South Korea eyes a rich BRICS road to the Global South – Asia Times

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In 2024, the BRICS nations continue to consolidate their influence in the global arena, collectively accounting for over 40% of the world’s population and approximately 30% of global GDP in purchasing power parity terms.

According to recent IMF projections, BRICS countries are set to contribute over 50% of global GDP growth in the coming years, underscoring their increasing weight in the international economic landscape.

China and India, in particular, remain the principal economic engines of the group, each maintaining robust trajectories fueled by China’s Belt and Road Initiative (BRI) and India’s ascendancy as a prominent manufacturing hub.

Complementing these giants, Russia leverages its vast energy resources, Brazil capitalizes on its agricultural and natural wealth and South Africa anchors the coalition’s outreach on the African continent. This strategic diversity enables BRICS to wield considerable influence in shaping global economic and political agendas.

Today, the BRICS is positioning itself as a counterweight to traditional Western-led financial institutions like the IMF and World Bank, aiming to restore balance and justice in the emerging global economic order.

Central to this effort is the New Development Bank (NDB), which began with an initial capital of US$100 billion to fund infrastructure and sustainable projects, extending beyond the BRICS members to other emerging economies.

This initiative, combined with efforts to promote trade in local currencies, reflects a strategy to reduce reliance on dollar-based systems and challenge Western dominance in global financial governance.

Moreover, BRICS has increasingly positioned itself as a representative of the Global South, advocating for principles of non-interference and mutual development.

The 2024 BRICS summit in Russia reinforced this by welcoming Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the UAE, highlighting its ambition to form a more inclusive grouping with greater global influence.

Today, BRICS is not merely an economic grouping; it represents the desire of the Global South for a shift toward a multipolar global order, with the grouping increasingly diverging from Western narratives on critical geopolitical issues.

This rising influence is reflected in efforts to reshape the international financial architecture, promote new development models, and challenge the dominance of Western-led institutions in international politics.

The group’s coherence in advancing the interests of the Global South and its proactive pursuit of economic sovereignty and technological self-reliance is pivotal to its vision of a new world order.

Strategic Seoul positioning

South Korea’s rise as a major economic and technological player has positioned it as an influential actor in global geopolitics. As a significant member of the G20 and an active participant in multilateral forums, South Korea has consistently advocated for greater representation of emerging economies in global governance institutions.

Despite its non-membership in BRICS, South Korea shares many of the coalition’s aspirations, particularly in diversifying economic partnerships and reducing dependence on a Western-centric international order.

South Korea’s strategic policies, such as the New Southern Policy (NSP), emphasize greater engagement with emerging economies in South and Southeast Asia, regions where BRICS nations, particularly India, hold considerable sway.

Furthermore, South Korea’s Indo-Pacific strategy aligns with BRICS interests, particularly in fostering connectivity and infrastructure development, providing fertile ground for deeper engagement on both bilateral and multilateral platforms.

For South Korea, closer cooperation with BRICS offers numerous benefits. By actively engaging with BRICS-led initiatives such as the NDB, South Korea can gain a foothold in emerging financial frameworks, reducing its reliance on traditional Western financial systems and broadening its influence in global economic governance.

This involvement also positions South Korea as a neutral partner that bridges traditional Western alliances with emerging powers in BRICS, enhancing its diplomatic leverage and strategic flexibility in an increasingly multipolar world.

The diversification of its export markets, supply chains, and diplomatic engagements through partnerships with BRICS nations will be essential for maintaining competitiveness and securing long-term interests.

Collaborating with BRICS institutions also provides South Korea the opportunity to access emerging markets and participate in the growing regional integration efforts among BRICS members and their allies.

India-South Korea in BRICS embrace

India and South Korea are already strong strategic and economic partners. However, as BRICS expands its influence in the global arena with India as a key player, it presents a unique opportunity for South Korea to enhance its global status by strengthening its bilateral ties and collaborating more closely on global security and strategic issues.

Both nations possess complementary strengths and shared interests, making cooperation increasingly beneficial amid shifting global dynamics. India and South Korea have established a robust economic partnership, but there is still significant potential to deepen trade and investment ties.

In the wake of BRICS’ rise, the two countries could focus on expanding the Comprehensive Economic Partnership Agreement (CEPA) to include areas such as digital trade, intellectual property rights, and services. This would not only provide preferential market access and boost bilateral trade volumes but also help South Korea strengthen its ties with the Global South.

Additionally, South Korea can leverage India as an alternative manufacturing hub amid shifting global supply chains, particularly in electronics, semiconductors and automotive manufacturing.

Participation in India’s ambitious infrastructure projects, such as the National Infrastructure Pipeline (NIP) and the Smart Cities Mission, presents further opportunities for Korean firms to expand their influence and capitalize on India’s rapid growth trajectory, reinforcing South Korea’s engagement with BRICS countries.

The evolving geopolitical landscape demands stronger strategic ties between South Korea and the Global South. Closer cooperation with India in maintaining a free and inclusive Indo-Pacific region, enhancing naval coordination, and strengthening joint efforts in counter-piracy and counterterrorism operations will bolster regional security and stability, enhancing South Korea’s role as a net security provider.

Moreover, the defense industries of both countries offer scope for collaboration in areas such as co-production of defense systems and joint development of critical technologies like missile defense, drones, and cybersecurity, reducing the Global South’s dependence on Western defense industries for national defense capabilities.

Both India and South Korea are leaders in innovation and technology, and collaboration in emerging fields such as artificial intelligence, renewable energy, quantum computing, and green technologies can yield substantial benefits not only for their national economies but also for the wider region and the Global South.

South Korea’s leadership in semiconductors can further support India’s ambitions to build a robust semiconductor ecosystem through joint investments and technology transfers, thereby boosting India’s position within the Global South.

Strengthening cultural ties and enhancing people-to-people exchanges are essential for sustaining deeper collaboration. By deepening academic exchanges, providing scholarships, establishing joint research centers, and promoting cultural collaborations in areas such as film, music, and cuisine, South Korea can enhance mutual understanding and support broader partnerships with India.

This cultural engagement can serve as a gateway for South Korea to connect with BRICS nations and the Global South, which has been a challenge due to its close ties with the United States and Western-dominated institutions. Developing deeper cultural relations with India can correct this diplomatic anomaly and allow South Korea to extend its engagement beyond the US and the West.

India and South Korea share common values of democracy, development and international cooperation. With the rise of BRICS, India can act as a bridge, bringing South Korean perspectives into multilateral dialogues. Joint efforts in platforms like the G20, UN, and ASEAN can enhance diplomatic influence and promote shared interests, including global governance reforms, climate action and cybersecurity.

Sustainability remains a key concern for South Korea. Collaborative projects with India and BRICS member countries in renewable energy infrastructure, smart grids, electric mobility, and autonomous transportation systems can contribute to mutual energy security and support a sustainable future while integrating South Korea’s economy more deeply with the rising Global South. By focusing on green technologies, India and South Korea can play a pivotal role in the global energy transition.

South Korea’s engagement with BRICS, especially through its strengthened partnership with India, offers a strategic pathway for enhancing its global influence and securing its long-term interests in an evolving multipolar world.

A robust partnership for a new era

As a member of the US-led security order in Northeast Asia and heavily dependent on the United States for its security and economic prosperity, it may not be easy for South Korea to become a member of BRICS in the near future.

However, as the global order evolves with the rise of BRICS, South Korea is uniquely positioned to enhance its cooperation and engage in BRICS initiatives. The rise of BRICS signifies a shift towards a multipolar global order, wherein traditional power dynamics are being redefined, and emerging economies are asserting their influence on the world stage.

By proactively engaging with BRICS, South Korea can secure strategic advantages, reduce dependency on traditional Western institutions, and expand its economic and geopolitical reach.

South Korea’s strategic positioning as an intermediary between Western alliances and BRICS nations presents an opportunity to shape regional and global dialogues, ensuring that its voice remains influential amidst shifting power structures.

By focusing on strategic, economic, and technological collaboration with India and engaging with the broader BRICS coalition, South Korea can protect its interests, seize new opportunities and bolster its status in an increasingly multipolar world.

