MUNICH — National Security Advisor H.R.McMaster made an appeal to NATO members and allies at the Munich Security Conference to look hard at who they’re doing business with overseas and cut off funding that indirectly funds Hezbollah and other proxy militias that weaken Middle East nations to bolster Iranian influence.

The Iranian regime continues to get support from commercial entities, affiliated with the Iran’s Islamic Revolutionary Guard Corps – “including Mahan Air, a company that lands right here in Munich airport,” said McMaster, referring to a report released at the end of 2017 by the National Council of Resistance of Iran that stated the Iran’s largest commercial airline in fact works as a tool for Iran’s expansionist policies.

In October 2017, President Donald Trump called for tougher sanctions against the IRGC, and the Treasury Department announced it was designating the IRGC as a terrorist entity under a White House Executive Order, for support of a number of terrorist groups, including Hizballah and Hamas, as well as to the Taliban. Treasury Secretary Steven Mnuchin at the time said the IRGC has played “a central role to Iran becoming the world’s foremost state sponsor of terror,” urging the private sector to recognize that the IRGC permeates much of the Iranian economy.

“What Iran is actually doing is applying the Hezbollah model to the greater Middle East,” McMaster said. “They want the Arab world perpetually weak, and [they want] weak governments in power that are dependent on Iran for support, while they grow terrorist organizations, militias, illegal arms groups outside that government’s control that can turn against government if that government acts against Iranian interests.”

Beyond Syria, this approach is happening in Iraq, where IRGC has grown Popular Mobilization Forces, as well as in Yemen. That network of proxies becomes and more capable as Iran seeds to them more destructive weapons, McMaster said, nd that is funded through commercial means.

Click here for full coverage from the Munich Security Conference

“When you invest in Iran, you’re investing in the IRGC. You might as well cut the Islamic Revolutionary Guard Corps a check and say, ‘please use this to commit more murder across the Middle East,’” McMaster said. “And when we look at the biggest trading partners with Iran, we of course see Russia, we see China. But we also see Japan, South Korea and Germany. It’s time to focus business intelligence efforts to figure out who we are really doing business with, and cut off funding.”

Sean Stackley, who also served as the acting secretary of the Navy from Jan. 20 to Aug. 3, 2017, kicked off his tenure as corporate vice president at L3 Technologies on Jan. 8, leading the company’s strategic advanced capabilities and technologies.

“It’s a whole new world,” Stackley said of his new role during an exclusive interview with Defense News on Jan. 3, the day after he officially wrapped up his tenure in government.

Looking for more on the U.S. Navy’s surface fleet? Get the latest here.

As one would figure for a high-level official from the Defense Department, Stackley did have options — he said he was approached by a number of market leaders. (He wouldn’t name which specifically.) He wasn’t ready to engage and settle with a single defense company, nor was L3 even on his radar as a possibility until he got the call from the company’s new chief executive. Chris Kubasik, who stepped into the CEO role at the start of the year after serving as chief operating officer since 2015, has worked with Stackley on government projects on and off for about a decade.

“Our strategy and vision has gained traction and is appealing to a lot of leaders,” Kubasik told Defense News. “Sean and I are completely aligned as to how L3 can help our customers with their important missions, and he was one of the most respected leaders in the Pentagon. We are excited to have him on board.”

For Stackley, the fact that L3 is a company built upon acquisitions, thus far maintaining some of the speed and agility that can come more easily for smaller companies, is an advantage.

“The government and our closest defense firms tend to grow up together; organizationally and structurally, they tend to become mirror images,” Stackley said. “For all the goodness — and I have four decades of public service and nothing but love and respect for what we do — the government is not credited with being really quick. L3, unlike its larger defense companies, did not take on that mirror image of the government. It’s kept its roots that came from the smaller companies that formed it. That’s a strength.”

That said, among the priorities for both Stackley and Kubasik is to further unify a corporation that remains relatively segmented — “to integrate all these parts of the companies to make something bigger,” in the words of the former Navy official.

