NATO: A Dangerous Paper Tiger

Authored by Patrick Armstrong via The Strategic Culture Foundation,

The Chinese have a genius for pithy expressions and few are more packed with meaning, while immediately understandable, than "paper tiger". NATO is one, but paper tigers that overestimate their powers can be dangerous.

Some Russians are concerned that there are today more hostile troops at the Russian border than at any time since 1941. While this is true, it is not, at the moment, very significant. The Germans invaded the USSR with nearly 150 divisions in 1941. Which, as it turned out, were not enough.

Today NATO has – or claims to have – a battle group in each of the three Baltic countries and one in Poland: pompously titled Enhanced Forward Presence. The USA has a brigade and talks of another. A certain amount of heavy weaponry has been moved to Europe. These constitute the bulk of the land forces at the border. They amount to, at the most optimistic assessment, assuming everything is there and ready to go, one division. Or, actually, one division equivalent (a very different thing) from 16 (!) countries with different languages, military practices and equipment sets and their soldiers ever rotating through. And, in a war, the three in the Baltics would be bypassed and become either a new Dunkirk or a new Cannae. All for the purpose, we are solemnly told, of sending "a clear message that an attack on one Ally would be met by troops from across the Alliance". But who"s the "message" for? Moscow already has a copy of the NATO treaty and knows what Article V says.

In addition to the EFP are the national forces. But they are in a low state: "depleted armies" they"ve been called: under equipped and under manned; seldom exercised. The German parliamentary ombudsman charged with overseeing the Bundeswehr says "There are too many things missing". In 2008 the French Army was described as "falling apart". The British Army "can"t find enough soldiers". The Italian army is ageing. Poland, one of the cheerleaders for the "Russian threat" meme, finds its army riven over accusations of politicisation. On paper, these five armies claim to have thirteen divisions and thirteen independent brigades. Call it, optimistically, a dozen divisions in all. The US Army (which has its own recruiting difficulties) adds another eleven or so to the list (although much of it is overseas entangled in the metastasising "war on terror"). Let"s pretend all the other NATO countries can bring another five divisions to the fight.

So, altogether, bringing everything home from the wars NATO is fighting around the world, under the most optimistic assumptions, assuming that everything is there and working (fewer than half of France"s tanks were operational, German painted broomsticks, British recruiting shortfalls), crossing your fingers and hoping, NATO could possibly cobble together two and a half dozen divisions: or one-fifth of the number Germany thought it would need. But, in truth, that number is fantasy: undermanned, under equipped, seldom exercised, no logistics tail, no munitions production backup, no time for a long logistics build up. NATO"s armies aren"t capable of a major war against a first class enemy. And no better is the principal member: "only five of the US Army’s 15 armoured brigade combat teams are maintained at full readiness levels". A paper tiger.

This reality was on display – for those who could see – in the "Dragoon Ride" of 2015. Intended "to assure those allies that live closest to the Bear that we are here", it was a parade of light armoured vehicles armed with heavy machine guns. Although breathlessly covered in the US media ("Show the world some of the firepower the United States and its NATO partners have in Eastern Europe"), it is unlikely that any watcher who had served in a Warsaw Pact army was impressed by what was in effect a couple of dozen BTR-50s. And neither was the US Army when it thought about it: a rush program was put into effect to give the vehicles a bigger weapon. The first one was delivered a year later. So now the US Army has a few lightly armoured vehicles with cannons. Something like the Soviet BTR-80 of the 1980s. Meanwhile, the Russians have the Bumerang-BM turret. Years of kicking in doors and patrolling roads hoping there are no IEDs are poor preparation for a real war.

No wonder NATO prefers to bomb defenceless targets from 15,000 feet. But there too, the record is unimpressive. Consider NATO"s last "successful" performance against Libya in 2011. No air defence, no opposition, complete freedom of movement and choice of action; and it took 226 days! Kosovo, a similar air action against a weak opponent, took 79 days. Meanwhile the years roll by in Afghanistan and Iraq.

Not, in short, a very efficient military alliance even when it is turned on against more-or-less helpless victims.

But there is one obvious question: does NATO take all its Russian threat rhetoric seriously, or is it just an advertising campaign? A campaign to bring in £240 million from the Baltics, an extra eighty billion for the US military-industrial complex, US$28 billion for Poland, Patriot missiles for Sweden, billions for F-35s for Norway (but no hangars for them), spending increases in the UK, Germany, France, Canada, Czech Republic and so on. A Russian threat is good for business: there"s poor money in a threat made of IEDs, bomb vests and small arms. Big profits require big threats. As I have written elsewhere, Russia was thought to be the right size of threat – big enough, but not too big. And they thought it was a safe target too – remember Obama in 2015 and his confidence that Russia didn"t amount to much?

Or so they thought then. What is amusing is that NATO is starting to worry about what it has awoken: "aerial denial zones", British army wiped out in an afternoon, NATO loses quickly in the Baltics, unstoppable carrier-killer missile, "eye-watering" EW capabilities, "black hole" submarines, generational lead in tanks, "devastating" air defence system, "totally outmatched". Russian actions, both diplomatic and military, in Syria gave NATO a taste: the Russian military is far more capable than they imagined. And far better wielded. The phantom conjured up to justify arms sales and NATO expansion now frightens its creators. A particularly striking example comes from General Breedlove, former NATO Supreme Commander who did much to poke Russia: he now fears that a war "would leave Europe helpless, cut off from reinforcements, and at the mercy of the Russian Federation." Not as negligible as they thought.

To what should we compare this weak, incompetent but endlessly boastful and belligerent alliance? In the past I have suggested that NATO is a drunk that drinks to cure the effects of its last bender. Is it a child in an endless tantrum, frightening itself with the stories it tells itself? Like the Warsaw Pact it is frightened of contradicting information or opinion and insists they be blocked. Certainly it is an exemplar of complacent self delusion: "Projecting Stability Beyond Our Borders" boasts about the Balkans, Iraq and Afghanistan. The unicorns roam free in NATOland.

There is no reason to bother to read anything that comes out of NATO Headquarters: it"s only wind. There is one response. And that is Libya. When they say stability, respond Libya. When they say terrorism, respond Libya. When they say peace, respond Libya. When they say dialogue, respond Libya. When they say values, respond Libya. NATO is dangerous in the way that the stupid and deluded can be. But, when its principal member starts demanding its members "pay their share", and the people of five members see Washington a greater threat than Moscow, maybe its final days are upon us.

But incessant repetition becomes reality and that"s where the danger lies. Hysteria has reached absurd proportions: 2014"s "gas station masquerading as a country" decides who sits in the White House; directs referendums in Europe; rules men"s minds through RT and Sputnik; dominates social media; every Russian exercise brings panic. This would all be amusing enough except for the fact that Moscow doesn"t get the joke. While the NATO forces on their border may be insignificant at the moment, they can grow and all armies must prepare for the worst. The First Guards Tank Army is being re-created. I discuss the significance of that here. When it is ready – and Moscow moves much faster than NATO – it will be more than a match, offensively or defensively, for NATO"s paper armies. And, if Moscow thinks it needs more, more will come. And there will be no cost-free bombing operations at 15,000 feet against Russia. NATO"s naval strength, which is still real, is pretty irrelevant to operations against Russia. And still the paper tiger bares its paper teeth.

In other words – and I never tire of quoting him on this – "We have signed up to protect a whole series of countries, even though we have neither the resources nor the intention to do so in any serious way". NATO has been kiting cheques for years. And rather than soberly examine its bank account, it writes another, listening to the applause in the echo chamber of its mind.

"Pride goeth before destruction, and a haughty spirit before a fall." We can only hope that NATO"s coming destruction does not destroy us too.

