Friday News Roundup - August 25, 2023

While Washington has been in its traditional August tempo, our attention has been drawn to events elsewhere. While the discussion about the events in Maui have already moved to discussions about preparation, response, and the politics of natural disasters and climate, there is still a cost in lives and livelihoods that is still being tallied. Behind the numbers are the heart wrenching stories of loss and stunning tale of survival based on bravery — and sheer luck. As we await the exact toll of what is already the deadliest wildfire in modern U.S. history, it is yet another scene this summer of paradise turned to horror by the force of nature.

This week’s political and legal conversation has been driven by the first-ever presidential mugshot, released by Fulton County, Georgia, authorities following the 45th president’s booking on state charges related to the 2020 election. Now we wait for judges to decide on whether the case can remain in state courts, as well as the timing with co-conspirators named in the Georgia case and the other federal cases faced by the former president. Based on the polling, as well as what we saw in the Milwaukee GOP debate, the party remains united behind Trump as the front-runner. How the 2024 political conversation shapes up remains to be seen, but the debate illustrated the general election conundrum for the GOP — how does the party emphasize its winning economic message when the base is focused on Trump and post-Dobbs abortion legislation.

Again, away from Washington, the debate over the economic path ahead is underway with central bank leaders meeting in Jackson Hole, Wyoming, to discuss not only the path ahead for the U.S. economy’s recession or “soft landing” but also the long-term prospects ahead for a global economy facing geopolitical and economic headwinds to the past-decades’ globalization and its benefits. Fed Chair Powell’s remarks focused on continuing to battle inflation and a hawkish focus on the Fed’s 2% inflation target. The timing of economic developments could weigh on the politics of 2024, or we could continue to see 2022’s pattern, where partisan feelings weighed more on economic perceptions than metrics of well-being.

In the media this week, Dan Mahaffee wrote in Breaking Defense on how pandemic lessons remain un-learned and, beyond vaccine controversies, other steps in preparation can be made.

Joshua C. Huminski, the Director of the Mike Rogers Center for Intelligence & Global Affairs reviewed Sir David Omand’s latest book “How to Survive a Crisis”. A guide to navigating turbulent waters Sir David’s book is far cleverer and deeper than the title alone suggests, offering historical lessons, personal experiences, and insights into how the United Kingdom manages emergencies. Huminski also offered his thoughts on whether or not “soft power” exists in practice (alongside the concept’s originator, Dr. Joseph Nye) for the Council on Geostrategy’s Big Ask.

In this week’s roundup, Veera Parko provides an update on the aftermath of the Maui wildfires and how policymakers and planners can start to look at the lessons for resilience and planning. Erica Ngoenha breaks down the outbound investment review order put forth by the Biden administration and how it has been received by Congress. Joshua Huminski covers the message Putin sends with the fiery demise of Yevgeny Prigozhin. Hidetoshi Azuma breaks down the details of the historic U.S.-Japan-Republic of Korea Summit held at Camp David.

The aftermath of Maui wildfires

Veera Parko

A Hawaii Army National Guard CH47 Chinook participates in an aerial water bucket drop to fight a wildfire on the island of Maui, Hawaii, August 9, 2023. (DOD Photo)

On August 8, a devastating wildfire fueled by high winds and drought, among other factors, erupted in Maui, Hawaii. This week, the death toll had reached 115 people, and on Tuesday August 22, authorities estimated that 1,000–1,500 people remained unaccounted for. The tragic number of victims makes the wildfire the deadliest in the United States after 1918.

After the disaster, there has been a great deal of criticism towards authorities’ response. This is, naturally, something that happens often after catastrophes. In Maui’s case some of the criticism has centered on whether disasters of this scale could have been prevented if lessons from past incidents had been learned and implemented.

Residents have claimed that the state and federal response has been too slow and the public was not ordered to evacuate in time. A local power company, Hawaiian Electric, has been criticized for not shutting down power amid high wind warnings, possibly resulting in sparking the destructive fires in the town of Lahaina. Outdoor public warning sirens were not planned to be used in wildfires, and a decision was therefore made not to sound them to warn people.

