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Blackwater USA – Daily Brief

Coming Up This Week

  • Federal Reserve Chairman Jerome Powell hopes to advocate for a rate cut this week—even though economic indicators look good—because the economy isn’t responding to Fed policy as theory would expect.
  • The second Democratic primary debate will take place over two nights—tomorrow and Wednesday—in Detroit.

China

  • Hong Kong saw another round of protests over the weekend, and there were further clashes in Yuen Long (where a violent mob targeted protesters at a train station last week).

Nigeria

  • Boko Haram attacked a group returning from a funeral in Borno State, killing at least 65 people—one of the worst single incidents in Nigeria in years.

Venezuela

  • Bloomberg published an excellent article based on interviews with a top Venezuelan defector. It’s pasted below.
  • I missed this last week, but former PDVSA senior exec Marquez Cabrera hanged himself in Madrid—just after agreeing to cooperate with a money laundering investigation. Spanish police are investigating the incident as an odd one, since Cabrera had seemed happy to turn himself in and offer information in the probe.
  • Pres. Maduro called missing FARC commanders Ivan Marquez and Jesus Santrich “leaders of peace,” and said they’re welcome in Venezuela. That’s bound to rile Maduro’s opponents, who can now accuse him of offering refuge to armed groups.

Guyana

  • Qatar Petroleum bought a 10% stake in Total’s offshore Orinduik and Kanaku blocks in Guyana. Total will still retain a 15% stake in each block.

Iran

  • Iran said the UK had violated the terms of the 2015 nuclear deal by seizing one of its tankers on July 19th: “Since Iran is entitled to export its oil according to the J.C.P.O.A., any impediment in the way of Iran’s export of oil is actually against the J.C.P.O.A.”
  • Iran also accused the UK of provoking it by sending military escorts with ships in the Persian Gulf, and said it wouldn’t swap detained tankers with the UK.

Afghanistan

  • Yesterday’s attack on the Green Trend party’s headquarters apparently killed at least 20 people—not just one, as initially reported. Also, former NDS head Amrullah Saleh is now thought to have been injured, though he was evacuated to safety. Neither the Taliban nor IS has claimed the attack yet, but it seems like it was timed to coincide with the opening of the election campaign.
  • Pres. Ghani—who’s running for reelection—insisted that only the Afghan government (and not the U.S.) has the authority to negotiate with the Taliban…probably so his current government would look more effective than it’s actually been.

U.S.

  • Director of National Intelligence Dan Coats announced his resignation. Coats has been particularly skeptical of Pres. Trump’s good relations with Pres. Putin, so I wonder if his departure has something to do with U.S. policy towards Russia.
  • A gunman killed three at the Gilroy Garlic Festival in California.
  • An analyst op-ed in the Wall Street Journal advocated for greater defense spending to adequately fund the Pentagon’s readiness and modernization plans—pasted below.

Other News

  • Colombian cyclist Egan Bernal became the first South American to win the Tour de France.

Top Defector Tells of Spying, Stealing and Mutiny in Venezuela (Bloomberg)

Days after being named chief of Venezuela’s feared Sebin intelligence agency last fall, General Manuel Ricardo Cristopher Figuera was called in by President Nicolas Maduro and asked where the enemy was.

“I don’t understand the question, sir,” Figuera says he responded.

“I want a report every two hours of what the political opposition is doing,” Maduro replied, listing some of the 30 politicians whose whereabouts and activities were to be surveilled. Reports, he said, needed to be sent not only to him but to his wife, Cilia Flores, and to Vice President Delcy Rodriguez. The monitoring involved spreadsheets with photos, mobile phone taps and round-the-clock shifts of on-the-ground four-agent teams observing movements and meetings.

Figuera, the most significant Venezuelan defector of the past two decades, is in the U.S. offering details of Maduro’s increasingly authoritarian rule and the schemes by which he, his family and associates embezzle the proceeds of oil, gold and other national treasures as the once-wealthy nation of 30 million descends into chaos and starvation.

Over five hours of interviews with Bloomberg in a Miami hotel and a nearby sports bar, Figuera, a burly 55-year-old trained in Cuba and Belarus, contended that the Venezuelan intelligence services have infiltrated Colombia’s security apparatus. With that penetration, early this year the Venezuelans tracked the movements of a key defector, Colonel Oswaldo Garcia Palomo, who was captured, tortured and interrogated after sneaking across the Colombian border to help organize a rebellion.

