Why a de facto Japan-India alliance can be a game changer

Brahma Chellaney

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Japanese Prime Minister Fumio Kishida’s trip this coming weekend to New Delhi, close on the heels of Australian counterpart Anthony Albanese’s own India tour, is indicative of growing strategic cooperation among the Indo-Pacific region’s major democracies.

Just as Germany’s rapid rise prior to World War I led to the Triple Entente among France, Britain and Russia, China’s aggressive expansionism has given the key Indo-Pacific democracies strong impetus to work together as a countervailing coalition.

The Quad, though without the form of a formal alliance, represents an emerging entente among the Indo-Pacific region’s four leading democracies: Australia, India, Japan and the U.S.

More fundamentally, the Indo-Pacific power balance will be determined, first and foremost, by events in East Asia and the Indian Ocean. This in turn makes the Japan-India relationship central to the region’s power equilibrium and stability.

Unlike the U.S. and Australia, India and Japan, which share frontiers with China, have seen their security come under direct pressure from Chinese President Xi Jinping’s muscular revisionism.

Kishida has pledged to double defense spending over the next five years following his government’s release of a new National Security Strategy which concluded that the country faces “the most severe and complex security environment since the end of World War II.”

America Has an Opportunity to Bring Bangladesh under the Indo-Pacific Framework

Joseph Rozen

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The escalating superpower competition between the United States and the People’s Republic of China (PRC) has gone from a trade dispute to a rivalry over the future of world order, technology, and values. Despite both sides being open to dialogue, President Joe Biden has made it clear that the United States will continue to compete vigorously with the PRC, aligning efforts with allies and partners around the world, and creating coalitions with like-minded countries on tech, intelligence, and strategy to counter Beijing.

Many poor countries in the Global South do not want to be caught in the middle of this competition; they want to improve their livelihood and develop their economies. China offers an easy solution via its now infamous “debt trap diplomacy,” where it provides massive loans without pre-conditions on issues of democracy or human rights, unlike the United States. Such loans enable China to influence these countries.

To counteract this, the United States established several coalitions with its partners, such as the AUKUS and the Quad. Creating these coalitions did not go smoothly, and it would be even more challenging to do similar with countries in the Global South. Nevertheless, Washington needs to adjust its strategy to expand its coalitions further. Bangladesh, a natural partner in the Indo-Pacific region, could be an excellent starting point.

Why Bangladesh?

China has three roads to Taiwan: The US must block them all

DAN BLUMENTHAL AND FRED KAGAN

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Washington has become preoccupied with the threat of a Chinese invasion of Taiwan in the near future. American national security discussions focus ever more intently on the military requirements for deterring or defeating that invasion.

These discussions — and the action they will hopefully generate — are important because the threat of a Chinese invasion is real. Yet it is not the most likely course that China’s President Xi Jinping will pursue to gain control of Taiwan.

China is pursuing three roads to unification, not one. It seeks to persuade the Taiwanese people and the international community to accept unification peacefully. It seeks to coerce such acceptance through forceful means short of war. And it is preparing to compel unification through direct military action.

China wins — and Taiwan and the West lose — if Beijing arrives in Taipei by any one of these roads. The U.S. and its partners must block all three.

China has been advancing along all three roads for decades. It began a massive general military modernization program in the 1990s, spurred in large part by the fear that the astonishing American success in the first Iraq War generated in China’s military. That modernization campaign does not aim solely at building an invasion force; China wants generalized military capabilities in order to face down and, if necessary, defeat a U.S.-led military coalition in any conflict.

China’s Three Roads to Controlling Taiwan

Dan Blumenthal, Frederick W. Kagan

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Executive Summary

US policy to defend Taiwan from Chinese aggression is overly focused on the risk that China will attempt an amphibious invasion of Taiwan. The US is not paying sufficient heed to Chinese efforts to regain control of Taiwan through persuasion and coercion, and US strategies to block a Chinese invasion may actually undermine efforts to block the persuasion and coercion roads to Chinese success. Xi Jinping likely prefers to accomplish his aims by means short of war. Those roads offer Xi the prospect of success at much lower risk and cost than fighting a war. The US must develop strategies to defeat these campaigns while deterring an invasion.

Beijing faces a difficult set of choices between military considerations and geopolitical dilemmas that US discussions of a putative Chinese invasion often fail to consider adequately. A militarily optimal Chinese invasion strategy would require that the People’s Liberation Army (PLA) strike American bases in Japan, a US treaty ally, and Guam, US territory, early in a conflict. Such attacks would bring the US fully into the war and expand the conflict to include Japan and other East Asian states. American strategists may worry that the US would not commit fully even after Guam was attacked or that the Japanese would try to remain neutral, but neither scenario is likely.

Xi has no reason to be confident in outcomes that would be optimal for China. Such attacks, after all, would be even more radical moves than Vladimir Putin’s have been in Europe. American strategists cannot take for granted that the US and its allies will behave optimally, but Xi cannot dismiss the possibility that they would. He will thus face an unpleasant choice once he decides to invade—accept the risk of expanding the war greatly or leave fully operational the bases from which a possibly devastating US military response might come. These considerations, among others, make strategies of persuasion, coercion, and military isolation short of invasion far more attractive to Xi.

