13 June 2019

Modi Reform Scorecard: DBT Checks the Right Boxes

By Anit Mukherjee 

Local residents line up at the Aadhar Card Camp, during the Public Information Campaign, at Swaroopganj in Sirohi District, Rajasthan on December 10, 2015. Source Wikimedia, Government of India, used under a creative commons license.

Status: In Progress – The Modi government has created a new portal to track its efforts to transition to a direct benefit transfer model in India

Difficulty: High – With the size of India’s population, and the difficultly in targeting remote and disconnected rural population, employing a comprehensive direct benefit transfer program remains difficult.

This is the thirteenth installment in a series of articles on the Modi Reforms Scorecard by the staff and experts at the Wadhwani Chair in U.S.-India Policy. The series seeks to provide analysis on why reforms marked as “Incomplete” or “In Progress” have not been completed, and what impact such reforms could have on specific sectors or the economy at large.

Direct Benefit Transfer (DBT) is one of the success stories of the Modi government. Started in 2013 under the previous government led by the Indian National Congress, DBT expanded significantly both in scale and scope during the last five years. From its inception, nearly $104 billion in government benefits has been transferred through DBT until May 2019. With nearly 600 million beneficiaries spread over 440 schemes under 55 different ministries, DBT has become a whole-of-government initiative under the National Democratic Alliance government. More importantly, DBT is now a platform with a defined protocol and process of onboarding existing programs and new initiatives such as the recently announced cash transfer for farmers (PM KISAN), providing future central and state governments with powerful tools to alleviate poverty and reduce inequality going forward.

US-India Ties Under Modi 2.0: The Good, Bad, and Ugly

By Aman Thakker

On May 23, Prime Minister Modi’s Bharatiya Janata Party won a resounding victory in India’s 2019 general elections. As Prime Minister Modi looks poised to take over India’s government for a second term, a key priority in his foreign policy will be continuing to advance relations with the United States. However, while Modi can expect some tangible deliverables early in his second term, he will also need to grapple with some serious challenges.

The Good

In Prime Minister Modi’s first term, security ties between the United States and India have been the key factor driving deeper collaboration between the two countries. Both countries have signed a number of defense agreements, conducted joint exercises, and have increased defense trade, with India committing to acquisitions of key U.S. platforms. As Prime Minister Modi begins his second term, he will see continued progress on all three fronts, underscoring the positive aspects of the relationship early on.

In the coming months, it is highly likely that both countries will announce the signing the Industrial Security Annex, as well as the last of the remaining “foundational agreements,” the Basic Exchange and Cooperation Agreement. India has also committed to expanding its fleet of P8-I maritime aircraft and will likely move forward with plans to purchase the Sea Guardian and the MQ-9 Reaper drones – all U.S. platforms. The United States and India will also conduct a new bilateral tri-services exercise, which was announced at the inaugural 2+2 dialogue between both countries. Prime Minister Modi can, therefore, look forward to several significant defense-related deliverables early in his second term.

Driving Change: U.S.-India Subnational E-Mobility Collaboration

Kartikeya Singh

Forty-five U.S. states and the District of Columbia and fourteen Indian states along with two of the country’s union territories are charting out visions in support of an electric mobility transition.

Colorado’s Electric Vehicle Plan aims to increase the number of electric vehicles in the state to 940,000 by 2030 while Gujarat’s draft electric vehicle policy envisions 100,000 electric vehicles in the state by 2023.

A diverse set of stakeholders including auto and electronics manufacturers, transportation service companies, utilities, real estate and urban development agencies, research institutions, and lawmakers must work in concert to usher in the age of the electric vehicle.
As the geography of innovation in this sector expands, sharing best practices between this diverse set of stakeholders and identifying opportunities for collaboration will help implement these states’ electric vehicle policies.

This brief builds on the recently signed energy cooperation agreement between the states of Gujarat and Colorado by comparing the two states’ EV policies and setting the stage for finding partners to help meet their targets.

US envoy launches new push on Afghan talks with Taliban

ISLAMABAD (AP) — Renewed efforts are underway to jumpstart stalled peace talks with the Taliban as a U.S. envoy is in Kabul and Pakistani and Afghan officials are meeting in Islamabad.

U.S. envoy Zalmay Khalilzad says he's holding meetings with Kabul officials on Monday, seeking to bring about a new round of Afghan-to-Afghan talks, which he describes as essential to resolving the country's nearly 18-year war.

