FP’s Situation Report: Sharpening rhetoric about the IS, but no war plan yet; John Allen: do it “NOW;” GAO says Bergdahl swap illegal; DOD throws cold water on ice bucket challenge; and a bit more.

By Gordon Lubold with Nathaniel Sobel

The killing of American journalist Jim Foley has created a new momentum for tackling the Islamic State in Iraq – and Syria – in a more effective and comprehensive way, even if the White House is still grappling with what form that effort would take.  Gen. Marty Dempsey, Chairman of the Joint Chiefs of Staff, along with Defense Secretary Chuck Hagel, seemed to agree yesterday that the Islamic State represents a far more dangerous threat than al-Qaeda ever did – a sentiment long held by analysts and military experts, and an argument made by a number of prominent people recently. But even as President the administration’s rhetoric seems to be setting the stage for a long haul in Iraq, it’s not yet clear what President Barack Obama will agree to do to meet the threat. And now that Obama has said repeatedly that he won’t put American "combat boots on the ground," he and his advisers will have to determine how to deepen a U.S. and coalition effort in Iraq and Syria that will mean doing just that without reversing himself on that point.

Many believe a focused effort doesn’t have to mean putting several thousands of troops onto the battlefield, but it does mean inserting more specialized forces to ensure an expanded airstrike campaign is effective. But while that is happening in limited form now, the call to expand the effort is awaiting a presidential nod.

Also yesterday, Dempsey made clear that only attacks inside Syria – the origin of the Islamic State – can defeat the militants. "Can they be defeated without addressing that part of their organization which resides in Syria? The answer is no. That will have to be addressed on both sides of what is essentially at this point a nonexistent border," Dempsey said yesterday.

FP’s Kate Brannen: "U.S. military operations in Iraq may be limited for now, but the rhetoric in Washington is heating up. On Thursday, it boiled over at the Pentagon, where Defense Secretary Chuck Hagel painted a new and more dangerous picture of the threat that the Islamic State poses to Americans and U.S. interests.

"The group ‘is as sophisticated and well-funded as any group that we have seen. They’re beyond just a terrorist group,’ Hagel said in response to a question about whether the Islamic State posed a similar threat to the United States as al Qaeda did before Sept. 11, 2001.

"‘They marry ideology, a sophistication of strategic and tactical military prowess. They’re tremendously well-funded. This is beyond anything that we’ve seen,’ Hagel said, adding that ‘the sophistication of terrorism and ideology married with resources now poses a whole new dynamic and a new paradigm of threats to this country.’

"Hagel’s comments added to the mismatch between the Obama administration’s increasingly aggressive rhetoric and its current game plan for how to take on the group in Iraq and Syria, which so far involves limited airstrikes and some military assistance to the Kurdish and Iraqi forces fighting the militants. It has also requested from Congress $500 million to arm moderate rebel factions in Syria. But for now, the United States is not interested in an Iraqi offer to let U.S. fighter jets operate out of Iraqi air bases." More here.

Full transcript of the Hagel Dempsey presser yesterday, here.

ICYMI: John Allen backs Obama’s airstrikes against ISIS but calls for an urgent American and international response and uses capital letters to do it.  Allen for Defense One, his BLUF: "…The president deserves great credit in attacking IS. It was the gravest of decisions for him. But a comprehensive American and international response now – NOW – is vital to the destruction of this threat. The execution of James Foley is an act we should not forgive nor should we forget, it embodies and brings home to us all what this group represents. The Islamic State is an entity beyond the pale of humanity and it must be eradicated. If we delay now, we will pay later." More here.

The Islamic State has conquered much of Iraq with the help of Saddam’s cronies. Now the men America once discarded could help win the country back. FP’s Shane Harris: "The Islamic State has conquered broad swaths of Iraq thanks to a surprising alliance with secular veterans of Saddam Hussein’s military. But now that partnership is fraying — giving Washington its first real opportunity to blunt the terrorist group’s advance without relying solely on American airstrikes or ground troops.

"The group of ex-Hussein loyalists, known alternatively as the Naqshbandi Army or by the acronym JRTN — the initials of its Arabic name — helped the Islamic State, formerly known as ISIS, win some of its most important military victories, including its conquest of Mosul, Iraq’s second-largest city. It has also given the terrorist army, which is composed largely of foreign fighters, a valuable dose of local political credibility in Iraq. JRTN, which was formed as a resistance group in 2006, is made up of former Baathist officials and retired military generals, and is led by the former vice president of Hussein’s revolutionary council, Izzat Ibrahim al-Douri, who was once one of the most-wanted men in the country during the U.S. occupation." More here.

