Tag Archive for: United States

Trump’s new world disorder

So much for the end of history. Twenty-seven years to the day after the fall of the Berlin Wall heralded the collapse of communism in Europe, Donald Trump’s election as US president endangers the liberal international order that his wiser, broader-minded predecessors crafted.

Trump’s “America First,” anti-“globalist” agenda threatens protectionist trade wars, a worldwide ‘clash of civilizations,’ the peace in Europe and East Asia, and further violence in the Middle East. His nativist and authoritarian views also undermine the shared values, faith in liberal democracy, and assumption of benign American hegemony on which the rules-based international system depends. Already in relative decline, the United States is now poised for an angry retreat from the world.

Optimists hope that Trump didn’t mean what he said during the election campaign; that he will surround himself with seasoned internationalist advisers; and that his wilder instincts will be tempered by the checks and balances of the US political system. Let’s hope so. But nothing in his temperament suggests as much. And with Republicans retaining control over both the Senate and the House of Representatives, Trump will have a freer rein than most presidents. That is especially true in trade and foreign policy, where US presidents enjoy much greater discretion—and where the damage he could do is potentially huge and enduring.

Start with trade. Globalisation had already stalled in recent years. Now Trump threatens to throw it into reverse. At the very least, his victory kills off the faint hopes of concluding the two jumbo trade deals that Barack Obama’s administration had been negotiating: the completed but unratified Trans-Pacific Partnership (TPP) with 11 Pacific countries, and the stalled Transatlantic Trade and Investment Partnership (TTIP) with the European Union.

Trump has also pledged to renegotiate the North American Free Trade Agreement (NAFTA) with Canada and Mexico. Worse, he wants to slap tariffs on Chinese imports, which would doubtless provoke a trade war. He has even spoken of pulling out of the World Trade Organization (WTO), the multilateral rules-based trading system.

Such an agenda would not only threaten a global recession. It would also tempt regions to split into rival trading blocs—a worrying prospect for a post-Brexit Britain seemingly intent on tearing itself away from the European Union to go it alone. In Asia, the collapse of the TPP, from which the Obama administration unwisely excluded China, paves the way for the Chinese to build their own trading bloc.

Trump’s victory threatens East Asia’s security as well as its economy. By retreating from free trade and casting doubt on US security guarantees for its allies, he could prompt Japan, South Korea, and others to race to acquire nuclear weapons to protect themselves against a rising China. The Philippines is unlikely to be the last country in the region to conclude that cozying up to China is a better bet than relying on an increasingly isolationist America.

Trump’s victory also undermines Europe’s security. His admiration for Vladimir Putin, Russia’s authoritarian leader, is alarming. Putin laments the break-up of the Soviet Union, wants to recreate a Russian sphere of influence in the country’s neighborhood and has already invaded Georgia and Ukraine. Trump’s suggestion that his commitment to defending NATO allies is conditional invites Putin to go further.

The Baltic republics of Estonia, Latvia, and Lithuania, NATO members that were once part of the Soviet empire and have substantial Russian minorities, are most at risk. While a common external threat ought to drive the EU to increase defense spending and deepen its security cooperation, EU-skeptic, austerity-hit European voters may have little appetite for this. Indeed, many European governments seem tempted to seek to appease Putin, rather than stand up to him.

Trump’s outright racism, hostility to Hispanic immigrants, and Islamophobic rhetoric threatens a culture clash—and even violence—within America. It could also set the stage for the ‘clash of civilizations’ of which the late Samuel Huntington warned. Bullying Mexico to try to force it to pay for the huge border wall that Trump wants to erect would be an act of hostility against all Latinos. Casting Muslims as enemies—and denying them entry to America, as he vowed during his campaign—would be a powerful recruiting sergeant for the Islamic State and al-Qaeda, as is suggesting that the US ought to seize Iraq’s oilfields for itself.

Perhaps the most enduring damage will be to America’s soft power and the appeal of its liberal democracy. The election of a racist president with fascist tendencies is an indictment of America’s political system. Trump himself has shown himself to be contemptuous of democracy, saying he would not accept the election result if he lost and threatening to jail his opponent. Chinese officials will not be alone in thinking that a system where lies, hatred, and ignorance trump sober deliberation is defective. America is no longer the ‘shining city upon the hill’ that successive presidents have proclaimed it to be.

Anti-establishment insurgents now have the wind in their sails. In the wake of the financial crisis and wrenching economic change, many voters have understandably lost faith in Western elites, who seem incompetent, corrupt, and out of touch. They also, wrongly, blame immigrants for their problems and feel threatened by social liberalism. In the absence of positive alternatives to a deeply flawed status quo, the risk of an even greater backlash is high. Unlikely as polls now suggest it is, Marine Le Pen of the far-right National Front may well win France’s presidential election next May. That would deal a hammer blow to the euro, the EU, and the West.

Liberal internationalists cannot afford to be complacent. Trump’s victory is a disaster—and it can get much worse than this. We need to defend our open, liberal societies and offer positive changes to win back anxious voters.

Trumped by the Joker?

Image courtesy of Flickr user Akhil.

If Heath Ledger could comment on the outcome of the US Presidential contest, he might suggest that, in politics and human commerce more generally, life imitates art. His portrayal of anarchy and disruption in The Dark Knight offered a disturbing metaphor for the likes of Geert Wilders, Nigel Farage and even our own lookalike, Pauline Hanson.

And now we have Donald Trump.

