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Will peace arrive to the Korean peninsula?

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After last year’s nuclear tests and the sabre rattling in recent months between North Korea and the US, it came as a surprise when Chung Eui-yong, the National Security advisor of South Korean president Moon Jae-in confirmed that Donald Trump and Kim Jong-un will meet in May. In previous months, several ships were reported violating the UN sanctions imposed on North Korea by moving products between ships to supply the closed Asian country. Japan was eager to press North Korea with new and even harder sanctions. Later, in February came the announcement, that North Korea will participate in the Winter Olympics, moreover the two Koreas marched together, and they had a joint female hockey team. During the Olympics, a North Korean orchestra performed several times in the South and a special delegation, including the sister of Kim Jong-un, also visited the Winter Games.

In early March a South Korean envoy visited its northern neighbour and met with prominent figures of the North, which was followed by a meeting of the southern delegation in Washington, where it was announced that the US President and North Korean leader are willing to meet each other.

If the summit happens, Kim Jong-un will overgrow his father, as it has never happened in North Korean history that a US President in office met with the Hermit Kingdom’s leader. Kim Jong-un said, North Korea will refrain from any further nuclear or missile tests and he is committed to denuclearisation with certain preconditions. Pyongyang wants guarantees for the regime’s survival and wants military threats against it removed. These conditions have to be clarified during the summit.

Most probably President Trump realised, there is no military solution to the Korean issue. Even if the US and its allies managed to neutralise the North Korean nuclear weapons, because of the proximity of Seoul, conventional weapons can easily kill millions of people in the South.

None of the participants offered a place for the summit yet. As Trump accepted Kim’s invitation, it is highly unlikely for Kim Jong-un to travel to Washington. Given President Trump’s personal characteristics, it is not likely he would volunteer to visit Pyongyang. The location of the summit will send a message. The best possible alternative would be South Korea. Seoul played a crucial role bringing the two leaders to a table, holding the summit in the South would mean that North Korea and the US acknowledge Seoul’s role.

Regional powers welcomed the announcement as well. Although Japan was one of the loudest on imposing stronger and stronger sanctions on North Korea, they offered $3 million to cover the costs of the International Atomic Energy Agency’s inspections of the nuclear facilities if Pyongyang agrees to them. Tokyo is also considering to offer even more if new facilities are revealed. China had a crucial role making Pyongyang recalculate the cost and benefit equation. Right after the introductions of the UN sanctions, the trade between China and North Korea dropped drastically. Not to push North Korea to the edge, Beijing voted against further sanctions and a special envoy was sent to Pyongyang to register China’s disapproval of Pyongyang’s nuclear and missile provocations. The delegation also tried to persuade them to join the negotiating table.

In the best-case scenario, the outcome of the summit could be a declaration of the end of the Korean War. The Korean peninsula is at a ceasefire with hostilities on pause. Denuclearisation is also on the table. Such a move could result in the lifting of sanctions and could initiate the slow process of North Korea joining the global economy.

The Mueller Indictment: The Beginning of the End or the End of the Beginning?

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On 16 February, Special Counsel Robert Mueller filed an indictment against thirteen Russian nationals and three Russian companies relating to an online influence campaign targeting the 2016 Presidential Election and the U.S. political system more generally. The filing was not surprising — the U.S. intelligence community published their ‘high confidence’ assessment of the operation in January 2017 — but the details were nonetheless dramatic. They include a global political interference campaign (‘Project Lakhta’), an organisation spearheading this campaign (the ‘Internet Research Agency’), a specialist unit focused on the 2016 election (‘the translator project’), hundreds of employees and, starting in 2014, the physical set-up of an intelligence collection team inside U.S. territory.

