Friday News Roundup — January 29, 2021
Early Steps on China Policy; Reddit and the Stock Market; The Politics of Who’s a ‘Ranger’
Happy Friday from Washington, DC. January has had a theme of particularly newsy Wednesdays brought to you by the letter “I”. January 6 had the Insurrection at the Capitol; January 13 had Impeachment; and January 20 had Inauguration. This week, however, broke the streak, and for that we are all grateful. There is no shortage of important news both at home and abroad, but it is a comforting change to get back to something that feels more like normal. The Senate agreed to an organizing resolution that gives Senate Democrats very weak control of the chamber, as befitting the 50–50 breakdown of seats, and a key group of centrists made statements supporting the use of the legislative filibuster. Two more of President Biden’s nominees, Secretary of State Anthony Blinken and Secretary of the Treasury Janet Yellen, were confirmed, while the push to confirm Alejandro Mayorkas moved slowly ahead.
This week at CSPC, we hosted Pavel Podvig from the United Nations Institute for Disarmament Research and Olga Oliker from the International Crisis Group to talk about New START and the future of nuclear arms control, and Tevi Troy to talk about his new book Fight House: Rivalries in the White House from Truman to Trump. Ethan argued for civic discourse as an antidote for civic strife in The Hill, and Joshua reviewed Jessica Donati’s Eagle Down: The Last Special Forces Fighting the Forever War in Diplomatic Courier.
First, we open with some CSPC news about our new Senior Fellow Zaid A. Zaid. Then, in this week’s Roundup, Dan looks at some of the early signs from the Biden administration’s approach to China, while Michael looks at how Reddit trolls sparked stock market turmoil, and Ethan parses who gets to call themselves a U.S. Army Ranger. As always, we end with some news you may have missed.
CSPC welcomes Zaid A. Zaid as Senior Fellow
Zaid brings 20 years of experience in tech, policy, law, foreign affairs, national security, and international development from work in both government and the private sector. He is an expert in digital governance and foreign policy.
During the Obama Administration, Zaid served as Special Assistant to the President and Associate White House Counsel. He is now on the Strategic Response Policy team at Facebook. Zaid holds a law degree from Columbia Law School as an Editorial Board member of the Columbia Law Review and a Richard Paul Richman Fellow.
CSPC President and CEO Glenn Nye remarked, “We are delighted to have Zaid join the CSPC team. His depth of experience and knowledge will enhance the work of CSPC to convene key players from the public and private sectors to promote innovative solutions to key national challenges.”
Building a Whole of Government China Strategy
Dan Mahaffee
While the Biden administration has largely focused on its domestic agenda, economic relief, and COVID response, this can hardly be interpreted as a foreign policy honeymoon. Simmering crises around the world continue. From readouts of presidential calls to statements in confirmation hearings, the White House has yet to make drastic changes in the course of U.S. policy — especially in terms of great powers competition with Beijing and Moscow. A reminder of this challenge came this week, as General Secretary Xi Jinping spoke at the virtual Davos forum. In pointed remarks, Xi warned of new Cold War mentalities, called for respect for the sovereignty of smaller countries, and lamented threats to globalization — General Secretary Xi knows his audience. However, as James Palmer of Foreign Policy rightly points out:
[Xi’s] remarks are hypocritical. While Beijing tells the world it opposes a new cold war, it is running anti-foreigner campaigns at home, cracking down on foreign ideologies, threatening smaller countries that don’t follow its demands, building up its military presence in disputed areas, sending flights over Taiwan, and asserting that its thoughtcrime laws have global scope. What China really opposes is anyone else acting in response to its aggressive moves.
China’s aggressive moves are undisputed at this point. The overall arc of U.S. policy is unlikely to change, as newly confirmed Secretary of Defense Lloyd Austin wholeheartedly endorsed the 2018 National Security Strategy emphasizing great power competition and called out the military and technological competition with China. Chinese bombers practicing missile strikes on a transiting U.S. carrier group in the South China Sea is as clear a reminder as ever of China’s increasingly muscular military. As for Foggy Bottom, as Michael capably covered a week ago, Secretary of State Antony Blinken voiced a similarly strong stance. At the same time, measures to prepare and strengthen the United States for competition enjoy bipartisan support on Capitol Hill.
