Ships gather off the ports of Los Angeles and Long Beach, California as a sailboat makes it way past them in this aerial photo taken February 6, 2015. The loading and unloading of cargo freighters has been suspended at all 29 U.S. West Coast ports this weekend because of chronic slowdowns on the docks that shippers and terminal operators have blamed on the dockworkers' union, the companies said Friday. Picture taken February 6, 2015 REUTERS/Bob Riha Jr To wage the hot peace of the twenty-first century against a newly expansionist Communist China, the United States must develop another tariff-free menu of options. James Roberts April 19, 2018 TweetShareShare Printer-friendly version The wise American policy architects of the Cold War who successfully walled-in the expansionist Communist Soviet Union behind its Iron Curtain didn’t need any tariffs in their tool kit. The only thing the USSR exported in any quantity was tyranny. Like their other products, it was an inferior good—dangerous and destabilizing. To maintain and promote a stable and prosperous postwar world, America contained and pushed back against Moscow by leading the West in building and maintaining a robust international institutional infrastructure for policy coordination and dispute resolution. To wage the hot peace of the twenty-first century against a newly expansionist Communist China, however, the United States must develop another tariff-free menu of options for an increasingly interconnected world that is extremely allergic to trade wars. The mid-twentieth century containment strategy should be the Trump administration’s model. Communism in practice has always failed. To stay in power amid the inevitable economic ruination it produces, the Soviet Union’s fascistic leaders grabbed land from neighboring territories and projected power at key geostrategic points around the globe. The goal was to ensure cheap imports of food and commodities from vanquished neighbors and to stoke Russian nationalism at home and fear among their foreign enemies. Chinese products are far superior to Soviet ones, but only because a generation of pragmatic leaders in Beijing were willing to honor the principles of Marxist-Leninism in the breach—averting their eyes from the animal spirits of the efficient private actors who drove the economy and tolerating enormous corruption to allow them to use state assets to turn a profit. Beijing has also had to prop up heavily indebted and inefficient—but job-creating—state-owned enterprises. The social costs of the Chinese regime’s hypocrisy are growing, as resentment of massive corruption and waste builds and undermines its legitimacy. Let’s not kid ourselves, then. Behind the placid and confident façade of wannabe Chinese president-for-life Xi Jinping lurks a Communist Party of China that is increasingly anxious, bedeviled by the same worries that confronted first Stalin and now Putin. The self-contradictory hybrid of mutually exclusive governing philosophies—capitalism in practice but communism in theory—is simply not tenable in the long term. But Xi and his large cohort of party faithful want to cling to their power and ill-gotten gains, so they have doubled down on communism, re-branding it as “Socialism with Chinese Characteristics for a New Era.” The social contract that Emperor Xi struck this year with his subjects is pretty simple: in exchange for their consent to his unlimited hold on authoritarian power, they get “China 2025,” which is a blueprint for China to become a global leader in the cutting-edge technologies that will define future American economic and military power (e.g. aircraft fabrication, robotics, semiconductors, electric vehicles, biotechnology, artificial intelligence and quantum computing). The promise of China 2025 slakes the Chinese people’s historic appetite for international prestige. But to make good on that promise, Beijing must continue doing what it has done for years: engage in cyber-theft of intellectual property and unfair trade and investment practices that force U.S. companies to transfer their proprietary technology. President Trump has diagnosed this threat correctly. But he must recalibrate his policy response so that it inflicts punishment on China’s leadership and without penalizing American workers, farmers, and consumers. Instead of implementing his initial response—a slew of counterproductive and economically destructive tariffs—the president should consider pursuing a tariff-free containment strategy. For example, the White House could wage an aggressive campaign at the International Monetary Fund, the World Bank, the global regional development banks (e.g. the Asian and Inter-American Development Banks), and other international financial institutions to penalize unfair Chinese practices. This could begin with President Trump directing U.S. Executive Director-designate Mark Rosen to commission IMF-led audits of the one-sided, nontransparent loans China has made to strategically located developing countries as part of its “Belt & Road Initiative.” Critics of BRI argue persuasively that these loans are structured to set those countries up to fail, which will allow the Chinese to declare them in default and move in to take ownership of vital assets such as ports, railroads, and airports. The United States should then use its power to impose loan conditionality on any unrepentant BRI beneficiary countries that refuse to renegotiate their BRI loans if IMF audits expose their flaws. America should also work with democratic, like-minded, and free-market member countries of the World Trade Organization that benefit from robust rule of law to use their own court systems to impose and enforce their own, tougher and quicker sanctions on China when the WTO finds China guilty of engaging in unfair and illegal trade practices. These steps would be in addition to some excellent actions already taken by the White House and Congress, including more aggressive challenges of Chinese intellectual property practices under the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights and through the Committee on Foreign Investment in the United States (CFIUS). Despite’s Xi’s outward bravado, China has serious problems. It would be quite vulnerable to these pressure tactics. And while this tariff-free menu might cause indigestion in Beijing, it would improve the health of the U.S. economy and avoid the risks it currently faces from a trade war. James M. Roberts is research fellow for economic freedom and growth in The Heritage Foundation’s Center for International Trade and Economics.

