The War in Ukraine, Multinationals and Risk Management

08/05/2022

By Paul Bracken

While media attention focuses on the military and humanitarian aspects of the war in Ukraine the huge implications for multinational corporations get very little attention.

Two major themes stand out here.

First, many companies will be swept up in the impassioned media stories of the war and overlook the more fundamental need for a disciplined assessment of political and social risks. Most companies want to do the right thing. But without a careful evaluation they will be sucked into the emotional and political hysteria that often comes with political and social conflict.

The second theme is the precedent that companies pulling out of Russia has established. Getting out of Russia is pretty much of a clear cut case.

It’s an easy call for many reasons. Future political and social risks won’t be so stark. They’ll be a lot more complicated.

Should multinationals come clean on their ties in China?

What about Hungary?

Israel?

What about African nations?

Outside critics argue that pressuring companies to get out of Russia shows that shaming businesses is a high profile tactic for their other political and social projects.

In the face of these major points we can look to one of the lessons of the Cold War, a lesson that’s still useful today. It’s the need to think through the dynamics of crises before they happen.

Who exactly is in charge?

Have they prepared beforehand by gaining relevant knowledge?

What is the checklist of things to consider while in a crisis?

How to recover reputation after the crisis is over?

In the middle of a crisis these questions won’t get the attention they need. There’s too much emotion, fear, and even panic. Companies need to think through how they assess political and social risks before they occur – that is the overwhelming lesson, not just from many crisis post-mortems, and also from academic and business school studies.

These problems aren’t going away after the Ukraine war is over.

They’re going to become more important as anyone who looks at today’s corporate environment can see. The Ukraine war is, likely, a rare, one-off event.

But the increasing frequency and intensity of social and political conflicts isn’t. Whether it’s the NBA or Apple in China, or a U.S. tech giant threatened with costly new regulations in the EU, companies need a systematic approach to deal with political and social conflict.

Politics can be a fractious place. Moreover, politicians are better at this game than most CEOs will ever be. After all, they do it for a living. And there are plenty of people who would love to mobilize a company’s good name and reputation for their cause. Or to advance some wedge issue to take out a company for their own personal agenda.

Game theory teaches that while it takes years to build a reputation, it can be lost in a single day by the mismanagement of some high profile risk. Look at Credit Agricole. This French investment bank had a good brand and solid reputation. It built this over many years.

But in 2015 they were caught running $ 32 billion of payments from Sudan, Cuba, and others through their New York office. They wound up paying nearly $ 800 million in fines to regulators, with a huge hit to their brand. Perhaps of equal importance, they got on the U.S. and New York State regulators’ radar screen.

As a result they had to dial back their risk appetite over a wide range of unrelated deals for fear of being accused of breaking the law a second time. Other financial institutions hesitated to do deal with them for fear of getting extra intense regulatory attention.

So what does a multinational corporation do in a world of growing political and social conflict?

Companies should start with asking themselves a basic question “Do we really know what we’re doing in this very different game?” Having worked with many companies it’s amazing to me that this question is rarely asked. There’s an unfounded feeling that political and social risks will somehow be dealt with, by someone, somehow.

This absence of forethought leads to a set of harmful, but predictable, decision patterns. One is that it lands on the CEO’s desk – largely because it doesn’t belong to any other department. Call this the “CEO risk” approach. Yet the vast majority of CEOs have little background or knowledge of political and social conflicts. But they need to appear like leaders. So they “wing it,” without any framework or staff work behind their decision.

In the CEO approach to risk management the long run consequences of a decision are subsumed to the immediate gut feeling of a single person. While this instinct may be a good one, and it may even be correct, it bets the future of the company on a hunch, a feel, for the situation.

A capital expenditure of any size would get far more staff review.

Yet the potential billions lost in making the wrong call in a fast moving crisis, in shareholder value, reputation, and heightened regulatory scrutiny dwarfs almost any bad capital expenditure.

Military officers would look at this situation with an immediate reaction: “Sir, you need to staff this out.” Some review process to look at the issue free of emotion, and to examine various “What if” branchpoints is needed. Going with your gut in war means lost lives. In business it can mean billions of dollars of destroyed value.

Absent a disciplined emotion free process the CEO is making a huge bet on something he or she probably hasn’t thought very much about. A CEO knows a lot about marketing, finance, HR, and operations. But about the way political and social conflict could impact the company?

Probably not. Too often, this CEO risk approach leads to aping whatever frame of reference the headlines are screaming. The result is overly hasty decisions without regard for their strategic consequences. In some cases it leads to panic.

There are scale changes in the risk environment that bear on managing political and social conflict. The huge sanctions put on Russia by the United States has expanded the apparatus for monitoring compliance with sanctions, technology sales, and cross-border money flows. Collection of information about these activities is mushrooming.

There’s a growing cooperation between intelligence services like CIA and NSA and with regulators in Treasury and Justice. Compared to even a few years ago the Departments of Treasury and Justice have new information collection to draw on. These are highly relevant to potential violations of the Foreign Corrupt Practices Act or to reviews by the Committee on Foreign Investment in the United States.

The apparatus now in Washington (and in states like New York) is today focused on a bad actor, Russia. No one seems to mind this because Vladimir Putin’s actions are so brazen. But an important lesson of the war in Ukraine is the precedent being set. Next year this apparatus might be focused on a different actor. Maybe China, or Hungary. Or maybe the target is “amoral” multinationals “who don’t pay their fair share of taxes.”