Working with Congress, there is an opportunity for the Biden administration to build a more coherent, strategic approach to competition with China. Building on the Trump administration’s recognition of the threat, a possible Biden strategy can be seen in a more systemic, institutional approach to China. To evaluate such an approach, it helps to break them down into various categories where contrasts can be made with the administration.
First, on the issue of human rights in China, the Biden administration has stayed the course with key Trump administration policies — although insider accounts suggest that President Trump cared little about human rights, focusing mainly on the military and trade balance. Still, rather than serving to corner the incoming administration, as some speculated, the Biden administration re-iterated the Trump administration’s genocide designation for Beijing’s policies targeting the Uighur population. While this opens the path to further sanctions on individuals and companies involved in that crime, Hong Kong also remains a point of significant concern. During the tumultuous transition period, Hong Kong authorities furthered their crackdown on pro-democracy leaders, including wealthy publisher Jimmy Lai. Should the Biden administration seek to work with China hawks in Congress, one key measure would be to allow for refugees from Hong Kong to seek asylum in the United States — one difficulty with this comes closer to home than from Beijing, Senator Ted Cruz blocked a previous measure welcoming Hong Kong refugees back in December. The United States should emulate the example of our friends in Britain and make it easier for Hong Kongers to flee the crackdown.
Next, the Biden administration has and can continue to emphasize the importance of cooperation with partners and allies — not only in the region, but around the world. Taiwan, India, and Japan are just some of the partners who face regular territorial challenges from Chinese military forces, while our Australian allies have faced an economic assault. The cooperation with allies that continued at various levels of government under the Trump administration will now be complemented by leadership from the Oval Office that lauds and respects allied contributions. While this tenor may help with some European allies, there will be significant pressure from established European business and political interests against a stronger stance on China. Thus, while allies in the Indo-Pacific present further opportunities for strengthening economic and security partnerships, engaging our European allies on China will require both managed expectations and policies emphasizing human rights, shared values, and the European grassroots’ perceptions of China.
Finally, while not a traditional aspect of foreign policy, the Biden administration’s domestic policy cannot be separated from our approach to China. Beijing sees the impact of COVID, its economic hit, and the rancor of our politics as harbingers of American decline. A focus on competition with China does not start at the waters’ edge. Looking beyond trade — where the Biden administration will likely keep the current tariffs — it requires investments in America to strengthen our infrastructure, education, and healthcare, while also fostering innovation and enterprise. Following the scenes of the past weeks — especially the January 6th insurrection — showing that American democracy can function, and deliver, is ever important.
While a formal strategy will take time and require far more detail, the initial strokes of such an approach are seen in the Biden administration’s early actions, as well as some of the measures that have been proposed in Congress. Confronting Beijing’s human rights abuses and working with allies address immediate concerns — much can be done here with executive power and support from Congress. With more aggressive incursions by Chinese air and naval forces in the region, there must be vigilance for the type of miscalculation that begets international crisis. These still are the near-term matters. The long-haul requires cooperation here in Washington to get ourselves in shape.
Redditors Troll Shorts for Lulz, GME Explodes
Michael Stecher
Like a lot of physical retailers, GameStop’s business has been disrupted in recent years. Video game console makers like Sony and Microsoft have created their own digital storefronts to cut out the middlemen and restrict the market for used games; a similar process has taken place with PC games. The same shifts in retail modalities that hammered Barnes and Noble like the decline of malls and the rise of Amazon have undercut GameStop’s business. Over the last two years, under pressure from investors, GameStop has tried to engineer a resurgence by focusing on digital sales. Some mild confidence was building that the company might turn around.
