Indian Strategic Studies: 12/19/22

19 December 2022

A Historical Evaluation of China’s India Policy: Lessons for India-China Relations

VIJAY GOKHALE

The violent clash in the Galwan valley in eastern Ladakh in 2020 fundamentally altered the dynamics of the India-China relationship. China’s increasing transgressions and attempts at coercion in the border areas since 2008–2009 have put the boundary question to the center of the India-China relationship. The salience of this question has also increased because the geopolitical backlash to China’s actions in 2020 has been greater than in previous instances, and because India’s policymakers and strategic community are no longer willing to give Beijing the benefit of the doubt regarding its intentions and actions. This has prompted a comprehensive relook in India at the past, present, and future of the relationship. While much of this has focused on the relationship from the Indian perspective and on trying to understand India’s China policy, the current chill in ties has highlighted the necessity of understanding China’s India policy. Thus, using Chinese sources, this paper analyzes the drivers of that policy and the options available to Indian policymakers to engage with, adapt to, and mold it.

This paper argues that from the time of Mao Zedong’s rise to the helm of the Chinese Communist Party and the founding of the People’s Republic of China in 1949, China’s India policy has been shaped by its view of the larger great power strategic triangle of China, the Soviet Union (later Russia), and the United States. As this triangle has evolved, this has had a direct effect on the India-China relationship. For much of the past seventy years, China was the weakest corner of the triangle and therefore driven by goals of security and status. In that context, it saw India—another large, developing country in Asia—as a competitor for security and status alike. As a result, China always looked at India through the lens of its own relations with the Soviet Union and the United States. It did not view India on its own merits, or credit it with agency, but as unequal as well as untrustworthy. China’s objective during the Cold War was to keep India as neutral as possible. In the post–Cold War period, the goal evolved to limit through containment and coercion India’s capacity to harm China’s strategic goal of hegemony.

Impact of disinformation on democracy in Asia

Jessica Brandt, Maiko Ichihara, Nuurrianti Jalli, Puma Shen, and Aim Sinpeng

An earlier version of Maiko Ichihara’s policy brief included a different screenshot of the most influential Russian accounts on Twitter. This has now been corrected.

THE NATURE OF THE PROBLEM

In Asia and around the world, disinformation campaigns — perpetrated by foreign actors seeking to shore up power at home and weaken their competitors abroad and by domestic actors seeking political advantage — are increasingly putting pressure on democratic societies. This pressure manifests through several pathways.

Senior Lecturer, Department of Government and International Relations - University of SydneyDemocratic societies rest on the idea that the truth is knowable and that citizens can discern and use it to govern themselves. Because disinformation feeds skepticism that there is such a thing as objective truth, it undermines the very foundation of self-government.[1]

A frequent tactic of foreign information manipulation campaigns is to amplify the most extreme views within a target society in order to weaken it from within. Meanwhile, domestic purveyors of disinformation often seek to demonize political opponents for electoral advantage. As a result, disinformation frequently drives polarization, making it harder for democratic societies to govern themselves.

Illiberal governments in particular use information manipulation campaigns to dampen the appeal of democracy. This is especially the case for Beijing-backed information operations targeting democratic societies in Asia. By making democracy less attractive to would-be rights activists, autocrats hope to tighten their grip on power at home.[2] But these activities can also depress support for democracy within target societies.

The 6G showdown with China is coming

Huawei is gearing up its new-generation telecoms technology. Will Ericsson and others be able to compete? ELISABETH BRAWAdd to myFT Huawei has far better technological capabilities than it did when 5G was under development © Jiao Xiaoxiang/VCG/Getty Images The 6G showdown with China is coming on twitter (opens in a new window) The 6G showdown with China is coming on facebook (opens in a new window) The 6G showdown with China is coming on linkedin (opens in a new window) Save current progress 0% Elisabeth Braw NOVEMBER 30 2022 76 Print this page Receive free Technology sector updates We’ll send you a myFT Daily Digest email rounding up the latest Technology sector news every morning. The writer is a fellow at the American Enterprise Institute and adviser to Gallos Technologies Now that 5G, or fifth-generation mobile telephony, is being rolled out across the world, the race for 6G is on. This is not only a contest for technology, but also for geopolitical influence.

China has grown in economic and political strength since the creation of 3G and 4G and its flagship telecoms firm Huawei is now intent on creating world-beating 6G technology. This puts the west at a crossroads: will companies and governments be able to set aside their doctrine of market competition in time to work collectively towards an alternative? The bruising battles of 5G deployment should serve as a cautionary tale. Initially, most western governments leaned towards allowing Huawei to compete for the contracts. But then concerns over the national security implications, led by the US, prompted countries such as the UK, France and Canada to ban or phase out Huawei equipment from their 5G infrastructure. The US has multiple sanctions on Huawei technology and just last week banned the purchase of certain components made by Huawei and the smaller Chinese firm ZTE. China, meanwhile, has retaliated by edging Sweden’s Ericsson out of the country — Huawei and ZTE now completely dominate the domestic market. It seems that the fight over 5G was a precursor to the looming 6G battle. Today, Huawei has far better technological capabilities than it did when 5G was under development.

