To avoid a Ukraine quagmire, study the Iraq War

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Early in April 2023, Pentagon documents that were leaked revealed that the US is reportedly monitoring Russia’s intelligence operations and spying on Ukraine, giving its presence in the conflict in Ukraine a new dimension.

The documents reveal that the US continues to support Ukraine with military knowledge in addition to money and weapons against the Soviet invasion, even though it has never actually declared war on Russia.

The conflict between Ukraine and Russia and US presence have no clear end in sight. The US has participated in wars as a third party before, but this incident specifically brings to mind the Iraq War.

From the perspective of US foreign policy, the Iraq and Ukraine war differ significantly. In particular, thousands of American soldiers died fighting in Iraq, whereas the US has no ground forces there.

However, analyzing the Iraq War and its protracted aftermath can really aid in expressing worries about the United States” involved in extreme violence in another distant place.”

Below are three important things to know.

1. Success is not guaranteed by action.

Osama bin Laden, the rich Saudi Arabian Islamist who planned the attacks on September 11, 2001, was still at large when former US President George W. Bush declared the US had invade Iraq in 2003.

Although not directly related, bin Laden’s continued evasion of the US fueled a public resentment of hostile governments. Saddam Hussein in specific disobeyed the US and its supporters.

The Syrian authoritarian continued to avoid inspections by the International Atomic Energy Agency, a UN watchdog organization, giving the impression that he was in possession of WMD. As the cat-and-mouse sport continued, this infuriated the US and its allies.

According to reports, Bush was very worried that Saddam would attack the US with alleged WMDs, causing more damage than 9 / 11 did.

Iraq was invaded in March 2003 by a coalition of nations led by the US that also included the United Kingdom and Australia. As it came to be known, the” coalition of the willing” quickly triumphed and overthrew Saddam’s government.

Immediately following the invasion, Bush experienced a rise in social guidance, but as the war dragged on, his polls began to decline.

However, the US demonstrated a poor idea of the politics, world, and other significant facets of its own country that it had taken the initiative to occupy and then attempt to recover.

The Syrian Army’s disbandment in May 2003 was one of many decisions that revealed poor judgment and sometimes outright knowledge. With the abrupt departure of Kurdish security forces, there was a severe civil unrest.

2003: US Army troops in Baghdad. Photo: Commons Wikimedia

When the army was disbanded, rebellious violent soldiers emerged into the available. A civil war broke out in 2017 as a result of the fighting between various Kurdish groups getting worse.

Iraq is still politically unbalanced today and is no closer to becoming a republic than it was prior to the invasion.

2. 2. Specific grudges cannot support a war.

Saddam led an extravagant style during his 24-year rule, oppressing civilians and political rivals. In Iraq, he committed murder against Kurds. After being captured by US soldiers in 2006, Saddam was soon put to death by his own men.

Putin is even more serious and well-known. He has a lengthy history of violently oppressing his men, and he benefited from being in charge of one of the most corrupt governments in the world.

Additionally, he is in possession of weapons of mass destruction and has repeatedly threatened to use them against other nations. Additionally, US political leaders have directly targeted Saddam and Putin. It was clear well before the US entered the Iraq and Ukraine war that they were fixated on overthrowing these strange foes.

The United States’ support for Ukraine is natural given that it is engaged in a protective conflict that has resulted in horrifying civilian casualties. Supporting Ukraine also makes sense from the perspective of US regional security because it aids in retaliation against an interventionist Russia that is becoming more and more China-aligned.

However, I also think it’s crucial to keep US interest in this conflict within national interest.

3. It might split the nation.

The US’s serious politics over foreign policy increased as a result of the Iraq War. Additionally, current surveys of public opinion regarding the Iraq War reveal that the majority of Americans do not believe the war made the US any safer.

Today, the US is dealing with growing social reluctance to join the Ukraine battle, another costly overseas commitment.

According to surveys conducted in January 2023, more Americans believe the US is giving Ukraine too many aid in recent months. According to Pew Research Group, about 26 % of American adults believed that the US was over-investing in the Ukraine war in late 2022. However, the US employment was still supported by three-quarters of those polled.

The typical American has little to no knowledge of either Iraq or Ukraine. When US guidance for international wars increases in price and the threat of retaliation, especially through the use of tactical nuclear weapons, remains a chance, patience can probably run out.

Guide to Ukraine is probably going to get involved in the quickly intensifying conflict in Washington over the debt sky.

A combat-ready Russian guy. US Department of Defense image

On the other hand, adversaries like Russia, China, and Iran might feel motivated to act aggressively elsewhere if the US does not provide Ukraine with enough support to fight off Russian attacks and restore its independence.

The relation between the war in Iraq and Ukraine, in my opinion, makes it abundantly clear that the US administration should be very clear about the fundamental objectives of its national security to the American people when deciding how much and what kind of support it will provide to Ukraine.

Although most people think that Ukraine should be supported in its fight against Russian aggression, the Iraq War serves as a warning that original plan should not disregard the past.

Patrick James is the Dornsife dean’s professor of international relations at USC Dornsife College of Letters, Arts and Sciences.

Under a Creative Commons license, this article is republished from The Conversation. read the article in its entirety.

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How Twitter brought down Silicon Valley Bank

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Due to Silicon Valley Bank’s March 10, 2023, crash, investor discussions about the institution spiked on Twitter, which fueled the SVB banks run. These tweets also caused some financial institutions with poor balance sheets to collapse, as we explain in our latest working paper,” Public media as a lender run catalyst.”

The bank’s stock ticker,” SIVB ,” was mentioned in a significant number of tweets on March 9 around 9 am EST. Before posts mentioning” SVB” or” Silicon Valley Bank,” which were aspect of a more general-interest word, started, it had been about 2.5 years.

The rapid decline in the company’s share price on March 9 coincided with that spike in trader tweets, which persisted in after-hours trading and before the market opened the following morning. On March 10, the day the bank failed, trading in SVB’s property was halted.

We categorized US businesses, along with a number of other acquaintances, based on the volume of tweets that were sent about them and their susceptibility to potential bank runs.