Interests, Not Ideology, Should Drive America’s Approach to China

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Ideologues prefer to understand the U.S.-China relationship as a contest between good versus evil. They take comfort in clean divisions between democracies versus autocracies. They like parallels between the current U.S.-China great power contest and the U.S.-Soviet Union Cold War. The United States triumphed over the Soviets in the Cold War, after all, so why not repeat the cycle again now with China, they ask.

To be clear, there is much to find reprehensible about the Chinese government’s gross human rights abuses at home and its growing assertiveness abroad. Even so, outrage is an ineffective emotion for advancing strategic objectives. Distilling the relationship down to a morality play between good versus evil does not bring solutions to challenges posed by China’s actions and ambitions within closer reach. Similarly, invoking Cold War analogies misdiagnoses the nature of the U.S.-China relationship and creates a false hope that the United States has the capacity to compel the collapse of China. After all, the Soviet Union was a military power with an anemic economy. China, by contrast, is both a military power and a global economic power who is determined not to repeat Moscow’s mistakes.

Any American attempt to treat China as its existential enemy (a la the Soviet Union during the Cold War) would isolate the United States from its friends and allies, none of whom have any enthusiasm for joining an anti-China containment coalition. If the United States travels down a new Cold War path on its own, it will struggle to resist the temptation to view its relationships with partners through the prism of great power competition. Countries will come to be seen as either with the United States in seeking to undermine China’s rise or against us by resisting such requests. And if the United States seeks to silo the global economy into an American-led order versus an authoritarian-led economic system, it will undermine its own strength and expose the limits of its appeal. Not even America’s closest partners in Europe or Asia would sign up for a role in erecting such a global economic partition.

China's War Warnings

Gordon G. Chang

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The world needs to look at what the Chinese leadership is in fact doing. Xi Jinping appointed what is now known as his "war cabinet" in October, at the Communist Party's 20th National Congress; he is implementing the largest military buildup since the Second World War; he has been trying to sanctions-proof his regime; and he is mobilizing the civilian population for war. Communist Party cadres, for example, are taking over privately owned factories and converting them from civilian to military production.

In the latest move, China's regime is establishing National Defense Mobilization Offices across the country. The Reservists Law went into effect the first of this month.

Whatever China intends, its intended victims need to match its preparations. There has never been a time when it has been more important to deter the People's Republic of China.

Even if all this is the biggest bluff in history, the Chinese military is provoking incidents that could lead to war, especially in the tense climate Xi Jinping has created. In December... a Chinese fighter jet dangerously intercepted a U.S. Air Force reconnaissance plane in international airspace over the South China Sea.

Moreover, beginning January 28, China's large spy balloon intruded into American airspace, then proceeded to surveil nuclear weapons sites, including Malmstrom, F. E. Warren, and Minot Air Force Bases, which house all of America's Minutemen III intercontinental ballistic missiles..... This path suggests China is gathering intelligence for a nuclear strike on America's strategic weapons — and shows Beijing's utter disrespect for the United States.

The Broader Context Behind China’s Mediation Between Iran and Saudi Arabia

Mehran Haghirian and Jacopo Scita

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The agreement between Iran and Saudi Arabia to restore diplomatic and economic ties is the latest development in the geopolitical shifts in the Gulf region that have been taking shape since January 2021.

The Saudis have been engaged in talks with Iran from around the same time as that month’s Al Ula Summit, which ended the blockade of Qatar and mended the rift within the Gulf Cooperation Council. In the two years since, the United Arab Emirates has restored its diplomatic relations with Iran and even replaced China as Iran’s top import partner; Kuwait, too, has returned its ambassador to Tehran.

The negotiations between Iran and Saudi Arabia since 2021 largely took place in Iraq and Oman. Other regional countries, including Kuwait and Pakistan, had attempted to arrange for talks between Tehran and Riyadh on numerous occasions in the past seven years. The heightened military tensions in the region during Donald Trump’s presidency in the United States ignited a sense of responsibility by other global powers and players to help manage and resolve regional conflicts.

China has been vocally calling for reconfiguring the regional security architecture in the Persian Gulf since 2020. In a U.N. Security Council meeting arranged by Russia in October of that year, China presented its proposal for security and stability in the Gulf region, arguing that with a multilateral effort, the region can become “an Oasis of Security.”

What were they thinking when they chose to invade Iraq?

Dan Hannan

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Twenty years ago, the U.S. set in motion the most disastrous foreign policy blunder in its history. On March 19, 2003, 160,000 American and British troops, accompanied by auxiliary detachments from Australia and Poland, invaded Iraq .

Their immediate aim was to overthrow Saddam Hussein . In that, at least, they succeeded. The fighting was largely over in three weeks. Baghdad was occupied, Saddam fled, and, on May 1, President George W. Bush declared “mission accomplished.” Though we moan about our decline, the Anglosphere in arms remains an awesome force.

What happened next was a different story. Whether we measure the financial cost, the civilian casualties, or the strategic consequences, the occupation was catastrophic — worse, even, than Putin’s invasion of Ukraine , which in some ways it inspired.

