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, Hezbollah, and the Ceasefire Discussions
2. Iran Sends Ballistic Missiles to Russia
3. U.S. Considers Lifting Restrictions on Ukraine’s Use of Weapons in Russia
4. China and the Philippines Hold Talks to Reduce Tensions Around Sabina Shoal

We begin this report with an update on the war in Gaza as the ceasefire negotiations have stalled once again. In addition, while Secretary Blinken visited Egypt last week to continue to push for a deal, tensions flared between Israel and Hezbollah following the pager/walkie-talkie attacks and the significant uptick in airstrikes against Hezbollah leadership/military infrastructure in Lebanon. The strikes over the past few days are related to Israel’s ultimatum to Hezbollah to move its forces back behind the Litani River, or risk all-out war with Israel. Next, we revisit Iran and the shipment of short-range ballistic missiles to Russia. The U.S. and EU put additional sanctions on Iran as a result, but Iran stands to gain sensitive military (and potentially nuclear) technology from Russia in return. We also provide an update on the war in Ukraine as discussions continue regarding the loosening of restrictions on Ukraine to allow its military to use longer-range Western weapons inside of Russia. We then report on the apparent easing of tensions between China and the Philippines following talks between the two nations regarding the recent incidents near the Sabina Shoal. However, we are not optimistic that these discussions will improve relations as neither side appears to be backing down, and the stage is still set for a miscalculation to occur in the South China Sea. Finally, our GIG continues to monitor Venezuela, where additional sanctions have been placed on the country, the opposition candidate has fled to Spain, and the regime has arrested three Americans accusing them of participating in a plot to overthrow Maduro.

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, Hezbollah, and the Ceasefire Discussions

As we have addressed in our previous ATWs, SITREPs, and podcasts, the war in Gaza continues, and the ceasefire negotiations have stalled once again. In an effort to work with regional partners to help move the discussion along, Secretary Blinken was in Egypt last week to meet with President El-Sisi. Before the visit, the U.S. announced that it was releasing $1.3 billion in military aid that it had promised Egypt. The Biden administration clearly believes that Egypt can help push the parties involved in the ceasefire talks towards a compromise, especially around the Philadelphi Corridor, which has become one of the major sticking points. Israel has stated that it must retain control of Gaza’s border with Egypt in order to preclude Hamas from using the tunnel system running below the border to rearm its forces in Gaza in the event of a ceasefire. However, while Blinken was in Egypt, the situation with Hezbollah in Lebanon escalated once again with two days of Israeli attacks involving the remote detonation of Hezbollah wireless communications devices. The attacks killed a few dozen people and wounded over 3,000 in Lebanon and Syria. This operation involved the infiltration of Hezbollah’s supply chain by Israel and the intention may have been to launch this covert attack in conjunction with a larger operation against Hezbollah forces in Lebanon. Regardless, the timing of these attacks makes sense as Israel recently announced that getting thousands of its citizens back into their homes in northern Israel is now one the aims of the war in Gaza, and the time for discussion is coming to an end. Israel is moving forces north now that major combat operations are winding down in Gaza and making preparations for what could end up being a ground operation into southern Lebanon to move Hezbollah forces back behind the Litani River. Israel continued with air strikes in the days after the wireless device attacks (in both southern Lebanon and targeted strikes in Beirut). Last Friday, an airstrike killed Ibrahim Aqil, a senior commander in the group’s elite Radwan forces, in Beirut. On Monday, Israeli aircraft hit more than 1,300 targets in another pre-emptive attack on Hezbollah’s military infrastructure, killing over 500 people and wounding over 1,000. Israel is clearly “preparing the battlefield” and capitalizing on the state of disarray that Hezbollah is in following the attacks on their communications systems. Israel issued an ultimatum for Hezbollah to pull back from the border, or face further (and more significant) military action until they do. Hezbollah has said that it will retaliate, leading to the possibility that this could result in a broader conflict.

