Tuesday, June 21, 2016

Tuesday, June 21, Night Wall Street Roundup: Wall St. Ticks Up On Economy Bets; Brexit Fear Ebbs

By Rodrigo Campos
June 21, 2016

U.S. stocks rose on Tuesday, led by gains in technology shares as Federal Reserve Chair Janet Yellen was optimistic about the economy and played down the risk of a recession, while concern over the upcoming British referendum remained subdued.

Yellen, however, warned that the British vote on Thursday on whether to stay in the European Union, alongside a U.S. hiring slowdown, posed risks to the economic outlook.

The British pound earlier brushed $1.48 to hit its highest level in nearly six months versus the U.S. dollar GBP=, as markets continued to price in the momentum toward a vote to remain in the EU.

"The biggest issue in the market is clearly the upcoming vote in the UK. The sentiment swings back and forth and right now it is swinging toward 'remain' and that is giving support," said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.

The Dow Jones industrial average .DJI rose 24.86 points, or 0.14 percent, to 17,829.73, the S&P 500 .SPX gained 5.65 points, or 0.27 percent, to 2,088.9 and the Nasdaq Composite .IXIC added 6.55 points, or 0.14 percent, to 4,843.76.

Microsoft (MSFT.O) led the S&P advance with a 2.2 percent gain followed by Apple's (AAPL.O) 0.8 percent rise.

As part of its biannual monetary policy report, the Fed warned U.S. stock market valuations are "well above" their median over the past 30 years, the strongest such assessment in years.

"The model they use may be useful in long periods of time, but hasn't proved to be useful in the short run," Meckler said, as he pointed to the low returns investors get from Treasury yields and a near-zero return on cash that is partly due to Fed policies.

"They inflated the asset class (stocks) and then they say, ‘Gee, it’s inflated’."

The S&P 500 is trading at about 16.5 times expected earnings, above the 30-year median of 14.6 times, according to Thomson Reuters Datastream.

The energy sector .SPNY led gains on the S&P 500 with an advance of 1.1 percent despite declines in crude oil futures.

Drugmaker Celgene (CELG.O) was the biggest weight on the S&P with a 2.4 percent decline to $96.86. Traders said they were fielding questions on Tuesday about the Independent Payment Advisory Board, which is intended to control costs under the Medicare government health program; analysts say creation of the IPAB board could be triggered as soon as this week.

United Continental (UAL.N) rose 3.4 percent to $44.86 after the airline operator laid out plans to generate an extra $3.1 billion in operating income per year by 2018.

Advancing issues outnumbered declining ones on the NYSE by a ratio of 1.30-to-1 while on the Nasdaq a 1.35-to-1 ratio favored decliners.

The S&P 500 posted 28 new 52-week highs and 3 new lows; the Nasdaq recorded 47 new highs and 57 new lows.

About 6.2 billion shares changed hands in U.S. exchanges, compared with the 6.83 billion daily average over the past 20 sessions.

Article Link to Reuters:

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Obamacare Premiums Are Going Up. Again. Now What?

By Megan McArdle
The Bloomberg View
June 21, 2016

If you haven’t been following the Obamacare news recently -- and given how much else has been going on, there’s a good chance you haven’t -- then you may have missed the news that insurers' rate-increase requests for 2017 are quite large. A new report from the Kaiser Family Foundation says the cost of the “benchmark” plan (the second-lowest-cost silver plan in a market, which is the price used to calculate subsidies) will go up 10 percent this year, double the rate at which prices increased last year. The lowest-cost silver plans are also seeing substantial hikes. This matters because these are the most frequently purchased plans.

The usual caveat applies to these preliminary requests: Regulators might not approve them. But that caveat was hauled out last year by the law’s supporters, who seemed to think that this was simply the opening stage of a negotiation in which insurers asked for the stars in the hope of settling on the moon. In fact, regulators approved large rate hikes, and the state of Oregon actually made some insurers raise rates by more than they’d planned. Regulators dislike high insurance premiums, of course, but they also dislike insurance companies suddenly going out of business and leaving their customers without insurance. They are not going to approve rates that they believe will cause insurers to lose large sums of money.

And thus far, everything we’ve heard from insurers indicates that they have lost large sums of money. Last year, it was possible to believe that this was simply a one-time problem, because the rates for 2016 were the first that had been set with a full year’s worth of data on the new Obamacare markets. Insurers, analysts said soothingly, had initially underpriced, but now they were correcting their mistake, and things would quickly stabilize.

That has proven to be a false hope. If anything, losses have widened, and rates need an even bigger correction this year. Some of this may be due to the expiration of the temporary risk-adjustment programs, and now the uncertainty over whether the Department of Health and Human Services will be allowed to keep cutting checks for another subsidy program aimed at customers whose family income is under 250 percent of the poverty line (a judge recently ruled that the payments were illegal, but the ruling will be appealed). However, that’s not the whole story here. A big part of it is simply that the insurers cannot make a profit at current prices.

What does that mean for the future? A few months back I was on a panel with a very smart health-care reporter who said, basically, “Yes, there will be rate hikes, but there is some price at which insurance can be sold profitably, and eventually, insurers will figure out what that price is.” My response was that this isn’t necessarily true. Insurance markets have some interesting features, one of which is that it is quite possible for there to be no price at which insurance can be profitably sold.

In health insurance markets, this phenomenon is known as the adverse-selection death spiral. Basically, every time the price of insurance goes up, many of the people in the insurance pool who use the least health care decide that it makes more sense to go without the insurance and bear the risk themselves, and they drop their coverage. That means you’re left with the more expensive patients to cover, which means the average cost goes up, which means prices have to go up … and, well, you get the idea. The price the market eventually finds may be so high that very few people want to buy the insurance.

Now, there are factors weighing against this, most notably the mandate and the subsidies. So far, the mandate seems to have had very little effect on people's propensity to buy insurance. I’ve been careful to say in the past that that might change, because the mandate penalties were phased in over a few years and are only now at full strength. However, next year will pretty much tell us whether the mandate is going to work. If we don’t see a substantial increase in the number of people buying insurance for 2017, then it will be safe to say that the mandate was too weak, and that we are not going to get the hoped-for surge of young, healthy people into the Obamacare exchanges. Which, in turn, will be bad news for prices.

The subsidies, on the other hand, are obviously affecting behavior, because most of the people buying exchange policies qualify for substantial subsidies. The good news is that this will blunt the desire for healthier people to drop their coverage as the price of policies rises, because those cost increases will be passed on to the government rather than the consumer. The bad news is that health is positively correlated with income (on average, the richer you are, the healthier you are likely to be), so a market in which the poorest people are the least likely to drop their coverage is a market in which you are selecting for a sicker, more expensive pool.

The worse news is that, unbeknownst to most people, the subsidies are actually capped at a little over 0.5 percent of gross domestic product. We’re nowhere near that level yet -- the Congressional Budget Office expects us to spend about $43 billion in 2017 on premium tax credits, while 0.5 percent of GDP would be a hair over $90 billion -- but it doesn’t take too many years of 10 percent increases to get there.

Does that mean that we’re entering a death spiral? No. This could be the year insurers finally get it together and find an equilibrium price for insurance at which the customers are willing to buy, and at which the insurers can actually make money. It’s been a hairy few years for insurers selling policies on the exchanges, but the pool seems to have stabilized at about 10 million people, and maybe now they’ll finally able to get an accurate cost forecast.

What recent news tells us is simply that a death spiral remains possible, because despite last year’s big increases, they still haven’t found that equilibrium price. Since we don’t know what that price may be, we can’t say whether it will make a viable market. And even if there is no viable equilibrium price, that still doesn’t mean we’re in for a death spiral, because we don’t know what the government will do. Say some state-level exchanges start going into death spirals. Does Congress just sit around and watch the market die?

That’s a genuine question; I don’t know the answer. But if the Obamacare exchanges die, they will take the entire individual insurance market with them in the affected states, because the law no longer permits insurers to separate the pools. There’s at least some chance that Republicans will weigh ideology against screaming voters, and decide the voters win.

What it comes down to is that three years in, we still don’t know what this program is going to look like or what it is going to cost. The number of people covered could go up; it could go down; it could flatten out about where it is right now. And the same is true of premiums. All we can say for sure right now is that eventually, we’ll find out.