We multiplied loses the bankers incurred as a result of the series of interest rate increases that started in March 2022 by the percentage of their payments that were below the Federal Deposit Insurance Corp. ‘ s security cap of US$ 250, 000 per account to determine risk.

We discovered that in March, stock of banks with significant Twitter engagement in January and February experienced significantly greater declines. The collection of institutions that were most vulnerable experienced a stronger impact. First Republic Bank was one of them, but it failed on May 1.

The one-third of businesses with the most posts saw drops in their share prices that were, on average, around twice as large as those of the other businesses when we examined what happened to the assets of all those with susceptible balance sheets between March 6 and March 13.

Why is it important?

Social marketing may have contributed to Silicon Valley Bank’s death, according to US politicians.

The Great Depression-era bank crisis is primarily responsible for the current understanding of bank functions. Back again, panic among banks customers was spread by word-of-mouth, media coverage, and social signals like lengthy lines outside of banks.

For US businesses, Silicon Valley Bank’s problems may be the tip of the iceberg. Screengrab, Twitter, and TechCrunch images

Since traditional media outlets primarily rely on one-way transmission from legal resources to the general public, the size of the reader and the quick spread of ideas set social media apart from newspapers and broadcast message.

Banks will undoubtedly continue to be concerned about this, especially in light of the problems that some financial institutions are currently experiencing.

What additional research is being conducted

Many of the ideas we raised in our documents were emphasized in a statement on SVB’s loss that the Federal Reserve released on April 28. It highlights SVB’s poor risk management and a sizable portion of Silicon Valley startup neighborhood savers, who are frequently very energetic and well-connected on social media.

Another group of academics, under the direction of Itamar Drechsler, a finance professor at the University of Pennsylvania, found that the subsequent rise in insured deposit accounts may weaken banks.

The development of perfectly modern businesses and mobile banking apps may increase this risk even more, according to ongoing research from a team of researchers at Columbia University and the University of Chicago.

What is unknown

According to reports, lenders who quickly withdrew money from SVB already used telephone calls, group email messages, Slack, and WhatsApp to express their worries.

However, since there is no content that is readily available to the public, it is difficult to determine what part those some, less formal dialogues played in causing the SVB bank run.

Tony Cookson is Associate Professor of Finance, University of Colorado Boulder and Christoph Schiller is Assistant Professor of Finance, Arizona State University

Under a Creative Commons license, this story has been republished from The Conversation. read the article in its entirety.

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First Republic collapse signals wider US bank ills

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First Republic Bank became the second-biggest bank failure in US history after the lender was seized by the Federal Deposit Insurance Corp. and sold to JPMorgan Chase on May 1, 2023. First Republic is the latest victim of the panic that has roiled small and midsize banks since the failure of Silicon Valley Bank in March 2023.

The collapse of SVB and now First Republic underscores how the impact of risky decisions at one bank can quickly spread into the broader financial system. It should also provide the impetus for policymakers and regulators to address a systemic problem that has plagued the banking industry from the savings and loan crisis of the 1980s to the financial crisis of 2008 to the recent turmoil following SVB’s demise: incentive structures that encourage excessive risk-taking.

The Federal Reserve’s top regulator seems to agree. On April 28, the central bank’s vice chair for supervision delivered a stinging report on the collapse of Silicon Valley Bank, blaming its failures on its weak risk management, as well as supervisory missteps.

We are professors of economics who study and teach the history of financial crises. In each of the financial upheavals since the 1980s, the common denominator was risk. Banks provided incentives that encouraged executives to take big risks to boost profits, with few consequences if their bets turned bad. In other words, all carrot and no stick.

One question we are grappling with now is what can be done to keep history from repeating itself and threatening the banking system, economy and jobs of everyday people.

S&L crisis sets the stage

The precursor to the banking crises of the 21st century was the savings and loan crisis of the 1980s.

The so-called S&L crisis, like the collapse of SVB, began in a rapidly changing interest rate environment. Savings and loan banks, also known as thrifts, provided home loans at attractive interest rates.

When the Federal Reserve under Chairman Paul Volcker aggressively raised rates in the late 1970s to fight raging inflation, S&Ls were suddenly earning less on fixed-rate mortgages while having to pay higher interest to attract depositors. At one point, their losses topped US$100 billion.

Paul Volcker in a file photo. Image: Twitter

To help the teetering banks, the federal government deregulated the thrift industry, allowing S&Ls to expand beyond home loans to commercial real estate. S&L executives were often paid based on the size of their institutions’ assets, and they aggressively lent to commercial real estate projects, taking on riskier loans to grow their loan portfolios quickly.

In the late 1980s, the commercial real estate boom turned bust. S&Ls, burdened by bad loans, failed in droves, requiring the federal government take over banks and delinquent commercial properties and sell the assets to recover money paid to insured depositors. Ultimately, the bailout cost taxpayers more than $100 billion.

Short-term incentives

The 2008 crisis is another obvious example of incentive structures that encourage risky strategies.

At all levels of mortgage financing – from Main Street lenders to Wall Street investment firms – executives prospered by taking excessive risks and passing them to someone else. Lenders passed mortgages made to people who could not afford them onto Wall Street firms, which in turn bundled those into securities to sell to investors. It all came crashing down when the housing bubble burst, followed by a wave of foreclosures.

Incentives rewarded short-term performance, and executives responded by taking bigger risks for immediate gains. At the Wall Street investment banks Bear Stearns and Lehman Brothers, profits grew as the firms bundled increasingly risky loans into mortgage-backed securities to sell, buy and hold.

As foreclosures spread, the value of these securities plummeted, and Bear Stearns collapsed in early 2008, providing the spark of the financial crisis. Lehman failed in September of that year, paralyzing the global financial system and plunging the U.S. economy into the worst recession since the Great Depression.

Executives at the banks, however, had already cashed in, and none were held accountable. Researchers at Harvard University estimated that top executive teams at Bear Stearns and Lehman pocketed a combined $2.4 billion in cash bonuses and stock sales from 2000 to 2008.