When faced with a strategic discontinuity, the most important first step for any strategist is to recognise it for what it is—an existential challenge to the prevailing world order. And make no mistake: just as the Brexit is an existential challenge to the European order as we know it, Trump’s election to the presidency of the world’s dominant power is an existential challenge to the world order as we know it.

In a copybook example of mellifluous persiflage, Prime Minister Turnbull intoned the same pious sentiments that have substituted for policy in a procession of AUSMIN statements and Defence White Papers for two decades. His immediate response was as bland as it was complacent. Our alliance with the US, he told us, was enduring because it was based on shared interests and common values, and not on the comings and goings of Presidents and Prime Ministers. Really?

And what are those shared interests and common values? Apart from trotting out the usual platitudes—democracy, the rule of law, maintaining the international order upon which our security and prosperity depends—our policy elite (of which the readers and writers of The Strategist are paid-up members) prefers mouthing comfortable truisms to the hard work of analysis and recalibration.

Throughout the western world, democracy is under challenge, not least of all because electorates have lost confidence in both the democratic institutions and the leaders who run them. The rule of law is under challenge, as a Trump administration toys with the forcible repatriation of illegal immigrants and Australia continues to deny legal rights to refugees on Manus and Nauru. And the international order—an artefact of the post WW2 dispensation—is under challenge as China emerges as a global power in its own right.

Like most other observers of the US, I forecast a Clinton victory. I was wrong. But in my post of 20 October 2016, I commented that ‘Donald Trump would’ve forced both the US and its partners to re-examine the foundations, purpose and strategic effect of the alliance network that has underpinned the strategic position of the West for seventy years’.

The time for that reappraisal has arrived. And it’s no bad thing.

As we try to come to terms with what has actually transpired in the US, we should be aware that, in a quite fundamental sense, Thomas Piketty belled the cat in his 2015 book Capital in the Twenty-First Century. Piketty’s thesis is straightforward: when the return on investment exceeds the return on labour, inequality is the result. Whether voters live in the rustbelts of the US, the ‘dark satanic mills’ of the UK, the soulless factories of industrial France or the sweatshops of Germany, they feel alienated and angry.

This is perhaps the central strategic issue facing the West: the failure of neo-liberal economics to improve the lot of the working class citizens who shed their blood in two world wars to protect individual freedom, build national prosperity and create a worthwhile future for their children. When the citizens of a democratic state believe they’re disenfranchised, the security of the state is in peril because its very raison d’être is in question.

At first blush, Trump’s instincts appear to favour a dangerous cocktail of exceptionalism, isolationism and protectionism, with a measure of racism and climate science denial to add colour and movement. A foreign policy that seeks to penalise its nearest neighbour, Mexico, for its poverty and its most important competitor, China, for its success is unlikely to do anything to ameliorate the economic issues that underpin US voter anger and distrust. And a strategic policy that wants to transfer the cost of US dominance to those allies that benefit, or think they benefit, from US military power is a surefire way of eroding the trust that is essential to strong alliances.

Australia, like our Asian and European alliance colleagues, has some serious work to do. The feckless complacency—best evidenced in the parroting of phrases like ‘shared interests’, ‘common values’ and ‘rules-based international order’—that has distinguished our strategic policy making for seventy years has to give way to a much more hard-nosed and clear-eyed appreciation of those things for which we, as a nation, are prepared to spend blood and treasure.

Our national interest isn’t defined by the power or the interests of the United States.

Rather, it’s defined by the inclusiveness, harmony and resilience of our people. It’s defined by equality of opportunity and equity in the distribution of the benefits of being Australian citizens. It’s defined by our ability to determine an international rules-based order that seeks to bring together our neighbours, including China, in both the design and operation of the rules rather than seeking to contain or constrain them. And it means being able to act in concert with like-minded nations, including the US, to sanction those that might seek to constrain our freedom to define and act in support of our national interest.

President Trump’s election will provide us with exactly the reality check we need.

America’s ‘Maginot Line’

Image courtesy of Flickr user Tony Webster.

Regardless of who wins today’s US presidential election, migration and border security will continue to be central policy issues for America and Americans. The border security policy dialogue in the US, like that in Australia, is deeply polarised. Worse still, finding compromises—let alone solutions to those polarised perspectives—is challenged by irreconcilable ideological perspectives on border security.

Those who hold such deep-set ideological perspectives—on both the secure and humanist ends of the paradigm—often selectively interpret specific incidents as universal truths. One migrant committing a murder certainly doesn’t make all migrants murders or criminals. Such flawed arguments serve to further complicate the challenge of US border and homeland security.

In the face of this polarised debate, ASPI’s Border Security program is today releasing its Strategy report, ‘America’s ‘Maginot Line: a study of static border security in an age of agile and innovative threats’, which critically explores the US contemporary border security experience.

While the paper provides a detailed analysis of the US border construct and its post-modern political challenges, in substance it tells a story of simplistic responses to complexity. Rather than just being a tale of a particularly complex homeland or national security context, the story can serve countries from Europe to Asia as an exemplar of the evolution of border security.

For the most part, US border security remains an operational activity, focused on creating a physical control barrier: a geographical barrier between a nation and those who might do it ill. The physical barrier is selectively permeable, based on, at best, flawed risk assumptions, and at worst, on xenophobic judgements.

The selective permeability of borders needn’t be a controversial challenge if the logic that underpins it engages with the changing nature of threat and risk. By way of example, assumptions about risk involving travellers with European passports need to be revisited in the light of recent attacks in France, Belgium and Germany.

