Blowing the bridge on Myanmar’s shifting civil war

At the onset of a monsoon season unlikely to see much respite in Myanmar’s raging civil war, the month of June was especially unkind to a coup regime struggling to impose its will on a nation in revolt.

The State Administration Council (SAC) junta’s woes were compounded by additional US sanctions on a listing banking sector, Chinese-brokered talks with three key ethnic armies that ended in failure and the first defections of entire military units to the anti-coup opposition, undercutting the regime’s already tenuous hold on a swathe of eastern Kayah state.

Attracting less attention amid the apparent confusion of a “war of a thousand cuts” was a string of attacks, also in the east of the country, that viewed together should have worried army headquarters in Naypyidaw rather more than the loss in Kayah of two ethnic Karenni Border Guard Forces (BGF) battalions of transparently dubious loyalty.

Underpinned by a notable new level of strategic planning and tactical execution, the opposition’s June strikes highlighted an operational approach which, as it gains traction across a multi-front war, is calculated to aggravate the central vulnerability of an army trapped between a crippling lack of manpower and overly extended areas of operations.  

The attacks also belied suggestions that unchallenged regime airpower can impose a military stand-off in which a better-resourced SAC needs only to wait out ethnic and political fissures in the opposition camp.

Bridges in the crosshairs

Not by coincidence, the series of coordinated assaults through the month zeroed in on bridges.

While geographically scattered, the attacks conveyed a clear message: For the first time, joint ethnic and Bamar resistance forces have conducted operations reaching into the national heartland to target infrastructure that is essential to the resupply of an army already facing a critical shortage of transport helicopters and that cannot be defended by airpower.

Beginning at dawn on June 1, the first operation involved a wave of synchronized assaults by forces of the Karen National Liberation Army (KNLA)’s 1st Brigade and allied, newly-formed People Defense Force (PDF) units on posts at both ends of the Donthami bridge.

A major span across the Donthami River near Thaton, the bridge is situated on the Asian Highway where it passes through Mon state linking Yangon to the Karen state capital of Hpa-an and the trade hub of Myawaddy on the Thai border.

The clashes reportedly continued for some 90 minutes and backed up traffic for a lot longer. While media reports of 45 army troops killed were likely inflated, the aggressive assaults probably intended to overrun the posts guarding the bridge had most certainly occurred.

Less than a week later, on June 6, a second operation in Kyaukkyi township of Bago region underscored the fact that the Donthami raid had not been a one-off.

Launched again at dawn, the action brought together a joint task force from the KNLA’s 3rd Brigade and allied PDFs and reportedly saw a police station and four army posts overrun followed by the demolition of the Bonthataw bridge across the Sittang River.

While accounts of up to 30 soldiers and police killed remain unconfirmed, drone images of the collapsed easternmost section of the bridge where the wide concrete structure meets the riverbank left no doubt that road connectivity between Kyaukgyi, east of the river and Kyauktaga on the west bank, a town on the main Yangon-Naypyidaw road and rail line, had been severed for at least the coming months.

On the same day, KNLA-led forces also reportedly blew a smaller bridge at Nat Ywar in Htantabin township, north of Kyaukgyi, not far from the transport hub of Toungoo city. That marked the second bridge destroyed in Htantabin in the space of ten days.

According to an official report carried May 30 on the state-run website myanmar.gov.mm, “PDF terrorists” had already destroyed an iron bridge on a road leading to a much larger bridge over the Sittang on May 26. 

The most disruptive attack, however, was again on the main Asia Highway artery in the early hours of June 29 when sappers of the KNLA 1st Brigade and PDFs brought down a 24-foot (7.3 meter) wide section of the Kyone Eit Bridge in Mon state’s Bilin township.

The collapsed section of Kyone Eait Bridge after a joint KNLA-PDF attack. Image: The Irrawaddy / Screengrab

Daylight images of the scene indicated that a major explosion had collapsed two-thirds of the bridge into the canal below, destruction that later took the life of an unfortunate motorist who at speed or in pre-dawn darkness drove his car into the newly-opened abyss.

Deliberately, however, the demolition squad had laid charges that left one 12-foot wide lane supported by two concrete pillars still navigable for road passage but inevitably resulting in major traffic bottlenecks.

The bridge blast was followed up by clearly well-prepared attacks by armed drones on regime officials inspecting the damage later in the morning, in which two were killed and some 27 others, mostly police and soldiers, wounded – a blitz which incidentally served to underscore the lethal advances in the resistance’s drone capabilities.   

Evolving resistance

Against the backdrop of the typically chaotic, come-as-you-please attacks on regime facilities that for many PDFs in central Myanmar are still the preferred approach to war, June’s Karen-led bridge raids stood out at the tactical level as striking examples of planning and execution that the National Unity Government’s (NUG’s) Ministry of Defense would do well to disseminate as lessons-to-be-learned across resistance ranks more broadly.

As complex operations requiring effective integration of disparate elements, success hinged on careful target selection and planning; up-to-date intelligence; reaching targets in darkness but on time; and then synchronizing the roles of several teams with different tasks at different locations, including those conducting preliminary assaults on posts calculated to disperse the impact of retaliatory artillery strikes and the follow-on demolition squad equipped with military-grade explosives and the training to use them to effect.

In the case of the Sittang bridge operation of June 6, all of that needed to be followed by withdrawal in daylight amid an alert and angry enemy reacting both on the ground and from the air.

Strategically, the geography of operations, presumably loosely coordinated between the NUG’s regional commanders and relevant KNLA brigades, was no less telling.

