Why is Europe’s youth leaning so far right? – Asia Times

In Europe, the phrase “never again fascism” is one that also echoes. The horrors of previous years are still haunted by the death and destruction experienced by hyper-nationalist, autocratic state in the first half of the 20th century.

But, as the current European Union votes show, the dread of the far right is slipping. Far-right events are making benefits across Europe as their method of political commitment continues to pay off. The political reasoning of earlier decades no more holds in some quarters.

Landscapes that would have ended political careers in Europe a century before are now being rewarded with political success.

His party outperformed all of the parties in Germany’s ruling coalition, winning six new seats in the European parliament, despite the lead candidate of the far-right Alternative for Germany ( AfD ) party’s statement that members of the Nazi SS were not necessarily criminals.

In addition, the AfD did surprisingly well in local elections that took place at the same time as the German votes. With critical elections taking place in the eastern states of Germany, it’s still a mystery whether the AfD’s forbidden forbids collaboration with the far right may experience another political boom.

The French election was the most stunning. Marine Le Pen’s even- right National Rally ( recently National Front ) smashed President Emmanuel Macron’s weak coalition of centre- appropriate parties. One of the “wildest gambles in modern European story” was called by the president after the election resulted in the president calling a snap election.

Macron’s campaign against the extreme correct has now failed. One popular center- proper politician, Éric Ciotti, declared his conservative Democratic party ( the party of Jacques Chirac and Nicolas Sarkozy ) would visit National Rally in a coalition. This has set off what has been called” the wildest 72 hours in French politics” in a generation.

An important illegal that prevents political events from cooperating with Le Pen has been profoundly broken, regardless of whether the Democratic party joins National Rally in this political period.

It seems clear that, far from denying National Rally a private triumph, Macron has created a scenario in which, if last week’s vote is repeated, he did had handed them the “keys of energy”.

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If Macron wants the National Rally to be discredited before Le Pen can win the presidency, he should look at Italy and other countries in Europe, where a period of government has normalized rather than discredited the far-right.

Giorgia Meloni, the prime minister of Italy, won the first place vote in the European Union, confirming her leadership in the right. The right-wing illiberalism bulwark parties in Hungary ( Fidesz ) and Poland ( Law and Justice Party ) continue to have a lot of power even though their vote was less than their historic highs.

Even outside the EU, in Britain, Nigel Farage’s populist far- right Reform Party has overtaken the Tories in polling for the first time. Many people will be watching their election results on July 4 with a mix of dread and interest.

Only in Nordic nations did a clear retreat from the extreme right occur. In Sweden, the Social Democrats, the Left Party and the Greens together managed to secure almost 50 % of the vote.

Youth against fascism? Not in 2024

Is this slurch to the right a sign of a generational shift in young voters ‘ attitudes toward anti-democratic, racist values? The assertion has been made in numerous instances, but are the young voters in Europe to blame for the rise of the right?

In Germany, at least, the picture is more complex. Talk of a generational swing, in the eyes of Tim Gensheimer, a German researcher studying youth voting patterns, goes against the fact that voters between the ages of 16 and 24 were just as likely to vote left as right of center.

Generational generalizations, he insists, overlook the fact that young people are sharply divided on political matters. Despite having a sense of dissatisfaction with major parties whose promises of a cleaner environment, lower living costs, and a secure future have come to nothing, this is true.

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Nonetheless, something has clearly changed.

A close examination of German youth voting reveals that the Greens were the real losers. They made promises in the previous election, but they have n’t delivered much, resulting in a significant 23 % decline in their youth vote.

By comparison, the AfD and the Christian Democratic Union ( CDU) picked up an additional 11 % and 5 % of young people’s votes respectively. Although the social-democratic SPD vote among young people has remained largely stable, it continues to be dangerously low.

Further to the left, the Linke lost ground among young voters in what they perceived as a terrible election. However, 6 % of voters under the age of 24 favored the new populist Alliance Sahra Wagenknecht, a paleo-leftist outgrowth of the Linke stripped of its progressive green, gender, and migration politics, and who was genuinely skeptical about military support for Ukraine.

Young Germans voted more for micro-parties than any established party, rather than voting as a group for the far right. The 35-44 age group, particularly men who felt their economic situation was precarious, were the age group that was most likely to support the AfD.

Far more obvious than any age divide, however, was Germany’s east- west divide, with the AfD polling first in all ex- East German states. Even this, however, is not the whole story, with a north- south divide also emerging. In most of the southern states of Bavaria and Baden-Württemberg, the AfD placed second behind the CDU, while in the north-western states of the SPD were frequently in second place.

The narrative involving young people in France was similar, with young people voting for the Greens and centrist parties after their share of the vote to the left gradually increased. Young people in France remained more likely to vote left of center than other age groups.

However, it is obvious that many young French voters participated in the far-right’s wider political migration, in part because of Jordan Bardella’s young star power and the young voters ‘ desire for a brighter future. Through his renewal of the party’s image, 32 % of voters aged between 18 and 34 felt able to vote for National Rally. Macron’s candidate managed a paltry 5 %.

Elsewhere, Spain too saw a noticeable rise in the influence of the far right, with Vox collecting two more seats on the back of its anti- migrant, anti- Islam and anti- gender- politics platform.

Vox has gained popularity among young men because of its blending of old Francoist principles, such as anti-liberal nationalism and ostensibly traditional family values, with more recent forms of anti-immigrant sentiment and climate change denialism.

Why are there so many young people attracted to the far right?

For some pundits, the answer lies with the parties ‘ tech- savvy approach, which has built up a colossal presence on TikTok.

The use of social media to spread anti-immigrant sentiment and white supremacist idealizations of the “mother, father, child” family, as well as far-right talking points about Russia’s invasion of Ukraine, has obviously made inroads among a young audience whose main interaction with the news comes through scrolling.

However, this ignores the fact that young Europeans have been screaming in the void for a number of elections already. They have been looking for a political home that gives them some respite from a cost-of-living crisis, unaffordable housing, a deteriorating ecosystem, and unending conflict.

If the youth vote continues to be overwhelmingly anti-the status quo, it is because the established parties ‘ campaign tendencies seem to be unpopular with those under 25. A well-founded pessimism regarding the ability of established politics to solve real, structural issues has provided fertile ground for far-right parties selling dangerously false solutions.

Matt Fitzpatrick is Professor in International History, Flinders University

This article was republished from The Conversation under a Creative Commons license. Read the original article.

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European debt now a better bet than US Treasuries – Asia Times

As relationship expert Bill Gross sparkles a bright spotlight on a rapidly evolving threat to US Treasury securities, the November election, Janet Yellen the n’t become happy.

The former Pacific Investment Management Co ( PIMCO ) chief investment officer has mentioned European debt as a ready substitute for securities that were sold by US Treasury Secretary Yellen’s team in recent interviews.

” As we move to November, and everything becomes more clear as to who may or who might not win, the doubt plus the potential legislation implications may affect Treasuries significantly”, Gross told Bloomberg.

Gross’s apparent move to Europe comes even after the electoral debacles in Berlin and Paris. Emmanuel Macron and Olaf Scholz faced opposition in the European Parliament elections on June 9.

As President Macron called a snap election in a bid to consolidate power, French bond yields reached their highest level since November. German and Italian bond prices plunged, too, as traders assessed the fiscal policy implications of the elections.

Gross notes, political surprises coming from the continent, and other significant events in India, Mexico, and South Africa that put many bond investors at risk due to market reactions. Could the US election pitting Democrats for Republicans against President Joe Biden be the next market snob?

” What we’ve seen the last few weeks is a reaction to uncertainty, in terms of not only the party that’s dominating, but uncertainty as to what their policies will be”, Gross explains.

As such, Gross adds,” there’s coming a point where European bonds are more attractive than Treasury bonds, in my opinion. In terms of attraction, the spreads for German and French 10-year bonds have decreased significantly over the past month or two in relation to Treasuries and today as well.

This is how US electioneering may cast a serious shadow over the attractiveness of the dollar, the linchpin of global finance and trade, written between the lines in bold font. And the difficult task Team Yellen must complete in order to stop the US government’s debt from rising worldwide.

Adding to Yellen’s challenges, a US national debt approaching US$ 35 trillion just as Washington politics become increasingly toxic.

A US debt run might be in the offing. Photo: Wikimedia Commons

Extreme polarization is already imperiling Washington’s credit rating. Last August, when Fitch Ratings yanked away America’s AAA&nbsp, credit score, it cited the polarization behind the January 6, 2021 insurrection among the reasons.

Additionally, Fitch cited political conflict involving raising the statutory debt ceiling and funding the US government as risk factors for the credit rating of Washington. Such clashes might worry Asia less if not for the fact Washington’s debt is&nbsp, twice the size&nbsp, of China’s annual GDP and more than eight times Japan’s.

Combined, Tokyo and Beijing hold about$ 2 trillion of US government debt. That vast pool of savings could be at risk if Moody’s Investors Service revokes Washington’s last remaining AAA rating. Surging US yields would affect global markets in unanticipated ways.

America’s sharp mercantilist pivot since 2017 is another worry for Asia’s export- reliant economies. Then, President Trump imposed severe tariffs on global steel and aluminum as well as Chinese goods.

When Biden arrived, he left Trump’s trade war in place— and added new layers of China- targeted curbs, most targeting China’s access to semiconductors, chip- making equipment and other vital, cutting- edge technologies.

Now, Trump’s plan to slap 60 % taxes on all Chinese goods is catalyzing something of a tariff arms race, one that’s drawing retaliation threats from Xi Jinping’s government. The EU followed this week with 38 % of its own tariffs after Beijing just imposed a 100 % tax on China-made electric vehicles.

Never mind that “policies are more likely to hurt than help the lower- and middle-income Americans they purport to benefit,” asserts economist Kimberly Clausing of the Peterson Institute for International Economics, a think tank based in Washington.

Stock markets everywhere could be in harm’s way as trade war risks increase and uncertainty surrounds growth prospects. According to Gross, the US’s “equity market is valued at historically high levels if looking at current 21-times ‘ price to earnings ratios” are considered. If GDP slows, he notes, there could be” a problem in terms of valuation at the moment for many stocks”.

