FP’s Situation Report: Putin drops a peace plan; NCTC’s Matthew Olsen walks back the ISIS threat; Hagel directs a re-assessment of vets discharged – did they have PTSD?; Dawn Cutler becomes the first woman to be a CHINFO; and a bit more.

By Gordon Lubold with Nathaniel Sobel

Fighting continues in Ukraine even as Putin releases a peace plan of sorts that says both sides should "end active offensive operations." Just as world leaders convene in Wales to discuss a range of issues that includes Russian aggression in Ukraine, Russian President Vladimir Putin submitted a "Putin plan" that Ukrainian President Petro Poroshenko had seemed to agree to in principle. Peace talks could begin tomorrow. But it might not be a great deal for Ukraine, where Russia could maintain an influential hand.

Reuters just minutes ago: "Ukraine’s president heard words of support from Western leaders at a NATO summit on Thursday, but a Kremlin peace offer failed to halt fighting in the east where dramatic advances by pro-Russian rebels have tipped the balance of power against Kiev. The West believes a rebel advance since last week is the result of an assault by heavily armed Russian troops sent across the border, and has been scrambling to find a response to the biggest confrontation with Moscow since the Berlin Wall fell."

The NYT’s Neil MacFarquhar: "… Mr. Putin’s plan seemed to raise more questions than it answered. First, there was no mechanism for implementation. Second, just hours earlier, his own spokesman had repeated the Russian position, widely criticized as implausible, that Moscow could not negotiate a cease-fire because it was not a direct party to the conflict. Analysts suggested that Mr. Putin’s strategy is to convince Kiev that it must negotiate, not fight, and to reinforce the idea that the overall outcome depended on Moscow." More here.

Here’s a question: what if sanctions against Russia, central to the West’s strategy in the crisis, are working, but Moscow doesn’t really care? FP’s Jamila Trindle: "The mere threat of additional Western sanctions against Moscow this week sent Russia’s currency to new lows; it’s down 12 percent this year. Inflation is expected to rise at least 1 percentage point. More than $100 billion in capital has already fled the country, by some estimates. Russia is feeling the Obama administration’s intended financial pain. The only problem is that its faltering economy hasn’t dissuaded President Vladimir Putin’s Ukrainian ambitions.

Juan Zarate, a former senior Treasury Department official in George W. Bush’s administration, to FP: "The West needs to realize that economic and financial measures imposed to date haven’t been effective in deterring Putin’s ambitions in Ukraine — and that even a maximalist financial isolation campaign alone may not be enough to stop Russian adventurism." More here.

Meantime, four NATO warships, from the U.S., France, Canada and Spain, will reportedly enter the Black Sea in coming days. Russia’s RT: "…USS Ross, an Arleigh Burke-class guided-missile destroyer, French Commandant Birot, Canadian HMCS Toronto, a Halifax-class frigate, and Spanish frigate Almirante Juan de Borbon will enter the Black Sea before September 7, the source told the Itar-Tass news agency. "[USS] Ross and [Commandant] Birot will pass through the Black Sea straits, September 3," he added, "Spanish and Canadian frigates will enter the waters of the Black Sea, September 6.

"At present there’s only one NATO ship in the Black Sea – France’s Dupuy de Lome, a surveillance ship designed to collect signals and communications from beyond enemy lines. According to the Itar-Tass source, the French vessel is expected to leave the Black Sea area on September 5."

France is backing off the idea of sending the Mistral (a ship) to Russia, citing the Ukraine crisis. The WaPo’s Dan Lamothe: "French officials said Wednesday that they will not deliver the first Mistral-class amphibious warship that Russia had ordered from Paris as part of a $1.7 billion weapons sale, a strong rebuke after months of aggressive actions by Russia in eastern Ukraine." More here.

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The U.S.’s counterterrorism chief says that ISIS is not planning an attack on America. Ever since Defense Secretary Chuck Hagel talked about the Islamic State as posing an "imminent threat," there seems to be a concerted effort across the administration to walk back this idea that the wolf is at the door. Yesterday, the head of the National Counterterrorism Center, Director Matthew Olsen, said there is ‘no credible information’ that the militants of the Islamic State, who have reigned terror on Iraq and Syria, are planning to attack the U.S. homeland. Although the group could pose a threat to the U.S. if left unchecked, any plot it tried launching today would be ‘limited in scope’ and ‘nothing like a 9/11-scale attack,’ FP’s Shane Harris wrote.