“A member of the Colombian intelligence service was in touch with one of ours and gave Palomo a telephone,” he said. “With that telephone they followed him.” Figuera contended that Palomo’s torture took place not at his Sebin agency but at the DGCIM, military counterintelligence. Figuera said Palomo, who’s still in Sebin prison, is a friend whose mistreatment horrified him.

The Colombian presidency said in reply to written questions that it is looking into the matter. The defense ministry didn’t respond to written requests for comment.

Much of Figuera’s narrative surrounds his claim that the abuse, corruption and authoritarianism he encountered after he took up his top position shocked him. This has been met with skepticism by leaders of the opposition who note that Figuera spent a decade as deputy head of DGCIM before taking over Sebin and that he certainly seemed fully integrated into the most brutal elements of the security apparatus before defecting.

Figuera addressed this, saying: “I share responsibility for Maduro’s stay in power, like any official who’s been part of this criminal enterprise. But if someone has evidence against me, I have no fear to face justice.”

Figuera’s status in the U.S. is temporary. Removed from a list of sanctioned Venezuelan officials upon defecting, he’s been granted a permit to stay but not to be a resident. His wife, Barbara Reinefeld, who attended the second part of the interview, has a longer-term visa because she has a sister and a son living in the U.S. The couple are staying with family in Miami as they try to figure out what’s next, although Figuera says he wants only to return to his homeland as soon as possible, adding that he believes Maduro can’t last out the year. A senior U.S. official said that if Figuera wants to stay, he’ll have to apply for residency or asylum.

April Betrayal

On April 30, when Juan Guaido, recognized as Venezuela’s interim president by the U.S. and more than 50 countries, went to a military base to drive Maduro from power, Figuera was part of the plot. He and Guaido believed other top officials were with them, including the president of the Supreme Court and the defense minister. But they didn’t show — it remains unclear whether they hesitated at the last minute or only feigned interest — leaving Figuera alone among senior officials to openly declare a shift in loyalty. He hasn’t spoken to either Defense Minister Vladimir Padrino Lopez or Supreme Court President Maikel Moreno since his departure and says he longs to look each in the eyes and challenge him over his betrayal.

Shortly after the failed attempt, he escaped to Colombia. In June, after fearing for his life there, Figuera flew to the U.S. where he spent days briefing U.S. officials.

Guaido and his aides, who have named officials in Caracas as well as ambassadors and advisers in Washington and elsewhere to serve as a rival government to Maduro’s, seem unsure what to do with Figuera. Some have accompanied him to briefings and interviews but he hasn’t been integrated into the group.

Carlos Vecchio, the Guaido ambassador to Washington, said in an interview that Figuera’s role is to provide evidence against Maduro. The interim government isn’t offering him any support in the US.

Figuera was until three months ago one of Maduro’s most trusted lieutenants, attending key meetings and helping him consolidate power. In March of last year, he said in the interview, Maduro sent him to the Dominican Republic to meet an official of the Central Intelligence Agency to negotiate an end to the U.S. economic embargo, suspend sanctions and open a channel of communication. The Americans had different ideas. They wanted Maduro to step down, release an American from prison and permit new elections. The effort went nowhere.

Illicit Gains

Figuera said that up close, he realized that the president is seeking personal enrichment and totalitarian control. He said the president’s 29-year-old son, Nicolas Maduro Guerra, has created a gold trading monopoly involving businessmen Eduardo Rivas and Alex Saab. When Figuera tried to launch an investigation into the gold trade, Vice President Rodriguez told him to back off, he said. Saab, a Colombian citizen, was indicted July 25 on U.S. money laundering charges, accused of funneling hundreds of millions of dollars to overseas accounts. Figuera also named Industry Minister Tareck el Aissami as the coordinator of international gold sales. Aissami was sanctioned by the U.S. in 2017.

Maduro Guerra declined to comment in an email response; Rodriguez didn’t respond to a request for comment, nor did the Information Ministry.

In recent months, Figuera began discussing with select colleagues how to edge Maduro out of power. They talked about setting up a South African-style reconciliation commission and a reformed political order. A number of top officials took part in the planning, he said, but declined to name them out of concern for their safety. Figuera said he is also part of an effort to document Maduro’s misdeeds and present the evidence to international tribunals of justice.

He said the Cuban protective force around Maduro has increased markedly in recent weeks to some 200 agents from around 20. The U.S. and much of the West have sought to isolate Maduro, especially after his re-election last year in a race widely condemned as rigged and illegitimate, and get him replaced by Guaido. But Cuba, Russia, China, Turkey and Iran remain allies helping the regime stay in power, Figuera said.

