Under the Radar News 01.30.12

Posted on Monday, January 30, 2012 by Ai-Shan Lu

A weekly compilation of underreported events in Asia.

  • Taiwan's President Ma Ying- jeou, who was re-elected on January 14, announced that a free trade zone will be established in Kaohsiung City, a southern city in Taiwan. According to Mr. Ma, "the government has put a lot of effort into free trade in the hope that Taiwan can join the Trans-Pacific Partnership (TPP) in 10 years, which is a new regional trade pact within the Asia Pacific Economic Cooperation (APEC)."

  • On January 26, South Korea’s Marine Corps held its first live-fire exercise on islands shelled by North Korea in 2010 since the death of Kim Jong-il. According to the spokesperson, the drill was a regular exercise that had been planned before Kim's death on December 17.

  • As China and Japan decided to mark the 40th anniversary of the normalization of diplomatic relations in Beijing on February 16, Japan Prime Minister Yoshihiko Noda tried to enhance diplomatic ties with the PRC and encouraged more people-to-people exchanges in the near future. During his visit to Beijing at the end of 2011, the two sides agreed to strengthen political mutual trust and increase dialogue in various fields.

  • The European Union (EU) agreed to lift some of its sanctions (how long have they been in place?) on Burma (Myanmar) ostensibly in response to the political reforms undertaken by the Burmese government. Visa bans on the president of Burma and other senior officials will reportedly be suspended, but other sanctions including an arms embargo and restrictions on targeted industries will remain. The easing of sanctions could lead to Western investment in oil, gas and other sectors to compete with Burma’s neighboring nations, especially India, Thailand and China.

  • Prime Minister Wen Jiabao stated that China will face bigger challenges in 2012 (Year of Dragon) in a meeting with top officials on January 21. Wen said that the government’s main goal will be to maintain price stability alongside rapid economic development. Moreover, that China must change its development model to “give more importance to people's lifestyles, and let the population share the fruits of the reform.”

  • Kazakhstan has decided to withdraw several billions of dollars out of Western banks to fund special projects to diversify its economy away from resource extraction. Kazakhstan is abundant in natural resources such as oil, gas and uranium. Kazakh President Nursultan Nazarbayev said that his government will invest in industrial-innovation projects.

  • China reportedly did not send any high-level officials to attend the World Economic Forum (WEF) at Davos. By comparison, the Chinese delegation used to be led by vice-premier ranking officials, and even premiers. Observers hold that absence of senior officials this year may reflect Beijing’s focus on domestic issues, especially in the run-up to the once-a-decade leadership shuffle later this year.
  • China’s Fengyun Weather Satellite Support to Maritime Surveillance

    Posted on Thursday, January 26, 2012 by Jenny Lin

    By: Jenny Lin

    Since its inception in 1988, the Fengyun (FY) program has become an international symbol of China’s burgeoning ambitions in space. China’s weather satellite program began with Chinese Premier Zhou Enlai’s 1970 approval of a Central Military Commission (CMC) proposal to initiate research and development (R&D) on weather satellites.With the launch of the first FY-1A in 1988, China became only the third nation to launch its own meteorological satellites. Since then, the PRC has launched four FY-1 weather satellites into polar orbit, five FY-2 geosynchronous weather satellites, and two FY-3 satellites that were boosted into polar orbits on Long March-4 launch vehicles.

    The FY series appear to be roughly analogous to those associated with the U.S Defense Meteorological Satellite Program (DMSP). The FY-3, equipped with almost a dozen all weather sensors, is China’s most advanced space asset providing meteorological support to the People’s Liberation Army (PLA). The system also could provide measurement and signature intelligence (MASINT) data to China’s emerging anti-ship ballistic missile (ASBM) targeting architecture.In addition to five additional FY-3 satellites to be launched between now and 2020, the next generation geosynchronous weather satellite, the FY-4, is expected to enter service in 2014.As a dual use asset, FY-3 requirements appear to have been developed by both the PLA General Staff Department (GSD) and China Meteorological Bureau. Specific PLA users with significant interests in the program include the GSD Second Department and GSD Third Department. Presumably, the GSD Operations Department and Service-level weather bureaus are key PLA users.

    The R&D and manufacturing supply chain has stretched across a range of bureaucracies. The China Aerospace Science and Technology Corporation (CASC) Shanghai Academy of Space Technology (SAST), also known as the Eighth Academy, is the lead systems integrator for the satellites, launch vehicle, and ground system R&D.Overall system designers were SAST’s Sun Jingliang [孙敬良] and Meng Zhizhong [孟执中].Lead satellite sub-system designer was SAST’s Dong Yaohai [董瑶海].Shanghai Institute of Technical Physics appears to have been responsible for the hyperspectral infrared sensor.

