30 November 2023

US-China Relations

Following the APEC conference in California, Chinese President Xi Jinping will now have to decide whether to follow through with the agreement between him and President Joe Biden on issues like fentanyl. The U.S. and China have also agreed to a partial resumption of military-to-military talks in the hope to reduce tensions in the South China Sea. However, it should be noted that China has consistently betrayed military promises in the South China Sea, and these talks are unlikely to be effectives. The Biden administration has not indicated they are willing to reduce tariffs and export restrictions on advanced technology, such as semiconductors. China likely engaged in these discussions because of the major internal economic and political problems plaguing the country (see below), and there has been a notable shift in diplomatic language by the CCP. Yet the CCP continues to support Russia in the war in Ukraine, and they are actively meddling in the Middle East to expand their influence. China hosted discussions on the Palestinian issue, and the CCP is working closely with Saudi Arabia, Egypt, Iran, and the UAE (via BRICS+). The cooling period between the U.S. and China is highly unlikely to last because Xi is highly unlikely to follow through on the fentanyl agreement or other issues. In addition, China hawks in the United States are deeply suspicious of the CCP’s support of regimes like Russia and China. Finally, the business environment (such as arbitrary regulations) are highly likely to change despite China’s economic problems. Therefore, corporations should maintain a strategy that recognizes the geopolitical risks, political instability, and economic problems in China over the medium term.

 

COP28 Started on November 30

The annual COP conference (COP28) started on November 30 and will run through December 12, and it is hosted in Dubai because the UAE will take on the presidency at the start of the events. There will be more than 70,000 people from almost 200 countries negotiating on major environmental issues. Approximately halfway through the summit, the group will start drafting a final agreement, and importantly the COP president tends to have the most influence in these discussions, which is why understanding the UAE’s agenda matters. The UAE is seeking an agenda around a “low-carbon future” that does not ultimately eliminate fossil fuels. OPEC members are especially keen on this agenda because many of these countries do not have diversified economies. Therefore, the UAE will likely push to focus on technologies like carbon capture rather than phasing out coal, gas, and oil.

 

China has FDI Deficit in Q3

Increased geopolitical and economic risks are reducing foreign direct investment (FDI) into China, and many Western corporations are looking to diversify their supply chains. The latest data shows that corporations “de-risking” (moving to other countries as suppliers) is having negative effects on China’s economy. Manufacturing contracted in October 2023 while exports continued to decline, and China saw its first-ever quarterly deficit in FDI in Q3. China is highly likely to face problems over the medium term as businesses want to hedge against geopolitical risks and the anti-free market approach of the CCP that prioritizes state-owned or state-backed businesses.

 

ER Patients Diverted Due to Ransomware Attack

U.S.-based Ardent Health Services experienced a cyberattack that impacted services in Oklahoma, New Mexico, and Texas, though Ardent oversees thirty hospitals across the country. In response to the attack, Ardent had to divert patients from emergency rooms in the three states mentioned, especially because they had to stop using Epic Systems that tracks patients’ healthcare records. This ransomware attack was not particularly unusual, but it highlights the persistent problem that critical infrastructure faces from such attacks. In the United States, energy, healthcare, telecommunications, and municipal governments have had significant disruptions that impacted local communities. Corporations are highly likely to continue experiencing such impacts because of the insecurity in most of these institutions.

 

Venezuela’s Possible Invasion of Guyana

Brazil placed their military on alert over a possible invasion of Guyana by Venezuela because of irredentist claims on the region of Essequibo. The International Court of Justice will issue a judgment on the territorial claims soon where Guyana claims the 1899 boundary established between Venezuela and then-British Guiana. However, Venezuela will hold a referendum on December 3 as to whether they should annex Essequibo, which makes up about two-thirds of Guyana’s landmass. This matters today because ExxonMobil discovered oil in 2015 in the region, making Guyana’s reserves larger than either the UAE or Kuwait. Brazil’s military readiness is important because Venezuela will need to go through Brazil to attack Guyana. A conflict has a moderate likelihood because Venezuela’s government might try to use the invasion to mitigate the major structural and economic problems they currently face.

 

AI and Security

The developer security company Snyk has issued a new report looking at security issues around AI-generated code, finding in a survey that 92% of developers thought AI coding tools could generate insecure code. According to the report, “Less than 10% of survey respondents have automated the majority of their security checks and scanning. 80% of respondents said that developers in their organizations bypass AI security policies.” Corporations are increasingly using AI to support their security efforts, but this report highlights that even major technological developments have their own insecurity. Inversely, new data by the cybersecurity firm SlashNext shows that there has been a 1265% increase in malicious phishing emails and a 967% increase in credential phishing specifically. This increase is due to cybercriminals using generative AI tools (like ChatGPT), which allows them to write sophisticated phishing messages.

 

Attempted Coup in Sierra Leone

Sierra Leone is still reeling from an attempted coup by what the government called “renegade soldiers” who sought access to a military armory in Freetown. In the attempted coup, at least 20 people died, but the attempt was ultimately a failure. Besides the armory, the assailants also targeted a police station, releasing 2,000 inmates. The government imposed a brief curfew while they restored order. This is the latest coup or coup attempt in western Africa falling Mali, Gabon, Guinea, and Burkina Faso. As such, it is another indicator of general political instability in Africa as the region is being impacted by economic and environmental problems.

 

Niger Repeals Anti-Migration Law

Niger's recent repeal of its controversial anti-migration law, Law 36-2015, which criminalized the transportation of migrants, particularly towards the north, marks a significant shift in the country's migration policy. This law, enacted in 2015 under the presidency of Mohammadou Issofou, was primarily aimed at reducing the flow of West Africans to Europe, particularly through Agadez, Niger’s fifth-largest city and a key transit point in the region. In addition to revoking the law, the government also expunged convictions that had been handed out under its provisions. This move effectively ends an eight-year security partnership between the European Union and Niger, adding to the already strained diplomatic relations between the Nigerien government and its Western partners, especially since the military seized power in July. The repeal of this law has raised concerns in Europe, where there is fear that it could lead to an increase in the influx of migrants. The European Union had previously supported measures to curb migrant smuggling, and the repeal of this law represents a setback to those efforts.

 

New Research on Geopolitical Risks

The Belfer Center at Harvard University has published a new report on geopolitics and the supply chain that is important analysis for security professionals and corporations. Titled "'Wars without Gun Smoke': Global Supply Chains, Power Transitions, and Economic Statecraft,” the abstract describes the utility of understanding supply chain issues during periods of power transition like the world is currently facing. 
 

Abstract: “Conflict is thought to be highly likely during a power transition. The spread of global supply chains has provided new economic weapons for competing great powers, but the businesses that constitute global supply chains can make it harder or easier for them to use those tools. High-value businesses within the dominant power tend to oppose their state’s use of economic statecraft because of its costs to them, whereas low-value businesses within the rising power tend to cooperate with their state because it benefits them.”

“If you want peace you don’t talk to your friends you talk to your enemies"

- Desmond Tutu

If you enjoyed this newsletter why not sign up to receive it by email

Logo

© Copyright. All rights reserved.

We need your consent to load the translations

We use a third-party service to translate the website content that may collect data about your activity. Please review the details in the privacy policy and accept the service to view the translations.