Article Link to The Bloomberg View:

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Drop The U.K. Panic Talk And Protect Global Markets

By Ashoka Mody
The Bloomberg View
June 21, 2016

The doomsday narrative of British Prime Minister David Cameron, the Bank of England and their official friends around the world is setting a course for a self-fulfilling financial panic. They insist that the British economy will be permanently poorer and global markets will be roiled if the British public votes to leave the European Union in a referendum on Thursday.

These claims are based on fuzzy analysis. More seriously, they are deeply irresponsible. Make no mistake, if markets do panic it will be because of the hysteria that the officials have built up. To redeem themselves, policymakers around the world must set up visible signposts now to dampen financial turbulence.

Upon leaving the European Union, Britain would trade less with Europe and more with other nations. It's possible that overall trade may fall somewhat during the transition. But all economists agree that the costs of such a decline would be small and short-lived. A just-released study from the International Monetary Fund shows that the share of British goods exported to the European Union fell stunningly to 45 percent in 2014 from 60 percent in 2000. This shift away from slower-growing Europe to the rest of the world is set to continue irrespective of Brexit.

For this reason, the entire official campaign against a British exit, or "Brexit,” is based on the further claim that British productivity would fall precipitously. There is no evidence for this assertion. A possible small, transitional, decline in trade cannot cause such a large fall in productivity. It's true that more trade has sometimes been associated with higher productivity, but only when countries emerged from economic isolation.

For advanced economies, the evidence favors the opposite possibility. The most productive firms are the most active exporters, and when it becomes harder to export, they redouble their efforts to improve productivity. For decades, as the deutsche mark appreciated, German producers held back an increase in their export prices by raising their efficiency.

At the very least, the long-term economic consequences of Britain leaving the EU are neutral within a small margin that no economist can parse, as many -- including former Bank of England Governor, Mervyn King -- are beginning to acknowledge. And when there is no looming fundamental economic loss, all predictions of financial panic become judgments based on anecdotes.

The Bank of England, for example, claims that Brexit fears have contributed to the fall in the value of the British pound since late 2015. This conclusion does not pass the simplest smell test. Much of the decline in sterling’s value took place earlier this year, when the polls -- and especially the betting markets -- showed a clear lead for the “Remain” campaign, and hence a low probability of exit. Sterling, in fact, stabilized as the “Leave” campaign gained ground earlier this month.

But such is the power of narrative that every analyst sees the ghost of Brexit in every market movement. European bank stocks are down, the claim is, because of Brexit. It takes a moment to recognize that European bank stocks have been falling behind for years as their leveraged bets are being unwound. Italian banks are walking on the edge of a precipice.

Similarly, there's no basis to the Bank of England’s claim that economic growth has already slowed in anticipation of Britain's departure from the EU. The British economy has moved predictably with the degree of fiscal austerity: gratuitous austerity delayed recovery from the financial crisis, a brief reprieve in 2014 drove a fleeting rebound, and more anticipated austerity is causing a slowdown. No forecaster can -- or should -- try to discern a Brexit effect amidst these much larger movements.

The world economy is in a fragile state. World trade, the best single barometer of global economic health, has been crawling. Indeed, the latest numbers suggest that world trade may not be growing at all. We know the reasons why. The Chinese economy has been grinding down, which has put a lid on Japanese and Asian growth. Though the euro zone is out of crisis mode for now, it is, at best, muddling ahead. And the United States has ceased acting as a global engine of growth.

Now the collective voices of officialdom have primed financial markets to fear Brexit. The big rebound in sterling and world stock markets after this weekend’s modest shift back to “Remain” suggest that the association of Brexit with financial mayhem may have sunk in.

There are enough fault lines in the global economy to worry about already. Adding this specter of a Brexit-induced financial collapse is misguided and self-indulgent.

Evidently, individual central banks are taking precautions. U.S. Federal Reserve Chair Janet Yellen has noted that Brexit is on her radar screen. And the Bank of England has added liquidity lines.

It is time now to step back from this dangerous course. Central banks should make a joint statement reassuring markets that they stand by with credible tools to protect global financial systems.

If Britain decides to exit from the European Union, a chapter in post-War European and global history will come to a close. How the event is remembered will depend on the wisdom of the present stewards of the global economic and financial systems.

Article Link to the Bloomberg View:

With All Else Failing, Try Rate Hikes To Rescue The Economy

By Mark Gilbert
The Bloomberg View
June 21, 2016

In most walks of life, it's pretty obvious that if what you're doing isn't working, you should try something else. In the world of central banking, however, the strategy has been to do more of what isn't working, providing trillions of dollars and euros of liquidity via quantitative easing and even sending official interest rates in some countries into negative territory.

But what if low interest rates are the problem, not the solution? What if the continuous central bank efforts to add more stimulus end up suggesting that the economic outlook is so bleak that nobody in their right mind would take advantage of the largess?

In December, the Federal Reserve raised its benchmark interest rate for the first time since 2006 and suggested that the move would be followed by four more increases this year. Instead, it's almost the middle of the year, and the futures market is betting the Fed is more likely to remain inactive for the next six months than raise again. "This mismatch between what we're saying and what we're doing is arguably causing distortions in global financial market pricing, causing unnecessary confusion for future Fed policy and eroding credibility," St. Louis Fed President James Bullard said last week.

One big problem with artificially engineering low borrowing costs is that capital can end up trapped in so-called zombie companies. What the economist Joseph Schumpeter called "creative destruction" is less likely when money is free. That prevents economic Darwinism from weeding out the weak.

Citigroup's Gregory Marks published a research note last week slamming central bankers for acting like doctors allowed to "perform experimental procedures on everyone who walks through hospital doors." He cited Rudolf von Havenstein, who was president of the German central bank when the country was gripped by hyperinflation between 1921 and 1923 in large part because he printed money with no regard for the inflationary consequences. His name has become synonymous with muddled monetary thinking (one of the funniest market Twitter feeds around bears his name). Here's what Marks wrote:

"We should be invoking Havenstein to identify the present flaw in institutional thinking around current monetary policy, specifically negative rates. In other words, the lesson here is that, unfortunately, people believed in the efficacy of a completely irrational policy because it was put in place by a qualified and experienced policymaker -- this instead of questioning the common sense merit of its possible outcome."

And in a research report published earlier this month with the title "The ECB Must Change Course," Deutsche Bank's Chief International Economic Torsten Slok argued that the euro zone central bank should prepare to reverse its policy stance:

"The longer policy prevents the necessary catharsis, the more it contributes to the growth of populist or extremist politics. Normalizing rates would be seen as a positive signal by consumers and corporate investors. The longer the ECB persists with unconventional monetary policy, the greater the damage to the European project will be."

If central banks (and indeed financial markets) are telling the world that money will be free for the foreseeable future, what incentive do consumers or companies have to borrow today to consume or invest, rather than waiting a while to see if demand picks up? Suppose instead there was a coordinated announcement that interest rates in the world's major economies would rise to, say, 2 percent in three months' time. Might that not grease the wheels of industry, prompting companies to borrow to invest?

I've previously argued that the Fed shouldn't have raised rates in December. Based on economic orthodoxy, I stand by that call. But I'm willing to entertain the possibility that it's time to rip up the textbooks and try some financial heterodoxy. If lower borrowing costs haven't revived growth or extinguished the threat of deflation, maybe it's time to give higher interest rates a chance.

The Iraq Victory That Could Lose The War

ISIS is being pushed out. But on the ground in Fallujah, a Sunni city in ashes, it’s clear the Iran-backed Shia militias mean to assert their power.

By Austin Bodetti 
The Daily Beast
June 21, 2016

FALLUJAH, Iraq — The Iraqi government, which has been shaken by weekly protests that charge its senior leadership with corruption, needed to win a military victory to try to salvage its political reputation. Thus was begun the Third Battle of Fallujah.

The city that had been the symbolic capital of Sunni resistance to American occupation and Shia domination has collapsed into a network of bombed-out homes, criss-crossing sand berms, and half-finished cement structures. Thousands of bullet casings, water bottles, and other discarded items litter the landscape. The Iraqi Security Forces have turned what remains of Fallujah, the City of Mosques, into an ash heap.

Last week, although scattered resistance by fighters from the so-called Islamic State continues in parts of the city, Iraqi Prime Minister Haider al-Abadi felt confident enough to declare Fallujah liberated on June 17 after the elite U.S.-trained soldiers of the Iraqi Counterterrorism Service (ICTS) recaptured a former government headquarters in the city center.