Germany’s Delegation To Russia Signals That Merkel Is Looking For New Allies

By George Friedman of Mauldin Economics

A delegation of executives from major German corporations recently met with Russian President Vladimir Putin.

Such delegations are not unusual. Sometimes it is routine, sometimes a courtesy. But occasionally, it has significance. In the case of Russia-Germany relations, such meetings are always potentially significant.

Germany’s Unsteady Relations

Two relationships are critical to Germany.

One is with the European Union, the other is with the United States. Neither relationship is stable right now. Brexit, the Spanish crisis, Germany feuding with Poland and the unsolved economic problems of southern Europe are tearing the European Union apart.

The Germans and the EU apparatus claim that none of these threaten the bloc. In fact, almost a decade after 2008, Europe appears to be achieving very modest economic growth. But the Germans know the dangers that lie ahead, even if Brussels does not.

Many of the EU’s problems are political, not economic. (I wrote about the inherent weakness of Europe in my free e-book, The World Explained in Maps, which you can find here)

Poland and Germany have butted heads over the tension between the right to national self-determination and EU rules. This is also what Brexit was about.

Spain is locked in a dispute over the nature of a nation and the right of a region to secede, while the EU considers what role it should play in the domestic matters of a member state. And although southern Europe’s problems are economic, the fact that Europe has eked out minimal growth means neither that such growth is sustainable nor that the growth rate comes close to solving the Continent’s deep structural problems.

As the de facto leader of the EU, Germany has to appear confident while considering the implications of failure.

The German relationship with the United States is unsettled—and not just because of President Donald Trump’s personality.

The strategic and economic situation in Europe has changed dramatically since the early 1990s—when the Soviet Union fell, Germany reunified and the all-important Maastricht treaty was signed—but Germany’s structural relationship with the US has not.

Both are members of NATO, but they have radically different views of its mission and its economics. Germany has the world’s fourth-largest economy, but its financial contribution to NATO doesn’t reflect that.

Then there is Russia. The American policy toward Russia has hardened since the Democratic Party adopted an intense anti-Russia stance following the presidential election—more intense even than that of the Republican Party, which has always been uneasy with Russia.

The Ukraine crisis continues to fester while US troops are deployed in the Baltics, Poland, and Romania. This has widened rifts within the EU. Germany isn’t interested in a second Cold War; Eastern Europe believes it’s already in one.

The Eastern Europeans are increasingly alienated from the Germans on the issue and more closely aligned with the Americans. At a time when German relations with key Eastern European countries are being tested, the added strain of US policy in the region is a threat to German interests.

Germany wants the Russia problem to subside. The US and its Eastern European allies think the way to accomplish that is through confrontation.

An Alternative That Germany Doesn’t Want

Germany’s foreign policy has remained roughly the same since 1991, even as the international reality has changed dramatically. This is forcing Germany toward a decision it doesn’t want to make.

It must consider what happens if the EU continues to disintegrate and if European countries’ foreign policies and politics continue to diverge.

It must consider what happens if the US continues to shape the dynamics of Europe in a way that Germany will have to confront American enemies, or refuse to do so. This isn’t just about Russia—we can see the same issue over Iran.

Germany can’t exist without stable economic partners. It has never been self-sufficient since it reunified. It must explore alternatives.

The most obvious alternative for Germany has always been Russia, either through alliance or conquest.

Germany needs Russian raw materials. It also needs the Russian market to be far more robust than it is so that it can buy more German goods.

But Russia is incapable of rapid economic development without outside help, and with the collapse of oil prices, it needs rapid development to stabilize its economy. Germany needs Russia’s economy to succeed, and what it has to offer Russia is capital, technology, and management.

In exchange, Russia can offer raw materials and a workforce.

An alignment with Russia could settle Eastern Europe in Germany’s orbit. With the way things are going, and given Germany’s alternatives, the Russian option is expensive but potentially very profitable.

But Germany has a problem with Russia. Every previous attempt at alignment or conquest has failed. Building up the Russian economy to create a robust market for German goods would certainly benefit both countries, but it would also shift the balance of power in Europe.

Right now, Germany is militarily weak and economically strong. Russia is moderately powerful militarily and economically weak. An alignment with Germany could dramatically strengthen Russia’s economy, and with it, its military power.

Having moved away from the United States and de-emphasized military power in the rest of the European peninsula, Germany could find itself in its old position: vulnerable to Russian power, but without allies against Russia.

On a Lookout for New Allies

The corporate chiefs’ trip to Russia is not a groundbreaking event, nor does it mark a serious shift in German policy. But it is part of an ongoing process. As the international reality shifts from what Germany needs, Germany must find another path.

In the short term, the United States is vulnerable to a cyclical recession, and hostility toward Germany is increasing in Europe—particularly in Eastern Europe. China is facing internal challenges of its own. There are few other options than Russia, and Russia is historically a most dangerous option for Germany.

Russia Kicks Off "Biggest Display Of Military Power Since The Cold War"

Today, Moscow kicked off its controversial, week-long "Zapad-2017" drill, the latest iteration of a series of training maneuvers that began under the Soviet Union in the 1970s, and which has angered and put NATO and Baltic States leaders on edge. Land, sea and air units will be taking part in war games until the 21st of September across a huge area encompassing western Russia, Belarus, the Baltic Sea and the Russian exclave of Kaliningrad.

After a long break following the collapse of communism, Zapad, or "west" in Russian, was revived in 1999 and then was expanded after Vladimir Putin became president at the end of that year. Previous versions were held in 2009 and 2013.  Moscow says fewer than 13,000 troops are participating - the threshold for inviting international observers - but NATO members believe as many as 100,000 troops will be involved in the drills. That would make this year"s drill the biggest display of Russian military power since the end of the Cold War a quarter-century ago. 

Foreign observers from NATO were never allowed to watch Soviet-era Zapad exercises, and diplomats based in Moscow were barred from visiting regions where the exercises were taking place. That was supposed to change with the signing of the Vienna Document, adopted in 1990 by the Vienna-based Organization for Security and Cooperation in Europe and updated in 2011, but Russia has always found ways to circumvent the agreement.

In the drill, Russia and Belarus will deploy their troops, designated as "the Northern ones" to stand up to the aggression from "the Western ones" – armed attackers from the made-up countries of Vesbaria, Lubenia, and Veishnoria. According to the scenario released by Russian and Belarusian defense officials, Vesbaria and Lubenia are located in the Baltic region and control the corridor which links the Russian exclave of Kaliningrad with Belarus.

In the real world, the corridor roughly corresponds to the border between Lithuania and Poland, both of them NATO members.  The hypothetical state of Veishnoria, however, is located in the Grodno area of Belarus, near the country"s western border. Experts cited by DW see this as a sign that Minsk and Moscow are preparing scenarios for threats originating in NATO countries as well as from within Belarus. The Grodno area seems to have a special significance as the home for a large population of Poles living in the former Soviet state. However, military officials insist that the scenario was developed "against a hypothetical opponent, unrelated to the concrete region."

What is the goal of the drill?

"Belarus and the Kaliningrad region have been infiltrated by extremist groups with the intention of committing terrorist attacks. The illegal militias are backed from abroad, providing them with armaments and naval and air capabilities. In order to neutralize the opponents, land forces will be deployed to cut off their access to sea and block air corridors in the region, with the support of the air force, air defense forces, and the navy," the official plan says.

The goal of the Zapad-2017 maneuvers is to coordinate actions between regional military commands "in the interest of ensuring military safety," Moscow and Minsk said. "The Republic of Belarus strives to prevent armed conflicts, and the Russian federation is providing it with political backing, financial aid, as well as technical and military support," according to the Belarusian Defense Ministry.