Harris: "…Aside from ratcheting down the rhetoric, Olsen, whom Obama nominated to run the center in 2011, offered a needed degree of political cover for the president, who has been criticized for not addressing the Islamic State threat more aggressively. Even Dianne Feinsten, the Democratic chairwoman of the Senate Intelligence Committee, said Obama was ‘too cautious’ last week when he said that the United States doesn’t yet have a strategy for attacking the group in Syria, where his own military leaders agree the United States must strike if he wants to wipe out the Islamist group. By describing ISIS not as an imminent threat to the U.S., Olsen gave the president some breathing room to develop that strategy over time." More here.

Meantime, Hagel, speaking to CNN’s Jim Sciutto in Rhode Island, helped defend Obama’s stance on the Islamic State yesterday. Read "Hagel Backs Obama on ISIS Strategy," and watch the vid, here.

But did Hagel mis-speak about the number of Americans thought to be fighting with ISIS? CNN’s Tom Cohen on Hagel’s interview with Sciutto: "…At one point, Hagel misspoke about the number of Americans believed fighting with ISIS. The Pentagon later told Sciutto that Hagel’s figure referred to the total number of Americans believed fighting in Syria with various groups, not just ISIS. About a dozen Americans are thought to be with ISIS."

From Wales, leaders vow not to be cowed by the Islamic State. AP’s Julie Pace this morning: "Faced with a mounting militant threat in the Middle East, President Barack Obama and British Prime Minister David Cameron declared Thursday that their nations will ‘not be cowed’ by extremists who have killed two American journalists." More here.

The danger hits home: The story of a North Carolina man who hoped to join ISIS. From NBC News’ Richard Engel in this exclusive: "Just a few weeks ago a Catholic-born, American man — a former military school student, special forces aspirant, law enforcement officer and bodybuilder — set off on a path far from any he’d envisioned for himself as a kid in North Carolina: on the other side of the world, in Lebanon, he was trying to figure out how to get into Syria and join ISIS, the most radical, bloodthirsty terrorist group of our times. Don Morgan, 44, said he was answering a higher calling." Full story here.

Confronting the three-headed monster: New defensive initiatives, in Asia and Europe and against Islamic extremists, are bound to upend President Obama’s military budget plans and challenge his military doctrine. The NYT’s David Sanger: "In vowing in Estonia on Wednesday to defend vulnerable NATO nations from Russia ‘for as long as necessary,’ President Obama has now committed the United States to three major projections of its power: a ‘pivot’ to Asia, a more muscular presence in Europe and a new battle against Islamic extremists that seems very likely to accelerate." More here.

The NJ’s Ron Fournier on the summer of Obama’s disconnect, here.

Who’s where when – Chuck Hagel is in Wales… Deputy Secretary of Defense Bob Work gives keynote remarks at the Combined Federal Campaign kick-off ceremony at 11 a.m. at the Pentagon… Chairman of the Joint Chiefs of Staff Army Gen. Martin Dempsey hosts a Facebook Town Hall at 2 p.m. at the Pentagon… Vice Director, Defense Information Systems Agency Maj. Gen. Alan Lynn delivers remarks at the Armed Forces Communications and Electronics Association Northern Virginia Chapter’s 7th Annual Joint Warfighter Information Technology Day at 1:30 p.m. in Vienna, VA…

Dawn Cutler just became the first woman to become the Navy’s CHINFO – that’s the U.S. Navy Chief of Information. Cutler, now a Rear Admiral, held her promotion ceremony at the Women’s Memorial at Arlington Cemetery. Navy Secretary Ray Mabus and Chief of Naval Operations Adm. Jon Greenert were there. Who is she? Click here.

