Posts Tagged China

China: OBOR, Africa And China’s Growing PMSC Industry

Members of the Ever Victorious Army, a mercenary army in China, during China’s Taiping Revolution. Led by American Frederick Townsend Ward and later Charles Gordon.

Every once in awhile, someone writes a good article on the state of some of these foreign markets that I really don’t have a good grasp of. For example, I do not speak Chinese, I do not work in the PMSC market in China, and I have had no interaction with Chinese contractors here at the blog or on Facebook. That’s not to say that they are not reading the blog or my FB stuff, but still, it is extremely difficult to get a good read on what is going on with that industry.

So I have to depend upon open source stuff that comes out, and try to put the pieces together. I also use my background as an armed security contractor to sift through what is interesting and what is not. With that said, I found these two articles below, to be very interesting.

The first talks about some key incidents that have fueled some movement in the Chinese PMSC market. In South Sudan last summer, there was a typical African ‘wild fire’ that broke out between the warring political factions there, and Chinese companies and their personnel were trapped. A PMSC named DeWe was called upon to rescue these folks, and their operation lasted over 50 hours. Here is a quote.

On the evening of July 8, the streets of the South Sudanese capital of Juba were raked with gunfire as an uneasy truce between warring political factions broke down. Inside the offices of DeWe Security, a Chinese private security firm, phones started ringing. Panicked Chinese oil workers employed by the China National Petroleum Corp, the main client of DeWe (pronounced DeWei) in South Sudan, were calling an emergency number to say they were in harm’s way and awaiting instructions. For Kong Wei, head of DeWe’s Juba office and a veteran of the People’s Liberation Army who retired five years ago, it was the start of a 50 hour-marathon without sleep as he and his colleagues executed an evacuation plan. “Bullets and shells flew over our compound all day and night”, says Mr Kong. The contractors soon realized that their tin-roofed cinder-block building couldn’t stop bullets ” just one of the many lessons they would learn.
In all, 330 Chinese civilians, stranded at 10 locations across the city, were instructed to hunker down until the airport could reopen. Some moved into shrapnel-proof metal containers. It was only on the fourth day of the fighting, once the government had blasted the rebels out of Juba, that the trapped workers were evacuated to Nairobi, the capital of Kenya.

I have no idea how many CNPC personnel were killed or if they all made it out alive, but the point being is that this was a major security nightmare, and it sounds like they were not that prepared for such an event. Chinese companies are not that responsible in that regard, and they are also going about it security in a very naive kind of way. For example, you should not be doing security in places like Iraq without a gun. Nor should you be providing security on boats without weapons. It’s just stupid and I continue to see this learning curve–they fear an liability of arming folks, then a bloody incident occurs where folks are killed and the security failed in protecting everyone, and then you get the backlash from the families of the deceased and from your citizens back home. Then eventually, they come to the logical point of arming their security. Remember, your threats out there could care less about your views on weapons and they will exploit your weaknesses if unarmed.

It kills me when this lesson had to be learned in the beginning stages of the Marsec industry when piracy was peaking, and unarmed guards were actually jumping ship as ‘armed’ pirates had their way with the client and their vessel. Well, the Chinese are learning this as well.

The other thing that needs to be brought up when talking about China, is their economic policy. OBOR or One Belt One Road is a Silk Road 2.0 type economic policy that China is currently trying to implement. It is said to be worth well over a trillion dollars. What is also driving OBOR is China has a manufacturing surplus, and it needs more trading partners and routes bad. Especially when they are now dealing with a Trump administration that has not been that favorable towards China.

As for the PMSC element of OBOR, Erik Prince and FSG just recently announced strategic alignment with OBOR. In one of the press releases, FSG mentioned that they were setting up two FOBs in Yunnan and Xinjiang province. China has some issues in these regions, and they have been clamping down on muslim extremists big time in places like Xinjiang or Yunnan. (on a side note, Xinjiang is Frontier in english…which makes you think that FSG was formed all along to deal with Xinjiang. It explains why they would bring on Prince, who is well known to jihadists)

Another point to bring up with OBOR is that the land component of this strategy has muslim extremists to contend with. TIP is one group of concern, and their members are getting more operational experience in places like Syria. They will be coming home, and that knowledge will be coming with them. Also, as China’s dealings with their muslim populations has been known to be extreme. But because journalists are really not able to cover that very well, I have no idea how bad the relationship really is. My guess is that it is bad, and the fear of a population being sympathetic to extremists is legitimate. So if OBOR is directed at building roads, pipelines and power lines in these areas, they will probably have issues. Here is a quote I found from one article that talked about actual numbers.