In the Sittang valley, the sabotage of key bridges increases pressure on isolated regime positions in a corridor of territory running north-south between the resistance-dominated Karen hills in the east and the river in the west. Linking this string of small garrisons is an already vulnerable secondary road between Toungoo in the north and Shwegyin in the south.

Kyaukgyi sits halfway along the corridor, a lynchpin town that the destruction of the Bonthataw bridge has now largely cut off from resupply by road from west of the Sittang. The coming months of the rainy season are likely to see stepped-up interdiction of the road by guerrilla forces now operating along its entire length, and possibly the abandoning or fall of the isolated regime positions it connects.

As commanders on both sides of the conflict are fully aware, a few short kilometers across the river on its west bank lie the main road and rail arteries linking Yangon to the capital Naypyidaw and the central city of Mandalay.

Those national arteries, in turn, are overshadowed by the central spine of the Bago Yoma mountains where in earlier conflicts Karen and communist guerrillas established base areas and springboards for attacks.

To the south in Mon and Karen states, the strategic threat posed by the KNLA-PDF alliance is far more immediate: aggressive guerrilla operations already threaten road connectivity between major cities.

Karen National Liberation Army (KNLA)’s Seventh Brigade parading as part of celebrations marking the 66th Karen Revolution Day at their headquarters in Myanmar’s eastern Kayin state in a file photo. Photo: Asia Times files / AFP/ KC Ortiz

The June bridge attacks marked a significant escalation of pressure exerted earlier in the dry season by the KNLA’s Thaton-based 1st Brigade and its affiliated PDFs on highways connecting Yangon, Mawlamyine (Moulmein) and Hpa’an.

Operations in the Thaton-Bilin zone in Mon state mirror a trend seen further east along the main road to the Thai border, where the KNLA’s 6th Brigade and PDFs have been constantly active in and around the highway towns of Kyondo and Kawkareik.

The cumulative impact of this activity has been a sharp spike in army casualties and the sacking of the commanders deemed responsible.  

In early April this year, Major General Myat Thet Oo, commander of the Mawlamyine-based Southeastern Regional Military Command, was relieved of his post and later consigned to see out his career as ambassador to Laos.

His boss, Lieutenant General Khun Hlaing, head of Bureau of Special Operations No 4 which oversees operations in both Karen and Mon states, was also abruptly fired.

Roadblocking the regime

At a stage of the war when the capture of urban centers by opposition forces is neither practical nor desirable, a strategy of squeezing key lines of communication connecting them is emerging by default as an optimum way forward.  

As evidenced in June across the KNLA’s wide Karen-Mon-Bago area of operations, the approach requires loose operational coordination at the regional level rather than any overarching and ultimately counter-productive attempt to impose strategic coordination on ethnic armed organizations operating in different parts of the country and facing very different military and political constraints.

In some cases, the pressure of constant ambushes central to this insurgent strategy has forced the military to essentially abandon key roads where the cost in lives and vehicles has come to outweigh the value of keeping them open.

The road between Kalay, a regional operations command center in northwest Sagaing and the crossroads town of Gangaw in Magwe region to the south, offers a striking case in point.

An extended 120-kilometer-long artery skirting the Chin Hills, which from late 2021 through 2022 was the scene of weekly clashes and army reprisal attacks on villages, the road has been abandoned this year as the military pulled back to its Kalay redoubt.

Along major highways the regime cannot afford to surrender, the alternative resistance scenario involves a campaign of ongoing ambush and disruption reinforced where possible by the blowing of bridges and the hemorrhaging of army manpower such assaults inflict.

This reality has already emerged both along so-called “IED Alley”, the highway between Sagaing City and Monywa, headquarters of the military’s Northwestern Command; and in a very different shape involving larger, better-organized and better-equipped Karen and PDF forces along the Asia Highway in Mon and Karen states.

The strategy’s success can be measured as military movements become fewer and concentrated in larger convoys that require the escort of armored fighting vehicles and helicopter gunships.

The military has already been forced to resort to this expedient in western Chin state and along stretches of the Ayeyarwady River in the Sagaing-Kachin border region where gunship escorts have been deployed to protect riverine movement of supply barges headed north.

Air war folly

These trends are emerging against the backdrop of the Myanmar Air Force’s failure to achieve appreciable impact on the battlefield.

Despite record numbers of sorties flown this year, at huge cost in ordnance dropped and fuel expended, the brunt of the MAF’S air war has fallen on civilians while resistance forces operating in small units without easily identified logistics hubs have suffered seemingly minimal casualties.

Indeed, the overall impact of the MAF’s campaign has been primarily psychological: terrorizing civilians while bolstering the morale of embattled penny-packet regime outposts.  

The grisly aftermath of a Myanmar military aerial bombing of Pazigyi Village in southern Sagaing Region, April 11, 2023. At least 100 people were killed in the attack. Image: Screengrab / YouTube

In far more lethal conflicts from World War II onwards, air assaults on civilian populations have ultimately proved counter-productive, fanning popular resolve to fight. Scrambling to support positions under mounting pressure, but ultimately too numerous all to be defended from the air, the military prong of MAF strategy represents at best a “finger in the dyke.”

In protracted conflicts that fail to provide sufficient daily drama easily measured in lives lost or kilometers gained, the international news industry is inclined to declare a “stalemate” and move on. Over the past year, Myanmar has been no exception to this tendency sometimes wrapped in the reassuring conclusion that the war is one that “neither side can win.” 