Iran and Saudi Arabia Renew Relations

Sima Shine, Yoel Guzansky, Eldad Shavit

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In a surprising announcement, Iran and Saudi Arabia announced a resumption of relations (which were severed in 2016) and a return of ambassadors, which will take place in two months at the latest. The announcement was surprising both in its timing and in the identity of the mediator – China. The move reflects Beijing’s increased involvement in the Gulf and strengthens its position vis-à-vis the United States in the region. While the US administration welcomes the decline in tensions in the Gulf and seeks to continue efforts to restart negotiations on a return to the nuclear deal, it views China’s intervention as an unfavorable dynamic. The main test for Iran-Saudi relations will be the continuation of the truce in Yemen, yet the underlying hostility between the countries will not disappear. At the same time, this development can be seen as a blow to efforts to create an anti-Iran camp in the region. However, the renewal of relations itself is not an obstacle to future normalization between Saudi Arabia and Israel. Riyadh’s considerations on this matter are broad and touch on deep issues regarding relations with Washington, developments in the Palestinian arena, and Saudi Arabia’s status as a protector of holy sites for Islam.

On Friday, March 10, 2023, Iran and Saudi Arabia announced the resumption of relations and the return of ambassadors to Riyadh and Tehran, which will take place no later than two months from now. The announcement was unexpected regarding the timing and regarding the identity of the mediator: China. As part of the commitments they took upon themselves, Riyadh and Tehran agreed to honor previous agreements, avoid interference in each other’s internal affairs, and engage in extensive negotiations on all bilateral and regional issues, with an emphasis on security and stability in the region.

American Power and the Defense of Taiwan

Matt Salmon

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American officials are increasingly concerned about China’s growing power and assertiveness. While spy balloons over the continental United States may be the current crisis, Washington should stay focused on the most likely flashpoint in the bilateral relationship: the possibility of a Chinese invasion of Taiwan.

Taiwan Is a Critical Interest for Both Superpowers

China’s President Xi Jinping has made it clear that the reunification of Taiwan with mainland China is a top priority, ordering his military to be ready to successfully invade the island by 2027 (the 100th anniversary of the establishment of the Chinese Communist Party and the People’s Liberation Army). Even so, any such invasion will be far from easy. To conquer Taiwan, China must invade an island 100 miles distant across historically treacherous waters and land massive forces on a remarkably limited number of well-defended beaches—all while preventing or limiting interference from the US military. Recognizing these challenges, China’s armed forces have invested heavily in capabilities that would allow it to meet Xi’s mandate by building the world’s largest navy, an increasingly modern air force, and thousands of missiles, some of which are designed to attack American bases and aircraft carriers. These forces would come to bear particularly if Taiwan explicitly moved toward independence. In 2016, Xi said, “We have the determination, the ability and the preparedness to deal with Taiwanese independence, and if we do not deal with it, we will be overthrown.”

American leaders increasingly realize the critical role Taiwan plays for US global interests. Taiwan’s geographic situation in East Asia anchors the First Island Chain, the linchpin to America’s defense of Japan, South Korea, and the Philippines. Further, as Chris Miller explains, the pandemic showed the world the importance of Taiwan’s production of nearly all of the world’s advanced semiconductor chips. The island accounts for 37 percent of all the new computing power in the world—every year. These factors make it increasingly unrealistic that the United States can avoid coming to Taiwan’s defense even if it wanted to. If Washington hopes to avoid a conflict with Beijing over Taiwan, it must act now to increase its deterrent against China.

Arm Ukraine or Prepare for China? Wrong Question.

Peter Rough, and Mike Watson

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Now that the war in Ukraine has entered its second year, the United States needs to address a supply problem that is growing more acute as the war goes on: The United States’ own military does not have enough missiles, rockets, and artillery munitions for modern warfare. As Joint Chiefs Chairman U.S. Army Gen. Mark Milley said recently : “One of the lessons of this war is the very high consumption rates of conventional munitions, and we are reexamining our own stockages and our own plans to make sure that we got it right.” The consequences are potentially alarming: When the Center for Strategic and International Studies recently conducted war games simulating a war over Taiwan, they revealed that the U.S. military would run out of missiles in less than one week.

Washington is searching for an answer. For some, the logical conclusion is to dramatically cut back munitions deliveries and other military aid for Ukraine, starting yesterday. As they see it, China—not Russia—is the United States’ main adversary and biggest threat. Washington should therefore prioritize scarce resources for the Indo-Pacific theater, especially as China’s rapid military buildup increasingly endangers Taiwan. Others counter that Russia is China’s junior partner, and weakening Moscow will make Beijing less willing to tangle with Washington. A Russia diminished and made less threatening by Ukraine will also allow for an even more decisive U.S. pivot to Asia later. Military aid to Ukraine should therefore be prioritized, even at the risk of diminished readiness elsewhere for now.

Whether to direct supplies to Ukraine or the Pacific, however, is the wrong question to ask, because what the United States military can currently field will not secure the balance of power in the Indo-Pacific. The intense use of munitions in the war in Ukraine, the sobering result of the Taiwan war game, and the simple fact that U.S. production of munitions and other equipment is inadequate for much beyond the quick, surgical strikes preferred by military planners all point to one conclusion: The U.S. defense industrial base must be strengthened if these shortfalls are to be met. This will be necessary whether or not any additional U.S. arms go to Ukraine. In fact, arming Ukraine does not need to slow down the response to China. Instead, it can give the United States a running start on revitalizing its defense manufacturing, if the right conclusions about the need to raise defense industrial capacity are drawn now.