In terms of his Navy tenure, Stackley remained rather mum about the recent challenges faced by the service, voicing strong support for the current leadership’s ability to address challenges and saying only that the June 2017 collision involving the destroyer Fitzgerald while he was serving as acting secretary “shook us.”

He did, however, speak to his optimism about the current administration’s approach to defense.

“More so than some of the past administrations that I’ve worked closely in or with, there’s been a heavy focus on the industry side with this administration,” Stackley said. “That brings with it a greater understanding of some of the challenges that industry faces, coupled with an understanding of the opportunities that the government has in terms of dealing with industry — from acquisition strategies to contract negotiations.”

“We’re at year one of the administration,” he continued. “But the team in place has a good respect for and understanding of industry, which lends itself to smart policies that protect the health and welfare of industry, but at the same time puts the department in a strong position to be a demanding customer.”

But what emerged since is an interesting and perhaps long overdue dialogue about the needs of the Coast Guard, both in terms of budget and acknowledgement as a key player in national security. Adm. Paul Zukunft, commandant of the Coast Guard, sat down with Defense News Executive Editor Jill Aitoro to offer his candid thoughts on the matter.

Admiral, you have said that the Coast Guard’s identity as an armed service is forgotten. Can you tell me what you mean by that?

I see it first forgotten, Jill, when I look at our appropriations. We are a military service. There are five. But about 4 percent of our budget is funded through DoD. We do a lot of work with the Department of Defense, yet a very small portion of our budget falls under defense discretionary budget funding. Ninety-six percent of that is considered non-defense discretionary. That’s where we found ourselves sometimes forgotten.

Is a flat budget a victory to you?

The reaction immediately when the Coast Guard was going to be defunded over a billion dollars, I would categorize it as organ rejection. We are a military service, and just as the other services are challenged with readiness, we are no different. In fact, we’re operating a very, very old fleet today and one of our biggest challenges is modernizing the fleet to bring it up to 21st century standards.

Walk through the system modernization requirements.

What’s changed in the last six or seven years is that the world has not become more tranquil. We’ve seen the largest flow of refugees since World War II. Unprecedented flows of cocaine destined for the United States coming out of Columbia. An ocean has opened up in the Arctic as well. We have even greater challenges as North Korea strives to be a nuclear nation targeting the United States. There’s a nine-dash line that’s now being contested in the east South China Sea. Then we still have all our legacy programs that we had in addition to that. So, many more challenges. I think we have more challenges awaiting us. We want to be ready for those.

Can you talk a bit about the mission of the Coast Guard from a national security perspective?

I sit with all the other service chiefs and we frame a national military strategy that focuses on North Korea, Russia, China, Iran, violent extremism. But are there other threats in the world where our defense enterprise is stretched so far and wide that yes, there are threats we don’t have the resources to attend to? Look at the Arctic. The Coast Guard has a strategy for the Arctic. We created an Arctic Coast Guard forum — as this sea opens, what fills that vacuum strategically? There’s an opportunity to fill that with the Coast Guard. As we look at unprecedented flows of migrants destined for our southwest border — why are they leaving in the first place? They’re leaving homes, countries that are rife with violent crime. 

Some of the worst violent crime in the world is just south of our border here today. Why are they violent? Drugs arrive there in bulk. They’re broken down in retail and they’re then brought across our border for consumption in the United States. But they’re all interrelated. Where they’re most vulnerable is at sea. Most people don’t realize that here on our ports, our waterways, the Coast Guard enables over $4.5 trillion of commerce every year. This is a virtue of our geography, our waterways. We’re a key enabler there for the secure movement of that cargo. We maintain that with a fleet of 35 ships. 

If you can imagine you maintain your entire system with 35 construction crews, well, that’s what we have. The challenge is that their average age is about 52 years old. We do need to recapitalize that. We’re very involved in cyber. We operate on the Department of Defense Information Network. But many of our stakeholders are in the .gov or in the .com domain as well that we need to have access with and to. We want to make sure that we’re not reaching out to partners that may have malware on their systems that we now introduce into the DOD Information Network. We have a strategy for that as well. 

Is there enough communication between the services and the Coast Guard?

