Grey Zone Situation Report 27 October 2023
Here's what you need to be tracking from the week been.
Hey everyone,
I hope you’ve all had a great week and are enjoying your weekends.
Over here in New Zealand, we are in a state of mourning. The All Blacks (our national identity) recently lost the Rugby World Cup final - devastating news. Probably the most important thing you’ll read in this update.
For this update, and future updates, I’ll be reverting to the Diplomatic, Information, Military, Economy (DIME) format as this allows me to structure the pieces a bit better.
Keep an eye on the below developments, especially China’s faltering economy. I know for most of you, economics isn’t very sexy, but everything tends to flow back to the money and once that goes away - things get dicey.
Over on the Strategic Daily, our premium daily releases, we covered the following:
China’s Quiet Support for Israel
The Possible Indo-Pacific Flashpoint You Cannot Forget
The Dominoes Towards Escalation in the Middle East are Falling
The Increase in Globar War Rhetoric
Our Recommendations on What you Need to Monitor
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Stay safe and see you next week.
ALCON.
DIPLOMATIC
Key Developments
26 October 2023. A Hamas political delegation visited Moscow with the likely aim of shoring up its support for military operations against Israel. The delegation, led by Mousa Abu Marzook, a founder of Hamas, met with Russian foreign affairs representatives. Reports from the visit indicate that discussions centred around the release of foreign hostages in the Gaza Strip and issues relating to the evacuation of Russian nationals from Gaza. In further reporting, Hamas has also stated that it considers all hostages to be Israeli - regardless of their actual backgrounds. Analyst Comment. This is escalatory, and Israel has demanded that the Hamas delegations leave at once as it “legitimizes atrocities”. This visit indicates Moscow’s intent to show itself as a relevant player in the region, especially when it comes to mediation (which is unlikely to happen). We read this as an indicator that Moscow is likely to logistically support Hamas - and other Iranian backed groups - in the event of escalations.
27 October 2023. The Chinese Ministry of Foreign Affairs spokesperson, Mao Ning, answered several questions pertaining to global affairs. Notably, the question regarding Hamas was raised - concerning the recent delegation visit to Moscow. The response was reiterated China’s stance on ensuring communication with all parties takes place in order to promote peace talks. Ning also stated that China will continue to commit to ensuring peace talks and de-escalation occurs.
27 October 2023. During talks with his Indonesian counterpart in New York, Iran’s Foreign Minister Hossein Amirabdollahian, Hossein provided insight into what it views resolutions to end the Gaza conflict should include. Hossein stated that there should be three main elements:
An immediate ceasefire,
the necessity for permanent access and delivery of humanitarian aid to Gaza, and
countering forced displacement of Palestiniations
Hossien further stated that Israel is committing genocide in Palestine, and that if it continues, “the warmongers will not be spared from the fire.” Hossein then claimed that Hamas’ recent actions were entirely in line with international law. Analyst Comment. What’s interesting is that Hossein has claimed that the resolution and his proposed components of it, mirrors the speech that the Indonesian foreign minster gave - except they also added a “plus one” to the address. This was addressing the root causes of the conflict and peace will not be achieved until this takes place.
INFORMATION
Key Developments
25 - 26 October 2023. New York state's casino operations and two hospitals fell victim to cyber attacks. The state Gaming Commission's central system, which serves slot parlors, was compromised, leading to the temporary closure of Jake 58 casino in Islandia. The Commission's spokesperson, Brad Maione, confirmed the incident but assured that there's no evidence of personal data being compromised.
HealthAlliance Hospital and Margaretville Hospital in Hudson Valley had to divert patients due to the cyber incidents. Despite the challenges, the hospitals remained operational, treating walk-in patients. Ambulance services were restored by Saturday evening.