What’s clear is that despite the organisational integration of border security under the umbrella of the Department of Homeland Security, US border security isn’t being managed strategically. Even when facing a range of post-9/11 challenges, the integration of border security was never going to be an easy task, given America’s federal model of government and governance. For starters, solving the strategic challenge involves entities far from the national capital.

While the federal government and its agencies must play a major role in protecting the border from major incursions, the day-to-day management of the border is also an issue for the states that lie on those borders. This requires a great deal of political will and effort.

The key assumption underpinning the operational management of border security in the US is that all harms can somehow be stopped or controlled through the control of individual border crossings or transactions. Unfortunately, the globalised nature of contemporary Western economies means that this operational approach no longer delivers consistent, effective or efficient border security. A change in US border security strategy is desperately needed but seems unlikely to materialise for the time being.

The US and Canada have enjoyed great success in creating a joint border continuum to the north, and that has brought economic benefits on both sides of the border. Unfortunately, the US concept of a border continuum that creates new policy options and defence in depth hasn’t materialised elsewhere.

We argue that border of the future should be a strategically-managed continuum in which disruption capabilities are focused upon by concise intelligence-based risk assessments. That doesn’t mean that all of the existing operational activities and border control measures are redundant. However, this US case study reveals that simplistic border processes are no longer sufficient in the face of amorphous threats. Put simply, neither a regulatory nor a literal wall will provide border security if it isn’t integrated with a number of other mechanisms and measures.

US border security is a story of complexity, but the answer to complexity isn’t strategic or operational isolationism. Rather, it’s strategically managing borders through a focus on disrupting threats while facilitating trade.

In both the US and Australian border security environments, there’s no shortage of new ideas and technology. Unfortunately, for the US there’s a dearth of cohesive overarching border security strategy and architecture. Such a strategy—risk based and intelligence led—is desperately needed to avoid unnecessary, inefficient and ineffective spending of public funds. One area that requires significant and timely intervention is land, air and sea domain awareness that’s integrated into a strategic border security lens.

In times of economic, international and domestic security uncertainty, immigration and border security are likely to continue to be headline issues for many national governments. Governments need to provide security and create a sense of confidence and trust in border security among their citizens. Unfortunately, the measures that provide populations with assurances often don’t have a substantive impact on security, but on perceptions.

For those on both sides of US politics, working out what policy success looks like in the coming months will be central to any meaningful change in meeting both border security and migration challenges.

The US–Australia Cyber Dialogue: fighting cybercrime in the Asia–Pacific

Image courtesy of Flickr user Jobs For Felons Hub.

Across the globe, financial losses due to cybercrime continue to mount. Estimates of the cost of cybercrime to the Asia–Pacific vary, but suggested figures of about US$81 billion imply that it’s a bigger problem than any one country can address on its own. For the participants at the recent Australia–US Cyber Security Dialogue, discussing growing cybercrime threats and current cooperation between governments, law enforcement and the private sector, highlighted some of the hurdles that must be overcome to elevate the fight against cybercrime.

The cross-jurisdictional nature of cyberspace means multi-layered cooperation between both countries’ government and law-enforcement agencies is required for cybercrime prevention and prosecution. At the government-to-government level, information sharing between the US and Australia is growing, with Australia being the first country to enter into a sharing framework with the Department of Homeland Security. That’s a promising step for bilateral cooperation on cybercrime, and should encourage other countries to contribute as well.

However, the quality of the public–private partnership to fight cybercrime isn’t as high as it needs to be in either Australia or the US. In both countries, the government approach to the private sector is seen as paternalistic, which has served to offend industry and discourage their full participation. Improving this perception through a more respectful approach, in pursuit of sincere partnership, will be a key requirement of improving cooperation on cybercrime.

Another key stumbling block is the nature and quality of information sharing between the public and private sector in both countries. There’s far more intelligence about the cybersecurity threat landscape available than is currently being shared by private and public sectors in both countries. Issues of classification can stifle governments’ ability to divulge data, while private sector entities may withhold information from the government and other companies as they are worried about losing commercial advantage, damage to their reputation or legal issues. As a result, some companies prefer to passively benefit from other’s information sharing before showing their own hand. In reality, information sharing is only of value when the right information is shared consistently, building both good will and trust between the parties, and reinforcing the value of the agreement. More forthcoming attitudes from all stakeholders will be necessary to address the growing cybercrime challenge.

To this end, governments in Australia and the US must take seriously the task of communicating the business case for information sharing to the private sector. Sharing relevant intelligence with trusted partners can serve to raise both the difficulty of cybercrime operations and rate of perpetrator apprehension across the board, likely lowering the net cost to a company. Sectoral information sharing and analysis centres and programs where members must submit a minimum number of malware samples every day to retain their membership have been suggested as mechanisms by which to defeat this race to the bottom. Likewise, governments in Australia and the US must work to overcome unnecessary bureaucratic red tape and make useful threat trend information available to the private sector where appropriate.

Ultimately, this problem can’t be viewed purely in simplistic bilateral terms. Cyberspace is a dynamic and complex ecosystem of connections, and so too our response must be. Effectively addressing cybercrime requires trusting relationships between both countries’ governments and private sectors in order to create a multipolar collaborative network between all four parties, rather than just a selection of two dimensional connections. Doing so will allow for greater threat information sharing across multiple divides, and is an important goal to work towards.

