Takshashila Discussion Document - Rebooting AI in India

Shailesh Chitnis

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India is languishing at the bottom of the artificial intelligence (AI) leaderboard when compared with its G20 peers. Other than exporting our best brains, our contributions have been tiny. Even as the gap between the United States and China on one side, and everyone else on the other widens, India's policymakers, researchers, and business leaders have shown little urgency.

We need to shift gears. Our research surveyed the state of AI in India and evaluated various policy options. While there are many recommendations that can be made, we prefer those that are immediate and agile.

Our big idea: launch a privately-funded research and development firm whose sole focus is on fundamental AI problems. This company, BharatAI, has the potential to become the hub of India's AI innovation ecosystem. Our initial estimate calls for an investment of roughly $250 mn over five years. This, we argue, is a high-risk, but high-impact idea that can kick-start India’s AI efforts.

Why China Wants to Knock India off Its Russia-US High-Wire Act

Neena Gopal

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With Indian Prime Minister Narendra Modi walking a fine line between not alienating longtime ally Russia and keeping the United States on its right side, could China’s ongoing encirclement of India see Chinese President Xi Jinping nudging Russia to re-examine India-Russia ties on his Moscow foray that began Monday?

Most Russia experts believe that’s unlikely.

Russia, a reliable defense and energy supplier has stood India in good stead through the years, calling, in fact, for better Sino-Indian ties. India, in return, has thwarted attempts by members of the G-20 grouping that it now chairs to censure Russia on its invasion of Ukraine.

But there’s little denying that an unarticulated Modi-fication of India’s Nehruvian non-alignment is underway. There’s an unspoken acquiescence to the United States’ embedding of New Delhi as the fourth prong alongside Australia and Japan in the U.S.-led Quad alliance as the South Asian counterweight to Beijing.

Australian Premier Anthony Albanese’s recent visit to India, which was to keep India tethered to the Quad and thwart the challenge posed by China’s increased grey zone warfare in the South China Sea, was reinforced when he and his AUKUS partners sealed a deal for an undersea nuclear fleet in the Indo-Pacific. The 24-hour stop in Delhi by Japan’s Prime Minister Kishida Fumio on Monday is part of the same prod for greater Indian support to counterweigh China’s blocking of a “Free and Open India-Pacific.”

Inside Bangladesh’s new data protection laws

Stephen Weymouth

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The 2022 Draft Data Protection Act (DPA), which establishes new restrictions related to the processing, storage, and transfer of data, appears to move Bangladesh’s digital governance in a different direction. The DPA is the first data-privacy law to be proposed in Bangladesh; it follows in the wake of new digital-privacy laws passed around the world over the past several years. Provisions of the bill have been met with criticism due to the restrictions they place on digital business activity and the lack of constraints established over the government’s enforcement authority.

The expansion of the digital economy raises legitimate concerns about data privacy that governments need to address. Yet, blanket restrictions on information flows, coupled with vague enforcement provisions, are unlikely to buttress consumer protections; and they may instead erode human rights. Some fear that governments can suppress opposition through digital surveillance under the guise of data governance.

This policy brief examines Bangladesh’s draft Data Protection Act. Following a brief overview of the act, it provides a framework for understanding the political tradeoffs that governments face when implementing digital-economy regulations. The article then considers how the act may influence the trajectory of Bangladesh’s integration in global markets, and the country’s prospects for continued growth.

Boosting India-Bangladesh Energy Cooperation

Indrajit Kumar

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With the inauguration of India-Bangladesh Friendship Pipeline (IBFP) for diesel supply from India to Bangladesh’s northern district on Saturday, bilateral relations between the countries have reached a new height. The pipeline, first of its kind in South Asia, will make Bangladesh’s diesel import a lot more cost-effective and secure. While inaugurating the pipeline jointly with Prime Minister Sheikh Hasina, Indian Prime Minister Narendra Modi has rightly termed the pipeline as a reflection of Bangabandhu’s vision of friendship.

In recent years, the marked improvement of Bangladesh-India ties has manifested itself in numerous ways such as increased connectivity, economic and energy cooperation and people-to-people contacts. Now a new major development in bilateral ties between the two friendly countries has come in the energy sector. The pipeline is an example of how neighbouring countries can support each other and contribute to each other’s growth and prosperity.

According to the report, construction of the pipeline which began in early 2020 has already been completed and the facility is now ready to be commissioned to carry gasoil from India. The pipeline stretches 125 kms through Bangladesh and 5 kms through India passing through Panchagarh, Niphamari and Dinajpur to the Parbatipur oil storage facility in Bangladesh. Built at a cost of around 350 crore Indian rupees, the pipeline is expected to dramatically improve gasoil import and transportation from India.

What does Xi Jinping want from Vladimir Putin?

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Ever since the second world war geopolitics have been moulded by the “strategic triangle” between China, Russia and America. Co-ordination between Mao Zedong and Josef Stalin in the early 1950s fuelled American determination to halt the spread of communism. That led to America fighting wars in Korea and Vietnam, its commitment to defend Taiwan, and multiple proxy conflicts elsewhere.

A decade later Mao’s schism with Nikita Khrushchev laid the ground for an American rapprochement with China. That brought covert Chinese assistance in the fight against Soviet forces in Afghanistan, which helped to end the cold war. It also underpinned the decades-long run of economic growth that has transformed China into a global power—and a geopolitical rival to America.

