Showing posts with label China. Show all posts
Showing posts with label China. Show all posts

Thursday, March 13, 2014

MH370 - Chinese misinformation


Just a quick update as I read the recent news on MH370...and as follow up to yesterday's blog post.

Yesterday the Chinese government released imagery of what they said could have been wreckage from MH370. 

The imagery of the "supposed wreckage" was found on Sunday. That's one day after the flight disappeared. So why did they choose to hold on to that information until Wednesday?!
Rescue and salvage crews raced out to the location and found...nothing. Some reports now claim the image was nothing more than two boats tied to each other. All information in a rescue operation is extremely and critically time sensitive. China decided that it could wait 3 days. It almost looks like they're intentionally confusing the rescue operation...

As I mentioned yesterday, Tracking misinformation often times leads one to the truth easier than tracking murky details.

Wednesday, March 12, 2014

Malaysian Flight 370 - Time to ask different questions


At first glance this story didn’t look like something I had anything to contribute to. Sure the disappearance of Malaysian Flight 370 seemed mysterious, but plane crashes over the ocean often are. However, more details keep coming out that just can’t be ignored. Often times tracking the misinformation will bring you closer to the truth than attempting to piece together the murky details.


Take for instance the two Iranians who had boarded the plane with stolen passports. Look how quickly Interpol shot down the possibility that this was a terrorist attack. Apparently, they “didn’t have criminal backgrounds” and were “most probably seeking asylum in Europe.”
Reports came out that relatives were waiting for them on the ground in Europe. iranians flight path.jpg


Now this is funny. Rather than take a more direct path (which is what you would expect for people traveling on a stolen passport) these two Iranians traveled to Qatar under their actual identities. From Qatar (still under their true identities) they went completely in the opposite direction to Malaysia. In Kuala Lumpur they would switch out passports and board flight 370 to Beijing. Wait...I thought they were on their way to Western Europe?
It looks even more ridiculous when you look at it on a map (above). The blue box shows where their supposed final destination is. The red line shows their actual movements.
Two Iranians, traveling on false travel documents, and Interpol says they were seeking asylum in Western Europe. Misinformation.



So what do we know that is fact?
1. The Boeing 777 took off from Kuala Lumpur at 12:41am.
2. The flight was to travel 2,700 miles to Beijing, China.
3. At 1:30am flight traffic control lost traffic of the plane over the South China Sea.


That’s the end of fact. No one’s getting any real answers because everyone is chasing the same leads.


Aviation experts have gone on record saying that the sudden disappearance and lack of communication from the airplane suggest “something we’ve never seen before”. A sudden explosion from either technical malfunction or a terrorist attack would have left massive debris, oil, etc in the general vicinity of where the last known location was.


So what happened?


A Boeing 777 is one of the most technologically advanced passenger planes to ever be put up into the sky. That may have been it’s achilles heel. We live in an era of high technology and cyber warfare. In 2008 Wired magazine did a story on the vulnerability to passenger airlines to cyber attack. They specifically mentioned Boeing aircraft.


This is just a small example of the possibilities. It also illustrates a growing cyber warfare arms race. One that has been intensifying in the South and East China Seas more specifically. Last May,The New York Times did a story on China’s growing cyber warfare capability.
The Chinese are rapidly trying to play catch up in their periphery. It’ll take at least a decade to match the U.S. Navy in the Pacific theater. They can however attempt to counter American assets unconventionally. Cyber warfare is the new battleground. China’s only chance at the moment is to neutralize U.S. drones, planes, and missiles with their cyber warfare program.


So what’s the point here? Remember Korean Airlines Flight 007?


We’re way past the days of scrambling fighter jets to shoot down civilian aircraft. That type of incident would never cut it in this day of mass and instant media.The political blowback would be nuclear.
I’m not saying this happened, but the possibility that this was a cyber attack is possible. It may seem far fetched, but the misinformation regarding the two Iranians tells us that there is something more here. I don’t think a Chinese move such as this could occur completely unilaterally. There would have to be something here to justify to other governments the need to do this.


In November of last year a report came out that showed Tehran and Pyongyang have been covertly collaborating to construct an 80 ton rocket that can be used in both countries ICBM program. For the most part, China has been looking the other way. However, on March 3rd North Korea conducted a missile launch that endangered a Chinese passenger plane. The plane passed through the trajectory of the missile.
Just 3 days later China would make the most overt statement toward North Korea than we’ve seen in awhile.
http://www.reuters.com/article/2014/03/08/us-korea-north-china-idUSBREA2703Q20140308


"The Korean peninsula is right on China's doorstep. We have a red line, that is, we will not allow war or instability on the Korean peninsula," Chinese Foreign Minister Wang Yi told reporters at a news conference for the National People's Congress in Beijing. Wang would go on to say that peace could only be obtained via denuclearization.