“The ceasefire talks are now further apart than ever because neither side wants a ceasefire. Israel’s war goals for Gaza are to eliminate Hamas and its military capabilities, return all hostages, and to ensure the Gaza Strip no longer poses a threat. None of the goals show a path to a ceasefire at this time. Israel knows that in order to finish the job they must keep a military presence in Gaza. Israel’s goals go against the Hamas demand for a complete Israeli withdrawal. The Hamas leader Yahya Sinwar’s goal is survival. He believes that time is on his side and the war with Israel will expand to his benefit and include a major front on the Israel-Lebanon border with Hezbollah. This could bring in Iran and their other proxy forces. The Biden administration acknowledges the negotiations are further apart than ever and time is running out with the November election in front of them. Meanwhile, the IDF is shifting the center of gravity for the war from Hamas to Hezbollah. Hezbollah’s firing of over 8,000 rockets into Israel causing the displacement of over 80,000 Israeli citizens is unacceptable with Israel adding ‘the safe return of residents to the north of the country’ as a new objective of winning the war. The sophistication of the pager/walkie-talkie attacks sent a deterrent signal to Hezbollah and Iran that they can be hit anywhere. The IDF is now repositioning forces to the north and posturing themselves to take on Hezbollah as operations are winding down in Gaza.” – General Robert Walsh

“Nothing has changed in regard to Israel’s objectives…they do not want an all-out war, but they will not be deterred from dismantling Hamas and making it safe for Israelis to return to northern Israel. The events of last week and over the weekend (pagers, walkie talkies, air strikes, etc.) are certainly intended to disrupt Hezbollah and to attempt to drive a wedge between Hezbollah and the Lebanese people. Israel will continue to keep the pressure on Hezbollah and Hamas until they have achieved the end state and/or set the conditions for a more favorable negotiation with both proxies. U.S. financial aid looks good for the U.S., but it is unlikely to nudge Israel into negotiations, nor does it help accomplish any of Israel’s stated objectives.” – General Mastin Robeson

“Ceasefire talks are going nowhere. The Israelis are frustrated but in a position to continue to dominate the Philadelphi Corridor, and continue to search for hostages and Hamas militants. Sinwar has no future role in Gaza governance and can never be part of a solution that is acceptable for the Israelis. Sinwar cannot legitimately govern, nor can he tolerate someone else governing. All parties recognize this, making the opportunity to get past the impasse almost imperceptible. Egypt was very clear in 1979 that they would NOT govern Gaza, and that wisdom has survived multiple attempts by others to govern. The U.S. has just cleared the release of financing of around $1.3 billion to Egypt without any humanitarian preconditions. This will likely have the effect of quieting any Egyptian concern about Israeli control of Philadelphi Corridor. Of course, the real story is the conflagration between Hezbollah and Israel. The Israelis have demonstrated near-complete dominance over a hapless Hezbollah, although the rocket fire continues. Hezbollah has a crisis of legitimacy and relevance that drives them to continue to expand its attempts to make Israel suffer. They are likely to create even more havoc in northern Israel. Israel can continue to hurt Hezbollah, but cannot defeat them in the current construct. There is a dramatic risk of escalation if Israel tries to do something on the ground. That would truly be a gift to Hezbollah, as it would even the tactical playing field.” – General Michael Groen

“In the last two weeks, PM Netanyahu spoke to the press about the importance to Israel of the Philadelphi Corridor to control future weapons smuggling from Egypt to Hamas (or its successors). Some news accounts report dissension between the PM, the Defense Minister, and some of the high-ranking Israeli security officials over retaining physical control of the corridor versus some other means of control, such as sensors combined with raiding. For those willing to give up the corridor, the driving impulse is to get (some) of the hostages back, hopefully alive, sooner rather than later. The fact that Hamas places such emphasis on the corridor is a key indicator of its strategic importance to both sides. The same is true of the importance of the hostages. A ‘hostages for the corridor’ swap seems logical to those of us on the outside. However, other issues impede a final deal – the number of Palestinian prisoners that Israel will release for each hostage, Hamas producing a list of living and dead hostages, the degree of future control Israel will have over Gaza, and the survival of Hamas and its leaders (Sinwar most prominently).” – General Rick Waddell