That goes, too, for Europe’s economic prospects as the region’s biggest economy, Germany, fends off recession risks. With a narrower electoral mandate, Chancellor Scholz ‘ Social Democrats and its progressive coalition partners are now free to stimulate growth.

Macron is smarting in France now that he lost to Marine Le Pen’s nationalist far-right party in parliamentary elections. The surprise snap election he announced overlaps with Macron’s hosting of the Paris Summer Olympics. Macron’s instinct to fight contrasts with Belgium’s Alexander De Croo, who resigned instead.

Macron urges French citizens to cast ballots the same way they did this weekend for the European Parliament, which has long been seen as a protest vote, according to Mujtaba Rahman, an analyst at Eurasia Group.

Macron “believes he can defy the polls by having to choose between the pro-EU, pro-Ukrainian, and centrist status quo” and the existential risk of a far-right government,” he said.

It’s quite a gamble on France’s future. Polls, Rahman says, suggest Macron’s centrist coalition will fail to win a majority, and if Le Pen’s National Rally picks up the most seats.”

That means” France will be in uncharted waters,” Rahman explains”. Le Pen has stated that she will partially withhold EU funding, impose stricter immigration laws, violate the EU single market by putting French business before French aid, and impose restrictions on aid to Ukraine.

Italy’s Giorgia Meloni had a much better week, continuing her pivot from far- right to mainstream. Along with a solid election showing, Meloni’s government will host the Group of Seven ( G7 ) in the days ahead.

Centrist European Commission President Ursula von der Leyen also appears to have reclaimed the far-right trend and been given another five-year term. She will likely be forced to make concessions to immigration and environmental policies to advance the agenda.

Ursula von der Leyen, the EC president, has been hawkish about China trade issues. Photo: Asia Times Files / AFP / Dursun Aydemir / Anadolu Agency

What all of this means for EU fiscal dynamics is a ripe subject. Another wildcard is the outlook for US rates. The core consumer price index dropped to its lowest level in more than three years in May.

Despite May’s lower CPI, the US Federal Reserve’s guidance seems” roughly unchanged,” says economist Dominique Dwor- Frecaut at advisory Macro Hive”. Cuts continue to be the best case scenario until the Fed has increased its confidence in the disinflationary outlook.

Will Denyer, economist at Gavekal Dragonomics, adds that” even though they had this softer inflation data in hand, Fed policymakers still pared back their rate cut expectations for the year.”

The global implications are uncertain. The belief that the Fed is” committed to its 2 % inflation target” in the foreign exchange market implies that any increase in US inflation has a tendency to cause the dollar to rise while slower inflation causes the US currency to contract, according to Denyer.

As a result, May’s softer CPI release saw the dollar ease against most currencies. However, it’s still unclear whether this focus will continue to be the main force behind the world’s exchange markets in the coming days and weeks.

Denyer contends that worries about the outcome of the French parliamentary election could devalue the euro. A potential drop in the Bank of Japan’s asset purchases could increase the yen. The main story is, however, May’s moderate US inflation and what it implies for US policy and global markets.

Not the whole story, though, as election- year shenanigans heat up in the US. Global markets will continue to be tense as Biden and Trump battle it out in the polls. &nbsp,

According to Kelvin Wong, an analyst at OANDA, the 10-year yield spread premium between US Treasury notes and Japanese government bonds has reduced Japanese insurance companies ‘ ability to invest in fixed-income securities, which may result in higher odds that the long-term JGB yields will likely trend higher.

According to Wang,” These potential upcoming fixed income portfolio adjustments from Japanese insurance companies may provide some support to halt the major yen’s weakness against the US dollar.”

However, as Gross points out, European debt will soon be popular with global investors as Yellen’s team struggles to maintain demand for a US Treasury debt market that appears to be in decline.

” Relative to the US, we see support for European bonds due to smaller fiscal deficits,” says Ann- Katrin Petersen, investment strategist at the BlackRock Investment Institute.

Follow William Pesek on X at @WilliamPesek

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China’s global military base strategy taking shape – Asia Times

China is signing foreign military base access agreements to expand the reach of its armed forces around the world, a move that counteracts America’s long-range deterrence plan for Taiwan and threatens India with encirclement.

RAND released a report this month outlining how China is negotiating base access agreements to expand its security footprint and allow People’s Liberation Army ( PLA ) and People’s Armed Police ( PAP ) to conduct operations abroad.

RAND identifies specific locations including Cambodia, Equatorial Guinea, Namibia, the Solomon Islands, the UAE and Vanuatu. According to the review, China currently has a logistics center in Djibouti and a Tajikistan paramilitary base.

Apart from those places, Newsweek reported in March 2024 that China is likewise seeking basic accessibility in Cuba, Pakistan, Tanzania, Sri Lanka and Myanmar.

Although these bases help peace operations like non-combatant evacuations and intelligence meeting, the Rand report claims that their prospective use during a wartime conflict is unsure. Through 2030, the PLA’s main kinetic task will likely be to protect sea lines of communication ( SLOC).

By 2030, China’s military writings suggest a lack of programs or the ability to use foreign bases for offensive operations against US forces, according to the Rand review. According to the statement, China prioritizes the defense of coastal trade roads and the defense against potential US barricades.

The statement also makes a point of highlighting the major difficulties the PLA faces in creating and maintaining these bases, including the social dependability of the host countries, operational assistance issues, and base security. It raises questions about the efficiency and endurance of the PLA’s strategy in the face of war because it notes that the PLA relies heavily on recruited human resources for shipping.

The PLA’s capability for higher-end combat operations from these locations is constrained despite efforts to create a network of corporate emplacements and logistics support foundations, including in professional ports.

According to the Rand report, increased PLA naval and air defense activities in international bases might show a shift to an aggressive stance, but administrative and political issues make it improbable that PLA bases will pose a major threat to US defense interests over the next ten years.

However, this examination may overlook the fast development of Chinese strategic planning and technology.

In a June 2024 article for The National Interest ( TNI), Brandon Weichert points out that China has the largest fleet of aircraft carriers worldwide, underscoring its significant shipbuilding advantage in comparison to the US.

Weichert claims that the People’s Liberation Army-N will use these resources to assert local supremacy by preventing US troops from entering the Indo-Pacific.

He claims that the PLA- N views its carriers as floating demand facilities in any eventual conflict, such as an invasion or Taiwan blockade. He also contends that the US must conform to the arrival of new geographical waters and Chinese naval installations in the Northern Hemisphere.

By leveraging the risk of a clear attack on the US island, China may seek starting exposure in the Western Hemisphere to challenge the US’s prolonged punishment in a Taiwan issue.

Robert Ellis cites base access in Cuba in a 2023 article for the Peruvian Army Center for Strategic Studies as evidence that China could launch special operations, retaliate against the US military, and attack the US mainland to sever key defense supply chains in a conflict scenario.

In addition, Gordon Chang warns in a Gatestone Institute article from June 2023 that China might launch long-range missiles against Cuba to attack US Navy installations in Florida, obstruct US vessels ‘ movements, and shoot down planes over the southeast of the country.

India worries that China will use its economic leverage to expand its lone overseas military base in Djibouti by expanding its base there. This circumstance would put an end to India’s rule over the Indian Ocean and stoke encirclement fears.

Although China’s base in Djibouti can support its naval operations in the Indian Ocean, it is located at the end of fragile supply lines, according to Isaac Kardon in a February 2023 Foreign Policy at Brookings briefing.

Kardon contends that China’s Djibouti facility is isolated and only effective because it does n’t cooperate with other Indian Ocean Chinese military installations. Kardon points out that China’s dual-use commercial facilities at Gwadar and Hambantota have still functioned as significant nodes for its naval operations.

In regards to Gwadar, Kardon and other authors mention it in a report from the China Maritime Studies Institute in August 2020, citing its location, military significance, and Chinese port operator.

According to Kardon and others, some PLA circles consider that Chinese base access to Gwadar to be as good as new, quoting a PLA official who said,” The food is already on the plate, we’ll eat it whenever we want,”

In line with the South China Morning Post’s (SCMP )’s (SCMP ) report from July 2023 that Hambantota will most likely be China’s next military base in the Indian Ocean, pointing out that China has direct control of the facility and represents its single largest port investment.

In terms of military support, Gwadar and Hambantota can back a more pervasive Chinese naval presence in the Indian Ocean, which could ultimately endanger India’s sea-based nuclear deterrent.

The Bay of Bengal’s deep waters offer better cover than the crowded waters of the Arabian Sea, according to Asia Times, who reported this month that India may be planning to convert it into a base for its nuclear ballistic missile submarines ( SSBN).

India’s SSBNs would patrol the Bay of Bengal from a massive submarine base in Rambilli, with the area being protected by surface assets like aircraft carriers and destroyers. Such a plan would allow India to launch launch-bombs ( SLBMs) at Pakistan and China without being detected by nuclear-tipped submarines.

However, nuclear tensions between China and India are most likely to be the result of their mutually advantageous penetrations of one another’s bastions using conventional weapons. In that scenario, Chinese warships operating out of Gwadar and Hambantota may monitor the movements of India’s SSBNs.

India is also considering expanding its presence in the South China Sea, where China intends to establish a base for its SSBNs, in line with India’s intentions in the Bay of Bengal.

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Li Qiang to Australia as relations move from freeze to thaw – Asia Times

Premier Li Qiang of China will travel to Australia from June 15 to June 18.

It is a Chinese premier’s first trip to Australia in seven years, and it also signals a more melting of the two nations ‘ once-frozen relationships.

The elite is in charge of the State Council and is ranked second among the seven-member governing Politburo. Just President Xi Jinping, as the mind of the Chinese Community Party, surpasses him.

In the same way as both our head of government ( prime minister ) and head of state ( governor- general ) are active in international diplomacy, both Li and Xi conduct international visits.

The prime minister has recently attended multilateral summits with Japan and South Korea, the G20, and the World Economic Forum. Li Keqiang, the preceding top, traveled to Australia in 2017.

