In this month’s edition of Around the World with Academy Securities, our Geopolitical Intelligence Group (GIG) focuses on the following geopolitical tensions that we are monitoring:

1. Update on the War in Gaza and the Ceasefire Discussions
2. Iran-Backed Hezbollah Forces Strike Israel
3. Ukraine’s Incursion into Russia
4. Chinese and Philippine Vessels Collide Near Sabina Shoal

We begin this report with an update on the war in Gaza as the ceasefire discussions continue this week. However, no major breakthroughs are expected in the near-term as both sides remain far apart on their key demands. One of the key gating items to reaching a deal is the Israeli demand of keeping troops on the Gaza border with Egypt, which is designed to stop the flow of weapons that would allow Hamas to rearm during any potential ceasefire. Next we address the recent exchange of fire between Hezbollah and Israel over the weekend where the IDF launched a pre-emptive strike against Hezbollah forces in Lebanon that were preparing a massive rocket/drone attack on Israel. While the IDF fighter jets were able to destroy thousands of rockets/launchers, Hezbollah was still able to fire over 300 rockets/drones into northern Israel that did minor damage. While the situation has de-escalated, the likelihood of further action by both Israel and Hezbollah is far from zero. Also, Iran is taking its time to evaluate the strategic risks in a retaliatory strike on Israel, and there is still a chance it moves forward in some capacity, especially if the ceasefire talks break down. We also report on Ukraine’s incursion into Russia (now entering its fourth week) where Ukraine has captured over 400 square miles of Russian territory. Next, we address the recent collisions between Chinese and Philippine coast guard vessels near the Sabina Shoal and the risk that an incident there could quickly escalate with these forces operating in such close proximity. Finally, the U.S. is weighing new punitive measures against Maduro in Venezuela, who continues to claim victory in the recent election.

Please reach out to your Academy coverage officer with any questions and we would be happy to engage.

Front and Center: Update on the War in Gaza and the Ceasefire Discussions

As we have addressed in our previous ATWs, SITREPs, and podcasts, the war in Gaza continues, even though some progress has been made in the ceasefire talks this week. However, significant obstacles still remain. Israel believes it is critical that its forces remain on the Gaza side of the border with Egypt in an area known as the Philadelphi Corridor, to ensure that Hamas is not able to rearm during any potential ceasefire by using its vast tunnel network. In addition, Israel claims that it must also continue to station troops along the Netzarim Corridor, which cuts through central Gaza, to ensure that armed Hamas fighters cannot return to northern Gaza. In addition to Israel’s concerns, the Hamas delegation left Cairo on Sunday after stating that its position remains that a ceasefire can only be agreed to once Israel accepts terms that include “a permanent ceasefire, a complete withdrawal from the Gaza Strip, the freedom of return of residents to their areas, relief, and reconstruction, and a serious exchange deal.” To help drive the parties to come to a deal, the proposed agreement includes a “huge surge of humanitarian aid” and an agreement to begin reconstruction. While the two sides remain far apart with their key demands, the exchange of strikes this past weekend between Israel and Hezbollah did not seem to affect the ceasefire discussions and may have taken some of the tension out of the region. However, while Hezbollah stated that the first phase of its operation has been “completed and accomplished,” there is still a risk that Iran follows through on its vow to avenge the assassination of Hamas’s political chief Ismail Haniyeh in Tehran last month. However, as we will address in the next section, it appears that Iran is being very cautious not to impact the current ceasefire talks or respond in a manner that will result in a significant attack by Israel against its military capabilities and/or draw the U.S. forces in the region into the conflict directly. Finally, our GIG will also continue to monitor Israel’s latest operation in the West Bank that began today, which is the largest there since the fighting began in Gaza last October. Israel’s concern is that Iran is helping to build an “eastern front” by funneling weapons to militants in the West Bank.

“The heart of the problem in gaining a ceasefire in Gaza is that Hamas wants a permanent ceasefire and all Israeli military forces to leave Gaza, while Israel wants a temporary ceasefire to get some of the hostages out and then continue with their objectives of ‘the destruction of Hamas’s military and governing capability, the freeing of all hostages, and ensuring that Hamas forces in Gaza no longer pose a threat to Israel.’ The two sides are split in their objectives, which is why a deal has been elusive. Israel intends to re-start military operations after some of the hostages are released in phase one, while Hamas wants an end to the war. The other sticking point is Israel has built the Netzarim Corridor that cuts through the middle of Gaza with the IDF manning checkpoints and the Philadelphi Corridor along the Egypt-Gaza border to prevent the smuggling of arms into Gaza via the vast tunnel complex. Both go against Hamas’s demand for a complete Israeli withdrawal. The U.S. is banking on their proposed phased approach to get started with a temporary ceasefire in phase one. Israel has gained the negotiating leverage as world pressure on Israel to stop the killing of civilians has waned. Hamas may agree to a temporary ceasefire in hopes that it could lead to a permanent one.” – General Robert Walsh

