NATO Finds Its War (I&W)

NATO FINDS ITS WAR

Did NATO miss an opportunity at its recent summit in Vilnius? Some critics have said as much, pointing to divisions within the alliance about the measures that it should adopt in offering assistance to Ukraine. But NATO is aiming at something much larger: the transformation of an old Cold War alliance into an institution fit for the new Cold War. It may in fact have achieved it at Vilnius.

Ukraine is the key that opened the door. Until Russia invaded Crimea in 2014, NATO had been organizing itself around the two challenges of terrorism and cybersecurity, finally adopting a Comprehensive Cyber Defense Policy in 2021. Since then, and at a quickening pace after the Biden administration found its feet and Russia invaded non-Crimean Ukraine on 24 February 2022, NATO has been focusing on democratic principles and the rule of law in order to shape a strategic approach. The emphasis on these values at Vilnius underscores their role in guiding NATO’s strategic evolution within the paradigm of the New Cold War.

What is often missed is that an emphasis on values – just the sort of approach that is often dismissed as mere piety – marks the transformation of NATO from a defensive alliance into an ideological alliance. Although attempts by the Biden administration to promote ideological initiatives such as the Summits for Democracy have gained little traction, NATO is different. It has been steadily expanding a conventional concept of security to encompass the global commons, including oceans, space, technology, and cyberspace. Departing from a conventional summit declaration, the Vilnius outcome document suggests a strategic roadmap, delineating NATO’s envisioned trajectory in a global order now characterized by constant transformation.

It makes no obvious sense that the North Atlantic Treaty Organization should have any responsibility for the global commons. However, the reality is that conflict between the United States on one side and Russia and China on the other leaves the global commons up for grabs. Due to technological shifts and innovations, the means for conflict and the platforms for conflict are in effect global, specifically the Internet, cyberspace, and space itself, where military command and control by major powers is dependent not only on satellites in fixed positions above national territory but also on a system of satellites in constant orbit around the planet. The global commons has become a zone of conflict because certain aspects of conflict have become globalized. An organization that includes the specifically geographical definition “North Atlantic” in its name and its mission is now embracing a more global role.

While post-summit commentary centered on NATO’s relationship with Ukraine, perhaps the most crucial immediate outcome lies in the adoption of new Regional Defense Plans. Devised for the protection of NATO’s northern, central, and southern flanks, they signify a new chapter in its strategy. Prepared by SACEUR General Cavoli and his team, and totaling over four thousand pages, the regional plans offer intricate and precise delineations of the alliance's intended actions in the event of an assault on any of its member states. This marks the first time since the Cold War that NATO has formulated such comprehensive and detailed plans, rendering the deterrence and defense capabilities of the alliance more credible than ever before. The impetus behind the completion of these regional defense plans has been the Russian aggression against Ukraine.

Looking to the next summit, which will be held at Washington in 2024, we anticipate the full emergence of Global NATO on the 75th anniversary of founding of the alliance. The North Atlantic Council has been assigned the task of producing a comprehensive threat assessment. The results will accelerate deliberations about the future of Ukraine, provide clarity on NATO’s relationship with China, and demonstrate the ways in which the alliance is preparing to confront the globalization of major-power national security. The Washington summit may well grapple with the same unresolved questions that linger after the Vilnius Summit: Does the Alliance’s door remain open? When will Ukraine find a place among its members? On the largest and most important questions, however, NATO will already have found its answers.

Food’s Carbon Footprint (I&W)

Food’s Carbon Footprint

Twenty years or so ago, premium pre-packaged pineapple from Ghana began appearing on the shelves of Waitrose supermarkets in London. Advertised on the label as helping to fund smallholder community projects in Ghana, the pineapple’s appeal lay in its being unusually sweet and juicy. This was apparently due in large part to the local climate in Ghana being drier than that in many other pineapple-producing areas and thus concentrating sweetness in the fruit. The pineapple was hand-picked, trimmed, and packaged in Ghana, helping to keep more of the value chain in-country and support the villages where the pineapple was grown. It was then refrigerated and flown to London, where it was finally displayed on the shelves of Waitrose. It was a “win-win” equation: the consumer got especially delicious pineapple, and the producing communities got a fair deal.

At the time, the “carbon footprint” of the pineapple would have been only an afterthought, and only for a few people. Today, the question should be front and center.

The ongoing revision of global supply chains could have some positive effects in terms of carbon reduction. Long, globalized supply chains are being deconstructed and revised, in part because long supply chains mean high energy costs for transport. This accelerated during the pandemic, although it has larger causes, including global geopolitical splintering and concerns for national security. Reshoring, near-shoring, and supply-chain simplification to emphasize robustness over efficiency are the focus today. But when carbon is part of this, it is mostly as an afterthought.

