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+---
+layout: post
+title : Monitoring In Antarctica
+author: William Muntean III
+date : 2024-03-19 12:00:00 +0800
+image : https://i.imgur.com/5SN2MXl.jpeg
+#image_caption: ""
+description: "Antarctic Monitoring Tools in Action"
+excerpt_separator:
+---
+
+_China opened its fifth station in Antarctica on February 7, 2024. The new Qinling station, located on Inexpressible Island in the Ross Sea, joins the existing Great Wall (Antarctic Peninsula), Zhongshan (eastern Antarctica), Taishan (eastern Antarctic highlands), and Kunlun (Dome A) stations._ _China, with five, now has the fourth most stations in Antarctica behind Argentina, Chile, and Russia, and has the fastest-growing presence in Antarctica, having opened three stations since 2009._
+
+Chinese president Xi Jinping declared in 2014 that the country intends to be a “polar power,” and its growth in Antarctica is consistent with achieving that goal in the southern hemisphere. China’s Ministry of Foreign Affairs said upon the opening of Qinling that the station “will contribute to humanity’s scientific understanding of the Antarctic, provide a platform for joint scientific exploration and cooperation between China and other countries, and help advance peace and sustainable development in the region.”
+
+So, what is China doing in Antarctica? And do its intentions, capabilities, and actions in that remote region threaten the national security of the United States and its allies? In 2023, CSIS published two publications on Antarctica that started to address these questions: “Great Power Competition Comes for the South Pole” and “Frozen Frontiers: China’s Great Power Ambitions in the Polar Regions.”
+
+Other than a few such articles, there is generally little focus in the United States on Antarctic geopolitics or their potential to affect U.S. and allied national security interests. The quiet in the United States is in stark contrast to the regular discussions on the topic in Australia, New Zealand, and the United Kingdom. However, this does not mean that no one in the United States is paying attention or that U.S. officials have no tools for learning what other countries are doing in Antarctica.
+
+Specifically, the Antarctic Treaty permits certain countries to conduct unannounced, in-person inspections in the region and requires countries operating there to provide advance notification of their activities, equipment, and personnel. In the United States, the responsibility to use these tools to monitor other countries’ capabilities in Antarctica falls to the Department of State. For example, as a State Department official, the author led the U.S. team that conducted a 2020 inspection of the Chinese station being built at Inexpressible Island, the same station that just opened. So while some commentators may have been caught unawares by the construction, which started in 2017, U.S. officials have already conducted a surprise inspection of the Qinling station in 2020.
+
+Given the rapidly growing Chinese presence in Antarctica — as well as concerns about how the Chinese stations might employ dual-use technology — now is a good time to review the tools the Antarctic Treaty provides for monitoring the presence, activities, and equipment of all countries operating in the region. In addition to knowing these tools exist, policymakers should be aware of the opportunities and limits of these tools so they can best use and strengthen them.
+
+
+### Key Non-armament and Monitoring Provisions in the Antarctic Treaty
+
+In 1959, 12 countries signed the Antarctic Treaty, which sought to prevent the use of Antarctica for military purposes while providing for freedom of scientific investigation and freedom of access. This decision headed off the growing possibility of violence between Argentina, Chile, and the United Kingdom over their overlapping sovereignty claims; locked in the cooperation demonstrated during the successful 1957–58 International Geophysical Year; and prevented Cold War competition from spreading to the coldest continent. Signatories to the document — the first Cold War non-armament and arms control treaty — agreed to significantly restrict military action (Article I), prohibit nuclear explosive devices and their waste (Article V), and establish a strong monitoring system (Article VII). Per the treaty, “Antarctica” is defined as everything below 60 degrees south latitude, regardless of whether it is land, any category of ice, or water. Any country can join the treaty, although only ones that conduct substantial scientific research in Antarctica can participate in the consensus-based decisionmaking process.
+
+#### Restricting Military and Nuclear Uses
+
+Limiting the risk that Antarctica could be used as a launchpad for conventional military forces, dumping ground for nuclear waste, or nuclear weapons testing site was particularly important to the countries closest to the continent. Article I addressed this by establishing that the region “shall be used for peaceful purposes only” and prohibiting, “inter alia, any measures of a military nature, such as the establishment of military bases and fortifications, the carrying out of military maneuvers, as well as the testing of any type of weapons.” This provision is remarkably broad, presumably so it can cover non-peaceful uses of the region comprehensively. It provides one example of what is prohibited — “any measures of a military nature” — and three examples of what could be considered as such. Given the structure of the provision, it would be normal, but incorrect, to conclude that these three examples are the main determinants of what needs to be prohibited to reserve Antarctica for peaceful use. However, focusing on only three examples would be insufficiently narrow. The correct reading is that “any measures of a military nature” is but one way that Antarctica cannot be used for non-peaceful purposes. In recognition of the importance of military logistical capabilities in particular, Article I does not prohibit the presence of military forces in Antarctica so long as their activities there are for scientific research or other peaceful purposes. Similarly, while Article V prohibits nuclear explosions and the disposal of radioactive waste in Antarctica, it does not prohibit the peaceful use of nuclear energy to fuel stations or vessels.
+
+Articles I and V were vital for the 12 countries that negotiated the treaty since Article IV holds in abeyance all sovereignty claims. There are seven countries that claim sovereignty over specific portions of Antarctica (Argentina, Australia, Chile, France, New Zealand, Norway, and the United Kingdom) plus two countries that maintain a basis to make claims in Antarctica (Russia and the United States). So long as the treaty remains in force, Article IV prevents new claimants from coming forward, freezes the current claims, and prevents any country from enforcing or applying its claim. Article IV therefore prompted the seven claimants to insist on Articles I and V due to their reasonable desire to prevent their national homelands from being threatened from territory they claim but cannot administer in Antarctica.
+
+
+### The Two-Tier Monitoring Program in Action
+
+Understanding that restrictions without monitoring are just dreams, negotiators went beyond just having words on paper and established a two-tier monitoring program to verify compliance with the Antarctic Treaty. These mechanisms — an inspections regime and a requirement for advance notification of activities in Antarctica — are found in Article VII. As a result, the 12 countries that negotiated the treaty and the 47 other countries that have signed onto its provisions (as of March 1, 2024) significantly reduced the possibility of Antarctica being used to threaten others.
+
+___`Understanding that restrictions without monitoring are just dreams, negotiators went beyond just having words on paper and established a two-tier monitoring program to verify compliance with the Antarctic Treaty.`___
+
+#### The Inspection Regime
+
+Of the two monitoring tools established by the treaty, the inspections regime has received more attention. This tool permits certain countries operating in Antarctica to conduct unannounced inspections. Per the treaty, the inspectors have complete freedom of access to all areas in Antarctica, including any station, installation, ship, aircraft, or equipment.
+
+This remarkably open provision was intended to advance both U.S. foreign policy goals and protect Antarctica. Per Ambassador Herman Phleger, the lead U.S. negotiator for the treaty, the United States’ intent was to use Antarctica to facilitate potential future treaties with the Soviet Union on “such vitally important matters as nuclear testing, surprise attack, and general disarmament” — agreements Moscow had been unwilling to accept at the time. According to Phleger’s testimony to the Senate Committee on Foreign Relations, the inspection provisions “will not only serve to protect the parties against any violation of the treaty, but should also prove a valuable source of practical experience in the detailed processes of international inspection.”
+
+If obtaining agreement to this broad inspection regime was the first step, the second step was to use this right. The first inspection was completed in 1963 by New Zealand of two U.S. stations (McMurdo and South Pole) followed by the U.S. inspection in 1964 of a number of facilities, including two Soviet ones. When planning for the first U.S. inspection, one of the norms important to U.S. officials was that the unannounced visits to Soviet and other stations “should not disrupt the very harmony and international cooperation which it is the primary purpose of the Treaty to preserve.” Consistent with this goal, Secretary of State Dean Rusk instructed the U.S. inspection team, “While performing inspections, you should bear constantly in mind that all states active in Antarctica have been both friendly and cooperative with the United States in matters relating to the continent, and it is the policy of the United States to preserve and enhance this situation.” The United States and other countries also made public the inspection findings rather than burying them in government bureaucracies under heavy classification restrictions.
+
+By promptly using the inspection provisions, publicizing the results, and making it clear that the inspections were not hostile or indicative of any specific treaty or national security concern, the United States and its allies reinforced that Antarctica was a place of cooperation and transparency reserved for peaceful scientific research. That they did so via surprise inspections indicated they did not believe in Antarctic exceptionalism or that the treaty’s words alone were sufficient to uphold it. This posture was also shaped by the desire to create favorable conditions for future arms-control agreements with the Soviet Union by demonstrating that in-person inspections would not necessarily be hostile.
+
+According to the Secretariat of the Antarctic Treaty, there have been 60 inspections since the treaty entered into force in 1961. The most recent — by the United States to certain Ross Sea sites and Australia to various stations throughout the continent — concluded in February 2020. The United States has conducted the most inspections overall (17), with Australia conducting the most during the twenty-first century (6).
+
+There are significant differences between earlier and more recent inspections. Only 12 countries conducted inspections during the first three decades, while 22 did during the second three decades. This trend reinforces that the inspection regime is neither just a U.S. interest nor merely a Cold War tool, but that it is important for many countries active in Antarctica, including those that have no territorial claim or are not leading participants in great power competition.
+
+The increasing number of inspecting countries and inspected sites is vital since the number of stations has grown over the decades. Having a wider range of states monitoring treaty compliance is particularly important since the seven claimant countries generally focus their inspections on the area they claim, likely due to having logistical capability and familiarity with that region as well as to learn the details of the activities of other countries in “their” area. For example, the United Kingdom has conducted eight inspections, only two of which were outside its territorial claim while both Argentina and Chile have conducted all of their six inspections in their claimed areas. Australia is the main exception to this observation, having sent officials to the Ross Sea and Peninsula regions, both of which are outside of its Antarctic claim.
+
+The rise in joint or multilateral inspections reflects their potential benefits, including the sharing of costs (political and logistical) and rewards (both practical and what was found). However, there is no treaty requirement for joint or multilateral inspections or provisions for neutral monitoring teams. This is because during the treaty negotiations, the United States insisted on the right to organize unilateral inspections due to challenges learned from attempting to conduct inspections with multiple countries during the Korean War.