The greatest in diplomatic niceties are required for an official visit of this stage. In general, it brings back the visit that Prime Minister Anthony Albanese made to China later last month.

What will the premier been doing?

The focus will be on set pieces for a visit to a head of a major world power in Canberra ( although I’m not sure if this will happen when Indian Prime Minister Narendra Modi hosts Albanese for a pre-cricket shoulder of recognition in a golden carriage ).

A complete royal pleasant, including a visit to Governor-General David Hurley, as well as a military display. This is the procedure and symbolic language of any formal visit.

The top will co-chair the seventh China-Australia Annual Leaders ‘ Meeting on the political front. In a memorable moment from 2003 when US President George W. Bush and Chinese President Hu Jintao delivered remarks within a day of each other, Xi addressed legislature in 2014.

Xi has traveled extensively throughout Australia, making jokes about getting a license for it when he visited Tasmania in 2014.

Before moving on to Malaysia, Li will spend time in Adelaide and Perth ( to visit the pandas and have lunch with depressed wine exporters ) for business development and a Chinese group visit.

China sees the attend as an opportunity to promote business and investment connections, much like we’ve seen our prime minister carrying company representatives on his travels.

The premier will also visit a Fortescue facility and a lithium refinery at Kwinana ( a joint venture with Chinese-owned Tianqi Lithium ). He may attend a roundtable on Australia-China CEO that the Business Council of Australia will convene business officials.

It’s a warning that, just as in Australia, China’s officials have an all- taking focus on improving economic development.

Given his history supporting innovative and business development, former minister Jocelyn Chey points out that Li will likely be interested in the financial possibility of greater interdependence in both industry and commerce.

Will there be big announcements?

Possibly not. I’m expecting more method and connection- tower. Basically, the work was done in advance to make the visit possible.

The defence ministries of Australia and China met in Canberra in March, and Trade Minister Don Farrell has been active addressing trade limits, with recent disclosures made regarding wheat and wine. ( Lobster is essentially the last industry to have trade barriers. )

To a great extent, the Albanese government has reached its goal of” stabilizing” relations. This attend focuses more on examining what other options are there for the couple.

Many will be listening cautiously to Li’s communication, which might well be simple. Propositions at the highest levels will be used as hints about plan and direction in an opaque political program.

The Taiwanese citizens are one of the most important people for this sensing: for instance, lower- level officials, buy companies, those planning holidays and parents making decisions about where their children will research.

Australia may be hoping that the message that it is up on the “friendly” state record will continue. A feeling that Australia was” never so pleasant, yet angry” had a bad impact on many small decisions by a range of players. Li’s kid studied in Australia, so it might be mentioned.

Continuing areas of disagreement

While those involved in protocol did often wish to reduce controversy, it is obvious the Taiwanese premier will face fierce media questions and possible demonstrations, for example by Uighur, Falun Gong and Hong Kong protesters.

Albanese has pledged to raise concerns during Li’s browse in accordance with Albanese’s oft-quoted statement,” We will co-operate where we can, disagree where we must, and participate in our national attention.”

This will include problems with people freedom, such as Yang Hengjun’s earlier death sentence. Albanese will assuredly once more express his concern about the Chinese’s continued action against American personnel in the Yellow Sea, which has imposed UN sanctions on North Korea, and other long-standing points of contention between the two nations.

Most of all, the president’s explore will show that China and Australia are able to include a “normal” political marriage after the decades of “deep freeze“.

It will demonstrate the value of politics as a means of communication, certainly as a means of expressing one’s opinion, to come up with alternatives and try to control others.

In the relationship between China and Australia, the differences are numerous. The Samples: ACRI/BIDA Poll released this week demonstrates just how serious Australians ‘ suspicion of China is still. This wo n’t be covered up by a state visit.

This is a better position than the previous decades, and it is more in line with those in other nations.

Diplomacy provides tools to maximize the benefits of a continuously significant but challenging relationship as Australia attempts to manage its relations with China in accordance with its regional interest and support for global rules.

Melissa Conley Tyler is Honorary Fellow, Asia Institute, The University of Melbourne

This content was republished from The Conversation under a Creative Commons license. Read the original post.

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Chinese EV firms can absorb EU tariffs: expert – Asia Times

According to a former general counsel of the Office of the United States Trade Representative ( USTR ), the new tariffs imposed on Chinese electric vehicles ( EVs ) wo n’t have a significant impact on imports from China.

According to Greta Peisch, a companion in the Wiley International Trade Practice, Chinese automakers are able to capture the EU’s weak tariffs and maintain successful margins in Europe in an interview with Asia Times.

Greta Peisch, a companion at Wiley and former Office of the United States Trade Representative general counsel, is shown in this picture. laws

In China, Chinese firms are selling their Vehicles for less money than in Europe. And when you compare the two different sticker costs, it appears that there is a lot of room for Taiwanese businesses to take that tariff, she said. &nbsp,

They may still be able to offer their EVs in Europe with the same income margin that they would be able to make in China, she said, even if the price is likely set at 38 %.

She claimed that China’s market has a capacity-building slump that it can no longer capture, leading to the price decline of EVs in China. She said, for instance, that BYD sold an EV type in China for about US$ 12, 000.

In April 2023, BYD priced its Seagull subcompact EV, the company’s cheapest unit, at US$ 11, 400 in China. The concept, powered by a 55 watt electrical motor and a 30 kilowatt per minute battery pack, you move 305- 405 kilometers per charge. The battery allows the EV to charge up to 80 % in 30 minutes. &nbsp,

Last month, BYD offered its Seagull EV Honor Edition at US$ 9, 700 in China. According to media reports, the business planned to sell the model for about 20 000 euros ( US$ 21.47 ) in Europe. Similar European EV models are priced at around 25, 000 to 30, 000 euros. &nbsp,

In fact, the EU on Wednesday only imposed a 17.4 % tariff on BYD’s EVs. The Hong Kong- listed BYD shares rose 5.82 % to HK$ 232.8 ( US$ 29.8 ). The Hang Seng Index, the benchmark for Hong Kong stock market, only rose by 0.97 % to 18, 112. &nbsp,

Germany’s opposition&nbsp,

The European Commission set up a 13-month investigation last October to find out whether government subsidies have helped Chinese EV manufacturers increase market share in Europe in recent years. Nine months after the investigation begins, it has the authority to impose provisional anti-subsidies. &nbsp,

The EC announced on Wednesday that it has “provisionally concluded” that if discussions with Chinese EV manufacturers fail to produce a successful solution, they will be subject to tariffs starting on July 4.

EV makers who participated in the investigation will typically be subject to a 21 % duty, as per the EC’s decision, while those who did not will be subject to a 38 % duty.

Specific charges will apply to BYD ( 17.4 % ), Geely ( 20 % ) and SAIC ( 38.1 % ). These costs would be added to the 10 % tariff currently in place on all imported vehicles into the EU. This results in tariffs of up to 48.1 % for Chinese EV manufacturers.

Non-Chinese automakers that produce some EVs in China will also be affected. Tesla may be given an “individually calculated duty rate” due to a particular request it made, though.

According to reports in the media, Germany made a final push to the EC to keep the EV tariffs as low as possible on Tuesday to stop China from retaliating. &nbsp,

After the EC’s Wednesday announcement, German Transport Minister Volker Wissing posted on X that” the EU Commission’s punitive tariffs affect German companies and their top products” .&nbsp,

German businesses expressed concern that the EU tariffs will have an impact on the country’s stark export-oriented economy.

Peisch, whose key responsibilities at USTR included coordinating with European partners on tariff action to address Chinese overcapacity, said it’s a significant challenge that Germany and its businesses oppose the EU’s new tariffs on Chinese EVs. &nbsp,

” Many German businesses have invested heavily in China. And it’s understandable that they are concerned about the EU’s tariffs and what they might mean for their Chinese markets, she said. They” simply assume that China will engage in retaliatory behavior,” they say.

” But in my opinion, Germany and those companies are a little short-sighted because I believe China wants to dethrone those European sellers in its own market,” she continued. There are still a lot of money to be made in China by these German producers in the near future. But will they still be greeted there in a while?

Before China begins replacing German businesses with local players, she advised German businesses to make long-term plans for their development. &nbsp,

Due to uncertainty over how China might respond to the EU’s new tariffs, European auto stocks fell on Wednesday and Thursday. &nbsp,

China’s responses

Beijing vowed to take the necessary steps on Thursday in response to the EU’s decision to impose new tariffs on Chinese electric vehicles.

The China-based government will pay close attention to the European side’s progress and will resolutely take all necessary steps to resolutely defend the legitimate rights and interests of Chinese companies, according to the government’s official statement on Thursday. &nbsp,

Lin Jian, a spokesperson for China’s foreign ministry, described the EU’s anti-subvention investigation as a typical example of protectionism that disregarded the facts and World Trade Organization regulations. &nbsp,

We urge the EU to take into account the rational and objective viewpoints of various stakeholders, correct its mistaken choice at once, stop politicizing trade, properly address economic and trade frictions through dialogue and consultation, and prevent harming China and the EU’s mutual trust, dialogue, and cooperation, Lin said.

According to Sun Xiaohong, secretary-general of the automotive branch of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, China has a lot of countermeasures against the EC’s most recent action, which does not adhere to WTO principles. &nbsp,

He said the EU’s move is unreasonable and not good for trade development. He claimed that Tesla’s temporary exemption from the temporary tariffs demonstrated that only Chinese businesses are targeted by the EU tariffs. &nbsp,

He added, however, that China is still willing to engage in negotiations with the EU to prevent a full-fledged trade war.

Peisch said it’s unclear what allegations and arguments China might have if it sued the WTO for the EU’s tariff action.

” Just saying’ protectionism’ does not make it inconsistent with the WTO rules”, she said. They would need to determine how the EU had broken those rules specifically. And from the face of it, I do n’t know what that would be”.

Read: China to retaliate if Europe raises EV tariffs

Follow Jeff Pao on X: &nbsp, @jeffpao3

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Is Israeli-Saudi normalization end or means? – Asia Times

There are many conditions that are necessary for a peace agreement between Israel and Saudi Arabia, including those relating to Israel or tranquility.

