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Bunkering in Mexico

By Fester:

One of the things that has been puzzling me about the narco-insurgencies in Mexico has been the fact that the cartels and smuggling gangs have not been hitting the Mexican oil export structure. The Mexican government relies on oil exports for over 40% of the national budget and it gets pays for delivery of a barrel, and not the production of a barrel.

The cartels can most likely fracture the Mexican state and deprive it of vital revenue streams...

the big source of revenue that is immediately vulnerable is the Mexican oil exporting infrastructure. Right now the Mexican government has a sales agreement to supply oil for $70 per barrel until the end of this fiscal year. That agreement only applies to oil that is delivered. Hammering the fairly limited Mexican export infrastructure would be a significant escalation of violence and strategic threat with the possibility of bringing the United States into Mexican territory and precipitating a massive crisis of legitimacy for the Mexican government.

The oil export infrastructure is a bit more robust than the Iraqi infrastructure that was hammered for four years, but not significantly so. There are only a few major pipelines that feed the export ports or cross into the United States. One of those pipelines goes through the most violent city in Mexico before it crosses the border at El Paso, Texas....

Attacking the oil export infrastructure would be a significant escalation as it would be an explicit strike against the legitimacy of the state.

John Robb is passing along a potential reason why the infrastructure has not been attacked. The cartels are bunkering and being parasites upon the infrastructure. Smuggling expertise is being transferred across domains from drugs and people to oil shipments to create new revenue streams for smugglers and other associated actors. Keeping the infrastructure up and operational at near normal levels allows for 'mild' parasitism to occur without drawing a strong response.

I'm still surprised that the pipelines and pumping stations have not been attacked in a systemic manner yet, but the bunkering/smuggling profit angle makes some sense as a counter-incentive.

Cracking an open source insurgency?

By Fester:

The guerrilla and criminal group(s) called MEND has successfully been pressuring the Nigerian state with a coordinated campaign of pipeline destruction, bunkering and intermediate and deep attacks against off-shore oil production facilities.  Nigeria has less than two weeks of domestic refined fuel supplies available and the shut-in of production is contributing to the run-up in prices for the global oil market.  Nigeria is not benefiting from this run-up as quantity produced has dropped faster than price received. 

The Nigerian government is offering a political solution that meets some of the guerrilla groups' demands:

MEND has rejected recent overtures from the government, including the offer of a blanket amnesty to militants who lay down their arms and give up their campaign. Some militant leaders have reportedly accepted the amnesty in principle. The group is seeking direct talks with the government and the release of one of its leaders, Henry Okah.  

The question is not whether or not everyone involved in the pipeline campaign will accept the amnesty and the attendant political gains.  The relevant question is if the leaders who have accepted the amnesty and political settlement in principle are connected enough, strong enough, and credible enough to change the local situational dynamic against the hardliners?  Can the political process deliver more goods and goodies to people who want to buy in than the system disruption and smuggling campaign?  And can those goods be distributed to the relevant players in a credible manner?

If that is the case where MEND is split between a political solution faction and hardliners, the insurgency will be cracked. 

On the MEND

By Fester:

MEND is a Nigerian insurgent/oil smuggling group that has effectively closed between a fifth to a third of Nigerian oil production potential for the past few years.  Their overt goal is to divert more oil revenue into the oil produce states' economies while a tacit goal may be to get rich smuggling oil.  MEND has been increasing the size and scope of their operations recently. 

Via Agence France Press:

The attack on Bille-Krakrama pipeline, which feeds the key Bonny export terminal in southern Rivers State, was carried out shortly after midnight Thursday.

This and other attacks, as well as future potential attacks against the brittle production network may be able to shut down the entire domestic energy market and force the government into an impossible position of credibility loss.

From the Nigerian Guardian:

Yesterday, the government admitted that it had no more crude for its refineries to process for local consumption.

Consequently, the Warri and Port Harcourt refineries have been shut. The Kaduna Refinery, though functioning, has no crude to process because the Warri plant, which feeds it is shut due to a damage to major pipelines. The only stock, which was reserved, will be exhausted in the next 15 days, the Nigerian National Petroleum Corporation (NNPC) said yesterday.

The corporation's Group Managing Director (GMD), Mohammed Sanusi Barkindo, who painted the pathetic picture of the industry, said in the next 15 days, it will run out of crude for domestic consumption.

The Nigerian government has very few options.  The first and their preferred option is for Alien Space Bats to abduct anyone involved in pipeline sabotage and publicly guarantee the pipeline security so that repair crews can get back to work in the next few days.  This is unlikely. 

