Abstract

Artificial Intelligence (AI)-assisted hybrid warfare increasingly relies on information-influence engineered to appear legitimate. The objective is not mass persuasion through provocatively aggressive propaganda, but the slow erosion of trust in the systems that coordinate production, finance, logistics, standards, and alliances. This article frames how agentic and semi-autonomous AI can enable integrated campaigns that fracture confidence, disrupt institutional tempo, and steadily unplug the U.S. industrial complex from global networks of capital, supply, and cooperation. The central mechanism is the respectability engine, a method that launders destabilizing narratives through credible formats and voices, synchronizes them with operational friction, and converts institutional reaction into proof.

Introduction

Industrial security now includes protecting the credibility of industrial data and the interpretive environment that surrounds it. Adversaries exploit seams between cyber incidents, supply chain friction, and public narrative by converting ordinary disruption into strategic doubt. The next phase resembles recurring truth emergencies, where the cost is paid in slowed decisions, strained partnerships, and diminished confidence in reliability. Leaders are forced to operate in two areas at once: maintaining output while defending meaning. A coordinated coalition is therefore required.

Political leaders must enable rapid public-private action without turning each incident into theater. Industry leadership must treat integrity verification and narrative readiness as core functions that support the industrial complex’s core operating environment. Media production organizations must translate technical truth into credible public consumption before adversary framings harden it into a perceived common sense. The warning signs rarely arrive as dramatic outages. They appear as subtle shifts in data integrity, sudden narrative spikes aligned with routine friction, anonymous expert placements with thin provenance, and institutional overreactions that become proof for the adversary.

Modern industrial power depends on coordinating systems that facilitate complex production to scale across time, distance, and organizational boundaries. These systems include standards regimens, logistics platforms, financial and insurance mechanisms, cloud dependencies, supplier relationships, and allied interoperability agreements. In hybrid warfare, adversaries do not need to destroy this machinery to weaken it. They merely need to degrade trust so that coordination becomes cautious, verification becomes constant, and momentum becomes politically risky.

The respectability engine as a strategic method

The respectability engine is a pattern of influence operations that manufactures legitimacy for destabilizing claims. Its objective is credibility that survives long enough to shape institutional behavior. This is accomplished by embedding narratives inside professional wrappers, including policy language, risk reporting, investigative aesthetics, and analytic products that appear rigorous while concealing assumptions.

Respectability matters because institutions react to what looks serious. Claims presented with a measured tone and selective evidence are harder to dismiss without incurring reputational costs. Once leadership reacts, the narrative gains legitimacy because the reaction itself is treated as confirmation. This is why influence campaigns do not require universal belief. They require procedural conversion, where suspicion becomes an audit, a policy, or a pause.

A respectability engine fits industrial coercion because industrial systems generate ambiguity. Delays, quality escapes, price swings, and bottlenecks are normal. A respectability engine converts normal conditions into strategic messaging that frames routine friction as systemic failure. The industrial complex can remain productive while confidence in its output erodes, and that erosion can reshape markets, alliances, and oversight decisions in ways that persist after technical recovery.

AI as the scaling layer for influence operations

Artificial Intelligence (AI) changes the influence of information by altering scale, personalization, and iteration. Agentic tools can ingest trade reporting, procurement discourse, professional networks, and leaked data ecosystems, then map sensitivities and target audiences. They can generate tailored narrative variants for officials, investors, and industry leaders; seed them through distributed placements and persona networks; and synchronize messaging with disruptive events. Timing transforms coincidence into perceived confirmation, making minor delays or defects feel like proof.

These functions reduce the adversary’s cost of experimentation. Message variants can be tested, tuned, and redeployed faster than institutions can coordinate a unified response. This enables persistent pressure delivered at machine tempo, and it exploits the gap between automation and governance.

Campaign design to degrade, fracture, and unplug

An AI-assisted campaign aimed at unplugging the U.S. industrial complex is best understood as an accumulation of effects. The goal is degradation by gradual disconnection from global trust networks, not sudden collapse.

Degradation begins with perceived reliability. Isolated incidents are selectively amplified and framed as indicative of broader systemic weaknesses. Attention frequently centers on the integrity of data and coordination systems, as diminished confidence in information quality slows decision-making processes. Verification requirements increase, decision cycles lengthen, and operational tempo declines. As a result, responsiveness erodes even in the absence of physical disruption or damage.

Fractures follow. Partners question dependence. Firms diversify. Regulators tighten. The campaign does not need universal belief. It needs enough doubt that risk management shifts incrementally and persists, even after technical recovery occurs.

Unplugging happens when doubt turns into regulatory delay. Legal hesitancy increases. The burdens of insurance and compliance grow. Reputational risk discourages collaboration. The respectability engine depicts disconnection as prudent governance and responsible resilience, making strategic isolation seem self-selected.

Operational coupling: Influence that rides on disruption

Influence operations are most effective when coupled with operational events, whether induced or naturally occurring. A cyber incident that delays a supplier becomes a narrative trigger. A localized quality issue becomes evidence of systemic failure. A labor dispute becomes proof of industrial decay. The coupling is often correlational rather than causal. The campaign succeeds when the narrative becomes the default explanation, and behavior changes follow.

Mechanisms of quiet legitimacy

Quiet legitimacy is produced through repeatable tactics, ones where credential laundering places claims into the mouths of voices perceived as independent, creating the appearance of distributed confirmation. Analytics include charts and technical language to convey rigor while hiding assumptions. Selective transparency leverages leaks and partial documents stripped of context. Moralization frames disagreement as negligence, making restraint feel irresponsible. These tactics resemble normal professional discourse rather than propaganda, which is why they persist even when individual claims are challenged.

Institutional effects: Decision denial and self-reinforcement

The most damaging outcome is decision denial. Leaders hesitate, delay approvals, expand verification loops, and shift from action to internal adjudication. Institutions then reinforce adversary framing through audits, restrictions, and public messaging that signal seriousness. The institution becomes the amplifier.

A further enabling condition is strategic silence. Political and industrial leaders often treat AI-assisted influence as reputational risk rather than industrial security, narrowing attention to incidents and compliance outcomes. This reduces urgency to build rehearsed counter-influence operations, narrative baselines, provenance tracking, and rapid truth publication aligned with operational integrity checks. Incentives intensify the gap. Political leaders fear acknowledging systemic exposure. Industrial leaders prioritize near-term output and optics. Under pressure, organizations default to ad hoc messaging and policy drag, validating narratives and accelerating disconnection through doubt and fatigue.

Implications for defense

Effective defense requires campaign awareness over incident-focused thinking. It involves establishing a clear narrative baseline, maintaining discipline in provenance, and enforcing decision discipline that sustains tempo while verification continues. It requires integrity assurance for data systems so leaders can demonstrate reliability through verifiable controls and transparent recovery. It also requires rehearsed counter-influence operations integrated with cybersecurity, risk governance, and partner communication. The aim is to preserve trust while sustaining output.

Conclusion

Industrial competition is determined as much by trust as by throughput. AI-assisted hybrid warfare enables influence operations that degrade confidence, fracture alliances, and gradually unplug an industrial complex from global networks, thereby shaping what stakeholders consider reliable and what partners judge as safe. The respectability engine remains central because it converts destabilizing narratives into credible concerns and turns institutional reaction into proof. Its effects become decisive when machine-speed amplification makes those narratives unavoidable through repetition and timing aligned with routine industrial friction. The industrial complex remains globally connected only if it can sustain trust while operating at speed under pressure designed to look responsible, data-driven, and legitimate. When legitimacy is amplified by machine-speed, the contest becomes less about a single narrative and more about who controls the conditions under which common sense forms.

Mr. Greg Sharpe is a Fellow and the director of Communications and Marketing for the National Institute for Deterrence Studies and the Managing Design Editor for the Global Security Review. He has 25+ years in marketing and communications with a focus on digital communications, organizational and institutional change, and analysis. The views of the author are his own.

Information Influence in AI-Assisted Hybrid Warfare in the U.S. Industrial Complex was originally published on Global Security Review.

China’s dominance of the rare-earth mineral supply chain gives Beijing a powerful tool of economic coercion against rival states. Vital rare-earth minerals like cobalt, copper, lithium, and graphite are crucial inputs for products used in daily life and in national defense. These include electric vehicles, solar panels, military aircraft, and semiconductors. Ensuring control over the supply chains of these critical minerals is becoming a key aspect of geopolitical rivalry. 

Much of this competition is focused on Africa, which holds about 30 percent of the world’s mineral reserves. China has already secured dominant positions in essential parts of these supply chains, recognizing the strategic importance of controlling access to these critical resources. 

China produces nearly 70 percent of the world’s rare earth minerals, and has reinforced this position through deliberate efforts to control every stage of the critical mineral supply chain. This process begins long before extraction, with Chinese banks and engineering firms securing involvement. Beijing then extends that control to the project’s end, pairing ownership of mines with ownership of the railways, roads, and ports through which these materials move. The result is a supply system in which China extracts, refines, and exports minerals from Africa which ensures that, in many cases, raw materials move on Chinese terms. 

China’s dominance in the rare earth mineral trade stems from its strategic approach to mineral supply chains, not just profit. This allows Beijing to maintain long-term control of mines during economic downturns. This is a luxury that profit-driven Western competitors do not have. Chinese firms enter the market fully prepared and offers financing, workforce, equipment, and logistics that often gain significant control over project execution from the start. This strategy has helped Beijing achieve “processing dominance,” meaning control over the refining system to the point that winning a mining contract in Africa does not ensure independence from Chinese supply chains. Although China produces only about 10 percent of the world’s lithium, cobalt, and copper, it controls roughly 40-90 percent of the refining capacity for these materials. Therefore, a Western company extracting ore in sub-Saharan Africa has not truly succeeded if the ore must be processed through a Chinese refinery. For the United States, this distinction has far-reaching consequences beyond market competition. 

The U.S. is highly exposed to supply chain disruption risks because critical minerals have uses that extend far beyond consumer products. They are key components of systems essential to national defense, including F-35 fighter jets, Virginia- and Columbia-class submarines, Tomahawk missiles, radar systems, Predator unmanned aerial vehicles, and more. The U.S. maintains only one domestic rare earth mine, possesses minimal refining infrastructure, and relies on China for 70% of rare earth imports. Expanding domestic mining and refining capacity requires significant capital investment and highly specialized expertise, limiting the speed at which domestic production can realistically offset exposure risks. The result is a situation in which the U.S. defense industrial base is significantly dependent on a strategic adversary for materials it cannot easily replace, and which are essential to the production and sustainment of advanced military capabilities. 

The risks of relying on a strategic adversary like China for materials vital to American national security are clearly shown by the China–Japan Rare Earths dispute of 2010. In September 2010, a Chinese fishing boat collided with two Japanese Coast Guard ships in the East China Sea, leading to the arrest and detention of the boat’s captain. In reaction, the Chinese government stopped exporting critical minerals to Japan. Tokyo, which depended on Beijing for nearly 90 percent of its rare earth mineral imports, saw prices for these goods rise nearly 10-fold in the year after the incident. Although the United States and Japan are in different positions within global supply chains, Japan’s experience demonstrates the broader strategic dangers that arise when a country becomes heavily dependent on a geopolitical rival for key resources. 

The coercive value of rare earth dominance lies not only in China’s ability to deny access but also in the threat of disruption. Even the possibility of export restrictions can drive price volatility, delay industrial production, complicate defense procurement, and undermine long-term investment planning. Japan’s response to the 2010 dispute reveals that dependency on rare earth elements is not unavoidable. Japan’s proactive approach included investing in recycling technologies, developing alternative materials, diversifying supply chains through overseas mining projects in Australia and other countries, and building stockpiles to secure reserves. As a result, Tokyo reduced its reliance on Chinese rare earths by about 30 percent, demonstrating that policy actions can yield tangible results. More broadly, Japan’s experience underscores a key truth of modern strategic competition: dependence on an adversary for vital materials can create vulnerabilities that go beyond economics. Washington and its partners should take notice. 

Holden Johansen is an independent researcher focused on geopolitical security risks. He holds a B.A. in Political Science from Miami University and completed coursework in European Politics and Security at the Danish Institute for Study Abroad in Copenhagen. The views expressed in this article are the author’s own. 

China’s Critical Mineral Strategy and the Structure of Strategic Competition was originally published on Global Security Review.

An Exclusive Economic Zone does not grant absolute territorial sovereignty to a coastal state. However, it secures the exclusive rights of a coastal state to explore and exploit vital economic resources within the water column and the seabed. In an era of intense geopolitical competition, Türkiye introduced the Blue Homeland doctrine as a comprehensive maritime strategy. This visionary strategic framework protects these rights and safeguards Ankara’s long-term interests in its surrounding seas. The implementation of this doctrine represents a fundamental shift in regional maritime geopolitics. 

The Aegean Sea and the Territorial Waters Status Quo 

Greece has long-standing ambitions to extend its territorial waters to 12 nautical miles in the Aegean Sea. This proposed move would severely threaten regional stability and the delicate balance established over decades. Historically, Türkiye has declared that such an extension is an indisputable cause of war. 

Currently, Türkiye is not a signatory to the 1982 United Nations Convention on the Law of the Sea. This abstention stems from the unique geographical structure of the Aegean Sea. Historically referred to as the Sea of Islands, the Aegean defies standard nautical mile limitations designed for open oceans. Applying these standard rules would severely restrict international airspace and maritime navigation. 

While Athens maintains a six-mile limit for now, it has militarized numerous Aegean islands despite Turkish claims that such deployments violate the demilitarization provisions of the Lausanne and Paris treaties. These historical agreements explicitly conditioned Greek sovereignty over these islands on their strict demilitarization. Consequently, the current militarization efforts undermine the foundational legal texts governing the region. 

Fault Lines in the Eastern Mediterranean 

In the Eastern Mediterranean, shifting geopolitical fault lines have given Türkiye a significant strategic advantage. In 2019, Ankara signed a Maritime Delimitation Memorandum of Understanding with Libya. This pivotal agreement completely dismantled the maritime containment strategy devised by Greece, Egypt, and the Greek Cypriot Administration. 

Simultaneously, lucrative natural gas discoveries have transformed the Eastern Mediterranean into a focal point of global energy competition. Initial efforts by opposing blocs attempted to exclude Türkiye from regional energy infrastructure, notably through the unviable EastMed pipeline project. However, the subsequent failure of these exclusionary projects proved that no regional energy equation can succeed without Türkiye’s participation. 

Today, Türkiye systematically codifies its maritime jurisdiction zones to consolidate these strategic gains. By defining legal boundaries for disputes dating back to 1982, Ankara actively redraws the Eastern Mediterranean energy map. Domestically, the Blue Homeland doctrine enjoys a robust bipartisan consensus across the political spectrum. The Turkish parliament is expected to legalize these maritime boundaries soon. Moving forward, Greece must face this newly established strategic reality. Athens must factor in both the regional energy resources and the renewed Libyan geopolitical equation. Rejecting diplomatic negotiations in favor of maximalist policies will not yield favorable outcomes for Athens. 

The Legalization of the Blue Homeland 

Declaring an exclusive economic zone establishes a definitive and recognized legal framework. It places all living and non-living resources within the water column and the seabed under the strict jurisdiction of a single state. The upcoming legislative steps of Türkiye will reinforce its sovereignty in the Aegean Sea. This definitive legal action preempts Greek claims to these contested waters. 

Crucially, this legal framework encompasses one hundred and seventy-six islands, islets, and rocks whose sovereignty remains disputed. Historical treaties never explicitly ceded the sovereignty of these specific geographic formations to Greece. Thus, this upcoming legislation solidifies both the legal and practical reality of the Blue Homeland doctrine. 

Under the current Territorial Waters Law of Türkiye, the Aegean boundary remains at six nautical miles strictly out of geographical necessity. In contrast, Türkiye applies the standard 12-mile limit smoothly in the Mediterranean and Black Seas. Despite this delicate equilibrium, Greece recently announced plans to create large national marine parks slated for 2025. This environmental initiative reveals a clear intent to establish unilateral control over disputed waters. Consequently, it poses a direct and unacceptable challenge to Türkiye’s maritime rights. 

Growing Concern in Athens 

Unsurprisingly, these structural moves trigger profound anxiety within political circles in Athens. The Greek government publicly expresses fears that codifying Türkiye’s maritime claims could be an immediate cause of war, as the Turkish parliament declared in 1995. Meanwhile, the Greek domestic press frequently accuses its administration of underestimating these significant developments. 

Greek media openly acknowledges that Türkiye’s growing geopolitical influence fundamentally shifts the regional balance of power. Greek outlets often mischaracterize this growing influence as Turkish revisionism. This rhetoric serves to mask that Ankara seeks to secure its rights under international law. 

Toward a New Regional Security Architecture 

The international system of today faces profound crises of global hegemony and a turbulent transition of power. Leaving maritime boundaries ambiguous in the Aegean and Eastern Mediterranean creates a massive and dangerous security vacuum. The recent initiative of Türkiye anchors its Blue Homeland vision upon a solid, unshakeable legal foundation. 

This codification is a proactive measure carefully designed to close the existing security gap. The international community and regional actors should not view Ankara’s actions as aggressive revisionism. Instead, they represent the foundational building blocks of a new regional security architecture. This new system is firmly grounded in legal clarity, effective deterrence, and geopolitical realism. 

Nazım Fatsa is a public sector professional and independent researcher based in Türkiye, currently completing his master’s studies in International Relations at Kütahya Dumlupınar University. His primary research focuses on regional security dynamics, Middle Eastern geopolitics, and maritime strategies such as the Mavi Vatan doctrine. He also serves as a Language Editor for several peer-reviewed publications, including the ASSAM International Refereed Journal and the Academic Thought Journal. The views of the author are his own. 

Redrawn Boundaries in the Eastern Mediterranean: Türkiye’s New Legal Moves was originally published on Global Security Review.

During the Cold War, deterrence centered on missiles, troop deployments, and nuclear escalation. Military power still matters enormously, but modern strategic competition increasingly unfolds far from conventional battlefields. Rival states now seek influence through weaker institutions, compromised elites, illicit financial systems, infrastructure dependence, and strategic corruption. In many cases, adversaries no longer need to defeat a country militarily to weaken its strategic position. 

This shift has blurred the line between governance problems and national security threats. Corruption no longer acts solely as a domestic political issue tied to ethics or economic inefficiency. Increasingly, it functions as strategic infrastructure that hostile states and aligned networks can exploit to gain influence, undermine institutions, and weaken deterrence from within. The result is a form of hybrid warfare that operates quietly below the threshold of conventional military conflict. 

Traditional military deterrence assumes that states seek to avoid direct escalation because the costs remain too high. Yet modern rivals increasingly prefer indirect approaches that create long-term political leverage without triggering military confrontation. Strategic corruption fits this model well because it weakens institutional resilience gradually and often without attracting immediate international attention. 