The Army and the Federal Police meanwhile provided fire support from the southern suburbs of the city. The People’s Mobilization (Hashd), an umbrella organization of several dozen Iranian-backed Shia militias and a smaller number of Christian, Sunni, and Yazidi paramilitaries, severed the northern routes out of Fallujah, while the American-led coalition launched occasional airstrikes against ISIS positions.

The Hashd and the ICTS share a fraught history. Throughout the 2000s, Iran used the Shia militias in a proxy war against Iraq’s American-trained security forces. The ICTS responded in 2008 by spearheading Operation Charge of Knights, which resulted in over 1,000 casualties and routed the Shia militias in Basra, the country’s third-largest city and a Shia stronghold.

“Before, we fought them,” Muhammad, a soldier with the ICTS, said of the Shia militias. “Now, they’re helping us against ISIS. They have two faces: fighting for Iraq, but working for Iran.”

In theory, the Hashd and the ICTS report to the Prime Minister’s Office, which, according to three of the militias’ senior leaders, controls and distributes all Iranian aid.

Under American pressure, the Prime Minister’s Office forbade the Hashd from entering Fallujah and ordered the ICTS to retake it alone.

“The majority of Fallujah’s civilians hold a positive opinion of the special forces, as opposed to the irregular forces,” Muhammad al-Issawi, a resident of Fallujah, told The Daily Beast.

Commanders with Kataib Hezbollah, a Shia militia that the U.S. State Department has labeled a terrorist organization for killing Americans during the Iraq War, confirmed to The Daily Beast that they were respecting the orders from the Prime Minister’s Office.

“The enemy is only 500 meters away,” said Erfad, who leads some of Kataib Hezbollah’s militiamen in Fallujah’s northern suburbs, “but we have orders from the Prime Minister’s Office to hold post. The ICTS is advancing from the south, and we don’t want to cause any complications.”

The majority of the militias, including Kataib Hezbollah, have remained in al-Karma and al-Saqlawiya, two towns to the north of Fallujah. Exhausted from the Ramadan fast, their fighters alternate between manning checkpoints, posing for photographs, and smoking hookahs.

The Badr Organization, the largest and oldest of the Shia militias and the closest to the Iraqi government, seems to have ignored the Prime Minister’s Office.

On June 13, Badr took a convoy to al-Hiakal in Fallujah’s southern suburbs and Shuhada 2 in Fallujah—a front reserved for the Federal Police and the ICTS—where one of its commanders was coordinating operations with the Ministry of Interior, which directs all police units in Iraq. The Minister of Interior belongs to Badr’s political party.

“Today, the Hashd is simply holding post,” the Badr commander, Sadiq al-Husseini, claimed to The Daily Beast and Iraqi journalists present. “The Hashd will simply remain on the outskirts of Fallujah until the prime minister orders otherwise.”

A few days later, the Institute for the Study of War nevertheless reported that Badr had entered Fallujah alongside the Federal Police. There has been no change to the prime minister’s order that the Shia militias stay outside the city.

Despite priding itself on freedom from the sectarianism that has plagued militias such as Badr, the ICTS seems to be maintaining a strategic, suspicious relationship with the Hashd.

On June 17, The Daily Beast witnessed Hadi al-Amiri, leader of Badr, meeting with Abdulwahab al-Saadi, leader of the operation to retake Fallujah. Several other leaders from the ICTS also were present.

Earlier that day, al-Saadi had criticized the Hashd, telling The Daily Beast, “The civilians see the Hashd as militiamen who can’t be controlled,” yet one of al-Amiri’s bodyguards asserted that the two men meet about three times a month. The ICTS blocked The Daily Beast and other journalists from the meeting.

The overt cooperation between Badr, a sectarian militia, and the ICTS, the one branch of the Armed Forces that has avoided sectarianism, will further divide Sunnis from the Iraqi government.

Even the Shia militias in the northern suburbs have tarnished the Iraqi government’s attempts at a nonsectarian campaign in Fallujah.

Omran Wali, another Kataib Hezbollah commander in al-Saqlawiyah, claimed, “We have been welcoming the civilians and treating them very well, bringing them to the camps for internally displaced people.” But an official investigation revealed that Shia militias have killed 49 civilians in the northern suburbs, and another 643 are missing. Iraqis are discussing rumors that the militias executed those missing in retaliation for an ISIS massacre at Camp Speicher near Tikrit in 2014.

Paramilitaries such as Kataib Hezbollah have also brought with them subtler but longer lasting problems.

The Daily Beast observed militiamen in al-Saqlawiya converting abandoned Sunni homes for their own use and recruiting fighters as young as 16 years old.

For the time being, however, the Iraqi government has gambled that the Shia militias are less dangerous disobeying orders and harassing civilians in Fallujah than siding with (or for that matter against) radical antigovernment protesters in Baghdad.

In April, after protesters breached the Green Zone, which houses many of Iraq’s ministries and most of its parliamentarians, Badr had mobilized its fighters against a Shia militia that had supported the protesters.

For now, the Iraqi government has buoyed its chances at short-term survival by more or less ending ISIS’s presence in Fallujah, which Baghdad’s politicians connected to a series of bombings in Sadr City that harmed the Iraqi government’s reputation for providing security.

Even so, the Shia militias’ military autonomy and sectarian abuses in addition to the Iraqi Security Forces’ tacit cooperation with them to enter Fallujah should raise serious concerns in Baghdad and Washington.

“Obviously, the Shia militias’ offensive against Fallujah complicates things in important ways,” Kenneth Pollack, a senior fellow at the Brookings Institution and former CIA intelligence analyst, said in an email. “They don’t fully respond to the Iraqi government. They frighten the Sunnis, largely because they have participated in ethnic cleansing.”

Al-Issawi, the resident of Fallujah, charged that Kataib Hezbollah alone had kidnapped 2,000 civilians throughout Anbar Governorate.

If even the ICTS, which spent much of the Iraq War dismantling the Shia militias’ underground military networks, now cooperates with them in seizing major Sunni cities, civilians such as al-Issawi may have more to fear. ISIS is on the way out, but the Shia militias are here to stay, and they may be the greatest threat to Iraq’s future as a country and nation.

“More generally, most experts I know worry more about Iraq’s political stability than about ISIS’s ability to hold Fallujah or Mosul indefinitely,” argued Michael O’Hanlon, another senior fellow at Brookings. “We have lots and lots of work to do—and the Iraqis have even more.”

Article Link to the Daily Beast:

Obama Will Finally Own Up To Drone War Dead

The White House is finally releasing figures about how many innocents have died in U.S. drone attacks. But the claim of only 100 or so civilians slain seems almost laughably low.

By Nancy A. Youssef and Shane Harris
The Daily Beast
June 21, 2016

President Obama is expected to issue an executive order as early as next week that for the first time would call for the United States annually to disclose how many civilians it believes it has killed in its airstrikes against terrorists around the world, The Daily Beast has learned.

The administration will announce that since Jan. 20, 2009, it believes airstrikes have killed roughly 100 civilians in countries including Yemen, Pakistan, Libya and Somalia, according to one defense official. It’s a figure many advocacy groups are likely to see as too low to be credible. Most independent estimates as closer to 1,000.

The order is intended to shed light on the U.S. effort to minimize civilian casualties, amid numerous claims that a 1,000 or more innocents have been killed. But the suggestion that only 100 have died from the thousands of U.S. strikes could reignite about debate about whether the U.S. actually knows who it’s killing through its furtive air war.

The Pentagon already keeps tallies of how many civilians it believes have been killed on the ground or through airstrikes in recognized war zones like Iraq, Syria, and Afghanistan. This order would cover the shadow wars—the semi-official conflicts in planes like Pakistan, where the United States had launched more than 300 strikes in Pakistan alone during the Obama administration. The order would for call for the release of figures on any airstrike--via drone or fixed wing aircraft--involving U.S. operations in these areas, two U.S. officials explained to the Daily Beast.

The administration has called its drone program a precise, effective form of warfare that targets terrorists and the reduces the chances of the United States becoming embroiled in quagmires in the war against extremists. But many opponents said the United States often does not know who it is killing--and even worse that it’s evasive about who it’s targeting. Even some defense officials fear the drone program has led some to join extremist groups.

Terror leaders around the world have cited the drone war as a reason for others to join their ranks. The release of the order and official tally will likely, in the short term, only add to the controversy.

