American Security Project

While Africa has emerged as one of the most robust economic regions in recent years, doing business in the region has historically carried substantial risk from a variety of factors.

The third panel, How to Invest and Manage Risk for U.S. Companies, was chaired by ASP Senior Adjunct Fellow and Principal of YCF Group Fadi Elsalameen. He was joined on the panel by Dante Disparte, ASP Consensus Member and Managing Director of Clements Worldwide, Dr. Barbara Samuels, Executive Director of Global Clearing House for Development Finance, Andrew Herscowitz, Power Africa and Trade Africa Coordinator – USAID, and John Moran, Vice President of Insurance – OPIC.

Disparte set the stage for the discussion by declaring that “this is the African century.” Disparte’s experience as the Managing Director for Land Rover in 32 countries in Sub-Saharan Africa has contributed to his understanding of the real risk and challenges of conducting business in Africa. He warned firms from using the “standard playbook” when it comes to managing risk in Africa and cautioned against overgeneralizing and solely relying on numbers and statistics to inform business decisions.

To approach risk which is by default heterogeneous in the African context with a homogeneous strategy to address risk is absolutely a failure.

Looking at risk and investment in Africa more broadly, Disparte noted that American security is directly connected to the growth and success of the economies of Africa.

If the U.S. through its institutions, through its government agencies, its entire apparatus doesn’t give American firms access to African opportunities our national security is at stake; our economic competitiveness is at stake.

Dr. Barbara Samuels also emphasized the connection between economic development and U.S. national security. One of the most difficult obstacles to development in Africa is the issue of energy access. This, Samuels said, is something that needs to be addressed in order to make any real progress on the ground.

In Tanzania, for example, approximately 80% of the population doesn’t have access to energy, so it is about working from the ground level up in order to be successful.

Power Africa is one of the initiatives that has been put forth by the Obama administration to double access to electricity in Sub-Saharan Africa as well as helping U.S. companies tap into African economies. Andrew Herscowitz laid out the mission of Power Africa:

This is about partnership…This is about demonstrating that these are good countries in which to invest and looking at how we can bridge those market imperfections that are preventing the investments from happening.

John Moran of OPIC which works with Power Africa to support privately managed equity funds echoed Herscowitz’s remarks:

We want to get attractive projects done and also work with policy initiatives and working with the U.S. government to reformat and refine an appropriate legal and regulatory environment to get capital flowing.

One of the chief concerns for anyone conducting business in Africa is dealing with a variety of security situations, including piracy in East Africa. Fadi Elsalameen, whose firm manages the Liberian ship registry and deals with the threat piracy on a daily basis, acknowledged the seriousness of this issue and sub-state threats. He also declared that this is the nature of business in the region but piracy must be seen in a larger societal context.

Piracy is a very serious issue around Somalia but the issue is much deeper than just a bunch ...

For nearly a decade, policymakers have attempted to more effectively incentivize the development of sustainable alternatives to petroleum as a transportation fuel. Mandates, subsidies, and other policies have succeeded in replacing 10% of the fuel supply with ethanol grown in the U.S. and have begun to create a network of battery-operated vehicles. But, these efforts are as yet incomplete, with further policy advances being hampered by the domestic boom in oil.

American Security Project hosted a panel of industry experts to speak about the current environment for renewable transportation and how their companies are leading innovation in developing different solutions to this serious problem. Erick Lutt, Director for Policy for the Biotechnology Industry Organization’s (BIO) Industrial and Environmental Section (IES), Ken Hill, Biofuels Business Development and Licensing Leader at DuPont Biofuels, James Chen, Vice President of Regulatory Affairs at Tesla, and Dr. Amgad Elgowainy, Principal Energy Systems Analyst and the Life-Cycle Analysis Team Lead at Argonne National Laboratory were panelists. Julia Pyper, a reporter for E&E Publishing, moderated the discussion with the observation that fuel is currently comprised of 10% renewable substances. This coupled with a growing demand for plug in vehicles showws that the industry is progressing.