As the United States gets more polarized the political motivation of regulators becomes more important. Sometimes there are few regulatory enforcement actions. But at other times there are spikes in the number of cases. It isn’t a random process.

Who happens to be in power in Washington has a lot to do with the targeting.

The difference now, and in the future, is that political-regulatory technology is getting a lot better. The war in Ukraine is accelerating the trend, with much more tightly linked connections between intelligence, regulation, and law enforcement. This even extends between countries, as the United States and the EU cooperate more on sanctions compliance.

Different from the CEO risk pattern is that the CEO delegates the matter to a department that seems to be the logical place for it. The legal department is the appropriate place for compliance and regulatory matters, or so it would seem.

But you cannot let your legal department own these issues. They will overlook broader strategic, political, and especially business dimensions of a crisis. Their training is in law. That’s how they think, not in terms of corporate strategy. They will stick to what they know, the narrow interpretation of the law. Key issues like the political motives of regulators, precedents getting set, and drawing unwanted scrutiny to the company will get scant attention. Here, a foreign multinational is an especially easy target.

Few people want to talk about this but a U.S. regulator can target a European or Asian company with near impunity. Likewise, the EU can go after an American technology company with an open hunting license. In both cases public opinion is likely to support it – and politicians know this. So do regulators. And both are better at the PR game than any company is likely to be. They have the links to key media organizations and reporters for news leaks hostile to a company.

I recommend that the leadership team develop a checklist of questions to put to their departments about potential violation of regulations that could arise in a crisis. Leaders also should play out different response scenarios, e.g. in terms of how certain hypothetical events could affect their reputation, employees, and how the media might handle real or perceived violations.

Here’s another idea.

During the 1962 Cuban Missile Crisis President Kennedy put together an ad hoc Executive Committee, or ExCom. It played out different scenarios of how Moscow might react to various U.S. moves. These were individuals whose judgement President Kennedy respected. Their job was to review recommendations from the Pentagon, CIA, and State Departments because JFK didn’t fully trust them to give neutral views or exercise good judgement.

A year earlier they had recommended a U.S. invasion plan to remove Fidel Castro by landing a force in Cuba, at the Bay of Pigs. This debacle led JFK to say that he would never again leave a really big decision to “the experts.”

The attraction of JFK’s ExCom was its limited scope and short lived tenure. it was stood up to handle a specific problem and then it was disbanded. This made its existence less threatening to established departments. Robert McNamara, JFK’s secretary of defense, many years later said that his biggest mistake was not setting up an ExCom to review his decision to go into Vietnam.

The range of political and social conflicts facing global companies is going to broaden. A crisis over doing business in Russia is very different from other problems of corporate social responsibility.

Just look at the current demands on business: pull out of Russia; the anti-trust breakup of technology firms; anti-fossil fuel protests; animal rights and testing; sustainable development; human rights in China. Demands from all sides for business to do something about social and economic inequality have also grown.

All of this makes corporate social responsibility a much more important, and a much broader issue. Government and public demands aren’t going away simply because a company did the right thing by quitting Russia. An important lesson business should learn is that most of these will not be as clear.

They will not be black and white. They will be gray, twilight issues of great complexity. At the same, time the media works to map complex issues onto a simple, binary choice. Stay or go from China. End fossil fuels or drown from rising ocean levels.

But to jump to the conclusion that a tradeoff is the way to deal with these twilight issues is a huge mistake. Companies need to recognize that corporate social responsibility cannot be usefully considered as taking a position along a one-dimensional profit to responsibility continuum.

If they use such an overly simplified framework they’ve lost the race at the starting gate. There’s a lot of complexities that have to be included that this framework misses.

Getting these into the leadership team’s conversations by asking better questions, scenario methods, staffing a temporary ExCom, and not delegating the future of the company to an unprepared department, can go a long way to facing the political and social storms ahead for multinational companies.

This article was published by The European Business Review on July 21, 2022 and is republished with permission of the author.

Featured photo: KYIV, UKRAINE – Feb. 25, 2022: War of Russia against Ukraine. View of a civilian building damaged following a Russian rocket attack the city of Kyiv, Ukraine. Dreamstime.

 

MV-22B Osprey Squadron Supports Marine Special Forces

U.S. Marines with Marine Forces Special Operations Command conduct night operations with an MV-22B Osprey, assigned to Marine Medium Tiltrotor Squadron (VMM) 365, during Exercise Raven (RavenEx) 22-5 at Combat Readiness Training Center, Gulfport, Mississippi, May 14, 2022.

VMM-365 provided assault support for MARSOC during a pre-deployment training exercise to enhance combat readiness in an unfamiliar expeditionary environment.

VMM-365 is a subordinate unit of 2nd Marine Aircraft Wing (MAW), the aviation combat element of II Marine Expeditionary Force.

GULFPORT, MS,

05.14.2022

Video by Lance Cpl. Christian Cortez

2nd Marine Aircraft Wing

The Defense of Taiwan Seen in a Global Context: A Polish Perspective

08/04/2022
There are many ways to manage this "gap" militarily for the United States. One way would be to focus on any PRC action on the model of the Battle of the Bulge

By Robert Czulda

Since February 2022, the world’s attention has been focused on the Russian aggression against Ukraine.

But once again we see a dangerous escalation in the Taiwan Strait. This is a direct result of imperialist appetites of the PRC, who considers Taiwan, formally known as the Republic of China, as its province (in fact, it is the opposite: Republic of China was established in 1912, while the People’s Republic of China was declared in 1949).

