Grey Zone SITREP: Disruptions in Oil, Cyber Warfare, and Adversary Readiness
Your always free and weekly digest covering the most important and underreported events to keep you ahead.
Hello Dear Readers,
Welcome to this week's edition of the Grey Zone Situation Report (SITREP) - your free and comprehensive yet concise digest for important and often overlooked events spanning the Indo-Pacific and beyond.
In this issue, we're introducing a segment not usually covered in our reports: updates on the energy sector, particularly oil markets. With escalating tensions in the Middle East, the global focus has been on military actions. However, the repercussions on oil, a critical driver of the global economy, could have far-reaching impacts, meriting our attention under the ‘Economic’ section of this SITREP.
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ALCON
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DIPLOMATIC
China to Deploy Charm Offensive in the US, Experts Urge Avoidance of Conflict
China has initiated a charm offensive in the United States through non-official avenues. Yang Wanming, the head of the semi-official Chinese People’s Association for Friendship with Foreign Countries, has embarked on a 12-day tour across the US, including stops in Washington, Texas, Nevada, California, and Washington state. This move aims to deepen friendships and advance cooperation between sister cities at the civil and subnational level.
The visit follows a consensus between Presidents Joe Biden and Xi Jinping to boost exchanges in various fields, reflecting a broader strategy to cultivate relations beyond the governmental sphere. Yang’s tour has already featured significant engagements, including a welcome dinner in Washington DC with multinational executives and a symposium marking 45 years of formal China-US relations, highlighting the potential for mutual success through cooperation.
Simultaneously, both nations have joined forces to combat the global fentanyl trade, showcasing a commitment to tackle shared challenges. This collaborative spirit extends to the renewal of the US-China Science and Technology Agreement, emphasizing the importance of stability and development in bilateral relations.
Amidst these diplomatic endeavors, tensions persist, highlighted by Beijing's protest over the alleged mistreatment of Chinese students in the US, indicating the complex nature of the China-US dynamic.
In Australia, a group of prominent figures has urged the government to adopt a mediating role to prevent US-China conflicts, advocating for a balance of power in the Indo-Pacific. This call for a new détente underscores the global stakes involved in US-China relations, with implications for international peace and prosperity. The Australian Prime Minister’s government has sought to balance its significant trade relationship with China against its security ties with the US, amidst concerns over regional stability and global strategic tensions.
INFORMATIONAL
Misinformation a Growing Concern for Upcoming Elections
A recent survey by TFC revealed that 82.8% of people in Taiwan encountered misinformation last year, an increase from 75% in 2022, with a third experiencing it "daily" or "frequently." Beyond outright falsehoods, subtler tactics are being employed to shape public opinion using available facts.
Puma Shen, head of Doublethink Lab in Taiwan, noted a decline in China's disinformation activities targeting Taiwan's elections after peaking between January and June 2023. Recognizing the potential for backlash from overt disinformation, the focus has shifted to manipulating public perception through real issues, such as security concerns and pollution, falsely attributing these to governmental corruption.
This strategy aims to undermine confidence in President Tsai Ing-wen's administration by linking societal problems to alleged government failures, complicating the fight against this form of indirect indoctrination compared to direct lies.
Similarly, Russia has engaged in a disinformation campaign against Ukraine, using public information to undermine military recruitment and promote draft evasion, particularly among the youth. This effort is detailed through social media guides and exacerbates personnel shortages, weakening Ukraine's defense capabilities.
Lyubov Tsybulska, a Ukrainian government adviser, highlighted the infiltration of support groups for soldiers' families by Russian operatives aiming to stir discontent and protests against the Ukrainian government. As the conflict prolongs, such psychological tactics are designed to deepen societal divisions and wear down public morale.
With elections upcoming in over 70 countries, involving more than 3 billion voters, the challenge of guarding against both blatant misinformation and more insidious forms of influence using factual information remains critical for maintaining democratic integrity.
MILITARY
China Conducts Reforms to Streamline Combat Readiness, Explores Military - AI Fusion with Russia
China has sped up its mobilization reforms in Fujian province by combining the military-civil fusion office with the mobilization office. This change is part of an effort to better integrate military and civilian resources, aiming to enhance combat readiness. The move aligns with China's strategy to improve coordination between military and civilian sectors, following President Xi Jinping's directive to reform the national defense mobilization system. This system includes the political, economic, and defense resources necessary for deployment in times of war or security threats.