The dilemma is that system sabotage is so cheap to execute and capital non-intensive MEND can credibly shut down the domestic pipeline system (and their own smuggling revenue streams) in the face of a large search and destroy sweep mission that will look good on TV but do nothing for security on the ground.

The Nigerian government can either concede the primary political goals of MEND and hope that there is enough internal policing and social cohesion to have all actors associated with MEND adhere to the agreement, or they can see their budgets blown up.  If local refined product production is shut down, the Nigerian government can either spend valuable hard currency on imports or see their entire urban economy come to a standstill.  The Nigerian government is in comparatively decent financial shape as they had been running decent size current account surpluses for the past few years so there may be cash reserves available to finance a few months of imports but MEND will have the ability to keep Nigerian hard currency cash flow negative for as long as they would like. 

Stupidity of Secrecy

By Fester:
Recently General McChystal in his confirmation hearings before taking command in Afghanistan noted that the most important metric for US and allied forces would be the number of civilians protected from harm in Afghanistan. This is a bit of a turn from the Twitter body counts of 'success' that the US PAOs are putting out. But this statement by McChrystal is aligned with current US population-centric COIN doctrine. The people are the center of operational gravity and their allegiance or at least tolerance of the counter-insurgent and passive intolerance of the insurgent is the key.

The strategic goal of US COIN doctrine is to build up the capacity and legitimacy of the host nation government by the provision of public goods and services, most notably security and economic development. The key is the legitimacy of the government must be accepted. And that means the government and its allies (in this case, the US government and military) must be seen as worthy of trust even, or especially when the truth is less than flattering. When the truth is less than flattering but it is told without pressure or coercian to cover it up, the government has engaged in a costly but credible signal that it is trying its best to be transparent and non-arbitary.

 Steve highlighted the internal debate amongst the DOD to bury the report on a set of airstrikes that allegedly killed numerous civilians after the US did not follow the rules of engagement. The argument is that attempts at transparency will only inflame the Afghani civilian population. This illustrates high level friction and confusion within the US decision loop.

When I read that, I wanted to stab myself in the eye with a dull spoon for the stupid burns. The civilian grapevine works very well in any society, and even better in one where there are few credible sources of information. The relevant actors already know about either this airstrike that killed civilians or other airstrikes that killed civilians. Releasing a report that accepts responsibility will not suddenly release new information into the wild. If anything, it could slowly, especially if it is a part of a corrective action cycle where after action reports are made public in cases of large scale civilian deaths so that procedures could be improved, nip some of the credibility killing conspiracy theories in the bud.

Tim F. has often noted the basic reason why transparency works well:

People do a more competent job under the threat of transparency and adversarial oversight. Take that away and you eliminate the disincentive for slack, graft and letting mistakes of every magnitude slide uncorrected. To the degree that whistleblowers are actively protected, shitty managers and government programs that fail for whatever reason can be exposed and corrected. Strict ethics rules enforced by zealous and independent oversight keep away the stink that almost always goes along with political power. If these things disappear it hardly matters who is in charge; shitty management will follow like water flows downhill. Tax money will disappear down unaccountable holes, important programs will stop working. National security will be less secure.

Secrecy does not help anyone on any measure. It delegitimatizes the United States military and by extension the Afghan government. It kills more civilians. It creates a juicier rumor mill where the casual assumption of credibility runs against US interests. It directly contradicts US COIN doctrine. It is mind-numbingly stupid and counter-productive.

Communication Co-optition

By Fester:
Co-opition and selective denial seems to be the information sharing strategy that both the Iranian protesters and the Iranian government has adapted. Both sides want to maintain the internal Iranian communication networks up and running to some degree while denying effective communication capacity to their opponents. Danger Room is passing along some communications security and denial advice from that emphasizes this co-opition profile:

But the tactic of launching these distributed denial of service, or DDOS, attacks remains hugely controversial. The author of one-web based tool, “Page Rebooter,” used by opposition supporters to send massive amounts of traffic to Iranian government sites, has temporarily shut the service down. Others worry that the DDOS strikes could eat up the limited amount of bandwidth available inside Iran — bandwidth being used by the opposition to spread its message by Twitter, Facebook, and YouTube. “Quit with the DDOS attacks — they’re just slowing down Iranian traffic and making it more difficult for the protesters to Tweet,” says one online activist....

Denial of Service attacks. If you don’t know what you are doing, stay out of this game. Only target those sites the legitimate Iranian bloggers are designating. Be aware that these attacks can have detrimental effects to the network the protesters are relying on. Keep monitoring their traffic to note when you should turn the taps on or off.