A familiar ring

That brings us back to Silicon Valley Bank.

Executives tied up the bank’s assets in long-term Treasury and mortgage-backed securities, failing to protect against rising interest rates that would undermine the value of these assets. The interest rate risk was particularly acute for SVB, since a large share of depositors were startups, whose finances depend on investors’ access to cheap money.

When the Fed began raising interest rates last year, SVB was doubly exposed. As startups’ fundraising slowed, they withdrew money, which required SVB to sell long-term holdings at a loss to cover the withdrawals. When the extent of SVB’s losses became known, depositors lost trust, spurring a run that ended with SVB’s collapse.

Silicon Valley Bank’s troubles could be the tip of the iceberg for US banks. Image: Screengrab / Twitter / TechCrunch

For executives, however, there was little downside in discounting or even ignoring the risk of rising rates. The cash bonus of SVB CEO Greg Becker more than doubled to $3 million in 2021 from $1.4 million in 2017, lifting his total earnings to $10 million, up 60% from four years earlier. Becker also sold nearly $30 million in stock over the past two years, including some $3.6 million in the days leading up to his bank’s failure.

The impact of the failure was not contained to SVB. Share prices of many midsize banks tumbled. Another American bank, Signature, collapsed days after SVB did.

First Republic survived the initial panic in March after it was rescued by a consortium of major banks led by JPMorgan Chase, but the damage was already done. First Republic recently reported that depositors withdrew more than $100 billion in the six weeks following SVB’s collapse, and on May 1, the FDIC seized control of the bank and engineered a sale to JPMorgan Chase.

The crisis isn’t over yet. Banks had over $620 billion in unrealized losses at the end of 2022, largely due to rapidly rising interest rates.

The big picture

So, what’s to be done?

We believe the bipartisan bill recently filed in Congress, the Failed Bank Executives Clawback, would be a good start. In the event of a bank failure, the legislation would empower regulators to claw back compensation received by bank executives in the five-year period preceding the failure.

Clawbacks, however, kick in only after the fact. To prevent risky behavior, regulators could require executive compensation to prioritize long-term performance over short-term gains. And new rules could restrict the ability of bank executives to take the money and run, including requiring executives to hold substantial portions of their stock and options until they retire.

The Fed’s new report on what led to SVB’s failure points in this direction. The 102-page report recommends new limits on executive compensation, saying leaders “were not compensated to manage the bank’s risk,” as well as stronger stress-testing and higher liquidity requirements.

It comes down to this: Financial crises are less likely to happen if banks and bank executives consider the interest of the entire banking system, not just themselves, their institutions and shareholders.

Alexandra Digby is Adjunct Assistant professor of Economics, University of Rochester; Dollie Davis is Associate Dean of Faculty, Minerva University, and Robson Hiroshi Hatsukami Morgan is Assistant Professor of Social Sciences, Minerva University

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

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FA Sustainable Finance Forum: Top Five Takeaways

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In terms of sustainable development goals (SDG), business and investment have long and difficult journeys ahead.  Sobering figures from a draft report published by the United Nations (UN) last month reveal that at the end of 2022, just 12% of the SDGs were on track to meet their 2030 targets.

“It’s time to sound the alarm,” the report warned.

“At the mid-way point on our way to 2030, the SDGs are in deep trouble. A preliminary assessment of the roughly 140 targets with data show only about 12% are on track.”

“Close to half, though showing progress, are moderately or severely off track and some 30% have either seen no movement or have regressed below the 2015 baseline.”

The audience at FinanceAsia’s recent Sustainable Finance Asia Forum on April 18 heard that although there is plenty of road to make up on the journey to net zero, so too is there substantial opportunity. 

ESG imperatives are changing the way institutional investors approach decision-making, develop sustainable products and operate within new regulatory frameworks.

While the over-arching message of the forum underlined that sustainable goals and driving yield are not inimical, how exactly institutions approach sustainable finance will shape the future.

The following are FA’s top five takeaways from a forum focussed on these frameworks.

***

1. Creativity is key

While sufficient capital may be out there to bootstrap transitional finance in Asia – a region that is bearing the physical brunt of climate change – getting it where it needs to go in emerging markets (EMs) is not working at the scale and speed necessary to effect change.

Emily Woodland, head of sustainable and transition solutions for APAC at BlackRock, told a forum panel exploring the state of play of Asia’s SDG commitments that, as well as climate and transition risks, investors also face the common-or-garden risks that come from operating in EMs.

“There are the general risks of operating in these markets as well – that’s everything from legal, to political, to regulatory to currency considerations,” she said. 

“Where finance can help develop new approaches, is around alleviating risks to attract more private capital into these innovation markets, and this is where elements like blended finance come into play.”

To make emerging market projects bankable, de-risking tools are urgently needed.

“That means guarantees, insurance, first loss arrangements, technical assistance which can help bring these projects from being marginally bankable into the bankable space, offering the opportunity to set up a whole ecosystem in a particular market.”

2. Regulation drives change

As investment in sustainable development goals moves from the fringe to the mainstream, institutions are bringing with them experience and learnings that are accompanied by policy, regulation and clear frameworks from regional governments.

Institutions are being asked to lead mainstream investment in the space as increasingly, investment in ESG becomes a viable funding choice.

“The next phase, which is the forever phase, will be when sustainability becomes mandatory rather than just a choice,” Andrew Pidden, Global head of sustainable investments at DWS Group told the forum.

“In the future, you will not be able to make an investment that has not been subject to due diligence with a view to doing no harm – or at least to doing a lot less harm than it is going to supply.”

“People may think this is never going to happen, but people thought this phase (of ESG investment becoming mainstream) was never going to happen 10 or 15 years ago.”

3. China is an ESG bond behemoth

Make no mistake, China is an ESG debt giant. Assets in China’s ESG funds have doubled since 2021, lifted by Beijing’s growing emphasis on poverty alleviation, renewable power and energy security.

