caused by their comrades’ attacks in Karachi and Kamra.  Tactically, they failed.

But that does not mean the operation wasn’t valuable. Like previous attacks  on Pakistani military installations, the Peshawar attack grabs headlines because  of its high profile. Put simply, the sensitivity of the target demands media  attention.

As in the Karachi and Kamra attacks, the Dec. 15 attack involves the security  of Pakistan’s nuclear arsenal. There are no indications that there are nuclear  weapons stored at the Peshawar base, and there is no evidence that the nuclear  weapons that may have been stored at the Karachi and Kamra bases were  compromised. But the attack nonetheless raises questions about the security of  Pakistan’s military installations and by extension their nuclear  arsenal. For the United States and India, such attacks compel lawmakers to  revisit debates over whether the United States should intervene to protect the  weapons.

These headlines and discussions benefit the Pakistani Taliban because they  call into question Islamabad’s ability to rule. Meanwhile, the Pakistani Taliban  will continue to try to destabilize the military, one of the strongest pillars  of the state, and provoke  fear of external involvement from the United States.

In fact, the Pakistani Taliban would benefit from U.S. involvement, which  would create huge public backlash and chaotic conditions in which the militants  could thrive. The Pakistani Taliban do not necessarily need to destroy aircraft  or kill military personnel to raise these doubts in Pakistan and the wider  world. From the perspective of the insurgents, all the coordination and  firepower they brought to the attack was a strategic success if this attack  nurtures that doubt, even if it wasn’t as tactically successful as previous  attacks.

Read more:  In Pakistan, Mixed Results From a Peshawar Attack | Stratfor

 

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The Geopolitics of Shale from Stratfor

The Geopolitics of  Shale is republished with permission of Stratfor.”

By Robert D. Kaplan Chief  Geopolitical Analyst

According to the elite newspapers and journals of opinion, the future of  foreign affairs mainly rests on ideas: the moral impetus for humanitarian  intervention, the various theories governing exchange rates and debt rebalancing  necessary to fix Europe, the rise of cosmopolitanism alongside the stubborn  vibrancy of nationalism in  East Asia and so on. In other words, the world of the future can be  engineered and defined based on doctoral theses. And to a certain extent this  may be true. As the 20th century showed us, ideologies — whether communism,  fascism or humanism — matter and matter greatly.

But there is another truth: The reality of large, impersonal forces like  geography and the environment that also help to determine the future of human  events. Africa has historically been poor largely because of few  good natural harbors and few navigable rivers from the interior to the  coast. Russia is paranoid because its  land mass is exposed to invasion with few natural barriers. The Persian Gulf  sheikhdoms are fabulously wealthy not because of ideas but because of large  energy deposits underground. You get the point. Intellectuals concentrate on  what they can change, but we are helpless to change much of what happens.

Enter shale, a sedimentary rock within which natural gas can be trapped.  Shale gas constitutes a new source of extractable energy for the post-industrial  world. Countries that have considerable shale deposits will be better placed in  the 21st century competition between states, and those without such deposits  will be worse off. Ideas will matter little in this regard.

Stratfor, as it happens, has studied the issue in depth. Herein is my own  analysis, influenced in part by Stratfor’s research.

So let’s look at who has shale and how that may change geopolitics. For the  future will be heavily influenced by what lies underground.

The United States, it turns out, has vast deposits of shale gas: in Texas,  Louisiana, North Dakota, Pennsylvania, Ohio, New York and elsewhere. America,  regardless of many of the political choices it makes, is poised to be an energy  giant of the 21st century. In particular, the Gulf Coast, centered on Texas and  Louisiana, has embarked upon a shale gas and tight oil boom. That development  will make the Caribbean an economic focal point of the Western Hemisphere,  encouraged further by the 2014 widening of the Panama Canal. At the same time,  cooperation between Texas and adjacent Mexico will intensify, as Mexico  increasingly becomes a market for shale gas, with its own exploited shale basins  near its northern border.

This is, in part, troubling news for Russia. Russia  is currently the energy giant of Europe, exporting natural gas westward in  great quantities, providing Moscow with political leverage all over Central and  particularly Eastern Europe. However, Russia’s reserves are often in parts of  Siberia that are hard and expensive to exploit — though Russia’s extraction  technology, once old, has been considerably modernized. And Russia for the  moment may face relatively little competition in Europe. But what if in the  future the United States were able to export shale gas to Europe at a  competitive price?

The United States still has few capabilities to export shale gas to Europe.  It would have to build new liquefaction facilities to do that; in other words,  it would have to erect plants on the Gulf of Mexico that convert the gas into  liquid so that it could be transported by ship across the Atlantic, where  regasification facilities there would reconvert it back into gas. This is doable  with capital investment, expertise and favorable legislation. Countries that  build such facilities will have more energy options, to export or import,  whatever the case may be. So imagine a future in which the United States exports  liquefied shale gas to Europe, reducing the dependence that European countries  have on Russian energy. The geopolitics of Europe could shift somewhat. Natural  gas might become less of a political tool for Russia and more of a purely  economic one (though even such a not-so-subtle shift would require significant  exports of shale gas from North America to Europe).

Less dependence on Russia would allow the vision of a truly independent,  culturally vibrant Central and Eastern Europe to fully prosper — an ideal of  the region’s intellectuals for centuries, even as ideas in this case would have  little to do with it.

This might especially be relevant to Poland. For Poland may have significant  deposits of shale gas. Were Polish shale deposits to prove the largest in Europe  (a very big “if”), Poland  could become more of an energy producer in its own right, turning this flat  country with no natural defenses to the east and west — annihilated by both  Germany and the Soviet Union in the 20th century — into a pivot state or  midlevel power in the 21st. The United States, in turn, somewhat liberated from  Middle East oil because of its own energy sources (including natural gas finds),  could focus on building up Poland as a friendly power, even as it loses  substantial interest in Saudi Arabia. To be sure, the immense deposits of oil  and natural gas in the Arabian Peninsula, Iraq and Iran will keep the Middle  East a major energy exporter for decades. But the shale gas revolution will  complicate the world’s hydrocarbon supply and allocation, so that the Middle  East may lose some of its primacy.

