Grey Zone SITREP 17 Feb 23
China's economy predicted to tank while South Africa enters the fray.
This week's SITREP covers growing geopolitical tensions in various parts of the world, with a focus on the rise of China and the efforts countries are making to protect their national security.
The SITREP highlights speeches made by former UK Prime Minister Liz Truss and former Australian Prime Minister Scott Morrison, which emphasize the need for coordinated action to combat the rise of a totalitarian China.
It also examines efforts by Taiwan and Australia to protect themselves from potential cybersecurity threats, and the impact of military exercises involving Russia, China, South Africa, and Cambodia on international relations.
The SITREP features analyst comments on each issue and offers insight into how governments can balance the benefits of new technology with the need to protect national security.
Additionally, if you haven’t caught my latest podcast episode with Croatoan Report - make sure to check it out:
Cole // ALCON.S2
In her first public overseas speech, Liz Truss has urged Britain and the rest of the G7 to agree on a package of sanctions to impose on China if it escalates military tensions with Taiwan. Truss has called for coordinated action to block "the rise of a totalitarian China" as she raises concerns about the threat to Taiwan's independence. She has also presented a six-point plan, including the creation of "an economic Nato" and regular audits by democratic countries to reduce dependence on China across critical industries.
Truss's speech is an attempt to rebuild her political reputation, after resigning as the UK's shortest-serving prime minister. It is also seen as an attempt to put pressure on Rishi Sunak to ensure a promised update to the government's defence and security plan and a stronger stance on China.
Additionally, the former Australian prime minister, Scott Morrison, has also accused the West of "appeasing" Beijing and has claimed credit for rallying other countries to "call out the bullying of the Chinese government". Morrison has urged the Albanese government to consider using Magnitsky-style targeted human rights sanctions laws to hold Chinese government officials accountable. He draws a parallel to 1938 when Neville Chamberlain proclaimed "peace in our time" on his return from Munich before the outbreak of the second world war.
On the flip side, China has recently put Lockheed Martin and a unit of Raytheon Technologies on an "unreliable entities list" over arms sales to Taiwan, banning them from imports and exports related to China. This has come amid heightened tensions after the US military shot down what it says was a Chinese spy balloon, and a day after Beijing warned of "countermeasures against relevant US entities that undermine China's sovereignty and security".
Analyst Comment. It is clear that tensions between China and the West are escalating, and Truss and Morrison's speeches have highlighted the need for coordinated action to stand up to Beijing. The free world is in danger, and it is essential that countries work together to prevent the rise of a totalitarian China. The creation of "an economic Nato" and regular audits by democratic countries to reduce dependence on China across critical industries could be effective in achieving this goal. However, it remains to be seen whether Sunak and other Western leaders will take a stronger stance on China and implement tougher sanctions if necessary.
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As geopolitical tensions continue to rise, countries around the world are increasingly taking steps to protect themselves from potential cybersecurity threats. One area of concern has been the use of civilian drones, which have become increasingly popular and accessible in recent years.
In Taiwan, the Executive Yuan has announced plans to tighten cybersecurity regulations governing civilian drones. These new regulations would require all drones sold on the commercial market to obtain cybersecurity certificates, and would ban the use of uncertified uncrewed aerial vehicles (UAVs). The move comes after reports that Chinese-made systems were used during Double Ten National Day performances last year.
Meanwhile, in Australia, the government has ordered the removal of 1000 cameras made by Chinese companies Hikvision and Dahua from government sites due to concerns they may contain spyware. Other western countries, including the US and Britain, have taken similar steps to remove Chinese cameras from their government buildings.
China has criticized Australia's decision, calling it an "erroneous practice" that discriminates against Chinese companies. However, many experts see the move as a necessary step to protect against potential cybersecurity threats.
Analyst Comment. As the use of drones and other technology continues to expand, it is likely that we will see more countries take steps to protect themselves from potential cybersecurity threats. These efforts may include tighter regulations, increased scrutiny of technology suppliers, and greater investment in cybersecurity measures. Ultimately, it will be up to individual governments to balance the benefits of new technology with the need to protect national security.
The planned military exercises involving Russia, China, and South Africa, as well as the resumption of joint exercises between Cambodia and China, have raised concerns among geopolitical experts. While military exercises are a common practice among nations, these particular exercises have raised eyebrows due to their timing and the involvement of nations with contentious relations.
The joint exercises between Russia, China, and South Africa, named “Mosi”, are scheduled for February 17 to 27, coinciding with the first anniversary of Russia’s invasion of Ukraine on February 24. More than 350 South African armed forces will take part in the exercises with the aim of sharing operational skills and knowledge with Russia and China. This is the second such exercise between the three naval forces.
The involvement of South Africa, which did not condemn Russia’s invasion of Ukraine, has led to concerns that the joint exercises are a message to the West. The exercises also come at a time when tensions between Russia and the West are high due to Russia’s actions in Ukraine, and the recent poisoning of Russian opposition leader Alexei Navalny.