    GSD Third Department 57 Research Institute, supported by the China Electronics Technology Group Corporation (CETC) 39th Research Institute (Northwest Institute of Electronic Equipment), developed the ground based receiving antenna system for the FY-3.Ground stations responsible for managing FY-3 satellite data reception, transmission and processing are Urumqi, Guangzhou, and Jiamusi.Other entities supporting the program included SAST’s Shanghai Institute of Electronic and Communications Equipment (804th Research Institute), CASC Fifth Academy’s Beijing Institute of Satellite Information Engineering (503rd Research Institute), and the CMA’s Network Surveillance Division. Other key players included Yang Zhongdong [杨忠东] and Lu Naimon [卢乃锰], both from the National Meterological Satellite Center.FY-3 satellite carries at least 11 on-board sensors.One study noted that the FY-3 includes a prototype package intended to support other sensors, such as over the horizon (OTH) radar systems, to compensate for sea clutter when tracking aircraft carriers and other moving targets at sea. Greater resolution enables more precise targeting.

    Comment and Conclusion

    Fengyun satellites collect and provide strategic weather reconnaissance data for civilian and military purposes. An accurate assessment of current and future weather conditions, such as cloud cover, atmospheric moisture, winds, temperature, and ocean currents, is critical for a range of military operations. Weather satellites can measure electromagnetic conditions in the ionosphere that could affect over the horizon radar and communication systems. They also can provide militarily useful data associated with complex maritime environments and terrains, including observation of targets under camouflage or perhaps even underground. Interests of GSD Third Department are unknown. Their role in the ground segment implies some linkage between the Fengyun program and signals intelligence.

    Jenny Lin is a Researcher at Project 2049 Institute. The author would like to thank Mark Stokes for his input and suggestions.

    Under the Radar News 01.23.12

    Posted on Tuesday, January 24, 2012 by Ai-Shan Lu

    A weekly compilation of underreported events in Asia.

  • According to the PRC’s National Bureau of Statistics, 51.3% of China’s total 1.3 billion population is now living in urban areas and the proportion of city dwellers has risen by almost 14% in the past decade. The data reportedly includes a large number of migrant workers. The NBS recommended that the Chinese government develop policies to address the country’s urbanization trend, for example, constructing more infrastructures and providing better social welfare to migrant labors.

  • Japan’s latest move to name uninhabited islets claimed by both China and Taiwan in the East China Sea could arouse controversy. According to Japan’s top government spokesman, Osamu Fujimura, naming those islands could boost the outer boundaries of Japan’s exclusive economic zone (EEZ). On the other hand, Chinese Foreign Ministry spokesman Liu Weimin claimed that those islets have been an inherent territory of China since ancient times.

  • Chinese Premier Wen Jiabao urged countries in the world to cooperate and proposed an idea of a global energy market management mechanism within the framework of G20 so as to maintain the stability and safety of resources supply at opening of the 5th World Future Energy Summit in Abu Dhabi. Wen expressed China’s willingness to collaborate with other nations but also emphasized that developed countries should assist developing countries in acquiring new technologies that enhance efficiency while protecting intellectual property rights.

  • The PRC’s vice president, Xi Jinping, met with former U.S. Secretary of State Henry Kissinger on January 16 and stated that, “the U.S. can view China’s strategic intentions and development path in as sensible and objective way, and be committed to developing a cooperative partnership.” Also, Xi emphasized that the bilateral relations between the two countries should be based on the three joint communiqués agreed and signed by both the PRC and the United States.

  • With more and more Asian countries strengthening their submarine fleets so as to protect their interests in the South China Sea, the US is facing greater challenges. China has increased its budget for modernizing its fleet and South Korea is selling subs to Indonesia. Also, India will acquire its nuclear-powered submarine from Russia. Even Thailand, Singapore, Taiwan and Bangladesh are planning to get subs. The significance of South China Sea cannot be overstated since most ships traveling between continents go through it and it is abundant in natural resources.
  • Time to Get Serious About Sanctions on Iran

    Posted on Wednesday, January 18, 2012 by Isabella Mroczkowski

    By David Asher

    U.S. Treasury Department sanctions against Iran are having a remarkable impact and much more is soon to come. In recent weeks the Iranian currency has crashed and the Iranian balance of payments, a close proxy measure for its oil revenue seems heading toward a deficit. Moreover, recently enacted legislation -- requiring banks to cease dealing with the Iranian Central Bank for oil imports within 60 days -- will soon be implemented. For Tehran, oil is money. Thus, cutting off oil revenue could soon bring the Iranian economy to its knees.

    Iran's recent threats to block the flow of oil via the Strait of Hormuz -- with the goal of sending oil prices skyrocketing -- are a sign that the Iranians are already feeling the pain of sanctions. For Tehran, it can only get worse from here. The problem with sanctions is that the longer they drag on, the more affected countries develop the means to skirt them. Saddam's Iraq came under the weight of a vast sanctions regime for over a decade and the government did not fall from power, let alone change course. Iran is a nation of sophisticated traders and we can expect it to undertake a web of evasive measures to struggle on. Moreover, even if the Iranian economy is brought to a halt, history shows that those in power will be the last to suffer. In fact, Iran's hardline Revolutionary Guards appear to be gaining power as the nation moves onto a quasi-wartime footing.

