El Niño: an investment case 

This year sees the return of El Niño, a natural climate event that occurs every two to seven years. El Niño originates in the Pacific Ocean along the equator causing waters there to become much warmer than usual, which gives rise to extreme weather phenomena. 

El Niño returns at a time when the global climate crisis has reached an unprecedented peak. And it will make the crisis worse. Scientists believe that this year’s record high temperatures combined with El Niño will produce even more severe weather across the globe. 

The Asia-Pacific region, already highly vulnerable to disasters, is expected to be one of the most affected by El Niño. Even more extreme droughts and more tropical cyclones triggering flooding and landslides are expected across the region this year and into the early months of 2024, resulting in more lives being lost, damaging homes and infrastructure and leading to higher economic costs.

The prospect of this double Climate-El Niño crisis is daunting. It is however also an opportunity to accelerate actions with a view to anticipate, mitigate, and adapt to the weather events that are coming. 

Improved forecasting

The first measure to cushion the impact of El Niño is to improve forecasts to anticipate the type and severity of hazards at regional, national, and subnational levels. The expanded use of satellite and technology in all countries combined with widespread dissemination of early warnings to all population groups likely to be affected, including the most isolated ones, is feasible, low cost, and high impact. 

The Asia-Pacific region is at the forefront of innovation and digital progress, driven by governments and a dynamic private sector.

The El Niño threat presents an opportunity to use digitization and data to help both central and local governments better assess risks posed by El Niño, anticipate the damage it may cause within communities as well as to infrastructure, protect the most vulnerable population groups, and provide a more rapid and effective response to the disasters. 

Focusing on the compounding impact of El Niño on the climate crisis can improve land, water, flood, and drought management by governments and local communities. For the private sector, particularly small and micro-enterprises, heeding the El Niño threat will help protect assets and secure business continuity.

El Niño can also cause setbacks in human development, particularly in poverty and inequality reduction. This realization should make it imperative to identify the environmental and socio-economic vulnerabilities to El Niño and to address their root causes at national and local levels through policies and targeted programmes ranging from housing to social protection to improve the resilience of communities to weather-related risks. 

Risk-informed development

El Niño also makes the concept of “risk-informed development” more relevant than ever. From Nepal to Fiji, the Asia-Pacific region has made very significant strides in putting risk-informed development into practice.

Risk-informed development has been integrated into national policies for urban and rural development, yet the scope and depth of risk-informed development still varies across and within countries. Accelerating its adoption will help counter the impact of El Niño and will offer long-lasting benefits. 

This El Niño comes at a time of increased economic, social fragility, and volatility in Asia and the Pacific. The region is still recovering from the impacts of the Covid-19 pandemic that have weakened growth and reversed human development progress and is also impacted by the ripple effects of the Russian invasion of Ukraine. 

Several countries have seen this exogenous impact aggravated by domestic political and social turmoil, resulting in an unbearable debt burden and a cost-of-living crisis that is affecting millions. This makes protection and adaptation to El Niño and the business case for climate actions stronger.

Plainly put, the destruction of infrastructure, the economic loss, and the financial resources for recovery are a cost to be paid. Conversely, the financial resources allocated for disaster preparedness and climate actions are worthwhile investments that should be done without delay.

Seen positively, El Niño should encourage international cooperation, particularly South-South cooperation. Many benefits are to be derived from specific exchanges of information and experience on how to anticipate and prepare for El Niño.

Such an exchange leading to replication or adaptations in planning, policies, capacity-building, and use of technology will make nations and communities more resilient to El Niño and climate change, more broadly.

Across Asia and the Pacific, the United Nations Development Program (UNDP), together with other UN agencies, governments, and international and national partners is actively engaged in climate actions that will help counter El Niño’s impact on countries and their populations. 

This is part of our contribution to human development and the Sustainable Development Goals. We cannot avoid El Niño, but we can take quick effective actions to prepare and diminish its impact. 