Infrastructure financing offers one example of this evolving landscape. Major infrastructure projects can generate economic growth, but opaque financing arrangements, weak procurement oversight, and political favoritism can also create long-term dependency and strategic leverage. Ports, telecommunications systems, energy infrastructure, and logistics hubs increasingly carry geopolitical significance alongside their economic value. Foreign influence over critical infrastructure may shape political decisions long before any military crises emerge. 

Illicit financial networks create additional vulnerabilities. Sanction evasion systems, offshore financial structures, and corruption-linked patronage networks allow authoritarian governments and criminal actors to preserve influence even under significant economic pressure. These systems often connect political elites, business interests, criminal organizations, and external state actors in ways that complicate accountability and obscure responsibility. 

The challenge becomes even more serious when state and non-state actors begin to overlap. Modern hybrid competition increasingly operates through networks rather than formal battle lines. Organized crime groups, private intermediaries, corrupt officials, and geopolitical rivals often interact inside the same gray zones. Those overlapping relationships make it harder to identify where criminal activity ends and strategic competition begins. 

The Western Hemisphere illustrates this problem clearly. Across parts of Latin America and the Caribbean, organized criminal groups now exert considerable influence over trafficking routes, local economies, migration systems, illicit mining operations, and even municipal governance. Criminal organizations often provide dispute resolution, employment, or social services that weak governments struggle to deliver. This creates fragmented sovereignty in which state authority exists unevenly across territories and institutions. 

These unstable environments create opportunities for external rivals seeking geopolitical access or influence. Weak oversight systems, corruption within procurement processes, and institutional distrust make states more vulnerable to strategic penetration. In these circumstances, foreign influence does not always arrive through military alliances or ideological movements. Instead , it emerges through infrastructure contracts, illicit finance, commercial dependency, or relationships with politically connected elites. 

Traditional deterrence frameworks struggle to address these dynamics because they still focus heavily on conventional military indicators. Defense planners understandably prioritize readiness, force posture, weapons modernization, logistics, and operational capability. These areas remain essential. However, military strength alone cannot fully protect states whose institutions face sustained internal erosion. 

States often weaken politically before they weaken militarily. Public distrust, elite fragmentation, corruption scandals, feeble judicial systems, and declining institutional legitimacy can reduce a government’s ability to respond effectively during periods of strategic pressure. Adversaries increasingly recognize this and exploit those vulnerabilities patiently over time. 

This problem extends beyond developing countries or fragile democracies. Advanced democracies also face growing concerns involving foreign influence operations, cyber-enabled corruption, disinformation campaigns, opaque lobbying networks, and strategic investments tied to geopolitical objectives. Hybrid competition increasingly targets the political and institutional foundations that support deterrence itself. As a result, national security discussions must broaden beyond military hardware and battlefield concepts alone. Deterrence depends not only on weapons systems, but also on institutional credibility, public trust, transparency, and political resilience. Governments that cannot maintain confidence in procurement systems, electoral institutions, judicial independence, or regulatory oversight may struggle to sustain strategic cohesion during periods of crisis. 

This reality does not mean every corruption scandal represents foreign subversion or hybrid warfare. Domestic political dysfunction often emerges from local conditions and internal failures. However, strategic rivals increasingly exploit those weaknesses opportunistically once they appear. Corruption creates openings that adversaries can leverage quietly and incrementally. 

The United States and its allies therefore need a broader understanding of deterrence in the twenty-first century. Military modernization remains necessary, particularly as rival powers continue expanding nuclear, cyber, and space capabilities. Yet strategic competition increasingly unfolds inside institutions as much as along borders or within contested seas. 

Institutional resilience should now be a centerpiece of national security planning. Strong oversight systems, transparent procurement practices, anti-corruption enforcement, independent courts, investigative journalism, and trusted public institutions all contribute to long-term strategic stability. These systems strengthen national resilience against both domestic corruption and external exploitation. 

In the emerging era of hybrid competition, states may not lose strategic position through invasion alone. They may lose it gradually through institutional erosion that weakens deterrence long before conventional conflict formally begins. 

Jeffery A. Tobin is a senior advisor and partner with Pan-American Strategic Advisors, conducting research on democracy, corruption, and institutional health. His work has appeared in outlets including Lawfare, Just Security, Foreign Policy in Focus, the Modern War Institute, and Small Wars Journal. The views expressed in this article are the author’s own. 

Strategic Corruption and the Future of Hybrid Warfare was originally published on Global Security Review.

Artificial intelligence is quietly redrawing the front lines of national security, and the United States’ Defense Industrial Base (DIB) now sits in the crosshairs of a new style of conflict. What once looked like routine cyber incidents now appears as a persistent campaign that fuses digital intrusion, supply chain manipulation, and targeted information operations into a single pressure system aimed at the factories, laboratories, and logistics networks that keep American forces armed and ready.

When most Americans imagine national defense, they focus on the uniformed force and the platforms that dominate headlines. Behind that visible edge of power stands a sprawling, largely private ecosystem of designers, manufacturers, software firms, logistics providers, depots, and research institutions that convert national intent into fielded combat capability. Federal regulation describes this DIB as the combined government and private sector industrial complex that can research, develop, produce, and sustain weapon systems and their components at the scale required for military operations.

That chain is far more diverse than the marquee names on major defense contracts. It includes niche machine shops, regional logistics firms, university laboratories, software providers, and government facilities that share technical data and workflow information through a constant flow of digital exchanges. Design files, bills of material, maintenance records, and operational telemetry form the nervous system of this industrial organism. When the system is healthy, the nation can surge production and sustain readiness under stress. When it is strained, deterrence becomes much harder to demonstrate in a crisis.

This industrial nervous system is absorbing AI at high speed, often with limited guardrails. Across the DIB, machine learning supports predictive maintenance, defect detection, demand forecasting, scheduling, and supply chain visibility. Corporate leadership often has only a surface-level understanding of how thinking machines can erode corporate identity, trust, and reputation quietly, yet catastrophically.

For the strategist, this adaptation expands the terrain adversaries can probe. Industry surveys in the World Economic Forum’s Global Cybersecurity Outlook 2026 report show that executives see AI as the primary driver of change in cybersecurity and regard AI-related vulnerabilities as the fastest-growing category of cyber risk. Organizations recognize that their attack surface is expanding as AI tools move into sensitive workflows, yet governance practices and security controls often lag deployment.

Hybrid campaigns against the DIB rarely announce themselves through spectacular outages. Security officials describe a patient pattern that begins with access and aims for endurance rather than immediate disruption. Once inside a network or supplier ecosystem, adversary teams map production rhythms, supplier dependencies, identity systems, and critical decision points where even modest delays can ripple across schedules and inventories. AI has become a force multiplier

for this reconnaissance, mining engineering files, and communications at machine speed and surfacing patterns that would take human analysts far longer to identify.

The contest is unfolding below the threshold of open conflict. Strategic competitors apply pressure through cyber intrusion, intellectual property theft, data manipulation, counterfeit insertion, and narrative operations designed to erode confidence in the U.S. capacity to arm itself and its allies. Hybrid pressure often manifests as subtle slowdown, rising cost, and creeping doubt rather than overt sabotage.

The stakes for deterrence are significant. Modern deterrence depends not only on visible platforms and war plans but also on an adversary’s belief that the United States can sustain forces and generate combat power at speed. If competitors conclude that AI-enabled systems in the DIB are brittle or easily manipulated, the credibility of deterrence weakens. The 2026 National Defense Strategy emphasizes strengthening the industrial base as a pillar of national power, tying cyber resilience directly to the ability to deter and wage war.

Pentagon planners increasingly describe cyber activity against the DIB as a persistent campaign environment. Adversaries can pursue national security effects through intrusions into private networks and business processes that support critical programs.

The technical attack surface is broad because the DIB operates as a tightly coupled system. Engineering teams collaborate across companies, moving design data through shared tools and platforms. Components flow through multiple tiers of suppliers before the final assembly. A single compromised vendor can offer adversaries access to multiple programs. Hybrid campaigns exploit these seams.

The effect of these operations extends beyond physical outcomes. Manipulated or stolen data can become material for influence narratives that frame U.S. production as unreliable or compromised. Production delays caused by cyber incidents can be amplified to sow doubt among allies about American capacity.

Adversary teams also benefit from repetition. They have treated the DIB as a learning environment, refining tradecraft through continuous operations. Hybrid coercion in this context is deliberate and calibrated, remaining below the threshold that would trigger a national response while still generating uncertainty and doubt.

Emerging evidence suggests that agentic AI systems are beginning to automate portions of this intrusion lifecycle. Automated chains reduce the cost of probing many suppliers and narrow the window for defenders to respond. For smaller firms with limited security resources, the pressure can quickly become unmanageable.

Security experts argue that defending against such campaigns will require disciplined governance and architecture. Pre-deployment AI security assessment and continuous validation must become standard practice, covering model selection, data provenance, access control, logging, and periodic reevaluation.

Architectural choices will also play a critical role. Zero trust principles and micro segmentation can reduce the impact of intrusions by limiting movement across networks. For DIB operators, this means treating segmentation and strong identity controls as the default architecture.

The industrial context around these cyber efforts is already volatile. The aerospace and defense sector is managing supply chain disruptions and resource constraints while trying to scale production. This environment amplifies the effectiveness of cyber sabotage and influence operations because attacks land in systems that are already stressed.

The strategic logic behind adversary focus on the DIB is clear. By degrading confidence and throughput, competitors can undercut deterrence without open conflict. When intrusions are contained and production continues under pressure, the calculus of hybrid aggression shifts.

Hybrid warfare against the DIB aims to bend trust in the systems that generate combat power. If those trust systems are distorted through advanced technologies and coordinated information operations, the result is slower decisions, higher costs, delayed output, and a quieter form of coercion.

Mr. Greg Sharpe is a Fellow and the director of Communications and Marketing for the National Institute for Deterrence Studies and the Managing Design Editor for the Global Security Review. Greg has over 35 years of military, federal civilian, and defense contractor experience in the fields of database development, digital marketing & analytics, technology use case exploration and assessment, and as a USAF doctrine outreach and engagement analyst. The views of the author are his own.

Quiet Warfare: Bending Data and Perceptions in the Defense Industrial Base was originally published on Global Security Review.

Amid U.S. involvement in a war against Iran, President Donald J. Trump has decided to double down on previous public expressions of disregard and distrust toward NATO. President Trump has threatened to withdraw the United States from NATO several times since his reelection. His repeated jibes at the alliance have raised concern among European defense experts and government officials. Former U.S. Ambassador to NATO Ivo Daalder recently noted that “It’s hard to see how any European country will now be able and willing to trust the United States to come to its defense.” And French President Macron indicated on April 2nd that, in his view, U.S. President Trump was undermining NATO through his repeated threats to withdraw from the alliance. Raising new fears of American abandonment on the part of European leaders, Trump, in various interviews and social media posts within a few days, said that the United States “will remember” France’s refusal to assist in the war against Iran; that NATO was a “paper tiger”; and that “Putin knows that, too, by the way.”

The most recent Presidential broadsides against NATO reflected Trump’s frustration with European allies who chose not to involve themselves in the war against Iran and/or denied their political and military support for the actions taken under Operation EPIC FURY—an effort that Secretary of War, Hegseth describes as “laser-focused [to] destroy Iranian offensive missiles, destroy Iranian missile production, destroy their navy and other security infrastructure – and they will never have nuclear weapons.” But this hesitancy among European allies should not have surprised U.S. leadership. Neither NATO as an alliance nor individual European governments were consulted before the decision to go to war, nor were they fully informed until the operation was already in progress. Further to the issue of NATO support, Trump’s address to the nation on April 1st simply assumed that the United States would wind up its military operations within several weeks and would turn the problem of unblocking shipping in the Strait of Hormuz over to European countries and others. In addition, Western European governments have strong public support for putting distance between themselves and the war in Iran. Popular majorities in every country oppose the U.S. and Israeli campaign, and European opposition to the war is enhanced by Trump’s personal unpopularity on that side of the Atlantic.

An additional element in the split between Trump and NATO was the Russian interpretation of its implications for the war in Ukraine, and more broadly, for Russia’s national security strategy writ large. Prolonged U.S. commitment to war in the Middle East could deplete the availability of military assets that would otherwise be available to sustain Ukrainian forces in their fight against Russia. The global spike in gas and oil prices was an obvious boon to the Russian economy and, from the standpoint of Ukrainian President Volodymyr Zelensky, an unwelcome distraction for European leaders from the priority of supporting Ukraine. Russia also took advantage of Epic Fury to reinforce its support for Iran by providing targeting information for Iranian missile attacks against Israel and other regional states. Russia and Iran had already been sharing technology and knowledge with respect to drone warfare even prior to the launch of military operations against Tehran.

To some extent, the volatility in the Trump administration’s approach to NATO reflected the President’s frustration at his inability to broker a peace agreement between Ukraine and Russia. Vladimir Putin viewed Russia’s war as existential and refused to acknowledge that there was any distinction between Ukrainian and Russian civilizations, let alone sovereignties. The Ukrainians responded in kind, resisting Russia’s invasion and occupation of Ukrainian territory with creative use of drone technology and edgy defensive strategizing that put at risk a variety of targets in Russian territory, including bomber bases and critical infrastructure. Worse for Putin, his invasion in 2022, preceded by Russia’s annexation of Crimea in 2014, refocused NATO on its primary mission of deterrence and defense in Europe as opposed to “out of the area” operations such as Iraq and Afghanistan. Even the formerly Cold War neutral states, Sweden and Finland, were added to NATO’s membership because of Russia’s attempted coup de main against Kiev that turned into the longest and most destructive war in Europe since World War II. Caught in a trap of his own making, Putin continued to pour troops and material into the battlefields of Donbas and elsewhere in eastern Ukraine to support a more favorable negotiating position, should productive negotiations ever materialize.

Given Trump’s propensity for rearranging the deck chairs on foreign policy via Truth Social memoranda, it is conceivable that he will tone down the anti–NATO rhetoric once he has decided on a strategy for winding down the U.S. military campaign in Iran. The process of deconflicting the Strait of Hormuz will likely involve participation from European nations and other countries. Almost nobody benefits from continued bottlenecks in global shipping of oil and other vital commodities. Regardless of the outcome in Iran, the United States needs NATO, and NATO needs the United States. Without the U.S. as the indispensable leading partner, NATO Europe has insufficient nuclear or conventional deterrence against further Russian aggression. This assertion implies no disregard for the steps that the U.S. European allies have already taken since 2022 to improve the quality of their armed forces and military–industrial complexes. It is instead a recognition that the unique American nuclear deterrent and conventional war-fighting capabilities, supported by European determination to resist further Russian aggression, create a global as well as a regional deterrent for Russia and its partners (The CRINKs – China, Russia, Iran, and North Korea) that benefits not only NATO but also world peace. On the other hand, a divided and internally fractious NATO invites further aggression within and beyond Europe.

Stephen J. Cimbala is Distinguished Professor of Political Science at Penn State Brandywine and the author of numerous works on nuclear deterrence, arms control, and military strategy. He is a senior fellow at NIDS and a recent contributor to the Routledge Handbook of Soviet and Russian Military Studies edited by Dr. Alexander Hill (Routledge: 2025). The views of the author are his own.

Trumping NATO was originally published on Global Security Review.

Advances in space technology are making the extraction of lunar and asteroid materials increasingly feasible. These capabilities promise the potential for significant economic gains, greater energy security, and new avenues of geopolitical influence for any spacefaring nation capable of developing and sustaining resource-extraction operations. As competition accelerates, the question is no longer whether space mining will occur, but who will shape the rules, norms, and capabilities that govern it.

To preserve American power in space, the United States must take formative policy action and protective research and development (R&D) measures to define the future of space mining before rival nations do. Building on the strategic momentum established in the space domain during the first Trump Administration, namely the creation of the U.S. Space Force, securing an early foothold in space mining will help counter adversarial efforts to undermine American leadership and preserve space as a key frontier for American power.

Formative Policy Action in Space Mining

In emerging domains, the first actors often leave a legacy that serves as a reference point for subsequent laws and behavior, such as the Outer Space Treaty (OST) of 1967. During the Cold War, the U.S. and the Soviet Union pushed outer space beyond its initial symbolic and scientific uses. Concerns over nuclear escalation prompted the creation of a legal framework that addressed non-weaponization and restrictions on national sovereignty. Despite approaching its 60th anniversary, the OST remains a foundational pillar of outer space governance, demonstrating how proactive U.S. leadership defined the rules of engagement and established operational precedents in an emerging domain. Sustaining this proactive approach is critical if the U.S. is to seize the strategic opportunities in outer space.

Space mining is among the more recent technical opportunities to emerge, alongside satellite constellations, orbital maneuvering, and AI-enabled platforms. Yet space mining is unique in that it offers potential energy security and trillions of dollars in economic value to those possessing return-to-Earth capabilities (currently limited, forcing a focus on in-situ resource utilization (ISR) for propulsion and life support). According to NASA’s Asterank database, extracting resources from the ten most cost-effective asteroids could yield profits exceeding $1.5 trillion. The promise of energy resilience and economic gain has captured the attention of global powers and middle-state actors alike, leading to a growing number of spacefaring nations and sparking geopolitical friction.

The U.S. and Luxembourg were among the first to formalize space mining in their legal frameworks, recognizing outer space resources as property subject to ownership and commercial trade. Conversely, Russia cites the Outer Space Treaty’s designation of space as the “province of all mankind” as a basis for prohibiting resource extraction and ownership. In response to the Trump Administration’s proposed lunar mining initiatives, Russian officials went so far as to accuse the U.S. of orchestrating an “invasion” of the Moon, likening it to “another Afghanistan or Iraq.” Russia’s actions, however, contrast sharply with its public stance, given its willingness to explore an agreement on space mining with Luxembourg in 2019.

Yet American space mining laws have been relatively insulated from further international criticism because they align with formative international frameworks. For example, the U.S. Commercial Space Launch Competitiveness Act of 2015 reflects Article II of the OST, which prohibits national appropriation of celestial bodies. Additionally, the 2020 National Space Policy aligns with the Artemis Accords by emphasizing transparency in national space policies and space exploration plans, as well as the sharing of scientific information. The legitimacy of U.S. legal principles has been strengthened by demonstrating its commitment to sharing the space domain as a collaborative partner while advancing its own interests and strategic advantages.

Critical questions about access to mining sites, extraction limits, and fair participation remain unanswered because frameworks such as the OST predate the concept of space mining. Addressing these questions and providing certainty before capabilities mature or competing nations establish their own frameworks is essential to preserving a U.S. strategic advantage in space.