The dichotomy between economic development and climate issues is becoming more widely recognized.  As Martin Wolf observed recently in the Financial Times:

The question of development assistance links with the challenge of climate. As everyone in developing countries knows, the reason the climate problem is now urgent is the historic emissions of high-income countries. The latter were able to use the atmosphere as a sink, while today’s developing countries cannot. So, today we tell them they must embark on a very different development path from our own. Needless to say, this is quite infuriating. Nevertheless, emissions must now be sharply reduced. This requires a global effort, including in many emerging and developing countries. Have we made progress on this task, in reality rather than rhetorically? The answer is “no.” Emissions have not fallen at all.

Wolf goes on to say that emissions must decline rapidly “while emerging and developing countries still deliver the prosperity that their populations demand,” and he reminds us that this will require a huge flow of resources towards them. “Countries with above average emissions per head [should] compensate those with below average ones,” and “high-income democracies are failing to offer adequate help in this, just as they did over Covid.”

This is factually accurate and morally valid. But is it realistic?

Even within democracies, the better-off seldom want, en masse, to help the worse-off, unless and until it becomes a matter of specific self-interest or even self-preservation and government policy leaves them no choice. By now, only the foolish or willfully ignorant would dismiss the possibility that high-income countries may themselves in the future need to survive with fewer resources—possibly with far fewer—across all socio-economic levels. So there may overall be less to spread around. Whatever lifestyle improvements and development that populations expect or demand in rich and in not-so-rich countries, it may simply not be possible to fulfill this. Many well-informed and intelligent individuals seem to have a strange blind spot about even admitting this as a possibility. It may be too emotionally painful to come to terms with a future that looks so much bleaker than the present or the recent past. Yet the abundance that globalization made possible, whether in delicious pineapple and other foods or in affordable apparel and electronics, cannot easily be squared with either decarbonization or reshoring.

Moreover, the extant systems that have been developed for global or even national redistribution of material assets—which is what Wolf is talking about—are far too inefficient and far too prone to corruption on both the transferring and receiving sides of the equation. Astonishing inefficiency occurs every day, even when redistribution is not being attempted: in the US we waste 30 to 40 percent of our food, for example, while 800 million people go to bed hungry around the world every night. Those on the deficit end of this imbalance are aware of the problem, and of course it is the source of enormous anger. As climate change makes agriculture less predictable, with dramatic effects for those least able to withstand food shortages, that anger will get worse.

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You Choose, You Lose? (I&W)

You Choose, You Lose?

The idea that the world’s states need to choose between the U.S. and China has been an article of faith in the U.S. intelligence community for some time. It broke the surface this week in a Foreign Affairs piece by Richard Fontaine, CEO of the influential think tank the Center for New American Security (CNAS), entitled “The Myth of Neutrality: Countries Will Have to Choose between America and China.” While Fontaine’s article is, as is usually the case, more modulated than the headline, he nonetheless concludes that the “time for choosing has arrived,” focusing in particular on “the effort to separate and safeguard technological supply chains.” SIG questions whether this is really the case.

The first problem with this argument is that technological supply chains are in private hands. The ability of any state, even China, to control its private-sector tech supply chains is uneven at best. This is true not just in present terms — the extent and nature of supply chains are not easy to measure, and measurement and enforcement can use government resources that might be better applied elsewhere — but also in prospective terms: supply-chain inputs and their providers change constantly. Moreover, Chinese and U.S. tech companies alike have multiple subsidiaries, JVs, equity investments, strategic partnerships, and so on outside their home markets, and those entities in turn have their own relationships. SIG’s experience in investigating Chinese and U.S. corporate ownership and part-ownership structures like these across the globe strongly suggests that arranging tech supply chains to conform with the political map will be difficult indeed.

The second problem with the choice argument is that it misses the non-equivalency of the U.S. and China in terms of tech sectors. At least since the expulsion of Google more than a decade ago, China has built its tech sector on the basis of a protected domestic market. As companies like Huawei, Alibaba, Didi Chuxing, and Tencent established themselves and grew, they enjoyed many advantages in having a gigantic captive market. However, that growth model had a dependency built into it, and when the Communist Party decided that Chinese tech companies were gaining too much social power it was easily able to clip their wings. The Party did not blink at liquidating tens of billions in equity value. Chinese tech companies are being obliged to subordinate themselves to state policy priorities, a process that shows no signs of easing. While the Party also works hard to build Chinese self-reliance in terms of supply chains and much else, supply-chain inputs really are the least of it, because the state has so much leverage in the C-suite already. The problem of Chinese tech companies is not guarding the home country’s supply chains but getting into other countries’ supply chains — and China’s autarkic policies, because they amount to a kind of nationalization, only make that problem worse.