According to a Washington Post investigation, Maui Emergency Management officials regularly warned county leaders that their staffing and evacuation infrastructure was inadequate to respond to a major disaster like a fast-spreading major wildfire. In addition to the lack of resources, lessons from wildfires from 2018 were clearly not adequately utilized for preparing for similar events in the future — even the internal after-action report on the fires went unpublished five years ago. That said, it is also obvious that this kind of extremely fast-spreading wildfire would pose an almost insurmountable challenge for any disaster management official, working under extremely difficult circumstances.

The aftermath of the Maui wildfires shows how important it is to prioritize disaster management in today’s threat environment. Even if the devastation of these particular wildfires was unprecedented, it was known that the area was wildfire prone, and it is probable that state and authorities were not sufficiently prepared for that particular risk. As Atlantic Council´s Beth Sizeland and I wrote recently, it is hard for any government to prioritize planning for future risk. But when disasters inevitably occur, governments rarely regret having invested time, resources and consistent focus on preparing for all kinds of disasters. This way, the adverse impacts, and the devastating toll on human lives in future disasters can be, if not removed, at least reduced.

Outbound Investment Review Picture Begins to Emerge

Erica Ngoenha

As we briefly covered in the most recent edition of the Friday News Roundup, earlier this month, the Biden Administration released its much-anticipated Executive Order aimed at curtailing American overseas investment in sensitive technologies that threaten U.S. national security. It is the latest effort to address the growing overlap between economic and national security policy in America’s competition with China.

The announcement comes after months of delay. Lengthy consulting periods with industry and allied countries slowed the release of the final product. In the meantime, the Senate passed its own version of an outbound investment review regime, the Outbound Investment Transparency Act (OITA) led by Senators Bob Casey and John Cornyn, as part of the National Defense Authorization Act (NDAA).

With Senate passage of OITA and the Executive Order released, a clearer picture of how the United States plans to regulate cross-border investments is emerging as the Executive Branch and Congress jockey to shape the rules and details.

The Executive Order creates a process for the Treasury Department, in consultation with the Commerce Department and other agencies as appropriate, to establish rules regulating outbound investment flows involving three categories: semiconductors, quantum computing, and artificial intelligence. The administration opted for a targeted approach that seeks to principally address technologies that could provide a material military advantage to countries of concern and thus threaten U.S national security. Most critically, the Executive Orders provides the government with the authority to require notification of or prohibit certain transactions. It will not function as a “reverse CFIUS” as some commentators initially posited, as there will be no case-by-case review of outbound investments. Instead, transaction parties will be required to follow established guidelines to determine whether a proposed transaction is prohibited, requires notification, or is permissible without notification.

Overall, the administration has proposed a more cautious approach than originally anticipated. It reflects recent efforts by the administration to dial down tensions with China. That Treasury and Commerce are taking the lead is an important factor. While the two agencies are natural fits given their experience regulating export controls and inbound investment, Secretaries Yellen and Raimondo have also been critical proponents within the administration of a more targeted approach to outbound investment that limits harm to U.S. companies.

OITA similarly takes a measured approach and is largely compatible with the Executive Order. While it expands the countries impacted, to include Russia, North Korea, and Iran, and broadens the technology areas to cover satellite communication, hypersonics, and networked laser scanning systems, it does not provide prohibition authority. It serves solely as a notification bill.

Despite the symbiosis between the Senate and the White House, a welcome aberration in a deeply partisan policy environment, some corners of Congress are pushing the administration to do more. Congressman Mike Gallagher, Chair of the House Select Committee on the Chinese Communist Party has been among the most influential voices urging the administration to be more active in curbing Wall Street’s support of China. In a letter transmitted to President Biden prior to the Executive Order’s release, Gallagher called on the President to take a more expansive approach focusing investment restrictions on companies associated with Chinese human rights violations and those that threaten U.S. technological advantages in addition to firms that pose a military or national security threat. Furthermore, Gallagher called for a wider swath of investments to be covered to include public market investments which “represent the majority of U.S. capital flows to the PRC,” opposing the administration’s preference to focus on active investments including joint ventures, equity investments, and mergers and acquisitions. Other House Members have echoed these sentiments including Foreign Affairs Committee Chairman Michael McCaul and Gallagher’s Democratic counterpart on the Select Committee, Ranking Member Raja Krishnamoorthi.