+
+Overall, Australia, the United Kingdom, and the United States have consistently been the most active countries in using the inspection tools. After conducting only one inspection in the first 20 years of the treaty, Australia has increased the pace of its inspections. Although the United Kingdom has conducted eight inspections it has inspected 138 sites — the most by far. It is also the leader in joint inspections, having undertaken seven joint inspections with different countries, followed by Argentina and Chile (which have conducted three joint inspections with each other in the past decade), France, Germany, and the United States. The pace of U.S. inspections has slowed significantly since the Cold War: The United States conducted eight of the 13 inspections prior to 1985 but has conducted only two inspections since 2013, only one of which included national security officials.
+
+The Soviet Union’s global stance against inspections likely reduced its willingness to use the treaty inspection regime despite its interest in monitoring its Cold War competitors. However, Russia did conduct two joint inspections with the United States in January and December 2012 during the “reset” period of U.S.-Russian relations. In addition, since China became a consultative party to the Antarctic Treaty in 1985, it has conducted two inspections, one in 2015 and one in 1990.
+
+#### Advance Notification in Practice
+
+Per Article VII, the second monitoring tool requires a country to give advance notice regarding “all expeditions to and within Antarctica, on the part of its ships or nationals, and all expeditions to Antarctica organized in or proceeding from its territory,” all its stations, and “any military personnel or equipment intended to be introduced by it into Antarctica.” This provides transparency about upcoming activities, which benefits both national security interests and scientific collaboration. Since traveling to the region is remarkably expensive and challenging, this process gives more countries greater insight into a wider area of Antarctica than could be achieved via in-person inspections. In addition, Article III requires parties to share plans for future and results from previous scientific programs “to the greatest extent feasible and practicable.”
+
+The advance notification process has evolved but is currently failing. For many years, parties met these obligations via diplomatic notes. However, this was inefficient, so representatives at the 2012 Antarctic Treaty Consultative Meeting (ATCM) decided they would use the web-based Electronic Information Exchange System (EIES) maintained by the treaty’s secretariat. On top of the information required by the treaty — most notably on expeditions and military personnel and equipment — parties agreed to provide additional information on areas such as the use of research rockets.
+
+Three troubling trends were salient at the 2023 ATCM. First, only 10 of the 29 consultative parties submitted their annual report for each of the past 10 years. Second, during this time, there was a 20 percent decrease in the number of parties that submitted their information. Third, when a party files its annual report, the document usually does not cover all topics, including treaty-required information.
+
+Of the major actors in Antarctica, China is the most significant party that has not consistently submitted information to the EIES, notably not filing any reports between 2017–2022 and recently filing the reports for the last two seasons. China’s failure to regularly report on its annual expeditions, station construction, and operations contributes to an information void that calls into question Chinese motives and capabilities. But as the secretariat has indicated, some topics are almost never reported on by any party, including the obligatory information on forward plans for scientific research and military personnel and equipment. This widespread failure by parties to meet agreed-upon transparency requirements amplifies stress on the Antarctic Treaty system even as concerns mount about its health.
+
+___`This widespread failure by parties to meet agreed-upon transparency requirements amplifies stress on the Antarctic Treaty system even as concerns mount about its health.`___
+
+
+### U.S. Inspections in 2020
+
+In 2020, the U.S. interagency team inspected five sites at three stations — Jang Bogo (South Korea), Mario Zucchelli (Italy), and the station later dubbed Qinling under construction on Inexpressible Island (China) — as well as Antarctic Specially Protected Area (ASPA) 161 and the runway under construction near Mario Zucchelli Station. The United States chose to inspect these five sites due to operational, scientific, and environmental reasons, in addition to national security ones.
+
+The composition of the team was consistent with the goal of inspection and included national security experts from the U.S. Department of State and U.S. Coast Guard, as well as experts in Antarctic scientific operations and environmental topics from the National Science Foundation and National Oceanic and Atmospheric Administration. All inspectors had the responsibility and ability to collect information on any of the priority issues up for inspection and were not restricted to a particular topic. Additionally, all inspectors used the EIES and other publicly available information to research the sites before arrival. As noted above, the EIES process is designed to satisfy not only the advance notification requirements of the Antarctic Treaty but also, as parties agreed to in 2012, provide additional information on other topics.
+
+Per the terms of the treaty and as subsequently illuminated by treaty meetings, the United States informed other parties of the names and affiliated U.S. government agency of the inspection team members in December 2019 but provided no information about the destinations or goals of the inspection. The United States informed the three selected stations of the team’s impending arrival roughly 36 hours before they reached the first site, the South Korean Jang Bogo station. Providing short-term advance notification is a customary courtesy, given how receptive all countries have been to these inspections, to reduce disruptions to scientific and operational activities and reduce risk of a transportation emergency.
+
+The United States was interested in the operational aspects of the chosen sites in the Ross Sea region largely due to the new infrastructure that had been (and was being) constructed there since the previous U.S. inspection in 2012: the Jang Bogo Station was opened in 2014, Italy was building a new runway, and China was building a new year-round station on Inexpressible Island. The Italian runway was of particular interest since it could serve as an alternative landing point for intercontinental flights to the U.S. McMurdo Station — a major transit and logistical hub 200 miles away — that would otherwise need to return to their departure point if weather at McMurdo was inhospitable. Having an alternative landing site in Antarctica could prevent “boomerang” flights that return to New Zealand, for example, thereby saving time, fuel, and money. Additionally, since the United States has the largest presence in the region, U.S. officials wanted to be prepared in case McMurdo personnel are called on to respond to an emergency. Decreasing the possibility that the finite U.S. resources at the station would be diverted from planned scientific or operational activity to provide emergency assistance to the Chinese, Italian, or South Korean stations along the Ross Sea was the main concern in the report, which therefore encouraged the then-unnamed Chinese station to increase communication with its Italian and South Korean neighbors.
+
+In addition to having the largest presence in Antarctica, the United States conducts the most scientific research on the continent. U.S. officials are always interested in learning about new activities and new approaches being pursued there, including ongoing Italian maritime research, new South Korean preparations for an inland traverse, and potential Chinese contributions to understanding the variation of the climate, cryosphere, and ocean in the Ross Sea region. At the time, these three parties were collaborating to designate a new ASPA to assist in monitoring one of the oldest Adélie penguin colonies and a breeding site of south polar skua, as well as serve as a reference point for sea-ice dynamics; ASPA 178 was approved at the 2021 ATCM in Paris. The United States also uses inspections to learn how parties are engaging with the environment, including but not limited to how a station is implementing the provisions of the Antarctic Treaty’s Protocol on Environmental Protection, a complementary agreement that entered into force in 1998. Notably, the inspectors “strongly encouraged” China to submit a final comprehensive environmental evaluation for its station, a requirement China subsequently completed in October 2021.
+
+None of the countries whose stations were inspected have made or can make territorial claims so long as the treaty is in force, so Article IV sovereignty considerations were of the less priority for the inspectors. However, New Zealand maintains a territorial claim over the Ross Sea area where the stations are located, so having U.S. officials travel there without informing New Zealand underscored that no country’s claim can impede an unannounced inspection. Inspection officials, who were warmly welcomed at all visited sites, focused on reviewing compliance with Article I and other treaty provisions and, as the report concluded, “found no violations of Treaty provisions reserving Antarctica solely for peaceful purposes.” Rather, “each of the stations was well-managed and impressive in terms of their general facilities and professional character.”
+
+However, the U.S. team very much considered Articles I and V and other provisions. Each station allowed the inspectors access to all parts of the station. Inspectors found no weapons, military equipment, or explosives at any of them; however, both Italy’s Mario Zucchelli station and Korea’s Jang Bogo station had military personnel present.
+
+In addition to the stations, the United States chose to inspect ASPA 161, which reinforced the point that giving an area protected status does not exempt it from the broader monitoring regime. Other countries had inspected protected areas, including Australia in 2016 and New Zealand, the United Kingdom, and the United States in 2005. Doing so also demonstrated how to conduct an inspection without harming the ecology of the area.
+
+Finally, the U.S. inspectors chose to highlight the importance of transparency. For example, the report encouraged countries to “maintain or increase the information they share” and noted the “significant disparity in the use of the [EIES],” as noted above, China has been particularly derelict at using this mandated transparency tool. By contrast, as has been the norm since the treaty was signed, the United States released its report not only to the Antarctic Treaty parties but also to the public.
+
+
+### Recommendations
+
+Given that the Antarctic Treaty does not resolve differences over Antarctica but addresses them by agreeing to disagree on key topics such as sovereignty and by curtailing military interests and activities, there is justifiable concern about how increased geopolitical rivalry may affect the future of the treaty. In particular, strategic rivalries may increase suspicion that certain countries are not complying with key provisions such as the obligation to use Antarctica for peaceful purposes only.
+
+However, existing tools do provide some solutions to these challenges and worries, and there is much the United States can do to ensure its own situational awareness of what is happening in Antarctica. Specifically, the United States should do the following:
+
+- __Increase the frequency of in-person, unannounced inspections.__ Although the Covid-19 pandemic disrupted and continues to affect Antarctic operations, and weather will always be the biggest challenge to any sort of movement, conducting only one full inspection during the past decade demonstrates a lack of commitment by the United States to monitoring the capabilities and activities of other countries in Antarctica in person. Every three to five years, the United States should aim to undertake inspections that cover an appropriate array of sites and use U.S.-flagged operated transportation.
+
+- __Increase collaboration with like-minded countries on inspections.__ Inspections are time-consuming and expensive. To mitigate these practical challenges, the United States should consider collaborating with other like-minded countries, such as by conducting joint inspections or sharing detailed information afterward.
+
+- __Promote the idea that inspections can in turn reinforce collaboration.__ The United States should consider conducting in-person inspections with other countries to achieve specific goals. For example, a joint inspection of Antarctic Peninsula sites with Argentina, Chile, and the United Kingdom — the three countries laying claim to the region — could send a powerful signal of cooperation. Like the U.S.-Russian inspections in 2012, a joint inspection by the United States and China could also provide a practical and discrete way for the two countries to demonstrate their collaboration in Antarctica and commitment to the treaty.