1 day after the Chinese government draws their “red line” Flight 370 disappears.


It’s possible the two Iranians on board flight 370 were traveling to Beijing to catch the train into North Korea. If you’re traveling to North Korea the road starts in Beijing. Could these two Iranians been a part of the Tehran/Pyongyang ICBM collaboration?


If the Chinese government used a cyber attack to disable Flight 370 how long would the Boeing 777 have coasted under radar levels before it eventually hit the ocean? This would explain why all electronic contact with the airplane completely stopped. An explosion would have left wreckage at the last known contact spot. There would be evidence. However, a sudden catastrophic loss of power would have rendered all the aircrafts systems unresponsive. She would have glided well beyond where she was reported to be.


Again, I’m not saying this is what happened, but all the elements are there to ask the question. It’s a dramatic statement made toward North Korea to back off. As the Soviet Union showed us in 1983, this type of response is well within play. It’s also a move that the U.S. and the rest of the west wouldn’t pursue too heavily. Strategic goals align...and geopolitics is a cold business.

Wednesday, March 5, 2014

Ukraine, Crimea, Russia - What do we do?


The more I watch the media coverage on Ukraine, Crimea, and Russia the more irritated I am on what’s being said. More importantly, however,  is what’s not being said. No one is talking about what the long term repercussions of Russia’s actions are for the entire “World Island”.


Putin appears to be advocating an extremely dangerous foreign policy. He’s saying that ethnic identification is more important than citizenship.


In Putin’s mind if there’s a high ethnic population in a foreign country that gives the right to militarily annex territory from a sovereign nation. This foreign policy was on display in the invasion of Georgia in 2008 and now currently in Ukraine.


Be very careful with the box you’re opening up here Mr Putin. You’re stoking the flames of nationalism in an area that has seen this type of behavior before. Europe is already seeing the rise of several far right groups. The situation in Crimea has the ability to create an ethnic ripple that could reach both great oceans.
How long before the Chinese use this as a basis to annex parts of eastern Russia? The number of Han Chinese along Russia’s eastern border grows every year. How long before Azerbaijan uses their high number of ethnic Azeris inside Iran? What about the high amount of ethnic Hungarians in Romania? As history has shown all it takes is one charismatic leader to stoke the fascist flames.


No one seems too keen on providing the public with actual options. How can we as citizens demand any kind of action from our elected officials if we don’t understand what needs to be done? Quit with the clever catch phrases like “It’s a new Cold War” or “Putin out maneuvers the west” etc.


Well….what should the U.S./Western response be?


First of all Russia needs to be expelled from the G8 immediately. How they got in at all was a complete mystery. There’s nothing complex or dynamic with their economy. It’s a fossil fuel export driven cartel...that’s about it. Immediately offer the vacant space to China. This would send not only Russia a message but also to China as well. Reading between the lines China would know that their G8 membership could be stripped if their aggression in the East and South China Seas get out of control.
Second, the United States needs to increase their military footprint in NATO countries. Nothing major that would constitute a buildup on Russian borders. Just enough to show the eastern European countries that we’re committed to their security.
Third, the U.S. needs to immediately approve natural gas exports to western European allies, NATO members, and other countries Russia threatens with their energy monopoly. This would help to take away Moscow’s natural gas trump card, and buy some time for the southern gas corridor pipelines to be built (roughly in 2018).


Remember that having Putin so focussed on his periphery is a very good thing. I laugh when I hear people claim that Putin outmaneuvered the west on this. How? Besides the fact that Russia lost Ukraine the biggest loss is that he woke the United State’s up in an area he thought was secure. Putin was so comfortable with the state of affairs in the countries along his borders that he got greedy and began to meddle elsewhere. Iran, Syria, Egypt...all areas he was able to engage in with the stability of his periphery. Now he can’t devote so much attention there anymore.
If I’m John Kerry I’m advising the President to keep Putin focused on Ukraine, Georgia, Moldova, Belarus, etc. Don’t let the heat on this cool. While Putin’s eye is focused here we can go back to work elsewhere.

Russia is not a global superpower. They are however a strong regional power. The down side of a regional power trying to exert themselves throughout the globe is that they get over extended. This is what’s happening currently to Putin and why he’s currently on the defensive….not offensive.