For China’s “One Belt, One Road” (OBOR) initiative, Islamic risk is also a prominent political danger. According to the broadest definition, OBOR involves 64 countries, 33 of which are Muslim countries, accounting for more than half the total. Among the remaining 31 non-Muslim countries, 10 countries have obvious existing Muslim unrest and are at risk of terror attacks. In total, 44 countries have Islamic risk, making up 69 percent of the total number of countries along OBOR.For example, Pakistan, China’s iron-core brother, is a country with serious Islamic extremism. From 2012 to 2013, violent terrorist incidents in Pakistan caused 11,590 deaths, which included 6,008 civilians, 1,408 policemen and 4,174 militants.

So there is OBOR and then there is also their expansion in Africa and their dealings in the middle east. I have written about that stuff in the past, and that is not new. But OBOR is something else, as far as scope and cost, and we will see how that works out.
Another deal that was mentioned in the articles below, from an industry news angle, is the growth of Chinese PMSC’s and the fact that they are unionizing. The first quote is about growth and it sounds like DeWe is making it’s moves. Also, it is interesting to know that HXZA has the monopoly on Chinese MarSec.

DeWe’s profile rose dramatically last summer when Chinese Poly-GCL Petroleum Group Holdings hired it to manage security at a $4bn LNG project in Ethiopia” the largest project that the Chinese private security industry has been asked to protect. Some other companies appear to have friends in high places. HXZA, for example, has a near-monopoly on security for Cosco Holding and China Shipping Container Lines, China’s two largest state-owned shipping groups. “They clearly have very solid relations to the state, considering how loyal their customer base is. And they are not that cheap,” says one foreign private contractor.

That LNG project in Ethiopia is huge! Here is a quick snippet of what that involves.

Development of the Hilala and Calub gas fields in southeastern Ethiopia may finally be getting underway, more than 40 years after their discovery.Project developers laid the foundation stone in early March for a $4 billion project to export gas from the fields to China. The project, which is being funded and developed by Chinese joint venture Poly-GCL Petroleum Group Holdings, involves the construction of a 700 km gas pipeline to transport up to 12 billion cubic metres of gas per year from the Ogaden Basin to the port of Damerjog in Djibouti, where the Hong Kong-based independent will build a 3 mtpa LNG export plant. The plan is to eventually expand the plant’s capacity to 10 mtpa.Construction should start in August and is expected to take three years to complete, a PR representative for the Djibouti government told Natural Gas Daily.

The reason why they need robust security for this operation is because of groups like Ogaden National Liberation Front. These folks attacked a Chinese assets in Ethiopia before, and no doubt, they will make things difficult for them again.
The final quote that was interesting as well, was this deal on numbers of PMSC’s and the fact that most are not armed. That is a bad combination, and I they are going to have quite a few incidents in the future if this is the attitude.

“About 3,200 Chinese employees of private security groups were based abroad last year”, says Liu Xinping, deputy director of the China Overseas Security and Defense Research Centre. “That compares with 2,600 Chinese troops deployed under UN mandates” China’s only foreign military deployments in conflict zones. Yet with a few exceptions the security contractors are usually unarmed. DeWe’s Chinese staff did not carry weapons during the fighting in Juba but led teams of armed locals. 7m Tonnes of oil destined for China said to be shut in by violence overseas each year Beijing is extremely cautious about the industry, partly due to the abuses of the type that have periodically plunged US occupations of Afghanistan and Iraq into crisis. In 2010, supervisors at a Chinese-owned coal mine in Zambia fired into a crowd of workers demanding higher pay, injuring 11 and triggering an anti-China backlash.
Two years later, a supervisor was killed at the site during a dispute over wages. One security company manager, who asked to remain anonymous, says all contracts they sign with Chinese state companies prohibit employees from carrying weapons.
“The government doesn’t want Blackwater,” he says.