Set against the investors who were cautiously optimistic were a group of hedge funds who were betting that the share price would go down. They borrowed shares of GameStop, which trades on the symbol GME, and sold them on the market. If the price declined, they would buy the shares back, return them to the lenders, and pocket a big profit. GameStop was one of the most-shorted stocks in the market; the number of shares shorted exceeded the total number of shares outstanding. This piece of financial alchemy happens because an owner of stock or the brokerage at which the owner custodies their assets lends the shares to a hedge fund who sells it to another buyer who then lends it to another hedge fund and so on.
Heavily shorted stocks become vulnerable to a “short squeeze.” As the stock price rises, hedge funds with short positions have to increase the amount of margin they post as collateral against the stock loans. Some of them will close out positions rather, but this involves buying shares on the market, which increases the upward pressure on the price. That means more margin calls and more buying.
Starting in June 2019, at least one poster on the Reddit page WallStreetBets had identified it as a short squeeze candidate and started buying call options. These options gave him the right to buy GME stock at $8 per share on January 15, 2021. Since the stock price was only around $5 at the time, this contract did not cost a lot of money. As the stock price crept higher over the last few months, more members of the WallStreetBets community bought into the stock — mostly also using options, but the net result is the same — and suddenly this distributed group of redditors controlled a substantial fraction of the outstanding shares of GME.
When some good news caused GME to pop two weeks ago, the short squeeze was on, but this group of redditors refused to sell, so the price exploded. WallStreetBets is a forum for a particular type of day trader; like much of reddit, it has a distinct ethos that runs the gamut from anti-establishment through anarchic and into nihilistic. Once the GME short squeeze became a fight between Redittors and hedge funds, more and more people poured money into the stock, and into other heavily shorted companies. These trades were powered by the increased availability of single-stock investing made possible by commission-free trading platforms like Robinhood. The hedge funds with short positions took massive losses, some required capital injections from investors to avoid insolvency, and fears spiked that this could spark a contagion similar to the collapse of the hedge fund Long Term Capital Management in 1998.
Recent price movements in GME have been insane. The price opened on January 4 (the first trading day of the year) at $19.00. It closed on January 25 at $76.79. The price almost doubled the next day and more than doubled the day after that. Yesterday, GME fell by more than 40%. That decline may have been driven by a decision by Robinhood to restrict users’ ability to buy more shares of GME, though existing positions could be sold. This decision prompted a major backlash from investors, as well as from the populist wings of both political parties — Ted Cruz agreeing with Alexandria Ocasio-Cortez is an unusual turn of events.
At first glance, it is easy to imagine that there is securities fraud going on here. Buying a cheap stock, ginning up buying interest among investors, and then selling when the price goes up are elements of a classic type of con called a pump and dump. That is what Jordan Belfort, the main character in the movie Wolf of Wall Street, went to prison for in 1999. When the GME bubble pops and the price falls back towards its economic fundamentals, people who bought into the hype will lose a lot of money. The missing element is that a pump and dump con uses false or misleading information to generate the buzz. The Securities and Exchange Commission will have its hands full analyzing options trades and posts on WallStreetBets to determine whether any fraud took place.
The GME episode provides more insight into the powerful technological and social trends of the 21st Century. 20 years ago, the internet made day trading possible. A few day traders got very rich during the tech boom and the opening up of the financial markets put more pressure on brokerages to make it easier and cheaper for retail investors — individuals rather than large institutions — to participate. The internet has also made possible the formation of ad hoc interest affinities that can wield immense power. Last summer, a group of Korean pop fans took credit for the disappointing attendance at a rally for President Trump in Tulsa that led to the firing of his campaign manager. Online communities of Harry Potter fans have waged a years-long battle to spiritually dispossess J.K. Rowling of her creation because her transphobia offends their appreciation of a fable about tolerance.
Each of these groups have their own bespoke interests that do not necessarily overlap: spending even a short period of time on WallStreetBets would make it clear that they are not overly concerned with trans rights. They are, however, unified in their opposition to an establishment that they feel has shut them out, and the ironic, pop-culture inflected language that signifies their group membership. This low-key, trollish anarchism, generally expressed through memes, does not map easily onto the distinctions that inform politics, but they wield substantial political power, and that power is likely to continue to grow in the coming years. The forces that motivate both gamergate and whatever we choose to call the upheaval in young adult fiction may turn out to be the red-brown alliance of our time.
