The unrest in the Arab world, which has continued for over a year now, implies one important conclusion beyond any ongoing regional struggle for democracy: It is a reflection on the globally important technological, even more about a crucial geopolitical breakthrough – an escape from the logics of the hydrocarbon status quo, which – after Copenhagen 2009 and Durban 2011 – will fail again in Rio (Earth Summit 2012/Rio+20) later this year.
“No one governs innocently” – de Beauvoir noted in her 1947’s The Ethics of Ambiguity. After a lot of hot air, the disillusioning epilogue of the popular McFB revolt is more firearms and less confidence residing in the Middle East and North Africa (MENA) region, as well as a higher (moral and environmental, socio–economic and political, psychological and security) carbon-energy price everywhere else. As if the confrontational nostalgia, perpetuated by intense competition over finite resources, in lieu of a real, far-reaching policy-making has prevailed again. Caught in the middle of its indigenous incapability and the global blind obedience to fossil carbon addiction, and yet enveloped in just another trauma, the Arab world and the wider Middle East theatre remains a hostage of a geopolitical and geo-economic chess-board mega drama. However, all that appears over-determined now was not necessarily pre-determined in the beginning.
A Grand Dilemma and the MENA
The MENA theatre is situated in one of the most fascinating locations of the world. It actually represents the only existing land corridor that connects 3 continents. Contributing some 6% to the total world population, its demographic weight is almost equal to that of the US (4,5%) and Russia (1,5%) combined. While the US and Russia are single countries, the MENA composite is a puzzle of several dozens of fragile pieces where religious, political, ideological, history-cultural, economic, social and territorial cleavages are entrenched, deep, wide and long. However, the MENA territory covers only 3% of the Earth’s land surface (in contrast to the US’ 6,5%, coverage and Russia’s 11,5%). Thus, with its high population density and strong demographic growth, this very young median population (on average 23–27 years old) dominated by juvenile, mainly unemployed or underemployed, but socially mobilized and often politically radicalized (angry) males, competes over finite and scarce resources, be they arable or settlers land, water and other essentials.
Competition in this theatre, that has a lasting history of external domination or interference, is severe, multiple, unpredictable, and therefore it is fluid and unsettled on the existing or alternative socio-economic, ideological, cultural and politico-military models, access, directions and participatory base.
Interestingly enough the recent crisis, pejoratively nicknamed the Facebook Revolution has so far ‘knocked down’ only MENA republics (declaratively egalitarian and secular regimes of formal democracy). For the time being, it has spared the Arab peninsular absolutistic monarchies (highly oppressive theocratic regimes of real autocracy). The modern-day version of Metternich’s Alliance of the Eastern Conservative Courts – the Gulf Cooperation Council (GCC) club has so far gained considerably from the calamities: (i) strategically – more durable regimes and ideologies, translated into their political and diplomatic offensive; (ii) institutionally – besides dominating the Organization of the Petroleum Exporting Counties (OPEC), the GCC theocracies now practically control the League of Arab States (LAS), sets its agenda, political direction and punitive actions; and (iii) geo-economically – huge petro-dollar revenues: enlarged quotas caused by the delivery disruptions and embargoes in Libya and elsewhere, as well as the general crude price increase due to MENA uncertainties – e.g. the Bahrain’s State Information Agency reports nearly 20% economic growth for 2011. Hence, if there was any Spring in the Arab world, it was the budding of (Wahhabi sectarian) ideological and hydrocarbon exports of the GCC autocracies in 2011.
Nevertheless, the announced reductions of the American physical presence in Afghanistan, its limits in (nearly failed, nuclear state of) Pakistan, massive overextensions suffered on the southwestern flank of the Euro-Asian continent, as well as the recent US Army pullout from Iraq, is felt within the GCC (in France, Israel and Turkey too) as dangerous exposure to neighboring (increasingly anticipated as assertive) Iran, as well as Russia and China behind it.
Right now, Syria pays a (proxy war) prize for it: This multi-religious country may end up entirely combusted, creating a dangerous security vacuum in the heart of MENA. Oil, its suppliers and its consumers are resolute to fortify and eventually diversify and intensify their bitter covert and overt fight in maintaining the status quo course.