They may not want the liability attached to arming their PMSC’s, but the threats out there could care less. They are armed, and to think anything other than an armed security professional will be able to stop these folks, is wishful thinking. It also does not match up with reality. China needs to take a hard look at what is happening worldwide, and know that it is a very dangerous world. If they care about their workers and countrymen, they should do the responsible thing and arm their security. Lives depend upon it.

This brings up another interesting point. Western PMSC’s have a distinct advantage when it comes to the armed security contractor game. Firearms are very much a part of the US culture. To not be armed is odd, if performing security functions. Plus, the US has a constitution that protects the rights of gun owners and our freedom of speech. In China, not so much. lol Matter of fact, these so-called Chinese PMSC’s, are really not private per se. They are state sponsored companies, and tightly controlled. They do not want these folks armed, because honestly, China has had a horrible time of uprisings in it’s history. Some of the most bloodiest rebellions and uprisings in the history of mankind, have happened in China. So they are very wary of losing any control or monopoly on the use of force. But their PMSC industry is going forward, and they are getting lethal because that is reality if they want to operate in places like Africa or the Middle East.

The question I always like to ask with this stuff, is where is the industry at, and where is it going in places like China? Hopefully this information helps the readership a little, and I will keep my eye out for any new movement with this stuff. –Matt

Chinese private security goes global

February 26, 2017

By Charles Clover

On the evening of July 8, the streets of the South Sudanese capital of Juba were raked with gunfire as an uneasy truce between warring political factions broke down. Inside the offices of DeWe Security, a Chinese private security firm, phones started ringing. Panicked Chinese oil workers employed by the China National Petroleum Corp, the main client of DeWe (pronounced DeWei) in South Sudan, were calling an emergency number to say they were in harm’s way and awaiting instructions.  For Kong Wei, head of DeWe’s Juba office and a veteran of the People’s Liberation Army who retired five years ago, it was the start of a 50 hour-marathon without sleep as he and his colleagues executed an evacuation plan. “Bullets and shells flew over our compound all day and night”, says Mr Kong. The contractors soon realized that their tin-roofed cinder-block building couldn’t stop bullets ” just one of the many lessons they would learn.
In all, 330 Chinese civilians, stranded at 10 locations across the city, were instructed to hunker down until the airport could reopen. Some moved into shrapnel-proof metal containers. It was only on the fourth day of the fighting, once the government had blasted the rebels out of Juba, that the trapped workers were evacuated to Nairobi, the capital of Kenya.

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Strategy: The Future Of War, By Sean McFate

I really liked this presentation because it brings in all of the elements that I have been talking about on this blog, into a nice format that Dr. Sean McFate has put together. It is definitely worth your time to watch and absorb.

The thing that stood out to me was the discussion of the strategic uses of private forces or PMSC’s. He presents the case that A. the industry is not going away B. we are reverting back to a pre-westphalian era, and C. that the west might not want to use PMSC’s for waging war, but other countries like China or Russia have no issue with them.

It is that dynamic that is interesting to me. That countries are slowly going towards the use of PMSC’s to wage war, and they are doing it as a part of their national interest. Russia for example used their little green men hybrid warfare strategy in the Ukraine. Iran uses mercenaries in Syria. And then there is China and their use of maritime militias. Even with the west, contractors have been used in Iraq and Afghanistan as a way to supplement manpower shortages in this wars. The common theme here is that private forces are used as a part of a larger ‘strategy’, and this presentation challenges those who are closed minded or unaware of those uses. It forces the viewer to think about how PMSC’s are used, or could be used, strategically.

In the past, I have discussed all sorts of interesting ways that private forces have been used for the sake of national interest. The very first overseas land operation of the US was the Battle of Derna (Shores of Tripoli from the Marine Hymn) in Libya, where a small contingent of Marines/Army commanded several hundred Christian and Islamic mercenaries to fight in the First Barbary War. The early privateers that the US used in the Revolutionary War and War of 1812 were another example of the use of PMSC’s as a part of a larger strategy to support national interest. The Flying Tigers was another example of modern aviation PMSC’s, or Britain’s Watchguard International Lmtd. in Yemen, or even recently with STTEP in Nigeria. Private forces can be used to great effect, and there are historical cases that make this point.