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China trials visa-free travel for six countries

People visit the Great Wall of Badaling in Beijing, ChinaGetty Images

China is trialling visa-free travel for citizens from France, Germany, Italy, the Netherlands, Spain and Malaysia for a year, its foreign ministry said.

From December to 30 November 2024, ordinary passport holders from these countries can do business or travel in China without a visa for up to 15 days.

This is to help “promote China’s high-quality development and opening up”, spokeswoman Mao Ning said on Friday.

Currently, most travellers need a visa to enter China.

The rare examples of those who are exempt include citizens of Singapore and Brunei, entering China for business, tourism, family visits and transit for no more than 15 days.

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AI safety in the here and now

The turmoil at ChatGPT-maker OpenAI, bookended by the board of directors firing high-profile CEO Sam Altman on November 17, 2023, and rehiring him just four days later, has put a spotlight on artificial intelligence safety and concerns about the rapid development of artificial general intelligence, or AGI. AGI is loosely defined as human-level intelligence across a range of tasks.

The OpenAI board stated that Altman’s termination was for lack of candor, but speculation has centered on a rift between Altman and members of the board over concerns that OpenAI’s remarkable growth – products such as ChatGPT and Dall-E have acquired hundreds of millions of users worldwide – has hindered the company’s ability to focus on catastrophic risks posed by AGI.

OpenAI’s goal of developing AGI has become entwined with the idea of AI acquiring superintelligent capabilities and the need to safeguard against the technology being misused or going rogue. But for now, AGI and its attendant risks are speculative. Task-specific forms of AI, meanwhile, are very real, have become widespread and often fly under the radar.

As a researcher of information systems and responsible AI, I study how these everyday algorithms work – and how they can harm people.

The AI most likely to cause you harm is not some malevolent superintelligence, but the loan algorithm at your bank. Photo: AP via The Conversation / Mark Humphrey

AI plays a visible part in many people’s daily lives, from face recognition unlocking your phone to speech recognition powering your digital assistant. It also plays roles you might be vaguely aware of – for example, shaping your social media and online shopping sessions, guiding your video-watching choices and matching you with a driver in a ride-sharing service.

AI also affects your life in ways that might completely escape your notice. If you’re applying for a job, many employers use AI in the hiring process. Your bosses might be using it to identify employees who are likely to quit. I

f you’re applying for a loan, odds are your bank is using AI to decide whether to grant it. If you’re being treated for a medical condition, your healthcare providers might use it to assess your medical images. And if you know someone caught up in the criminal justice system, AI could well play a role in determining the course of their life.

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AI has become nearly ubiquitous in the hiring process.

Algorithmic harms

Many of the AI systems that fly under the radar have biases that can cause harm. For example, machine learning methods use inductive logic, which starts with a set of premises, to generalize patterns from training data.

A machine learning-based resume screening tool was found to be biased against women because the training data reflected past practices when most resumes were submitted by men.

The use of predictive methods in areas ranging from health care to child welfare could exhibit biases such as cohort bias that lead to unequal risk assessments across different groups in society. Even when legal practices prohibit discrimination based on attributes such as race and gender – for example, in consumer lending – proxy discrimination can still occur.

This happens when algorithmic decision-making models do not use characteristics that are legally protected, such as race, and instead use characteristics that are highly correlated or connected with the legally protected characteristic, like neighborhood.

Studies have found that risk-equivalent Black and Latino borrowers pay significantly higher interest rates on government-sponsored enterprise-securitized and Federal Housing Authority-insured loans than white borrowers.

Another form of bias occurs when decision-makers use an algorithm differently from how the algorithm’s designers intended. In a well-known example, a neural network learned to associate asthma with a lower risk of death from pneumonia.

This was because asthmatics with pneumonia are traditionally given more aggressive treatment that lowers their mortality risk compared to the overall population. However, if the outcome from such a neural network is used in hospital bed allocation, then those with asthma and admitted with pneumonia would be dangerously deprioritized.