Help cover the bloggers: change your twitter settings so that your location is TEHRAN and your time zone is GMT +3.30. Security forces are hunting for bloggers using location and timezone searches. If we all become ‘Iranians’ it becomes much harder to find them.

The Iranian government is trying to interdict activist communication to other activists and to external actors while maintaining connectivity to the rest of the world. The protesters are attempting to maintain their rat lines to each other as well as self-organizing groups and external message amplifiers while attempting to knock back Iranian government connectivity through DDoS attacks on external news agencies.
At the current level of confrontation where the Iranian state still has the loyalty of its security forces as well as the loyalty of non-state, but state interest aligned paramilitary forces, this co-opitition framework will continue. We will know that the protestors are about to be crushed if Iran decides that the value of connectivity to the rest of the world is outweighed by its costs and cuts its internet connections to the major fiber trunk lines.

Humility Helps

By Fester:

Andrew Exum is commenting on the Lebanese elections and has a simple insight that should be taken to heart by any American policy maker:

In general, it might be healthy to admit that what we did and did not do in Washington had a far smaller impact on these elections than what the Lebanese did and did not do in Lebanon proper.

This simple lesson in humility and non-American exceptionalistic ego-centrism would be an extraordinarily valuable lesson that could inform most schools of foreign policy thought and most operational doctrines of foreign policy and military policy implementation. It is not always about us. Local facts and local issues matter, on the whole, a lot more than distant preferences that are often moderately uninformed by the local mileau.

Humility helps. It is not always about the United States as there are many situations that have their own internal logic that is minimally related, at most, to the day to day political drama in the United States.  This removal of ego-centrism is a useful analytical tool as I noted in 2004 regarding a right wing blogger trying to impose a US political explanation on unrelated activities in Iraq:

In response to the coordinated bombing attack against a ceremony celebrating the opening of a sewage treatment plant that killed 35+ children and wounded ten or more American soldiers who were present, Roger Simons makes the following comment:

Is today's carnage in Iraq...... timed for the debate tonight? It's hard to know, but it's far from impossible. We do know, the terror mongers have tried to influence elections before,

I need to respond to this idiocy. The attack was brutal and I wish it did not happen, but Mr. Simons needs to get over himself and his extremely narrow viewpoint. Not everything that is happening around the world is occurring because of its potential effect on the upcoming US elections.

The Iraqi insurgents have been operating on their own rhythm and motives since the very beginning and although there is a political and propaganda component to it, it has not been specifically targeted at immediate inflection points. Instead it has been targeted at isolating the battlefield and dictating a situation where the US becomes more isolated and less able to create winning situations

It is very seldom just about US. 

Local coins for COIN

By Fester:

Zenpundit earlier this month reviewed the Accidental Guerrilla by David Kilcullen and he noted one of the major problems in the entire COIN literature:

First, Kilcullen’s three principles are an operational and not a genuinely strategic doctrine. In fairness, no major COIN advocate has ever said otherwise and have often emphasized the point. The problem is that a lot of their intended audience - key civilian decision makers and opinion shapers in their 30’s-50’s often do not understand the difference, except for a minority who have learned from bitter experience. Most of those who have, the Kissingers, Brzezinskis, Shultzes etc. are elder statesmen on the far periphery of policy

This leads to a massive disconnect in planning, policy and goal sets, as operational goals (securing a modicum and 'decent' level of violence) overrides the minimally existent political constraints and goals. 

The 10 second description of the official US Army counter-insurgency doctrine is simple:

Enhance the host government's legitimacy and capability while denying legitimacy and capacity to the insurgent(s).

From this, everything else derives including the strong inclination to NOT using air strike, the argument that the best metric of success is not body counts but secured villages or neighborhoods.  This basic axiom should guide the actions of every leader from the E-4 fire team leader to the Secrtary of Defense and the President.  All actions that contribute to legitimacy and capacity enhancement of the host government are productive actions strategically.  All actions that do not aid in supporting legitimacy and capability are self-defeating actions. 

Time Magazine reports on the current US plan for Afghanistan.  It involves a surge of a few additional brigades, a doubling of the Afghani Army, increasing the national police force and expanding local militias.  There are many problems, including the dispersion of the legitimacy of violence to non-state militias, but there is a far more pragmatic concern of sustainability:

That's the reason the Obama Administration is considering doubling the size of Afghanistan's military and national police forces, to roughly 400,000. That's more than triple what U.S. officials had estimated would be needed to defend the country shortly after the U.S. invaded in late 2001....

