"Team Russia + China" Suddenly Crowding Our Shores
Why it matters and what to do next ...
Russia and China last week teamed up to do something we’ve never seen before.
Not during the original Cold War (1947-1991).
Not during the Korean Conflict.
And not here during a New Cold War … one that’s clearly spooling up.
Not ever …
Until last Wednesday, that is.
On that day, a joint Beijing/Moscow military exercise sent two nuclear-capable heavy bombers from each country into the Alaska Air Defense Identification Zone (ADIZ), the North American Aerospace Defense Command (NORAD) reported.
It was the first time warplanes from China and Russia jointly approached U.S. air space — and the U.S. coastline.
“Russian bombers have conducted such patrols since the Cold War, and Chinese and Russian bombers have operated together before. But this is the first time they have done so in the Alaskan ADIZ,” FDD writers said last week.
Some observers will dismiss this as more of the same, since Russia warplanes fly into the Alaskan ADIZ several times a year …
Since Russia and Chinese planes have done this to other countries …
And since the U.S. military runs its own version of these gambits — and has run them for decades.
But Wednesday’s incident warrants notice. It’s different. It represents an “escalation” of sorts. It was meant as a message. It comes at a time of great uncertainty here inside America. And it’s a “preview of coming attractions” — as a sign of things to come.
That means we need to take note of it … as Americans … as observers … and as investors.
So I’ll use today’s Stock Picker’s Corner (SPC) to give you the facts … to explain what those facts mean … and to explain what you can do about it.
In Part II later this week, I’ll tell you about a company that’s putting all this together.
And I’ll start with an answer to the most-basic question of all: What the heck is an ADIZ?
Buffer Zones … And Hot “Spots”
The Air Defense Identification Zone (ADIZ) is kind of a national-security created “buffer zone” that’s still, technically, international air space — meaning it exists outside the sovereign air space claimed by a country.
The United States was the first to create one – back in December 1950, at the start of the Korean War. And, today, about 20 countries have them. As buffers, they play a crucial role. They serve as a kind of “early warning space” that gives air defense networks time to identify, prepare for and react to incoming aircraft – which can include intercepting and turning them away.
Here's a map of the ADIZ for America and Canada.
Countries make a game of probing their rivals’ ADIZ areas — sometimes flying as close as possible to sovereign boundaries, too.
Russian aircraft flew into the Alaskan ADIZ in February, April and May of this year. And Russian and Chinese warplanes have been much more aggressive with Japan: According to a June Newsweek report, the Japanese Air Force had been forced to scramble jets nearly 700 times in the previous 12 months as aircraft from Russia and China “probed” the island nation’s air defenses.
China is especially aggressive with Taiwan. It sent 1,700 planes toward and around that island nation last year. During a 24-hour stretch earlier this month, Taiwan said it detected the highest number of Chinese warplanes this year — a show of force that (not) coincidentally took place at the same time as the NATO Summit in Washington, D.C.
The United States does this, too. Under the label of “Freedom of Navigation Operations,” or FONOPs, we run ships through the South China Sea – as a way of challenging territorial claims that don’t comply with international laws. The U.S. Navy and Air Force fly military planes through there, too — at times with terrible consequences.
Late last October, a USAF Boeing B-52 Stratofortress suffered a near-miss when a Chinese fighter jet allegedly zoomed within 10 feet of the heavy bomber. Air Force Times says there have been 180 aerial intercepts of U.S. aircraft since the fall of 2021. China warplanes fired flares in front of a Canadian military helicopter during that same time frame.
And back in April 2001, a China Shenyang J-8 jet fighter collided with a Lockheed EP-3 – a spy plane version of the P-3 Orion sub-hunter — an incident that killed the fighter pilot and led to a forced landing by the U.S. Navy plane.
But this was different.
We’re talking about two Russian Tupelov Tu-95 and two China Xi’an H-6 heavy bombers. Both were escorted to and from the ADIZ by Russian fighters. And none of the combat planes came within 200 miles of the U.S. coast.
The Real Story
So why do countries conduct these flights?
The reasons are many … and varied. But I’ll share a few here (intentionally oversimplified, of course).
Standard Military Drills: The air forces and navies of the world want their pilots and air crews to stay sharp — and to conduct exercises where there’s a bit more “skin in the game” to up the ante.
It’s a Test … and Only a Test: Even if you don’t actually penetrate your enemy’s air space, getting close to it gives you a heck of an information dump. You see how fast they respond. You “light up” the air defenses — maybe getting a read on what kind of radar, air-to-air missiles and interceptors your enemy has.
Spying: Remember that Lockheed EP-3 I mentioned a moment ago? The “E” prefix stands for “electronic” — meaning the aircraft has a special gear installed to jam enemy air defenses, provide “early warning” advantages and even gather electronic and signals intelligence.
To Send a Message: China’s tactics in the South China Sea — flying close to aircraft and flying close to Taiwan — are meant to intimidate. The overflights that coincided with the NATO Summit was a sign of displeasure. The Russia/China tandems – involving Japan and now NORAD — are intended to up the ante. The U.S. flights through that area say that “we don’t recognize your claim of this whole area as sovereign territory.”
There are other “messages” and “objectives,” too — but you get the point.
And don’t dismiss any of this as “routine” or “not a big deal.”
Because “big-deal territory” is where I believe we’re headed. And we’ve been there before.
