Assessing Three Current Geopolitical Risks

Saudi Arabia and NOPEC, Taiwan Invasion Risk, and Russia Using a Dirty Bomb

We have received a lot of questions about many geopolitical issues in the last 72 hours. While China risk in the wake of the Chinese Communist Party Congress tops the list – and we are preparing a separate analysis on that issue – we thought it worthwhile to give a quick assessment of Saudi Arabia/NOPEC, Taiwan invasion risk, and the situation in Ukraine. 

Please let us know if you have any questions.

Saudi Arabia and Risk of Congress Passing NOPEC:

• We see the prospects of the US Congress passing NOPEC legislation as minimal. The Biden White House will oppose it, as will a pretty strong bipartisan majority.

• Biden intends at this point to consult with Congress after the elections on Saudi relations and possible policy options in retaliation for the recent OPEC+ decision.

• However, we believe there is likely to be little substantively done, and the risk is more in the “headline risk” category (e.g., “White House orders review of US military deployments in the Middle East” or “White House reviewing military sales to Saudi Arabia”). To be clear, we do not believe there will be any real/substantive cut-back on US military deployment in the Middle East or noticeable/substantive cut-back in military sales to Saudi.

• We also would point out that Israel is already making clear to the White House and key US congressional allies that Saudi is an increasingly important security tie/ally in the region and does not want to see any further deterioration in US-Saudi relations.

• The real risk is if the US does nothing in response to the OPEC+ decision, according to US sources we have spoken to, it may encourage Deputy Crown Prince Mohammed Bin Salman (MBS) to do other things that are not in the US’s strategic interests.

Taiwan Invasion Risk:

• Two recent headlines have prompted markets to ramp up concern over a possible invasion of Taiwan – 1) Secretary of State Tony Blinken’s comments at Stanford University earlier this week and 2) US Navy Chief of Naval Operations Michael Gilday suggesting an invasion could happen as soon as this year.

• We cross-checked both supposed comments and found both are being taken out of context and poorly reported by the media. First, Blinken’s office tells us he did not say an invasion was imminent or close to imminent. Blinken sat for a ‘fireside chat’ with former US Secretary of State Condoleezza Rice at Stanford.  You can read the entire transcript, including questions from the audience HERE.  Here is what Blinken said: 

“What’s changed is this – it goes back to something that Condi was saying at the very beginning – there has been a change in the approach from Beijing toward Taiwan in recent years.  And instead of sticking with the status quo that was established in a positive way, a fundamental decision that the status quo was no longer acceptable, and that Beijing was determined to pursue reunification on a much faster timeline. And if peaceful means didn’t work, then it would employ coercive means – and possibly, if coercive means don’t work, maybe forceful means – to achieve its objectives. And that is what is profoundly disrupting the status quo and creating tremendous tensions.”

•  Second, Admiral Gilday’s comments were as follows: “What we’ve seen over the past 20 years is that they have delivered on every promise they’ve made earlier than they said they were going to deliver on it,” Gilday said. “When we talk about the 2027 window, in my mind, that has to be a 2022 window or potentially a 2023 window; I can’t rule it out.”

• Admiral Gilday – as any military leader worth their salt, he/she would never rule anything out and must plan for all contingencies. Additionally, we would note we are in the midst of an intense debate on Capitol Hill over defense spending.  

• Our view is that Chinese President Xi Jinping will take, as a matter of policy going forward, a tougher verbal stance against Taiwan than before US Speaker Nancy Pelosi’s (D-CA) recent controversial visit to Taiwan. Beijing will seek to leverage the current state of relations permanently – but that does not mean invasion is imminent. 

• How will we know if China is preparing to invade Taiwan? We would point to this excellent analysis by the former CIA Chief China Analyst on what to look for if in fact China were preparing to invade Taiwan:   https://carnegieendowment.org/2022/10/03/how-we-would-know-when-china-is-preparing-to-invade-taiwan-pub-88053  

• After reading this piece, you can see none of the “trip wires” that would necessarily be tripped by China on the way to invasion have been tripped.

Russia/Ukraine and the Use of a Dirty Bomb:

• US Secretary of Defense Lloyd Austin has had two extraordinary phone conversations in the last three days with his Russian counterpart, Defense Minister Sergei Shoigu. 

• Austin and Shoigu last spoke a few months ago (although there have been constant back-channel communications via two other nations).

• The purpose of the second call (Pentagon statement HERE) was to rebut growing Russian chatter of Ukraine using a dirty bomb – an almost certain “false flag” operation where Russian Forces would detonate a dirty bomb and blame it on Ukraine. A dirty bomb would be small – even the size of a suitcase – and would spew radioactive or biological (highly unstable and hard to use) or chemical materials.

• Shoigu pressed Austin on the claim that it is Ukraine and not Russia that is preparing to use a dirty bomb – as he did in separate calls with the French and Turkish Defense Minister. 

• Using a dirty bomb - and other forms of “asymmetric warfare” would fall into the risks we have previously outlined as Putin increasingly is backed into a corner by poor military execution of the war. A good example is the four holes blown in Nord Stream I & II. Other concerns to Western security officials are:

- Blowing underwater transatlantic communication cables between the Western Hemisphere and Europe, Africa, and the Middle East (they are unguarded. See the attached note to a possible Russian effort to do this back in January 2022);

- Attacks on commercial and government/military satellites;

- Additional attacks on oil/gas pipelines virtually anywhere in the world that are used to supply Europe;

- Sabotaging the global food supply chain: By cutting off grain/fertilizer exports from Ukraine and limiting what is sold by Russia, the impact would be felt hardest in the Middle East and Africa and could potentially set off a mass-migration event toward Europe in the spring of 2023. 

• Concerning the use of tactical nuclear weapons in Ukraine, the Biden Administration continues to believe the risk remains fairly low. What would Russia hit? There are no massed Ukrainian military forces, only large civilian centers. We would note Putin was warned by Chinese President Xi at the Shanghai Organization meeting in Uzbekistan last month that using tactical nuclear weapons would result in China no longer being able to assist Russia and would force Beijing to join the rest of the world in strongly condemning Putin.

• Aside from the risk of deploying a dirty bomb – which would have limited geographical reach but cause mass hysteria among troops and civilian populations – we continue to believe there is a greater chance of Putin using chemical weapons. Russia managed and deployed chemical weapons in Syria for the Assad Regime. It has been documented that there were more than 60 chemical attacks between 2014-2020, all done with the direct assistance of Russian chemical weapons specialists (see Arms Control Association’s Timeline of Syrian Chemical Weapons Activity 2012-2022). Most of these were chlorine attacks – lethal but also able to quickly dissipate, leaving little evidence.