In the West, perhaps the most well-known civilians killed by a drone strike were American Warren Weinstein and Italian Giovanni LePorto, who were being held by al Qaeda in Pakistan, when a January 2015 U.S. strike targeting the deputy al Qaeda in the Indian Subcontinent leader killed the two hostages as well.

But they not the only innocents taken out. Independent groups put civilian death tolls in the hundreds, sometimes in the thousands—and have said the U.S. has not been honest about who has been killed. For example, Reprieve, a human rights group dedicated to studying the drone war, estimates that 4,700 people in all have been killed in the U.S. drone war. And a 2013 McClatchy report found that despite U.S. assertions that drone strikes had killed top level al Qaeda members, classified documents show that the strikes have also killed hundreds of lower level militants.

At the same time, by routinely releasing such figures, it likely will be easier for the U.S. to pay compensation to civilians killed in airstrikes. In places like Yemen, the U.S. has, at times, paid compensation by way of proxy.

According to a source familiar with the discussions, the president may also impose other new rules on drone and other air strikes, including providing more financial reparations to families of civilians killed in drone strikes and requiring other countries with which the U.S. partners to follow the same rules as it does.

The source added that the administration is also expected to release a less redacted copy of the presidential policy guidance that governs drone strikes. That means more details about the policy may come to light than currently available

U.S. officials have insisted that they don’t conduct strikes unless there “near-certainty that no civilians will be killed or injured,” as President Obama explained in 2013.

As recently as last Tuesday, the president referred to his war on al Qaeda as a success story.

“If the implication is that those of us up here and the thousands of people around the country and around the world who are working to defeat ISIL aren’t taking the fight seriously, that would come as a surprise to those who have spent these last seven and a half years dismantling al Qaeda,” Obama said after a counter-terror meeting at the Treasury Department, using the government’s prefered acronym for ISIS.

When the U.S. does release figures on civilian casualties in Iraq and Syria, they are often at odds with those making assessments on the ground. For example, according to Airwars, which monitors strikes in Iraq and Syria, at least 1,323 civilians have been killed by coalition airstrikes since the war against ISIS began. By comparison, according to U.S. Central Command, which keeps tally of such figures, coalition strikes have killed 21 and injured 17, as of April 2016.

The administration first hinted at the release of the new executive order in March when Lisa Monaco, the president’s counterterrorism security adviser,announced the decision at a speech before the Council on Foreign Relations.

“In keeping with the President’s commitment to transparency, I can announce that, in the coming weeks, the Administration will publicly release an assessment of combatant and noncombatant casualties resulting from strikes taken outside areas of active hostilities since 2009. Going forward, these figures will be provided annually,” Monaco said during the March speech.

“Because we know that not only is greater transparency the right thing to do, it is the best way to maintain the legitimacy of our counter terrorism actions and the broad support of our allies.”

Since then, the order has been mired in internal legal debate, delaying the announcement, a U.S. official explained to the Daily Beast.

White House officials declined to discuss the specifics of the order, but said any decision is an attempt at transparency about the U.S. and its efforts to minimize civilian casualties.

“The President has been clear that we must be more transparent about both the basis of our counterterrorism actions and the manner in which they are carried out. As the President has noted, ‘when we cannot explain our efforts clearly and publicly, we face terrorist propaganda and international suspicion, we erode legitimacy with our partners and our people, and we reduce accountability in our own government,’” Ned Price, a National Security Council spokesman explained to The Daily Beast.

Article Link to The Daily Beast:

Iran’s New Heavy Water

By Michael Rubin
June 21, 2016

The true legacy of the Joint Comprehensive Plan of Action (JCPOA), the so-called Iran deal, will not be peace in our time or an end to Iran’s nuclear program. Rather, the true legacy of the JCPOA will be the permanent dilution of the non-proliferation regime. The agreement lowered the standard set by South Africa in 1991 (full transparency on previous 20 years of nuclear work) and Libya in 2003 (physical dismantling of the program).

When Kerry agreed to the JCPOA, one of the biggest surprises was his collapse on Fordo (or Fordow), a secret, underground nuclear facility the Islamic Republic built covertly. “They don’t need to have an underground, fortified facility like Fordo in order to have a peaceful nuclear program,” President Obama said in 2013. Iranian Foreign Minister Mohammad Javad Zarif convinced the notoriously credulous Kerry otherwise.

The reason for Iran’s insistence on keeping Fordo is becoming increasingly clear. According to Iran’s Tasnim News Agency, citing a statement from Russia’s Rosatom State Nuclear Energy Corporation:

"Russia and Iran are trying to transform Fordo’s former fuel enrichment plant into installations for heavy isotope production. This statement stated that Moscow and Tehran are advancing in reaching an agreement to transform Fordow’s former fuel enrichment plant into installations for heavy isotope production. Deputy Director General of Rossatom Nikolay Spasskiy consulted with Iranian Ambassador to Russia Mehdi Sanaei and the Deputy Head [and spokesman] of the Atomic Energy Organization of Iran…about transforming Fordow into heavy isotope installations."

So, while the Obama administration cites the reconfiguring of the heavy water reactor at Arak, with Russian assistance, as a success, Iran now seems to be pursuing an alternate means to produce and work with heavy water, by which it could potentially establish a pathway to a bomb. And they are doing it dozens of meters underground. But why worry? After all, Zarif isn’t a liar. Is he?

Article Link to Commentary:

The Trump Nuclear Bomb

Other public figures won’t admit they agree with him — but they often quietly adopt his ideas.

By Victor Davis Hanson 
The National Review
June 21, 2016

Donald Trump has a frightening habit of uttering things that many people apparently think, but would never express. And he blusters in such an off-putting and sloppy fashion that he alienates those who otherwise might agree with many of his critiques of political correctness.

Nonetheless, when the dust settles, we often see that Trump’s megatonnage strikes a chord — and, with it, sometimes has effected change. In an odd way, the more personally unpopular he becomes for raising taboo issues, the more resonant become the more refined variants of his proposals for addressing these festering problems.

For the last several months, anti-Trump demonstrators have sought to disrupt his rallies; they attack his supporters and wave offensive anti-American and often overtly racist placards, while burning American and waving Mexican flags — often with a nonchalant police force looking on.

Trump shouts back that their antics are only further proof of his general point: Illegal immigration and an open border have subverted our immigration laws and created a paradoxical movement that is as illogical as it is ungracious. After fleeing Mexico, entering the U.S. illegally, and being treated with respect (try doing the same in any Latin American country), some foreign nationals have been waving the flag of the country they do not wish to return to, while scorning the flag of the country that they demand to stay in. But apparently they are not fond of Trump’s larger point, disguised by his barroom rhetoric, which is that the old melting-pot protocols of rapid assimilation, integration, and intermarriage have been sabotaged — and now the American people can at last see the wages of that disaster on national TV.

In response to the general public disapproval that focused on the violent demonstrations, anti-Trump protestors recently have announced that they will ban Mexican flags from their future rallies. They probably will not, but why did they even play-act that they would? Are illegal-immigration activists suddenly turned off by Mexico and appreciative of the United States? Be that as it may, it would surely be a good thing if immigrants to the U.S. and their supporters stopped attacking the icons of the country that they have chosen to reside in.

For that matter, why suddenly during the past six months did 16 Republican primary candidates begin talking about enforcing immigration laws, avoid the very mention of “comprehensive immigration reform,” and promise to finish the southern border fence? While they all deplored Trump’s mean-spirited rhetoric, they all more or less channeled his themes. Until the approach of the Trump battering ram, outrageous developments like the neo-Confederate concept of sanctuary cities being exempt from federal law were off limits to serious criticism — even from the Republican congressional establishment.

Trump dismissively characterized Judge Gonzalo Curiel as a “Mexican” (the absence of hyphenation could be charitably interpreted as following the slang convention in which Americans are routinely called “Irish,” “Swedish,” “Greek,” or “Portuguese,” with these words used simply as abbreviated identifiers rather than as pejoratives). Trump’s point was that Curiel could not grant Trump a fair trial, given Trump’s well-publicized closed-borders advocacy.

Most of America was understandably outraged: Trump had belittled a sitting federal judge. Trump had impugned his Mexican ancestry. Trump had offered a dangerous vision of jurisprudence in which ethnic ancestry necessarily manifests itself in chauvinism and prejudice against the Other.