It turns out that Australia also has  large new natural gas deposits that, with liquefaction facilities, could  turn it into a principal energy exporter to East Asia, assuming Australia  significantly lowers its cost of production (which may prove very hard to do).  Because Australia is already starting to emerge as the most dependable military  ally of the United States in the Anglosphere, the alliance of these two  great energy producers of the future could further cement Western influence in  Asia. The United States and Australia would divide up the world: after a  fashion, of course. Indeed, if unconventional natural gas exploitation has  anything to do with it, the so-called post-American world would be anything  but.

The geopolitical emergence of Canada — again, the result of natural gas and  oil — could amplify this trend. Canada has immense natural gas deposits in  Alberta, which could possibly be transported by future pipelines to British  Columbia, where, with liquefaction facilities, it could then be exported to East  Asia. Meanwhile, eastern Canada could be the beneficiary of new shale gas  deposits that reach across the border into the northeastern United States. Thus,  new energy discoveries would bind the two North American countries closer, even  as North America and Australia become more powerful on the world scene.

China also has  significant deposits of shale gas in its interior provinces. Because Beijing  is burdened by relatively few regulations, the regime could acquire the land and  build the infrastructure necessary for its exploitation. This would ease  somewhat China’s energy crunch and aid Beijing’s strategy to compensate for the  decline of its coastal-oriented economic model by spurring development  inland.

The countries that might conceivably suffer on account of a shale gas  revolution would be landlocked, politically unstable oil producers such as Chad,  Sudan and South Sudan, whose hydrocarbons could become relatively less valuable  as these other energy sources come online. China, especially, might in the  future lose interest in the energy deposits in such low-end, high-risk countries  if shale gas became plentiful in its own interior.

In general, the coming of shale gas will magnify the importance of geography.  Which countries have shale underground and which don’t will help determine power  relationships. And because shale gas can be transported across oceans in liquid  form, states with coastlines will have the advantage. The world will be smaller because of unconventional gas  extraction technology, but that only increases the preciousness of  geography, rather than decreases it.

Editor’s Note: Stratfor offers a combination of  geopolitical insight, source-driven intelligence and objective analysis to  produce customized reliable information and forecasting for businesses,  organizations and government agencies. For more information about Stratfor’s  client solutions offerings, click here: http://info.stratfor.com/solutions/

Read more:  The Geopolitics of Shale | Stratfor

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The Israeli Periphery from Stratfor

The Israeli  Periphery is republished with permission of Stratfor.”

By Reva Bhalla Vice President of Global  Affairs

The state of Israel has a basic,  inescapable geopolitical dilemma: Its national security requirements  outstrip its military capabilities, making it dependent on an outside power. Not  only must that power have significant military capabilities but it also must  have enough common ground with Israel to align its foreign policy toward the  Arab world with that of Israel’s. These are rather heavy requirements for such a  small nation.

Security, in the Israeli sense, is thus often characterized in terms of  survival. And for Israel to survive, it needs just the right blend of  geopolitical circumstance, complex diplomatic arrangements and military  preparedness to respond to potential threats nearby. Over the past 33 years, a  sense of complacency settled over Israel and gave rise to various theories that  it could finally overcome its dependency on outside powers. But a familiar sense  of unease crept back into the Israeli psyche before any of those arguments could  take root. A survey of the Israeli periphery in Egypt, Syria and Jordan explains  why.

Maintaining the Sinai Buffer

To Israel’s southwest lies the Sinai Desert. This land is economically  useless; only hardened Bedouins who sparsely populate the desert expanse  consider the terrain suitable for living. This makes the Sinai an ideal buffer.  Its economic lifelessness gives it extraordinary strategic importance in keeping  the largest Arab army — Egypt’s — at a safe distance from Israeli population  centers. It is the maintenance of this buffer that forms the foundation of the 1979  peace treaty between Egypt and Israel.

The question percolating in Israeli policy circles is whether an Islamist  Egypt will give the same level of importance to this strategic buffer. The  answer to that question rests with the military, an institution that has formed  the backbone of the Egyptian state since the rise of Gamel  Abdul Nasser in 1952.

Achieving National Security in the Periphery

Over the past month, the  military’s role in this new Muslim Brotherhood-run Egypt quietly revealed  itself. The first test came in the form of the Gaza crisis, when the military  quietly negotiated security guarantees with Israel while the Muslim Brotherhood  basked in the diplomatic spotlight. The second test came when Egypt’s Islamist  president, Mohammed Morsi, attempted a unilateral push on a constitutional draft  to institutionalize the  Muslim Brotherhood’s hold on power.

 

The military bided its time, waiting for the protests to escalate to the  point that rioters began targeting the presidential palace. By then, it was  apparent that the police were not to be fully relied on to secure the streets.  Morsi had no choice but to turn to the military for help, and that request  revealed how indispensable the military is for Egyptian stability.

There will be plenty of noise and confusion in the lead-up to the Dec. 15  referendum as the  secular, anti-Muslim Brotherhood civilian opposition continues its protests  against Morsi. But filter through that noise, and one can see that the military  and the Muslim Brotherhood appear to be adjusting slowly to a new order of  Nasserite-Islamist rule. Unlike the 1979 peace treaty, this working arrangement  between the military and the Islamists is alive and temperamental. Israel can  find some comfort in seeing that the military remains central to the stability  of the Egyptian state and will thus likely play a major role in protecting the  Sinai buffer. However, merely observing this dance between the military and the  Islamists from across the desert is enough to unnerve Israel and justify a more  pre-emptive military posture on the border.

Defending Galilee

Israel lacks a good buffer to its north. The most natural, albeit imperfect,  line of defense is the Litani River in modern-day Lebanon, with a second line of  defense between Mount Hermon and the Sea of Galilee. Modern-day Israel  encompasses this second barrier, a hilly area that has been the target of  sporadic mortar shelling from Syrian government forces in pursuit of Sunni  rebels.