+
+- __Encourage compliance with advance notification requirements.__ The United States should continue to push all countries to supply the information they agreed to provide to the EIES. It should encourage work by neutral knowledgeable authorities, such as the Secretariat of the Antarctic Treaty, to report on EIES compliance annually. In addition to reviewing the submissions of other countries, the United States should set a positive example of compliance with the EIES reporting requirements. It should make sure its own submissions are timely and complete.
+
+- __Increase attention paid to dual-use equipment.__ The United States should analyze the information already collected during previous inspections and submitted to the EIES regarding telescopes, telecommunications equipment such as submarine cables if and when they are built, and satellite infrastructure such as the U.S. Global Positioning System, Russia’s Global Navigation Satellite System, China’s BeiDou Navigation Satellite System, and the EU Galileo system. If Washington feels the existing requirements to report on military equipment are not sufficient to supply the information it needs, it should also consider proposing to add additional fields to the EIES. Countries should also prioritize in-person inspections of key sites to verify the information submitted is consistent with what is on the ground. Knowing what equipment is in Antarctica is the first step to determining related risks and mitigation actions.
+
+---
+
+__William Muntean III__ is a senior associate (non-resident) with the Americas Program at the Center for Strategic and International Studies in Washington, D.C.
diff --git a/_collections/_hkers/2024-03-21-next-with-hezbollah.md b/_collections/_hkers/2024-03-21-next-with-hezbollah.md
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+---
+layout: post
+title : Next With Hezbollah?
+author: Seth G. Jones, et al.
+date : 2024-03-21 12:00:00 +0800
+image : https://i.imgur.com/tflaljs.jpeg
+#image_caption: ""
+description: "The Coming Conflict with Hezbollah"
+excerpt_separator:
+---
+
+_Although the Israel-Hamas war in Gaza has captured the world’s attention, there is a serious risk of war between Israel and Hezbollah, according to a new assessment by CSIS._ _Since October 7, 2023, there have been over 4,400 rocket, missile, and other stand-off attacks by Israel and Hezbollah combined. Hezbollah has also repeatedly violated UN Security Council Resolution 1701 by deploying forces and firing anti-tank guided missiles and other stand-off weapons against Israel from the zone between the Blue Line and the Litani River, according to CSIS geolocation analysis. The United States needs to increase its diplomatic engagement to prevent what could become a much wider and more violent war in the Middle East._
+
+
+### Introduction
+
+Shortly after Hamas’s brutal terrorist attacks in southern Israel on October 7, 2023, Israel nearly launched a preventive war against Hezbollah in southern Lebanon. Israeli intelligence assessed that Hezbollah fighters were on the verge of crossing the border into northern Israel as part of a multi-pronged attack. The Israel Defense Forces (IDF) deployed fighter aircraft that awaited orders to strike targets in Lebanon. Israeli officials apparently notified the White House around 6:30 a.m. on October 11, 2023, that they were considering preventive strikes and requested U.S. support. But senior U.S. officials, including President Joe Biden, pushed back. According to CSIS interviews with U.S. officials, they were worried that Israeli strikes in Lebanon would unnecessarily trigger a regional war and were skeptical of Israel’s intelligence that an attack was imminent.
+
+Although Israel did not launch a preventive war, the possibility of an Israel-Hezbollah conflict looms over the region. Israel faces a dilemma. It can risk war with Hezbollah, but in the process, a war would broaden the fighting in a way that makes the current war in Gaza look like a minor dust-up. Israel could also wait, which would avoid war now with Hezbollah, but this could risk a more serious conflict in the future with a foe that is better armed and capable and that could control the timing of a war to its advantage.
+
+To better understand the prospects of war, this brief asks several questions. What factors shape the possibility of war? What are Hezbollah’s capabilities today? What are Israel’s options? What options does the United States have to mitigate or prevent a war?
+
+To answer these questions, this analysis includes a mixture of both quantitative and qualitative information. It compiles data on Israeli and Hezbollah strikes along the Israel-Lebanon-Syria border, geolocates Hezbollah attacks against Israel in the zone between the Blue Line and the Litani River, and examines satellite imagery of Israeli strikes against Hezbollah targets. It also assesses Hezbollah’s military capabilities, including compiling data on Hezbollah’s stockpile of 120,000 to 200,000 short-range guided ballistic missiles, short- and intermediate-range unguided ballistic missiles, and short- and long-range unguided rockets. Finally, it draws on interviews the authors conducted with U.S. and Israeli officials on a trip to Israel.
+
+The analysis makes three main arguments. First, the security situation has dramatically worsened in recent months for several reasons: the October 7 attacks profoundly increased Israeli insecurity; the displacement of over 150,000 civilians on both sides of the Israel-Lebanon border has created growing pressure, particularly in Israel, to alter the security situation so that civilians can return; Hezbollah and Iranian-linked groups in Lebanon and Syria continue to stockpile stand-off weapons that can hit Israel; and Hezbollah continues to violate UN Security Council Resolution (UNSCR) 1701. Taken together, these factors have created a volatile situation in an already tense Middle East.
+
+Second, violence between Israel and Hezbollah has already started to climb after nearly two decades of low-level conflict. Since October 7, there have been more than 4,400 violent incidents concentrated around the Blue Line and the Golan Heights involving Israel and Hezbollah, according to CSIS analysis. In addition, CSIS analysis indicates that Hezbollah’s anti-tank guided missiles (ATGMs) have struck Israeli forces from concealed launch sites less than three kilometers from the Blue Line on at least 17 occasions since October 7, a clear violation of UNSCR 1701.
+
+Third, the United States needs to increase diplomatic efforts to prevent an all-out war, which would be devastating for both Lebanon and Israel and ignite a broader conflagration in an already combustible region, including triggering more attacks on U.S. forces.
+
+The rest of this brief is divided into four sections. The first examines the evolving security landscape. The second section assesses Hezbollah’s capabilities and force disposition, particularly along the Israel-Lebanon border. The third section analyzes Israel’s objectives and options. The fourth section explores U.S. policy options.
+
+
+### The Changing Security Landscape
+
+Israel has repeatedly fought Hezbollah since the group’s inception in the early 1980s. Indeed, Hezbollah has defined itself from the start in opposition to Israel and dedicated itself to driving Israel out of Lebanon. Israel and Hezbollah conducted periodic operations against each other in the 1980s and 1990s despite the presence of the United Nations Interim Force in Lebanon (UNIFIL), and Hezbollah succeeded in forcing the Israeli military to withdraw from Lebanon in 2000. In the process, Hezbollah conducted an array of terrorist attacks against Israel around the world.
+
+Despite Israel’s withdrawal from Lebanon, Hezbollah continued occasional attacks on Israel, using the pretext that Israel occupied Shebaa Farms, a small area at the intersection of the Lebanon-Syria-Israel border. Hezbollah claimed Shebaa Farms was Lebanese territory and thus that Israel’s occupation continued, despite the United Nations concluding that Shebaa Farms is Syrian and that Israel had evacuated its forces from Lebanon completely.
+
+Another area of dispute was the village of Ghajar, just west of Shebaa Farms and bisected by the Israel-Lebanon border. Its residents have both Lebanese and Israeli citizenship. For years, a fence divided Ghajar, but Israeli forces reoccupied all of Ghajar in 2006 and today retain control there.
+
+The low-level conflict between Israel and Hezbollah flared into an all-out war in 2006 after a Hezbollah cross-border kidnapping operation. The war left over 100 Israelis and around 500 Hezbollah fighters dead, as well as devastated Lebanon. Hezbollah likely did not anticipate its operation would spark an all-out war, and Hezbollah leader Hassan Nasrallah later announced that he would not have conducted the operation if he had known a war would occur. Although Hezbollah suffered far more dead, some Israelis saw the war as a disaster due to the large number of Israelis killed, and the IDF’s battlefield performance was widely criticized.
+
+The 2006 war ended with UNSCR 1701, which created a zone between the Blue Line and the Litani River along the borders of Israel, Lebanon, and Syria. According to UNSCR 1701, the area between the Blue Line and the Litani River should be free from any armed personnel, assets, and weapons except for those of the government of Lebanon and UNIFIL.
+
+
+_▲ Figure 1: UNSCR 1701 Zone in Southern Lebanon_
+
+After 2006, an uneasy deterrence prevailed. Israel occasionally attacked Hezbollah fighters and Iranian arms shipments headed to Hezbollah and other groups in Syria, and there were intermittent rockets, drones, and other stand-off attacks back and forth across the border. For the most part, however, the border was the calmest it had been in decades, with both sides eager to avoid another all-out war.
+
+Today, however, the situation is delicate for several reasons. First, the October 7 attacks dramatically increased Israeli insecurity. It is difficult for most outsiders to fully comprehend the psychological impact and trauma caused by the gruesome attacks. Israel was surprised on October 6, 1973, when Egypt and Syria launched an attack on Israeli forces in the Sinai and Golan Heights. But October 7, 2024, was largely a surprise attack that killed Israeli civilians, including women, children, and the elderly, and involved numerous atrocities and sexual violence, much of it captured on video. Indeed, it was the third-deadliest terrorist attack around the globe since the University of Maryland began collecting terrorism data in 1970, and on a per capita basis, it was 15 times more deadly than the terrorist attacks in the United States on September 11, 2001. In interviews conducted by several of the authors in Israel in December 2023, Israelis of all sorts stressed the failure of their intelligence services and military forces on October 7, and many Israelis felt they could no longer rely on deterrence given its failure against Hamas on October 7.
+
+The attacks took a psychological toll on Israelis. According to an analysis published in the medical journal The Lancet, the attacks led to notably higher levels of post-traumatic stress disorder (PTSD), depression, and generalized anxiety disorder (GAD) among Israeli citizens. It concluded, “Our findings show that the deleterious effects of these attacks were not restricted to those directly exposed to the brutal acts of terror but also to those indirectly exposed. Thus, these attacks are to be considered as a mass trauma event affecting an unprecedented proportion of the country/s population.” According to a Gallup opinion poll, Israelis’ emotional health plummeted after the attack, with record-high majorities saying they experienced higher-than-normal levels of worry (67 percent), stress (62 percent), and sadness (51 percent). As Gallup concluded, “No other country has ever seen such a large year-on-year increase in negative experiences.”