“An Israeli-Hamas ceasefire appears more elusive each day. The pre-conditions are too restrictive and heretofore out of reach. Israel does not want to occupy Gaza, but will be prepared to ensure that its interests are accommodated if the governance of Gaza ‘after next’ keeps Israel at risk of another 7 October. Neither side is prepared to ‘stop the bleeding’ while both have their respective advantage in the current struggle. Gaza must be fixed, and the world is clamoring for a solution. International pressure against Israel’s war aims in Gaza will grow. At some point, Israeli leadership must declare ‘mission accomplished’ and back off. On the other hand, Israel controls most of Gaza and can exert its military presence anywhere at any time. Hamas has been deeply bloodied and weakened. It is now a feckless, if not still relevant, political entity. Israel has deployed its military quite effectively but is dangerously close to risking its readiness as a result of its extended operations. The IDF must increase its recruiting if it hopes not to exhaust itself with the possible, if not inevitable, increase in its operations against Lebanese Hezbollah.” – General Spider Marks

“As long as Netanyahu and Sinwar are the key leaders, I don’t see a solution since both seem to benefit from continued hostilities. I think that while governments are trying to bring this to an end, it is wishful thinking. I suspect that Sinwar needs to be killed before Netanyahu believes he has completed the mission. Israel also needs to solve the problem of sealing the Philadelphi Corridor with Egypt, or all of this will just be rebuilt over time. I do think Iran is waiting for the outcome of the peace talks, but their patience will run out as indicated by Hezbollah’s strikes last weekend. Once they realize that Netanyahu and Sinwar won’t agree to a ceasefire, the escalation will begin.” – General Frank Kearney

“It is unknown what Sinwar’s strategy will be and if this new role means there will be any change, which I doubt. His likely priority is keeping from being captured/killed. While there are a number of dynamics in play from continued ground operations to ceasefire talks, Netanyahu no doubt sees Sinwar as we saw Osama bin Laden. As Spider points out, at some point there has to be a ‘mission accomplished’ which I think may be possible when the IDF announces Sinwar has been captured or killed.” – General Robert Ashley

“In peace negotiations so far, Israel has asked Hamas to provide the status of the remaining hostages, which Hamas has so far refused. On the other hand, Hamas has demanded a total Israeli withdrawal as any part of a ceasefire. As this would ensure the political survival of Hamas, Israel has refused. Meanwhile, Israel continues its operations to destroy as many of the Hamas battalions and brigades as possible, kill their major leaders, and destroy the Hamas tunnel system. Despite all of the calls for ‘ceasefire now,’ it is worth remembering that the fighting would stop immediately if Hamas surrendered. It is hard to conceive of Israel giving up control of the Gaza-Egyptian border or the Netzarim Corridor, both of which will give Israel substantial control no matter who emerges to lead Gaza when the fighting stops. To reduce the possible political and physical damage from any Israeli or U.S. counterstrike, Iran will likely use its terror proxies to continue to retaliate in ways that may not be distinct from the ongoing Houthi, Hezbollah, and Iraqi militia actions.” – General Rick Waddell

Iran-Backed Hezbollah Forces Strike Israel

As we have addressed in our recent SITREP, Israel received indications of a massive imminent rocket and drone attack by Hezbollah last Sunday and launched a pre-emptive strike in Lebanon destroying thousands of rockets/launchers. Hezbollah then launched a likely smaller-than-planned attack, firing over 300 rockets and drones into northern Israel, targeting military installations. Israel was able to intercept many of the rockets/drones and the attack caused little damage. Following the attack, Hezbollah claimed that the operation to avenge the killing of senior Hezbollah commander Fuad Shukr in Beirut last month was complete. While the situation seems to have de-escalated for the moment, both sides indicated that they reserve the right to continue attacks in the future. In addition, Iran has yet to respond directly against Israel, likely because of the risk of a major escalation with Israel and potentially the U.S., which currently has two aircraft carrier strike groups in the region in addition to an amphibious ready group and a ballistic missile submarine. All eyes will be on the ceasefire discussions and Iran likely believes a deal in the near-term would allow them to claim that their threats of retaliation helped drive all parties to an agreement. However, if these discussions fall apart, there is a continued risk that Iran may decide it is in its best interest to strike Israel in order to satisfy the demands of its proxies and attempt to restore deterrence. Meanwhile, the Iran-backed Houthi rebels continue to strike shipping in the region and the time may be coming for coalition forces led by the U.S. to begin to put additional pressure on the flow of weapons from Iran.