The most critical push back to Gallagher’s position comes from his own Republican colleagues in the House. House Financial Services Chair Patrick McHenry opposes new outbound investment screening tools, preferring the government instead look to existing policy mechanisms like sanctions and export controls to guide its competition with China. Upon the release of the Executive Order, McHenry praised the administration for showing restraint calling it, “a more thoughtful and targeted approach than initially reported.”

These differences represent broader tensions between U.S. national security policy objectives and U.S. economic policy which has traditionally embraced and encouraged free capital flows. For now, the administration is in the driver seat and looking to achieve a delicate balance between the two. The Treasury Department is currently undertaking a comment period and is expected to take a year to develop the specific regulations enabled by the Executive Order.

Though Senator Casey and others have urged Congress to continue its efforts to codify outbound investment screening into law, a contentious NDAA process may curtail the legislative body’s ability to shape investment rules. Controversial social issues included in the House’s version of the NDAA threaten to derail the conference process. Moreover, disagreement within the House as reflected by the dueling positions of McHenry and Gallagher suggest it will be difficult to build consensus on anything more robust than what the White House or their Senate colleagues have put forward.

The Final Demise of Yevgeny Prigozhin

Joshua C Huminski

Did Putin’s chef get his “just desserts?”

It was almost certainly only a matter of time before Yevgeny Prigozhin would find himself removed from the Russian political scene. After his abortive mutiny in June the former criminal, entrepreneur, chef, turned warlord was living on what was in effect borrowed time, which expired on 23 August 2023 when he died, along with the other passengers and crew, in a plane crash. How the Wagner private military company leader’s plane was brought down is the subject of some speculation, with some believing that Russia’s air defense network shot down the plane and others suggesting a bomb exploded on-board, mid-flight.

Regardless of how the plane was brought down, it is a high-profile signal to those who would challenge President Vladimir Putin as Prigozhin had done. His armed mutiny, seizure of Rostov-on-Don and attempted march toward Moscow was the most significant challenge to Putin’s presidency and his autocratic regime yet seen. Whilst Prigozhin backed down less than 24 hours later, it remained nonetheless a challenge to both the appearance of and the actual control Putin exerted over the Kremlin and Russia’s system of government.

Prigozhin’s mutiny was not, as some have suggested, an attempted coup or an effort to unseat Putin. True enough the Wagner leader had emerged as a highly vocal critics of Defense Minister Sergei Shoigu and the Chief of the General Staff Valeri Gerasimov, but the reasons for the mutiny were far more bureaucratic than power politics. Prigozhin criticized the Ministry of Defense and the armed forces for failing to support his mercenaries, but chiefly balked at orders that his forces sign official contracts with the Russian military. This posed a direct threat to Prigozhin’s nominal power base and source of revenue, and was not a viable option. His actions, almost certainly condoned by some within the Russian armed forces, also signified frustration on the part of many senior Russian officials about the conduct of the war and its costs, but not a belief that the costs were too high, rather that the war was not being prosecuted aggressively enough.

After backing down Prigozhin allegedly reached a deal with Putin where he would go into exile in Belarus and his forces absorbed into the Russian military, at least those that did not participate in the mutiny directly. It was clear that the agreement was not worth the paper on which it was metaphorically printed. The moment Prigozhin took up arms against Putin, he had in effect signed his death warrant.

What becomes of his broader empire remains to be seen. Wagner was just one element of a much broader eco-system of companies that Russia analyst Mark Galeotti calls “autocratic support services” — a one-stop shop of enabling activities ranging from political technologists and propagandists, through to the ubiquitous armed fighters. Wagner was, chiefly, a profit-seeking enterprise, one whose interests often overlapped with the Kremlin and from whom it received tacit and explicit support (and no small amount of direction, as well). The group’s efforts in Africa were as much about securing raw materials and resources as it was advancing Russian political interests.