The incongruity of Obama’s summer vacation and golf outings with the horrors of the Middle East fuel his critics, the NYT’s Peter Baker and Julie Hirschfeld Davis, here.

Welcome to Friday’s edition of Situation Report. If you’d like to be one of our subscribers, we’d love to have you. Sign up for Situation Report by sending us a note at gordon.lubold@foreignpolicy.com and we’ll just stick you on. Like what you see? Tell a friend.  And if you have a report you want teased, a piece of news, or a good tidbit, you, send it to us early for maximum tease. And the more shovel-ready, the better. And hey! Follow us: @glubold and @njsobe4.

The Islamic State will likely force the Pentagon to rethink its budgeting, Hagel said. Defense News’ Marcus Weisgerber, quoting Hagel: "[Y]ou’re constantly shaping a budget to assure that resources match the mission and the mission and the resources match the threat… [Y]ou’re shifting [money] all the time on what you think is going to be required… "We’ve had to move assets over the last couple of months…to accomplish what we accomplished in Iraq. That costs money, that takes certain monies out of certain funds. So it’s a constant, fluid process as you plan for these." More here.

Foley’s brutal death at the hands of what British officials assume but have not yet confirmed was a British citizen is quietly creating a coalition of the willing, including some Arab states. The FT’s editorial page on Britain’s problem with jihadism:  "…David Cameron’s government is right to check whether it is doing enough to counter Isis and its misguided supporters. One looming question is whether the UK should join the US in air strikes to prevent Isis forming a hardened caliphate. But whatever Mr Cameron decides, he will want to re-examine whether the UK has sufficient legal powers and resources to thwart violent Islamists at home." More here.

With crises brewing in Ukraine and the Middle East, the transatlantic alliance needs a shot of fresh energy. Jim Stavridis for FP on what should be on the table at the upcoming NATO summit in Wales, to include the "new relationship with Russia" and the need for European nations to spend more on defense, but also: "…The third agenda item is a strategy for the Levant and Near Middle East. The rise of the Islamic State and the ongoing crisis in Syria will ultimately send hundreds of trained jihadists first to Europe then to the United States." More here.

Grand Mufti Sheikh Abdulaziz Aal Alsheikh blasted Al-Qaeda and Islamic State militants as "enemy number one" of Islam. From the Saudi Gazette, here.

Why can’t British intelligence prevent men like James Foley’s killer from fighting in Iraq — or coming home? Alex Massie for FP: "…Richard Barrett, formerly head of the MI6’s counterterrorism operations, expressed confidence that Foley’s murderer would be identified and dealt with — one way or another – ‘sooner or later.’ British intelligence officers are using voice-recognition technology to assist the quest to identify the man, but Barrett added that the sickening nature of these crimes means that the search for his identity will not be confined to the intelligence community.

"…But identifying ‘Jihadi John’ and stopping him is a different matter. Military action against the Islamic State might suppress the threat the organization poses in the Middle East, but it could further radicalize other British Muslims who would interpret airstrikes against IS as another ‘war on Islam.’ Gains in one arena might easily be offset by setbacks in another. Yet doing nothing is not an attractive option either." More here.

Foley’s death re-energizes the debate over paying ransoms, the WSJ’s Dion Nissenbaum, Jennifer Leitz and David Gauthier-Villars, here.

Reuters this morning: Iraqi and Kurdish forces try to recapture IS-held towns, here.

ICYMI – Why Hillary Clinton is gambling with her hawkish foreign policy posture. Nicholas Lemann for the New Yorker, here.

A year ago, a chemical weapons attack killed hundreds of my neighbors and friends. But the greatest tragedy is Obama’s refusal to punish the murderer in Damascus. Qusai Zakarya for FP: "…I am a survivor of Syrian dictator Bashar al-Assad’s chemical weapons attacks of Aug. 21, 2013. One year ago today, my heart stopped for 30 minutes after I inhaled nerve gas launched by Assad regime forces on my hometown of Moadamiya, a suburb of Damascus. The scene outside my front porch that morning was like something from Judgment Day.