Protective R&D Measures for Space Mining Capabilities

As the future of space mining and its economic potential threaten to catalyze geopolitical tensions, it is crucial for the U.S. not only to be among the first to establish governance frameworks but also to develop tangible space mining capabilities. Yet space is no longer a domain of uncontested U.S. dominance, as China has evolved from a near-peer to a peer competitor. Initiatives such as the Tiangong Space Station and the International Lunar Research Station underscore China’s growing space capabilities and its ambitions to assume a leadership role.

China’s rapid rise may be attributed in part to its exposure to U.S. space technologies, as bilateral cooperation agreements have provided avenues for interaction with U.S. research and development efforts. Despite the Wolf Amendment, which prohibits bilateral cooperation with China without explicit authorization from Congress and the FBI, numerous violations of the provision have likely conferred strategic benefits on China, eroding the competitive edge the U.S. seeks to maintain. In 2024, the Office of the Inspector General investigated a state University for violations of the Wolf Amendment and announced in December that the University agreed to pay $715,580 to resolve civil allegations. When applying for and receiving NASA research grants, the University failed to disclose a professor’s affiliations with and support from the Chinese government. Similarly, according to a report published by the Select Committee on the Strategic Competition Between the U.S. and the Chinese Communist Party (CCP), hundreds of articles crediting NASA funding were identified that were jointly published by U.S. researchers (including public universities and federal research entities) and CCP institutions. In early February 2026, the University of Texas at San Antonio agreed to pay nearly $130,000 in penalties after federal investigators alleged that the lead principal investigator for a NASA-funded Center for Advanced Measurements in Extreme Environments failed to disclose affiliations with researchers in China.

China’s sustained intellectual property theft is eroding U.S. dominance in space and diminishing the impact of formative U.S. space mining policy measures. Prioritizing R&D for space mining, particularly return-to-Earth capabilities, is a central focus for spacefaring nations and must be a priority for the United States. However, R&D initiatives must be paired with enforceable oversight structures that protect intellectual property from adversarial appropriation. Enforcement entities should also demonstrate a clear commitment to implementing protective measures and punishing violators. Without such protections, any research investments risk benefiting adversarial states as much as the U.S., as evidenced by instances in which China has capitalized on U.S.-funded advancements.

Conclusion

Although the U.S. is facing increasing demands across emerging warfighting domains, with numerous competing national security concerns, space resource governance and capability development can no longer be sidelined. The U.S. must act decisively and with strategic clarity to build the legal and behavioral foundations for space mining, and to enact protections for space mining R&D, as competitors advance their own initiatives. Space mining has become a strategic imperative, one that this Administration must seize to ensure that American values, interests, and leadership define this emerging domain, resource governance and capability development resource governance and capability development.

Rachel Butler is a doctoral student in the Department of Defense and Strategic Studies at Missouri State University. She holds master’s degrees in history and strategic studies, with research interests focused on ethical and cognitive warfare. Views expressed in this article are the author’s own. 

Seizing the High Ground: The Case for U.S. Leadership in Space Mining was originally published on Global Security Review.

The Western Hemisphere is the de facto core position for undisputed U.S. power, integrity, and uncompromising sovereignty. While the U.S. commitment to Europe remains, European nation-states must step up to the plate and take charge of funding and leadership of their own defense. The segment on “civilisational erasure” is directly aligned with the position already made explicit by Vice President JD Vance in early 2025 at the Paris artificial intelligence conference in France and the Munich Security Conference in Germany.

One of the most meaningful merits of the NSS is its call to reposition economic security, industrial renaissance, and technological leadership at the heart of the U.S. strategy to deter and prevail in the event of military conflict. The NSS refrains from mentioning “major power competition,” opting instead for an acknowledgement of spheres of influence.  The NSS does not antagonizes China, instead framing it as an economic and technological competitor, rather than an ideological one. Sustaining American reshoring, reindustrialization, industrial base funding, technological edge, manufacturing supply chains, and access to critical materials, is what underwrites how the U.S. deals with China, deterrence postures notwithstanding. A clear focus on economic competition allows the NSS to remain as vague as possible on the potential for military confrontations in the Indo-Pacific.

Economy, Industry, Technology

In the 2025 NSS, the terms “economy/economic” are used 66 times and “industry/industrial” 19 times, including under “industrial base,” “industrial production,” and “industrial supply chains.” As for “technology/technological,” they appear 17 times. The core meaning of a dozen such mentions is captured as follows:

U.S. military power and diplomatic influence rest on a strong, resilient domestic economy. National security depends on rebuilding America’s industrial base, restoring economic self-reliance, and securing critical supply chains. Economic and technological competitiveness over the long term is essential to preventing conflict and sustaining global leadership. Further, the United States will actively protect its workers and firms from unfair economic practices.

American power requires an industrial sector able to meet both civilian and wartime production needs. Reindustrialization is a top national economic priority, aimed at strengthening the middle class and regaining control over production and supply chains. The U.S. will reshore manufacturing, attract investment, and expand domestic capacity, particularly in critical and emerging technologies. Hence a credible military depends on a robust and resilient defense industrial base.

Preserving merit, innovation, and technological leadership is essential to maintaining America’s historic advantages. Strengthening the resilience of the U.S. technology ecosystem, especially in areas such as AI, is a national priority and a foundation of global leadership. Thus, long-term success in technological competition is central to deterrence and conflict prevention.

Economic Security First

The 2025 NSS references industries primarily through a national-security lens, rather than civilian market categorization, including defense (industrial base, munitions production, weapons systems manufacturing, military supply chains), manufacturing (re-shored industrial production, domestic manufacturing capacity, wartime and peacetime production), energy (oil, gas, coal, nuclear) and its infrastructure and exports, strategic supply chains (critical materials, components and parts manufacturing, logistics and production networks), infrastructure, both physical and digital to be built at industrial-scale, and strategic technologies.

The 2025 NSS strategic technologies are artificial intelligence, explicitly cited as a comparative U.S. advantage; other critical and emerging technologies such as dual-use and strategic technologies tied to national power; defense and military technologie integrated with industrial and innovation advantages; intelligence and surveillance technologies such as monitoring supply chains, vulnerabilities, and threats; cyber technology including espionage, theft, and protection of intellectual property; industrial and manufacturing technologies aiming at re-shoring, reindustrialization, and advanced manufacturing; energy technologies directly linked to economic and national security; and sensitive technologies protected via aligned export controls.

The 2025 NSS treats economic power, industrial superiority, and technological edge as inseparable pillars of national security. Technology is framed less as a civilian growth driver and more as a strategic asset, a competitive weapon, and a deterrence multiplier. Civilian industry is subordinated to national resilience, mobilization capacity, and deterrence, reinforcing the 2025 NSS’s broader fusion of economic security, industrial policy, and military strategy. This constitutes an optimal response to the Chinese “civilian-military fusion” and “unrestricted warfare” model.

Space

While a mention of “space” appears only once on page 21 of the NSS, the second Trump administration published on December 18th an Executive Order “Ensuring American Space Superiority“ prioritizing lunar basing and economic development by 2030 with a clear focus on Artemis, cislunar security as a theatre, and space nuclear power on a schedule. To secure U.S. assets and interests from Earth orbit through cislunar space to the Moon, integrating commercial capabilities into the defense complex, reforming acquisition, and modernizing the nation’s military space architecture become paramount. Space traffic management and space situational awareness services are no longer solely provided by the U.S. government for free.

Repositioning the U.S. as an unrivalled economic-industrial-technological leader provides valuable opportunities to the Western Hemisphere and Indo-Pacific and Europe-Middle-East-Africa regions: “The goal is for our partner nations to build up their domestic economies, while an economically stronger and more sophisticated Western Hemisphere becomes an increasingly attractive market for American commerce and investment.” After 35 years of the West divorcing itself from Reality, we now face a technology-savvy tripolar world. The NSS, complemented by the Executive Order on Ensuring American Space Superiority, merely reflects a long overdue readjustment to 21st-century geopolitics. These are fundamentally the space, nuclear, and disruptive industries, focused in ways that achieve techno-strategic power.

Christophe Bosquillon is a Senior Fellow at the National Institute for Deterrence Studies. The views expressed are the author’s own.

Techno-Economic power at the heart of the 2025 U.S. National Security Strategy was originally published on Global Security Review.

For eighty years the United States pursued a policy of globalism with worldwide military commands to implement this policy. It is prohibitively expensive and is becoming increasingly difficult to sustain. Observers point out that the US defense budget was $849 billion in 2024, but this is only part of the overall annual expenditure on defense. Most countries include veterans benefits in their defense budgets. The United States treats these costs differently. Today the Veterans Administration (VA) budget stands at $369.3 billion and is rising rapidly because of the wars in Iraq and Afghanistan, which drove healthcare and retirement costs higher.

As Table 1 shows, the VA budget rose about 10 percent per annum, resulting in the VA budget rising to the second largest amount of discretionary funding in the federal budget.  Further, as the breakdown of annual expenditure shows, medical costs are growing as the soldiers who went to war as young people are now in their forties and their health issues are becoming chronic while the injuries they suffered are becoming more difficult to treat due to age-related complications.

Table 1

Veterans Administration Budget 2018–2025

Source: US Veterans Administration (2024)

Combined expenditures for fiscal year 2025 will surpass $1 trillion. Given America’s growing debt such expenditure is difficult to sustain, especially if Washington’s global military footprint continues to expand at a rapid pace. Finding the manpower to wage war is becoming increasingly difficult for the United States.

The Afghanistan and Iraq conflicts saw the United States suffer 8,492 combat fatalities.  Compared to the 58,000 deaths in Vietnam and 53,000 in Korea this number was significantly smaller. A critical reason was excellent triage care and swift evacuation of wounded soldiers from the battlefield. To get soldiers to serve in an all-volunteer force, the United States was offering $20,000 to $40,000 enlistment bonuses. Today, those numbers are even higher.

Further, in his autobiography, Hillbilly Elegy, Vice President J. D. Vance discussed how the American working class, which his family belonged to, blamed George W. Bush and Barack Obama for making them cannon fodder in Afghanistan and Iraq. This feeling, combined with the high number of walking wounded (over 50,000) who came back from the wars with physical and psychological trauma, led to a growing reluctance amongst America’s combat-age population to go to war. In such circumstances, reducing military expenditures and the nation’s global military footprint makes sense.

In this context, Trump’s plan for hemispheric defense is a return to the Monroe Doctrine of the nineteenth century, where the United States maintained its military supremacy over the Western hemisphere and kept out foreign powers. Defending the Western hemisphere is easy. As Otto von Bismark once said, “The Americans are a very lucky people. They’re bordered to the north and south by weak neighbors, and to the east and west by fish.”

In the 21st century, the United States remains the predominant naval power in the Atlantic Ocean as well as in the Eastern and South Pacific, making it difficult for any aggressor to penetrate America’s defensive walls. Fielding an American military force that is based around a blue-water Navy and a globally deployable Air Force is a cost-effective strategy because it takes away the expense of overseas bases. In fact, recognizing that in a conflict with China there could be political unwillingness in Asia to host F-35s, the first Trump administration decided to build a new generation of lower yield nuclear weapons that could be launched from cruise missile–carrying submarines.

The Quest for Territory

Since coming to power, Donald Trump suggested Canada become the 51st state and the purchase of Greenland. Denmark has stated that Greenland is not for sale while in Canada Trump’s statements led to a revival of Canadian nationalism and a boost in the fortunes of a very unpopular liberal party. President Trump’s motivation for such efforts is clear.

In terms of minerals, a United States that has full access to minerals in Canada and Greenland is on par with the mineral wealth of Russia. Acquiring Canada and Greenland would also make the United States and Russia the two most prominent Arctic states and would freeze out attempts by China to acquire influence in the region.

Trump’s demands caused global leaders to wonder about the rationality of such pronouncements but what he said is based in political and historical facts. The United States purchased the Virgin Islands of St. Thomas, St. Croix, and St. John from Copenhagen in 1917 and, subsequently, bought Water Island from a private Danish company in 1944. If the citizens of Greenland choose, via referenda, to join the United States, such a purchase has historical precedent.

In the case of Canada, the Quebecois have periodically asked for independence and Ottawa conducted referendums to see if the population of Quebec wants to secede. So far, secessionists suffer defeat each time. It is interesting to note that the Atlantic provinces of Canada—New Brunswick, Newfoundland, Nova Scotia, and Prince Edward Island—previously said that Quebec’s secession would lead to their joining the United States. British Columbia, which is divided from Canada by the Rockies and whose economy is tied to the West coast of the United States, would potentially follow suit. Canada would then consist of Ontario and the northern part of Quebec where the native population has made it clear that they have no interest in joining the Francophone nationalists.

The fact is that Canada has a fragile economy that could breed long-term discontent.  Further, in Quebec, the Parti Quebecois’ charismatic leader Paul St. Pierre Plamondon, who is likely to win the provincial election in April, wants a third independence referendum by 2030. If that happens, Trump’s territorial realignment may come to pass. In a world where all or part of Canada is part of the United States and Greenland is an American territory, the United States is in far less need of Europe or Asia. With only 11 percent of the American economy derived from exports, an internally focused United States is not a nation in a bad position.

Amit Gupta is a Senior Fellow in the National Institute of Deterrence Studies. The views in this article are personal. He may be contacted at amit.gupta1856@gmail.com.

Hemispheric Defense: An Idea Whose Time Has Come was originally published on Global Security Review.

During the signing event, President Trump remarked, “On trade, I have decided, for purposes of fairness, that I will charge a reciprocal tariff, meaning whatever countries charge the United States of America, we will charge them no more, no less. In other words, they charge the US a tax or tariff, and we will charge them the exact same tax or tariff, very simple.”

A strong economy is vital to national security. In addition to reliable access to energy, minerals, and capital, any great power fundamentally requires a resilient, production-oriented, economic infrastructure that ensures a comprehensive and adequate industrial base capable of producing most of the nation’s necessities.

Furthermore, America’s national debt exceeds $36 trillion, with a debt-to-GDP ratio surpassing 133 percent. In fiscal year 2024, the cost of servicing the debt’s interest surpassed America’s defense budget.

Americans place great importance on fairness and balance. The Declaration of Independence famously states that “all men are created equal” and advocates for equal treatment for all individuals, regardless of status or position. The Constitution establishes a framework that balances power among various branches of government, as outlined in James Madison’s Federalist 51.

Socrates once remarked, “If measure and symmetry are absent from any composition in any degree, ruin awaits both the ingredients and the composition…. Measure and symmetry are beauty and virtue the world over.” He was right.

President Trump seeks to implement tariff reciprocity towards America’s competitors in a fair, just, and balanced manner. Can this same principle be applied to his peace through strength deterrence approach? Yes, it can.

Dynamic parity is a nuclear deterrence strategy that deliberately achieves and maintains a contextually symmetrical balance of nuclear force capabilities, capacities, and composition in relation to the combined nuclear strength of China, North Korea, Russia, and possibly Iran. This strategy seeks to balance America’s nuclear deterrent force against the potentially collaborative arsenals of these adversaries, thereby enhancing deterrence, reassuring allies, and preserving strategic stability in a world lacking binding arms control agreements.

America is about 15 years into a 30-year effort to recapitalize its nuclear arsenal, which has a program of record that offers a one-for-one intercontinental ballistic missile (ICBM) swap, two fewer ballistic missile submarines, and a reduced bomb load capacity. The current program of record was designed for a world that no longer exists.

Even the Biden administration’s acting Assistant Secretary of Defense for Space Policy acknowledged the need to explore “options for increasing future launcher capacity or adding more deployed warheads in land, sea, and air capabilities” to address the significant growth and variety of China’s nuclear arsenal. The 2023 Congressional Commission report on U.S. Strategic Posture stated that the current nuclear modernization program is “necessary, but not sufficient” for facing two nuclear peers: China and Russia.

Americans often assess the fairness of financial rewards and the distribution of costs, commonly reacting to perceived unfairness with feelings of hostility and responding with protest. Regarding economic, political, or national security issues, we are “wired to resist unfair treatment.” This sense of fairness and balance also extends to America’s defensive posture. A recent Reagan National Defense Forum Survey noted that 77 percent of voters were concerned that the national debt might force defense cuts, with 79 percent supporting increased defense spending, and 70 percent of those surveyed were concerned about “Russia launching a thermonuclear attack against the US.”

In this context, geopolitical fairness refers to the perceived evenhandedness among nations in a manner that mutually impacts interests. Meanwhile, geopolitical balance pertains to the distribution of perceived power between states in the international system. The 2024 Annual Threat Assessment noted that Russia possesses the largest, most diverse, and most modern nuclear weapons stockpile in the world. This infers that America remains inferior in aggregate nuclear weapon numbers and is trailing in modernization, which creates an imbalance.

Correcting long-standing imbalances in trade policy and military shortfalls is vital to the American conscience. Allowing trade deficits with economic competitors to persist without challenge is akin to unilateral disarmament. The US trade deficit for goods reached a record $1.2 trillion in 2024, while the treasury borrowed $2 trillion that same year. Ongoing deficits of this magnitude threaten domestic companies and jobs, putting negative pressure on GDP and the prosperity of individual Americans. Ensuring that America’s nuclear deterrent can counter the threats posed by its adversaries will safeguard citizens’ security and sovereignty, enabling prosperity.

President Trump’s new Trade and Tariff Reciprocity Policy, like the nuclear deterrence strategy of Dynamic Parity, places the burden of acceptable behavior on America’s competitors. They both empower America to act in the interest of fairness, aiming to achieve balance in both process and product. Geopolitical stability is not born of an America exploited economically or constrained militarily. This kind of weakness is not only provocative but also insulting.

Col. Curtis McGiffin (US Air Force, Ret.) is Vice President for Education of the National Institute for Deterrence Studies and a visiting professor at Missouri State University’s School of Defense and Strategic Studies. He has over 30 years of total USAF service. The views expressed are his own.

Trump’s Trade and Tariff Policy Benefits America’s Nuclear Deterrent was originally published on Global Security Review.

Too few Americans contemplate the role of digital currency volatility in acting as a barrier or an enabler to nuclear deterrence. The reality is that there are opportunities and risks that volatile cryptocurrency plays in the strategic calculus of nuclear states.

Cryptocurrency and Geopolitical Shifts

Cryptocurrencies are decentralized and borderless, challenging traditional financial systems and reshaping how states interact economically. Their volatility stems from market immaturity, speculative trading, regulatory uncertainties, and evolution of these ever-changing technologies. Essentially created to prevent intermediaries, like banks and financial institutions, cryptocurrencies lay the foundation for trustless transactions for illicit activities.