The Zircon missile system on the Russian frigate, which Russian President Vladimir Putin has described as unique and without equivalent, has also raised concerns. The ship will undertake training in the Atlantic and Indian Oceans and the Mediterranean Sea, further adding to the anxiety.
India’s ongoing military exercise with the US, named “Yudh Abhyas”, has also been criticized by China, which claims that the exercise violates Sino-Indian bilateral agreements for border peace. India has responded by saying that it exercises with whomever it chooses to and that the exercise has nothing to do with the bilateral agreements. India has also criticized China for its own breach of the agreements of 1993 and 1996 in the form of Chinese transgressions in eastern Ladakh.
Meanwhile, the joint military exercise between Cambodia and China, named “Golden Dragon”, has resumed after suspension for the past two years due to the Covid-19 pandemic. The joint exercise involves about 1,000 soldiers and officers from the Cambodian and Chinese military participating in the training event. The exercises will deploy attack-helicopters, armoured personnel carriers, tanks, artilleries, mortars and other heavy combat equipment. The exercises aim to strengthen comprehensive strategic ties and promote practical cooperation between their armies, especially with respect to communication mechanisms, military manoeuvres, human resource training, health strategies and disaster rescue operations.
Analyst Comment. While these military exercises may be a routine affair, their timing and the nations involved have led to concerns among geopolitical experts. The joint exercises between Russia, China, and South Africa come at a time when tensions between Russia and the West are high, and the involvement of South Africa, which did not condemn Russia’s invasion of Ukraine, has raised eyebrows. The ongoing India-US military exercise has also led to criticism from China, which sees it as an effort by the US to meddle in India-China border affairs. The resumption of joint exercises between Cambodia and China has also been met with concern due to China’s aggressive behaviour in the region.
As these military exercises continue, it is important for nations to maintain transparency and ensure that their actions do not lead to further tensions or conflicts. The involvement of multiple nations with contentious relations in these exercises only adds to the importance of transparency and communication. It is crucial for geopolitical experts to monitor the situation closely and to ensure that the exercises do not lead to any unforeseen consequences.
It’s is important to keep a close eye on the global economic landscape, especially when it comes to the relationship between major world powers and their influence on smaller countries. One such relationship that has been in the news recently is the debt owed by Pakistan and other countries to China, and the concerns that the United States has expressed over this situation.
China has become Pakistan's largest single creditor, having provided billions in loans to the country. However, this has led to a crippling economic crisis for Pakistan, with inflation at its highest in decades and critically low foreign exchange reserves. The United States has expressed its concerns about this situation, not just in Pakistan but also in other parts of the world where Chinese debt is a major issue.
This is not the only news from China that has caught our attention recently. According to Standard Chartered Chairman José Viñals, China's economy is set to be "on fire" in the second half of 2023. This is due to the reopening of the Chinese economy following several years of strict "zero-Covid" measures, which has buoyed sentiment among economists that the global growth and inflation picture may be less bleak than initially feared this year.
While Chinese GDP grew by just 3% in 2022, its second-slowest growth rate since 1976 and well below the government's target of around 5.5%, shorter-term data has indicated a quicker-than-expected recovery as pandemic-era measures are wound down. The reopening has not been without its challenges, with China reporting a huge rise in Covid cases and deaths in recent weeks. However, Viñals suggests that the resulting widespread immunity, combined with the reopening of borders, will enable the Chinese economy to "surprise to the upside" in 2023.
This positive outlook is due in part to the support that the Chinese government is providing with their fiscal policy, particularly in the property sector. Viñals also notes that the intensity of regulation or the regulatory crackdown on some sectors like the IT sector has been reduced, which is also a positive factor.
Analyst Comment. The situation with Chinese debt in countries like Pakistan is a reminder of the potential risks of overreliance on a single creditor. However, the positive outlook for China's economy in the coming years could also have implications for global growth and inflation, which we must continue to monitor closely.
From the Outstations
Former Italian Prime Minister Acquitted Over Briber Allegations via HM Intelligence.
An Italian court on Wednesday acquitted former Prime Minister Silvio Berlusconi in a case where he was charged with paying witnesses to lie about his involvement in underage prostitution. Prosecutors had demanded that Berlusconi be imprisoned for six years for bribing 24 guests at his parties to give false testimony in a previous trial, where he was charged with paying for sex with a 17-year-old nightclub dancer. He was acquitted in the underage prostitution case because of a lack of proof that he knew he was paying a minor. The former leader was then charged with bribing witnesses.
In a time when corruption in the EU is being closely examined, it is possible that this acquittal will be viewed negatively by other EU member states. While it is possible that Berlusconi is innocent, his track record will lead many people to find that hard to believe. However, while he has had an acquittal in this case, there are still many more legal cases for this former prime minister to face and only time will tell if the 'Bunga Bunga' parties were worth it.
List of new Chinese Ambassadors.
ALCON.S2 Chinese Invasion of Taiwan Indicators