Sean covers a broad scope of ideas, and they are provocative to the say the least. What I wanted to post was the ten ideas of this future war he describes. Bear in mind, he is mostly referencing what is going on right now, and trying to envision where this goes with each point.

1. There will never be ‘symmetry’.

2. Technology won’t save us.

3. States matter less.

4. Warriors are masked and may not fight for states.

5. Laws of war and international law don’t apply.

6. There will be a market for force with mercenaries.

7. Others will wage war and new kinds of superpowers will emerge.

8. Plausible deniability is power.

9. Hearts and minds matter very little.

10. There will be more war.

I won’t ruin the whole thing for the reader, but I did want to comment on one deal he brought up that is not discussed a lot out there. He mentioned ‘hack back‘ companies, or basically cyber companies contracted to attack hackers or countries that used hackers to attack those companies. To me, this is pure cyber privateering, and we are getting close to the concept of state sanctioned hacking as this becomes more of a problem. I am reminded of the attack on Sony, and how brutal that was. Or worse, hacks on nuclear facilities…. In the past I have talked about how the Letter of Marque could be used for this as a means of keeping it in check. As more companies or countries get attacked by hackers who are sponsored by states, the idea of attacking back becomes more and more a thing to consider. For a further exploration of cyber privateering, I suggest the Morgan Doctrine blog. Interesting stuff and check it out below. If you are interested in further exploring this topic, I highly recommend Sean’s book called The Modern Mercenary: Private Armies and What They Mean for World Order. –Matt

 

The future of war points.

A screen shot of the future of war points.

 

 

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Cool Stuff: The Flying Tigers Heritage Park In China

“The victories of these Americans over the rice paddies of Burma are comparable in character, if not in scope, with those won by the Royal Air Force over the hop fields of Kent in the Battle of Britain.”-Prime Minister Winston Churchill on the Flying Tigers

Folks, this is quite the thing. I recently stumbled upon this massive memorial park project in China, and no one knows about it. At least I have never heard about it and I track this kind of stuff. And how cool is this?

So why is this significant? I am speculating here, but this would qualify as probably the worlds largest park ever dedicated to the sacrifice and efforts of a private military company, in the history of private military companies.( AVG or The Flying Tigers were a private military company/air force, and the work they did during WW 2 is the stuff of legends.)

The park is being built in Guilin, China. The site itself is located next to Claire Chennault’s command cave, which has been a tourist attraction over the years.  Now, there will be a massive park built right next to it.

The Flying Tigers Heritage Park committee are still seeking donations for the project, but obviously they have received some serious funding to get the park to this level. I recommend checking out the links below, and following their progress via their Facebook page. –Matt

Website for park here.

Facebook page for park here.

 

This is the artist’s rendition of what it will look like when complete. Here is some of the progress made. Here is a photo of the command cave with some tourists heading up there to check it out. With this artist’s concept overhead view, you can see the size of the project.

 

Why the Flying Tiger Historical Park?
The obvious answer is it is a chance to honor, preserve the memory of, and record for history the remarkable story that is the Flying Tigers, the Chinese and the CBI theater of World War II. A story that for many reasons has been overlooked, forgotten, or buried.
Many books have been written about the Flying Tigers and the pilots who flew the Hump (Air supply route from India to China across the Himalayan Mountains… the most dangerous air supply route in the world.) but for the most part the story and record set by these combatants has been passed over when reporting on the larger history of the Pacific War in WW II. The Chinese contribution has all but been ignored and yet their sacrifices were what made it possible for our American fighting men to achieve the success they did.
So, within the park grounds, the museum and the cave, we will tell their story. We will have memorial walls and statues honoring those who gave the ultimate sacrifice on foreign soil. The museum will have archives which will hold records, books and personal accounts of that dark period in our world history. Photographs and artifacts, both military and personal, will be on display. Archival film footage will allow one to revisit that time and experience a little of what these warriors experienced.
The Less Obvious Answer Is More Compelling…

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War Art: One The Hard Way, By Dan Zoernig

This is cool. This is some artwork depicting combat that actually happened between a Flying Tiger and a Japanese Zero. For those that do not know who the Flying Tigers or AVG are, they were an American private air force that flew combat missions for the Chinese, against the Japanese, with US blessing, all before and a little bit during the beginning stages of WW2. They were the only game in town for attacking the Japanese after the Pearl Harbor attack happened, and it is some very unique American war history. America also cheered this company on as they did their thing in China, all because this country wanted some payback. A movie was also made about this company, staring John Wayne.

