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Analysis: The rise and rise of western covert ops


When the suntanned, towering SEAL testified to the Congressional House Armed Services Committee in September, just a few weeks after he took over his new role, he used posters detailing the growth of his forces. In the decade since September 11 2001, U.S. Special Operations Command personnel numbers have doubled, its budget tripled and deployments quadrupled.The Bin Laden takedown is simply the tip of an iceberg of fast-growing, largely hidden action by the United States and its allies. Those with knowledge of such operations say this changing state of warfare could spark a range of unintended consequences, from jeopardizing diplomatic relationships to unwanted, wider wars.That’s not entirely new. Secret wars against communism in Southeast Asia in the 1960s helped spawn larger conventional conflicts. In the 1980s, the “Iran-Contra” arms-for-weapons scandal embarrassed the Reagan administration, while support for Islamist guerrillas fighting Russian occupation in Afghanistan helped produce Bin Laden and Al Qaeda.And it’s not just western powers. Just last week, the United States accused Iran of a plot to kill the Saudi ambassador.The appeal of such tactics is clear. Military operations are far more politically palatable if you keep dead bodies off TV screens. A computer worm planted in Iran’s nuclear program, secret help to rebels in Libya, drone strikes to cripple Al Qaeda — all can achieve the desired effect without massive publicity.In an era of budget cuts, they are also cheap — particularly compared with the cost of maintaining and deploying a large conventional military force. McRaven said his 58,000 operatives cost a mere 1.6 percent of the Pentagon’s predicted 2012 budget.”Put simply, (they) provide a tremendous return on the nation’s investment,” McRaven told the unclassified portion of the Congressional hearing. “The special operations forces have never been more valuable to our nation and allies around the world than they are today, and that demand will not diminish for the foreseeable future.”MORE WARS, FEWER PEOPLE?The CIA has long retained its own, much smaller band of paramilitary operatives, sometimes operating with military special forces. Their numbers have also risen sharply in recent years to hundreds or even thousands, security experts say. Under its new director, General David Petraeus, the agency is expected to further increase such deniable operations as assassination and sabotage.Britain, Israel and others are also believed to have renewed their focus on specialist, hidden techniques, and are plowing resources into emerging fields such as cyber warfare.As the Iraqi and Afghan campaigns ramp down, Pakistan, Yemen, Somalia, the Philippines and Mexico are all touted by security and intelligence experts as potential theaters for new operations. U.S. special forces are now deployed in some 75 countries, where their missions range from training to assassinations. Yet even some supporters of the new tactics worry about the lack of public discussion.”We may find ourselves fighting more wars with fewer people,” says John Nagl, a former U.S. Army officer who wrote its counterinsurgency manual and now heads the Center for New American Security, a think tank. “That raises some interesting questions — like whether we have the right to do that. There is much less public debate. Society doesn’t pay the cost and so doesn’t ask the questions.”A MODERN WAY OF WARQuietly, this approach is already redefining how conflicts are waged. Conventional troop surges might have dominated coverage of Iraq and Afghanistan, but behind the scenes the generals were heavily dependent on secret, special operations. Intelligence operators, remote-controlled drones and troops from the SEALS, Delta Force, Britain’s SAS and other forces fought hidden campaigns against insurgent leaders and bomb makers, working with local communities to turn conflicts against Al Qaeda, the Taliban and their allies.”There has been a real renewed focus on special operations and clandestine services,” says Fred Burton, a former U.S. counterterrorism agent and now vice president for strategic intelligence firm Stratfor. “They were always there, of course, but they had become somewhat sidelined. That’s definitely changed now.”To an extent, the shift is down to technology. This provides some entirely new weaponry — such as the cybermunition Stuxnet, which caused Iranian nuclear centrifuges to rip themselves apart. It also allows force to be more targeted.”You change your ability to integrate information, which in many ways is at least as important as collection,” says Anthony Cordesman, a former senior U.S. intelligence official now at the Center for Strategic and International Studies. “You have collation of information almost in real time. You can pull together the information and find the target.”That is already changing the shape of western militaries. A drone can be flown remotely by just one pilot, but it takes around 20 analysts to interpret and assess the data it collects. This in turn produces a much larger array of potential targets. In Afghanistan alone last year, McRaven says his forces