January 26, 2019

Why is Jaitley throwing tantrums at CBI for fixing Chanda Kochhar and other ICICI Bank officers?

Pgurus.com

Is Jaitley peeved at the PM doing an end run around him and having the CBI file a charge sheet against the ICICI? What is his interest?

By

 Sree Iyer

 -

January 26, 2019

Is Jaitley peeved at the PM doing an end run around him and having the CBI file a charge sheet against the ICICI? What is his interest?

For a few weeks, I thought of not writing anything against the former Finance Minister Arun Jaitley, due to his delicate state of health, battling Cancer in my country of residence, the United States of America. PGurus have written many critical articles on Jaitley and his policies. After my friends alerted me that he is unwell and undergoing treatment, I thought, I must not be too critical of him.  But after seeing the atrocious and unethical tweets on Friday exploding his anger on the Central Bureau of Investigation (CBI) for registering a First Information Report (FIR) in the ICICI Bank fraud case against Chanda Kochhar and other ICICI Bank staffers, I decided to break my self-imposed silence.

Mr. Jaitley, I don’t need to give you lectures on the responsibilities of you as a Minister, though you are Minister without Portfolios due to your medical condition. Did you not pontificate that people should have “discipline”? Is this your “discipline”?


Mr. Jaitley, you have crossed the line by tweeting against your government (read Prime Minister Narendra Modi) by expressing your anger against the CBI for probing the corrupt persons. More than that, I owe a reply to you because we – PGurus – first exposed this ICICI Bank fraud of Chanda Kochhar and her husband taking bribes from loan allotments, when all media houses were keeping a criminal silence on this issue for over two years.  In March 25, 2018, we exposed this fraud, leading to a response from ICICI Bank and the story was then carried forward by Indian Express and other media houses, ultimately leading to the exit of Chanda Kochhar from the Bank[1].

You can’t have the cake and eat it too!

You have a bad habit of protecting the corrupt. Be it in Chidambaram involved cases or NDTV related cases. In this case, the other accused, Videcon’s Venugopal Dhoot is also your good friend. You cannot let your past friendships come in the way of your work as a Minister. This is not the first time you are talking against CBI and the investigating agencies. When you were resting after your Kidney transplant also you did a similar thing by addressing a Bankers meet via video conference in July 2018. That time you were venting at investigators for fixing bankers in Maharashtra[2].

Your tweets from the Cancer Hospital on January 25, 2019, is unethical and not befitting of a Senior Minister.

Arun Jaitley

@arunjaitley

My advice to our investigators – avoid adventurism and follow the advice given to Arjun in the Mahabharata – Just concentrate on the bulls eye.

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8:15 PM - Jan 25, 2019

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Arun Jaitley

@arunjaitley

Professional investigation targets the guilty & protects the innocent. It secures convictions and furthers public interest. One of the reasons why our conviction rates are poor is that adventurism and megalomania overtakes our investigators and professionalism takes a back seat.

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Arun Jaitley

@arunjaitley

Professional investigation targets the real accused on the basis of actual and admissible evidences. It rules out fanciful presumptions. There is no personal malice or corruption. It targets the guilty and protects the innocent.

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Arun Jaitley

@arunjaitley

Sitting thousands of kilometers away, when I read the list of potential targets in the ICICI case, the thought that crossed my mind was again the same – Instead of focusing primarily on the target, it is a journey to no where (everywhere).

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Arun Jaitley

@arunjaitley

Investigative Adventurism Vs. Professional Investigation http://bit.ly/2RfmL1u 

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Your above tweets have embarrassed the Prime Minister. You don’t need rocket science to understand that the CBI registered an FIR on Modi’s direction and it is common knowledge that you have been blocking several investigations by throwing tantrums till you left India. You should be at least obliged to Modi for accommodating you in the Cabinet, after being trounced in the Lok Sabha election by a majority of around two lakh votes, while a majority of the BJP candidates won during the 2014 wave.

I know why the CBI probe on NDTV is stuck. Your yesterday’s tweet makes it clear. In NDTV case, the ICICI Bank’s founder K V Kamath is involved in providing loans to Prannoy Roy illegally. Now I assume, you have a role in blocking the CBI and ED in probing in NDTV related money laundering and bank frauds case too.

Mr. Jaitley, I don’t need to give you lectures on the responsibilities of you as a Minister, though you are Minister without Portfolios due to your medical condition. Did you not pontificate that people should have “discipline”? Is this your “discipline”?

I see no point in advising you at your age. “Tum Sudhrega Nahi” – the common Hindi adage suits you. My simple, unsolicited advice – concentrate and take care of your health. Let the CBI do its job.

References:

[1] How Chanda Kochhar was caught in the loan granting frauds, while all shied to take action against her – Jan 24, 2019, PGurus.com

[2] Mr. Jaitley, what is wrong with you? Gone senile? How dare you criticise CBI & Police for acting against corrupt Bankers? Jul 6, 2018, PGurus.com

January 25, 2019

Has the China Collapse Finally Arrived?


January 22, 2019

China has been on the verge of a hard landing for many years, according to some analysts. Will they finally be right in 2019? In this issue of Sinology, I explain that in the fourth quarter of 2018, China's economic deceleration was not significantly sharper than I expected, and several policy changes should lead to stronger activity and market sentiment in the second half of this year. A hard landing is still not on the horizon.

There was not a sharp slowdown in the last quarter

Everyone paying careful attention to China should have expected the year-on-year (YoY) growth rates of almost every aspect of the economy to slow a bit last year, as that has been a consistent pattern for about a decade. The economy has become so large, and growth rates were so fast for so long, that this deceleration is inevitable.

What has worried many observers, however, is the perception that in the last quarter (4Q18), China's growth rate slowed much more sharply than expected. With final data for 2018 now in hand, let me explain why that perception is not accurate.

Still the world's best consumer story

Let's start by examining the largest part of China's economy—consumption.

Income growth is, of course, the foundation of consumer spending, and in 4Q18, inflation-adjusted (real) income growth slowed a bit, to 6.2% YoY, down from 6.9% in 4Q17. That degree of slowdown was within my expectations, and it is worth noting that last quarter's pace was roughly the same as the 6.3% recorded in 4Q16.

 

One data point that did surprise on the downside in the last quarter was the nominal growth rate of retail sales of consumer goods by larger firms, which slowed to 2.6% from 7.3% in 4Q17. But, this sharp deceleration was due almost entirely to a collapse in auto sales, which fell by 8.3% YoY, in contrast to a rise of 4.4% during 4Q17.

This new car collapse was, however, largely the consequence of a temporary tax cut from late 2015 through the end of 2017, which brought forward demand—retail sales of autos by larger firms rose 10.1% in 2016 and 5.6% in 2017—rather than being a reflection of a lack of spending power or sentiment on the part of consumers. (For this reason, new car sales are likely to remain weak in 2019.)

In fact, nominal retail sales by larger firms excluding autos rose 7.7% during the last quarter, compared to 8.6% in 4Q17 and 8% in 4Q16.
 
Not a dramatic deceleration, especially when a sharp fall in global oil prices also contributed to slower growth in retail sales, as gasoline prices were down.

Adjusted for inflation, the growth rate of retail sales accelerated in December to 6.7% YoY, up from 5.8% in November and 5.6% in October, although down from 7.8% in December 2017.
 
Here is another perspective: household consumption rose 8% YoY in 4Q18, up from 6.1% during 4Q17, despite the sharp slowdown in auto sales last year. This acceleration reflects the rising share of consumer spending on services, as well as the strength of spending on services.

Services now account for 44.2% of household consumption, up 1.6 percentage points from a year ago.
 
And the household consumption data covers the full range of spending on services, such as education, health care, rent, travel and entertainment, while the services spending captured by the retail sales data is limited to only restaurant dining and other food-related services. (Retail sales covers spending by companies and government agencies, while, of course, household consumption data—which is only published quarterly—excludes those organizations.)