The foundation of South Korea’s partnership with India rests on shared values, mutual trust, and complementary strengths, making their cooperation pivotal for navigating the uncertainties of a changing global landscape.

Actively engaging with BRICS allows South Korea to align itself with a coalition that is reshaping the global order, securing its position as a key player in the evolving multipolar landscape, and expanding its influence on the global stage.

This proactive engagement not only enhances South Korea’s diplomatic and economic leverage but also solidifies its role as a dynamic actor in a redefined global order, positioning itself as a bridge between emerging powers and established global players.

It is time for South Korea to adjust its diplomatic strategy to claim its due place in the emerging new order in the region.

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Russia blurring lines between physical and cyber war on the West – Asia Times

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Over the past few years, Russia-affiliated hackers have conducted attacks against critical American and European infrastructure networks and disrupted hospital operations across the US. The scope and boldness of these attacks have increased as Russia seeks to expand its war against Ukraine and its supporters on multiple fronts.

In recent years, Russia has not only focused on waging cyber war on Western states but has attempted to infiltrate the heart of the internet through open-source software. The heads of MI6 and the CIA made a joint statement highlighting that Russian intelligence has been conducting a “reckless campaign of sabotage throughout Europe.”

In January 2024, Russian hackers targeted a water facility in rural Texas, causing a water tower to overflow. Similar malicious activities were detected in other towns in north Texas. In March 2024, President Biden’s administration warned US governors about escalating cyberattacks on water and wastewater systems. Further cyberattacks occurred in Indiana and targeted healthcare provider Ascension in May.

Russia’s cyberattacks are not limited to the US. In March, Russian hackers mistakenly targeted a mill in France, believing it to be a hydroelectric dam. They also attacked Poland’s water infrastructure due to its strong support for Ukraine. Poland called out Russian state-sponsored hackers for targeting its government networks in May 2024.

The cybersecurity vulnerability of critical infrastructure, especially in small towns with limited resources, makes it an easy target for hackers. Healthcare organizations are prime targets, with attacks capable of disabling medical equipment and diverting ambulances.

In June 2024, Russian hackers were responsible for a ransomware attack on several major London hospitals, affecting blood transfusions and test results and leading to canceled operations and diverted emergency patients. Hundreds of operations and appointments continued to be canceled after the June 3, 2024, cyberattack on NHS provider Synnovis.

In the first week following the attack, doctors were forced to delay 800 planned operations and 700 outpatient appointments. They had to revert to using handwritten records due to the system disruptions. Additionally, one hospital even had to solicit blood donations from its clinical staff to manage the crisis caused by the hack.

As Russia faces challenges on the battlefield in Ukraine, its cyber activity will continue to evolve to support espionage and battlefield enablement. Countries leading aid efforts for Ukraine, such as the UK and the US, remain prime targets of Russian cyber aggression.

Anne Keast-Butler, director of the UK’s Intelligence, Cyber and Security Agency, has expressed concern about Russian intelligence collaborating with proxy groups to conduct cyberattacks.

Unit 29155 of Russia’s GRU military intelligence agency, previously blamed for coup attempts, assassinations and bombings, now also runs a hacking group called Cadet Blizzard, which targets Ukraine, the US and Europe.

The group has been linked to cyberattacks such as the WhisperGate malware, which hit Ukrainian organizations ahead of Russia’s 2022 invasion. According to Western intelligence, Unit 29155 is blurring the lines between physical and cyber warfare, using both traditional sabotage tactics and disruptive cyber operations.

Ukraine served as a testing ground for Russian cyber weapons through the initial invasion in 2014 and the 2022 full-scale invasion. Ukraine has significantly hardened its defenses with Western support.

However, Russia has learned from its initial mistakes, launching one of its most disruptive cyber-attacks in December 2023 on Ukraine’s largest telecom operator, Kyivstar, leaving millions without mobile and internet service for days.

Factory sabotage

Russia has also resorted to recruiting criminals to sabotage Western factories supplying arms to Ukraine. On March 21, 2024, a London warehouse containing aid shipments to Ukraine was destroyed in a fire.

Then, in mid-April, an American artillery shell factory, which supplies some of its products to Ukraine, also went up in flames. Just two days later, on April 17 an explosion occurred at the Welsh factory of BAE Systems, a British defense contractor that manufactures weapons for Ukraine.

Russia has also conducted electronic warfare against Western aviation in the Baltic region. This has led to incidents like GPS jamming, which caused Finnair to suspend flights from Finland to Tartu, Estonia. Russia has also made thousands of attempts to disrupt European rail networks as part of a broader campaign to destabilize the EU and sabotage critical infrastructure, according to the Czech Republic’s transport minister.

In April 2024, two German-Russian nationals were arrested in Germany on suspicion of plotting sabotage attacks, including targeting US military facilities. The suspects are believed to have been planning these attacks as part of a broader strategy to disrupt aid flows to Ukraine.

In July 2024, CNN reported that earlier this year US intelligence uncovered Russian government plans to assassinate the CEO of a prominent German arms manufacturer that has been producing artillery shells and military vehicles for Ukraine. The assassination plot was part of a broader Russian strategy to target defense industry executives across Europe who are supporting Ukraine’s war effort.

Ukrainian law enforcement agencies also dismantled a Russian-run network planning arson attacks in Ukraine and the EU, targeting shopping centers, gas stations, pharmacies, and markets in July 2024. The group, consisting of 19 people from various Ukrainian regions, was acting on Russian intelligence services’ instructions and aimed to sow social instability and undermine support for Ukraine.

The goal of Russia’s hybrid warfare is not only to punish the West for supporting Ukraine but also to divert Western resources and attention away from aiding Kyiv. Moscow’s strategy hinges on the belief that targeting critical infrastructure and intensifying attacks on Western nations, can strain their financial and operational capacities.

The Kremlin anticipates that if European citizens begin to feel the direct impact of the war on their daily lives, they will pressure their governments to push for a peace settlement – one that would favor Russia and allow Vladimir Putin to claim victory.

This piece is an excerpt from a report presented by the author at the UK Parliament on October 9, on behalf of the Henry Jackson Society, titled “Military Lessons for NATO from the Russia-Ukraine War: Preparing for the Wars of Tomorrow.”

Read the original report, which includes extensive footnotes to show the sourcing of facts and quotations. Asia Times is republishing this excerpt with permission.

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Conscription in Korea and Taiwan: The difference a year makes – Asia Times

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This article was originally published by Pacific Forum. It is republished with permission.

Mandatory military conscription systems differ between South Korea and Taiwan, raising questions about their different standards of military training. Furthermore, they raise deeper questions about whole-of-society acceptance of and approach to defense needs, which may prove crucial in both countries’ long-term defenses.

Failure to understand the significance of length of service can have serious consequences.

For South Korea the largest threat comes from North Korea, whose forces lie approximately 30 miles from Seoul, the South’s largest city and capital. Taiwan’s only significant threat is the People’s Republic of China, 100 miles off the coastline of Taiwan; the two sides are separated by a strait that is one of the most heavily trafficked areas for maritime commerce.

Societal views are reflected in the implementation and intent of conscription. In South Korea, all seven members of the globally popular music group BTS have signed on to complete their required military service. As of 2024 one member has completed the mandatory service period of two years, as other band members await their initial military training dates.

In contrast, in Taiwan (formally called the Republic of China) in December 2022, then-President Tsai Ing-wen announced a politically controversial policy that, beginning in 2024, mandatory military service would be extended from the insufficient four-month requirement to one year of training for eligible males born on or after January 1, 2005. Her decision was sensitive even though it addressed a problem of insufficient personnel and readiness

Requiring different service

Pursuant to national law in South Korea, which is formally called Republic of Korea, compulsory military service is required of all males starting at age 18. This has been policy for decades and has not changed dramatically in that timeframe. A man deemed ineligible for military service is assigned to the National Police or another non-military public service institution.

A conscript serves in the active component for no less than two years. Conscripts deemed fit for service and volunteers are given the same training in one of Korea’s National Training Centers. The period for this entry training is six weeks. Once that’s completed, all new members of the Korean Armed Forces move on to their respective branches for additional training (see flow chart).

Chart: https://www.reddit.com/r/Military/comments/1ckm5ol/conscription_of_south_korea/

Taiwan’s version of conscription differs in many respects from that of South Korea.

For example, according to the 2023 National Defense Report, planned basic military training (BMT) consists of eight weeks.  Similar to Korea, Taiwan has provisions for males not considered viable for service but who can still perform some form of national service. (See the following chart from the National Defense Report 2023.)

Credit: Republic of China National Defense Report 2023

Compare and contrast: implications for military training

South Korea has a long-standing law that is steeped in societal acceptance toward military service as a typical process most males must undertake.

As mentioned, then-President Tsai’s reinstating the one-year time of service was not popular politically. However, there is a profound difference in one year of service in the Taiwan compared with two years of service. At face value, South Korea seems to devote less time to initial military training, but its conscripts receive longer training over 18-21 months. Additional training is given to the conscripts from the military components that they are entering such as the army/marines, navy or air force.

However, Taiwan’s previous political decisions first to reduce the conscription period to four months and then to raise it back to one year reflected the unpopularity of conscription.

There are two explanations for this phenomenon: lack of support for military service or lack of useful military training that would increase readiness and economic skills.

In contrast, two years of service as required in South Korea profoundly affects competency and effectiveness. Typically, the longer military personnel stay in their military specialty, the more proficient and competent they become. There is the added benefit that those personnel would be able to mentor incoming conscripts within their respective units. In theory, those new conscripts benefitting from mentors would be trained up faster.

Taiwan has systemic recruiting and retention challenges. Thus, well-trained troops who make the military their career field are in short supply. This problem in turn reduces the proficiency and capacity of Taiwanese armed forces in all areas, encompassing a long-term challenge. Consequently, a one-year turnover creates a logistical issue as well.

Implications for societal defense

In summary, like South Korea, Taiwan is in a precarious position. Taiwan is moving in the right direction by reinstituting the one-year conscription requirement, because such required national military training is important not only for personnel recruitment and military readiness but also for the whole-of-society’s deterrence and defense. Therefore, much more is needed in Taiwan. There needs to be a deep introspective look at a national and societal level and the viewpoint of national defense.

South Koreans, subject to required military conscription, might be individually unhappy with this national requirement. However, South Korea’s societal acceptance of national defense has meant that people who try to skirt the duty or leave Taiwan to circumvent conscription law are seen as cowardly, not doing their part for the greater society, and treated as social pariahs. Examples are South Korean celebrities who left the country to escape mandatory service and drew the fan bases’ negative response.

In contrast, Taiwan’s societal views previously indicated the unwillingness to return to one-year conscription and doubts about increased defense spending. This mindset is counter-productive to the national propensity to fight their existential threat. Some polls indicate that there is a segment of Taiwan’s population who will leave the country, choose to surrender, or simply hide. However, other polls suggest that as many as 70% of Taiwanese people would fight to defend their country.

However, in the case of Taiwan, there may be confounding variables to the issue of social reluctance toward military service. The island state’s ruling party, the Kuomintang, instituted martial law from the end of the Chinese Civil War in 1949 until 1987, during which time the military’s role took on the role of law enforcement over a civilian population. The military implemented measures of control that were considered violent and suppressive by the general public. This historical trauma is still remembered by segments of the Taiwanese population today, which may be an additional reason that Taiwan is resistant to military service.

For Taiwan, South Korea is an appropriate example of another Asian society that also faces an existential threat – as well as its own period of military rule. Yet, as mentioned previously, Korea generally has deep and wide societal acceptance of mandatory military service. Someone skirting the responsibility of national military service is seen as a coward, because that individual’s action and decision diminish the country’s overall defense.

Taiwan must institute a whole-of-society approach by the media, educational institutions (at all levels), and discussions around the family table about how conscription should not be seen as a burden but an honorable duty and part of life as a ROC citizen. Defense is not only the military’s duty but that of the whole society. Part of educating all of society as to the importance of conscription is making people aware of the qualitative difference between four months and one year in military training – as well as the difference between one year and two.

In addition, bilateral and multilateral military dialogues involving Taiwan about required military training should be part of efforts to deter coercion and conflict as well as to shore up Taiwan’s resilience and legitimacy.

After Taiwan’s first group of reinstated one-year conscripts completed their basic military training, a survey in 2024 found important public support for this extended compulsory military service.Taiwan should extend military conscription to longer than one year, especially since it lacks a territorial defense force like that of Ukraine.

Urgency is needed. Taiwan will face an existential crisis in less than 10 years, possibly in the second half of the 2020s or the first half of the 2030s.

Kendrick Farm ([email protected]), a resident James A. Kelly Korea fellow at Pacific Forum, also is involved with a US-South Korean joint venture business with an emphasis on artificial intelligence.

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Sophgo, Bitmain deny ties with Huawei’s supply chain – Asia Times

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Chinese fabless chip maker Xiamen Sophgo and bitcoin mining equipment supplier Bitmain have denied any business relationship with Huawei Technologies after being accused of having asked Taiwan Semiconductor Manufacturing Co (TSMC) to produce Ascend 910B chips.

TSMC has suspended shipments to Sophgo after an Ascend 910B processor, an artificial intelligence (AI) chip developed by HiSilicon, was found on a Huawei AI accelerator, Reuters reported on October 27, citing two unnamed people familiar with the matter. 

The report came after TechInsights, a Canada-based information platform for the chip industry, said in a report on October 9 that it found the Ascend 910B on a Huawei Atlas 300T A2 AI training card. The Information reported on October 18 that the US Commerce Department has started an investigation into whether TSMC is directly or indirectly supplying Huawei with smartphone and AI chips. 

“The investigation of the US Commerce Department on possible TSMC-and-Huawei link is not related to Sophgo and its product. Sophgo has never engaged in any direct or indirect business relationship with Huawei,” Sophgo said in a statement on October 27.

“Sophgo has been conducting business in strict compliance with applicable laws and regulations, including but not limited to all the applicable US national export control laws and regulations, and has never been in violation of any of such laws and regulations,” it said.

It added that it has provided a detailed investigation report to TSMC to prove that it is not related to the Huawei investigation. 

Luring Taiwanese chip engineers

Sophgo was founded in April 2019 by Micree Zhan, a co-founder of Bitmain. According to its website, Sophgo focuses on the research and development (R&D), promotion and application of computing power products such as RISC-V processors and tensor processing units (TPUs).

RISC-V is an open-source instruction set architecture (ISA) that provides a foundation for processor design. A TPU is a custom-designed application-specific integrated circuit (ASIC) that accelerates machine learning workloads. 

The company said it has R&D centers in more than 10 Chinese cities, including Beijing, Shanghai, Shenzhen, and Qingdao, as well as in the United States, Singapore and other countries. It said more than 73% of its employees are R&D personnel while 78% of them have master’s and doctoral degrees.

Sophgo’s senior executives include Chairman Zhan, President Chen Weiyu and Chief Executive Zhao Hong’ai. 

According to company search website Tianyancha.com, Zhan holds a 22% stake in Sophgo. Xiamen Qiayi Technology, controlled by Sophgo’s senior executives led by Zhao, owns a 33.1% stake in Sophgo. 

Public information shows that Zhao finished a master degree course at Peking University’s School of Integrated Circuits and has 10-years of experience in product planning, R&D management, sales and marketing.

Zhao founded Sophon in 2016 and Cvitek in 2019, both of which are Beijing-based chip design firms that later merged into Sophgo. She is now a legal representative of Sophgo. 

In a panel discussion organized by China Computer Federation in June 2022, she was among 21 guest speakers who shared their views about the Chinese Communist Party’s achievements in empowering women in the computing industry. 

On Monday, Bitmain said in a statement that it specializes in designing cryptocurrency mining rigs and is not involved in or related to the supply chain investigation as reported by the media recently. 

”Any news alleging that Bitmain is involved in the aforementioned event is false and baseless,” it said. “Bitmain reserves the right to take legal action” against any media outlet that “publishes and disseminates false information.”

Zhan’s ’Huawei dream’

In March 2021, IC Link Limited and WiseCore Technology, two units of Bitmain, were fined in Taiwan for violating the island’s Cross-Strait Act as they used high salaries to lure Taiwanese chip engineers to work in the mainland without government’s approval. 

Richard Hu Weixing, dean of Faculty of Social Sciences at the University of Macau, said in an article in August 2024 that some mainland firms had used TSMC’s chip manufacturing services and ASE Holdings’ chip assembly and test services via IC Link Limited and WiseCore Technology.

TMTPost, a news website in mainland China, said in an article on Monday that a unit of Bitmain formed a partnership with Huawei in 2018 to provide the latter’s smartphone users with bitcoin wallet services. 

The report said that, when Sophgo was established in 2019, Zhan hired former Huawei employee Li Qi as the company’s legal representative and director. But Li left Sophgo in 2021.

However, the TMTPost article was removed from the Internet in China on Monday afternoon. It is still being circulated on overseas websites.

An article published by Odaily.com, a unit of Beijing-based news website 36Kr, in 2020 said that Zhan had had a “Huawei dream” in 2018 to 2019 as he insisted that Bitmain use Huawei’s product development team (PDT), integrated product development (IPD) and human resource systems. Zhan’s drive to “replicate Huawei” ended in 2020 after co-founder Wu Jihan intervened, the article said. 

Read: Huawei uses TSMC loophole to bypass US chip ban

Follow Jeff Pao on X: @jeffpao3

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The case for tariffs in an unsettled world – Asia Times

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In the October 18 summary of the Wall Street Journal’s “Weekend Interview between the Journals’ editors and Donald Trump,” James Taranto notes disagreement about tariffs – the Journal editors being against them, as have been several recent op-eds including one by Phil Gramm and Donald Boudreaux published October 16.

Economics textbook models, assuming no military threats, no taxation, no volatile exchange rates and no restrictions on the movement of people across borders, show that whereas the introduction of tariffs improves the situation of a protected sector, the damage to the rest of society is greater than the benefit.

However, once we discard the assumptions, the case against tariffs disappears.

The Gramm and Boudreaux employment of 19th century data about the peaceful US to make the case against tariffs is irrelevant  now since that century (a.) was on the gold standard and (b.) was characterized by especially free movement of people, millions coming to the “swim or sink” US’s model of society at the time.      

These are not new observations. Adam Smith wrote similarly in his Wealth of Nations: Governments must impose tariffs “when some particular sort of industry is necessary for the defense of the country.” He thus justified the Navigation Act, which, among other restrictions, allowed only English ships to bring goods into England.

Another case “in which it will generally be advantageous to lay some burden upon foreign [countries] for the encouragement of domestic industry is when some tax is imposed at home upon the produce of the latter.  In this case, it seems reasonable that an equal tax should be imposed on the like produce of the former.”

Academic and nationalist jargons can distort these arguments and suggest that governments must then protect boot-makers, farmers and steel makers since the army needs boots, steel and food to march, fly and eat – patriotism used as a political tool to rationalize every tariffs. However, this reservation is just a reminder of being skeptical of all generalizations.      

Still, in his influential Capitalism and Freedom published in 1962, Milton Friedman wrote that “it would be far better to move to free trade unilaterally, as Britain did in the 19th century when it repealed the Corn Laws in 1846.” He believed that, but presented no evidence. What happened in Europe then was something different.

During the first half of the 19th century, France’s average tariffs stood at roughly 20%, whereas England’s was in the 50-65% range – yet the Industrial Revolution was taking place in England. France’s did not start until the second half of that century – and used British engineers to build the railways.

True, by 1850 English average tariffs dropped to the 25% range. However, Napoleon II’s promotion led to the 1860 Treaty of Commerce between France and England, following which the average level of tariffs dropped in both countries to the 10% range, other countries joining the treaty.

The coordinated drop came with other changes. Whereas England was under the gold standard since the early 18th century, by 1870 and until 1914, Europe and much of the world came to be on the gold standard, a period accompanied by relatively free movement of people and capital – not replicated since.

The1930s analyses of the impact of reducing the Smoot-Hawley tariffs are no better. They neglect the sequence of events preceding  the reduction. President Franklin Roosevelt confiscated gold in 1933, and promptly did a 59 percent devaluation of the dollar (in terms of gold).

Subsequently, in 1934, FDR got the unprecedented right to renegotiate trade agreements (the Congress delegating authority to the executive branch with the reciprocal trade agreement). Devaluation has impacts similar to tariffs. Both encourage domestic production (both at a cost – in an ideal world).  The devaluation diminished the American need of tariffs, and gave greater negotiating powers with European countries that did not devalue relative to gold (Britain and France).

None of these conditions exists these days, particularly the “sink or swim” feature. Floating exchange rates and heavy regulations on the movement of people have severe consequences. Tariffs – second bests – mitigate compounding mistaken exchange rate and other policies and atavistic models in the world.

Consider the impact of floating exchange rates. We negotiate prices of goods, services, longer-term contracts, financial ones in particular to ensure their purchasing power in global trade. The 19th century gold standard assured such stability. These days most contracts are priced in dollars or euros, which, however, fluctuate one relative to the other and relative to other currencies in the 50-100% or even more over short periods.

In the present floating exchange rates system, this volatility brought about the multi-trillion-dollar trade in notional derivatives, their main role being to approximate stable values of contract. Their use does not come cheap and requires deep financial domestic markets that most countries do not have.

In the countries lacking markets, companies’ access to financing becomes more expensive or even prohibitive, preventing them from growing – although these countries experience rapidly increasing young population. In an “ideal world,” capital would flow from aging societies to younger ones – as the former are savers, and the latter are the future. However, at present, the aging societies have the institutions that secure values of capital flows.

The younger, even well skilled cohorts in the developing countries, having limited access to capital, stay under-employed, under-paid and live under atavistic institutions, with limited options to migrate.

One consequence of immobilizing employees is have them produce goods and services at far lower prices than in Western welfare states, where employees pay taxes for sustaining their welfare model of society.  This is exactly the situation that Adam Smith considered exceptional as justifying tariffs.  Depending on the execution, and if combined with different migration policies, tariffs could not only protect the nation’s employees, but also be so structured as to attract investments and properly channel the migration flow.

Are such tariffs the “ideal” way to deal with the present global upheaval?

Are there better alternatives?  In principle, yes. On the horizon – no. 

An alternative would be to go back to clauses in the original Bretton Woods agreement to stabilize exchange rates.  During the negotiations, John Maynard Keynes worried that fixed exchange rates there would lead to chronic balance of payments problems, some countries experiencing constantly rising dollar reserves.  To sustain stable exchange rates, the latter countries had to “commit” to expand domestically and liberalize imports. To achieve such commitment, Keynes suggested penalizing these countries with prolonged trade surpluses, limiting purchases of their exports. This clause was never enforced.

In a recent WSJ op-ed, Greg Ip, though not mentioning exchange rates, paraphrases Michael Pettis offering a solution other than tariffs to achieve this: He writes that Pettis “believes that taxing surplus countries’ purchases of US assets would stop the inflow of their savings [and would] aid US-based manufacturers’ competitiveness and reduce the trade deficit.” Capital taxes “target surplus countries directly.”

The problem with this solution is that countries building up reserves pursue centralized models of society – while deepening financial markets by deploying savings domestically disperses power, which those in charge are reluctant to do.

Briefly: Western welfare states face now such centralized states, wherein dwell the majority of the (immobilized) youth (in the now 8 billion population, up from 1 billion a century ago) – a massively dis-equilibrated world. As of now, all these states pursue a mistaken exchange rate policy, too.

Tariffs – on the movement of people, too – are a way to mitigate the impact of this range of mistaken policies, putting pressures on the atavistic states to change their domestic policies.

This article draws on two books by Reuven Brenner, The Force of Finance: Triumph of the Capital Markets and History: The Human Gamble, and on his article “Toward a New Bretton Woods Agreement.”

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Prabowo’s big chance to be a global green leader – Asia Times

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Indonesia entered a bold new era with the October 20 inauguration of President Prabowo Subianto.

The leader’s ascent, rooted in a military career as a special forces commander, embodies a deep commitment to national sovereignty. But in a world where threats are as environmental as they are geopolitical, sovereignty must evolve beyond traditional defense.

So will Prabowo’s Indonesia, the world’s fourth-most populous nation and a vital maritime axis, merely drift with the currents of global change or will it seize the helm and steer toward more assertive environmental leadership and sustainable prosperity?

Indonesia’s vast archipelago loses an estimated US$4 billion annually due to illegal, unreported and unregulated (IUU) fishing, accounting for about 17% of global IUU fishing losses. It’s a crisis that depletes marine biodiversity and jeopardizes the livelihoods of over 2.6 million Indonesians in the fisheries sector.

As the nation’s maritime wealth is stolen, impinged on by illegal fishing boats including from China, the impacts are being felt in terms of economic potential and food security.

To reverse this tide, Indonesia must embrace advanced maritime surveillance and stringent enforcement, as demonstrated by Norway’s success in curbing illegal fishing. By adopting cutting-edge technologies like satellite monitoring and automated identification systems, Indonesia can reclaim control over its rich marine territories.

Strengthening legal frameworks and fostering regional cooperation through ASEAN will further amplify these efforts, positioning Indonesia as a guardian of marine resources and reinforcing sovereignty in a tangible way.

Simultaneously, Indonesia’s pursuit of economic growth through industrial downstreaming has transformed its abundant nickel reserves into a booming export industry. In 2015, Indonesia’s nickel exports were valued at only 45 trillion rupiah (US$2.9 billion).

However, following the implementation of downstream processing policies, the figure surged to 520 trillion rupiah ($33 billion) by 2023. This economic boon, however, has caused significant environmental risks.

Energy-intensive smelting processes, primarily powered by coal, contribute substantially to greenhouse gas emissions, undermining both global climate efforts and Indonesia’s own environmental sustainability.

Here, Indonesia faces a pivotal choice: continue on an environmentally unsustainable path or pivot toward a renewable energy revolution. The country has an estimated 400 gigawatts (GW) of technical potential for renewable-based power generation.

Solar alone could contribute half of this potential, while hydropower and geothermal could deliver up to 75 GW and 29 GW, respectively. Yet, renewables currently account for only 13% of the national energy mix.

By investing in renewable infrastructure and incentivizing clean energy integration in industrial processes, Indonesia could emulate China’s successful model of aligning economic growth with environmental stewardship.

To accelerate this transformation, Indonesia must adopt strategic policies such as feed-in tariffs, tax incentives for renewable projects and the gradual phasing out of fossil fuel subsidies.

To his credit, Subianto has said he plans to launch a green economy fund by selling carbon emission credits from projects such as rainforest preservation, aiming to raise $65 billion by 2028, one of his advisors told Reuters last month.

Establishing green industrial zones powered entirely by renewables could not only reduce carbon emissions but also attract global investors committed to sustainable practices. This shift will require confronting entrenched fossil fuel interests and mobilizing public support—a test of leadership that could ultimately define Prabowo’s legacy.

At the heart of this agenda is the imperative to improve the lives of all Indonesians. Sustainable development must be inclusive, ensuring that economic progress does not come at the expense of environmental integrity or social equity.

Engaging local communities in renewable energy projects can create jobs, reduce energy poverty and stimulate rural economies. Community-based initiatives, such as micro-hydropower plants and solar cooperatives, empower citizens and distribute the benefits of growth more equitably, fostering a sense of ownership and shared prosperity.

Indonesia’s strategic position grants it significant influence over regional stability and environmental stewardship. By championing sustainable practices and leading collaborative efforts to address climate change, Prabowo’s administration can elevate Indonesia’s global standing.

The choices made today are critical—not just for Indonesia but for an entire region grappling with the dual challenges of economic development and environmental degradation. Indonesia’s actions could set a precedent for others, amplifying its impact far beyond its borders.

President Prabowo’s inauguration represents more than a change in leadership; it is an opportunity to redefine Indonesia’s role in the 21st century.

By boldly integrating environmental sustainability with economic ambition, Indonesia can demonstrate that prosperity and ecological responsibility are not opposing forces but rather complementary goals.

The path forward will be challenging, but with decisive action and visionary leadership, Indonesia can transform potential into tangible progress. Prabowo has the opportunity to transform Indonesia into a beacon of sustainable development at the heart of Asia. And the time to act is now.

Setyo Budiantoro is a fellow at the IDEAS Global Program, Massachusetts Institute of Technology (MIT), and Nexus Strategist at The Prakarsa.

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Forget Gaza and Ukraine, East Asia’s brewing war will matter more – Asia Times

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MANILA–All major global powers are flexing muscles in East Asian waters, with the US, China and even Russia conducting major drills across the Western Pacific and Southeast Asia in recent days. While global attention focuses on the potential for a major conflagration in the Middle East, great powers are sleepwalking toward conflict in Asia.

Last week, the US destroyer USS Dewey (DDG-105) and Royal Australian Navy frigate HMAS Stuart (FFH153) conducted bilateral operations in the Strait of Malacca, a show of joint force in a crucial maritime chokepoint. China’s People’s Liberation Army Navy responded by deploying its Dongdiao class surveillance ships to the East and South China Sea.

Beyond naval deployments, Washington and Beijing have also been fortifying their military presence in the area. The US will likely retain the Typhon missile system in the Philippines for the foreseeable future after its controversial deployment ahead of the Balikatan annual exercises earlier this year.

A top US general publicly hailed the move as “incredibly important” to American regional strategy, namely the Biden administration’s aim to establish an arc of military alliances and missile defense systems across the Western Pacific in anticipation of a potential direct conflict with China.

For Beijing’s part, the Asian superpower is building its own network of stealth-penetrating radars in adjacent waters to counter American air superiority in the event of a contingency.

Once completed, the new facilities will “significantly increase China’s signals intercept and electronic warfare capabilities across the disputed Paracel Islands archipelago and add to a wider surveillance network spanning much of the South China Sea,” a report by the UK think tank Chatham House argues.

Although concentrated on Ukraine, Russia has also flexed its naval muscle and doubled down on its military diplomacy by conducting drills in Myanmar and, for the first time, Indonesia, where newly inaugurated President Prabowo Subianto is expected to adopt a more proactive and multi-aligned foreign policy.

To underscore its growing resolve, Southeast Asia’s largest nation also recently drove away a Chinese coast guard vessel entering Indonesia’s exclusive economic zone in the so-called North Natuna Sea.

Meanwhile, Vietnam, following a few short years of relatively calm ties with its northern neighbor, is also doubling down on its military footprint in the disputed waters.

To prepare for possible conflict with China in adjacent waters, the Southeast Asian dynamo is adding a new 1.5 kilometer to its sprawling network of military facilities across the South China Sea, where it controls up to 27 land features.

Decades of rapid economic growth and expanding trade have disincentivized any major conflict in Asia over the past quarter of a century. The last time two regional states came to blows was the bloody skirmishes between Vietnamese and Chinese troops in 1988 over the disputed Johnson South Reef in the South China Sea. 

Over the next three decades, however, China managed to build vast networks of influence and trade across the region, while also dramatically deepening its economic interdependence with the US and its key Asian allies of Japan, Australia and South Korea.

Today, Southeast Asia is the largest export destination for Chinese products, while China is a major investor and source of technology in much of the region. Bilateral trade between Beijing and major Western economies is also in the trillions of dollars annually, underscoring the depth of economic ties among all major players in the Indo-Pacific.

For the past three decades, almost all regional states, regardless of their political systems, have relied on economic performance for public legitimacy. But China’s rapid rise, America’s domestic and foreign policy troubles and intensified disputes across the Western Pacific have created a geopolitical tinderbox of unprecedented magnitude involving multiple major powers and the world’s biggest and most dynamic economies.

The Biden administration has relied on an “integrated deterrence” strategy, which seeks to leverage its vast network of alliances in the region to constrain China’s assertiveness. Accordingly, it has also expanded joint drills with key regional allies such as Australia.

“Every time we operate together, we strengthen our capabilities and shared commitment to a free and open Indo-Pacific,” US Vice Admiral Fred Kacher, commander of the US 7th Fleet, said in a statement following the latest US-Australia drills reaching from Taiwan Straits to the Malacca Straits. “This exercise further builds on our existing interoperability and combined readiness we have with the Royal Australian Navy,” he added.

For China, however, these exercises are both provocative and an impetus for further enhancing its own military presence in disputed areas. The PLA-Navy’s Dongdiao-class surveillance ship Tianshuxing (795) was sighted last week just 62 miles west of the island of Amami Oshima of Japan before heading for the Philippine Sea in the Western Pacific.

Chinese Liaoning Carrier Strike Group, meanwhile, reportedly sailed north through the Taiwan Strait.

China is also preparing for high-tech warfare by strengthening its electronic war capacity. According to the Chatham House report, China is building new stealth-penetrating radar systems based on satellite imagery that show distinctive hexagonal grouping of SIAR synthetic impulse and aperture radar) poles, a control tower and several mobile missile staging pads on the Triton Island in the disputed Paracel Islands archipelago

According to the Chatham House report, “Once completed, the radar on Triton will form what is believed to be a wider network of at least three overlapping counter-stealth radars built across Chinese bases in the South China Sea over the past decade.”

China seems to be reacting to growing American combat stealth aircraft deployments across the region, including F-22 Raptor stealth fighters, B-2 Spirit stealth bombers, and F-35 stealth fighters.

Earlier this year, the US Air Force deployed as many as 186 F-22s to participate in Australia’s major Pitch Black international air combat exercise. American stealth fighters – both F22s and F-35s – have also visited Singapore, Indonesia (Bali), Brunei, Thailand and the Philippines.

US Pacific Air Forces commander Kevin Schneider said the fighters’ rising presence in the South China Sea is a reflection of the “growing understanding and awareness of the threat posed by Beijing in their illegal, coercive, aggressive, and deceptive activities.”

He claimed there is a “greater desire [of our regional partners] to do more and a willingness to allow us to transit airplanes through their locations, their willingness to expand exercises to be perhaps more realistic for the threat environments that we face.”

Meanwhile, a Russia Navy surface action group consisting of corvettes, consisting of RFS Hero of the Russian Federation Aldar Tsydenzhapov (339), RFS Rezkiy (343) and RFS Gromkiy (335) recently conducted joint drills with Myanmar counterparts in the Indian Ocean.

“The main objective of the exercise is to comprehensively develop and strengthen naval cooperation between the countries, jointly counter global threats and ensure the safety of civilian shipping in the Asia-Pacific region,” Russia said in a joint statement.

In coming weeks, the Russia Navy contingent will join Indonesian counterparts in Surabaya, Java, for the Orruda 2024 exercises. Under the newly installed Prabowo administration, Indonesia is expected to adopt an Indian-style assertive and multi-aligned foreign policy vis-à-vis all major powers.

“The China Coast Guard-5402 (CCG-5402) re-entered the Indonesian jurisdiction on Friday,” Indonesia’s Maritime Security Agency said in a statement issued on October 26 after repelling a Chinese coast guard vessel intruding into Indonesian waters at the southern edge of the South China Sea.

“Indonesia has a sovereign right to explore the natural resource in that area and that cannot be disturbed by any country,” the Indonesia maritime agency said in a statement.

Neighboring Vietnam, in turn, is also expected to adopt an increasingly assertive stance amid ongoing disputes with China in disputed waters. Last month, several Vietnamese fishermen were severely beaten and injured after being apprehended by Chinese authorities in the disputed Paracel Islands.

Vietnam condemned China and “demanded that Beijing respect its sovereignty in the Paracel Islands, launch an investigation and provide it with information about the attack.” Far from confined to diplomatic protests, Vietnam is quietly preparing for military contingencies by building what could be its largest airstrip in the disputed South China Sea.

Since 2021, Vietnam has dramatically enhanced its military presence on the Barque Canada reef, which could soon host a modern airstrip that could extend as long as three kilometers in coming years amid rapid reconstruction.

“The new airstrip will considerably expand Vietnam’s maritime patrol capabilities as the existing runway on Spratly Island is too short for larger aircraft,” said Gregory Poling, director of the Asia Maritime Transparency Initiative at the Washington-based Center for Strategic and International Studies think tank, told the media.

Follow Richard Javad Heydarian on X at @Richeydarian

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Letter to Trump: make peace and rebuild America’s industrial base – Asia Times

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This article first appeared on The American Mind, a publication of the Claremount Institute think tank, and is republished with permission.

Dear President Trump:

Congratulations on your November election victory. President Joe Biden and Vice President Kamala Harris have left you with a strategic disaster and a fragile economy, but you have put forward a program to keep the peace and restore economic growth. Here are some ideas that may help in your efforts, followed by more specific proposals:

  • Inflation is closer to 8% than the official “3%” after figuring in higher interest costs to consumers. Biden started this inflation by running record budget deficits and the Federal Reserve made it worse by increasing the interest burden on consumers. You must educate the American public on this reality and get the right people in place to fix it.
  • The federal budget deficit is 6.4% of GDP, “larger than any deficit in records going back to 1930 except the years around World War II, the 2008 financial crisis, and the pandemic,” according to the Tax Foundation. Federal interest costs have doubled and now cost as much as defense. Get people on the Fed board who understand your economic agenda.
  • Our woke education system is a disaster and has betrayed working-class kids. We can’t fill skilled jobs in manufacturing because high school graduates lack basic math skills. In the short term, state community college systems and work-study apprenticeship programs can help. Create a federal-state initiative for public-private partnerships in manufacturing skills, and ask Governor Ron DeSantis to head it.
  • Vice President-elect J D Vance offered a workable peace plan in September to end the Russo-Ukrainian war. Give him a big role in handling the Ukraine problem. Leftovers from the foreign policy establishment in your first administration did nothing but sandbag you. Don’t listen to them and put a smart outsider in charge instead.
  • The US military-industrial complex is a hopeless morass of corruption and incompetence that can’t make enough artillery shells to supply Ukraine, let alone enough submarines. Bypass the Pentagon brass and the defense contractors and choose a secretary of defense who understands new defense technologies.
  • Your proposal to put high tariffs on Chinese EV imports but allow Chinese companies to build plants in the US is brilliant—and very much like Ronald Reagan’s response to Japanese auto imports in the 1980s.

An America First Economic Policy

Biden and Harris left you with record debts and deficits, and a dangerous household debt burden. Their reckless spending on handouts to their favored constituencies caused this inflation, not monetary policy, as David Malpass observed.

The Federal Reserve kept interest rates too low for too long and then raised them too much. Former Treasury Secretary Lawrence Summers showed that the real inflation rate is double the official number after including higher interest rates. Ask him to help the Bureau of Labor Statistics publish the real inflation rate.

You need a stable monetary policy instead of the Fed’s boom-and-bust whipsaw. Put people on the Federal Reserve Board who understand how monetary policy actually works instead of the ideologues who run the Fed today.

The biggest obstacle to industrial revival is the lack of skilled labor, thanks to the liberals who control US education. Summon the CEOs of our biggest manufacturing companies, and they’ll tell you the same thing: less than a quarter of US high school students are proficient in math. That puts high-end jobs in computer-controlled manufacturing out of their reach.

We can fix the problem by enlisting state community college systems in partnership with corporations. Florida already has the ball rolling. Ask Governor Ron DeSantis to head an emergency effort to train skilled workers.

For the first time in American history, America imports more capital goods than we produce for domestic consumption. The downside of tariffs is that they will increase costs for manufacturers who rely on foreign inputs, and domestic substitutes will take time and money to provide. You might propose a tariff rebate for American manufacturers who buy Chinese capital goods to expand production in the US.

The tax system is rigged against capital-intensive investment, raising the after-tax cost of capital for manufacturing. America’s stock of manufacturing equipment hasn’t risen in 20 years according to the Federal Reserve.

To return to a long-term growth trend, we need about $1 trillion in capital spending. GOP leaders in Congress should propose emergency legislation to allow immediate tax write-offs of capital equipment.

The 2017 corporate tax cut, which increased the number of years required to expense capital equipment, should be revised to allow immediate expensing of capital equipment. That may be a bigger stimulus for domestic manufacturing than tariffs.

Countering the National Security Establishment

You outraged the foreign policy swamp when you denounced endless wars, and they spent four years trying to remove you from office. The swamp bet the farm on endless war in Ukraine, and your refusal to play along makes you their irreconcilable enemy.

Don’t underestimate how determined they are to stop you. You hired establishment types in your first administration and had cause to regret it every time. Now, there’s no room for compromise with the swamp.

The Deep State entrapped your first National Security Adviser, General Mike Flynn, and his successors H R McMaster and John Bolton repaid your trust by turning on you. You can’t trust the failed, feckless foreign policy establishment.

It knows nothing but forever wars and meddling in other countries’ affairs. The problem is that the establishment has controlled promotion in government service and academia for three generations, so any candidate with a big resume got it the wrong way.

Vance may not have a lot of foreign policy experience, but common sense is a better qualification than years of pushing incompetent policies. Ask Victor Davis Hanson to run foreign policy and national security recruitment for the transition team.

And continue to seek the advice of Hungary’s Prime Minister Viktor Orban, your strongest supporter overseas and the smartest politician in Europe. Vance’s plan to end the war in Ukraine—establishing a ceasefire, a buffer zone, and Ukrainian neutrality—will do the job.

David Friedman did a brilliant job crafting the Abraham Accords as Ambassador to Israel in your first term. Persuade him to return to the job. The Biden administration treats Saudi Arabia like a pariah and cozies up to Qatar, the host and paymaster to Hamas.

That’s an outrage, especially after the October 7, 2023 massacre. Reach out to the Saudis and the UAE. Otherwise, US influence in the region may dissolve in the face of China’s diplomatic initiatives.

You rightly proposed a missile shield to protect the United States. Reviving Reagan’s Strategic Defense Initiative is the best defense policy anyone has put forward in years.

You will get bad advice from the uniforms. They wasted trillions building the wrong kind of military and will try to justify their previous blunders by demanding more of the same. We don’t need nearly a quarter million troops deployed overseas.

The Navy’s expeditionary forces are obsolete. Surface ships are sitting ducks for anti-ship missiles—and China has thousands of them. Meanwhile, our depleted industrial base can barely build one submarine a year.

The Pentagon brass will feed you phony scenarios to justify more obsolete legacy systems. Hire experts who see through flummery like Air Force officer and Stanford Professor Oriana Skylar Mastro.

You can’t trust the US Intelligence Community. Fifty-one senior intelligence officials signed a statement in 2020 claiming that the Hunter Biden laptop story was a Russian hoax. That might have cost you the election. Their appointees hold all the senior jobs today.

Seventy percent of the US intel budget goes to private contractors, opening the system to cronyism and corruption. It will take years to clean up this mess. In the meantime, create a “Team B,” a small group of people you can trust at the National Security Council to keep you informed on world affairs and double-check the CIA’s daily briefing.

Don’t trust the “process people” at the White House. Your Deputy Chief of Staff Chris Liddell told a Republican luncheon not long ago that by picking the people who would attend meetings at the Oval Office and assigning their roles, he could predetermine your decisions 90% of the time. Bring in outsiders who work for you, not the swamp.

We’re in a situation like 1973, when Soviet air defense ruled the skies. In less than ten years we invented smart warfare, turned the tables on Russia, and began winning the Cold War. We invented the Digital Age as a byproduct of our revolution in defense technology.

Don’t put a flag officer or defense contractor lobbyist in charge of the Pentagon. Appoint a defense secretary with deep knowledge of new military technologies, someone like Michael Griffin, your Under Secretary of Defense for Research and Engineering and the former head of NASA.

Under fiscal constraints, we can’t expand defense spending across the board. Focus on missile defense for the American homeland and American military assets. Cut legacy spending on forever wars, like the 230,000 US troops deployed overseas, and legacy systems like aircraft carriers.

Your first two defense secretaries came respectively from the Marines and the defense industry—and both of them tried to stop you from winning in 2024. You would be better served by a scientist who understands high tech in defense of the American homeland. Chips for defense and critical infrastructure should be produced at home under secure conditions.

Biden’s CHIPS Act is a disaster. It gave $8.5 billion to Intel just before it laid off 10% of its workforce. Worst of all, it left out R&D for chips based on new technologies. We’ve played Whack-a-Mole with China’s chip industry for five years. The battle for semiconductor dominance will be won by chips using interaction at the molecular or atomic level, with speeds orders of magnitude faster than silicon.

Finally, the swamp bet the future of NATO on the Ukraine misadventure. That disaster will cripple, if not destroy, NATO in its present form.

How to Deal with China

We’ve spent $7 trillion on forever wars. China spent $1 trillion on its Belt and Road Initiative. We lost influence and power, whereas China gained both. China’s exports to the US, Europe, and Japan are stagnating, but its exports to the Global South have doubled since you left office. China now exports more to the Global South than to all developed markets combined.

A lot of Chinese exports to the Global South are indirect exports to the US: China builds, plans, and ships components to Vietnam, India, and Mexico, and they export in turn to the US. This translates into a jump in Chinese influence in Asia, Europe, the Middle East, and Latin America, and more US dependence on Chinese supply chains.

China is gaining on us. At best, sanctions on exports of US technology to China buy time. At worst, they will backfire: Instead of keeping China dependent on our products, we have handed Chinese companies a captive domestic market for legacy chips and chip-making equipment.

We beat Russia in the Cold War by inventing the Digital Age, using NASA and the defense budget to drive breakthroughs in new technologies. We can innovate better than China. But federal support for R&D under Reagan was double its present level as a percent of GDP.

That’s why it’s critical to shift the defense budget to support new technology. To take only one example: We can’t out-produce China in missiles. The best response to China’s huge force of anti-ship missiles is directed-energy weapons (for example, lasers). But the Pentagon R&D budget for these new weapons is less than $800 million a year, or the cost of ten fighter planes.

We want to maintain the status quo over Taiwan. China won’t risk using force as long as Taiwan doesn’t move toward independence. With thousands of anti-ship missiles and hundreds of 5th-generation aircraft, China already outguns us in the South China Sea. To keep the balance of power, we need new anti-missile technology—not more sitting ducks in the form of surface ships.

Act at once on your proposal to combine steep tariffs on Chinese EV imports with an invitation to Chinese companies to build plants in the US. As Elon Musk well knows, China has a big lead in industrial automation, including AI applications and 5G communications.

Xiaomi just opened a fully automated plant that can turn out 1,000 cars a day. No US company can make an EV with a sticker price under $10,000 like BYD’s Seagull. It’s like the 1980s when Japanese automakers had better technology than Detroit. Forcing the Japanese to build plants here helped the U.S. auto industry get up to speed.

Just as we did during the Cold War, we need to harness America’s unique capacity for innovation to renew our industrial base. And if you can guide us there, Mr. President, your second administration will be remembered as a turning point in American history.

David P Goldman is deputy editor of Asia Times, a Washington fellow of the Claremont Institute and a senior writer for Law & Liberty.

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BRICS isn’t de-dollarizing anytime soon – Asia Times

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BRICS Summit host Russian President Vladimir Putin disappointed both anti-colonial enthusiasts and Western alarmists last week by conceding that the bloc’s members “have not built and are not” building a payment system to challenge the US dollar-based global banking system.

The leaders of the two economic giants present at the summit, China’s Xi Jinping and India’s Narendra Modi, did not mention alternative payment arrangements in their respective remarks.

The technical requirements for alternative payment systems aren’t the problem. The SWIFT system that controls interbank payments in dollars and other major Western currencies merely transmits secure messages.

The challenge, rather, is economic: US demand for imports fuels an outsized portion of economic growth in the Global South. China’s exports to the US amount to just 2.3% of its GDP, but about half of its surge in exports to the Global South since 2020 depends on re-exports to the United States.

While China’s exports to the Global South more than doubled from about US$60 billion a month to $140 billion a month, US imports from the Global South rose from about $60 billion a month to $100 billion a month during the past four years.

Graphic: Asia Times

Dependence on the US market varies widely across the universe of developing countries. Vietnam and Mexico, the two favorite venues for so-called “friend-shoring,” that is, transferring production away from China to putatively friendlier countries, registered big increases in exports to the US as a share of GDP.

