Good morning and Happy New Year,

Welcome to another Thursday morning brief. Let’s look at some major updates from this week.

Reporting Period: 30 December 2024 - 2 January 2025

Bottom-Line Up Front:

NATO May Invoke Article 4 Due To Russian Sabotage

Summary
On 29 December, EuroNews reported that Sweden’s opposition Social Democrat party has urged the government to invoke NATO’s Article 4 — a request that would force a special meeting of alliance members. Sweden’s Foreign Minister Stenergard stated the government “does not rule anything out.” Article 4 has been invoked seven times since NATO’s creation in 1949.

Findings

• Article 4: This article compels member cooperation and coordination against growing security threats:

• Sabotage: On 25 December, the Estlink-2 power cable, which transmits energy from Finland to Estonia, was ruptured. Finland seized a Russian tanker, the Eagle S, believed to be involved in the sabotage. A 30 December investigation found anchor drag marks on the sea floor, indicating sabotage. The same day, the Finnish Coast Guard also stopped a small craft from reaching the Eagle S.

• Future Actions: In lieu of a coherent, rapid response by NATO, individual states are beginning to suggest they will undertake their own measures to reduce or halt future sabotage. Sweden and Estonia have already expanded patrols and surveillance operations with naval vessels and aircraft. On 29 December, Latvia’s prime minister said its military may seize ships linked to Russia’s “shadow fleet” if threats emerge or continue.

• NATO: On 30 December, NATO stated it would expand operations in the Baltic, but did not provide details regarding what assets will be deployed or what missions they will carry out. NATO said it is considering expanding the role of its Maritime Centre for Security of Critical Undersea Infrastructure.

Why This Matters
There are three immediate effects of Russia’s — and China’s — sabotage operations in NATO territories:

• Decreased Relations: Russia’s continued sabotage decreases whatever diplomatic relations remain between Moscow and NATO states. This is also complicated by the fact that some NATO states share warmer relations with Russia than others, making a unified front on security and Ukraine peace negotiations a tall order.

• Security Escalations: NATO nations cannot allow sabotage to go unchecked due to the violation of national sovereignty, responsibility in governance, and growing concerns of direct conflict with Russia. Some states, like Sweden, Estonia, Finland, and Poland are making it their individual responsibility to address these security concerns, leaving NATO positions further disjointed and increasing the range of possible conflict flashpoints (i.e. instances of major security crises that lead to conflict).

• Competency and Positive-Sum Gains: An unpopular opinion in the world of foreign affairs and national security is this — sometimes state and non-state actors do things because they can. There is often an added benefit of developing tactical or operational competencies for militaries or operational forces. In the case of sabotage and hybrid warfare, NATO’s delayed and disjointed response simply builds competency for Russian and Chinese agents. Additionally, disruptions in services and costs associated with repairs or assembling a response is a positive-sum gain for Moscow and Beijing.

Sources: EuroNews, AP News, The New Voice of Ukraine, NATO, ASPI, NATO

Iran’s Energy Crisis Shrinks Industry, Rial Value

Summary
Iran is currently facing an economic crisis due to low energy production, sanctions, proxy war, and aging infrastructure. The energy crisis, which is rapidly devaluing the Iranian Rial and shrinking industrial output, poses a significant risk to the Khamenei regime. Iran’s crisis makes Tehran significantly less capable of funding and coordinating Hamas, Hezbollah, and the Houthis against Israel.

Findings

• Industry: Iran’s Supreme Labor Council stated that upwards of 50% of Iran’s industrial facilities have ceased operations due to power outages. More than 80 power plants have shut down.

• Energy Crisis: Iran’s energy crisis, which is marked by electricity and gas shortages, is reportedly due to aging infrastructure, international sanctions (i.e. related to Tehran’s nuclear development and funding and coordination of terrorist proxies), and corruption.

• Geopolitics: Iran’s costs are also running high due to Tehran carrying out a losing proxy war against Israel. Iran’s 2024 defense budget likely topped $16.7 billion, with billions going to Hezbollah, Hamas, the Houthis, and the Quds forces each year.

• New Sanctions: On 31 December, the US Department of the Treasury announced it was instituting new sanctions against Iran (and Russia) for attempted interference in the 2024 US election.