Another reflection of the health of the consumer story is that final consumption of goods and services accounted for 76.2% of China's GDP growth in 2018, up from a 57.6% share in 2017 and a 47% share in 2013.
 
With the investment (gross capital formation) share of GDP growth falling to 32.4% last year, down from 55.3% five years earlier, it is clear that there has been significant progress in the rebalancing of the Chinese economy. 

It is also worth noting that the contribution to GDP growth from net exports (the value of a country's exports minus its imports) was -8.6% for all of 2018, making clear that China is no longer an export-led economy. (Over the past five years, the average annual net export contribution to China's GDP growth was -1.3%—something to remember when thinking about the impact of a possible trade war.)

Manufacturing, excluding autos, is healthy

The value-added of China's industry grew just slightly less rapidly in the last quarter: 5.7%, compared to 6.2% in 4Q17 and 6.1% in 4Q16. And even that modest deceleration was due largely to the collapse in auto sales, which led to sharply lower auto production. The value-added of the auto industry declined by 2.7% during the last quarter, down from a rise of 10% in 4Q17 and 17.9% in 4Q16. This reflects that, aside from autos, China's manufacturing sector remained healthy in the last quarter.
  

Manufacturing and property investment is healthy

Total fixed asset investment (FAI) rose 7.2% YoY in the last quarter, up from 6.4% a year earlier. Manufacturing capital expenditure was particularly strong in the last quarter, up 11.6% compared to 6.6% a year ago. Investment in real estate was also strong, despite slower growth in new home sales, because inventory levels were very low and developers expect purchase restrictions to be relaxed in the future. We estimate that real estate investment rose 8.1% in 4Q18, compared to a rise of only 0.1% in 4Q17. 

 

The other major component of FAI is spending on public infrastructure. The central government engineered a sharp slowdown in this space during the first three quarters of last year, as steps were taken to rationalize local government spending, but the growth rate recovered a bit in the fourth quarter, up 5.1%, compared to 17.3% a year ago. With a modest fiscal stimulus and a very weak base, the YoY growth rate of infrastructure is likely to provide a boost to overall economic activity this year.


Growth wasn't bad, but sentiment was terrible

Since the degree of economic growth deceleration last year was largely within my expectations, why was market sentiment in China abysmal? I think there were four key reasons.

The most important driver of pessimism was fear of a trade war with the U.S. Domestic investors told me they were concerned about far more than just a disruption of shipments to China's top export market. They worried that President Trump might escalate the conflict beyond tariffs, limiting the ability of Chinese to study in the U.S., or banning Chinese imports of American semiconductors, which are the foundation of China's tech sector. The negative consequences of a possible cold war-style relationship between the world's two largest economies weighed heavily on domestic sentiment last year.

The second driver of pessimism was concern that during the first three quarters of last year, Chinese leader Xi Jinping voiced strong support for state-owned enterprises (SOEs), while expressing little love for the private firms, which account for most employment and all net new job creation in China. This was, however, a change in rhetoric, rather than in policy. In fact, investment by private firms rose 8.7% last year, up from 6% in 2017.

But entrepreneurs told us that Xi's apparent disregard for their contributions to China's economy left them apprehensive about the future.

A third factor was the unintended consequences of the government's efforts to de-risk the financial system. Shadow banking was cut sharply last year, with shadow loans outstanding down by almost 11% YoY as of December, in contrast to a rise of 15% through December of 2017. Total credit rose by about 10% last year, but the composition of the new flow changed: traditional bank loans accounted for 81% of new credit, up from a 51% share in 2013 as shadow banking was curbed. There was a similar clampdown on peer-to-peer lending. While these changes are good for the long-term health of the financial system, they created short-term pain for many private firms, who were among the largest recipients of shadow credit.

A fourth factor behind last year's pessimism was a cloud of regulatory uncertainty. Policy changes were often made abruptly, with little transparency or clear guidance on how they would be implemented at the local level, leading to risk aversion. Examples included enforcement of environmental protection rules, collection of social security taxes, and price controls for generic drugs. 

Sentiment is likely to improve in the second half of this year

In the first half of this year, sentiment is likely remain weak, contributing to slightly weaker macro numbers. But there are several reasons to expect sentiment and economic activity to strengthen in the second half.

The first reason is that I expect a 1H19 resolution to the short-term trade dispute between the U.S. and China. Trump seems to believe that resolving this problem and lifting his tariffs on Chinese imports is important to his re-election prospects, and he has therefore adopted a more realistic negotiating strategy, dropping his irrational focus on the bilateral trade deficit as well as demands for Xi to make deep structural changes, such as eliminating his industrial policies and support for SOEs. I think Xi recognizes that Trump's remaining demands, including better market access for American firms and stronger protection for intellectual property rights, will contribute to China's economic progress, and Xi also wants to avoid a conflict that could escalate into a tech war, jeopardizing China's access to US semiconductors. A Trump—Xi deal will not resolve the longer-term challenges in the bilateral relationship, but it will lift short-term fears of an escalating trade war.

The second reason to expect better sentiment in China is that Xi has already pivoted away from his rhetorical embrace of SOEs, with recent public statements expressing support to entrepreneurs. His banking regulators have also announced a series of measures designed to boost lending to private firms. While it isn't clear how effective those measures will be, the impact on entrepreneurial sentiment should be apparent in the coming quarters.
 
Modest easing of monetary and fiscal policy is a third reason for optimism this year. China's banking regulators have indicated that they will take steps to mitigate the impact of the shadow banking crackdown, including increasing interbank liquidity, which will lower interbank rates. Mortgage rates have already begun to decline. This will be accompanied by modest fiscal policy easing, including further tax cuts and a small boost to infrastructure spending. Because the economy remains reasonably healthy, these policy fine-tuning measures will fall far short of a dramatic stimulus, and their objective is to boost sentiment and ensure the macro deceleration remains gradual, rather than to reaccelerate growth.

I also expect policy fine-tuning in the residential property sector. New home sales were soft last year, but this was expected, as more than 100 cities enforced policies designed to deter sales and keep prices from rising. Those policies worked: new home sales rose 2.2% by square meter last year, after rising by 5.3% in 2017 and 22.4% in 2016. This year, I expect Beijing to allow some of those 100 cities to relax (but not eliminate) their housing purchase restrictions, which will release some pent-up demand, but I do not expect a broader relaxation of house purchase restrictions. This year, Chinese are likely to buy another 12 million new homes, with a minimum of 30% cash down.

Finally, although regulatory uncertainty will remain a fact of life in China for many years to come, investors are likely to see more clarity on some specific issues, including a relatively benign impact on company profits from more effective collection of social security taxes.
 
All of these factors, along with relatively low valuations in the A-share market, are likely to result in better sentiment among domestic investors in the second half of this year.

Regards,

Andy Rothman
Investment Strategist
Matthews Asia

Sources: Matthews Asia, CEIC, National Bureau of Statistics (NBS) and CLSA

https://matthewsasia.com/perspectives-on-asia/sinology/article-1541/default.fs

The invasive species threat from China's Belt and Road Initiative

https://www.axios.com/china-belt-and-road-initiative-is-massive-invasive-species-threat-20059504-3439-4e71-b0ca-9bda7b33645d.html

China's ambitious Belt and Road Initiative, a program to fuse Asia with Africa and Europe via land and maritime networks, has the potential to forever alter the biodiversity of key habitat on multiple continents, a new study warns.

Why it matters: By connecting regions through large infrastructure projects — including ports, railways and telecommunications networks — scientists fear the project could accelerate the spread of invasive species. Such species, once established in a region, could harm biodiversity in ways that are difficult to impossible to reverse.

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The backstory: The Belt and Road Initiative(BRI) has been championed by Chinese President Xi Jinping, and is viewed by many as a modern version of the Silk Road that was set up during the Han Dynasty some 2,000 years ago.

Details: The new study, published Thursday in Current Biology, uses a comprehensive risk analysis to find the areas most vulnerable to the introduction and spread of 816 different invasive species — including amphibians, reptiles, birds and mammals.