This volatile mix of person-to-person transactions and zero oversight introduces both unpredictability and opportunity, raising questions about their implications for nuclear deterrence, which now must deal with a domain that includes ungoverned access to financial streams that can be used by state and non-state actors to engage in elicit behavior that undermines deterrence stability.

Nuclear deterrence relies on a delicate balance of power, with states maintaining assured second-strike capabilities to dissuade adversaries from initiating conflict. This balance hinges on credibility and capability. Cryptocurrencies, with their volatile swings in value, could serve to undermine stability within a country or enable elicit actors to engage in a range of nonnuclear actions that undermine strategic stability.

The Risks of Cryptocurrency Volatility as a Barrier

Cryptocurrency volatility can act as a barrier to nuclear deterrence by creating financial instability and undermining a state’s ability to project economic power. Traditional nuclear powers depend on stable economies to maintain robust defense capabilities, fund deterrence strategies, and support diplomatic efforts. Sharp and unpredictable fluctuations in digital assets can undermine financial stability, weakening a state’s capacity to fund critical defense initiatives.

For the United States, crypto is not a major issue currently. But, for North Korea, who funds its nuclear program through elicit activities, crypto is important. Proliferators also use crypto to conduct activity. Instability in crypto makes illicit activity even more high stakes and unpredictable.

Instability creates advantages for state and non-state actors to exploit cryptocurrency markets for nefarious purposes, such as evading sanctions, financing proliferation, and bypassing traditional financial controls. The decentralized nature of cryptocurrencies complicates efforts to monitor, track, and regulate illicit activities, potentially undermining efforts to prevent the spread of nuclear weapons or restrict financing for state and non-state actors pursuing destabilizing weapons programs.

Cryptocurrency instability also presents a challenge to strategic stability through cyber threats. If critical financial systems or exchanges are disrupted, or if adversaries manipulate markets to harm a nation’s economy, it could create economic shocks severe enough to destabilize deterrence relationships, increase miscalculation risks, or fuel insecurity-driven arms build-ups.

The Darknet and Conflict Escalation

Darknet cryptocurrency markets empower bad actors by offering anonymity and decentralized financial tools, enabling a wide range of conflict-escalating activities. These markets facilitate the purchase of illegal arms, military-grade technology, and hacking tools, often used to destabilize regions and target critical infrastructure (command-and-control systems) through cyberattacks.

Terror organizations leverage cryptocurrencies for anonymous funding, allowing them to finance operations, recruit globally, and expand their influence. Sanctioned entities exploit these markets to bypass international restrictions and acquire resources that fuel aggressive actions.

The ability to transact anonymously with cryptocurrencies also shields organized crime, including narcotics and human trafficking, whose revenues often fund conflict zones and insurgent groups. Covert exchanges on the darknet can increase espionage, destabilize international relations, and provoke hostilities to serve a radically motivated agenda.

In parallel, extremist groups utilize these platforms to spread propaganda, incite violence, and radicalize populations, further destabilizing fragile regions. The combination of anonymity, decentralized systems, and hidden economies presents a formidable challenge for global security efforts aimed at conflict prevention and stability.

Cryptocurrency as an Enabler of Nuclear Deterrence

On the other hand, cryptocurrency volatility also opens new avenues for strengthening nuclear deterrence through financial resilience and innovation. The decentralized nature of digital assets can enable states to diversify their financial resources and reduce dependency on traditional systems that might be vulnerable to adversarial influence or geopolitical tensions. In times of economic crisis or sanctions, cryptocurrencies can provide states with alternative means to maintain fiscal stability, thus supporting their deterrent capabilities. Countering bad activities with good can be as challenging as the reliance on traditional financial stability for positive security assurance.

Furthermore, blockchain technology, which underpins cryptocurrencies, offers potential for transparency, accountability, and verification mechanisms in arms control agreements. By leveraging blockchain, states can create tamper-proof records for tracking nuclear materials, enhancing verification regimes, and building trust between adversaries. The volatility of digital assets may fuel innovation and drive investment into these applications, ultimately strengthening nuclear stability and deterrence structures.

Balancing the Risks and Opportunities

While the volatility of cryptocurrencies poses undeniable risks, it is essential to approach them with a nuanced perspective to find the right balance between risk and reward. Policymakers must strike a balance between leveraging the opportunities that digital assets present and mitigating their risks to global security. Collaborative efforts to regulate and stabilize cryptocurrency markets can reduce the likelihood of financial instability while harnessing the potential of decentralized systems.

In addition, enhanced cybersecurity measures must accompany any state or multilateral effort to integrate cryptocurrency into the financial systems that underpin deterrence capabilities. Protecting digital infrastructure against malicious actors will ensure that the advantages of decentralized assets are not overshadowed by their exploitation for destabilizing purposes.

A New Strategic Frontier

The volatility of cryptocurrency markets is both a challenge and a frontier for instability of nuclear deterrence. While it poses risks through financial instability, illicit use, and cyber threats, it also offers opportunities for financial resilience, innovation, and transparency. In today’s evolving digital environment, nations must adapt to this dual-edged sword, developing strategies that incorporate the volatility of digital assets into a comprehensive approach to deterrence.

Ultimately, whether cryptocurrencies become a barrier or enabler of nuclear deterrence depends on how nations, regions, and regulators in the broader international community respond to this evolving challenge. By advocating cooperation, innovation, and regulation, cryptocurrencies can strengthen global security architectures and contribute to a stable nuclear order—turning volatility into a force for strategic stability and peace.

Greg Sharpe is the Marketing and Communications Director at the National Institute for Deterrence Studies. The views expressed in this article are his own.

The Volatility of Cryptocurrency: Barrier or Enabler of Nuclear Escalation? was originally published on Global Security Review.

Cyber-Espionage and the Economy

While the current pandemic crisis presents businesses with unprecedented economic challenges to their very existence, it has also created a tremendous level of cyber-risks. Heightened risks are present not only due to the significant numbers of individuals working from home, increasing the vulnerability landscape, but also because as states fall deeper into recessions, some may resort to cyber-espionage in an attempt to position better their post-pandemic political, economic, and industrial structures. Regardless of the industry, the intellectual property (IP) of any organization is likely to be a precious target for foreign government-sponsored hackers.

Whether they seek production know-how, manufacturing plans, patents, research, or trade secrets, foreign governments may resort to unethical means of acquiring critical industrial and trade information to enhance their domestic economy posture and further leverage their comparative and absolute advantages, while simultaneously imposing costs on their adversaries. Chinese government-sponsored hacking groups, as well as their Russian counterparts, have a long-standing history of engaging in such malicious acts.

Government-sponsored and international criminal hacking groups, particularly those sponsored by the Chinese and Russian governments, are likely already taking advantage of the pandemic to increase their espionage activities around the globe. In this respect, it was recently reported that the Chinese cyber threat group, APT41, has already launched “one of the broadest campaigns by a Chinese cyber espionage actor we have observed in recent years” according to the cybersecurity firm FireEye. The attacks targeted the healthcare sector, including the pharmaceutical industry as well as other industries, including banking, manufacturing, media, telecommunications, and non-profits in several countries. Though, arguably, different sectors might be more prone to cyber-espionage campaigns than others, depending on the level of the industry’s criticality and IP possession. Yet in desperate economic times, government-sponsored hackers are likely to “harvest” as much data as possible—even non-industrial data.

Politically Motivated Cyber-Espionage

Many would argue that an organization’s IP or industrial data are the primary targets for government-backed hackers and cyber-attacks. However, non-industrial data can also be of great value to adversary governments to leverage their political advantage and position. Such data can include the general online behavior of the public, which then can give adversary-states insight into public sentiment towards the government of a target country, thus allowing adversaries to more effectively plan and orchestrate targeted online disinformation campaigns. These online campaigns are usually conducted to degrade the credibility and trust between the targeted country’s public and its media and governmental institutions. In doing so, adversaries attempt to covertly shape political developments in targeted countries.

Accordingly, cyber espionage is an activity that effective online disinformation campaigns are built upon. Again, it is no wonder how Chinese and Russian backed cyber-troops pioneered the systematic use of online disinformation tactics and exploitation of social media for such purpose. The latter is particularly evident from the recent actions performed by China and Russia while the ongoing pandemic crisis is taking place, where both countries tried to push conspiracy theories targeting western audiences to create political divisions, fear, and confusion. Furthermore, as the pandemic crisis continues to profoundly disrupt the global economy, the debate on global power shifts, and the reshaping of the international order is already starting to take place. In this regard, one cannot ignore China’s hegemonic intentions, and neither should one be surprised to see a surge of Chinese cyber-espionage and disinformation campaigns.

Countermeasures

Undoubtedly, the current pandemic presents both public and private organizations around the world with unprecedented economic risks leading to severe consequences on a macro and micro-scale. Although macro-level implications are evident in terms of economic performance, unemployment, and economic security, micro-level consequences may include a rise in crime, public unrest, and threats to civil order. Furthermore, the micro-level effects mentioned can be further fuelled by foreign cyber espionage and disinformation campaigns aimed at undermining the internal stability of a targeted state by adversarial actors.

That said, protective measures and recovery plans must be collective, in coordination and close partnership between a nation’s government, domestic organizations, and the private sector. The current pandemic has narrowed the available options for mitigating the economic fallout given the unanticipated and significant decline many industries are facing.

As economic measures, including but not limited to stimulus packages—an integral part of a state’s national security—are being implemented around the globe, the focus here is on governmental countermeasures targeting the spread of foreign cyber-espionage and disinformation. Even a slight relaxation of counter-espionage and counter-disinformation measures could impact economic recovery efforts. In this respect, several actions can be taken at the national level:

1. Sovereign states should agree on a formalized collective, coordinated intergovernmental response of indictment, and sanctions against governments sponsoring hacking groups should be implemented.
2. Governments should reinforce and harness their cyber defenses and data encryption. Additionally, governments must continuously address the weakest link in their cybersecurity chain: the human factor. The human element is mostly thought of in terms of increasing cyber-awareness and hygiene training. However, the particular focus here is the importance of increased monitoring of staff to limit insider threats who can be recruited by foreign bodies for facilitating espionage or network access.
3. Existing data policies of every governmental institution should be reviewed to further control and limit who have access to what.
4. Governments should strongly encourage the private sector industries to harness their internal cybersecurity team. While medics globally are on the frontline of fighting the pandemic and coronavirus spread, the organization’s cybersecurity teams are on the frontline of fighting the dangerously rising level of cyberthreats and associated digital risks related to espionage. That said, regardless of the industry, organizations must empower their cybersecurity teams more than before to more effectively counter increasing vulnerabilities surface and cyber-risks. Especially that with the growing pandemic uncertainties, social distancing measures will undoubtedly increase the individuals use of internet, computers, tablets, and smartphones.
5. Governments should increase online cyber-hygiene and awareness training for their general public. While cyber-hygiene has been something long-time called for, yet it is currently more required than before. Individuals must ensure vigilance while digitally navigating. Especially in times of crisis and fear, due to human nature, individuals thrive on more news and updates on the internet. In this regard, cybercriminals will possibly exploit such concerns to distribute more malware, malicious link, malicious websites, phishing emails, and scamming attempts. Recent reports found that global phishing activity increased by 667 percent during March 2020.
6. Governments should as well as encourage the private sector industries to limit the access of employees working from home to the organization’s intellectual property. Whether confidential financial documents, business plans, or critical research in an R&D department, employees’ access to any document or material deemed as the organization’s intellectual property should be as limited as possible. Concerning point five, it is never guaranteed that employees will not fall prey to any online malicious trap that could infect their device.
7. Continuously re-evaluate the digital and online tools needed by public and private sector employees needs to work from home to ensure safety, privacy, and security as much as possible. As different organizations utilize different tools and thus requires a different level of assessment. However, one example we can indicate here is the rapid adoption of Zoom, a video conferencing website and app that saw a rapid rise globally over the past month as a result of the “working from home” implementation. Accordingly, it’s been reported that hackers are capitalizing on the current extensive use of communication apps, including Zoom and Google classrooms, and are trying to infiltrate online meetings. Furthermore, there are ongoing concerns over Zoom’s privacy practices, with countries like Taiwan already banning its use.
8. In tackling online disinformation threats, governments should set up a dedicated taskforce comprising stakeholders of its national intelligence, national security, media, and ICT authorities. Such a task force would contribute to protecting their nation’s citizens by ultimately monitoring continuously and responding to foreign media outlets, online propaganda, and social media for adversaries’ disinformation campaigns. Furthermore, such a taskforce should regularly communicate to the public the right and factual information to avoid unintentional misinformation spread by the public.
9. Governments should work at all levels to ensure the highest level possible of transparency and government performance with its citizens via daily press briefings, in appearances on national media outlets, and official social media accounts. In doing so, governments minimize the possibility of having its citizens falling victim to falsified information spread by adversaries online.

With the ongoing pandemic crisis combined with the “warning drums” of a deep economic recession, governments worldwide are facing a full-scale national crisis that perhaps the maximum was done prepare for it was a hypothetical simulation or a table-top exercise. Managing the crisis, in reality, can be much more complex and a nightmare for decision-makers. However, flexible, agile, and governments that are being flexible and adaptable while at the same time prioritizing their cybersecurity measures and counter-espionage efforts are more prone to survive the crisis as well as sustain domestic business operations with minimal loss.

A Global Recession Will Fuel Cyber-Espionage was originally published on Global Security Review.

In January of this year, General Secretary Xi Jinping of the Chinese Communist Party (CCP) visited Myanmar, where he laid the foundations of the China-Myanmar Economic Corridor. Xi signed dozens of bilateral agreements while lauding the Burmese leadership for its efforts to combat terrorism while bypassing entirely the internationally condemned treatment of Myanmar’s Rohingya ethnic minority.

Beijing has been steadily encircling India since 2013 when General Secretary Xi announced the start of the Belt and Road Initiative (BRI) and its constituent projects like the China-Pakistan Economic Corridor (CPEC), the CMEC (China-Malaysia Economic Corridor), or the China-Sri Lanka Economic Corridor, to name a few.

India Encircled by a String of Pearls

Thus far, India has followed a sheepish approach to Beijing’s voracious appetite for geopolitical influence, as exhibited by its much-publicized “String of Pearls” strategy to exercise geo-economic and military domination across the globe by making massive infrastructure and trade investments.

Strategic Chinese acquisitions in its “String of Pearls” include the purchase of a port in the West African state of Djibouti, the Hambantota Port of Sri Lanka, the Gwadar port in Pakistan, and more recently, a deep-sea port at Kyaukpyu, Myanmar. Bejing is already on track to exert the regional dominance reminiscent of Chinese hegemony in the 5^th century AD.

India is involved a geopolitical quagmire with China, an adversarial power, yet an important strategic partner. While China is India’s second-largest bilateral trade partner, it is also rapidly consolidating its influence throughout South Asia. India, therefore, is at risk of encirclement, restricting its ability to exert its still-considerable influence in the world, particularly in Africa, and, to an extent, in South Asia.

How Should India Respond?

India has consistently rejected the idea of participating in the Belt and Road Initiative, citing concerns over sovereignty. The China-Pakistan Economic Corridor, which passes through Baluchistan in Pakistan-occupied Kashmir, has been a point of contention for New Delhi, albeit one that has been mildly expressed. Despite economic and strategic conditions that are seemingly in Beijing’s favor, there are several steps that New Delhi can take to counter China’s expanding influence in India’s backyard.

First, it’s clear that India cannot match China in terms of economic strength, at least not in bilateral terms. However, India can use its regional influence to strengthen multilateral geo-economic organizations of which it is a member, such as the South Asian Association for Regional Cooperation (SAARC) and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) by embarking on multilateral economic projects in the iron and steel, oil and petroleum, and textile sectors, as well as leveraging its considerable expertise in the information technology sector.

Second, New Delhi must double-down on a carrot-and-stick approach to managing geo-economic competition with China. India has massive market potential, with a population of over 1.3 billion people. The country is one of the world’s largest markets for electronics, IT, logistics, and, more recently, defense. At the same time, India must intensify scrutiny of Chinese goods by strengthening the Harmonized System Nomenclature (HSN) and by cracking down on imported products of substandard quality—a critical step to take considering that 45% of India’s imported goods are of Chinese origin.

Third, India must take further steps to bolster its exports to countries increasingly wary of China’s growing influence, particularly as global scrutiny of the sustainability of China’s Belt and Road Initiative gains traction. At the same time, New Delhi should facilitate Transfer of Technology (ToT) agreements with other countries in sectors where India is traditionally strong, such as logistics, defense, agriculture, and dairy. India must increase its use of its soft power by undertaking proactive cultural, economic, and political diplomacy in key BRI participant-countries, including Myanmar, Malaysia, Indonesia, Cambodia, and Brunei, while simultaneously bolstering defense ties through bilateral and multilateral military exercises and training programs.

Finally, India must strengthen its economic relations with ASEAN member-states, particularly with the Vietnam-South Korea-Japan trilateral grouping. More robust economic ties between the ASEAN group and India will be an essential component in countering China’s hegemonic trade practices. Thus, India’s withdrawal from the Regional Comprehensive Economic Partnership (RCEP) was an unfortunate setback in the efforts to build a healthier and more equitable multilateral economic partnership.

New Delhi must move rapidly to boost India-ASEAN trade and investment levels. The slower India is in responding to China’s aggressive economic moves; the more India will end up losing in the era of great power competition.

A study conducted by the Research Bureau of the PHD Chamber of Commerce and Industry has predicted that Indian trade with ASEAN economies will double by 2025, from the current level of $142 billion (2018) to $300 billion. Measures the Indian government can take include enhancing incentives for Indian exporters, implementing policies to significantly boost the international presence of India’s service sector, undertaking a continuous review of the ASEAN-India Trade in Goods Agreement, simplifying customs procedures, bolstering private sector engagement, and improving access to financial and banking services.

Is India at Risk of Losing the Game of Great Power Competition? was originally published on Global Security Review.

If you’ve not heard of Transnistria—the de-facto state nestled between Moldova and Ukrain—you could easily be forgiven. The territory is just over 4,000 square kilometers, is home to just under 500,000 people and recognized only by three additional de-facto states. While Abkhazia, South Ossetia, and Artsakh may treat Transnistria as an independent state, the rest of the world sees Transnistria as a breakaway portion of Moldova. Moldova itself calls the tiny strip of land on the eastern bank of the Dniester river an autonomous territorial unit with special legal status.

Since the conflict that led to its secession in 1992, Transnistria has used its uncertain legal status to act as a thriving market for illegal arms. The country is estimated to house Europe’s largest ammunition stockpile. This stockpile alongside easily corrupted officials and porous borders has allowed Transnistria to operate as prime real estate for much business that cannot be conducted openly in many other countries. This business includes the monopoly Sheriff corporation, Sheriff LLC, which is owned and founded by Viktor Gushan, a former Soviet KGB officer.