Now another shift of the triad looms. Xi Jinping, China’s leader, is due in Moscow on March 20th for a three-day visit: his first since Russia’s invasion of Ukraine last year. At the very least it will be an emphatic display of solidarity with Vladimir Putin, Russia’s president. It may be more, too: American officials believe Mr Xi is weighing Russia’s request to supply it with lethal weapons, including artillery shells and attack drones, for use in Ukraine. If Mr Xi agrees, it would draw China into a proxy war with nato.

In China’s telling, Mr Xi heads to Moscow as a peacemaker, and with no offer of arms. He is likely to use his trip to repeat his call for an end to the war, and to promote a 12-point peace plan first proposed by China in February. Mr Xi will echo recent Chinese statements urging respect for all countries’ territorial integrity and opposing any use of—or talk of using—nuclear weapons.

How Chinese Companies Are Reinventing Management

Mark J. Greeven, Katherine Xin, and George S. Yip

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Chinese companies have long been acclaimed for their manufacturing prowess and, more recently, for their pragmatic approach to innovation. Now it’s time to recognize how they are also reinventing the role of management through an approach we call “digitally enhanced directed autonomy,” or DEDA.

DEDA uses digital platforms to give frontline employees direct access to shared corporate resources and capabilities, making it possible for them to organize themselves around specific business opportunities without managerial intervention. Autonomy is not complete, nor is it given to everyone. Rather, it is directed exactly where it is needed, and what employees do with their autonomy is carefully tracked. The approach contrasts with the Western model of empowerment, which gives employees broad autonomy through reduced supervision.

In this article we describe the three core features of the DEDA approach: granting employees autonomy at scale, supporting them with digital platforms, and setting clear, bounded business objectives. We describe how Chinese companies such as Handu Group, Alibaba Group, and Haier Group are using those features, and we draw lessons for Western companies.

Autonomy at Scale

Autonomous teams are a long-established management concept, although the term is usually applied to small work units, such as self-managed teams in factories. What Chinese companies have done is to scale team autonomy up to groups of as many as several dozen people, notably at the customer-facing end. The freedom of such teams resonates in China, where autonomy confers status; as the Chinese saying goes, “It’s better to be the head of a chicken than the tail of a phoenix.”

Eye on China

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Section A: India-China Relations

This section is brought to you by Anushka Saxena

This week, there have been some statements of interest to cover, as well as a Bill from the US Congress that may be both, a boon and a bane for India.

To begin with, interesting comments were made by Indian EAM S. Jaishankar and Chief of Army Staff General Manoj Pande on China, at the India Today Conclave held in New Delhi on 17 and 18 March, 2023.

Indian Express reports: “The situation along the Line of Actual Control (LAC) in eastern Ladakh remains “very fragile” and “quite dangerous” in terms of military assessment, External Affairs Minister S Jaishankar said Saturday, in a significant choice of words that underlines the current state of the India-China border standoff that began nearly three years ago.”

It adds: “This is a very, I would say, challenging and abnormal phase in our ties with China. Why I say that is because from 1988 when Rajiv Gandhi went there till 2020 the understanding was that peace and tranquility on the border would be maintained,” Jaishankar said.

He said the Chinese violated the agreements in 2020 and “the consequences of it were seen in Galwan Valley and other areas”. “We have deployed our troops, we have stood our ground and the situation to my mind still remains very fragile because there are places where our deployments are very close up and in military assessment, actually therefore, quite dangerous,” he said.

Is “The Chinese World” the Future? Confucianism and Xi Jinping

Carlo J. V. Caro

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When Xi Jinping, now in an unprecedented third term, first came to power back in 2012, he indicated his intention to replace the Western international order with a “Community of Common Destiny.” Backed by China’s tremendous economic growth and political stability, Xi has sought to reorder “chaos” like the Chinese philosopher Confucius attempted more than two thousand years ago. Xi himself frequently alludes to Chinese classical thought in his aim to construct what he believes would be a more “inclusive” and “just” order.

In order to understand Xi’s grand ambition and vision for a Chinese international order, it is necessary to better understand its philosophical underpinnings—especially both Xi’s and the Chinese Communist Party’s (CCP) fixation with Confucian thought. This, in turn, also requires understanding the context through which such came about, necessitating a dive into Chinese history.

The Early Dynasties and the Emergence of Confucius

In ancient times, before the rise of China’s famous dynasties, the central plain of China was inhabited by several tribes who did not share a common leader. According to tradition, even though there was fighting between them, a mechanism existed called shanrang that ensured succession based on moral virtue and behavior rather than blood lineage. Via this, King Yu the Great succeeded Emperor Shun by earning the respect of other tribes. His son Qi established the first dynasty, the Xia. But there was no centralized power during the Xia, Shang, and Zhou dynasties. Instead, these periods were marked by disorder and chaos, due to the multitude of states and their relative autonomy.

Danger Close: People’s Republic Of China

Brent Ramsey

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We are at war but most Americans are blissfully unaware. Folks are busy living their lives, attending school, work, raising kids, pursuing dreams, or if retired, leisure activities, visiting grandkids, enjoying life. Most are ignorant of the malign designs of the Chinese Communist Party (CCP) of the People’s Republic of China (PRC).

