NO NUKE TALK: The North Korean delegation sat stone-faced during yesterday’s talks when the South Korea representative briefly mentioned “denuclearization” during the first face-to-face talks between the two Koreas in two years. The agreed-upon agenda was the Olympics, and just the Olympics. And according to reporters who monitored a televised feed of the meeting, there was no response from the North’s chief negotiator, and most had a friendly upbeat tone.

But afterward, North Korea chief representative Ri Son Kwon castigated South Korean reporters for saying the negotiations included denuclearization, and said his country did not see South Korea as a military threat. “All our cutting-edge weapons, including our hydrogen bomb and intercontinental ballistic missiles, are not targeting our Korean brothers, China or Russia but the United States,” Ri said. “If we begin talking about these issues, then today’s good results might be reduced to nothing,” according to pool reports.

THANK YOU, MR. TRUMP: Still, South Korean President Moon Jae-in was clearly pleased with the outcome of the talks, in which North Korea agreed to send a high-level delegation to next month’s winter games in Pyeongchang. He said it might never have happened without America’s leadership. “I think President Trump deserves big credit for bringing about the inter-Korean talks, I want to show my gratitude,” Moon told reporters at a news conference. “It could be a resulting work of the U.S.-led sanctions and pressure.”

Moon also floated the idea of a future summit between himself and North Korean leader Kim Jong Un, so long as conditions were right. “To have a summit, some conditions must be established. I think a certain level of success must be guaranteed,” Moon said, according to a translation by the AP.

A QUALIFIED WELCOME: In a statement issued by State Department spokeswoman Heather Nauert, the U.S. expressed support for the talks, provided they don’t undermine international sanctions against the regime. “The United States remains in close consultations with ROK officials, who will ensure North Korean participation in the Winter Olympics does not violate the sanctions imposed by the U.N. Security Council over North Korea's unlawful nuclear and ballistic missile programs,” Nauert said.

“The United States is committed to a safe and successful Winter Olympic Games, and the United States will send a high-level presidential delegation to the games,” Nauert said, while adding that there is no daylight between Moon and Trump. The two leaders “have agreed to continue the campaign of maximum pressure on North Korea toward the goal of complete and verifiable denuclearization of the Korean Peninsula.”

THE ‘BLOODY NOSE’ STRATEGY: The Wall Street Journal reported yesterday that some members of the Trump administration are mulling over the idea of a so-called “bloody nose” strike against the North, a very limited strike against a nuclear facility that would cause limited damage without triggering all-out war. Our discussions with Pentagon officials found little support for the dubious strategy, which would carry a high risk of miscalculation and could spark the very bloodbath that everyone wants to avoid.

One official said Defense Secretary Jim Mattis, who has issued several dire warnings of the horrific nature of a second Korean war, remains convinced that cutting off imports will eventually cripple North Korea’s nuclear program. The official described a recent meeting in which Mattis was examining a photograph of a North Korean “TEL,” short for Transporter Erector Launcher. Mattis pointed out that the mobile missile launcher, essentially a giant truck, was not built in North Korea. “Everything they have, they get from someplace else,” the official quoted Mattis as saying. “They don’t grow rubber in North Korea. They are getting the tires from somewhere.”

ONE ANALYST'S TAKE: Harry Kazianis, director of defense studies at the Center for the National Interest, nailed the big flaw in the strategy: Kim would have no way of knowing that the “limited” strike was in fact a one-shot deal, and not the beginning of regime change, which is his biggest fear. “Kim would be very hard pressed to not only respond, but lash out with whatever weapons he has left,” Kazianis said. “That could mean a nuclear strike or Seoul, Tokyo or even potentially the U.S. homeland.”

Kazianis thinks Kim is simply playing for time. “I would argue the reason why Kim has not tested the Hwasong-15 again, the missile from the November 28th test, is that he needs time to get the heat shield technology finished. He likely needs a few months. So, why not lock down South Korea in talks knowing that America won’t attack or hit with more sanctions if negotiations are moving forward and he holds off on nuclear or missile tests. It makes perfect sense.” Kazianis predicts “the world will go nuts over Kim’s skaters” and Kim will get a few months to develop his reentry technology. “Then, in early April, the talks will stall, and before U.S.-ROK joint exercises start we wake up to an ICBM test in South Pacific with a dummy warhead splashing down into the ocean,” he said. “Game. Set. Match.”