LEVI MAXEY 

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Bottom Line: The Kremlin employs an array of often overlapping and competitive security and intelligence services to create multiple sources of intelligence, encourage risk-taking and keep a wary eye on each other. This has enabled Russian President Vladimir Putin to consolidate power by playing agencies off of each other to avoid uninvited power grabs. But these redundancies can also create inefficiencies that Russia can’t afford as its economy continues to falter.

Background: The Soviet Union primarily relied on two intelligence services. The Committee for State Security (KGB) was tasked with foreign political and economic espionage, covert action – known as active measures – and domestic security, while the Main Intelligence Director (GRU) under the General Staff is responsible for military intelligence. Since the collapse of the Soviet Union, Russia broke the KGB largely into four services – the Federal Security Service (FSB), Foreign Intelligence Service (SVR), Federal Protection Service (FSO), and the Interior Ministry (MVD) – while cutting the GRU’s workforce significantly. 

The most influential agency remains the FSB, whose remit includes everything from domestic security to external activities such as foreign collection, cyber operations, criminal cultivation and active measures such as information operations and even assassination. For example, following the November 2006 assassination of Russian defector and former FSB officer, Alexander Litvinenko, in London, a British public inquiry concluded in January 2016 that the operation was the work of the FSB, and likely approved directly by Putin. As a former KGB officer and later FSB director, Putin largely looks to the service as his most trusted arm both at home and abroad. 

Other internally-focused Russian security services include the Federal Protection Services (FSO) and Interior Ministry (MVD). FSO, which resembles aspects of the U.S. Secret Service, is primarily responsible for the protection of government figures and facilities, as well as monitoring the rest of the Russian intelligence services for misconduct. The MVD resembles the FBI, focusing on law enforcement against organized crime and counterterrorism. Putin also announced a new National Guard in April 2016, which is likely intended as a praetorian guard to clampdown on dissent, but could eventually seek to consume other law enforcement entities. 

External intelligence collection and action is theoretically under the domain of the SVR and GRU, who both conduct cyber espionage and maintain networks of human intelligence officers under “legal” diplomatic cover inside of foreign ministry embassies around the world – such as military or cultural attachés – and covert officers, or “illegals,” posing as students, business persons, journalists and other professions. In June 2010, the FBI apprehended a spy-ring of 10 SVR “illegals” operating in the United States. The SVR officers were exchanged a month later for a number of Russian prisoners, including Sergei Skripal, a former GRU officer accused of working for British intelligence who was poisoned in March 2018 alongside his daughter by a nerve agent developed by Russia. 

While the SVR largely focuses on developing long-term networks of deep-cover operatives abroad, the GRU’s aggressive and risk-taking culture sets it up for tactical intelligence collection and operations. It includes cyber espionage and attack, battlefield reconnaissance and clandestine operations using its Spetsnaz, or special forces. GRU has sharpened its teeth by operating in unstable regions, cultivating proxies ranging from criminal arms dealers such as Victor Bout, to mafia bosses, militias, and mercenaries in Chechnya, Georgia, Ukraine and elsewhere. 

Daniel Hoffman, former Chief of Station, CIA

“The one thing that didn’t change when the Soviet Union collapsed was that the SVR, FSB and the GRU continued to mount high-value operations against the United States and the rest of their enemies. The rest of the Soviet Union collapsed, they did not. Former KGB and Director FSB Putin has purposely directed these intelligence services to mount increasingly aggressive social networking media, cyber and influence attacks on top of their traditional espionage.”

Mark Kelton, former deputy director for counterintelligence, CIA National Clandestine Service

“The Russian Federal Security Service (FSB) is the largest and most influential Russian service. The successor to the Second Chief Directorate of the KGB, it is responsible for internal security and counterintelligence. It also is principally responsible for intelligence activities in the former Soviet Union. The Russian Foreign Intelligence Service (SVR) is the successor to the First Chief Directorate of the KGB and is responsible for intelligence collection and operations abroad. The Russian Military Intelligence Service (GRU) has responsibility for military intelligence collection, but also undertakes some operations that overlap with those of the other services.”