Vietnam’s exports to the US in 2023 amounted to about 27% of the country’s GDP, compared to just 10% in 2020, while Mexico’s US exports rose to 27% of GDP in 2023 from 20% in 2010.

Graphic: Asia Times

Singapore and Malaysia, by contrast, showed little increase in US exports as a share of GDP. Indonesia and Brazil export comparatively little to the United States.

Some Asian countries, notably Malaysia and Thailand, export more than 60% of their GDP, mainly to other Asian countries. Brazil, Indonesia and China are far less export-dependent.

Today, China exports just 19% of its GDP compared to 27% in 2010, which means that an increasing share of GDP growth depends on domestic consumption and investment.

Graphic: Asia Times

What makes the United States such an important factor in the economies of the Global South is its enormous current account deficit. The table below ranks the current account surpluses and deficits of the 20 largest economies from the largest deficit to the largest surplus.

With a current account deficit of $80 billion a month, or $1 trillion a year, the US appetite for an excess of imports over exports dwarfs the rest of the world.

Graphic: Asia Times

China is the largest or second-largest economy in the world, depending on whether we count GDP in US dollars or adjust for purchasing power parity, but China’s imports from the Global South have been stagnant for three years.

Graphic: Asia Times

China won’t replace much of American import demand for the time being, given Beijing’s focus on high-tech investment rather than consumer demand. At the margin, that leaves the Global South all the more dependent on the US.

Projecting current trends into the future suggests a steady rise in consumer spending in the Global South, especially in East Asia, and the emergence of robust domestic markets and less dependence on exports.

Below is a chart published by the Brookings Institution think tank last year, projecting that the total consumer market in East Asia will overtake the US consumer market by 2028.

Graphic: Asia Times

Developing countries, though, don’t pay their bills on projections. Arranging payments for goods in international trade is a trivial issue. More challenging is financing long-term deficits.

India, for example, used to run an annual trade deficit with Russia of less than $3 billion. Discounted Russian oil sales to India after the start of the Ukraine war boosted this to more than $60 billion.

What will Russia do with the Indian rupee equivalent of $60 billion? It would far prefer to have another currency, for example, the UAE dirham, that can be used to buy goods in third markets.

The Global South doesn’t yet have the capital markets or the currency stability to convince a surplus trading country to simply hold assets of the deficit country in exchange for goods.

That is what the United States does so well: Its $18 trillion negative net foreign asset position corresponds to the last 30 years’ cumulative current account deficits.

America sells assets to foreigners in return for their goods. The Global South doesn’t have the assets to sell, or at least not in the form that the rest of the world would like to own.

That helps explain why the BRICS Summit’s final declaration relegated the issue of payment systems to feasibility studies:

We reiterate our commitment to enhancing financial cooperation within BRICS. We recognize the widespread benefits of faster, low-cost, more efficient, transparent, safe and inclusive cross-border payment instruments built upon the principle of minimizing trade barriers and non-discriminatory access.

We welcome the use of local currencies in financial transactions between BRICS countries and their trading partners. We encourage strengthening of correspondent banking networks within BRICS and enabling settlements in local currencies in line with BRICS Cross-Border Payments Initiative (BCBPI), which is voluntary and nonbinding, and look forward to further discussions in this area, including in the BRICS Payment Task Force.

BRICS central banks don’t hold each other’s currencies as reserve assets, with limited exceptions. Just 2.3% of world central bank reserves are held in China’s RMB, up from 1.1% in 2016 but down from a peak of 2.8% in 2022. Most of them are buying gold. If the legend on US currency states, “In God We Trust,” gold says, “Trust nobody.”

Sweeping changes across the Global South would be required to make their currencies attractive reserve instruments—transparency and risk management of capital markets, the development of a local middle class, infrastructure, and education.

A great deal of this is happening in stages in many developing countries but progress is gradual and uneven. We now can foresee circumstances under which the Global South might declare independence from the dollar system. But we aren’t there yet and won’t be for years under any foreseeable circumstances.

Follow David P Goldman on X at @davidpgoldman

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Israel-Iran in dangerous game of face-saving missile strikes – Asia Times

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Israel’s strike on military targets in Iran over the weekend is becoming a more routine occurrence in the decades-long rivalry between the two states.

Israel has conducted low-level or “unofficial” operations in Iran in the past, but since the October 7, 2023, Hamas attacks on southern Israel and subsequent Israeli war in Gaza, tensions between Iran and Israel have spilled over into direct military confrontation for the first time.

While the consequences of this particular strike are not yet clear, it does show that the violence in the Middle East is not winding down any time soon. This is also a clear example of how easily one conflict – in this case, Gaza – can expand into new conflicts with unintended consequences.

But there are other dimensions at play beyond Gaza and the Palestinians. Relations between Israel and post-revolutionary Iran have never been good. The Iranian government has called for the destruction of Israel, and Israel has used its foreign intelligence service, Mossad, to disrupt Iran’s nuclear program with assassinations and cyber warfare.

In its most recent direct attack on Iran, Israel struck military targets from the air in the provinces of Tehran, Khuzestan and Ilam, causing minor damage to military installations and killing four soldiers. Israel had consulted the US State Department about its plans but the US was not directly involved in the strikes.

Though Tehran has played down the extent of the damage, the Iranian regime has not ruled out a response, which should keep the region on edge for weeks to come. In fact, some hardliners in the Iranian parliament say the strike crossed a red line and a response is necessary.

Answering the question of “who started it?” in this conflict is not that simple. If you were to ask the Iranians, they would say the first escalation came in early April when Israel struck an Iranian diplomatic compound in Damascus, Syria, killing two senior Iranian generals, among others.

If you were to ask the Israelis, they would say that attacks by Hezbollah in northern Israel over the past year are effectively Iran throwing the first stone, as Hezbollah is a militant proxy of the Islamic Revolutionary Guard Corps (IRGC).

Iran has responded to Israeli strikes on its territory twice with barrages of rockets and explosive drones – once in retaliation for the consulate strike and again in early October after Ismail Haniyeh, one of the leaders of Hamas, was killed by a strike in Tehran. Israel’s latest airstrike was in direct response to Iran’s early October retaliation.

US President Joe Biden said after the latest Israeli attack, “I hope this is the end” – an effort to urge both parties to halt their escalations. But unfortunately, it is not his call to make.

Maintaining a delicate balance

There is a reason why direct military strikes between nations are rare, even between sworn enemies. When attacking another state, it is difficult to know exactly how they will respond, though a retaliatory strike is almost often expected.

This is because defense forces are not just used for fighting and winning wars – they are also vital to deterring them. When a fighting force is attacked, it’s important for it to strike back to maintain the perception it can deter future attacks and make a display of its capabilities. This is what is happening right now between Israel and Iran – neither side wants to appear weak.

If this is the case, where does the escalation end? De-escalation is essentially a game of chicken – one side has to be content with not responding to an attack to take the temperature down.

But there are equal pressures on states to choose to respond to an attack or de-escalate. On the one hand, showing that your military is incapable of responding to an external threat is unacceptable, and theoretically invites further attacks. An unused deterrent is not a deterrent.

On the other, there’s the risk a retaliation could spiral into all-out conflict with your adversary. In the case of Israel and Iran, this would almost certainly mean the involvement of US forces – a dire prospect.

Thankfully, this outcome is unlikely. There are signs both Iran and Israel are using their strikes to “save face” and maintain their deterrence capability rather than escalate tensions further, given the fact both made strikes on nonessential targets.

Both sides have reasons to avoid a larger conflict. Israel has just opened a second front against its adversaries by targeting Hezbollah in Lebanon and would face the largest conventional fighting force in the region if an all-out war broke out with Iran.

And Iran’s leaders have been under pressure domestically in recent years due to widespread public discontent. Iran would much rather continue to attack Israel through its proxies and maintain plausible deniability, as a direct war could threaten the regime’s survival.

But this latest strike is also a reminder that the longer conflicts go on, the less likely they are to remain contained. For over a year, the war in Gaza has raised tensions in the region to a fever pitch.

A ceasefire would go a long way to reducing these tensions and stop the spread of political violence across the region – before it’s too late.

Andrew Thomas is lecturer in Middle East Studies, Deakin University

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

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