China is ruled by CCP Chairman and President Xi Jinping. His word is law. His goals are anathema to freedom loving people everywhere. The people of China are helpless pawns. They have no rights. Government may lock people in their dwellings for months on end with no reason and no recourse, as they recently did. There is no freedom, no autonomy. Everything, everyone in China is subordinate to the will and whims of the CCP and its absolute ruler, President Xi. I have written extensively on the threat of the CCP here, here, and here. China experts Gordon Chang of Gatestone Institute, Dr. Michael Pillsbury of Heritage, and former Trump National Security Advisor Lt Gen H. R. McMaster have sounded alarms about the PRC. See General McMaster’s recent Congressional testimony. Dr. Pillsbury concludes there is a 70% chance that the PRC will dominate the world. Unfortunately, too little heed is paid to these warnings. We don’t want a world ruled by China.

Decades ago, Congress established the US-China Economic and Security Review Commission. That non-partisan body has been doing yeomen’s work warning the nation of the CCP/PRC threat. Their sobering 2023 Executive Summary is well worth reading. The full report lays out in stark detail the corrupt and evil ways the PRC is using to gain power, influence, and dominance in virtually everything. Experts consider China a peer or near-peer to the United States in both military and economic strength. A 2023 study by Australia Public Policy Institute documents China’s leadership in 37 out of 44 fields. Technology is crucial to economic and military strength. China is a leader in space, Artificial Intelligence, quantum computing, rare earths, manufacturing, college degrees, patents, pharmaceuticals, hypersonic missiles, shipbuilding, batteries, solar panels, manufacturing, port control, and many other fields. Senator Rubio issued a startling report Made in China 2025 on CCP’s plans to dominate in 10 critical sectors by 2025. They are well on their way to this goal.

China Is Tweaking Its Propaganda for African Audiences

Joshua Eisenman

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While much has been written on China’s media campaigns in the United States, Europe, and Asia, until recently Beijing’s Africa-focused propaganda has received comparably little attention. But it represents a model Beijing is building on to target the global south more broadly. Africa’s 1.48 billion people, set to hit 2.48 billion by 2050, are a critical part of the global community, and China is keen to win them over. Chinese Communist Party (CCP) propaganda emphasizes positive changes in African societies that are attributed, whenever possible, to cooperation with, or learning from, China.

Beijing seeks to build an international coalition of like-minded partners to help further its “core national interests.” While there are various interpretations of this term, all assume three basic overlapping objectives: ensure the CCP will continue to rule China; maintain and defend China’s sovereignty and territorial integrity, as defined by the CCP; and promote a stable international environment conducive to enhancing China’s comprehensive national strength. Beijing is working to develop compelling messaging and strengthen its capacity to reach African audiences, with so far mixed results.

On one hand, Africans generally view China’s presence on the continent favorably. China’s official news agency, Xinhua, has 37 bureaus in Africa, more than any other media agency; and China’s Africa-focused propaganda programs have successfully cultivated dozens of influential African interlocutors who help promote the country’s image and interests. Yet despite spending untold millions of dollars each year on its Africa-focused propaganda work, by some measures China’s favorability still lags behind that of the United States. Moreover, Beijing’s official media outlets have low levels of African viewership, and there is little overlap between the most common themes in their coverage and those in mainstream African media outlets.

Twenty Years Later, the U.S. Military Is Still Lost in Iraq

Jonathan Lord

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March 20 marks the 20-year anniversary of the U.S. invasion of Iraq. Over the coming days and weeks, much ink will likely be spilled to reflect on the implications of the invasion. Some writers will reflect on their personal accounts of the war, how it shaped their lives or cost the lives of those they loved. Others will undoubtedly reflect on the policy decision to invade Iraq, likely considerations about the faulty, politicized intelligence that prompted the invasion, the opportunities lost, and the fortunes made. This article, however, is none of those. This is a flashing red warning: 20 years after the invasion, the United States is strategically adrift in Iraq.

In a speech last month at the Atlantic Council, National Security Council Middle East Coordinator Brett McGurk unveiled the “Biden doctrine” of the Middle East. The speech—an articulation of the president’s policy vision for the Middle East—made no meaningful mention of Iraq. McGurk had nothing to say about the approximately 2,500 U.S. troops still deployed in the country, nor did he have any words elucidating a vision for the future of the U.S.-Iraq relationship. McGurk also neglected to mention Syria except to say that the United States was supporting the victims of the earthquake with humanitarian aid. The Islamic State? Not referenced once.

Iraq and the Pathologies of Primacy

Stephen Wertheim

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Twenty years ago, the United States invaded Iraq. It spent a decade breaking the country and then trying to put it back together again. It spent another decade trying to forget. “We have met our responsibility,” U.S. President Barack Obama told the nation in 2010 while declaring a short-lived end to the U.S. combat mission in Iraq. “Now, it is time to turn the page.”

For Obama, moving on meant taking the fight to al Qaeda and the Taliban in Afghanistan through a surge of U.S. troops. Obama’s critics, for their part, soon found another reason to tell Americans to “get over Iraq”: the debacle was, in their view, making the president and the public too reticent to use military force, this time to sort out Syria’s civil war, which erupted in 2011. Obama refrained from striking Damascus, but he ended up deploying troops to Iraq and Syria in 2014 to fight the Islamic State (also known as ISIS), which emerged out of the maelstrom of the United States’ original invasion.