According to the Wall Street Journal, Israel has first aid in stifling the US Senate’s support for an American-Saudi defense treaty that safeguards Arabian security and American interests, including separating Riyadh from Beijing, according to Biden officials.

Then, Israel must accept territory for Israeli self- determination yet before Hamas, which pledges to kill the Jewish state, is eradicated. Saudi Arabia will only begin to restore ties with Israel once they are established, and it will only do so on its own, not in line with the Muslim League or the OIC.

Saudi Arabia first suggested a bilateral peace with Israel regardless of the Palestinian track in January 2023, and Riyadh did so in accordance with a change in its foreign policy that had begun with Crown Prince Muhammad Bin Salman’s ( MBS ) appointment in 2016. In the Arab and Muslim worlds, Riyadh began placing the” Royal First” before” Saudi First.”

Along identical lines, the country minimized its involvement in Lebanon and Syria, among other places, deeming these places carefully insignificant.

Riyadh’s view aligned with the Trump administration’s exterior- in serenity model, which pursued diplomatic peace treaties between Israel and personal Arab governments as a prelude to Israel peace with Palestinians. However, the Biden administration switched to the more traditional” Palestinians first” approach and afterward Israeli-Arab peace. Biden’s see of Egyptian peace with Israel therefore clashed with Riyadh’s interests.

In January, Riyadh and Washington made a clear cut of the two countries ‘ differences. Washington went a step further by considering the option of formally recognizing a Palestinian state, while the Saudis promised to restore ties with Israel in exchange for an inevitable training toward a Palestinian condition.

The Saudis vehemently opposed their position, making the creation of a Palestinian state a necessity for standardization with Israel in order to avoid appearing less sympathetic of Israeli needs than Washington. Since then, it appears that both Washington and Riyadh have settled on the “pathway to a Arab position” as a necessity for Saudi normalization with Israel.

No one seems to be aware of the details or even attempted to describe what a Arab position looks like or means. The Arab state is run by who? Hamas, which refuses to acknowledge Israel and declares an end to war, what happens to it? And who speaks on behalf of Palestinians while America, Saudi Arabia, and Israel try to iron out these issues.

Blinken thus pressed Gulf cities to join forces with the Palestinian Authority ( PA ) to end the Gaza War and pursue peace by pleading his hopes on the corrupt, powerless, and irrelevant Palestinian Authority ( PA ).

Gulf officials were uneasy about Washington dictating a post-war roster, despite reluctantly complying with their requests. The international minister of the United Arab Emirates, Abdullah Bin Zayed, apparently engaged in a” shouting match” with the PA’s subsequent- in- command, Hussein al- Sheikh, and demanded that the PA enlist more skilled Palestinians such as former Prime Minister Salam Fayyad.

In a national election year, the Biden administration appears to be more focused on its home constituents than on Middle Eastern realities. Given that Hamas strongly opposes identification of and harmony with Israel, Washington has doubled down on an Jewish peace with Hamas and coupled it with a two-state peace agreement with the PA.

Washington declared that its diplomatic defense agreement with Saudi Arabia was set as a result of its plan spinning in circles, possibly as a result of the assumption that such information would encourage Israel to accept a ceasefire and a two-state solution.

Why, then, did Israel be motivated by an American-Saudi defense treaty? And given that 74 percent of Israelis oppose a Palestinian state without a trustworthy Palestinian peace partner, why should Israel use political capital in Washington to pass a treaty that does n’t resolve its conflict with the Palestinians? Biden’s politics looks contradictory.

Saudi Arabia would have been more successful if it had ratified a peace treaty without condition with Israel and established a powerful ally. The Israelis and Saudis may work together once they become allies to resolve a number of issues, including stabilizing Gaza and Hamas, battling local tyrannies, and bolstering Saudi relationships with the US in ways that disentangle Beijing. The Saudis may work together to find a trustworthy Arab partner who can negotiate peace with Israel through this alliance.

Due to Biden’s politics, peace will be the only thing that will happen until the place is fixed, preventing Saudi normalization with Israel. Washington should rather use the Israeli-Saudi harmony as a means of halting the Iran-led warring camp in the area and a means of resolving a 2,000-year-old conflict between Israel and the Palestinians.

Hussain Abdul-Hussain is a research fellow at the Foundation for Defense of Democracies ( FDD), a nonpartisan, nonpartisan research institute based in Washington, DC, that focuses on foreign policy and national security. Following Hussain on X @hahussain

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China’s war games near Taiwan threaten peace – Asia Times

With the January election of President Lai Ching-Te, who was elected president in Taiwan, the country recently experienced still another quiet change of power.

Lai urged China to stop its harassment and” choose discourse over fight” in his inaugural speech.

Taiwan was simulated to be blocked by China in response. The People’s Liberation Army released images that purport to be” strong abuse” for dropping rockets on one of the world’s most densely populated nations.

Politics under threat

Beijing’s typical response to the 24 million people who have the right to vote democratically is to “break heads and let blood flow” Taiwan, a renegade province in China, needs to “return to the hug of the country,” despite the fact that China has no power over Taiwan.

China has been attempting to update background and validate its claim to be sovereign over Taiwan in recent years using its political clout and impact at the UN.

China is a techno-authoritarian state that has regressed even further under the leadership of Xi Jinping, despite Taiwan’s position being top in the Human Freedom Index ( just one spot ahead of Canada ).

Tibetans are forced to” Sinicize” and lose their cultural and religious heritage, while millions of Uyghur Muslims are still living in re-education and forced labor camps.

Reaching beyond territories

Social rebels, journalists and international citizens are not immune from harassment or prison.

The Taiwanese government goals and threatens Chinese citizens and critics of China wherever they are in what has been termed international oppression, assisted by Chinese’police stations operating with violence elsewhere.

Some governments, including Canada’s, precaution against go to China and Hong Kong due to the “risk of random protection” of laws prohibiting actions or talk critical of the Chinese Communist Party.

China’s repression, surveillance and arbitrary detention are common, and quite tactics and technologies are dangerously being exported worldwide.

While the Taiwanese government denounces TikTok’s forced withdrawal, the game, like Facebook, WhatsApp, and Google, is restricted within China’s great network.

War sports

China engaged in comparable battle game when Nancy Pelosi, a former US House speaker, visited Taiwan in 2022.

The speed of Taiwanese warship and fighter incursions into Taiwan’s Air Defence Identification Zone is increasing. In contrast, short of mounting an war, China is extremely testing the waters by deploying its maritime militia to cluster territories under Taiwan’s power.

Known as “grey- area” strategies, they fall little of the use of power, which is prohibited under international law. Also referred to as” salami slicing,” grey-zone tactics that are not completely problems make it difficult for others to react without triggering an eventual escalation of a conflict.

However, resisting threats of power or military coercion could lead to normalizing such aggressive behavior and provoking China to more disturb international peace and stability.

These acts of abuse and threats may occur both on Earth and in cyberspace and space, all of which have potential serious effects on human life and infrastructure.

Pattern of foolish behavior

China has never concealed its desire to alter the world order despite strongly allying with Russia and earnestly providing weapons to support its conflict in Ukraine.

Taiwan is also affected by China’s increasingly brutal maritime and flying military operations. States presumably enjoying freedom of navigation have also been repeatedly harassed on foreign waters by Canadian and American plane enforcing UN sanctions against North Korea.

China is also continuing to fight India over its territorial claims and militarizing territories in the contested lakes of the South China Sea.

China has also been attributed with deliberately enticing tracking and emergency stress signals in the Asia-Pacific, which threatens international aviation safety.

Why Taiwan things

Tech professionals from all over the world just spoke about the potential of cutting-edge technologies and AI. The Taiwanese-born NVIDIA CEO Jensen Huang described his country as” the unsung hero, a staunch pillar of the world” because of its leadership in computing technology and chip production.

Taiwan is also at the forefront of a China that is becoming more assertive and intense. Taiwan experiences the highest level of attacks in the world every day that target government services and infect cultural hostility.

Taiwan can learn a lot about how to increase voter engagement in the modern era, combat international control, and dispel misinformation and propaganda that undermine trust in democratic processes and institutions.

The most recent war games involving Taiwan serve as yet another illustration of how China attempts to undermine democratic governments and global security. It might be a simulated harm today. However, it must be done that the earth may unite to stop it from ever being a reality.

At McGill University, Kuan-Wei Chen is a scientist in air and space rules.

This content was republished from The Conversation under a Creative Commons license. Read the original post.

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Whistleblower says Microsoft left US govt hackable – Asia Times

by Renee Dudley, with research by Doris Burke

This story was originally published by ProPublica, a Pulitzer Prize-winning investigative newsroom.

Microsoft hired Andrew Harris for his extraordinary skill in keeping hackers out of the nation’s most sensitive computer networks. In 2016, Harris was hard at work on a mystifying incident in which intruders had somehow penetrated a major US tech company.

The breach troubled Harris for two reasons. First, it involved the company’s cloud — a virtual storehouse typically containing an organization’s most sensitive data. Second, the attackers had pulled it off in a way that left little trace.

He retreated to his home office to “war game” possible scenarios, stress-testing the various software products that could have been compromised.

Early on, he focused on a Microsoft application that ensured users had permission to log on to cloud-based programs, the cyber equivalent of an officer checking passports at a border. It was there, after months of research, that he found something seriously wrong.

The product, which was used by millions of people to log on to their work computers, contained a flaw that could allow attackers to masquerade as legitimate employees and rummage through victims’ “crown jewels” — national security secrets, corporate intellectual property, embarrassing personal emails — all without tripping alarms.

To Harris, who previously had spent nearly seven years working for the US Defense Department, it was a security nightmare. Anyone using the software was exposed, regardless of whether they used Microsoft or another cloud provider such as Amazon. But Harris was most concerned about the federal government and the implications of his discovery for national security. He flagged the issue to his colleagues.

They saw it differently, Harris said. The federal government was preparing to make a massive investment in cloud computing, and Microsoft wanted the business. Acknowledging this security flaw could jeopardize the company’s chances, Harris recalled one product leader telling him. The financial consequences were enormous. Not only could Microsoft lose a multibillion-dollar deal, but it could also lose the race to dominate the market for cloud computing.

