Journal: USNI/AFCEA Feature Stephen Carmel of Mersck Line Limited on Global Connectivity, Risk, Trade, and Security

02 China, 05 Energy, 10 Security, Commerce, Commercial Intelligence
Stephen M. Carmel
Stephen M. Carmel

Stephen Carmel is a world-class speaker with a truly compelling story to tell, and after learning about him from his appearance at the USNI/AFCEA Joint War Fighting Conference,  we were deeply impressed.

Below we summarize the highlights from his speech, which we have put into a proper document with emphasis added throughout.  This is one of the most useful intelligent commercial presentations to government we have every seen.

Highlights of his “prime” or most recent speech are below–although delivered in May, it did not hit critical mass in our circles until just now.  Whatever “challenging tone” might be detected below is from Phi Beta Ioto–the speaker is a diplomat.

Carmel 14 May 09
Carmel 14 May 09

1)  Complexity is the prime challenge.  US Government is not trained, equipped, or organized to deal with complexity.

2)  Global trade web has zero slack capacity and both the maritime and air webs depend in internal train and truck webs to keep going.  US is $20 billion behind in the latter infrastructure.

3)  Global trade web runs on computers and with the dependence on just in time inventory handling, has zero slack in the event of disruption, and the easiest as well as the most damaging disruptioin lies with computers and data that can be contaminated, manipulated, or simply destroyed.

4)  USG completely missed China’s deal with Russia to lock up the Siberian oil supply that is now bonded at the hip with the Chinese refining capacity that was part of the deal–this is a supply not subject to maritime interdiction.

5)  US military is very heavily dependent on the global supply chain, and does not appear to have factored in that dependency or its vulnerability to precision disruption.

6) Arctic and natural resources in the Arctic, is the next battlefield, US military (as well as all other US government entitites responsible for having a clue about the world at large) is not trained, equipped, or organized for that environment, and Phi Beta Iota speculates, neither is the U.S. Intelligence Community.

7) US dependence on strategic minerals, many of which are 100% imported, is a known vulnerability, not not one that the US Government appears to be addressing with any degree of coherence or even awarness.

8)  China is central to US survival yet US has a split personality in dealing with China, could benefit from getting a grip on the totality of the relationship and devising a coherent Whole of Government approach that is initmately respectful of private sector concerns, equities, and opportunities.

9) The U.S. Government’s policy focus is narrow [he avoids saying ignorant, incoherent, and sophmoric, but he might as well have] and takes stands that appear to be completely oblivious to the implications of those stands with respect to both the global trade web and the domestic trade web.

10) Bad policy is a self-inflicted wound that is much–much, much, much–more damaging to the US economy than any combination of terrorist attacks.  He offers two examples, both compelling, and it is clear this gentleman is both a thoughtful patriot, and one hell of a good businessman.

11)  Congestion is the Achilles heel of complexity, and the easiest to disrupt with relatively small asymmetric attacks or subtle sabotage.

12)  QUOTE: “Understanding the global system as a system, interdependencies, and network interaction effects is critical to proper policy.  The Chinese for example, are acutely aware of how important Los Angles is to their economy.  It is unlikely there is any appreciation in the US for how valuable Hong Kong is to the US economy.   Hong Kong by the way dwarfs LA in terms of container flow.  We are piker’s here as far as the size of container terminals go.”

13) Single points of failure are real, pervasive, not understood, and very, very scary.

14)  Lack of political will–to understand, to act, to think–is the single reason why Somali piracy, Peak Oil, and all our other challenges have gone from easily anticiated and manageable challenges, to near-catastrophic and nearly-unmanageable global crises.

Now for one more, his 2007 presentation to the Maritime Strategy Conference.  On the left, the conference itself, on the right his presentation to that conference.

Maritime Strategy LogoCarmel 2007