By 2021, it was President Joe Biden’s turn to urge the country to move on from post-9/11 debacles. “​​I stand here today, for the first time in 20 years, with the United States not at war,” he declared in September. Biden had just withdrawn U.S. forces from Afghanistan. The United States nevertheless continued to conduct counterterrorism operations in multiple countries, including Iraq, where 2,500 ground troops remained. “We’ve turned the page,” Biden said.

The Biggest Threat to Democracy

Nima Gholam Ali Pour

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The protests in Iran against the regime's Islamist dictatorship have largely been quelled for the time being, but the conflict remains. It is between a regime that implements medieval and barbaric laws and a young generation that wants to live in a modern and civilized society; and between a regime that rejects the notion of, and constantly defies, an international community, and the Iranian people, who are increasingly longing for Iran to become part of the international community.

The conflict is also one between democracy and dictatorship: a democracy where the mullahs' gender apartheid imposed upon the public is abolished, where Iranians would be allowed to vote in free and democratic elections, and where the government would respect human rights.

Even if the mullahs, with their robust security apparatus, manage to put down the protests in Iran yet again, they and the Iranian people's longing for freedom will not disappear. Also not disappearing are all the brave freedom fighters being tortured in the regime's prisons. These heroes must continue to be supported. Now. They must not be forgotten or overlooked.

In a speech to the Swedish parliament, this author urged the government to support the freedom fighters in Iran:

"The mullahs' regime has a robust security apparatus that targets its own population. Therefore, it will take longer for this revolution to be successful. This is precisely why it is important that the Swedish and European support for the protests in Iran does not wane, but remains even next year, the year after and as long as the Islamist regime in Iran remains."

What Do America’s Spies Really Think About China?

KENT HARRINGTON

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ATLANTA – The US intelligence community’s annual threat assessment for 2023 certainly cannot be faulted for having a narrow focus or Pollyanna perspective. From a rising China, Russian aggression, and Iran’s nuclear ambitions to climate change, future pandemics, and the growing reach of international organized crime, the IC’s analysis is as comprehensive as it is worrying.

Inaugurated two decades ago as a gesture of transparency and to inform Congress and the American public, the annual threat assessment offers the intelligence agencies’ top-line conclusions about the country’s leading national-security threats – though always in ways that will not compromise “sources and methods.” As in the past, America’s spies and intelligence analysts have stayed in their lane and avoided policy questions or any suggestion that some problems are more important than others.

Yet when testifying to the Senate Intelligence Committee on March 8, US National Intelligence Director Avril Haines was not as constrained. She made it abundantly clear that the Biden administration regards China as “our unparalleled challenge,” and as America’s leading national-security threat.

If the annual threat assessment was less categorical, that is because it represents a harmonized view. Differences of expert opinion and bureaucratic battles across 18 intelligence agencies come with the territory, requiring compromises on both wording and substance. Having chaired scores of meetings to coordinate IC assessments as a member of the National Intelligence Council, I can attest to the heated debates that are involved. Forging a consensus among such an animated crowd is a true art.

U.S. Reaches Deep Into Its Global Ammunition Stockpiles to Help Ukraine

Gordon Lubold

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WASHINGTON—Ukraine’s insatiable demand for artillery has for months outpaced Western forecasts, setting off a global hunt for more ammunition and forcing the U.S. to raid its stocks abroad to help Kyiv prepare for its counteroffensive later in the spring.

With some U.S. allies unwilling or unable to supply enough ammunition for Ukraine, the U.S. military is pulling from its munition supplies in a number of locations, including in Israel, South Korea, Germany and Kuwait. These sites, known as prepositioned stocks, are where the U.S. stores everything from trucks to bandages to support American forces around the world.

The first drawdown of munitions from these sites was late last year, U.S. and congressional officials said.

The pressure on the U.S. to take more ammunition from its overseas stocks comes as some of Washington’s allies with the biggest stores of artillery rounds have shied away from supplying Ukraine for fear of being seen by Russia as a party to the fight in Ukraine.

Russia has repeatedly warned countries not to supply arms to Ukraine. In January, Russian State Duma Speaker Vyacheslav Volodin said that supplying weapons to Kyiv “would lead to a global disaster,” and alluded to Moscow’s potential retaliation.

Poland’s Threat Assessment: Deepened, Not Changed

Mariusz Antoni Kamiński and Zdzisław Śliwa

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Polish-Russian relations are traditionally difficult, shaped by geostrategic locations in Europe and shared history. Russians have stereotypes about Poland that color their perception of Polish issues. This, combined with ongoing political and economic disputes, creates a situation where hopes for improvement are slim.

Poland and Russia’s common history includes a number of painful historical memories that make it challenging to build mutual trust and reconciliation, which outside observers must understand. Although the two nations have been neighbors for more than a thousand years, the critical historical events came between the 16th and 17th centuries, when both countries competed for primacy in Eastern Europe. Poland lost this rivalry, resulting in Austria, Prussia, and Russia partitioning Poland three times between 1772 and 1795, when Russia made Poland a principality within the Russian empire until Poland’s independence in 1918. The result was the compulsory Russification of Polish lands, widespread attempts to convert Catholic Poles to Orthodox Christianity, and the brutal suppression of national uprisings. Together, these meet the modern criteria for ethnic cleansing and form the basis of Poles’ historical consciousness.