Harris said he pleaded with the company for several years to address the flaw in the product, a ProPublica investigation has found. But, at every turn, Microsoft dismissed his warnings, telling him they would work on a long-term alternative — leaving cloud services around the globe vulnerable to attack in the meantime.

Harris was certain someone would figure out how to exploit the weakness. He had come up with a temporary solution, but it required customers to turn off one of Microsoft’s most convenient and popular features: the ability to access nearly every program used at work with a single logon.

He scrambled to alert some of the company’s most sensitive customers about the threat and personally oversaw the fix for the New York Police Department. Frustrated by Microsoft’s inaction, he left the company in August 2020.

Within months, his fears became reality. US officials confirmed reports that a state-sponsored team of Russian hackers had carried out SolarWinds, one of the largest cyberattacks in US history.

They used the flaw Harris had identified to vacuum up sensitive data from a number of federal agencies – including, ProPublica has learned, the National Nuclear Security Administration, which maintains the United States’ nuclear weapons stockpile, and the National Institutes of Health, which at the time was engaged in Covid-19 research and vaccine distribution.

The Russians also used the weakness to compromise dozens of email accounts in the Treasury Department, including those of its highest-ranking officials. One federal official described the breach as “an espionage campaign designed for long-term intelligence collection.”

Harris’ account, told here for the first time and supported by interviews with former colleagues and associates as well as social media posts, upends the prevailing public understanding of the SolarWinds hack.

From the moment the hack surfaced, Microsoft insisted it was blameless. Microsoft President Brad Smith assured Congress in 2021 that “there was no vulnerability in any Microsoft product or service that was exploited” in SolarWinds.

Microsoft President Brad Smith testifies in 2023 before the U.S. Senate Judiciary Committee Subcommittee on Privacy, Technology, and the Law. Photo: Screenshot via webcast / GeekWire

He also said customers could have done more to protect themselves.

Harris said they were never given the chance.

“The decisions are not based on what’s best for Microsoft’s customers but on what’s best for Microsoft,” said Harris, who now works for CrowdStrike, a cybersecurity company that competes with Microsoft.

Microsoft declined to make Smith and other top officials available for interviews for this story, but it did not dispute ProPublica’s findings. Instead, the company issued a statement in response to written questions.

“Protecting customers is always our highest priority,” a spokesperson said. “Our security response team takes all security issues seriously and gives every case due diligence with a thorough manual assessment, as well as cross-confirming with engineering and security partners. Our assessment of this issue received multiple reviews and was aligned with the industry consensus.”

ProPublica’s investigation comes as the Pentagon seeks to expand its use of Microsoft products — a move that has drawn scrutiny from federal lawmakers amid a series of cyberattacks on the government.

Smith is set to testify on Thursday before the House Homeland Security Committee, which is examining Microsoft’s role in a breach perpetrated last year by hackers connected to the Chinese government. Attackers exploited Microsoft security flaws to gain access to top US officials’ emails. In investigating the attack, the federal Cyber Safety Review Board found that Microsoft’s “security culture was inadequate and requires an overhaul.”

For its part, Microsoft has said that work has already begun, declaring that the company’s top priority is security “above all else.” Part of the effort involves adopting the board’s recommendations. “If you’re faced with the tradeoff between security and another priority, your answer is clear: Do security,” the company’s CEO, Satya Nadella, told employees in the wake of the board’s report, which identified a “corporate culture that deprioritized both enterprise security investments and rigorous risk management.”

ProPublica’s investigation adds new details and pivotal context about that culture, offering an unsettling look into how the world’s largest software provider handles the security of its own ubiquitous products. It also offers crucial insight into just how much the quest for profits can drive those security decisions, especially as tech behemoths push to dominate the newest — and most lucrative — frontiers, including the cloud market.

“This is part of the problem overall with the industry,” said Nick DiCola, who was one of Harris’s bosses at Microsoft and now works at Zero Networks, a network security firm. Publicly-traded tech giants “are beholden to the share price, not to doing what’s right for the customer all the time. That’s just a reality of capitalism. You’re never going to change that in a public company because at the end of the day, they want the shareholder value to go up.”

A “Cloud-First World”

Early this year, Microsoft surpassed Apple to become the world’s most valuable company, worth more than $3 trillion. That triumph was almost unimaginable a decade ago. (The two remain in close competition for the top spot.)

In 2014, the same year that Harris joined Microsoft and Nadella became the CEO, Wall Street and consumers alike viewed the company as stuck in the past, clinging to the “shrink-wrapped” software products like Windows that put it on the map in the 1990s. Microsoft’s long-stagnant share price reflected its status as an also-ran in almost every major technological breakthrough since the turn of the century, from its Bing search engine to its Nokia mobile phone division.

As the new CEO, Nadella was determined to reverse the trend and shake off the company’s fuddy-duddy reputation, so he staked Microsoft’s future on the Azure cloud computing division, which then lagged far behind Amazon. In his earliest all-staff memo, Nadella told employees they would need “to reimagine a lot of what we have done in the past for a … cloud-first world.”

Microsoft salespeople pitched business and government customers on a “hybrid cloud” strategy, where they kept some traditional, on-premises servers (typically stored on racks in customers’ own offices) while shifting most of their computing needs to the cloud (hosted on servers in Microsoft data centers).

Security was a key selling point for the cloud. On-site servers were notoriously vulnerable, in part because organizations’ overburdened IT staff often failed to promptly install the required patches and updates. With the cloud, that crucial work was handled by dedicated employees whose job was security.

The dawn of the cloud era at Microsoft was an exciting time to work in the field of cybersecurity for someone like Harris, whose high school yearbook features a photo of him in front of a desktop computer and monitor with a mess of floppy disks beside him. One hand is on the keyboard, the other on a wired mouse. Caption: “Harris the hacker.”

As a sophomore at Pace University in New York, he wrote a paper titled “How to Hack the Wired Equivalent Protocol,” referring to a network security standard, and was awarded a prestigious Defense Department scholarship that the government uses to recruit cybersecurity specialists. The National Security Agency paid for three years of his tuition, which included a master’s degree in software engineering, in exchange for a commitment to work for the government for at least that long, he said.

Early in his career, he helped lead the Defense Department’s efforts to protect individual devices. He became an expert in the niche field known as identity and access management, securing how people log in.

As the years wore on, he grew frustrated by the lumbering bureaucracy and craved the innovation of the tech industry. He decided he could make a bigger impact in the private sector, which designed much of the software the government used.

At Microsoft he was assigned to a secretive unit known as the “Ghostbusters” (as in: “Who you gonna call?”), which responded to hacks of the company’s most sensitive customers, especially the federal government. As a member of this team, Harris first investigated the puzzling attack on the tech company and remained obsessed with it, even after switching roles inside Microsoft.

Eventually, he confirmed the weakness within Active Directory Federation Services, or AD FS, a product that allowed users to sign on a single time to access nearly everything they needed. The problem, he discovered, rested in how the application used a computer language known as SAML to authenticate users as they logged in.

This is what makes a SAML attack unique. Typically, hackers leave what cybersecurity specialists call a “noisy” digital trail. Network administrators monitoring the so-called “audit logs” might see unknown or foreign IP addresses attempting to gain access to their cloud services. But SAML attacks are much harder to detect. The forged token is the equivalent of a robber using a copied master key. There was little trail to track, just the activities of what appear to be legitimate users.

Harris and a colleague who consulted for the Department of Defense spent hours in front of both real and virtual whiteboards as they mapped out how such an attack would work, the colleague told ProPublica. The “token theft” risk, as Harris referred to it, became a regular topic of discussion for them.

A Clash With “Won’t Fix” Culture

Before long, Harris alerted his supervisors about his SAML finding. Nick DiCola, his boss at the time, told ProPublica he referred Harris to the Microsoft Security Response Center, which fields reports of security vulnerabilities and determines which need to be addressed. Given its central role in improving Microsoft product security, the team once considered itself the “conscience of the company,” urging colleagues to improve security without regard to profit. In a meeting room, someone hung a framed photo of Winston “the Wolf,” the charismatic fixer in Quentin Tarantino’s movie “Pulp Fiction” who is summoned to clean up the aftermath of bloody hits.

Members of the team were not always popular within the company. Plugging security holes is a cost center, and making new products is a profit center, former employees told ProPublica. In 2002, the company’s founder, Bill Gates, tried to settle the issue, sending a memo that turned out to be eerily prescient. “Flaws in a single Microsoft product, service or policy not only affect the quality of our platform and services overall, but also our customers’ view of us as a company,” Gates wrote, adding: “So now, when we face a choice between adding features and resolving security issues, we need to choose security.”

At first, Gates’ memo was transformational and the company’s product divisions were more responsive to the center’s concerns. But, over time, the center’s influence waned.

Its members were stuck between cultural forces. Security researchers — often characterized as having outsized egos — believed their findings should be immediately addressed, underestimating the business challenges of developing fixes quickly, former MSRC employees told ProPublica.

Product managers had little motivation to act fast, if at all, since compensation was tied to the release of new, revenue-generating products and features. That attitude was particularly pronounced in Azure product groups, former MSRC members said, because they were under pressure from Nadella to catch up to Amazon.

“Azure was the Wild West, just this constant race for features and functionality,” said Nate Warfield, who worked in the MSRC for four years beginning in 2016. “You will get a promotion because you released the next new shiny thing in Azure. You are not going to get a promotion because you fixed a bunch of security bugs.”

Former employees told ProPublica that the center fielded hundreds or even thousands of reports a month, pushing the perennially understaffed group to its limits. The magazine Popular Science noted that volume as one of the reasons why working in the MSRC was one of the 10 “worst jobs in science,” between whale feces researchers and elephant vasectomists.

“They’re trained, because they’re so resource constrained, to think of these cases in terms of: ‘How can I get to ‘won’t fix,’” said Dustin Childs, who worked in the MSRC in the years leading up to Harris’ saga. Staff would often punt on fixes by telling researchers they would be handled in “v-next,” the next product version, he said. Those launches, however, could be years away, leaving customers vulnerable in the interim, he said.