According to Zixiao (Alex) Cui, managing director CCX Green Finance International, in 2022, green bond issuance volume alone totalled about RMB 800 billion ($115.72 billion), marking a 44% increase year-on-year (YoY). In the first quarter of 2023, there were 113 green bond issuances worth almost RMB 20 billion.

“Actually, this number decreased compared to last year because right now in the mainland, the interest rate for lending loans from banks is very low so there’s really not much incentive to issue bonds,” he told the audience during a panel on the latest developments in Chinese ESG bonds and cross-border opportunities.

“But over the long term, I think we are on target to achieve a number no less than last year.”

At the heart of this momentum is China’s increasingly ESG positive regulation.

“Policy making is very critical because in the mainland, we have a top-down governance model mechanism which has proven effective in terms of scaling up the market – especially on the supply side.”

4. Greenwashing depends on your definition

When is greenwashing – the overstating of a company’s or product’s green credentials – technically measurable, and when is it a matter of opinion?

Gabriel Wilson-Otto, head of sustainable investing strategy at Fidelity International, told a panel addressing greenwashing and ESG hypocrisy issues, that these transparency and greenwashing concerns are often problems of definition.

“There is a bit of a disconnect between how these terms are used by different stakeholders in different scenarios,” he says.

On one side, is the argument around whether an organisation is doing what it says it is, which involves questions of transparency and taxonomy.

“In the other camp there’s the question of whether the organisation is doing what’s expected of it. And this is where it can get incredibly vague,” he explained.

Problems arise when interests and values begin to overlap.

“Should you, for instance, be investing in a tobacco company that’s aligned to a good decarbonisation objective? Should you pursue high ESG scores across the entire portfolio?” he queried.

“Depending on where you are in the world, you can get very different expectations from different stakeholders around what the answer to these sub-questions should be.”

5. Climate is overtaking compliance as a risk

While increased ESG regulation means that companies must take compliance more seriously, this is not the only driver. According to Penelope Shen, partner at  Stephenson Harwood, there is a growing understanding that climate risks are real.

“The rural economic forum global risk survey shows that the top three risks are all related to financial failure directly attributable to climate risk and bio-diversity loss,” she highlighted during a panel called ‘ESG as a component of investment DNA and beyond?’

“In fact, if you look at the top 10 risks, eight of them are climate related.”

The prominence of climate as a risk factor has consistently ranked top of the survey over the past 10 years, she explained.

“Other more socially related factors such as cost of living and erosion of social cohesion and societal polarisation are also risks that have consistently ranked highly,” she noted.

What’s your view on the outlook for green, social and sustainable debt in 2023? We invite investors and issuers across APAC to have your say in the 6th annual Sustainable Finance Poll by FinanceAsia and ANZ.

¬ Haymarket Media Limited. All rights reserved.

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Citi appoints new Malaysia CEO

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Citi has appointed Vikram Singh as new CEO of its Malaysian business, effective from May.

A spokesperson for the bank told FinanceAsia that Singh had already relocated to Kuala Lumpur for the new role, which will see him prioritise growth across the market franchise.

In his new capacity, Singh reports to Amol Gupte, head of South Asia and the Asean region, and takes responsibility for the full suite of the bank’s activities in Malaysia. This includes oversight of the performance of Citi’s Solutions Centres in Kuala Lumpur and Penang, which support its wider banking operations in over fifty countries.

Singh has served across a number of Citi’s core divisions to date. He started his career with the bank 24 years ago working across its India-based business, in posts located in Mumbai, Bengaluru and New Delhi. Most recently, he was head of Asia Pacific Regional Account Management, managing coverage of global subsidiary clients operating in the region, from Singapore. 

A release shared with media pointed to Singh’s particular expertise leading the bank’s Corporate and Investment Banking effort in the Philippines over a period of five years, during which he devised robust business strategies that went on to achieve double-digit revenue growth.

“Vikram’s long career and experience with the firm will be invaluable in leading the next stage of growth in a market that also supports many of our global businesses and functions,” Gupte said in the announcement.

Citi established a presence in Malaysia 64 years ago. In January 2022, the bank announced plans to sell its consumer franchise in four Asean markets including Malaysia, to United Overseas Bank (UOB). The deal finalised in November 2022, bringing the bank regulatory capital benefits of approximately $1 billion. 

Offering an update on the bank’s performance in the market following the divestiture, the spokesperson told FA, “We continue to see good client activity across our institutional businesses.” He noted “good growth and client work”.

Elaborating on the current opportunities that Malaysia presents, the contact pointed to varied growth avenues across investment and corporate banking, as well as within the bank’s trade and treasury business, such as hedging.

“Across our institutional businesses from Banking, Markets and Services, we see opportunities to support both local and multinational corporate (MNC) clients further.”

The spokesperson added that the bank has recruitment plans around Singh’s appointment to support client-led growth. 

¬ Haymarket Media Limited. All rights reserved.

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Enter Australia in the laser weapon race

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For those who aren’t gamers,” God mode” is a method of operation( or cheat ) included in some shoot-related games. You always run out of ammunition and are impervious to harm in God manner.

Of course, there is no God way in real life, but the military organizations around the world are very interested in weapons that resemble it, such as laser and additional” directed energy arms.” For instance, directed energy projects cost the US government close to$ 1 billion annually.

The argument is not unique to Australia. A directed power weapon system was required by the 2020 Force Structure Plan to be” capable of defeating armoured vehicles up to and including key battle tanks.”

The latest directed energy screening range for American business AIM Defence was introduced in March of this year on the fringes of Melbourne by Deputy Prime Minister Richard Marles. The Defense Science and Technology team announced a$ 13 million( US$ 8.6 million ) contract with European defence technology firm QinetiQ to create an initial protective light in April.

The new A$ 3.4 billion Advanced Strategic Capabilities Accelerator ( ASCA ) program places a high priority on directed energy technology.

Large quantities of electromagnetic energy are concentrated on a far-off goal by an energy tool that is directed. Light( a laser ) may be used to generate this energy, but microwaves or radio waves may also be employed.

We’ll focus on laser-based directed power weapons for the sake of conciseness, but the same can be said for other types of arms.