conducted some 2,000 raids against identified high-value adversaries.LIKE LAWRENCE IN ARABIATo work with tribal groups and win their loyalty, language skills and cultural awareness are essential. Special forces helped shape both the “Sunni awakening”, which swept Al Qaeda and its allies from much of Iraq, and the more recent rebel victory in Libya. McRaven said he believed the Afghan “village program”, working with local communities and police, might prove his forces’ most important contribution to that war.The need for such skills is not new, of course. McRaven demands all his officers and NCOs learn a second language. Others in the field read ancient histories or the writings of idiosyncratic English archeologist T.E. Lawrence, better known as “Lawrence of Arabia”.Often dressed as a local Bedouin, Lawrence worked with Arab rebels against Turkish forces during World War One, selecting the leaders he felt had the best chance of success and supplying them with arms and tactical advice. It was better and more sustainable, he believed, that local forces do the job than for outsiders to do it for them.”What you need is people who can put themselves in harm’s way, understand the different cultures and think fast enough to be able to adapt to events,” says retired Lieutenant-General Graeme Lamb, a former director of Britain’s special forces. “We don’t have a huge number of these people, but… there are enough out there who have read Lawrence, dealt with people like Sunni insurgents and are comfortable in that kind of environment.”THIS OR THE 101ST AIRBORNE?But some argue the most important force driving the new tactics is an almost visceral objection to more conventional warfare in the wake of the Iraq conflict, and Israel’s wars in Lebanon and Gaza.”It’s almost always a matter of political will,” says Nigel Inkster, a former deputy chief of Britain’s Secret Intelligence Service (MI6). “The new technologies do give you some new options, but broadly these capabilities have always existed. The question is whether you choose to take the more covert route or send in the 101st Airborne.”Cash flow is also key. Those with knowledge of western strategy toward Libya say it was driven more by what could not be done than what could. A wider military intervention was politically impossible and financially unaffordable, yet politicians demanded something be done.Some of the most successful strategies were not conventional. British officials say the secret “oil cell” that helped starve Muammar Gaddafi of fuel supplies was key to rebel victory, yet involved the use of little or no military force.Besides straining budgets, the global financial crisis has also made great powers more reluctant to risk the economic shock of serious conflict. One reason Stuxnet was such an appealing tool, security experts say, is that it carried less risk of Iranian military retaliation against shipping in the Gulf. That would have sent oil prices soaring.A senior Israeli official has said cyber warfare offers a less politically dangerous option for nations in a media-saturated age. Israel suffered widespread international scrutiny and frequent condemnation for its wars in Lebanon and Gaza.”War is ugly, awfully ugly,” Israel’s Deputy Prime Minister Dan Meridor — who overseas spy services and nuclear affairs — told diplomats and journalists at the Jerusalem Center for Public Affairs in February. “War is all the time on television… people see this and can’t take it… Because it is difficult, one looks for other ways. One of these ways is the intelligence community … are trying to do things that don’t look that ugly, don’t kill people.”RISK OF BLOWBACK?But the secret campaign against Iran’s nuclear program has not been entirely bloodless. Sabotage might be relatively clean, but Israel’s Mossad is also suspected of being behind the killings of several of Tehran’s nuclear scientists.With so much now taking place behind the scenes, a handful of critics is expressing concern that there is simply far too little scrutiny.”The implications are vast,” says Patricia De Gennaro, a counterinsurgency expert and professor at New York University who has worked with U.S. forces in the Middle East. “There is no accountability. People have been basically brainwashed, with the help of the media and others in the Beltway, into believing we don’t have a right to know what their military is doing.”In an era that may see heightened state-to-state rivalry — not least between older western powers and increasingly assertive emerging states such as China — any operations that go awry could heighten tensions further.The information revolution may also be making it harder to keep operations secret. The Bin Laden raid was reported by a local resident on Twitter within minutes of the helicopters touching down.It would be a delusion to see covert operations as a simple solution to global problems. “This comes in cycles,” says Cordesman.”There is a tendency to grossly exaggerate success and underestimate the cost… These things are never under control, not even in a democracy. Nothing you ever do with violence is going to be clean or simple. But sometimes you just have to look at the options, look at the consequences of not acting, and then do it.”