+
+Consequently, Israel’s risk tolerance has likely changed. If Hamas, less well-armed and trained than Hezbollah, can brutally kill over 1,100 Israelis, what might the more formidable Hezbollah do? Hezbollah’s close relationship with Iran and its ties to Hamas reinforce this fear. Reducing the risk Hezbollah poses includes ensuring that Hezbollah’s elite Radwan forces are not poised on Israel’s border, as they were before October 7, 2023. Israel would also like curbs on Hezbollah’s arms and other, more expansive restrictions, though they are aware this is unlikely. Israeli officials profess to prefer a diplomatic solution but warn that “we will have to act on our own” should diplomacy fail.
+
+Second, in addition to increasing Israel’s sense of insecurity, the repercussions of the October 7 attack and clashes between Hezbollah and Israel have displaced more than 150,000 people on both sides of the Israel-Lebanon border since October 2023, including roughly 80,000 civilians from northern Israel and 75,000 from southern Lebanon. For Israel, resettling its internally displaced persons back to their homes and villages in northern Israel will require creating — and ensuring — a security environment that currently does not exist. Israeli leaders need to convince their population that, this time, the intelligence services can anticipate any attack and the military can stop it — a difficult task given Hezbollah’s capabilities and one far harder due to the discrediting of military and intelligence officials on October 7. Domestic pressure has been growing to improve the security situation. According to Avigdor Liberman, a former minister of finance who leads an opposition party, the Israeli government has been weak in the north: “The red line became a white flag — the war cabinet surrendered to Hezbollah and lost the north.”
+
+Third, Hezbollah has dramatically improved its military since 2006 and stockpiled over 120,000 stand-off weapons in Lebanon and Syria, as discussed in more detail in the next section. With Iranian partner and proxy forces active in Lebanon, Syria, Iraq, and other countries across the region, the threat from the north could get worse over time, not better.
+
+
+_▲ Figure 2: Assessed Areas of Operations of Hezbollah ATGM Teams (October 8, 2023–March 5, 2024)_
+
+Fourth, Hezbollah has repeatedly violated UNSCR 1701 by stationing its forces in the zone between the Blue Line and the Litani River, sometimes under the cover of the fake nongovernmental organization “Green Without Borders.” Geolocated footage from Hezbollah propaganda videos indicates that Hezbollah ATGMs have struck Israeli forces from concealed launch sites less than five kilometers from the Blue Line on at least 17 occasions since October 7, as shown in Figure 2, a clear violation of UNSCR 1701. These attacks have mostly been against Israeli military bases and intelligence, surveillance, and reconnaissance (ISR) systems. At least seven Israeli civilians and approximately 10 IDF soldiers have been killed in the attacks. ATGMs played a major role in the 2006 war, during which they accounted for the majority of Israeli infantry casualties, including the loss of 24 tank crewmen and penetration of about 20 tanks.
+
+
+_▲ Figure 3: Violent Incidents Related to the Israel-Hezbollah Conflict by Week_
+
+As shown in Figure 3, there was little fighting between Hezbollah and Israel in the months prior to the October 7 attack. But the 15 weeks after the attack have witnessed more than 4,400 violent incidents involving Israel and Hezbollah. Hezbollah began to launch limited attacks on Israel as a way of showing solidarity with Hamas. This led to an Israeli response, resulting in a bloody tit-for-tat. As Hezbollah leader Hassan Nasrallah warned, “You expand, we expand. You escalate, we escalate.” The incidents have been concentrated around the Blue Line, as illustrated in Figure 4.
+
+
+_▲ Figure 4: Violent Incidents Related to the Israel-Hezbollah Conflict (October 8, 2023–March 15, 2024)_
+
+
+### Hezbollah’s Objectives, Military Forces and Capabilities
+
+This section examines Hezbollah’s overall objectives, force design, defensive positions, rocket, missile, and unmanned aircraft system (UAS) arsenal, anti-tank capabilities, air defense capabilities, and proficiency as a fighting force.
+
+__Objectives:__ Hezbollah has several objectives that could lead to a conflict with Israel, though the organization has numerous, and at times competing, goals, some of which make a conflict less likely or at least would lead Hezbollah to be cautious. Hezbollah sees itself as a revolutionary organization that is one of the leaders of the broader Muslim struggle against Israel. Destroying Israel has been a part of its core ideology since its founding, and most of its members are sincerely against the very existence of the Jewish state. Hezbollah shares this goal with Iran, which also rejects Israel ideologically and sees it as a threat to the Islamic Republic: for decades, Iran and Israel have engaged in a shadow war, with Israel conducting assassinations against Iran and building alliances with regional rivals of the Islamic Republic like Saudi Arabia. Iran, for its part, has backed groups like Hamas and Hezbollah against Israel, used terrorism, and otherwise tried to weaken Israel. Hezbollah also sees itself as the defender of Lebanon, and various territorial disputes and Israeli incursions are a constant source of tension. Finally, Hezbollah, like Hamas, seeks the release of prisoners in Israeli custody.
+
+Hezbollah, however, has important reasons for caution. Most importantly, Hezbollah seeks broader popularity in Lebanon, and triggering a destructive war could grievously undermine support, particularly outside its Shiite core constituency. Iran also may seek to keep Hezbollah in reserve as a weapon to use should Israel or the United States launch a major attack on Iran itself. Finally, Hezbollah recognizes the military power of Israel and would not lightly provoke a conflict it might lose or, at the very least, lead to widespread destruction in Lebanon.
+
+__Force Design:__ Hezbollah has approximately 30,000 active fighters and up to 20,000 reserves. Its forces primarily consist of light infantry, which have historically been trained and built for stealth, mobility, and autonomy. Hezbollah has employed a version of what the United States calls “mission command,” empowering subordinates to make independent battlefield decisions based on a commander’s intent. This force design has allowed Hezbollah to operate effectively under conditions of overwhelming Israeli firepower. In 2006, for example, its rocket units were designed to set up a launch site, fire, and disperse in less than 28 seconds, relying on prepositioned equipment, underground shelters, and mountain bicycles to achieve such a small window of exposure. In the wake of the 2006 war, Hezbollah continued to build on the strengths of this approach, decentralizing its command and control and reorganizing to force the IDF into more urbanized terrain where its fighters can take advantage of concealed, fortified positions.
+
+Hezbollah’s experience fighting in support of Bashar al-Assad in Syria for the past decade has given it access to capabilities and competencies used by conventional armies. Hezbollah can now conduct coordinated maneuvers of larger forces, employ suppressive artillery, and conduct logistics to support larger groupings of forces. Fighting in Syria has also given Hezbollah access to T-72, T-54/-55, and T-62 main battle tanks (MBTs). Its ability to employ armor inside Lebanon, however, is questionable. MBTs require dedicated sustainment formations and supply chains that may not exist in Hezbollah’s areas of control in Lebanon itself, and Israel would aggressively target MBTs with fighter aircraft, drones, and artillery. Hezbollah also fought against a different enemy in Syria — irregular forces that look very different from the modern military of the IDF. Hezbollah’s ability to effectively employ the capabilities it has gained since 2006 in the face of IDF firepower, especially airpower, is also unclear, and indeed, it is likely that any large, heavy forces would be quickly destroyed if they were deployed.
+
+__Geography and Defensive Positions:__ The geography of southern Lebanon offers several advantages that Hezbollah fighters could exploit in a war with Israel. The region, including much of the area directly across the Israeli border, predominantly consists of rocky hills. In 2006 and in other clashes with Israel, small and mobile groups of Hezbollah militants used trees, patches of vegetation, caves, surface irregularities, and buildings along the slopes of the hills to conceal their movements and fire rockets, UASs, and ATGMs at Israeli positions on the border. Any heavy Israeli military ground force attempting to move throughout the region would likely be restricted to the major hard-packed roadways due to the hilly terrain and would, therefore, be vulnerable to harassment with ATGMs, improvised explosive devices (IEDs), and ambushes.
+
+Hezbollah has built a network of tunnels and bunkers in the hills of southern Lebanon to host and move equipment and personnel relatively securely. Hezbollah also uses this infrastructure to launch ambushes and rocket attacks. Where it lacks purpose-built military fortifications, Hezbollah fighters can exploit existing civilian infrastructure in the cities, towns, and villages throughout the region. During the 2006 war, civilian infrastructure was critical to Hezbollah fighters in southern Lebanon. They used it in place of formal military fortifications to hide command centers, complicate Israeli targeting, conceal fighters for ambushes, and enable fighters to disperse, maneuver, and defend in depth. Thousands of civilians fled from southern Lebanon as strikes between Hezbollah and Israel intensified after October 7, 2023. Some of the towns and villages along Lebanon’s southern border almost completely emptied. In a war with Israel, Hezbollah could exploit civilian infrastructure and its network of tunnels and bunkers to attack Israeli ground forces and quickly retreat. Aware of Hezbollah’s fortifications and probable tactics, Israeli attacks would likely emphasize clearing and destroying Hezbollah’s tunnel network in southern Lebanon.
+
+A number of rivers run through southern Lebanon, including the Litani River, which flows south from the Lebanon Mountains before bending west where it empties into the Mediterranean. Control of these rivers and their features represents an important strategic objective, including controlling the movement of troops, equipment, and supplies. These rivers also serve as natural defensive fortifications that can be exploited for tactical advantages in combat by defending forces.
+
+__Rockets, Missiles, and Unmanned Aerial Systems:__ Hezbollah’s rockets and missiles pose two distinct threats to Israel. The first is their coercive effect: continuous rocket, missile, and UAS barrages can kill or wound Israelis — both civilians and military personnel — or destroy important political or economic infrastructure in Israel. This is the way Hezbollah’s rockets and missiles were primarily used in 2006 and how they are usually discussed in the context of war with Israel. The second threat comes from the tactical and operational effects of these systems: suppressing or attritting IDF forces to limit the effectiveness of Israeli operations. Hezbollah gained experience conducting combined arms operations in Syria, and the group may attempt to use rockets and missiles as part of ground operations against Israeli forces.