Whilst the indictment helped to dial down the divisiveness of the Russian threat, it was nevertheless also interpreted through the prism of the politically-charged ‘Special Counsel Watch’: daily speculation as to the direction and conclusion of the special counsel investigation. This was especially the case given Deputy Attorney General Rod Rosenstein’s statement before the press that there is “No allegation in this indictment that any American had any knowledge” of Russia’s operation — an evident reference to the investigation into Trump campaign collusion. Sean Hannity carried the headline ‘Vindicated’ on his Fox News show on the evening of the indictment, whilst President Trump would tweet his “vindication” the following day. Such matters were not left to partisan noise-makers, however. Debate has ensued among legal commentators over whether, on the central questions of Russian interference and Trump-Russia collusion, the indictment signals an approaching conclusion to the special counsel investigation or the preliminary building blocks of a larger criminal conspiracy. Paul Rosenzweig, for instance, in a special edition Lawfare podcast, argued that the mass of detail within the document indicates it is a “speaking indictment” that tells a narrative “akin to a final report”, given the likely absence of a formal ‘Muller Report.’ For this reason, amongst others, Mr Rosenzweig argues, it is likely that “We’re closer to the end than to the beginning.”

What appears more likely, however, is the opposite. Importantly, the indictment describes only the ‘third prong’ of the Russian operation: its online disinformation campaign. The document does not touch upon the first prong: the direct tampering of U.S. election infrastructure, nor the hacking and dissemination of internal Democratic National Committee (DNC) communications (the second prong). All three were officially confirmed by the U.S. intelligence community in its January 2017 assessment of the Russian operation, with the second stated explicitly by the Director of National Intelligence on October 7, 2016. Mr Mueller could of course be without admissible evidence for these latter two prongs, but this seems doubtful given the ‘high confidence’ assessment of the January 2017 report. Thus, the charge that the indictment is a weak response to the Russian operation, levelled by those such as former U.S. Attorney for the Southern District of New York, Andrew McCarthy, seems premature. Instead, it is reasonable to concur with Mr McCarthy’s successor, Preet Bharara, that Mr Mueller has more indictments in store.

It is also noteworthy that the document is silent on the question of political collusion, whether by the Trump campaign or the Russian government. In some quarters, the clear absence of Trump campaign collusion in relation to a detailed finding of Russian election interference has fuelled speculation that the indictment foreshadows Mr Muller’s more general conclusion: that Trump campaign involvement in the Russian operation was negligible. Yet the indictment does not refer to Russian intelligence, nor to Russian government supervision of the operation. Instead, the funder and director of the Internet Research Agency, Yevgeny Prigozhin, is charged as a private Russian citizen, and any ties he has to Vladimir Putin and the Russian government (there are many) are referred to only implicitly. This silence is again a departure from the U.S. intelligence community’s ‘high confidence’ 2017 assessment that referred to “Moscow’s influence campaign” directed by “Putin and the Russian government.” It is doubtful, therefore, that Mr Mueller believes the online influence operation was exclusively the work of private actors friendly to the Russian government. What appears more likely is that the indictment is intended to be distinctly apolitical: a building-block approach intended to minimise exposure of Russian government sources whilst maximising public disclosure of the operation. In recent weeks, two ways have been posited as to how charges against additional political actors might later be placed on-top of this preparatory block:

The first was floated in a Lawfare article by Emma Kohse and Benjamin Wittes, who argued that Mr Mueller’s unusual charge against thirteen Russian nationals — that they sought to “obstruct the lawful functions of the United States through fraud and deceit” (18 U.S.C. §371) — might in fact be preparatory ground for charges relating to collusion filed against additional actors. As Susan Hennesy and Wittes once argued in Foreign Policy magazine, collusion is a thin and problematic area in U.S. statute, consequently meaning, “in and of itself and to the extent it took place, [collusion] is a political problem, not a legal one.” However, returning to Kohse and Wittes’ argument, if additional actors did in fact aid these Russian nationals, 18 U.S.C. §371 may plausibly be expanded onto these persons. Such a charge would require a much less problematic burden of proof orientated around obstruction of U.S. government functions, rather than conspiracy to organise the influence campaign itself. Although it would be irresponsible to speculate as to how a prosecutor would evaluate a person’s conduct without knowledge of the details of the allegation, as Kohse and Wittes make clear, it is reasonable to conclude that Mr Mueller’s indictment does not draw the matter to a close.