Lutt outlined current trends in the government and areas that need further attention to merit success in the future. He stated that success

…is done through government incentives and the number of policy instruments. This in turn creates a favorable climate for innovation and continued investment. These tax incentives have provided to drive down the cost of future technologies.

He expressed concerns about the EPA’s recent reduction of volume of renewable fuel dictated by the “Renewable Fuel Standard” stating “This shows a deep misunderstanding of the RFS.” This uncertain investment climate forces companies to take their companies and projects overseas.  Many companies state that this is a direct result from the uncertain investment climate in the United States towards biofuels.

He outlined that “…the Obama administration must finalize their stance and fix the RFS to be based of the capabilities of production for bio fuels and not in regards to oil production.”

Hill outlined positive steps DuPont is taking in the field of biofuels and how there is a nexus between agriculture and bio technology.  In his summary of current issues for biofuels he stated: “Corn ethanol was off the shelf technology when the RFS was first implemented. The real challenge is feeding the factory enough to produce a viable level of fuel.”

There is a substantial benefit to be had in rural economies across the nation. For ethanol to be produced, there will need to be a serious expansion in the production in energy crops, and this in turn will help generate funds in once displaced economies, as not all of the crops needed can be produced in the Midwest region.

While biofuels might pose part of the answer to this question, a group still needs to do research on their role in the environment. Dr. Elgowainy’s group at Argonne National Laboratory focuses on the assessment of alternative fuels and the impact they might have on the environment. His summarized his current research:

…our goal is to look at the manufacturing of energy. We analyze all the way from the primary source and energy type. What is used? What is the life cycle of the fuel? Are there any additional emissions that we need to take into account?

DuPont is not the only business making advances in the renewable transportation field, as Tesla proposes a different solution than biofuels. Chen outlined the different way people are approaching the dependence on petroleum, as he asserted that “half of our trade deficit is tied to oil”. With the reveal of their 2008 roadster,

The emerging geopolitics of energy shows why it is important for the United States to take a leadership role in exporting Liquefied Natural Gas (LNG). Internationally high demand and our domestic resources have created an opportunity to build a global, market-based energy economy. This will be particularly important in preventing monopoly energy producers from using their control of gas markets to sway foreign policy.

Marik String, a nonresident Senior Fellow in the International Security program at the Atlantic Council, chaired a panel of industry experts to talk about America’s role in building a world market for LNG. The panelist were Jennifer Harris, a Senior Fellow at the Council on Foreign Relations, Christopher Guith, Senior Vice President for Policy at the US Chamber of Commerce’s Institute for 21st Century Energy, and Andrew Ware, Director of Strategic Project for Cheniere Energy.  The conversation was started by remarks from String discussing the traditional characteristics of gas markets, and how they differ substantially from traditional oil trade where contract terms still depend on some political relationship with the suppliers.

This is best exemplified with the current disruptions in supply in the dispute between some Eastern European countries and Russia. String said that over the past 10 years, Russia has cut off supplies of gas to their neighbors over 25 times. They have also manipulated prices in the market with regards to the current political climate between the two nations. As he said “there is no reason Lithuania should pay twice what Germany pays.”

Highlighting the geopolitical rationale for exporting LNG, String said:

Exporting American LNG could drive down the international prices and drive up the liquidity in the market. A lot of the US LNG discussions have been spurred by the current conflict surrounding Ukraine. More US LNG would aid in driving down that price and give other vulnerable consumers more options.

He continued stating that in the perspective of trade, the United States has been extremely inconsistent with stances we take in other venues. To describe this inconsistency, he quoted a passage from a WTO ruling from US/EU in WTO case against China with regards to rare earth elements. “No country can ward their raw materials from the global market place at the expense of their WTO partners.”

Chris Guith echoed these sentiments by saying how we are currently in blatant violation of the base concept of the WTO by treating a select group with priority as opposed to the rest. He even went as far to assert that:

If another country was to file a claim against the United States, I would be surprised if we were able to successfully defend our current practice. Our allies are saying that we need this gas, please export it. With our current trade preferences, America is being hypocritical and this is lessening our moral authority in the world.