What makes Transnistria so popular for illegal trade?

Perhaps Transnistria’s largest asset for illegal trade is its proximity to Odessa, Ukraine’s Black Sea port which operates as a prime spot for most Eurasian trade. Transnistria’s main exports are cigarettes, arms, alcohol, and food. Historically, much of this trade was unable to go through Moldova or to the European Union due to trade boycotts. Instead, Transnistria relied on the porous borders between itself and Ukraine. However, given the ongoing civil war in Ukraine, that approach has shifted.

After 2014, Ukraine’s border policy has become much more aggressive. Instead of allowing illegal products to travel to Odessa, Ukraine border patrols are much stricter now both regarding products and people. In its place, Transnistria has been forced to turn westward. After a long series of negotiations, Moldova signed a tariff-free trade deal with the European Union in 2014. This deal additionally allowed trade to be conducted from Transnistria with a few caveats. Businesses in Transnistria could take advantage of this deal so long as they were registered in Moldova and agreed to customs inspections. This shift within Transnistria gave way to massive change. While in 2014, While in 2014, 27 percent of exports went to the European Union, in 2016, that data point increased to 58 percent.

Will Transnistria continue to be an illegal trade hub?

While Transnistria has certainly shifted most of its trade to the West, it remains to be seen whether or not it has ended its reliance on illegal trade. Sheriff LLC, for example, has a monopoly not only on all domestic business within Transnistria but also on illicit trade. Even with increased trade with the European Union, it is unlikely that such a behemoth like Sheriff would give up a significant portion of its income. Moreover, while it certainly appears as though Transnistria is slowly turning westward, its historical connection with Russia cannot be understated.

This relationship with Russia implies that even with stricter Ukrainian border policies, there will be a portion of the population that feels close to and therefore travels to Russia. Naturally, not all of this travel will involve illegal trade. Given Transnistria’s experience with smuggling, it would be surprising if black market trade ceased simply due to new border restrictions.

Transnistria: No Longer an Illegal Trade Hub? was originally published on Global Security Review.

Over the years, global climate change severely and observably impacted the environment, resulting in rapidly melting glaciers, ice covers on rivers and lakes breaking up much earlier than anticipated, and unprecedented levels of animal migration, as increasing numbers are displaced from their natural habitats. According to the Intergovernmental Panel on Climate Change (IPCC), the global temperature could increase from 2.5 to 10 degrees Fahrenheit over the next century.

The effects of climate change are more visible than ever before in the Arctic. The Arctic sea ice extent for October 2018 averaged 6.06 million square kilometers (approximately 2.34 million square miles), the third-lowest level recorded in October from 1979 to 2018. To put this in perspective, the sea ice extent was 2.29 million square kilometers (1.42 million square miles) below the 1981 to 2010 average, and 170,000 square kilometers (105,633 square miles) greater than the record low observed for October 2012. As global temperatures rise, the natural resources within the Arctic region are increasingly easier to access, prompting greater frustration from environmentalists.

The melting of the Arctic sea ice has coincided with the discovery of energy deposits as well as the development of the technology needed to access those resources. These developments have caused the members of the Arctic Council—states with territorial claims in the Arctic—to pay increased levels of attention to the region.

The Arctic Council is made up of Canada, Finland, Denmark (Greenland), Iceland, Norway, Russia, Sweden, and the United States (Alaska). Of these, Canada and Russia hold the most territory (Russia controls the most Arctic territory of any Arctic state). Being a party to the United Nations Convention on the Law of the Sea (UNCLOS), which states that a country’s Exclusive Economic Zone extends 200 nautical miles offshore, Russian claims cover approximately 40 percent of the Arctic.

The Arctic plays host to substantial natural resources. A 2008 report released by the United States Geological Survey (USGS) estimated that the Arctic holds around 1,670 trillion cubic feet of natural gas, 44 billion barrels of liquid natural gas, and 90 billion barrels of oil—the vast majority of these being offshore. As more territory becomes accessible, excess reserves of gold, zinc, nickel, and iron already found in part of the Arctic may be discovered. From the connectivity perspective, the two major sea routes that permit ships to pass through the Arctic run along the Russian and Canadian coasts, i.e., the Northern Sea Route and the Northwest Passage.

The Northern Sea Route runs from the Barents Sea, near Russia’s border with Norway to the Bering Strait between Siberia and Alaska. The Northern Sea Route (NSR) would dramatically reduce the transit time for ships traveling from East Asia to Western Europe. On the other hand, the Northwest Passage connects the Atlantic and Pacific Oceans through the Canadian Arctic Archipelago.

Shipping lanes connecting Europe with East Asia currently run from the Mediterranean through the Suez Canal to the Red Sea, transiting the Malacca before reaching East Asia. The distance is roughly 21,000 kilometers (13,049 miles) and the typical transit time is around 48 days. The Northern Sea Route would cut the distance to 12,800 kilometers, reducing transit time by 10 to 15 days. According to a paper published by the CPB Netherlands Bureau for Economic Policy Analysis:

“The direct impact of the opening of the NSR is that international shipping (volume by distance) is reduced by 0.43%, but global trade volumes increase by 0.21%. The total percentage of world trade that will be rerouted through the Northern Sea Route will be around 5.5%.”

The paper further estimates that 15% of all Chinese trade will be through the Northern Sea Route. The optimization of the NSR will result in a significant rerouting of the world shipping lines and would have a drastic impact on the usage of the Suez Canal and the Malacca Straits to reach the Southeastern and East Asian Markets. According to CPB research, roughly 8% of global trade currently transits the Suez Canal, and it is estimated that level would be reduced by two-thirds once the Northern Sea Route becomes fully operational. To illustrate, from 2008 to 2012 the average number of commercial ships transiting the Suez Canal each year was approximately 15,000—the re-routing of vessels through the NSR, according to CPB research, would reduce that number by 10,000.

The rapidly melting sea ice has prompted some analysts to predict that the shorter shipping route could largely replace the Suez Canal Route that connects the Red Sea and the Mediterranean Sea. Such a conclusion overlooks the fact that ships using the Suez Canal Route make stops at ports in Southeast Asia and the Middle East when transiting between Europe and East Asia. In other words, to be commercially viable, large container ships using the Suez Canal route need to make deliveries to several customers along the way.

In contrast to the Suez Canal Route, the territory that lies along the Northern Sea Route is sparsely populated, meaning low demand for imported goods. Moreover, replacing one trade route with another could have a drastic impact on the economies of the countries that rely on the transit fees of the southern maritime trade route. Lastly, the Northern Sea Route is only safe to navigate during the summer when the straits are relatively ice-free. Even then, escort icebreaker vessels are often necessary to navigate the waters as there is always a risk of unpredictable ice conditions. Additional variables, such as a lack of search and rescue teams and support infrastructure, along with high insurance premiums for shipping vessels, need to be taken into account when evaluating the viability of the Northern Sea Route.

This is not to say, however, that the NSR is not a serious competitor to the southern sea route. Many scholars have argued that global shipping companies may become more interested in the NSR as it becomes more accessible and viable when compared with the longer and piracy-prone traditional Suez Canal Route. Specifically, the NSR makes more economic sense for shipments of oil and liquid natural gas (LNG). Increased energy trade through the NSR would largely benefit Russia, which has heavily invested in maritime transport ventures and energy projects in the Arctic.

The Russian government’s planned Murmansk Transport Hub will construct new roads, railway infrastructure, ports, and other facilities on the western side of the Kola Bay. It is described as one of the biggest infrastructure projects in Russia and by far the largest in the Arctic. There are also plans to upgrade the M18 highway between Murmansk and the Norwegian border. The new road will significantly improve the route between the border towns of Nikel, Russia and Kirkenes, Norway. The Sabetta Port project is a joint project undertaken by Novatek and the Russian Federal government to service the Yamal LNG project and a nearby gas field operated by Novatek. The port will facilitate gas shipments of both eastwards and westwards along the Northern Sea Route. Furthermore, the Russian government also plans to produce the LK-60 icebreaker and the LK-60 II icebreaker, which are required for cargo ships to access the NSR.

The economic benefits of the Northern Sea Route, combined with large-scale Arctic infrastructure development projects and the existence of substantial energy resources of energy resources to be tapped, make the Arctic a lucrative prospect for Russia and the other Arctic states. However, the strategic desirability of the Arctic trade route will depend on many factors, including the continuous melting of ice, development of modern vessels to sustain harsh weather conditions, an upward trend in global trade, increased demand in Asian markets, persistent piracy around the Horn of Africa, growing instability in the countries around the Suez Canal region, and heightened congestion in the Strait of Malacca. All these factors will further contribute to the geostrategic importance of the Arctic as a natural resource and transportation hub. At the same time, however, the growing importance of the region may also lead to increased competition.

Melting Arctic Sea Ice Opens New Maritime Shipping Route was originally published on Global Security Review.

It is therefore unsurprising that in recent months, the member-states of the Gulf Cooperation Council (GCC) have ramped up efforts to consolidate and expand their trade and investment ties with the republics of Central Asia. In January, Saudi Arabia expressed its intent to invest heavily in Uzbekistan’s textile industry as part of a broader commitment to expand economic cooperation. On March 20^th, 2019, Tajikistan secured a loan worth $25.5 million (USD) from the Kuwait Fund for Arab Economic Development for infrastructural repair in its impoverished southeast. 

Leading the Gulf’s charge into Central Asia is the United Arab Emirates (UAE). A flurry of diplomatic activity has taken place so far this year, culminating in March with the presidents of Kazakhstan and Uzbekistan visiting Abu Dhabi. Bilateral economic ties have been strengthened, mainly through the Mubadala Development Company, the sovereign wealth fund of the UAE. Mubadala secured extensive investments in Kazakhstan’s polyethylene and polypropylene production and aerospace industries in 2018. In March of 2019, the company announced its intention to invest $10 billion (USD) in Uzbekistan’s manufacturing, agricultural, and energy sectors. 

While economic links such as these have existed between the two regions since the collapse of the Soviet Union in the early 1990s, the recent acceleration of GCC overtures toward Central Asia is driven by a conflation of geopolitical and economic developments. The persistence of low oil prices, coupled with continued volatility of the global market, has crystallized the need for both regions to diversify their economies. The prosperous Gulf States see in the likes of Kazakhstan and Turkmenistan sizeable investment opportunities in industries beyond energy, such as agriculture and manufacturing. 

In turn, the cash-strapped countries of Central Asia rely on outside investment to fuel national economic development and the GCC make for particularly attractive partners. Not merely do they offer seemingly endless capital, but until recently they have appeared to transcend the predatory geopolitical maneuvering that has tended to follow investment in the region from the likes of local powers—namely China and Russia. Both have approached investment in Central Asia as a means through which to secure political interests. China, for example, has recently purchased vast tracts of arable land in Tajikistan, arousing government fears of monopolization.  

How long the perception of GCC neutrality can be maintained, however, is uncertain. The UAE and Saudi Arabia have been driven to Central Asia in recent months in-part by a desire to pre-emptively combat further incursions into the region by a rival power: Iran. The country has deep historic cultural and political links with the area and is increasingly expressing an interest in expanding its economic presence.

Tehran has been probing investment opportunities in Turkmenistan and Kazakhstan amid an improved diplomatic atmosphere following the signing of the Convention on the legal status of the Caspian Sea in August of 2018.  There is scope for Central Asia to become a zone of contestation between the Gulf and Iran, as an extension of the competition that defines their conduct in the Middle East.  Though this development won’t be to the taste of Central Asian governments, it is unlikely to deter the highly profitable trajectory of their expanding ties with the GCC. 

The Geopolitical Implications of Expanding Ties Between the Gulf and Central Asia was originally published on Global Security Review.

English is gradually replacing Russian as the most common foreign language spoken in Mongolia, as Western corporations control increasingly large segments of the Mongolian mining industry. The mineral sector is the most essential part of the Mongolian economy. The former Soviet satellite state has approximately ten percent world’s known coal reserves.

Two companies dominate the Mongolian mining industry—Oyu Tolgoi and Tavan Tolgoi. Oyu Tolgoi, two-thirds of which is owned by Canadian and British-Australian firms, is the dominant player in the Mongolian mining sector. Despite its poor environmental record, the Canadian mining giant Rio Tinto is increasingly influential within Mongolia. Following a 2013 disagreement between the company and the Mongolian government, Ulaanbaatar was forced to fire Tserenbat Sedvachig, the executive director of Erdenes Oyu Tolgoi, the state-owned company that controls the remaining third of Oyu Tolgoi.

The second major corporation in the Mongolian mining industry is the state-owned Tavan Tolgoi. Mongolian lawmakers recently approved a plan to sell up to thirty percent of the Tavan Tolgoi coal mine, with the government officials expressing their hopes that Rio Tinto will have to maintain a level of “working cooperation” with the Mongolian mining giant.

Mining accounts for approximately one-third of Mongolia’s GDP. Mineral commodities comprise a little over eighty-nine percent of the country’s total exports. Although Western corporations like Rio Tinto maintain a strong level of influence over the country’s economy, China imports the majority of Mongolian exports. In contrast, Russia’s involvement in the Mongolian economy plummeted in the aftermath of the Soviet Union’s collapse.

By the 1990s, Mongolian trade with Russia declined by around eighty percent, as China’s diplomatic relationship with and economic influence over Mongolia increased. In recent years, however, Russia has sought to rebuild its ties with Mongolia to enhance its standing as a regional power. The Russian government wrote off ninety-eight percent of Mongolia’s state debt, and an agreement was signed to build an oil pipeline from Russia to China through Mongolia.

The Mongolian public retains a certain amount of nostalgia for Russia, and a recent flight of Western investment has reinforced such sentiments. During the Soviet era, Mongolia was considered the USSR’s unofficial 16th republic, with most people in the country being able to speak and understand Russian.

Today, the Russian language is far less popular with Mongolians, especially among the youth. Furthermore, even though the Cyrillic alphabet is the country’s official alphabet, young Mongolians increasingly use the Latin alphabet on their phones and social media. Nearly half of all comments made by young Mongolian Facebook users are written in the Latin alphabet, with the remaining portion being in Cyrillic. Going forward, Ulaanbaatar may make an effort to standardize the use of the Latin alphabet, which has been the trend in many former Soviet republics or Soviet aligned-states that used the Cyrillic script in an official capacity.

Russia is not only losing economic influence in Mongolia, but it is also losing cultural influence. English has replaced Russian as the most common foreign language used by many young Mongolians. This adoption is fueled by both migration and the desire to integrate further into the global economy. Even though a significant number of Mongolian schools and universities continue to teach Russian to their students, the presence of Russian culture in the country will continue to decline.

Russian Influence in Mongolia is Declining was originally published on Global Security Review.

What began as a small collection of infrastructure projects in neighboring countries in 2013, has now expanded to neighboring regions and continents, impacting 65% of the world’s population, and 40% of global GDP. Primarily funded by private investors, State-Owned Enterprises (SOEs), the Asian Infrastructure Investment Bank, and China’s Exim Bank, the Belt and Road Initiative (BRI) is China’s flagship of foreign policy and investment. Encompassing massive economic corridors, transportation routes, and critical infrastructure across 68 countries, BRI is nothing short of the most ambitious development project in history.

The incentive for the initiative stems from a shared desire to improve transcontinental connectivity in commerce and people-to-people ties by offering massive investment, inexpensive credit lines, and excess Chinese capacity in steel and cement — all vital to critical infrastructure projects. In turn, Beijing aims to realize the return on BRI investments through the expansion of its geopolitical and economic spheres of influence.

Initially driving investment in transportation routes between Eastern and Western China, an economic corridor through Pakistan, and deep sea port development in Sri Lanka, BRI projects quickly spread from Central and Southeast Asia to Eastern and Southern Europe. Already the EU’s second-largest trading partner, China offers Europe abundant opportunities to improve transportation in the Eurasian corridor by decreasing transportation costs, transit times, and carbon emissions.

As international trade routes operate now, importing Chinese products can be rather cumbersome. The most cost-efficient route can take up to 40 days on a container ship. To reach European markets from coastal China, a freight ship must sail through the Strait of Malacca, across the Indian Ocean, up the Red Sea, and through the Mediterranean Sea to round Iberia and Normandy, and finally pass through the English Channel to dock at the deep-water ports of Rotterdam and Hamburg.

With new high speed rail across Central Asia, trains could freight materials by land directly from China to the European Union. According to research from the Center for Economic Policy Research, new transportation routes created by BRI infrastructure projects will decrease shipping times and costs by 3.5% and 4% between BRI countries and by 2.8% and 3.2% with the rest of the world.

Although there are numerous ways in which Chinese investment — within and apart from BRI — can benefit Europe, the European Union remains wary of increasing Chinese influence within its member states, and with good reason. In 2017, China’s state-owned enterprise (SOE) COSCO Shipping, one of the world’s largest ocean carriers, bought up a 51% share in the Port of Piraeus — Greece’s largest port. Athens subsequently blocked a joint EU statement on Chinese human rights abuses at the U.N. Human Rights Council in Geneva.

Far from being an isolated incident, Chinese lobbying of the kind seen in the Port of Piraeus has become China’s M.O. in exercising economic sharp power in Europe. While the Belt and Road Initiative is an opportunity to foment economic development and stability across Eurasia, it is also the disguised economic engine of Chinese geopolitical statecraft.

Beijing seeks to insert itself into the European dialogue and policymaking process to undermine European unity to gain preferential access to European markets and limit the ability of the European Union to exercise collective foreign and economic policy that hampers China’s geopolitical ambitions. Where Russia seeks to challenge and disrupt Europe through disinformation and military posturing, China seeks to assert its will into European policymaking to manipulate the geopolitical climate to its advantage.

Countering Sharp Power

In recognition of the threat to collective policymaking, on 20 November, after less than 18 months of negotiations, the European Parliament, Council, and Commission committed to the creation of an investment screening mechanism. The unprecedented speed and unity on this issue marks the gravity with which the European Union perceives the threat of Chinese economic influence in the European theater. Although the mechanism applies broadly to all FDI in the European Union, the motivation to protect the EU’s domestic interests through its creation is evident.

The EU also appears acutely aware of the need the accompany investment screening with its own economic development initiatives. Greater EU investment in Southern and Eastern Europe would strengthen political ties with Northern and Western Europe. It would also provide an economic alternative to Chinese investment in European countries with higher unemployment, emigration, and hostility towards the political elite in Brussels.

The EU recognizes that without a significant economic alternative, Europe’s poorer countries are willing to file in line with China’s geopolitical ambitions so long as they reap the benefits from Chinese investment. China has already invested €600 million in the Port of Piraeus in an attempt to modernize the port, which is poised to bring in thousands of logistics jobs and an increased demand for further infrastructure investments from Greece, inland to Western Europe.