After the Communist Party Congress in October 2022, provinces like Fujian, starting in December of that year, set up defense mobilization departments. A significant shift with these reforms is that provincial leaders now manage tasks that were once the responsibility of local military districts. This adjustment is intended to make it easier for provincial governments to orchestrate the efforts of various administrative departments in mobilization tasks.
Activities supporting these reforms have included:
Over 1,200 national defense training events in Xiamen, Fujian Province, with participation from more than 860,000 people.
Joint training exercises in Luan City, Anhui Province, involving civilian units for water/energy supply and rescue services, along with psychological counseling.
The transformation of a residential area into a “mobilization village” in Shijiazhuang, Hebei Province, complete with emergency signs and information on air defense and bomb shelter locations.
Local government officials throughout China have also increased interactions with the military, in response to Xi Jinping's call for advanced defense development. This includes visits by leaders from the Communist Parties of Fujian, Anhui, and Jiangxi provinces to the PLA Eastern Command, which oversees the Taiwan Strait and the East China Sea.
In seperate reporting, Beijing held Russian-Chinese consultations on the use of artificial intelligence (AI) in the military. The discussions focused on exchanging views and coordinating actions on the use of AI in military applications, especially regarding lethal autonomous weapons systems (LAWS). The talks highlighted the shared perspectives of Russia and China on this issue, emphasizing the importance of continued cooperation both in bilateral settings and international forums.
North Korea Continues Missile Tests and Military Inspections
North Korea has conducted a test of a super-large cruise missile warhead and launched a new anti-aircraft missile, according to the Korean Central News Agency (KCNA). These tests, carried out on February 2 by the General Directorate of Rocket Science of the DPRK, aimed at advancing the technologies of various new weapons. KCNA stated that these activities were part of the routine operations of the rocket science department and were not related to the regional situation. The agency also highlighted that the tests did not negatively impact the security of neighboring countries.
The missile launch followed a visit by Kim Jong-un to a shipyard in the port city of Nampho (also known as Nampo) on the west coast, where he emphasized the importance of a strong naval force in war preparations. During his visit, Kim was briefed on the construction of various warships as part of a "huge plan" set by North Korean leadership, though specifics of the plan were not disclosed.
Additionally, KCNA reported that Kim had inspected the construction of a nuclear submarine and discussed the manufacturing of new types of warships. At a ruling party meeting in 2021, Kim outlined a plan for developing and upgrading military capabilities, including the construction of nuclear submarines and underwater drones capable of nuclear attacks. North Korea has been actively testing a range of weapons, including ballistic missile systems and an underwater drone.
The country has criticized the United States and South Korea for conducting large-scale military drills, which it views as escalating tensions and necessitating its preparations for a nuclear war. Following these events, the US Special Operations Command announced the completion of training with South Korea's special operations forces.
ECONOMIC
Update on Global Oil Markets: Surge in Iran's Oil Exports and Strategic Shifts
Iran's oil export shipments have seen a significant boost in 2023, reaching an average of 1.3 million barrels per day. This increase of nearly 50% from the previous year is the highest in five years, with China being the main recipient of these exports. Despite strict US sanctions, Iran's oil production also rose to 2.99 million barrels per day, as per the International Energy Agency (IEA).
Meanwhile, global shipping logistics face disruptions reminiscent of the COVID crisis, with an increased volume of ships passing through the Suez Canal. Regional tensions, exacerbated by US and British airstrikes in Yemen, have led to heightened warnings for ships navigating this volatile area. Consequently, maritime trade faces potential prolonged challenges.
Shipping costs have surged, with Drewry Shipping Consultants reporting a 23% increase in the cost of shipping a 40-foot container, now averaging $3,777. Spot market rates for containers from China to Los Angeles have similarly risen by 38% to $3,860. Companies bound by long-term shipping contracts are now facing additional fees to cover the rising costs of shipping, fuel, and insurance.
Saudi Aramco, the world's largest oil company, has abandoned plans to increase oil production capacity. This decision marks a departure from previous ambitions to boost capacity to 13 million barrels per day by 2027, reflecting a reassessment of future oil demand projections. With Saudi Arabia currently operating below its capacity due to OPEC+ output cuts, this shift suggests a strategic recalibration in anticipation of changing global demand dynamics.
Saudi Arabia also plans to reduce domestic oil consumption for power generation, potentially freeing up an additional 1 million barrels per day for export by 2030. This move could significantly impact global oil markets and government resource allocation in the coming years.