Tuesday, February 25, 2014

Qatar - The United States’ Main Priority in the Middle East


Before saying anything I want the reader to remember one all encompassing point. If you get confused or lose track with anything in the following article go back and reference the next statement. Everything that happens in the Middle East revolves around energy.

Ok, now that we’ve got that out of the way…



Ever since the Arab Spring kicked off in December of 2010 I’ve been curiously following the Muslim Brotherhood. That obviously got me very interested in the Egyptian Revolution of 2011 and I looked on in amazement as the Muslim Brotherhood candidate Mohammed Morsi became President. The most interesting thing for me was how The United States and the Arab media dominated by Al Jazeera backed this new regime so intently.
Almost every Middle Eastern nation has an outright ban on the Muslim Brotherhood. The Muslim Brotherhood infiltrates a nation from the inside, incites populist uprisings, and attempts to topple governments. Egypt was their crowning achievement. So why is Qatar, who runs the Al Jazeera news network, the only nation in the Middle East not scared of the Muslim Brotherhood? Why was the United States so fully committed to Morsi’s government? It seems more evident as time goes by that the Muslim Brotherhood is a geopolitical tool being used by The United States and Qatar.

Why Qatar? Calling Qatar a country is a bit of a stretch. With a population of around 1.8 million only 250,000 of these are actual citizens. Citizens pay zero income tax and enjoy the highest per capita GDP in the world at 106,000. Qatar is an absolute monarchy ruled by the Al Thani family. The current Emir is Tamim bin Hamad Al Thani. I think it’s more accurate to look at Qatar as a large LNG (Liquified Natural Gas) company and the Emir is the CEO. The rest of the Al Thani family are the board members. This set up makes for a perfect relationship with the business minded Americans.



The relationship between the U.S. and Qatar took a big step forward in 1991. In an effort to diversify away from oil as their main cash crop a United States construction firm named Bechtel supervised the construction of the North Dome natural gas field off the Northeast coast. ExxonMobile stepped right up and became the largest foreign investor in the North field. Two U.S. companies were overseeing the development of the infrastructure and the drilling. In fact, the U.S. and other western nations provide the pink slips for all of the technology used in the North Field and in the GTL (gas-to-liquids) technology which makes it possible to ship LNG via the sea lanes.
The power of Qatar’s natural gas reserves is insane. They’re #3 in the world behind Russia and Iran respectively. The big difference is that Qatar only has 1.8 million inhabitants with only 250,000 of them being citizens. It’s a ridiculous amount of power all in the hands of the Al Thani family.


So in 1991 we have Bechtel and ExxonMobile developing the third largest gas reserves in the world. Later in that decade the Thani’s constructed the Al Udeid Air Base just south of Doha. Kind of interesting since Qatar didn’t even have an air force at the time. In steps the United States Army Corps of Engineers who begin constructing what would now be called United States Central Command.
It’s interesting to note that Qatar’s “military” is little more than a show piece. They have roughly 11,000 men to protect their borders and assets. How many Americans are at Al Udeid? Well, the exact number is classified. I’ve been there and it looked like a lot to me. It’s well known that in 1999 the Emir approved 10,000 U.S. personnel to be permanently stationed there. That’s almost as many as there are in the entire Qatari armed forces. Basically you can say that USCENTCOM is the guaranteer of Qatari security. We’ve never come out and actually said that but that’s what we’ve done. You can’t say the same for any other U.S. ally in theater...Saudi Arabia, Egypt, Jordan, not even Israel!


We’ve doubled down on Qatar and have slowly been alienating our traditional allies in the Middle East. It’s all about who controls the flow of energy. Qatar will be a major supplier to much of the world. They’re already the main supplier of LNG to Asia. Asia’s consumption is set to explode over the next 10-20 years.Qatar LNG exports map.gif
The primary route for Asia’s LNG is across the Indian Ocean and up through the South China Sea. Kind of puts into perspective why China is building up their naval presence there. Currently if you want to shut down China all you have to do is blockade ships coming from the Indian Ocean up through the South China Sea. Right now, Qatar and the United States control that flow of energy.
This brings us back to Egypt. The use of the Arab Gas Pipeline is a major strategic goal for both Qatar and the U.S. Access to that pipeline would enable Qatar to supply gas all the way into Syria.arab gas pipeline.png
Depending on who wins the current Syrian Civil war the Arab Gas Pipeline could extend up into Turkey where it would then link up with the South Caucasus Pipeline, the Trans-Anatolian Pipeline, and the Trans Adriatic Pipeline. Qatar’s North Field along with Azerbaijan’s Shah Deniz gas field would pump more natural gas into Europe than Russia does. This puts into perspective why Qatar has been funding the Syrian Opposition with weapons. It also shows why Russia is so adamant that they do not let Assad lose the country.