+
+Hezbollah is probably the most heavily armed non-state group in the world, and its stockpiles of rockets, missiles, and UASs are a major part of its arsenal. Estimates of how many rockets and missiles Hezbollah possesses vary from 120,000 to 200,000. Because of Hezbollah’s close relationship with Iran, it is likely that Tehran would resupply Hezbollah quickly if it used this arsenal in a conflict with Israel. This resupply is easier than in the past, as Iran’s presence in Syria expanded considerably after Tehran came to the rescue of the Syrian regime when civil war broke out after 2011, creating a land bridge that enables weapons to go from Iraq to Syria to Hezbollah in Lebanon. This stands in sharp contrast to Hamas, where weapons and people must be smuggled via tunnels from Gaza.
+
+As shown in Table 1, the bulk of Hezbollah’s arsenal consists of short-range unguided projectiles. Hezbollah has also dramatically increased its access to long-range missiles since 2006, meaning that most of Israel will feel the threat of Hezbollah attacks if the conflict escalates. Finally, Hezbollah’s precision-guided missiles pose an acute threat to Israel’s most important political, military, and economic centers — a threat that did not exist in 2006.
+
+
+_▲ Table 1: Hezbollah’s Rocket and Missile Arsenal_
+
+Eliminating the threat from Hezbollah’s rockets will be extremely difficult. The rockets can be launched from trucks, increasing their mobility and therefore survivability, or from underground bunkers, as was common during the 2006 war. Finding and destroying Hezbollah’s rocket and missile capabilities would involve an enormous reconnaissance-strike effort involving a variety of intelligence assets, precision strike capabilities, and ground forces.
+
+Hezbollah’s rocket and missile arsenal also includes long-range missiles. These are also likely to be used mainly in a coercive capacity, with Hezbollah undertaking long-range strikes against Israeli population centers to undermine Israeli support for the war. Hezbollah used its long-range rockets and missiles throughout the 2006 war despite an Israeli air campaign aimed at destroying their launchers and Hezbollah’s apparent unwillingness or inability to make much use of its Iranian-made long-range weapons.
+
+Hezbollah’s guided missiles make up an even smaller number of those long-range missiles — a few hundred at most. The accuracy of these weapons makes each attack more devastating and creates greater pressure on Israeli air defense systems. They provide Hezbollah with the capability to strike high-value targets, vital economic centers, and critical infrastructure.
+
+While Hezbollah has historically used its rockets and missiles to impose pain on Israel rather than as part of combined arms operations, an important unknown is how Hezbollah might use its rocket and (to a lesser extent) missile capabilities in support of ground operations against the IDF. Hezbollah could attempt to capture territory in northern Israel or the Golan Heights in a Hezbollah-Israel war, or at least conduct raids there. This would require ground maneuver, which modern militaries usually enable using suppressive fire from artillery or air platforms. Hezbollah demonstrated the ability to integrate ground maneuver with suppressive fires in Syria, and it may attempt to do so in a war with Israel. Such tactics are difficult in practice, and expertise is probably unevenly distributed across Hezbollah’s military forces. IDF air defenses and air power would also limit Hezbollah’s ability to use its rockets and missiles in this manner.
+
+
+_▲ Figure 5: Satellite Imagery of Damaged Runway in Qalaat Jabbour Mountain Region, Lebanon_
+
+In addition to its rocket and missile stockpiles, Hezbollah possesses a significant arsenal of UASs that include commercial quadcopters, suicide drones, loitering munitions, and more sophisticated platforms with surveillance and strike capabilities. Hezbollah’s UASs are almost entirely supplied by Iran and are used to conduct surveillance of — and strikes against — Israeli targets. On January 25, 2024, the IDF struck a 1,200-meter runway in southern Lebanon that it alleges Hezbollah built with Iranian assistance and was used by Hezbollah to launch large UASs. The airstrip and the surrounding base illustrate the advancement of Hezbollah’s UAS capabilities to include larger and more sophisticated systems. The base also contained a helicopter landing pad, support and storage facilities, and warehouses and UAS hangers under construction. The damage to the airstrip caused by the Israeli airstrikes can be seen in Figure 5, including four bomb craters on the runway.
+
+Since October 7, Hezbollah has attempted at least 40 UAS attacks against Israeli targets, as shown in Figure 6. Several of these attacks have successfully penetrated Israeli air defense systems, killing IDF soldiers and damaging military sites in precision strikes.
+
+
+_▲ Figure 6: UAS Incidents in Israel (October 8, 2023–March 15, 2024)_
+
+As seen in Table 2, Hezbollah UAS systems come in a wide variety. This list is not exhaustive, and Hezbollah likely possesses additional Iranian or indigenous drone models. Also not shown are the variety of commercial drones, such as Chinese DJI quadcopters, that Hezbollah possesses and which can be used to conduct surveillance or modified to deliver explosive payloads. Should war with Israel break out, Hezbollah would likely receive additional imports of drones from Iran and emphasize adapting commercial off-the-shelf systems to their needs. After all, Iran has established logistics supply routes — both air and land bridges — that can bring weapon systems and other equipment from Iran to Lebanon through Iraq and Syria. The result is that Hezbollah would probably be able to sustain a campaign of UAS attacks against Israeli targets in Lebanon and Israel unless supply routes were cut.
+
+
+_▲ Table 2: Select Iranian UAS Exported to Hezbollah_
+
+Hezbollah’s tactical employment of UASs in a war with Israel is difficult to predict. Hezbollah drone operators have received training from Iran’s Islamic Revolutionary Guard Corps–Quds Force, have performed military exercises with drones, and are observing the war in Ukraine, where a variety of new uses and techniques for drones on a battlefield have emerged. Hezbollah could attempt to use its UASs as part of a reconnaissance-strike complex, relaying targeting information for indirect fires or attacking mobile Israeli targets, but Hezbollah’s ability to coordinate its UAS and ground-based capabilities remains to be seen. Hezbollah could also use UASs to detect, surveil, and attack Israeli forces should they enter southern Lebanon or to overwhelm Israeli air defenses through swarming attacks, possibly in combination with rockets and missiles. The effectiveness of these tactics will likely be limited, however, by Israel’s sophisticated counter-UAS capabilities, including electronic warfare systems, air defense systems, and other countermeasures that could disrupt UAS communications with ground systems or knock them out of the sky altogether.
+
+__Anti-tank Guided Missiles and Improvised Explosive Devices:__ ATGMs and IEDs give Hezbollah potent capabilities to attack armored vehicles and fortified locations. These capabilities were vital to its tactical successes in the 2006 war, although Israeli tactical failures contributed to the loss rate it experienced in 2006. The IDF is unlikely to repeat those mistakes.
+
+Hezbollah has almost certainly improved its anti-tank capabilities since 2006. It currently fields an ATGM system, Tharallah, that is designed to overcome the active protection system used by the IDF’s Merkava MBTs, although its efficacy is unclear from open sources. Hezbollah has taken steps to improve the mobility of its anti-tank units, mounting Kornet anti-tank missiles on all-terrain vehicles. Several news outlets also reported in late January 2024 that Hezbollah had used a more advanced Kornet-EM to attack an Israeli air control base, which would represent a significant increase in ATGM range and destructive power. On the tactical side, analysis of Hezbollah’s combat performance in Syria suggests that its members remain well schooled in using ATGMs against armored vehicles and fortified infantry positions. The result is that Hezbollah’s ATGMs are likely to remain one of its deadliest capabilities, even if they do not attain the success rate of 2006.
+
+Hezbollah also has a considerable IED capacity. Hezbollah employed IEDs with explosively formed penetrators (EFPs) against Israel in the 1990s and will almost certainly seek to do so again. EFPs are shaped charges with a concave end, which typically send a molten copper slug through targets and then create a deadly spray of hot metal. Hezbollah’s expertise in using IEDs probably allowed it to contribute to IED attacks against U.S. and British forces in Iraq. During the war in Iraq, Iran’s Islamic Revolutionary Guard Corps–Quds Force — which aids Hezbollah — built infrared triggers, explosive circuits, and other EFP components in Iran and smuggled them across the border in Iraq to be used against U.S. forces. Hezbollah could also conduct attacks on Israeli forces using tunnel bombs, which were used in Iraq and Syria to literally undermine fortified positions, or improvised rocket-assisted munitions, which Hezbollah used. These IED capabilities, combined with Hezbollah’s ATGMs, would allow the group to harass and disrupt the advance of Israeli ground forces in Lebanon.
+
+These weapons, however, will not be decisive in battle. They are suited for killing one vehicle at a time or striking a small, fortified position, not for defeating a combined force integrating infantry, armor, indirect fires, and air power. Israeli countermeasures, such as the Trophy active protection system, will also limit their efficacy. IEDs will, however, inflict casualties, which Hezbollah leaders probably believe would undermine political will in Israel.
+
+__Air Defense:__ Since the 2006 war, Hezbollah has emphasized the advancement and expansion of its air defense capabilities in an effort to degrade Israeli air superiority. Hezbollah’s air defenses include a range of systems primarily manufactured by Iran and Russia, including anti-aircraft guns, man-portable air defense systems (MANPADS), and short- and medium-range surface-to-air (SAM) missile systems, as seen in Table 3. These systems most commonly make their way into Lebanon smuggled through Syria, and Hezbollah has occasionally used them to engage Israeli UASs flying over southern Lebanon in recent years.
+
+
+_▲ Table 3: Hezbollah’s Air Defense Systems_
+
+In November 2023, U.S. intelligence officials reportedly believed that Russia’s Wagner Group intended to transfer another SA-22 system to Hezbollah from Syria. There have also been recent allegations that militias in Syria are actively training to use Iran’s most advanced air defense system, the Khordad-15.
+
+As shown in Figure 7, Israeli aerial activity has decreased in recent years and remains at historically low levels today, suggesting that Israel takes the threat of Hezbollah’s air defense systems to its aircraft seriously. Statements from Israeli military officials confirm as much. In 2022, the outgoing chief of Israel’s air force stated that Israel no longer had unimpeded air superiority over southern Lebanon.