Beijing’s aggressive stance and endeavors violate norms and customs of international law, including a right of nations to self-determination. Many things can be said about Taiwan, but definitely not that it wants to be a part of the PRC.

Even without a formal declaration, Taiwan is already a sovereign state with its own, independent foreign security policy, as well as with its armed forces.

Moreover, Taiwan is now an example of a thriving democracy and open society, which has evolved a long way from being an authoritarian regime.

China has openly threatened to not allow Speaker of the House of Representatives Nancy Pelosi to visit Taiwan, but was unable to block it. While the visit itself is a great boost for Taiwan and its right to remain a free and independent state, China’s hollow threats is an important victory for the United States, who once again showed that it is the only democratic superpower and no one, including the PRC, can limit its freedom of actions.

Ignoring PRC’s threats and Pelosi’s unhindered landing in Taipei are an extremely important victory in the war of nerves between the United States and China (which, obviously, goes way beyond Taiwan).

This is also a reputational damage for Beijing and particularly for Xi Jin-ping.

Beijing’s attempt to intimidate both the United States and Taiwan, as well as to limit a scope relations between both states, failed significantly.

China was forced to recognize its inferiority.

Moreover, this is also an important message from the United States, which for a long time has been criticized for President Biden’s weak and passive leadership. Now the Americans manifested their steadfastness and strength.

A similar case happened just two years ago, when the United States sent two bombers into a zone, which had earlier been proclaimed by China as its own ADIZ (Air Defence Identification Zone). The Americans successfully challenged Beijing and won.

Such incidents are always dangerous (since they might trigger an armed clash and even a war), but at the same time they are an integral part of any cold war rivalry – and without a doubt this is a current level of relations between the United States and China.

Similar incidents occurred several times during the Cold War against the Soviet Union.

It was the unshakable and demonstrated force that ultimately contributed to the West’s victory over the “Evil Empire.” Now we are in a similar situation.

Just as during the Cold War the United States could have not allow even a piece of West Berlin to fall under the control of the Soviet Union, now it is necessary to assure that Taiwan remains an equal member of a community of free and democratic nations.

Concessions and appeasement only encourage a bully. The same was Putin’s Russia and the same might happen with Xi’s China. Appetites of authoritarian regimes cannot be satisfied.

China’s reaction to Pelosi’s visit in Taiwan was hysterical – similar visits of U.S. officials were tolerated in the past. For instance, Taipei was visited in 1997 by Newt Gingrich, who was then a Speaker of the House of Representatives. Beijing’s current overreaction was first of all an attempt to test the Americans, who are now preoccupied with the Russian aggression on Ukraine. Secondly, Xi Jin-ping wanted to divert the interest of Chinese public opinion from domestic problems.

Despite China’s failure, one should not lose vigilance.

The PRC will not give up. Singapore’s Founding Father and its first Prime Minister Lee Kuan Yew  rightly noted that “no Chinese leader can be branded as the leader who lost Taiwan”. This warning, which was made in 1997, is still valid – Xi Jinping does not want to a person, who lost Taiwan.

But it does not mean that a full-fledged invasion is imminent.

This scenario is unlikely for several reasons.

First of all, China’s military is not yet prepared to carry out such massive combined operation, which would require hundreds of thousands of troops and a large naval and air bridge from mainland China to Taiwan’s shores, which would be defended by 170 000 troops.

Secondly, such an invasion would have tremendous diplomatic, political and economic consequences for the PRC, who wants to control Taiwan, not to destroy it.

Both Taiwan and the United States must be prepared to cope with other forms of armed hostilities.

Apart from intimidating live-fire exercises, another plausible scenario includes an aerial and naval blockade of Taiwan, which would have a devastating effect both for its economy and the world.

Taiwan is an unmatched leader of the semiconductor industry. Just one company, TSMC (Taiwan Semiconductor Manufacturing Company) produces more than 50% of all semiconductor in the world (they are used also in the military, including in the F-35 jets).

Another possible scenario, which must also be taken into account, is a seizure of Taiwan’s small islets, which are located near mainland China.

This particularly applies to Kinmen (Quemoy) – a group of Taiwanese islands, which could be easily captured by Beijing. Kinmen was savagely attacked by the PRC in 1958, but Taiwan preserved its control.

This is one of scenarios considered by Taiwan’s decision-makers and experts as the most possible.

Someone could ask – why bother with a tiny island with a population of 24 million?

A rivalry over the future of Taiwan is not only a struggle for this island and its society.

This is foremost a clash of two systems of values: democracy and freedom versus autocracy or even totalitarianism.

It is also a fight to preserve Pax Americana – the United States is undoubtedly a hegemon full of flaws.

American democracy is shaken by serious problems.

As a world policeman, the United States has made many, often great, mistakes.

But American leadership is the best we can have, at least for now.

It is naive to think that without American leadership and its contributions, the world will become more just, predictable and calmer – it is quite the opposite.

History shows that sooner or later a new hegemonic contender emerges.

Do we prefer the world to be influenced by the United States or by totalitarian China?

This is a rhetorical question but being pressed by today’s authoritarian powers, Russia and China.

Also, see the following:

Taiwan Trends and Scenarios: Challenge for the Next U.S. Administration

Shaping a Way Ahead for Taiwan: Getting Out from Under the Domination of the PRC “One China Policy”

Airpower When Directly Faced with the Authoritarian Powers: The International Fighter Conference 2019

Taiwan in Pacific Defense: Turning a New Page

 

The Challenge of Supply Chain Resilience: The Case of Rare Earth Minerals

08/03/2022

By John Coyne

Recently, ASPI researcher Albert Zhang shone a spotlight on a sophisticated Chinese Communist Party information campaign targeting rare earths and Australian company Lynas. This research has powerful implications for those policymakers seeking to create resilient supplies of rare-earth elements (REEs) and critical minerals.