But there's a problem with the option of doubling the size of the Afghan security forces: Officials inside and out of the Pentagon warn that the bill for setting up such a large force, estimated at $2 billion to $3 billion annually for several years, could prove daunting — more than double the budget of the Afghan government, and way more than could be sustained by Afghanistan's own economy for the foreseeable future.

Implied with this statement is that the current Afghanistani force structure is more expensive than the government's current budget.  So doubling the force structure either means the Kabul government will forever be a client government begging for outside funding to fund its oversized armed forces or it will be incapable of providing basic public services or it will be subject to the whims of the IMF and economic cycles that dwarf the Kabul government's capacity to influence.  None of those scenarios are legitimacy enhancing scenarios. 

The disconnect will lead to a minimization of political goals as our national decision loop short circuits itself to subjugating itself to the known processes instead of grappling with the needed questions as to what end states are achievable and desirable. 

Only Fit For Burning

By Steve Hynd

The Washington Post today has an article on the status of U.S. psyops in the Iraqi media:

As'ad AbuKhalil, a political science professor at California State University who writes the Angry Arab blog, said the campaigns are ridiculed in the Arab world.

"They have a very crude tone and content, and the narrator sounds like Saddam's own propagandist," he said. "The Arabic used also is awkward, clearly translated from English texts most likely drafted in some office on K Street. One is struck by the extent to which the ads show Iraqis as Westernized and secularized."

..."All Iraqis know that these organizations are supported" by the U.S. government "with the aim of normalizing the occupation," said Abdul Kareem Ahmad, a lawyer in Salahuddin province. "I say to the Future Iraq organization: If those funds had been given to the poor and the widows, Iraq would have become a pioneer in social welfare. Millions of dollars go into the pockets of war profiteers who believe victory in Iraq can be won through the media using underground movies."

Noor Sabah, an engineer in Fallujah, said her friends and relatives ridicule the ads.

"These commercials are boring, poor and annoying," she said. "Everyone knows they're American -- not Iraqi-made."

Much of the production of the billboard ads, video slots and free newspapers has long been contracted out to private American media companies, at a cost of hundreds of millions of dollars. Other efforts, like the US-military produced "Baghdad Now" newspaper are the product of military psychological warfare units. Either way, they're singularly ineffective with most Iraqis comparing the U.S. psyops campaign unfavorably to that of Saddam.

A U.S. Army officer in Baghdad, speaking on the condition of anonymity so he could express criticism of the product, said the Iraqi soldiers at his outpost mock the publication and are more interested in the editorially independent Department of Defense newspaper, Stars and Stripes, and in the magazines soldiers get in the mail.

"They say it's childish," the officer said. "Baghdad Now makes a good fuel source at the Iraqi checkpoints."

Not even fit to wrap fish in.

So, of course, the Powers That Be, having been shown corporate and military powerpoint slides about how clever everyone is being, have decided to expand the Epic Fail.

Richard C. Holbrooke, President Obama's special envoy to Afghanistan and Pakistan, recently told lawmakers that the administration is working on a strategic communications plan for that region that draws on the lessons of Iraq.

"This is an area that has been woefully under-resourced," Holbrooke told the Senate Foreign Relations Committee last month. "The strategic communications plan -- including electronic media, telecom and radio -- will include options on how best to counter the propaganda that is key to the insurgency's terror campaign."

I tell you, the U.S. military and government are institutionally incapable of waging an effective people-centric counterinsurgency campaign. They say they can, on paper, but when the theory hits reality institutional inertia and exceptionalist arrogance does for them every time.

Mexico and drug cartel update

By Fester:

Just a couple of notes (via the Agonist) on the situation in Mexico concerning the narco-insurgencies that are occurring:

Guatamala is experiencing the displacement effect as drug groups are dodging Mexican government efforts by moving over the border to lightly policed and patrolled areas of Guatamala:

Via Reuters

Brazil will finance Guatemala's purchase of six military airplanes and a radar system to help it tackle a growing threat from drug gangs within its borders, Guatemalan President Alvaro Colom said on Tuesday....

And the LA Times has more:

Gunmen unleashed a furious barrage of bullets and at least one grenade, in some cases finishing the job point-blank. When the shooting stopped that day in April, five of the 10 Guatemalan agents lay dead and a sixth was wounded.