Why This Matters
Iran is in a state of desperation. An energy crisis, sanctions, an exposed security posture, and authoritarian governance do not make for peace and prosperity. There there are three future scenarios for Iran to consider:

• Domestic: It is possible that rising costs and shut-off essentials, like heating, hot water, and electricity, will lead to domestic protests and political violence in Iran. Given Khamenei’s authoritarian leadership style and unpopularity abroad, protests could develop and target the regime, leading to an overthrow or civil conflict in Iran. This scenario is currently unlikely but could develop over time.

• Boost to Proxies: Iran, sensing external pressure from Israel and its ability to strike within its borders, could expand its support for its proxies in Gaza, Yemen, and Lebanon. In doing so, Iran could attempt to coordinate a synchronized attack on Israeli troops or facilities. Khamenei has vowed to retaliate against Israel for the strikes it carried out on Iranian soil.

• Regional Conflict: Iran shares poor relations with actors in its region, such as Afghanistan, Pakistan, and armed groups in Syria. If some anti-Iran factions sense a growing weakness in Tehran, Iran could experience attacks inside its borders from forces other than Israel’s. The Assad regime in Syria benefitted from Iran’s financial and military backing, and now that HTS is unifying groups, Iran could be a target for future attacks.

While it is hard to gauge the likelihood of some of these scenarios, they are intended to illustrate the significance of Iran’s position — that the Khamenei regime exists in a fragile state and may not be able to be bailed out by allies in Russia or China. The second and third order of effects from mounting crises could, in 2025, see the downfall of Khamenei as Iran’s Supreme Leader.

Sources: Iran International, US Treasury, FDD, FDD

South Korean Court Issues Arrest Warrant For President

Summary
On 14 December, South Korean President Yoon Suk Yeol was impeached by the opposition-controlled National Assembly for his declaration of martial law on 3 December. The impeachment has suspended his presidential powers. On 31 December, the Seoul Western District Court issued warrants to detain Yoon and search the presidential office and residence.

Findings

• Warrants: This is the first time a warrant has been issued to detain a South Korean president. AP News reports that it is unlikely South Korean law enforcement will carry out the warrants so long as Yoon remains in office — even with his powers suspended. If this assessment is true, it also decreases the likelihood of Yoon resigning.

• Investigation: South Korea’s Corruption Investigation Office for High-Ranking Officials (CIO) is investigating with Korean law enforcement and military authorities regarding Yoon’s 3 December martial law declaration. The investigation is seeking to determine if the decision was a lapse of judgment or a floundered coup attempt.
  The CIO was established in 2019 and formed as an agency in 2021. Interestingly, in 2021, Yoon proposed resigning from his position as Prosecutor General over his objections to the CIO’s creation, stating it would take powers from court prosecutors.

• Decision: South Korea’s Constitutional Court will determine whether or not to dismiss Yoon as president or reinstate his powers. If Yoon is dismissed, arrested, and found guilty of a coup attempt, he faces life in prison or the death penalty.

Why This Matters
The issuance of warrants has sparked further protests, with Yoon’s supporters rallying against the decision. The situation highlights a growing divide between Yoon’s backers and the liberal opposition in parliament.

According to AP News, Yoon’s office has previously obstructed law enforcement investigations, even using presidential security to block searches by claiming that raids on locations containing state secrets are illegal. If Yoon continues to evade legal scrutiny while remaining in power, South Korea could face heightened political unrest or even violence.

Given South Korea’s history of authoritarian rule, its democratic system remains relatively fragile. A deepening rift between the major political parties further threatens to erode public trust and undermine the effectiveness of democratic institutions.

If Yoon's opposition continues to make decisions that can be perceived as anti-democratic or detrimental to South Korean democracy, it may open a path for Yoon to recover political support, reassert presidential authority, and even reinstate martial law. While this represents an extreme and unlikely scenario, it could enable Yoon to suppress political opposition and consolidate power with the backing of public sentiment. Likewise, it is the narrative his opposition is likely to perpetuate until they can get him out of office.

Sources: AP News, BBC

US Navy, Air Force Conduct Strikes On Critical Houthi Targets In Yemen

Summary
On 31 December, US Navy and Air Force assets conducted various precision strikes on Houthi facilities in Yemen. US Central Command (CENTCOM) stated the operation reduced the Houthis’ ability to attack Israel. The effects also reduced the Houthis’ ability to harass and attack US Naval and civilian merchant vessels in the region.

Findings

• Strikes: According to US Central Command (CENTCOM), the strikes destroyed several Houthi Command and Control (C2) sites and several weapons production facilities in Sana’a, Yemen’s capital. During the operation, a Houthi coastal radar site, seven cruise missiles, and multiple attack UAVs over the Red Sea were also destroyed.