When Soviet forces sought to invade Europe in the name of communism at the end of the Russian Civil War, they were decisively defeated at the Battle of Warsaw in 1920, which stopped the Soviet advance and frustrated their desire to ignite a global revolution. Stalin, then an officer in the Red Army, was one of the contributors to this disaster and took his revenge in 1940, ordering the execution of some 22,000 Polish officers and intelligentsia at Katyń, after partitioning Poland again with Germany. The Soviets occupied Poland at the end of World War II and imposed a communist regime until 1989, depriving Poland of full political and economic sovereignty, creating elite dependence on the Soviet Union, and enabling Soviet interference in Poland’s internal affairs.

Waking Up to the World’s Water Crisis

QUENTIN GRAFTON, JOYEETA GUPTA, and AROMAR REVI

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NEW YORK CITY – The world is becoming accustomed to the drip-drip of catastrophic headlines following each new climate-driven disaster. Increasingly frequent and severe heatwaves are causing wildfires in California and widespread coral die-offs in Australia. Unprecedented floods have wreaked havoc in Pakistan, Germany, China, and New Zealand. Drought in the Horn of Africa is causing famine for millions. And this list could go on.

The common element underlying all these cataclysms is water. From the forced shutdown of nuclear reactors in France to the heavy snowfall that covered large swaths of North America in December, or the recent cholera outbreak in Lebanon, we are witnessing the symptoms of a mounting global water crisis – either too much, too little, or too dirty.

Yet water remains mostly absent from global discussions. While concerns about the geopolitical order, climate change, and the COVID-19 pandemic have understandably been in the spotlight, water is rarely discussed outside the context of humanitarian responses to local, national, or transboundary floods or droughts. This is a major blind spot: In the World Economic Forum’s 2023 Global Risks Report, nine of the ten biggest risks for the next decade have a water-related component.

China Sends Military Drones to DRC Amid Fears of Regional War

Robert Bociaga

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The Democratic Republic of Congo (DRC) is set to receive attack drones from China, a move that has sparked concerns about a potential regional conflict between Rwanda and the DRC.

According to Africa Intelligence, a Paris-based news site, China Aerospace Science and Technology Corporation will soon supply the total of nine Caihong 4 (CH-4) attack drones to help Kinshasa fight the Rwanda-backed rebels on the territory of DRC.

Experts have concerns about the arms transaction with the DRC, fearing that weapons could end up in the wrong hands and exacerbate the conflict.

In recent months, tensions between the DRC and Rwanda have been mounting, with Rwanda shooting a DRC fighter jet in late January over an alleged violation of Rwandan airspace. Attempts by the United Nations, United States, and other African states to normalize the situation have been unsuccessful.

The Great Lakes region of Africa has been strongly affected by insecurities that date back to the Rwanda genocide of 1994, when hundreds of thousands of people lost their lives in massacres. Today, as a result of a resurgence of violence generated by armed groups, 5.8 million people are displaced across the DRC.

Will Russia use Battlefield Nuclear Weapons?

Robyn Hutchins

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With the war in Ukraine entering its second year, Russian President Vladimir Putin may find himself in a position where the use of battlefield nuclear weapons is necessary. Whether Putin is willing to violate the nuclear taboo is still undecided, but the prospects are growing that he may resort to such a tactic out of sheer desperation as the U.S. continues to send billions to Ukraine.

As the war, which was expected to last a week, grinds on, Putin is looking for ways to signal Russia’s commitment to the war effort and put an end to American optimism. Russian suspension of New START treaty participation is just the latest attempt to signal resolve and establish escalation dominance over the United States.

Russian Strategy

While some argue that Putin will never use nuclear weapons, the Kremlin’s (2020) “Basic Principles of State Policy of the Russian Federation on Nuclear Deterrence” reveal how Moscow plans to use nuclear weapons far beyond just to deter existential threats. Putin’s repeated nuclear threats are in line with Russian policy. In the escalating crisis between Russia, Ukraine, and the United States, Putin’s next move may be a low altitude air burst of a low-yield nuclear weapon.

Today, Russia possesses at least 2,000 battlefield nuclear weapons of varying yields that are launched from delivery vehicles like the Iskander-M ballistic missile, which has seen its conventional version used in Ukraine. These battlefield nuclear weapons are designed to affect small areas and achieve discreet destruction on the battlefield. They are very different from the strategic nuclear weapons which inspire Hollywood Armageddon movies.

Weapons Effects

Silicon Valley Brings Disruption to Global Finance

Tim Bartz und Michael Brächer

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It’s not often that central bank executives directly inform the public at large about what they discuss behind closed doors. But Thursday saw one of those rare moments. Christine Lagarde, president of the European Central Bank (ECB), went before the press in Frankfurt to announce that it was bumping up interest rates by half a percentage point, just as it had in February.

Unusually, though, Lagarde made clear that the decision had not been unanimous. She said that of the 26 members of the bank’s Governing Council, there were "three or four that did not support the decision" to raise rates and would have preferred to wait and see how the situation in the banking sector would develop. As she made clear: "It’s not business as usual."

Lagarde’s noteworthy comments came on the heels of several days of turbulence on global capital markets that awakened ominous memories of autumn 2008 and the ensuing financial crisis. A number of pressing questions have suddenly arisen, and the press conference held by the ECB president did little to change that: Whether the markets can be restabilized; whether more banks will start wobbling; whether we are facing a new crisis.

Gordon Chang: China Is The ‘Fuel’ Behind Putin’s War In Ukraine

Gordon Chang

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What happens when the world’s two most dangerous humans meet?