Also today, another naval officer, Cmdr. Bill Speaks, is leaving the Pentagon’s office of public affairs. Speaks, who covered the Central Command "area of operations" for the Pentagon’s public affairs apparatus, is headed to Norfolk. Col. Steve Warren, who heads the Pentagon’s media operations, on the Arabic-speaking Speaks: "He has been a key player on this team… he studies issues, he knows them intimately, and I have come to trust him… his public affairs instincts are keen and his dedication is unmatched."

DoD is willing to reconsider discharges of Vietnam vets with PTSD. Military Times’ Andrew Tilghman: "The Defense Department has agreed to reconsider the bad-paper discharges for thousands of Vietnam-era veterans who may have suffered from combat-related post-traumatic stress disorder but were kicked out of the military in the era before that became a diagnosable condition.

"In a new rule announced Wednesday, the Pentagon said veterans from the Vietnam era and other past wars with other-than-honorable discharges will be given "liberal consideration" if they seek to correct their military records and provide some evidence of a PTSD diagnosis that existed at the time of their service." More here.

The U.S. delegation meets with the Iranians in Geneva today.  Who’s going? Scroll below.

New in SitRep this morning for budget wonks: CSBA’s Todd Harrison looks at the Pentagon’s ’15 budget with a fine-tooth comb. One of his conclusions? There’s a lot of money hidden in the "supplemental funding" budget even as Afghanistan’s costs drop. From the exec sum of his new report, to be released today: "…Of the $58.6 billion in the OCO supplemental request, $53.4 billion is for Operation Enduring Freedom in Afghanistan. While this is a 38 percent reduction in real terms from the FY 2014 level of funding for Afghanistan, force levels in Afghanistan are planned to decline by 69 percent. If the request is enacted, the average cost per troop in Afghanistan will reach a record high in FY 2015 of $4.6 million per troop per year, compared to $2.3 million in FY 2014 and an average of $1.2 million for FY 2005 to FY 2013.

"The rise in the cost per service member can be attributed in part to Congress and DoD moving funding into the OCO budget that had previously been in the base budget. Because OCO funding does not count against the BCA budget caps, moving funding from base budget to OCO funding allows DoD and Congressional appropriators to fund additional programs and activities without offsetting cuts. While there are surely costs associated with the drawdown, these costs should not be significantly higher than the costs included in previous OCO budgets to build bases and transport the same troops and equipment to Afghanistan." CSBA will have a briefing for reporters, but anyone can watch the live stream, here.

Look for the report later here.

Also hot off the press this morning: A new CNA Corporation report examines the history of operations assessment. From the abstract: "…Over the past decade, CNA Corp. analysts have found themselves increasingly involved in operations assessment, as has the broader military operations research community. Yet, to our knowledge, there is no comprehensive account of the history of operations assessment. This paper aims to serve as a primer on the subject to provide context on how operations assessment has grown and developed over the past several decades." Find the report titled "Are We Winning: A Brief History of Military Operations Assessment," by Emily Mushen and Jonathan Schroden, here.

A few lines, buried deep in the 2015 appropriations bill, could be a nightmare for American detainees and the State Department. Richard Grenell and Jeremy Stern for FP: "…Unfortunately, Washington’s latest attempt to aid Americans held in foreign countries will actually harm them. This month, the House will vote on a 2015 appropriations bill containing a provision, already approved by the Senate, called "Assistance for United States Citizens and Nationals Wrongly Detained Abroad" (AFDA). Buried in hundreds of pages of text and likely unread by those voting on it, AFDA is an attempt to centralize control over the detainee process. If ratified, it will sanction the federal government to subordinate some U.S. detainees to the interests of bureaucrats, politicians, and lobbyists, and restrict the efforts of families to lobby for their loved one’s release." More here.

Neither the right nor the left is satisfied with the results of Israel’s latest operation in Gaza – and Bibi is under attack.  Gregg Carlstrom reporting for FP in Tel Aviv, here.

Israel prepares for the possibility of local Islamic State cells. Ha’aretz’s Gili Cohen, here.

Sotloff, Foley, and the doctors fighting Ebola are part of a vital breed of first responders demanded by a new global reality. FP’s David Rothkopf: "In the wake of 9/11, the world developed a special appreciation for first responders, the men and women who ran toward danger when they saw it. They risked all to help others, and fittingly there was a surge of recognition for cops and firefighters and paramedics — both those lost in the twisted metal of lower Manhattan and those who carried on in the same tradition.