The Fed’s tightening is a recipe for global volatility. Silicon Valley Bank’s collapse is just the start.

Martin Mühleisen

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Monetary policy is said to require about one to two years to have its maximum impact on inflation. Judging by that metric, the US economy may still have a few quarters to go before higher interest rates eventually put a damper on economic activity. The same cannot be said about the financial sector, however, which last week experienced the first large bank failure in over ten years. Almost exactly one year after Federal Reserve Chairman Jerome Powell announced the first rate hike in the current tightening cycle designed to fight inflation, the Federal Deposit Insurance Corporation (FDIC) placed Silicon Valley Bank (SVB) in receivership after a run on the bank’s assets had exposed a glaring hole in the bank’s balance sheet.

From what is known so far, the cause for SVB’s demise was a classic asset-liability duration mismatch. The bank held a large portfolio of long-term bonds that had lost in market value as interest rates increased over the past year. As word began to spread about its weak financial situation, it did not have enough short-term liquidity to meet customers’ demands for deposit withdrawals. The bank was then forced to sell its assets and realize its losses, which eventually led regulators to step in.

With the Fed’s tightening cycle still in full swing, it stands to reason that SVB—the sixteenth largest US bank with $209 billion in assets at the end of 2022—is not the only bank or financial institution to experience maturity mismatches of this kind. FDIC Chair Martin Gruenberg cautioned last week that the US financial system carries a $620 billion risk from value losses in bond portfolios. Much of this may be spread across smaller financial institutions, but it remains to be seen how other banks are able to cope with valuation losses on their balance sheets.

US Cybersecurity Policy Plays Catch-up amid DPRK Hacking Threat

Stefano Ermini

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On March 2, the White House released a note to share the annual cybersecurity strategy, in line with the new challenges which the Western world is currently facing. The two main objectives highlighted by President Biden are quite clear: “Rebalance the responsibility to defend cyberspace” and “realign incentives to favor long-term investments” in order to favor economic recovery in the wake of the COVID-19 pandemic.

The second pillar of the 39-page report is explicitly titled “Disrupt and Dismantle Threat Actors,” referring to those international cyberterrorist and criminal organizations which are currently on the U.S. blacklist. Ransomware activities are multiplying “from safe havens like Russia, Iran and North Korea,” taking advantage of “poor cybersecurity practices.” More specifically, aggressive e-pirate teams, born and raised in the Democratic People’s Republic of Korea (DPRK), are a constant target of D.C. experts, due to the significant damage they’ve managed to cause over the course of nearly twenty years.

Young hackers, most of the times coming from particularly impoverished parts of North Korea, are raised by the Pyongyang regime from an early age. DPRK officers generally select the next-gen army through tough tests and, if successful, they bring those children to the capital. Juche mindset, which is driving every single activity within North Korean borders, is instilled on the future hackers, as well, who are requested to sleep together in wide dormitories and endure early wake-up calls to join intensive classes focused on math and IT.

The US isn’t investing nearly enough in critical tech to outpace China: Report

JASPREET GILL

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WASHINGTON: Based on rhetoric around Washington, it would seem government agencies, including the Defense Department, have skyrocketing investments in advanced technologies. But a closer look reveals the US isn’t investing nearly enough in order to outpace adversaries like China in areas like artificial intelligence and machine learning, warns data analytics group Govini in a new report.

“In recent years, the U.S. Government has recognized the importance of emerging technology to both strategic competition with China and our future national prosperity, and multiple administrations and congresses have taken action accordingly,” Govini’s 2022 Federal Scorecard report states. “But despite these efforts, moving fast enough to beat China remains a pernicious challenge.”

Govini’s analysis is derived from a list of critical technology areas revealed earlier this year from the office of the undersecretary of defense for research and engineering. The list includes 14 technologies, among them artificial intelligence, quantum science, biotechnology and space technology, according to a Feb. 1 memo obtained by Breaking Defense.

Overall, US government spending on critical technologies nearly doubled from $60.7 billion in FY17 to $117.2 billion in FY21, with a significant increase in FY20 and FY21, according to Govini’s report.

And yet, “it certainly doesn’t say we have a strategic approach and we’re going to double down in these areas because we understand not just the importance of the technology, but the concepts for applying them on the battlefield,” Govini CEO Tara Murphy Dougherty told Breaking Defense on Tuesday. “And that’s where I think…the risk is.”

US approaching ‘critical window’ in world-defining tech competition with China: Report

JASPREET GILL

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WASHINGTON — A compromised open internet, widespread technology-enabled surveillance and a world dependent on China for most core digital technologies. Those are just some of the worrying potential outcomes to be expected if the US doesn’t act within the next few years to maintain its global technological dominance, according to a new report published by a group of defense innovation experts.

The technological competition with China “is going to be the defining feature of global politics for the rest of our lives,” Bob Work, former deputy defense secretary, told reporters Tuesday. “And it is going to determine who is the greatest economic power in the 21st century. It’s going to determine who is the greatest military power. It is a competition that we simply must win.”