The second means was floated by David Kris, former Assistant Attorney General for National Security. In a Lawfare article entitled ‘Law Enforcement as a Counterintelligence Tool’, Mr Kris argued that Mr Mueller’s indictment may have been partly designed to build public consensus for future prosecutorial and non-prosecutorial action against actors external to the indictment. Public exposure, Kris argues, can be a damaging means of disrupting influence operations where such action is designed to remain covert, whilst also providing a productive means for alerting public attention to the larger threat and generating debate as to how to deter future conduct. As such, the indictment may serve as a building-block approach with which Mr Mueller can recommend future measures against actors nominally external to the operation detailed in the document.

It is of course impossible to accurately speculate as to the direction of the Mueller investigation, given the success of its operational security. It is reasonable to assess, however, that suggestions that Mr Mueller has reached the final stages of his investigation into Russian interference and Trump campaign collusion are likely premature.

Italian Election

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Italy had its elections this Sunday the fourth of March. No single party won enough seats to be able to form a government and so the painful process of negotiating and forming a coalition government must take place. The election results show that the Italians are frustrated by the problems that immigration brings; they are not alone as Europe as a whole seems to be reacting to the status quo in a similar manner.

The political party Five Stars won the most seats with 32% of the vote. The group was started by comedian Beppe Grillo in 2009 but he was replaced by the current leader Luigi Di Maio after an online election held on the group’s website in September 2017. The party cannot be pinned down to an ideology as they take ideas from all over the political spectrum. They are populist, environmentalist, anti establishment and have promised a universal income. Before the election they vowed not to conduct talks with the other parties, something they have back tracked on. Prime Minister Matteo Renzi of the Democratic Party resigned as head of the party after they only got 19% of the vote. The party is split over the idea of joining Five Stars to form a government. In third place with 17% of the vote is the Northern League. The party was formally a regional power in the northern regions of Italy but gained ground in central Italy. The party is regarded as a far right populist. No one party has made any overt moves at the moment and negotiations are likely to be long and arduous.

Italy is one of the first entry points to the EU as such they receive a lot of immigrants from Northern Africa. The major incident where 6 African immigrants where shot in the city of Macerata on the 3rd of February this year by Luca Traini an unsuccessful candidate for the Northern League party caused a large counter protest and pushed the many issues of immigration to become a talking point the election. The effect on the sustained influx of immigrants on this election is not to be underestimated.

Anti Establishment parties have seen a lot of success across Europe causing the Euro to fluctuate and people to become uncertain about the future of the EU. Europeans seem frustrated with the status quo and are voting against it in significant elections. Many people who voted for Brexit did so as they felt that they were loosing out in the current situation and so lashed out against the establishment. Marine Le Pen in France got the final round of voting for the president in 2017 where she too portrayed herself and her party as anti-establishment. The German political party Alternative for Germany (AfD) took a surprising third place in the German election in September 2017. While they were unable to use there position to get into government it was a strong voice against Angela Merkel’s polices, in particular the open border police she followed and her acceptance Syrian refugees.

Eastern Ghouta: A living hell on earth

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Airstrikes carried out by the Syrian regime and its Russian allies have pummelled Eastern Ghouta for the eighth consecutive day, with warplanes and artillery hitting hospitals and residential areas, resulting in one of the deadliest assaults since the 2013 chemical attack. While most of the suburbs of Damascus have returned to government control, the Syrian government has stepped up attacks on eastern Ghouta in its effort to clear the countryside from the presence of terrorists and rebels in the area. The region under government-siege for years was declared a “de-confliction”, ceasefire zone last May, but it has become a battleground as the status quo stands indefensible.