We’re out of the Cold War and into the Fossil Fuel War. Whoever controls the flow of energy controls the world. Right now the United States is going all in to ensure Qatar is the main supplier of natural gas to the planet. The current crises in Ukraine, the civil war in Syria, and even higher tensions in the South China Sea are all due in some part to this war. A chessboard that saw it’s pieces laid in the early 90’s is nearing its mid-game stage. The conclusion is still far from over.

In the end regardless of whether they tell you that the issue is either human rights, pro democracy, chemical weapons, etc….Everything that happens in the Middle East revolves around energy.

Saturday, February 22, 2014

A Tale of Two Asian Economies...


I’m going to start this by describing a country. See if you can guess who I’m talking about…


This country lies in East Asia. After much turmoil it was able to pull itself out of the gutter by building a huge export economy. Labor cost was low so outside businesses were quick to invest. No one paid much attention at first but before long everyone was intrigued by this nations back to back to back years of double digit economic gains. Money supply came in tidal waves.


View from the outside world


Pretty soon this country is dubbed the next great power of the world. Destined to overtake the United States and then some. This nation begins buying up property around the world including many well known landmarks in the United States. People start saying things like “They own the world” and “everything is made there”.


Meanwhile inside the country


Asset prices are soaring. It becomes so expensive to own property in the major cities that most people don’t even try. The state bank floods the banks with cash and credit increases at a large rate. The currency appreciates faster than anticipated. This makes their export goods not as competitive to the rest of the world and the economy slows down. A major economic crash hits the entire world and the export driven economy is dealt an even larger blow.


Who is it?


It depends on what generation you primarily grew up in. If you’re 35 or over you’re probably thinking this is Japan. If you’re 30 or under you’re most likely thinking China. The truth? You’d all be right.
The Japanese economy in the 80’s was a dynamic powerhouse. Sony bought CBS Records, Columbia Pictures , and Mitsubishi bought Rockefeller Center! Japan was surely buying up the U.S. brick by brick. Archived Article
Pretty soon we’d all be speaking Japanese right? Wrong. The Japanese asset price bubble popped (http://en.wikipedia.org/wiki/Japanese_asset_price_bubble) and their economy came crashing down. In fact most of Japan’s frenzy of buying up and investing in United States assets came just 2-3 years before the final collapse. Those “in the know” knew this was coming. They were buying and investing in anything they could OUTSIDE of Japan because there was literally no hope on the mainland.


Likewise, the Chinese economy these days is all the rage. And from where it began it’s come a long way. China’s GDP has risen rapidly over a short period of time (like Japan). Right now it sits at about half of the U.S. economy at around 8 trillion. However, this is no different than the rise of the Japanese or even the South Korean economy during their heydays.
If you look at the Japanese problems in the early 90’s and the current Chinese economy you’ll see some striking similarities. Currency appreciation, soaring asset prices, investing out of country rather than in, etc.


Now, each of these Asian economies have had their issues during their rapid rise. China, however has some pretty scarey and glaring problems. To start, their banking system is totally screwed. Check it out. The state runs the bank, the bank gives credit to state run companies to manufacture goods in large bulk. What happens when the world economy is down and no one is buying their cheap goods? Those state run companies don’t turn a profit and default on their state granted loans. In fact net domestic credit (state granted loans to state companies) is said to equal 140% of their GDP. They’re massively overleveraged. To make matters worse China doesn’t include any of this on their balance sheets. As the economy slows down this will become an even greater problem as the state will not be able to pump money into their banks to keep their state run businesses afloat.


A Chinese problem that Japan didn’t have to deal with is a massive social disruption. Foreign companies can’t afford to stay in China. They’re beginning to move their factories to places like Vietnam, Mexico, and Ethiopia. As jobs disappear and cash flow dries up what’s going to happen to China’s 1.3 billion people? Especially in China’s interior where it is the least developed. Civil unrest could reach epic proportions.

You can bet that the Chinese government is watching the current protests in Thailand intently. Likewise, the citizens of China are doing the same. In the past the Chinese government has used nationalism to divert the attention of the populace away from their current problems and toward countries like Japan and the U.S. They’ll most likely do the same in the near future. Look for China to get more aggressive towards her neighbors and for their businessmen to invest heavily outside the country. Those two signs alone will tell you more than “official state released economic numbers”.