The researchers, including authors from the state-run Chinese Academy of Sciences, quantified the risks of invasive vertebrates by looking at 2 factors:

Risk of transporting a new species: This relies on trade and transport data to determine the risk that an invasive species could hitch a ride to a new location; andWhether habitat is suitable for a new species: This is based on a species' known climatic range and other requirements, and describes whether a species could thrive in a particular spot.

They combined these to identify 14 invasion hotspots in 68 countries, from the Caribbean to Southeast Asia and Africa.

The study found that most of the high-risk areas fell along the 6 corridors that have been proposed for the project, study co-author Yiming Li, a professor of animal ecology and conservation biology at the Chinese Academy of Sciences, said in an email to Axios.

Some of the species used in the study include:

The African clawed frog, or Xenopus laevis, which is an invasive species that destroys native populations of frogs.European starlings, or Sturnus vulgaris, which can damage crops and compete with native species for food.

The ship rat, or Rattus rattus, which, according to Li, has "directly caused the extinction of many species including birds, small mammals, reptiles, invertebrates, and plants, especially on island ecosystem."

The authors recommend that a fund be established to help countries monitor for the spread of invasive species and to combat them, Li said.

What they're saying:

"A major weakness of this approach, which the authors acknowledge, is that it is necessarily based on existing trade and transport data... Since a major aim of the BRI is to boost trade on existing routes and forge new ones, it seems likely that this study significantly underestimates the potential risks."

— Richard Corlett, research professor at the Chinese Academy of Sciences, who was not involved in the new study

"This study reveals a potentially massive hidden cost of the Belt & Road—one that’s received almost no attention. In that sense it’s an unusually valuable analysis."

— Bill Laurence, a distinguished research professor at James Cook University in Australia, who was not involved in the new study

Laurence recommends a bolder approach to combating invasive species along the BRI corridors, noting that invasive species cost trillions in damage worldwide per year.

He dismissed the idea of a fund to fight the invasive species, saying it would be "like treating cancer with a band-aid." The better solution, he said, is to limit human access in the first place: "That’s the only thing that really works."

Go deeper:

The staggering scale of China's Belt and Road InitiativeThe climate stakes of China's Belt and Road InitiativeChina's Belt and Road Initiative strays from course

Huawei overseas troubles are mounting

AXIOS CHINA Bill Bishop

Speaking of Huawei, the company's position in Europe may have just gotten more complicated.

What's new: The Polish espionage case centered around now fired Huawei employee Wang Weijing could lead to a rethink of Huawei's European marketshare. The Wall Street Journal reports:

Part of the investigation — which officials said Poland is coordinating with the U.S. — involves events at the country’s elite Military University of Technology, whose graduates often go on to take sensitive security and military jobs..

Mr. Wang had visited the university in conjunction with a contest run by Huawei called “Seeds of the Future,” according to the university. In recent years, students there have been among the winners of the contest, which offers all-expenses-paid trips to China, including a week at company headquarters in Shenzhen.

Quick take: The Poland case may be a useful lever for the U.S. to convince European countries they need to "de-Huawei," as WSJ points out here...

Senior U.S. officials say they are exploring how to roll back the deep involvement of Chinese companies such as Huawei in the economies and infrastructure of Poland and other European countries.

“We are figuring out how to deal with that,” said a senior U.S. official with detailed knowledge of the region. The broader telecommunications infrastructure is at risk “now that some countries have been infected.”

The big question: Is this U.S. exploration of "roll back" unfair? Joe Tsai, executive vice chairman of Alibaba, told a Reuters event in Hong Kong that it is...

I think what the American government and together with the Five Eyes Alliance — what they’re trying to do with Huawei — is a bit unfair, there’s definitely a political agenda behind it."

My thought bubble: It does not matter if some people think what is happening to Huawei is "unfair" and part of an "political agenda." The tide has turned against Huawei amongst most key U.S. allies.

Go deeper:

U.S. Believes It Doesn’t Need to Show ‘Proof’ Huawei Is a Spy Threat (WSJ)U.S. universities unplug from China's Huawei under pressure from Trump(Reuters)

French diplomat: Spies gonna spy – there aren't any magical cyberspace laws that can prevent it

https://www.theregister.co.uk/2019/01/22/countries_spy_regardless_global_cybersecurity_regulation/



Pragmatic chap looks at reality of international relations

By Gareth Corfield in Lille, France22 Jan 2019 at 17:30

FIC2019 A French diplomat has suggested that future global regulation of cyberspace could exempt spying from regulation "as long as some specific sectors are preserved".

Although he prefaced his comments by saying "I speak on my behalf, not for France," Jean Heilbronn went on to tell an audience at French infosec conference FIC2019: "I don't think we need a new global agreement to stabilise cyberspace."

Heilbronn – a diplomat whose background includes posts as a political advisor to the French Ministry of Defence and at NATO, as well as a period spent studying at the London School of Economics – spoke during a panel discussion at the Forum Internationale de Cybersécurité titled: "Which form of multilateral regulation can lead to a safe and stable cyberspace?"

"We already have rules in international law with the UN Charter which prevents restrictions on the use of force," said Heilbronn through a translator, though later in the talk he switched to fluent English. "That also applies to cyberspace... let's be careful with this notion."

He continued: "What matters is that states have to respect some lines and shouldn't cross some red lines. States spying on each other? That's normal. We should not normally prevent this. If we have a ban [on spying] then we need to check that the ban is not breached. There would be no consensus on how to punish a ban. Let's not get into negotiations we would lose."

After the panel session, he clarified his remarks to The Register by saying that states are always going to engage in espionage, something that is not actually illegal under international law, and that recognising these types of grey areas is vital in diplomacy. Spying for the purpose of gaining industrial advantage (IP theft) was one example he gave of an unacceptable use of spying. During his talk he boiled down the problem of cyberspace regulation to one of crisis prevention, crisis management and international regulation "as a lawmaking activity" intended to create "new standards [and] new behaviours".

Heilbronn's fellow panelists were broadly of the view that current international bodies are good enough to regulate cyberspace, insofar as it needs regulating to help prevent potentially warlike escalations of force arising out of nation-state-level hacks. They also thought that the world could do this without needing dedicated new cyber multinational bodies.

Michael Daniel of the Cyber Threat Alliance, a former advisor to past American president Barack Obama, characterised cyberspace regulation as "not just a technological problem but also a physical problem, an economic problem... and an international relations problem".

"Cyberspace is relatively young," said Daniel, contrasting it with how international treaties on maritime borders and commerce evolved over centuries. "In the US the [world wide web] is barely able to drink."

Frédérick Douzet, a member of the Global Commission for Stability in Cybersecurity, gloomily opened with: "We really believe that cyberspace stability is at risk, international security and peace is also at risk," He qualifyed that by saying it was "because of a broader geopolitical context that shows a lot of tension right now".

"There is a strong incentive to find a way to regulate this space to avoid a major catastrophe," she added, pointing out that nation states' tools (such as the NSA's Eternalblue) have a nasty habit of leaking into the public domain, with elements ending up in malware such as WannaCry and NotPetya.

"10 years ago," mused Daniel, "we'd have been talking about website defacements. When was the last time we talked about website defacement as a problem? Now we're talking about NotPetya as a problem." ®

European Innovation Partnerships: How Successful Have They Been in Promoting Innovation in the EU?

European Innovation Partnerships: How Successful Have They Been in Promoting Innovation in the EU?

publication_icon

Rumen Dobrinsky

wiiw Research Report No. 438, January 2019 
33 pages including 2 Tables and 1 Figure

FREE DOWNLOAD

The paper presents an analytical assessment of the implementation of European Innovation Partnerships (EIPs) launched as one of the commitments of the EU Flagship Initiative Innovation Union with the aim to achieve innovative breakthroughs addressing major societal challenges. The EU launched five EIPs to address important societal challenges: (1) Active & Healthy Ageing; (2) Water; (3) Agricultural Productivity and Sustainability; (4) Raw Materials; and (5) Smart Cities and Communities.