Biases from algorithms can also result from complex societal feedback loops. For example, when predicting recidivism, authorities attempt to predict which people convicted of crimes are likely to commit crimes again. But the data used to train predictive algorithms is actually about who is likely to get re-arrested.

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Racial bias in algorithms is an ongoing problem.

The Biden administration’s recent executive order and enforcement efforts by federal agencies such as the Federal Trade Commission are the first steps in recognizing and safeguarding against algorithmic harms.

And though large language models, such as GPT-3 that powers ChatGPT, and multimodal large language models, such as GPT-4, are steps on the road toward artificial general intelligence, they are also algorithms people are increasingly using in school, work and daily life. It’s important to consider the biases that result from widespread use of large language models.

For example, these models could exhibit biases resulting from negative stereotyping involving gender, race or religion, as well as biases in representation of minorities and disabled people.

As these models demonstrate the ability to outperform humans on tests such as the bar exam, I believe that they require greater scrutiny to ensure that AI-augmented work conforms to standards of transparency, accuracy and source crediting, and that stakeholders have the authority to enforce such standards.

Ultimately, who wins and loses from large-scale deployment of AI may not be about rogue superintelligence, but about understanding who is vulnerable when algorithmic decision-making is ubiquitous.

Anjana Susarla is Professor of Information Systems, Michigan State University

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

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More Thais return home from conflict-ridden Myanmar

More Thais return home from conflict-ridden Myanmar
Senior Myanmar military officers hand over 24 Thais to army officers at the second Thai-Myanmar Friendship Bridge in Mae Sai district, Chiang Rai, on Friday. (Photo: Third Army’s public relations centre)

Another group of 24 Thais, who were trapped in northern Myanmar due to escalating clashes between Myanmar soldiers and ethnic rebel groups, were repatriated to Mae Sai border district of Chiang Rai province on Friday.

Myanmar authorities had notified Thai counterparts about the repatriation of the 24 Thais – 16 men and eight women. 

The evacuees were moved from Laukkaing to Kenthung in Shan state amid the conflict between Myanmar soldiers and an alliance of ethnic minority groups – the Myanmar National Democratic Alliance Army (MNDAA), Ta’ang National Liberation Army (TNLA) and Arakan Army (AA).

The 24 Thais were under the protection of Myanmar soldiers in Kentung, about 168 kilometres north of Mae Sai. The group left Kentung around 7am on Friday.

They were handed to Thai authorities at the permanent border checkpoint in Mae Sai on the same day, according to a source at the Thai-Myanmar border.

Of the Thais, the youngest  was a 18-year-old woman, while the oldest was a 35-year-old man. All of them will undergo health check-ups before being handed over to officials at Chiang Rai Immigration checkpoint.

The Third Army’s public relations centre said on its Facebook page on Friday that the 24 individuals were handed over to army officers at the second Thai-Myanmar Friendship Bridge in Mae Sai about 11.30am on Friday.

On Monday, a group of 266 Thai nationals who were evacuated by Myanmar authorities from the border town of Laukkaing in Shan State to Kunming in China on Sunday, returned to Thailand on two commercial flights.

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How much is Australia profiting from the Gaza war?

Australia’s defense export program has recently come under scrutiny for its lack of transparency – particularly in relation to whether approved export permits are providing material support to Israel’s war against Hamas.

The UN special rapporteur on the Palestinian Territories has criticized the government’s lack of transparency, as have academics and politicians.

They contend the government should be publicly divulging the details of the military export permits it approves. Currently, this is not done.

To compel the government to release information about recent exports, a group of human rights organizations recently filed an application in the Federal Court. The aim: to gain access to permits for exporting defense equipment to Israel since its military operation began in early October.

Only limited details about the Department of Defense’s approved exports are routinely published.