I should note that the Flying Tigers had a bounty program as well… Maybe that is why this pilot was willing to rip apart another aircraft with his own? lol As to the back story, Parker Dupouy was awarded the Chinese Sixth Cloud Banner medal for his heroic actions that day. I would say this maneuver was pretty damned aggressive and ballsy. –Matt

Buy a print of it here.

 

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Industry Talk: Erik Prince Starts Africa Focused Investment Firm With Frontier Resource Group

Prince, who credits the Navy SEALs with bringing out his entrepreneurial spirit, said there were two main risks that perhaps every businessman in Africa must face.
The first one is the political risk in some countries, and the second is the very bad transportation and infrastructure, which means a high cost of doing business there.
“If you can’t get to market cheaply enough, that’s not interesting,” Prince said.
Many foreign investors came to Africa purely for its natural resources, he said, but they forgot that transporting those resources was as important as exploring and producing them.

This is interesting news. As I mentioned before in prior posts, Africa will be a top focus for PMSC’s just because of all the business and resource extraction potential there. A company like Frontier Resource Group can easily be the company that can link the investors with those PMSC’s that could protect and insure those investments in Africa. Or at the least, FRG can help to identify those investments with the highest chance of success based on the risk assessments done by FRG.

The mention of Chinese investors partnering with FRG is key as well. I mentioned in prior posts about an increase in business for South African PMSC’s or consultants from the Chinese, and it would make sense that Prince would want to step in and serve this particular group of investors. –Matt

Website for Frontier Resource Group here.

 

Into Africa: Ex-navy SEAL sets trail for investors
November 19, 2012
By George Chen
Erik Prince of Blackwater fame has set up a company that will be the ‘search radar’ to help firms manage the risks of investing there
The man who built up Blackwater – the giant private security force that guarded US diplomats in some of the world’s most dangerous places, including Afghanistan and Iraq – sees Africa as his future.
After Erik Prince sold his firm to investors about two years ago, the former officer in the Navy SEALs – the special US military force that killed Osama bin Laden last year – set up a new company called Frontier Resource Group (FRG) early this year.
FRG is an Africa-dedicated investment firm partnered with major Chinese enterprises, including at least one state-owned resource giant that is keen to pour money into the resource-rich continent.
“Africa is so far the most unexplored part of the world, and I think China has seen a lot of promise in Africa,” Prince said during a brief trip to Hong Kong last week to meet potential Chinese investors and partners. “But the problem is if you go alone, you bear the country risk on your own. You have to get support and maintenance there,” Prince, FRG’s managing partner, told the South China Morning Post in an exclusive interview.

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Afghanistan: Potential For A Mining Boom Splits Factions, Attacks Scare Chinese From Anyak

“If you were to pick a country that involves high risk in developing a new mining sector, Afghanistan is it,” said Eleanor Nichol, campaign leader at Global Witness, a group that tries to break the link between natural resources, corruption and conflict. “But the genie is out of the bottle.”

The part of this article that struck me was the illegal chromite mining and smuggling going on, thanks to the Haqqani network. If they think it is lucrative enough to do illegally, then there must be some money in it.  So any effort of the government to move in and secure those mines would be good. They could get a private company in there to extract it, they would deny the Haqqani’s that revenue, and it would get people working and earning a living.

And really, earning a living is what Afghans need– as noted in this quote:

At a store in the dusty bazaar, Shir Ali, 38, a gangly man who drives a minibus, says that with a job as a day laborer or security guard or driver, he could buy uniforms and textbooks to send all of his 12 children to school.
Sitting at the counter behind open sacks of rice and beans, the storekeeper, Daoud, 38, cracks his bronzed face with a smile, sharing the optimism but also the trepidation about whether at last his country can really make something of itself.
“If the mine doesn’t come, we will be like those people who live on treasure,” he said, “but they cannot use it.”