These arms may harm the sensitive digital systems that control devices and the people who use them, melt or burn stronger equipment, or both, depending on how much power is focused on the destination.

A black and white photo of a metal missile shell on a stand, appearing to explode.
In the 1980s, the US tested empirical light weapon systems. AP via The Conversation, a portrait

Magnetic waves are significantly faster than even the fastest conventional arms because they move at the speed of light.

Consider a hypersonic missile that is moving 10 kilometers off at ten years the speed of sound. By the time the directed light power from a high-power light reached the goal, it would have only moved in 10 meters.

Additionally, these arms never run out of ammunition because they project easy rather than weapons. Additionally, this implies that the weapon’s weapons does not need to be produced in a shop.

Directed power moves in a straight line because it is not affected by inertia like rockets and bullets. This makes target and aiming simpler and more trustworthy.

Additionally, directed energy arms have less chance of hitting near objects or sending debris flying because they cause problems by heating up a destination area.

Although directed energy arms have all these benefits over conventional weapons, it has proven challenging to construct good ones.

The enormous power needed to eradicate practical targets like missiles is one issue that laser weapons face. This dimension of object needs beams with hundreds of kilowatt or even megawatts of energy to be destroyed. We would need five years as much power to run these systems because they are only about 20 % appropriate.

Here, we are also into watt country, which is the amount of power a small city uses. Sometimes portable directed energy systems are enormous because of this.

Although devices with capacities up to 300kW have been developed, the US has just recently been able to produce a fairly low-power 50kW light small that is suitable for use on an armored vehicle.

A photo of an armoured vehicle
A 50kW light product mounted on an armoured vehicle is known as the US’s directed energy maneuver-short range air defense, or DE M-SHORAD. Jim Sheppard from the US Army via The Conversation

Additionally, the exquisite photonic equipment that produces the light very quickly needs to be freed of all that fire, or it will harm the light itself. Although laser technologies with more effective heat transfer have steadily increased the amount of light energy that can be effectively produced, this has proven to be challenging.

Dealing with for large amounts of energy also has the unintended consequence that any flaws in the visual techniques used to center and direct the light could easily harm the laser procedure catastrophically.

Additionally, it is difficult to direct a laser through atmospheric volatility, sand, or rain to an area the size of 10 cent pieces tens of kilometers away. The simple challenges become clear when you consider how challenging it is to maintain the energy in the same area on a fast-moving destination for tens of seconds.

Having said that, systems to get around all of these challenges are still being developed.

But let’s say that all of the specialized issues with directed power weapons are resolved. Even now, there will be vital infrastructure and supply chain challenges in order to manufacture them in large quantities.

There are businesses in Australia that have the knowledge to produce for gadgets. However, an industrial strength for the processing of the required laser diodes and high-quality optics, which does not occur in Australia, is required to develop and mass-produce directed energy weapons.

We will need to create such industries if we want to have” royal capability”— the ability to produce these weapons without relying on outside sources.

This is a costly and time-consuming invest in national network. In times of peace, it is relatively simple to obtain the basic materials for a directed energy weapon from abroad; however, in time of major conflict, nations that can produce these devices are likely to do so for their special needs.

Australia and many other nations will continue to be interested in developing directed energy arms due to their significant military benefits and the effects of an enemy possessing them.

However, as recent nuclear submarine policy decisions have demonstrated, it is not simple to quickly create an technological capability in technologies that our commercial base has up until now completely disregarded.

Sean O’Byrne is Associate Professor, Deputy Head of School (Research), School of Engineering and Information Technology, UNSW Canberra, UNSW Sydney

Under a Creative Commons license, this article is republished from The Conversation. read the article in its entirety.

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US Fed weighs mixed signals in next crucial rate call

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Is the Federal Reserve finished raising interest rates now that inflation has decreased and the US market has cooled? After all, the central bank’s goal when it started jacking up prices more than a year later was to gradually lower the direction of prices without crashing the economy.

According to data released on April 27, 2023, the gross domestic product— the most comprehensive indicator of an economy’s output — expanded at a rate of just 1.1 % annually in the first quarter, down from 2.6 % during the last three months of 2022. Additionally, the most recent customer premium data from March indicates that inflation is slowing to 5 % annually, which is the lowest level in about a year.

However, the Fed hasn’t most finished raising rates just yet, which is bad news for consumers and businesses who are tired of skyrocketing borrowing costs. When the Fed meets for a two-day meet that ends May 3, 2023, commercial businesses are forecasting another quarter-point increase. Additionally, there might be additional changes in the future.

But this does bring up another crucial question: Is the Fed getting close to creating the” soft landing” it’s been hoping for with all the recent, frequently contradictory data and narratives about inflation, bank failures, and layoffs in the tech sector?

The market oscillates between zigzags.

The GDP facts offers some hints to the solution despite being a mixed bag.

Ultimately, the most recent GDP figures point to a good economic slowdown in the future, which is largely attributable to an increase in inventories, meaning that rather than ordering new goods, businesses are relying more on items that are already in storage.

Companies appear to be more likely to sell what is already available than to purchase different goods, probably in anticipation of a decline in consumption. Additionally, business investment fell 12.5 % during the quarter.

Consumer spending, which makes up about two-thirds of GDP, increased at a healthy 3.7 % rate at the same time that investment in machinery like computers and robotics increased by 11.2 %. However, this category is quite volatile and could easily change in the coming quarters.

A decline, such as a decrease in new purchases for manufactured goods, is also indicated by some data. This, along with the decrease in stock in the GDP report, may imply that companies are bracing themselves for a decline in consumer demand for goods and services.

Job openings have been declining when we consider the labor market, despite the fact that job growth has been strong( 334, 000 over the past six months ). According to the Bureau of Labor Statistics, holes decreased to about 9.9 million as of February 2022 from a peak of around 12 million.

Is the price of prices high or low?

We can also see opposing figures in terms of prices.