Israel does not face a conventional military threat to its north, nor will it  for some time. But the descent of the northern Levant into sectarian-driven,  clan-based warfare presents a different kind of threat on Israel’s northern  frontier.

It is only a matter of time before Alawite forces will have to retreat from  Damascus and defend themselves against a Sunni majority from their coastal  enclave. The conflict will necessarily subsume Lebanon, and the framework that  Israel has relied on for decades to manage more sizable, unconventional threats  like Hezbollah will come undone.

Somewhere along the way, there will be an internationally endorsed attempt to  prop up a provisional government and maintain as much of the state machinery as  possible to avoid the scenario of a post-U.S. invasion Iraq. But when  decades-old, sectarian-driven vendettas are concerned, there is cause for  pessimism in judging the viability of those plans. Israel cannot avoid thinking  in terms of worst-case scenarios, so it will continue to reinforce its northern  defenses ahead of more instability.

Neutralizing the Jordan River Valley

The status of the Jordan River Valley is essential to Israel’s sense of  security to the east. So long as Israel can dominate the west bank of the river  (the biblical area of Judea and Samaria, or the modern-day West Bank) then it  can overwhelm indigenous forces from the desert farther east. To keep this  arrangement intact, Israel will somehow attempt to politically neutralize  whichever power controls the east bank of the Jordan River. In the post-Ottoman  Middle East, this power takes the form of the Hashemite monarchs, who were  transplanted from Arabia by the British.

The vulnerability that the Hashemites felt as a foreign entity in charge of  economically lackluster terrain created ideal conditions for Israel to protect  its eastern approach. The Hashemites had to devise complex political  arrangements at home to sustain the monarchy in the face of left-wing Nasserist,  Palestinian separatist and Islamist militant threats. The key to Hashemite  survival was in aligning with the rural East Bank tribes, co-opting the  Palestinians and cooperating with Israel in security issues to keep its western  frontier calm. In short, the Hashemites were vulnerable enough for Israel to be  considered a useful security partner but not so vulnerable that Israel couldn’t  rely on the regime to protect its eastern approach. There was a level of tension  that was necessary to maintain the strategic partnership, but that level of  tension had to remain within a certain band.

That arrangement is now under considerable stress. The  Hashemites are facing outright calls for deposition from the same tribal  East Bankers, Palestinians and Islamists that for decades formed the foundation  of the state. That is because the state itself is weakening under the pressure  of high oil prices, now sapping at the subsidies that have been relied on to  tame the population.

One could assume that Jordan’s oil-rich Gulf Arab neighbors would step in to  defend one of the region’s remaining monarchies of the post-Ottoman order  against a rising tide of Muslim Brotherhood-led Islamism with heavily subsidized  energy sales. However, a still-bitter, age-old geopolitical rivalry between the  Hejaz-hailing Hashemite dynasty and the Nejd-hailing Saudi dynasty over  supremacy in Arabia is getting in the way. From across the Gulf, an emboldened  Iran is already trying to exploit this Arab tension by cozying up to the  Hashemites with subsidized energy sales to extend Tehran’s reach into the West  Bank and eventually threaten Israel. Jordan has publicly warded off Iran’s  offer, and significant logistical challenges may inhibit such cooperation. But  ongoing negotiations between Iran’s allies in Baghdad and the Jordanian regime  bear close watching as Jordan’s vulnerabilities continue to rise at home.

Powerful Partners Abroad

In this fluctuating strategic environment, Israel cannot afford to be  isolated politically. Its need for a power patron will grow alongside its  insecurities in its periphery. Israel’s current patron, the United States, is  also grappling with the emerging Islamist order in the region. But in this new  regional dynamic, the United States will eventually look past ideology in search  of partners to help manage the region. As U.S.-Turkish relations in recent years  and the United States’ recent interactions with the Egyptian Muslim Brotherhood  reveal, it will be an awkward and bumpy experience while Washington tries to  figure out who holds the reins of power and which brand of Islamists it can  negotiate with amid messy power transitions. This is much harder for Israel to  do independently by virtue of ideology, size and location.

Israel’s range of maneuver in foreign policy will narrow considerably as it  becomes more dependent on external powers and as its interests clash with those  of its patrons. Israel is in store for more discomfort in its decision-making  and more creativity in its diplomacy. The irony is that while Israel is a  western-style democracy, it was most secure in an age of Arab dictatorships. As  those dictatorships give way to weak and in some cases crumbling states, Israeli  survival instincts will again be put to the test.

Read more:  The Israeli Periphery | Stratfor

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Al Assad’s Last Stand from Stratfor

Al Assad’s Last Stand is republished with permission of Stratfor.”

By Omar Lamrani

The battle for Damascus is raging with increasing intensity while rebels  continue to make substantial advances in Syria’s north and east. Every new  air base, city or town that falls to the rebels further underlines that Bashar  al Assad’s writ over the country is shrinking. It is no longer possible to  accurately depict al Assad as the ruler of Syria. At this point, he is merely  the head of a  large and powerful armed force, albeit one that still controls a significant  portion of the country.

The nature of the conflict has changed significantly since it began nearly  two years ago. The rebels initially operated with meager resources and  equipment, but bolstered by defections, some outside support and their demographic advantage, they have  managed to gain ground on what was previously a far superior enemy. Even  the regime’s qualitative superiority in equipment is fast eroding as the rebels  start to frequently utilize main battle tanks, infantry fighting vehicles,  rocket and tube artillery and even man-portable  air-defense systems captured from the regime’s stockpiles.

Weary and stumbling, the regime is attempting to push back rebel forces in  and near Damascus and to maintain a corridor to the Alawite coast while delaying  rebel advances in the rest of the country. Al Assad and his allies will fight  for every inch, fully aware that their power depends on the ability of  the regime forces to hold ground.

The Battle for Damascus

Visit our Syria  page for related analysis, videos, situation reports and maps.

It is important to remember that, despite considerable setbacks, al Assad’s  forces still control a sizable portion of Syria and its population centers.  After failing to take Damascus in Operation Damascus Volcano in July, the rebels  are again stepping up their efforts and operations in the Damascus area.  However, unlike in their previous failed operation, this time the rebels are  relying on an intensive guerrilla campaign to exhaust and degrade al  Assad’s substantial forces in Damascus and its countryside.