It will also require the services of private security companies and professionals who know how to operate in Afghanistan and navigate it’s complex ways. Mining operations require everything, from good roads to electricity to infrastructure to house miners and engineers, etc. They also need a viable way of getting that stuff out of the country, and all of this needs to be protected. Of course Afghans will be protecting a majority of this, but expats will be involved as well– to protect foreign companies from these Afghan protectors and insurgent/criminal attacks.

I say this because of the large spike of insider attacks and the infiltration of bad guys. The criminal/Taliban networks will all want their cut, or they will be attacking everything to make the point. Don’t forget about the Islamic extremists, and they will attack foreign infidel companies just for common practice. Companies must have a protective buffer in the form of expats in order to work in such a dangerous and complex environment.

The Afghan government must also come to terms with this reality, and if they want the revenue necessary to fund their military and police and services to the people, then they will have to do business with these foreign companies and meet in the middle. If those companies cannot trust your APPF force, or the local guards they contract with, then the government must know that it is either you allow these companies to bring in their own security–or they don’t come at all.

And like Daoud said,  “If the mine doesn’t come, we will be like those people who live on treasure,”. They will also be a poor and pissed off people, who will find no use in a government that cannot produce the conditions necessary for this foreign investment and involvement. No jobs equals protests–please note the Arab Spring…. No revenue means you cannot pay your soldiers or police, or properly secure the country. Get the picture Afghanistan?

To make this point very apparent, I posted a second article about the Chinese pulling their people out of the Anyak copper mining project. The Taliban are definitely targeting this operation to scare off the Chinese and put the hurt to the Afghan government. Here is a quote:

“We had meetings with them (the Chinese investors) and assured them these rocket attacks happen anywhere and they are not the direct targets. We had repeatedly meetings with them but could not make them confident,” Sardar Mohammad Sultani, acting deputy Minister of the Interior, told Reuters in his office.
“They left before any harm (was done to them). This was their own idea… It’s up to them if want to return or not,” said Sultani, in charge of the security force protecting the mine.
A spokesman for the consortium running Aynak, China Metallurgical Group (MCC) and Jiangxi Copper, confirmed some workers had been sent home indefinitely. It said unspecified “conditions” promised by the Afghan government in their contract had not been met…The threat is so severe that villages have warned the Afghan rights and anti-corruption monitor Integrity Watch Afghanistan (IWA) to stay away as they can no longer guarantee their safety.
IWA reported there are four armed groups operating in the Aynak area, some aiming to stop the project.
And the attacks are becoming more deadly. At the start of September, an assault on the protection unit killed 15 Afghan policemen, spreading fear among local and visiting workers…

 On another note, it looks like the Chinese will be getting into the game of training/funding/equipping Afghans. Enter the Private Security Dragon. lol

In a rare visit to Kabul this month by a top Chinese leader, bilateral deals on security were signed, including an agreement for police to be trained, funded and equipped with help from Beijing.
The government did not say whether the Chinese programme was aimed at boosting security around China’s oil and mining assets.

Interesting stuff, but Afghanistan can navigate this if they pull together and get serious about securing and controlling this stuff. They must secure this revenue source for the people, and do all they can to break this ‘resource curse’. –Matt

 

 

Potential for a Mining Boom Splits Factions in Afghanistan
By GRAHAM BOWLEY
September 8, 2012
If there is a road to a happy ending in Afghanistan, much of the path may run underground: in the trillion-dollar reservoir of natural resources — oil, gold, iron ore, copper, lithium and other minerals — that has brought hopes of a more self-sufficient country, if only the wealth can be wrested from blood-soaked soil.
But the wealth has inspired darker dreams as well. Officials and industry experts say the potential resource boom seems increasingly imperiled by corruption, violence and intrigue, and has put the Afghan government’s vulnerabilities on display.
It all comes at what is already a critically uncertain time here, with the impending departure of NATO troops in 2014 and old regional and ethnic rivalries resurfacing, raising concerns that the mineral wealth could become the fuel for civil conflict.
Powerful regional warlords and militant leaders are jockeying to widen their turf to include areas with mineral wealth, and the Taliban have begun to make murderous incursions into territory where development is planned. In the capital, Kabul, factional maneuvering is in full swing, including disputes over lucrative side contracts awarded to relatives of President Hamid Karzai.

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