6 February 2018

: A Chinese Superweapon, and Saudi Arabia Dreams of Big Tech

Feb 4, 2018 | 

AI is one of the most important things humanity is working on. It is more profound than, I dunno, electricity or fire.

    Sundar Pichai, CEO of Google

Brexit Negotiations Pick Up Speed. The Brexit negotiation is slowly gaining momentum again as the remaining 27 members of the European Union approved a series of guidelines for the upcoming negotiations over the transitional period that will follow Britain's departure from the bloc in March 2019. London will be allowed to remain in the EU single market until December 2020, but it will not participate in EU policymaking. More important, the United Kingdom will be authorized to negotiate free trade agreements with non-EU countries during the transition period (a key part of Britain's post-EU strategy). Negotiations over the transitional period will start next week.

Korean Olympics. South Korea's Winter Olympics will begin in Pyeongchang on Feb. 9, marking the start of events that will last through mid-March and showcasing a warming in inter-Korean ties. Expect North Korea to continue its pause in missile testing, but also expect the country to show signs of continued resolve to pursue a nuclear deterrent. The day before the Olympics begin, North Korea will stage a much-talked-about military parade that may feature its intercontinental ballistic missile technology. The key question is not what happens at the Olympics, but what happens after. And with the United States and South Korea giving every sign that they will carry out their joint military drills after the games, this detente has a short shelf-life and will quickly begin to run into the incompatible interests of the various parties.

Uzbek Security Chief Ousted. Uzbekistan's long-serving National Security Service chief, Rustam Inoyatov, was dismissed by President Shavkat Mirziyoyev on Jan. 31. The move marks a major step in Mirziyoyev's consolidation of power, one that likely will lead to a deeper overhaul of Uzbekistan's security structures. Given that Inoyatov represented a faction that took a more conservative stance on some of the changes and liberalization policies pursued by Mirziyoyev, his dismissal could also spur a potential acceleration of economic and political reforms as the president further entrenches his rule.

India's Budget Released. On Feb. 1, India's Finance Minister Arun Jaitley presented a $381 billion budget aimed at appeasing the country's politically powerful rural constituency in the lead-up to Prime Minister Narendra Modi's 2019 re-election bid. Jaitley unveiled a health insurance program covering 100 million impoverished families and prioritized spending on rural roads. Defense spending saw a modest increase of 7.8 percent, meaning Indian military modernization will move slowly despite heightened tensions with China along the disputed northern border.

U.S.'s Russia List Drops. The U.S. Treasury Department unveiled the long-anticipated "Russia lists" that explore the elite and powerful Russians tied to Vladimir Putin's government. The publicized lists dropped with a dud, and without expanding sanctions. Kremlin officials quickly mocked the hype and fizzle, leading Moscow to refrain from expanding reprisal sanctions. The Treasury Department can still build sanctions off the lists in the future, though the White House made it clear it prefers to focus on the current sanctions over Ukraine, deepening the gulf between Congress and the Trump administration.
On Our Minds

Chinese Railgun Development. First, there were reports of a Chinese hypersonic glide vehicle being slated for a 2020 initial operational capability, and then there were reports of a number of recent breakthroughs in engine technology. Last week, images posted online appear to show a prototype Chinese railgun getting ready for sea trials. These developments surely will add impetus to recent U.S. Defense Department proclamations that Washington needs to get serious about great power competition. But just how far along is Beijing in its development of the latest military technology? And is the United States really losing its previously overwhelming military edge given its already considerable spending on defense and research and development?

Saudi Arabia Targets Big Tech. News surfaced last week that Saudi Aramco was in talks with Alphabet to set up data centers in Saudi Arabia. The tech sector has become a focal point for Crown Prince Mohammed bin Salman as Saudi Arabia continues with its Vision 2030 platform. Already Saudi Arabia has been in talks with Amazon and Apple over potential investments, some of which could be signed during the crown prince's upcoming visit to the United States. From its proposed megacity of Neom to its investments into Uber, Saudi Arabia is betting on "Big Tech." But will Big Tech bet on Saudi Arabia? U.S. tech companies have long pushed back on meddling in their users' data. And Saudi Arabia lacks the high-skilled workforce to innovate in the tech sector.

Germany's Government Remains in Limbo. Negotiations to form a "grand coalition" are making progress in Germany, but many members of the parties involved are not particularly thrilled about them. In recent weeks, we have seen members of the center-left Social Democratic Party criticize the agreement to negotiate a coalition, but now members of the conservative Christian Democratic Union and Christian Social Union parties also are expressing concern. Conservatives are worried that another grand coalition will lead to higher public spending in Germany and to greater risk-sharing in Europe. On the surface, Germany is committed to collaborate with France on EU reform. But resistance from the conservatives could make Berlin push to water down, or even oppose, some of Paris' proposals.

Chinese-Vatican Detente. China and the Vatican reportedly will sign a framework accord in the coming months as part of multiyear negotiations to restore ties. The deal could resolve long-standing differences over the appointment and recognition of bishops, reconciling communities that follow Beijing-appointed church leaders and "underground" communities that follow leaders approved by Rome. By improving ties with the Vatican, Beijing hopes to isolate Taiwan, of which the Vatican is a key remaining ally, and regulate its underground churches, while the Vatican seeks to expand its influence across China's vast Catholic community. Still, it remains to be seen how the two sides will reconcile their core differences over the authority of religious affairs.

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