China’s success in pressuring Greece to block a joint statement against Chinese human rights abuses at the UN is undoubtedly alarming to European national security policymakers.  Nevertheless, it’s important to recognize that Greek politicians are beholden to their constituents, who might be willing to overlook criticizing Chinese human rights for the economic benefits that accompany Chinese investment.

Even with enhanced investment screening, the EU’s foreign interests remain vulnerable. On 21 September, following a 2017 “Joint Staff Working Document” on a “Euro-Asian Connectivity Mapping Exercise,” the European External Action Service adopted an “EU Strategy on Connecting Europe and Asia,” hereafter referred to as the Euro-Asian Connectivity Initiative (ECI). Implicitly designed to respond to the geopolitical ambitions of the BRI, the ECI aims to further develop the EU’s own soft power through increased economic and diplomatic presence within its Eastern neighborhood and beyond.

Adapted to “pursue a ‘coherent approach’ to connectivity” which “encompass[es] all modes of transport links (land, sea and air) as well as digital and energy links in the Euro-Asian area,” the ECI will likely become an integral part of the European Union’s Common Foreign and Security Policy (CFSP) in the East, providing an economic and diplomatic framework for future relations. The question remains, will Europe’s ECI come into direct competition with China’s Belt and Road Initiative?

Although Europe and China have differing visions for Eurasia, many of their fundamental goals are shared. Both Europe and China recognize the potential for economic growth at home and abroad by bringing the two ends of Eurasia closer together. Fostering greater connectivity and trade through Central Asia would not only drive down the costs and time required of maritime shipping, but also provide economic stimulus for developing economies in the region and greater access to rich natural resources. As Central Asians’ mobility and wealth increase, greater connectivity  will encourage stronger people-to-people ties through shared education, research, innovation, culture, and tourism. China and Europe also share a mutual interest and commitment to the political stability and security of periphery countries at the nexus of Europe and Asia which can be strengthened through economic growth.

However, Europe’s vision for Eurasian connectivity is to encourage economic development, good governance, and open society through adherence to “principles of sustainability, transparency, market principles, open procurement rules, a level playing field, as well as equal treatment and equal access.” Likewise, Europe will likely require benchmarks for the respect of human rights and democratic governance to its investment proposals through the ECI. In addition to these laudable goals, the EU will, nonetheless, seek to develop its own soft power and influence throughout Central Asia, in part for its own merit and in part to counter the influence of China over the heartland of Eurasia.

In contrast, China is solely dedicated to reaping economic benefits and accruing political leverage over key routes of connectivity, reflected by its lack of insistence on governmental transparency, respect for human rights, or equal access to investment opportunities. Most BRI contracts are ultimately chosen by Beijing. However, Chinese investments often come with a ‘no strings attached’ policy which may appeal to countries reluctant to meet Western provisions for economic and political liberalization.

Baiting the Balkans

Even within non-EU European nations, the temptation of Chinese investment funding is strong. There are fewer bureaucratic delays and stipulations attached to massive infrastructure investment projects when dealing with an autocratic regime. China has the financial resources, enterprise, and political wherewithal to invest billions in new development projects overnight.

In the eyes of EU candidate countries, Chinese investment is a godsend. Among the EU’s Copenhagen Criteria for European Union membership, countries must have a well-developed and stable economy to integrate well into the single market without posing themselves a burden on the European economy. For EU hopefuls like Serbia, Chinese infrastructure investment reads like a golden ticket to economic prosperity and eventual EU membership.

With around €5.3 billion ($6 billion) in Chinese investments in Serbia alone, the Balkans has become China’s backdoor entry to securing greater influence in the European Union.

Yet Beijing’s investment overtures in the Balkans and Eastern Europe are the call of a siren for many would-be EU member states. As attractive as these investments may seem, Serbia doesn’t have to look far to get a sense of the risks that come with Chinese investment. Just 500 km from Belgrade, Montenegro embarked on an ambitious project in 2017 to connect their port of Bar to mainland Serbia, largely funded by China’s Exim Bank.

In theory, completing this project could be hugely beneficial to Montenegro. Yet two feasibility studies in 2006 and 2012 disproved the project’s economically viability due to the lack of traffic in the area. With an already burgeoning debt to GDP ratio, the Chinese loan “has sent Montenegro’s debt soaring and forced the government to raise taxes, partially freeze public sector wages and end a benefit for mothers to get its finances in order.”

China’s “if you fund it, they will come” approach to economic development may not actually yield the short and long term results it promises. What’s even more disappointing for the Balkans is the use of Chinese labor and capital to advance these projects — in Montenegro, 70% of the workers on the port of Bar project are Chinese. China is, in essence, driving Montenegro into debt to finance a project with highly questionable economic returns while using primarily Chinese labor in Serbia’s backyard. Belgrade should take note.

For now, the EU’s dualistic response to China’s increasing sharp power is encouraging. A stronger investment screening mechanism will ensure that European countries agree to infrastructure projects or loans on financially stable terms and will prevent China from buying up industries that could threaten national security. At the same time, EU funding initiatives will provide an economic alternative to Chinese investment and will bolster political ties with European, Central, and South Asian countries.

The Road Ahead

American hegemony over the post-Cold War liberal world order grew out of an alliance of Western countries adhering to free market economics, democratic soft power, and control over the global commons. While China has no ambition to replace the United States and become a global hegemon, but rather aims to displace the West’s influence by leveraging Chinese capital, technocratic policymaking, and foreign debt.

By amplifying its political and economic soft power through BRI investments, China simultaneously creates and controls the means by which its economic power is exercised through BRI countries. The renowned scholar of Asian geopolitics Parag Khanna tells us that the driving force of the 21st century will be the ever-closer economic and people-to-people ties between nations around the world. He is right to claim so. Connectivity — and the means to control it — is the new currency of geopolitics.

The European Union is gradually coming around to this way of thinking, but its implementation in foreign policy remains slow. The ECI marks a first step towards pursuing a greater presence in Eurasian connectivity projects and policymaking. As Europe moves closer to a state of strategic autonomy, it must develop a more comprehensive, efficient, and effective foreign policy regime to keep pace with China’s expanding influence. Great strides have been taken already by establishing a screening mechanism for FDI, establishing the Permanent Structured Cooperation, and elaborating upon the European Union’s Neighborhood Policies. Nevertheless, Brussels needs to develop a more cohesive strategy to address Chinese sharp power influence in Eastern Europe and Central Asia.

The European Union has yet to reconcile its own principles with its nascent role as a regional hegemonic power. Maintaining and promoting liberal international values of democracy, free market equality, and human rights are difficult to pair with the realpolitik of geopolitics in the era of connectivity. It remains to be seen if the EU has the political wherewithal to compete with China on 21st century terms. For now, the future of Eurasia hangs in the balance.

This article was originally published on The International Scholar.

Geopolitics in the Era of Connectivity: Beijing and Brussels Compete for Central Asia was originally published on Global Security Review.

As it stands, a mineral-based economy is one of the few options available when it comes to establishing a solid foundation on which to develop Afghanistan’s economy. The development of the country’s mineral sector has been hampered by insecurity, political instability, poor policy direction, the absence of a basic legal framework, and a lack of necessary infrastructure and transit agreements with neighboring countries. However, Afghanistan’s mineral deposits present an alternative to the country’s increasing over-reliance on an economy dependent on foreign aid.

Afghanistan’s mineral deposits consist of metals and non-metals. Many strategically essential minerals can be found in the country, including beryllium (used in airplanes, helicopters, ships, missiles, and spacecraft), uranium, lithium, and niobium (a rare soft-metal use in semiconductor production). According to the United States Geological Survey (USGS), Afghanistan’s mineral wealth is estimated at around (US) $1 trillion. This figure is based on previously conducted Swedish, British, and Soviet geological surveys, in addition to more recent studies performed by the USGS. In total, however, only about 30% of Afghanistan’s territory was covered by previous geological surveys. Even though the earlier Swedish, British, and Soviet studies have been updated with more recent aerial geophysical and geochemical studies, a complete geological survey is required to understand the full potential of Afghanistan’s mineral deposits.

Existing data only accounts for 30% of the country, and isn’t comprehensive enough to confidently estimate the value and depth of Afghanistan’s mineral wealth. Furthermore, a complete geological study of Afghanistan would enable for a more accurate determination of the economic feasibility of developing the country’s mineral extraction and distribution capabilities. In other words, all that is known from existing geological surveys is that there are signs of what could be a substantial presence of minerals elsewhere in the country, but the details of specific deposits remain unknown. Already, doubts have been raised that Afghan mineral deposits could be economically unviable to develop resource extraction capabilities around. While these doubts may sway potential investors, the country’s known mineral deposits remain attractive from an investor’s standpoint.

There is a near-unanimous consensus in Afghanistan that the country must develop its mineral sector. When it comes to the pace of such development, however, there are three primary schools of thought within Afghan policy-making circles and the country’s political establishment. In the first camp are those who believe that the mineral sector development should be pursued without delay. They argue that Afghanistan must supplement declining foreign aid with revenues drawn from mineral extraction. Those in the second group posit that mineral sector development should be prioritized based on the revenue-generating potential of individual deposits. The third group opposes any progress until the political and security situation in the country stabilizes so that Afghans can explore any development in a more secure environment. Given the economic circumstances, combined with the urgent need to build a domestic economy that isn’t dependent on foreign aid, Afghanistan has no choice but to move aggressively to develop its nascent mining industry.

Fast-paced development requires up-to-date and complete geological information concerning mineral deposits. However, such data is unavailable. Providing access to a comprehensive geological survey is a significant challenge, and undertaking such a study is a costly exercise. A complete study will be impossible without the outside investment, legal reform, and decisive political action that is needed to build a strong and apolitical Afghanistan Geological Survey, an agency which currently is deeply politicized and has a limited functional role, having been monopolized by a generation of Soviet-trained geologists.

Traditionally, it is the responsibility of the state to provide potential investors with the necessary geological survey data. Geological studies are essential when it comes to soliciting both private and public sector investment, at home and abroad. Complete geological surveys are expensive, costing millions of dollars the Afghan government cannot afford. This is where Afghanistan’s foreign aid donor community can play a crucial role.

To date, the Afghan government has received eight tenders and awarded two significant contracts with support from the U.S. Department of Defense, the U.S. Agency for International Development (USAID), the U.K. Department for International Development (DfID), and the World Bank. These include tenders for developing the Aynak copper mine, the Hajigak iron ore deposit, the Badakhshan gold mine, the Shaida copper mine, and the Ghazni gold and copper deposits. Almost all have their flaws, but the initiation of bidding processes and the awarding of contracts nevertheless sends a strong signal to the global investor community that the Afghan mining industry is open for business.

Recently, however, the National Unity Government (NUG) has announced its decision to review all received bids and awarded contracts. This announcement sends the wrong signal to investors, on the top of Afghanistan’s myriad of security, political, and infrastructure problems. It is well within the Afghan government’s right to review or even revise existing contracts and bids, however, halting the process altogether will be disastrous for the development of Afghanistan’s mining industry. All face shortcomings or obstacles concerning feasibility clauses, energy and water shortages, human capital challenges, and an absence of transit agreements, to name a few. The best way to address these shortcomings, however, is through bilateral negotiations and contract revision mechanisms, rather than canceling bids outright and effectively shutting down the bidding process.

On the other hand, artisanal and small-scale mining (for construction materials and precious stones, for example) remain a source of financial revenue for the Afghan government but, at the same time, are a significant driver of instability in regions of the country where government presence is little-to-nonexistent. The black market economy from these mines fuels the conflict within the country, particularly in the northern and eastern provinces. Today, part of the unrest in regions in the country’s north and east—such as the Logar province—is due to local rivalries over mineral revenues from small mineral deposits. In the short-term, the best way to tackle these issues is through the gradual incorporation of smaller-scale mining operations into the country’s overall strategy, as the rule of law and the reach of the country’s security forces extend to all parts of the country.

The Afghan government institutions responsible for the development of the country’s mineral sector (i.e. the MOMP and AGS) have little-to-no experience with managing the tendering process and the awarding of large mining contracts. The eight existing tenders, along with many of the awarded contracts represent are Afghanistan’s first experiences awarding substantial mineral rights contracts. They were solicited or awarded with technical expertise and assistance provided by foreign partners including the U.S. Department of Defense Task Force for Business Stability Operation (TFBSO), the World Bank, and DfID, amongst others. Many contracts have been awarded in a mostly noncompetitive environment where global mining corporations such as MCC or CNPCI, with years of experience negotiating large-scale mineral rights contracts, are entering into negotiations with Afghan officials lacking the necessary negotiating skills or expertise.

On the other hand, certain circles within the Afghan public and private sectors oppose awarding mining contracts to foreign firms and are advocating for the establishment of large state-owned oil and gas, iron, and copper corporations—possibly employing a public-private partnership model. However, this view loses sight of the fact that the Afghan labor force lacks the necessary technical expertise, and Afghanistan itself lacks the necessary financial capital to pursue a state-owned industrial model. The necessary technical knowledge, skilled human capital, and financial resources can only come from foreign firms for the foreseeable future. Afghanistan’s existing state-owned enterprises—such as the Afghan Gas Enterprise (AGE) and the Afghan Fertilizer Factory in the country’s north—are struggling financially and operationally, suffering from antiquated machinery and incompetent management resulting from years of conflict and instability.

The Afghan Ministry of Mines and Petroleum (MOMP) has been primarily occupied in recent years with the management and awarding of small-scale constructing material and precious stone extraction contracts through the MOMP Cadastre department. However, the role of such an vital institution shouldn’t be confined to the awarding of minor contracts. Instead, the MOMP should be empowered to oversee the proper implementation, oversight and control, audit, and financial revenue management, and technical oversight of all large and small mineral extraction rights contracts. The ministry is in desperate need of a severe overhaul if there is to be any substantive, long-term development in the Afghan mineral sector.

The Afghan tax and royalty regimes are further obstacles to the development of the country’s mining industry. The country’s tax structure is burdensome for investors and is internationally non-competitive—the country’s taxes are much higher than those in South American or African states. Royalty payments for the Aynak Copper Mine are set at nearly twelve percent, and rates for the Hajigak Iron Ore mine are around eight percent, far higher than international norms—which are between four and six percent. Simply put, the financial and economic regime presently governing the Afghan mineral economy is not attractive to potential investors. These factors must be changed if any long-term, sustainable development of Afghanistan’s mineral sector are to be seriously considered.

Another major obstacle to the development of the Afghan mineral sector is a lack a lack of necessary infrastructure to facilitate the export of minerals. Afghanistan is poorly connected to regional ports, both due to the country’s geography and the current security situation. An integrated infrastructure development strategy for the establishment of resource corridors to ports in the region as well as the construction of energy pipelines to power the plants for processing minerals before export. Such an integrated infrastructure development program would require billions of dollars in capital and technical expertise that is presently lacking in the country. The Afghan government should aggressively engage in resource diplomacy with its neighbors to gain access to ports to export commodities to international markets.

Despite these challenges, the Afghan mineral sector remains an attractive opportunity for both domestic and foreign investors. None of the difficulties mentioned above are formidable enough that they cannot be addressed by measures gradually enacted by the Afghan government. In the immediate-term, Afghanistan must present a strategic framework for the development of its nascent mineral sector—one that attracts both domestic and international investment. This framework must include reform of the country’s legal system, in addition to providing policy direction to attract foreign investors.

While Afghanistan’s mineral deposits present a tremendous economic opportunity for the country, the government must prioritize the mineral deposits it intends to put to domestic and international tender. Just a few successful bids and their successful implementation would serve as a pilot project, paving the way for further investment—a necessary step for the development of Afghanistan’s mineral sector.

Are Afghanistan’s Mineral Deposits the Answer to the Country’s Economic Woes? was originally published on Global Security Review.

Sanctions were first imposed in 2014 when the United States and European Union imposed visa restrictions and asset freezes on Russian officials in the wake of Russia’s annexation of Crimea and subsequent intervention in Ukraine.

Despite these sanctions, however, there appears to have been no change in Russian behavior. Given that the point of these restrictions was to change Russia’s rogue state mindset vis-à-vis Ukraine and interference in other states, it begs the question of how effective these measures are.

Russia has failed to change its behavior as the result of sanctions.

Russian activity in Syria has increased while Russian-sponsored disinformation campaigns in the U.S. and European countries show no signs of decline. In 2018, Russian agents poisoned Sergei and Yulia Skripal in Salisbury, England. Despite the evidence and testimony from chemical weapons experts, Russia continues to deny its involvement in the affair.

Lastly, if there is an event that is clear evidence that sanctions aren’t affecting changes in Russian foreign policy, it is the recent naval confrontation in the Kerch Strait. On November 25, 2018, a Russian Coast Guard vessel rammed a Ukrainian Navy tugboat — resulting in a series of dangerous actions as both Ukraine and Russia refused to back down, behavior that could have rapidly escalated the situation.

If sanctions had been effective, one might expect that such an action (i.e., the ramming of a Ukrainian Navy vessel) would have been deterred. By that logic, it’s reasonable to assume that the U.S. and E.U. would impose even more sanctions if Russia continued its pattern of behavior.

However, sanctions aren’t working.

Most of the sanctions imposed on Russia are targeted at the Russian elite, as a significant portion of Putin’s support base is comprised of then. It is believed that if Putin’s support base — mainly consisting of oligarchs whose fortunes are dependent upon the Kremlin — lost their ability to access funds and travel to Europe and North America — they would then demand Putin take steps to reverse his foreign policy.

However, that strategy doesn’t seem to be working in the way that Western states assumed it would. In fact, according to the Stockholm International Peace Research Institute (SIPRI), Russia became the second-largest arms producer this year. Russia’s production rate is up 8.5 percent from 2017, which on an annual basis amounts to approximately $37.7 billion in weapons. India and China, both of which have purchased units of the S-400 air defense systems in the last year, are large buyers of Russian-produced arms.

The logic of Western sanctions fails to account for Russia’s political system.

Western sanctions don’t work because they fundamentally misunderstand the structure of Russia’s political system. In Russia, Putin gives the elites access to funding in exchange for their support and punishes those who step out of line, such as former oligarch Mikhail Khodorkovsky. Such examples convince Russian elites and oligarchs alike that stepping out of line is not worth it. No matter the annoyances that come from Western sanctions, those are still not comparable to the negative reaction that would arise if they spoke out against Putin.

Companies owned or controlled by dissenting oligarchs could lose state support or funding, with the oligarchs themselves having political corruption and tax-evasion charges brought against them. Furthermore, the non-elite segments of the Russian population perceive sanctions as an aggressive tactic employed by the West to weaken Russia. In essence, Russia’s current political system rewards those who remain in line with the Kremlin — the consequences for speaking out are too high. At their current levels, sanctions will remain largely symbolic and will not lead to a reform of the Kremlin’s foreign policy.