How or even if Myanmar’s popular opposition can “win” remains to be decided but it would be folly to discount the remarkable mobilization, sustainability and access to armaments it has achieved in two short years – advances that, as indicated in June, continue to evolve in ways that are not immediately obvious but undoubtedly significant.

In the context of a civil war that is in many ways unprecedented, speculation into the future is of dubious value. But if current trajectories are any guide, it might focus more usefully less on who will win and more on how and when the nation’s floundering military will lose.

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DBS digital banking disruption in May due to ‘human error’, preliminary probe finds

SINGAPORE: The disruption to DBS’ digital banking services on May 5, 2023 was caused by human error, according to preliminary investigations by Singapore’s largest lender.

The bank found that “human error in coding the programme that was used for system maintenance” affected access to its online and automated teller machine (ATM) services for over six hours, said Senior Minister Tharman Shanmugaratnam on Wednesday (Jul 5).

“The error led to a significant reduction in system capacity, which in turn affected the system’s ability to process internet and mobile banking, electronic payment and ATM transactions,” said Mr Tharman in a written answer to a parliamentary question.

DBS initially said on May 5 that the disruption was caused by a “systems issue”, unrelated to an earlier day-long disruption in March.

According to the bank, the March disruption was caused by “inherent software bugs”, Mr Tharman noted on Wednesday.

CNA has reached out to DBS for more information.

Mr Tharman was responding to Member of Parliament Tan Wu Meng (People’s Action Party-Jurong), who had also asked what was being done to strengthen the reliability and resilience of retail banks’ digital services in Singapore.

Mr Tharman noted the creation of a special committee to investigate the earlier March outage. This committee has been ordered by the Monetary Authority of Singapore (MAS) to extend its review to cover the latest incident, and to use qualified independent third parties. 

In May, DBS CEO Piyush Gupta said the committee review would be completed “as a matter of utmost priority” and that DBS would “implement all recommendations expeditiously”.

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Pakistan’s ‘imbalance’ of payments

The International Monetary Fund ( IMF) announced a staff-level agreement with Pakistani authorities on June 29 as Pakistan struggles with an import backlog and declining export volumes, steadily depleting its precarious foreign exchange reserves.

A nine-month Stand-by Arrangement ( SBA ) worth 2,250 million special drawing rights( equivalent to roughly US$ 3 billion, or 111 % of Pakistan’s IMF quota ) is included in this agreement.

The current account deficit ( CAD ) reached an astounding$ 17.4 billion in the fiscal year 2022, a sizeable increase from the$ 2.82 billion gap seen in FY21. The government encountered various difficulties following the devastating floods of 2022, which resulted in a decline in forex reserves and the loss of creditors’ confidence.

In response, the government soon put in place austerity measures to prevent a possible default on international debt and import restrictions on all goods aside from basic food and medical supplies.

Despite the president’s work, the nation saw a significant decrease in CAD earlier this month, reaching stumbling lows of$ 242 million in January. This drop was accompanied by a drop in forex reserves to just$ 3 billion, making the economy vulnerable to economic shocks.

Pakistan’s Current Account Balance( in US billions ) is shown in Figure 1.

The World Bank is the cause.

In order to maintain production, local companies rely on imported input, with 53 % of total imports coming from intermediate goods. The president’s mercantilist policies and trade restrictions caused them significant disruption. Higher attrition rates, decreased export productivity, and major disruptions in the commodity chains were the results of this.

international financial investments

Deficits in the current and capital accounts worsen the balance-of-payments ( BoP ) situation and impede Pakistan’s economic development. Foreign direct investment ( FDI ) has decreased as a result of the unreliable and hostile business environment.

It has consistently been difficult for foreign investors to fund private enterprises due to high tariff rates, political uncertainty, criminal concerns, strict duty and interest-rate regulations, and demanding security clearance requirements.

Labor output growth has been impacted by the reduction in FDI and insufficient technology transfer, which has resulted in lower production increases and impractical economies of scale for the past 20 years.

Due to favorable regional and external factors, there was a noticeable increase in FDI flows between 2003 and 2007.

To improve stability and increase investor confidence, the government took a number of actions. These included privatisation activities, liberalizing and deregulating the economy, streamlining administrative procedures, and fostering private-sector expansion. Both domestic and international participants found this to be an attractive investment opportunity.

During this time, the foundation for the China-Pakistan Economic Corridor( CPEC) was established, along with increased investments from China and various local nations. However, Pakistan’s energy crisis, political unrest, infrastructure bottlenecks, and the US-led financial crisis of 2007 – 2008, which stifled foreign investments, all hampered economic growth.

Figure 2: Foreign Direct Investment( percentage of GDP ) in Pakistan

Sources: Author’s unique, World Bank data

BoP limitations

The small investment and savings routine, which drains foreign currency from Pakistan’s resources, is to blame for the drop in imports. Also, Pakistan’s limited involvement in the international and regional economies is a major deterrent for foreign investors.

Lack of industrialisation reduces producers’ productivity and competitiveness, shifting local use preferences toward imported goods and increasing the trade gap. The ability to increase exports in the face of a steadily declining currency reflects the general lack of efficiency across sectors.

In comparison to other emerging markets, Pakistan’s export capacity is still sluggish. The treatment of Pakistan’s BoP will be significantly hampered by this, necessitating ongoing changes to bring it down to acceptable levels.

Pakistan appears to follow a BoP-constrained growth model, which predicts that any growth-rate development will be accompanied by an immediate decline in the physical balance. Adjusted for its BoP and structural parameters, the projected growth rate of the nation is 3.8 %.