"But the worst sadness of my life did not come the day my friends died. It came three weeks later, watching a livestream of President Obama. I learned from that speech that the United States would make a deal with Russia to rid Syria of its chemical weapons, instead of striking at Assad for his atrocities. I had to translate this news into Arabic for my friends — we cried harder than we had on Aug. 21, because we knew that Assad now had a green light to kill all the Syrians he wanted, so long as he did not use sarin gas." More here.

Baghdad cautions that unauthorized oil purchases could be funding IS. Al-Awsat’s story: "…In a statement on Wednesday, Iraq’s Oil Ministry said: ‘International purchasers [of crude oil] and other market participants should be aware that any oil exports made without the authorization of the Ministry of Oil may contain crude oil originating from fields under the control of [ISIS]. The only seller of Iraqi crude oil authorized by the Ministry of Oil is [Iraq’s state-owned oil company] SOMO.’

"The statement urged buyers to ‘exercise caution’ and to consider that any purchases of Iraqi crude made without the authorization of SOMO ‘may expose them to sanctions for contributing to the financing of terrorist activities.’
An informed source told Al-Awsat: "ISIS was indeed selling Iraqi crude from captured refineries and oilfields. He said the crude was being sold to Kurdish traders in the border regions straddling Iraq, Iran and Syria, and was being shipped to Pakistan where it was being sold ‘for less than half its original price.’ He added that many oilfields and refineries in the country remained outside government control." More here.

The GAO says the Pentagon broke the law when it traded Bowe Bergdahl for five Taliban prisoners. Military Times’ Chuck Vinch: "The Defense Department broke the law when it transferred five Taliban detainees from the prison at Guantanamo Bay, Cuba, to Qatar in exchange for former prisoner of war Army Sgt. Bowe Bergdahl, the Government Accountability Office said Thursday.

"In a seven-page opinion, the GAO said a provision of the 2014 Defense Appropriations Act bars defense officials from using taxpayer funds to transfer any prisoner from Guantanamo unless the secretary of defense gives Congress at least 30 days’ advance notice. The Pentagon made the transfer May 31. In response to the GAO legal opinion, defense officials acknowledged that Defense Secretary Chuck Hagel sent written and telephonic notice to congressional leaders on May 31 and June 1 and 2." More here.

Who’s where when today – Deputy Secretary of Defense Bob Work is in South Korea. He meets with Service Component Commander, Parliamentary Senior Vice Minister of Defense Ryota Takeda, participates in a joint presser with Vice Minister of Defense, meets with Parliamentary Senior Vice Minister for Foreign Affairs Nobuo Kishi, and attends a formal dinner hosted by VMOD…

Johns Hopkins University’s Michael Vlahos on how Americans understand war, here.

Don’t look now but Libya is falling apart.  FP’s Siddhartha Mahanta, here.

Gen Prayuth Chan-ocha is anointed Thailand’s interim prime minister. The FT’s Michael Peel in Bangkok: "General Prayuth Chan-ocha tightened his junta’s grip on Thailand on Thursday, as the country’s puppet parliament named him prime minister, three months after the May 22 coup. High quality global journalism requires investment. In a surreal session in Bangkok’s once disputatious legislature, MPs handpicked by the military, including many serving officers, stood up one by one to confirm the putsch leader as their choice without debate or dissent.

"While Gen Prayuth has not been formally appointed and was not even present at the vote, it is widely expected he will take on the post as part of the junta’s widening efforts to reshape Thailand’s turbulent politics and stuttering economy." More here.

DoD throws cold water on the ‘Ice Bucket Challenge.’ Military Times’ Jeff Schogol: "The Defense Department has declared war on the ALS "Ice Bucket Challenge," the Internet phenomenon in which people get doused with ice water to raise money to combat amyotrophic lateral sclerosis, also known as Lou Gehrig’s disease.

"Even former commander in chief President George W. Bush has accepted the challenge, but the DoD Office of General Counsel has issued an edict that current service members and Defense Department employees cannot have ice dumped on them while in uniform – including civilian uniforms.

"…Earlier this week, the Blue Angels posted video on their Facebook page of the team being drenched with bone-chilling ice and cold water, but the video appears to have been removed. And on Tuesday, the creator of the popular Terminal Lance comic, Maximilian Uriarte, called on Marine Corps Commandant Gen. Jim Amos to take the challenge. So far, no word from the Amos camp." More here.