Andrew Ware spoke about LNG from the industry point of view, stating that there is clearly a global demand for gas, and it will continue to grow. He outlined how LNG currently constitutes roughly 10% of all natural gas trade, with the remainder being transferred via pipeline. He discussed how North America stands at a competitive advantage as the least dependent on imported LNG. He stated that:

The United States is a sleeping giant in the market. In regards to price formation, the United States is unique that we have a well-developed market and natural gas (and not oil index) is what determines that price.

This different model on how to price natural gas offers a new paradigm, which will offer leverage to the consumers of LNG in the international market.  He further outlined how the risk is inherently minimal due to the demand growth which is to remain at 6% each year form the next 25 years.

Harris articulated her view on LNG in the terms of geopolitical stakes and economic consequences.

Main Points:

* Nuclear power must be part of the solution to reduce carbon emissions

* Nuclear power plants of the future look very different than power plants today

On Tuesday, William Freebairn, managing editor of Platts Nucleonics Weekly, Jack Bailey, the Sr. Vice President of Businesses Development at NuScale Power, Keith Bradley, Program Leader and Senior Technical Advisor for national and global security programs at Argonne National Laboratory, and Mark Haynes, President of Concordia power met to discuss the future of nuclear power and the political and technical hurdles.

Freebairn opened this discussion on energy technology by asking what the future of energy landscape looks like, given financial issues concerning the field?

Bailey remarked that the energy industry must look at the big picture: reducing carbon emissions. The key to this, he said, is “if we have technology that can be deployed that could reduce any one of these sectors by near 100% we should do it.” He then delved into the policy reasons of why nuclear energy should be part of the solution. First, the clean air value (no greenhouse gas emissions for nuclear energy) is important for reducing emissions. Nuclear reactors supply reliable production of energy and fuel supply – interruption of gas or oil supplies does not affect nuclear reactors or nuclear material. He added that the economic implications are important: “Nuclear energy makes more jobs per 1000 megawatts than any other technology we use to make power.”

Bailey then described the NuScale power module. These reactors are small, can be built entirely in a factory, and rely on basic physics principles for safety.  “Physics is a reliable way to make things work.”  They are able to sustain themselves indefinitely after a catastrophic event with no operator action, no AC/DC power, and no additional water.  However, large initial investments with long-term returns, high costs for first-time early movers, and rigid regulation are challenges to building and deploying these reactors.

Bradley spoke about innovation risk and how to make smarter decisions. “Energy security is about a lot more than protecting the power source. Society, as it depends critically on the energy supply, should be interested in ‘energy confidence’. We need to think of energy supply and availability as an ecosystem.” He recommended a diversified portfolio of energy storage, including batteries and biofuels. He also cited the need to break down ‘silos’ and have scientists share expertise with the community. “This is a global problem and we need a mechanism to bring the community together to tackle big problems.”

Haynes explained the differences between advanced nuclear reactor designs: Some have higher operating temperatures, so they are more thermally efficient and produce less waste heat, some have better fuel utilization, some can burn spent fuel, and some can burn thorium. Likening reactors to golf clubs, he said “you’re going to need a lot of different types of clubs to play the game.” He displayed the 2012 US primary energy consumption by source and sector, which shows that electrical energy is the least carbon–intensive of all the sectors. Because nuclear power would go 100% to the electricity sector, he labeled it a “one-trick pony.” From a public policy perspective, being a leader in nuclear power grants the U.S. several things: environmental goals, exports, entry into other energy markets, and support to build a high-tech industry. It also would grant the U.S. a real, legitimate say in non-proliferation negotiations. Haynes warned that we are losing that power in the U.S. by not building new reactors. “If we don’t buy now, we will pay later.” He explained that here are 30 countries going nuclear right now,

Main Points:

* Fusion can provide clean (emission free) energy and help create a new high-tech industry.

