The Persian Gulf "Threshold" Reminds Me of Earlier Times
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The Persian Gulf “Threshold” Reminds Me of Earlier Times

by | published October 2nd, 2019

As readers may recall, I had expected to provide an update on how what is transpiring in the Persian Gulf would affect investment decisions moving forward. That was to have taken place shortly after my return from Dubai.

The players in the region had other ideas.

While Marina and I were in the air on September 14, drones and cruise missiles attacked the huge Saudi oil installations at Abqaiq and the Khurais oil field. By the time we landed, the terrain had changed. Again.

And that has required two more trips in short order.

Later this week, I’ll be at an undisclosed location for some heavy reevaluations of investment risk in the Persian Gulf. Two weeks later it’s off to one of my most frequent haunts, London, for a heavyweight meeting on tanker security in the Gulf and another place I have been active in recently – the South China Sea.

Stay tuned for that; I’m afraid this snowball has just started to roll.

The implications of these changes have animated most of what I have written for the last two weeks while waiting for the dust to settle.

Of course, the target in these matters never remains stable. Priorities in investment placements that had represented some of the directions emphasized by folks at my meetings in Dubai, Doha, and Fujairah were quickly scrapped after the Saudi oil attacks.

Saudi production has apparently returned to pre-attack levels (although my contacts believe use is being made of strategic oil reserves to make up some of the difference while the grade of crude exported is a concern).

But that’s not the real problem…

A Case of Deja Vu

There is now a significantly truncated level of belief that the situation is secure.

A seminal matter is widely acknowledged: Despite having spent billions on high end military hardware from the U.S., France, and elsewhere, Riyadh cannot defend its own oil infrastructure.

There is a basic reason for this, and it is hardly unique to Saudi Arabia. I have experienced it arising repeatedly over the last forty years.

Established nations seem intent on defending against the last war, acquiring the biggest, shiniest, most expensive armaments to do so, and thereby open themselves up to attack from “below the threshold.”

The concept is one honed during my tenure as an intelligence officer and applied beginning in the unsettling closing period of U.S. involvement in Vietnam.

To understand the idea, you need to have some background and be introduced to one of the more colorful people I have known.

Sophistication vs. Familiarity

Much of the Vietnam conflict was a process of learning how the other side fought. We went in to fight a brief police action of sorts with the wrong attitude, the wrong arsenal, and impatience to get the whole thing done with before the next election back home.

Those with the military upper hand, as an early mentor of mine noted, “Never feel comfortable fighting for less than the maximum of objectives with less than the maximum of fire power available.” In Vietnam, that resulted in our carrier task forces offshore, bombers at 40,000 feet, enough napalm to incinerate a country, and sophisticated aircraft.

All against an adversary using tunnels and paths through the bush.

The object was to get the other guy to cry “uncle.” Yet it turns out the other guy had been fighting superior firepower of one sort or another for centuries. They had a different mindset.

All of this was immortalized by one of the more curious figures in the war who probably contributed more to developing “the threshold” concept than anybody I ever knew.

Our paths crossed as I was starting out and he was preparing to leave (with a bang, as it turns out)…

Bringing Whistleblowing to a New Level

You need to know something about this fellow. Sam Adams was a direct descendent of the John Adams who became president and the Sam Adams who, in addition to setting a revolutionary standard in his own right, has ended up known to most these day as a great Boston lager.

A graduate of both Harvard College and Harvard Law, Sam was a Wall Street lawyer for a bit until finding his true calling: He entered the CIA in 1963.

While possessing a brilliant mind, Sam could also be a pain in the ass. Sometimes the posterior was his; more often it was attached to somebody else.

Despite riding a desk at Langley for much of his carrier, Sam became far and away the best analyst of the Viet Cong and of our fundamental inability to understand how they thought and operated. His book Who the Hell Are We Fighting? remains the best study to emerge from a bitterly divisive war.

That book really treated two wars. The first was fought on the ground against an indigenous enemy we knew little about. The second conflict was internecine, inside the U.S. intelligence community itself.

Personally, I survived both by a combination of using my mission parameters largely to ignore the chain of command, blind luck, and misreading a map. But all of that is the subject of another story, one I may someday tell.

Sam gave my detailed preoperational briefings stateside before I went in theater and debriefed me outside Tokyo once I returned. Both were the best I ever experienced.

Before he died in 1988, Sam had redefined “the threshold,” and had also created a firestorm in the process.


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Sam left the Agency in 1975. He testified before Congressional committees in what became known as the “order of battle” controversy.

This involved Sam’s exhaustive argument claiming that the U.S. government and intelligence community had deliberately underestimated the strength of the enemy, derided the underlying VC support within the population, and distorted body counts for political purposes. This brought the ire of the CIA, MACV (Military Assistance Command, Vietnam) intelligence, and some very heavy hitters.

But Sam was just revving up.

He appeared as a defense witness for Daniel Ellsberg and Anthony Russo in the Pentagon Papers case, and then brought whistleblowing to a whole new level.

Sam pilfered documents out of the CIA, buried them on his farm in northern Virginia, and then leaked them to CBS. The result was the January 1982 bombshell The Uncounted Enemy: A Vietnam Deception.

Based on Sam’s work, the CBS documentary claimed that high U.S. officers, including overall commander General William Westmoreland, had manipulated intelligence reports and deliberately underestimated VC strength.

Westmoreland sued CBS… and Sam. The general withdrew the suit in 1985.

 

Sam outside the courthouse in 1984
Photo: Steerforth Press

Fourteen years after his death, the Sam Adams Award was created. It is given annually by an independent group founded by Ray McGovern (another former CIA high-profile activist) to an intelligence professional who has taken a stand for integrity and ethics. This has been a politically charged award at times. Former winners include Julian Assange, Chelsea Manning, and Edward Snowden.

But back to the threshold.

The New Persian Gulf Threshold

There always develops a level below which a military power cannot effectively utilize its favored or primary weapons. What emerges under that threshold are calculated, low intensity attacks for specific, limited effect.

In the process, the “big boy” cannot effectively respond without escalating the conflict and thereby running the risk of sucking in additional participants.

This is where Saudi Arabia finds itself after September 14.

It cannot attack Iran and must be careful not to compel either the U.S. or Israel to enter the fray in any overt way. Should either occur, this becomes at least a region-wide battle with risk calculations radically altered.

As this unsettled mosaic moves, the impact on the energy markets clearly moves as well. As is always the case in such circumstances, new opportunities emerge.

Some of this will become clearer as I again confer with players and advisors who set the stage. That all begins in a few days.

My life may be unsettling. But it’s sure never dull.

Sincerely,

Kent

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