The drill is set to proceed in two stages. Initially, the military will boost their air force and air defense capabilities to protect key military and state objects, and prepare to "isolate regions of activity by the illegal armed groups and their subversive-reconnaissance squads." The second stage will be "to work out the issues of managing troops while repelling an aggression" against Russia and Belarus.

Who will take part?

Officially, the two countries say that some 12,700 servicemen will be involved in the upcoming drills. "Zapad-2017" will also involve 70 planes and helicopters, 280 tanks, 200 artillery weapons, ten ships, 200 "heavy weapons and guns" and various other pieces of military equipment. The drills will also include agents of the Russian intelligence service FSB, as well as people working for the Russian Foreign Ministry and the Ministry of Emergency Situations.

However, NATO allies have repeatedly disputed these numbers, with German Defense Minister Ursula Von der Leyen claiming the real number is likely to be upwards of 100,000 troops. International accords mandate that countries provide a larger degree of transparency when holding drills with over 13,000 troops.

Last weekend, Russia’s Defense Ministry said it was "bewildered" by Von der Leyen"s assertion, and repeated its claims that drill would stay below the 13,000 threshold. Previously, the Kremlin has asked foreign defense officials and military-diplomatic corps to visit the final stage of the joint exercise at one of the sites in Russia. Belarus also stated that it had sent out invitations to UN, OSCE, NATO, the post-Soviet Commonwealth of Independent States, and military attaches accredited in Belarus.

Despite a global anti-Russian wave that would make McCarthy blush, so-called experts don"t believe that Russia is about to launch a war, at least not yet , according to NBC.  "NATO remains calm and vigilant, and committed to keeping Estonia and all our allies safe," NATO Secretary General Jens Stoltenberg said last week in Estonia, one of the tiny Baltic nations that borders Russia and often worries about undue influence from Moscow. But not everyone in the region is so sanguine. In Lithuania, another Baltic nation that was once part of the Soviet Union, Defense Minister Raimundas Karoblis summed up the mood.

"We can"t be totally calm. There is a large foreign army massed next to Lithuanian territory," he told Reuters.

Other Western officials, including the head of the U.S. Army in Europe, Gen. Ben Hodges, have raised concerns that Russia might use the drills as a "Trojan horse" to make incursions into Poland and Russian-speaking regions in the Baltics. Hodges made the comment in a Reuters interview in July.

There are fears that Moscow may be moving far more troops into Belarus than it intends to withdraw, establishing a permanent military presence there on the border with NATO countries. And officials in the Baltics and Poland have voiced alarm that the exercises could be used as a cover for Russian aggression, as happened in 2014, when Moscow staged large-scale exercises to camouflage preparations to intervene on the side of pro-Russian rebels in eastern Ukraine.

NATO is also concerned: "Russia is not organizing defensive operations but instead an offensive threat, testing how serious we are about protecting the members of NATO," said Jonathan Eyal, international director of the Royal United Services Institute, a London-based think tank. Belarus not only borders Russia, but also three of America"s key but relatively isolated NATO allies: Poland, Lithuania, and Latvia.

"Russia is reminding us that the Baltic states are relatively indefensible," Eyal added according to NBC. "They want to see where the cracks are in NATO and where they can be widened."

Stoltenberg, the NATO secretary general, said he could not speculate about the real purpose of Zapad-2017, saying that this would become clear only once it was over next week. At the same time, he noted, the exercise fits a “pattern of a more assertive Russia” that is “exercising more aggressively” and, through its actions in Crimea and eastern Ukraine, has shown that “it is willing to use military force against its neighbors.”

In hypothetical scenarios played out by the Rand Corporation last year found that it would take Russian forces just 60 hours to reach the outskirts of the Estonian and Latvian capitals of Tallinn and Riga.

In terms of this year"s Zapad exercise, what concerns some officials and experts is they aren"t exactly sure how big they will be. There are also questions about Putin"s true intention. The last Zapad exercise, in 2013, featured "more than 75,000 men, who were engaged in simulated operations in the air, on land and at sea," according to a report by The Jamestown Foundation, a Washington-based research institute. For comparison, last year 24 NATO members held a military exercise named "Anakonda," which included more than 31,000 service members.

Whatever the number, the exercises come against the backdrop of several close encounters between Russian and NATO aircraft and ships in recent years.

"There"s always a possibility for miscalculation when that"s going on," Gen. Curtis M. Scaparrotti, NATO"s supreme allied commander, told reporters last month, referring to these near-misses. "I think that"s the importance of transparency, particularly on Russia"s part, to tell us about [the Zapad] exercise: What should we expect to see, what is the size of them, where will they operate?"

* * *

What is far less mentioned in the western press, is that are pointed out earlier, Belarus had previously invited international monitors from various foreign countries to observe the active phase of the drills.

“We are not planning to attack anyone. In terms of what the drills will be like – we’ve invited almost anyone who wants to attend. Let them come and watch,” Belarusian President Aleksandr Lukashenko stated in September. In July, Belarusian Defense Minister Andrey Ravkov, also stressed that international organizations, including the UN, NATO, and the OSCE, as well as more than 80 foreign observers, are invited to the drills since there is “nothing to conceal.”

Finally, while the world’s attention is focused on Zapad 2017, NATO and its allies have increased their military activity on Russia"s borders.

Launching today, by odd coincidence, Sweden is holding its largest war games in over two decades, timed to start at the same time as the Russia-Belarus drills. Apart from exceeding the number of troops participating in Zapad 2017 by several thousand, the maneuvers are aimed to prepare for a possible Russian attack.

Moreover, around 40,000 NATO troops and allied forces have taken part in various military drills in Europe this summer, according to Air Force Brigadier General John Healy, who directs the drills of US forces in Europe. Eighteen NATO exercises, including Noble Partner in Georgia, occurred in the Black Sea Region alone, close to the Russian border, in summer 2017. At the same time Hungary, Romania and Bulgaria joined separate US-led Saber Guardian 2017, which took place this summer. Around 25,000 service members from 22 allied and partner nations were involved in the drills, making them the largest of the 18 Black Sea region exercises this year.  Earlier, Ukraine hosted the US-led Sea Breeze 17 naval drills, involving around 2,500 troops and more than 30 ships from 17 participating countries.

Massive Russian, NATO Wargames Set To Begin Amid Mutual Accusations Of Provocation

As the two old, cold war adversaries, Russia and NATO, prepare to begin massive war games to show off their respective military strengths, it was the UK"s turn to accuse Russia first of "testing the West" by conducting war games on NATO’s eastern flank in its biggest military exercise in four years. Speaking on BBC"s “The Andrew Marr Show” on Sunday, U.K. Defense Secretary Michael Fallon said that Russia"s exercise "is designed to provoke us, it’s designed to test our defenses, and that’s why we have to be strong. Russia is testing us and testing us now at every opportunity. We’re seeing a more aggressive Russia. We have to deal with that."

In a testament to our hyperbolic times, Fallon"s statement also contained just a "little bit" of fake news: while Fallon said that more than 100,000 Russian and Belorussian troops are at the borders of North Atlantic Treaty Organization members, Russian Deputy Defense Minister Alexander Fomin said last month that the so-called Zapad 2017 exercise Sept. 14-20 involves 13,000 troops, and that the drills are “purely of a defensive nature" according to Bloomberg.

