ISIS DOWN, NOT OUT: While Acting Defense Secretary Patrick Shanahan declared ISIS is just weeks away from losing the last bit of territory it controls in Syria, the nation’s top intelligence official told the Senate, “ISIS is intent on resurging and still commands thousands of fighters in Iraq and Syria.”

Director of National Intelligence Dan Coats testified yesterday at a Select Senate Committee hearing on worldwide threats, “While ISIS is nearing territorial defeat in Iraq and Syria, the group has returned to its guerrilla warfare roots while continuing to plot attacks and direct its supporters worldwide.”

NORTH KOREA NOT DENUCLEARIZING: It wasn’t the only reality check delivered by Coats yesterday. He also cast doubt on whether President Trump will be able to secure a deal to get North Korea’s Kim Jong Un to give up his missiles and nuclear weapons programs.

“We currently assess that North Korea will seek to retain its WMD capabilities. It is unlikely to completely give up its nuclear weapons and production capabilities because its leaders ultimately view nuclear weapons as critical to regime survival,” Coats said in his opening statement. “Our assessment is bolstered by our observations of some activity that is inconsistent with full denuclearization.”

IRAN NOT NUCLEARIZING: “While we do not believe Iran is currently undertaking activities we judge necessary to produce a nuclear device, Iranian officials have publicly threatened to push the boundaries of [the Iran nuclear deal] restrictions if Iran does not gain the tangible financial benefits is expected from the deal,” Coats said in his annual assessment, noting that Iran maintains the largest inventory of ballistic missiles in the Middle East.

“The Iranian regime will continue pursuing regional ambitions and improved military capabilities even while its own economy is weakening by the day,” he said.

HAPPENING THIS MORNING, TRUMP WEIGHS IN: “When I became President, ISIS was out of control in Syria & running rampant. Since then tremendous progress made, especially over last 5 weeks. Caliphate will soon be destroyed, unthinkable two years ago. Negotiating are proceeding well in Afghanistan after 18 years of fighting,” President Trump tweeted at 6:30 a.m. “Fighting continues but the people of Afghanistan want peace in this never ending war. We will soon see if talks will be successful? North Korea relationship is best it has ever been with U.S. No testing, getting remains, hostages returned. Decent chance of Denuclearization.”

COATS ON CHINA: “China's actions reflect a long-term strategy to achieve global superiority,” Coats said. “In its efforts to diminish U.S. influence and extend its own economic, political and military reach, Beijing will seek to tout a distinctly Chinese fusion of strongman autocracy and a form of Western-style capitalism as a development model; an implicit alternative to democratic values and institutions. These efforts will include the use of its intelligence and influence apparatus to shape international views and gain advantages over its competitors, including especially the United States.”

COATS ON RUSSIA: “Even as Russia faces a weakening economy, the Kremlin is stepping up its campaign to divide Western political and security institutions and undermine the post-World War II international order. We expect Russia will continue to wage its information war against democracies and to use social media to attempt to divide our societies. Russia's attack against Ukrainian naval vessels in November is just the latest example of the Kremlin's willingness to violate international norms, to coerce its neighbors and accomplish its goals.”

SLOW MOTION WITHDRAWAL: The Pentagon insists it’s in the process of complying with President Trump’s December order to begin withdrawing all U.S. ground troops from Syria. “We are on a deliberate, coordinated, disciplined withdrawal,” Shanahan said yesterday.

But people in Syria don’t see any sign of it. “There has been no change in the situation on the ground,” Ilham Ahmed told the Washington Post. Ahmed, who heads the executive committee of the Syrian Democratic Council said the situation is “just like before” Trump’s announcement.

Shanahan indicated yesterday that the hold-up may be figuring out who is going to fill the vacuum left by the departure of U.S. troops, so that Russia, Iran or Syria regime forces don’t move in, or worse ISIS reconstitutes.

“The phase that this moves to is how do you sustain local security?” Shanahan said. “You know that's, that's where the support of the coalition, that's where these partnerships are so critical,” he said.

5,000 TROOPS TO COLOMBIA: Shanahan punted when asked about the mysterious notation seen on John Bolton’s legal pad Monday with the words, “5,000 troops to Colombia,” scrawled on it, just as Bolton asserted that “all options are on the table.”

