Businesses Wary of China’s Military Activity Surrounding Taiwan

“I think if you're a leader, and you're thinking over the horizon—not only in the next 12, 18 months, but the next decade—you have to be thinking about these things. I don't think currently my clients are in panic, but I think they're taking it very, very seriously. And they don't want to replicate what's happened between Russia and Ukraine on a much bigger scale.”

Amid rising tensions between Taiwan and China, CEO Dale Buckner weighs in on how Global Guardian is advising and preparing global businesses with supply chains, assets, and people in the region in a recent Voice of America article.

SITUATION UPDATE 

The first two weeks of August saw a significant increase in cartel-related violence across multiple areas of Mexico, including in Tijuana, Ciudad Juarez, Guanajuato, and Guadalajara. The violent clashes, including shootouts, vehicle blockades, fires, and car-jackings followed the arrest of cartel leaders in Guadalajara and gang clashes inside a prison in Ciudad Juarez. This uptick underscores the omnipresent risk of violence in Mexico, and the need for low-profile, secure transportation for travel within the country. 

Recent Incidents

• 09-10 August - Overnight violence erupted in Guadalajara and Guanajuato after the arrest of high ranking CJNG member "El Doble R" on 09 August. Cartel members clashed with security forces, set fire to convenience stores, and set several vehicles ablaze to prevent the passage of security forces. At least three people were killed, 19 vehicles destroyed, and eleven suspects arrested.
• 11 August - At least 10 people were killed in Ciudad Juárez after suspected cartel members attacked multiple fast food restaurants and convenience stores. The attacks were linked to deadly gang clashes that occurred at a Ciudad Juárez prison (Cereso No. 3) earlier in the day.
• 12-13 August - Overnight cartel violence broke out across northern Baja California, including in Tijuana, Mexicali, Ensenada, and Rosarito. Multiple vehicles, including buses and taxis, were car-jacked and set ablaze, forming burning blockades. It is believed that CJNG members carried out the blockades in response to the arrest of "El Doble R" in Guadalajara several days before. At least 17 people were arrested in connection with the burning blockades. 

Impact

As a result of the violence, the Mexican Army sent 350 soldiers and National Guard personnel to Tijuana to be deployed across Baja California state to help shore up security. A similar deployment occurred in the Quintana Roo area last year following an uptick in cartel violence. 

Further violence is possible in the near-term, and can be expected following future arrests of any high-ranking cartel members. The homicide rate in Mexico remains high, and the country is on track to report more than 30,000 murders this year.

U.S. firms eye Taiwan exit on Chinese invasion risk

“…they don't want to happen what just happened in Russia where they lost billions of dollars’ worth of assets, both financial and hard, so they are already looking to disperse people and assets to other countries.”

With a growing number of corporate leaders closely watching Taiwan and analyzing the risk to their operations, CEO Dale Buckner weighs in on how Global Guardian is supporting clients with contingency plan development in the Politico China Watcher.

Strategic UPDATE 

On 25 July 2022, Taiwan commenced its semi-annual military drill simulating a Chinese invasion of its shores. Tensions across the Taiwan Strait are high after it was leaked that the United States (U.S.) House Speaker Nancy Pelosi plans on traveling to Taiwan in August. Given Russia's invasion of Ukraine, the threat to Taiwan posed by China no longer seems so distant and low probability. A conflict over Taiwan now represents the highest impact downside risk to businesses operating in Asia and to the global economy writ large.

Beijing considers self-ruled Taiwan to be a renegade province and has always maintained its right to use force to reunify. China has historical, economic, and geostrategic imperatives for controlling Taiwan. After witnessing China’s crushing of democracy in Hong Kong, reneging on its “one country, two systems” policy, the Taiwanese people’s desire to unify with the mainland has reached all-time lows – a mere two percent in 2022 polling. The prospects of peaceful unification are all but dead.