Since its peak in June 2022 at 9.1 %, the headline consumer price index has in fact been steadily declining. The Fed’s preferred solution of inflation, the primary preferred eating index, has nevertheless remained obstinately elevated.

The index, which excludes volatile food and energy prices, was up 4.6 % in March from a year earlier and has barely budged in months, according to the most recent data, released on April 28, 2023.

a grocery store in Washington, DC, selling fruits and vegetables. AFP portrait by Brendan Smialowski

However, wages increased at an annual 5.1 % in the first quarter, also in line with data released on April 28. Income, when rising, can have a significant upward thrust on price. Even though it’s down from its 5.7 % peak in the second quarter of 2022, wage growth is still moving at the fastest rate in at least 20 years.

More excursions are coming.

What does all of this mean for the Fed’s interest rate policy, then?

The market chances strongly favor another 0.25 amount stage increase, making it the 10th straight increase since March 2022, when the next meeting is scheduled to start on May 3.

The central bank is probably not finished raising rates because the inflation rate is still well above the Fed’s target of about 2 %, along with continued job growth and a low unemployment rate. I concur with the competition conflict pricing for a quarter-point increase for the meeting in May. Future content will direct any rate increases that come after that.

The good news is that, in my opinion, the higher price changes have historically occurred.

landing gently, or at least slowly

That brings us full circle to the crucial query: How near is the Fed to implementing a soft landing in which the US business is able to control inflation without erupting?

Unfortunately, it’s also soon to tell. Political and international functions, such as potential impasse on debt ceiling deals or further escalation of the Ukraine combat, you turn things upside down. Work businesses can be very unstable. Having said that, a development or mild recession is what we are anticipating.

What makes them different? A growth recession indicates a poor economy, but not enough to cause unemployment to rise drastically. This is preferable to an even mild recession that results in multiple quarterly GDP declines and significantly higher unemployment.

Simply put, we are unsure of which is more plausible. However, I believe that a severe downturn has been avoided, barring any fatal and unexpected events.

Christopher Decker, Professor of Economics, University of Nebraska Omaha

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Welcome to the age of AI inequality

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On November 30, 2022, OpenAI launched the AI chatbot ChatGTP, making the latest generation of AI technologies widely available.

In the few months since then, we have seen Italy ban ChatGTP over privacy concerns, leading technology luminaries calling for a pause on AI systems development, and even prominent researchers saying we should be prepared to launch airstrikes on data centers associated with rogue AI.

The rapid deployment of AI and its potential impacts on human society and economies is now clearly in the spotlight.

What will AI mean for productivity and economic growth? Will it usher in an age of automated luxury for all, or simply intensify existing inequalities? And what does it mean for the role of humans?

Economists have been studying these questions for many years. My colleague Yixiao Zhou and I surveyed their results in 2021, and found we are still a long way from definitive answers.

The big economic picture

Over the past half-century or so, workers around the world have been getting a smaller fraction of their country’s total income.

At the same time, growth in productivity – how much output can be produced with a given amount of inputs such as labor and materials – has slowed down. This period has also seen huge developments in the creation and implementation of information technologies and automation.

Better technology is supposed to increase productivity. The apparent failure of the computer revolution to deliver these gains is a puzzle economists call the Solow paradox.

Will AI rescue global productivity from its long slump? And if so, who will reap the gains? Many people are curious about these questions.

While consulting firms have often painted AI as an economic panacea, policymakers are more concerned about potential job losses. Economists, perhaps unsurprisingly, take a more cautious view.

Radical change at a rapid pace

Perhaps the single greatest source of caution is the huge uncertainty around the future trajectory of AI technology.

Compared to previous technological leaps – such as railways, motorized transport and, more recently, the gradual integration of computers into all aspects of our lives – AI can spread much faster. And it can do this with much lower capital investment.

This is because the application of AI is largely a revolution in software. Much of the infrastructure it requires, such as computing devices, networks and cloud services, is already in place.

There is no need for the slow process of building out a physical railway or broadband network – you can use ChatGPT and the rapidly proliferating horde of similar software right now from your phone.

A photo of a phone showing ChatGPT on the screen.
Unlike great technological innovations of the past, many AI tools will be instantly available to anyone with an internet connection. Photo: Shutterstock via The Conversation

It is also relatively cheap to make use of AI, which greatly decreases the barriers to entry. This links to another major uncertainty around AI: the scope and domain of the impacts.

AI seems likely to radically change the way we do things in many areas, from education and privacy to the structure of global trade. AI may not just change discrete elements of the economy but rather its broader structure.

Adequate modeling of such complex and radical change would be challenging in the extreme, and nobody has yet done it. Yet without such modeling, economists cannot provide clear statements about likely impacts on the economy overall.

More inequality, weaker institutions

Although economists have different opinions on the impact of AI, there is general agreement among economic studies that AI will increase inequality.

One possible example of this could be a further shift in the advantage from labor to capital, weakening labour institutions along the way. At the same time, it may also reduce tax bases, weakening the government’s capacity for redistribution.

Most empirical studies find that AI technology will not reduce overall employment. However, it is likely to reduce the relative amount of income going to low-skilled labor, which will increase inequality across society.

Moreover, AI-induced productivity growth would cause employment redistribution and trade restructuring, which would tend to further increase inequality both within countries and between them.

As a consequence, controlling the rate at which AI technology is adopted is likely to slow down the pace of societal and economic restructuring. This will provide a longer window for adjustment between relative losers and beneficiaries.

In the face of the rise of robotics and AI, there is a possibility for governments to alleviate income inequality and its negative impacts with policies that aim to reduce inequality of opportunity.

What’s left for humans?

The famous economist Jeffrey Sachs once said

What humans can do in the AI era is just to be human beings, because this is what robots or AI cannot do.

But what does that mean, exactly? At least in economic terms?

In traditional economic modeling, humans are often synonymous with “labor”, and also being an optimizing agent at the same time. If machines can not only perform labor, but also make decisions and even create ideas, what’s left for humans?