Beyond information sharing, building capacity in the Asia–Pacific is a significant area for both Australia and the US when it comes to bilateral government-to-government and public–private cooperation. Cybercriminals are able to act with impunity within certain countries that don’t have the resources, capability or legal framework to address cybercrime. Coordinated efforts to shut down those safe havens will increase the cost of business for cybercrime groups and decrease the rate of harm.

The private sector is well-positioned to tackle that task, with many companies possessing the necessary investigative capabilities to help regional countries raise the difficulty of criminal operations. That’s more than an altruistic endeavour, as the private sector is likely to benefit from the opening up of new markets for cybersecurity products and online services that come with raising of a country’s cyber maturity. So, fortunately, the business case for this method of fighting cybercrime is a lot easier to make, but coordinated partnership is still a key ingredient for success.

There’s much that the US and Australia can do together to reduce the volume and seriousness of cybercrime. More robust threat information sharing and the active removal of cybercrime safe havens should be focus areas of partnership between the government and private sectors of both nations. Further maturing US–Australia cooperation on cybercrime in the Asia–Pacific will provide increased security and economic prosperity for both countries.

The US–Australia Cyber Dialogue: cooperation in the Asia–Pacific

Image courtesy of Pixabay user bykst.

The Asia–Pacific’s digital potential offers enormous development and trade opportunities that, if effectively harnessed, will benefit the economies of Australia and the United States. Indeed, the region’s increasing importance to the economic and strategic interests of both countries meant that examining the region’s cybersecurity was an obvious choice for the opening session of the inaugural Australia–US Cyber Security Dialogue in Washington DC last month.

Connectivity rates in the Asia–Pacific are soaring, growing at 12% last year. But about half the region still isn’t connected to the internet, providing a huge reservoir of people who are yet to take advantage of the benefits of digital commerce and development. The region’s economies continue to grow, with an average GDP growth rate of 5.4% in 2016, which is driving the region’s connectivity to broader international economic security. However, in some cases, the rapid proliferation of networks isn’t being matched by the necessary regulatory frameworks, governance structures and individual and corporate savviness to adequately meet cybersecurity challenges.

As a result, there are regional disparities between digital tigers such as South Korea, Japan and Singapore, and less developed states such as Laos and Bangladesh. That unevenness has created cybercrime hotspots in permissible regulatory environments, such as the Philippines, and protectionist barriers to trade in over-regulated economies, such as China. So while regional connectivity promises prosperity, it can also complicate security and trade flows.

That unevenness also reflects the geopolitical realities of the Asia–Pacific. The region’s power struggles are evident in cyberspace, as major powers compete to exploit the domain’s benefits, and jostle to influence emerging countries as they come online. China is making waves in cyberspace. Its government is investing heavily in baseline ICT infrastructure across the region, condoning or overlooking cybercrime operations from within its borders, and leveraging cyberspace as a tool for information operations, such as those conducted in July at Vietnamese airports in relation to the South China Sea disputes.

As China pursues its strategic interests through cyberspace, so too does the US. At the recent ASEAN Summit in Laos, President Obama and Secretary of Defense Ash Carter reinforced the US commitment to the rebalance towards Asia and its central security role in the Asia–Pacific. The US views cyberspace as an important mechanism by which to maintain its regional influence, and it’s investing in both the defensive and offensive capabilities of US Cyber Command, accordingly. The ratification of the Trans-Pacific Partnership by the US will also serve to strengthen trade and supporting regional economic growth in this area. The US and China have demonstrated some promising moves towards compromise with the September agreement on state-sponsored intellectual property theft. However, their visions for the future of cyberspace remain incompatible.

With the US as its central security partner and China as its top two-way trading partner, Australia has an interest in stabilising the region’s digital landscape. The historic alliance relationship, underpinned by shared values and a mutual interest in Asia–Pacific stability, make Canberra and Washington natural partners in ensuring that the online world is governed my appropriate rules and norms.

In this complex strategic environment, Australia and the US must develop a nuanced and coordinated approach to regional cybersecurity.  There’s value in standing shoulder-to-shoulder to defend the future of a free, secure and reliable cyberspace. However, the inherently unstable nature of contemporary cybersecurity means that unnecessary confrontation is best avoided in favour of strategic nudges and moderate moves to influence the online behaviour of revisionist states such as China and Russia.

While military cooperation between Australia and the US is an important element of the bilateral relationship, cybersecurity is a whole-of-government issue and must be addressed holistically. To avoid a narrow and reactive military approach to cybersecurity issues and to facilitate more preventative and proactive cyber diplomacy, Australia and the US should move beyond focusing on incident response measures. We need to work together to build capacity, develop international norms of online behaviour and establish confidence building methods in the Asia–Pacific. Australia and the US should also strive to be role models for the region, exemplifying best practice in cybersecurity policy and awareness at home.

Australia–US cyber cooperation in the region must also include partnerships with the private sector. In many cases, private sector companies have established links to government-owned enterprises in the region that can serve to increase cyber maturity. There’s also scope to improve and further capitalise on the intelligence sharing capacity of companies, modernising international and cross-sectoral threat sharing mechanisms to foster a detailed conversation.

The first session of the US–Australia Cyber Dialogue cemented the importance of bilateral cyber cooperation in the Asia–Pacific, highlighted the significant benefits and risks on the table as we pursue regional cyber stability, and underscored the key role of public-private partnership in this effort. The fast-changing and dynamic nature of cybersecurity in the Asia–Pacific will ensure that these issues remain a focus of the Australia-US Cyber Security Dialogue for years to come.