“‘Rangers’ Lead the way”
Ethan Brown
Military service and political aspersions took center stage in this week’s headlines when Congressman Jason Crow (D-CO) put Senator Tom Cotton (R-AR) on blast across the twitterverse for the use of a label typically ascribed to a select few in the military. The backstory is fairly straightforward, yet rife with controversy befitting the school-yard squabbling that crosses partisan boundaries in today’s tribal political spheres. This is likely to come back to haunt the 2024 presidential GOP hopeful when primary debates open, an unfortunate continuation of the politicization of the defense enterprise.
For reference, there is a Salon magazine article that disparaged Sen. Cotton’s 2012 congressional campaign for Arkansas’ 4th congressional district, specifically targeting his claim of having served as an “Army Ranger” in Iraq and Afghanistan. During his bid for the congressional seat, his campaign ran ads citing his honorable service experience in Iraq and Afghanistan, highlighting the fact that he declined a Judge Advocate General (JAG — military legal defense teams) commission in order to join the infantry. Important to note here that Senator Cotton is a Harvard graduate, receiving his J.D. from Harvard Law School in 2002 and had worked for several years (both circuit judge clerkships and private practice law) in the legal industry before volunteering to serve. So in light of his declining the JAG commission…let’s just say that the quality of life difference between a JAG and an infantry officer are…profound, to say the least.
The ads, as well as subsequent interviews and radio appearances on the campaign trail, saw the candidates clear assertion that he “volunteered to serve as an Army Ranger”. For important reference, Senator Cotton had successfully completed the Army’s notoriously difficult “Ranger School”, and was authorized to wear the prestigious Ranger Tab with his army uniform as an infantry officer. The later portion of this column will explain the particular differences between being a Ranger School graduate, and being an “Army Ranger”, a member of the distinguished 75th Ranger Regiment.
First things first — Senator Cotton’s service record is not in question; he deployed to Iraq and Afghanistan, first with the 506th Infantry Regiment (101st Airborne Division), and then with the 3rd Infantry Regiment. He received multiple Army and Air Force achievement and commendation medals, as well as a Bronze Star. The smearing of an individual’s military service is the unfortunate theme here, albeit in the (accurate) context that Sen. Cotton’s claim to have been an “Army Ranger”, is not valid. Words mean things, and plenty of fact-checkers, pundits, and formers have jumped on both sides of the issue.
U.S. Army Ranger School
Ranger school is the ultimate “suck fest”. The course, which is colloquially referred to as the Army’s premier leadership program, is open to all members of the DoD, and many coalition partners send their personnel to attend the program, which focuses on small-unit tactics, leadership, and combat skills under some of the worst non-combat conditions imaginable.
The curricula is an 81-day event (very few of the hundreds of candidates per course complete all three phases without a wash-back though), beginning at Fort Benning, Georgia. “Benning Phase”, is a multi-week affair of rigorous assessments, physical training, batteries of tests and assessments, and the beginning of the arduous combat patrols modeled after the doctrinal lessons catalogued in the Ranger Handbook. A third of each class does not make it through Benning phase, and those candidates are sent from Fort Benning back to their home units.
After the initial weeks, the RI’s (Ranger Instructors) like to tell candidates offloading the buses for “mountain phase” in Dolahnega, Georgia, that “this is where Ranger School begins.” More combat patrols, with members of each platoon changing out leadership roles for a given combat patrol on a daily basis. The candidates are charged with planning and leading raids, ambushes, fire and control decision making, communications, and a bevy of seemingly minute tasks like knot-tying, radio procedures, and quoting various passages from the Ranger Handbook in order to receive their go/no-go ratings from the RIs. Enough “no-gos’’ or a bad peer review from fellow candidates will get an aspiring Ranger School graduate washed back to a previous phase, awaiting the chance to try again. An integrity violation, a trend of sub-par performances (especially for officers like then-Lieutenant Tom Cotton), or as is often the case, medical emergencies and injuries, will get a candidate returned to their unit with a “do not return”. Mountain phase is the great equalizer of candidates.