The nearly 200-page “Mid-Decade Challenges to National Competitiveness” report, released on Tuesday, is the first report published by the Special Competitive Studies Project, led by former Google CEO and co-chairman of the US government’s National Security Commission on Artificial Intelligence (NSCAI) Eric Schmidt and Work, who serves on the group’s board of advisors. The Special Competitive Studies Project is a private outfit, formed after the NSCAI’s work concluded last October.

The report builds on several ideas from the NSCAI and focuses on three technology “battlegrounds” with China that they say the US must win: microelectronics, fifth-generation wireless technology (5G) and AI. The report also notes where it sees the US already behind.

The US has announced its National Cybersecurity Strategy: Here’s what you need to know

Akshay Joshi, Daniel Dobrygowski

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The US government is continuing efforts to strengthen the country's cybersecurity prowess as well as bolster its overall technology governance strategy.

Earlier this month, President Joe Biden released a new National Cybersecurity Strategy, which outlines steps the government is taking to secure cyberspace and build a resilient digital ecosystem that is easier to defend than attack — and that is open and safe for all.

"When we pick up our smart phones to keep in touch with loved ones, log on to social media to share our ideas with one another, or connect to the internet to run a business or take care of any of our basic needs, we need to be able to trust that the underlying digital ecosystem is safe, reliable and secure," Biden wrote in the framework's preface.

The strategy is part of a larger effort by the Biden administration to strengthen cyber and technology governance. This included efforts to increase accountability for tech companies, boost privacy protections and ensure fair competition online.

Why does the US need a National Cybersecurity Strategy?

The world is increasingly complex and cyberthreats are growing more sophisticated, with ransomware attacks running into millions of dollars in economic losses in the US. In 2022, the average cost of a ransomware attack was more than $4.5 million, according to IBM.

Ukraine’s Military Intelligence Chief Predicts How War Will End

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Kyiv, Ukraine – As Ukraine announces a planned counteroffensive in the Spring, the head of the country’s Main Intelligence Directorate, Major General Kyrylo Budanov, is predicting that the coming battles will be ‘decisive’.

It’s not the first prediction that the general, who has grown up professionally in the ranks of military intelligence, has made. He is one of the few members of President Volodymyr Zelensky’s inner circle who – just over a year ago – didn’t believe that Russia was simply ‘training’ the troops that were assembling along Ukraine’s border, as Moscow falsely claimed. Budanov was one of the few who warned President Zelensky that Russia was preparing to launch an invasion.

“I was relying only on facts,” he says, speaking from the heavily fortified headquarters he now calls both office and home, near Ukraine’s capital. “All the information that we had, all the available data, was pointing to an invasion.”

A year later, as the media speculated about a new Russian offensive that could give President Vladimir Putin a much-needed win to mark the anniversary of the invasion, Budanov dismissed the notion of a ‘mythical Russian offensive’.

“The so-called Russian offensive is already underway,” he told The Cipher Brief in mid-February, before some of the heavier recent fighting began. “It is taking place on the territory, mostly now, of Donetsk Oblast, and in principle, there is nothing new in it. It will go on as it is going on now. But this dramatically differs from what the media is saying. People are waiting for some mythical date when a thousand tanks will move forward, and 400 planes will advance at 4 a.m. It won’t happen that way.”

Ukrainian and Russian losses mount in fierce battle for Bakhmut

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Fierce fighting is raging for control of the centre of Bakhmut in eastern Ukraine, Russian and Ukrainian forces say, as both sides claim battlefield successes in the longest running and bloodiest battle of Moscow’s invasion.

Ukraine said on Monday that Russia’s Wagner mercenary group, which has said it is leading Moscow’s charge for the industrial city, was trying to push forward in Bakhmut, which has been the epicentre of fighting for months.

“Wagner assault units are advancing from several directions, trying to break through our troops’ defensive positions and move to the centre of the city,” the Ukrainian military said in a morning briefing.

“In fierce battles, our defenders are inflicting significant losses on the enemy,” it said.

Russian forces have captured eastern Bakhmut but so far have failed to encircle it.

“All enemy attempts to capture the town are repelled by artillery, tanks and other firepower,” Colonel General Oleksandr Syrskyi, the commander of Ukraine’s ground forces, was quoted as saying by its Media Military Centre.

Wagner boss Yevgeny Prigozhin acknowledged that his forces were coming up against determined resistance as they seek to take control of the city centre.

Experts React: The Collapse of Silicon Valley Bank in National and International Contexts

Stephanie Segal , Gerard DiPippo , and Mark Sobel

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A deposit run at California-based Silicon Valley Bank (SVB) led state regulators to place the bank in receivership on Friday, March 10. Other regional banks also came under pressure, and regulators moved to stem further contagion of the U.S. financial system. On Sunday, March 12, the U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, and Federal Deposit Insurance Corporation (FDIC) issued a joint statement announcing “decisive actions to protect the U.S. economy by strengthening public confidence in our banking system.” These actions include invoking the “systemic risk exception,” to guarantee 100 percent of demand deposits—even those above the $250,000 statutory cap—at SVB as well as New York-based Signature Bank. In addition, the Federal Reserve announced it would make available additional funding to eligible depository institutions through the creation of a new Bank Term Funding Program (BTFP). On Monday, President Biden reassured the public that the U.S. financial system was safe; as of Tuesday morning, midsize lenders’ stocks had partially recovered from precipitous losses the previous day, and the situation remains fluid.