“Yesterday’s escalation and casualties in Lebanon tell me that the effort to de-escalate by outside nations is failing. While Lebanon may not want war, it seems that Israel does, and is on the path to that end. We should believe Netanyahu when he says that he will do whatever is required to move his 80k displaced citizens back to northern Israel because he has nothing to lose by doing so. The Iranians, while suffering humiliation, have prevented an Israeli-Saudi rapprochement and MBS has stated that this won’t occur without a Palestinian state. Of course, for that to occur Bebe has to be ousted. The Israeli war drums continue to sound and that is what Iran, Hezbollah, Hamas, and the Houthis want. This round of violence will not end until there is a Hamas-Israel deal and regardless of the deal, Hamas will claim victory.” – General Frank Kearney

Iran Sends Ballistic Missiles to Russia

As we addressed in our recent SITREP, it was reported this month that Iran has sent short-range ballistic missiles to Russia for use in its war in Ukraine. Russia will use these weapons on the battlefield and near the border with Ukraine allowing it to move its own longer-range missiles deeper into Russia and outside the range of the UK-supplied Storm Shadow or other weapons. This deal was in the works for over a year and following the report, the U.S. and several key EU allies announced additional sanctions on Iran. While Iranian President Pezeshkian had said that one of his priorities was to try to re-engage with the West (the EU in particular), this latest development crossed a red line for the Europeans. In addition to improving its relationship with Russia, Iran will likely receive more advanced military technology. The regime has been asking for the S-400 missile system and fighter aircraft like the Su-35, but the level of support could even go one step further and result in the transfer of ballistic missile, space, or even nuclear technology. However, in addition to these risks, the near-term concern for the region is how Iran might get involved if the situation between Israel and Hezbollah escalates. Iran has yet to respond directly against Israel following the killing of the Hamas political leader in Tehran in late July, likely because Iran fears a larger confrontation with Israel and the U.S. The U.S. still has a Carrier Strike Group in the region in addition to an Amphibious Ready Group and an Ohio-class guided missile submarine that carries over 150 Tomahawk cruise missiles. Meanwhile, the Iran-backed Houthi rebels continue to strike shipping in the region and recently fired another missile at Israel. Regardless of how involved Iran gets in any kind of Israeli escalation with Hezbollah, Khamenei will likely encourage all Iranian proxy forces to increase their activity against Israel and possibly U.S. forces in the region in support of Hezbollah, similar to how they have supported Hamas since the war began last October.

“The Biden administration’s influence on Iranian actions is waning. The October 7th Hamas attacks in Israel caused the U.S. to back off from any nuclear weapons negotiations. Iran is now supplying ballistic missiles to Russia resulting in the U.S. issuing new sanctions against Iran. Iran’s new President Pezeshkian stated that he is deepening his ties with Russia to counter Western sanctions. They already deepened their more important relations with China based on economic needs. China brokered a deal between Iran and Saudi Arabia while the U.S. was on the sidelines. These deepening ties to China and Russia are aimed at countering U.S. interests and influence in the region. Iran’s ‘Axis of Resistance’ proxy groups have also continued their attacks on U.S. forces in Iraq and Syria and on the U.S.-protected shipping lanes in the Red Sea. Relations with Iran are headed in the wrong direction from where President Biden intended them to be after he took office.” – General Robert Walsh