The fleeing killers, identified by authorities as members of the Mexican drug gang known as the Zetas, left behind a cargo truck packed with 700 pounds of cocaine. More stunning was the cache found in a brick warehouse: 11 M-60 machine guns, eight Claymore mines, a Chinese-made antitank rocket, more than 500 grenades, commando uniforms, bulletproof vests and thousands of rounds of ammunition....

During the last year and a half, the Zetas have carved a bloody trail across Guatemala's northern and eastern provinces. More than 6,000 people were slain in Guatemala in 2008. Police say most of the killings were linked to the drug trade.

As the recent blood bath shows, the violence is now threatening the capital, deep in the interior....

Already, traffickers operate freely in rural stretches nearest Mexico: building secret airstrips in the northern province of Peten to ferry shipments of cocaine, paying small-time farmers to grow poppy and moving contraband across the porous frontier into Mexico.

Another Mexican drug cartel is covering out a traditional 20th century government replacing insurgency in the south and west of Mexico. The other interpretation is they are applying Capone's methods to a decent chunk of Mexico. Again via another LA Times story:

Whether by intimidation, purchase or direct order, drug gangs can sometimes dictate who is a candidate and who is not, and put some of their own people in races -- a perversion, critics say, of democracy itself....

"It is a way to win power with fear, where the authorities either don't have the capability to fight it, or have the capability but not the inclination," said German Tena, president of the Michoacan branch of the country's ruling National Action Party.

"There are mayors and politicians who 'let things happen,' and there are some who have sold their soul to the devil," said a high-ranking Michoacan state official who agreed to discuss the sensitive topic of corruption in exchange for anonymity.

La Familia also has steadily diversified into counterfeiting, extortion, kidnapping, armed robbery, prostitution and car dealerships. The group offers money or demands bribes; increasingly, people in Michoacan pay protection money to La Familia in lieu of taxes to the government.

My emphasis on the last. If this truly is the case, than La Familia has successfully delegitimatized the government's monopoly on force and has replaced it with its own quasi-legitimacy of force utilization. 

Time is on the MEND

By Fester:

MEND, the Nigeria Delta insurgency/bunkering operation(s) is still active.  We just have not been hearing as much about it for two reasons.  First, they have slowed down operations while the media attention is focused on the more spectacular piracy operations in the East African littoral. Secondly, with the global drop in oil demand, MEND's ability to knock out half a million to a million barrels of potential (& easy) production per day is far weaker.  Right now, every major oil producer has significant slack capacity, so marginal drops in Nigerian production do not have large impacts on oil prices. 

Eagle Speaks has an update on recent MEND activities:

The latest ONI Worldwide Threats to Shipping Report (to 27 May 09)can be found
here. Highlights:

1. NIGERIA: Oil platform attacked 26 May 09 in the Niger Delta region off the coast of Nigeria. Approximately five men in a speedboat approached an oil platform in Amenam field

.
2. NIGERIA: Vessel robbed 21 May 09 at 0320 local time while anchored in Lagos roads. Six robbers armed with automatic weapons boarded the vessel.
.
3. NIGERIA: Tanker (CM SPIRIT) hijacked 13 May 09 while underway in the Chanomi Creeks in the Niger Delta.
.
4. NIGERIA: Vessel (CHIKANA) hijacked 13 May 09 while underway in the Chanomi Creeks in the Niger Delta.

I truncated the reports for brevity's sake.  These attacks may be important as there is a potential for continued upward pressure on oil prices from the combination of demand getting rebuilt and a weakening dollar.

Econbrowser has more on oil prices:

So to the extent that oil speculators see any green shoots, perhaps they're in the nature of Asian bamboo rather than American prairie grass. Chinese oil consumption was up 4% in April, though that was the first year-on-year gain for them in 6 months. India's oil consumption also seems to be growing. But so far those gains are well below the drops seen in the U.S. and elsewhere.....

so far this year inventories have been well above average. Futures prices had exceeded spot prices by enough until recently that there was a risk-free profit to be had from buying at spot, storing the product physically, and hedging by selling futures. Had it not been for the added demand for oil coming from inventory accumulation, the price would have fallen further. Nevertheless, it is interesting that U.S. inventories have been coming down significantly during May, the same month when oil prices started to rise significantly, although inventory levels remain above average.

IF, and this is a big IF, there is growth in demand instead of just a positive second derivative for oil in the near future, then MEND's strategy of hitting the Nigerian oil production and export infrastructure will have larger global impacts than local impacts which is a converse of the current pay-off matrix. 

MEND is just something to keep an eye on for this summer but I don't expect a whole lot of impact unless several other things go wrong.