Trump was certainly crude, but on closer analysis of his disparagements he had blundered into at least a few legitimate issues. Was it not the Left that had always made Trump’s point about ethnicity being inseparable from ideology (most infamously Justice Sotomayor in her ruminations about how a “wise Latina” would reach better conclusions than intrinsically less capable white males, and how ethnic heritage necessarily must affect the vantage point of jurists — racialist themes Sotomayor returned to this week in her Utah v. Strieff dissent, which has been characterized as a “Black Lives Matter” manifesto)? Had not Barack Obama himself apologized (“Yeah, he’s a white guy . . . sorry.”) for nominating a white male judge to the Supreme Court, as if Merrick Garland’s appearance were something logically inseparable from his thought?

What exactly was the otherwise apparently sober and judicious Judge Curiel doing in publicizing his membership in a group known as the San Diego La Raza Lawyers Association? Raza — a term that will likely soon disappear from American parlance once belated public attention focuses on its 1960s separatist origins and its deeper racist Francoist and Mussolinian roots — is by intent racially charged. Certainly, an illegal-immigration advocate could not expect a fair trial from any federal judge who belonged to a group commensurately designated “the San Diego Race Lawyers Association.” From this tawdry incident, we will remember Trump, the racial incendiary — but perhaps in the aftermath we will also question why any organization with Raza in its name should earn a pass from charges of polarizing racial chauvinism. The present tribalism is unsustainable in a pluralistic society. I wish the antidote for “typical white person,” “punish our enemies,” “my people,” (only) Black Lives Matter, and “la Raza” were not Donald Trump, but let us be clear on the fact that his is a crude reaction to a smooth and unquestioned racialism that, in bankrupt fashion, has been tolerated by the establishments of both parties.

For seven years, Barack Obama has not deigned to explain to the American people why he abhors terms like radical Islam, Islamic terrorism, and Islamist, unlike European leaders and most Americans. Obama certainly in the past has had no problem with using far more sweeping and generic categories — for example, dressing down millions of Pennsylvanians as know-nothing clingers, or Christians in general for their purported centuries of “high-horse” sins. His administration has stereotyped and provoked plenty of groups, from supposedly parasitic entrepreneurs who did not build their own businesses to a nation of supposedly cowardly non-minorities.

In one area alone, Obama and his administration have created a vacuous and dangerous vocabulary of euphemisms — violent extremism, man-caused disasters, overseas contingency operations, a largely “secular” Muslim Brotherhood, and so on. Such nomenclature only confuses Americans about the dangers that they face from radical Islam while emboldening Islamists, who can suspect that if we are afraid to call them what they are, then we may also be defensive about their bogus grievances against the West. Neither ISIS and al-Qaeda nor the relatives of Omar Mateen and Rizwan Farook, the San Bernardino killer, have shown any gratitude to the U.S. for its politically correct tiptoeing around who is blowing up, beheading, and shooting whom — and why. Most recently, the administration, in disturbing 1984 style, edited out the Orlando terrorist’s explicit praise of and statement of solidarity with ISIS from the released transcript of his call to 911 — in an apparent effort to reinvent him as a generic rather than Islamic terrorist.

So why have polished politicians such as Barack Obama and Hillary Clinton suddenly decided that the American people needed explanations about, or changes in, their longstanding vocabulary?

Trump in blunderbuss fashion has questioned the premises of the seven-decade-old NATO alliance. Observers on both sides of the Atlantic derided his simplistic critique of paltry European contributions to the defense of the West as a sort of know-nothing nativism. It may well have been. But then strangely, European governments — Germany’s especially — quietly began issuing statements that, in fact, they were planning to up their defense budgets. Why now such acknowledgments, if Trump were a mere buffoon? And how did it happen that Europe (in aggregate perhaps the largest economy in the world) has still relied on far greater U.S. defense expenditures 70 years after the end of World War II?

Two examples of Trump’s most controversial and in some sense reprehensible invective are his suggestions that we should temporarily bar Muslim immigration into the United States, and that we should hold the families of terrorists accountable for their silence. Critics rightly decry both suggestions as unworkable, creepy, and contrary to the American sense of decency, while privately perhaps acknowledging that something is wrong with current immigration from the war-torn Middle East, a problem by now spanning two generations.

Collate the profiles of the Boston, Fort Hood, Chattanooga, UC Merced, San Bernardino, and Orlando attackers, and four themes emerge: (1) the parents, spouses, girlfriends, or siblings of the killers had plenty of occasions to discover that something was wrong with the person in question, but chose to remain silent and not contact authorities; (2) many second-generation Americans of Middle Eastern heritage feel no gratitude to the U.S. for taking in their parents, much less for their own good luck of being born in the U.S. rather than in their parents’ war-ravaged hellholes; (3) even on the occasions when state or federal authorities did look into reports that, for example, the Boston or Orlando killers were jihadist extremists, agents did little proactively, perhaps out of worry that they might be pegged as Islamophobic or as unduly profiling those of Middle Eastern descent; and (4) the U.S., like Europe, has no mechanism for screening the hundreds of thousands of immigrants that are flowing across its borders, and thus no way of knowing whether terrorist cells are infiltrating the country.

The reaction to Trump’s rants was understandable. A chorus denounced him for his racism, nativism, and xenophobia. Yet, quietly, authorities now say that they may well bring up Omar Mateen’s wife and others on charges of conspiracy or accessory to terrorism, in a muscular fashion that we have not witnessed before in other terrorism cases, especially the outrageous exemption given the conniving girlfriend of Tamerlan Tsarnaev. If there is a precedent set that remaining silent while a relative plots mass death means a long prison sentence, then such deterrence may save lives in the future.

Meanwhile, lots of politicians are now either calling for a temporary cessation of immigration from the Middle East or confessing that they have no idea who is entering the United States. They channel Trump’s outrage that unchecked entry from countries like Iraq, Syria, or Yemen is suicidal, but they clean up his invective by predicating possible future limitations based on the country of origin rather than on religious affiliation.

So what are we to make of these sometimes resonant messages from our often reviled messenger?

Is Trump an Ajaxian tragic figure who takes it upon himself to raise issues for the benefit of public debate — in overheated fashion garnering public attention with the full knowledge that his advocacy will earn him only hatred and ostracism?


A better metaphor is Trump as a loose nuclear weapon. Once he is dropped onto an issue, no one quite knows exactly the parameters of the ensuing explosion — only that it is going to blow up lots of things, and foremost Trump himself. In the subsequent charred landscape, no one emerges unscathed from the fallout, and many suspect that they should have adopted proactive solutions well before they were nuked by Trump.

A final irony?

Would far more sober and judicious candidates like Mitt Romney and Paul Ryan, had they run again in 2016, have brought up these issues? If so, could they have called commensurate public and presidential attention to them? Is losing politely in a fairly close race always preferable to the risk of losing loudly by a large margin?

So we always return to the central truth of 2016: Trump is a symptom, not a catalyst. He was created by the hyperpartisan unconstitutional overreach of Barack Obama, and by the appeasement of much of the Republican establishment, who wished to be liked and admired for their restraint and Beltway moderation rather than feared for their insistence on adherence to the Constitution and the protection of the individual from an always growing and encroaching government.

Article Link to the National Review:

Tuesday, June 21, Morning Global Market Roundup: Sterling Rises But Stocks Dip As Brexit Keeps Nerves Taut

By Nigel Stephenson
June 21, 2016

Sterling hit a seven-week high against the dollar on Tuesday on expectations Britons will vote to stay in the European Union but stocks failed to build on the previous day's gains as this week's referendum kept many investors cautious.

Two opinion polls published on Monday put the "Remain" camp ahead before Thursday's vote but another gave "Leave" a slight lead.

The dollar retreated against most major currencies with the exception of the yen, which has retreated this week on indications the campaign for Britain to stay in then EU has regained momentum.

"Financial markets appear to be taking the view that the race may well already be run, which given the twists and turns seen already in this campaign may well be extremely far sighted, or dangerously premature. With more polls due out later today we can expect to see further volatility unfold in the event of a move either way," said Michael Hewson, chief strategist at CMC Markets in London.

Also keeping investors nervous was testimony due later in the day from the head of the European Central Bank and from U.S. Federal Reserve Chair Janet Yellen, whose remarks will be scoured for clues to the timing of a possible rise in U.S. interest rates.