Cyber wrap

Image courtesy of Flickr user Alex Proimos.

A large DDoS incident hit the Internet last Friday, taking down several US news, entertainment and business websites including Netflix, Twitter, Spotify, The New York Times, Facebook and Tumblr. Domain name system manager Dyn reported that it was ‘monitoring and mitigating’ DDoS attacks against its infrastructure throughout the day, with fallout mainly affecting sites across the US East coast. The significance of the incident wasn’t only in its size but its source, with the DDoS emanating from a botnet propped up by thousands of seemingly innocuous devices such as CCTV video cameras, baby monitors and digital video recorders. The malware used to conduct the attack, Mirai, is the same as that launched against Brian Kreb’s website in September—a fairly unsurprising development after the malicious source code was recently made available online. Chinese manufacturer XiongMai Technologies has actually recalled several of its products sold in the US, mostly webcams, in light of their security vulnerabilities that were leveraged to execute the DDoS attack. In a small silver lining, Friday’s Internet takedown has served to focus attention on the need to secure the ever-growing Internet of Things.

After reports surfaced earlier this month of Yahoo secretly scanning millions of customer emails on behalf of US intelligence services, people are still scrambling to clarify if that was actually the case. This week, Yahoo’s general counsel sent a letter to the US Director of National Intelligence, James Clapper, urging for clarification on the supposed secret directive issues by the government, arguing that ‘transparency is critical to ensure accountability’. On the same day, the American Civil Liberties Union filed a motion with the Foreign Intelligence Surveillance Court for the release of classified records relating to any ‘novel or significant interpretations of law’ between 9/11 and the passage of USA Freedom Act in June 2015. Until the government makes a definitive statement on the legitimacy of those claims, rumours and speculation will continue to hurt Yahoo’s impending acquisition by Verizon.

The future looks worse for NSA contractor Harold Martin, arrested last month for the unauthorised removal of ‘an astonishing quantity’ of classified government data over the last 20 years. Initial reports concluded that Martin was more likely a digital hoarder than a leaker, however, the latest filing in his case states ‘the government anticipates that the charges will include violations of the Espionage Act’. The government refers to a breach of 18 US Code 793 of the Act, namely the gathering, transmitting or losing of information to be used ‘to the injury of the United States, or to the advantage of any foreign nation,’ and those heightened charges will likely mean more severe sentencing. While no solid connection has been found between Martin and the Shadow Brokers’ online auction of NSA hacking tools, he reportedly remains the prime suspect.

Amnesty International has released a new report scoring technology companies on how well they fulfil their human rights responsibilities when it comes to encryption and an individual’s right to privacy. The report provides a ‘message privacy ranking’ of 11 companies based on multiple criteria including whether the company provides default end-to-end encryption, if it has an active dialogue with customers on threats to their privacy, and its level of transparency in terms of government requests for access to personal data. Facebook, Apple and Telegram came in as the top three, while Snapchat, Blackberry and Tencent have been named and shamed, with each scraping together less than 30 points out of a possible 100.

Yesterday was a tough day for those involved in the August #censusfail with their appearance before a Senate hearing. Witnesses program IBM, the Australian Bureau of Statistics, the Special Advisor to the Prime Minister  on Cyber Security and the Australian Privacy Foundation were grilled by the Senate Economics References Committee over responsibility for the national debacle—you can check out a detailed breakdown of the day’s blame game discussions here. It’s now up to the Prime Minister to determine ‘which heads will roll and when’.

Finishing on a positive note, it’s been a good week for cybersecurity collaboration between private sector and educators. The National University of Singapore has teamed up with Singtel to establish a new US$30.8 million cybersecurity lab that will focus on the development of cybersecurity tools. The partnership between the University of New South Wales and the Commonwealth Bank is also growing, with the creation of a new cyber engineering lab intended to address the ‘alarming shortfall of in-demand cyber security graduates in Australia’. The Center for Strategic and International Studies has also just published a new report on the global shortage of cyber skills, titled Recruiting and Retaining Cybersecurity Ninjas. The report explores ways organisations can solve their human resources problem in order to ‘build and keep a critical mass of high-end specialists’, so take notes!

100 years after the Great War arrived on America’s doorstep

One hundred years ago, in October 1916, the German submarine U 53 made an unannounced visit to Newport, Rhode Island. After sailing, the U-Boat proceeded into international waters to intercept and sink a number of merchant ships in sight of the coast. Conducted according to the ‘stop and search’ requirements of customary international law, there was no loss of life, as passengers and crew were allowed to leave before their ships were sunk. Nevertheless, the attacks were a stark demonstration to both the Americans and the Allies of the oceanic reach of Germany’s new submarines.

That seemed at the time to have been a propaganda victory for the Germans but, in both frightening and alerting the United States, may have been a misguided initiative. The decision to attack merchant shipping without warning may have been Germany’s most significant error during the World War I, as arguably nothing but the deaths of its nationals in torpedoed ships could have brought the United States into the war.

There were other effects of the unrestricted campaigns of 1915 and 1917 that had profound consequences on Germany’s ability to wage war. The initial effort, which began in February 1915 was conceived fundamentally as a campaign of terror, in the hope that neutral merchant ships and Allied merchant seaman would be too frightened to enter the declared war zone around the British Isles. The only economic motive was the concern of German shipping interests that their share of the global carriage trade was being captured by the British, prospectively shutting them out from the revival of commerce that would follow a negotiated peace.