Different trade and diplomatic measures must be taken in order to break free from this period. Readjusting trade ability, diversifying and growing the industry base, and prioritizing efficiency over profit subsidies are all important steps.

It’s important to take lessons from nations like the Philippines and Vietnam, which have outperformed Pakistan in terms of business accessibility. In order to spur economic growth and increase foreign exchange reserves, Pakistan may increase the range of exported goods beyond textiles and grain, improving industry openness.

In order to accomplish this, Pakistan should think about diversifying its international purchase ties beyond its existing allies, such as China, Saudi Arabia, the United States, Britain, and the U.A.E. Pakistan may increase capital outflows and improve its economic prospects by forging new diplomatic ties and building strong ones.

Pakistan’s economy is caught up in a vicious cycle of unequal BoPs, and any growth rate growth is accompanied by an ongoing decline in the exterior balance. Detailed business and diplomatic measures are required to overcome this obstacle.

By reviving its import power, diversifying its business center, and prioritizing performance, Pakistan can break free from this period.

Pakistan’s economic development will be aided by emulating successful models from nations like the Philippines and Vietnam and growing international funding alliances through effective politics. This will also strengthen foreign exchange reserves and lay the groundwork for long-term sustainable growth.

& nbsp, Debt ad Infinitum: Pakistan’s Macroeconomic Catastrophe is the title of an article by this author that is more in-depth.

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Malaysian analytics startup, UrbanMetry, recognized as 2023 Technology Pioneer by World Economic Forum

The list of 100 Technology Pioneers simply includes Indonesian companies.The objective is to make places better for everyone, green, and smarter.Leading estate data analytics firm UrbanMetry, based in Kuala Lumpur, Malaysia, was chosen as one of the” Technology Pioneers” by the World Economic Forum. The 2014-launched startup, led by Koh Cha-Ly(…Continue Reading

Pakistan’s struggle against currency depreciation

In October 2022, the Pakistani rupee showed promise by appreciating 3.9%, reaching 219.92 per US dollar. This positive trend was fueled by anticipated foreign-currency inflows from the International Monetary Fund (IMF) and foreign investors.

However, the Finance Ministry failed to foresee the ensuing volatility that would soon disrupt the market. Subsequently, in February 2023, the rupee experienced a sharp decline, hitting 275.5 per dollar and causing significant market disruption.

Currency crises have plagued economies since the 1960s because of fixed exchange rates under the Bretton Woods system. However, in the case of Pakistan, it was the inherent domestic structure of the economy, rather than the exchange-rate regime, that contributed to the rupee’s collapse.

The country found itself exposed to an increasingly volatile domestic situation, exacerbated by a fixed exchange rate, international tensions, and the impact of the Covid-19 pandemic. These factors pushed Pakistan into an inevitable currency crisis.

Figure 1:  Pakistani Rupee per US$ (2010-February 2023)

Source: Council on Foreign Relations

Rising prices of essential imports, including fuel, edible oil and pulses, have burdened the government, leading to an inflated current-account deficit and mounting fiscal challenges. This has resulted in cost-push inflation that has escalated the costs of inputs, making it unviable for local producers to continue production.

Adding to the predicament, Pakistan’s foreign-exchange reserves are rapidly dwindling, and with no visible assistance from the IMF in sight, the country’s citizens are confronted with a humanitarian crisis of significant proportions.

Persistently high current-account deficits (CADs) are unsustainable and often lead to major balance-of-payment (BoP) difficulties. A high CAD attracts speculators who anticipate a fall in forex reserves, leaving the central bank incapable of defending the currency.

Furthermore, the deleterious effect on the scale of indebtedness weakens the country’s finances, making it increasingly difficult to access international credit.

The removal of the ceiling on the dollar-rupee exchange rate in January was part of efforts to revive the IMF loan program. This move led to a significant decline in the rupee, reaching a record low.

The devaluation of the Pakistani rupee against other major currencies such as the US dollar, the euro and the Indian rupee has been an ongoing trend since early 2018 when the Pakistani unit transitioned from a managed exchange-rate system to a free-floating exchange rate against the dollar.

While IMF lending can provide temporary relief, Pakistan should exercise caution regarding excessive borrowing, as large capital inflows can undermine the viability of the BoP in the long run.

It is likely that the funds will be utilized to boost consumption and meet existing debt obligations rather than enhancing the productive capacity. Such utilization of funds does not add to the productive capacity, and the inefficiency leads to low returns.

In the long run, it becomes increasingly difficult to procure external funds as the failure to generate foreign exchange earning capacity establishes the country as a defaulter.

Crisis upon crisis

Hence any further debt taken on by the government should be utilized while paying acute attention to the productive capacity of the sectors.

The rupee has undergone a series of depreciations since 2021. It fell to 176 from 160 rupees against US dollar by the end of 2021. A major reason was the collapse of the banking system in neighboring Afghanistan after the withdrawal of US forces in August that year.

Pakistan’s reliance on imports for essential commodities further pressured the currency. In 2022, the devastating floods and political upheaval worsened the foreign-exchange crisis.

With exchange rates fluctuating in the 200-rupee range, Pakistan faces a struggling currency and subsequent increase in imports, leading to soaring inflation and rising poverty levels.

The Consumer Price Index (CPI) in Pakistan rose by 27.5% year on year in 2023, with an average inflation rate of 25.4% for the first seven months of the fiscal year 2022-23, compared with 10.3% during the corresponding period of the previous year.