Zapad 2017 preparations

To this end, NATO Secretary General Jens Stoltenberg also told BBC today that Russia should allow western monitors to access the proceedings, in line with rules that require international observation of all exercises involving more than 13,000 troops. “We have seen before that Russia has used big military exercises as a disguise or a precursor for aggressive military actions against their neighbors,” Stoltenberg said. “That happened in Georgia in 2008 when they invaded Georgia, and it happened in Crimea in 2014 when they illegally annexed Crimea. So we call on Russia to be fully transparent.”

Stoltenberg also said that Russia has a history of “under-reporting” the number of troops in its exercises and “using loopholes in international agreements to avoid international observation,” although it was not clear just which country Putin had an intention of invading next.

Meanwhile, what the NATO commander forgot to mention is that just days before the dreaded Russian "Zapad 2017" exercise is set to begin, NATO"s own Steadfast Pyramid 2017 military exercise kicked off in Latvia on Sunday, with 40 senior commanders from NATO states, as well as Finland and Sweden. They are expected to train how to “plan and conduct operations” amid the bloc’s buildup in the region.

Steadfast Pyramid 2017 and Steadfast Pinnacle 2017, involving more than 40 senior officers from NATO member states, plus Finland and Sweden, will take place at the Riga-based Latvian Defense Academy, the country’s national news agency LETA reported on Sunday.

Covering the duration of Russia"s drills, Steadfast Pyramid, the first part of the exercise, will last until September 15. It is reportedly “to improve the ability of top-level officers and commanders to plan and lead joint operations,” according to LETA. Steadfast Pinnacle, the next stage of the drill, will last from September 17 until September 22. Steadfast Pyramid and Steadfast Pinnacle were first held in Latvia in 2011.  British General James Everard, the NATO Deputy Supreme Allied Commander Europe, is expected to arrive in Latvia to oversee both stages of the exercise, Latvia’s Defense Ministry said, according to LETA.

NATO soldiers participating in East European war games.

Meanwhile, not much is known so far about NATO"s war games. A NATO fact sheet says Steadfast Pyramid and Steadfast Pinnacle are focused on “further developing the abilities of commanders and senior staff to plan and conduct operations through the application of operational art in decision making.”

Latvia, a former Soviet republic, has seen a major NATO buildup over the past months. Recently, NATO deployed four multinational battlegroups in Estonia, Latvia, Lithuania, and Poland as part of Enhanced Forward Presence (EFP). These combat-ready battlegroups, led by the UK, Canada, Germany, and the US respectively, are meant to demonstrate “the strength of the transatlantic bond.” A 1,100-strong battlegroup led by Canada is stationed in Latvia, comprising a number of mechanized infantry units as well as a tank company and some support elements, according to NATO.

While NATO has denied it, Moscow has repeatedly accused NATO of offensive behavior, and justifies its own defensive buildup and posture on NATO"s encroachment on Russian borders.

Meanwhile, blissfully unconcerned about the Russian response, Poland and the Baltics have been calling for a stronger military presence in their countries, claiming it is necessary to deter “assertive” Russia. Lithuania has gone so far as suggesting developing a “military Schengen project that would facilitate the movement of troops in Europe.” Earlier this week, Lithuanian Defense Minister Raimundas Karoblis said the Benelux countries – Belgium, the Netherlands, and Luxembourg – as well as Finland and Estonia, support the plan, which includes “simplifying procedures and investing in infrastructure.”

At the same time, Moscow has consistently said the ongoing buildup threatens Russian and European security. In mid-July, Russian envoy to NATO Alexander Grushko said the alliance is pushing forward for “an intensive mastering of the potential theater of military operations, accompanied by the development of the necessary infrastructure.”

To underscore his point, Grushko added that from July to November, NATO will hold 15 drills complementing each other, “which are held in the same operative field and aimed at providing a vast range of support measures.”

Finally, Russian President Vladimir Putin earlier said that Moscow will not remain silent facing emerging threats on its western borders. NATO’s saber-rattling leaves Russia no other choice than to “give a suitable response to all of these actions,” he said, noting that Moscow’s countermeasures will be “much cheaper,” if not quite as technologically advanced, Putin told award-winning filmmaker Oliver Stone.

The Secret History Of The Banking Crisis

Authored by Adam Tooze via ProspectMagazine.co.uk,

Accounts of the financial crisis leave out the story of the secretive deals between banks that kept the show on the road. How long can the system be propped up for?

It is a decade since the first tremors of what would become the Great Financial Crisis began to convulse global markets. Across the world from China and South Korea, to Ukraine, Greece, Brexit Britain and Trump’s America it has shaken our economy, our society and latterly our politics. Indeed, it has thrown into question who “we” are. It has triggered both a remarkable wave of nationalism and a deep questioning of social and economic inequalities. Politicians promise their voters that they will “take back control.” But the basic framework of globalisation remains intact, so far at least. And to keep the show on the road, networks of financial and monetary co-operation have been pulled tighter than ever before.

In Britain the beginning of the crisis was straight out of economic history’s cabinet of horrors. Early in the morning of Monday 14th September 2007, queues of panicked savers gathered outside branches of the mortgage lender Northern Rock on high streets across Britain. It was—or at least so it seemed—a classic bank run. Within the year the crisis had circled the world. Wall Street was shaking, as was the City of London. The banks of South Korea, Russia, Germany, France, Belgium, the Netherlands, Ireland and Iceland were all in trouble. We had seen nothing like it since 1929. Soon enough Ben Bernanke, then chairman of the US Federal Reserve and an expert on the Great Depression, said that this time it was worse.

But the fact that the tumult assumed such spectacular, globe-straddling dimensions had initially taken Bernanke by surprise. In May 2007 he reassured the public that he didn’t think American subprime mortgages could bring down the house. Clearly he underestimated the crisis. But was he actually wrong? For it certainly wasn’t subprime that brought down Northern Rock. The British bank didn’t have any exposure in the United States. So what was going on?

The familiar associations evoked by the Northern Rock crisis were deceptive. It wasn’t panicking pensioners all scrambling to withdraw their savings at once that killed the bank. It wasn’t even the Rock’s giant portfolio of mortgages. The narrative of Michael Lewis’s The Big Short, of securitisation, pooling and tranching, the lugubrious details of trashy mortgage dealing, the alphabet soup of securitised loans and associated derivatives (MBS, CDO, CDS, CDO-squared) tell only one part of the story. What really did for banks like Northern Rock and for all the others that would follow—Bear Stearns, Merrill Lynch, Lehman, Hypo Real State, Dexia and many more—and what made this downturn different— so sharp, so sudden and so systemic, not just a recession but the Great Recession—was the implosion of a new system not just of bank lending, but of bank funding.

It is only when we examine both sides of the balance sheet—the liabilities as well as the assets—that we can appreciate how the crisis was propagated, and then how it was ultimately contained at a global level. It is a story that the crisis-fighters have chosen not to celebrate or publicise. Ten years on, the story is worth revisiting, not only to get the history right, but because the global fix that began to be put in place in the autumn of 2007 is in many ways the most significant legacy of the crisis. It is still with us today and remains largely out of sight. The hidden rewiring of the global monetary system provides reassurance to those in the know, but it has no public or political standing, no resources with which to fight back if attacked. And this matters because it is increasingly out of kilter with the nationalist turn of politics.

In the wake of the crash and its austere aftermath, voters in many countries have pointed the finger at globalisation. The monetary authorities, however, have quietly entwined themselves more closely than ever before—and they have done so in order to provide life support to that bank funding model which caused such trouble a decade ago. Ten years on, the question of whether this fix is sustainable, or indeed wise, is a question of more than historical interest.