Good Wednesday morning and welcome to Jamie McIntyre’s Daily on Defense, compiled by Washington Examiner National Security Senior Writer Jamie McIntyre (@jamiejmcintyre), National Security Writer Travis J. Tritten (@travis_tritten) and Senior Editor David Brown (@dave_brown24). Email us here for tips, suggestions, calendar items and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email and we’ll add you to our list. And be sure to follow us on Twitter @dailyondefense.



SHIP-BASED ANTI-MISSILE MISSILES TO JAPAN: The State Department has OK’d a potential $133 million sale to Japan of Raytheon-made interceptor missiles that are used with Aegis missile defense systems and could help protect the U.S. ally from North Korea. Congress has been notified of the proposed foreign military sale that includes four Standard Missile-3 Block IIA missiles and canisters. “If approved, this proposed sale will support the continued good health of the U.S. defense industrial base and provide jobs for the American worker,” a State Department official said in a statement. “It would also follow through on President Trump’s commitment to provide additional defensive capabilities to treaty allies threatened by the DPRK’s provocative behavior.” The SM-3s can be employed on Aegis-class destroyers or on land via the Aegis Ashore program, and have demonstrated an ability to shoot down incoming ballistic missiles in recent joint U.S.-Japanese tests.

PATRIOT CONTRACT: Raytheon also announced it won a $1.5 billion contract to provide a foreign country “additional capability” for its Patriot Integrated Air and Missile Defense System -- but it is not saying who will be getting the system. The customer is an “undisclosed member of the 14-nation group that own the combat-proven” missile defense system. The defense giant said the contract was awarded on Jan. 4.

HAPPENING TODAY — AUDIT THE PENTAGON: Defense Department Comptroller David Norquist is set to testify to the House Armed Services Committee at 10 this morning about his quest to audit the Pentagon. For more than two decades, the sprawling military has been required to undergo an annual audit and was striving toward the goal of getting its books in order. Norquist was appointed by Trump last year and in December announced the start of the audit, which he called “one of the largest ever undertaken in history.” Lawmakers who have been eager to get the audit underway are sure to want details.

AFGHANISTAN AUDIT: The Pentagon’s Office of the Special Inspector General for Afghanistan Reconstruction, or SIGAR, has released a highly critical audit of a dubious U.S. effort between 2010 and 2014 to foster economic development in Afghanistan. The internal watchdog found $675 million was spent on projects, many of which were abandoned of left incomplete, because of “safety concerns, lack of sustainable design, and other problems.”

The audit was requested by Judiciary Committee Chairman Sen. Chuck Grassley, who said in a statement yesterday the report’s results are “just another example of the Defense Department’s failure to get its financial house in order,” and “helps explain why the Defense Department can’t earn a clean opinion of its annual financial audits.” Grassley said “careless bookkeeping” means “American taxpayers may never know what happened to the rest of their money.”

NO BUDGET BREAKTHROUGH: Republicans and Democrats emerged from White House talks yesterday with what appeared to be a broad framework for continued immigration policy negotiations. But there was no breakthrough agreement yet that could clear the way for an omnibus spending bill to fund the military and avert a partial government shutdown before the current stopgap budget expires on Jan. 19.

Flanked by congressional whips Sen. Dick Durbin and Rep. Steny Hoyer, Trump presided over an unusual hour-long, on-camera negotiation at the White House. “I'm appealing to everyone in the room to put the country before party, and to sit down and negotiate and to compromise, and let's see if we can get something done. I really think that we have a chance to do it,” Trump told the bipartisan gathering of House and Senate lawmakers. As part of a budget deal, Democrats want protections for 700,000 undocumented Dreamer immigrants and Trump has countered with a demand for $18 billion over the next decade for his Mexico border wall.

IT’S STILL ABOUT THE CAPS: But the talks turned to whether defense spending increases would be matched with nondefense increases, exposing a key partisan divide bedeviling an omnibus bill. “As we come up on the Jan. 19 deadline, the lives that are hanging in the balance are those of our military that are needing the equipment and the funding and everything they need in order to keep us safe, and we should not play politics on this issue to stop our military from getting the funding that they need,” Rep. Martha McSally said.

McSally is among Republicans who propose breaking with past budget deals and raising spending caps only on defense. Trump praised her comment. “OK, good, and I think a lot of people would agree with that. ... We need our military desperately. Our military has been very depleted. We're rebuilding, and we're building it up quickly, and we're negotiating much better deals with your purveyors and with your manufacturers and with your equipment makers — much better than it was before,” he responded. “I looked at boats that started off at $1.5 billion, and they're up to $18 billion, and they're still not finished. In this case, a particular aircraft carrier. I think it’s outrageous. So, we're very much agreeing with you on that one.”