Finally, the fortunate ones will move on to Camp Rudder, in Florida, for the notorious “swamp phase”. It is similar to mountain phase — combat patrols, raids, and maneuvers under the constant glare of RI’s looking for any reason to wash back a candidate; but this phase is performed in and around Eglin AFB’s treacherous swamps and remote training airfields.
All of Ranger School is performed on little or no sleep, always under the burden of a 90-lb rucksack and combat equipment, with no other food or drink besides potable water, and MREs (meals ready to eat). Candidates that attend Ranger School often lose in excess of 20 lbs, and all deal with assorted injuries, pain, sleep deprivation, and unfathomable stress.
Upon completion of the course, successful candidates are presented with the coveted Ranger Tab, approved for wear (and a mandatory uniform item) that will forever mark the bearer as a survivor of the worst three months in the U.S. Army. Senator Tom Cotton survived that as an officer (they tend to catch the harshest RI critiques due to their impending leadership positions over soldiers), and hats off to him for the distinguished achievement.
“Sua Sponte”
However, Ranger School and “being an Army Ranger” are indeed two separate things. This is the issue that individuals such as Congressman Jason Crow are riding on in the political mudslinging of the past week. Congressman Crow is a former member of the Army’s 75th Ranger Regiment, a unit within the U.S. Army’s Special Operations Command who own a unique and distinguished role as the world’s premier Light Infantry unit. I had the distinct privilege of spending the back half of my Air Force Special Tactics career as a Forward Air Controller aligned with Bravo Company, 3rd Battalion of the 75th Ranger Regiment (at Fort Benning, no less), and thus have a personal affinity for the sheer professionalism and tactical supremacy of “Army Rangers”.
“Recognizing that I volunteered as a Ranger, fully knowing the hazards of my chosen profession…” goes the first stanza of the Ranger creed, which exemplifies the entire ethos of the Regiment. As the Army’s premier Direct Action and Joint Forcible Entry unit, the Regiment has led the Special Operations community in distinguished missions against U.S. and allied adversaries since its inception in World War Two. Notable missions including the Normandy Invasion, Operations Just Cause, Urgent Fury, Black Hawk Down, Camp Rhino, Haditha Dam, and so many other critical national security events that the public will never know of. As a direct action unit, the Regiment has simply owned the counter-terror war in the previous two decades, specializing in pinpoint raids to remove terrorist cells in theaters of combat around the world. As a joint forcible entry unit, the Regiment stands by to initiate theater operations in any environment in order to enable massed conventional forces access to a denied area of operations.
In short, the Regiment is its own beast within the defense, and indeed the special operations community. Rangers are distinctive in their wear of the Tan Beret with the Regimental Flash, but only after successfully completing the 8-week Ranger Assessment and Selection Program, a grueling and tactically driven selection process to hand-pick the best of the best to join the ranks of the organization. Similar to Ranger Schools “suck”, RASP does not strictly teach skills, it refines the fundamental soldier core-competencies and hires the absolute cream of the crop. Simple selection is not the end state however. The smallest of tactical, professional, or integrity infractions at any point in a Regimental Rangers career can (and as I observed many times, rapidly does) result in an RFS (removed for standards), where the soldier is admonished, barred from ever returning to the Regiment, and sent to a conventional Army unit for their remaining careers. It is important to note here that every Ranger above the position of Team Leader (usually an E-5) MUST complete Ranger school in order to remain part of the Regiment and promote through the ranks and senior positions within their respective maneuver elements.
Politicizing a name
It is because of these distinct, though interrelated characteristics of the confusing “Ranger” moniker that so much vitriol has circulated around Senator Cotton’s use of the term. Those who have served in the 75th Ranger Regiment take great issue with the haphazard use of the expression “an Army Ranger”, when an individual is referring to completion of Ranger School. Defendants who eschew this pedantic thinking potentially equate the term to equitable suffering in order to acquire status or label.