He dismissed the recent negotiations between the government and opposition in Norway, now in Barbados, as useless unless Maduro agrees to step down. Otherwise, he said, the president will try to use the talks to buy time and reduce sanctions, which are hurting.

“What’s going on in Venezuela?” he said when asked to sum things up. “Well, it’s being destroyed.”

Budget Deal Is No Win for the Military (WSJ)

Congress and Trump agree to spend more on defense, but not nearly enough.

Authors: Rick Berger is a research fellow and Gary Schmitt is a resident scholar at the American Enterprise Institute.

Announcing a new two-year budget deal, President Trump noted that “real compromise” was necessary to “give another big victory to our Great Military.” A day later, the president claimed the U.S. armed forces were “almost totally rebuilt from the depleted military I took over.” Unfortunately, that’s not true. While the deal avoids a worst-case scenario for the Pentagon—$71 billion in immediate, mandatory cuts under the 2011 Budget Control Act—it still does not adequately fund the Defense Department’s 2018 National Defense Strategy. History will remember the Trump administration’s defense policy for helping to repair military readiness, but not for rebuilding and modernizing the military as President Reagan did.

The White House’s 2017 National Security Strategy directs the U.S. military to regain its edge against China and Russia, even as it continues to deter Iran and North Korea and keep jihadist terrorists at bay. In total, the strategy demands a robust military posture in three major theaters: Europe, East Asia and the Middle East. But the proposed budget, even with the repeal of the Budget Control Act through 2021, falls short of the funding the military needs to carry out the strategy with confidence.

Consider the chasm between the current U.S. military and the stated requirements for force structure, readiness and modernization, all of which were validated by the independent, bipartisan National Defense Strategy Commission.

The Navy must grow from 290 ships to 355, even as it introduces unmanned ships and pursues new long-range strike capabilities. The Air Force must grow from 312 squadrons to 386 while developing new networking initiatives and manned-unmanned teaming concepts. And the Army must grow from 478,000 soldiers to 540,000 and aggressively modernize its equipment after several high-profile failures.

Defense technocrats may argue about whether to increase the size of the force or modernize it more quickly. Either way, these force-structure targets are a klaxon for a military asked to do more with less.

Bipartisan defense legislation from three congressional committees identifies a perfect example of this gap. The Air Force must buy 72 fighters a year to meet its fighter-squadron target. Yet as one committee notes, “the resources to initiate and sustain such growth simply do not exist within the fiscal year 2020 budget request or [five-year spending] program, nor does the Air Force’s five-year plan for fighter procurement achieve 72 new aircraft within any year.” Multiply this contradiction across the services and their myriad personnel and weapons needs, and the overall defense budget shortfall jumps out.

Mr. Trump supports each of these goals, plus additional investment in missile defense and modernization of the country’s nuclear forces. Why doesn’t his defense budget reflect this? This incongruence between what the Pentagon officially asked for and its real needs stems from the White House itself. The budget request—$733 billion in 2020 and flat spending thereafter—was always an arbitrary set of numbers. No one at the Defense Department can explain how a $733 billion budget actually meets the requirements of the National Defense Strategy. In the absence of a confirmed defense secretary, the Pentagon did not push back against White House budget officials who have never supported the security strategy with sufficient resources.

How much would it cost to close this strategy–budget gap? Former Defense Secretary Jim Mattis and Gen. Joseph Dunford, chairman of the Joint Chiefs of Staff, repeatedly testified that matching budget to strategy required 3% to 5% annual real growth. Over the next two years, that totals $40 billion to $100 billion above the levels in the budget agreement that Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin recently reached. Over five years, that equates to around $550 billion in additional funding, exactly the amount of buying power the Pentagon lost under the Budget Control Act.

While the Pentagon cannot spend its way out of America’s national-security problems, it can also spend too little to give the all-volunteer force greater certainty it will be a position to win in the event of a conflict. There are multiple reasons the military services face problems in recruiting and retaining experienced personnel. Certainly, one reason is the sense they are being asked to put themselves in harm’s way without the tools to carry out their duties.

Political leaders cannot make up for the time lost under the Budget Control Act. But they can make up for the lost money to render current U.S. national-security challenges easier to solve and set the U.S. military on solid footing for the great-power competition the country now faces. The current budget agreement may avoid outright disaster—or it may simply postpone it.