Hoyer, who has been leading the Democratic push to raise non-defense spending caps in tandem, took exception with the exchange. “There are no Democrats that don't want to make sure that the military is funded properly,” Hoyer said. “But we also understand that our domestic issues, whether it’s education, whether it’s healthcare, whether it’s environment, whether it’s transportation and infrastructure, they're important, as well.”

Past budget deals in 2013 and 2015 raised both defense and nondefense spending caps equally and Democrats are again looking for parity, Hoyer reminded Trump and the seated lawmakers. “What we ought to have done over the last six months ... is to reach some agreement on what the caps are going to be,” Hoyer said. “So we can get to where we should get and want to get there, but we ought to have an agreement based upon what the last —” Trump cut in. “But, Steny, we do have to take politics out of the military. We need that military. All the other things we talk about, we're not going to be here if we don't have the right military,” Trump said.

MATTIS DONS LOBBYIST HAT: While lawmakers visited Trump, Mattis dropped into the Senate for lunch with Republicans and Democrats, and a chance to make the case for passing a defense spending bill as the Jan. 19 deadline looms. But it was unclear whether his visit shifted the debate among Senate Republicans who are largely convinced that military funding is desperately needed and Democrats who are steadfast in their effort to get nondefense funding and immigration reform.

Senate Minority Leader Chuck Schumer was upbeat about the outcome of the White House immigration talks, saying they “boded well” for a deal. But he said “no” when asked if the Mattis visit moved Democrats on the issue. “We greatly respect him. Everyone in our caucus knows defense is important,” Schumer said. “We made the argument [that] so are some non-defense things, help us get those.” In the past, Republicans have argued matching defense increase with a commensurate hike in domestic spending would irresponsibly add to the deficit. “That went out the window with the tax bill,” Schumer said. “So, we can do both.”

THORNBERRY UNDECIDED ON CR: As the clock ticks down on the budget deadline, it seems more likely that Congress is heading for another stopgap continuing resolution. “It kind of looks that way,” said Sen. Jim Inhofe, a senior member of the Armed Services Committee. “My feeling has always been, and you’ve heard me say this, is it’s fine if they want to do a CR but they should exempt military.” Other lawmakers such as Sen. John Cornyn, the majority whip, have acknowledged the possibility that another stopgap measure might be needed to buy more time.

Rep. Mac Thornberry, the House Armed Services chairman, has been pushing a major defense spending hike for a year and has railed against CRs, which he says hurt the military. Thornberry holds sway over a significant bloc of Republicans in the House and has leverage over budget decisions. He voted against the first fiscal 2018 stopgap measure in September but supported two more passed in December, hoping a budget deal could be reached this month. He told the Washington Examiner he has not decided how he may vote on another CR. “Every day under a CR does damage to the military, so I am not for that,” he said. It will depend on the details. “We’ll see what the situation is,” he said.

SCOTT JOINS SASC: A second South Carolina Republican has joined the Senate Armed Services Committee. Sen. Tim Scott was named to the policy-writing panel by Senate leadership after a divisive Alabama election race left an empty seat. He joins fellow Palmetto State Sen. Lindsey Graham. “It’s going to be huge. I am so glad,” said Graham, responding to Scott’s appointment. “I think you [will] find him very conversant in all things military.” Scott will now have a seat at the table as Armed Services works toward the next National Defense Authorization Act, the massive annual legislation that sets military policy and priorities. “Tim is a very thoughtful person, we are glad to have him there,” said Sen. Thom Tillis, an Armed Services member from North Carolina. “I welcome the same sort of calmness he brought to the tax [reform] debate to any debate we have, NDAA or otherwise.”

Scott, whose voting record falls just to the right of more centrist Republicans, was appointed to an open Senate seat in 2012 by former Gov. Nikki Haley and won a special election to finish out the term of retired Sen. Jim DeMint. He won re-election in 2016. “Having two brothers who served, I know well the sacrifices made by members of our Armed Forces, and I will continue working to ensure our military is the best trained and equipped fighting force in the world,” Scott said in a statement. South Carolina is home to Shaw Air Force Base, Marine Corps Air Station Beaufort, and the Marine Corps’ boot camp at Parris Island.