+
+
+_▲ Figure 7: Average Daily IDF Flight Hours over Lebanon by UN Reporting Period_
+
+In the event of war, Hezbollah’s air defenses would likely force Israeli aircraft to fly at higher altitudes, reducing their ability to accurately hit targets on the ground. At the same time, Hezbollah’s air defense systems would be high-priority targets for Israel. On February 26, 2024, the IDF announced that it had struck Hezbollah’s air defense sites in the Beqaa Valley in response to Hezbollah shooting down an Israeli drone over Lebanon earlier that day. In an escalated conflict, Israel would likely continue to favor the use of UASs over manned aircraft to reduce the risk posed by air defense systems to its pilots, though Israel does have fifth-generation aircraft such as the F-35 Lightning II stealth fighter. A successful downing by Hezbollah of a manned Israeli aircraft would be a strategically significant event. Although Hezbollah’s upgraded air defense systems pose a greater threat to Israeli aircraft than they did in previous conflicts, Israel still has immense air superiority over Lebanon. Israel’s air force boasts some of the most advanced aircraft in the world, including U.S. and indigenously designed systems. Since the October 7 attack, Israel’s air force has successfully struck targets across Lebanon on almost a daily basis.
+
+__Human Factors:__ Hezbollah’s tactical proficiency, combat experience, and will to fight make it a much deadlier threat than Hamas — and even other regional militaries. Western analysts praised Hezbollah’s efficacy in the 2006 war with Israel, and its forces have only since grown more effective. Hezbollah’s combat experience in Syria has given its troops experience in ground combat that few regional militaries possess, forcing them to learn how to conduct offensive operations and exposing them to the tactics, techniques, and procedures of the Russian military. Hezbollah members have also repeatedly displayed a willingness to accept decisive engagement and fight to the last soldier — attitudes that will only be increased by the desire to defend their homes from an Israeli offensive.
+
+In short, the Hezbollah that Israel would face if violence were to escalate to major ground operations is more capable than in 2006. Hezbollah is larger, better armed, and more experienced, thanks in part to its experience fighting in Syria. It is most effectively designed to fight a coercive campaign aimed at killing Israeli soldiers and civilians at a steady rate through rocket, long-range missiles, ATGM, and UAS attacks. But it may also have some ability to conduct combined arms offensives against Israeli troops and limit Israeli air dominance. Even so, it remains technologically outmatched by the IDF, which has long prepared for a rematch of the 2006 war, has been engaged in a war with Hamas since October 2023, and will be able to bring much greater firepower to bear from its land- and air-based platforms.
+
+
+### Israeli Objectives and Options
+
+In light of the changing strategic landscape and Hezbollah’s evolving capabilities, what options does Israel have? There are at least four options: (1) return to the pre–October 7 status quo and emphasize deterrence, (2) start an all-out war with Hezbollah to destroy the group’s capabilities and force it to comply with Israel’s demands, (3) engage in a limited war with Hezbollah to put pressure on the group and push its forces further from the Israeli border, and (4) use coercive diplomacy to better implement UNSCR 1701.
+
+#### Option 1: The Status Quo Ante and a Return to Deterrence
+
+Israel might try to return to a deterrent approach, which has uneasily kept the peace for almost 20 years. Deterring Hezbollah rests on the idea that the threat of war — including the potential destruction of portions of Lebanon — and punitive strikes on the group and Lebanese infrastructure will keep the group from launching attacks or at least massive strikes on Israel. This threat works by endangering something Hezbollah holds dear, such as the lives of its leaders, its power in Lebanon, and the well-being of its constituents. After Israel left Lebanon in 2000, it retaliated against the occasional rocket strike or other violation of the peace with the threat of more massive strikes should Hezbollah mount a larger attack. As Prime Minister Benjamin Netanyahu warned in December 2023, “If Hezbollah chooses to start an all-out war, then it will single-handedly turn Beirut and South Lebanon, not far from here, into Gaza and Khan Yunis.”
+
+Deterrence seems to be alive even after October 7. Nasrallah has stressed in public statements that Hezbollah does not plan a broader war even as it supports the Palestinians and will not rule out escalation if circumstances change. Hezbollah strikes focus on a discreet target set along the border even though the group has the capacity to launch far more attacks and to strike all of Israel. It is clearly trying to limit its attacks even as it shows solidarity. Hezbollah cares about its constituents and recognizes that a repeat of the 2006 war, let alone something much worse, would be a disaster for these supporters. In recent years, Lebanon’s economy has plummeted, and Hezbollah does not want to take the blame for a war that would further devastate the country. Israeli threats have made clear to Hezbollah that Lebanon would be hit hard if an all-out conflict resumes, and the devastation of Gaza reinforces the credibility of this threat.
+
+Deterrence, however, could fail for several reasons. A strike that kills large numbers of Israeli civilians, even if accidental, would inflame the situation. Deterrence also rests on understanding an adversary’s decision calculus, and Israel might misunderstand Hezbollah’s tolerance for attacks on Hamas leaders or the continued loss of Hezbollah cadre, including important operational leaders. As previously noted, Israel’s risk tolerance has changed, and Israeli leaders might decide that even a small chance of Hezbollah attacking Israel needs to be preempted.
+
+#### Option 2: An All-Out War
+
+Should deterrence fail, whether by accident or by choice, an all-out war is possible. Israel’s chief of staff, Herzi Halevi, told Israeli soldiers that the chances of war against Hezbollah are growing. Part of Israel’s logic is that a war with Hezbollah at some point is inevitable and that Israel should not wait for a surprise attack. Chuck Freilich, a former Israeli deputy national security adviser, noted, “If you believe that with Hezbollah is inevitable, as many in Israel do, then now is as good a time as any to do it.”
+
+A war would likely focus on preventing a more dangerous repeat of October 7, going after Hezbollah’s rocket, missile, and drone capabilities and trying to push the group’s fighters farther from the border, probably to the other side of the Litani River. Even a decisive defeat of Hezbollah, however, would not lead to the group’s destruction given its deep roots in Lebanon and strong support from Iran.
+
+Israel possesses considerable capacity for war with Hezbollah, though the Lebanese group would be a formidable foe. Israeli intelligence tries to continuously monitor Hezbollah missile and UAS sites. Indeed, part of why Hamas was able to surprise Israel on October 7 was likely because Israeli intelligence was more focused on Hezbollah, which it saw as the greater threat.
+
+The IDF outnumbers Hezbollah in troops, tanks, artillery, and other forms of military power. Israel’s equipment is also far more sophisticated, and its forces are better trained. Since its poor performance in the 2006 war, Israel has prepared for war with Hezbollah, in contrast to its lack of preparation for the invasion of Gaza. Israel has prepared a target set it can draw on at any time for strikes.
+
+An Israeli attack would probably involve massive airstrikes that would seek to target Hezbollah leaders, disrupt command and control (which would also involve cyberattacks), and hit Hezbollah’s rocket launcher sites, especially those that involve Hezbollah’s precision munitions arsenal. Although Israel would target Hezbollah leadership and military sites in Beirut and in the Beqaa Valley, it would likely focus most of its effort on Hezbollah’s presence near the border. Using lessons learned in Gaza, Israel would likely also attempt to destroy Hezbollah’s tunnel network. Finding and targeting Hezbollah tunnels has been an Israeli military and intelligence priority for years, though Hezbollah showed in 2006 that it could successfully use deception to build an extensive network.
+
+Some Israeli leaders, such as Benny Gantz, a member of Prime Minister Netanyahu’s war cabinet, remarked in February 2024 that Israel could strike the Lebanese military as part of a broader war. “It is important that we be clear — the one responsible for the fire from Lebanon is not only Hezbollah or the terrorist elements that carry it out, but also the government of Lebanon and the Lebanese state that allows the shooting from its territory,” Gantz said. He also added: “There is no target or military infrastructure in the area of the north and Lebanon that is not in our sights.”
+
+Israel might then invade Lebanon with several divisions (it used four in Gaza, where the dense urban terrain required extensive manpower), seeking to uncover and destroy hidden tunnels and force Hezbollah fighters to the other side of the Litani River. Although southern Lebanon is not densely populated like Gaza, some of the fighting would involve urban warfare. If Israel were to successfully remove Hezbollah forces, it would then carefully monitor the area and conduct extensive strikes if necessary to prevent any return. Israel might push for a more robust UNIFIL force to monitor the area or seek to create a buffer zone, working with Lebanese proxies, as it did before 2000, though both of these approaches have proved insufficient in the past.
+
+Hezbollah would respond in several ways. Hezbollah forces would conduct guerrilla attacks, likely using an extensive tunnel network and well-prepared defensive positions near the Israeli border, taking advantage of the rough terrain there. Hezbollah would also attempt cross-border attacks as well as perhaps maritime infiltration in order to strike at Israel directly. In addition, Hezbollah would use its massive rocket and missile arsenal to attack Israel, overwhelming Israel’s defensive systems and striking at targets throughout the entire country: in 2006, Hezbollah was able to conduct rocket and missile attacks for all 34 days of the war, and its arsenal today is far larger. Finally, Hezbollah might conduct international terrorist attacks at Israeli targets around the world, working extensively with Iran to do so. Hezbollah would also use its influence over the Lebanese government to ensure that any ceasefire was on its own terms.
+
+#### Option 3: Limited War
+
+Another approach is to continue the current level of conflict, in which there is no all-out war, but dozens of Hezbollah fighters are killed every month, as well as a small number of Israelis. Civilians would die on both sides, but if current patterns continue, far more Lebanese would be killed than Israelis. Limited war would involve regular Israeli airstrikes on Hezbollah forces near the border and on the occasional Hezbollah commander, while Hezbollah would fire anti-tank missiles at military and civilian infrastructure across the border, allow Palestinian groups based in Lebanon to attempt the occasional cross-border attack, and launch rocket and mortar attacks on Israeli positions.
+
+Limited war would serve several purposes for both Israel and Hezbollah. For Israel, such strikes keep Hezbollah off balance, forcing its commanders to hide or risk being killed and putting its weapons caches at risk. In addition, the strikes show the Israeli people that the government is actively trying to defend them and make it hard for Hezbollah to amass forces that might conduct a surprise attack across the border. For Hezbollah, limited war allows it to show solidarity with Hamas and affirm Iran’s “resistance” agenda. Although Hezbollah has lost over 100 fighters since October 7, this level of casualties is manageable for a large organization with many skilled personnel. For both Hezbollah and Israel, limits to the conflict help avoid the costs of an all-out war.