REEs are a group of 17 metals—15 elements from the lanthanide series and two chemically similar elements, scandium and yttrium. Each has unique properties vital for a range of commercial and defence technologies, including batteries, high-powered magnets and electronic equipment. An iPhone, for example, contains eight rare-earth minerals, and there are probably a couple in your refrigerator and washing machine. They also make up about 420 kilograms of an F-35 fighter jet and are essential for guided missiles.

Despite their name, REEs are not all that rare. They’re present in abundance in the earth’s crust. The challenge, however, is finding them in sufficient concentrations to justify commercial mining operations. Securing the upfront financing required to build a mine in a location that will tolerate the substantial environmental impacts of rare-earth processing is no easy task.

Fortunately for China, the commercial viability of its reserves, Chinese companies’ access to state-backed financing and the country’s lax environmental regulations have helped build its dominance of the global REE market.

China’s rare-earth production exceeds that of the world’s second-largest producer, the US, by more than 100,000 tonnes per year. The US still relies on China for most rare-earth imports. According to the US Geological Survey, China accounted for at least 58% of global production of REEs last year, and possibly up to 80% if you include illegal and undocumented production activity. In some cases, like heavy REE processing, China has 100% control of the market.

The problem here isn’t just that the CCP has monopolistic control of the global REE supply chains, but that it is willing to use this power to coerce and control others. The issue is not a hypothetical one. Realising that controlling the global market makes for a useful economic lever, the CCP has used this power to coerce trading partners on more than one occasion.

In 2010, it effectively restricted rare-earth exports to Japan after a Chinese fishing trawler collided with a Japanese coastguard vessel near the disputed Senkaku Islands.

More recently, it threatened to limit rare-earth supplies to US defence contractors, including Lockheed Martin, over US arms sales to Taiwan.

The CCP’s coercive use of its REE monopolies is reason enough for some nations to seek to create sovereign resilience and insulate themselves from manipulation.

Japan, the US and Australia have each sought to improve their supply-chain resilience. Japan has invested in Australian company Lynas for more than a decade to provide it with alternative supplies. The US government has recently done the same for REE supply chains to the Department of Defense. However, unilateral efforts no longer appear to be adequate to secure alternative supply chains.

The CCP doesn’t want to lose its control of this key market. And it has used a range of measures to prevent the diversification of supply chains. China routinely adjusts its domestic production quotas and subsidises rare-earth prices. It uses this power to strategically flood the market when it wants to drive out competitors and deter new market entrants.

Zhang’s work shows that the CCP isn’t just using economic means to prevent the dilution of its monopolistic control of global REE supply chains. It is also willing to use a range of non-competitive covert and clandestine means to maintain its market position.

Establishing alternative REE supply chains is difficult enough. The CCP’s actions, including its information campaigns, rapidly increase the complexity of the challenge. The key strategic message here for Australia, Japan, the US and other like-minded countries is that market forces alone aren’t going to fix this problem.

National-level policymakers cannot, on their own, solve this challenge. Creating global supply-chain alternatives that promote healthy competition and resilience will require minilateral efforts. Here, Australia, as a source of REEs, must work with countries like the US and Japan.

As a starting point, Japanese, Australian and American policymakers need to address several issues to fast-track the creation of alternative supply chains.

For investors, financing new or emerging REEs has substantial geopolitical risk. To mitigate that, policymakers should consider creating a sovereign REE risk fund to underwrite the commercial risk from the CCP’s overt and covert activities.

The Australian government needs to consider how it might promote Australian industry and entrepreneurs to move further along the REE value chain. Policy levers, including tax measures, will be crucial to success. There is significant potential in the establishment of multi-ore mineral-processing hubs in Australia.

Policymakers and industry will need to find ways to mitigate the effects of both China’s market-distortion tactics and more normal ebbs and flows in demand. Various mechanisms are required, including minilateral REE ore stockpiling and market interventions that flatten out demand.

Australia must engage with industry 4.0 technology and move further along the REE value chain so that it is more than just a miner. Japan and the US ought to see the mutual benefits of this approach. After all, there is no point in creating supply-chain resilience for REE ores if miners must still send them to China for processing.

While these suggestions offer options, they are only a starting point. Over the next year, ASPI intends to increase the public discourse on and knowledge of REEs in Australia. Only through better policy will Australia and its allies achieve the REE supply-chain security and resilience essential in the 21st century.

John Coyne is head of ASPI’s Northern Australia Strategic Policy Centre and strategic policing and law enforcement program.

He is on Twitter at @johncoyne14.

This article was published on July 8, 2022 by ASPI under the title, “Rare earths in Australia must be about more than mining.”

https://www.aspistrategist.org.au/rare-earths-in-australia-must-be-about-more-than-mining/

Featured photo: Rare earth elements and minerals loaded on cargo ship in China.

 

Naval Air Station Lemoore Public Works

Naval Air Station Lemoore Public Works Officer Cmdr. Greg Woods discusses what NAVFAC Southwest Public Works at NAS Lemoore does to support the Fleet, NAS Lemoore’s mission, future, and the many successful developments at NAS Lemoore.