We are about to find out. Vladimir Putin and Xi Jinping are going to get together for their 40th in-person chat Monday. The conversation, in Moscow, is scheduled to run until Wednesday.

Xi’s timing confirms the closeness to his Russian counterpart. The summit, for one thing, is being held much earlier than expected. The Wall Street Journal on the 21st of last month reported the pair might get together “in April or in early May.”

As it turned out, the announcement of the meeting occurred just hours before the International Criminal Court in The Hague issued a warrant for the arrest of the Russian president for the deportation of Ukrainian children. Beijing and Moscow had to know the warrant would be announced soon, so the trip could be China’s way of signaling support for Russia’s alleged war crimes, including genocide, in Ukraine.

During the three-day meeting, Xi and the war criminal suspect—there’s little doubt that Putin is both guilty as charged and the perpetrator of other horrific acts—will undoubtedly issue expressions of support for the other. They are also expected, at least according to Russian media, to sign significant agreements.

There will certainly be discussions about Beijing’s 12-point peace plan, titled “China’s Position on the Political Settlement of the Ukraine Crisis,” released February 24. Xi Jinping will undoubtedly press acceptance of his proposal in order to leverage the success of the Iran-Saudi deal Chinese diplomats brokered this month.

Confronting the Global Water Crisis

MARIANA MAZZUCATO, NGOZI OKONJO-IWEALA, JOHAN ROCKSTRÖM

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LONDON – The world’s water crisis can no longer be ignored. Unless we manage water properly, we will neither tackle climate change nor meet most of the Sustainable Development Goals (SDGs).

Last year’s unprecedented floods, droughts, cyclonic storms, and heatwaves showed what is coming. But while such disasters garner plenty of attention, the underlying water crisis does not. Water-related challenges – whether there is too much or too little, or whether it is dirty and unsafe – are already fueling chronic food and health insecurity in entire regions. Every 80 seconds, a child under five dies from a disease caused by polluted water; and hundreds of millions more are growing up stunted and with diminished lifetime prospects.

Making matters worse, we have entered a vicious cycle in which the interaction of the water crisis, global warming, and the loss of biodiversity and natural capital exacerbate all three. Wetland erosion and lost soil moisture risk turning some of the planet’s great carbon stores into new sources of greenhouse-gas emissions, with devastating consequences for the climate.

No country can rely on its own territory for more than half the rainfall it receives. Everyone’s fresh water ultimately comes from precipitation, which depends on the presence of stable oceans, intact forests, and healthy ecosystems in other countries and regions. Yet the capacity of both land and ocean systems to generate water is being destabilized.

Russian Military Preparing New Destructive Attacks: Microsoft

Phil Muncaster

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Russia is readying another destructive cyber-assault on Ukraine, and could expand its targets to include organizations outside the country supplying Kyiv, according to Microsoft.

Microsoft Threat Intelligence revealed the news in a new report: A year of Russian hybrid warfare in Ukraine.

It said that Sandworm, a unit linked to Russian military intelligence agency GRU, is preparing to follow its Foxblade and Caddywiper efforts last year with new wiper malware.

“As of late 2022, the threat actor may also have been testing additional ransomware-style capabilities that could be used in destructive attacks on organizations outside Ukraine that serve key functions in Ukraine’s supply lines,” it added.

“The Prestige ransomware operation against a Polish firm in late 2022 provides a precedent for such attacks.”

In fact, both Prestige and a separate variant, “Sullivan,” have been linked to Sandworm. Attacks using these malware types may have been attempts to test the reaction of Ukraine’s allies to a targeted destructive attack outside Ukraine, Microsoft claimed.

Germany’s Conservatives Are Ready for a Culture War

Ruairi Casey

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For many centrist supporters of former German Chancellor Angela Merkel, the prospect of Friedrich Merz leading her Christian Democratic Union (CDU) was once considered a worst-case scenario. The hard-right Merz had rivaled Merkel for the CDU’s top post at the turn of the century and was gradually sidelined before he left politics for corporate law and finance in 2009. An indefatigable opponent of the liberal migration policy Merkel became known for, Merz returned to Berlin in an attempt to claim the conservative party’s mantle after Merkel announced her retirement in 2018.

Last January, Merz was finally tapped as CDU leader following the party’s historically poor performance in Germany’s September 2021 federal elections. By that point, the so-called “Merkel continuity” candidates who defeated Merz in 2018 and 2021 CDU leadership contests—Annegret Kramp-Karrenbauer and Armin Laschet—had floundered. Laschet’s bid for chancellor that year proved particularly calamitous. The CDU lacked a clear policy platform and suffered from Laschet’s several public gaffes. The party bled masses of votes to the Greens and Social Democratic Party (SPD), which campaigned on climate and social policy and formed a coalition with the Free Democratic Party (FDP) under SPD Chancellor Olaf Scholz.

In the 14 months since Merz was elected to the CDU’s top job, the party has—predictably—shifted to the right. But it has also revitalized itself. Merz has proved to be a more comfortable fit than many observers expected. Free from the compromises and policymaking of governing, he has thrived as a combative opposition leader against Scholz’s limping coalition.

Peace And Conflict Resolution: Artificial Intelligence Seems More Intelligent Than Human Political Intelligence

Jan Oberg

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A few days ago, I got the idea of checking what the AI-based ChatGPT had to say about issues pertaining to the war in Ukraine. I must say that its answers were a pleasant surprise from the perspective that I hold dear – peace.