Concern Britain, the world's fifth-largest economy, will leave the EU has weighed on financial markets for weeks and has been cited by central bankers, including the Fed's Yellen, as a major obstacle for the global economy.

Britain's FTSE 100 .FTSE blue-chip share index, fell 0.1 percent while the pan-European FTSEurofirst 300 stocks index .FTEU3 was up 0.1 percent. Both indexes gained more than 3 percent on Monday.

Asian shares rose. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.6 percent. Tokyo's Nikkei 225 index .N225 rose 1.3 percent, buoyed by a weak yen.

Sterling, the main vehicle used by international investors to express a view on the referendum, rose as high as $1.4747 GBP=D4, a seven-week high in European trade.

"Some of the recent events have been favorable for Britain to remain in the EU, but it's still too close to call," said Manuel Oliveri, currency strategist at Credit Agricole. "We are advising our clients to go neutral into the vote, although we remain constructive. If "Remain" wins we expect sterling to rise to $1.55."

The pound gained 0.7 percent to 153.70 yen GBPJPY=. The Japanese currency, which is often sought by investors in times of market uncertainty, also fell 0.5 percent to 104.46 against the dollar JPY=.

The dollar index .DXY, which measures the U.S. currency against six major peers, fell 0.1 percent.

Crude Dips

Brent crude oil prices LCOc1 fell but held above the $50 a barrel they broke through on Monday for the first time in a week on reduced expectations of a Brexit.

Yields on low-risk U.S. and German government bonds, which rose on Monday, held steady. German 10-year yields DE10YT=TWEB were flat at 0.062 percent, having turned negative last week when Brexit worries were at their most acute.

Gold, another "safe haven" where investors park their money at times of heightened risk, fell 0.5 percent XAU= to about $1,283 an ounce.

Article Link to Reuters:

Oil Prices Fall For First Time In Three Days

By Yuka Obayashi
June 21, 2016

Oil prices fell in Asian trade after a strong two-day rally that was fed by easing concerns Britain would leave the European Union after a referendum this week, allowing market participants to focus on supply issues.

U.S. crude's expiring July front-month contract CLN6 was down 41 cents at $48.96 a barrel at 0650 GMT. The more actively traded August contract CLQ6, the new front-month from Wednesday, was down 41 cents at $49.55. That contract settled up nearly 3 percent at $49.96 on Monday.

Brent crude futures' August front-month contract LCOc1 was down 52 cents at $50.13 a barrel.

On Monday, it climbed $1.48, or 3 percent, to $50.65 a barrel. The contract has risen about 7 percent since Thursday's settlement, after dropping 10 percent in six previous sessions.

Two opinion polls released on Monday suggested support for Britain staying in the European Union had recovered some ground following the murder of a pro-EU lawmaker last week, although a third survey found backers for a "Brexit" ahead by a whisker.

While concerns over a British exit fade into the background, however briefly, supply issues are back in focus.

Saudi Arabia's crude oil exports dropped in April despite high production levels, suggesting its battle for market share against U.S. shale drillers may be running its course.

With oil prices up more than 30 percent this year, shale drillers are looking at turning the taps on again and have proved resilient beyond Saudi and OPEC expectations.

Prices approaching $60 a barrel may entice U.S. shale drillers to resume operations capping gains, Shintaro Ambe, an executive vice president in charge of energy at Japanese trading company Mitsui & Co told shareholders at an annual meeting on Tuesday in Tokyo.

"We expect oil prices to gradually rise over the mid- to long-term, but we don't expect prices to reach $100 a barrel quickly as they did three years ago," he said in response to a question from a shareholder on the outlook for crude.

Potentially adding to supply, Iran has increased its crude export capacity at its main terminal on Kharg Island to allow eight tankers to load simultaneously, the oil ministry's news agency Shana reported on Monday.

Meanwhile, Nigeria's naira NGN=D1 slumped 30 percent against the dollar on Monday after the country's currency peg was removed to alleviate the chronic foreign currency shortages choking growth in Africa's biggest economy and major oil exporter.

Article Link to Reuters:

Japan Military On Alert For Possible North Korean Ballistic Missile Launch

June 21, 2016

Japan's military was on alert for a possible North Korean ballistic missile launch, a government source said on Tuesday, with media reporting its navy and anti-missile Patriot batteries have been told to shoot down any projectile heading for Japan.

North Korea appeared to have moved an intermediate-range missile to its east coast, but there were no signs of an imminent launch, South Korea's Yonhap News Agency reported, citing an unnamed government source.

A South Korean defense ministry official said it could not confirm the Yonhap report and said the military was watching the North's missile activities closely.

Tension in the region has been high since isolated North Korea conducted its fourth nuclear test in January and followed that with a satellite launch and test launches of various missiles.

Japan has put its anti-ballistic missile forces on alert several times this year after detecting signs of missile launches.

The Japanese government source said there were again signs North Korea might be preparing a launch of the intermediate-range Musudan missile, the same missile it attempted to launch in May, prompting the order for the military to go on alert.

South Korea's Foreign Ministry said if the North goes ahead with a launch it would again be in violation of U.N. resolutions and defying repeated warnings by the international community.

"It will further isolate the North from the international community," ministry spokesman Cho June-hyuck told a briefing.

The United Nations Security Council in March imposed tightened sanctions against North Korea over its pursuit of nuclear weapons.

North Korea has failed in all four attempts to launch the Musudan, which theoretically has the range to reach any part of Japan and the U.S. territory of Guam.

North Korea tried unsuccessfully to test launch the Musudan three times in April, according to U.S. and South Korean officials, while a May attempt failed a day after Japan put its military on alert.

North Korea is believed to have up to 30 Musudan missiles, according to South Korean media, which officials said were first deployed in around 2007, although the North had never attempted to test-fire them until this year.

Article Link to Reuters:

Tehran Drags Moscow Deeper Into Syria

The war in Syria is hitting Iran ever closer to home, prompting Tehran to push for closer coordination with Russia, even as leaders on both sides complain of a lack of confidence and tactical misalignments.

June 21, 2016

For Iran, the ongoing war in Syria is no longer a matter of regional security. The conflict now has direct effects and implications for Iran's national security. This perspective is clear in the daily statements coming from Tehran, from the images of slain Iranian soldiers and high-ranking officers laid to rest in the Iranian capital and most recently the appointment of Rear Adm. Ali Shamkhani, the secretary of Iran’s Supreme National Security Council, as military and security coordinator of the joint cooperation group on Syria with Moscow and Damascus.

Shamkhani's appointment came in the wake of the recent summit that brought together the defense ministers of Syria, Iran and Russia in Tehran. It was clear from the meeting that the three countries are keen to boost their cooperation after having suffered some major setbacks in past weeks. These losses have been blamed on a lack of coordination and major differences over objectives, according to a Syrian official who spoke to Al-Monitor on condition of anonymity. The Syrian official said, “Russia, as a major world power, was looking at the scene from its position … and thought that giving peace a chance should have saved a lot of lives. The other side — the US, mainly — wasn’t serious about its commitments. Therefore, the attacks by militants were more brutal than before and this caused some losses in the field.”

Once a naval commander of the Islamic Revolutionary Guard Corps, Shamkhani will report directly to Iran’s Supreme Leader Ayatollah Ali Khamenei, “who’s the man who has the final say on main issues in Syria,” an Iranian official told Al-Monitor in a telephone interview. The official, who spoke on condition of anonymity, explained that Shamkhani knows Iran’s “red lines” very well and that he’s in direct contact with Khamenei. He said, “The Supreme Leader is following every detail in Syria because he believes that this war is in fact on Iran the same as it is on Syria. He also supports every kind of coordination with friendly and allied parties to this war, as it is a world war that needs each and every effort.” The official indicated that Tehran supports every effort aimed at ending the Syrian conflict, saying, “In Geneva, Vienna or anywhere, seeing people sitting together around the table is the best thing. Yet sitting just to buy time doesn’t make sense. The Americans are buying time for their new president at the cost of lives in Syria. We can’t accept such hesitation amid people’s tragedies.” He added, “Our friends the Russians went to the end [of the road] with the Americans. We warned on several occasions that this is not right. We even lost several officers and observers because of Russia’s position, and now that they discovered that there’s no outcome, we are going to start a new level of cooperation.”