Despite the Allies’ deficiencies in anti-submarine warfare and shipping management, the German Navy didn’t have the numbers to make the first campaign work—there were only two U-Boats at sea in the ‘sink at sight’ area on the day it was declared. This reflected the lack of rational calculation that marked so much of the German effort. Terror was no more effective at sea than it proved to be from the air with the Zeppelin raids.

What the German Navy—and German shipowners—also missed was that global trade with Germany had been reviving rapidly by the end of 1914 and the Allied blockade proved less than effective. The British always feared that the Netherlands would be the likely conduit for illicit business with Germany and, while that country remained an important entrepôt, Scandinavia had begun to play an important role. American commercial interests were active as they sought to exploit the windfall profits that could be made. The truth was, however, that British businesses were also deeply involved. That had several causes. One was certainly the placement of profit before patriotism, occasionally to the point of outright treason, but there were other reasons. A healthy national economy, partly financed by the adversary’s hard currency, would have a better ability to sustain the expenses of war than one that didn’t have the stimulus of the additional trade. That was the reason why Napoleon created the ‘Continental System’—specifically to prevent British commerce with Europe. It took bitter internal debate before authorities such as the Board of Trade recognised that industrial war in the twentieth century required a different approach.

The U-Boat campaign had three effects, which combined to undermine the German position. First and directly, it was an ‘own goal’ in that the German submarines unknowingly sank cargoes whose final destination would otherwise have been Germany. Second, the German initiative allowed the Allies to go much further in the imposition of a blockade than international law allowed (or the Americans wanted) with the justification of reprisal. The reality that ‘the British are thieves but the Germans are murderers’ kept the US from reacting too strongly to such limitations on its commerce. Third, and perhaps most important, although it’s a point rarely made by historians, the submarine attacks and the Allied reprisals first restricted and then removed the Germans from the business world of the US. The Allies would always be better positioned to exploit the Americans’ industrial strength and their increasing ability to provide financial support, but the indirect trade with Germany that was being developed through neutral nations was on a scale—and could have become even larger—that would have ensured that significant elements in Wall Street had an interest in supporting the Germans. That would have created an obstacle to US entry to the war on the Allied side.

It’s true that the German campaign of 1917 had more economic calculations behind it than 1915, with the idea that a sustained effort by the U-Boats could sink sufficient tonnage in six months to make it impossible for an import-dependent Britain to feed itself. But those calculations were gravely flawed, as was demonstrated when the Allies were able to compensate for their staggering losses by much more effective management of their remaining tonnage, their repair and shipbuilding effort and their ports and storage ashore. The introduction of convoy was an important operational contribution, but only a part of a national and allied effort that showed how the democracies were much more effective than the ramshackle Imperial German state.

We spend much time thinking of the ‘war of territory’ that was waged on the Western and Eastern Fronts. The fact is, as U 53’s visit to Newport provided an uncomfortable reminder, the ‘war of supply’ mattered just as much between 1914 and 1918.

A post-TPP world: play time is over

The contest for the future of the Asia–Pacific is often treated by analysts and participants as a two-player game. The US and China are trying to ‘lead’ and the ‘winner’ will be the country that can ultimately control the most rules and other players in the system at some unspecified point in the future. For example, here’s the usually excellent commentator Evan Feigenbaum:

https://twitter.com/EvanFeigenbaum/status/779839619525283840

This board game style picture captures some big and important parts of the present competition. But it also imposes a tactical emphasis that isn’t always ideal. Namely the jostling between the two main countries to decide and dictate the way ahead.

The Trans-Pacific Partnership is a classic example. It was started by Brunei, Chile, New Zealand, and Singapore as the Trans-Pacific Strategic Economic Partnership Agreement in 2005. Once the US decided to negotiate entry in 2008 however, it was soon treated as a US initiative for the region. For the Obama administration the TPP became a way to show that the Pivot/Rebalance was more than just a military effort. For analysts it became a test of American leadership, in contrast to China’s ‘One Belt, One Road’ plans.

With an intransigent US Congress and both Presidential candidates now against the treaty, many see the likely failure of the TPP as evidence of a failure of US leadership in the Asia–Pacific. In turn, China is seen as having achieved a victory. It didn’t have to be like this.

What the board game picture obscures is that the real contest isn’t dependent upon the strength of American ‘leadership’, but the dispersal of its values. So long as most of the region sticks to basic capitalist, pluralistic, institutional and democratic norms (in that rough order of priority), then China’s ability to challenge American interests will be largely diminished.

It’s no coincidence that the most capitalist region in the world (Asia) is the one most comfortable with US presence. Meanwhile more protectionist areas such as the Middle East or Latin America (which have also seen extensive US ‘leadership’) still seethe at the idea of America as a regional player.

What matters for the US isn’t whether it’s the one that sets the rules, but rather whether the rules are set in ways that suit it.

Even our habit of calling ideas such as markets and institutions ‘US values’ is somewhat of a reversion to the board game picture. The opening up of Asia to capitalism owes as much to the actions of domestic actors in each country, and regional actors such as Australia, Singapore, South Korea and Japan as it does to the United States.

These partners of the US played vital roles helping to spread the norm of trade liberalisation over the last few decades. They established institutions, they made good faith cuts to their own barriers, they persuaded, negotiated and pushed hard to bring the rest of the region on board.

