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BLACKWATER USA | DAILY BRIEF


U.S.

  • Tech executives from Google, Apple, Facebook, and Amazon testified before Congress about anticompetitive practices. Several executives claimed that their company is “not that big”—even though the four collectively make up 16% of the market cap of the S&P 500, i.e., a very disproportionate 16% of the total market cap of the 500 largest public companies in the U.S.

  • Pres. Trump plans to reduce U.S. troop presence in Germany by about 12,000 (or around one third), relocating some units to Belgium and returning some to the U.S. One analyst called it a “punitive move” against Germany for failing to pay adequate contributions to NATO, in Trump’s view. The WSJ’s Editorial Board also had some strong objections to the plan: “He’ll weaken America’s military posture and get nothing in return.” (Op-ed pasted below).

  • Stocks are down this morning over a record GDP decline and reports that Pres. Trump suggested delaying the November 2020 election due to unsubstantiated fraud concerns.

Russia / Belarus

  • Belarus accused Russia of sending over 200 mercenaries into the country to meddle with its election, and state media claimed 33 of the men had been arrested. While Belarus has historically been a puppet state for Russia, Pres. Lukashenko is trying a different tactic in an attempt to cure his waning popularity.

  • On a side note, Lukashenko also admitted that he “managed to survive” an asymptomatic case of coronavirus, since his touted prevention of drinking vodka and going to the sauna apparently failed to prevent his infection.

China

  • Hong Kong blocked 12 opposition candidates—including high-profile activisits Joshua Wong and Lester Shum—from standing in Legislative Council elections in September.

  • In addition, Hong Kong is reportedly considering postponing those elections by a year anyway, which would be a further disappointment for the opposition. The opposition had improbably hoped to win a majority of seats so it could fight anti-democratic policies from within.

  • Separately, the EU imposed sanctions on China that bar it from sending Hong Kong equipment that can be used to repress pro-democracy protests. The EU also said it was reassessing extradition arrangements with Hong Kong, and may offer Hong Kong residents similar fast tracks to residency like those the UK extended recently.

Afghanistan

  • AsiaTimes had a good op-ed on the opportunities and risks Afghanistan’s natural resources present for the country—see below.

  • The Taliban said it would release the remaining ~200 government prisoners it committed to releasing as a show of “goodwill” for Eid. It already released 25 government detainees in Baghlan and Logar today.

  • The Eid ceasefire is broadly holding, with a few minor clashes in Kandahar and Ghazni in which both sides said they were defending the other’s aggression.

Strategic Minerals

  • Panasonic announced that it will produce new “2170” lithium-ion cells for Tesla that improve energy density by 5% and reduce expensive cobalt content. Production will start in September at Tesla’s factory in Nevada.

Other News

  • Turkey passed a new law that gives the government significant authorities to regulate social media content and threatens to penalize U.S. tech titans if they don’t open offices in Turkey—despite the new restrictions that would bind them.

  • Zimbabwe’s zany ZANU-PF government signed a $3.5 billion deal to compensate white farmers who were evicted from their land over 20 years ago. That said, Zimbabwe plans to fund the payments by selling a 30-year bond on the international market, and buyers will be scarce: Zimbabwe currently has inflation of over 700% and is unlikely to be able to repay bondholders.

The role of Afghanistan’s resources in security (AsiaTimes)

The country's vast mineral reserves present both opportunity and potential dangers

Afghanistan is a mountainous country. Although this land has had precious mines since ancient times, during most of the 20th century it did not progress in terms of exploration and exploitation of its mineral resources and it did not receive much attention from foreign countries. After the Soviet invasion of Afghanistan, more attention was paid to this, leading to the discovery and identification of resources such as copper and iron.

After the fall of the Taliban and the establishment of the Islamic Republic of Afghanistan, this issue received more attention from the government and foreign countries.

During the last two decades, we have witnessed the Afghan government’s efforts to identify natural resources in the country with the help of foreign governments and companies. Therefore, strategic, diverse and important reserves of copper, oil, gas, lithium, uranium, etc have been found and identified in different parts of Afghanistan. The total value of Afghanistan’s underground reserves appears to be a trillion dollars or more.

Information and statistics regarding Afghanistan’s natural resources are more general. But recognizing Afghanistan as a country with important, diverse and vast mineral reserves is important. These statistics should be considered in the analysis, policy-making and evaluation of organizations, non-governmental actors, and foreign powers. In the end, the existence of mineral resources could be both a threat to the country’s security and an opportunity for improved security and economic development in Afghanistan.

From a specific point of view, Afghanistan’s mineral reserves could be a source of hope for citizens for development and a formula for supplying financial resources. Currently Afghanistan faces such problems as a major proportion of its population in poverty, insecurity in many provinces, political and administrative corruption, low per capita income, dependence on foreign economic aid, and dozens of other economic challenges.

At the same time, ensuring security for Afghanistan’s mineral reserves could be a major support for the country’s economic, political and cultural growth and help eliminate backwardness. This requires security as a platform for development of the resource-extraction industry.

It should also be noted that if the government can find a precise formula for the exploitation of Afghanistan’s mineral resources, an important part of this will be ensuring that the financial needs of the security and military sectors are met. In addition, as the government’s economic capability increases thanks to the increase in the export revenues of the mining sector, its ability to tighten security in the provinces and prevent drug cultivation will also increase.