UPDATE 1-China’s Wen pledges stable yuan to exporters-Xinhua


Wen pledged “a basically stable exchange rate” during a tour in the southern Chinese city of Guangzhou.On Friday, Wen called for joint efforts to combat rising trade protectionism in the world and said trade friction had been politicised, the official China Daily reported on Saturday.Speaking at the opening of the Canton Fair in Guangzhou, Wen called on countries to combat the looming international financial crisis by employing rational methods to handle trade friction.”The current challenge is that there is growing trade protectionism worldwide and more trade friction is politicized, which casts a large shadow over and hurts the global economic recovery,” Wen was quoted as saying by the newspaper.”China and the other nations should work hand-in-hand to open up markets to each other,” Wen said.The U.S. Treasury Department said on Friday it would delay until later this year a ruling on whether China is manipulating its currency as Democratic Party lawmakers tried to overcome Republican opposition to a bill that would punish Beijing for its currency policies.Beijing has already decried the U.S. legislation, which would let Washington slap countervailing duties on goods from nations deemed to subsidise exports by undervaluing their currencies, including China’s yuan, which many lawmakers say is held drastically low against the dollar.

Goldman’s Murti, super-spike predictor, sees oil tight again


* Sees ‘huge draws’ in inventoriesNEW YORK, Oct 14 (Reuters) - The Goldman Sachs equity analyst who predicted oil prices would spike to $150-$200 a barrel three years ago said on Friday the market is showing ‘stark similarities’ to the start of the 2007-2008 bull run.Arjun Murti, Goldman’s top energy equities analyst in New York, said that falling inventories and disappointing supply growth had left the oil market “extremely tight” and it is likely prices will climb higher.”The physical market suggests that the current environment for oil looks very similar to the 2007 bull market that led to demand rationing prices in the first half of 2008,” Murti said in a note to clients that was coauthored with London-based analysts Michelle della Vigna and Henry Morris.”Disappointing supply, decent demand, huge draws in inventories and limited spare capacity are all common factors. We are currently in the tightest physical market we have experienced since the end of 2007/beginning of 2008.”In 2005 Murti was one of the first analysts to predict oil prices would one day hit $100 a barrel, an almost unthinkable level at a time when prices averaged $57 a barrel for the year. He was proved right three years later.The New Jersey native, who has described himself in the past as ‘anti-oil’, went on to make his ‘super spike’ $150-$200 a barrel call in May 2008, when prices were around $115.Brent crude prices would eventually peak at $147.50 a barrel in July 2008, but he was stung by criticism after prices collapsed in the second half of that year.In Friday’s note, Murti stopped short of forecasting how high prices might rise.Goldman Sachs’ commodity research team, which forecasts prices for individual raw materials, sees Brent crude oil averaging $120 a barrel in 2012. Brent is on course to average more than $100 for the first time ever this year.Some energy traders said Murti’s bullish view was supporting a strong rally in Brent crude on Friday. Prices were up almost $3.50 at $114.50 by early afternoon in New York, and have climbed almost 15 percent since briefly dipping below $100 a barrel 10 days ago.HOW TIGHT IS THE MARKET?Murti said that inventories of oil in developed countries have fallen sharply in 2011, influenced by supply outages in Libya and buoyant demand.”The latest inventory data from Europe, the U.S. and Japan suggests total inventories are now 31 million barrels below their five-year seasonal average, and in absolute terms crude inventories are back at their 2006 levels,” Murti said, adding stocks would be even lower if it were not for the International Energy Agency’s emergency fuel release over the summer.”This reflects a global market in deficit despite Saudi producing the highest amount of crude since the 1980s and shows stark similarities to the 2007 bull market that led to demand rationing prices.”Murti, said that demand in the United States, the world’s largest oil consumer, had not yet been curbed substantially by higher prices this year, suggesting they could have further to climb.”We continue to believe the imbalances between global oil demand and supply will only be corrected by price incentivized demand destruction, likely driven at first by the United States,” Murti said.If prices keep rising he tipped Statoil, Bowleven , Occidental , Suncor , China National Offshore Oil Corp (CNOOC) and India’s state-owned Oil and National Gas Corp (ONGC) as the energy companies most likely to outperform.

Solyndra says Harrison departed as CEO on October 7


Solyndra asked the bankruptcy court to approve the appointment of Todd Neilson of Berkeley Research Group LLC as the company’s chief restructuring officer, essentially taking up the role of CEO.Solyndra filed for bankruptcy on September 6, burdened with $783 million of secured debt and squeezed by falling prices for panels caused by an industry glut.The Department of Energy guaranteed the $535 million loan to the company, which Solyndra has said may not be repaid in full.

Lipper-Emerging market funds top and tail performance tables


LONDON Oct 12 (Reuters) - While the world fretted about Europe and its debt crisis, the biggest market swings during September were in emerging economies, sending Turkey-focused funds to the top of performance rankings and China to the bottom, according to Lipper data.The worst performing equity fund last month out of more than 3,400 vehicles available for sale in the UK was the Henderson HF China A2 USD fund , which dropped by a third, according to figures from Thomson Reuters funds research firm Lipper.Also near the bottom was the Atlantis New China Fortune fund , down nearly 25 percent.”September was a very bad month for Chinese stocks,” said Maarten-Jan Bakkum, emerging market equity strategist at ING Investment Management.”The whole year people were already concerned about China - the structural issues, the banking problems, local government debt, that kind of stuff. Now in September you clearly saw people were starting to adjust their growth forecasts.”The Chinese authorities intervened to support the country’s ailing stock market on Monday, with the country’s sovereign wealth fund increasing its stakes in its “big four” banks.”As always with China, the challenge is to distinguish between cyclical threat and long term opportunity,” said Merrill Lynch Wealth Management in a note to clients this week.”Bottom line, China will see growth ease towards 7 to 8 percent in the coming decade as against the 11 percent pace enjoyed in 2003-10 but will reflect a maturing economy rather than a cyclical collapse.”Other emerging markets such as Russia were also well represented towards the lower end of the fund performance tables, meanwhile.Equities in developing countries fell around the world throughout September, largely on fears that the European debt crisis would result in weak demand in developed economies which are major export destinations for emerging market economies.The MSCI Emerging Markets Index fell around 15 percent during the month, compared with a drop of less than 7 percent for the S&P 500 .Bucking this trend was Turkey which saw its market rebound during September and pushed funds focused on the country to the top of the performance table.Three out of the five best performing funds were Turkey-focused during September, according to Lipper data.Top of the table was the Magna Turkey fund , up by 12 percent, followed by HSBC’s GIF Turkey Equity fund and BNP Paribas’ L1 Equity Turkey fund .Investors attributed this to a bounce-back after a slump rather than fundamental economic prospects, however.”The Turkish market relative to other emerging markets bottomed in mid August. So when the correction in emerging marekts became heavy, Turkey did better,” said Bakkum.