McMASTER’S WHITE HOUSE TOUR ENDING? White House aides have been informed they must decide before the end of the month whether they will stay with the administration through the 2018 midterm elections in November, according to CNN. White House chief of staff John Kelly is working to fill positions before January ends, mitigating the flow of outgoing advisers. However, a lack of qualified and willing replacements, coupled with a long hiring process, is complicating the effort.

Some officials who may soon be on their way out include White House counsel Don McGahn and national security adviser Lt. Gen. H.R. McMaster — two people Trump has vented about publicly. However, their future at the White House is not yet decided, the report said.

McMaster, an active duty three-star general, has been at odds with Trump concerning policy in Afghanistan and Iran, while McGahn has a compelling legal reason to stay since he is a potential witness in special counsel Robert Mueller’s Russia probe, a source familiar with the situation told CNN.

SEEKING PUTIN’S FAVOR: A top White House official allegedly suggested withdrawing U.S. troops from Eastern Europe in a gesture to Russian leader Vladimir Putin shortly after Trump took office, according to a report in the Daily Beast. The report says the proposal was never enacted, but characterized it as the first known instance of senior White House aides angling to relocate U.S. military forces in a move to satisfy Putin.

Kevin Harrington, the National Security Council’s senior official for strategic planning, is reported to have suggested in February 2017 that U.S. troops be pulled back from areas near Russian borders in order to “refram[e] our interests within the context of a new relationship with Russia,” according to a former official, who was present when Harrington suggested the idea.

PENTAGON’S NEXT GENERAL COUNSEL: The White House announced last night that Trump intends to nominate Paul Ney to be the DoD’s general counsel. He was previously acting general counsel and principal deputy general counsel of the Navy Department, and deputy general counsel for Legal Counsel in the Defense Department Department.

2ND ARMY DEATH: The Pentagon announced the second fatal casualty of the year, which it says was the result of a non-combat incident in Iraq. Spc. Javion Shavonte Sullivan, 24, of Fort Mill, S.C., died Jan. 8 in Anbar Province. He was assigned to the 16th Signal Company, 11th Theater Tactical Signal Brigade, Fort Hood, Texas, the Pentagon said.

On New Year’s Day, Sgt. 1st Class Mihail Golin died in a combat engagement in Afghanistan.

PLEASE CLAP: Things got awkward when Chief of Naval Operations Adm. John Richardson addressed the Surface Navy Association’s national symposium yesterday. Bruised from two deadly collisions in the Western Pacific that killed 17 sailors last year, a host of firings and several investigations that found widespread readiness problems in the fleet, Richardson tried to strike an optimistic tone, Defense News’ Valerie Insinna tweeted.

“Richardson: Does our Navy have things to fix? Certainly, and we will get after that. Can we be stronger? Yes and we will. But [I] would rather be a sailor in the US Navy than anywhere else in the world.

“‘That’s my applause line,’ he says to silent audience, who then clap. #awkward”

THE RUNDOWN

Washington Post: Who is attacking Russia’s bases in Syria? A new mystery emerges in the war.

Reuters: Turkey urges Russia, Iran to stop Syrian army offensive in Idlib

New York Times: Iran’s Leader Calls Trump ‘Psychotic’ and Warns of Revenge

Breaking Defense: Navy’s Warfighting ‘Renaissance,’ ‘Obsession’ With Great-Power War: Richardson, Rowden

USNI News: Panel to Congress: China Accelerating Technology Development in Artificial Intelligence, Quantum Computing

Military Times: Oprah as commander in chief? Here’s what she had to say about the Iraq War

USA Today: Top takeaways from North Korea's talks with South

Task and Purpose: A Foreign Navy Screwed Up Its New $3 Billion Nuclear Missile Sub By Leaving Its Hatch Open

Navy Times: The Navy's next-generation frigate comes with a big price tag

DoD Buzz: USS Wasp Enters Pacific Ahead of Historic Deployment With F-35B

Stars and Stripes: No permanent basing for Navy sub hunters in Iceland despite construction projects

Defense Tech: Is SpaceX or Northrop to Blame for Lost Spy Satellite?