    To enforce sanctions and significantly enhance pressure directed against Iran's leadership (not just its people), the U.S. should consider an Iran-Hezbollah Illicit Activities Initiative similar to the one used against Kim Jong Il's regime, 2001-2006, and akin as well to the strategy applied successfully against Slobodan Milosevic and his cronies in the Balkans in the mid-90s (see the testimony). These previous interagency and international initiatives brought together U.S. and foreign government partners to apply a matrix of pressure strategies to directly affect the hold on power of the North Korean and Serbian regime leaders and coerce them to either give up global defiance or potentially fall from power. Notably, both initiatives incorporated domestic and international law enforcement against the illicit support networks and financial sanctuaries for regime leaders, in addition to the targeted and broader trade sanctions being applied currently against Iran.

    Almost every seriously sanctioned regime in history has gotten into illicit activity to offset the cost imposed by sanctions. Iran is no exception to the rule. It appears to have been quietly engaged in state directed illicit activities to benefit the Revolutionary Guard and their antecedents since the onset of the revolution (and accompanying sanctions) -- everything from illegal technology procurement and weapons smuggling to involvement in narcotics trafficking and money laundering. In the coming months, as sanctions bite harder and oil profits disappear, we can expect the scale and importance of these illicit activities for the IRGC (and Hezbollah) to increase dramatically. However, the more Tehran and its affiliates rely on illicit activity, the easier it will be to apply law enforcement and international law strategically to hold their leaders and their finances accountable. Provided a sufficient enforcement dragnet is created, Iran may fall into the same self-created trap as North Korea and Serbia. However, if an enforcement system is not rapidly assembled, we can safely assume that Iran -- particularly with the help of China and Russia -- will embrace the black economy as well as marshal sanctions workarounds that could enhance the power of the IRGC, speed up its nuclear timeline, and heighten the chances of conflict.

    The groundwork for an illicit activities initiative already exists, thanks to the excellent work of U.S. law enforcement. In the last year, the findings of Operation Titan -- a massive Drug Enforcement Administration money laundering investigation into Iran's key affiliated terrorist organization, Lebanese Hezbollah -- have emerged in the public eye. As the New York Times details in a recent article, this investigation has documented billions of dollars of cocaine laced funds that have made their way from Hezbollah accounts in Lebanon into the U.S. and European banking system over the last five years. A December 2011 asset forfeiture claim against Hezbollah financial fronts, including the Lebanese Canadian Bank, filed in the Southern District of New York (SDNY) spells out the case that for Hezbollah, Lebanon has become a veritable money laundering machine.

    Ironically, the data below, from the Lebanese Central bank website, plainly illustrates the scale of Hezbollah's money laundering activity. It is hiding in plain sight. As the data shows, miraculously, Lebanese banks exploded in growth in the wake of Hezbollah's war with Israel in 2006 - with dollar-denominated deposits making up nearly 2/3 of the Lebanese banking system and over 50% of its growth. Until recently -- when DEA and Treasury began to crack down -- bank dollar and euro deposit growth has kept up a dramatic pace, despite Lebanon having large sovereign currency, economic, political, and security risk. This explosive growth makes no sense, unless Lebanon has become a major financial safe haven for drug trafficking organizations worldwide (and where the risk of moving so much foreign bulk cash and wire transfers is effectively offset by a highly complicit Lebanese government). As the risk of further U.S. actions has become clearer to bank depositors (bad guys included) and the Syria/Iran crisis expands, capital has started to flee Beirut en masse (see the balance of payments slide). Indeed, Lebanon is in the midst of a balance of payments crisis presently as a result.

    Bottom line: (undoubtedly with Tehran's consent) the Hezbollah criminal terrorist organization -- as the SDNY Civil action shows convincingly -- established a world class money laundering mechanism out of Beirut at the end of 2006 to help the organization survive amidst the economic fallout of a financially ruinous war with Israel (where Iran didn't seem to want to fill the whole financial void). Through its law enforcement investigations, the U.S. is now well positioned to hold Hezbollah and Iran accountable for using Beirut as an illicit venue. Moreover, cracking down on Hezbollah's illicit finances is one of the only things that can save the Lebanese banking system and economy from unraveling further. The predominant risk to the Lebanese banking system and the Lebanese economy today is born from Hezbollah's domineering illicit activities and their infiltration into the entire Lebanese financial system and economy (real estate is infiltrated at least as much as banking). If the cost of survival for Lebanese banking is punishing Hezbollah, then the Lebanese need to turn on Hezbollah (and curtail Iran's access in the process). Strategic law enforcement against Hezbollah, could serve as a key element to an counter-Iranian illicit activities strategy in the weeks and months to come.

    David Asher is a non-resident senior fellow at the Center for a New American Security and member on the Project 2049 Board of Advisors. He served as the architect of the Bush administration's global campaign against the finances of the Kim Jong Il regime and has long served as expert on counter-threat finance programs and issues for the government and the private sector.

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