“I didn't bring a notepad today,” Shanahan joked, but when pressed he repeated refused either confirm or deny whether President Trump is seriously considering dispatching American troops to Colombia to turn up the heat on Nicolas Maduro, the embattled president of neighboring Venezuela.

This morning Trump tweeted, “Maduro willing to negotiate with opposition in Venezuela following U.S. sanctions and the cutting off of oil revenues. [Juan] Guaido is being targeted by Venezuelan Supreme Court. Massive protest expected today. Americans should not travel to Venezuela until further notice.”

MORE TROOPS, OR DIFFERENT TROOPS? Shanahan also revealed yesterday a Department of Homeland Security request for more U.S. military support for southern border security through the rest of the fiscal year.

“DHS has asked us to support them in additional concertina wire, and then expanded surveillance capability,” Shanahan said. “And we've responded with, you know, ‘Here's how many people it would take, and this is the timing we'd be able — timing and mix of the people to support that.’" Asked how many people that would require, Shanahan said “Several thousand. I'll leave it at that number.”

Currently, there are approximately 2,350 active duty troops and about 2,270 national guard troops on the border. What’s unclear is how many of those troops will be rotated out and replaced with new troops, and what that will do to the total number deployed in 2019.

“The numbers fluctuate,” John Rood, undersecretary of defense for policy, told the House Armed Services Committee, yesterday. “One portion of them has been approved to be deployed through January of 2019. There will be additional deployments of active duty troops that will go through the end of this fiscal year, September 30th, in response to the latest request from the Department of Homeland Security.”

WHY ACTIVE DUTY? Committee Chairman Rep. Adam Smith D-Wash, grilled Rood about why active-duty troops were sent instead of more National Guard units. “It is very, very rare to send troops to the border,” Smith insisted.

Rood said the 5,900 active-duty members of the military were dispatched because they were more readily available since thousands of guardsmen had been deployed in April.

“Active-duty military personnel were selected because the secretary of defense determined them to be the best-suited and most readily available forces from the total force to provide the assistance requested by the DHS,” Rood told the committee.

LOCKHEED MARTIN IN THE BLACK: Lockheed Martin Corporation reports $1.5 billion in profits on fourth quarter 2018 net sales of $14.4 billion. The company expects sales to climb more than 6 percent this year amid a swelling order backlog for the F-35 fighter jet, the most expensive weapons program in U.S. history

The Bethesda, Md.-based defense contractor said Tuesday its targeting $57 billion in revenue this year after sales growth in 2018 fueled by increased U.S. military spending. An F-35 order late in the year added 250 planes to the fighter's outstanding orders, pushing the total to 400, CEO Marillyn Hewson told investors on an earnings call. That "exceeds the total F-35 deliveries made to date," she said, "a clear sign of the program's momentum."

MORE 4Q RESULTS DUE: Both Boeing and General Dynamics are set to release their fourth quarter results this morning, with Northrop and Raytheon reporting tomorrow.

BOEING: At yesterday’s off-camera press briefing at the Pentagon, Shanahan was asked about reports he was perceived as ‘the man from Boeing,” given his past position with the company, and reports that in private meetings that he trashed Lockheed Martin and boasted that Boing would have done a better job meeting production goals for the F-35.

“I am biased towards performance,” Shanahan said. “I am biased towards giving the taxpayer their money's worth. And the F-35 unequivocally I can say has a lot of opportunity for more performance.”

He said the Pentagon’s strong ethics rules prevent him from intervening on behalf of Boeing and dismissed the grumbling about pro-Boeing bias as “just noise.”

THE RUNDOWN

Washington Post: Russia secretly offered North Korea a nuclear power plant, officials say

Bloomberg: Launch-and-Landing Failures Add to $13 Billion Ship’s Troubles

Voice of America: Afghans Worry as US Makes Progress in Taliban Talks

Navy Times: Senator: Chinese Buildup In South China Sea Like ‘Preparing For World War III’

Foreign Policy: U.S. Developing Supply Route Along Dangerous Stretch From Djibouti to Somalia

Breaking Defense: More Missile Defense Ships, New Ground Deployments

Voice of America: Iran's Cyber Spies Looking to Get Personal

Stars and Stripes: China tests ‘Guam killer’ missile, claims weapon could strike moving aircraft carrier

Air Force Magazine: Air Force Academy to Hire Enlisted NCOs for Accredited Faculty Position