“Iran has delayed their strikes against Israel for fear of a disproportionate Israeli response and concern over the significant number of U.S. naval ships in the region. The naval force could be used to take out Iran’s military capabilities unlike during the previous Iranian strikes on Israel where the U.S. ships and aircraft just downed Iran’s missiles. All sides appear to not want to expand the war. Iran must calculate the risk of an Israeli response that could go well beyond the previous Israeli strike and could inflict major damage on Iran’s military capabilities. The heavy-handed approach that Israel has taken in Gaza with Hamas is a clear signal that Israel’s defense strategy is always anchored with a disproportionate attack to make the other side pay heavily. The delay also raises fear with the Israeli population that benefits Iran. It allows Iran time to weigh the potential Israeli response against the level of force used by Iran. The best estimate is that Iran will limit its response to protect its reputation and avoid embarrassment, while not starting a full-scale war in which they would suffer the most. There is also the face-saving opportunity of a Gaza ceasefire agreement that would allow Iran to back away from an attack on Israel and not jeopardize the ceasefire that both Iran and Hamas badly want. Israel’s pre-emptive strikes on Hezbollah’s preparation to launch a massive missile and rocket barrage on Sunday may have de-escalated the situation in the near-term.” – General Robert Walsh

“Iran will not directly respond militarily against Israel following Israel’s successful assassinations of Hamas’s political leader (Haniyeh) in Tehran and Lebanese Hezbollah’s military leader (Fuad Shukr) in Beirut, over three weeks ago. Iran knows full well that an ‘unintentional success’ of an Iranian strike inside Israel would lead to an aggressive Israeli response. Such a response would be devastating to much of Iran’s military and nuclear infrastructure. Iran wants nothing to do with directly expanding the war with Israel. It is a fight that it would lose. Tehran is, however, prepared for its proxies to increase their strike missions against Israeli and U.S. targets in the region. This kind of back and forth, respecting the limits of each belligerent’s ability to resist, is inevitable and has no end. The game-altering strategy is to bring the fight to Iran and to damage Tehran’s political influence. Iran’s navy is vulnerable. An attack that decreases Tehran’s ability to sustain the terrorist activities of the Houthis in the Red Sea and Iran’s unchallenged access to the Strait of Hormuz for its oil imports and exports would weaken Iran’s influence, put pressure on the ruling elites, and increase domestic sacrifice and suffering. The path to solutions in the Mideast goes through Tehran.” – General Spider Marks

“We are witnessing the phase of this conflict where subtlety and nuance of action/messaging are really the things to watch. Hezbollah has no interest (due to risk to themselves) in further major strikes into Israel, but they could not sit idly by without some retaliation for the loss of several of their tactical leaders. The Israelis could not ignore the April Iranian strike on Israel without demonstrating its retaliation against specific high-value Iranian targets. The Iranian calculus of retaliation against Israel invites a response, but only if it is very tightly constrained. The U.S. has a language of deterrence that includes big words like ‘Aircraft Carrier.’ Most of the language of deterrence in this region is subtle, not in English, and typically directed at a specific leader, organization, or populace. It is a more nuanced dialogue that we only partly understand. In any case, all parties want to claim they have/could strike to keep their ‘public’ (or ‘street’ level) support. Creating this hair-trigger balance across actors creates tremendous risk for a spark that ignites the whole stack. The innocents are ignored by all parties, and suffer the most.” – General Michael Groen

“With each passing day the probability of a direct Iranian strike against Israel diminishes, but it’s not zero and the Sunday Hezbollah strike doesn’t count as an Iranian retaliation. However, what may be moving into the calculus of the leadership of Iran is more of a consideration of domestic issues, and further attacks do nothing to assuage the economic impacts that Iran’s isolation has on the daily life of most Iranians. The Supreme Leader hasn’t changed his stripes with his new president, but the risk/fear of civil unrest may be a bigger concern than forgoing a direct attack against Israel as a face-saving action to bolster Iran’s reputation. Ultimately the greatest fear of any autocratic regime is an uprising from within, not an external invasion. Another Tower 22 incident is always a risk, especially now that there has been another delay in the potential departure of U.S. forces. While the U.S. continues to build up its forces in the region, our reticence to engage in little more than defensive actions may not provide the deterrence necessary to preclude an Iranian strike which can still come at the time and place of their choosing. Meanwhile we will still see pressure across the proxy network as evidenced by the recent Houthi attack against a vessel in the Red Sea.” – General Robert Ashley