How to Stop Chinese Coercion

By Victor Cha

It took just seven words for the National Basketball Association to get canceled by Beijing. As pro-democracy protesters swarmed the streets of Hong Kong in October 2019, Daryl Morey, then the general manager of the Houston Rockets, one of the NBA’s 30 teams, posted a simple message to his Twitter account: “Fight for freedom, stand with Hong Kong.” Chinese broadcasters and streamers quickly announced that they would no longer show his team’s games. The league, which has more viewers in China than in the United States, immediately tried to distance itself from Morey’s tweet, writing that the general manager didn’t speak for the NBA and issuing a statement that implicitly rebuked him. That response fostered a backlash among fans outside China and did nothing to please Beijing. A bipartisan collection of U.S. senators blasted the league for not standing by Morey’s freedom of expression while all 11 of the NBA’s Chinese sponsors and partners suspended their cooperation. With a couple of exceptions, China’s broadcasters stopped airing NBA games until March 2022. The league’s commissioner, Adam Silver, estimated that the rupture cost his organization hundreds of millions of dollars.

At first glance, the row between China and the NBA may seem like small potatoes: a tiny example of how the U.S.-Chinese relationship is now more defined by contestation than by close economic partnership. But Beijing’s behavior toward the NBA is emblematic of a much bigger and extremely worrying pattern, and it is one that the Biden administration’s China strategy does not wholly address. Over the last dozen years, Beijing has slapped discriminatory sanctions on trading partners that interact with Taiwan or support democracy in Hong Kong. It has imposed embargoes on and fueled boycotts against countries and companies that speak out against genocide in Xinjiang or repression in Tibet. Indeed, the Chinese Communist Party (CCP) has gone after almost any entity that has crossed China in any way. And this strategy has worked. Because the Chinese economy is so integral to global markets, China’s coercive behavior has caused tens of billions of dollars in damage. The mere threat of Chinese cutoffs is now prompting states and businesses to stay quiet about Beijing’s abuses.

China Thinks 50 Years Ahead. Can the US

James Stavridis

James Stavridis is a Bloomberg Opinion columnist. A retired U.S. Navy admiral, former supreme allied commander of NATO, and dean emeritus of the Fletcher School of Law and Diplomacy at Tufts University, he is vice chairman of global affairs at the Carlyle Group. He is the author most recently of "To Risk It All: Nine Conflicts and the Crucible of Decision." @stavridisj

In dealing with a rising China, one vital element of America’s national approach is missing: a long-term strategy. I spent decades as a strategic planner in the Pentagon, mostly focused on that elusive point where budget — money to pay troops, buy weapons, build overseas bases, conduct crucial research — meets a viable strategic conce It is hard work, believe me. We did high fives when we managed to construct a short, five-year plan for defense spending, and that was before we needed to incorporate the threat of China as a true rival. Meanwhile, my opposite number in the People’s Liberation Army, under the watchful eye of the Chinese Communist Party, was methodically, deliberately and efficiently building at least a 50-year plan, if not something that looked a century into the future. China is the ultimate long-term planner, and we’ve never been able to replicate that in Washington.

No, Xi’s visit to Riyadh wasn’t because of bad US-Saudi relations. It’s about much more.

By Jonathan Fulton

Chinese President Xi Jinping was in Riyadh from December 7 to 10, attending three summits and inspiring thousands of over-wrought headlines about what it means for the United States’ interests in the Middle East. Given the bad state of US-Saudi relations, it is natural to see Xi’s visit in the context of geopolitical competition between Washington and Beijing, but that framework misses the bigger picture. This trip was part of a much longer trajectory of deepening China-Middle East relations in which ties with several regional countries have become increasingly mature.

In the China-Saudi bilateral relationship, this is the fifth state visit for a Chinese head of state. Each had resulted in a wider range of areas where the two countries cooperated, starting with Jiang Zemin’s 1999 visit when he signed a Strategic Oil Cooperation Agreement, eventually making China the top energy customer for the Kingdom. The previous one, a 2016 visit when Xi and King Salman signed a comprehensive strategic partnership (CSP) agreement, elevated the Kingdom to the highest level in China’s diplomatic hierarchy. Between the two trips, relations had grown to include a more varied relationship across trade, investment, financing, technological cooperation, educational outreach, and security.

The US-Saudi relationship has been in a rough stretch. US President Joe Biden’s attempts to get it back on track with a visit in July did not deliver the hoped-for results, as evident in the OPEC+ decision to cut crude production, which was seen in Washington as “a jab at Biden.” However, linking Xi’s visit to Biden’s misses the many ways in which China and Saud Arabia have become important to each other. Despite former Secretary of State Mike Pompeo’s assertion, it is neither a result of “bad American policy” nor a matter of Riyadh hedging to get a better deal from Washington. The Saudis and their Gulf Cooperation Council (GCC) neighbors see China as a great power partner with a seat on the United Nations Security Council, a major energy market, and a source of technological support and investment that can help them build diversified economies. The relationship is far more than a trick to get America’s attention.

What Xi Jinping’s Saudi Arabia visit means for the Middle East

They rolled out the purple carpet. Chinese leader Xi Jinping traveled to Saudi Arabia this week for a series of summits with countries from around the Middle East, cementing over thirty energy and investment deals and basking in a good bit of pageantry courtesy of the host nation.