A close up photo of an eye with a bright white halo around the pupil.
What’s so special about humans? Economists are still working on that one. Photo: Arteum.ro / Unsplash via The Conversation

The rise of AI challenges economists to develop more complex representations of humans and the “economic agents” which inhabit their models.

As American economists David Parkes and Michael Wellman have noted, a world of AI agents may actually behave more like economic theory than the human world does.

Compared to humans, AIs “better respect idealized assumptions of rationality than people, interacting through novel rules and incentive systems quite distinct from those tailored for people.”

Importantly, having a better concept of what is “human” in economics should also help us think through what new characteristics AI will bring into an economy.

Will AI bring us some kind of fundamentally new production technology, or will it tinker with existing production technologies? Is AI simply a substitute for labor or human capital, or is it an independent economic agent in the economic system?

Answering these questions is vital for economists – and for understanding how the world will change in the coming years.

Yingying Lu is Research Associate, Center for Applied Macroeconomic Analysis, Crawford School of Public Policy, and Economic Modeller, CSIRO

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What China gains as Ukraine peacemaker

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After more than a year of no direct communication, the Chinese president, Xi Jinping, and Ukrainian president, Volodymyr Zelensky, had a phone conversation on April 26, 2023.

According to the Chinese record of the call, “the two sides exchanged views on China-Ukraine relations and the Ukraine crisis”, but globally it was seen as an attempt by Beijing to step in as peacemaker.

Meanwhile, Zelensky tweeted that he “had a long and meaningful phone call” with Xi, and later expanded on his Telegram channel saying that particular attention was “paid to the ways of possible cooperation to establish a just and sustainable peace for Ukraine”.

The most concrete outcome of the call is Xi’s confirmation that China will appoint a special representative on Eurasian affairs to Ukraine “to have in-depth communication with all parties on the political settlement of the Ukraine crisis.”

If nothing else, this signals that China is getting serious with its mediation efforts and judges the time to be right for this, not least because of increasing tensions in the Western alliance and doubts about the success of a Ukrainian counteroffensive.

China’s move is another indication of a changing international order that Beijing is keen, and increasingly able, to shape. What is immediately at stake for China is its relationship with the EU. For the EU’s member states, the war in Ukraine, including a possible further escalation, is of much more acute security concern than it is for China.

European officials have repeatedly urged Beijing to use its influence over Moscow to “bring Russia to its senses”, as French President Emmanuel Macron put it on his recent visit to China.

Other senior EU officials, from European Commission President Ursula von der Leyen to European Council President Charles Michel and the EU’s high representative for foreign affairs Josep Borrell have similarly left no doubt that China’s stance on the war in Ukraine will shape the future of EU-China relations. Given how important the EU and China are for each other economically, both sides have an interest in a stable and constructive relationship.

China-EU relations are, of course, part of a bigger picture of relations between China and the West. Yet even here, there are some signs of a possible opening. US treasury secretary Jane Yellen acknowledged that “negotiating the contours of engagement between great powers is difficult” but also noted that Beijing and Washington “can find a way forward if China is also willing to play its part.”

The Xi-Zelensky phone call fits into a careful and fragile choreography of moves that might gradually see a more effective management of the war in Ukraine that would, initially, prevent further escalation and eventually pave the way toward a settlement.

While it would not resolve all of the contentious issues in China-West relations, it would remove one particularly problematic issue from the list of immediate concerns.

A soldier returning fire in Bakhmut, Ukraine.
President Xi is now appointing a special envoy to Ukraine as part of moves from China to push forward peace talks. Photo: Reuters / Alamy via The Conversation

At the same time, China needs Russia as leverage in its great power competition with the West, and Xi is unlikely to abandon his partnership with Putin. But China also needs a Russia that is more controllable, and this means China needs an end to the war in Ukraine, which still has the potential to escalate further.

By reining in Russia over Ukraine, Xi can firmly establish China as an indispensable guarantor of sustainable security and stability in Europe.

Risks for the West

If the Chinese initiative is given the benefit of the doubt in Brussels and Washington and gains traction in Kyiv and Moscow, it gives Beijing a major opportunity to begin shaping a new Eurasian security order. While the West may be able and willing to contain the Kremlin militarily and isolate Russia economically, Xi will have a major role to play in managing Putin politically.

In other words, Beijing’s calculation may well be that for Europe to regain a measure of stability and security, China’s cooperation will be essential. This does not diminish the importance of the transatlantic security relationship embodied by NATO, but it would mean an acknowledgment of the fundamentally changed dynamics of the European order and the far more critical role of China within it.

Bringing about a negotiated end to the war in Ukraine may take some time and require more than just Beijing’s mediation. But even an end to the fighting in Ukraine in the form of a stable ceasefire could benefit China. Such an intermediate outcome would make it more likely, for example, that the Black Sea deal, which allows Ukraine to export its grain, would be extended again, easing the global food crisis.

A Black Sea Grain Initiative shipment at sea. Image: UNCTAD

This would consolidate China’s influence and leadership in the developing world, further cementing its status as an important power broker in the new bipolar order sketched out in a 2019 white paper China and the World in the New Era.

Building a new international order

While China’s more open engagement in mediation efforts to end the war in Ukraine could significantly advance Beijing’s vision of a new international order, it is not without risks for Xi.

As Zelensky noted in his call with Xi, the “territorial integrity of Ukraine must be restored within the 1991 borders.” Russia’s predictable reaction, delivered by foreign ministry spokeswoman Maria Zakharova, was to accuse Ukraine of linking its willingness to negotiate “with ultimatums containing … unrealistic demands.”

Ultimately, the question for Beijing, which has consistently affirmed its support for the international norms of sovereignty and territorial integrity, becomes whether it can find a way to square the circle between Moscow’s internationally isolated insistence that its illegal war and land grab in Ukraine be recognized and Kiev’s demand that its borders not be subject to change by force.

This is a fundamental question for European and global order, and since the 1975 Helsinki Final Act the inviolability of borders was the foundational principle of European security.

Whatever the fate of China’s mediation efforts in the war are, they will be a major test of the skill and leverage that Chinese diplomats have and they will be an indication of how China intends to play its future role in a re-imagined Eurasia.