The paper reviews the rationale of introducing the EIPs as a policy intervention aimed at promoting innovation in the EU and traces the organic evolution and governance structures of the newly emerging formations. It then provides an analytical evaluation of this EU policy initiative based on factual analysis of its implementation experiences and a comparison of its objectives and actual outcomes. In particular, the paper analyses the role of the EIPs as drivers of systemic change in the European innovation ecosystem and catalysts of new innovation activity in Europe.

This critical assessment serves as the basis for drawing some conclusions about the strengths and weaknesses of the EIPs as a new policy approach to foster innovation activity in Europe. One central conclusion is that while the EIPs have been very efficient in promoting collaboration among innovation stakeholders they have fallen short of breeding innovation activity of the expected scope and scale. The paper analyses the reasons for this weakness and formulates some recommendations that could serve as possible remedies.

 

Huawei claps back at Western backlash with 5G launches


Huawei announced a new series of 5G-ready products yesterday, including a core chipset, modem, and smartphone.

The announcement follows closely on the heels of Huawei Deputy Chairman Hu Houkun’s boasts about the company’s 5G superiority at Davos (see Wednesday’s Tip Sheet).

Why it matters: There are two legs to the 5G race.

🔷Mobile carriers need to lay the infrastructure (antennas and cell towers) to support the new networks.

🔷And manufacturers must simultaneously launch consumer electronics that can connect to those networks.

The bigger picture: China is now almost wholly dependent on foreign chipsets. And that makes leaders nervous, especially given a series of actions by foreign governments to limit the ability of Huawei and ZTE to operate internationally and acquire Western technology.

That’s why the country is rushing to build its own capabilities (Nikkei):“To address this risk, President Xi Jinping aims to increase China's semiconductor self-sufficiency to 40% in 2020 and 70% in 2025 as part of his ‘Made in China 2025’ initiative to modernize domestic industry.”

Get smart: The 5G race is about more than technological competition. It’s about China thumbing its nose at US attempts to slow its growth.
 

READ MORE
Nikkei: Huawei unveils speedy 5G chipset in step to self-sufficiency

What Xi’s dream city will look like in 2050

TRIVIUM CHINA

The Xiong’an reform document (see last entry) describes what the city should look like in 2050.

The Party will be omnipresent:

“Wherever the new area expands, Party organizations will be there.”But the government will keep a low profile:“To the greatest extent possible, [we should] reduce government allocation of market resources and direct government intervention in market activities.”The city will be a hub for foreign investment:“[We will] establish a system that is in line with international trade and investment rules.”“Supportive fiscal, science and technology, and financial policies…will apply equally to domestic and foreign-funded enterprises.”Most housing will be publicly owned:“Individual’s homes will primarily be shared ownership [i.e. by government and individuals].”The city will be data-driven:“We will] exploring the establishment of an integrated smart city management mode'."And green:“[We will] explore including resource consumption, environmental damage, and ecological damage in the calculation of development costs.”

Get smart: Xi wants to build his dream city from scratch. But that will take a long time. Will Xi's successor(s) (he can't live forever!) carry out his vision?

READ MORE

Gov.cn: 中共中央 国务院关于支持河北雄安新区全面深化改革和扩大开放的指导意见

January 24, 2019

Gwadar, betting on globalization



In early 2019, several states in Middle East announced their interest in the port of Gwadar in Pakistan. The port of Gwadar is the flagship project of  China-Pakistan Economic Corridor (CPEC). With the opening of the CECP to the rest of the world, the port of Gwadar is likely to become a major hub connecting China, South Asia, the Middle East and Africa.

A strategic port for Pakistan and China

It was not until 2007 that the deepwater port of Gwadar was inaugurated by President Musharraf. Built with technical and financial support from China, the development of Gwadar Port became China Pakistan Economic Corridor’s main of project in 2015. One of the aims of China is to create a new route linking its western provinces to the sea of Oman; this ambition involves the modernization of the Karakoram road, the development of new infrastructure in Pakistan and finally the construction of a major port, that of Gwadar.
This strategic function is not really new. It must be remembered that until 1954, the port of Gwadar was under the sovereignty of the Sultanate of Oman.
The Omani presence in Gwadar dates back to 1784 to Sultan bin Ahmad. At the beginning of the 20th century, the British Raj proposed to purchase Gwadar to Oman, but negotiations did not succeed. British demands became more urgent after explorations for oil deposits near Gwadar were made, and the then Omani Sultan would have been willing to accept the British offer in exchange for a military support against rebel movements.
Negotiations resumed in 1939, still without results. It was only after the Second World War that the question of Gwadar resurfaced. After the partition of India in 1947, Gwadar was led by an Indian administrator on behalf of the Sultan of Oman. Faced with growing tensions with the new Pakistani state hoping to recover the port of Gwadar (in 1954, a Pakistan report noted the strategic aspect of Gwadar), and because of the good relations that maintained the sultanate with New Delhi, the Sultanate offered Gwadar not to Pakistan but to India, but New Delhi refused. In 1958, Oman sold the port of Gwadar to Pakistan for $3 millions; Gwadar then was part of Baluchistan province.
The port of Gwadar stayed away from the hustle and bustle of the world and was home to a few fishing villages, so it was not until the 8th Five-Year Plan in 1993 that Pakistan considered the development of Gwadar Harbor. After the collapse of the Soviet empire, Pakistan hoped to turn this port into a commercial and energy hub for the newly-landlocked Central Asian republics. But the civil war in Afghanistan (1992-1996), then the Taliban regime (1996-2001) and finally the second war of Afghanistan from 2001 put an end, for a time, to the dreams of connections with the Central Asia. But at the same time, China was looking for alternatives to the Melaka Straits and helped Islamabad to develop Gwadar.

Chinese investment in Gwadar

China is expected to invest nearly $ 54 billion in CPEV, and since 2015 Gwadar has become a priority for Chinese investment in the region. One of the goals of Beijing is to develop the port, which will be managed by China Overseas Port Holding for forty years, and to create special economic zones that will house factories, logistics companies, hotels …
It’s really about building a new city. China will build a hospital, but also some educational centers.
With 70,000 inhabitants in 2015, Gwadar may be home to two million inhabitants by 2030

An international hub

At the center of Chinese attention in the region, the port of Gwadar is becoming a global hub. The case of Gwadar shows us how the” Belt and Road Initiative” should work. The BRI has for main objective to create the conditions for development, and should in no way be considered as a only-Chinese project. In September 2018, Pakistan and China announced the opening of the CECP to third countries.
Chinese infrastructure and investment in Gwadar make the city more attractive for all investors, especially those from Middle East, who are the first ones to have shown interest in this Pakistani port.
The main investor would be Saudi Arabia, which is expected to build a refinery in Gwadar and thus make Gwadar a major center for energy in the region. The contract is expected to be signed in February, on Prince Prince Mohammad bin Salman’s next visit to Pakistan. Ryad is also expected to announce other projects in Gwadar.The construction of the new Gwadar airport, which is expected to be the largest in the country, will start this year. It is funded in part by the Sultanate of Oman.
Qatar, which faces the hostility of Ryad, is also thinking of developing projects in Gwadar in the agri-food and gas sectors.
It can be seen that the CECP and the first Chinese investment in Gwadar will help make all the future projects in Gwadar more viable

The challenges of Gwadar

To achieve its ambitions, the port of Gwadar faces many challenges. One of them is fresh water supply and power shortage. Until now, Gwadar is not connected to the national grid and relies on electricity supplies from neighboring Iran. But, major investment will quickly resolve this issue and boost activities in this port. After several years of delay, this summer, the central government and Baluchistan authorities confirmed the construction by China Power Company of a 300-megawatt coal-fired power plant. In January 2018, a desalination plant was inaugurated to meet the growing needs of the inhabitants of Gwadar. There is no doubt that other investment of this type will have to be made.
The second major challenge facing Gwadar is the integration and empowerment of the local population. The Balochistan province where Gwadar is located is one of the poorest in the country and suffers from some separatist tensions. Projects in Gwadar will need to be accompanied by social initiatives, so that people benefit from the CECP and work on the new Gwadar sites. It should be noted that this social dimension is taken into account by the Chinese and Pakistani authorities. According to China Power Company, the poorest residents of Gwadar and its surrounding areas should benefit from free electricity to help them out of poverty. According to a Pakistan study, the development of Gwadar port and all CECP projects are expected to create nearly 700,000 direct jobs by 2030

And Europe?