The US was a clear beneficiary of the spread of open market economies in Asia. Not only was it able to gain wealth from the new markets, the change also helped to soften any threat posed by a ‘unipolar’ Washington in the 1990s, while increasing the importance of the US to the region ever since.

US allies and partners are thus its greatest resource in the endurance of an Asian region which supports American interests and concerns. As I’ve previously written, building up the military capabilities of its partners ought to be the US’s predominant focus.

In return, these states need to do far more to ensure the dispersal of values and ideas which support a long-term US presence. Rather than providing reassurance or loyalty—as Australians are want to do—we should do more to ensure the region suits American interests. Foremost among those is the capitalist orientation of the region.

While there’s still a chance for the TPP to pass in a lame duck session of Congress, work must now begin on its successor: one that’s started by states in Asia, which focuses on the concerns of Asia, and which, even if the US does later join, is always talked about and presented as an Asian arrangement.

Australia can play a crucial role here. We have a long and proud history of supporting trade liberalisation, for economic and strategic reasons. In the 1990s we wisely switched to Preferential Trade Agreements, which have kept the deals coming. But that well is running dry. And it has tended to shift the emphasis to questions of Australia’s immediate gains, rather than long-term regional openness.

As Bob Hawke wrote in his memoir, ‘increasingly foreign policy is trade policy and trade policy is foreign policy’. A common path to Australia’s concerns for prosperity (via more trade) and security (via an enduring US presence) may thus lie in the creativity and ambition of our trade policy.

Play time is over.

Trump’s emotional intelligence deficit

Image courtesy of Flickr user Alberto G.

Last month, 50 former national security officials who had served at high levels in Republican administrations from Richard Nixon to George W. Bush published a letter saying they wouldn’t vote for their party’s presidential nominee, Donald Trump. In their words, ‘a President must be disciplined, control emotions, and act only after reflection and careful deliberation.’ Simply put, ‘Trump lacks the temperament to be President.’

In the terminology of modern leadership theory, Trump is deficient in emotional intelligence—the self-mastery, discipline, and empathic capacity that allows leaders to channel their personal passions and attract others. Contrary to the view that feelings interfere with thinking, emotional intelligence—which includes two major components, mastery of the self and outreach to others—suggests that the ability to understand and regulate emotions can make overall thinking more effective.

While the concept is modern, the idea isn’t new. Practical people have long understood its importance in leadership. In the 1930s, former Supreme Court Justice Oliver Wendell Holmes, a crusty old veteran of the American Civil War, was taken to meet Franklin D. Roosevelt, a fellow Harvard graduate but one who hadn’t been a distinguished student. Asked later about his impressions of the new president, Holmes famously quipped: ‘second-class intellect; first-class temperament.’ Most historians would agree that Roosevelt’s success as a leader rested more on his emotional than his analytical IQ.

Psychologists have tried to measure intelligence for more than a century. General IQ tests measure such dimensions of intelligence as verbal comprehension and perceptual reasoning, but IQ scores predict only about 10 to 20% of variation in life success. The 80% that remains unexplained is the product of hundreds of factors playing out over time. Emotional intelligence is one of them.

Some experts argue that emotional intelligence is twice as important as technical or cognitive skills. Others suggest it plays a more modest role. Moreover, psychologists differ about how the two dimensions of emotional intelligence—self-control and empathy—relate to each other. Bill Clinton, for example, scored low on the first but high on the second. Nonetheless, they agree that emotional intelligence is an important component of leadership. Richard Nixon probably had a higher IQ than Roosevelt, but much lower emotional intelligence.

Leaders use emotional intelligence to manage their ‘charisma’ or personal magnetism across changing contexts. We all present ourselves to others in a variety of ways in order to manage the impressions we make: for example, we ‘dress for success.’ Politicians, too, ‘dress’ differently for different audiences. Ronald Reagan’s staff was famous for its effectiveness in managing impressions. Even a tough general like George Patton used to practice his scowl in front of a mirror.

Successful management of personal impressions requires some of the same emotional discipline and skill possessed by good actors. Acting and leadership have a great deal in common. Both combine self-control with the ability to project. Reagan’s prior experience as a Hollywood actor served him well in this regard, and Roosevelt was a consummate actor as well. Despite his pain and difficulty in moving on his polio-crippled legs, FDR maintained a smiling exterior, and was careful to avoid being photographed in the wheelchair he used.

Humans, like other primate groups, focus their attention on the leader. Whether CEOs and presidents realise it or not, the signals they convey are always closely watched. Emotional intelligence involves awareness and control of such signals, and the self-discipline that prevents personal psychological needs from distorting policy. Nixon, for example, could strategise effectively on foreign policy; but he was less able to manage the personal insecurities that caused him to create an ‘enemies list’ and eventually led to his downfall.

Trump has some of the skills of emotional intelligence. He’s an actor whose experience hosting a reality-television show enabled him to dominate the crowded Republican primary field and attract considerable media attention. Dressing for the occasion in his signature red baseball cap with the slogan ‘Make America Great Again,’ he appeared to have gamed the system with a winning strategy of using ‘politically incorrect’ statements to focus attention on himself and gain enormous free publicity.

But Trump has proven deficient in terms of self-control, leaving him unable to move toward the centre for the general election. Likewise, he’s failed to display the discipline needed to master the details of foreign policy, with the result that, unlike Nixon, he comes across as naive about world affairs.