“To keep the show on the road, networks of financial and monetary co-operation have been pulled tighter than ever before”

In 2007 economists were expecting a crisis. Not, however, the crisis they got. The standard crisis scenario through to autumn that year involved a sudden loss of confidence in American government debt and the dollar. In the Bush era, the Republicans had cut taxes and spent heavily on the War on Terror, borrowing from China. So what would happen, it was asked anxiously, if the Chinese pulled the plug? The great fear was that the dollar would plunge, interest rates would soar and both the US economy and the Chinese export sector would crash land. It was what Larry Summers termed a balance of financial terror. America’s currency seemed so doomed that in autumn 2007, the US-based supermodel Gisele Bündchen asked to be paid in euros for a Pantene campaign, and Jay-Z dissed the dollar on MTV.

But somewhat surprisingly, like the nuclear stand-off in the Cold War, the financial balance of terror has become the basis for a precarious stability. Crucially, both Beijing and Washington understand the risks involved, or at least they seemed to until the advent of President Donald Trump. Certainly during the most worrying moments in 2008 Hank Paulson, Bush’s last Treasury Secretary, made sure that Beijing understood that its interests would be protected. Beijing reciprocated by increasing its commitment to dollar assets.

In 2007, it was not the American state that lost credibility: it was the American housing market. What unfolded was a fiasco of the American dream: 8.7m homes were lost to foreclosure. But the real estate bust wasn’t limited to the US. Ireland, Spain, the UK and the Netherlands all had huge credit booms and suffered shattering busts. As homeowners defaulted some lenders went under. This is what happened early on to predatory lenders such as New Century and Countrywide. Bankruptcy also came to the Anglo Irish Bank and Spain’s notorious regional mortgage lenders, the cajas. In the fullness of time, it was—perhaps, though not necessarily—the fate that might well have befallen Northern Rock too. But before it could suffer death by a thousand foreclosures, Northern Rock was felled by a more fast-acting kind of crisis, a crisis of “maturity mismatch.”

Banks borrow money short-term at low interest and lend long at marginally higher rates. It may sound precarious, but it is how they earn their living. In the conventional model, however, the short-term funding comes from deposits, from ordinary savers. Ordinarily, in a well-run bank, their withdrawals and deposits tend to cancel each other out. Fits of uncertainty and mass withdrawals are always possible, and perhaps even inevitable once in a while. So to prevent them turning into bank runs, governments offer guarantees up to a reasonable amount. Most of the Northern Rock depositors had little to fear. Their deposits were, like all other ordinary savers, guaranteed by then Chancellor Alistair Darling. The investors who weren’t covered by government backing were those who had provided Northern Rock with funding through a new and different channel—the wholesale money market. They had tens of billions at stake, and every reason to panic. It was the sudden withdrawal of this funding that actually killed Northern Rock.

As well as taking in money from savers, banks can also borrow from other banks and other institutional investors. The money markets offer funds overnight, or for a matter of weeks or months. It is a fiercely competitive market with financial professionals on both sides of every trade. Margins are slim, but if the volumes are large there are profits to be made. For generations this was the preserve of investment bankers—the ultimate insiders of the financial community. They didn’t bother with savers’ deposits. They borrowed in the money markets. From the 1990s commercial banks and mortgage lenders began to operate on a similar model. It was this new form of “market-based” banking combined with the famous securitisation of mortgages that enabled the huge expansion of European and US banking that began to crash in 2007.

Run for the hills: Northern Rock depositors rush to start taking out their money. 

By the summer of 2007 only 23 per cent of Northern Rock’s funding came from regular deposits. More than three quarters of its operation was sustained by borrowing in capital and money markets.

For these funds there were no guarantees. For a run to develop in the money market, the mortgages did not need to default. All that needed to happen was for the probability of some of them defaulting to increase. That was enough for interbank lending and money market funding to come abruptly to a halt. The European money markets seized up on 9th August. Within a matter of days Northern Rock was in trouble, struggling to repay short-term loans with no new source of funding in prospect. And it was through the same funding channel that the crisis went global.

The attraction of money market funding was that it freed you from the cumbersome bricks-and-mortar branch network traditionally used to attract deposits. Using the markets, banks could source funding all over the world. South Korean banks borrowed dollars on the cheap to lend in Won. American banks operating out of London borrowed Yen in depressed Japan, flipped them into dollars and then lent them to booming Brazil. The biggest business of all was the “round tripping” of dollars between America and Europe. Funds were raised in America, which for reasons of history and the nation’s sheer scale, is the richest money market in the world. Those dollars were exported to institutions and banks in Europe, who then reinvested them in the US, very often in American mortgages. The largest inflow of funds to the US came not from the reinvestment of China’s trade surplus, but through this recycling of dollars by way of Europe’s banks. Barclays didn’t need a branch in Kansas any more than Lehman did. Both simply borrowed money in the New York money markets. From the 1990s onwards, Europe’s banks, both great and small, British, Dutch, Belgian, French, Swiss and German, made themselves into a gigantic trans-Atlantic annex of the American banking system.

All was well so long as the economy was buoyant, house and other asset prices continued to go up, money markets remained confident and the dollar moved predictably in the direction that everyone expected, that is gently downwards. If you were borrowing dollars to fund a lending business the three things that you did not want to have happen were: for your own loans to go bad; money markets to lose confidence; or for dollars to suddenly become scarce, or, what amounts to the same thing, unexpectedly expensive. While the headlines were about sub-prime, the true catastrophe of the late summer of 2007 was that all three of these assumptions were collapsing, all at once, all around the world.

“The Fed effectively established itself as a lender of last resort to the entire global financial system”

The real estate market turned down. Large losses were in the pipeline, over years to come. But as soon as Bear Stearns and Banque Nationale de Paris (BNP) shut their first real estate funds, the money markets shut down too. Given the global nature of bank funding this produced an acute shortage of dollar funding across the European and Asian banking system. It was the opposite of what the best and brightest in macroeconomics had expected: strong currencies are, after all, meant to be built on thrift and industry, not shopping splurges and speculative debts. But rather than the world being glutted with dollars, quite suddenly banks both in Europe and Asia began to suffer periodic and panic-inducing dollar shortages.

The paradigmatic case of this counterintuitive crisis would eventually be South Korea. How could South Korea, a champion exporter with huge exchange reserves be short of dollars? The answer is that in the years of the recovery from the 1997 East Asian crisis, while Korean companies Hyundai and Samsung had conquered the world, Korea’s banks had been borrowing dollars at relatively low interest rates to lend out back home in Won to the booming home economy. Not only was there an attractive interest rate margin, but thanks to South Korea’s bouyant exports, the Won was steadily appreciating. Loans taken out in dollars were easier to repay in Won. As such these loans cushioned the losses suffered by South Korean firms on their dollar export-earnings.

By the late summer of 2008 the South Korean banks operating this system owed $130bn in short-term loans. Normally this was no problem, you rolled over the loan, taking out a new short-term dollar credit to pay off the last one. But when the inter-bank market ground to a halt the South Koreans were painfully exposed. Barring emergency help, all they could do was to throw Won at the exchange markets to buy the dollars they needed, which had the effect of spectacularly devaluing their own currency and making their dollar obligations even more unpayable. South Korea, a country with a huge trade surplus and a large official dollar reserve, faced a plunging currency and a collapsing banking system.

In Europe the likes of RBS, Barclays, UBS and Deutsche had even larger dollar liabilities than their South Korean counterparts. The BIS, the central bankers’ bank, estimated that Europe’s mega-banks needed to roll over $1-1.2 trillion dollars in short-term funding. The margin that desperate European banks were willing to pay to borrow in sterling and euro and to swap into dollars surged. Huge losses threatened—and both the Bank of England and the European Central Bank (ECB) could not do much to help. Unlike their East Asian counterparts, they had totally inadequate reserves.