After the last surge in fighting around Damascus in July and August, the  regime kept large numbers of troops in the area. These forces continued search  and destroy operations near the capital despite the considerable pressure facing  its forces in the rest of the country, including in Aleppo. Once the rebels  began to make gains in the north and east, the regime was forced to dispatch  some of its forces around Damascus to reinforce other fronts. Unfortunately  for the regime, its operations in the capital area had not significantly  degraded local rebel forces. Rebels in the area began intensifying their  operations once more, forcing the regime to recall many of its units to  Damascus.

Aware of the magnitude of the threat, the regime has reportedly shifted its  strategy in the battle for Damascus to isolating the city proper from the  numerous suburbs. The rebels have made considerable headway in the Damascus  suburbs. For example, on Nov. 25 rebels overran the Marj al-Sultan  military air base in eastern Ghouta, east of the capital. Rebel operations in  the outskirts of Damascus have also interrupted the flow of goods to and from  the city, causing the prices of basic staples such as bread to skyrocket.

Rebel Gains in the East and North

Damascus is not the only area where the regime is finding itself under  considerable pressure. The rebels have made some major advances in the last  month in the energy-rich Deir el-Zour governorate to the east. Having  seized a number of towns, airfields and military bases, the rebels have also  taken the majority of the oil fields in the governorate. They captured the  Al-Ward oil field Nov. 4, the Conoco natural gas reserve Nov.  27 and, after al Assad’s forces withdrew from it on Nov. 29, the Omar  oil field north of the town of Mayadeen. Al Assad’s forces now control only five  oil fields, all located west of the city of Deir el-Zour. With the battle for  the city and its associated airfield intensifying, even those remaining fields  are at risk of falling into rebel hands.

The rebel successes in Deir el-Zour have effectively cut the regime’s ground  lines of communication and supply to Iraq. They have also starved the regime of  the vast majority of its oil revenue and affected its ability to fuel its war  machine. At the same time, the rebels are reportedly already seeking to  capitalize on their seizure of the eastern oil fields. According  to reports, the rebels are smuggling oil to Turkey and Iraq and using the  revenue to purchase arms. They are also reportedly using the oil and  natural gas locally for power generators and fuel.

While all of eastern Syria may soon fall into rebel hands, rebels in the  north have continued to isolate al Assad forces in Idlib and Aleppo  governorates, particularly in the capital cities of those two provinces. After  overrunning the 46th regiment near Atarib on Nov. 19 following a  two-month siege, the rebels are now looking to further squeeze remaining regime  forces in Aleppo by taking the Sheikh Suleiman base north of the  46th regiment’s former base.

The Rebels’ Improved Air Defense Capability

Isolated and surrounded, regime  forces in the north are increasingly relying on air support for both defense  and supply. However, this advantage is deteriorating every day and is  increasingly threatened by the rebels’ improved air defense arsenal and  tactics.

The rebels first attempted to acquire air defense weaponry by seizing heavy  machine guns and anti-aircraft artillery. They captured a number of air defense  bases, taking 12.7 mm DShK heavy machine guns, 14.5 mm KPV heavy machine guns  and even 23 mm ZU-23-2 autocannons. Over time, the rebels became more proficient  with these weapons, and an increasing number of Syrian air force fixed-wing and  rotary aircraft were shot down. The rebels also formed hunter-killer groups with  air defense equipment mounted on flatbed trucks that provided them mobile  platforms for targeting regime air and infantry units.

As more and more regime bases were taken, the rebels were able to bolster  their air defense equipment through the capture of a number of man-portable  air-defense systems. At the outset of the conflict, the Syrian military  maintained a large inventory of shoulder-fired air-defense missiles, likely  thousands of missiles ranging from early generation SA-7s to very advanced  SA-24s. These missiles were stored in army bases across the country. There are  also unconfirmed reports that Qatar and Saudi Arabia may have transferred some  man-portable air-defense systems to the rebels through Turkey.

The rebels tallied their first confirmed kill with shoulder-fired air-defense  missiles Nov. 27, when they shot down a Syrian Arab Air Force  Mi-8/17 helicopter near Aleppo city. The weapon system used in the  attack was likely an SA-7, SA-16 or SA-24 captured from the 46th regiment.  The surface-to-air missiles are a serious upgrade in the rebels’ air  defense capability.

The Fight Continues

Having isolated al Assad’s  forces in the north and made substantial advances in the east, the  rebels are poised to push farther into the Orontes River Valley to relieve the  beleaguered rebel units in the Rastan, Homs and al-Qusayr areas of Homs  governorate. For months, regime forces have sought to overwhelm the remaining  rebel forces in Homs city, but the rebels have managed to hold out.  The rebels are also set to begin pushing south along the main M5 thoroughfare to  Khan Sheikhoun and the approaches to Hama. However, first they need to overwhelm  the remaining regime forces in Wadi al-Dhaif near Maarrat al-Numan.

Alternatively, the regime is fighting hard to maintain its control over the  Orontes River Valley around Homs in order to keep an open  corridor linking Damascus to the mostly Alawite coast. Not only is  this corridor at risk of eventually being cut off, but the regime is also facing  a substantial push by rebel forces into northeastern Latakia governorate from  Idlib. Rebels have advanced in the vicinity of the Turkman Mountain, have taken  control of Bdama and are now fighting their way down in the direction of Latakia  city.

While events in Damascus and Rif Damascus are increasingly worrisome for the  regime, al Assad’s forces in the rest of Syria are also under considerable  pressure from rebel advances. It is by no means certain that al Assad’s forces  are under imminent threat of collapse because they still hold a great deal of  territory and no major city has yet been completely taken by the rebels. The  retreat and consolidation of al Assad’s forces also allows them to maintain  shorter and less vulnerable lines of supply. However, it is clear that the  regime is very much on the defensive and has been forced to gradually contract  its lines toward a core that now encompasses Damascus, the Orontes River Valley  and the mostly Alawite coast. With the regime’s situation rapidly  deteriorating, even the attempt to stage a gradual withdrawal to the core is  risky.