Specific details about which manufacturers receive the permits and the nature of the exported goods, however, are not provided publicly, even when they are requested through the Freedom of Information Act. The government often cites confidentiality or the protection of business information as reasons for rejecting the requests.

Reporting provided to international bodies is also limited. For instance, Australia typically only provides the general class of equipment being exported by country for publication on the United Nations Register of Conventional Arms. This information only relates to broad types of conventional weapons or components for weapons of mass destruction.

Some information does get released during Senate Estimates hearings. A hearing in October, for instance, revealed the government had approved 350 defense export permits to Israel in the last five years, including 50 this year. However, it did not detail what those exports were.

Australia’s international obligations

Australia is obliged to prevent the export of goods that can be used either for unlawful conduct during armed conflicts or human rights violations.

Some of these obligations come from specific treaties, such as the Arms Trade Treaty, which set out the exact requirements for exporting some types of defense items. Others come from Australia’s responsibility as a sovereign state not to contribute to another country breaching international law.

These obligations cover various things, including:

  • what specific items Australia can export, and
  • to whom it can sell military goods or “dual-use” items (meaning they have a civilian function but could also be used in military operations).

For instance, there are laws that limit exports to entities that are the subject of international sanctions, or if an entity has committed (or is suspected of committing) human rights abuses or war crimes when using the exported items.

In addition, there are separate lists of prohibited items (such as those that could be used in weapons of mass destruction), and particular types of weapons (such as chemical or biological) which are banned under other treaties.

Australia also has obligations to ensure it respects the laws of armed conflict by not actively contributing to another country breaching the laws of war under the Geneva Conventions and its protocols.

This means if another country is involved in a conflict and is observed to be systematically breaching the laws of war, Australia cannot lawfully provide material support to them.

Australia has a specific list of items called the Defense Strategic Goods List. Permits are required to allow for the export, import and distribution of goods on this list. There are also controls over the specific skills and knowledge related to making and using such items.

The list is broad – it includes everything from conventional weapons and components (like tanks or weapon sights) to dual-use objects (such as certain types of lasers or chemicals that could be weaponized).

Australia’s arms exports lack transparency. Photo: Twitter screengrab

To export an item on the list, approval is required by the minister of defense or their delegate. Among the things they have to consider are whether the goods would risk being used against Australia’s international legal obligations or to “commit or facilitate serious abuses of human rights.”

The law does not outline how much weight is put on each criterion or what kind of information is necessary to support this decision-making process.

As it stands, the main method to test this process is through Freedom of Information Act requests, which have been shown to have limited success, or through parliamentary processes, such as Senate Estimates.

The other option is to discover the information through a court case, as the application filed this month is attempting to do.

Arms control scrutiny

In Europe, arms controls are generally subject to greater public scrutiny.

The United States also publishes more information about its exports. Canada has recently implemented a process of publicly reporting the reasons that export permits are declined.

In the United Kingdom, a group filed a similar court case to the Australian one, seeking information on weapons exports to Saudi Arabia. This case ultimately failed in June.

However, it compelled the UK government to clarify its decision-making criteria regarding alleged human rights abuses and to publish more information about its weapons export decisions.

The legislation that controls the permit system is currently undergoing a required five-year review. However, the government has yet to implement the recommendations it agreed to following the 2018 review.

There has also been little public information about the progress of the updates agreed to from the last review, or what has changed so far.

Another bill was recently introduced to make some changes to these laws. However, this focused on tightening existing controls and easing restrictions with two key allies – the US and UK – to facilitate the AUKUS agreement. The lack of public transparency about export controls remains.

In light of the current geopolitical situation, Australia could demonstrate its commitment to its international legal obligations by making some additional adjustments. For example, it could allow outside parties to make submissions on weapons export permits or routinely publish more details of its approved permits.

Transparency in export controls is considered best practice by many other countries, and Australia can easily do more to align itself to this.