The situation in the U.S. is nearly the opposite. The U.S. is an open market. It sources supply-chain inputs, capital, and talent from all over the planet. The most onerous government tech regulations prevent some (not many) U.S. companies from selling into the China market, but in this the U.S. has a willing assistant in Chinese state policy. Corporate espionage and IP theft aside, the Chinese state does not want U.S. companies supplying Chinese markets, except in those instances where Chinese companies still can’t match non-Chinese producers.

There really isn’t much of a choice to be made. China is a non-market economy with a security obsession and it sources supply-chain inputs for those things it can’t locate domestically. The U.S. is a market economy that sources supply-chain inputs from wherever they currently are cheapest. Yes, there are constraints for U.S. companies on sourcing from China, but that leaves all of the rest of the world for U.S. companies to work with.

That points to a third major problem with the choice argument as regards tech supply chains. Companies in the rest of the world can also make things and sell them into their domestic markets and into the 193 national markets that are not the U.S. or China. To the degree that the U.S. or China try to force a choice, the most attractive choice will usually be “both” while reserving the option of “neither.” If these choices are rendered impossible, most countries will choose the U.S., not because of its values but because its open economy has greater possibilities for them. From the supply point of view, as Fontaine notes, China competes well on price — ZTE will build a 5G network for less than Nokia would charge — but as non-Chinese, non-U.S. suppliers increasingly come online, how long can a country with rising wages and government debt, a shrinking workforce, and a non-convertible currency compete on price?

The security question is a separate one: It will not be (and never has been) easy to be an ally of both the U.S. and China, or to be neutral. But in terms of tech supply chains, the choice between the U.S. and China, in most sectors and for most countries, is a false one.

How Putin Goes (I&W)

How Putin Goes

The speed with which, in handling Yevgeny Prigozhin’s Wagner Group insurrection, Vladimir Putin went from bluster to bargaining led many analysts to declare that his weakness had been exposed and his demise would arrive soon. But Putin's departure from power is not forthcoming in the near future. The convergence of the interests that fortify Putin's existing system is robust and compelling. Putin is currently consolidating his position in preparation for elections in 2024.

In March, a year after his invasion of Ukraine, Putin's popularity remained very high, with an approval rating surpassing 80%, as indicated by a survey conducted by Levada, an independent Russian research organization. In some ways, recent developments fortified Putin's position: disloyal individuals have been exposed and purged. Sources closely associated with the general staff and the security services confirmed that General Sergey Surovikin was interrogated, while three undisclosed U.S. officials reported that Surovikin possessed prior knowledge of Prigozhin's plot to incite rebellion against Russia's military leadership.

Undeniably, Russia’s internal security crisis has eroded Putin’s stature on the global stage. But this erosion is more likely to push him to further provocative actions than to lead him to withdraw from the scene. The confluence of this crisis with the annual NATO summit (11 July) in Vilnius raises the prospect of potential assertive responses from Putin.

At home, Putin is very practiced at adjusting his authoritarianism to circumstances. He has learned from observing his Syrian ally, Bashar Al Assad, and the way in which his neighbor Recep Tayyip Erdogan defended his power in 2016. Rather than destabilizing the prevailing authoritarian regime, the Wagner coup is poised to reinforce and perpetuate authoritarianism through the adoption of novel strategies and practices.

Prigozhin, however, is not going to go away quietly. His security-oriented mindset is firmly grounded in profit-seeking. It is inconceivable that someone of Prigozhin's disposition could accept that the Russian Ministry of Defense would assimilate his Wagner troops by formalizing their involvement through contractual agreements, transforming them into an official component of the Russian military. His army is his business, one he is most likely to keep vital in Africa. Enterprises such as Lobaye Invest in the Central African Republic and M-Invest, along with its subsidiary Meroe Gold in Sudan, have emerged as key players involved in resource exploitation, controlling significant mining concessions. Several have recently been granted long-term extensions, further solidifying their hold on valuable resources. Wagner has rights to the Ndassima mine in the Central African Republic through a comprehensive 25-year contract with potential for extension. Prigozhin is resolute in his reluctance to relinquish any aspect of this expansive enterprise.

Of course, Putin and Prigozhin are both mortal as well as rich in enemies. But violent deaths aside, they will find ways to survive in the brutal world they know so well.