The center also routinely rejected researchers’ reports of weaknesses by saying they didn’t cross what its staff called a “security boundary.” But when Harris discovered the SAML flaw, it was a term with no formal definition, former employees said.

By 2017, the lack of clarity had become the “butt of jokes,” Warfield said. Several prominent security researchers who regularly interacted with the MSRC made T-shirts and stickers that said “____” (meaning fill in the blank) “is not a security boundary.”

“Any time Microsoft didn’t want to fix something, they’d just say, ‘That’s not a security boundary, we’re not going to fix it,’” Warfield recalled.

Unaware of the inauspicious climate, Harris met virtually with MSRC representatives and sketched out how a hacker could jump from an on-premises server to the cloud without being detected. The MSRC declined to address the problem. Its staff argued that hackers attempting to exploit the SAML flaw would first have to gain access to an on-premises server. As they saw it, Harris said, that was the security boundary — not the subsequent hop to the cloud.

Business over security

“WTF,” Harris recalled thinking when he got the news. “This makes no sense.”

Microsoft had told customers the cloud was the safest place to put their most precious data. His discovery proved that, for the millions of users whose systems included AD FS, their cloud was only as secure as their on-premises servers. In other words, all the buildings owned by the landlord are only as secure as the most careless tenant who forgot to lock a window.

Harris pushed back, but he said the MSRC held firm.

Harris had a reputation for going outside the chain of command to air his concerns, and he took his case to the team managing the products that verified user identities.

He had some clout, his former colleagues said. He had already established himself as a known expert in the field, had pioneered a cybersecurity threat detection method and later was listed as the named inventor on a Microsoft patent. Harris said he “went kind of crazy” and fired off an email to product manager Mark Morowczynski and director Alex Simons requesting a meeting.

He understood that developing a long-term fix would take time, but he had an interim solution that could eliminate the threat. One of the main practical functions of AD FS was to allow users to access both on-premises servers and a variety of cloud-based services after entering credentials only once, a Microsoft feature known as “seamless” single sign-on. Harris proposed that Microsoft tell its customers to turn off that function so the SAML weakness would no longer matter.

According to Harris, Morowczynski quickly jumped on a videoconference and said he had discussed the concerns with Simons.

“Everyone violently agreed with me that this is a huge issue,” Harris said. “Everyone violently disagreed with me that we should move quickly to fix it.”

Morowczynski, Harris said, had two primary objections.

First, a public acknowledgement of the SAML flaw would alert adversaries who could then exploit it. Harris waved off the concern, believing it was a risk worth taking so that customers wouldn’t be ignorant to the threat. Plus, he believed Microsoft could warn customers without betraying any specifics that could be co-opted by hackers.

According to Harris, Morowczynski’s second objection revolved around the business fallout for Microsoft. Harris said Morowczynski told him that his proposed fix could alienate one of Microsoft’s largest and most important customers: the federal government, which used AD FS. Disabling seamless SSO would have widespread and unique consequences for government employees, who relied on physical “smart cards” to log onto their devices.

Required by federal rules, the cards generated random passwords each time employees signed on. Due to the configuration of the underlying technology, though, removing seamless SSO would mean users could not access the cloud through their smart cards. To access services or data on the cloud, they would have to sign in a second time and would not be able to use the mandated smart cards.

Harris said Morowczynski rejected his idea, saying it wasn’t a viable option.

Morowczynski told Harris that his approach could also undermine the company’s chances of getting one of the largest government computing contracts in US history, which would be formally announced the next year. Internally, Nadella had made clear that Microsoft needed a piece of this multibillion-dollar deal with the Pentagon if it wanted to have a future in selling cloud services, Harris and other former employees said.

There’s a history here: In court documents unsealed and filed February 20, 2020, Amazon’s cloud computing arm said it was looking to depose seven “individuals who were instrumental” in the Pentagon’s JEDI source selection and “played pivotal roles” in the ultimate awarding of the contract to Microsoft, among them then-President Donald Trump and then-Defense Secretary Mark Esper. A spokesperson for Amazon Web Services told CNBC in a statement: “President Trump has repeatedly demonstrated his willingness to use his position as president and commander in chief to interfere with government functions – including federal procurements – to advance his personal agenda. The preservation of public confidence in the nation’s procurement process requires discovery and supplementation of the administrative record, particularly in light of President Trump’s order to ‘screw Amazon.’ The question is whether the President of the United States should be allowed to use the budget of the DoD to pursue his own personal and political ends.” Photo: CNBC

Killing the competition

By Harris’s account, the team was also concerned about the potential business impact on the products sold by Microsoft to sign into the cloud. At the time, Microsoft was in a fierce rivalry with a company called Okta.

Microsoft customers had been sold on seamless SSO, which was one of the competitive advantages — or, in Microsoft parlance, “kill points” — that the company then had over Okta, whose users had to sign on twice, Harris said.

Harris’ proposed fix would undermine the company’s strategy to marginalize Okta and would “add friction” to the user experience, whereas the “No. 1 priority was to remove friction,” Harris recalled Morowczynski telling him. Moreover, it would have cascading consequences for the cloud business because the sale of identity products often led to demand for other cloud services.

“That little speed bump of you authenticating twice was unacceptable by Microsoft’s standards,” Harris said. He recalled Morowczynski telling him that the product group’s call “was a business decision, not a technical one.”

“What they were telling me was counterintuitive to everything I’d heard at Microsoft about ‘customer first,’” Harris said. “Now they’re telling me it’s not ‘customer first,’ it’s actually ‘business first.’”

DiCola, Harris’ then-supervisor, told ProPublica the race to dominate the market for new and high-growth areas like the cloud drove the decisions of Microsoft’s product teams. “That is always like, ‘Do whatever it frickin’ takes to win because you have to win.’ Because if you don’t win, it’s much harder to win it back in the future. Customers tend to buy that product forever.”

According to Harris, Morowczynski said his team had “on the road map” a product that could replace AD FS altogether. But it was unclear when it would be available to customers.

In the months that followed, Harris vented to his colleagues about the product group’s decision. ProPublica talked to three people who worked with Harris at the time and recalled these conversations. All of them spoke on the condition of anonymity because they feared professional repercussions. The three said Harris was enraged and frustrated over what he described to them as the product group’s unwillingness to address the weakness.

Neither Morowczynski nor Simons returned calls seeking comment, and Microsoft declined to make them available for interviews. The company did not dispute the details of Harris’ account. In its statement, Microsoft said it weighs a number of factors when it evaluates potential threats. “We prioritize our security response work by considering potential customer disruption, exploitability, and available mitigations,” the spokesperson said. “We continue to listen to the security research community and evolve our approach to ensure we are meeting customer expectations and protecting them from emerging threats.”

Another major warning

Following the conversation with Morowczynski, Harris wrote a reminder to himself on the whiteboard in his home office: “SAML follow-up.” He wanted to keep the pressure on the product team.

Soon after, the Massachusetts- and Tel Aviv-based cybersecurity firm CyberArk published a blog post describing the flaw, which it dubbed “Golden SAML,” along with a proof of concept, essentially a road map that showed how hackers could exploit the weakness.

Years later, in his written testimony for the Senate Intelligence Committee, Microsoft’s Brad Smith said this was the moment the company learned of the issue. “The Golden SAML theory became known to cybersecurity professionals at Microsoft and across the U.S. government and the tech sector at precisely the same time, when it was published in a public paper in 2017,” Smith wrote.

Lavi Lazarovitz of CyberArk said the firm mentioned the weakness — before the post was published — in a private WhatsApp chat of about 10 security researchers from various companies, a forum members used to compare notes on emerging threats. When they raised the discovery to the group, which included at least one researcher from Microsoft, the other members were dismissive, Lazarovitz said.

“Many in the security research community — I don’t want to say mocked — but asked, ‘Well, what’s the big deal?’” Lazarovitz said.

Nevertheless, CyberArk believed it was worth taking seriously, given that AD FS represented the gateway to users’ most sensitive information, including email. “Threat actors operate in between the cracks,” Lazarovitz said. “So obviously, we understood the feedback that we got, but we still believed that this technique will be eventually leveled by threat actors.”

The Israel-based team also reached out to contacts at Microsoft’s Israeli headquarters and were met with a response similar to the one they got in the WhatsApp group, Lazarovitz said.

The published report was CyberArk’s way of warning the public about the threat. Disclosing the weakness also had a business benefit for the company. In the blog post, it pitched its own security product, which it said “will be extremely beneficial in blocking attackers from getting their hands on important assets like the token-signing certificate in the first place.”

The report initially received little attention. Harris, however, seized on it. He said he alerted Morowczynski and Simons from the product group as well as the MSRC. The situation was more urgent than before, Harris argued to them, because CyberArk included the proof of concept that could be used by hackers to carry out a real attack. For Harris, it harkened back to Morowczynski’s worry that flagging the weakness could give hackers an advantage.

“I was more energetic than ever to have us actually finally figure out what we’re going to do about this,” Harris said.

But the MSRC reiterated its “security boundary” stance, while Morowczynski reaffirmed the product group’s earlier decision, Harris said.

Harris said he then returned to his supervisors, including Hayden Hainsworth and Bharat Shah, who, as corporate vice president of the Azure cloud security division, also oversaw the MSRC. “I said, ‘Can you guys please listen to me,’” Harris recalled. “‘This is probably the most important thing I’ve ever done in my career.’”

Harris said they were unmoved and told him to take the problem back to the MSRC.

Microsoft did not publicly comment on the CyberArk blog post at the time. Years later, in written responses to Congress, Smith said the company’s security researchers reviewed the information but decided to focus on other priorities. Neither Hainsworth nor Shah returned calls seeking comment.

Defusing a ticking bomb

Harris said he was deeply frustrated. On a personal level, his ego was bruised. Identifying major weaknesses is considered an achievement for cybersecurity professionals, and, despite his internal discovery, CyberArk had claimed Golden SAML.

More broadly, he said he was more worried than ever, believing the weakness was a ticking bomb. “It’s out in the open now,” he said.