• Effects: CENTCOM says the strikes will reduce the Houthis’ ability to attack US Navy and civilian merchant vessels in the Red Sea and Gulf of Aden. The production facilities that were destroyed were producing missiles and one-way attack UAVs (i.e. suicide drones).

Why This Matters
By destroying Houthi sites in Yemen, the US achieves two objectives:

• Reducing Threats: Strikes on Houthi C2 sites and weapons depots impact their ability to attack naval vessels. It also protects Israel from further attacks, allowing IDF forces to operate in a safer, more offensive environment.

• Free-Up the IDF: By striking strategic Houthi targets, the US destroys the cooperation and unity of the Houthis, but also of Iran’s proxies in the region. As Iranian proxy groups suffer casualties and deplete combat power, the IDF is able to carry out a greater range of operations with greater efficiency. We saw this following a ceasefire in Lebanon, a decision that freed up IDF troops to advance into Syria and destroy Assad’s military.

While Iran-backed proxies are very likely to continue attacking US and Israeli troops and assets, we could be approaching a point in the conflict where terrorist activity dips. If Iran’s proxies are unable to coordinate operations and are unable to effectively pressure the IDF and US forces, we could see renewed ceasefire agreements and the release of hostages — a decision that could lead to the withdrawal of Israeli troops from Gaza.

At the same time, slowed operations against Israel could sow desperation and lead to increased attacks against military and non-military targets in Israel and across the region.

Sources: UPI

Ukraine Officially Halts Supply Of Russian Gas To Europe

Summary
On 1 January 2025, Ukraine halted the transit of Russian gas through Ukrainian territory due to a prewar transit deal expiring. Ukrainian President Zelenskyy called the development “one of Moscow’s biggest defeats.” he previously stated he would not renew the deal so long as Kyiv remains at war with Russia. Some nations, like Slovakia and Moldova, are already feeling the effects.

Findings

• Russian Revenue: Zelenskyy claimed that the decision is a defeat for Russia because it will deprive Putin of a multi-billion dollar revenue stream. However, Russia’s “shadow fleet” still operates in the Baltic Sea and illicitly transits energy products, subverting sanctions, to markets that reach Europe (i.e. Qatar).

• EU Energy Crisis: Some states in the EU remain reliant on Russian energy. Slovakia and Hungary, who have pro-Russian heads of state, used to acquire over one-third of their energy from Russia. Zelenskyy claims the EU has already found new suppliers, but energy costs continue to rise due to short supply. In Moldova, more than 100,000 people have already lost access to heating and hot water.

• EU-US Deal: Ursula von der Leyen, the head of the EU Commission, previously stated she will pursue an energy import deal with the US once President-elect Trump takes office. Trump is looking to expand US energy production as a way of lowering costs, expanding industry, and generating revenue. With no energy coming directly from Russia to the EU, such a deal is more likely.

Why This Matters
The result of this deal is very likely to influence Trump’s policies with the EU in addition to being a major debate point in possible Ukraine peace negotiations.

• Trump and the EU: Trump wants to expand US energy to lower domestic costs and make the US a major energy exporter. While such a policy would benefit Europe, Trump is intent on getting a “fair deal,” stating that if Europe cannot meet his interests, he will institute heavy trade tariffs to make up the difference. This could potentially strain US-EU relations, and develop complications in cooperative efforts on security or diplomacy.

• EU Supranationalism: Europe’s leading nations, such as Germany and France, continue to speak of European interests and needs as if they are unanimous. The truth is that Europe’s states are deeply fragmented on energy and security policies, and Eastern European states may be more inclined to partner with Russia on energy due to lower costs and growing political alignments.
  It is possible that, as the EU begins to approach peace negotiations with Ukraine and Russia, some states may use the energy crisis as a coercive political tool — favoring Russian interests to influence EU internal policies.
  Additionally, the fallout from losing Russian energy could expand anti-EU sentiment across Europe. France remains ruled by a caretaker government, Germany faces snap elections with right and far-right frontrunners, and states like Romania, Georgia, Slovakia, Hungary, and Moldova are becoming more sympathetic to Putin.

Sources: The Guardian, The Guardian, NBC News

End Brief

That concludes this Thursday morning edition of The Intel Brief.

Thanks for your continued support — I am looking forward to keeping you informed through 2025!

Thanks,

Nick