The warm visit contrasts with US President Joe Biden’s muted get-together with Saudi Crown Prince Mohammed bin Salman (MBS) this summer, which was followed by Saudi Arabia’s decision to cut oil production to Biden’s chagrin. It also presents an opportunity for Xi to get away from home amid rising concern around his zero-COVID policies, which the government is trying to delicately unwind amid street protests and dismal economic numbers.

We reached out to our experts on China and the Middle East to answer our burning questions about this visit and what’s coming next. This post will be updated as contributions roll in.

1. What does this summit mean for Saudi Arabia and China? Why are they engaging?

It’s natural to look at Xi’s trip to Saudi Arabia as a counterpoint to Biden’s trip there in July, but that misses the bigger and far more interesting picture. This is the fifth time a Chinese president has been to the Kingdom. With each trip—starting with Jiang Zemin in 1999—the bilateral relationship has gotten deeper and broader. The two countries have a wide range of interests in engaging with each other and that is more significant than a perceived slight to Washington. If it were simply a matter of the Saudis signaling their displeasure with the United States, then Washington could eventually get the relationship back on track and Riyadh would drop Beijing. That’s not going to happen.

It’s official: The United States is developing a bank-to-bank digital currency

Josh Lipsky and Ananya Kumar

While the world was busy watching the collapse of crypto exchange FTX, the US Federal Reserve system made an important move. Speaking at the Singapore FinTech Festival on November 4, a senior official from the New York Federal Reserve surprised many in the audience by announcing that for the past several months, the New York Fed has been developing a “wholesale” central bank digital currency (CBDC) designed to speed up transfers between banks around the world.

For those who thought the United States was behind in the digital-currency “space race,” the news was welcome. In a subsequent white paper on the project—named Project Cedar—the New York Fed explained that it has already completed stage one of testing and proved that international currency transactions could be done both quickly and safely through the blockchain. But buried in the technical details was a revealing line on the ambitions of the project: The goal of the new network is “to reduce settlement risk in cross-border, cross-currency transactions.” The message? We see what the world is doing on CBDCs, and the United States is not going to be left behind.

Amid Ukraine War, Russia’s Northern Sea Route Turns East

By Trym Eiterjord

The Russian war on Ukraine is upending global energy markets. European countries are pushing to reduce their dependence on Russian oil and gas, while China and India are making the most of new, discounted supplies of increasingly shunned Russian hydrocarbons. This reshuffling of energy relations is also impacting the Northern Sea Route, the Arctic waterways that run along large stretches of Russia’s northern coastline, and which Russian President Vladimir Putin is looking to develop into an international shipping route.

Putin has made developing the country’s Arctic territories a national priority, in part to capitalize on the region’s vast stores of oil, gas, coal, and other natural resources. The Northern Sea Route, the maritime zone that extends from the Kara Sea eastward to the Bering Strait, is crucial for developing these territories, providing a way to ship resources out for export to markets at more southern latitudes in Europe and Asia.

Melting sea ice is making waters along the route more navigable. In 2018, Putin called for traffic along the route to be boosted to an annual 150 million tons of cargo by 2030. Ambitious even by pre-invasion standards, these targets have yet to be adjusted to the increasingly dire wartime straits that Russia now finds itself in. Instead, officials are doubling down on Putin’s grandiose growth targets. In April, Deputy Prime Minister Yuri Trutnev stated that the Northern Sea Route will see up to 200 million tons of cargo by 2030, a significant bump up from the pre-war goal. Last year, a modest 34 million tons of cargo were transported on the route.

By the numbers: The global economy in 2022

As this year began, many experts predicted inflation would be transitory, Europe’s recovery would be stronger than the United States’, and China would return to strong growth. Then inflation soared and Russian President Vladimir Putin invaded Ukraine—fueling an energy crisis in Europe and food price shocks around the world. Meanwhile, China’s zero-COVID policy chained its economy. To make sense of a shocking year for the global economy, our GeoEconomics Center experts take you inside the numbers that mattered—including many you may have missed—in 2022.

$2 trillion

DECLINE IN MARKET VALUE OF CRYPTOCURRENCY ASSETS

Over the past year, the market value of cryptocurrency assets has collapsed from $3 trillion to about $850 billion as Bitcoin—the original and best-known cryptocurrency—plunged from $68,000 to $17,700, stablecoins such as TerraUSD broke the advertised one-to-one peg to the US dollar, and the crypto-exchange FTX sank from a $32 billion valuation to bankruptcy within a week. Those losses and market turmoil have laid bare the volatility of crypto-assets and the pressing need for consumer protections.

Will the U.S.-Africa Summit Address U.N. Security Council Reform?

BY: Solomon Dersso; Tim Murithi; Susan Stigant

U.N. Security Council (UNSC) reform has been a long-standing demand from many in the international community, but calls for an overhaul of the institution have grown louder amid renewed interest in democratizing the international system and addressing historical exclusion and injustices in its core institutions. And in a major development this past September, President Biden told the U.N. General Assembly the United States would support reforming the Security Council — specifically mentioning the addition of permanent members from Africa.The U.N. Security Council meets at the U.N. Headquarters in New York City. September 22, 2022.

Such a change would not only acknowledge Africa’s pivotal role in forging global peace and prosperity, it would also unlock new avenues for addressing the toughest challenges facing the international community.