“Iran does not want a war with Israel, nor does it want to expand the existing conflict. It is in Iran’s best interest to continue to work via proxies. Hezbollah cannot win a war with Israel, and the recent attacks on pagers and handheld radios have been unnerving to Hezbollah. Israel has demonstrated its ability to disrupt and impede Hezbollah with a string of cause and effect events (culminating with the successful attack on a Hezbollah leader when he was forced to meet face-to-face due to their comms network being compromised). Iran will continue to work through their proxies regarding their efforts to inflict pain on Israel, disrupt world shipping lanes, and adversely impact the western economy. Iran will continue to use the Russia/Ukraine conflict to gain present & future leverage with Russia, thus they will continue to provide ammunition to Russia as well as assist Russia in circumventing sanctions. The best U.S. option to apply pressure is to more aggressively enforce the sanctions that have been applied to both, and to seek a new policy for protecting shipping lanes.” – General Mastin Robeson

“The U.S. could return to the ‘maximum pressure campaign’ of the Trump years. Such a campaign reduces the cash available to the Iranian regime but comes at the price of diplomatic conflict with countries whose companies deal with Iran (China and some EU members). Despite Israel assassinating Ismail Haniyeh in Tehran and executing the pager/walkie-talkie attacks, Iran and its proxy Hezbollah, are most likely to revert to the mean – regular rocket attacks from the Hezbollah stocks in Lebanon augmented by the occasional Houthi attack. Of interest is the allegation that Iran hired an Israeli businessman to assassinate the Israeli PM, Defense Minister, and head of Shin Bet, perhaps as a direct retaliation. It is worth remembering that Hezbollah regularly launched missiles into Israel before the Gaza War began, albeit in smaller volumes, and will continue to launch missiles into Israel after any Gaza ceasefire is agreed upon. Consequently, Israel will continue to attack Hezbollah in Lebanon. The last thing Israel will want is to launch a ground invasion, given the poor results of the 2006 invasion, the current stress on the Israeli forces from Gaza operations, and the likely casualties from opening a second ground front.” – General Rick Waddell

U.S. Considers Lifting Restrictions on Ukraine’s Use of Weapons in Russia

In our previous ATW we addressed the progress Ukrainian forces have made with their incursion into Russia. While Ukraine was incredibly successful in taking control of hundreds of square miles of land around Kursk, the question continues to be how long they will be able to hold the territory as Putin has now commenced a counteroffensive to retake the land. However, according to a U.S. assessment, Russia will likely need over 50,000 troops to successfully reclaim the territory lost to Ukraine’s forces and it does not look like Russia has dedicated that kind of manpower to the effort to date. In addition, Zelensky believes that the Kursk operation has been successful in that it took Russia’s attention away from its advance in eastern Donetsk, where the strategically important city of Pokrovsk is still at risk of being lost to Russian forces. In addition, Russian forces are attacking Ukraine from deeper behind the border and remain out of range for many of the current weapons provided to Ukraine. Zelensky continues to call on the U.S. and NATO to ease the restrictions on weapons such as the U.K. Storm Shadow (~150-mile range) and even the U.S. ATACMS (~190-mile range) for use against military targets deeper inside of Russia. The U.S. and its allies are considering lifting some of these restrictions. However, Putin has said that if these systems are used inside of Russia, he will view this as the U.S. and NATO getting directly involved in the war. As Russia continues to strike Ukrainian energy infrastructure in advance of the winter months, it will be critical for Ukraine to receive both increased numbers of air defense systems as well as permission to begin to use the longer-range weapons against military targets deeper inside of Russia.

“Russia and Iran ‘dramatically escalated’ Putin’s war in Ukraine with Iran supplying ballistic missiles to Russia. The missiles provide Russia with more capacity to target Ukraine’s infrastructure. The action puts pressure on President Biden and could be a tipping point for the U.S./European decision to ease their restrictions on using the weapons they supply to Ukraine to strike into Russia. They recently discussed easing the restrictions while the final decision has not been announced. President Zelensky has been long asking for the U.S. to level the playing field. He needs the ability to use his long-range weapons to strike into Russia to counter Putin’s incessant deep strikes across much of Ukraine. Zelensky said Ukraine may not have attacked into the Kursk region of Russia had they been able to attack with their long-range weapons. Russia warned the U.S. and NATO that they will escalate the war with such a decision.” – General Robert Walsh