+
+At the same time, limited war poses problems for both groups, in addition to the regular casualties. The biggest problem is the impact on civilians along the border. The conflict worsens Lebanon’s always-simmering instability and mounting economic problems, and Hezbollah risks taking the blame. Perhaps 75,000 Lebanese have fled southern Lebanon, with no immediate prospect of return: a similar political problem for Hezbollah to what Israel faces, with its displaced citizens, who are unlikely to return to their homes en masse as long as limited war continues. Finally, it is unclear whether a limited war would actually remain limited.
+
+#### Option 4: Coercive Diplomacy
+
+Another approach is to use coercive diplomacy to compel Hezbollah to abide by UNSCR 1701. To this end, the United States, often represented by mediator Amos Hochstein, is using diplomacy to negotiate with Lebanese leaders, and thus indirectly with Hezbollah, while Israel is putting military pressure on the group through a mix of strikes on Hezbollah forces and leaders. The renewed threat of an all-out war gives this pressure additional strength. Hezbollah, however, does not want to be seen as surrendering to Israeli pressure, particularly at a time when Israeli attacks on Palestinians are dominating the headlines.
+
+In addition to ending Hezbollah attacks on Israel, the goal for Israel would be for Hezbollah to move its armed forces back, as promised under UNSCR 1701, to the Litani River. It is possible that Israel would also accept a less comprehensive withdrawal that moves Hezbollah farther back from the Israel-Lebanon border but not all the way to the Litani River. UNIFIL might need to be bolstered substantially and be far more aggressive in its use of force in response to any incursion, both of which would be difficult to accomplish.
+
+Israel, too, would be asked to make concessions and changes in response to UNSCR 1701 and to appease Hezbollah. Israel regularly violates Lebanese airspace, which Israel does to strike and monitor Hezbollah positions. Hezbollah would also likely seek an Israeli evacuation of Shebaa Farms and the village of Ghajar, perhaps placing them under UNIFIL so that the group could claim a political victory even as it made concessions.
+
+
+### Managing the Crisis
+
+With a high risk of conflict, Washington needs to step up efforts to prevent an all-out war (Option 2), which would have significant and negative implications for the United States at home, in the Middle East, and around the globe. Restoring deterrence (Option 1) and limited war (Option 3), while better from a U.S. perspective, both have their limits. Option 1 appears, at best, a temporary solution that could easily fall apart, while Option 3 could spiral into an all-out war and, even in limited form, could be disastrous for both Lebanon and Israel. The U.S. military is already overstretched in countering a range of threats, such as China in the Indo-Pacific, including around Taiwan and the South and East China Seas; North Korea, which is accelerating its conventional and nuclear capabilities and issuing provocative threats of nuclear conflict with South Korea; and Russia, which is waging an attrition war against Ukraine and developing land, air, naval, space, and cyber capabilities that threaten the United States and its allies. The U.S. defense industrial base is also overstretched. An all-out war between Israel and Hezbollah would likely require additional U.S. military assets — such as one or more carrier strike groups as well as fixed-wing aircraft, ISR platforms, and munitions — that are needed in other theaters.
+
+A war could dramatically raise tensions with populations across the Middle East and beyond — including in the United States and Europe — and lead to increased attacks by Iranian-backed groups against Israel, the United States, and commercial targets in the region and littoral areas. U.S. forces in the region, already facing limited attacks from Iranian-backed groups, would likely face more frequent and larger strikes. Although the economic implications of the Gaza war have been limited, an all-out war would likely have significant implications on trade, supply chains, energy prices (including oil and gas), investment, and tourism.
+
+A major war would also have significant humanitarian costs. Hezbollah’s rocket and missile systems put all of Israel under threat, and its ground forces are far more formidable than those of Hamas. Israel’s promise to devastate Hezbollah strongholds in Lebanon as it has in Gaza is credible, and thousands could die in these attacks. Lebanon’s economy, already under severe strain, could collapse completely as hundreds of thousands of people are displaced and the country’s infrastructure is destroyed.
+
+Consequently, the United States should focus its efforts on implementing a policy of coercive diplomacy (Option 4). There has been some movement toward negotiations. For example, U.S. officials like Amos Hochstein have made energetic efforts to restore stability and discussed a proposal that calls for the withdrawal of non-state armed actors from southern Lebanon, a deployment of Lebanese armed forces, and a development plan for southern Lebanon. In addition, France presented a three-step proposal to Israel, Lebanon’s government, and Hezbollah (and briefed it to the United States) that outlines a 10-day process of de-escalation and calls for Hezbollah to withdraw its fighters to a distance of about six miles (10 kilometers) from the border. Negotiations are critical, but they will not be easy. Hezbollah has formally rejected negotiating a de-escalation proposal until the war in Gaza ends.
+
+U.S. leadership will be important. As Henry Kissinger remarked, “One has to remember that every progress that has been made towards peace in the Middle East has come under American leadership.” Preventing an all-out war between Israel and Hezbollah is likely the next test.
+
+---
+
+__Seth G. Jones__ is senior vice president, director of the International Security Program at CSIS, and author most recently of Three Dangerous Men: Russia, China, Iran, and the Rise of Irregular Warfare (W.W. Norton).
+
+__Daniel Byman__ is a senior fellow at CSIS, professor at Georgetown University’s School of Foreign Service, and author most recently of Spreading Hate: The Global Rise of White Supremacist Terrorism (Oxford).
+
+__Alexander Palmer__ is an associate fellow in the Transnational Threats Project at CSIS.
+
+__Riley McCabe__ is a program manager and research associate at the Transnational Threats Project at CSIS.
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+---
+layout: post
+title : Ukraine’s Financial System
+author: Oksana Ihnatenko and Arzu Abbasova
+date : 2024-03-28 12:00:00 +0800
+image : https://i.imgur.com/QQ9qG53.jpeg
+#image_caption: ""
+description: "The Resilience and Integrity of the Financial System in Ukraine"
+excerpt_separator:
+---
+
+_This report highlights key stakeholder views from a recent workshop on developments in Ukraine’s financial system._
+
+
+
+In February 2024, the Centre for Financial Crime and Security Studies (CFCS) at RUSI convened an online workshop entitled “The Resilience and Integrity of the Financial System in Ukraine: Two Years after Russia’s Full-Scale Invasion”. As Ukraine continues its commitment to strengthening anti-money laundering (AML) efforts and implementing EU reforms, it recognises the significance of preparing for the upcoming enhanced follow-up procedure and 6th round of the MONEYVAL mutual evaluation, the regional body of the Financial Action Task Force (FATF) to which the country belongs. In light of this, the virtual workshop addressed key issues crucial for ensuring Ukraine’s readiness for the assessment. The workshop forms part of CFCS’s Supervising and Monitoring Ukraine’s Reconstruction Funds (SMURF) project, supported by the National Endowment for Democracy. The workshop, held under the Chatham House Rule, gathered representatives from key Ukrainian financial institutions and relevant authorities, including the State Financial Monitoring Service of Ukraine, the Ministry of Finance of Ukraine, the Prosecutor General’s Office, the Ministry of the Digital Transformation of Ukraine and others. This report summarises the main findings of the workshop.
+
+
+### Introduction
+
+Ukraine’s second enhanced follow-up MONEYVAL report, published in June 2020, identified several deficiencies in the country’s technical compliance with standards set by the FATF, the global standard-setter in anti-financial crime. The report flagged areas including risk assessments of new technologies, risk-based supervision and regulation of virtual assets, statistical data on AML and counterterrorist finance (CTF), and others as key issues where the country still has significant work to undertake. During the online workshop, participants reflected on these flagged areas, offering insights in how to effectively tackle these challenges. The workshop not only focused on Ukraine’s technical compliance with AML standards but also delved into the effectiveness of the country’s existing response to financial crime. It focused on four principal areas: development of the law on virtual assets; a path to creating a single register of bank accounts of individuals and legal entities; public–private partnerships; and recovery of the proceeds of crime.
+
+
+### Ukraine’s Technical Compliance with AML Standards
+
+#### Development of the Law on Virtual Assets
+
+Virtual assets and the laws on their regulation emerged as a key topic during the workshop. This was largely due to the spotlight cast on the topic following the downgrade of Ukraine’s rating to “partially compliant” in its second enhanced follow-up MONEYVAL report to in relation to FATF Recommendation 15 on new technologies.
+
+The first attempt to regulate virtual assets in Ukraine, aligning the country with international standards on AML/CTF and comprehensive financial monitoring, was made in 2022, when the Law on Virtual Assets No. 2074-IX was adopted and signed. However, participants noted that the law is not yet in effect due to delays caused by required amendments to the Tax Code of Ukraine. A participant clarified that the reason behind the delay is that the necessary draft law for taxing operations with virtual assets has not been developed.
+
+Rather than developing the necessary technical amendments to the Tax Code of Ukraine, a different pathway was chosen to address the issues around the regulation of virtual assets. Two alternative draft laws were registered in Ukraine’s legislature, the Verkhovna Rada, to revise the already-adopted Law on Virtual Assets and legalise the market and solve the taxation issue. However, neither has yet been passed. One participant noted that the main difference between the two draft laws lies in the taxation rules and classification of virtual assets.
+
+Draft Law No. 10225, developed by Ukraine’s National Securities and Stock Market Commission in cooperation with EY (Ernst & Young), translates the EU’s Markets in Crypto Assets Regulation (MiCA) standards into the Ukrainian context and proposes a standard tax rate of 18%, with a 1.5% military tax. Draft Law No. 10225-1, on the other hand, was developed by the Ministry of the Digital Transformation of Ukraine, and proposes the combination of the Base Law No. 2074-IX with MiCA standards. This draft law proposes a three-year transition period during which the tax rate would be only 5%, with an increase of this rate to 9% over the subsequent five years and 18% after eight years of market regulation. This second draft law aims to simplify the creation of the virtual asset market, streamline the authorisation process for service providers, and promote market development in accordance with EU standards.
+
+While Ukraine has not adopted either of the two draft laws, workshop participants noted that there is already widespread use of virtual assets in Ukraine and a growing demand among the population, underscoring the need to regulate the industry. Ukraine was ranked fifth on the Global Crypto Adoption Index in 2023, and approximately 6.5 million Ukrainians, 15.72% of the population, owned digital currency in 2022. It should also be noted that while Ukraine’s AML Law offers a legal framework for launching AML/CTF regulation of virtual assets, the law has not be enforced since it came into effect in 2020.