Furthermore, Pakistan has been grappling with a severe wheat crisis, leading to hoarding and stampedes in some provinces as the government struggles to provide subsidized flour supplies at 160 rupees per kilogram.

The demand-pull inflationary tendencies have been at play due to high demand and low supply, with imports held up at ports, exacerbating the shortage of dollars in the country. This situation contributes to rising inflation and puts strain on consumers’ income and savings.

Figure 2: Pakistan’s National Headline Inflation (Y-o-Y) before and after Covid-19

Source: The World Bank

To combat rising inflation and stabilize the currency, the State Bank of Pakistan has increased the interest rate by 300 basis points, resulting in a cumulative increase of 1,050 basis points since January 2022. However, by early 2023, the country’s foreign-exchange reserves plummeted to a 10-year low of US$3.09 billion.

External debt repayments came to a halt, and import payments were suspended until appropriate fiscal measures were determined to address the dire situation.

In conclusion, Pakistan’s rupee volatility has been a tumultuous journey toward currency depreciation. The country’s inherent domestic structure, coupled with a fixed exchange rate, international tensions, and the Covid-19 pandemic, have pushed Pakistan into a currency crisis.

Rising prices of essential imports, persistent CADs, and dwindling forex reserves have further exacerbated the situation. It is crucial for Pakistan to exercise caution in managing its finances, avoid excessive borrowing, and focus on enhancing productive capacity to achieve long-term stability and economic growth.

A more detailed article by this author can be found here: Debt ad Infinitum: Pakistan’s Macroeconomic Catastrophe.

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The tech flaw that lets hackers control surveillance cameras

Hikvision cameraGetty Images

Chinese-made surveillance cameras are in British offices, high streets and even government buildings – and Panorama has investigated security flaws involving the two top brands. How easy is it to hack them and what does it mean for our security?

In a darkened studio inside the BBC’s Broadcasting House in London, a man sits at his laptop and enters his password.

Thousands of miles away, a hacker is watching everything he types.

Next, the BBC employee picks up his iPhone and enters the passcode. The hacker now has that, too.

A security flaw in the surveillance camera on the ceiling – manufactured by the Chinese firm Hikvision – means it’s now vulnerable to attack.

“I own that device now – I can do whatever I want with that,” says the hacker. “I can disable it… or I can use it to watch what’s going on at the BBC.”

CCTV camera can zoom on computer keyboard

Thankfully for the man being watched, the hacker is working with the BBC. This is part of a series of experiments by Panorama to test the security of some Chinese-made surveillance cameras.

Hikvision and Dahua are two of the world’s leading manufacturers of surveillance cameras.

Nobody knows how many of their units line the UK’s streets.

CCTV camera

Last year, the privacy campaign group Big Brother Watch attempted to find out. Between August 2021 and January 2022, it submitted 4,510 Freedom of Information requests to public bodies across the UK. Of 1,289 that responded, 806 confirmed they used Hikvision or Dahua cameras – 227 councils and 15 police forces use Hikvision, and 35 councils use Dahua.

Hikvision cameras are used to monitor many government buildings too – in a single afternoon in central London, Panorama found them outside the Department for International Trade, the Department of Health, the Health Security Agency, Defra and an Army reserve centre.

Security experts fear the cameras have the potential to be used as a Trojan horse to play havoc with computer networks, which in turn could spark civil disruption.

Prof Fraser Sampson, the UK’s surveillance camera commissioner, warns the country’s critical infrastructure – including power supplies, transport networks and access to fresh food and water – is vulnerable.

“All those things rely very heavily on remote surveillance – so if you have an ability to interfere with that, you can create mayhem, cheaply and remotely,” he says.

Charles Parton of the Royal United Services Institute (Rusi), a former diplomat who worked in Beijing, agrees: “We’ve all seen the Italian Job in our youth, where you bring the whole of Turin to a halt through the traffic light system. Well, that might have been fiction then, it wouldn’t be now.”

Hikvision told Panorama it is an independent company and is not a threat to UK national security.

“Hikvision has never conducted, nor will it conduct, any espionage-related activities for any government in the world,” it said, adding that its “products are subject to strict security requirements and are compliant with the applicable laws and regulations in the UK, as well as any other country and region we operate in”.

Panorama worked with US-based IPVM, one of the world’s leading authorities on surveillance technology, to test whether it was possible to hack a Hikvision camera. IPVM supplied the one that was installed in a BBC studio.

Panorama could not run the camera on a BBC network for security reasons – so it was put on a test network where there is no firewall and little protection.

The camera Panorama tested contains a vulnerability discovered in 2017. IPVM’s director Conor Healy describes this as “a back door that Hikvision built into its own products.”

Hikvision says its devices were not deliberately programmed with this flaw and it points out that it released a firmware update to address it almost immediately after it was made aware of the issue. It adds that Panorama’s test is not representative of devices that are operating today. But Conor Healy says more than 100,000 cameras online worldwide are still vulnerable to this issue.

As Panorama’s hacking experiment begins, Conor and IPVM’s research engineer John Scanlan are sitting behind laptops in their Pennsylvania headquarters.

The "hackers" prepare to carry out their experiment

Hacking a computer system without permission is a criminal offence – so Panorama is not providing all of the details of how they do it.

Healy and Scanlan start by locating the camera inside Broadcasting House, then go to work attacking its security.

Then Healy times how long it takes to seize control of it. Just 11 seconds later, Scanlan announces: “We have access to that camera now.”

They can now see inside the studio – including the Panorama employee on his laptop.