Some history fans may already know about Francis Gary Powers, the Central Intelligence Agency (CIA) pilot of the Lockheed U-2 spyplane brought down by an air-to-air missile while on a mission over the Soviet Union on May 1, 1960. That shoot-down was truly an international incident — because Powers survived, was taken prisoner and put on trial for espionage.
But fewer know about USAF Maj. Rudolf Anderson, a U-2 pilot shot down and killed during a recon flight during the Cuban Missile Crisis.
And I’ll wager that even fewer know about the 17 USAF crewmembers killed on September 2, 1958, when their specially modified Lockheed C-130 Hercules was shot down in flames by four MiG-17 fighters. The plane entered Soviet air space – either by accident or intentionally to gather data. Author and intelligence expert James Bamford agrees this was probably the case.
Much of the incident remains a mystery: The plane carried six crewman — and 11 intelligence gatherers. The Russians say all 17 were killed. But the remains of only six men — the crewmen — were repatriated … leading to speculation that some or all of those others lived and were made secret prisoners.
These missions were known as “ferret flights,” and were focused on intelligence gathering, Smithsonian Magazine said in a 2017 report.
“Cold War ferret flights, made by the Navy and Air Force [had a special] purpose: Pinpointing the location and capabilities of the enemy’s radar in the event of nuclear war with the Soviet Union, the information would be critical to the Strategic Air Command bombers, would have to jam, destroy or evade radar in order to strike Soviet targets,” Smithsonian writer Paul Glenshaw said. “Flying unarmed, and at night, along the Soviet borders or even hundreds of miles inland, the ferret crews did not try to hide from the enemy radar; instead, they would get deliberately caught. Then they could listen to the enemy response through radio, radar, and other signals. The plan was to capture information, then get out before the fighters were scrambled or missiles were launched.”
Most of these were secret: Even the families of the C-130 crew didn’t learn the truth for decades.
And other families still don’t know the truth.
Here’s another fact I’ll bet most folks don’t know: According to that Smithsonian report, more than 200 Americans were killed on these Cold War missions to the Soviet Union. About 126 are still missing from 14 Cold War missions, the POW/MIA Accounting Agency says.
A Civilian Toll
Heightened tensions around ADIZ areas or along air space boundaries can have horrific consequences for non-combatants.
Some of these “other” incidents include:
The September 1, 1983 shootdown of Korean Air Lines Flight 007, which was destroyed by air-to-air missiles from a Soviet Fighter after the jetliner wandered into prohibited air space. All 269 aboard – including a U.S. senator – were killed. The Soviets claimed they thought it was a spy plane.
The July 3, 1988 shootdown of Iran Air Flight 655 by a missile fired by the U.S. Navy guided-missile cruiser U.S.S. Vincennes. The Iranian Airbus A300 was over Iranian waters and was on a flight from Tehran to Dubai. Navy officials claimed the ship mistook the Airbus for an Iranian F-14 Tomcat. All 290 aboard were killed.
And the July 17, 2014 destruction of Malaysian Airlines Flight 17, which was shot down by Russian-backed troops using a ground-to-air missile while flying over Eastern Ukraine. All 295 aboard were killed.
There are others, too. But these are the highest profile. And they all three share one point: All were civilian aircraft that were flying over or near contested or “hot” areas. And better intelligence might have prevented them.
Big Bucks, Big Surge
Here at SPC, we’re big believers in following the most-powerful storylines. That’s how you make sense of the world around you. That’s how you protect yourself. And it’s how you invest.
The New Cold War is one such storyline we’re following.
It’s real. And it’s destined to keep spooling up as countries around the world ramp up spending.
As they will.
Global military spending jumped 3.7% in 2022 to hit a record $2.24 trillion, says the Stockholm International Peace Research Institute (SIPRI), an independent think tank that’s one of the leading experts on arms, military spending and other global security issues. And it will continue to grow — approaching $3.3 trillion by decade’s end, SIPRI says.
The three largest spenders — the United States, China and Russia — accounted for 56% of that $2.24 trillion total. And the 13% jump in spending in Europe was the steepest year-over-year surge in 30 years.
The United States is far and away the world’s No. 1 military spender. U.S. outlays hit $877 billion in 2022 – 39% of total global military spending and three times the $292 billion spent by China, the No. 2 player in military budgets.
Military spending has helped rev China up into a true superpower. That $292 billion for 2022 was 4.2% more than in 2021. And it was 63% more than in 2013, SIPRI says.
Beijing has boosted China’s military budget for 28 years in a row.
What’s Next …
There’s a “new dynamic” taking place because of this New Cold War — one that’s fostering a trend I refer to as “deglobalization.” We’re seeing different countries around the world retreat toward regional “trading blocs.”
And that’s pushing Russia and China together.
Russia is dealing with sanctions because of its fight against The Ukraine. China faces constraints because the West wants to blunt its technological advances in such areas as aviation, semiconductors and artificial intelligence (AI) (coincidentally, three storylines we’re following).
The Alaska ADIZ incident is a “proof point” of this new collaboration between Moscow and Beijing.
That’s adding a layer of complexity and flintiness to the New Cold War.
And so is the technology advances were seeing — in AI, in drones, in cyberwarfare and more.
The offshoot of all that: Data … massive amounts of data.
In wartime — or in the defense of peacetime — all that data must be harvested, correlated and organized into useable “intelligence.”
And later this week — in Part II of this report — I’m going to show you one company that can make that happen.
See you then;
What defense stocks would be good?