06.08.2022

Video by Mario Icari

Naval Facilities Engineering Systems Command (NAVFAC) Southwest

The Chief of the UK General Staff’s Perspective on the European Defense Challenge

08/01/2022

By William Leben

The British Army’s main effort is now mobilisation to deter Russian aggression, and it must accept ‘ruthless prioritisation’ to this end, General Sir Patrick Sanders has said.

Speaking at the Royal United Services Institute’s Land Warfare Conference in London, the British Chief of the General Staff (CGS) articulated his army’s immediate answer to the war in Ukraine and reflected on the longer-term responses that will be required. His address came just prior to the commencement of a major NATO summit in Madrid, which Prime Minister Anthony Albanese is attending.

‘This is our 1937 moment,’ Sanders said, appealing to members of the audience to do all they can to deter further conflict. He cautioned against the assumption that the war in Ukraine would remain limited, or that Russia was destined to fail, observing instead that battlefield defeat catalyses rapid learning. Any respite for Ukraine and its partners is temporary, he said, and Russia has demonstrated the capacity to regenerate forces and win in the past.

The CGS also framed events in Europe within the global geopolitical moment. ‘In meeting a revanchist Russia, we cannot be guilty of myopically chasing the ball’, said Sanders. ‘Defence cannot ignore the exponential rise and chronic challenge of China, not just within the South China Sea but through its sub-threshold activities across the globe. Beijing will be watching our response to Moscow’s actions carefully.’

The CGS spoke about the limits of deterrence by punishment that have been exposed by the Russian invasion. Deterrence by denial in the European theatre therefore has a new importance, and the British response, according to Sanders, must be a mix of forward basing and very-high-readiness forces. Land power and armies are central to this response.

The burden for this adjusted posture must fall increasingly on European NATO members, said Sanders, because ‘taking up the burden in Europe means we can free more US resources to ensure that our values and interests are protected in the Indo-Pacific’.

‘Ukraine has also shown that engaging with our adversaries and training, assisting and reassuring our partners is high-payoff activity… With the right partner and in the right conditions persistent engagement and capacity building can be really effective. [The UK’s] Operation Orbital has made a key contribution to preparing the Armed Forces of Ukraine for this fight and it continues to expand exponentially’.

Sanders repeatedly warned against trying to do everything: ‘we will need to suppress our additive culture and guard against the “tyranny of and”—we can’t do everything well and some things are going to have to stop; it will mean ruthless prioritisation’. He said the force must ‘deprioritise where necessary.

Explaining the way forward for the British Army—and noting concerns that should sound familiar to an Australian audience—the CGS said that ‘we must be honest with ourselves about future soldiers’ timelines, capability gaps and risks’. Long-term efforts are important but must occur in conjunction with must faster change occurring ‘from the line of march’.

The CGS identified four immediate ‘focused lines of effort’ for his army.

First, and most importantly, boosting readiness. NATO needs highly ready forces that can deploy at short notice for the collective defence of alliance members. Deterring Russia means more of the army ready more of the time, and ready for high-intensity war in Europe. So we will pick up the pace of combined arms training, and major on urban combat. We will rebuild our stockpiles and review the deployability of our vehicle fleet… The time has come to be frank about our ability to fight if called upon.

Second, we will accelerate the modernisation outlined in future soldier… We will seek to speed up the delivery of planned new equipment including long-range fires, attack aviation, persistent surveillance and target acquisition, expeditionary logistic enablers, ground based air defence, protected mobility, and the technologies that will prove pivotal to our digital ambition: communications and information services and electronic warfare. Most importantly, this will start now—not at some ill-defined point in the future.

Third, we will rethink how we fight. We’ve been watching the war in Ukraine closely and we are already learning and adapting… Many of the lessons are not new—but they are now applied. We will double-down on combined arms manoeuvre, especially in the deep battle, and devise a new doctrine rooted in geography, integrated with NATO’s war plans and specific enough to drive focused, relevant investment and inspire the imagination of our people to fight and win if called upon.

Fourth and finally, Sanders said he is ‘prepared to look again at the structure of our army. If we judge that revised structures will make the army better prepared to fight in Europe, then we will follow Monty’s advice and do “something else”. Now of course adapting structures has implications for the size of the army… Obviously our army has to be affordable; nonetheless, it would be perverse if the CGS was advocating reducing the size of the army as a land war rages in Europe and Putin’s territorial ambitions extend into the rest of the decade, and beyond Ukraine’.

Sanders reiterated that people remain central to the army and its effectiveness. He observed that apparent technological superiority has not translated into a will to fight by the Russian armed forces in Ukraine. He observed that Russian forces are suffering from ‘moral decay’ and that the British Army must protect its own ‘moral component’ and ‘fighting spirit’. ‘To put it simply’, said Sanders, ‘you don’t need to be laddish to be lethal—in a scrap you have to truly trust those on your left and right’.

He asked members of his army to cut through unnecessary bureaucracy: ‘like any public institution we have accumulated some barnacles that slow us down—but we are not just any institution, so it’s time to strip them back’.

General Sanders also noted that mobilisation is not simply an internal activity, and that industry is a key partner, remarking that ‘We can’t be lighting the factory furnaces across the nation on the eve of war; this effort must start now if we want to prevent war from happening’.

William Leben is an analyst on secondment to ASPI from the Australian Army. The views expressed in this article are those of the author and do not necessarily reflect the position of the Department of Defence, the Australian Army or the Australian government.

This article was published by ASPI on June 30, 2022.