* Private companies are investing in novel fusion experiments

* U.S. is moving fusion from an energy to a science initiative, with no plans to get into engineering of it or build a engineering test reactor. With current funding levels U.S. will become a support program for other countries to build demos, and not a world leader in fusion.

On Tuesday, Andrew Holland, ASP’s Senior Fellow for Energy and Climate Change, Michael Delage, V.P. of Strategy and Corporate Development at General Fusion, and Steve Dean, President of Fusion Power Associates convened to talk about the future of fusion energy. Starting the conversation, Holland said “when we talk about next generation energy, an important part of that is fusion… it is literally the power of the stars.” Holland went on to explain the basic principles of fusion. He explained that although the domestic fusion program was founded in the 1950’s, the U.S isn’t producing fusion energy yet. First, it is very diffic’re not making investments, it doesn’t mean the rest of the world isn’t.”  ASP recently published a fusion white paper laying out a ten-year vision for the field. It calls for a fusion commissioner to increase political will and pressure to advance the field. The U.S. must pursue multiple and parallel research paths and actively collaborate with businesses and industry. He asked, “Can we plan for something that is beyond any president’s time in office, beyond political terms? We need to think about this in long term.”

Michael Delage from General Fusion opened by refuting the statement that fusion energy “has been 20 years away since 50 years ago.” Looking at progress in terms of metrics, fusion energy has grown as fast as Moore’s Law. The difference between 1970’s fusion and today’s fusion is like the difference between a smart phone and the first calculator 30, 40 years ago. He then talked about the two big kinds of fusion research, Magnetic Fusion and Laser Fusion (Inertial Confinement Fusion). The difference in plasma density between the two approaches is 10 trillion. There is a large opportunity for fusion at intermediate density levels. National laboratories have a few experiments, including the Z-machine, but there is something interesting going on in private companies. Citing an article in Science, he read

Traditionally, fusion energy research has meant huge efforts like the $20 billion multinational ITER project and $3.5 billion National Ignition Facility. But that may be changing. In unassuming industrial units across North America, Europe, and elsewhere, small teams of scientists and engineers supported partly or entirely by private finance are working out novel approaches to fusion. Their goal: to design financially viable power reactors simpler and cheaper than the government-funded behemoths and to build them faster. Some of the new technologies look bizarre, but venture capitalists are convinced that each holds at least a slim chance of an enormous payoff.

Delage then explained the fusion experiment being built at

Building off the current national conversation surrounding the ongoing turbulence in the Middle East, a cadre of panelists reflected on the future of the region and laid out several prescriptions for the United States’ involvement in the Middle East, with varying degrees of optimism and pessimism.

Fadi Elsalameen began the discussion by commenting on the public focus on a military strategy to counter the Islamic State in Iraq and Syria (ISIS). He asked whether military force is the only solution to regional instability and insecurity when the majority of the Arab population consists of poor, unemployed youth. Citing the World Bank, Elsalameen noted that “the Arab world has to generate about 100 million jobs” by 2020 in order to maintain the current rate of employment.

Highlighting the need to focus on the youth, Elsalameen stated:

You have unemployed poor people who aren’t being included in political process, who aren’t being included in economic process. There are many, many, many sides to this issue; it’s not just the military.

Former Undersecretary for Public Diplomacy and Public Affairs Tara Sonenshine, reiterated Elsalameen’s comments on the current focus on “bombs and bullets.” She emphasized the importance of the “ordinary citizen.” Sonenshine lamented:

We did not really pay attention to those voices calling for peaceful change, ultimately voices drowned out by extremists. I think our sin… is the sin of impatience. Revolutions, they are not evolutions. Transitions take time. We have grown increasingly impatient for change, results, and improvements.

However, she expressed hope for the region. She called for a return to fundamental U.S. beliefs – democracy, the promotion of civil society, and freedom of speech and expression – and that we must focus on these goals alongside our military aims.

Shadi Hamid, a fellow at the Brookings Institution’s Center for Middle East Power and the author of Temptations of Power: Islamists and Illiberal Democracy in a New Middle East, took a more pessimistic view of the United States’ future involvement in the region. Hamid critiqued President Obama’s counterterrorism strategy as too narrow and “not enough to combat ISIS because [ISIS] is more than a terrorist group. It is a serious threat that requires a long-term plan.”

