Australian politician asks for cyberspying regulation pact

Australia’s shadow communication minister, Liberal, Malcolm Turnbull has said he wants to propose a “new global pact to regulate cyberspying” in the wake of reports of further Chinese cyberspying in Australia and the US. 

Two things worth noting: Turnbull’s party is expected to win Australia’s federal elections in September.

The other thing is that Turnbull has previously voiced support for giving Chinese telecommunication Huawei –  blocked from national bids in Australia and the US – another chance, if and when the Liberals are returned to power. Huawei was blocked from participating in Australia’s national broadband network.

From the WSJ piece: “If the Chinese complain that they are being hacked, and they probably are, the argument is, well, we all have the capacity to hack each other, shouldn’t we be agreeing on some ground rules and it being in our mutual best interest to ensure that it doesn’t happen?” he said. 

The idea of ground rules is something the US government has long advocated for. Watch this space. 

American and Chinese influence in South America

This article teases out some of the finer points of US-China economic competition in South America, a place that hasn’t seen this kind of geopolitical jockeying since the Old Cold War. In those days, the US and Soviet Union vied for influence across the continents.

Back then ideology and geography were everything. And communist parties with links to the Soviet Union were systematically weakened by the US, either diplomatically or through other means. So it will be interesting how competition in South America between the US and China plays out this time around.

The Bloomberg article notes, of course, that both the US and China aren’t actively competing.

Both the U.S. and China deny they’re competing with one another. The two countries “can play to their respective advantages” and contribute to the region’s development, Foreign Ministry spokesman Hong Lei said May 21 in Beijing.

While China’s demand for resources will surely keep many South Americans working, it shouldn’t be underestimated how much China needs those resources. The US, while in need of some new infrastructure and manufacturing, of course, has a less industrial economy. The Chinese, and the Japanese and South Koreans for that matter, all engage in resource diplomacy, the pursuit of natural resources partially as a political goal. The reason for this is that China needs many more resources than it is naturally endowed with to keep its economy ticking over. Japan and South Korea have few natural resources. It’s worth thinking about this for a moment, too. As the maritime nature of US-China competition becomes clear, many of the resources the Chinese need will be nearer the US. But that is only if the importance of the physical world reasserted itself, in say, an actual war. For now, across this web of resource deals that the advanced Asian economies are pursuing is another web of trade agreements. The most important one is between the US and Asia is the oft-scorned Trans-Pacific Partnership. The Chinese have proposed their own version, too. But what’s interesting is how instead of the fixed geographical borders and delineations that marked the Cold War, there will increasingly be overlapping bands of affiliation, with some countries consistent partners of the US and some of China, but many more countries somewhere in between, in flux.

The US has deep cultural links to Latin America, which it will have to play up, to bolster its influence. But the Chinese can portray themselves as comrades of the Global South. It will be interesting to see what images and themes the US sends out to try to blunt this advantage.

Is China’s hacking of Australia’s intelligence service a form of coercion?

The Prime Minister and Attorney General of Australia say the report about the departments of Prime Minister and Cabinet, Foreign Affairs, Defence and Australia’s intelligence service   being hacked by China are “inaccurate.” The problem for any reporting on this subject is how hard it is to confirm. A server being accessed surreptitiously to gain information – a “cyberattack” or “cyberhack” in the media’s parlance – looks no different than a server going about it’s business undisturbed. Unless, of course, it’s a disruptive attack, like the sort aimed against US banks and gulf state refineries. Even in that case, it might just look like a terminal of a computer that doesn’t work. In other words, reporters have to rely on many off-the-record conversations and many peeks at documents they can’t quote from, etc, in order to report the story. So there is always the possibility that China, the source of so much cyber espionage, has wrongly been blamed.

…But based on the ABC’s reporting, I don’t think so. China denies it, of course. 

The other major thing that stands out for me is the response from Australia. This ASIO-hack story comes less than two months after China and Australia agreed to deepen their diplomatic relationship in a “historic” meeting. The Australian PM, Julia Gillard, and a large entourage of officials met with China’s new leadership. Bands played national anthems. Business heads met, although it turns out some of them may not have been aware they were being hosted by an arm of China’s intelligence.

In any case, the government’s response that the report is “inaccurate” could just be diplomatic politeness. If it is just politeness, the question is: who are the politicians covering for? Are they covering for a domestic audience, or an international one? If the Chinese were responsible, why would the Australian foreign minister assure that it won’t hurt the Australia-China relationship? It’s almost as if one country already has massive leverage over the other. It brings to mind those words in the Defence White Paper about Australia’s national security interests being based on protecting Australia’s sovereignty – “which includes freedom from coercion by other states.”  

Cold War: What we know now

The emerging consensus seems to be that while the US and China are trade partners in the physical world, they are adversaries online. The “good” news, is that this cyber competition is not limited to the US and China. Think Iran. Think Russia. But the US-China cyber-tug-of-war likely has some dynamics of its own.

While both sides would snoop on each other’s military capabilities, China, because of its state-controlled capitalism, links its military-run industrial espionage with its state-directed capitalism. What’s new about this? If the US were doing it, you’d have direct linkages between say the CIA with Goldman Sachs. That’s not to say some CIA guys don’t know some GS guys. But it would be GS calling the CIA and asking for the insider investment information on coal mining deals in Myanmar, which the CIA would duly provide. Under US law, it doesn’t work this way. There are safeguards. And yes, there are violations. But as a rule, you wouldn’t have an overt linkage between the state spies and industry.

But in the Chinese model, it looks like a matter of industry needing plans of more efficient power grids, for example, and then turning to the PLA to secure those plans from abroad.

This is a game changer for the US, and the way US industries must plan and act in the current business environment.

In the near-term, I think this presents a huge, existential challenge for the US economy and government.

In the long-term, all things being equal, I see the seeds of China’s Japanification through this process. And so while China postures, it hides what is a structural, cultural fragility that will manifest itself more clearly in coming years.

In terms of Cold Wars, that is where we are: A US-China Cold War online, but US-China trade partnership in the physical world.