Most Americans probably had not heard of SVB a week ago, but the failure of the sixteenth-largest U.S. bank last week continues to reverberate across the country and beyond. U.S. regulators have moved quickly to stem the contagion, and the jury is still out as to what, if any, additional measures might be required to calm financial markets.

How Russia’s Invasion of Ukraine Exposed NATO’s Fault Lines

Christopher McCallion

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The Russian invasion of Ukraine initially seemed to galvanize the United States’ NATO allies and encourage them to take a more energetic role in Europe’s defense. But some analysts have recently noted that the war actually seems to have had the contrary effect of increasing Europe’s dependence on Washington. This should not be a surprise to anyone, since Europe’s dependence will inevitably increase in proportion to the United States’ own commitment to the continent’s security.

While French president Emmanuel Macron has championed strategic autonomy in recent years, and German chancellor Olaf Scholz announced a historic “Zeitenwende” in defense policy in response to the Russian invasion, both countries have proceeded cautiously over the course of the war. Germany only grudgingly sent Leopard 2 tanks to Ukraine following parallel moves by the United States and the UK, while Macron has insisted that a post-war resolution must include a recognition of Russian security concerns.

This has increasingly frustrated Eastern European allies like Poland and the Baltic States, whose hard line on Russia has put them at odds with what they perceive as their Western counterparts’ ambivalence, making them all the more eager to maintain the U.S. presence in Europe.

But the more restrained attitude of France and Germany towards Russia is not based on spinelessness or frugality. Instead, due to geography, relative power, and history, Western and Eastern Europeans have profoundly different threat perceptions of Russia.

Silicon Valley Bank failed: What happens next?

Hung Tran

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On March 10, 2023, SVB Financial Group (Silicon Valley Bank), serving high tech startups and their owners, suffered from a serious bank run and was closed by California regulators. A few days earlier, Silvergate Financial, a bank catering to crypto asset clients, was unable to meet deposit withdrawals and voluntarily wound down its business. On March 12, the regulators also closed Signature Bank in New York, which has been active in crypto asset trading.

At the same time, the Fed announced a new Bank Term Funding Program (BTFP) designed to lend to banks and other depository institutions for up to one year against high quality collateral such as US Treasuries, agencies, and mortgage backed securities, at their face values instead of market values. The BTFP will be backstopped by $25 billion from the Treasury’s Exchange Stabilization Fund (ESF)—in addition to the Federal Deposit Insurance Corporation (FDIC) fund of $125 billion, which has been paid in by banks as insurance premiums.

They also emphasized that all depositors at the two closed banks will have access to their deposits. Presumably, the closed banks have sufficient collateral to borrow from the new program to pay off all depositors. However, it is highly likely that share and bond holders will have to take haircuts in the resolution of the closed banks. Prompt actions by regulators enable startup companies to have access to their deposits at SVB to continue functioning. But they have failed to stabilize financial markets in the United States and globally.

The launch of the BTFP aims to help banks make full use of their US Treasury portfolios—without realizing mark-to-market losses—in order to payoff large depositors exceeding the $250,000 FDIC limit per account, per bank. The BTFP thus buys time for the Treasury collateral to regain par value at their maturity, allowing the authorities to claim that taxpayer money will not be involved in the resolution of the failed banks. Nevertheless, “buying time” represents rescuing banks from the marked-to-market losses on their high-quality bond holdings; and the public fund from the ESF is being used as a back-up. As a result, there will likely be criticism and protests from politicians opposed to bank bailouts following the 2008 financial crisis.

Russia’s War Against Ukraine is Catalyzing Internet Fragmentation

Christoph Meinel and David Hagebölling

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On March 11, 2022, many observers held their breath: the Russian government had instructed Russian website operators to make themselves independent of the worldwide web by that date. While it soon became clear that only state-owned websites and services were separating, the idea of Russia decoupling from the global internet has persisted in discussion and reporting.

Within weeks after its invasion of Ukraine, Russia had indeed dropped a close-meshed “digital iron curtain” between its more than 140 million citizens and the rest of the world. The Russian government blocked numerous news sites and banned many popular Western internet services and social platforms, including Facebook, Instagram, and Twitter. New laws against “fake news” threaten administrative and criminal charges against those Russians that inform about their country’s war in Ukraine.

Notwithstanding this crackdown, Russia has not severed ties with the global internet. Still, the idea of an autonomous “RuNet” is more than just a rhetorical device. Russia’s 2019 "internet sovereignty" law created the legal basis for an on/off switch of sorts. It requires internet service providers (ISPs) to enable the routing of traffic through exchange points approved by the federal agency Roskomnadzor. It also empowers Roskomnadzor to force ISPs to route traffic via special override systems that authorities can use to filter and re-route traffic. Moreover, since 2021, Russian ISPs must be able to process queries to the Domain Name System (DNS)–the internet's “telephone directory”–on servers located within the country, ensuring that computers can locate internet resources even in the event of a nation-wide disconnect from global networks.

The fascinating history and current state of Israel’s ties to China — Q&A with Carice Witte

Jeremy Goldkorn

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Carice Witte began studying Chinese in 1979 in Yale University’s famous East Studies program, and first began visiting China in the early 1980s. Today, she runs SIGNAL — the Sino-Israel Global Network & Academic Leadership — an Israel-based organization set up to “strengthen Israel’s position with China.”