Trump has a reputation as a bully in interactions with peers, but that isn’t bad per se. As the Stanford psychologist Roderick Kramer has pointed out, President Lyndon Johnson was a bully, and many Silicon Valley entrepreneurs have a bullying style. But Kramer calls such figures bullies with a vision that inspires others to want to follow them.

And Trump’s narcissism has led him to overreact, often counter-productively, to criticism and affronts. For example, he became embroiled in a dispute with an American Muslim couple whose son, a US soldier, was killed in Iraq, and in a petty feud with Paul Ryan, the Speaker of the House of Representatives, after Trump felt slighted. In such cases, Trump stepped on his own message.

It is this deficiency in his emotional intelligence that has cost Trump the support of some of the most distinguished foreign policy experts in his party and in the country. In their words, ‘he is unable or unwilling to separate truth from falsehood. He does not encourage conflicting views. He lacks self-control and acts impetuously. He cannot tolerate criticism.’ Or, as Holmes might say, Trump has been disqualified by his second-class temperament.

Globalization and its new discontents

Image courtesy of Flickr user eesti

Fifteen years ago, I wrote a little book, entitled Globalization and its Discontents, describing growing opposition in the developing world to globalizing reforms. It seemed a mystery: people in developing countries had been told that globalization would increase overall wellbeing. So why had so many people become so hostile to it?

Now, globalization’s opponents in the emerging markets and developing countries have been joined by tens of millions in the advanced countries. Opinion polls, including a careful study by Stanley Greenberg and his associates for the Roosevelt Institute, show that trade is among the major sources of discontent for a large share of Americans. Similar views are apparent in Europe.

How can something that our political leaders—and many an economist—said would make everyone better off be so reviled?

One answer occasionally heard from the neoliberal economists who advocated for these policies is that people are better off. They just don’t know it. Their discontent is a matter for psychiatrists, not economists.

But income data suggest that it is the neoliberals who may benefit from therapy. Large segments of the population in advanced countries have not been doing well: in the US, the bottom 90% has endured income stagnation for a third of a century. Median income for full-time male workers is actually lower in real (inflation-adjusted) terms than it was 42 years ago. At the bottom, real wages are comparable to their level 60 years ago.

The effects of the economic pain and dislocation that many Americans are experiencing are even showing up in health statistics. For example, the economists Anne Case and Angus Deaton, this year’s Nobel laureate, have shown that life expectancy among segments of white Americans is declining.

Things are a little better in Europe—but only a little better.

Branko Milanovic’s new book Global Inequality: A New Approach for the Age of Globalization provides some vital insights, looking at the big winners and losers in terms of income over the two decades from 1988 to 2008. Among the big winners were the global 1%, the world’s plutocrats, but also the middle class in newly emerging economies. Among the big losers—those who gained little or nothing—were those at the bottom and the middle and working classes in the advanced countries. Globalization is not the only reason, but it is one of the reasons.

Under the assumption of perfect markets (which underlies most neoliberal economic analyses) free trade equalizes the wages of unskilled workers around the world. Trade in goods is a substitute for the movement of people. Importing goods from China—goods that require a lot of unskilled workers to produce—reduces the demand for unskilled workers in Europe and the US.

This force is so strong that if there were no transportation costs, and if the US and Europe had no other source of competitive advantage, such as in technology, eventually it would be as if Chinese workers continued to migrate to the US and Europe until wage differences had been eliminated entirely. Not surprisingly, the neoliberals never advertised this consequence of trade liberalization, as they claimed—one could say lied—that all would benefit.

The failure of globalization to deliver on the promises of mainstream politicians has surely undermined trust and confidence in the ‘establishment.’ And governments’ offers of generous bailouts for the banks that had brought on the 2008 financial crisis, while leaving ordinary citizens largely to fend for themselves, reinforced the view that this failure was not merely a matter of economic misjudgments.

In the US, Congressional Republicans even opposed assistance to those who were directly hurt by globalization. More generally, neoliberals, apparently worried about adverse incentive effects, have opposed welfare measures that would have protected the losers.

But they can’t have it both ways: if globalization is to benefit most members of society, strong social-protection measures must be in place. The Scandinavians figured this out long ago; it was part of the social contract that maintained an open society—open to globalization and changes in technology. Neoliberals elsewhere have not—and now, in elections in the US and Europe, they are having their comeuppance.

Globalization is, of course, only one part of what is going on; technological innovation is another part. But all of this openness and disruption were supposed to make us richer, and the advanced countries could have introduced policies to ensure that the gains were widely shared.

Instead, they pushed for policies that restructured markets in ways that increased inequality and undermined overall economic performance; growth actually slowed as the rules of the game were rewritten to advance the interests of banks and corporations—the rich and powerful—at the expense of everyone else. Workers’ bargaining power was weakened; in the US, at least, competition laws didn’t keep up with the times; and existing laws were inadequately enforced. Financialization continued apace and corporate governance worsened.

Now, as I point out in my recent book Rewriting the Rules of the American Economy, the rules of the game need to be changed again—and this must include measures to tame globalization. The two new large agreements that President Barack Obama has been pushing—the Trans-Pacific Partnership between the US and 11 Pacific Rim countries, and the Transatlantic Trade and Investment Partnership between the EU and the US—are moves in the wrong direction.

The main message of Globalization and its Discontents was that the problem was not globalization, but how the process was being managed. Unfortunately, the management didn’t change. Fifteen years later, the new discontents have brought that message home to the advanced economies.