Hamid expressed concern that there was no broader vision talking about the role of democracy and democracy promotion in the Middle East. He agreed that the U.S. needs to “look beyond the narrow military aspects” and re-focus on democracy promotion. Citing the importance of democracy in countering terrorism, Hamid said:

Well, if the failure of democratic processes during and after the Arab Spring and the general failure of governance is one of the contributing factors of extremism, then it becomes very important. It becomes important to look at the root causes of terrorism and extremism… We can’t lose sight of that.

Thinking in the long term, therefore, is essential. Hamid concluded by emphasizing the need to rethink and fundamentally change America’s foreign policy approach. He urged that the United States must find a way to distance ourselves from autocratic regimes, whose long-term goals the U.S. does not share. To do so requires strong leadership that he believes the U.S. currently does not have.

Giving his first comprehensive presentation on his view of public diplomacy, Under Secretary Richard Stengel spoke to an audience of prominent practitioners and academics at ASP on Tuesday, and addressed a variety of issues the United States faces in 2014 and beyond.

Mr. Stengel opened his remarks by discussing his long-standing involvement in the values and ideas of public diplomacy. During his tenure as managing editor of TIME, Stengel saw TIME’s mission as being “to explain America to the world, and the world to America.” Feeling that this was a fairly good definition of public diplomacy, Stengel explained that many of the issues he was “reckoning with” at TIME are the same issues he currently faces at the State Department. But the changes in the modern media landscape have caused it to become “exponentially more complicated.”

Explaining his general perception of how public diplomacy works today, Stengel said:

Public diplomacy is a conversation. It’s people talking to people—it’s not governments talking to people—it’s sometimes people talking to governments. And all of this new technology, particularly social media, enables this conversation to happen in a way it was never able to happen before…I want us to be in that conversation.

He continued:

In that conversation, our job isn’t to make people like us, or to persuade people that we’re right. It’s to tell people what our policies are, it’s to explain why we have come up with these policies, and then engage in a conversation.

Discussing the fall of the Berlin Wall and the end of the Cold War, Mr. Stengel noted that despite a general consensus that the ideological battle had been won, we are now seeing a re-emergence of history, blood, and borders. Freedom and democratic governments have been in decline in many areas around the world, and the U.S. needs to reckon with this reality.

Commenting on the Internet’s role in public diplomacy, Mr. Stengel felt “we were a little naïve” about the Internet, explaining that several governments have been successfully restricting internet access, and therefore limiting freedom of speech and information. While the Center for Strategic Counter Terrorism Communications is potent, much more needs to be done by the United States online.

With regards to the concern over Russian State media’s outreach in recent years, Stengel argued that Russia’s news is “nothing like what we think of as objective news.” He noted that the U.S. has started a Russian language “narrowcasting” messaging service designed to reach individuals on specific platforms, and that he sees the situation as a competition for “swing voters.” Though an audience member challenged the U.S. interpretation of the situation in Ukraine, Stengel staunchly argued:

The thing that is absolutely indisputable, is that Russia violated the territorial integrity of an independent nation…Russia violated these norms that we have considered universal.

In addition to addressing many of the direct challenges in America’s public diplomacy efforts, Mr. Stengel also spoke on the concept of soft power.

…As we all know public diplomacy is soft power…we need to do more to harden our soft power. That’s not to say that so many of the parts of public diplomacy don’t matter. Educational exchanges are the gold standard of people to people diplomacy, they have long term benefits that are incalculable, and it’s wonderful. But in the short term, there needs to be a hardening of that soft power landscape....

On Wednesday July 30th, 2014, ASP conducted an event on energy policies: “Beyond Rhetoric: How The U.S. Can Help Enhance European Energy Security” in conjunction with “LNG Allies”, an association that advocates for expanded relationship with America’s allies on natural gas. The event discussed concrete steps that the US can take now and in the future to bolster Europe’s energy security. A large amount of the discussion focused on the use of American exports of liquefied natural gas (LNG) as a new geopolitical tool.