As for Putin, many critics questioned why he waited eight weeks before acting against Prigozhin. The longer he waited, the weaker he looked, they argue. It could be equally argued that Putin was biding his time and waiting to act. There has been a quiet purge of Wagner-friendly officers within the Russian military (and those who agreed with his and others’ criticisms of the conduct of the war such as the commander of the aerospace forces, General Sergei Surovikin) and Wagner forces are now under the control of the Ministry of Defence. If anything Putin and his inner circle used the opportunity to identify and excise those who would serve as a source of challenge from within before acting to remove Prigozhin, taking out not just the Wagner leader but those sympathetic to him. Had Putin lashed out he would have, arguably, looked even weaker. Just as he could not countenance acting on Prigozhin’s criticisms and demands to remove Shoigu and Gerasimov, so too he must not be seen as recklessly responding.

In responding in a cold, methodical manner Putin sent an even stronger and clearer message to the political and security ecosystem — disloyalty is unacceptable and will be met with the harshest of penalties, but when Vladimir Vladimirovich decides. Most coldly, Putin sent his condolences to Prigozhin’s family. His death is unlikely to have a rallying effect; dispossessed oligarchs are not likely to surreptitiously meet in Dubai or Istanbul, inspired by his actions, to plot out their own mutiny or coup. If anything, Putin’s actions merely confirm what the elite already understood: to cross the Kremlin is to ensure your time on earth is decidedly cut short. The cracks on the edifice will, nonetheless, remain. Such a high-profile removal of Prigozhin does not ameliorate the fact that he took up arms in the first place.

The Kremlin will also use it as a full stop on the story of Prigozhin, and a distraction from bad news about the war and the economy. Whilst state-run/owned/backed media dominates the airwaves, Prigozhin’s death will at least suck up the oxygen in the room for the time being.

What effect will this have on the war? Likely little to none. Prigozhin’s forces had achieved notable successes during the course of the war, but were never as independent as many analysts assumed, relying heavily on the Ministry of Defence for supply and support. The Russian armed forces chafed at the parallel command structures and the need to support what was increasingly an armed rabble of former convicts. Tier one shock troops these never were. Without Prigozhin as an advocate and face, those remaining Wagner fighters sympathetic to their former leader will be increasingly isolated.

Prigozhin’s death ends the truly curious story of how this one-time criminal became a warlord of sorts to the Kremlin. As with the mutiny itself, some will claim that this is the beginning of the end, or where a beginning of the end could well have started for Putin’s regime. That may be egging the custard too much. A challenge? Yes. The first cracks in the edifice? Perhaps. The signal amidst the noise that will see Putin removed from power? Not likely.

The First US-Japan-ROK Trilateral Summit

Hidetoshi Azuma

The first US-Japan-Republic of Korea (ROK) Summit occurred at Camp David in Maryland on August 18. Despite Washignton’s long-standing alliances with East Asia’s two leading democracies, trilateral cooperation has suffered inherent obstacles perennially frustrating progress due to lingering historical animosities. Against this backdrop, the event last week underscored a new chapter in the trilateral relationship, although its future remains imperfect.

The trilateral summit last week highlighted the Camp David Principles consisting of the following:

Promoting the Free and Open Indo-Pacific.
Strongly opposing attempts to unilaterally change the status quo by force or coercion
Working closely with the Association of Southeast Asian Nations (ASEAN) and Pacific island nations
Standing united in commitment to complete the denuclearization of North Korea
Reaffirming the importance of peace and stability in the Taiwan Strait

The above points laid the foundation for the summit’s outcome in the form of the joint declaration called the Spirit of Camp David comprised of the following:

Strengthening the strategic partnership between the US-Japan alliance and the US-ROK alliance, and raising the trilateral security cooperation to new heights
Holding swift consultations to coordinate trilateral responses to regional challenges, provocations and threats
Holding an annual US-Japan-ROK Summit Meeting, an annual Meeting of Foreign Ministers, Defense Ministers, and Director Generals of the National Security Council, and the launch of Finance, Commerce and Industry Ministers Meeting
The US extended deterrence commitment to the defense of Japan and ROK is strong.
Holding Annual Joint Exercises of Self-Defense Forces and U.S. and ROK Armed Forces
Strengthening policy coordination on global supply chain disruptions, and establishing an early warning system for global supply chains for economic security

Given the troubled history of the trilateral relationship, these are significant achievements appearing to defy fatalism. Indeed, the key driver behind the summit was the Chinese elephant in the room as the three allies gathered in Maryland looked to transcend history.