The Taliban carry out near-daily attack, inflicting staggering casualties on Afghan forces, and now control about half of Afghanistan. Washington, meanwhile, has accelerated efforts to find a peaceful resolution to the conflict and has been pressing for direct talks between the Taliban and Kabul.

Meanwhile, Afghan and Pakistani officials from a group tasked with finding ways to cooperate on diplomatic, military and intelligence-sharing are meeting in Islamabad.

China, Corn and Caterpillars

By Xander Snyder

As if China’s African swine fever outbreak wasn’t enough to worry about, its agricultural sector is now facing down armyworm. The name of this invasive pest is a misnomer: It’s actually a caterpillar, but so named because the swarm progresses methodically plant by plant, destroying large swaths of economically vital crops. Armyworm feeds on 80 different species of plants, including corn. China is the world’s second-largest producer of corn and the plant’s myriad uses – for human consumption, animal feed and other derivative products – means that any impact on the corn supply will affect other related agricultural products in China.

Armyworm is endemic to North and South America. It was first found outside of its native habitats in 2016 in West Africa, after which it quickly spread across the African continent; only 10 African countries have thus far been spared. By 2018, it had made its way to India. The pest was first spotted in China in Yunnan province earlier this year.

China moves to shut spigot on rare earths for first time in 5 years

BEIJING/NEW YORK -- The Chinese government signaled Tuesday that it will take steps toward restricting rare-earth metal exports in its deepening trade war with the U.S., a step that could disrupt key supplies for high-tech industries even at the risk of isolation from the international community.

Meanwhile, the U.S. Department of Commerce promised "unprecedented action" to reduce dependence on foreign sources of "critical minerals" and recommended urgent steps, including boosting domestic production.

The moves by both sides reflect the vital importance of rare earths to the tech sector today and in the future. China knows it wields a strategic advantage as the dominant supplier, while the U.S. understands that its technological advantage hinges on continued access to the minerals.

At a meeting of China's National Development and Reform Commission on Tuesday, rare-earth experts recommended greater controls on exports of the metals, according to the state-run Xinhua News Agency. The recommendation calls for a centralized system to manage their mining and processing, and the commission said it will soon launch a policy reflecting the proposal.

Is China leading in global innovation?

Innovation is the process by which new knowledge and ideas are created. Global leaders in innovation produce the scientific discoveries and technological advances that shape the modern world, making it critical to national power. An economy’s capacity to innovate is dependent on a variety of factors, including its commitment to research and development, the quality of its workforce, and the effectiveness of government institutions. As China works to upgrade its economy, its innovative strengths and weaknesses will shape its long-term economic competitiveness and prospects for global leadership.

Global Innovation Index

The Global Innovation Index (GII) is an annual ranking of more than 120 economies by their innovation capabilities and output. The GII scores and ranks each economy based on its performance within seven different pillars of innovation. Use the below interactive to compare how different economies perform in the GII. Click the play button to animate change over time.

Beijing Makes a Push To Keep China Working at All Costs

Extended and possibly greater tariffs on China will increase the country's employment stress in the low-end manufacturing sector, adding further stress to a labor market already dealing with financial and tech sector job losses.

An expanded services sector and rural development have helped buffer low-end job losses, but as the exports and services sectors struggle, the risk of expanded unemployment will grow.

As it prepares for an enduring trade war, the Chinese government will expand stimulus measures in the coming months, even at the expense of increasing long-term risk.

One of the principal tools at the disposal of Chinese leaders to preserve social stability and bolster political capital is (and always has always been) employment. But their ability to fulfill the ideal of near-universal employment in China has diminished over the past few months under the strains of a cooling economy and the challenges brought by a trade war with the United States. In the wake of the 2008 global financial crisis, when tens of million low-end manufacturing workers lost their jobs as exports suffered, Chinese authorities led an intense effort to diversify the economy by building up the service sector and inland industrial bases. With few other policy paths available to hedge against social disruption, Beijing turned to expansive monetary and fiscal stimulus to soften the unemployment picture, but that strategy exacted a high price.

China and Russia's better weapons, risky behavior are threats we can't ignore


Unusually for Washington these days, there is consensus at both ends of Pennsylvania Avenue that China and Russia, rather than terrorism, Iran or even North Korea, pose the most serious threats to American national security. There is good reason for this; both China and Russia have taken increasingly belligerent stances toward the United States.