“If we zoom in tight on the keyboard, we can see clearly the keys that he’s pressing to put his password in,” Scanlan says.

“This is akin to a locksmith giving you a key to your home and the secretly making a master key for all of the locks in that community… that’s effectively what Hikvision engineers did.”

BBC iPlayer

From spy balloons to secret police stations and dissidents on the run, Panorama investigates China’s global surveillance operation. We reveal new details about Beijing’s fleet of spy balloons – and hack a Chinese-made security camera to show how similar devices that line our streets could be exploited.

Watch on BBC One at 20:00 (20:30 in Wales) on Monday 26 June – and afterwards on BBC iPlayer (UK only)

BBC iPlayer

Hikvision says its “products do not have a ‘backdoor'” and were not deliberately programmed with this flaw. It adds it believes that nearly all of the local authorities using their devices would have updated their cameras long before now.

Next, the hackers begin their second test – accessing Dahua’s cameras by infiltrating the software that controls them.

Two test cameras have been set up in IPVM’s headquarters. If the hackers are successful, they could take charge of an entire network of surveillance cameras.

Soon they find the software vulnerability. “There we go, we’re in,” says Healy.

Now they are inside the system, they can use a camera to eavesdrop.

“What a lot of people don’t realise about these cameras is that a large majority of them have microphones,” Healy explains, and while users often switch these off, it’s easy for hackers to switch them back on again – in effect, “wiretapping” the room.

Dahua says when it was made aware of the vulnerability late last year it “immediately conducted a comprehensive investigation” and quickly fixed the problem through “firmware updates”.

The company also says it is not state-backed and that its equipment could not interfere with the UK’s critical infrastructure. It adds: “These allegations are untrue and paint a highly misleading picture of Dahua Technology and its products.”

Prof Sampson

But experts say the UK needs to do more to protect itself from what Prof Sampson, the surveillance camera commissioner, describes as “digital asbestos”.

“We have a previous generation that has installed this equipment, largely on the basis that it was cheap and got the job done,” he says. “We’ve now realised that it has some serious and inherent risks – so what do we about it?”

Asked whether he trusts Hikvision and Dahua, he replies: “Not one bit.”

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PwC Australia: Accounting giant splits business after tax leak scandal

The PwC logo seen in the lobby of their offices in Barangaroo, Australia.Reuters

PwC Australia says it will sell its government business for A$1 ($0.70; £0.50) after a scandal over the misuse of confidential government tax plans.

The accounting giant has also announced the appointment of a new chief executive.

The move will allow the firm “to move forward with predictability and focus,” PwC Australia said in a statement.

In January, it emerged that a former PwC Australia partner had leaked the classified information.

The ex-partner, who was advising the Australian government, had shared drafts of corporate tax avoidance laws with colleagues, who used it to pitch to potential clients. The leaks occurred between 2014 and 2017.

The company has said that no confidential information had been used to help clients pay less tax.

However, politicians and officials have called for PwC Australia to be banned from being awarded government contracts until it satisfactorily responded to the scandal.

On Sunday, PwC Australia said it had appointed Kevin Burrowes as its new chief executive. He was previously PwC Network’s global clients and industries leader.

“He will work with his colleagues and management team to re-earn trust with PwC Australia’s stakeholders,” said Justin Carroll, the chair of PwC Australia’s governance board.

The company also said it would sell its Australian federal and state government business to private equity firm Allegro Funds, with the aim of reaching a binding agreement for the deal by the end of next month.

The sale will create two independent firms without any “disruption in vital services to public sector clients,” PwC Australia said.

In May, Tom Seymour, the previous chief executive of PwC Australia, stepped down after he admitted to being one of at least 67 recipients of the sensitive information at the centre of the scandal.

Later that month, the company put nine partners on leave and overhauled its governance board.

Australia’s Treasurer Jim Chalmers called the revelations a “shocking breach of trust”.

For the current financial year, the Australian government is committed to contracts with PwC worth A$255m, according to official data.

Since the scandal first emerged, major pension funds including AustralianSuper, as well as the country’s central bank, have said they would not sign any new contracts with PwC.

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Google, Microsoft rivalry supercharging the AI race

Microsoft and Google have recently made big investments in two of the most valuable companies in artificial intelligence (AI). OpenAI, which developed ChatGPT, has received a staggering investment of US$10 billion from Microsoft, while Google has invested $300 million in Anthropic.

The companies’ financial support for AI has pushed an ongoing rivalry into the public spotlight. Google’s struggle for dominance with Microsoft is increasingly at the forefront of discussions about AI’s future success.

Google has made enormous contributions to the field of AI development, including the invention of transformers – a particular form of machine learning, where an algorithm improves at tasks as it is “trained” on data – the advancement of techniques for automating the translation of languages and the acquisition of AI company DeepMind.

Although Google has consistently positioned itself at the forefront of AI development, a significant milestone was reached with the introduction of ChatGPT. California-based company OpenAI released ChatGPT in November 2022 and a more advanced version, GPT-4, was unveiled in February 2023.

The arrival of ChatGPT sparked widespread discussion about artificial general intelligence (AGI) – where machines surpass human intellect. This was also the focus of warnings by Geoffrey Hinton, an influential figure in AI, who gave several interviews outlining his concerns about the technology after resigning from Google earlier this year.

Consequently, the number of research papers focusing on large language models (LLMs) – the type of AI technology ChatGPT is based on – surged. Other AI research areas, such as dialogue systems and information retrieval, stand to lose out.

Amid this rapid technological disruption, it seems that Google fears losing its technological edge and market dominance.