To date, the European states do not have defined strategies regarding the development of the port of Gwadar. However, Gwadar could gradually become more visible from the European authorities.
OBOreurope and the Cooperans, however, are encouraging all European companies to take an interest in this new port, which may become a new Dubai. Although Pakistan unfortunately faces terrorism risks, the country has many assets to attract foreign investors. Modern infrastructure construction and the development of the port of Gwadar will create new opportunities for European companies.



https://www.oboreurope.com/en/gwadar-globalization/

Swedish defense agency raises concerns over Chinese satellite station in polar region

MERC.ORG

Scientists at the Swedish defense ministry have warned that a Chinese satellite station located in Kiruna in northern Sweden could potentially be used by the Chinese military for spying and surveillance purposes. The accusations triggered an angry response from the Chinese embassy in Stockholm, calling the remarks “irresponsible” and “hyped up fabrications”.

The station, officially known as the China Remote Sensing Satellite North Polar Ground Station, was built by China in 2016 and is run by the Institute of Remote Sensing and Digital Earth (RADI), which is part of the Chinese Academy of Sciences. According to the scientists from the Swedish Defense Research Agency, under the Ministry of Defense, “China could be using the station – which relays images of the arctic regions – to complement military intelligence or provide additional military satellite surveillance should Chinese military satellites be disabled in a time of war.”

While the Kiruna station was built for civilian use, the boundaries between the Chinese military and the civilian sector are not clearly defined. Furthermore, Chinese plans for military-civilian integration do raise questions whether satellite stations like the one in Sweden could indeed be used for surveillance purposes. But the warnings by the Swedish scientists are also part of a wider debate in Sweden on China’s growing influence and come amid a diplomatic row that has marred bilateral relations. The Swedish government has repeatedly voiced concerns regarding China’s human rights situation after the arrest of Chinese-born Swedish bookseller Gui Minhai in China about a year ago. Beijing, for its part, complained about the treatment of some Chinese tourists in Sweden and even issued a travel warning, which the authorities renewed last December.

January 23, 2019

Uyghur Intellectual: A Death Sentence For a Life of Service



Posted by Amy Anderson

Note: This article written by Amy Anderson is based on interviews with Tashpolat Tiyip’s friends, students and relatives. Their identities cannot be revealed due to obvious reasons. 

Sometime after he disappeared in 2017,  Tashpolat Tiyip, the president of Xinjiang University, was sentenced to death in a secret trial.  The Chinese state has provided no justification for this horrifying violation of human rights. Like hundreds of other Uyghur intellectuals, it has simply taken his life away. Drawing on interviews with Tiyip’s students and relatives, this article tells the story of his life and demonstrates the grotesque absurdity of the Chinese totalitarian state. A man who has dedicated his life to furthering the vision of the state and his people appears to have been sentenced to death for this effort.

A Geographer with a Dream

Tashpolat Tiyip, born in 1958, came of age during the infamous Cultural Revolution during his teenage years. Upon his graduation from high school in 1975, he was asked to join the “Down to the Countryside Movement” and worked as a Red October tractor driver in the fields of Nilka County, in Ili Prefecture.  After six months of saving his salary he was able to buy an Uyghur-Chinese dictionary. According to one of his relatives, every evening he would memorize at least 50 new Chinese words, which he would repeat over and over again while he was driving the tractor in the field from dawn to dusk.  His favorite thing to do after work was to sit beside the Ili River. From a young age he dreamed of becoming a geographer and exploring the physical landscape of the Uyghur homeland. He had faith in a better future as he studied Chinese and enjoyed the sunset over the Heavenly Mountains.

In 1977, the Chinese state declared that the human catastrophe of the past 10 years was the fault of the “Gang of Four” and the revolution was now over. Many of the youth returned from the villages to their home cities and were given an opportunity to take the national college entrance exam. Tiyip loved the landscape of the Uyghur homeland: the mountains, grasslands, rivers and streams. According to his students, he thought often about the land he had cultivated. He deeply appreciated the dry, bare, sandy, salty environment that generations of indigenous people had cultivated through hard work and, through this, built deep roots. The land was filled with stone, mountains and heat. It was the land where Uyghur ancestors had lived. The farmers he had met had dedicated their whole lives to make a living from it.

As one of his relatives said, recounting the story of his life, Tiyip was thrilled to take the first national college entrance exam after the ten years of chaos, and received an offer to study Sports Education. Although his family and friends encouraged him to pursue this career as he was a talented athlete, he knew he wanted to be a geographer and help his community by learning from scientific advances in water management and agronomy. He spent the next year studying even harder and through this became fluent in Chinese.  In 1978 he passed the exam with flying colors and was able to find a place in his dream major in the Geography Department at Xinjiang University.

Tashpolat Tiyip guiding fieldwork in Qaghaliq County (Source)

Saving River Ecology and Improving Soil Fertility

Following his graduation in 1983, Tiyip started his teaching career at his alma mater, the Department of Geography at Xinjiang University. He was deeply  engaged in his research, and began experimenting with the soil in his own front yard. Every summer and winter break he went to do fieldwork throughout the Uyghur homeland, something he continued for 35 years. His goal was to understand and maintain the river ecology and soil by applying remote sensor technology and other systems. In order to formally pursue this passion, he enrolled in a graduate program at the Tokyo University of Science in 1988. When he left, his only daughter was just four years old. According to a friend, her picture was always in his wallet.

One of Tashpolat Tiyip’s key publications: Research in Theory and Management of Ecological Environment Regulation in Arid Areas.

As one of his relatives put it, during his time in Japan Tiyip often slept just 4 hours a day in order to focus on his studies. He was not only studying a wide range of professional subjects and conducting his experiments in order to complete Master’s and Ph.D. degrees in the shortest time possible, but also learning Japanese and English in order to gain access to a broader range of research materials. Astonishingly, he finished all of these requirements in four years and earned a Doctorate of Engineering in Applied Geography. By 1992, he became the first Uyghur to earn a Ph.D. in geography in Xinjiang. In a published interview from 2011 he said: “mountains, lakes, deserts and oasis coexist in Xinjiang. The land is abundant with oil, coal, copper and other rare metals. It is a paradise for environmental research. My entire career was contained in Xinjiang.” Continuing he said that while some of his cohort of fellow international students chose to stay in Japan, he was eager to come back, be with his family and continue his research in the land he loves.

Since 1992, he has led more than 17 national and international research projects, published 5 books and more than 200 scholarly articles. His research has primarily focused on ever-fast desertification of Xinjiang ecology, specifically the reasons for the increasing levels of salinity in the soil, the destruction of river ecology and the shrinking of water resources. His publications on a remote sensing assessment of the imapact ofsalinization, environmental changes and human activities in the Taklimakan Desert were published in a number of different languages and received international acknowledgment. His work was particularly important in understanding the degradation of the Tarim River, Kucha River, Ebinur Lake, the essential water sources of the Tarim Basin, and community adaptation to these ecological change. Through their research Tiyip and his students attempted to bolster the sustainability of local communities who were suffering from environmental degradation.