“It is not clear how the Iranians and Russians can continue to violate every element of the Laws of Armed Conflict and escalate its attacks on Ukrainian civilians and infrastructure without being called out as ‘escalating’ the conflict themselves. It is not clear why so many allow Putin to dictate the terms of what is an ‘escalation’ and what is not. Ukraine is capacity constrained in munitions, delivery systems, and soldiers, and cannot sustain a fight forever with an opponent that is triple its size. Some asymmetry must be created for the Ukrainians to push for peace. Allowing the Ukrainians even a minimalist authority to defend its civilian population from air-launched missiles and rockets would seem to be a defense mechanism rather than an escalation.” – General Michael Groen

“There are indications that Russia’s volunteer recruitment rates aren’t large enough to provide the manpower needed to expand Russian offensive operations in Ukraine as well as conduct a counteroffensive against the Ukrainian incursion into Kursk. Putin signed a decree on September 20 intended to attract more candidates for volunteer contract military service, which also signals his intent to avoid involuntary mobilization. In order to increase the scale and tempo of operations, Russia will either need to increase the number of volunteer recruits or decrease the casualty rate, which some Western estimates put as high as 1,000 men per day.” – General Mary O’Brien

“It may be helpful to view this conflict through three lenses. The first, and the one that probably gets the most attention, is the tactical fight. Here all the indicators are that there is unlikely to be a breakthrough on either side. The engagement near Pokrovsk may result in loss of territory, as may a Russian counterattack on the limited incursion near Kursk. We should not expect these territorial losses to drive the strategic outcome. Secondly, and more importantly, the current debate over long-range strikes is less about their impact on the battlefield, and more about the signal that this sends to Moscow over the West’s commitment to supporting Ukraine in the long-term and with ever escalating capabilities. Perceptions of vacillation by strategic leaders will give flawed credibility to Putin’s threats and make Ukraine’s allies look weak. It is critical to demonstrate confidence and confront the aggressor. The third, and most important perspective, is to sustain the resolve of Ukraine’s civil society. It is they who are shedding blood and enduring hardship for the good of others. But, if they do not feel that they are being supported militarily, economically, and politically, there is a risk that their commitment will falter. This will have serious consequences for Zelensky’s political mandate and, in due course, his ability to negotiate from a position of strength.” – General Sir Nick Parker

“The Ukrainians have innovated their own long-distance drones which they are using for strategic attacks on Russian long-range bomber bases and energy infrastructure. Lifting the restrictions on ATACMS would give the Ukrainians more operational depth to shape the tactical battlefield by hitting troop concentrations, logistics nodes, and transport lines in the Russian rear. This will raise the cost for the Russians, and blunt some of their offensive capabilities around the Kursk salient and near Pokrovsk. Taking the political and economic steps to mobilize enough manpower to fill the ranks of assault units is likely to be the decisive factor for both sides.” – General Rick Waddell

China and the Philippines Hold Talks to Reduce Tensions Around Sabina Shoal

As we have addressed in previous ATWs, tensions between China and the Philippines have been increasing in recent months. Back in June, a Chinese coast guard vessel rammed a Philippine resupply ship heading to the Sierra Madre on the Second Thomas Shoal, injuring a Philippine sailor. Tensions flared once again in August, this time however near the Sabina Shoal, where Chinese and Philippine coast guard ships collided. The Sabina Shoal is of significant strategic value to the Philippines, as one day it could be used to help resupply the Sierra Madre. However, in an effort to reduce some of the tensions between China and the Philippines once again, the two nations held “candid” talks earlier this month. At those talks, Chinese officials said that Beijing would “firmly uphold its sovereignty” in the region and demanded that the Philippines remove a coast guard vessel that had been anchored by the Sabina Shoal for several months. While the Philippines sent this ship back to port a few days later, officials said that a replacement was on its way and is being sent to reaffirm its presence and to monitor any Chinese reclamation activities. With the Mutual Defense Treaty between the Philippines and the U.S. in place, there is always a chance that an incident could escalate quickly, and the Philippines could call on the U.S. for assistance. In addition to the continued tension in the South China Sea, China participated in the massive Ocean-24 exercises led by Russia this month, which covered the Pacific and Arctic Oceans, the Mediterranean, Caspian, and Baltic Seas and involved over 400 warships, submarines, and support vessels, over a hundred planes and helicopters, and over 90,000 troops. These exercises were Russia’s largest since the Cold War and demonstrate coordination and interoperability with the nations participating in the exercise. The growing military relationship between China and Russia is of concern and is one of the reasons why the U.S. is reinforcing relations with its regional allies as well.