Ukraine’s Incursion into Russia

As we addressed in our previous SITREP, Ukrainian forces continue their operation inside of Russia after sending troops over the border three weeks ago. While the initial goals and timing of the operation were unclear, it is now evident that Ukraine has been succeeding in its mission to embarrass Putin and the Russian forces, draw the attention of the Russian military away from the front lines, and to potentially gain leverage in any peace discussions that may occur in the future. So far, Ukrainian forces have seized over 400 square miles of Russian territory around Kursk. While Putin has ordered his forces to expel the Ukrainian troops from the region by October 1^st, the operation continues as Ukraine has the momentum and has executed its strategy very well, by employing both mass and maneuver tactics. However, on August 26^th, Russia commenced a massive missile and drone attack on Ukraine, targeting critical energy infrastructure and major cities including Kyiv. While F-16s were reportedly used to help shoot down some of the weapons used in this attack, Zelensky is asking for more help. In addition to requests for air defense systems, Zelensky has also called on his supporters in the U.S. and NATO to continue to ease the restrictions on weapons such as the ATACMS (Army Tactical Missile Systems) for use against targets deeper inside of Russia. In addition, another issue is that Belarus has amassed a significant force on its border with Ukraine. Ukraine also reported that former Wagner mercenaries were among the troops at the border, and urged Lukashenko “not to make tragic mistakes for their country under Moscow’s pressure.” While this is likely an intimidation tactic driven by Putin, if there would be an incident at the border that brought Belarus into the conflict, that would be a significant problem for Ukraine. However, the actual likelihood of this happening is low at this time, as Belarus would require significantly more manpower and resources to conduct any major offensive operations against Ukraine.

“Ukraine’s military attack into Russia is symbolic and a distraction to Russia designed to get them to divert forces from the front lines in the Donbas region, while Ukraine gains leverage in advance of peace talks. It bolsters Ukrainian morale while showing the U.S. and NATO that Ukraine can take the fight to Russia. The Russian military was surprised and slow to respond, causing Putin problems with his propaganda campaign. It is a personal humiliation that the massive Russian army allowed an attack on the Russian homeland by an outmanned and outgunned Ukrainian force. This could increase Western support to ease restrictions on using long-range weapons to attack Russia. Key is Ukraine’s military not over-extending themselves with their offensive salient (battlefield surge) and ending up in a weaker position than when they started. From a military standpoint, it shows that armored maneuver is not dead on the modern battlefield if the right gaps are selected for the attack.” – General Robert Walsh

“Ukraine is demonstrating that they can execute offensive operations. They need Europe’s/NATO’s continued support, and they need some terrain to bargain with in ceasefire talks. I wish they had the combat power to exploit the breakthrough, but they simply don’t. However, Russian forces are pushing offensively as well, but are simply not competent or strong enough to push back the AFU penetration and sustain their own offensive efforts at the same time.” – General Frank Kearney

“Ukraine could be using the Kursk incursion for all of these reasons – symbolism, a distracting flanking movement, and to gain leverage for future talks. The fighting in eastern Ukraine settled into trench warfare soon after the Ukrainian counteroffensive of Autumn 2022. The Russians launched an offensive earlier this year with their push towards Kharkiv, which quickly stalled. It remains to be seen whether the Ukrainian incursion will be more successful, since neither side has been able to build operational or strategic reserves large enough to sustain tactical breakthroughs. Mass, like maneuver, is still a principle of war. To be successful, Ukraine will now have to dig in before the winter to protect the flanks of their salient, and find the forces to extend their push to the southeast into the rear of the Russian forces pushing toward Kharkiv.” – General Rick Waddell

Chinese and Philippine Vessels Collide Near Sabina Shoal

As we have addressed in previous ATWs, tensions between China and the Philippines have been increasing in recent months. During an incident on June 17^th where a Chinese coast guard vessel rammed a Philippine resupply ship heading to the Sierra Madre on the Second Thomas Shoal, a Philippine sailor was injured. However, in an effort to reduce tensions a few weeks later, officials from both sides held talks in Manilla and agreed to try to prevent these kinds of dangerous confrontations at the shoal. China agreed to allow only the resupply of food and water to the Sierra Madre (Philippine warship that was intentionally grounded on the nearby Second Thomas Shoal 25 years ago and made into an outpost) and the Philippines was required to notify China in advance of the deliveries. This agreement seemed to reduce some of the tension in the region, but China continues to assert control over nearly all of the South China Sea and the Philippine National Security Adviser Eduardo Ano recently said that Manila would not back down either. Last week, tensions flared once again, this time however near the Sabina Shoal, where on August 19^th, and again on August 25^th, Chinese and Philippine coast guard ships collided. While both sides blamed one another for the incident, the Sabina Shoal is of strategic value to the Philippines as one day it could be used to help resupply the Sierra Madre. While the U.S. has continued to warn China of the Mutual Defense Treaty it has with the Philippines, the stage continues to be set for an incident that could escalate very quickly.