The one advantage that the Europeans did have over the Koreans, was that the dollars they had borrowed had largely been invested in the US, the so-called “round-tripping” again. The huge portfolios of American assets they had accumulated were of uncertain value, but they amounted to trillions of dollars and somewhere between 20 and 25 per cent of the total volume of asset- and mortgage-backed securities. In extremis the Europeans could have auctioned them off. This would have closed the dollar-funding gap, but in the resulting fire sales the European banks would have been forced to take huge write downs. And most significantly, the efforts by the Fed and the US Treasury to stabilise the American mortgage market would have been fatally undercut.

“In the 60s, swaps were about stabilising exchange rates. Now they’re all about stabilising oversized banks”

This was the catastrophic causal chain that began to emerge in August 2007.

How could the central banks address it? The answer they found was three-pronged. The most public face of crisis-fighting was the effort to boost the faltering value of the mortgage bonds on the banks’ books (typically securitised versions of other banks’ mortgage loans, which were becoming less reliable in the downturn), and to provide the banks with enough capital to absorb those losses that they would inevitably suffer. This was the saga of America’s Troubled Asset Relief Programme, which played out on Capitol Hill. In the case of Northern Rock this prong involved outright nationalisation. Others took government stakes of varying sizes. Warren Buffett made a lucrative investment in Goldman Sachs. Barclays has now been charged by the Serious Fraud Office with fraudulently organising its own bailout, by—allegedly—lending money to Qatar, which that state is then said to have reinvested in Barclays. Without the bailout, you ended up with Lehman: bewildered bankers standing on the pavements of the City and Wall Street carrying boxes of their belongings. The masters of the universe plunged to earth. It half-satisfied the public’s desire for revenge. But it did nothing for business confidence.

With enough capital a bank could absorb losses and stay afloat. But to actually operate, to make loans and thus to sustain demand and avert a downward spiral of prices and more bankruptcies, the banks needed liquidity. So, secondly, the central banks stepped in, taking over the function, which the money market had only relatively recently assumed but was now suddenly stepping back from, of being the short-term lenders. The ECB started as early as August 2007. The Bank of England came in late, but on a large scale. The Fed became the greatest liquidity pump, with all of Europe’s banks benefiting from its largesse. The New York branches of Barclays, Deutsche, BNP, UBS and Credit Suisse were all provided with short-term dollar funding on the same basis as Citi, Bank of America, JP Morgan and the rest.

But it was not enough. The Europeans needed even more dollars. So the Fed’s third, final and most radical innovation of the crisis was to devise a system to allow a select group of central banks to funnel dollars to their banks. To do so the Fed reanimated an almost-forgotten tool called the “swap lines,” agreements between central banks to trade their currencies in a given quantity for a given period of time. They had been used regularly in the 1960s, but had since gone out of use. Back then, the aim was stabilising exchange rates. This time, the aim was different: to stabilise a swollen banking system that was faltering, and yet abjectly too big to fail. At a moment when dollars were hard to come by, the new swap lines enabled the ECB to deposit euros with the Fed in exchange for the dollars that the eurozone banks were craving. The Bank of England benefited from the same privilege.

Not that they were welcome at first. When the Fed first mooted the idea in the autumn of 2007, the ECB resisted. It did not want to be associated with a crisis that was still seen largely as American. If Gisele didn’t want to be paid her modelling fees in US dollars, why on earth should the ECB be interested? But as the European bank balance sheets unravelled, it would soon become obvious that Frankfurt needed all the dollars it could get. Initiated in December 2007, the swap lines would rapidly expand. By September all the major European central banks were included. In October 2008 the network was expanded to include Brazil, Australia, South Korea, Mexico, New Zealand and Singapore. For the inner European core, plus Japan, they were made unrestricted in volume. The sums of liquidity were huge. All told, the Fed would make swap line loans of a total of $10 trillion to the ECB, the Bank of England the National Bank of Switzerland and other major banking centres. The maximum balance outstanding was $583bn in December 2008, when they accounted for one quarter of the Fed’s balance sheet.

It was a remarkable moment: the Fed had effectively established itself as a lender of last resort to the entire global financial system. But it had done so in a decentralised fashion, issuing dollars on demand both in New York and by means of a global network of central banks. Not everyone was included. Russia wasn’t, which was hardly surprising given that it had come to blows with the west over Georgia’s Nato membership application only weeks earlier. Nor did the Fed help China or India.

And though it helped the ECB, it did not provide support to the “new Europe” in the east. The Fed probably imagined that the ECB itself would wish to help Poland, the Baltics and Hungary. But the ECB’s president Jean-Claude Trichet was not so generous. Instead, eastern Europe ended up having to rely on the International Monetary Fund (IMF).

Swapsies? As a scholar of the Great Depression, the Fed’s Ben Bernanke knew the importance of swap lines. Photo: MARK WILSON/GETTY IMAGES

The swap lines were central bank to central bank. But who did they really help? The reality, as all those involved understood, was that the Fed was providing preferential access to liquidity not to the “euro area” or “the Swiss economy” as a whole, but to Deutsche Bank and Credit Suisse. Of course, the justification was “systemic risk.” The mantra in Washington was: you have to help Wall Street to help Main Street. But the immediate beneficiaries were the banks, their staff, especially their highly-remunerated senior staff and their shareholders.

Though what the Fed was doing was stabilising the global banking system, it never acknowledged as much in so many words, certainly not on the record, where it said as little as it decently could about the swap line operation. The Fed’s actions have global effects. But it remains an American institution, answerable to Congress. Its mandate is to maintain employment and price stability in the US economy. The justification for the swap lines, therefore, was not global stability, but the need to prevent blowback from Europe’s de facto Americanised banks—to avoid a ruinous, multi-trillion dollar fire sale of American assets. Once the worst of the crisis had passed, Bernanke would assist the European banks in liquidating their American assets by way of the Fed’s three rounds of asset purchases, known as Quantitative Easing (QE).

The swaps were meticulously accounted for. Every cent was repaid. No losses were incurred—the Fed even earned a modest profit. They were not exactly covert. But given the extraordinary extension of its global influence that the swaps implied, they were never given publicity, nor even properly discussed. Bernanke’s name will be forever associated with QE, not swap lines. In his lengthy memoirs, The Courage to Act, the swaps merit no more than a few cursory pages, though Bernanke as a scholar of the 1930s knows very well just how crucial these instruments were. Is this an accident? Surely not. In the case of the swap lines, the courage to act was supplemented by an ample measure of discretion.

The Fed did everything it could to avoid disclosing the full extent and range of beneficiaries of its liquidity support operations. They did not want to name and shame the most vulnerable banks, for fear of worsening the panic. But there are politics involved too. Given the rise of the Bernanke-hating Tea Party in 2009, the likely response in Congress to news headlining the scale of the Fed’s global activity was unpredictable to say the least. When asked why no one on Capitol Hill had chosen to make an issue of the swap lines, one central banker remarked to me that it felt as though “the Fed had an angel watching over it.”

One other reason for the tight lips is that the story of the swap lines is not yet over. The network was rolled out in 2007 and 2008 as an emergency measure, but since then it has become the under-girding of a new system of global financial crisis management. In October 2013, as the Fed prepared finally to begin the process of normalisation by “tapering” its QE bond purchases, it made another decision which made plain that the new normal would not be like the old. It turned the global dollar swap line system into a standing facility: that is to say, it made its emergency treatment for the crisis into a permanent feature of the global monetary system. On demand, any of the core group of central banks can now activate a swap line with any other member of the group. Most recently the swap line system was readied for activation in the summer of 2016 in case of fallout from the Brexit referendum.