Contradictory position?

This concern is not unwarranted. ChatGPT, made by a direct competitor, has made use of Google’s pioneering internet search techniques to generate significant profit. Furthermore, the flow of talent from Google to OpenAI – along with the latter’s rapid growth – has become a worrying trend for the search giant.

When OpenAI was founded, one of its principles was making software that was “open source”, where software is publicly available, allowing developers to share and modify it. Google, meanwhile, has maintained a relatively consistent commercial approach regarding its plans and ambitions.

However, OpenAI’s recent shift towards commercialism and closed-source practices seems to contradict its original corporate philosophy.

Representation of ChatGPt
ChatGPT has been successfully using search techniques pioneered by Google. Giulio Benzin / Shutterstock

Some industry insiders have criticized OpenAI for its somewhat contradictory posture. While it presents itself as a champion of open-source AI, it is undeniably a commercial entity, a fact it does not readily admit.

This tension between OpenAI’s public image and business realities has made the rivalry with Google even more intriguing.

One likely outcome of this competition is the continued evolution and refinement of AI technology, spurred by the need to stay ahead in the market. Google’s techniques, once exploited by OpenAI for commercial gain, will probably undergo further innovation.

This evolution will not only enhance the functionality of AI applications, but also greatly improve user experiences.

Yusuf Mehdi, corporate vice president at Microsoft, recently indicated that the company didn’t feel it necessary to overhaul the search landscape, as even a single point increase in market share represented a US$2 billion hike in value This strategic downsizing of their ambitions could be an attempt to lessen competitive pressures in the tech industry.

Stronger scrutiny

It’s worth noting that Microsoft’s association with OpenAI adds another layer to this complex rivalry. Google has also shown a willingness to invest in external AI projects to extend its influence.

For instance, the company’s investment in Anthropic, an AI research company, reflects Google’s strategy to maintain its technological lead through strategic partnerships.

One concern that resonates with many people, including me, is the potential for misinformation, disinformation and distortion created by ChatGPT. With over 200 million users, it serves around 2.53% of the global population.

Widespread disinformation on social media has significantly eroded trust in online content and reportedly influenced the 2016 US presidential election.

With such a vast user base for ChatGPT, it is conceivable that tech companies could manipulate conversations, subtly swaying users’ preferences and decisions in numerous ways. Therefore, the need for stronger scrutiny and regulation of these large language models is becoming increasingly urgent.

The welcome screen for the OpenAI “ChatGPT” app is displayed on a laptop screen on February 03, 2023 in London, England. Photo: Twitter / Leon Neal / Getty Images

Despite the growing competition over AI, Google remains a respected entity in the global tech industry. The AI rivalry between Google and Microsoft has driven both companies to push the boundaries of this technology, promising exciting advancements in the years to come.

The various strategies employed in this competition, from talent acquisition to strategic investments, reflect the significance of the stakes in the AI landscape. Specifically, acquiring top talent allows these companies to advance their AI capabilities, giving them a competitive edge.

Strategic investments, on the other hand, allow for diversification and expansion into new AI applications and sectors, increasing their influence and market share in the AI field. These actions underscore the high value and potential of AI technology in shaping our future.

Yali Du is Lecturer in Artificial Intelligence, King’s College London

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

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Tsai holds the key to a China tech revival

There’s a certain logic to Alibaba Group bringing back Joseph Tsai following his foray into owning the Brooklyn Nets basketball team.

The future of China’s most-watched tech player presents one of the most tantalizing jump-ball moments in global finance. Looked at one way, putting Tsai back into the game is a savvy move by Alibaba’s board.

The company’s leadership team seemed to decide that Daniel Zhang wasn’t the right chairman and CEO to execute a sweeping restructuring to split Alibaba into six separate units.

So who better to turn around the struggling e-commerce giant than Tsai as chairman and fellow co-founder Eddie Wu as chief executive officer?

Of course, only time will tell if pulling Tsai off the bench is the right decision. Some argue that Alibaba might do better with a new generation of leaders, not members of the old guard so close to founder Jack Ma.

Yet Alibaba’s ability to return to strong profitability looms in the background as Chinese Premier Li Qiang takes his first shots on the world stage.

This week, Chinese leader Xi Jinping’s No 2 is visiting Germany and France. The ostensible goal of Li’s first official foray abroad is to sell his China-is-back-in-business campaign and to stabilize ties with Europe’s top economic powers.

Looming in the background of every meeting, though, is Beijing’s perceived inhospitality toward multinational companies keen to harness China’s rise. The same goes for the Xi era’s tolerance for tech disruption at home.

This latter question has complicated foreign direct investment decisions since late 2020, when Team Xi pounced on Alibaba’s Ma.

Days after Ma criticized Beijing regulators for antiquated thinking in a Shanghai speech, the regulatory empire struck back. A planned November 2020 initial public offering by Ma’s Ant Group was scrapped.

Jack Ma has been in Chinese regulators’ crosshairs. Photo: AFP / Philippe Lopez

Xi’s move shocked global finance circles. Ma had long been the face of Chinese innovation, a regular presence on the Davos set whose spectacular success heralded the nation’s global tech ambitions. Ant’s IPO, which would have been the globe’s biggest ever, aimed to supersize the point.

Six years earlier, Alibaba’s splashy IPO in New York set the stage for China Inc’s internationalization. Only this time, Ma’s fintech outfit planned to sell about $37 billion in shares in Shanghai and Hong Kong. It would’ve signaled China’s arrival as a tech and finance titan.