Why Russian Sanctions are Ineffective was originally published on Global Security Review.

Data breaches seem to be the name of the game in tech this year, and the latest, a software flaw that exposed the private data of hundreds of thousands of Google+ users, has just snagged the spotlight. Despite the fact that data breaches and cybersecurity attacks occur across the globe, their occurrences in major technology markets such as the United States and the European Union (EU) tend to take policy precedence and draw greater media attention.

However, as emerging market nations—such as Indonesia and those in Sub-Saharan Africa—continue to rapidly digitize and foster new technology-based businesses, more attention needs to be paid to the risks these markets and their users face. Failure to do so will significantly hinder economic growth and business development in these regions.

Over 90% of African businesses operate under the cybersecurity poverty line, which means they are unable to adequately protect themselves from vulnerabilities and losses. Although Africa has comparatively limited communications infrastructure, the continent has a high penetration rate of new technologies, and as a result is a prime target for digital attacks. In 2017, cybercrime cost the continent $3.5 billion and yet 96% of online security incidents went unreported. Large and expanding digital hubs such as Nigeria and Kenya particularly suffered, accruing losses of $649 million and $210 million, respectively.

Cybercrime in Africa has targeted startups, corporations, institutions and governments alike. This June, South African insurance company Liberty Holdings Ltd. was held ransom by hackers who were able to access sensitive data including emails. The company is responsible for overseeing 2.5 million life-insurance policies and administering over 10,000 retirement plans and 500,000 individual and institutional investment customers, raising concerns about the consequences of such a hack. Some progress, however, is being made: there was a 73% increase of Information Security Management System certified companies on the continent between 2015 and 2016, the majority of which are based in South Africa, Nigeria and Morocco.

Similarly, in the Asia-Pacific region, cybercrime poses a serious threat to economic success. A study commissioned by Microsoft found that the total potential losses to the region from cyber attacks was $1.745 trillion, or 7% of the region’s current gross domestic product (GDP). These risks are particularly apparent in the ASEAN region, where nations invest an average of 0.07% of their GDP in cybersecurity infrastructure and operations. The consequences of such underfunded and undervalued cybersecurity initiatives can be seen in practice in Indonesia, where the country’s highest valued startup on record, Go-Jek, was found to have significant security vulnerabilities. 

Go-Jek is a ride-sharing and logistics startup that has over 15 million weekly active users and is widely considered a major competitor to global brands such as Uber and Lyft. In March 2017, Fallible, an Indian security firm claimed they were able to extract information such as GPS coordinates of rides and user data such as phone numbers and pick up and drop off points from two problematic APIs on the app. The firm also claimed they were able to exploit a vulnerability which enabled them to manipulate notifications users received. An Indonesian hacker based in Thailand identified similar vulnerabilities in 2016. Go-Jek is Indonesia’s first startup to become a unicorn (meaning it became valued at $1 billion), and over the past year, the company has invested heavily in expanding their services to include mobile payments. 

This expansion into a field that engages with even more sensitive user data underscores the need for a greater cybersecurity focus, as well as a complementary regulatory environment that similarly prioritizes security in tandem with growth. In 2017, the Government of Indonesia took steps in this regard, establishing a National Cyber Agency (NCA) to develop an integrated cyber defense strategy. However, given that in the same year, almost half of Indonesia’s companies were impacted by over 205 million cyber-attacks, costing $34 billion in direct financial losses and long-term reputational damage, there is a great deal of work to be done. 

In larger and more developed technology markets, data security and privacy laws such as the recently passed General Data Protection Regulation (GDPR) compel companies to invest more time and resources into developing and maintaining robust security infrastructure. However, in markets, such as in Sub-Saharan Africa and Asia-Pacific, where such regulations and cybersecurity-focused policy environments are weaker or lacking in enforcement, commensurate practices by businesses are less common.

Going forward, emerging market businesses and governments need to recognize that to achieve economic growth and reap the benefits of the ongoing digital boom, cybersecurity needs to be a priority. In practice, this means that there needs to be greater emphasis on operating and maintaining updated and robust security systems; training and expanding cybersecurity workforces; developing long-term cyber resilience strategies that account for all levels of corporate or institutional operations; raising awareness about the importance of such security practices; and generating legislation that adequately offers protections and remediations. 

Greater investment in regionally-specific cybersecurity infrastructure can also open up noteworthy business opportunities. The cybersecurity market is expected to be worth $2 billion by 2020, and thus far the African continent has not released any commercially viable cybersecurity products, while ASEAN nations, although having made some progress, also have room to grow.

The average cost of cybercrime for businesses and governments across the globe is increasing at a rapid rate, and emerging markets are at significant risk. Developing more robust cybersecurity infrastructure, policies, programs and cultures must be prioritized. This is particularly important now as these regions will soon be host to the majority of global internet users, as well as a large share of future digital businesses and services. 

Cyber Insecurity is Harming Emerging Markets was originally published on Global Security Review.

On April 27, 2018, Kim Jong Un became the first North Korean leader to step foot in South Korea – where he was welcomed by South Korean President Moon Jae-in.

A few days later, the South Korean government reported that Kim had promised to give up his nuclear arsenal under certain conditions.

While some viewed the summit with skepticism and issued reminders about Kim’s villainous past, others began talking of a unified Korea – a reasonable reaction considering that the leaders signed a document called the Panmunjom Declaration for Peace, Prosperity, and Unification of the Korean Peninsula.

The intentions of these two leaders are key. While Donald Trump and Xi Jinping and Vladimir Putin may tweet and hold meetings, it is the nearly 80 million Koreans who will determine the future of how they will share their peninsula.

As scholars who study Japan, Korea, and East Asia, we know that the “Cold War” has always been “hot” in Asia. That’s why we suggest the focus now should be on forging new ties with North Korea. The question of how South Korea and North Korea will merge can be left for the future.

To understand why it’s helpful to remember why Korea was split into two countries in the first place.

Creating two Koreas

In August 1945, in the basement of the State Department in Washington, D.C., two American army officers traced a line across a National Geographic map and divided the Korean peninsula – at the time colonized by Japan – at the 38th parallel.

This division was part of an Allied vision of Japan’s impending defeat.

Many – especially the Russians – had anticipated that Japan would be divided like Germany.

After all, it was Japan, not occupied Korea, who was the enemy combatant. Yet the Soviets acquiesced to the American idea.

Ideological camps among Koreans that had taken root under Japanese oppression challenged one another for expression in the following months. Eventually, the communists gained leadership in the North and their challengers in the South.

Five years later the Korean War erupted to claim the lives of one in eight Koreans. Tens of thousands of international participants would also die in what history books flatly name the first major conflict of the Cold War.

The 1953 armistice ending the fighting in Korea more or less followed the 1945 line. Under this agreement, Koreans who had collaborated, resisted or simply endured Japanese rule prior to the Korean War (1950-1953) now found themselves assigned entirely new identities: “North Korean” and “South Korean.” The meaning of these names has diverged and morphed into new realities on both sides since then.

The view from South Korea

In South Korea, people often refer to the Korean War as yugio – literally 6.25 – referring to June 25, 1950, when the grandfather of today’s North Korean leader ordered his troops to cross the border and attack the South. This state-sanctioned narrative reinforces an antagonistic relationship. The North is framed as the aggressor, the South as an innocent victim, and the U.S. and the West as the savior of South Korea. Not unimportantly, North Koreans call the same history “The Fatherland Liberation War.”

While the 2015 Asan Report finds that more than 80 percent of South Koreans “dutifully” answer that Korea should be reunified, fewer than 20 percent support immediate reunification. Their sense of an ethnic bond is decreasing, and reunification is mostly seen as an economic burden.

In 2010, former president Lee Myung-bak proposed a “reunification tax” to support the costs of reunification, whenever it came. The tax proposal received little support from the public or among politicians, especially after the North’s attack on a South Korean warship Cheonan and the shelling of the South’s Yeonpyeong Island later that year. Speaking in 2014, former President Park Geun-hye also tried to promote a positive image of reunification, calling it a “jackpot” (daebak).

She claimed that reunification – a combination of North Korean labor and South Korean technological advancements – would create jobs and strengthen the Korean economy.

Despite government’s effort to reposition the reunification issue, public opinion data show that South Korean youth are only increasing their detachment from North Korea.

An easier path

So, if an older generation’s understanding of reunification is a hard sell, what is the path forward?

South Korea could instead seek a peaceful coexistence of two Koreas with free trade, free exchange of people and no military threats. Perhaps public support for reunification may reemerge and strengthen as ties are strengthened through increased exchanges at the civil level and greater economic independence in the North, thereby lowering the “costs of reunification.”

One of the main reasons there has not yet been a resolution to the “North Korea problem” has been persistent, divergent dreams of reunification. For the U.S. and South Korea, a reunified Korea would be a liberal, capitalist democracy. For North Korea, China, and Russia, a reunified Korea would not be a close ally of the United States and certainly would not host U.S. troops.

Over the last 30 years, the benefits of a divided Korea have only increased for those outside the peninsula. Initially, North Korea served as an important “buffer state” between the communist China and Russia to the north and the democratic and capitalist countries of South Korea, Japan – and their ally, the United States. Even after the Cold War ended, ideological differences among these important geopolitical players has continued, reinforcing the benefits of North Korea’s liminal status.

If we can follow public opinion in South Korea and temporarily abandon the dream of a single Korea, it is possible to see that everyone would benefit from a peaceful, prosperous, nonnuclear North Korea. China’s economic success has demonstrated that a country can take advantage of markets without becoming a capitalist democracy. It can offer North Korea guidance on how to develop using the Chinese model.

If neighboring countries opened up their markets to trade and offered targeted foreign direct investment, North Korea can experience the kind of economic miracle that Japan, South Korea, and China have already enjoyed.

If the United States and its allies can offer security guarantees to North Korea, it should not need to hold onto its deadly nuclear weapons.

If North Korea can recognize that it is in everyone’s interest that North Korea not only continues to exist but becomes more prosperous, then perhaps Kim Jung Un will make good on his promise to let go of his nuclear ambitions.

Once North Korea is more economically independent, maybe reunification can be conducted as a joyful reunion between equals. That day is far in the future, however. In the present, powerful negotiators must find the skill to chart a path toward peace and prosperity for North Korea. If they can manage it, they will have left a great legacy to the world.

The Goal in Korea Should be Peace and Trade—Not Unification was originally published on Global Security Review.

For decades, Western academics, policymakers, and analysts assumed that China’s embrace of capitalist economic policies would set the stage for democratic reform. Almost three decades later, however, the Chinese Communist Party (CCP) remains firmly in power under the increasingly autocratic leadership of General Secretary Xi Jinping.

While the CCP-controlled government faces a range of threats from groups within its borders, the idea of a downturn in the Chinese economy remains a very legitimate threat.

The Chinese government has radically modernized its economic policies over the past three decades, completely reversing their initial Marxist or Maoist aversion to providing monetary compensation for labor.

These reforms are responsible for the significant growth of the Chinese middle class, which has the potential to be the most influential group in China when looked at in regards to socio-economic status.

As a result, the considerably large middle class has come to perceive the CCP as being responsible for their rising levels of prosperity.

China has undoubtedly experienced the effects of the 2008-2009 global economic crisis; it indeed fared much better than the majority of the world. However, China still faces many hurdles to overcome.

Rising Debt and Escalating Unemployment for Chinese College Graduates

It is becoming increasingly difficult in China for college graduates to find jobs, the volume of China’s exports is dropping, and tens of millions of workers are out of work. The possibility of a financial crisis in China could challenge Beijing’s ability to hold up its side of the deal with the population.

Since the inception of Jiang Zemin’s ‘Three Represents,’ meant to attract private entrepreneurs to party membership, the middle and upper classes have seen the party as being responsible for their economic well-being.

The government provides an environment for a healthy, regulated economy, to encourage the creation of private wealth and property, and in return has its rule legitimized by its people.

Arguably, while it is individuals are responsible for the creation of personal wealth, the party made it possible. If the government or party cannot guarantee jobs to the people, there remains the little reason for the people to tolerate the strict control that the party maintains over the state.

If the CCP-controlled government cannot sustain economic growth, it could be perceived by members of the growing middle class as violating the social contract that has existed between China’s citizens and the country’s ruling party elite.

The CCP could face a challenge to its legitimacy if and when the time comes that it is unable to guarantee a healthy economy, prompting potential discontent from the middle class.

Beijing has a track record of effectively suppressing unrest

The Chinese government has become particularly adept at maintaining or regaining control over its people via means of physical repression, censorship, and through the creation of an environment where fear of speaking out is a legitimate means of control. Indeed, the likelihood of an economic downturn eliminating the CCP’s influence is minimal.

Rising social discontent isn’t likely to be enough to force the party itself from power, but it might be sufficient to tempt some members of the elite to take advantage of the situation to their political benefit, thus leading to internal instability within the party and damaging its credibility.

While the CCP has an extraordinary ability to suppress dissent, many argue that it can only contain such dissent for so long.

However, due to the rapid proliferation of advanced technologies including surveillance, censorship, and controlled access to information, the Chinese authorities are empowered as never before, to monitor, identify, and censor those whose activities are a perceived threat to the party.

Nevertheless, a sustained economic downturn poses a threat to the CCP’s legitimacy.

Continued civil unrest on the part of groups desiring independence from CCP rule as a result of religious suppression and ethnic inequality illustrate not-insignificant threats to the party’s ability to maintain total control over the Chinese state.

Regardless, the most significant threat to the power monopoly held by the CCP is a pronounced economic downturn.

While the party may not be overthrown if segments of the Chinese populace make their economic grievances known, the likelihood that the CCP would emerge unscathed is slim.

The party is increasingly structured around a rigid hierarchy and personality cult that is centered around Xi, a drastic shift from the somewhat meritocratic structure of the CCP that existed under the tenures of Deng Xiaoping, Jiang Zemin, and Hu Jintao.

In China, Change Trickles Down from the Top

There has recently been an increased desire for greater citizen participation in local politics, along with calls for an end to the one-party policy from Chinese intellectuals. However, the latter are fewer and far between, as the message doesn’t resonate with many in China.

However, that doesn’t mean the party would disintegrate. More likely, it would reorganize itself. Change in China is significantly more apt to come from the top rather than the bottom.

Not only would it create very a substantial amount of public dissent, but it could encourage a power struggle within the ranks of the party elite.

Party officials seeking to take advantage of such a situation might break away from the party to seek public approval to gain more authority, power, and perceived legitimacy for themselves.

The likelihood of an individual taking advantage of a situation like this is higher than the removal of the party itself from power. Furthermore, the mobilization of a large segment of the Chinese population, organized around a common goal, remains unlikely.

Removal Two-Term Limits Signals Potentially Significant Reforms

The party has argued that abolishing term limits for the party leader puts the chairmanship in line with the unlimited tenures for the party and military heads — and that strengthening this “trinity” of leadership is good for long-term political stability.

Xi Jinping holds both the top leadership positions within the Chinese Communist Party and the military (the People’s Liberation Army).

Xi’s consolidation of power serves several purposes—both in the domestic and international arenas.

Domestically, the removal of the term-limits gives Xi the bandwidth necessary to initiate major, strategic structural reforms to the Chinese economy, society, and the party bureaucracy.

Xi would be hard-pressed to deliver on his pledges to make China a truly global power in three stages: 2020, 2035 and 2050. Militarily, for example, Xi proposed that China’s military would complete mechanization efforts by 2020, modernization by 2035, eventually evolving into what he termed “a world-class army by 2050,” complete with a blue water navy capable of hemispheric, if not global force projection.

Economically-speaking, the seeming indefinite nature of Xi’s rule allows a degree of leeway in pursuing domestic economic policies that could be painful to many Chinese in the short-term. Xi can pursue policies he believes will be beneficial in the long-term, without having to concern himself with the short-term implications as they relate to his political position.

Internationally, the removal term limits could signify stability and continuity, at a time when many governments and world leaders are questioning the reliability of the United States as the traditional guarantor of international security and order.

In light of the U.S. withdrawal from the Iran deal (signed and negotiated during the previous Obama administration), the reforms in China could be a signal to China’s partners and potential partners that they can rely on stability and continuity, as opposed to the unpredictability emanating from the White House.

An Economic Downturn in China is the Greatest Threat to Chinese Domestic Security was originally published on Global Security Review.

• The seven largest emerging market countries could grow, on average, around two times as fast as advanced G7 economies.
• Six of the seven largest economies in the world are projected to be emerging economies. In 2050, the global economy will be led by China, with India in second place, followed by Indonesia in fourth place.
• The United States is projected to be the world’s third-largest economy in 2050, based on gross domestic product (GDP).
• The European Union’s share of world GDP could fall below 10% by 2050.
• The U.K. could drop to tenth place, with France potentially cut from the top 10, and Italy falling from the top 20. They are projected to be overtaken by countries with faster-growing economies like Mexico, Turkey, and Vietnam (respectively).

The global economy could more than double in size by 2050, far outstripping population growth, thanks to continued technology-driven productivity improvements. Emerging markets will drive global financial growth, and will progressively increase their share of world gross domestic product, based on an analysis of World Bank economic projection data. The global economy is projected to approximately double in size by 2042, growing at an annual average rate of around 2.6% between 2016 and 2050.

This growth is expected to be primarily driven by emerging market and developing nations, with the Emerging-Seven (E7) economies of Brazil, China, India, Indonesia, Mexico, Russia, and Turkey growing at an annual average rate of almost 3.5% during the next 34 years, compared with an annual average growth rate of 1.6% for the G7 countries of Canada, France, Germany, Italy, Japan, the United Kingdom, and the U.S.

 Half of the seven largest economies in the world are still considered emerging markets.

A continued shift will be observed in international economic power away from high-income advanced economies towards emerging economies in Asia and elsewhere. The E7 could account for nearly 50% of the globe’s gross domestic product by 2050, while the G7’s share of global GDP declines to just over 20%.

China has already overtaken the U.S. to become the world’s largest economy in purchasing power parity (PPP) terms, while India currently stands in third place and is projected to overtake the U.S. by 2050. In terms of PPP, the United Kingdom is projected to. fall to tenth place, France is forecasted to fall out of the top ten, and Indonesia could climb to fourth place by 2050

While looking at Gross domestic product measured at market exchange rates (MERs), one doesn’t see quite such a radical shift in international economic power, representing the lower average price levels in emerging economies.

However, China is projected to be the world’s largest economy by 2030, and India the third largest in the world by 2050. This reveals a considerable and gradual shift in economic power towards Asia and the Indo-Pacific region.

Emerging economies will take center stage by 2050.