Read more:  Al Assad’s Last Stand | Stratfor

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Egypt and the Strategic Balance from Stratfor

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“<a href=”http://www.stratfor.com/weekly/egypt-and-strategic-balance”>Egypt and the Strategic Balance</a> is republished with permission of Stratfor.”

By George Friedman Founder  and Chief Executive Officer

Immediately following the declaration of a cease-fire  in Gaza, Egypt was plunged into a massive domestic crisis. Mohammed Morsi,  elected in the first presidential election after the fall of Hosni  Mubarak, passed a decree that would essentially neuter  the independent judiciary by placing his executive powers above the high  court and proposed changes to the constitution that would institutionalize the  Muslim Brotherhood’s power. Following the decree, Morsi’s political opponents  launched massive demonstrations that threw Egypt into domestic instability and  uncertainty.

In the case of most countries, this would not be a matter of international  note. But Egypt  is not just another country. It is the largest Arab country and one that has  been the traditional center of the Arab world. Equally important, if Egypt’s  domestic changes translate into shifts in its foreign policy, it could affect  the regional balance of power for decades to come.

Morsi’s Challenge to the Nasserite Model

The Arab Spring was seen by some observers to be a largely secular movement  aimed at establishing constitutional democracy. The problem with this theory was  that while the demonstrators might have had the strength to force an election,  it was not certain that the secular constitutionalists would win it. They  didn’t. Morsi is a member of the Muslim Brotherhood, and while there were  numerous claims that he was a moderate member, it was simply not understood that  he was a man of conviction and honor and that his membership in the Brotherhood  was not casual or frivolous. His intention was to strengthen the role of Islam  in Egypt and the control of the Muslim Brotherhood over the various arms of  state. His rhetoric, speed and degree of Islamism might have been less extreme  than others, but his intent was clear.

The move on the judiciary signaled his intent to begin consolidating power.  It galvanized opponents of the Muslim Brotherhood, which included secular  constitutionalists, Copts and other groups who formed a coalition that was  prepared to take to the streets to oppose his move. What it did not include, or  at least did not visibly include through this point, was the Egyptian military,  which refused to  be drawn in on either side.

The Egyptian military, led by a young army officer named Gamal Abdel Nasser, founded the  modern Egyptian state when it overthrew the British-supported monarchy in  the 1950s. It created a state that was then secular, authoritarian and  socialist. It aligned Egypt with the Soviet Union and against the United States  through the 1970s. After the 1973 Arab-Israeli war, Egyptian President Anwar  Sadat, who was later assassinated by Islamists, shifted Egypt into an alliance  with the United States and signed a peace treaty with Israel.

This treaty was the foundation of the regional balance of power until now.  The decision to end the state of war with Israel and use Sinai as a  demilitarized buffer between the two countries eliminated the threat of  nation-to-nation war between Arabs and Israel. Egypt was the most powerful Arab  country and its hostility to Israel represented Israel’s greatest threat. By  withdrawing from confrontation, the threat to Israel declined dramatically.  Jordan, Syria and Lebanon did not represent a significant threat to Israel and  could not launch a war that threatened Israel’s survival.

Egypt’s decision to align with the United States and make peace with Israel  shaped the regional balance of power in other ways. Syria could no longer depend  on Egypt, and ultimately turned to Iran for support. The Arab monarchies that  had been under political and at times military pressure from Egypt were relieved  of the threat, and the Soviets lost the Egyptian bases that had given them  a foothold in the Mediterranean.

The fundamental question in Egypt is whether the election of Morsi  represented the end of the regime founded by Nasser or was simply a passing  event, with power still in the hands of the military. Morsi has made a move  designed to demonstrate his power and to change the way the Egyptian judiciary  works. The uprising against this move, while significant, did not seem to have  the weight needed either to force Morsi to do more than modify his tactics a bit  or to threaten his government. Therefore, it all hangs on whether the military  is capable of or interested in intervening.

It is ironic that the demands of the liberals in Egypt should depend on  military intervention, and it is unlikely that they will get what they want from  the military if it does intervene. But what is clear is that the Muslim  Brotherhood is the dominant force in Egypt, that Morsi is very much a member of  the Brotherhood and while his tactics might be more deliberate and circumspect  than more radical members might want, it is still headed in the same  direction.

For the moment, the protesters in the streets do not appear able to force  Morsi’s hand, and the military doesn’t seem likely to intervene. If that is  true, then Egypt has entered a new domestic era with a range of open foreign  policy issues. The first is the future of the treaty with Israel. The issue is  not the treaty per se, but the maintenance of Sinai as a buffer. One of the  consequences of Mubarak’s ouster has been the partial  remilitarization of Sinai by Egypt, with Israel’s uneasy support. Sinai has  become a zone in which Islamist radicals are active and launch  operations against Israel. The Egyptian military has moved into Sinai to  suppress them, which Israel obviously supports. But the Egyptians have also  established the principle that while Sinai may be a notional buffer zone, in  practice the Egyptian military can be present in and responsible for it. The  intent might be one that Israel supports but the outcome could be a Sinai  remilitarized by the Egyptians.

A remilitarized Sinai would change the strategic balance, but it would only  be the beginning. The Egyptian army uses American equipment and depends on the  United States for spare parts, maintenance and training. Its equipment is  relatively old and it has not been tested in combat for nearly 40 years. Even if  the Egyptian military was in Sinai, it would not pose a significant conventional  military threat to Israel in its current form. These things can change, however.  The transformation of the Egyptian army between 1967 and 1973 was impressive.  The difference is that Egypt had a patron in the Soviet Union then that was  prepared to underwrite the cost of the transformation. Today, there is no global  power, except the United States, that would be capable of dramatically and  systematically upgrading the Egyptian military and financially supporting the  country overall. Still, if the Morsi government succeeds in institutionalizing  its power and uses that power to change the dynamic of the Sinai buffer, Israel  will lose several layers of security.

A New Regional Alignment?