The Iranian official concluded, “Iran, Russia and Syria agreed on a common goal: combating terrorism, which today is the main threat to the whole region. Our cooperation, common vision and commitment will give good results, and this happened in the past months and years despite some complexities we are facing. What we are quite sure of is that this cooperation will achieve a lot of hope, and for sure we will all emerge victorious.”

But how will this be reflected on the ground?

A Syrian field commander told Al-Monitor he expects that the coming weeks will see an escalation of the situations in north and east Syria, “The Iranians are sending more troops. … Some have already arrived. And the Russians informed us that new plans are going to be implemented in Syria and this might involve real changes in tactics. What we are sure of is that the more our allies are on the same track, the closer we are to victory.” The commander suggested that even on the Iranian side, there have been some differences in the way things are done on the ground, and said, “As time is passing, this is becoming part of the past and we hope from now on that things will assume a better direction.”

While a major portion of Aleppo is under the control of the Syrian army and its allies, battles are expected in districts that were lost to opposition groups and Jabhat al-Nusra. As for Idlib and Raqqa, a major attack by the Syrian government and its partners will mean the deployment of thousands of forces and aerial cover by Russia, a move that might sabotage the fragile cease-fire agreed on with the United States.

On June 6, a Russian official who spoke off the record in Moscow told a group of journalists, including Al-Monitor’s correspondent, that relations with Washington are surreal. “One day we agree on something, the second day they do the opposite. When we ask them, they blame it on others. There’s difficulty in building confidence with them. Even when they commit themselves to an agreement, it takes them months to implement it.” While the Russian official stated firmly that his country is committed to a peaceful solution in Syria, he suggested that some Persian Gulf countries are becoming more flexible about Syria. “They are ready to accept a provisional period with Syrian President Bashar al-Assad in office, but in return they want guarantees that Iran will have no role: not in Syria alone, but in the whole region. This is not possible, for Iran is a main power in the region along with Saudi Arabia — and both have a role to play.” The official concluded, “We regard our forces, the Iranian forces and Hezbollah as the only legitimate foreign forces in Syria, and therefore we are coordinating together.”

Indeed, one Syrian official told Al-Monitor on condition of anonymity that visiting Russian Defense Minister Sergei Shoigu informed the Syrian president in their June 18 meeting that “new Russian troops are to be deployed in Syria next week.”

Article Link to Al-Monitor:

Tehran drags Moscow deeper into Syria

Shocking News For The US Army: They Might Lose The Wars Of The Future

Russia, China and others are catching up--a big problem for sure.

By Dan Goure
The National Interest
June 21, 2016

The U.S. Army once was superior to every potential adversary in terms of combat power, what it called overmatch. This is no longer entirely true. In the future battlefields, the Army will face enemies that will be extremely lethal, more numerous, fighting on home turf and able to exploit the advantage of getting in the first blow. Unless the Army takes a number of steps in the near-term, it is likely to find itself not merely outmatched, but at risk of defeat.

In its most recent conflicts the Army benefitted from a number of advantages that are unlikely to be available in the future, certainly in other regions of the world. It had a secure logistical base largely free from interdiction. It could count on total air dominance. It didn’t have to face any long-range fires. While adversaries in Iraq and Afghanistan made excellent use of improvised explosive devices (IEDs), the only anti-armor threats came from rocket-propelled grenades. Finally, the Army possessed the luxury of unimpeded communications.

Few, if any, of these advantages are likely to hold true in future conflicts, certainly none involving regional powers or so-called near peer adversaries. In Europe, Asia and even portions of the Middle East, the U.S. military will have to fight for air superiority. Even where adversaries have not deployed integrated air defenses, Army maneuver forces, bases and lines of communications are likely to be subject to massed rocket and missile attacks. Brigade combat teams will face an array of lethal threats ranging from sophisticated IEDs to advanced, tandem-warhead anti-tank guided missiles, precision guided artillery projectiles, long-range guns, armed drones and air-delivered weapons.

The Russian Army, for example, has demonstrated an impressive array of new capabilities in its operations in the Ukraine and Syria including the coordinated use of drones with massed artillery and rocket batteries, advanced area munitions and thermobaric warheads, extremely lethal and sophisticated anti-tank guided missiles and the use of electronic warfare to black out military communications. It has shown an impressive capability to rapidly mobilize and deploy significant combined arms forces. In Eastern Europe, the Russian Army also will be operating close to its supply centers and under the protection of an integrated air defense network.

The Army’s Operating Concept during the latter part of the Cold War was “fight outnumbered and win.” This made sense when the principal adversary was the Warsaw Pact. It was simple, clear and focused on ways, means and ends. The new bumper sticker is “win in a complex world.” It is essentially meaningless. In view of the Army’s declining end strength, aging equipment and platforms, and the rise of new threats, it is likely that the Army again will have to fight and to do so outnumbered.

The character of the conflict and adversary in Southwest Asia propelled the Army to concentrate on ways of enhancing the survivability of its deployed forces. Out of this effort came the highly mobile Stryker with slat armor and, more recently, a double-V hull to defeat IEDs. There were tens of thousands of heavily armored mine-resistant ambush protected vehicles and uparmored Humvees. Electronic warfare focused entirely on ways of detecting and jamming remotely-controlled IEDs. The Army even adapted the Navy’s Phalanx close-in defense system to protect critical facilities against rocket attacks. Soldiers were provided with improved body armor.

The drive to enhance force protection and platform survivability is ongoing. The Army is seriously considering deploying active protection systems (APS) on at least a portion of its fleets of combat vehicles. APS systems such as the Israeli Trophy have proven highly effective against rocket-propelled grenades and anti-tank missiles. The Army is investing in a multi-mission launcher that can support the AMRAAM anti-aircraft missile as well as a future miniature hit-to-kill interceptor to counter rockets, artillery and mortars. The decades-old, open-topped M-113s are being replaced by a much more survivable Armored Multi-Purpose Vehicle based on the Bradley Infantry Fighting Vehicle. Army Aviation is deploying countermeasures to defeat infrared surface-to-air missiles and a navigation system for degraded vision environments.

But in order to fight outnumbered and win, the Army also must invest in near-term lethality enhancements to match its efforts in force protection and platform survivability. The Army recently undertook a short-term program in response to an urgent operational need from U.S. Army Europe to upgun some 80 Stryker vehicles with a new and more capable 30mm cannon. What about the rest of the fleet? The possibility of mounting an anti-tank missile such as the Javelin on the Stryker also has been suggested. The Army badly needs new precision munitions, the Multiple Launch Rocket System and mortar systems to defeat both enemy armor and also their rocket launchers and massed artillery. Plans to enhance the lethality of both the Bradley and the Abrams tank with sensor and targeting upgrades and, for the latter, a new multipurpose cannon round, need to be funded in the near-term. Directed energy weapons for tactical applications against hostile air threats, rockets and artillery are within reach. Then there is the need to match investments in advanced networking such as the WIN-T system with a new generation of electronic warfare capabilities that will render adversaries deaf, dumb and blind.

In counterinsurgency campaigns the goal, simply put, is to outlast the other side. Hence, the emphasis in Army modernization on survivability. In a serious conventional conflict with a near-peer, regional hegemon or capable non-state actor, this will not be enough. To fight and win outnumbered requires being more lethal than the adversary too.

Article Link to the National Interest:

The Gun Control Farce

By Thomas Sowell
Real Clear Politics
June 21, 2016

Surely murder is a serious subject, which ought to be examined seriously. Instead, it is almost always examined politically in the context of gun control controversies, with stock arguments on both sides that have remained the same for decades. And most of those arguments are irrelevant to the central question: Do tighter gun control laws reduce the murder rate?

That is not an esoteric question, nor one for which no empirical evidence is available. Think about it. We have 50 states, each with its own gun control laws, and many of those laws have gotten either tighter or looser over the years. There must be tons of data that could indicate whether murder rates went up or down when either of these things happened.

But have you ever heard any gun control advocate cite any such data? Tragically, gun control has become one of those fact-free issues that spawn outbursts of emotional rhetoric and mutual recriminations about the National Rifle Association or the Second Amendment.

If restrictions on gun ownership do reduce murders, we can repeal the Second Amendment, as other Constitutional Amendments have been repealed. Laws exist to protect people. People do not exist to perpetuate laws.

But if tighter restrictions on gun ownership do not reduce murders, what is the point of tighter gun control laws -- and what is the point of demonizing the National Rifle Association?