“Russia’s and China’s naval fleets teamed up once again during their Ocean-24 exercise demonstrating more evidence of their growing alliance to counter the military strength of the U.S. and its allies across the globe. Combining the naval strength of both countries presents a challenge to the U.S. that it has not seen since World War II. Putin said the exercise involved 15 countries. It demonstrates the increased geopolitical risk between the growing alliances that are slowly opposing each other. Russia and China need each other’s support, though their interests are different. China does not have the naval experience that it needs in light of the rising territorial tensions in the South and East China Seas. There seem to be minimal diplomatic discussions taking place to ease the increased tension as the military situation heats up.” – General Robert Walsh

“China has little consideration for the Philippines or any other claimant in the SCS. Holding talks over Sabina Shoal is not likely to change the status quo. This ‘performance art’ on the part of China seeks to influence regional states who might wish to press their own claims with military force. Without a broader conversation that brings in Japan, ROK, the U.S., Australia, and other claimants, this is just a gesture. The environment of ‘might makes right’ will continue to dominate for the foreseeable future. The Russians and Chinese are not ‘allies’ so much as partners of convenience. They may become closer over time (with the U.S. as their noted ‘catalyst’) but there is not a natural alliance in the making. China and Russia will continue to make demonstrations of limited cooperation, but are not likely to ever be true allies.” – General Michael Groen

“The PRC and Russia are conducting increasingly frequent joint exercises in recent years and expanding the geographical scope of their cooperation. The two countries have now held joint exercises in at least five different parts of the world since July, including naval exercises in the South China Sea, Gulf of Finland, Sea of Japan, Sea of Okhotsk, and in the Northern Pacific. The Russian news agency TASS quoted the Russian Deputy Defense Minister as saying, ‘The plan for military cooperation between Russia and China includes more than 100 events this year, and the number will grow,’ and that Russia is ‘ready to share its unique experience with Western weapons with partners.’ While this number is likely an exaggeration, joint military exercises (such as the ongoing Ocean-24 drills) are one way Russia can share information with China.” – General Mary O’Brien

“China does not have any allies or partners like we do; they only have clients, and Russia is one of their bigger clients. We just conducted Exercise Super Garuda Shield 24, a multinational military exercise hosted by Indonesia with over 23 nations participating, focused on improving our warfighting skills, fostering interoperability, and building relationships and trust. China knows that we, along with our allies and partners, will support the Philippines if the situation escalates, so the talks are just to put guardrails in place (and open lines of communications between senior leaders) in the event of a major miscalculation/accident at the tactical level.

Ocean-24 provides us with a great collection opportunity to potentially see if there are any new technologies they are using and observe their joint/combined capabilities. Like us, China has to exercise their fleet/military if they want to improve and learn from others. China currently has a limited military presence abroad while we have hundreds of military bases across the world providing us with opportunities for our military to work together with others to enhance our relationships and trust.” – General KK Chinn

“The PRC-Philippines talks will not work. China will not give up its physical control or its claims. The talks will temporarily de-escalate the situation before the Chinese return for future provocations, perhaps when the Ocean-24 drills conclude. For the Russians, the Pacific is not as vital as Europe, but their participation with the Chinese adds a possible strategic flank that the U.S. and its allies must watch, particularly in the Arctic.” – General Rick Waddell

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