Absolutely. We have Coast Guard plugged into every combatant commander. We have a three-star officer who is the J6 on the Joint Chiefs of Staff. So, we have very good what I would call cross-pollenization of Coast Guard with all the arm services and with all the combatant commands.

The final piece in all this, Jill, is our people. It’s very intriguing to stay focused on hardware, your capital plan, but we rolled out a strategy about a year and a half ago that focuses on how you recruit. How do you train, and more importantly how do you retain a workforce in this 21st century? Because if we don’t get that right, all our recapitalization efforts will go for naught if we don’t pay attention to our people.

You have said in the past that the Coast Guard needs 5,000 additional personnel, 1,100 additional reservists to accomplish the primary mission. Where is the gap right now?

It is across the board right now, Jill. We are trained and equipped, and by equipped I would say manned for a status quo environment. As we look at violent extremism breaking out, if we have a violent event, a terrorist event here in the homeland, we would be very challenged to sustain a heightened level of protection for any period with the manning levels that we have right now. We’ve been funded below the Budget Control Act floor for five years running now when it comes to our annualized operating expenses which includes salaries. 

So when you’re funded below that level, we’ve made some difficult choices in the past. We trimmed 1,100 billets out of our reserve component, which right now is the smallest it has been since before the Korean War. That is not a good place for us to be. We made difficult choices in offset active duty personnel under the same mantra as well. We’re growing a cyber team. We don’t have enough. As we build out new fleets we need to man those fleets and we need to look at how do we maintain those fleets as well. 

Then when I look at our civil servants, we need each one of those. I cannot afford to have a civilian retire and then go into a hiring freeze approach and not bring someone on board to take their place. Something as straightforward as our pay, most of that is done by civilians. 

You cannot look at a civilian anywhere in our Coast Guard and not assign value to what they contribute to all our missions.

In the case of incidents domestically, violent extremism for example, how would the Coast Guard respond?

I’ll take you back seven years ago when we had the Deepwater Horizon oil spill. I was the federal on-scene coordinator for that. As you may recall, just before that we have the earthquake in Haiti. You had all the triggering mechanisms in place for a mass migration out of Haiti. Now you’ve got the worst oil spill in history coinciding with hurricane season. Meanwhile, out in the Pacific Northwest we have what’s called the Cascadia subduction zone. There’s lot of pressure on that tectonic plate, and if it releases, within 10 minutes that first tsunami comes ashore. Roadways are ruined and it becomes a maritime response. Today, the Coast Guard can respond to maybe one of those but not all three. Now you throw a terrorist event on top of that. We can just do that and not the other three. 

If you have a terrorist event and it affects maritime — 95 percent of our trade right now moves by water. It would devastate our economy; it would devastate our manufacturing. If we just shut down the ports and allow nothing to come in or out, the Coast Guard would have to screen with our inner agency partners everything coming in and out of the port. But we would at least triple down what we do today in that contingency. That’s why you need to grow the service, but you cannot assume that you only have one and only one in a given year. We don’t get a choice in that. 

There’s a lot of talk of building up the Navy, the other services. What is it the Coast Guard asking for?

Well, certainly I’m not in competition with the Navy. We have the world’s best Navy. It’s often not recognized; we also have the world’s best Coast Guard as well. This was validated at the International Sea Power Symposium where I spoke last September. Many maritime nations, they can’t afford a Navy. Many of the threats they see are very Coast Guard-like. In fact, they want to be like the United States Coast Guard. We have over 26 students at our Coast Guard Academy today that will go back to their countries and probably in the future be military leaders in their countries because they want to be like the United States Coast Guard. 

We cannot be more relevant than we are now. But what we need is predictable funding. We have been in over 16 continuing resolutions since 2010. I need stable and repeatable funding. An acquisition budget with a floor of $2 billion. Our operating expenses as I said, they’ve been funded below the Budget Control Act floor for the past five years. I need 5 percent annualized growth over the next five years and beyond to start growing some of this capability back. 

But more importantly, we [need] more predictable, more reliable funding so we can execute what we need to do to carry out the business of the world’s best Coast Guard.