Many of the approximately 400,000 people still trapped in the rebel-held area are cowering in basements while water, food and electricity supplies have run out. Witnesses have told Reuters that it is “raining bombs”- over 2500 have been injured and more than 520 civilians have lost their lives. And while the death toll is rising, the medical system in eastern Ghouta, overwhelmed with mass casualties, is near collapse. Medics and doctors say, after nearly a week of airstrikes that have hit 22 hospitals (with 13 hospitals destroyed in just three days alone), they have now started using expired drugs to treat the many wounded. International organisations that monitor the Syria crisis alleged there was clear evidence that hospitals were deliberately targeted. The Violations Documentation Centre, which has been gathering data on attacks in Syria, said hospitals were being targeted with different munitions to those used elsewhere in Ghouta. “This is important to note because the Syrian regime is largely using unguided and improvised bombs, but when it comes to hospitals and medical points, guided and directed rockets are used. Also, when a particular medical site is hit once, it is then hit again when first responders arrive.” Authorities in Ghouta have also detailed attacks on up to six civil defence centres, which have been used to coordinate rescue attempts.

Damascus and Moscow deny using barrel bombs or hitting civilians and stated that the rebels use civilians as human shields. Rebels have been firing mortars on the districts of Damascus near eastern Ghouta, wounding seven people on Wednesday and killed at least six people on Tuesday. “Today, residential areas, Damascus hotels, as well as Russia’s Centre for Syrian Reconciliation, received massive bombardment by illegal armed groups from eastern Ghouta,” Russia’s Defence Ministry said late on Tuesday.

The UN has described the Eastern Ghouta as a “living hell on earth”, denounced the bombardment, saying such attacks could be war crimes and appealed for an “immediate suspension of all war activities in eastern Ghouta”. Assad’s ally, Russia has responded by saying that they do not target civilians and point to rebel mortar fire on Damascus. On Thursday the United Nations Security Council (UNSC) ended its meeting on eastern Ghouta in Syria without voting on a draft resolution for a 30-day ceasefire as Russia disagreed to the proposal and described it as non-realistic. Russia stated that it would have supported a 30-day truce, but not one that included the Islamist militants it says the onslaught on eastern Ghouta is meant to target. UNSC has been negotiating the draft resolution on the ceasefire for nearly two weeks now as the Syrian regime has pressed on with a fierce offensive in the rebel-held enclave. A UNSC meeting took again place on Saturday after multiple delays. The unanimous passage of the resolution was hailed by Western diplomats, who had pushed hard for a deal amid a week of intense Syrian regime bombing of Eastern Ghouta. Hours before the vote, the civilian death toll climbed above 500. Nikki Haley, the US ambassador to the UN, castigated Russia for days of delays which slowed the passage of the resolution. “In the three days it took us to adopt this resolution how many mothers lost their kids to the bombing and the shelling?”

It remains to be seen what impact the deal will have on Eastern Ghouta. A 30- day truce however would allow for the delivery of critical supplies and evacuation of the wounded. Mrs Haley said the US was “deeply sceptical the regime will comply” with the ceasefire and called on Russia to pressure Assad’s forces to respect it. Iranian General Mohammad Baqeri said that “parts of the suburbs of Damascus, which are held by the terrorists, are not covered by the ceasefire and clean-up [operations] will continue there.” The resolution does not cover militants from Isis, al-Qaeda, and Hayat Tahrir al-Sham, previously known as Jabhat al-Nusra. The two main rebel factions in Ghouta – Faylaq al-Rahman and Jaish al-Islam – said after the vote that they would implement the truce and facilitate aid access. but also vowed to respond to any attacks. Russia demanded that the resolution not to include a specific time for the ceasefire to go into force. The text instead reads that it should begin “without delay”, making it unclear when the fighting would actually stop.

Shortly after the unanimous vote by the 15-member council, warplanes struck a town in eastern Ghouta, the last rebel enclave near Syria’s capital, an emergency service and a war monitoring group said. In the meantime, health officials in Eastern Ghouta are accusing Syrian government forces of using chlorine gas in their aerial bombardment campaign in the Damascus suburb. They stated that “victims were showing symptoms “consistent with exposure to toxic chlorine gas”.