China has made generating the military capability to invade Taiwan a decade-long focus, producing some 200 advanced J-16 fighter jets and J-20 stealth jets and building a naval fleet larger than the American Navy in the greatest military build-up since WWII. In lockstep, Beijing has also produced robust anti-access/area denial capabilities designed to prevent Washington from being able to come to Taipei’s defense.

Counter to popular belief, China’s window for action is closing for demographic, economic, and military reasons. In addition, its neighbors have increased their military spending, and some have begun to band together in forums such as the Quadrilateral Security Dialogue (U.S., India, Japan, Australia) and AUKUS (Australia, United Kingdom, U.S.). Estimates from both Taiwan and the U.S. indicate that China may make its move before 2027 when it celebrates the 100th anniversary of the founding of China’s People’s Liberation Army (PLA). Though circumstances may accelerate or decelerate Beijing’s plans.

Possible Flashpoint

The proposed trip by Speaker Pelosi would be the first trip by a U.S. official of her rank in 25 years against a very different geopolitical backdrop than that of 1997. The potential Pelosi trip puts the U.S. in a dangerous catch-22 situation vis a vis the Chinese Communist Party. The trip comes as President Xi is preparing to break conventions and seek a third term at the ruling Communist Party's 20th congress this fall, and the American mid-term election season heats up.

• Abandoning the trip would be seen as cowing to China which would help inculcate the dominant sentiment in Beijing that America is in decline and losing its willingness to use its hard power, further endangering Taiwan. Domestically, it would also offer ammunition to President Biden’s opponents who would like to portray him (and his party by extension) as weak on China ahead of the mid-term elections.
  
  
• Going ahead with the trip, conversely, would dramatically increase cross-strait tensions. The Chinese Ministry of Defense and several other party officials have subsequently issued threats. The U.S. military is taking these seriously with the navy dispatching an aircraft carrier strike group from Singapore to strengthen its force posture and deter any Chinese action ahead of the visit. 

Should the trip go ahead there will be pressure on all sides to demonstrate resolve without taking unnecessary escalatory risks. Yet there is always the potential for miscalculation and human error.

Strategic UPDATE 

After Russian forces secured Lysychansk—marking the completion of its capture of the Luhansk oblast—Russia paused from 04 July to 16 July to regroup and reconstitute its forces. The slow-moving offensive in Donetsk has resumed, yet the Donbas (Luhansk and Donetsk oblasts) is no longer the center of gravity of the conflict.

• On 20 July, Russian Foreign Minister Sergei Lavrov declared that the geographical objectives of Russia have changed from just the Donbas to now include Kherson and Zaporizhia oblasts.
• Since the end of June, Ukraine has deployed between 8-12 U.S.-made High Mobility Artillery Rocket Systems (HIMARS) which have been incredibly effective on the battlefield despite their low number. Ukraine now has the ability to target Russian ammunition, supplies, and command and control centers well behind the front lines. This development has forced the Russians to disperse/decentralize their logistics depots further slowing down the Russian offensive in the east and making it more difficult for Russian defenders in the south to obtain supplies. 
• On 19 and 20 July, Ukraine targeted the Antonovskiy Bridge on the Dnipro River in Kherson oblast. The bridge is one of two key river crossing points, making it a vital supply line for Russian forces in Kherson, Mykolaiv, and Kryvyi Rih regions. Ukrainian forces have been softening Russian positions in Kherson for over a month attacking both frontline defenses as well as command and control centers and logistical nodes. It is possible that the efforts to prevent Russian resupplying of its forces on the west bank of the Dnipro mean that Ukraine will escalate its counter-offensive in the south in the coming days and weeks.
• On 13 July, the European Commission revised its guidance on Russian sanctions, carving out an exception for goods transported from Russia to the Russian exclave of Kaliningrad via Lithuania by rail. Almost a month earlier, Lithuania began to implement EU sanctions on Russia effectively cutting off Kaliningrad from Russia. The solving of this impasse greatly reduces tensions between Russia and the Baltic states, which stood to bear the brunt of Russian intimidation tactics. 