Speaking on June 2 at the Shangri-La Dialogue, China’s defense minister, Gen. Wei Fenghe, clearly referred to the U.S. when he spoke of “big countries [that] intervene in regional affairs, make troubles, walk away and leave a mess behind.” Alluding to the U.S. Navy’s Freedom of Navigation operations, Wei justified ongoing Chinese military construction in the South China Sea as a response “in the face of heavily armed warships and military aircraft.”

Russia, about whom Gen. Wei noted that “the China-Russia Comprehensive Strategic Partnership … has been running at a high level,” has stepped up its confrontational behavior vis-à-vis American military forces. On June 5, a Russian SU-35 fighter intercepted an American P-8 anti-submarine warfare aircraft over the Mediterranean. Two days later, in the Pacific, in what was a highly dangerous maneuver, a Russian destroyer closed within 100 feet of the guided missile cruiser Chancellorsville.

The Ultimate Way to Deter China: Why Island-Chain Defense Can Work

by James Holmes

"Message to Beijing: you can try to deny U.S. and allied forces access to the Western Pacific or the freedom to move around within the theater, but you will see your access and freedom of movement curtailed if you do. Strewing missiles of various kinds along the island chain while deploying manned and unmanned aircraft and ships of war nearby would seal up the straits through which surface and air traffic must pass to reach the broad Pacific." 

It’s always gratifying to see your ideas take wing. Back in 2012, on a lark, Toshi Yoshihara and I broached a strategic concept we took to calling “island-chain defense,” or sometimes a “Great Wall in reverse.” Long story short, the conceit behind island-chain defense is that the United States can mold geography, land, air, and sea power, and adroit alliance management into a formidable barrier to Chinese maritime movement. Fortifying the “first island chain” that runs parallel to the mainland coastline would discourage aggression by convincing the Chinese Communist leadership aggression cannot pay.

Message to Beijing: you can try to deny U.S. and allied forces access to the Western Pacific or the freedom to move around within the theater, but you will see your access and freedom of movement curtailed if you do. Strewing missiles of various kinds along the island chain while deploying manned and unmanned aircraft and ships of war nearby would seal up the straits through which surface and air traffic must pass to reach the broad Pacific. No People’s Liberation Army (PLA) commander would relish running such a gauntlet.

Escalating U.S.-Iran Tensions: What’s Next?

Philip H. Gordon

Neither Iran nor the United States likely wants war, but the possibility of a miscommunication is considerable, risking a dangerous escalation.

As tensions flare between the United States and Iran, CFR Senior Fellow Philip H. Gordon examines the prospects for resolving differences or raising the risk of a military altercation.

The Trump administration has maneuvered U.S. warships and evacuated diplomatic staff in Iraq, citing unspecified threats from Iran. What is your read?

There is every reason to believe these threats are credible. While no clear evidence has been made public, we can suspect that Iran was behind the recent drone strikes on Saudi oil facilities and acts of sabotage on ships in the Gulf. Such actions—asymmetrical and difficult to trace—would be consistent with previous Iranian actions, and it is plausible that Iran would retaliate for the latest U.S. sanctions and try to send a message to Washington to back off.

All that said, the Trump administration faces a big challenge because of its reputation for making false statements. The perception that it is looking to provoke a conflict with Iran undermines the credibility of its allegations. 

What a War With Iran Would Look Like

By Ilan Goldenberg

Tensions between Iran and the United States are at their highest point in years. The 2015 Iran nuclear agreement is teetering. The Trump administration is using sanctions to strangle the Iranian economy and in May deployed an aircraft carrier, a missile defense battery, and four bombers to the Middle East. Washington has evacuated nonessential personnel from its embassy in Baghdad, citing intelligence suggesting that Iran is increasingly willing to hit U.S. targets through its military proxies abroad.

The United States also stated that Iran almost certainly perpetrated the recent damage to oil tankers flagged by Saudi Arabia, Norway, and the United Arab Emirates (UAE) and claimed that Iran had temporarily loaded missiles onto small boats in the Persian Gulf. In early May, U.S. National Security Adviser John Bolton publicly threatened a response to any Iranian attacks, “whether by proxy, the Islamic Revolutionary Guards [sic] Corps or regular Iranian forces.”

The good news is that the situation is not as bad as it appears. None of the players—with the possible exception of Bolton—seem to really want a war. Iran’s military strategy is to keep tensions at a low boil and avoid a direct confrontation with the United States. Washington struck a tough public posture with its recent troop deployment, but the move was neither consequential nor terribly unusual. If the United States were truly preparing for a war, the flow of military assets into the region would be much more dramatic.

Focus on the Trinity: German Innovation From Moltke to World War I

Jaison D. Desai

The Prussian and German military developed a highly effective and adaptive management system through a coordinated effort to engage along all three aspects of warfare proposed by Carl von Clausewitz. This “wondrous (or paradoxical) trinity” is comprised of primordial violence, chance and probability, and reason as a facet of policy. Clausewitz relates these respectively to concerns of the people, the commander and his army, and the government.[1] Innovation in the Prussian military, beginning in the 1860s and continuing through World War I, drove the creation of a powerful military force by aligning innovations to the three pillars of Clausewitz’s trinity. The concept of primordial violence and concerns of the people was reinforced by social acceptance of militarism and the elevation of the military profession to one of prominence and respect.[2] To address chance and probability, the Auftragstaktik concept of decentralized operations, mission orders, and training using wargame scenarios helped to better prepare flexible military leaders.[3] Finally, reason and government policy was addressed by investment in education systems that reinforced learning and supported other instruments of national power, especially manufacturing and technology.[4]

The philosophical writings of Clausewitz heavily influenced Prussian military innovation and adaptation in the late 1800s. These theories on the conduct of war derived from his personal experience fighting Napoleon and from his multiple roles under Gerhard von Scharnhorst, a Prussian general who focused on institutional reforms within the Army.[5] Among the most prominent conceptions Clausewitz discusses is war as a “wondrous trinity” of primordial violence, chance and probability, and reason. He argues the three aspects are both “deep-rooted in their subject and yet variable in their relationship to one another.”[6] It is essential to consider all three aspects as pieces of a whole approach to war, as “a theory that ignores any one of them or seeks to fix an arbitrary relationship between them would conflict with reality.”[7] As Prussian military and civilian leaders sought ways to improve and adapt the country’s ability to wage war, efforts placed against each of these three pillars of the trinity enabled development that made it a resilient and adaptable fighting force in World War I and beyond.

Should the Russians Hug the Chinese?


At a time when US President Donald Trump is waging a trade war against China, Chinese President Xi Jinping has found a new “best friend” in his Russian counterpart, Vladimir Putin. But is this new friendship really in Russia’s best interest?

MOSCOW – Chinese President Xi Jinping was the toast of Russia last week. He smiled at the Moscow Zoo as Russian President Vladimir Putin admired the pandas Xi had brought (a standard Chinese gift to countries it courts). In St. Petersburg, he toured the Aurora, the warship that fired the shot marking the start of the Bolshevik Revolution in 1917, and took an evening boat cruise with Putin. At the St. Petersburg Economic Forum, he quoted Fyodor Dostoevsky.

At a time when US President Donald Trump – who once called his relationship with his Chinese counterpart “outstanding” – is waging a trade war against China, Xi needs a new “best friend.” In his own words, that is what he has found in Putin. But is all this mutual affection really in Russia’s best interest?

To be sure, this is not a new development. Over the last six years, Putin and Xi have met at least 30 times, and annual trade between their countries amounts to more than $100 billion. But the bilateral relationship has deepened significantly lately, exemplified by last week’s Forum, which resulted in more than 25 trade and other agreements covering areas ranging from agriculture to technology. Both leaders gush that their two countries are now on better terms than ever.

Europe Must Fix Its Fiscal Rules


In an environment of persistently low interest rates and below-potential output, economic policymakers must rethink the prevailing approach to public debt. For the eurozone, this means creating a common budget, or at least overhauling the fiscal rules that have tied member-state governments' hands for no good reason.

TRENTO – Earlier this year, I argued that in countries where interest rates are extremely low and public debt is considered safe by investors – making it less costly from both a fiscal and economic standpoint – larger fiscal deficits may be needed to make up for the limitations of monetary policy. The eurozone has now reached this stage.

After the 2008 financial crisis and subsequent euro crisis, monetary policy played a key role in stabilizing and reviving the eurozone. It took pragmatism, creativity, and political flair on the part of European Central Bank President Mario Draghi to accomplish this feat. But while monetary policy hasn’t quite run out of fuel, it cannot be expected to serve the same role again.

By contrast, fiscal policy, the other key component of sound Keynesian macroeconomic management, has been underused as a cyclical tool, with the result that eurozone output still is not at its potential level. This is an urgent problem that cannot be solved by any one country alone; it demands a concerted eurozone response. But while the need for a common eurozone budget from which to draw additional spending is more pressing now than in the past, this would entail risk-sharing among the member states, which is a politically difficult issue.

Russian Economic Forum—All About China

By: Pavel K. Baev

The annual St. Petersburg International Economic Forum was held last week (June 6–8) with the usual pomp and spin. But the traditional goal of attracting Western investments was clearly replaced with an urge to advertise the strength of ties between Russia and China. President Xi Jinping was the guest of honor at the Forum, and he had visited Moscow prior to it for long meetings with President Vladimir Putin. Both leaders supplemented their talks with new descriptions of extraordinarily friendly relations; thus, the arrival of two young pandas to the Moscow Zoo for a 15-year stay was intended to materially demonstrate this perfect rapprochement (Moskovsky Komsomolets, June 5). In embracing his Chinese “dear friend,” Putin sought to show he did not bemoan missing the meeting of Western leaders, who gathered in France to commemorate the 75thanniversary of the Allied landing in Normandy—which, in the Russian interpretation, is anyway an event of secondary significance for the final outcome of World War Two (Vedomosti, June 7).

The unprecedented Chinese dominance at the summit-conference in St. Petersburg—nearly a thousand guests arrived from the People’s Republic—did not actually signify any specific surge in economic cooperation with the host country (Kommersant, June 7). In the five years since Putin’s May 2014 visit to Shanghai, jumpstarting a new bilateral partnership, the amount of promises and memoranda of understanding has greatly exceeded the modest number of projects under implementation (Kommersant, May 31). Chinese entrepreneurs and state-owned companies are quite reserved about investing in Russia, particularly in the latter’s financial sector, which is seen as vulnerable to Western sanctions (see EDM, December 12, 2018). Seeking to camouflage this under-achievement, Putin lashed out against the undue prominence of the US dollar as the world currency and described the United States’ censure of Huawei as the “first technological war of the digital era” (RIA Novosti, June 7, 2019). In another ostensible show of support for China, the Russian destroyer Admiral Vinogradov dangerously approached the US cruiser Chancellorsville in the East China Sea. The Russian government followed up this incident with a disingenuous official protest lodged at Washington (Newsru.com, June 7).

A China-Europe Rail Link Circumventing Russia Could Have Major Geopolitical Consequences

By: Paul Goble

To buttress the country’s flagging economy, Moscow has counted on the Russian Federation being the primary transit route for Chinese goods being shipped to Europe. However, Beijing’s commitment to becoming the dominant player on the Northern Sea Route (The Barents Observer, June 7) as well as plans by Ukraine, Georgia and Azerbaijan to develop a railway corridor linking China with Europe via their territories (Casp-geo.ru, June 4) both cast doubt on Russia’s expectations. Those expectations are also hampered by the degraded state of the Russian railway system, over which trains travel much slower than on newer tracks elsewhere. And this limitation is further exacerbated by the fact that shippers have to shift from the international standard rail gauge width and back again when they go into and out of the Russian Federation.

The Ukrainian, Georgian and Azerbaijani plan was announced at the end of May, during the Ukrainian Ports Forum. The proposed route will rely both on railways still to be constructed or modernized as well as on the use of ships between Central Asia and Azerbaijan and between Georgia and Ukraine. Yuli Lavrenyuk, Ukraine’s deputy infrastructure minister, told the group that Azerbaijan and Ukraine currently have sufficient shipping capacity both on land and on the sea to handle “about 80 percent” of what this transportation corridor could carry once completed. Hence the two maritime links are not the bottleneck some had feared and that Moscow had counted on to keep this plan from being realized (Zerkalo.az, May 31).

Europe is slowly recognising the new contours of world power

Pinpointing the most significant meeting of world leaders in the northern hemisphere last week was not an easy task.

The impressive gathering of western allies to mark the 75th anniversary of the D-Day landings in Britain and France may be the first thing to spring to mind.

However, one might consider, instead, the talks between Vladimir Putin and Xi Jinping in Saint Petersburg, in which the Chinese and Russian leaders shared thoughts on their growing “global partnership and strategic co-operation”.

Caught in the grip of a trade showdown with the US, Mr Xi revealed he has met with his “best friend”, Mr Putin, 30 times in just six years.

China and Russia form an effective double act. Viewed through European eyes, they offer both significant pressures and benefits.

And now, the continent is waking up to just how much the world has changed. America has pivoted away from the European Union. President Donald Trump has heralded the opportunities of Brexit, which marks an end, of sorts, to European expansion.

Confronting Iran: To What End?

By Paul Rogers 

The escalation of tensions and threats between Iran and the United States during May has increased the potential for a new war in the Middle East with potentially catastrophic social and economic consequences. This briefing seeks to clarify what interests Washington and its key regional allies, Israel and Saudi Arabia, see as worth risking such destruction. And what might be the alternatives?


In the past month there has been a marked increase in tension between the United States and Iran, coinciding with the first anniversary of President Trump’s withdrawal from the multinational Joint Comprehensive Plan of Action (JCPOA) of July 2015. The remaining state signatories to the JCPOA, China, Russia, the UK, France and Germany, as well as the EU, all remain committed to the agreement with Iran, which is intended to prevent it from developing nuclear weapons. President Trump regards it as a bad deal and has re-imposed sanctions on Iran which are already seriously affecting the country’s economy.

The Iranian government has been angered by the failure of the other members of the JCPOA – especially its ostensible allies: the UK, France and Germany – to counter the US sanctions. The rhetoric coming from both sides, especially the United States, has become increasingly ill-tempered. It is a situation further complicated by the desire of Israel to see Iran’s nuclear and missile ambitions severely curbed, and by the Saudi government’s more general concern over the power of Iran, not least its growing influence in Arab states like Iraq, Syria, Lebanon and Yemen.

Trump—Looking for More Trade Wars to Fight

Source Link
Kevin Nealer

Markets underestimate how election-year pressure will likely increase U.S. protectionism.

Investors seem to think that they have already priced in trade restrictions imposed or threatened by U.S. President Donald Trump.

They include increased tariffs on Chinese products that went into effect on June 1, pending restrictions on the Chinese telecoms group Huawei, existing tariffs on steel and aluminum produced outside North America, and the threat of escalating tariffs on Mexico—"suspended" only if immigration enforcement goals are met.

But investors seem to underestimate the Trump administration’s continued willingness to keep applying trade sanctions.

For instance, the administration in late May “celebrated” Indian prime minister Narendra Modi's reelection by increasing tariffs on India as a result of removing it from a special trade program for developing countries, known as the Generalized System of Preferences (GSP), which grants tariff concessions.

The US and China’s Arctic Ambitions

By Mercy A. Kuo

Trans-Pacific View author Mercy Kuo regularly engages subject-matter experts, policy practitioners, and strategic thinkers across the globe for their diverse insights into U.S. Asia policy. This conversation with Malte Humpert – Founder and Senior Fellow of The Arctic Institute, investigative journalist for High North News, and author of The Future of Arctic Shipping: A New Silk Road for China (2012) – is the 191st in ”The Trans-Pacific View Insight Series.” 

Briefly explain China’s strategic interests in Arctic.

The Arctic is becoming a “new” political space in which China wants to be actively involved. As the emerging global power of the 21st century, it actively wants to participate in policymaking processes and ensure that its interests are being met. Two overarching strategic interests are the region’s previously inaccessible natural resources as well as the access to emerging shipping lanes.

The Arctic region, especially Russia’s territories and near-shore waters, hold significant oil and gas reserves. Through several large-scale investments, including financing for Novatek’s Yamal LNG and Arctic LNG 2 projects, China is actively involved in the development and exploitation of these resources. China benefits from long-term supply contracts with Novatek and its shipping partners of LNG.

Greece's Economic Past Will Haunt Its Political Future

After years of harsh austerity measures, the waning popularity of Greece's ruling Syriza party has made it vulnerable to losing power come July 7, when the country will hold an early general election. 

Regardless of who wins the vote, however, Greece's next leaders will still have to work within the confines of a fragile economic recovery, where unemployment remains high and the banking sector weak. 

In the coming years, Greece's dwindling and aging population will strain the country's public services, making it harder for Athens to grow out of its massive debt. 

The next administration will also have to navigate a range of complex territorial and diplomatic disputes with Turkey, including those related to energy exploration off the coast of Cyprus. 

Editor's Note: This assessment is part of a series of analyses supporting Stratfor's upcoming 2019 Third-Quarter Forecast. These assessments are designed to provide more context and in-depth analysis on key developments over the next quarter. 

For the first time in a decade, Greek voters will elect a government without their country being part of an economic rescue program. Markets have reacted positively in anticipation of the July 7 vote since opinion polls have the conservative New Democracy party securing another victory, after squarely defeating the ruling Syriza party in the recent EU parliamentary elections. But despite the opposition party's campaign promises to accelerate Greece's recovery through pro-business policies, if elected, its leaders will soon find that the complicated issues underpinning Athens' economic malaise and geopolitical constraints will not be solved in one term — or several, for that matter.

Most cyber attacks from the US: report

By Sun Haoran and Zhao Yusha 

A Chinese report warned on Monday that most cyber attacks against Chinese networks in 2018 came from the US, which Chinese experts predicted that the latter is preparing to wage a large-scale "cyber war" but China is prepared to launch a strong counterattack. 

The information came from an annual report released by China's National Computer Network Emergency Response Technical Team (CNCERT) on Monday.

The CNCERT said that in 2018, 14,000 servers in the US infected by a Trojan virus or botnet controlled 3.34 million host computers in China; and the number of servers increased 90.8 percent year-on-year, the Xinhua News Agency reported.

In 2018, 3,325 US IP addresses with the Trojan virus infected 3,607 Chinese websites, an increase of 43 percent compared with 2017, CNCERT said.

Aside from implanting viruses, the US has long been hacking information from the terminals of Chinese customers, and has been utilizing apps to tap, steal information and analyze the information they obtained, a Beijing-based military expert, who also specializes in cybersecurity, told the Global Times on Monday.

Under attack: How the DoD can best protect and defend against cyberthreats

By: Greg Decker, Booz Allen Hamilton  

In our hyperconnected world, cyberthreats against federal agencies are increasing in frequency, sophistication and impact, opening up to attack vast amounts of sensitive data that is housed on government IT systems and the nation’s critical infrastructure, such as airports, hospitals and power plants. These threats often pose a greater threat than physical attacks on our nation and are incredibly difficult to identify.

Each day, the Department of Defense, which protects our national security and terabytes of some of the country’s most sensitive data, thwarts 36 million email breach attempts. With new threats every day and criminals who regularly diversify their attacks, experts predict cyberattacks will get worse before getting better. Federal agencies, like the DoD, can turn the tide on the battle now by rethinking how to best prioritize their spend, time and talent to more nimbly detect hackers and prevent future threats.

As recent events like the Russian meddling during the 2016 U.S. election and the Baltimore ransomware attack last month confirms, the United States faces an array of cyberthreats from digitally savvy terrorists, criminals, hacktivists and foreign adversaries who are looking to cause disruption or erode U.S. national security. Despite this persistent and dangerous threat, research shows that many federal agencies have yet to adopt standards and strategies to shore up their cyber defenses.

United Technologies, Raytheon to Create Aerospace Giant

United Technologies Corp. agreed to buy Raytheon Co. in an all-stock deal, forming an aerospace and defense giant with $74 billion in sales in one of the industry’s biggest transactions ever.

The new entity will be called Raytheon Technologies Corp. when the deal closes in the first half of 2020, after United Technologies completes the separation of its Otis elevator and Carrier air-conditioner businesses, the companies said in a statement Sunday. While billed as a merger of equals, current United Technologies shareholders will own most of the combined company, which is expected to be worth well over $100 billion, according to Bloomberg Intelligence.

The combination “will define the future of aerospace and defense,” United Technologies Chief Executive Officer Greg Hayes said in the statement. The bigger company will combine United Technologies’ Pratt & Whitney F-35 fighter jet engines with Raytheon’s Patriot missile-defense products and expertise in areas such as radars, munitions and cybersecurity.

Tajik Military Increasingly Part of Russian Army in All But Name

By: Paul Goble

Tajikistan’s military, according to Moscow-based defense analyst Vladimir Mukhin, “today represents a small outpost of the Russian Army. It is completely equipped with Russian arms, has the same organizational structure,” its soldiers and officers are being trained by Russians and in Russian military schools, and its forces are fully integrated into exercises organized by Moscow. Moreover, he points out, the strongest and most reliable military force in this Central Asian country is not Tajikistani at all but rather a Russian military base that Moscow owns the lease to until 2042 (Nezavisimaya Gazeta, May 28).

No other military of a former Soviet republic is as fully integrated into the Russian Armed Forces as Tajikistan’s, a situation highlighted last week (May 28) by the visit to Dushanbe of Russian Defense Minister Sergei Shoigu (TASS, May 28). The particularly close military-military relationship reflects three interrelated calculations by Moscow: First, Tajikistan has the longest land border with Afghanistan (1,300 kilometers) of any Central Asian state and, thus, is more at risk than any other country regarding the spread of radicalism from there that could, ultimately, make its way toward the Russian Federation. Second, Tajikistan itself is unstable and at risk of collapse—its government is corrupt and heavily in debt, its population is increasingly disaffected, and the center’s control over the regions is increasingly in doubt, according to some observers (see EDM, October 18, 2018). And third, Russia views Tajikistan as a potential model for the restoration of Russian dominion over the entire Central Asian region, convinced that by controlling the force structures there, it can politically control the countries as well.