Stefan Wolff is Professor of International Security, University of Birmingham and Tetyana Malyarenko is Professor of International Relations, Jean Monnet Professor of European Security, National University Odesa Law Academy

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US and South Korea reach nuclear weapons deal

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The United States and South Korea have unveiled an agreement under which leaders in Seoul will be handed an enhanced role in planning any nuclear response to a strike in the region by North Korea.

Announced at a state visit to Washington by South Korean President Yoon Suk Yeol on April 26, 2023, the so-called “Washington Declaration” will see US deployments of “strategic assets” around the Korean Peninsula, including an upcoming visit by a nuclear submarine. The last time the US had nuclear weapons in South Korea was in 1991.

Sung-Yoon Lee, an expert on U.S.-Korean relations at Tufts University, explains what the decision to revamp nuclear relations means and why it has come now.

What is in the ‘Washington Declaration’?

Well, there’s strong language. Whereas the U.S. has repeatedly “reaffirmed” its commitment in the past to the defense of South Korea, the wording in the Washington Declaration is more robust. It builds on the language contained in the joint statement released during Biden’s visit to Seoul soon after Yoon assumed office in May 2022.

On that occasion, the US pledged its “extended deterrence commitment to the Republic of Korea using the full range of US defense capabilities, including nuclear, conventional and missile defense capabilities.”

This time, lest there be doubt, that affirmation is made “in the strongest words possible.”

But what does that mean in real terms? First, the US “commits to make every effort to consult” with the Republic of Korea “on any possible nuclear weapons employment on the Korean Peninsula.”

More substantively, the two sides commit “to engage in deeper, cooperative decision-making on nuclear deterrence,” including through “enhanced dialogue and information sharing regarding growing nuclear threats” to South Korea.

It will come as a welcome development to decision-makers in South Korea, although it raises questions about just how much intel on North Korea’s threat and capabilities the US – and Japan, with its advanced signal intelligence systems – did not share with previous administrations in Seoul.

Second, the two allies will establish a new nuclear consultative group to “strengthen extended deterrence, discuss nuclear and strategic planning and manage” the growing threat posed by Pyongyang. This means Seoul now will have a seat at the table when it comes to planning any nuclear response strategy and in readying its “conventional support to US nuclear operations in a contingency.”

From right, US First Lady Jill Biden, US President Joe Biden, South Korean President Yoon Suk Yeol and, behind him, Kim Keon Hee, first lady of South Korea, attend a wreath-laying ceremony at the Korean War Memorial in Washington, DC, on Tuesday, April 25, 2023..Photo: EPA

In sum, Seoul will now have a much greater say in intel-sharing and planning for a joint long-term nuclear strategy, with a focus on its own role in any future flare-up in the Korean Peninsula.

It is a big step forward.

Why are the US and South Korea announcing this now?

The international security environment has drastically changed over the past year, necessitating credible countermeasures from the two allies, in cooperation with Japan. North Korea has fired well over 100 missiles since January 2022. Meanwhile, Russia’s invasion of Ukraine has only pulled China and North Korea closer into its sphere. And China has gone beyond its usual “wolf-warrior diplomacy” rhetoric by conducting threatening military drills around Taiwan last August and, again, this April.

The Washington Declaration comes on the 70th anniversary of the alliance between Washington and Seoul. The timing serves as an opportunity to reflect on and reassess the relationship. But, no doubt, the main drivers in this strongly worded reaffirmation of the alliance are the recent actions taken by the governments in Pyongyang, Moscow and Beijing.

How has South Korea’s position on nuclear options evolved?

The Korean Peninsula has been through two periods of actual “denuclearization” since the 1953 armistice that ended combat during the Korean War.

The first was in the 1970s when the US, catching wind of South Korea’s secret nuclear weapons program, threatened to withdraw all its troops from the South unless Seoul completely dismantled the program. And, so, the government abandoned its nuclear ambitions.

The second came in 1991 when the US and South Korea – perhaps anticipating the coming collapse of the Soviet empire and a severely debilitated North Korea – agreed to withdraw all US tactical nuclear weapons from the South, even as the North was working on its own nuclear program while vigorously talking “denuclearization.”

But in recent years, public opinion in South Korea has strongly shifted toward self-nuclearization rather than reliance on the US stockpile off South Korea’s shores. North Korea’s relentless pursuit of more powerful nuclear and missile capabilities, starting with the resumption of ballistic missiles tests in May 2019 after an 18-month lull, has stiffened views in the South.

President Yoon himself floated the idea of self-nuclearization earlier this year. But the Washington Declaration appears to have tamped down such sentiment. In it, Yoon “reaffirmed” the Republic of Korea’s “longstanding commitment” to the Nuclear Nonproliferation Treaty, which would prevent the country from building up its own nuclear weapons stockpile.

How will the declaration affect regional tensions?

A staple of North Korean propaganda is that its arms program is a response to US “hostile policy” – which Pyongyang defines as anything from Washington raising concerns about the North’s egregious human rights record to the stationing of US troops in South Korea and joint US-South Korea military drills.

North Korea has launched more than 100 missiles since the beginning of 2022. Photo: KCNA

As such, it is reasonable to assume that Pyongyang will respond with a threatening act or two in the coming days. Using the Washington Declaration as cover, expect North Korea to embark on another brazen act of defiance.

Last December, Kim Yo Jong, the North Korean leader’s sister and deputy, threatened an intercontinental ballistic missile test on a normal trajectory, rather than the steep angle launches that avoid threatening nearby countries. And in 2017, North Korea’s former foreign minister Ri Yong Ho suggested that Kim Jong Un was considering testing a hydrogen bomb test over the Pacific. Either would represent a ratcheting up of North Korea’s provocations.

China, meanwhile, is likely to fall back on its decades-old mantra that issues on the Korean Peninsula need to be resolved “through dialogue” – a position that not only fails to penalize Pyongyang but indirectly empowers the isolationist state.

Sung-Yoon Lee is a professor in Korean studies at Tufts University.

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

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