Topic: Foreign Policy and National Security

Navy Corruption Scandal

The Washington Post has published another report on the Glenn Defense Navy scandal. For more than a decade, the head of Glenn Defense, Leonard Glenn Francis, cozied up to Navy leaders in the Pacific to win lucrative contracts for resupplying ships. He cashed in on overpriced contracts and fraudulent invoices, and he had numerous moles inside the Navy to ensure his continued enrichment.

Francis wined and dined Navy officers, providing them with gifts, prostitutes, and other favors to get their help and protection. The episode is appalling in so many ways, and it has disturbing implications: If Navy officers were so easily seduced by this Singapore con artist, are leaders in other military and intelligence services just as vulnerable to old-fashioned, low-tech bribes?

Here are some highlights from the Post:

The Navy allowed the worst corruption scandal in its history to fester for several years by dismissing a flood of evidence that the rotund Asian defense contractor was cheating the service out of millions of dollars and bribing officers with booze, sex and lavish dinners, newly released ­documents show.

The Singapore-based contractor, Leonard Glenn Francis, found it especially easy to outwit the Naval Criminal Investigative Service (NCIS), the renowned law enforcement agency that has inspired one of the longest-running cop shows on television.

Starting in 2006, in response to a multitude of fraud complaints, NCIS opened 27 separate investigations into Francis’s company, Glenn Defense Marine Asia. In each of those instances, however, NCIS closed the case after failing to dig up sufficient evidence to take action against the firm, according to hundreds of pages of law enforcement records ­obtained by The Washington Post under the Freedom of Information Act.

Known as Fat Leonard for his 350-pound physique, Francis held lucrative contracts to resupply U.S. warships and submarines in ports throughout Asia. He was also legendary within the Navy for throwing hedonistic parties, often with prostitutes, to entertain sailors.

Other Navy documents obtained by The Post show that staffers at U.S. Pacific Fleet headquarters were so worried about the potential for trouble that they drafted a new ethics policy to discourage Navy personnel from accepting favors from Francis. But their effort was blocked for more than two years by admirals who were friendly with the contractor, according to officials familiar with the matter.

Despite rising signs of widespread fraud, the Navy kept awarding business to Francis’s company. In 2011, Glenn Defense won deals valued at $200 million to service U.S. vessels at ports stretching from the Russian Far East to Australia.

Besides Francis, 12 people — including an admiral and nine other Navy personnel — have pleaded guilty to federal crimes. Five other defendants still face charges.

Justice Department officials say there is no end in sight to the investigation and that 200 people have fallen under scrutiny. Among them are about 30 current or retired admirals, according to Navy ­officials.

… In exchange for paid sex with prostitutes, cash and luxury vacations, Francis’s informants fed him a near-daily diet of classified material and inside information that enabled him to keep gouging the Navy and outfox his pursuers for years, according to court records.

A prior Washington Post story on the scandal is here.

A study examining federal bureaucratic failure is here.

Trump Towers or Trump Targets?

Donald Trump’s election ushers in a new challenge for homeland security and counterterrorism both at home and abroad. Trump owns, has a stake in, or has lent his name to scores of properties all over the United States and the world. A terrorist could decide to target a Trump Tower in Stuttgart, a Trump hotel in South Korea, or a Trump golf resort in Dubai. A terrorist might even decide to target the famous carousel in Central Park, which Trump also owns. The attraction to the terrorist is obvious: Trump’s hotels, resorts, and condominiums are vulnerable “soft targets,” without any of the serious security measures surrounding American embassies or other government buildings. Even better, most of these targets have the president’s name on them in huge letters. Clearly the symbolic damage of such an attack would be immense.

What is not clear, however, is just how great a threat this exposure represents and how the United States should deal with it.

A quick look at the list of Trump’s properties reveals that several of them are located in countries with significant serious civil unrest and instability. Trump Tower in Istanbul, for example, probably seemed like a pretty safe bet five or ten years ago as Turkey was working towards membership of the European Union. But today, thanks to spillover from the Syrian civil war, the failed military coup, and the recent assassination of the Russian ambassador to Turkey, the neighborhood seems much less secure than it used to.