We talked by video call last week about arms dealers, ports, academic exchanges, how Israeli citizens and government officials see China, the strange history of the two countries’ ties, and more.

This is an abridged, edited transcript of our conversation.

—Jeremy Goldkorn

Can you talk about the relationship between Israel and China, and how Israel’s ties to the U.S. affect it?

Israel was the first country in the Middle East to recognize the People’s Republic of China in January 1950. China wasn’t as quick to recognize Israel. And before Israel felt comfortable reaching out to China officially, it was looking for the okay from the U.S. because it was the U.S. and Europe that gave the push to create the state of Israel in 1948. By the time [Israel’s first prime minister] Ben-Gurion was able to get feedback from the Americans, China had already signed onto the Bandung Conference agreement and joined the boycott of Israel.

Reviving the Arsenal of Democracy: Steps for Surging Defense Industrial Capacity

Cynthia Cook

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Russia’s war in Ukraine has reinforced the necessity of maintaining a deep inventory of weapons. Any future operational plans assuming that a war will be short-lived may run against a capable and determined adversary willing to wage a prolonged conflict. That is what has happened in Ukraine, where Russia’s plan for a quick decapitation strike and absorption of further territory was thwarted by the fierce resistance of the Ukrainian people with the support of allies and partners, led by the United States. It is now a war of attrition. The protracted nature of the war has prompted questions and reflection on the readiness of the U.S. defense industrial base, though the current conflict is not yet an exercise in industrial mobilization. To date, the robust support that the United States has provided to Ukraine has primarily come out of stockpiles, drawing the United States down to levels that have triggered concerns as to whether there are sufficient residual inventories for training and to execute war plans in the case of a conflict in which the United States is directly involved. It is no longer a question of whether the U.S. industrial base is prepared to rapidly surge production in the case of a direct conflict with a capable adversary—it is clear that it is not, and that is because the necessary investments have not yet been made to make it so.

In World War II, the United States served as the “Arsenal of Democracy”—a term President Franklin D. Roosevelt used to refer to the key industrial role U.S. industry played in the Allied war effort—but it took more than five years for the industrial base to fully gear up for the war effort.[1] If the United States were to be directly engaged in conflict, the time it could take to surge production represents a serious vulnerability. Why is surging production so complicated, and why would it take so long?

Washington may be about to take a giant step backward in closing the digital divide

Blair Levin

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The reason for the potential debacle? The Affordable Connectivity Program (ACP), which provides a $30 per month subsidy for broadband to over 16 million households (with the number continuing to grow) will run out of funds.

Congress established the ACP in the Infrastructure Investment and Jobs Act (IIJA) of 2021. That law correctly observed that “a broadband connection and digital literacy are increasingly critical to how individuals participate in the society, economy, and civic institutions of the United States; and access health care and essential services, obtain education, and build careers.”

To assure that all were connected, the law appropriated $65 billion to broadband. Congress devoted most of the funds to network deployments in unserved and underserved areas, but there was another $14.25 billion allocated to the ACP to assure that broadband would be affordable to all. The program is projected exhaust all its funds sometime in the first half of 2024.

The end of the program would be a disaster for families who generally have little savings or discretionary income and will suddenly face monthly broadband charges of $30 or more. It would also rob the broader economy of an opportunity to grow faster due to universal connectivity. As demonstrated by a 2021 study on the employment effects of subsidized broadband for low-income Americans, such programs increase employment rates and earnings of eligible individuals due to greater labor force participation and decreased probability of unemployment, with a benefit of $2,200 annually for low-income households.

When Managing Cybersecurity, Operate Like You’ve Already Been Compromised

Renee Tarun

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Not to dredge up unpleasant memories, but do you remember how we all felt in the early stages of the Covid-19 pandemic? Vaccines and treatments weren't yet available, and people faced real risks. We isolated ourselves in our homes for weeks or months, kept our distance from other people when we had to go out and canceled gatherings with family and friends. We went through the day with the assumption that everyone we encountered might have the virus.

Then, two things happened. Vaccines were developed that reduced the likelihood of infection and severe illness. And more contagious variants of the virus began to circulate. The result? Many who were vaccinated, boosted and continued masking and distancing practices wound up contracting the virus. But partly because of the precautions they'd taken, the illness wasn't as severe for most of them.

Coping With Near-Universal Cyberattacks

I think this scenario parallels the situation we see in cybersecurity today. The most effective organizations have been working for years to bolster their cyber defenses in a strategic way. They've worked on broadening protection to cover the entire attack surface, integrating across the cybersecurity stack to provide centralized monitoring and management and automating processes for better efficiency and quick incident response.

Yet, many organizations occasionally suffer a successful attack. In fact, it would be much easier to count the number of organizations that weren't impacted by a cyberattack in 2022 than those that were.

AI will step in as human workers struggle to cope with evolving cyber threats, says expert

Damien Black

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Artificial intelligence (AI) could end up being the ultimate job creator, both for itself and human beings. While one expert believes intelligent automation is creating better cybersecurity solutions that only it can effectively manage, he also says it will soon open the industry’s doors to less skilled workers.