In summary, at no point should Senator Cotton’s service be denigrated or questioned, and the slandering and squabbling over his inflation of the Ranger label is just a sad reminder of our ongoing political divides. This column might only serve as hair splitting, but addressing the errant use of the expression “Army Ranger” remains warranted, speaking from someone who walked beside those in the Regiment over multiple deployments. Those Regimental folks take the term quite seriously, while still nodding their stoic approval and anyone who manages to survive the notorious Ranger School.
News You May Have Missed
President Biden May Terminate $500M Arms Deal With Saudi Arabia
Miles Esters
The Yemeni Civil War has turned into the world’s worst humanitarian crisis.The is a proxy war between Saudi Arabia and Iran and to a lesser extent the UAE. A key enabler of Saudi Arabia’s intervention in the conflict-ridden country has been the supply of U.S. offensive weapon systems. In May 2017, the Trump administration signed a record arms deal with the country to counterbalance Iran in the region. Subsequently, in late December 2020, the State Department notified Congress that it was approving another arms deal with the Saudi’s worth $478m to supply them 7,500 precision-guided missiles. However, the Biden administration has signaled that it plans to reexamine its relationship towards the country and that begins with ending US support of the Saudi military campaign in Yemen by halting foreign military sales to the Kingdom. This comes at a precarious moment as the Saudi government recently expanded US CENTCOM access to “use various air bases and seaports in the country’s western regions” to enhance contingencies to counter Iran.
Chicago Teachers on the Brink of Strike
Sarah Naiman
As the strike deadline approaches, 25,000 Chicago public school teachers refused to return to the classroom this week, upending plans for the resumption of local elementary and middle schools on February 1. Amidst the COVID-19 pandemic, there have been an increasing number of educator strikes around the country. Like its counterparts in other states, the Chicago Teachers Union (CTU) is concerned about classroom safety, specifically regarding the availability of PPE and proper ventilation. In a vote on Sunday, over 70% of CTU members voted against returning to the classroom. The union is now on the brink of strike just fifteen months after its last major strike. Contentiously, while the CTU is refusing to return to the classroom, it is simultaneously advocating for faster educator vaccination. Chicago teachers are set to begin receiving the vaccine around mid-February. For now, it is unclear how the vaccine will affect teachers’ willingness to return to the classroom in Chicago and around the country.
India and China Border Tensions
Jaqueline Ruiz
Last week, Indian and Chinese forces clashed in the NakuLa area of the state of Sikkim. Officials are calling it a ‘minor faceoff’ that was resolved with protocols set in place. According to Indian security officials, Chinese soldiers attempted to cross the border into Indian territory which resulted in a dispute using sticks and stones. Firearms were not used in this particular clash. Tensions are high in the area where the border is largely undemarcated. The failure to reach a mutual border decision has led to years of conflict amongst them. The Line of Actual Control (LAC) consists of the main three contentious areas among China and India. There are troops deployed along the LAC despite the freezing winter temperatures because of the deadly clash that happened in June. The clash in June was the deadliest conflict they endured in more than five decades. It resulted in the death of 20 Indian soldiers and an unknown number of Chinese casualties. That clash also broke an agreement they had to not use firearms during border confrontations.
Miami Heat Deploy COVID-Sniffing Dogs
Last night was the first Miami Heat home game at which fans were allowed into American Airlines Arena since the NBA suspended its regular season last March. Only 1,500 tickets were sold in order to ensure limited clustering and virus exposure risk. In addition, while fans are waiting in line, they will be scanned by specially trained COVID-sniffing dogs. A study in Germany last year showed that dogs could have a detection accuracy similar to those of lab tests for the disease and, according to Axios, COVID-sniffing dogs are being used in airports in Finland, Chile, and the United Arab Emirates. This goes to show that, while the Miami Heat are near the bottom of the standings in the NBA’s Eastern Conference, dogs are still awesome.
The views of authors are their own, and not that of CSPC.