John Sipher, former member, CIA Senior Intelligence Service

“The Russian intelligence services have distinct but overlapping roles, and are both competitive with each other, and often distrust the other services. They are all aggressive in their own ways, and they all engage in covert, active measures to include efforts related to propaganda, subversion, disinformation, deception operations, cyber-attacks, forgeries and even assassination. For example, it is not clear which organization was at the forefront of the recent attempt to murder former GRU officer Sergei Skripal in England.”

Issue: The organizational structure of Russian intelligence services might resemble that of the West – dividing up responsibilities among multiple services – but the prevailing culture and authoritarian control over these services creates infighting for prestige and favor with Putin and his closest allies in the Kremlin’s Security Council and Presidential Administration. This, coupled with Russia’s endemic corruption, creates an intelligence cycle that confirms Putin’s worldview rather than presenting cold facts and possibly unwelcome truths, and prioritizes short-term results that can be bartered for insider business opportunities.

John Sipher, former member, CIA Senior Intelligence Service

“The competition and potential friction between the services operates on a couple different levels. Like in other countries, the leaders of the organization are part of a constant political game/battle to be relevant to the Kremlin and please President Putin. They each need to compete for attention and avoid embarrassment. Likewise, officers in the lower levels of the organization try to achieve their goals and resent interference or complication from the other agencies. Whereas these types of political and bureaucratic battles take place everywhere, in Russia, there is an additional overlay of corruption. The more senior you are in Russia, the better opportunity to steal. At the same time, everyone knows that everyone else is corrupt and it is beneficial to hold information on your rivals that could possibly be used against him. This adds a layer of complication that makes it very hard for westerners to fully understand the power and personal dynamic of intelligence and security leaders in Moscow.”

Steve Hall, former member, CIA Senior Intelligence Service

“Just like the oligarchs, these intelligence services are competing for Putin’s attention because they know that improves their own resources and capabilities and, importantly, their individual profits or share of the riches. A little less of what are the bureaucratic guidelines and more of what is the culture? If the model is one that you have one central autocrat – Putin – who is tracking the country’s way forward, and he is not getting what he needs in terms of intelligence collection or in terms of implementation of things he wants done, such as active measures, then he’ll simply replace a chief or rely on someone else or switch gears to another organization.”

Mark Kelton, former deputy director for counterintelligence, CIA National Clandestine Service

“The Russian services have a history of competition, some of it driven by institutional rivalry, wherein the Soviet or Russian leaderships have played one service off against another, and by the dictates of compartmentation wherein different services might target or even run the same agents. For example, during the Alger Hiss/Whittaker Chambers and Robert Hanssen cases, the GRU and NKVD/KGB/SVR worked with the same people, unbeknownst to each other.” 

Corruption remains endemic within the Russian government, and the additional level of secrecy and control afforded to the intelligence services makes them particularly susceptible. Russian intelligence officers, as a matter of common practice, engage with members of criminal underworld, often blending money, crime and political power in Russia and abroad. As instruments of the state, criminal proxies provide global reach, plausible deniability during active measures and expertise and resources outside of official channels. 

In March 2017, for example, the U.S. Department of Justice revealed indictments for two FSB officers alongside three cybercriminals for their January 2014 breach of Yahoo, gaining access to over 500 million accounts. Estonia’s internal security service, KAPO, has consistently observedFSB agents being recruited in criminal smuggling rings that cross the borders into Russia, where their crimes are used as leverage for their cooperation. 

The GRU’s turn to political intelligence and operations, despite its military background, is indictive of its overlapping with FSB and SVR. For example, both the GRU and FSB were simultaneously on the networks of the Democratic National Committee in the spring of 2016, but it was the GRU that in turn “weaponized” the stolen emails in the form of Guccifer 2.0 and DCLeaks as part of the Kremlin’s political influence operation. This confluence of roles between the GRU and SVR/FSB was also apparent in 2014 after a GRU officer was kicked out of France for actively seeking to find salacious material on the personal life of then-French President Francois Hollande, to use as Kompromat, or compromising material – a blackmail tactic common among Russian intelligence services. 

Competition between overlapping Russian intelligence services can be a strength. As a May 2016 report from the European Council on Foreign Relations points out, agencies are forced to be aggressive, innovative and achieve results. There also is a level of redundancy with multiple streams of intelligence whispering into Putin’s ear. But there are disadvantages as well. The need for immediate and tangible results before other services often comes at the cost of with the integrity of the analytic process and hampers coordination and burden sharing between services. 