If this sounds a bit ambiguous, bear with me. Ricardo Villadiego, an advocate of AI automation in cybersecurity and CEO of Lumu, has high hopes for machine learning in his sector, all the more so because he believes that what the technology is already doing – flagging more system anomaly alerts than human beings ever could – means that either more workers will be needed to sift through them, or more AI.

And at a time when Big Tech has been laying off sapiens left and right, as global economic crisis driven by inflation forces company bosses to tighten their purse strings, my money would be on the latter. Here’s another way of looking at it: the cybersecurity industry is already short by an estimated 3.5 million jobs, with retention levels of existing staff at subpar, as highly skilled workers increasingly complain of burnout and demoralization and quit.

If what Villadiego says about AI essentially creating more work – albeit in a beneficial way – for cybersecurity workers is true, it looks like intelligent machines might also be the best tool for eliminating more onerous tasks, while opening up less demanding job roles to people needed to work with the tech in the near future.

Villadiego took time out to talk to Cybernews and help us make sense of an increasingly nuanced digital security landscape.

Expert Issues Dire Warning About Cyber Threats to Military, Commercial Satellites

Doug Messier, Parabolic Arc

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WASHINGTON – SmallSat Alliance Chairman Chuck Beames issued a dire warning during his keynote address that kicked off the Satellite 2023 Conference on Monday.

“Make no mistake, we are at war. Our adversaries are fighting hard,” he said, warning of threats to the satellite networks that U.S. military and industry are dependent on.

Although much attention has been paid to anti-satellite (ASAT) weapons that could blind or destroy satellites, Beames said the most serious threat lies in the areas of software and cybersecurity – which has been described as the “soft underbelly” of global satellite networks.

America’s adversaries don’t just consider military satellites as targets, but they are looking at all of the satellite networks that the United States and its allies depend upon, he added. The winner of this new war will be able to dictate how space is used and by whom.

Beames said it wouldn’t be too difficult for an adversary to gain control of the Global Positioning System (GPS), a constellation of satellites that provide navigation and other services. GPS is so deeply embedded in daily life that the U.S. economy would collapse if that happened. The resulting economic chaos would make the collapse of the Silicon Valley Bank look like a minor disruption by comparison, he warned.

Over the years, there have been a hodgepodge of cybersecurity solutions implemented, Beames said. Some of these have worked, at least for a while. But, serious vulnerabilities remain.

The Book of War Is Written by Chance: Napoleon’s 1812 March and the Challenge of Using History as a Guide for Strategy

Peter Hickman

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Preparing for future warfare based on historical lessons has long been fundamental to military leadership and strategy. Field Marshal Montgomery’s observation that “rule one on page one of the book of war, is: ‘Do not march on Moscow’” belies the fact that one of the most famous marchers on Moscow rigorously studied history and yet marched on Moscow.[1] Whatever the book of war may say, Napoleon Bonaparte understood that “in war, chance is half of everything.”[2] Napoleon’s study of history and march on Moscow illustrate why even the most assiduous students of history often follow their predecessors into disaster.

In June of 1812 Napoleon’s efforts to avoid another war with Tsar Alexander of Russia had failed. As Napoleon and his Grande Armée crossed the Niemen River into Russia, Napoleon requested and studied written accounts of Charles XII of Sweden’s ill-fated invasion of Peter the Great’s Russia in 1709.[3] Charles, like Napoleon, relied on speed to force a rapid decision. Yet Peter the Great’s Russian armies continuously withdrew into the interior, employing a scorched earth approach that ensured Charles would find no support for his army from the land. In extended pursuit, Charles was exposed to the Great Frost of 1708/09 while isolated on inhospitable Russian territory.[4] Voltaire vividly describes 2,000 men freezing to death before Charles’s “very eyes.”[5] Terribly weakened by the ravages of the Russian winter, Charles was defeated at the Battle of Poltava, and the tide turned. Charles fled, and the war ended Sweden’s dominance in Europe.

The Age of American Naval Dominance Is Over

Jerry Hendrix

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Very few Americans—or, for that matter, very few people on the planet—can remember a time when freedom of the seas was in question. But for most of human history, there was no such guarantee. Pirates, predatory states, and the fleets of great powers did as they pleased. The current reality, which dates only to the end of World War II, makes possible the commercial shipping that handles more than 80 percent of all global trade by volume—oil and natural gas, grain and raw ores, manufactured goods of every kind. Because freedom of the seas, in our lifetime, has seemed like a default condition, it is easy to think of it—if we think of it at all—as akin to Earth’s rotation or the force of gravity: as just the way things are, rather than as a man-made construct that needs to be maintained and enforced.

But what if the safe transit of ships could no longer be assumed? What if the oceans were no longer free?

Every now and again, Americans are suddenly reminded of how much they depend on the uninterrupted movement of ships around the world for their lifestyle, their livelihood, even their life. In 2021, the grounding of the container ship Ever Given blocked the Suez Canal, forcing vessels shuttling between Asia and Europe to divert around Africa, delaying their passage and driving up costs. A few months later, largely because of disruptions caused by the coronavirus pandemic, more than 100 container ships were stacked up outside the California Ports of Long Beach and Los Angeles, snarling supply chains throughout the country.