The eve of the U.S.-Africa Leaders Summit is a propitious moment to highlight how U.S. support for reform can enhance the U.S.-Africa partnership. African political, civic and academic leaders are looking to see how Biden plans to translate this commitment into action and how African leaders will seize this moment to advance their common position.

Amani Africa’s Solomon Dersso, the Institute for Justice and Reconciliation’s Tim Murithi, and USIP’s Susan Stigant discuss the momentum behind calls for U.N. Security Council reform, as well as what African leaders are looking for in a new U.N. peace and security system.

Why did President Biden’s announcement the U.N. General Assembly matter?

Stigant: The Biden administration’s strategy toward sub-Saharan Africa acknowledges that it is “impossible to meet today’s defining challenges without African contributions and leadership.” In short, Africans need a seat at the table, a voice in shaping discussions and a vote in making decisions.

Asian States Are Worried the U.S. Is a Perennially Distracted Superpower

By Isheika Cleare

South Korean marines take positions during a joint amphibious landing exercise with their Philippine and U.S. counterparts at a beach facing the South China Sea in San Antonio town, Zambales province.

South Korean marines take positions during a joint amphibious landing exercise with their Philippine and U.S. counterparts at a beach facing the South China Sea in San Antonio town, Zambales province, on Oct. 7.

When the Biden administration imposed export controls to restrict the transfer of sensitive technology to China, it signaled the United States’ final abandonment of the once-popular political theory that China’s integration into the global economy would make it freer and friendlier. Washington is proactively enacting more aggressive policies to delay China’s rise to global preeminence. But it doesn’t want to do this alone and has already reached out to allies in Europe and elsewhere. The most difficult sell, however, is likely to be to China’s neighboring states.

For Indo-Pacific states, this is a fraught request, as picking sides risks jeopardizing regional stability and economic growth. U.S. officials want Asian states to help it hold back China’s rise by withholding material support and cooperation or, even better, by actively pushing back against Chinese expansion. Most Pacific states, from Vietnam to the Philippines, want to continue to enjoy trade with China, one of their biggest economic partners, while receiving security protection, explicit or otherwise, and regional balance from the United States. This strategy allows them to maintain neutrality and avoid alienating either power. Calm coexistence and the continuance of the status quo is their best bet.

A looming Russian offensive

Russia is massing men and arms for a new offensive. As soon as January, but more likely in the spring, it could launch a big attack from Donbas in the east, from the south or even from Belarus, a puppet state in the north. Russian troops will aim to drive back Ukrainian forces and could even stage a second attempt to take Kyiv, the capital.

Those are not our words, but the assessment of the head of Ukraine’s armed forces, General Valery Zaluzhny. In an unprecedented series of briefings within the past fortnight the general, along with Volodymyr Zelensky, Ukraine’s president, and General Oleksandr Syrsky, the head of its ground forces, warned us of the critical few months ahead. “The Russians are preparing some 200,000 fresh troops,” General Zaluzhny told us. “I have no doubt they will have another go at Kyiv.” Western sources say that Russia’s commander, General Sergey Surovikin, has always seen this as a multi-year conflict.

The Russian Army Is Preparing for a Fresh Attack

By Maxim Samorukov

There is a consensus emerging in the West that Russia has already lost its war against Ukraine. The timing, cost, and scope of Ukraine’s victory may be unknowable, but survival of the sovereign state of Ukraine is no longer in question.

Similarly, it is commonplace to say that Russian President Vladimir Putin has ruined Russia’s vaunted domestic political stability once and for all by mobilizing military-age men to fight in Ukraine. The sight of thousands of people escaping the country to dodge the draft was taken as confirmation that Putin had miscalculated badly and risked ruining the regime’s legitimacy at home.

Yet what matters to the Kremlin is the crude reality that the draft has enabled Russia to mitigate troop shortages at the front. The deployment of mobilized forces in Luhansk prevented Ukraine from making major advances in the region since the fall of Lyman, Ukraine, in early October. In Kherson, reinforcements facilitated Russia’s orderly withdrawal, helping to avoid a repeat of its disastrous defeat in Kharkiv. The Russian army has even made incremental gains near Bakhmut in the Donetsk region at the cost of scores of newly mobilized soldiers and prisoners.

Parliament of loopholes: Why the Qatar scandal was inevitable

By Sarah Wheaton

It’s the scandal everyone saw coming.

Allegations of corruption and money laundering have landed a vice president of the European Parliament in jail and embarrassed the European Union’s only directly elected institution with sealed-off offices and cash-filled suitcases. The details may not have been predictable, but the eventual reckoning was: Transparency campaigners have been warning about lax rules and even laxer enforcement at the Parliament for years.

If “the European Parliament is under attack,” as President Roberta Metsola put it on Monday, that’s at least in part the result of fierce resistance to any attempt to shut the gates. Time and time again, members of the Parliament have resisted proposals to shine more light on their work and shrugged off the lack of enforcement of rules already in place — all the while taking advantage of perks and privileges that would make a member of the Borghese family blush.