Publicly, Microsoft continued to promote the safety of its products, even boasting of its relationship with the federal government in sales pitches. “To protect your organization, Azure embeds security, privacy, and compliance into its development methodology,” the company said in late 2017, “and has been recognized as the most trusted cloud for US government institutions.”

Internally, Harris complained to colleagues that customers were being left vulnerable.

“He was definitely having issues” with the product team, said Harris’ former Microsoft colleague who consulted for the Defense Department. “He vented that it was a problem that they just wanted to ignore.”

Harris typically pivoted from venting to discussing how to protect customers, the former colleague said. “I asked him to show me what I’m going to have to do to make sure the customers were aware and could take corrective action to mitigate the risk,” he said.

Harris also took his message to LinkedIn, where he posted a discreet warning and an offer.

“I hope all my friends and followers on here realize by now the security relationship” involved in authenticating users in AD FS, he wrote in 2019. “If not, reach out and let’s fix that!”

Separately, he realized he could help customers with whom he had existing relationships, including the NYPD, the nation’s largest police force.

“Knowing this exploit is actually possible, why would I not architect around it, especially for my critical customers?” Harris said.

On a visit to the NYPD, Harris told a top IT official, Matthew Fraser, about the AD FS weakness and recommended disabling seamless SSO. Fraser was in disbelief at the severity of the issue, Harris recalled, and he agreed to disable seamless SSO.

In an interview, Fraser confirmed the meeting.

“This was identified as one of those areas that was prime, ripe,” Fraser said of the SAML weakness. “From there, we figured out what’s the best path to insulate and secure.”

More troubling revelations

It was over beers at a conference in Orlando in 2018 that Harris learned the weakness was even worse than he’d initially realized. A colleague sketched out on a napkin how hackers could also bypass a common security feature called multifactor authentication, which requires users to perform one or more additional steps to verify their identity, such as entering a code sent via text message.

They realized that, no matter how many additional security steps a company puts in place, a hacker with a forged token can bypass them all. When they brought the new information to the MSRC, “it was a nonstarter,” Harris said. While the center had published a formal definition of “security boundary” by that point, Harris’ issues still didn’t meet it.

By March 2019, concerns over Golden SAML were spilling out into the wider tech world. That month, at a conference in Germany, two researchers from the cybersecurity company Mandiant delivered a presentation demonstrating how hackers could infiltrate AD FS to gain access to organizations’ cloud accounts and applications. They also released the tools they used to do so.

Mandiant said it notified Microsoft before the presentation, making it the second time in roughly 16 months that an outside firm had flagged the SAML issue to the company.

In August 2020, Harris left Microsoft to work for CrowdStrike. In his exit interview with Shah, Harris said he raised the SAML weakness one last time. Shah listened but offered no feedback, he said.

“There is no inspector general-type thing” within Microsoft, Harris said. “If something egregious is happening, where the hell do you go? There’s no place to go.”

SolarWinds breaks

Four months later, news of the SolarWinds attack broke. Federal officials soon announced that beginning in 2019 Russian hackers had breached and exploited the network management software offered by a Texas-based company called SolarWinds, which had the misfortune of lending its name to the attack. The hackers covertly inserted malware into the firm’s software updates, gaining “backdoor” access to the networks of companies and government agencies that installed them. The ongoing access allowed hackers to take advantage of “post-exploit” vulnerabilities, including Golden SAML, to steal sensitive data and emails from the cloud.

Despite the name, nearly a third of victims of the attack never used SolarWinds software at all, Brandon Wales, then acting director of the federal Cybersecurity and Infrastructure Security Agency, said in the aftermath. In March 2021, Wales told a Senate panel that hackers were able to “gain broad access to data stores that they wanted, largely in Microsoft Office 365 Cloud … and it was all because they compromised those systems that manage trust and identity on networks.”

Microsoft itself was also breached.

In the immediate aftermath of the attack, Microsoft advised customers of Microsoft 365 to disable seamless SSO in AD FS and similar products — the solution that Harris had proposed three years earlier.

As the world dealt with the consequences, Harris took his long simmering frustration public in a series of posts on social media and on his personal blog. Challenging Brad Smith by name, and criticizing the MSRC’s decisions — which he referred to as “utter BS” — Harris lambasted Microsoft for failing to publicly warn customers about Golden SAML.

Microsoft “was not transparent about these risks, forced customers to use ADFS knowing these risks, and put many customers and especially US Gov’t in a bad place,” Harris wrote on LinkedIn in December 2020. A long-term fix was “never a priority” for the company, he wrote. “Customers are boned and sadly it’s been that way for years (which again, sickens me),” Harris said in the post.

In the months and years following the SolarWinds attack, Microsoft took a number of actions to mitigate the SAML risk. One of them was a way to efficiently detect fallout from such a hack. The advancement, however, was available only as part of a paid add-on product known as Sentinel.

The lack of such a detection, the company said in a blog post, had been a “blind spot.”

‘Microsoft Is back on top’

In early 2021, the Senate Select Committee on Intelligence called Brad Smith to testify about SolarWinds.

Although Microsoft’s product had played a central role in the attack, Smith seemed unflappable, his easy and conversational tone a reflection of the relationships he had spent decades building on Capitol Hill. Without referencing notes or reading from a script, as some of his counterparts did, he confidently deflected questions about Microsoft’s role.

Laying the responsibility with the government, he said that in the lead-up to the attack, the authentication flaw “was not prioritized by the intelligence community as a risk, nor was it flagged by civilian agencies or other entities in the security community as a risk that should be elevated” over other cybersecurity priorities.

Smith also downplayed the significance of the Golden SAML weakness, saying it was used in just 15% of the 60 cases that Microsoft had identified by that point. At the same time, he acknowledged that, “without question, these are not the only victims who had data observed or taken.”

When Senator Marco Rubio of Florida pointedly asked him what Microsoft had done to address Golden SAML in the years before the attack, Smith responded by listing a handful of steps that customers could have taken to protect themselves. His suggestions included purchasing an antivirus product like Microsoft Defender and securing devices with another Microsoft product called Intune.

“The reality is any organization that did all five of those things, if it was breached, it in all likelihood suffered almost no damage,” Smith said.

Neither Rubio nor any other senator pressed further.

Ultimately, Microsoft won a piece of the Defense Department’s multibillion-dollar cloud business, sharing it with Amazon, Google and Oracle.

Since December 2020, when the SolarWinds attack was made public, Microsoft’s stock has soared 106%, largely on the runaway success of Azure and artificial intelligence products like ChatGPT, where the company is the largest investor. “Microsoft Is Back on Top,” proclaimed Fortune, which featured Nadella on the cover of its most recent issue.

In September 2021, just 10 months after the discovery of SolarWinds, the paperback edition of Smith’s book, “Tools and Weapons,” was published. In it, Smith praised Microsoft’s response to the attack. The MSRC, Smith wrote, “quickly activated its incident response plan” and the company at large “mobilized more than 500 employees to work full time on every aspect of the attack.”

In the new edition, Smith also reflected on his congressional testimony on SolarWinds. The hearings, he wrote, “examined not only what had happened but also what steps needed to be taken to prevent such attacks in the future.” He didn’t mention it in the book, but that certainly would include the long-term alternative that Morowczynski first promised to Harris in 2017. The company began offering it in 2022.

Renee Dudley is a tech reporter at ProPublica. Follow her on X  @renee_dudley.

Doris Burke, a senior research reporter at ProPublica, provided research.

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Fret not Delhi, Dhaka’s surely not in Beijing’s orb – Asia Times

For years, Sino- American competition for influence over Bangladesh has been a tough- driving pressure in South Asia’s geopolitics. As a cousin of India and a coastal state of the Indian Ocean, Bangladesh has often been embroiled in the conflict, and consequently, both Beijing and New Delhi have sought to expand their control over the country, often at the other’s expense.

Since the late 1950s, Bangladesh, known as East Pakistan between 1947 and 1971, has been a geopolitical battleground between the dragon ( China ) and the elephant ( India ). East Pakistan was in the Foreign circle at the time that Pakistan and China forged close relationships.

But, after Bangladesh’s independence in 1971, the country’s international policy was based on the maxim “friendship to all, malice towards none”, and adopted a no- aligned, non- aggressive and positively natural foreign policy. So, the nation has successfully balancing and maneuvering their strategic competition with both India and China while maintaining rational and cooperative relations with both.

Despite this, many American analysts <a href="https://www.oneindia.com/international/chinas-growing-role-in-bangladesh-raises-concerns-for-india-us-3722347.html”>have expressed concern about the potential integration of Bangladesh into China’s sphere of influence. However, this is a total interpretation of Dhaka’s foreign policy, so it is necessary to respond to this claim from a balanced and objective perspective.

Second, under customary international law, Bangladesh is a sovereign, independent state, and as a result, it is fully able to conduct its international politics without interference.

Bangladesh has complete freedom of action over its foreign policy, both legally and morally, as long as its actions do n’t violate any of the UN’s ( UN) Charter’s provisions. No other state has the legal authority to obstruct negotiations between Bangladesh and any other country, including China, and Bangladesh has the right to do so.

Although Bangladesh has complete freedom to pursue its foreign policy, it is apparent that India may make an effort to increase its security and therefore feel a certain way about China’s involvement in its immediate vicinity. However, New Delhi may know that Dhaka’s collaboration with Beijing is not directed against any other condition, including India.

Bangladesh’s partnership with China aims to meet its own development needs, and it is solely concerned with its inside development. The Indians should keep in mind that Dhaka has consistently demonstrated its civility to New Delhi while taking into account India’s safety concerns.

For instance, Dhaka has interdicted north Indian rebel leaders to India, extradited them to India, and resisted putting the strong seaport project in Sonadia Island, which is supported by China, into operation.

American analysts frequently classify certain Chinese initiatives and projects as potential risks to Indian interests. These include the possibility of providing US$ 5 billion in Chinese loans, Chinese-backed infrastructure projects, the development of a Chinese-financed underwater center in southwestern Bangladesh, and the upcoming Sino-Bangladesh military training.

When you examine these tasks and activities closely, it becomes clear that none of them are directed at India or interfere with American security or other interests.