Lauren Sanders is Senior Research Fellow on Law and the Future of War, The University of Queensland

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

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Global markets eye BOJ response as inflation quickens

Japan’s economic landscape is undergoing a subtle shift as core consumer price growth picked up slightly in October, following a brief easing the previous month. 

The countrywide core Consumer Price Index (CPI), which excludes volatile fresh food costs, rose 2.9% year on year in October, government reveals, compared with the 3% expected by economists in a Reuters poll.

Core inflation had slowed to 2.8% in September from 3.1% in August, the first time it was below 3% since August 2022.

This fresh data published on Friday have sparked debate among domestic and international investors about the potential for the Bank of Japan (BOJ) to reconsider its monetary stimulus measures. 

A potential rollback of such policies could send ripples through global markets, impacting various asset classes and reshaping investor sentiment.

The most immediate impact of a BOJ monetary stimulus pullback would likely be felt in currency markets. 

Historically, changes in the BOJ’s policy stance have influenced the value of the Japanese yen. 

A reduction in monetary stimulus might result in a stronger yen, affecting Japan’s export competitiveness. Also, other major currencies, such as the US dollar, would likely experience fluctuations as global investors reassess their currency allocations in response to a strengthening yen.

Equity markets, both in Japan and globally, would react too to the prospect of a BOJ stimulus policy shift. 

Sectors sensitive to interest rates, such as financials and utilities, could experience volatility as investors reassess the impact of changing monetary conditions on corporate earnings. Conversely, export-oriented sectors in Japan may face headwinds due to a potentially stronger yen affecting international competitiveness.

Changes in monetary policy in Japan would also influence commodities and real assets. As investors seek inflation hedges, commodities like precious metals could be expected to experience heightened demand. 

In addition, real assets such as real estate and infrastructure could see increased attention as investors pivot toward tangible assets in response to evolving economic conditions.

In broader terms, the prospect of the BOJ rolling back monetary stimulus introduces an element of uncertainty into global markets, which could potentially impact risk sentiment. 

Investors may reassess their risk exposure, leading to shifts in allocations between risk-on and risk-off assets. Market volatility could increase as participants adjust their investment mix due to changing expectations for Japan’s economic trajectory.

One thing is for sure: The consequences of a BOJ stimulus shift extend well beyond Japan’s borders, making it a focal point for investors worldwide.

Nigel Green is founder and CEO of deVere Group. Follow him on Twitter @nigeljgreen.

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CNA Explains: Why is North Korea’s spy satellite launch a big deal?

How will this affect regional and global dynamics?

In protest over the Malligyong-1’s launch, South Korea has partially suspended a 2018 military agreement with the North aimed at defusing tensions along their shared border.

The next day, Pyongyang said it would no longer abide by the deal, and would deploy “more powerful” troops and “new-type” military equipment to the region.

“The possibility of an accidental armed conflict along the Military Demarcation Line (the border) will increase,” Professor Yang Moo-jin from the Seoul-based University of North Korean Studies told local media.

“And the possibility of accidental clashes escalating into a war has also increased.” 

As with the ongoing conflicts in Europe and the Middle East, any breakout of war on the Korean peninsula wouldn’t be confined to just between the two main parties.

It will be of critical interest to the US, particularly with North Korea’s status as a nuclear power state and not to mention close ties to Russia as well as China.

Researchers Victor Cha and Ellen Kim from the US-based Center for Strategic and International Studies noted that Beijing and Moscow would not support any actions by the UN Security Council to punish North Korea.

In particular, Russia’s supposed role in assisting North Korea with satellite and possibly other advanced military tech should concern the rest of the world, the analysts wrote, saying it “would be a major blow to the international nonproliferation regime and rules-based international order”.

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Protecting children in a digital world is a moral imperative of our era

When you meet a child who has gone through the trauma of sexual exploitation and abuse, you never forget it.