Tashpolat Tiyip accepting an award from the president of Turkmenistan, Gurbanguly Berdimuhamedow, for his work to promote international literature and exchange. (Source)

A Legacy of Collegial Leadership

As Tiyip rose in leadership at Xinjiang University, his support for collaboration began to stand out.  He took up the responsibilities as chair of the Geography Department soon after he came back from Japan in 1993. Given his track record of research and leadership in the Geography Department, in 1996 he was promoted to vice president of Xinjiang University a position he held for 14 years. Based on his excellent performance both in academics and administration, in 2010 he was promoted to the President and Vice Secretary of the Communist Party of Xinjiang University. Until his arbitrary detention at the Beijing airport on his way to a conference in Germany in late March 2017, he was widely praised for his contribution to the development of the university.

Tiyip built a close relationship with more than 50 universities in 20 countries, including Japan, France,TurkeyKyrgyzstan, Kazakhstan, and Turkmenistan. He received an honorary doctoral degree from the French Ecole Pratique des Hautes Etudes (EPHE) in 2008, in honor of his work on the environment in arid zones using satellite remote sensing. The Chinese state media published articles praising him as a model minority leader. Articles with titles such as “From a Tractor Driver to Doctor of Paris University”, stated that his honorary degree was “not only an honor for Tashpolat Tiyip, but also for Xinjiang University.” He built even closer relationships with high-ranking universities in first-tier cities in China, such as Tsinghua University, and created fellowship programs for minority graduate students from Xinjiang at these institutions. He hoped these academic collaborations would increase the education quality of Xinjiang and contribute to it’s the development and sustainability.

Tashpolat Tiyip in Paris, during a ceremony to receive an honorary doctorate from the Sorbonne in November 2008. (Source)

Like many great leaders Tiyip is charismatic, funny, and smart. He is particularly known for his attention to detail. Many of his students that I spoke with admired how he balanced the administrative work and political duty so well, while at the same time continuing his research scholarship. His special attention to his graduate students made him one of the best advisors at the school, regardless of whether they were Han-Chinese, Uyghur, Kazakh, they worked together with a collegiality that centered on their shared love of geography. When Xinjiang officials first started the “Becoming Family” campaign, which placed mostly Han civil servants in the homes of rural Uyghur farmers, Tiyip stated  that he believed it was a good policy that would create connections between elites and villagers. According to one of his students, since he was also born and raised in a rural farming family, and he had done in-depth fieldwork throughout the years with farmer communities, he genuinely enjoyed visiting and talking to the elders. In some of his research, he collaborated with the folklorist Rahile Dawut to integrate scientific data with Uyghur traditional ecological knowledge in order to better understand the cause and solution for the desertification of ecology in the Tarim Basin.

Tashpolat Tiyip with a farmer who he met through his fieldwork in rural desert locations.

Being Labeled “Two Faced”

From the perspective of his students, Tiyip  has been a deeply caring mentor. From the perspective of his colleagues, Tiyip has been a wise leader. From the perspective of his family, he has been a devoted father and loving husband. Tiyip’s wife, his partner for 36 years, Venira, is a professor of information technology. She was also a collaborator on a number of his research projects.  From the perspective of his daughter, Tiyip’s only child, he has been and always will be her greatest hero.  According to those who are close to her, she was deeply influenced by her father’s passion for geography. She also pursued a career in the same discipline, earned a doctoral degree and became her father’s colleague. For years, their annual family vacation was fieldwork in the heart of the Taklimakan Desert, carrying sensor technology equipment, setting up their tents, building a fire, sharing knowledge and laughter.

When those that were close to him heard that he had been taken away on charges of being a “two faced” person, they were dumbfounded. The question that was on all of their minds was: “Why was he taken? Where was his ‘other’ face?”  Many people whom I interviewed for this article have known him to be a brilliant geographer, an amazing leader and loving father. One person told me that everyday he carved out half an hour from his busy schedule and took his granddaughter to the playground on the Xinjiang University campus. Many people remarked on how much he enjoyed watching his granddaughter play. He told a friend that he had missed his daughter’s precious toddler years while he was studying in Japan, and now he wanted to spend as much time as possible with his granddaughter.

Welcoming remarks at a conference on “Studies of Mazar Cultures on the Silk Road.” From left to right three prominent Uyghur intellectuals who have all been disappeared: Tashpolat Tiyip, Arslan Abdulla & Rahile Dawut. (Source Anonymous)

When I asked interviewees to speculate on Tiyip’s “other face,” no one could explain the logic behind his arbitrary arrest. Instead they repeatedly attested to his character and achievements.

I pressed them further, asking if they could think of anything that may have made him a target. After a long pause, one of his students stated: “the only thing that I can think of is that he used to begin his public statements with a brief greeting in Uyghur language, usually for less than thirty seconds, before he led school meetings in fluent Chinese. Maybe this is why (he was taken).”

As recent reporting has shown, being Uyghur and taking pride in Uyghur language and heritage itself is enough to demonstrate “disloyalty” to the Party. But still, is such “disloyalty” deserving of the death penalty? Articles that praised Tiyip’s achievements are now being systematically deleted from the internet.  His name and legacy are being erased, even from the list of presidents of Xinjiang University. Ironically, Sheng Shicai, the Guomindang leader who ruled Xinjiang from 1933-1944, who was described as one of the most evil traitors by the Communist Party, is still listed as a president of the school from 1942-1944. Yet, there is now no trace of Tashpolat Tiyip’s name.

According to a family friend, Tiyip’s  daughter was diagnosed with thyroid cancer in 2018, at the age of only 34. This life-threatening illness came after her father’s indefinite incarceration and death sentence. Since extreme stress and depression can result in a weakened immune system, it is possible that her health crisis is connected to the ongoing state violence that has shattered her family, and Uyghur society more generally over the past two years.

As I was writing this article and was presented with overwhelming evidence of Tiyip’s moral character,  I could not stop thinking: in what kind of world is a life of service to one’s country and people deserving of a death sentence? Where can justice be found in such a world?

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https://livingotherwise.com/2019/01/22/death-sentence-life-service/

Oxford University’s chancellor warns  of national security risks when academics collaborate with China



It emerged this week that Oxford University has cuts ties with Huawei, the Chinese technology company, amid security concerns

 Camilla Turner, education editor  

Greg Ritchie 

19 JANUARY 2019 • 9:00PM

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Oxford University’s chancellor has warned of national security risks when academics collaborate with China.

Lord Patten, who was the last British governor of Hong Kong, said there should be a point of contact in the Government for universities chiefs to turn to if they are concerned about a particular project.

Joint academic research projects in the field of humanities as well as the sciences could be pose security risks, he added.

“If the Government has anxieties about a company, then it should be possible for a university – if it is being offered research collaboration with that company – to ask somewhere in Government what’s happening,” Lord Patten told the foreign affairs select committee.

“I think the more we talk about this – as the Australians, the New Zealanders, the Canadians, and the Americans are – the more we talk about it and the more we’re grown up about it, first of all the more likely we are to get things right and pick up things like intellectual property theft and problems of security.”

Lord Patten, a cross-bench peer and former chair of the Conservative Party, said it would be “astonishing” if China was not exercising soft coercion on academics and students in the West, by funding or collaborating on research.

It emerged this week that Oxford University has cuts ties with Huawei, the Chinese technology company, amid security concerns.

An email sent to computer science doctoral students at the university warned students not to pass sensitive information to Huawei employees. The university said that it has decided not “pursue new funding opportunities” with Huawei Technologies Co Ltd or its related companies.

Huawei has faced criticism from intelligence agencies around the world

Huawei has faced criticism from intelligence agencies around the world over its close links to the Chinese government. The company has regularly denied any suggestions that its technology could be used for espionage.

Lord Patten told MPs of a case where a university was asked to work on a humanities research project along with a consortium of other British and Chinese universities.

“You discover that there are some issues that are clearly going to be off-bounds, or you discover that the whole thing is being run not by an academic in the humanities but a Chinese engineer who happens to be….rather senior in the Communist party,” he said.

“And if you discover you’re being shut out of some meetings that only the Chinese are going to, then you’ve got a right to be suspicious.”