As the original crisis unfolded in 2008, radical voices like Joseph Stiglitz in the west, and central bankers in the big emerging economies called for a new Bretton Woods Conference—the meeting in 1944, which had decided on the post-war currency system and the creation of the IMF and the World Bank. The Great Financial Crisis had demonstrated that the dollar’s exorbitant privilege was a recipe for macroeconomic imbalances. The centre of gravity in the world economy was inexorably shifting. It was time for a new grand bargain.

“Central banks has staged Bretton Woods 2.0. But they had not invited the public or explained their reasons”

What these visionary suggestions failed to register was that foundation of the world’s de facto currency system were not public institutions like the IMF, but the private, dollar-based global banking system. The introduction of the swap lines gave that system unprecedented state support. The Fed had ensured that the crisis in global banking did not become a crisis of the dollar. It had signalled that global banks could rely on access to dollar liquidity in virtually unlimited amounts, even in the most extreme circumstances. The central banks had, in other words, staged their Bretton Woods 2.0. But they had omitted to invite the cameras or the public, or indeed to explain what they were doing.

The new central bank network created since 2008 is of a piece with the new networks for stress testing and regulating the world’s systemically important banks. The international economy they regulate is not one made up of a jigsaw puzzle of national economies, each with its gross national product and national trade flows. Instead they oversee, regulate and act on the interlocking, transnational matrix of bank balance sheets.

This system was put in place without fanfare. It was essential to containing the crisis, and so far it has operated effectively. But to make this technical financial network into the foundation for a new global order is a gamble.

It worked on the well-established trans-Atlantic axis. But will it work as effectively if it is asked to contain the fallout from an East Asian financial crisis? Can it continue to operate below the political radar, and is it acceptable for it to do so? With the Fed in the lead it places the resources, expertise and authority of the world’s central banks behind a market-based system of banking that has shown its capacity for over-expansion and catastrophic collapse. For all the talk of “macroprudential” regulation, Basel III and Basel IV, rather than disarming, down-sizing and constraining the global banking system, we have—through the swap lines—embarked on, if you like, a regulatory race to the top, where the authorities intervene heavily to allow the big banks in some countries to continue what they were doing before the unsustainable ceased to be sustained. And without even the political legitimacy conferred by G20 approval. Not everyone in the G20 is part of the swap line system.

The Fed’s safety net for global banking was born at the fag-end of the “great moderation,” the era when economies behaved nicely and predictably, and when a “permissive consensus” enabled globalisation. Though a child of crisis, it bore the technocratic, “evidence-based” hall marks of that earlier era. It bears them still.

Can it survive in an age when the United States is being convulsed by a new wave of economic nationalism? Is there still a guardian angel watching over the Fed on Capitol Hill? And with Trump in the White House, how loudly should we even ask the question?

NATO Beefs Up Logistics Infrastructure For Offensive Operations

Authored by Alex Gorka via The Strategic Culture Foundation,

Some very important news is kept out of spotlight and undeservedly so. Bits of information pieced together indicate that very quietly the North Atlantic alliance is gearing up for large-scale combat operations. War preparations are not limited to weapon systems deployments and troop movements that hit headlines. No combat can be waged without logistics.

The US Army official website informs that the US European Command (EUCOM) Logistics Directorate (ECJ4), other EUCOM directorates, NATO allies and partners, and the Joint Logistics Enterprise (JLEnt) are effecting an unprecedented security transformation. They are transitioning from being focused on assurance through engagement to being a warfighting command postured for deterrence and defense. Throughout fiscal year 2017, 28 joint and multinational exercises in 40 European countries, the buildup of four NATO Enhanced Forward Presence (EFP) multinational battlegroups in the Baltics, and overlapping deployments of rotating armored brigade combat teams and combat aviation brigades will test, validate, and offer proof of principle for these infrastructure and organic capability investments.

NATO Exercise Saber Guardian 17, a US Army Europe-led, multinational exercise, took place in Bulgaria, Hungary, and Romania on July 11 - 20, 2017 with 25,000 troops and forces from 24 countries. The event demonstrated the increased scope and complexity of war games. The drills were conducted against the background of this year"s rotational deployment of more than 4,500 troops in the Baltic states of Lithuania, Latvia and Estonia, as well as Poland. 2nd Cavalry Regiment soldiers are already operating as a deterrent force roughly 100 miles from Poland’s border with the Russian military enclave of Kaliningrad.

Citing the lessons learned from the training event, US Army Lieutenant General Ben Hodges, commander of US Army Europe, emphasized in an interview the importance of NATO logistics. According to him, progress is evident but much remained to be done to ease the movement of military equipment and forces across Europe in the event of a real crisis, and Germany could play a crucial role. Hodges noted that Berlin could ensure guaranteed rail access as part of its bid to boost military spending from around 1.2 percent of gross domestic product to the 2 percent NATO target.

The military leader underscored the importance of creating a military free transit zone modeled on the 1996 Schengen agreement to allow free forces movements across the borders of European NATO members.

Meanwhile, construction works are in full swing to enable Poland to host combat-ready stocks at the 33rd Air Base, operated by the Polish Air Force. Powidz, a village with a population of 1,000, is to become a strategically important NATO hub for the Baltics and all of Northern Europe. The plans include the delivery of more than a brigade’s worth of military vehicles, equipment, artillery and personnel. In April, Lt. Gen. Ben Hodges described it as the «center of the center of gravity».

Over the next two years, $70 million will be spent on 77 military infrastructure and improvement projects for both US Army and US Air Force operations. An additional $200 million in NATO funds will be spent for the US Army Corps of Engineers to construct a new storage site and warehouse facility in Powidz. Poland’s increasing importance is the result of a combination of factors, Hodges said, including geography and existing hubs, such as the NATO Enhanced Forward Presence unit in the country’s northeast. «Any contingency we have to deal with, we’ll almost certainly have to come through Poland», he noted.

US European Command Chief Gen. Curtis M. Scaparrotti is planning for an expanded military presence in Europe to eventually include a full US Army division. If that happens, even on a rotational basis, the Army would likely need more facilities for basing forces.

In May, US Army Europe announced that it had established a new tactical headquarters in Poznan, Poland. The goal is to enhance the mission command of US rotational forces and units assigned to US Army Europe conducting operations where no significant military presence had been previously maintained.

So, Poland is in focus of the infrastructure efforts but the plans go much further. The Estonian town of Tapa, which sits at an important railway junction, is located less than 150km (93 miles) from the Russian border. It has recently become the base for a NATO battle group, in accordance with the Enhanced Forward Presence concept approved at the Warsaw summit in 2016. It envisions multi-national battle groups deployed in each of the three Baltic States and another in Poland.

General Sir Nicholas Patrick «Nick» Carter, the head of the British Army as Chief of the General Staff, said «We would very much like to test the land line of communication from our mounting bases in Germany, forward into the Baltics, and we would absolutely like to test what it would be like bringing in reinforcing capabilities - the signature equipment that are appropriate to show how you would reinforce and to understand what would happen».

In 2016, Poland and the Baltic States reached an agreement to link Poland, Finland and the Baltic States with the unified Trans-European Transport Network (NRA) that will be crucial to the defense of the Baltic States. A continuous rail link named «Rail Baltica» from Tallinn to Warsaw (Poland), via Kaunas (Lithuania) and Riga (Latvia) will lead to significant logistical implications for the NATO.