"Neither James Foley nor Steven Sotloff wore a badge or a uniform. Nor did Mbalu Fonnie, Alex Moigboi, Alice Kovoma, Mohamed Fullah, or Sheik Umar Khan. But they embodied the first-responder spirit as truly and fully as any of those whose courage inspired us and whose sacrifices broke our hearts at the World Trade Center. For precisely that reason, out of genuine respect for them and their contribution to the world, it is essential we not make the same errors we did amid the anger and grief that marked the earliest days of what we once called the War on Terror." More here.

Did you know? Sotloff was also an Israeli citizen, by the NYT’s Isabel Kershner, here.

A look at the work of Sotloff, who contributed to FP and Time amonth others, by The Atlantic’s Uri Friedman, formerly of FP, here.

Ayman al-Zawahiri says his global armed group would "raise the flag of jihad" across the Indian subcontinent. Al Jazeera’s story,  here.

More on Iraq, Syria, etc.

The UAE condemns ISIL’s acts. From the UAE’s The National: "The Ministry of Foreign Affairs on Wednesday night strongly condemned the atrocities and terrorist acts carried out by ISIL in Iraq and Syria. Ahead of Thursday’s Nato summit in Wales, the ministry called on the international community to adopt a clear strategy for countering terrorist and extremist groups.

From the statement: "Our world is witnessing many serious challenges and amongst the greatest is terrorism… The UAE expresses its deepest concerns and strongest condemnation of terror acts and criminal practices of violent extremists…The UAE condemns the atrocities of the so-called ISIL, which aims to kill, terrorise and displace civilians, ransack property, and demolish historic and religious sites." More here.

What Homer’s Iliad tells us about the Islamic State. Michael Vlahos for HuffPo, here.

U.S. troops are (probably) already in Iraq fighting ISIS. Marc Ambinder for the Week comments on Ford Sypher’s dispatch for the Daily Beast, which reported on Tuesday that German and U.S. forces are on the ground in Iraq: "A spokesman for the Central Command denied this specifically. ‘There are no U.S. troops on the ground in or around Zumar,’ he said. But Sypher’s Kurdish sources told him that one team of U.S. Special Operations Forces and several teams of German Kommando are on the ground to help coordinate airstrikes. Whom to believe? Go with Sypher.

"Why? Recall the NATO bombing in Libya and repeated denials from U.S. officials that troops weren’t on the ground, and would not be on the ground.

"But there were men and women employed and trained by the U.S. government inside Libya. They were engaged in paramilitary activities. They had guns. There were members of the Central Intelligence Agency’s Special Activities Division (SAD) – about 40 of them. They worked with Libyan and ground-spotters from other NATO countries to help NATO fighters find their targets and help the CIA track high-value Libyan and foreign terrorists. These Americans were there on the legal authority of a covert action finding that President Obama signed, and then notified Congress about." More here.

A government order in Saudi Arabia makes it illegal for top brass to marry non-citizens.  Al-Rai’s story, here.

The U.S. delegation meets with the Iranians in Geneva today.  Who’s going? Here’s the list: William J. Burns, Deputy Secretary of State; Wendy R. Sherman, Under Secretary of State for Political Affairs; Mr. Jacob J. Sullivan, Senior Advisor; Ambassador Brooke D. Anderson, Senior Advisor to the Secretary of State and the Under Secretary of State for Political Affairs on Iran Negotiations; Mr. James Timbie, Senior Advisor to the Under Secretary of State for Arms Control and International Security; Mr. Paul Irwin, Director for Nonproliferation, National Security Council; Mr. Christopher Backemeyer, Director for Iran, National Security Council; Mr. Eytan Fisch, Assistant Director for Policy, Office of Foreign Assets Control, Department of Treasury; Ms. Julia Jacoby, Special Assistant to the Under Secretary of State for Political Affairs, Department of State; Mr. Matan Chorev, Special Assistant to the Deputy Secretary of State, Department of State.