Lord Patten was the last British governor of Hong Kong

He said that Confucius institutes - Chinese government funded cultural centres attached to British universities - and their activities “raise some issues” since they are  “by-and-large an offshoot of the propaganda department of the Communist Party”.

He went on: “If the Confucian  Institute is working on a university campus as a contributor to Chinese language instruction, to understanding about the spectacular Chinese civilisation, that is fine. If it’s trying to shape the curriculum, if it’s trying to shape students’ attitude to Tibet or Xinjan or free speech or other issues like that, then it’s not acceptable.”

Lord Patten said that all British universities should take these issues seriously, adding: “It is simply craven to argue you can’t raise this or that issue or that because it will annoy [China] and you won’t do as much business.”

Last month, MPs urged British universities to exercise "extreme caution" accepting money from Huawei, amid growing international concern about the security threat posed by the controversial Chinese telecom company.

Huawei, the world's biggest telecom equipment manufacturer, has agreed to pour at least £6m into UK universities including Cambridge, Oxford, Manchester and York despite warnings from intelligence agencies around the world over potential security risks posed by the company’s technology.






https://www.telegraph.co.uk/education/2019/01/19/oxford-universitys-chancellor-warns-national-security-riskswhen/

The Indo-Pacific Initiative: Opportunities for European and UK Engagement

EVENT

Date:  08 February 2019, 0930 
Venue: Royal United Services Institute, Whitehall, London

RegisterThis conference aims to expand the understanding of what Japan’s Indo-Pacific Initiative is and how it is viewed in Europe and the Indo-Pacific region.

Japan’s Free and Open Indo-Pacific Initiative views the Indian Ocean and the Pacific Ocean as a single maritime theatre, and seeks to promote stability and prosperity in the region through enhancing connectivity between Africa and Asia.

The security challenges present in the region, such as promoting non-proliferation, stemming climate change and combatting terrorism, transcend national boundaries and require a global response. Japanese Foreign Minister Taro Kono has suggested that Europe could have a collaborative role in the Indo-Pacific, particularly highlighting the UK and France.

As the world’s largest trading bloc and one of Asia’s top trading partners, the European Union has an interest in the economic growth and stability of the Indo-Pacific and the rules that govern it. However, it is less clear how the EU and European countries view the initiative and their potential role in it.

This conference aims to expand the understanding of what Japan’s Indo-Pacific Initiative is and how it is viewed in Europe and the Indo-Pacific region. Furthermore it will seek to explore what the opportunities for engagement are for European countries and the UK with Brexit on the horizon.

Conference speakers include:
 

H.E. Ambassador Koji Tsuruoka, Embassy of Japan in the United KingdomDarshana Baruah, Associate Director, Carnegie India

Dr. Yuka Kobayashi, Assistant Professor in China and International Politics, SOAS

Cleo Paskal, Associate Fellow, Asia-Pacific Programme

Prof. Satoru Mori, Department of Global Politics, Hosei University

Celine Pajon, Head of Japan Research, Center for Asian Studies, IFRI

Garima Mohan, Research Fellow, Global Public Policy Institute

Eva Pejsova, Senior Analyst, European Union Institute for Security Studies

Veerle Nouwens, Research Fellow, RUSI

Prof. Tsuneo Watanabe, Senior Fellow, Sasakawa Peace Foundation

Dr. Alessio Patalano, Senior Lecturer, King’s College London

For more information click here or for further queries please contact Jeremy Wimble, JeremyW@rusi.org

THE "DARK SIDE" OF DIGITAL DIPLOMACY


Jan 22, 2019
by
Corneliu Bjola

Like many other technologies, digital platforms come with a dual-use challenge that is, they can be used for peace or war, for good or evil, for offense or defense.

The same tools that allow ministries of foreign affairs and embassies to reach out to millions of people and build “digital” bridges with online publics with the purpose to enhance international collaboration, improve diaspora engagement, stimulate trade relations, or manage international crises, can be also used as a form of “sharp power” to “pierce, penetrate or perforate the political and information environments in the targeted countries,” and in so doing to undermine the political and social fabric of these countries.

The “dark side” of digital diplomacy, by which I refer to the strategic use of digital technologies as tools to counter disinformation and propaganda by governments and non-state actors in pursuit of strategic interests, has expanded in the recent years to the point that it has started to have serious implications for the global order.

For example, more than 150 million Americans were exposed to the Russian disinformation campaign prior to the 2016 presidential election, which was almost eight times more the number of people who watched the evening news broadcasts of ABC, CBS, NBC and Fox stations in 2016. A recent report prepared for the U.S. Senate has found that Russia’s disinformation campaign around the 2016 election used every major social media platform to deliver words, images and videos tailored to voters’ interests to help elect President Trump, and allegedly worked even harder to support him while in office. Russian disinformation campaigns have also been highly active in Europe, primarily by seeking to amplify social tensions in various countries, especially in situations of intense political polarization, such as during the Brexit referendum, the Catalonian separatist vote, or the more recent gilets jaunes” protests in France.

For resource-strapped governmental institutions, especially embassies, this is clearly a major problem, as with a few exceptions, many simply do not simply have the necessary capabilities to react to, let alone anticipate and pre-emptively contain a disinformation campaign before it reaches them.

Worryingly, the Russian strategy and tactics of influencing politics in Western countries by unleashing the “firehose of falsehoods” of online disinformation, fake news, trolling, and conspiracy theories, has started to be imitated by other (semi)authoritarian countries, such as Iran, Saudi Arabia, Philippines, North Korea, China, a development which is likely to drive more and more governments to step up their law enforcement efforts and digital counter-strategies to protect themselves against the “dark side” of digital diplomacy.

For resource-strapped governmental institutions, especially embassies, this is clearly a major problem, as with a few exceptions, many simply do not simply have the necessary capabilities to react to, let alone anticipate and pre-emptively contain a disinformation campaign before it reaches them. To help embassies cope with this problem, this contribution reviews five different tactics that digital diplomats could use separately or in combination to counter digital disinformation and discusses the possible limitations these tactics may face in practice.

Five counter-disinformation tactics for diplomats:

Tactic #1: Ignoring

Ignoring trolling and disinformation is oftentimes the default option for digital diplomats working in embassies and for good reasons.

The tactic can keep the discussion focused on the key message, it may prevent escalation by denying trolls the attention they crave, it can deprive controversial issues of the “oxygen of publicity,” and it may serve to psychologically protect digital diplomats from verbal abuse or emotional distress.

The digital team of the current U.S. Ambassador in Russia seems to favor this tactic as they systematically steer away from engaging with their online critics. This approach stands in contrast with the efforts of the former Ambassador, Michael McFaul, who often tried to engage online with his followers and to explain the position of his country on various political issues to Russian audiences, only to be harshly refuted by the Russia Ministry of Foreign Affairs (MFA) or online users.

At the same time, one should be mindful of the fact that the ignore tactic may come at the price of letting misleading statements go unchallenged, indirectly encouraging more trolling due to the perceived display of passivity and of missing the opportunity to confront a particular damaging story in its nascent phase, before it may grow into a full-scale, viral phenomenon with potentially serious diplomatic ramifications.

Tactic #2: Debunking

In the post-truth era, fact-checking is “the new black” as the manager of the American Press Institute’s accountability and fact-checking program neatly described it.

Faced with an avalanche of misleading statements, mistruths and ‘fake news’ often disseminated by people in position of authority, diplomats, journalists and the general public require access to accurate information in order to be able to take reliable decisions. It makes thus sense for embassies and MFAs to seek to correct false or misleading statements and to use factual evidence to protect themselves and the policies they support from deliberate and toxic distortions. The #EuropeUnited campaign launched by the German MFA in June 2018 in response to the rise of nationalism, populism and chauvinism, is supposed to do exactly that: to correct misperceptions and falsehoods spread online about Europe by presenting verifiable information about what European citizens have accomplished together as members of the European Union.