“The Russians are masters at intelligence and covert games. However, they never developed the corresponding capacity to analyze and understand intelligence. They were too willing to believe conspiracy theories, and there was intense pressure to tell the leadership what it wanted to hear rather than the unvarnished truth. Putin’s strong beliefs, resentment toward the west, corruption and power to hurt those who threaten him suggest that it unlikely that the intelligence services provide unbiased information, but instead play to his preconceived views.”

Mark Kelton, former deputy director for counterintelligence, CIA National Clandestine Service

“The intelligence services of Russia do not exist to inform policy in the sense that Western services do, in providing evaluated, all-source analytic judgments on issues of import. They have no capacity to conduct such analysis. The information they provide to the Russian leadership is much more raw in form than is the case in the West.”

“The closer you are to power in Russia, the more able you are to make money or get things done. So the idea of rule of law and who are criminals and who are not is very blurred and very Byzantine in Russia. I’m not sure that there’s that big of a distinction between organized crime and the intelligence and law enforcement services in Russia.”

Response: While NATO was first conceived as a collective defense organization against the threat of Soviet military aggressiveness, Russia’s modern turn toward “hybrid warfare” cannot be countered by merely conventional military means. Of particular concern is burden-sharing among NATO member states toward countering Russian active measures, such as information operations and cyber intrusions, including by targeting the criminal proxies and funding streams that facilitate them. 

The U.S. and other NATO members could also covertly seek to insert misinformation, conspiracy and doubt in Russia’s intelligence cycles, playing off their desire to please Putin’s worldview. Much like Russia seeks to exacerbate societal divisions in the west, NATO could seek to widen the chasms between Russian intelligence services, playing them off of each other and draining their limited resources. 

“If we are not talking about preparing for a conventional Russian attack, cyber is arguably the most important thing that NATO needs to be focused on. It’s also an area where NATO can pretty easily coordinate with each other and, indeed, I think it’s been doing so in terms of sharing of information on that kind of threat. Counterintelligence is a lot harder because it gets into conducting mole hunts and trying to find out where you are penetrated as an organization – whether it’s NATO, CIA or DIA. That is a much harder and more sensitive thing to do. But the cyber stuff has really got to be out there in front. It is close to being number one in my book.”

“This is an intelligence challenge. We need to collect the intelligence on their plans and intentions. That means penetrating their intelligence services so that we can track what they are doing and then prevent, preempt, and counter their espionage against us. One good example was the 2010 arrest of the SVR ‘illegals.’ As far as our resources, we are tracking a lot of different state and non-state actor threats, such as terrorists, and criminals, the Chinese and a host of others. The question for the intelligence community is whether they have enough resources to track Russian targets. We shut down consulates in San Francisco and Seattle, which will reduce Russia’s footprint, but there are ongoing resource allocation challenges.”

Looking Ahead: In September 2016, Russian media reported the Kremlin was planning a major reorganization of Russia’s security and intelligence services. The outlined plan included creating a monolith agency similar to the KGB, called the Ministry of State Security (MGB), by bringing the Federal Protection Service (FSO) and SVR under the leadership of the FSB. However, there has been little public progress towards reorganization.

Mark Kelton, former deputy director for counterintelligence, CIA National Clandestine Service

“There has been talk of reestablishing a unitary service akin to the KGB, which would include both the FSB and SVR. It remains to be seen whether Putin goes in that direction, or sees more value in maintaining both as separate, competitive, services he can play off against each other bureaucratically. In any case, the FSB will seek to expand its foreign operations at the expense of the SVR in particular.” 

A consolidation of intelligence agencies seemingly first began in March 2003 with the dissolution of Russia’s former signals intelligence agency, the Federal Agency of Government Communications and Information (FAGCI), similar to the NSA. The roles of FAGCI were then melded into the FSB, SVR and GRU. While the continuation of such a consolidation would surely remove some of the current system’s inefficiencies, Putin has actively denied the FSB its ambitious plans towards empire-building. This could in part be to keep those around him weak enough to control through internal competition, but also to maintain multiple sources of independent intelligence. 

John Sipher, former member, CIA Senior Intelligence Service

“It remains to be seen who will achieve prominence with Putin. In the meantime, they will compete with each other and push the boundaries of their authorities. Putin wishes to keep the various barons off-balance and allow him to determine who has power and influence and provide the ability to push any of them down if they appear to become too powerful. It is likely an ugly and complex game of personal power that we will never fully comprehend.”

Steve Hall, former member, CIA Senior Intelligence Service

“There is simply a lot of behind-the-scenes inside pool that is happening. Some of it probably very personality-based, some of it very business-based, in terms of what oligarch has too much power, what intelligence organization is the most successful, and does that then represent a potential threat to Putin? So there are a lot of balancing acts going on across all these different sectors that we probably know very little about in the West.

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