A look at the rest of the region shows that Egypt is by no means the only  country of concern for Israel. Syria, for example, has an uprising that, in  simple terms, largely consists of Sunnis, many of which are Islamists.  That in itself represents a threat to Israel, particularly if the relationship  between Syria and Egypt were revived. There is an ideological kinship, and just  as Nasserism had an evangelical dimension, wanting to spread pan-Arab ideology  throughout the region, the Muslim Brotherhood has one too. The Syrian Muslim  Brotherhood is also the most organized and coherent opposition group in  Syria. As Morsi consolidates his power in Egypt, his willingness to engage  in foreign adventures, or at least covert support, for like-minded insurgents  and regimes could very well increase. At a minimum Israel would have to take  this seriously. Similarly, where Gaza  was contained not only by Israel but also by pre-Morsi Egypt, Morsi might  choose to dramatically change Egypt’s Gaza policy.

Morsi’s rise opens other possibilities as well. Turkey’s Islamic-rooted  Justice and Development Party is also engaged in a careful process of  reintroducing Islam into a state that was militantly secular. There are fundamental  differences between Egypt and Turkey, but there is also much in common.  Turkey and Egypt are now engaged in parallel processes designed to create modern  countries that recognize their Islamic roots. A Turkish-Egyptian relationship  would both undergird the Egyptian regime and create a regional force that could  shape the Eastern Mediterranean.

This would, of course, affect American strategy, which as  we have said in the past, is now rapidly moving away from excessive  involvement in the Middle East. It is not clear how far Morsi would go in  breaking with the United States or whether the military would or could draw a  line at that point. Egypt is barely  skirting economic disaster at the moment because it is receiving a broad  range of financial aid from the West. Moving away from the United States would  presumably go well beyond military aid and affect these other types of economic  assistance.

The fact is that as Egypt gradually evolves, its relationship with the United  States might also change. The United States’ relationship  with Turkey has changed but has not broken since the Justice and Development  Party came to power, with Turkey following a more independent direction. If a  similar process occurred in Egypt, the United States would find itself in a very  different position in the Eastern Mediterranean, one in which its only ally was  Israel, and its relationship with Israel might alienate the critical  Turkey-Egypt bloc.

Prior to 1967, the United States was careful not be become overly involved in  protecting Israel, leaving that to France. Assuming that this speculation about  a shift in Egypt’s strategic posture came to pass, Israel would not be in  serious military danger for quite a while, and the United States could view its  support to Israel as flexible. The United States could conceivably choose to  distance itself from Israel in order to maintain its relationships with Egypt  and Turkey. A strategy of selective disengagement and  redefined engagement, which appears to be under way in the United States now,  could alter relations with Israel.

From an Israeli point of view — it should be remembered that Israel is the  dominant power in the region — a shift in Egypt would create significant  uncertainty on its frontier. It would now face  uncertainty in Egypt, Syria and Lebanon, and while unlikely, the possibility  of uncertainty in Jordan. Where previously it faced hostile powers with  substantial military capabilities, it would now face weaker powers that are  less predictable. However, in an age when Israel’s primary concern is with  terrorist actions and uprisings in Gaza and the West Bank, this band of  uncertainty would be an incubator of such actions.

The worst-case scenario is the re-emergence of confrontational states on its  border, armed with conventional weapons and capable of challenging the Israeli  military. That is not an inconceivable evolution but it is not a threat in the  near term. The next-worst-case scenario would be the creation of multiple states  on Israel’s border prepared to sponsor or at least tolerate Islamist attacks on  Israel from their territory and to underwrite uprisings among the Palestinians.  The effect would be an extended, wearying test of Israel’s ability to deal with  unremitting low-intensity threats from multiple directions.

Conventional war is hard to imagine. It is less difficult to imagine a shift  in Egyptian policy that creates a sustained low-intensity conflict not only  south of Israel, but also along the entire Israeli periphery as Egypt’s  influence is felt. It is fairly clear that Israel has not absorbed the  significance of this change or how it will respond. It may well not have a  response. But if that were the case, then Israel’s conventional dominance would  no longer define the balance of power. And the United States is entering a  period of unpredictability in its foreign policy. The entire region becomes  unpredictable.

It is not clear that any of this will come to pass. Morsi might not be able  to impose his will in the country. He may not survive politically. The Egyptian  military might intervene directly or indirectly. There are several hurdles for  Morsi to overcome before he controls the country, and his timeline might be  extended for implementing changes. But for the moment, Morsi appears in charge,  he seems to be weathering the challenges and the army has not moved. Therefore,  considering the strategic consequences is appropriate, and those strategic  consequences appear substantial.

Read more:  Egypt and the Strategic Balance | Stratfor

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Mimicking Breivik in Poland from Stratfor

“<a href=”http://www.stratfor.com/weekly/mimicking-breivik-poland”>Mimicking Breivik in Poland </a> is republished with permission of Stratfor.”

By Ben West

Poland’s Internal Security Agency announced Nov. 20 that it had arrested  “Brunon K,” a chemistry professor at the Agricultural University in Krakow who  allegedly planned to attack the lower house of the Polish parliament. The arrest  came Nov. 9, just two days before Warsaw’s annual Independence Day parade, which  authorities believe could have been another target. During the arrest,  authorities seized ammonium nitrate fertilizer, high-powered, military-grade  explosive RDX and other bomb-making equipment. They also seized several  hundred rounds of ammunition, a bulletproof vest and a pistol.

Presumably, the suspect in question is Dr. Brunon Kwiecien, who has published  multiple chemistry papers at the Agricultural University in Krakow, according to  a Polish academic directory. Kwiecien openly espoused anti-government views and  accused the Polish government and the European Commission of tyranny.  Specifically, he condemned the Anti-Counterfeiting Trade Agreement, which has  angered Internet freedom activists in Europe.

Kwiecien is also a self-proclaimed supporter of Norwegian  ultranationalist terrorist Anders Breivik, who conducted a successful lone  wolf attack in Oslo in 2011. Indeed, tactically Kwiecien’s plot against the  Polish government resembled Breivik’s in many ways. But his was only the latest,  certainly not the last, thwarted terrorist attack in Europe, where similar plots  can be expected as the economic and political situation continues to  worsen.