MEPs make a gross salary of about €9,400 a month, but they’re also allowed to hold second (and third and fourth and …) jobs. And about a quarter of MEPs do just that, according to a 2021 Transparency International EU analysis. One lawmaker — Italy’s Sandro Gozi — had 20 side hustles, raking in at least €360,000 a year (and perhaps twice that), according to his voluntary financial declarations. An aide to Gozi later said these disclosures had been filed incorrectly and the numbers shown were not accurate. The most recent figures show Gozi wears 13 extra hats, earning up to €5,988 a year.

This, noted Transparency International, opens the door to all sorts of conflicts of interest. For example, the watchdog cited Miapetra Kumpula-Natri, a Finnish Socialist “who holds paid positions on the boards of two energy companies in her home country while serving as a Member of the Committee on Industry, Research and Energy.”

HII’s Tech Transformation Is Making It Much More Than America’s Biggest Shipbuilder

Loren Thompson

Huntington Ingalls Industries recently decided to stop spelling out its name in communications and instead refer to itself by its stock symbol—HII.

One reason is that the phrase “Huntington Ingalls” is synonymous with shipbuilding—it is by far the biggest builder of warships in the Western Hemisphere—but the company is transforming itself into something more than a shipbuilder.

The company’s Mission Technologies unit is growing so fast that its portfolio of synthetic training, cyber, artificial intelligence and sustainment programs will soon outstrip the revenues generated Ingalls Shipbuilding—builder of all the Navy’s amphibious warships and most of its surface combatants.

By 2025, Mission Technologies may be providing over a quarter of all the company’s sales.

What’s striking about that trend is that many of the company’s traditional customers are barely aware the business unit exists.

Management has transformed the company with little fanfare, making it not only a designer and builder of the world’s most complex vessels, but also operator of the defense department’s largest virtual training enterprise, the biggest aggregator of military cyber data, and an industry leader in fifth-generation electronic warfare.

North Korea And Russia: The Only Winners In A U.S.-China Cold War?

By Robert Kelly

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Only Troublemakers like North Korea and Russia Benefit from a Sino-US Cold War: If the United States and China fall into a cold war, the only countries in the world to benefit would be places like Russia and North Korea. The rest of the Indo-Pacific would suffer dramatically if the US and China fight what the Biden administration calls ‘great power competition.’

This may be inevitable.

China and the US are deeply different regime types. Both fear the other. China has territorial and prestige grievances – most obviously regarding Taiwan – which will not be accommodated by its neighbors and raise the spectre of conflict. But we should still do our utmost to avoid a long, potentially disastrous, cold war-style struggle with China.

East Asia’s Loss

The status quo in the Indo-Pacific is conducive to many states. The US and China balance each other. Many mid-size states, such as those in the Association of Southeast Asian Nations, do not wish either to be hegemonic in the region. The current situation in which trade with China fires their economies while the US provides some pushback on China’s belligerence suits them.

Many regional middle powers have mixed perceptions of both players. The US may be farther away and more liberal than China, but the US has a record of third-world intervention which has made many developing countries wary of aligning too closely with the US. India is the paradigmatic case. It shares democratic values with the US. It also shares geopolitical anxiety about China and Islamic fundamentalism. Yet this overlap of values and interest has never resulted in an alliance or otherwise tight relationship, mainly for India’s fear of being dominated by the US.

U.S. Will Train More Ukrainian Troops, Adding Advanced Battle Tactics

By Eric Schmitt and Andrew E. Kramer

WASHINGTON — The United States is expanding the number of Ukrainian troops it instructs at a base in Germany, with a new focus on advanced battlefield tactics, the Pentagon announced on Thursday.

The expanded training would emphasize “combined arms” warfare — tight coordination among infantry, artillery, armored vehicles and, when it is available, air support, so that each group is strengthened and protected by the others.

Ukrainian officials have been wary of pulling too many troops off the front lines at any given time for specialized training given the intensity of the war. But with winter slowing the tempo of fighting in many parts of the combat zone, officials said the coming months would provide a window for more troops to benefit from training.

The training is expected to begin in January and would enable American instructors to train a Ukrainian battalion, or about 500 troops, each month, a number that could grow, Brig. Gen. Patrick S. Ryder, a Pentagon spokesman, said at a news briefing. Other U.S. officials said the battalions could range up to 800 soldiers each.

American forces are now training about 300 Ukrainians per month — and have trained 3,100 since the war began — focused on teaching them to use specific advanced U.S. weapons systems. That includes 610 soldiers who have learned to use the High Mobility Artillery Rocket Systems, or HIMARS, that Ukraine has used to devastating effect against Russian forces, hitting targets far behind the front lines, including ammunition depots, command posts and bridges.

Exclusive: The global supply trail that leads to Russia’s killer drones

By Stephen Grey, Maurice Tamman and Maria Zholobova

Dec 15 (Reuters) - The hundreds of Russian drones hovering ominously over the Ukrainian battlefield owe their existence to an elastic, sanctions-evading supply chain that often runs through a shabby office above a Hong Kong marketplace, and sometimes through a yellow stucco home in suburban Florida.

The "Sea Eagle" Orlan 10 UAV is a deceptive, relatively low-tech and cheap killer that has directed many of the up to 20,000 artillery shells that Russia has fired daily on Ukrainian positions in 2022, killing up to 100 soldiers per day, according to Ukrainian commanders.

An investigation by Reuters and iStories, a Russian media outlet, in collaboration with the Royal United Services Institute, a defence think tank in London, has uncovered a logistical trail that spans the globe and ends at the Orlan's production line, the Special Technology Centre in St. Petersburg, Russia.