In Southeast Asia, millions of child sexual exploitation images are downloaded, copied, forwarded, and shared in the blink of an eye, perpetuating trauma and stigma. In the borderless world of the Internet, national law-enforcement agencies find themselves limited.

Behind every abusive video and image is the life of a child, forever altered.  

Asia already registers the highest rate of child Internet users globally. Alarmingly, up to one in five Internet-using children in ASEAN has experienced child sexual exploitation and abuse online. With Internet use continuing to grow rapidly, all signs suggest this frightening number will only increase over time.  

This means accelerating action for child online protection is a matter of extreme urgency. Every child has the right to be safe from harm, both online and offline. And this is the collective responsibility of governments, of industry and the private sector, of parents and caregivers, of family members and young people themselves. 

There is increasing awareness of the pivotal role industry can, and should, play. Technology companies can help design innovative solutions to tackle online abuse, identify and rapidly take down abuse materials, cooperate with law enforcement to report illegal and suspicious activities, and adopt corporate policies on child protection.  

This week, with the support of UNICEF, Southeast Asian governments and industry representatives are convening in Bangkok at the second ASEAN-ICT Forum on Child Online Protection to discuss just that.  

The call to the technology industry to step up and improve child online protection is not just being made by us: It is being made by children and young people themselves. They have been asking for easily accessible online reporting mechanisms, for the rapid takedown of harmful content and for perpetrators of abuse to be swiftly removed from online platforms, and for child-friendly information about staying safe online and protecting their privacy.     

Yet among the children and young people surveyed ahead of this week’s forum, 51% told us they still see worrying or offensive content on a daily basis. 

Southeast Asia has shown strong commitment to addressing child sexual exploitation and abuse. Robust frameworks for child online protection are already in place, notably the 2019 ASEAN Declaration to Protect Children from All Forms of Online Exploitation and Abuse.

What needs to be done now is accelerate the implementation of the framework and its action plan, particularly through urgent action and accountability on the part of the private sector, in addition to appropriate regulation by states. 

As we work to keep children safe online, one of the fine balances we must continue to strike is ensuring they can still unlock all the precious new opportunities afforded by the Internet.

The Internet has helped children and young people learn, connect with and support one another, play, and make their voices heard. For more marginalized boys and girls living in remote areas and disadvantaged households, being connected to the Internet can change lives and open entirely new horizons. 

In a debate that has often been prolonged and polarizing, our actions must systematically be guided by children’s rights. At the heart of all dialogue, policies and measures should be children’s right to protection from harm, their right to privacy, to information, to education, to association and to speech. We can, and must, do better to uphold this range of rights online.

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Ukraine war a stalemate on land but not at sea

As the attention of the world centers on the war in Gaza, many commentators believe that the war in Ukraine is becoming a stalemate. To date, Ukraine’s highly anticipated summer counteroffensive has not resulted in any substantial territorial gain, and Russia has not made any progress either.

In military terms, a stalemate is not necessarily negative, depending on your perspective. It’s a chance to replenish ammunition stocks (for instance, Russia’s limited supply of missiles) or procure new key weapons systems for the next phase of the war (Ukraine’s acquisition of F-16 fighter jets.)

In political and diplomatic terms, a stalemate enables both sides to rally their allies and partners – see Moscow’s public relations offensive in the Middle East to capitalize on the effects of the Israel-Hamas war. But it can also contribute to war fatigue – and we are seeing a degree of this among Kiev’s allies in the West.

However, this notion of a stalemate neglects the war’s maritime dimension, which has evolved fairly dramatically in Ukraine’s favor in recent months. With winter coming, recent successes in the Black Sea appear to offer Ukraine substantial tactical, strategic and political advantages.

Kiev claims that since the beginning of the war, Ukrainian forces have damaged or destroyed 27 warships and vessels belonging to Russia’s Black Sea fleet, including the fleet’s flagship, the 11,000-ton cruiser Moskva, as well as one of Russia’s Kilo-class submarines that carries cruise missiles.