Here is the speech delivered at the RUSI’ Land Warfare Conference by the COS on June 28, 2022:

I stand here as the first Chief of the General Staff since 1941 to take up this position in the shadow of a major state on state land war in Europe. As I do, I’m reminded of the words of a man in whose footsteps I tread. In relative obscurity, and recognising the impending danger the nation faced, the then Brigadier Bernard Montgomery wrote this in the pages of that magnificent publication Royal Engineers’ Journal of 1937:

We have got to develop new methods, and learn a new technique…. There is no need to continue doing a thing merely because it has been done in the Army for the last thirty or forty years – if this is the only reason for doing it, then it is high time we changed and did something else.

For us, today, that “something else” is mobilising the Army to meet the new threat we face: a clear and present danger that was realised on 24th February when Russia used force to seize territory from Ukraine, a friend of the United Kingdom. But let me be clear, the British Army is not mobilising to provoke war – it is mobilising to prevent war.

The scale of the war in Ukraine is unprecedented. 103 Battalion Tactical Groups committed. Up to 33,000 Russians dead, wounded, missing or captured. A casualty rate of up to 200 per day amongst the Ukrainian defenders. 77,000 square kilometres of territory seized – 43% of the total landmass of the Baltic states. Ammunition expenditure rates that would exhaust the combined stockpiles of several NATO countries in a matter of days. The deliberate targeting of civilians with 4,700 civilian dead. 8 million refugees. For us, the visceral nature of a European land war is not just some manifestation of distant storm clouds on the horizon; we can see it now.

In all my years in uniform, I haven’t known such a clear threat to the principles of sovereignty and democracy, and the freedom to live without fear of violence, as the brutal aggression of President Putin and his expansionist ambitions. I believe we are living through a period in history as profound as the one that our forebears did over 80 years ago. Now, as then, our choices will have a disproportionate effect on our future.

This is our 1937 moment. We are not at war – but we must act rapidly so that we aren’t drawn into one through a failure to contain territorial expansion. So surely it is beholden on each of us to ensure that we never find ourselves asking that futile question – should we have done more? I will do everything in my power to ensure that the British Army plays its part in averting war; I will have an answer to my grandchildren should they ever ask what I did in 2022.

We have agency to prevent war now. But only if we take a new approach.

These are extraordinary times. So I will not take the usual approach of a new CGS to this event. It will not be the traditional tour of the horizon covering the full breadth of Army business. I will concentrate on one area alone – how I intend to mobilise the British Army – our Regulars, Reservists and Civilians – to deter Russian aggression. To prevent war.

We are already a busy Army. But today is about mobilisation, and to mobilise effectively we will need to suppress our additive culture and guard against the ‘tyranny of and’ – we can’t do everything well and some things are going to have to stop; it will mean ruthless prioritisation.

From now the Army will have a singular focus – to mobilise to meet today’s threat and thereby prevent war in Europe.

This is not the rush to war at the speed of the railway time tables of 1914. It is instead an acceleration of the most important parts of Future Soldier’s bold modernisation agenda, a move to a positional strategy, an increased focus on readiness and combined arms training and a broader institutional renewal that creates the culture required to win if called upon. This process, given a name Operation MOBILISE, will be the Army’s primary focus over the coming years.

So why do we need to mobilise?

Under the leadership of the Prime Minister and the Defence Secretary, the United Kingdom has risen to meet Moscow’s aggression. Defence has worked at a phenomenal pace to bring together a coalition of partners to provide materiel, intelligence and training to sustain Ukraine in its fight against the Russian invaders. Our bi-lateral relationship with Kyiv has gone from strength to strength; this year alone we have supplied 9500 anti-tank missiles, of which over 5000 were NLAW. We have already provided UK-based training for 650 AFU soldiers, and in the coming months, the British Army will deliver battle-winning skills to a further 10,000 Its just started.

The upcoming Madrid Summit is a timely opportunity to demonstrate our leadership in NATO and our enduring commitment to our allies. Mobilising the Army to prevent war is as tangible and concrete an act of leadership as I can offer – the UK will lead by example.

It is dangerous to assume that Ukraine is a limited conflict; one of its obvious lessons is that Putin’s calculations do not always follow our logic. It’s also worth remembering that historically, Russia often starts wars badly. And because Russia wages war at the strategic, not the tactical level – its depth and resilience means it can suffer any number of campaigns, battles and engagements lost, regenerate and still ultimately prevail. History has also shown us that armies that have tasted defeat learn more quickly. While Russia’s conventional capability will be much reduced – for a time, at least – Putin’s declared intent recently to restore the lands of ‘historic Russia’ makes any respite temporary and the threat will become even more acute. We don’t yet know how the war in Ukraine will end, but in most scenarios, Russia will be an even greater threat to European security after Ukraine than it was before. The Russian invasion has reminded us of the time-honoured maxim that if you want to avert conflict, you better be prepared to fight.

So this is the challenge that I will address through mobilisation. And to make it crystal clear – This means focusing on winning the war, working with these allies, against this threat and in this location. And we will see the first orders issued in Madrid tomorrow.

This threat has also materialised at a time when the world is already looking less secure – the viewpoint set out clearly in last year’s Integrated Review and the Defence Command Paper. In meeting a revanchist Russia, we cannot be guilty of myopically chasing the ball. Defence cannot ignore the exponential rise and chronic challenge of China, not just within the South China Sea but through its sub-threshold activities across the globe. Beijing will be watching our response to Moscow’s actions carefully. But ceding more territory to Putin could prove a fatal blow to the principle of national sovereignty that has underpinned the international order since 1945. And we cant allow NATO states to live with the grim reality of the human cost of occupation that we see in front of us.