The Plot

Kwiecien allegedly considered Breivik’s  vehicle-borne improvised explosive device attack on Norway’s parliament  building a failure — Breivik’s killed  only eight people and failed to inflict catastrophic structural damage on  the building. Breivik used 1 metric ton of ammonium nitrate-based explosives,  commonly called ANFO,  or ammonium nitrate fuel oil, and parked his vehicle on the street,  putting some distance between the VBIED and the building. Kwiecien intended to  construct an explosive device using 4 metric tons of ANFO inside a tanker truck,  crash through the gates of the parliament building and detonate the VBIED within  the courtyard. Investigators believe that it would have been a suicide mission.  Had he executed his attack successfully, he likely would have created a blast  big enough to cause significant structural damage and loss of life, resulting in  more damage and more deaths than Breivik’s explosive device.

According to authorities, Kwiecien began planning for the attack between July  and September. He apparently had traveled to Warsaw to surveil the area  surrounding the building. The fact that there is fairly light security at the  entrance to the parliament building may have encouraged Kwiecien to go forward  with his plot.

What differentiates Kwiecien — and Breivik before him — from many other  aspiring terrorists is his knowledge of how to make bombs. Most grassroots  terrorists lack the requisite  skillset and the wherewithal to build a viable explosive device. Reaching  out for assistance in acquiring these skills exposes them to detection. For  example, Adel Daoud was arrested Sept. 15 in Chicago by an undercover FBI agent,  from whom Daoud had sought assistance to carry out his attack.

Kwiecien’s Skillset

Kwiecien, a professional  chemist, could have avoided Daoud’s fate. He had the scientific background  necessary to know how to make explosives. He also was an explosives enthusiast;  allegedly he lost several of his fingers detonating a homemade bomb when he was  a teenager. He had filmed his “experiments” over the past 10 years. Authorities  also claim that Kwiecien had detonated a bomb containing as much as 250  kilograms (about 550 pounds) of explosives, though video footage shows explosive  charges that were much smaller.

 

Even if he had detonated a bomb of that size, there is no indication that he  ever came close to experimenting with a bomb containing 4 metric tons of  explosives. Thoroughly mixing 4 metric tons of ammonium nitrate fertilizer and  diesel, the typical fuel oil in ANFO, is very difficult, but the challenge in  constructing bombs that large is detonation. Generally, the larger the main  charge is, the harder it is to achieve a simultaneous detonation and thus cause  maximum damage.

Four metric tons of ANFO equates to more than 3,000 liters (800 gallons).  Successfully igniting all that material requires the ignition of several  smaller, high-powered detonation charges. Otherwise the device can fail or only  partially detonate in what is referred to as a low-order explosion, where the  ANFO is propelled away from the device rather than detonated. In 2010, Faisal  Shahzad attempted to construct a device and detonate it in Times  Square. But he was an amateur bombmaker. As such, he constructed a poorly made  bomb, and the main charge failed to detonate accordingly.

It appears that Kwiecien was planning to use RDX for the detonation charges.  Acquiring ANFO is relatively easy; it is made from legitimate agricultural  products, and Kwiecien worked at an agricultural university. Acquiring RDX  is far more difficult; it’s a military-grade explosive that is much more  regulated than fertilizer. But again, Kwiecien’s chemistry background would have  given him the skills needed to make homemade RDX instead of having to source it  externally. Making it alone would shield him from law enforcement officials who  monitor the acquisition of such materials.

Kwiecien’s Mistakes

It is unclear whether Kwiecien could have built the bomb he intended to, but  he was much more likely to have done so than other would-be terrorists. However,  just because Kwiecien appears to have had the skillset to make a bomb without  alerting the authorities does not mean that he kept the plot only to himself. In  fact, he made several serious mistakes in plotting his attack that made him  vulnerable to authorities.

Kwiecien brazenly advertised his anti-government ideology. He reportedly  spoke openly with his students about bringing down the Polish government. He  taught extracurricular classes on making explosives and claimed that officials  had threatened to prosecute him if he didn’t stop them. His wife, a biologist,  alerted authorities when Kwiecien allegedly asked her how he could make a  biological “dirty bomb.”

In addition, Kwiecien used his own email address and identity for his online  activity, where he made anti-government comments, praised Breivik and openly  recruited like-minded people to join his cause. Reports indicate that Polish  authorities’ investigations into Breivik’s connections in Poland may have also  led to Kwiecien. All of these actions tipped off authorities, who likely had a  fairly thick file on him by the time he was arrested.

Notably, none of his actions were necessarily grounds for prosecution. To  gather more evidence, the Polish national police mounted an investigation that  involved infiltrating his group. Excluding Kwiecien, the group comprised four  members, two of whom were undercover agents. The other two were arrested.

Once undercover, the two operatives were able to collect details on  Kwiecien’s weapons and explosives acquisition efforts. Moreover, they would have  been able to provide evidence that ties Kwiecien to the materials meant to be  used in the attack. The operatives also could have kept tabs on Kwiecien and  alerted authorities when they believed he was moving closer to an attack.

Kwiecien’s motivations for expanding his group are unknown, but ultimately it  was his desire for recruitment that compromised him.

Breivik’s Influence

Like Breivik, Kwiecien embodied the rare combination of ideological fervor  and technical capability. But unlike Breivik, he did not strictly adhere to  operational security standards. Breivik went to great lengths to maintain  operational security, seeking help only when he absolutely needed it — like  when he traveled to purchase firearms. Kwiecien flaunted his capabilities and  his ideology, making him a bigger target for authorities.

Kwiecien was also a copycat who sought to conduct the same attack that  Breivik did, only on a larger scale. European authorities — indeed, law  enforcement agencies around the world — have studied the Breivik case for more  than a year. Thus they probably became better at identifying attacks that employ  the same tactics.