The key question, however, is whether fact-checking actually works and if so, under what conditions?

Research shows that misperceptions are widespread, that elites and the media play a key role in promoting these false and unsupported beliefs, and that false information actually outperforms true information. Providing people with sources that share their point of view, introducing facts via well-crafted visuals, and offering an alternate narrative rather than a simple refutation may help dilute the effect of disinformation, alas not eliminate it completely.

While real-time fact checks can reduce the potential for falsehoods to “stick” to the public agenda and go viral, direct factual contradictions may actually strengthen ideologically grounded beliefs as disinformation may make those exposed to it extract certain emotional benefits. This is why using emotions in addition to facts may prove a more effective solution for countering online disinformation, although the right format of fact-based emotional framing arguably varies with the context of the case and the profile of the audience.

Tactic #3: Turning the tables

The jiu-jitsu principle of turning the opponent's strength into a weakness may also work well when applied to the case of counter-disinformation strategies.

The use of humor in general, and of sarcasm in particular, could be reasonably effective for enhancing the reach of the message, deflecting challenges to ones’ narrative without alienating the audience, avoiding emotional escalation, and undermining the credibility of the source.

The case of the Israeli embassy in the U.S. using a “Mean Girls” meme in June 2018 to confront Ayatollah Ali Khamenei’s hateful tweet about Israel being a “malignant cancerous tumor” that “has to be removed and eradicated” is instructive: it was widely shared and praised on social media and proved effective in calling attention to Israel’s plea for a harsher international stance towards Iran.

On a slightly different note, the sarcastic tweet of the joint delegation of Canada at NATO in Aug 2014 poking fun at the statements of the Russian government about is troops entering Crimea by “mistake,” showcased Canada’s commitment to European security and the NATO alliance and further undermined the credibility of Kremlin in the eyes of the Western public opinion.

While memetic engagement is attracting growing attention as a possible tool for countering state and non-state actors in the online information environment, one should also bear in mind the potential risks and limitations associated with this tactic. It is important, for instance, to understand well the audience, not only for increasing the effectiveness of the memetic campaign, but more critically for avoiding embarrassing situations when the appeal to humor may fall flat or even backfire, thus undermining one’s own narrative and standing. The overuse of memes and humor may also work against public expectations of diplomatic conduct, which generally revolve around associations with requirements of decorum, sobriety and gravitas. Most importantly, memetic engagement should not be conducted loosely, for entertaining the audience, but with some clear objectives in mind about how to enhance the visibility of your positions or policies and/or undermine those of the opponent.

Tactic #4: Discrediting

A stronger version of the jiu-jitsu principle mentioned above is the tactic of discrediting the opponent. The purpose in this case is not to undermine the credibility of the message, but of the messenger itself so that the audience will come to realize that whatever messages come from a particular source, they cannot be trusted.

This tactic should be considered very carefully, and should be used only in special circumstances, as it would most likely lead to an escalation of the online info dispute and would probably trigger a harsh counter-reaction from the opponent. The way in which this tactic may work is by turning the opponent’s communication style against itself: amplifying contradictions and inconsistencies in his/her message, exposing the pattern of falsehoods disseminated through his/her channels of communication, and maximizing the impact of the counter-narrative via the opponent’s “network of networks.”

Following the failed assassination attempt of Sergei Skripal and his daughter in March 2018, pro-Kremlin accounts on Twitter and Telegram started to promote a series of different conspiracies and competing narratives, attached to various hashtags and social media campaigns, with the goal, as one observer noted, to confuse people, polarize them, and push them further and further away from reality. In response to this, the FCO launched a vigorous campaign in which it took advantage of the Russian attempt to generate confusion about the incident by forcefully making the point that the 20+ different explanations offered by Kremlin and Russian sources, including the story that the assassination might have been connected to Skripal’s mother-in-law, made absolutely no sense and therefore whatever claim Russian sources might make, they could be trusted.

While the campaign proved effective in further undermining the credibility of Kremlin as a trustworthy source and convincing partners to back up U.K.’s position in international fora, it should nevertheless be noted that the bar set by Russian authorities after the invasion of Crimea and the shooting down of MH17 was already low. In addition, while the tactic of discrediting the opponent may work well to contain its influence online, it may do little to deter him/her from engaging in further disinformation as long as the incentives and especially the costs for pursuing this strategy remain unaltered.

Tactic #5: Disrupting

One way in which the costs of engaging in disinformation could be increased is by disrupting the network the opponent uses for disseminating disinformation online.

This would imply the mapping of the network of followers of the opponent, the tracing of the particular patterns by which disinformation is propagated throughout the network, and the identification of the gatekeepers in the network who can facilitate or obstruct the dissemination of disinformation. Once this accomplished, the disruption of the disinformation network could take place by targeting gatekeepers with factual information about the case, encouraging them not to inadvertently promote “fake news” and falsehoods, and in extreme situations by working with representatives of digital platforms to isolate gatekeepers who promote hate and violence.

The Israeli foreign ministry has been one of the MFAs applying this tactic, in this case for stopping the spread of anti-Semitic content. Accordingly, the ministry starts first by identifying gatekeepers and ranking them by their level of online influence. It then begins approaching and engaging with them online, with the purpose of making them aware of the fact that they sit an important junction of hate speech. The ministry then attempts to cultivate relationships with these gatekeepers so that they may refrain from sharing hate content online. In so doing, the ministry can effectively manage to contain or quarantine online hate networks and prevent their malicious content from reaching broader audience.

If properly implemented, this tactic could indeed significantly increase the costs of disseminating disinformation as opponents need to constantly protect and by case to rebuild their network of gatekeepers. They may also have to frequently re-configure the patterns by which they disseminate disinformation to their target audiences. At the same time, this tactic requires specialized skills for successful design and implementation, which might not be available to many embassies or even MFAs.

The process of engineering the disruption of the disinformation network also prompts important ethical questions about how to make sure this tactic is not abused for stifling legitimate criticism of the ministry or the embassy.

Conclusions

As argued elsewhere, digital disinformation against Western societies works by focusing on exploiting differences between EU media systems (strategic asymmetry), targeting disenfranchised or vulnerable audiences (tactical flexibility), and deliberately masking the sources of disinformation (plausible deniability). The five tactics outlined in this paper may help MFAs and embassies better cope with these challenges if applied consistently and with a strategic compass in mind. Most importantly, they need to be carefully adapted to the context of the case in order to avoid unnecessary escalation.

Here are ten questions that may help guide reflection about how to decide what tactic is appropriate to use and in what context:

➡What type of counter-reaction would reflexively serve to maximize the strategic objectives of the opponent?

➡What are the risks of ignoring a trolling attack or disinformation campaign?

➡What type of disinformation has the largest potential to have a negative political impact for the embassy or the MFA?

➡To what extent giving the “oxygen of publicity” to a story will make the counter-reaction more difficult to sustain?

➡What audiences are most open to persuasion via factual information?

➡What audiences are less open to be convinced by facts?

➡What type of emotions resonate with the audience in specific contexts and how to invoke them appropriately as a way of introducing factual information?

➡What type of humor works better with the target audience and how to react to situations when humor is used against you?

➡How best to leverage the contradictions and inconsistencies in the opponent’s message without losing the moral ground?

➡Who are the gatekeepers in the opponent’s network of followers and to what extent can they be convinced to refrain from sharing disinformation online?

➡Under what conditions is reasonable to escalate from low-scale counter-reactions (ignoring, debunking, ‘turning the tables’) to more intense forms of tactical engagement (discrediting, disrupting)?

 

Note from the CPD Blog Manager: This piece was originally published by the Elcano Royal Institute here, where you can find more references to source material referenced throughout the article.

CORNELIU BJOLA

CPD Blog Contributor and Faculty Fellow

Associate Professor in Diplomatic Studies, University of Oxford




https://www.uscpublicdiplomacy.org/blog/dark-side-digital-diplomacy