Assessment on the Threat of the Drug Cartels for the Mexican Oil Industry

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Key Judgements

  • Fuel theft has exploded as a form of financing for the cartels and criminal gangs, which seek to diversify their sources of income to fight the pressure placed on them by the Mexican government.
  • It is highly probable that this criminal activity will increase over time and bring out old and new criminal groups, if the Government and Pemex do not find a solution to the problem in the short and medium term.
  • The economic damages that the theft of fuel creates to Pemex could break the oil company, whose oil production could be so seriously affected as to drastically increase imports from other countries, such as the United States, which would have a direct impact on the price of gasoline for the industry and the population.
  • Pemex workers are the great asset of cartels and criminals, because they have information about the passage of oil through refineries and pipelines, so the fight against internal corruption of the company must be central in the plan to stop the theft of fuel, while offering greater security to workers who receive threats from criminals.

Introduction

Drug trafficking, kidnappings and assassinations are among the main security concerns in Mexico, but in the last decade there has been an unstoppable increase in a criminal act of lesser importance, but with a great economic impact, the theft of fuel, whose authors are called “huachicoleros”, and their actions have a serious impact on the activities of Petróleos Mexicanos (Pemex), which receives 52 billion dollars a year, and directly affects government revenues, given that the industry accounts for a fifth of these.

Background

Since the beginning of the war against drug trafficking undertaken by former President Felipe Calderón and continued by the current president, Enrique Peña Nieto, the Mexican government’s strategy consisted of beheading the cartels to end the internal structure of these. While this strategy involved the destruction of the cartels, they were divided into much smaller criminal groups, with the same objectives, but with fewer resources and more competition. These criminal gangs, and the cartels still in existence, seek to diversify their sources of income in order to survive the attacks of the Government and not to depend excessively on drug trafficking; the whole population uses gasoline to run their cars, and in the day to day of society, oil is almost as important as water, it is a business with high profitability and relatively low risks, for this reason the oil industry was a clear target for criminals.

Assessment

The demand of fuel from the cartels to diversify their sources of income has led to the number of clandestine intakes of fuel stolen directly from the Pemex pipelines increasing from 710 intakes in 2010, to 10 363 in 2017, a 868% increase in seven years, and 51% more than in 2016. The Mexican government estimates that the cartels earn 20 billion dollars from illegal traffic of fuel, and experts say that the cartels amass 20% of the national crude.

The business is much more profitable than drug trafficking because it hardly involves risk to criminals. This low risk lies in several factors, the main one is the vast oil pipeline network that Pemex has throughout the Mexican territory, some 57,000 kilometers that cross lands with different orography, which makes the protection of all this infrastructure very difficult. Secondly, the ease of selling the stolen fuel, given that it does not have to be exported across a border like drugs, but it is sold directly in carafes to the population, wholesale to large factories, or through gas stations that accept this illicit gasoline. And finally, the extensive information that criminals possess about oil movements in refineries and through oil pipelines, and knowledge for their extraction; information obtained through bribes or threats to Pemex workers, who often have no choice but to yield, since occasionally the local authorities are accomplices of the cartels.

Not all Mexican States suffer fuel thefts, some regions such as Baja California, Colima or Queretaro do not suffer these incidents; the states most affected by fuel theft are Guanajuato, with 1,852 intakes, followed by Puebla, with 1,443, Tamaulipas, with 1,100, Hidalgo, with 1,064, and Veracruz, with 1,012; followed very closely by the States of Jalisco, Sinaloa, Nuevo León, Tlaxcala and the State of Mexico. These states are the most affected because they have a large industrial fabric that demands fuel, which is transported through oil pipelines that run through these states; furthermore, in many of these territories the cartels have an important presence. In the case of Puebla, it should be noted that the so-called “red triangle” is located on its borders, an area where the Minatitlán-Mexico pipeline transports 40% of the national crude, which makes Puebla a priority for this type of criminals