Here is what I asked and what it answered – within a couple of seconds:

How to make peace in Ukraine?

The conflict in Ukraine is complex and multifaceted, and there are no simple solutions. However, here are some steps that could potentially contribute to peace in Ukraine:Dialogue: The first step towards peace in Ukraine is for all parties to engage in dialogue. This includes the Ukrainian government, the separatists in Eastern Ukraine, and Russia. All sides must be willing to sit down and negotiate in good faith.

Ceasefire: A sustainable ceasefire is necessary to create an environment conducive to dialogue. All parties must agree to a cessation of hostilities and respect the ceasefire agreement.

Humanitarian aid: The conflict has resulted in the displacement of many people, and there is a need for humanitarian aid to help those affected by the conflict.

Addressing underlying issues: The conflict in Ukraine is rooted in political, economic, and social issues that need to be addressed. This includes issues related to language rights, economic disparities, and regional autonomy.

Is China About To Destroy Encryption As We Know It? Maybe

PATRICK TUCKER

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Late last month, a group of Chinese scientists quietly posted a paper purporting to show how a combination of classical and quantum computing techniques, plus a powerful enough quantum computer, could shred modern-day encryption. The breakthrough–if real–would jeopardize not only much U.S. military and intelligence-community communication but financial transactions and even your text messages.

One quantum technology expert said simply “If it's true, it's pretty disastrous.”

But the breakthrough may not be all it’s cracked up to be.

The paper, “Factoring integers with sublinear resources on a superconducting quantum processor,” is currently under peer review. It claims to have found a way to use a 372-qubit quantum computer to factor the 2,048-bit numbers of in the RSA encryption system used by institutions from militaries to banks to communication app makers.

That’s a big deal because quantum experts believed that it would require a far larger quantum computer to break RSA encryption. And IBM already has a 433-qubit quantum processor.

The Chinese researchers claim to have achieved this feat by using a quantum computer to scale up a classical factoring algorithm developed by German mathematician Claus Peter Schnoor.

Quantum Revolution! ‘Breakthrough’ By Chinese Scientists Could Rewrite Einstein’s Nobel Prize Winning Theory

Tanmay Kadam

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A Chinese-led team of scientists claimed to have achieved a breakthrough that could rewrite Albert Einstein’s Nobel Prize-winning theory.

In 1905, Einstein published a paper explaining the photoelectric effect, in which he put forth that light comprises discrete packets, “energy quanta,” now called ‘photons,’ as opposed to the wave theory of light, which was widely accepted at the time.

He predicted that photons above a certain threshold frequency when falling on a specific material, eject electrons from its surface. This phenomenon is called the photoelectric effect, which is said to have resulted in the 20th-century quantum revolution in physics.

The discovery of the photoelectric effect earned Einstein the 1921 Nobel Prize in Physics.

The discovery of the photoelectric effect laid the foundation for several modern-day technologies that depend on light detection or electron-beam generation.

High-energy electron beams have been used at a large scale to analyze crystal structures, treat cancer, kill bacteria, and machine alloy.

The materials that convert photons into electrons are known as photocathodes. Notably, most of the photocathodes known today were discovered around 60 years ago, and all of them are said to have a defect.

Chinese hackers are getting more sophisticated with their attacks, report says

INES KAGUBARE

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Chinese state-sponsored hackers have found clever ways to circumvent cybersecurity tools which have allowed them to get into the networks of governments and companies and spy on people, a practice they’ve been conducting for several years without detection, The Wall Street Journal reported.

According to Google researchers, the newly discovered hacking techniques are different from the usual cyber espionage Chinese hackers are known for.

“Instead of infiltrating systems behind the corporate firewall, they are compromising devices on the edge of the network — sometimes firewalls themselves — and targeting software built by companies such as VMware Inc. or Citrix Systems Inc,” the Journal said.

The researchers told the news outlet that the new hacking techniques “represent a new level of ingenuity and sophistication from China.”

This comes as tensions between the U.S. and China mount over a myriad of issues, including security concerns over TikTok, cyber espionage, election security, spy balloons and recent export control restrictions.

Just this week, the Biden administration threatened to ban TikTok in the U.S. if its Chinese-based parent company, ByteDance, did not sell its stake to an American company. This follows months of pressure from U.S. and state lawmakers, primarily Republicans, to ban the social media app, especially on government-issued devices.

AI set to benefit from blockchain-based data infrastructure

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The rise of ChatGPT has been nothing short of spectacular. Within two months of launch, the artificial intelligence (AI)-based application reached 100 million unique users. In January 2023 alone, ChatGPT registered about 590 million visits.

In addition to AI, blockchain is another disruptive technology with increasing adoption. Decentralized protocols, applications and business models have matured and gained market traction since the Bitcoin

$27,781 white paper was published in 2008. Much needs to be done to advance both of these technologies, but the zones of convergence between the two will be exciting to watch.

While the hype is around AI, a lot goes on behind the scenes to create a robust data infrastructure to enable meaningful AI. Low-quality data stored and shared inefficiently would lead to poor insights from the intelligence layer. As a result, it is critical to look at the data value chain holistically to determine what needs to be done to get high-quality data and AI applications using blockchain.

The key question is how Web3 technologies can tap into artificial intelligence in areas like data storage, data transfers and data intelligence. Each of these data capabilities may benefit from decentralized technologies, and firms are focusing on delivering them.