There are data not only from our 50 states but also from other countries around the world. Professor Joyce Lee Malcolm's empirical study, "Guns and Violence: The English Experience," should be eye-opening for all those who want their eyes opened, however small that number of people might be.

Professor Malcolm's book also illustrates the difference between isolated, cherry-picked facts and relevant empirical evidence.

Many gun control advocates have cited the much higher murder rates in the United States than in England as due to tighter gun control laws in England. But Professor Malcolm's study points out that the murder rate in New York has been some multiple of the murder rate in London for two centuries -- and, during most of that time, neither city had serious restrictions on gun ownership.

As late as 1954, "there were no controls on shotguns" in England, Professor Malcolm reported, but only 12 cases of armed robbery in London. Of these only 4 had real guns. But in the remainder of the 20th century, gun control laws became ever more severe -- and armed robberies in London soared to 1,400 by 1974.

"As the numbers of legal firearms have dwindled, the numbers of armed crimes have risen" is her summary of that history in England. Conversely, in the United States the number of handguns in American homes more than doubled between 1973 and 1992, while the murder rate went down.

There are relevant facts available, but you are not likely to hear about them from politicians currently pushing for tighter gun control laws, or from the mainstream media, when those facts go against the claims of gun control advocates.

Despite hundreds of thousands of times a year when Americans use firearms defensively, none of those incidents is likely to be reported in the mainstream media, even when lives are saved as a result. But one accidental firearm death in a home will be broadcast and rebroadcast from coast to coast.

Virtually all empirical studies in the United States show that tightening gun control laws has not reduced crime rates in general or murder rates in particular. Is this because only people opposed to gun control do empirical studies? Or is it because the facts uncovered in empirical studies make the arguments of gun control zealots untenable?

In both England and the United States, those people most zealous for tighter gun control laws tend also to be most lenient toward criminals and most restrictive on police. The net result is that law-abiding citizens become more vulnerable when they are disarmed and criminals disobey gun control laws, as they disobey other laws.

The facts are too plain to be ignored. Moreover, the consequences are too dangerous to law-abiding citizens, whose lives are put in jeopardy on the basis of fact-free assumptions and unexamined dogmas. Such arguments are a farce, but not the least bit funny.

Article Link to Real Clear Politics:

The Speech Intimidation Game

The left plays rough to shut down conservative ideas—as Visa and Coke learned the hard way.

By Kimberley A. Strassel 
The Wall Street Journal
June 21, 2016

To this day, Lisa Nelson refers to it as the “corporate blackmail” letter. It arrived in the early spring of 2012 at her Visa office in Washington, D.C. Ms. Nelson at the time was in the government-relations department for the credit-card company and had seen her share of bare-knuckle political activism. But this letter was bigger, meaner, scarier.

The letter was officially addressed to Visa CEO Joseph Saunders and every member of Visa’s board; Ms. Nelson had been cc’ed. It came from a black advocacy group known as Color of Change, co-founded by liberal activist Rashad Robinson and by onetime Obama adviserVan Jones.

The month before, a 17-year-old African-American in Sanford, Fla.,Trayvon Martin, had been fatally shot by a neighborhood-watch volunteer named George Zimmerman. The circumstances of the altercation proved confusing, but the black community instantly became angry over the police’s decision not to arrest Mr. Zimmerman. Florida has a “stand your ground” law, which authorizes a person to protect against a perceived threat. Within a few weeks, Color of Change was blaming this law on a center-right organization known as the American Legislative Exchange Council.

Visa was among a number of companies that gave money to ALEC, in support of its efforts to foster a pro-business environment in state legislatures. Color of Change’s letter was direct: Visa’s board must immediately pull all money from ALEC. If it did not, the advocacy group would air radio ads in the hometowns of Visa board members, holding them accountable for the death of a young black man.

The Visa board members weren’t alone. More than a few Fortune 500 companies had made the mistake of revealing, at an event here or there, that they donated to ALEC. The threatening letters flew out to board members at McDonald’s, John Deere, Coca-Cola, PepsiAmazon, Wendy’s, Procter & Gamble.

Ms. Nelson, whom ALEC hired as its CEO in 2014, recalls thinking that “I needed to keep making the case that, as a company, we could not be put in a position where we could be told who we could work with.” Her boss agreed. Visa kept on with its ALEC donations. At least for a time.

The Trayvon Martin shooting was a new way for progressives to go after ALEC. They had long despised the group, but attacking ALEC took on a new urgency after the 2010 midterm elections, when voters had revolted against unpopular liberal policies and programs. Democrats sustained staggering losses on the federal and state levels. Republicans had unprecedented control over state legislatures and governors’ mansions, and a new ability to green-light reforms that ALEC proposed.

In an interview with Bloomberg in May 2012, Common Cause spokeswoman Mary Boyleexplained that her group had been waiting for months for the right moment to file a complaint with the IRS to strip ALEC of its nonprofit status. “The Trayvon Martin thing was like a gift,” she said, in an extraordinary, if horrifying, moment of honesty.

Within weeks of the shooting in February 2012, a liberal coalition had mobilized against ALEC, elevating an organization few Americans had ever heard of to the status of national pariah, responsible for laws that the left now refers to as “kill at will” statutes. A rogues’ gallery of left-wing groups, including MoveOn.org, People for the American Way and Color of Change, demanded that ALEC make its funding sources public.

As a 501(c)(3) organization, ALEC doesn’t have to disclose who gives it money. But over the years some companies had acknowledged their ALEC partnership. Color of Change tracked down these names and cranked up its machine. A letter to 85,000 Color of Change members urged them to insist that the companies stop supporting ALEC. Next up were the “corporate blackmail” letters like the one Lisa Nelson received at Visa.

Coca-Cola crumpled quickly, in early April publicly declaring that it would pull its donations to ALEC. Then the lemmings started jumping blindly. By the end of the carnage, ALEC had lost as many as 100 major companies, a significant portion of its mixed (small and large) 500-company membership. It was a huge hit. ALEC, a lean organization routinely operating with a budget of about $7 million, was at risk of losing it all.

When ALEC held its annual meeting in Chicago in August 2013, protesters thronged outside the Palmer House hotel. The ALEC board was holed up, working through business, when someone’s phone went off. “Beep, beep, beep, beep. I see the guy look at it, and then he shows me,” says Bill Meierling, vice president of public affairs at ALEC. “And I’ve barely got a glance when everybody’s phone in the entire room all starts going off at the same time.”

Illinois Sen. Dick Durbin, a member of the Democratic leadership, had mailed a letter to 300 organizations across the U.S. that he suspected of funding ALEC. The letter mentioned Trayvon Martin and demanded that each organization disclose any ALEC connection and tell Mr. Durbin whether it supported “the ‘stand your ground’ legislation that was adopted as a national model and promoted by ALEC.” He intended to make the results public at a hearing the following month.

The Durbin letter was half intimidation, half fishing expedition. The intimidation was obvious: Stay away from ALEC or your company will pay a public price. The fishing expedition was almost worse. The left had squeezed all it could out of the organizations known to have associated with ALEC, and new targets were needed. If Mr. Durbin could force a few more companies to admit a relationship, the proxy activists could gin up their shareholder resolutions, Color of Change could rev up the board radio ads, MoveOn.org could mobilize protests—and ALEC would lose more support.

The Durbin roster seemed to reflect little more than having put any name that had ever been mentioned in the same sentence as ALEC on a list, and adding a few more for good measure. Some of the targets were downright amusing. The owner of a car dealership in Louisiana got a Durbin letter simply because ALEC had once done an event on his lot.

Up to now, ALEC had been on its heels. But Mr. Durbin miscalculated. He seemed unaware that the group had revamped its PR shop and moved into fight mode. Mr. Durbin had also struck during ALEC’s annual meeting, perhaps figuring the letter would cause internal disarray. It had the opposite effect. “Everyone that mattered was all in the same room; we were able to articulate a plan of action,” says Mr. Meierling. “It galvanized us, because no one could believe he’d do such a thing.”

Mr. Meierling points out that the Durbin letter became a big turning point for many on the right. “It got people to realize there is a huge difference between secrecy and privacy,” he says. “And that everyone has the right to associate freely, the right to debate free ideas.” By the time the Durbin hearing happened, a senator chastened by widespread condemnation took the stage. Mr. Durbin barely mentioned ALEC, turning the hearing instead into a look at gun violence. He’d been called out.

Article Link to The Wall Street Journal: