7 July 2019

Two New IS Wilayat in South Asia: IS Reinvigorates Itself in Pakistan and India

By: Farhan Zahid

After the unexpected terrorist attack in Sri Lanka in May, Islamic State’s (IS) Central Shura (council) announced the establishment of two new Wilayat (governorates) in South Asia. The seven simultaneous and well-concerted terrorist attacks in Sri Lanka on Easter Sunday were orchestrated by National Tawheed Jamaat (NJT), a small cell of radicalized but educated individuals of affluent Sri Lankan Muslim families.

The first announcement by IS’ official Amaq Media was concerning the creation of Wilayat-e-Hind on May 12, followed by Wilayat-e-Pakistan on May 14 (VOA Pakistan, May 15). The new Wilayat are named after countries, which is a break from IS’ previous standards of naming its units after historic regions such as “Khorasan” for South and Central Asia. The move is in fact a departure from its past policy of not accepting nation-states as Wilayat of the self-proclaimed caliphate, especially in the case of Pakistan, a country carved out of British Indian dominions.

Rethinking India’s Approach to China’s Belt and Road Initiative

Zorawar Daulet Singh

The second Belt and Road Forum for International Cooperation in April 2019 witnessed a transformed discourse on China’s grand connectivity initiative. Evoking an agreeable geoeconomic vision, the joint communique spoke of “extensive consultation,” “green,” “people-centred and sustainable development” as well as “high quality, sustainable infrastructure” that is “inclusive and broadly beneficial” (Belt and Road Forum 2019a). There is little doubt that China viewed the forum as a platform to exude more responsive and multilateral norms, with Xi Jinping himself acknowledging some of the problems with the initiative. Three broader trends might have convinced Beijing that the time was ripe for an adjustment.

To begin with, China has faced a growing tide of criticism against its ambitious connectivity plans in recent years, particularly from India and more advanced Western economies. Some of it is not without basis, as the Belt and Road Initiative (BRI) has faced problems ranging from cost overruns to allegations of corruption and lack of transparency in the conception of projects. Nevertheless, Western propaganda had reached a fever pitch that was complicating the pursuit of the initiative.

Pakistan's Prime Minister Will Struggle With an Economic Slowdown of His Own Making

Reducing Pakistan's trade and fiscal deficits will be the main domestic challenge Prime Minister Imran Khan faces in the months ahead. Austerity measures will dampen demand in Pakistan's consumption-driven economy, slowing growth. The slowdown will offer the country's two main opposition parties an opportunity to challenge Khan and deflect attention from the corruption scandals that beset them.

Pakistan's $300 billion economy is approaching the doldrums after a period of strong growth. In the 2018-19 fiscal year that ended in June, economic expansion is forecast to have cooled to 3.3 percent, down from a 13-year high of 5.5 percent set the previous fiscal year. For Prime Minister Imran Khan, managing the economy has proved a major challenge since his Pakistan Tehreek-e-Insaaf took the helm in a coalition government in August 2018. To rein in the country's unsustainable trade and fiscal deficits, the government has hiked interest rates, allowing the Pakistani rupee to weaken, and cut public spending — measures that initiated a slowdown by dampening growth in the consumption-driven economy. The slowdown will make for volatile politics in Pakistan in the short term as the opposition tries to exploit the economic pain.

The Big Picture

Imran Khan’s Failing Revolution The Pakistani Populist Is Yet to Deliver

Asif Shahzad

ISLAMABAD, July 1 (Reuters) - Pakistan on Monday increased natural gas prices by up to 200% on Monday, shortly before the International Monetary Fund (IMF) was due to decide whether to approve a $6 billion loan for the country, which faces a balance of payment crisis.

Pakistan’s Oil and Gas Regulatory Authority (OGRA) announced the new prices, the third increase since Imran Khan became prime minister last August.

The latest increases in the prices of gas and oil, as well as increased duties approved in the budget, are in effect slashing costly government subsidies.

The IMF has been urging the government to do more to balance its books, and its board is likely to meet on Wednesday to decide on the loan agreement.

The government says the gas price increase will help ease a deficit of over $1 billion at the state-owned natural gas suppliers Sui Northern and Sui Southern, both bleeding cash and subsidising consumers and industries.

Pakistan: Key Afghan Border Crossing to Remain Open 24 Hours For Trade

By Ayaz Gul

ISLAMABAD - Pakistan announced Monday that its main Torkham border crossing with Afghanistan will remain open round the clock from next month to facilitate bilateral and transit trade activities.

Officials described the move as a “good news” for traditionally strained relations between the two countries, which share a nearly 2,600 kilometer traditionally porous border.

The decision is “one of the important outcomes of close engagement” between Islamabad and Kabul, particularly during last week’s visit to Pakistan by Afghan President Ashraf Ghani, officials noted. Ghani’s two-day visit also underscored improvement in bilateral ties, they said.

Afghanistan is a landlocked country and mostly uses Pakistani land routes as well as seaports for conducting international trade. Pakistani exporters also consider the neighboring country is a major destination for their goods.

Iran, China, OPEC, and Holiday Gas Prices

Last week, we published a commentary anticipating some of the outcomes of the G20 meeting, important side discussions on energy security and the Strait of Hormuz, Iran’s expected breach of the nuclear deal’s uranium cap, U.S.-China trade talks, and the recently completed Organization of the Petroleum Exporting Countries (OPEC) meeting. With those sessions now behind us, we thought it useful to provide an update on the outcomes and reflect upon the implications and reactions in the energy market.

U.S.-Iran Tensions

Since last week’s multinational efforts urging both sides to deescalate, no new incidents have occurred in the Strait of Hormuz (although a Houthi drone strike reportedly hit Saudi Arabia’s Abha airport yesterday). Not surprisingly, however, the Trump administration announced on Monday that the U.S. strategy of exerting “maximum pressure” on Iran will continue until the country alters course. And while multilateral talks have begun with regards to stepped up efforts of securing safe passage through the Strait of Hormuz, the cost, logistics, and implementation challenges of convoy escorts and over flight operations to protect energy flows in the Gulf remain formidable.

Dealing with the Dragon


Winston Churchill famously referred to Russia as “a riddle wrapped in a mystery inside an enigma.” Doubtless, many would agree the same could be said of China. During nearly four decades dealing off and on with China, first as a university teacher and then as a diplomat with the Foreign Agricultural Service, I have seen hundreds of officials and exporters from dozens of countries smack their foreheads in surprise and frustration at Chinese behavior—from unjustly rejected shipments and illogical lurches in negotiating positions to blatant disregard of World Trade Organization commitments.

Since the United States and the People’s Republic of China established diplomatic relations in 1979, the relationship has swung back and forth between one of glowing expressions of optimism about shared interests in a peaceful and prosperous world, and one of tension and mutual mistrust. Always underpinning hopes for a happy future on the U.S. side was the basic assumption that China would join the international community as a “responsible” player, and that the obvious benefits of a “rules-based” system of trade and diplomacy would inevitably lead China in that direction, to the betterment—and enrichment—of all.

How Africa Can Benefit From China's Belt and Road Initiative

By Efem Nkam Ubi

The extension of the Belt and Road Initiative (BRI) of the People's Republic of China to Africa could be viewed as an afterthought. The BRI, which launched in Kazakhstan and Indonesia in 2013, seemed to be "Asia first" in outlook. Speaking about the initiative in 2014, Chinese President Xi Jinping, said: "First, we should focus on Asian countries and realize connectivity in Asia first. The Belt and Road both trace their origins to Asia ... It is natural that we focus our attention on connectivity between Asian countries and strive to expand our common interest."

According to the World Bank, the BRI aims to strengthen infrastructure, trade and investment links between China and dozens of other countries that collectively account for over 30 percent of global GDP, 62 percent of the world's population and 75 percent of known energy reserves.

Trump’s Fighter Jet Sale to Taiwan Advances Despite China’s Protests


The Trump administration’s plan to sell more than 60 new F-16 fighter jets to Taiwan is now moving forward after longer-than-anticipated negotiations, paving the way for a deal that is sure to prompt fresh protests from China only days after Washington and Beijing agreed to restart trade talks.

Taiwan formally submitted a request for 66 “Block 70” F-16 jets, the newest version of Lockheed Martin’s legacy fighter, earlier this year, but the deal took longer than expected to hammer out due to negotiations over price and configuration of the aircraft, two officials told Foreign Policy.

The goal is to move the sale to the next step by the August congressional recess, according to one administration official. However, it is not yet a done deal. The request must be converted into a formal proposal by the Defense and State Departments, and then formally notified to Congress. Lawmakers would then have 30 days to block the sale.

Hong Kong protesters storm the legislative council

THE DAY began with an official celebration of the return of Hong Kong to China on July 1st. It ended in the ransacking of a government building and tear gas. The televised chaos, including scenes of protesters violently smashing their way into and trashing the Legislative Council building, where some displayed the British and colonial-era flags, represent the latest test for Carrie Lam, the chief executive of Hong Kong, and for Xi Jinping, her ultimate boss in Beijing.

A wave of massive protests in recent weeks has left them searching for how best to respond to the demands of citizens of Hong Kong, who fear that their freedoms are being whittled away under Chinese rule. Opposition has been galvanised, in particular, by a bill that would make it possible for people accused of crimes in mainland China to be sent there to face trial. 

Why China No Longer Needs Hong Kong

By Eswar S. Prasad

For many years after regaining control of Hong Kong from Britain in 1997, China mostly respected the territory’s institutions. That is no longer the case, as Beijing’s heavy hand during the recent protests in the city has made obvious.

So what changed? In 1997, China needed Hong Kong. China had not yet been allowed to join the World Trade Organization, so Chinese exporters had limited access to the global market. Hong Kong was the solution: It served as a channel for entrepôt trade — goods from China could enter the territory’s ports and then be sent as exports from Hong Kong to the rest of the world, thus evading the trade restrictions imposed by member nations on nations outside the organization.

When China became part of the trade organization in 2001, entrepôt trade through Hong Kong lost its importance. By some estimates, nearly half of China’s trade went through Hong Kong in 1997, today that figure is less than 12 percent.

Just How Strong Is Erdogan’s Hold on Turkey?

With his sweeping overhaul of Turkey’s political system in 2017, President Recep Tayyip Erdogan appeared to cement his near-total control over the country. Though Erdogan just suffered the worst electoral setback of his political career in the Istanbul mayoral election, which was rerun June 23, his disregard for the outcome of the initial vote there was the clearest signal that he may be prepared to completely destabilize Turkey’s democracy to maintain that grip on power.

After the opposition won a narrow March vote, the Supreme Election Council sided with Erdogan and his Justice and Development Party, or AKP, and overturned the results. The Supreme Election Council’s decision underscores how severe the erosion of democratic institutions has been under the AKP. Though opposition candidate Ekrem Imamoglu of the opposition Republican People’s Party, or CHP, won the rerun, Erdogan’s interference with the initial outcome points to a future in which the regime may no longer even look for institutional cover when it decides to subvert democratic norms.

How Trump Reset U.S.–North Korea Relations

by Bruce W. Bennett

On Saturday Korea time, President Trump tweeted that he would be in South Korea over the weekend. “While there, if Chairman Kim of North Korea sees this, I would meet him at the Border/DMZ just to shake his hand and say Hello(?)!” Later, Trump said, “If he's there we'll meet for two minutes.”

Many pundits have concluded that this was political grandstanding. But they may be missing the significance of this act. In American culture, if I visit a place where a friend or relative lives, I will usually make every effort to at least go see that friend or relative and say a two-minute “hi.” So from a U.S. cultural perspective, President Trump was making it very clear that he considers Kim Jong Un to be a friend.

Remember that Article 1 of the June 12 Singapore Summit Agreement says that, “The United States and the DPRK commit to establish new U.S.–DPRK relations…” This form of last-minute visit just because the president was in the neighborhood is very much in the spirit of Article 1, and very different from past U.S.–North Korean leadership relationships. Trump was very clearly fulfilling a part of the Singapore Agreement. Presumably, he was hoping that Kim Jong Un would also fulfill something in the denuclearization part of that agreement. This may not be just a show—it could be very important.

Vladimir Putin’s war on the “liberal idea”


Vladimir Putin arrived at the G20 in Osaka, Japan, as the victor of an ideological world war. This was in part due to the Russian president’s distance from his home country: for a few hours he was able to separate himself from Russia’s social and economic problems, which he has not successfully resolved, and to forget the people who have lost trust in him.

Putin took advantage of his presence among world leaders to assume his favoured role: that of the international relations strategist, the philosopher of history. He is indeed certain that the ideology he has spent years developing is gaining popularity – and even triumphing – everywhere: China, Turkey, India, Brazil, the US and Europe. “Putinism” might be alienating citizens at home, but it has revealed itself to be an excellent export.

Vladimir Putin is first and foremost offering a brutal diagnosis of the world since the end of the Cold War: a world of Western domination, which he views as both hypocritical and unjust. In his interview with the Financial Times, the Russian president referred to this ideological, political and economic hegemony as “the liberal idea”, declaring that it had become “obsolete”. As such, he is not only targeting economic liberalism – an ideology which, after all, he himself pursues in Russia – but also political liberalism: a system based on the rights of individuals and civil society.

While Trump Isolates the U.S., It’s ‘Let’s Make a Deal’ for the Rest of the World


Donald Trump may be withdrawing from the world, but almost no one else is following suit.

While the Trump administration walks away from trade deals and throws up ever more barriers to free trade, the rest of the world is racing headlong to deepen globalization. That means that as U.S. consumers pay higher prices at home, and U.S. producers face greater obstacles for their exports, their counterparts around the world will reap the benefits.

Over the weekend, while Trump made headlines for not pouring more gasoline on his trade war with China (even while maintaining tariffs on hundreds of billions of dollars’ worth of Chinese goods), the European Union inked two landmark trade deals that will open markets with hundreds of millions of people.

Christine Lagarde Won, but This Isn’t a Game


The haggling over the European Union’s top jobs has been a remarkable drama. The effort by German Chancellor Angela Merkel to broker a deal for Europe at the G-20 summit in Osaka, Japan, last week was shot down in flames. It was perhaps the most embarrassing reversal of her career, whether in Germany or in the European arena—although she eventually saved face by securing the European Commission’s presidency for a political ally, German Defense Minister Ursula von der Leyen.

But the game of musical chairs was not just a spectacle. It has real significance—and poses real risks. Act by act, Europe could be seen working its way toward a unique type of transnational politics. There’s reason to fear, however, that all the attention devoted to politics came at the expense of looming questions of policy.

The eventual outcome is certainly no victory for democracy at the European level. In the race for the top jobs, the so-called spitzenkandidaten who headlined the EU parliamentary elections in May were sidelined. Rather the process has confirmed once again the priority of national leadership. France and Germany each got one of the top jobs—von der Leyen for the commission presidency, IMF Director Christine Lagarde for the presidency of the European Central Bank (ECB).

Europe Alone

By Alina Polyakova And Benjamin Haddad 

Speaking at the Munich Security Conference in early 2019, former Vice President Joe Biden had a reassuring message for European politicians, diplomats, and military leaders worried about American disengagement: “We will be back.” Biden’s speech was met with applause and relief. Wait out the tenure of U.S. President Donald Trump, he seemed to be saying, and sooner or later, leaders can return to the transatlantic consensus that defined the post–World War II era. Patience is the name of the game.

Biden was feeding a common but delusional hope. A new U.S. administration could assuage some of the current transatlantic tensions by, say, removing tariffs on European steel and aluminum or rejoining the Paris climate agreement. But these fixes would not deal with the problem at its root. The rift between the United States and Europe did not begin with Trump, nor will it end with him. Rather than giving in to nostalgia, U.S. and European leaders should start with an honest assessment of the path that led them to the current crisis—the first step to building a more mature and forward-looking transatlantic partnership.

Closing Off America From Its Neighbors Isn’t Keeping It Great

Howard W. French

As the 17th-century poet John Donne wrote in those immortal lines, “No man is an island, entire of itself; every man is a piece of the continent, a part of the main.”

Don’t be alarmed. This is not a column about poetry, or metaphysics, but about how the world economy has churned and woven its way, however unsteadily, toward closer and closer ties between different countries and regions, and thus toward greater integration overall. These processes are generally called globalization, lending to a sense that this is something relatively new, but in fact, it has been going on in one form or another for centuries. ...

Power and Paranoia in Caracas

By Ivan Briscoe

On April 30, leaders of the Venezuelan opposition, among them National Assembly Chair and self-proclaimed interim President Juan Guaidó, gathered before dawn on a three-lane highway in Caracas to proclaim the start of “Operation Freedom,” an uprising to liberate Venezuela. Liberation, however, proved fleeting. A smattering of supposedly mutinous secret policemen had gathered for the uprising, yet within two hours of its proclamation, they had piled into their vehicles and sped off. As one opposition member present at the time later recalled, “It was over before it began.”

Why Vietnam Looks Like the Next Target of Trump’s Tariffs

David Brown 

Is it Vietnam’s turn in Donald Trump’s barrel? In a rambling interview last week with Fox News, Trump unexpectedly blasted Vietnam, a growing American partner in Southeast Asia and the host of Trump’s highly anticipated but ultimately failed summit with North Korean leader Kim Jong Un in February. Vietnam is “almost the single worst abuser of everybody,” Trump declared in response to a question about imposing tariffs on the country, adding that “a lot of companies are moving to Vietnam, but Vietnam takes advantage of us even worse than China.”

It was a moment that Vietnamese officials have been dreading ever since President Trump took office. Within hours of his inauguration in January 2017, Trump took the U.S. out of the Trans-Pacific Partnership, or TPP, the centerpiece of President Barack Obama’s trade policy. It would have bound the U.S., Vietnam, and ten other Pacific Rim countries in the world’s boldest free trade deal, a pact covering a third of world trade in goods and services and setting high standards for working conditions, environmental stewardship and protection of intellectual property.

A “Star Wars” sequel? The allure of directed energy for space weapons

By Jeff Hecht

The high-energy lasers of the 1980s were unwieldy assemblages of tanks, tubes, and plumbing that produced light by burning flowing gases, and the space shuttle was not ready for “space trucking.” In the decades since then, though, laser technology has come a long way, and the giggle factor of these technologies – dubbed “Star Wars” weapons by their detractors – is gone. High-energy solid-state lasers, not available in the Reagan era, are now being tested to shoot down rockets, mortars, and drones at hundreds of meters or more on the battlefield. Their success so far has led the Pentagon to reconsider high-energy lasers and other directed energy weapons for missile defense and perhaps other military applications on the fringes of space and in orbit. But are new actors merely making the same mistakes again, in an updated setting?

Are new actors merely making the same Reagan-era mistakes again, in an updated setting?

Report: Pentagon Should Assume US Satellites Are Already Hacked

New research by London-based think tank Chatham House warns that NATO forces need to step up efforts to protect their space infrastructure from cyberattacks by Russia, China and other adversaries.

Space-based systems are an increasingly important part of defense strategies, due to their role in guiding weapons, intelligence gathering, and providing forces with essential means of communication. However, the security of satellite systems is often flawed. As a result, Chatham House concludes that if “cyberthreats are not effectively addressed, vulnerabilities in the strategic infrastructure could result in severe consequences for international security.” In fact, the think tank maintains that “it would be prudent” for countries to assume that adversaries have already hacked into their space infrastructure.

For information about security in space from a businesses perspective, please check out OODA’s research report on this topic.

The existential threat from cyber-enabled information warfare

By Herbert Lin

Corruption of the information ecosystem is not just a multiplier of two long-acknowledged existential threats to the future of humanity – climate change and nuclear weapons. Cyber-enabled information warfare has also become an existential threat in its own right, its increased use posing the possibility of a global information dystopia, in which the pillars of modern democratic self-government – logic, truth, and reality – are shattered, and anti-Enlightenment values undermine civilization as we know it around the world.

Corruption of the information ecosystem poses the possibility of a global information dystopia, in which the pillars of modern democratic self-government are shattered

Espionage and LinkedIn: How Not to Be Recruited As a Spy

By Scott Stewart

Intelligence agencies have always used open source intelligence to spot people with access to the programs or information they are attempting to collect. The internet provides such agencies with more open source information than ever; some sites, such as LinkedIn, are particularly useful for spotting people with access to desired information or technologies. By understanding how intelligence agencies use LinkedIn and other social media platforms, one can take steps to avoid or mitigate the threat.

The risk that hostile intelligence services will use LinkedIn as a recruitment tool has been widely reported. One such report, by Mika Aaltola at the Finnish Institute of International Affairs published in June 2019, focused on Chinese activity on LinkedIn. The phenomenon, however, is neither confined to Chinese intelligence operations nor limited to that particular social media platform. All intelligence agencies use similar exploits, as illustrated by the Iranian-linked hack of Deloitte in which a LinkedIn connection was used to gain an employee's trust. Even so, the number of reported cases attributed to the Chinese — including those of former intelligence officers such as Kevin Mallory and corporate espionage cases such as one involving an engineer at GE Aviation — suggest their intelligence services are among the most active and aggressive users of LinkedIn as a recruitment tool.

The Big Picture

Hate Speech on Social Media: Global Comparisons

by Zachary Laub

A mounting number of attacks on immigrants and other minorities has raised new concerns about the connection between inflammatory speech online and violent acts, as well as the role of corporations and the state in policing speech. Analysts say trends in hate crimes around the world echo changes in the political climate, and that social media can magnify discord. At their most extreme, rumors and invective disseminated online have contributed to violence ranging from lynchings to ethnic cleansing.

The response has been uneven, and the task of deciding what to censor, and how, has largely fallen to the handful of corporations that control the platforms on which much of the world now communicates. But these companies are constrained by domestic laws. In liberal democracies, these laws can serve to defuse discrimination and head off violence against minorities. But such laws can also be used to suppress minorities and dissidents.
How widespread is the problem?