The event’s panel included: Robin Dunnigan, Acting Deputy Secretary for Energy Diplomacy in the Department of State’s Bureau of Energy Resource; Žygimantas Pavilionis, the Ambassador of Lithuania to the US; and Charles McConnell, Executive Director of the Energy and Environment Initiative at Rice University and former Assistant Secretary of Energy. The discussion was moderated by ASP’s Senior Fellow for Energy and Climate – Andrew Holland.

The event began with introductions from both our CEO, Brigadier General Stephen A. Cheney, USMC (Ret.), and Holland.

Dunnigan believes the US will likely be a net exporter of natural gas within two years given the recent shale boom. She touched on how providing Europe with natural gas is hard to execute as the Department of Energy gives licenses to private companies that represent nations in the export/import process, making it a more difficult procedure. She noted that Ukraine needs to strike some sort of deal with Russia’s Gazprom before the winter because there is nothing that can make up the shortfall before then. She discussed the July 29, 2014 roll-out of sanctions on Russia by both the US government and the EU, some of which specifically targeted the energy sector.

Ambassador Pavilionis called for increased infrastructure in Lithuania, implying that there should be less energy reliance in regards to Russian gas. The ambassador called for US government support in creating that infrastructure. He made the clear case that Lithuania was a country inspired by American ideals of freedom and open markets – and called for the US to respect those values by opening its markets to exports of LNG.

McConnell added information and context regarding the energy relationship that currently exists between Europe, Russia, and America. He suggested that national security concerns about energy means that countries shouldn’t simply leave LNG exports to the markets: countries and large energy firms should make direct investments in American export terminals because this will foster a closer relationship and get more terminals built. Energy is a strategic commodity, not simply a commercial.

All the panelists discussed how this all takes time, but that events in Eastern Europe are moving faster than the political schedule here in the U.S. Additionally, the money put into these projects (billions), adds to the length of the process. The panel pointed out the fact that energy insecure countries should not rely on one source of energy (LNG), but have a varied energy portfolio for added security.

The extensive Q&A section discussed the importance of the Export-Import Bank for financing energy projects in Eastern Europe, comments from Cheniere (one of the companies that will be exporting LNG) that their predicted LNG capacity was all “sold o...

On Tuesday, June 10, representatives of the American Security Project visited San Antonio, Texas for a series of meetings, public events, and briefings on how climate change is affecting security, and how institutions in the region are planning for it.

Attending were BGen Stephen Cheney, USMC (ret.), ASP’s CEO and Lt. General Norman Seip, USAF (Retired). Cheney is the CEO of the American Security Project, and a 30 year veteran of the Marine Corps. Seip currently serves as an advisor to the Air Force. His most recent operational assignment was as the Commander of 12th Air Force (Air Forces Southern), Davis-Monthan Air Force Base, Ariz. As the Deputy Combined Forces Air Component Commander for U.S. Central Command, General Seip had a direct impact in supporting combat operations in operations Iraqi Freedom. Both are members of ASP’s Consensus for American Security. Andrew Holland, ASP’s Senior Fellow for Energy and Climate, and Porter Brockway, ASP’s events manager, rounded out the delegation.

 

Army Installation Management Command, Fort Sam Houston

The first stop on the tour was to the headquarters of the Army Installation Management Command (IMCOM) at Fort Sam Houston.  Army IMCOM is the result of a recent (2002) consolidation of base support operations under one command – removing redundancies from across other operational commands. Today, IMCOM manages over 14,000,000 acres in 70 installations in the United States and around the world. It has almost 40,000 miles of utility infrastructure, over 2,200 miles of railroads, and almost 800 million square feet of building space.