Executives seek briefings on Taiwan war risk

Russia’s invasion of Ukraine has global business executives looking more closely at geopolitical hot spots—and the potential war over Taiwan is at the top of the list.

In a Financial Times article, CEO Dale Buckner comments on how Global Guardian is briefing companies on the risks associated with this potential conflict and helping executives prepare their contingency and evacuation plans.

Situation UPDATE 

On 24 June, the United States Supreme Court (SCOTUS) ruled on the Dobbs v. Jackson Women’s Health Organization case, siding with Dobbs (the state of Mississippi). In doing so, SCOTUS overturned Roe v. Wade (federally guaranteed constitutional right to abortion access) and placed the issue in the hands of state legislatures. The ruling on this highly polarizing socio-political issue comes ahead of the November mid-term elections and will be leveraged politically. Protests by pro-choice activists and counter-protesters are likely to occur in major cities across the U.S.

While these protests will likely remain peaceful, some could turn violent as bad actors—lone wolves and domestic extremist groups—seek to take advantage of the situation. There is an increased risk of vandalism and violence against churches, abortion facilities, and pharmaceutical sites. 

Known planned protests for later today include:

• Austin, TX: Outside the Federal Courthouse Plaza located at 501 West Fifth Street
• New York City, NY: Washington Square Park and Union Square
• Washington, D.C.: Supreme Court
• Over the weekend, protests in the following cities are already planned and more are expected: Atlanta, GA; Boston, MA; Chicago, IL; Houston, TX; Los Angeles, CA; New York, NY; Philadelphia, PA; San Francisco, CA; and Seattle, WA.
• Additional protests in other cities across the country are likely. 

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Strategic UPDATE 

On 18 June, Lithuania began to impose a ground transit ban on EU-sanctioned Russian goods (steel, wood, coal, oil products, heavy machinery, luxury goods, amongst others) coming from Belarus to Kaliningrad, effectively cutting off the exclave from the rest of Russia. On 21 June, Moscow warned that Lithuania will face consequences "in the near future" unless it allows the trains to pass. The only remaining transit route now is by way of the sea through international waters since Russian planes are banned from EU airspace. Russia has few meaningful response options that both fall short of triggering an escalation with NATO and alleviating the strain on its Baltic Oblast.

• Kaliningrad–which is located between Lithuania and Poland along the Baltic sea–is the home of Russia’s Baltic fleet and around one million people.
• As a preliminary show of force, Russia is conducting provocative maneuvers on Estonia's border, violating the NATO member's airspace with helicopters and simulating missile attacks. 

• The most likely responses from Russia will include any or all of the following:
  • Continued aggressive rhetoric
  • Military drills along the borders of the Baltic states
  • Cyber attacks on the public and private sectors in the Baltics and even EU at large
  • Harassment of commercial vessels in the international waters of the Baltic sea
• Ultimately, Russia will likely opt to supply Kaliningrad by sea as it pushes for a settlement with the EU to resume ground transport of sanctioned goods and oil.
• Meanwhile, the slow tempo battle for the Donbas continues in Ukraine with both sides’ capabilities and manpower continuing to be depleted. Though Russia's capture of Luhansk Oblast looks increasingly likely.

War in Ukraine, COVID-19 is changing the security landscape

"These extreme events that were previously thought to have been things of the past have returned with a vengeance. The clustering of such events speaks to the covariate nature of risk in today’s world. From geopolitics to the digital realm, the COVID-19 pandemic has ushered in an era where bad actors at both the state and substate levels are taking advantage of uncertainty."

In a recent article on SecurityInfoWatch.com, Director of Intelligence Michael Ballard outlines the global threats—geopolitical instability, ransomware and cryptocurrency attacks, 3D-printed arms, and the pandemic-fueled increase in crime—continuing to present security challenges for organizations around the world, as highlighted in Global Guardian's 2022 Worldwide Threat Assessment. Michael also offers suggestions for businesses to minimize the potential impact from these threats and protect their people and operations.