Given the commitments of the US in Asia during the 20s and 30s, I believe that the burden for conventional deterrence in Europe will fall increasingly to European members of NATO and the JEF. This is right in my view: taking up the burden in Europe means we can free more US resources to ensure that our values and interests are protected in the Indo-Pacific

And we are not alone in facing this new reality. Looking out at you here today I am reassured by the number of allies and partners I see before me. The faces of friends from previous campaigns where we have shared hardship and laughter, failures and victories. We have shed blood together. We remember those we left behind. And it this our willingness to shed blood to protect our common values and each other’s territory that will see us prevail.

So, how are we going to mobilise?

Article V remains the cornerstone of our national security; that makes it a critical national interest. The conflict in Ukraine will herald I think a paradigm shift in how NATO delivers collective deterrence; from a doctrine of reacting to crises, to one of deterring them. This principle is at the heart of Op MOBILISE: Russia knowing that they cannot gain a quick localised victory – that in any circumstances and any time frame they will lose if they pick a fight with NATO.

Deterrence demands all of the tools of statecraft, underpinned by soldiers, sailors, aviators and Civil Servants operating across all five operational domains. It requires forces across Defence that are modernised, relevant, and harness the potential of the fourth industrial revolution. Effective deterrence also means communicating clearly so we maximise deterrent effect without increasing the risk of mobilisation.

When faced with an adversary such as Mr Putin, with the campaigns of Peter the Great as his reference point, the war in Ukraine also reminds us of the utility of Land Power: it takes an army to hold and regain territory and defend the people who live there. It takes an Army to deter. And this army, the British Army, will play its part alongside our allies.

In Ukraine we’ve seen the limitations of deterrence by punishment. It has reinforced the importance of deterrence through denial – we must stop Russia seizing territory – rather than expecting to respond to a land grab with a delayed counteroffensive.

To succeed, the British Army, in conjunction with our NATO allies and partners, must be in-place or at especially high readiness – ideally a mix of both. Tripwires aren’t enough. If we fail to deter, there are no good choices given the cost of a potential counterattack and the associated nuclear threat. We must, therefore, meet strength with strength from the outset and be unequivocally prepared to fight for NATO territory.

If this battle came, we would likely be outnumbered at the point of attack and fighting like hell. Standoff air, maritime or cyber fires are unlikely to dominate on their own – Land will still be the decisive domain. And though I bow to no one in my advocacy for the need for game changing digital transformation, to put it bluntly, you can’t cyber your way across a river. No single platform, capability, or tactic will unlock the problem.

Success will be determined by combined arms and multi-domain competence. And mass. Ukraine has also shown that engaging with our adversaries and training, assisting and reassuring our partners is high payoff activity. Future Soldier’s new Ranger Regiment – on the ground in Ukraine before the invasion – and the new Security Force Assistance Brigade are well set for this. With the right partner and in the right conditions persistent engagement and capacity building can be really effective. Operation ORBITAL has made a key contribution to preparing the Armed Forces of Ukraine for this fight and it continues to expand exponentially. And We must be wary of Russia’s malign activities further afield – our global hubs, including Kenya and Oman, will still play a vital role as we seek to mobilise to meet aggression in Europe – allowing us to help our partners there secure strategic advantage elsewhere in the world.

This is the war that we are mobilising to prevent, by preparing to win. With our NATO and JEF partners. Against the Russian threat. In Eastern and Northern Europe. And in doing so it is my hope that we never have to fight it.

So what does this mean for the Army…

My predecessor, and my friend, General Sir Mark Carleton-Smith, laid the foundations for the most ambitious transformation of the British Army in a generation, Future Soldier. We, I owe him a great debt. The Government has also generously committed 41 billion pounds to Army equipment over the next decade.

But as we face a new reality, a race to mobilise, we must be honest with ourselves about Future Soldiers’ timelines, capability gaps and risks – and now our own diminished stockpiles as a result of Gifting in Kind to the brave soldiers of the Armed Forces of Ukraine. We should not be afraid of necessary heresies. Defence is only as strong as its weakest domain. And technology does not eliminate the relevance of combat mass.

To mobilise the Army I intend to drive activity across four focused lines of effort:

First, and most importantly, boosting readiness. NATO needs highly ready forces that can deploy at short notice for the collective defence of alliance members. Deterring Russia means more of the Army ready more of the time, and ready for high-intensity war in Europe. So we will pick up the pace of combined arms training, and major on urban combat. We will re-build our stockpiles and review the deployability of our vehicle fleet. And having seen its limitations first-hand as the Commander of the Field Army, I think we need to ask ourselves whether Whole Fleet Management is the right model given the scale of the threat we face. The time has come to be frank about our ability to fight if called upon.

Second, we will accelerate the modernisation outlined in Future Soldier. NATO needs technologically advanced modern armies able to deploy at speed and fight together. They must be able to integrate effects across the domains, all stitched together by a sophisticated and robust command, control and communication network. We will seek to speed up the delivery of planned new equipments including long range fires, attack aviation, persistent surveillance and target acquisition, expeditionary logistic enablers, Ground Based Air Defence, protected mobility, and the technologies that will prove pivotal to our digital ambition: CIS and Electronic Warfare. Most importantly, this will start now – not at some ill-defined point in the future.