The A.I. Scare (I&W)

The A.I. Scare

With the release of ChatGPT in November 2022, the regulation of artificial intelligence suddenly entered the realm of popular politics and media commentary. By May 2023, AI experts were circulating a letter that referred to “mitigating the risk of extinction from AI.” In the same month, the EU Parliament was refining what it called “the first ever rules for Artificial Intelligence.” This wasn’t really true—China got there first—but it did reflect the high level of political energy surrounding the topic. By late June, US President Biden was in San Francisco warning tech leaders about AI’s dangers. The American Enterprise Institute, in line with news-cycle tradition, raised the alarm about excessive regulation.

SIG’s view is that there is both more and less here than meets the eye: “more” in the sense that state regulation of AI is indeed coming on fast; “less” because its effects are not likely to be very dramatic, at least not in the United States.

The Regulatory Wave

China, which early on saw AI as both a strategic technology and a threat to state control of speech and opinion, led the way on AI regulation in 2017 (the “New Generation Artificial Intelligence Plan”) and hoped that its standards would gain international adoption. The powerful Standardization Administration of China (SAC) issued 53 “Guidelines for the Construction of the National New Generation Artificial Intelligence Standard System” in 2020, meeting the deadline set by the 2017 AI Plan. As typically happens in China in moments of political enthusiasm, different bureaucracies began to compete for the new turf and the Communist Party needed to pick some winners and assert its authority. In March 2023, at the Two Congresses, the Party reshuffled bureaucratic authorities and centralized the domestic assertion of AI power, very much in step with the “rectification” of Chinese big-tech power that began in 2021. The extent of Party concern about AI regulation can be measured by the fact that China actually agreed with the United States on some non-binding standards for military AI use in February 2023.

The US, also typically, has been much slower in developing regulations, although it was quick to develop desiderata that don’t seem to have had much real force: Donald Trump’s 2019 Executive Order and a November 2020 Memorandum, followed by Biden’s Blueprint for an AI Bill of Rights in October 2022. The National Institute for Standards and Technology (NIST) took 2 years to consult stakeholders before issuing the “AI Risk Management Framework” in January 2023. The EU was on a similar schedule.

In general, China’s regulatory framework seeks to control information and remind Chinese tech companies that they operate at the pleasure of the Party. The EU aims at identifying and eliminating potential AI harms without constraining innovation. China and the EU both shape much of their efforts with the goal of minimizing dependency on US companies. The US aims at maximizing American innovation and minimizing harms to individual rights.

The 3 efforts reflect very different political cultures, suggesting that they will not be synthesized into broader international standards. In all 3 cases, a principal motivation has been to develop standards that will help each player improve its competitive position against one or both of the other players. It’s hard to see how competition will turn into cooperation any time soon.

So tech regulation is coming, more and more. Unlike at earlier moments of tech revolution, however, there is no free infrastructural (the open Internet) or commercial (unrestrained use of apps) or political (no data sovereignty, no privacy) global platform that AI can build on before it is regulated away. The AI platform is being pre-regulated.

Meanwhile, Back at the Startup

Actual tech regulation, as distinct from the setting out of ideas about things that tech should and shouldn’t do, has traditionally been led by industry. AI will not be much different.

So far, AI innovation has tended to come from smaller companies connected to the open-source community. Broadly, this has been the pattern for tech innovation for decades. It’s possible that AI innovation, too, will follow the pattern that led much of humanity to use the same search engine and a handful of social-media apps: a small company gains a technical advantage, is well run, has the capital to scale its platform without having to generate profits, eats its competitors, and wins big. But the conversation among AI industry leaders today is about whether or not AI innovation will grow based on these same “network effects” rooted in tech, capital, scale, and quantity of data.

The answer might very well be “no.” 

Why? Mainly because AI development teams increasingly turn toward “synthetic data,” that is, curated data sets that are edited to increase the chances of the AI system itself arriving at a desired result—not a specific result, of course, but a result within set parameters, a usable result. This means that the advantage of having huge controllable datasets—which was thought to give China and US big tech significant advantages just a few years ago—is not necessarily that important. It also means that AI development is not a prisoner to the need for scale that so shaped the development of search and social media.

Under these circumstances, AI regulation will be harder to do in any detail because innovators will be small and quick and the use cases for their products hard to predict.

The exception to this small-size advantage is computing power, known in the jargon as “compute”. Large companies with deep pockets have the advantage in compute. That said, compute is itself a product, as Amazon Web Services discovered and proved. And size can be a burden: the biggest companies tend to innovate in ways that take advantage of their size (e.g. lots of compute power) but can also lead them to innovate in ways that don’t matter to the actual market. The history of big-tech failures—Google Wave, Facebook Beacon—is suggestive.