Trump properties in Muslim-majority nations may present the greatest risk of attack, given Trump’s hardline rhetoric towards the Islamic State and towards Muslims and Islam more generally. Trump Tower Manila, for example, sits within easy striking distance of Abu Sayyaf, a Philippine Islamist group that has pledged allegiance to the Islamic State and has a history of bombing attacks. Trump also owns high-visibility properties in Azerbaijan, the United Arab Emirates, and India, all of which house one or more jihadist groups. Even Trump Tower in Seoul might not be safe: ISIS has recently labeled South Korea an enemy of the caliphate, attempting to incite attacks on U.S. installations in South Korea. In all of these locales, Trump Towers might prove to be an irresistible target.

Trump’s properties clearly present a new kind of Achilles heel for the United States, but what exactly should be done about the potential threat? One position might be to argue that the United States should do nothing. After all, the United States government bears no legal responsibility for providing security at these private establishments. But practically speaking it seems obvious that a major terrorist attack on one of Trump’s towers would have political and security implications that go well beyond the legal question. Attacks on American embassies from Tehran to Benghazi, for example, have always provoked anger and support for retaliation among U.S. citizens. Aware of the symbolism of an attack on a Trump Tower, Americans would likely feel similarly, putting pressure on the U.S. government to respond.

Perhaps one of the most critical aspects to consider along these lines is the reaction of the president himself. How would Trump respond if Trump Tower in Istanbul went up in smoke, killing hundreds of people? From everything we have seen since he began his presidential campaign, it seems likely that Trump would take such an act extremely personally. And given his hawkish rhetoric about dealing with terrorism, it is possible that Trump would respond emotionally, using his executive authority to take extreme measures beyond those dictated by a cool calculation of costs and benefits. Unfortunately, not only might such a response be dangerous and counterproductive for the United States, it might also play right into the hands of terrorists seeking to provoke just such an overreaction.

A second possibility is for Trump to divest from his private holdings and to begin to take the necessary steps to rename his associated properties. This would have the benefit of dramatically reducing the symbolic value of the properties as targets while simultaneously reducing the potential emotional impact on Trump himself. An attack on a hotel that “used” to bear Trump’s name is less likely to offend his ego and to provoke him to an overreaction.

If Trump is unwilling to do this, then he must come up with an alternative plan to ensure that his privately-owned properties and those bearing his name do not expose him to potential blackmail or provocation once he becomes president. Unfortunately, Trump’s reluctance to divest from his businesses, or even to acknowledge the potential for conflicts of interest, strongly suggests that he will not come up with such a plan, or even admit that such a plan is necessary. If so, Trump will be choosing to leave the United States vulnerable on a new front in the battle against terrorism.

Aleppo Falls, Pound Strengthens, Inflation Subsides

The fog of war, coupled with the output from multiple propaganda machines, makes it difficult to determine which side has the upper hand in any conflict. After the fall of Aleppo, it appears that President Bashar al-Assad’s forces are getting the upper hand. But are they?

The best objective way to determine the course of a conflict is to observe black market (read: free market) exchange rates, and to translate changes in those rates via purchasing power parity into implied inflation rates. We, at the Johns Hopkins-Cato Institute Troubled Currencies Project, have been doing that for Syria since 2013.

The two accompanying charts—one for the Syrian pound and another for Syria’s implied annual inflation rate—plot the course of the war. It is clear that Assad and his allies are getting the upper hand. With their recent victory in Aleppo, the black-market exchange rate has moved in Assad’s favor and, likewise, inflation has continued to fall.

Waste, Fraud, Abuse and Trump

Prior to attacking intelligence assessments on Russian hacking and meeting with Kanye this week, the president-elect went on a bit of a defense jag. Monday, @realDonaldTrump bashed Lockheed’s F-35 joint strike fighter program for its “out of control” price-tag.  He said the same of Boeing’s Air Force One replacement last week. Saturday, he vaguely tweeted his approval for a Washington Post story claiming that the Pentagon “buried evidence” that it wastes $25 billion a year. Sunday, on Fox News, Trump criticized both aircraft and implied that their excessive cost results from a corrupt practice: the revolving door, where officials manage weapons programs and then go work for the manufacturer.