By 2050 economies like Indonesia, Brazil, and Mexico are likely to be bigger than those of the United Kingdom and France, while Egypt and Pakistan could overtake Italy and Canada. With regards to growth, Vietnam, India, and Bangladesh may be the most rapidly growing economies from 2015-2050, averaging an increase of around 5% annually.

Nigeria has the potential to be the fastest growing major African economy, and could potentially increase its national gross domestic product ranking from place to fourteenth by 2050. However, Nigeria will only realize this possibility if it can diversify its economy away from oil and strengthen its democratic institutions and national infrastructure.

Poland and Colombia exhibit great potential and are projected to be the quickest growing large economies in their respective regions; Latin America and the E.U. Many emerging economies will be supported by a relatively rapidly growing populations, boosting domestic demand and the size of the workforce.

Investments in education and improved economic freedoms are necessary to ensure there are enough jobs for the growing number of young individuals in these countries, providing a path of sustainable growth for countries with emerging markets and developing economies. 

Today’s advanced economies will continue to have higher average incomes, but developing countries will likely make progress towards eliminating that gap. With the possible exception of Italy, each of the G7 will rank above the E7 states in 2050, based on rankings of projected gross domestic product per capita.

Emerging Economies Will Hold Increasing Amounts of Global Economic Power by 2050 was originally published on Global Security Review.

As global trade has flourished in recent decades, so have trade disputes. Trading nations have created various forums to adjudicate conflicts, but they are increasingly the subject of controversy. U.S. President Donald J. Trump has long criticized trade dispute resolution panels as unfair and ineffective, particularly those the United States is party to via the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO). While some critics say dispute panels undermine national sovereignty, proponents argue they offer much-needed protections that boost confidence in global investment and prevent trade wars.

Why did dispute panels emerge?

As cross-border trade and investment increased rapidly through the 1990s, individual states as well as public and private investors sought ways to adjudicate conflicts or alleged violations of trade agreements. Over time, the international trading system has developed a number of mechanisms to do this, depending on the type of dispute and the parties involved.

The authority of these supranational bodies is established by agreements such as bilateral investment treaties (BITs) and free trade agreements (FTAs), or by membership in an international organization such as the World Trade Organization (WTO). Parties agree to accept rulings, though enforcement authority and appeals processes vary.

What types of disputes do they handle?

These bodies broadly deal with two types of disputes: state-state, in which governments challenge the trade policies of other governments; and investor-state, in which individual investors file complaints against governments.

State-State. Most state-state disputes are handled by the WTO system, the primary body governing international trade. Each of its 164 members have agreed to rules about trade policy, such as limiting tariffs and restricting subsidies. A member can appeal to the WTO if it believes another member is violating those rules. The United States, for instance, has repeatedly brought WTO cases against China over its support for various export industries, including one in early 2017 alleging that Beijing unfairly subsidizes aluminum producers. That case has not been decided yet, though the Trump administration has already retaliated by unilaterally imposing tariffs on some Chinese aluminum producers.

Investor-State. Known as investor-state dispute settlement (ISDS) cases, these disputes typically involve foreign businesses claiming that a host government abused them by expropriating their assets, discriminating against them, or otherwise treating them unfairly. For example, a Canadian gold mining company claimed that Venezuela’s nationalization of the gold industry in 2011 violated an investment treaty between the two countries. A tribunal found that while Venezuela had the legal right to nationalize private sector industries, it failed to properly compensate the company for the expropriated assets.

How does the WTO adjudicate cases?

The WTO’s forum for arbitration is called the dispute settlement mechanism (DSM). The DSM is run by a rotating staff of judges, as well as a permanent staff of lawyers and administrators. The WTO appoints a panel to hear a case if the opposing parties are unable to resolve the issue through negotiations. A panel’s rulings, if not overturned on appeal, are binding on the respondent country. If guilty, it has the choice to cease the offending practice or provide compensation. If the country fails to respond, the plaintiff country can take targeted measures to offset any harm caused, such as blocking imports or raising tariffs.

Member states have filed more than five hundred disputes since the WTO’s creation in 1995, but most of these cases have been settled prior to litigation.

A number of multilateral institutions adjudicate investor-state disputes, such as the Permanent Court of Arbitration in the Netherlands, or the London Court of International Arbitration, but one of the most important is the International Center for Settlement of Investment Disputes (ICSID). Created in 1965 as part of the World Bank, the ICSID has 162 member states, all of whom have agreed to recognize the legitimacy of its arbitration system.

Unlike the WTO, the ICSID has no permanent tribunals and does not directly rule on cases. Rather, it administers the process by which disputants choose an independent, ad hoc panel of arbitrators to hear their case. The arbitrators are generally legal experts, including professors, practicing lawyers, and former judges. The specifics on the sorts of conflicts that can be referred to an ICSID panel are set out in individual trade or investment agreements.

There are some 2,500 treaties with investment dispute provisions in force around the world, and the ISCID has administered more than six hundred disputes in its half-century existence. The number of cases accelerated through the 1990s and 2000s with the proliferation of investment agreements, reaching a peak of fifty-two in 2015. About a third of the cases are settled or withdrawn before concluding; a third are dismissed in favor of the defendant; and a third favor the investor in full or in part. An investor’s award generally holds the full force of domestic law in the country being sued.

What are the criticisms of the WTO’s system?

Most trade experts see the WTO’s arbitration forum as one of its most successful efforts, helping to institutionalize rules and reduce the threat of trade wars. However, critics, including the Trump administration, have criticized the WTO system on several grounds. U.S. Trade Representative (USTR) Robert Lighthizer has argued the WTO has an anti-U.S. bias because 134 complaints have been brought against the United States, more than any other country, and it has lost most of those cases.

Most trade experts see the WTO’s arbitration forum as one of its most successful efforts.

But many economists argue this is misguided, noting that complainant countries, including the United States, usually win cases they bring to the WTO because they tend to bring only the strongest cases. As former USTR Michael Froman points out, the United States under President Barack Obama brought more cases to the WTO than any other country during that time, including sixteen against China. It won all that have been decided.

Trump and Lighthizer have also said the WTO is incapable of policing China. The USTR’s 2018 report on China asserted for the first time that Beijing’s state-led economic policy is so inimical to global free trade rules that it renders the WTO effectively irrelevant. “No amount of enforcement activities by other WTO members would be sufficient to remedy this type of behavior,” it states.

Other analysts argue that the WTO has been increasingly undermined by its most powerful members, including the United States. For instance, the Obama administration ignored a series of unfavorable rulings and blocked the appointment of a WTO judge for the first time.

What is the debate over investor-state dispute tribunals?

Investor-state dispute tribunals have become a flash point in the debates over multilateral trade deals such as NAFTA, the Trans-Pacific Partnership (TPP), and the proposed U.S.-Europe Transatlantic Trade and Investment Partnership (TTIP).

Opponents say that these tribunals erode national sovereignty by allowing foreign corporations to bypass domestic legal systems. In 2017, a group of more than two hundred lawyers and economists warned that such provisions [PDF] give corporations “alarming power” to override domestic legislation, based on the secret deliberations of unaccountable tribunals that have no appeals process. Before the U.S.-Europe trade negotiations were put on hold in 2016, this worry was especially acute among the European public, which feared that ISDS would allow U.S. companies to challenge EU rules on labor and environmental protections, food safety guidelines, and other public interest legislation.

The Trump administration, too, is skeptical of the provision, which Lighthizer has called “offensive” for giving non-Americans a veto over U.S. law. The administration has proposed changing NAFTA’s ISDS provision to be “opt-in” rather than automatic, which Canada and Mexico have strenuously opposed.

Supporters say these concerns are overblown, pointing out that the United States has never lost an ISDS case to a foreign investor, and that investors tend to lose more cases than they win. Furthermore, they argue that ISDS protects foreign investments made by U.S. businesses, and generally boosts cross-border investment.

What are the options for reforming these systems?

At the WTO, reform discussions have focused on process, as the number of disputes and appeals, as well as the complexity of cases, have increased in recent decades. Reform proposals include expanding the pool of experts on panels, digitizing paperwork, and other tactics to streamline operations. Some have suggested the WTO’s dispute body take decisions based on majority vote rather than consensus, as it does now, though such a move would likely be opposed by the United States and others. Currently, a single member can delay proceedings.

Meanwhile, the public controversy over ISDS has led governments around the world to experiment with other approaches to investor protection. One option is to remove ISDS from some agreements altogether, as countries such as Australia have done, pushing businesses to first pursue challenges through the domestic legal system and then, if unsuccessful, allowing for state-state dispute settlement.

In another alternative, the European Union is developing an investment court that will operate more like the WTO tribunal system, with a permanent roster of judges, strict conflict-of-interest rules, public proceedings, and an appeals process. The European Union and Canada included a version of this in their 2016 trade agreement.

Are there other mechanisms to resolve disputes?

Individual trade deals have also created separate state-state arbitration mechanisms. This was the case with the Canada-U.S. Free Trade Agreement (CUSTA), the precursor to NAFTA. CUSTA’s Chapter 19, which was continued in NAFTA, allows for one government to challenge the trade policies of another via an independent, bi-national panel, which bypasses domestic court systems.

NAFTA’s Chapter 19 has proven controversial. Canada insisted on its inclusion in CUSTA because of what it saw as a long history of unfair U.S. trade policies. Ottawa has brought dozens of cases before these panels, many relating to U.S. duties on Canadian lumber. The Trump administration has called for the removal of Chapter 19 from NAFTA as part of the renegotiations that opened in 2017.

Some trade experts argue that Chapter 19 reduced trade disputes between NAFTA members because it made it likely that any trade barriers would be overturned by the panels. Removing it, some say, could lead to an increase in duties, especially by a U.S. administration that has seemed eager to apply them. This, in turn, could lead to retaliatory trade measures from Canada and Mexico.

How Are International Trade Disputes Resolved? was originally published on Global Security Review.

Over two million Chinese workers have been laid off in recent months due to “overcapacity.” Companies have been shut down as employers either sold their businesses or simply disappeared. These layoffs have increased the numbers of unemployed youth in urban areas, increasing the risk of social unrest. Chinese Communist Party Chairman Xi Jinping has suggested sending China’s increasingly debt-prone youth to work in the country, in a “Second Cultural Revolution.”

Few have taken the offer despite employment opportunities in farming, food processing, and rural tourism. Industrial manufacturing—comprising approximately 45 percent of China’s GDP—is suffering from debt-laden overproduction. Chinese corporations owe an aggregate amount equivalent to 170% of China’s GDP. China’s economy appears to be on shaky ground, as layoffs increase and consumer debt levels and capital flight skyrocket.

The state-supported National Institute for Finance and Development (NIFD) stated earlier this year that local and provincial governments, small businesses, and households owe an amount totaling 154 trillion yuan (almost $23 trillion)—228 percent of China’s GDP. The NFID estimates that household debt alone is projected to reach 66 trillion yuan ($8.45 trillion) within the next three years.

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Corruption, Speculation, and Money Laundering

Economists and media pundits within China have recently escalated rhetoric critical of financiers and industrial elites. Wang Xiangwei, a Beijing-based media pundit, harshly criticized speculators and financial tycoons for their prolific exploitation of regulatory loopholes and government connections.

In the South China Morning Post, Wang wrote that these speculators secured cheap loans for themselves while issuing high-risk financial products to finance projects and investments both within and outside of China.

Furthermore, China’s wealthy have begun moving massive amounts of capital abroad, under the guise of the government’s call for investing overseas—termed “going out.” A particular tactic being used is inflating the value of one’s domestic assets and guaranteeing these funds to overseas branches of Chinese banks, which in turn provide them with overvalued loans which finance asset acquisitions abroad.

Lay-Offs and Labor Disputes

China’s massive labor force has enabled it to become the globe’s manufacturing hub, creating massive domestic economic growth. Unemployment insurance covers only about 10% of China’s 270 million migrant workers according to the Chinese Government’s statistics agency.

Lin Yanling, of the Beijing-based China Institute of Industrial Relations, says that “the size of China’s labor force has peaked, but it’s wrong to think that there will be no employment problems.” Lin said 80% of China’s workers are “in a weak position” regarding their job and wage security, adding “if the economic situation is not good, their position will become even weaker.”

Any mass-disruption for manufacturing workers, migrant workers, or other low-wage worker is bound to have consequences for internal stability that could prompt a forceful intervention by the government. This and ongoing wage stagnation are the two issues of greatest concern. Thus, the government’s efforts to resettle urban unemployed in the country through offers of paying jobs could be a preemptive attempt to avoid internal disruption by dispersing concentrations of disaffected workers to more rural environs.

Long-Term Stability over Short-Term Growth

According to the South China Morning Post, the impending economic crisis is rooted in expansive fiscal policy, increased government spending, rising property values, extremely lax monetary policies, record-high bank lending, and exploitation of regulatory loopholes. In 2009, during the last economic crisis in China, then-Premier Wen Jiabao oversaw the disbursement of over $500 billion to stimulate the stagnating economy. This provided badly needed relief to the economy, but ongoing corruption and crony capitalism, combined with rising competition from lower-wage countries like Vietnam, ensured that growth continued to stagnate.

Between 2010 and 2015, Chinese economic growth steadily declined from 10.5% (annual GDP growth) to 6.9%, respectively. The current GDP growth target is 6.5%. Louis-Vincent Gave, co-founder of Gavekal Research, recently said “the 6.5% growth target, you can still achieve it, but at a higher and higher cost. So why would they [the Chinese Government] want to keep doing that?” Gave added that the practice of dropping growth targets could serve to decrease short-term growth, but promote long-term sustainable growth.

Thus, this practice would align with Xi Jinping’s initiative to increase risk management capabilities. While increased oversight would impede short-term growth, it would offer a safety net to the overall economy, while structural reforms would ensure longer-term economic stability.

Rising Debt, Corruption, and Unemployment Will Haunt China Throughout 2018 was originally published on Global Security Review.

Forecast: China’s political stability will hang in the balance.

Xi will emerge from the party’s congress with the political capital required to see a lot of his ambitious visions through. However, in the aftermath of widespread mortality among the Party’s top ranks, the president will focus his instant attention on stabilizing the country.

Xi will seem to contain any economic issues in the home or disputes overseas that may sabotage the picture of the Party or the president’s status within it. This effort will consist of steadying China financial system and hugely leveraged firms while mitigating the possibility of volatility. To that end, China has tried to blunt the impact of U.S. Trade measures, insisted on discussion with North Korea while discouraging U.S. Military actions and struck a temporary deal with India to end their tense border standoff.

China’s sensitive environment won’t cause its leaders to ignore economic reform entirely. The party’s newly instated officials, after all, will have to boost the public’s confidence in the authorities as the economy stays stable but weak.

Within the last several months, Beijing has combined broad-based structural reforms like the consolidation of businesses, production cuts and the enforcement of environmental regulations with renewed attempts to chip away at the mountain of debt crippling the nation’s state-owned enterprises, financial sector and local authorities. These reforms will only accelerate in the upcoming quarter.

After three decades of historical financial growth and social change, Beijing, amid slower growth and the aftereffects of a debt binge, is transitioning from an investment-driven, export-based economy to one fueled by domestic consumption.

Meeting demands for clean air, affordable houses, improved services, and continued opportunities are going to be essential for the government to maintain legitimacy and political order. President Xi’s consolidation of power could threaten an established system of steady succession, while Chinese nationalism—a force Beijing occasionally encourages for support when facing foreign friction—might prove hard to control.

Analysis: Beijing’s Balancing Act

Beijing probably has ample resources to prop up growth while efforts to spur private consumption to take hold. Nevertheless, the more it “doubles down” on state-owned enterprises (SOEs) in the economics, the more it’ll be at higher risk of financial shocks that cast doubt on its fiscal management capabilities.

Automation and competition from low-cost producers elsewhere in Asia and even Africa will put pressure on wages for unskilled workers. The nation’s rapidly shrinking working-age population will act as a strong headwind to growth.

China Faces a Daunting Task in Managing Its Growth and Security was originally published on Global Security Review.

Despite Venezuela’s enormous oil reserves, the decline of the country’s oil production can be attributed to four major factors: the first, the current absence of qualified extractors that could exploit the heavy petroleum reserves. Nevertheless, as oil prices rose, the government demanded changes to arrangements made with companies to get higher revenues. When companies denied, their assets were captured and expropriated.

Oil Industry Mismanagement

Even when petroleum prices were higher, the government spent the proceeds to finance the country’s social programs, but failed to reinvest properly at all levels from the capital intensive business that is oil production.

The second is the failure of President Chavez’s government to understand the degree of capital expenditure which was needed to continue developing the country’s petroleum. After Petroleos de Venezuela (PDVSA) Workers had gone on strike, they were dismissed and replaced by workers loyal to President Chavez, regardless their lack of expertise. Over 40,000 workers were fired and were replaced with over 120,000—largely inexperienced—workers. This resulted in a substantial decrease in oil production.

Venezuelan Oil Tankers

The next reason is Venezuela’s tankers inability to deliver their freight. Vessels which sail the high seas are obliged by the international maritime law to meet environmental criteria. This usually implies that the tankers must be cleaned before traveling to overseas ports to prevent environmental harm In the port, port facilities or others boats.

For the boats to be cleaned, workers in scuba suits scrub crude oil by hand from the tankers. PDVSA has since failed to pay back the service providers that keep clean and repair the vessels, the accumulation of cleaning invoices that the company can’t pay has caused the tankers transporting oil to be stranded up to two months.
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Global Oil Prices

The last reason is the fall in petroleum prices in the international industry. The decrease in oil prices that began in late 2014, when the overall poor economic performance in China, Brazil, and Europe fuelled a fall in the requirement, while the distribution and production continued to increase. The situation sent Venezuela’s economy to a plunge; the petroleum sector contributed to 95 percent of Venezuelan exports. Even when oil prices were higher, the government spent the proceeds to finance the country’s social programs but failed to reinvest properly from the capital intensive business.

The International Monetary Fund estimates that Venezuela’s inflation rate will increase up to a crippling 720% this past year. The country’s economic catastrophe has further exacerbated deep political tensions, causing a constitutional crisis, mass protests, looting, and civilian casualties with the death toll now in excess of 100. Price controls were intended to keep the essential goods affordable to the poorest inhabitants of the country, however, manufacturers reduced production because of the limit on what they can charge customers.

The crisis has forced people to deal with the shortage of foodstuffs in stores and supermarkets by substituting unavailable products like corn flour and pasta with locally grown plantains and potatoes. Nevertheless, shortages of basic and specialized medications, along in the lack of medical care in virtually all of the country’s health service units continue to be widespread. This has led to looting and massive demonstrations in the streets of Venezuela.

Analysis: The Economic Roots of Venezuela’s Collapse was originally published on Global Security Review.