Data storage

FCC proposes to ease direct satellite-to-phone communications

THERESA HITCHENS

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SATELLITE 2023 — The Federal Communications Commission today agreed to propose a new licensing rule that would ease the development of direct satellite links to handheld devices such as phones and tablets for 5G communications — a potential the Defense Department is exploring for military use.

“There’s a lot of interest by the DoD,” Rick Lober, vice president and general manager, Defense Systems at Hughes Network Systems, told Breaking Defense on Wednesday during the Satellite 2023 conference. “It helps solve their terminal problem, that they’ve been living with for a lot of years, of very expensive terminals that are all proprietary systems.”

The FCC is asking for industry comment on the its plan that would, in essence, allow satellites to use radio frequency spectrum that is now slated for use by providers of terrestrial mobile wireless communications. The commission regulates use of the RF spectrum by telecommunications companies, both those operating satellite and terrestrial fixed or mobile networks.

“The Notice of Proposed Rulemaking adopted today proposes a framework through which satellite operators collaborating with terrestrial service providers would be able to obtain FCC authorization to operate space stations on certain currently licensed, flexible-use spectrum allocated to terrestrial services. The Commission is proposing to add a mobile-satellite service allocation on some terrestrial flexible-use bands,” the FCC said in a press release announcing today’s decision.

Ukraine and industry show how Europe can jump ahead on JADC2, ex-generals say

SYDNEY J. FREEDBERG JR.

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WASHINGTON — A group of experts may have found a paradoxical bright side to decades of European under-investment in defense.

Since NATO doesn’t have huge sunk costs in a globe-spanning command-and-control system built on legacy tech, as the US does, it has fewer barriers to embracing the kind of cutting-edge, off-the-shelf technology that’s proven so effective in Ukraine, from commercial satellites to crowdsourced intelligence to data-sharing.

“We have a legacy force that needs to be brought forward,” said James “Hoss” Cartwright, a former vice-chairman of the joint chiefs of staff and member of the Atlantic Council board. “You can’t just say, you know, wave your hand and it’s all of a sudden digital. It doesn’t work that way. That is tens of billions of dollars [and] probably ten years to do it effectively.”

“In Europe, there’s not a lot of legacy there,” Cartwright argued, “so you’re going to be able to integrate this relatively quickly in comparison to the United States.”

“NATO might have a leg up on the US … not being tied to our legacy environments,” agreed a senior engineer from RAND’s Project Air Force, Sherrill Lingel. Even in the US Air Force — which has led the drive for the interservice meta-network known as Joint All-Domain Command & Control (aka JADC2) — “we have an industrial-age architecture; we have stove pipes; we have person-in-the-loop for most steps,” she said, as opposed to seamless, automated sharing of data.

Is Russia regrouping for renewed cyberwar?

Clint Watts

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As the second year of the Russian war in Ukraine commences, a detailed survey of the cyberattacks used during the first year of the war, and especially new developments we have observed in recent months, provide hints of what the future of this hybrid war may hold.

Since the start of the war, Russia has deployed at least nine new wiper families and two types of ransomware against more than 100 government and private sector Ukrainian organizations. Strong cyber defense partnerships between the public and private sector, and Ukrainian preparedness and resilience, has successfully defended against most of these attacks, but Russian activity continues.

In 2023, Russia has stepped up its espionage attacks, targeting organizations in at least 17 European nations, mostly government agencies. Wiper attacks continue in Ukraine.

We also continue to monitor for the development and deployment of new ransomware variants. As of late November 2022, Microsoft and other security firms identified a new form of ransomware, called “Sullivan”, deployed against Ukrainian targets, in addition to the “Prestige” ransomware Russia deployed in Ukraine and Poland in October 2022. Our analysis suggests that Russia will continue to conduct espionage attacks against Ukraine and Ukraine’s partners, and destructive attacks within and potentially outside Ukraine as was done with Prestige.

Fighting When the Network Dies

Captain Sam J. Tangredi, U.S. Navy (Retired)

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“The ultimate cause of our failure was a simple one . . .

the inferior science of our enemies. I repeat—by the inferior science of our enemies.”

—Arthur C. Clarke, “Superiority”1

U.S. national security cannot rely exclusively on a tightly networked, system-interdependent, high-bandwidth–requiring, all-digital joint force in a fight against a technologically near-peer opponent. Likewise, it cannot depend primarily on an exquisite information grid consisting of an “internet of things.”2

Despite the advantages the combat systems such a force might need, they also would bring vulnerabilities and disadvantages—vulnerabilities that have not been evident in operations since 1991. Since then, the United States has not faced opponents that could fight its networks. Nor has the United States had to “fight to get to the fight.” That will not be the reality of combat in a “great systems conflict” characterized by a high level of electromagnetic and cyberwarfare and kinetic strikes against U.S. and allied C4ISR systems—particularly if such strikes came as a bolt from the blue.3

The U.S. joint force—particularly the Navy—needs to retain a “network-optional,” low-bandwidth, electromagnetically hardened, locally commanded, and systems-redundant blue-water “legacy” force if it intends to survive and keep fighting as the initial electromagnetic storm subsides and sophisticated digital networks must be reset to restore advanced precision-combat power. Although few of its individual combat systems would be truly analog, for contrast, this legacy reserve force could be called the “analog fleet.”