Third, we will re-think how we fight. We’ve been watching the war in Ukraine closely and we are already learning and adapting. Not least to the help of RUSI, Many of the lessons are not new – but they are now applied. We will double-down on combined arms manoeuvre, especially in the deep battle, and devise a new doctrine rooted in geography, integrated with NATO’s war plans and specific enough to drive focused, relevant investment and inspire the imagination of our people to fight and win if called upon.

And Fourth, I am prepared to look again at the structure of our Army. If we judge that revised structures will make the Army better prepared to fight in Europe, then we will follow Monty’s advice and do “something else”. Now of course adapting structures has implications for the size of the Army – and I know that there will be questions on Army numbers locked, loaded and ready to fire from the audience! Put simply, the threat has changed and as the threat changes, we will change with it. My job is to build the best Army possible, ready to integrate with fellow Services and Strategic command and ready to fight alongside our allies. Obviously our Army has to be affordable; nonetheless, it would be perverse if the CGS was advocating reducing the size of the Army as a land war rages in Europe and Putin’s territorial ambitions extend into the rest of the decade, and beyond Ukraine.

Importantly, the four mechanisms I have used to illustrate how the Army will mobilise will all be initiated from the line of march. This means now rather than in some distant and ill-defined point in the future.

Op MOBILISE is as much about people as it is about training and hardware. The last 125 days of conflict in Ukraine have shown us if we needed showing the enduring nature of war; its violent and human nature, and its timeless interplay of friction and chance. It has reminded us all that war fundamentally remains a clash of wills. Russia’s so called ‘Special Military Operation’ has shown that while Moscow may have invested in some of the most modernised land technology in the world, it lacked the will to fight when faced with a tenacious Ukrainian defence. Let down by its leaders, we have seen the moral decay of the Russian Army play out in front of us.

The fighting spirit of our people is the Army’s single greatest responsibility. The moral component matters. To succeed in mobilising we must ensure that we engender the culture and behaviour required to forge and cohere a confident and winning team, and, in my 37 years’ experience, I have learnt that trust increases tempo. I am fully behind the TEAMWORK initiative set up by my predecessor. It is not woke-ism nor in any way a lessening of standards at a time where the British Army must be prepared to engage in warfare at its most violent. To put it simply, you don’t need to be laddish to be lethal – in a scrap you have to truly trust those on your left and right.

And when the British Army has been faced with any challenge during its long history, it has always been the ingenuity of our people that has seen us through. I know there will be an opportunity cost to mobilising – and we must continually review and balance our priorities to meet emerging threats. But mobilisation also requires us to cut down that which slows us down. I want to you all, I’m talking to the Army here to identify those areas of our process and bureaucracy that take up your time – like any public institution we have accumulated some barnacles that slow us down – but we are not just any institution, so it’s time to strip them back.

Mobilisation is not just an internal focus. We must take industry with us and have the right relationships with our enabling agents to deliver and quicken the ambitious modernisation targets we have set ourselves. I will use the next few months to engage personally with you, our industry partners and encourage you to use the framework offered by the new Land Industrial Strategy to make the Army more lethal and more effective, with better equipment in the hands of our soldiers at best speed. We can’t be lighting the factory furnaces across the nation on the eve of war; this effort must start now if we want to prevent war from happening.

I’d be naïve if I ignored the fact that the Army’s platform procurement has not been a smooth journey during the last decade. We have the humility to learn the lessons from where it has gone wrong and the confidence to engage with industry to generate the mutual trust required to get the very latest technology for the best value for money. And we should also be bolder in celebrating our successes – AH64 Echo is flying now, the first Boxer will be in service in 2023, the first Challenger 3 arrives in 2024 ‘and the Sky Sabre air defence system was deployed and operating in Poland only weeks after entering service.

This speech forms my first order of the day. Mobilisation is now the main effort. We are mobilising the Army to help prevent war in Europe by being ready to fight and win alongside our NATO allies and partners. It will be hard work – a generational effort – and I expect all ranks to get ready, train hard and engage. We must be practical and cut through unnecessary bureaucracy, be prepared to deprioritise where activity is not mission critical, honestly highlight risks where we identify them and avoid falling victim to the say-do gap or the lure of institutional panaceas – conscious of the advice of the late, great, John Le Carre that Whitehall panaceas often simply go ‘out with a whimper, leaving behind…the familiar English muddle’.

I expect this change to be command led. And that includes all commanders: from the General in Main Building, to the young Lance Corporal in the barrack room, from the reservist officer on a weekend exercise, to the Civil Servant in Army Headquarters.

And as we mobilise, I echo the words of General Montgomery to his team in the dust of the North African desert in 1942, “we must have confidence in one another”…

As the new CGS I have confidence in each and every one of you. And I am proud to stand among you.

And my final message to you is this:

This is the moment to defend the democratic values that define us;

This is the moment to help our brave Ukrainian allies in their gallant struggle;

This is the moment we stand with our friends and partners to maintain peace throughout the rest of Europe.

This is our moment. Seize it.

 

 

 

163rd FS Blacksnakes

A-10C Thunderbolt II aircraft, assigned to the 163rd Fighter Squadron, perform multi-aircraft generation maneuvers July 10, 2022, at the Fort Wayne Air National Guard base, Fort Wayne, Indiana.

Airmen from the 122nd Fighter Wing performed military duties during a large-scale readiness exercise that tested their abilities to respond to real-world threats.

FORT WAYNE, IN,

07.10.2022

Video by Staff Sgt. Rita Jimenez

122nd Fighter Wing Public Affairs