Military.com: How the Coast Guard Navigated Trump's 1st Year

Defense One: US Navy: More Ships, Tech, Training, Could Help Prevent Collisions at Sea

Calendar

WEDNESDAY | JAN. 10

7 a.m. 2799 Jefferson Davis Hwy. 30th Annual National Symposium of the Surface Navy Association with Rep. Rob Wittman and Adm. Paul Zukunft, commandant of the Coast Guard. navysna.org

10 a.m. Rayburn 2118. Full committee hearing and Department of Defense update on the Financial Improvement and Audit Remediation (FIAR) Plan. armedservices.house.gov

10 a.m. 1775 Massachusetts Ave. NW. Sustainable security: The transatlantic community and global challenges with H.E. Erna Solberg, the prime minister of Norway. brookings.edu

10 a.m. Rayburn 2172. Sanctions and Financial Pressure: Major National Security Tools. foreignaffairs.house.gov

12 p.m. 1201 Pennsylvania Ave. NW. Realizing A Free and Peaceful Indo-Pacific. hudson.org

1 p.m. 1211 Connecticut Ave. NW. With Great Power: Modifying U.S. Arms Sales to Reduce Civilian Harm. stimson.org

3 p.m. 1201 Pennsylvania Ave. The Crisis in Iran and Its Implications for Syria. hudson.org

THURSDAY | JAN. 11

7:30 a.m. 2799 Jefferson Davis Hwy. 30th Annual National Symposium of the Surface Navy Association with Navy Secretary Richard Spencer and James Geurts, assistant secretary of the Navy for research, development and acquisition. navysna.org

9 a.m. 1211 Connecticut Ave. NW. The Past and Future of South Asian Crises with Rep. Ami Bera, vice ranking member of the House Foreign Affairs Committee. stimson.org

9:15 a.m. 529 14th St. NW. Iran's Protests and Their Impact on the Arab Region. press.org

9:30 a.m. 529 14th St. NW. Challenging Guantanamo. press.org

10 a.m. Dirksen 419. U.S. Policy in Syria Post-ISIS with Ambassador David Satterfield. foreign.senate.gov

12 p.m. 214 Massachusetts Ave. NE. Rep. Ron DeSantis discusses President Trump’s “Ultimate Deal”: Is Israeli-Palestinian Peace Possible? heritage.org

12 p.m. 1700 Army Navy Dr. AFCEA Washington, D.C. luncheon with Lt. Gen. Alan Lynn , director of the Defense Information Systems Agency. dc.afceachapters.org

12 p.m. 1800 M St. NW. Countering Hezbollah’s Transnational Criminal Enterprise. defenddemocracy.org

2:30 p.m. 740 15th St. NW. Guantanamo Under Trump. newamerica.org

FRIDAY | JAN. 12

11 a.m. 214 Massachusetts Ave. NE. Assessing the Trump administration’s National Security Strategy. heritage.org

11 a.m. 1300 Pennsylvania Ave. NW. All You Need to Know about Russian Hackers. wilsoncenter.org

1 p.m. 1616 Rhode Island Ave. NW. Book discussion of “Safe Passage: The Transition from British to American Hegemony” with author Kori Schake. csis.org

TUESDAY | JAN. 16

8 a.m. 2401 M St. NW. Defense Writers Group breakfast with Rep. Mac Thornberry. defensewriters.gwu.edu

10 a.m. 1775 Massachusetts Ave. NW. Pakistan, America, and extremism: The path ahead

12 p.m. 1800 M St. NW. National Security in the Age of Blockchain. defenddemocracy.org

12:15 p.m. 740 15th St. NW. The Future of Euro-Atlantic Conditionality. newamerica.org

12:30 p.m. 1201 Pennsylvania Ave. NW. Iran Protests: Consequences for the Region and Opportunities for the Trump Administration. hudson.org

3 p.m. 1211 Connecticut Ave. Emergency Management in Japan: Prospects for US-Japan Cooperation. stimson.org

WEDNESDAY | JAN. 17

6:45 a.m. 1800 Jefferson Davis Hwy. Special Topic Breakfast with Gloria Valdez, deputy assistant secretary of the Navy for ship programs. navyleague.org

8:30 a.m. 1789 Massachusetts Ave. NW. Congress and the 2018 national security landscape: A conversation with Sen. Lindsey Graham. aei.org

9:30 a.m. 1211 Connecticut Ave. NW. Getting Ahead of the Threat Curve: Duty of Care and Organizational Accountability for Nuclear Security with Michael Chertoff, former Homeland Security secretary. stimson.org

12 p.m. 214 Massachusetts Ave. NE. Bully of Asia: Why China’s Dream Is the New Threat to World Order. heritage.org

2 p.m. 1030 15th St. NW. NATO's maritime frontier and a view from its maritime command with Vice Adm. Clive Johnstone, Royal Navy commander Allied Maritime Command. atlanticcouncil.org