How industry can build better AI for the military

By: Kelsey Reichmann

As AI becomes more prominent in the national security community, officials are grappling with where to use it most effectively.

During a panel discussion at the C4ISRNET conference June 6, leaders discussed the role of industry building AI that will be used by the military.

After studying small and big companies creating AI technology, Col. Stoney Trent, the chief of operations at the Pentagon’s Joint Artificial Intelligence Center, said he found commercial groups do not have the same motivations that exist in the government.

“Commercial groups are poorly incentivized for rigorous testing. For them that represents a business risk,” Trent said. Because of this, he the government needs to work with the commercial sector to create these technologies.

“What the Defense Department has to offer in this space is encouragement, an incentive structure for better testing tools and methods that allows us to understand how a product is going to perform when we are under conditions of national consequence because I can’t wait,” Trent said. “Hopefully, the nation will be at peace long enough to not have a high bandwidth of experiences with weapons implementations, but when that happens, we need them to absolutely work. That’s a quality of commercial technology development.”

For this to take place, the Department of Defense needs to help create the right environment.

The Army wants a singular focus, not one-off solutions

By: Mark Pomerleau 

The days of one-off solutions for providing situational awareness and command-and-control information in the Army could be numbered.

“We are on the verge of putting tactical common operating environment capability into the Army organization in the very near term,” Col. Troy Crosby, project manager for mission command at Program Executive Office for Command, Control and Communications-Tactical, said June 6 at the C4ISRNET Conference in Arlington, Virginia.

The Army is getting ready to field the first set of capabilities under a new modernized network architecture in 2021, which will include the first iteration of the Command Post Computing Environment (CP CE).

CP CE is a web-enabled system that will consolidate current mission systems and programs into a single user interface.

Crosby said CP CE is on the verge of receiving a critical decision from the Army this month as to whether or not it has passed all of its tests and can be used by soldiers in combat.

The Army's 'Big Six': America Plan to Wipe Out Russia or China In a War

by Sebastien Roblin

To avoid the earlier dramatic failure of “super programs” like the Future Combat System, the Army plans to adopt off-the-shelf solution where possible, and operationally test numerous projects before deciding which merit the funding to ramp up to full-scale development and production.

The U.S. Army is at a crossroads as the Pentagon is reorienting itself to fight a capable great power opponent after nearly two decades focused on counter-insurgency conflicts.

Russia poses a traditional land-power challenge for the U.S. Army with its large mechanized formations threatening the Baltics, as well as formidable long-range ballistic missiles, artillery and surface-to-air missiles.

By contrast, a hypothetical conflict with China would focus on control of the sea and airspace over the Pacific Ocean. To remain relevant, the Army would need to deploy long-range anti-ship-capable missiles and helicopters to remote islands, allied nations like Japan and South Korea and even onto the decks of U.S. Navy ships.

Almost all the Army’s major land warfare systems entered service in the 1980s or earlier. Five ambitious programs to replace aging armored vehicles, artillery and helicopters consumed $30 billion only to fail spectacularly.

Strategy through Partnership Is Key to NATO’s Future

By Stephen Delaney

In April, the North Atlantic Treaty Organization (NATO) celebrated its 70th anniversary, yet the Alliance faces an uncertain future. With Montenegro’s accession in 2017 and North Macedonia’s expected accession later this year, the debate over whether NATO should continue to grow is in full force. However, an alternative exists for NATO to enhance global security and stability. Instead of focusing on expansion, NATO should leverage its established institutional and strategic expertise to improve the safety and security of its members through capacity-building and outreach to help build regional partnerships in Asia, Africa, and South America.

NATO is arguably the most successful security cooperation organization in history. The Alliance succeeded in removing the barriers and rivalries between nations that historically plagued Europe, creating a system of military governance that has prevented warfare on a continent previously defined by two of the bloodiest conflicts in human history. This success is based upon NATO providing a forum for member-states to work together on security concerns. Its leaders understand the mechanisms required to resolve the complex political-military challenges and foster cooperation within an alliance that stretches across two continents.