The leading players of the theft of fuel vary according to the affected region. Remnants of the extinct Zetas perpetrate these robberies in the territories of Tamaulipas, Nuevo León, Tabasco, Puebla, Campeche and Veracruz; once one of the most dangerous criminal gangs in the world, they are currently seeking to survive the government’s effective plan to hunt them down, which has led them to steal fuel as a funding channel, since the Zetas have never been linked to drug trafficking, but with extortion and human trafficking. Remaining groups of the historic Gulf Cartel have also made use of this practice but are concentrated mainly in Tamaulipas and some areas of Nuevo Leon. In Guanajuato, the new Santa Rosa de Lima cartel has proclaimed itself as the main perpetrator of these robberies and threatens to blow up the presence of the Cartel Jalisco Nueva Generación (CJNG), which entirely dominates the robberies that occur in Jalisco. The Sinaloa Cartel, considered the most important cartel in the world, has also set itself the objective of diversifying its sources of income and dominates the intakes produced in the State of Sinaloa, being the architect of 13% of the intakes nationwide.

Both Pemex and the Mexican government have launched a series of measures to end this activity. Pemex will stop transporting gasoline in tankers, and will move to transport an untreated product that would hinder its use by the huachicoleros, on the other hand, the trucks will now be equipped with hidden GPS systems that will facilitate their recovery by security forces; legally, the penalty for fuel theft has been increased, which is now considered a serious crime punishable between 15 and 25 years in prison, at the same time that large fines amounting to 107,000 dollars are established. However, the most important measure is an agreement between Pemex and the Government to strengthen the surveillance of the national pipeline network with land and air patrols.

Outlook

The theft of fuel is one of the most damaging criminal activities in Mexico, given that its consequences have repercussions in various areas.

Economically, the fuel losses have cost Pemex one billion dollars in 2017, to which we must add the cost of repairing the damages caused to the pipelines by the huachicoleros. This happens when Pemex is at its worst, given that in 2017 its refineries have only operated at 60% capacity for various reasons, which has reduced production to 1 948 000 barrels per day in 2017, 9.26% less than in 2016, the lowest figure since 1980. This situation could cause an economic collapse of the company, given that an increase in criminal activity would only result in more economic losses for Pemex, which loses income annually and has a huge debt that exceeds one hundred billion dollars in 2017.

In the political sphere, this new criminal activity could undermine the liberalization of the oil sector undertaken by Enrique Peña Nieto, which aims to attract foreign investment to modernize the obsolete Pemex extraction technologies, which despite investing more money every year, its investments are distant from the multi-million-dollar investments of giants like Exxon Mobil, which last March announced investments of 20 billion dollars on the coast of the Gulf of Mexico. The situation of insecurity is already driving away several companies and threatens to hinder government efforts to boost the sector and suppose a loss of up to four points of Mexican GDP.

Socially, the situation could cause a serious shortage problems for the population of one of the largest oil producing countries, as has been the case in some Mexican states in recent years, which would lead directly to an increase in oil imports, mainly from the United States, which would further increase the price of gasoline, which after the liberalization of the sector grew by 25%; this in turn would directly affect the theft of fuel, since the cartels and criminals sell gasoline at a cheaper price than the official, which would lead them to increase their market share, and this criminal activity, by an increase in demand for cheap gasoline.

Another aspect, barely considered, is the environmental one, given that the rupture of clandestine extraction valves produces oil leaks and even large explosions that affect the environment and entail large costs to offset some damages that are sometimes irreparable.

The benefits of fuel theft could further trigger criminal activity because of the cost-benefit ratio of the business. Therefore, the Mexican Government and Pemex must put an end to this criminal activity by increasing the safety of oil pipelines and tankers, to discourage criminals from stealing them. One of the most important aspects that the authorities must fight is the internal corruption of Pemex, given that none of the cartels would be able to carry out this activity if it were not for the valuable information stolen from the oil company’s workers, either through bribes or threats, along with the materials for extraction stolen from the company thanks to these workers.