Based on Russian customs filings and bank records, the investigation marks the first time a supply route for American technology has been traced all the way to a Russian manufacturer, whose weapon system is used in Ukraine.

The Special Technology Centre, which once made a variety of surveillance gadgets for the Russian government and now focuses on drones for the military, was first targeted by U.S. sanctions after President Barack Obama said it had worked with Russian military intelligence to try to influence the 2016 U.S. presidential election.

The sanctions, which took effect in 2017, barred any American citizen or resident or U.S. company from supplying anything that might end up with the Special Technology Centre. In March of this year, the U.S. government tightened those restrictions by blocking all sales of any American products for any military end user, and effectively blocked all sales to Russia of high-technology items like microchips, communications and navigation equipment.

The Hellish ‘Groundhog Day’ Trap Putin Could Force Us Into

A. Craig Copetas

PARIS—More than 500 Western financers, politicians, and industrialists flooded the French Ministry of Finance this week for a European fundraising burlesque aimed at resurrecting Ukraine from Vladimir Putin’s devastation.

The pockets of French President Emmanuel Macron—and others who attended Tuesday’s Bilateral Franco-Ukrainian Forum for Resilience and Reconstruction of Ukraine—were emptied of some $1 billion. The immediate pledge to fix Ukraine’s obliterated power grid and other public utilities doesn’t come close to the $1 trillion Ukraine needs to fully rebuild the country, but there’s an even bigger problem at hand.

The war-ravaged country needs an insurance agent willing to secure their investment against Putin, who could choose to destroy the infrastructure they’ve vouchsafed to recreate by April 2023. The Russian president’s belligerence isn’t covered under the umbrella policies offered by the likes of insurance giants Lloyds of London or the GEICO Gecko.

That’s a gamble for the ages.

“It’s not just where the insurance guarantees will come from,” says conference delegate Anastasiya Shapochkina, founding partner of the economic consultancy Eastern Circles and a lecturer on Ukrainian-Russian affairs at Sciences Po. “We’re trapped in a loop because no one is explaining the rules of the game or where and how to actually acquire reconstruction money.”

The Economic Impact of Russia Sanctions

In response to Russia’s 2022 war on Ukraine, a broad, multilateral coalition, including the United States, the European Union (EU), the United Kingdom, Canada, Australia, Japan, and others, imposed sweeping new sanctions on Russia. The sanctions—unprecedented in terms of scope, coordination, and speed—target the overseas wealth and economic activity of Russia’s elites and decisionmakers. The sanctions also target Russia’s financial and energy sectors and access to western technology, among other financial and trade tools. The sanctions have created challenges for Russia but to date, have not delivered the economic “knock out” that many predicted. New sanctions on Russian oil exports implemented in December 2022 may increase economic pressure on the government.

Although sanctions are a foreign policy tool deployed in several contexts, the coordinated sanctions on Russia are significant to the global economy due to the size of Russia’s economy—before the war, the 11th largest in 2021—and Russia’s integration in the global economy. In addition to its oil and natural gas exports, Russia has been a key global supplier of several metals (titanium, aluminum, and nickel), chemical gases used in semiconductor production, wheat, and fertilizers, among other commodities. Many U.S. and international firms had also established factories, joint ventures, and retail operations in Russia, and face losses as they exit the Russian market.

Volodymyr Zelensky and his generals explain why the war hangs in the balance

Two books stand out in the stacks resting on the desk of Volodymyr Zelensky, Ukraine’s president. One is a collection of essays on Ukrainian history by Mykhailo Hrushevsky, a 19th-century thinker who helped forge the country’s national identity. The second is “Hitler and Stalin: the Tyrants and the Second World War”, by Laurence Rees, an English historian. The books hint not only at the president’s outlook, but also his changed circumstances.

When The Economist last spoke to Mr Zelensky, in March, the conversation took place in a situation room. He was living in a secret bunker full of instant noodles and a sense of existential peril. Now he is back in his old wood-panelled office in central Kyiv. An Oscar statuette, lent for good luck by Sean Penn, a Hollywood actor, stands on a shelf. Though sandbags and tank traps remain, gone is the adrenalin of those early weeks. Mr Zelensky’s routine typifies the change. At 6am each morning he dons his reading glasses and flicks through 20 or so pages of each book.

The global microchip race: Europe’s bid to catch up

The region still has hidden strengths in the equipment used in chipmaking but faces a shortage of skilled labour A worker assembles an illumination module at ASML in the Netherlands. ASML is a key group in the European semiconductor industry © FT Montage/Ton Toemen/ASML/Getty Images The global microchip race: Europe’s bid to catch up on twitter (opens in a new window) The global microchip race: Europe’s bid to catch up on facebook (opens in a new window) The global microchip race: Europe’s bid to catch up on linkedin (opens in a new window) Save current progress 0% Lauly Li in London DECEMBER 13 2022 136 Print this page Receive free Semiconductors updates We’ll send you a myFT Daily Digest email rounding up the latest Semiconductors news every morning.