Trump’s tweets temporarily lowered defense contractors’ stock prices, prompting speculation that he’s paying CEOs back for criticism, or worse. But Trump’s comments aren’t new. He attacked the F-35 during the campaign. He claimed that he could fund a massive military buildup by “conducting a full audit of the Pentagon, eliminating incorrect payments, reducing duplicative bureaucracy, collecting unpaid taxes, and ending unwanted and unauthorized federal programs.”  He promised to “balance our budget,” by eliminating “waste, fraud and abuse” in the federal government. He repeatedly suggested that corporate interests—pharmaceutical, oil, finance and defense companies—have hijacked government and added to its cost.

Trump’s views on Pentagon waste then seem less whim than an outgrowth of his approach to public policy. Does that mean Trump is set to “crack down” on Pentagon spending, “make war on the defense industry or take on the “military-industrial complex?” There are several reasons why the answer is not really.

One is Trump’s appointments. As in other areas, they conflict with his campaign rhetoric. Trump famously said he knows more about ISIS than the generals, but seems inclined to defer to those that he deems “his.”  That’s especially true of his Secretary of Defense pick, retired general James Mattis, who has mostly conventionally-hawkish views on military spending. For example, he repeats the false claim that sequestration, which only occurred once since the 2011 Budget Control Act, in 2013, annually slices the defense budget across-the-board.  He even called sequestration a bigger threat than any U.S. enemy, while testifying in favor of a military spending boost. Mattis casts doubt on Trump’s commitment to defense reform in another way: he raced through the revolving door, going to work for General Dynamics upon his retirement from military service in 2013.

Pentagon Spikes Report on Waste Because It Found Too Much

In 2014, the Pentagon commissioned a study to identify wasteful practices and improve efficiency, but when the researchers found too much waste – approximately $125 billion worth – the officials who asked for the report tried to bury the findings. As reported in the Washinton Post, Pentagon officials worried that “Congress would use the findings as an excuse to slash the defense budget.”

The Pentagon imposed secrecy restrictions on the data making up the study, which ensured no one could replicate the findings. A 77-page summary report that had been made public was removed from a Pentagon website.

Particularly telling are a series of comments by Deputy Defense Secretary Robert O. Work, the Pentagon’s second-highest-ranking official, and Frank Kendall III, the Pentagon’s chief weapons-buyer. 

Will Mattis Be a Voice of Caution at the Pentagon?

“We are going to appoint ‘Mad Dog’ Mattis as our secretary of defense,” President-elect Donald Trump told a crowd in Cincinnati last night. He added, “They say he’s the closest thing to Gen. George Patton that we have.”

To be successful, James Mattis will also have to be this generation’s George Marshall, and perhaps its Dwight Eisenhower and George Washington, too.

Upcoming Cato Discussion on China’s Role in Dealing with North Korea

The United Nations Security Council has approved another round of sanctions against North Korea in response to its latest nuclear test. No one really believes that the new penalties, focused on Pyongyang’s coal and other exports, will have any effect. In fact, it is doubtful that China, which purchases most of the North’s goods, will fully enforce the new resolution.

Still, with most policymakers giving up any hope that the so-called Democratic People’s Republic of Korea will voluntarily negotiate away its nuclear program, Beijing remains the best option for constraining the DPRK’s nuclear ambitions. The People’s Republic of China so far has refused to play its assigned role, but Washington continues to press the PRC to act.

Getting Beijing to take strong action against North Korea is a long-shot, as I explain in an upcoming Policy Analysis, but worth serious effort by Washington. What that would involve is the subject of a forum at Cato at noon on December 8. Susan Glaser of the Center for Strategic and International Studies and Scott Snyder of the Council of Foreign Relations will join me in a panel discussed moderated by Cato Vice President Christopher Preble to discuss the challenges and possibilities of engaging China over the issue.

One thing is clear. Washington and its East Asian allies need to persuade rather than demand that the PRC act. How best to convince Beijing, and what mix of carrots and sticks would be most effective in doing so, will be among the issues discussed on the 8th. I hope you can join us: the details, including where to RSVP, are included here.