Thomas Durell Young, a program manager at Naval Postgraduate School, Monterey, California, and a staff consultant at the RAND Corporation, has recently published a book, titled Anatomy of Post-Communist European Defense Institutions. He believes that the «new» members of the alliance - Hungary, Poland, the Czech Republic, the three Baltics States, Bulgaria, Romania, Slovakia, and some of the republics that emerged out of Yugoslavia - need to radically transform their «ineffectual legacy logistics organizations« with the help of «old» members of the alliance. Professor Young emphasizes the importance of reform as a potential war with Russia would «almost certainly» start in Central or Eastern Europe.

The rapid creation of logistics infrastructure and some other factors, such as militarization of the Scandinavian Peninsula, fit into a bigger picture of NATO war preparations in East Europe and the Baltics. These are not steps of defensive nature. The goal is to acquire the ability to move substantial forces to the areas close to Russia’s borders gearing up for offensive operations in an armed conflict.

"Our Leaders Should Shut Up" - Time For The US To Modernize Its Approach To Russia

Authored by James Durso via TheHill.com,

The Cold War was never won or lost; it just ended one day. Who even remembers where they were on December 3, 1989? 

As the Cold War ended, the U.S. forswore a demand for unconditional surrender, thanked God it was over, and thought about how to spend the peace dividend. The message Russia took away was: We didn’t lose.

And so, after the chaos of the Yeltsin years and “shock therapy,” Vladimir Putin ascended to the Russian presidency. Buoyed by high oil prices and the network of siloviki, he resumed the task of every Russian ruler since Peter the Great: securing the periphery.

Putin’s secure periphery won’t necessarily involve physical occupation of neighboring states. Russia’s goals can also be achieved by political subversion and using information warfare as a political warfare tool to create unsettled conflicts. As to what the Russians want to secure, it’s no secret – just look at a map.

The East European Plain covers the Baltics, Belarus, Ukraine, Moldova, Romania, and European Russia and is the traditional invasion route to Russia used by the Golden Horde, the Swedish Empire, the  Grande Armée, and the Third Reich. Russia is practically landlocked, has no ready access to the oceans, and its population centers, agricultural belt, transportation system, and industrial assets are concentrated West of the Urals – on the East European Plain.

Russia’s fear of invasion from the West probably originated in the 1200s and is captured in the lamentation, “for our sins, unknown tribes [Mongols] came” in The Chronicle of Novgorod. Russia will act to extend its borders, but the use of political warfare means it can stay below NATO’s Article 5 threshold and, when accused of hacking and stealing emails or whatnot, can direct the court’s attention to Exhibit A: Edward Snowden.

Whatever Putin’s motivation – patriotism, paranoia and insecurity, or all the money he allegedly has – his message about protecting Christianity and Russia’s unique culture against a homogenized, relativistic Europe resonates with many more Europeans than Communism ever did. Russia’s project is also aided and abetted by Germany’s feckless welcome of over one million Middle Eastern immigrants, many of whom will never be economically productive and thus be unlikely to assimilate.

So yes, Russia is challenging the U.S., but hyping Russia as a greater threat than the Islamic State, per Sen John McCain (R-Ariz.), is, as they say in Washington, “unhelpful.” It is, however, clever marketing to prepare the taxpayers for Cold War 2.0.

Much of America’s political class and commentariat doesn’t want to admit that the end of the Cold War, watershed that it was, didn’t mean an end to power politics on the continent. Is Russia unpredictable? No, but its tactics are, as we saw in Ukraine and Syria. In the annals of statecraft, that’s hardly cheating. Even worse, at least for some in Washington, Putin might actually believe what he’s saying.

What should we do? 

One is prioritize. As Charles de Gaulle asked, are we ready to trade New York for Paris? We probably weren’t then and we sure aren’t now as nothing less than an attack on the U.S. is worth a nuclear exchange. If Russia’s focus is on information operations (IO) and unconventional warfare, we should help the Eastern European states that already have experience with Russian cyber operations. Military maneuvers with allies are always useful, but political warfare is moving to the non-kinetic sphere of weaponized social media. IO adds another layer states must work through before they result to kinetic measures and, if combined with unconventional warfare instead of conventional forces on a tripwire footing, can limit the body count if things heat up.

Secondly, we should swear off “regime change.” A policy of regime change is an excellent way to rally the troops. Unfortunately, the troops it rallies are the opposition’s. Remember, the first rule of regime change is you don’t talk about regime change.

No doubt some senior Russian officials and businessmen are unsatisfied with Putin, but they’re not so unsatisfied that they will cooperate with the U.S., EU or NATO in unhorsing him, especially given our chronic inability to keep a secret. Despite all that “mafia state” chatter, Russia’s leadership will, if they need to, close ranks and clean house to protect themselves and Russia. I’m sure we’ll get along just great with President Sergei Shoigu.

Finally, our leaders should shut up. Calling Russia a “regional power,” as President Obama did, or saying Putin can be a “best friend,” as President Trump did, is counterproductive. We’ll get better results with Russia if we are firm, respectful, unambiguous, and consistent in defending our interests.

NATO Holds Defense Drill Simulating Russian Invasion Of Baltics

NATO officials are growing increasingly nervous about the possibility of an invasion of the Baltic states ahead of Russian wargames planned this fall on the border of Belarus and Poland that could involve as many as 100,000 troops. That "anxiety" was on display this week, when US and British troops carried out the first NATO military exercise that involved a simulated defense of the Suwalki Gap, an area in northern Poland on the border with Lithuania that serves as the gateway to the Baltic region.

In other words, a drill against a Russian invasion of the Baltics states, and by extension, Europe.

NATO officials described the area as a “choke point” that, if it were taken by an invading force, could potentially isolate the Baltic states from their NATO allies, according to Reuters.

"The gap is vulnerable because of the geography. It"s not inevitable that there"s going to be an attack, of course, but ... if that was closed, then you have three allies that are north that are potentially isolated from the rest of the alliance", said U.S. Lieutenant General Ben Hodges.

 

"We have to practice, we have to demonstrate that we can support allies in keeping (the Gap) open, in maintaining that connection," he said.

 

Since Russia’s annexation of Ukraine back in 2014, NATO has shifted four battlegroups totaling just over 4,500 troops to Estonia, Latvia, Lithuania and Poland.

US and UK aircraft took part in the exercises, alongside troops from Poland, Lithuania and Croatia in a simulated defense of the potential flashpoint in an area several hours" drive from where a U.S. battalion is stationed at Orzysz base in Poland, Reuters reported.

Of course, Russia has repeatedly said it has no plans to invade the Baltics, and has warned that the "defensive" buildup in NATO forces against its borders is an unprovoked act of aggression againt Russia.

However, Russia"s protests have done little to sway the US Senate, which passed new sanctions against Russia this week, allegedly in retribution for Russia’s meddling in the US election. The measures were included in an Iran sanctions bill that was widely expected to pass, but as the Hill reported yesterday, President Donald Trump is leaning on House Republicans to drop the bill because he fears it could damage US-Russia relations.

In addition to Trump, Germany and Austria have also voiced their displeasure for one measure outlined in the sanctions bill, asking the US drop its opposition to the Nord Stream 2 pipeline that would pump Russian gas to Germany beneath the Baltic Sea. Austria"s Chancellor Christian Kern and Germany"s Foreign Minister Sigmar Gabriel said earlier this week that it appeared that the opposition of the pipeline was aimed at securing US energy jobs and pushing out Russian gas deliveries to Europe.

“Europe"s energy supply is a matter for Europe, and not for the United States of America," Kern and Gabriel said.

Meanwhile, NATO acknowledged the symtoblic nature of the drills, saying the exercises were more of a gesture than a dress rehearsal for war. As Brigadier General Valdemaras Rupsys, head of Lithuania"s land forces, explained, “this is only a small-scale drill compared to what would be needed in case of a real attack.”