+
+As market regulations continue to develop, it is also becoming necessary to understand what effective financial monitoring of the virtual asset industry would look like. Participants agreed that effective monitoring relies on a strong market framework. This includes having a diverse range of service providers that serve a broad user base. Without such an ecosystem, the necessary data for effective monitoring would be lacking. Therefore, it is essential to simplify the authorisation procedures for these services, especially during the initial stages, to foster market growth and stimulate demand among a wider population. In the first period of market development, the authorisation process should be as straightforward as possible, as this will help to shape the market and create demand for the service providers from a larger population. Once the market is shaped, additional tools for regulatory influence, impact and review/control will be implemented and become a regular element of the financial market.
+
+Pseudonymity of virtual assets was another key topic that emerged during the discussion. One participant posited that most users and customers of virtual assets do not consider anonymity the most important aspect of virtual assets, and would be willing to comply with Know Your Customer measures and allow themselves to be identified to ensure they have no criminal intent. Both of the draft laws noted above propose that all service providers must fully identify their users in every case. With the implementation of the law, virtual asset users will have the opportunity to participate in a regulated and transparent market. Another issue identified during the workshop was the lack of crypto-to-fiat gateways in the market. It is important for customers to have the freedom to move their money, especially for exchanging between fiat currency and virtual currencies. However, due to various complications and currency regulations, this task remains quite challenging.
+
+Despite the above-mentioned challenges, one participant drew attention to the benefits of legalising virtual assets in Ukraine, particularly the impact on technical compliance with AML standards and market developments. They noted that legalisation of virtual assets can provide opportunities for business growth, technological advancement, and an increase in state revenue. Additionally, it can help to eliminate the use of Ukraine’s market by criminals for money laundering of crypto assets and sanctions evasion. In the long term, it can also provide access to EU markets in crypto assets and offer additional channels for money flows towards Ukraine’s reconstruction.
+
+The next important steps for the legalisation of the market are expected from the Tax Committee of the Verkhovna Rada. The Committee is currently reviewing the draft laws and will choose one as the main law for market development. Workshop participants acknowledged that it is difficult to provide a timeline because of the obstacles caused by the war. Nonetheless, the representative of the Ministry of the Digital Transformation of Ukraine noted that the decision as to which law will move forward is expected by the end of summer 2024. After that, amendments to the basic law could take effect by the end of 2024. With virtual asset companies already working in Ukraine, differing opinions were expressed as to whether the market can operate without waiting for a specific regulation to be adopted.
+
+Participants in the workshop and authors of the draft laws have been in constant dialogue with the community, the market and potential participants. Overall, workshop participants agreed that there is a need to create a regulatory environment as soon as possible and pass the relevant law.
+
+#### A Path to Creating a Single Register of Bank Accounts and Safe-Deposit Holders
+
+With Ukraine’s progress towards EU accession, another concern identified by workshop participants was the necessity of creating a central register of bank accounts and safe-deposit holders, stemming from the requirements of the 5th Anti-Money Laundering Directive. Ukraine has in fact initiated the development of a single register of bank accounts. During the workshop, participants noted that the register of bank accounts of legal entities is already in place, administered by the State Tax Service of Ukraine, and that law enforcement authorities have access to it. However, information about the bank accounts of individuals is not included in the register, and it was agreed that this should be the focus of future work.
+
+One participant drew attention to efforts by the Ministry of Finance of Ukraine in this regard. The Ministry had prepared a draft law entitled “On Amendments to the Tax Code of Ukraine and Certain Legislative Acts of Ukraine Regarding the Establishment of the Unified Register of Accounts of Individuals and Legal Entities and Individual Bank Safes”. Yet the participant said that in 2023, after the draft law was submitted to the Cabinet of Ministers of Ukraine, concerns about privacy, confidentiality and human rights compliance were raised, and the matter was approached with caution.
+
+The passage of the law was delayed as specific legislative amendments in relation to confidentiality were required, which the Ministry of Finance continues to work on. The law’s drafters were asked to research the confidentiality issue and prepare the necessary amendments to provide safeguards in relation to private information. Currently there is a concern among government officials regarding how personal data could be leaked or misused for malicious purposes.
+
+One participant noted that officials have identified as a major obstacle a lack of coherence of Ukraine’s data protection regulations in relation to the EU framework. The country has not yet adopted the EU’s General Data Protection Regulation provisions, which would impact the entire process. Participants also noted that Russia has made attempts to abuse the register and use the information included in it. To deal with cyber security threats, a deadline for the establishment of the register has been set for 2027. This will give Ukrainian authorities time to involve cyber security experts in its development and prepare the appropriate procedures and protocols.
+
+One participant recalled that the EU’s Ukraine Facility programme requirements mandate the implementation of a single register by 2027. Ukraine’s National Revenue Strategy for 2024–30 acknowledges the importance of building trust and confidence within the population in the use of private information about bank accounts in the register.
+
+
+### The Effectiveness of Ukraine’s Response to Financial Crime
+
+#### Public–Private Partnerships (PPPs)
+
+Beyond the discussion of Ukraine’s technical compliance with AML standards, the workshop also placed a spotlight on the issue of the effectiveness of the country’s response to financial crime. The 2017 Mutual Evaluation Report (MER) on Ukraine concluded that the implementation of measures necessary to fight financial crime in the country was not sufficiently effective. Consequently, the workshop discussion extended beyond the technical ratings of the FATF. Among the topics raised against this backdrop was the current status of public–private partnerships (PPPs) in Ukraine.
+
+Participants emphasised the key role of PPPs, particularly in the evolving landscape of AML technology. They underscored how PPPs significantly enhance the formulation of efficient market rules and regulations in two key ways. First, they serve as effective deterrents against market violations, while driving progress. Second, given the potential unfamiliarity of state officials with emerging technologies and their business applications, PPPs offer a collaborative platform for knowledge sharing to facilitate deeper understanding of these technologies. However, it was noted that the bureaucratic nature of certain authorities can cause challenges in establishing robust PPPs. Nevertheless, one participant argued that the key to initiating and sustaining PPPs lies in their voluntary nature. Thus, there needs to be a strong emphasis on fostering willingness and providing incentives for the private sector to collaborate with the public sector.
+
+Positive examples of PPPs in Ukraine emerged during the discussion, although these were not always in relation to conventional financial crime. Participants argued that PPPs in Ukraine are often used for such purposes as raising awareness and establishing communication channels, showcasing the diverse and innovative ways in which they can be leveraged for mutual benefit. On this, one participant highlighted the efforts of the National Bank of Ukraine in raising awareness and establishing a direct communication channel with the private sector. Also mentioned as a good example of a PPP was the Public Council under the Ukrainian Ministry of Finance, a group that includes representatives of public organisations, trade unions and other citizen associations, which gathers annually to discuss issues related to financial services and their impact on society. It was noted that the State Financial Monitoring Service has also set up a Public Council on AML issues. Another participant highlighted that the Ministry of Digital Transformation is actively working on developing a regulatory “sandbox”, scheduled for completion by the end of 2024. This sandbox aims to streamline communication between businesses and government authorities, fostering an environment conducive to PPPs. While some of the initiatives mentioned by the participants suggested promising steps towards PPP development in Ukraine, it was agreed that there remains a need to further strengthen and expand these efforts and learn from foreign experience.
+
+#### Recovery of the Proceeds of Crime
+
+Another key topic raised concerning the effectiveness of Ukraine’s anti-financial crime measures related to the country’s efforts to recover the proceeds of crime. Asset recovery is a key FATF priority, particularly under the current Singaporean presidency. In fact, Ukraine’s MER noted that the country needs to ensure that prosecutors handling proceeds-generating cases are well-trained in modern financial investigative techniques, and highlighted a need for focused guidance on the importance of early restraint and confiscation of proceeds.
+
+On Ukraine’s efforts to recover assets, a participant from the Prosecutor General’s Office noted that considerable effort has gone into developing the efficiency of pre-trial investigations of criminal cases. The Prosecutor General’s website has published reports on the results of AML investigations, noting that 7,832 criminal offences related to AML and CTF were investigated in 2023. The report also shows that, according to indictments, the established value of legalised property obtained by criminal means in this period was UAH 2,998,290,540 ($78,263,910), of which UAH 212,426,030 ($5,544,923.50) has been seized. However, despite these achievements, it was highlighted that the key to ensuring effectiveness in recovering the proceeds of crime lies in taking a comprehensive approach during pre-trial investigations. Participants noted that while accessing information about assets or accounts within Ukraine is swift, investigations involving international partners take a long time and can be delayed by prolonged procedures. That said, Ukraine’s formal and informal cooperation with EU countries on mutual legal assistance was reported as working well. Additionally, attention was drawn to the importance of court judgements authorising confiscation, highlighting the key role that these play in asset recovery. It was noted that Ukraine’s particularly low score on Immediate Outcome 7 of its MER – which relates to the effectiveness of a country’s money laundering investigations and prosecutions – should serve as a reminder of the need to demonstrate effective use of financial investigations to recover assets.
+
+Overall, one workshop participant emphasised that it is crucial to recognise that the impact of the FATF assessment of Ukraine is still ongoing. Ukraine’s 2020 MER requires the country to continually report on its efforts to address the deficiencies identified in the MER, and it must submit a progress report by December 2024.
+
+Looking ahead, while Ukraine’s next MONEYVAL Assessment will not occur until 2027, workshop participants emphasised that all relevant stakeholders in the country should take the necessary measures to both uphold high standards of technical compliance by passing relevant legislation and ensure their effectiveness by ensuring that these laws are implemented. The world – and the EU in particular – is watching.
+
+---
+
+__Oksana Ihnatenko__ is a Researcher for the Supervising and Monitoring Ukraine’s Reconstruction Funds (SMURF) project at the Centre for Finance and Security at RUSI. Her research examines resilience and integrity of the Ukraine’s financial system. In particular, her research focuses on Ukraine’s adherence to FATF standards, fighting financial crime, anti-money laundering efforts, and issues surrounding reconstruction.
+
+__Arzu Abbasova__ is a Research Analyst for the Centre for Finance and Security. She works on CFCS’s Restricting Kleptocracy project, besides managing related communications and engaging with stakeholders.