On the edge of a tranquil forest an hour’s drive from Stuttgart, where hiking trails snake through the trees and across gently rolling hills, sits one of Europe’s secret weapons in the global race to develop the world’s most advanced semiconductors. Oberkochen, a small town of just 8,000 people in the south-western state of Baden-Württemberg, is headquarters to Carl Zeiss SMT, the only manufacturer of the mirrors and lenses used in the world’s most advanced chipmaking equipment. Its ultra-precise mirrors and lenses are so accurate that they are capable of a precision 200 times greater than the James Webb Space Telescope. Zeiss has “a unique competence”, says Peter Wennink, chief executive of ASML, the Netherlands-based company that holds a global monopoly on manufacture of the extreme ultraviolet lithography (EUV) machines required to make cutting edge chips — and is one of its most important customers. Without Zeiss optics, he says ASML could not make its EUV machines, which use ultraviolet light to scan chip designs on to silicon wafers at a tiny scale.

Divided in the Face of Defeat: The Schism Forming in the Russian Elite

There was already talk of a possible split within the Russian elite two months ago, after Russia’s hurried retreat from Ukraine’s Kharkiv region. Since then, Russian troops have also been forced to withdraw from the key city of Kherson, and the predicted schism is taking shape. Members of the elite are dividing into relative realists who are calling for a tactical pause in the fighting in order to rethink Russia’s goals, and those who advocate remorseless escalation at any price.

Never before have Putin’s strategic decisions—generally seen as the price of stability—pushed the Russian elites to the brink of a divide. They put up little resistance to the evisceration of the oligarchs, the rise of the siloviki (security services), and the 2008 Georgian war, while the annexation of Crimea from Ukraine in 2014 was positively welcomed by many.

From 2015, life in Russia started becoming rapidly Sovietized, culminating in changing the constitution to allow Putin to remain in power and the complete decimation of the genuinely anti-Putin (“non-system”) opposition. The elites grumbled, but carried on as if nothing had happened. Even the invasion of Ukraine didn’t divide the elites, though it came as a shock to them. Willingly or otherwise, they had to accept the war as a fait accompli. Anyone who was strongly opposed to it simply left the country. If they were unable to leave, they remained silent.

Until the September retreat from the Kharkiv region, the reasoning of most members of Russia’s elites—from the siloviki to big business—was simple: Russia would have to win somehow. It didn’t matter what that meant in practice, but defeat could well bring sociopolitical destabilization, and the elites certainly don’t want a revolution. The Kremlin, therefore, would have to achieve some kind of conquest that would enable the regime to evade collapse.

The Pandemic and War — Not Government Spending — Caused Inflation, According to Nobel Prize Winner

Jon Schwarz

I REALIZE THIS question seems extremely boring: Has the recent bout of high inflation in the U.S. been caused by insufficient supply in various areas of the economy, or too much overall demand?

But please bear with me. Because the answer illuminates and affects every single aspect of the life you’re living, right now. Would you like your town’s jagoff employers to be so desperate that they apply for you to work for them, instead of the other way around? Would you like to defuse the underlying rage in American life that seems to lead to a mass shooting every 37 seconds? Would you like $50 trillion? (Not made up, see below.) Then keep reading.

A new paper by Ira Regmi and Joseph Stiglitz makes the case that the answer is the former, i.e., insufficient supply. As they put it, “Today’s inflation comes mostly from sectoral supply side disruptions, largely the result of the COVID-19 pandemic … and disruptions to energy and food markets originating from Russia’s invasion of Ukraine. … [It] is not the result of significant excesses of aggregate demand such as might have arisen from excessive U.S. pandemic spending.” This means large, fast increases in interest rates by the Federal Reserve “will not substantially lower inflation unless they induce a major contraction in the economy, which is a cure worse than the disease.”

Every company is a software company: Six ‘must dos’ to succeed

Chandra Gnanasambandam, Janaki Palaniappan, and Jeremy Schneider

Marc Andreessen’s observation from more than ten years ago that “software is eating the world”1 needs an update: software is the world. The software industry continues to grow at a massive clip. More and more traditional companies are realizing that to compete and grow in a digital world, they must look, think, and act like software companies themselves.

Per McKinsey research from June 2022, nearly 70 percent of the top economic performers, compared with just half of their peers, are using their own software to differentiate themselves from their competitors.2 Fully one-third of those top performers monetize software directly.

The pressure to evolve is building thanks to three fundamental shifts. First, the accelerated adoption of digital products is driving an effort to embed software in the product and purchase experience through everything from personalization to seamless omnichannel delivery. Second, more of the value in more products and services from more industries is coming from software. For example, the average industrial company expects its share of revenue from software to double over the next three years. Finally, the growth of cloud computing, platform as a service, low- and no-code tools, and AI-based programming assistance are putting unprecedented power into the hands of billions of workers.

Mobile, Autonomous 3D-printed Drone Manufacturin

Daniel Pereira

In a series of posts entitled Autonomous Everything, we explore automation in all its technological forms, including legacy working assumptions about the term itself. Autonomous Everything includes a broad autonomous future in areas such as Security Automation, Automation and the Workforce, Automation – or Augmentation – of the workforce, and Automation of AI/Machine Learning Training Models and Industry Standardization. Recently, we checked in with Junaid Islam, a well-known cybersecurity expert, to discuss security automation tools, the increased cyber risks enterprises face, and the emerging AI-based Zero Trust cybersecurity for Smart Energy, Transportation, and Manufacturing systems.