In this sense, the summit was a remarkable success. Yet, history is often unkind to lofty aims without proper deference to the past. Indeed, Japan and ROK are culturally trapped, if not cursed, by history unlike their future-oriented American ally. Washington’s exultation in the seeming success of the trilateral summit currently rests on a fragile foundation laid carefully by the Japanese Prime Minister Fumio Kishida and the ROK President Yoon Suk Yeol under the guidance of the US President Joe’s Biden. Absent these willing personalities on the other end of the Pacific, the future of the newfound trilateralism in the Indo-Pacific remains far from bright.

News You May Have Missed

Polish Authorities Investigating Legionnaires Outbreak as Potential Bio-Attack

Polish authorities are investigating events in Rzeszow, Poland, where an outbreak of Legionnaires’ disease has killed seven and sickened hundreds. While authorities stressed that the effort was purely in the investigative stages, the city’s importance as a hub for personnel and supplies for Ukraine has led to speculation about a purposeful bio-attack.

BRICS Coalition Growing

The annual BRICS Summit concluded Thursday with the announcement that the coalition will add 6 new members to its ranks. A coalition of emerging nations, BRICS has up until now consisted of Brazil, Russia, India, China, and South Africa. By more than doubling their base of members, the coalition amasses support and economic heft in favor of rebalancing the world order away from U.S. and Group of Seven (G7) dominance.

While all of the member states were interested in expanding the group, they disagreed on the pace and goals of expansion. China and Russia seek to create an economic and political rival to the G7 and western dominance, while Brazil, India, and South Africa hope to keep their relationship balanced and stable with the West. However, the addition of new states, particularly Iran, reflect a stronger anti-West sentiment and indicates China substantially had their way in the negotiations.

Despite the additions, the conference did not cover everything its members were calling for. Notably, Brazil was unable to convince other members to look into adopting a new currency to reduce global dependence on the dollar. Overall, questions remain on how the West will respond to an increasingly powerful global coalition of emerging nations, how much influence BRICS will truly be able to exert, and, most notably, what is next the iteration of the group’s acronym.

Commerce Secretary Raimondo to China

Soon to be the fourth Biden official to do so, Secretary of Commerce Gina Raimondo has announced that she will be visiting China next week. The visit will include discussions with top Chinese officials and American business leaders as the secretary looks to clarify the U.S. policy goal of “de-risking” amid heightened tensions and an economic downturn in China. Additionally, experts are suggesting the visit serves a dual purpose of stabilizing communications between the two global powers in the months leading up to a potential meeting between presidents Joe Biden and Xi Jinping at the Asia-Pacific Economic Cooperation (APEC) Summit in San Francisco.

As it stands, the Department of Commerce is a key component in the current U.S. policy of “de-risking” from China. This policy seeks to limit trade in high-tech sectors, and was most recently reinforced by President Biden’s executive order limiting outbound investment in these areas of concern. Secretary Raimondo’s visit will help make clear to Chinese officials that these recent controls are for the sake of protecting national security, rather than a complete economic separation. That message has the potential to soften the outcry from Beijing in the event of further regulations. In the lead up to this visit, the Commerce Department’s Bureau of Industry and Security announced they will be lifting 27 Chinese entities from their unverified list, enabling them to purchase U.S. technology and signaling efforts at cooperation.

Raimondo also plans to meet with the American Chamber of Commerce and other U.S. business officials to evaluate the business landscape in Shanghai. China is increasingly exerting its state power to coerce foreign businesses. However, what is most notable at this moment is the poor economic conditionswithin China. The country continues to struggle to recover from COVID restrictions, and it faces crises in housing and youth unemployment. In terms of “de-risking” U.S. investment, struggling economic conditions may serve as a disincentive even stronger than U.S. regulatory efforts.

The views of authors are their own and not that of CSPC.

Sydney JohnsonAugust 25, 2023