 

As the manager of such a large amount of infrastructure in diverse regions around the world, IMCOM is at the front-line of the Army’s preparations for climate change. They must prepare for climate change because they are seeing the impacts already. Coastal bases (admittedly more a feature for the Navy than the Army) are at risk from a combination of sea level rise and storm surges. In arid regions, already dry conditions are combining with more prevalent and deeper droughts to harm water availability at bases. Drought can also harm the ability to train, as drier conditions in live-fire training ranges can actually lead to wildfires. For example, in the summer of 2013, artillery training at Fort Wainwright in Alaska caused a wildfire that threatened homes near Fairbanks. Ironically, also in arid regions, the Army must prepare for more extreme rain events – because climate change is expected to increase such rain events – which could harm infrastructure. For example, in the summer of 2013 at Fort Irwin in California, monsoon rains washed out bridges, damaged barracks, and harmed areas of the National Training Center.

In 2014, as a part of a DoD-wide initiative, the Army has been undergoing a series of vulnerability assessments for its coastal installations. In the future, they have plans to expand these comprehensive vulnerability assessments to all other Army sites.

One area vulnerability that the Army has identified is base energy security. They have ramped-up efforts to build “Net-Zero” facilities across the coutnry. The goal for these facilities is to use only as much energy as they can produce on base (using renewable energy), to use only as much water, and to produce zero net waste. The Net Zero initiative will be important for providing a framework going forward.

On Wednesday July 16th, the American Security Project (ASP) hosted Daniel Wagner, MGen Robert Scales, Missy Ryan, and Smita Malik, with moderator Dante Disparte in a talk titled, “Iraq in Crisis: Recent Developments and Risk Management Strategy.”

The speakers considered the threat that the Islamic State poses to businesses and their investments in Iraq, and how these businesses can manage the risks associated with operating in such a volatile, precarious area.

Dante Disparte began the talk by connecting the Islamic State’s rapid, unexpected rise in Iraq to similar events with Boko Haram in Nigeria, Islamist groups in Mali, and attacks on the Karachi airport.

The situation in Iraq is not isolated and businesses must see it as part of a larger pattern that may continue to unfold in unstable parts of the world for decades to come. Businesses must account for the involved risks associated with operating in parts of the world that lie along religious, political, and cultural fault-lines.

Missy Ryan

Missy Ryan began her segment by analyzing the recent events surrounding the Islamic State’s expansion into many Sunni-majority areas of Iraq, with the United States and the Iraqi military caught off-guard. In the wake of IS’s advance, Shia militias have mobilized themselves while Kurdish peshmerga forces have both defended their autonomous region and gained valuable, disputed lands such as the city of Kirkuk and its surrounding oil-fields. Importantly, the Islamic State has made alliances with former members of Saddam’s Arab Nationalist Ba’ath Party rather than being composed solely of native and foreign jihadist fighters.

Recently, on July 15th, the Sunni-parliament elected a new leader and elections for the Kurds and Shia will take place in the coming weeks. However, Iraqi prime-minister Nouri al-Maliki is very reluctant to step down and allow the election of a new prime-minister, even though doing so would help to repair relationships among the country’s many sectarian and ethnic groups.

MGen Robert Scales

MGen Robert Scales began his segment by recounting conversations that he has had with contacts who have recently visited Iraq. According to these contacts, the exportation of Iraqi oil continues largely unimpeded and IS is primarily concerned with consolidating control rather than expanding into new areas of the country. Unfortunately, it is unlikely that the Iraqi army, or any other force in the region, possesses the resources and initiative to move against IS and regain the areas it controls.

The Iraqi military’s capacity to fight is impeded by corruption and shortage of supplies and soldiers. Sunni and Shia radicalism is beginning to take root among some of the soldiers, rooted in a general distrust of the national government. The Islamic State has acquired data detailing relationships between Iraqi military and civilians and the United States military, and has used this data to execute and terrorize individuals who formerly worked with the United State.

Paradoxically, in modern Iraq, there are Shia militias who are willing to fight the Islamic State but who have very little combat skill contrasted with soldiers in the national army who have more skill but have no will to fight. In the wake of IS’s advance, Americans who are currently living in Iraq do not know who to trust.