This will have a positive long-term and mid-term effect on reducing the financial resources of insurgent groups from opium trading. In addition, by providing more security for the legal extraction of mineral resources, a large number of unemployed citizens and members of extremist groups will swarm to the mining sector and as a result, they will distance themselves from extremist groups such as Islamic State (ISIS).

Another cause of instability

Existence of mineral reserves in a country does not lead automatically to security and development. On the one hand, access to these reserves is a constant goal of extremist and terrorist groups. For the past two decades, the Taliban and other groups have sought to seize control of areas where there are underground reserves or to extort money from companies and individuals extracting them.

In fact, terrorist or anti-government groups that benefit from this sector are trying to block the government’s and investors’ access to mines in different regions. Continuation of this could lead to new instability in the country and further strengthen opposition groups and terrorist movements.

In addition, the illegal extraction and sale of precious stones and minerals in Afghanistan could, in the shadow of the government’s inability to contain it, be a factor in empowering armed groups in some areas.

Also, the illegal profit of extraction and illegal sale of minerals by criminal organizations and armed opposition forces in some parts of the country is several times the government’s profit. As well, some of these resources are smuggled out of the country.

Unauthorized extraction by non-governmental actors not only harms the security-making process, but also strengthens such actors and terrorist and extremist groups. Apart from this, increasing foreign investment in underground reserves is a fundamental and obvious need. The exploitation of underground reserves requires sophisticated technology, so the government must provide the right conditions for foreign investment.

But the lack of security in many parts of the region has discouraged sponsorship by investment firms and other international players. If this continues, will open the door to extremist groups and non-governmental individuals to the exploitation of the country’s national resources, and will provide them with more financial resources and the possibility of greater insecurity.

Perspective

What is clear is that Afghanistan’s vast discovered mineral reserves could be seen as an opportunity to make the country more secure and help it achieve its political and economic goals, but also as a threat to its security and as an opportunity for the influence of other actors. It should also be noted that, in principle, any domestic and foreign investment in Afghanistan’s vast and diverse resources is tied to a variable called “security and stability.”

But the reality is that the government has failed to come up with a comprehensive approach to managing Afghanistan’s underground reserves, and in practice, contrary to the plans it has been made, profits from this sector have fallen far short.

Therefore, if the Afghan government fails to provide adequate security in the short and medium terms, it should not be expected that its economic programs for domestic and foreign mineral exploitation and investment will have a significant impact.

What is clear is that Afghanistan’s mineral sector has so far failed to provide an opportunity for improved security. But if peace talks are finally concluded and the Taliban shift their approach to providing security, this will provide an important opportunity to encourage foreign investment. Otherwise, the lack of security will continue to be the biggest challenge to exploiting Afghanistan’s natural resources.

Trump’s Spite-Germany Plan (WSJ)

He’ll weaken America’s military posture and get nothing in return.

Beneath the din of media condemnation, it can be hard to sort the good from the bad in President Trump’s unorthodox foreign policy. Some initiatives scorned by foreign-policy elites have been wise, like pulling out of failing arms accords. Yet the Pentagon’s plan to withdraw almost 12,000 U.S. troops from Germany is far from a stroke of populist genius. It’s a blow to U.S. interests that won’t fulfill the cost-saving objective Mr. Trump claims to be concerned with.

Amid souring relations with German Chancellor Angela Merkel, Mr. Trump in June ordered thousands of U.S. troops withdrawn from the country. On Wednesday Secretary of Defense Mark Esper sketched out the plan. He said the U.S. will cut its troop presence in Germany to 24,000 from 36,000, with some 5,600 moved elsewhere in Europe, including Belgium and Italy, and 6,400 stationed back in the U.S.

The Pentagon is presenting the move as improving its flexibility. Yet the U.S. presence in Germany—along with infrastructure and knowledge built over decades—is strategically located in the geopolitical and economic heart of Europe. Moving forces south or west in the Continent is a retreat that reduces U.S. ability to surge into the theater if Russia makes a military move. Indebted countries like Italy or Spain are unlikely to pay more than wealthy Germany for the U.S. presence.

The Obama Administration in 2012 and 2013 withdrew U.S. combat brigades from Germany, and Vladimir Putin responded by invading Ukraine in 2014. Expect the Kremlin to get similar signals from President Trump’s move. Mr. Esper said some forces will move to Poland, but there is no agreement yet to do so. One reasonable suggestion is moving the U.S. Africa Command, now based in Germany, to southern Europe so it is closer to the Mediterranean.

As for the troops coming home, Mr. Esper says many will return on rotations “in the Black Sea region.” This will be costly. The Journal reports that the retreat from Germany may cost $6 billion to $8 billion.

Mr. Trump is legitimately impatient about Germany’s failure to meet its Nato defense commitments, its support for Russia’s gas pipeline, and its naivete about China. He might have emphasized the last point by announcing that the Indo-Pacific is now a more important theater than Europe and moving a few thousand U.S. troops to Asia to pressure Berlin.

Instead he appears to be undermining America’s military position out of pique—moving U.S. forces to punish Germany, though many will go to countries that also aren’t pulling their weight. Oh, and in the middle of an election campaign he’s undermining the case, which he supported with action over three years, that he is tougher than Democrats on Mr. Putin. Mr. Trump’s erratic foreign-policy impulses remain the greatest risk of a second term.

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