Perhaps most important, Kwiecien’s case also shows that Breivik’s call to  action has been heard. In his manifesto, Breivik appealed to other like-minded  individuals to form cells and fight multiculturalism in Europe. Individuals like  Breivik and Kwiecien, who combine capability and ideology, are rare. But Europe  has a skilled workforce that could produce similarly capable extremists.

Indeed, Breivik and Kwiecien are not alone in their ultranationalist ideals.  On Nov. 23, Swedish extremist Peter Mangs was sentenced to life in prison for a  series of killings targeting immigrants around Malmo, a city in southern Sweden.  Mangs killed for several years before he was caught, indicating that he was well  disciplined and practiced operational security.

The conditions of Europe are conducive for extremism. As national economies  worsen and European institutions weaken, there will be more cause, in the eyes  of extremists, to lash out against the state and against Europe. Such  threats are not found only among ultranationalists. Left-wing groups and anarchist  cells also pose a threat, as evidenced in Greece and  Italy. Kwiecien certainly will not be the last extremist to plot an attack in  Europe, and the more like-minded individuals who take up the cause, the higher  the chances are for more attacks.

Read more:  Mimicking Breivik in Poland | Stratfor

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A Pause for Negotiations in the Israel-Hamas Conflict from Stratfor

The latest thoughts of George Friedman of Strafor on the situation in Gaza. Click here for a previous report.

“<a href=”http://www.stratfor.com/analysis/pause-negotiations-israeli-hamas-conflict”>A Pause for Negotiations in the Israeli-Hamas Conflict</a> is republished with permission of Stratfor.”

The Israeli-Hamas conflict has entered into a negotiation phase. Both sides  want talks. Hamas wants them because any outcome that prevents an Israeli ground  assault gives it the opportunity to retain some of its arsenal  of Fajr-5 rockets; the Israelis want them because the cost of an  invasion could be high, and they recall the political fallout of Operation Cast  Lead in 2008, which alienated many European and other governments.

No matter how much either side might want to avoid ground warfare,  negotiations are unlikely to forestall an Israeli assault because Hamas’ and  Israel’s goals leave little middle ground.

Visit our Israel  page for related analysis, videos, situation reports and maps.

One of Hamas’ main goals in this current round of fighting is to retain  enough Fajr-5 rockets to allow it to threaten the Israeli heartland, the Tel  Aviv-Jerusalem corridor. If they succeed, Hamas will have gained a significant  lever in its relations with the Israelis. The Israeli goal is to deny Hamas  these rockets. The problem for the Israelis is that this requires a ground  assault in order to have any chance of success. The Israelis may think they know  where the rockets are, but they cannot be certain. Airstrikes can target known  facilities, at least those where rockets are not stored in hardened underground  bunkers. But only by going in on the ground with substantial force will the  Israelis have the opportunity to search for and destroy the rockets.

Finding middle ground will be difficult. The retention of the Fajr-5 both  dramatically improves Hamas’ strategic position and gives Hamas the chance to  further weaken the Palestinian National Authority. Hamas cannot agree to any  deal that takes the rockets away — or that does not at least leave open the  possibility that it could have them. Meanwhile, Israel simply cannot live with  the Fajr-5 in the hands of Hamas.

Lack of International Involvement

It is interesting to note the remarkable indifference of most countries that  normally rush to mediate such disputes, the United States chief among them.  Washington has essentially endorsed the Israeli position so strongly that it has  no option to mediate. The Turks, who had been involved with the Gaza issue  during the flotilla  incident of May 2010, have taken no steps beyond rhetoric in spite of  relations with both Hamas and Israel. The Saudis have also avoided getting  involved.

The Egyptians have been the most active in trying to secure a cease fire:  Beyond sending their prime minister into Gaza on Nov. 16, as well as their  intelligence chief and a group of security officials, Cairo then hosted a  delegation of senior Hamas and Islamic Jihad members to further this goal. But  while the Egyptians have a great interest in preventing an Israeli ground  invasion of Gaza and are crucial to the Israeli imperative to prevent weapons  smuggling via Gaza, there is little more they can do at present to mediate  between the two sides.

If no one seems to want to serve as mediator, it is because there is such  little room for negotiation. It is not ideology but strategy that locks each  side into place. Hamas has come this far and does not want to give up what it  has maneuvered for. Israel cannot allow Hamas a weapon that threatens the  Israeli heartland. This situation is too serious for the parties to reach an  agreement that ends the hostilities for now but in reality simply pushes back  the issues to be addressed later. No one is eager to mediate a failure. U.N.  Secretary-General Ban Ki Moon has said he will go to Gaza in the coming week,  but he will not be in a position to find middle ground.

Israel will not budge on this. Hamas could be compelled to relent under  threat from its core financial supporters in the Arabian Peninsula, but these  states, such as Qatar, are all far more concerned with the threat posed by Iran.  The fact that these rockets likely originated with Iran ought to give them  incentive to lean on Hamas.

Dubious Prospects for Negotiations

It is important to bear in mind that the war is already under way. Israeli  airstrikes are intense and continuous. Hamas is firing rockets at Israel.  What has not yet happened is a direct ground attack on Gaza by the Israelis,  although they have been mobilizing forces and should now be in a position to  attack if they so choose. But the Israelis would much rather not attack. They  fear the consequences — measured both in human casualties and in political  fallout — that would certainly follow.

Thus, both sides want a negotiated end on terms that would leave the other  side in an impossible position. While Hamas might be able to live with the  status quo, Israel cannot. A negotiated end is therefore unlikely. Still, both  sides are signaling their willingness to talk, and however forlorn the  possibilities, there is a chance that something could be arranged.

We remain of the opinion that this current pause will be followed by a ground  assault. Only by expanding the discussion beyond the Fajr-5 to a broader  settlement of Hamas-Israeli issues could these negotiations succeed, but that  would require Hamas recognizing Israel’s right to exist and Israel accepting the  equivalent of a Palestinian state run by Hamas in Gaza — one that might spread  its power to the West Bank. The more expansive the terms of these negotiations  get, the more dubious their prospects for success — and these negotiations  start off fairly dubious as it is.

Read more:  A Pause for Negotiations in the Israeli-Hamas Conflict | Stratfor

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