In a related incident, five southwestern Ontario hospitals faced cyberattacks causing delays. Patients experienced prolonged wait times, and some procedures were canceled. The affected hospitals, including Windsor Regional Hospital and Bluewater Health, have been working to address the issue. The systems impacted are managed by TransForm, a non-profit. They confirmed the cyberattack and are investigating its extent.
Analyst Comment. hospitals are frequent targets for cybercriminals due to the sensitive information they hold. There are usually challenges in tracing back to the culprits, especially if the attack originates from countries known for cybercrimes like Russia, North Korea, or China.
MILITARY
Key Developments
24 October 2023. A Chinese J-11 pilot made a dangerous intercept of a U.S. Air Force B-52 aircraft over the South China Sea. The PRC pilot's actions were deemed unsafe and unprofessional, risking a collision by flying too close to the B-52 during a nighttime operation. This incident is the latest in a series of concerning interactions, with over 180 reported since fall 2021. The Department of Defense highlighted this pattern of risky behavior by the People's Liberation Army in the 2023 China Military Power Report and released declassified images and videos on October 17, 2023, showcasing similar incidents. Analyst Comment. These interceptions are not unusual, at least in terms of their frequency. What is concerning is the increasingly brazen tactics of PLAAF pilots (not to mention PLAN captains) when operating in vicinity of Western military aircraft. These are the actions that are likely lead to a miscalculation between militaries, which would almost certainly lead to localised skirmish and conflict. Footage of the below incident below.
25 October 2023. Over 90 official delegations from countries and international organizations, such as Russia, the US, the UK, and Brazil, have confirmed their attendance at the Beijing Xiangshan Defence Forum. This includes more than 30 ministers, military leaders, and representatives from organizations like ASEAN, ICRC, and the Arab League. Notably, this year has seen an increase in participants, especially from developing countries and international groups, compared to previous years.
This year, the forum will center on the Global Security Initiative (GSI). The agenda includes 4 main sessions, 8 special sessions, high-level dialogues, expert discussions, seminars for young officers and scholars, and a seminar on the Art of War.
The below video is the propaganda piece to accompany the forum.
26 October 2023. The U.S. and Australia have decided to expand their defense collaboration with Japan to include unmanned aerial vehicles. This move is in response to China's increasing military power. After a meeting at the White House, U.S. President Joe Biden and Australian Prime Minister Anthony Albanese emphasized the partnership's goal to improve interoperability and speed up technology transfer in autonomous drone operations. This announcement follows the Pentagon's recent introduction of the "Replicator" initiative, a strategy to deploy numerous cost-effective autonomous drones within 18 to 24 months to counter China's military strengths. Analyst Comment. Noting that this is Indo-Pacific based, it’s likely these drones will be based around ISR platforms as well as decoy missions during a future conflict. The challenge for these would obviously be price points, especially if they are to be delivered at scale.
ECONOMIC
Key Developments
27 October 2023. Foreign direct investment (FDI) into China has experienced a sharp drop, intensifying economic challenges for Beijing and local governments amidst a broader economic slowdown. Data from the Chinese commerce ministry indicates a 34% decrease in FDI in September, marking the most significant decline since 2014.
This downturn in FDI is consistent with a series of underwhelming economic indicators since China lifted its pandemic restrictions earlier this year. Despite a 15% surge in FDI in January, there have been double-digit percentage declines every subsequent month.
Foreign companies are rapidly extracting their profits from China rather than reinvesting. This shift comes as local governments, already strained by a property crisis and the costs of zero-Covid policies, are trying to attract foreign executives back to China.
Despite these challenges, President Xi Jinping recently announced plans to lift restrictions on foreign investment in China's manufacturing sector, emphasizing the interdependence of China's success with global prosperity.
Analyst Comment. A failing Chinese economy is one of the key indicators towards a more aggressive China, militarily speaking. Furthermore, China has significant economic interests in the Middle East and should the region escalate, where oil supply is reduced, this would further strain their economy. Nearly half of China’s oil imports come from the Persian Gulf.
ENDS