The crackdown that followed was the ultimate economic buzzkill. After sidelining Ma, regulators turned their sights on Baidu, Didi Global, Tencent and others.

At the time, Xi’s government went after Alibaba for what it argued was monopolistic behavior. Since that period, Alibaba shares lost roughly 70%, killing more than half a trillion dollars of value.

China’s most watched company never quite got its groove back. Competition from companies like ByteDance Ltd and PDD Holdings didn’t help. Now, Alibaba also must work to regain market share in cloud services, which will now be Zhang’s focus.

The good news here is that the “transition enables Zhang to dedicate fully to cloud, as it is in the best position to embrace AI opportunities ahead,” says Jefferies analyst Thomas Chong. “We expect AI is a priority for all business lines of Alibaba.”

In a broader sense, though, Tsai taking the reins at Alibaba could play into Premier Li’s pitch that China is re-prioritizing private sector innovation while Beijing claims it wants to tame trade tensions with the US.

Here, Vey-Sern Ling, managing director at Union Bancaire Privee, speaks for many when he calls Alibaba “a China proxy” that can be “dragged down by geopolitics and China’s economy.”

As such, the board’s move to put Tsai in charge is a very big deal says analyst Rui Ma, founder of advisory Tech Buzz China. “Alibaba is constantly reshuffling its leadership, but rarely at the topmost level,” Rui says.

Adds Yale University law and history professor Taisu Zhang: “I suspect I’m not the only person surprised by Joe Tsai’s re-ascendancy at Alibaba in such uncertain times.”

Alibaba could become a global investor darling again. Image: Agencies

The biggest previous shakeup was in 2019, when Ma formally stepped away from Alibaba’s management. Tsai’s ascension suggests that Ma’s vision for where the company plans to head next is once again guiding Alibaba.

As such, says analyst Fawne Jiang at Benchmark Co, there’s reason to “believe that Joe’s takeover as the chairman should help to boost investors’ confidence.”

Brian Wong, an early Alibaba employee and former special assistant to Ma, told Bloomberg that Tsai’s rise is “exactly what an organization as big as Alibaba needs, and one that has international aspirations. He’s in a very good position, given his background and skills, to kind of play that role and really help bridge the company from China to the world, and vice versa, the world to China.”

Tsai will need to be all this and more as he tries to execute Alibaba’s plans to split its business into six separate units, the most radical restructuring in the company’s quarter-century history.

Each business group will have separate lines of management and will be empowered to raise outside funding and go public.

In March, when the plan was first announced, Alibaba said the shakeup is “designed to unlock shareholder value and foster market competitiveness.”

At the same time, analysts at S&P Global Rating argue that Alibaba’s earlier payment of a fine over alleged monopolistic behavior removes “a significant overhang” for Alibaba shares. The settlement, S&P concludes, “removes the possibility of more serious consequences.”

Analyst Zerlina Zeng at CreditSights notes that “we think that the corporate reorganization reduces the risk of cash burn for Alibaba to fund unprofitable business lines.”

Apart from Taobao & Tmall, most other Alibaba business units “are loss-making,” Zeng says. They include cloud services, food delivery arm Ele.ma, logistics arm Ampa and overseas e-commerce platforms like Lazada and AliExpress.

“We estimate that a large chunk of Alibaba’s capex and investments over the past few years were used to expand these business units,” Zeng says. “We expect the potential separate equity fund-raising (including IPOs) of these business units to help ease the cash burn for Alibaba, a credit positive in our view.”

All this gives Tsai space to reboot a corporate behemoth that’s had a decidedly rough few years. The stakes are even higher than that considering that Alibaba’s “split-up could also serve as a template for Alibaba’s peers” over time, notes Evercore ISI analyst Neo Wang.

Tsai, 59, is a Taiwan-born, US-educated innovator with a uniquely eclectic background. Along with buying a NBA basketball empire, Tsai was a key player in Manhattan commercial real estate, Hong Kong finance at Reorient Group Limited and more recently a blockchain and cryptocurrency enthusiast.

Premier Li’s inner circle was almost certainly consulted on Tsai’s taking over at Alibaba. Given Li’s own background with Alibaba, this could prove to be an intriguing partnership of sorts.

China’s newly-elected Premier Li Qiang takes an oath after being elected during the fourth plenary session of the National People’s Congress (NPC) at the Great Hall of the People in Beijing, China on March 11, 2023. Image: Pool / Twitter / Screengrab

In the 2010s, Li served as governor of Zhejiang province, where Alibaba is headquartered. Reportedly, Li was close to Ma. Hence the reasons why many observers think Li’s rise to the top of Beijing’s power pyramid augurs well for the high-tech sector’s return to economic prominence.

This is expected to be a key talking point that Li will advance in Europe. In Berlin on Monday, Li told German business executives that increased cooperation between China and Europe is vital to global prosperity.

Li and Chancellor Olaf Scholz voiced support for binding their economies more closely together and working to reduce climate change risks.

Li told reporters that “China and Germany, as two influential major powers in the world, should join hands to cooperate closely.” Beijing, he said, is keen on cooperating in sectors including manufacturing, electric vehicles and green finance.

Still, much of Li’s sales pitch in Europe is that, today’s economic challenges and Sino-US trade tensions aside, the future is bright for Chinese growth, innovation and foreign investment.

For a case in point, all Li needs to do is point to how Alibaba is raising its game – and, perhaps, offering pointers to other China Inc disrupters.

Follow William Pesek on Twitter at @WilliamPesek

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