First, Bangladesh wants to borrow$ 5 billion ( at an interest rate of 1 % ) from China to pay for its expenses and the purchase of raw materials. American passions are unaffected in any way by this. Because China is the only state that will lend to Bangladesh at for a low interest rate, Dhaka is requesting this product from Beijing.

Dhaka would have been happy to accept India’s credit if it had been willing to lend a$ 5 billion loan to Bangladesh at a 1 % interest rate. Some researchers may worry that Bangladesh is falling into a “debt trap” in China, but another foreign experts contend that Dhaka has a wealth of knowledge and minimal risk of default.

Next, some Indian experts worry that China is developing network in Bangladesh close to the Siliguri Corridor to defame India. These problems, too, are false. It should be remembered that Bangladesh is an” India- locked” position and among 64 Bengal towns, 30 share edges with India.

Bangladesh, it is undoubtedly entitled to all of its border districts to have equipment projects, and it has the right to choose which state to invest in them. Additionally, none of the jobs China is implementing in Bangladesh’s border towns are focused on the defense.

Additionally, China does not have the right to stop soldiers or military technology on Bangladeshi place, and upon the completion of these projects, these infrastructures may become controlled by Bangladeshis, not the Chinese.

Additionally, there is no treaty signed between Bangladesh and China regarding Chinese troops ‘ use of Bangladeshi territory during combat. Accordingly, in case of a war between China and India, China would not be able to use these infrastructures.

In addition, Bangladesh has shown goodwill toward India by providing the country with transit and transshipment facilities because the Siliguri Corridor does not allow India to access its northeastern territories in sufficient numbers.

Other Indian analysts are concerned about China’s$ 1 billion investment in the Teesta River Comprehensive Management and Restoration Project. It should be noted, however, that the Indian- implemented Teesta Barrage Project has created a serious water crisis in Bangladesh, and Dhaka’s efforts to resolve the issue diplomatically has met with failure.

However, the river has a significant economic impact for five northern Bangladeshi districts that have 22 electoral constituencies and have more than 10 million residents. Therefore, the restoration of the river is a significant internal political issue that affects the careers of numerous local politicians. This project, in no sense whatsoever, represents a threat to Indian interests.

Third, China has been Bangladesh’s largest source of military equipment since the late 1970s, primarily because of the low cost, ease of maintenance and relative efficiency of Chinese weapons. This, in itself, does not pose any threat to India.

Bangladesh also imports weapons from a number of other states including Russia, Turkey, the United States, the United Kingdom, Italy, France and Serbia, and is currently looking to further diversify its sources of arms. Bangladesh has also stated that it wants to purchase some military equipment from India.

Fourth, China has contributed money to the construction of Cox’s Bazar’s first submarine base, the BNS Sheikh Hasina, which will have the capacity to house six submarines and eight warships. Bangladesh has purchased two Ming-class submarines from China and is likely to purchase more naval vessels from the nation, so China has provided funding for the project.

The Bangladeshi government’s” Forces Goal 2030″ includes the transformation of the Bangladesh Navy into a ‘3D force, as well as the construction of the base and the acquisition of submarines. This is crucial to ensuring Bangladesh’s maritime security, and it is again no threat to India because of both Bangladesh’s hostile intentions toward any of its neighbors and India’s significantly larger submarine fleet.

The Chinese People’s Liberation Army- Navy ( PLA- N ) will not be able to enter the base, despite China having funded the construction of the base. Moreover, Bangladesh opted for Chinese submarines because of their low price. Bangladesh reportedly had negotiated with India and Russia for the acquisition of submarines before engaging in negotiations with China.

Interestingly, India did not sell submarines to Bangladesh but later sold a Kilo- class submarine to Myanmar. Therefore, Bangladesh’s purchase of Chinese submarines and China’s financing of a Bangladeshi submarine base are purely commercial transactions unrelated to India.

Finally, the potential Sino-Bangladesh joint military exercise is a logical extension of the two states ‘ already-existing defense partnership and does not pose any real threat to India. It is its sovereign prerogative to conduct similar exercises with China and regularly participates in joint military exercises with India, the US, and the UK.

Last but not least, the Indian media has implied that Bangladesh’s positions on Tibet, Taiwan and the South China Sea is a result of Chinese coercion. Nothing is further from the truth, however.

It is illogical to suggest that Bangladesh does the same owing to Chinese coercion since Tibet itself recognizes Tibet as a part of China and adheres to the” One China” policy. Bangladesh does not have a significant stake in the disputed region in terms of the disputes in the South China Sea. Accordingly, its Indo- Pacific Outlook suggests ensuring peace and prosperity throughout the region.

Dhaka’s foreign policy is examined carefully and objectively to determine whether it intends to achieve its goals of maximizing its internal development through foreign policy initiatives while preserving its sovereignty and independence from external influences.

Dhaka, as always, has no intention or interest in provoking any other state, not least one that is close to India. Instead of embracing the dragon and the elephant, Bangladesh is open to developing and maintaining positive relationships with both.

Md Himel Rahman is a freelance analyst with a focus on international and strategic affairs based in Dhaka. His articles have been published in The Interpreter, The Diplomat, South Asian Voices, The Geopolitics, Eurasia Review, The Daily Star, The Daily Observer, Dhaka Tribune, and other platforms.

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Inflation is cooling but not fast enough for the Fed – Asia Times

It was a triple whammy for economic data lovers.

The Bureau of Labor Statistics released its most recent inflation figures on June 12, 2024, day. The announcement was fairly good, showing that prices rose 3.3 % in the year to May 2024– less than some economists had expected.

The Federal Reserve held interest rates steady as forecasters had anticipated and released an updated set of financial projections as the conference came to a close, a few hours later.

What does it all mean? Economicist Christopher Decker was asked to explain by The Conversation US.

What are the main conclusions drawn from the most recent inflation review?

The May prices price– as measured by the Consumer Price Index for All Urban Consumers, or CPI- U – was down a little from April, but not by much. Generally, this implies that not much changed on the prices before, and it’s been like this for a while today.

This is n’t a bad thing, though. I prefer to view inflation in the long run: it has actually stabilized around 3.3 %. In fact, we’ve been around 3 % to 3.7 % for 12 months now. So we also have income and job growth as well as stable price rise, even if it is higher than the Fed’s target level of 2 %. The state of the economy is still powerful.

In terms of the details, power prices are down compared with previous month– but electricity prices tend to be dangerous, but that might be a speck in the data, not a true trend. The labour markets are also constrained. In May, average weekly earnings increased by 4.1 % over the same period last year, indicating that businesses must pay higher wages to attract and keep new hires.

In May, prices- adjusted profits increased 0.5 % from April to May of this year. Consumer spending, which accounts for two-thirds of the British gross domestic product, will likely increase as income outpace inflation. Payments increased by 272, 000 in May, away from 165, 000 and 310, 000 in April and March, both.

In brief, this statement, along with other new information reports, continues to show a very robust and stable economy.

Why has inflation stayed above the Federal Reserve’s 2 % goal for so long?

Accommodation costs and prices are the main causes of the inflation’s continued upwards of 2 %. Higher construction and maintenance fees, as well as a strong demand from people who are priced out of ownership, are driving rental prices upwards. House prices and mortgage rates remain high, making household purchases difficult, especially for primary- day homebuyers.

The Fed maintained interest rates today and indicated it may probably cut rates once more in 2024. However, politicians were considering three price cuts this year just three months ago. What changed?

The Fed is quite data- driven, and when the information changes, the Fed changes program.

Since March 2022, the Fed has raised costs more than ten days. This was done in an effort to halt economic expansion and thus halt prices. I believe that many policymakers believed that may cause the inflation rate to fall more quickly than it did. Instead, employment growth remained stronger than expected.

In many ways, the labour market is also working through Covid- related problems. Some workers slowly reentered the workplace. Thus, production was enhance to meet demand for goods and services. This meant that even with significantly higher inflation, there was room for the economy to grow.

Additionally, the U.S. experienced offer problems unlike anyone in recent memory. We’re likely also dealing with a few remaining effects around, as well. Higher prices helped, however, decrease prices down by not 2 % as a result.

Presently, time will tell if we are at a fresh standard. The Fed clearly does n’t think so. It’s still holding fast to 2 % prices. We might see some higher wage rises than pre-Covid costs if the labour market does seem to be returning to where it is right now. As businesses try to maintain profit profits while covering higher labour costs, this could lead to significantly higher inflation rates.

Why do so many Americans have mixed feelings about the market if inflation is steady and wages have increased?

People tend to compare the prices they paid years ago, in my opinion, because they do n’t care so much about month-to-month inflation as much. For example, the average cost of a few eggs is about US$ 2.70 now, whereas before Covid it was$ 1.46 or so. People remember that and feeling ripped off because they forgot that egg were$ 4.82 in the beginning of 2023 and have generally decreased since.

What do you anticipate happening throughout the year?

Even if the Fed’s 2 % inflation target is left out, the current macroeconomic data does n’t really suggest that we need to change interest rates. Economic growth is n’t slowing dramatically, so cutting rates is n’t necessary. And inflation is n’t accelerating, so increasing rates is n’t justified.

Holding prices continuous is currently the most prudent course of action for some potential homebuyers, as difficult as that may be.

What do you anticipate happening over the long term?

I was checking out the most recent “dot plot” from the Fed, which shows where each of the voting officials anticipates standard interest rates to end in 2024, 2025, and 2026.

The majority of officials believe that the federal funds rate, which is currently at 5.3 %, will stay at this level for the remainder of the year before dropping a little above 4 % in 2025. Most then believe it will accomplish 3.25 % or so by 2026. So they are betting on the need for price reductions in 2025 and 2026.

For me, this makes feeling, without a doubt, in 2025. Both the market and the employment industry are showing signs of sluggishness. Anticipate any moves toward price cuts to be continuous, though. A gradual lowering of the Fed’s policy is a good bet as long as there are n’t any significant increases in the key job and inflation data.

Christopher Decker is Professor of Economics, University of Nebraska Omaha

This content was republished from The Conversation under a Creative Commons license. Read the original post.

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