We now explore Orbital Composites’ work with United States Air Force to create mobile, autonomous 3D-printed drone manufacturing capabilities.

About Orbital Composites

Unsatisfied with current technologies, Cole Nielsen founded Orbital Composites in 2014 based on the idea that “3D printers need to be designed around the parts that they create. The solution: robots. Robotic automation offers tremendous advantages at the fraction of the cost of traditional manufacturing systems, including scalability, and complex 3D printing on curves. To further prepare our customers for industry 4.0, we knew we needed to equip our technology to be able to synchronize up-to-the-millisecond data across thousands of cloud robots and IoT devices. After determining these as industry’s future requirements, we launched Orbital S in 2019 to propel our world into the next generation of manufacturing. But this is only the beginning – the quest for developing impossible products won’t stop. We are committed to constant innovation not just to adapt to our transient global economy, but to be leaders of change. (1)

Will Blockchain Bring Security and Transparency to B2B Payments?

Cryptocurrency-powered business models are reshaping front- and back-end business operations around the world. They not only provide innovative new answers to questions about exchanging money across borders and transferring large sums, but also offer compelling new solutions for fraud prevention and transparency-driven security measures. Misha Graboi, CFO at Chia Network, recently sat down with PYMNTS to talk about how companies can take advantage of distributed networks for business-to-business (B2B) engagements, without sacrificing functionality for security. “Payments using cryptocurrency technologies are relatively straightforward,” Graboi said, “but one area where certain crypto technologies really shine is the ability to improve transparency along an entire value chain. “[They] provide the security that is inherent in bitcoin, and the functionality inherent in smart contracting languages and platforms, but do it at a fraction of the energy use we see today [across cryptocurrency transactions],” he said. While fast and efficient payments can help drive growth, the back end of payments management is generally resource intensive, and he said cryptocurrency solutions are no different. “It can be complex to go from essentially, I won’t say a cash-oriented business, but things like checks and even ACH, into one that can leverage blockchain technologies,” Graboi said. “Many CEOs will be spending a lot of time thinking about the best way to integrate these technologies into existing processes, or whether they need to redesign their operations and come up with new internal processes.”

Who cares who wins

By Paul Winter

Eighty years after rampaging behind enemy lines in the deserts of North Africa, and forty-two years since exploding into the public’s consciousness by dramatically ending the Iranian Embassy siege, Britain’s elite Special Air Service (SAS) is once again the centre of the nation’s attention. This renewed notoriety owes nothing to any stunning military success or dramatic action on the part of the Regiment, as it is referred to, but rather to the new BBC television series, SAS: Rogue Heroes. Based on the best-selling book by Ben Macintyre, who was granted privileged access to the SAS’s own classified regimental archives, SAS: Rogue Heroes depicts the wartime birth and first unsteady steps of the world’s most famous Special Forces unit.

Described by the media’s usual suspects of military commentators and cheerleaders as an adrenaline-fuelled, “gung-ho”, “rock-star history” of the SAS’s infancy, Rogue Heroes is not only a piece of televisual entertainment. It serves another, more profound purpose — namely the supercharging of the Regiment’s reputation, fighting-record and mythology. It also adds a further stratum to existing layers of legend, which throughout its operational history have afforded the SAS a distinct psychological advantage over its opponents.

Book shelves buckle under the sheer volume and weight of a growing corpus of work on the Regiment. The high-levels of embellishment, hyperbole and dissembling inherent in these literary outpourings, compounded by operational security, plausible deniability and a refusal on the part of the MoD to comment on the activities and very existence of UK Special Forces units, has meant, unsurprisingly, that academics and journalists alike have found it a challenge to penetrate the shroud of secrecy enveloping the activities of the SAS. It is difficult to differentiate, therefore, between what is fact and what is myth.

Ostracism and stigmatisation have answered their heresies

Let’s Make It Easier to Share Top-Secret Data With Allies, Intel Leader Say

BY LAUREN C. WILLIAMS

The Pentagon's military intelligence agency wants to build a digital common space so it can better share and secure top-secret information with international partners.

“It has become commonplace where we develop everything in a no-foreign environment, and that model needs to flip,” said Doug Cossa, the Defense Intelligence Agency’s chief information officer, said Tuesday.

“And the capability delivery pipeline that we're developing in DIA is that one front door, that one shared environment to where we can overlay those standards for cybersecurity, for interconnectivity across agencies, across the community, across the IC and DOD and across our federal partners,” Cossa during a keynote speech at the Department of Defense Intelligence Information System, or DoDIIS, Worldwide Conference in San Antonio, Texas.

Teaming with the Pentagon’s chief information office, DIA wants to create a “simple IT foundation” that leans on the concept of using common services and interoperable infrastructure. The agency is also working with the Defense Information Systems Agency and Office of the Director of National Intelligence.

To get there, Cossa said he’s focused on five main priorities for 2023: updating and expanding the top-secret JWICS internetwork, moving toward zero-trust systems, improving communications with international partners, delivering software to the defense intel community, and improving the workforce.

JWICS, which stands for Joint Worldwide Intelligence Communications System, is a decades-old network that facilitates top-secret communications. DIA wants update infrastructure, expand its reach, secure it with zero trust principles, and add autonomous features.

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