With Russia’s naval base at Sevastopol considered no longer safe after a series of successful Ukrainian attacks, much of Russia’s Black Sea fleet has had to relocate to the port of Novorossiysk on the Russian mainland.

Moving its remaining Kilo-class submarines to safer locations is important for Russia because it cannot afford to lose any more of these expensive and scarce vessels.

Map of Black Sea including Novorossiysk.
Russia has shifted naval assets away from its Black Sea fleet base to Novorossiysk. Photo: Shutterstock via The Conversation / Michele Ursi

Tactical and strategic implications

This winter, we can again expect Russia to try to degrade Ukraine’s energy infrastructure, as it attempted to do last year. Russia used Kalibr cruise missiles launched from the Black Sea as part of this strategy, creating additional vectors of penetration to saturate Ukraine’s air defense capabilities.

But the repositioning of the Black Sea Fleet further away from Ukraine will have a negative effect on Moscow’s logistics and tactical options this time around. And in a long war – such as this conflict is predicted to be – denying the enemy even one tactical option can have synergistic effects on the overall conduct of operations.

The impacts of Ukraine’s successful harassment and strikes against Russia’s Black Sea assets – its warships, shipyards, command centers and air defense sites – are apparent well beyond the Black Sea.

Here’s why: the situation on the ground in Ukraine has become a slog, as both Russia and Ukraine are trying to exhaust each other and their allies. So Ukraine’s campaign in the Black Sea, which has increased the vulnerability of Crimea, has a great deal of significance.

While it is unlikely to provide a direct opportunity for Kiev to retake the peninsula any time soon, the perceived threat obliges Moscow to devote attention and limited resources to the defense of Crimea, which will affect its overall strategy of attrition.

Insurance deal

The relocation of Russia’s naval resources away from Ukraine’s main trading routes in the northwestern Black Sea has weakened Russia’s attempted blockade of Ukraine. In the words of the Ukrainian president, Volodymyr Zelensky: “Russia is unable to use the Black Sea as a springboard to destabilize other regions of the world.”

Moving its naval assets further away from its base at Sevastopol has not completely prevented Russia from targeting civilian shipping, though. On November 9, a Russian missile hit and damaged a civilian vessel sailing under a Liberian flag as it entered a Black Sea port in the Odesa region, killing one and injuring four people. This led to a spike in insurance premiums.

The Black Sea port in Odesa, Ukraine. Photo: Twitter Screengrab / Alamy

Blockades only work if they make the operational and financial risks for ship operators and insurers too high, so it’s crucial that Kiev can act to increase confidence in Ukraine among the global shipping sector. The first step has been to reduce the threat posed by the Russian navy; the next is to reduce risk perception and normalize maritime trade to and from Ukraine.

Importantly, despite the incident with the Liberian-flagged ship, Kiev has managed to finalize a deal with a group of 14 British insurers that enables discounted insurance premiums (compared to high war premiums) thanks to a mechanism of state financial backing. Announcing the deal, the Ukrainian prime minister, Denys Shmyhal, explained:

It will make it possible to make a discount on the cost of insurance against military risks for exporters of all products from Ukraine. This will make the Black Sea corridor more accessible to a wider range of exporters.

The more ships that are able to move goods in and out of Ukraine, the more this will demonstrate that, despite Russia’s attempts to block Ukraine’s ability to trade, there is a lower risk involved – thus creating a new cycle of confidence within the maritime sector, and reinforcing the idea that the Russian blockade is obsolete.

Kiev’s key allies, including the UK, appear to understand the advantage that Ukraine now holds in the Black Sea. Despite the apparent stalemate on land, Ukraine’s successes at sea will ensure its resilience in the longer term.

Basil Germond is Professor of International Security, Department of Politics, Philosophy and Religion, Lancaster University

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

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