“The geopolitical and military situation in the South China Sea is going downhill fast. Last week Chinese and Philippine coast guard vessels collided several times near Sabina Shoal over yet another area of friction between the two countries. The U.S. reaffirmed its support of the Philippine government through the Mutual Defense Treaty, while condemning the Chinese coast guard’s actions. The military risk of a miscalculation has never been higher. The Philippines continues to deploy maritime forces to the area after they determined that China was yet again conducting land reclamation operations. China has taken a systematic approach to intimidate the Philippines and gain control of disputed resources in the South China Sea. China also claims most of the Philippines’ maritime waters. They continue to ignore the 2016 Hague Court ruling that China’s claim has no basis in international law. China’s aggressive actions are bringing the U.S., Japan, Australia, New Zealand, the United Kingdom, France, and Germany together in support of the Philippines by condemning China’s actions. The fear is that China’s coercive approach is aimed at causing the Philippine coast guard to make a mistake that allows China to take advantage of the situation and impose its will across the disputed region.” – General Robert Walsh

“The collisions are likely another test of U.S. support for its regional allies, this time the Philippines, whose robust stance has raised the stakes. Nevertheless, firm in its resolve, the Philippines will take a measured stance, while asserting their rights (e.g. using their coast guard rather than their navy). However, the U.S. has condemned China’s ‘escalatory and irresponsible’ actions in the disputed areas, and National Security Advisor Sullivan ‘reiterated the ironclad U.S. commitment to the U.S.-Philippines Mutual Defense Treaty, which extends to armed attacks on Philippine armed forces, public vessels, or aircraft – including those of its coast guard – anywhere in the South China Sea.’ Of note, in July, the U.S. pledged $500 million in military aid during a visit to Manila by Blinken and Austin, who said the level of funding was ‘unprecedented’ and ‘sends a clear message of support for the Philippines.’ Finally, while U.S. forces are judged to be stretched regionally, they will have to demonstrate their ability to respond alongside the Philippines to more serious incidents, particularly if there is loss of life.” – Admiral Sir George Zambellas

“The Chinese have shown themselves to be aggressively patient. They have steadily advanced their claims in the South China Sea in little steps over two decades – turning ‘maritime features’ into islands. China has also announced formal claims that extend to the coastal waters as far south as Indonesia and is slowly building the largest navy in the world. China also continues to send out large fishing fleets and has utilized both a ‘maritime militia’ and official coast guard vessels to protect the fishing fleets. The Chinese have now arrived at the point where they are willing to use non-lethal acts to defend their claims.

While the Chinese have used this sequence of physical acts to make their claims concrete, they have also pursued diplomatic means to slow the response of other nations, whether at the UN or at the annual ASEAN and APEC summits or bilaterally. What is different is that the Philippines under President Marcos has begun to push back, even if only slightly. Marcos needs more allies, more assets, and more actions to reverse a situation that his predecessors allowed to happen. As long as he pushes back, expect more clashes. The Chinese will not quit unless they face concerted action from the nations affected, and from a wider international community. The Chinese have the time and the military assets to be patient.” – General Rick Waddell

“Integrated deterrence means working with allies and partners to ensure that they send a strong message of willingness to resist any Chinese attack – not only with military responses, but also with economic preparations to make them more resilient in the event of a protracted economic war. If our strategic center of gravity is our allies and partners, then Secretary of Defense Austin has done a good job networking with our allies and partners in the region with his 11 official visits to the Indo-Pacific, the 2nd most of any Secretary of Defense. We have continued to strengthen our regional force posture, support our allies’ and partners’ capabilities, and we are operating together like never before as bilateral and multilateral exercises have grown in scale, scope, and complexity which have enhanced interoperability and demonstrated deterrence. Exercise Balikatan 2024 in the Philippines a couple of months ago saw Philippine, U.S., Australian, and French forces, as well as 14 international observers, participating is an example of our shared resolve against aggressive Chinese behavior in the region. China will always push red lines in trying to establish ‘new normals’ but will always de-escalate as long as we stand firm with our allies and partners in the region.” – General KK Chinn

DISCLAIMER