Petro-retro Status Quo: Petrodollars and petro-security
The US has a lasting geo-economic interest in the Gulf of a rather extensive agenda, which is inevitably coupled with its overarching global security concerns. As is well known, oil is the most traded commodity in the world– roughly 12% of overall global trade. By far the largest portion of internationally–traded crude originates from the Gulf. Thus, the US imperatives in the Gulf are very demanding: (i) to support the friendly local regimes with their present socio-political and ideological setups; (ii) to get, in return, their continued approval for the massive physical US military presence and their affirmative vote in international fora; (iii) to maintain its decisive force in the region, securing unhindered oil flows from the Gulf; (iv) to remain as the principal security guarantor and tranquilizer, preventing any hostile takeover – be it of one petrol-exporting state by another or of internal, domestic political and tribe/clan workings; (v) to closely monitor the crude-output levels and money flow within the Gulf and to recycle huge petro-dollar revenues, usually through lucrative arms sales and other security deals with the GCC regimes; (vi) will not enhance, but might permit (calls for) gradual change of the domestic socio-economic and politico-ideological frames in the particular Gulf state, as long as it does not compromise the US objectives in the region as stated above, from (i) to (v).
On the other side of Hormuz, Iran is a unique country that connects the Euro-Med/MENA with Central and South, well to the East Asia, so as it solely bridges the two key Euro-Asian energy plateaus: the Gulf and Caspian. This gives Iran an absolutely pivotal geopolitical and geo-economic posture over the larger region – an opportunity but also an exposure! No wonder that the US physical presence in the Gulf represents a double threat to Iran – geopoli- tically and geo-economically. Nearly all US governments since the unexpected 1979 Shah’s fall, with the G.W. Bush administration being most vocal, have formally advocated a regime change in Teheran. On the international oil market, Iran has no room for maneuver, neither on price nor on quotas. Within OPEC, Iran is frequently silenced by cordial GCC voting.
The US hegemony in the Gulf, a combination of monetary control (crude is traded exclusively in US dollars, predominantly via the New York-based NYMEX and London-based IPE) and physical control (the US Navy controls all transoceanic oil transports), is the essential confirmation as well as the crucial spring of the overall US global posture. In exchange for the energy inflow security, the US anchors loyal bandwagoning in many places around the globe. As long as oil remains priced in USD, it will represent the prime foreign reserve currency (some 68% of global reserves is held in USD), as the functional tie between the major currencies’ exchange rates, (economic and politico-military) security and fossil-fuel energy cannot be derailed and delinked. Finally, this hegemony is not only based on the exclusivity of oil currency, but also on the exceptionality of the very policy of pricing.
Throughout most of oil’s short history, the price for ‘black gold’ was high enough to yield profits (via the 7-Sisters, mostly for Wall Street – besides the US military, another essential pillar of American might), still without pricing it overly high, which would in return encourage sustained and consequential investments in alternative energy sources. Basically, the main problem with Green/Renewable (de-carbonized) energy is not the complexity, expense, or the lengthy time-line for fundamental technological breakthrough; the central issue is that it calls for a major geopolitical breakthrough. Oil and gas are convenient for monopolization (of extraction location and deployed machinery, of intl. flows, of pricing and consumption modes) – it is a physical commodity of specific locality. Any green technology (not necessarily of particular location or currency) sooner or later will be de-monopolized, and thereby made available to most, if not to all. Therefore, the overall geopolitical imperative for the US remains preservation – not change – of the hydrocarbon status quo.
Ergo, oil (and gas) represents far more than energy. Petroleum (be it a finite biogenic mineral or not) is a socio-economic, psychological, cultural, financial, security and politico-military construct, a phenomenon of civilization that architectures the world of controllable horizontalities which is currently known to, possible and permitted, therefore acceptable for us.
In a broader historical, more vertical or philosophical sense, the hydrocarbons and its scarcity phychologization, its monetization (and related weaponization) is serving rather a coercive and restrictive status quo than a developmental incentive. That essentially calls not for an engagement but compliance. It finally reads that the fossil fuels’ consumption (along with the policy of prizing it) does not only trigger one CC – Climate Change (repeated failure in Durban), but it also perpetuates another global CC – planetary Competition and Confrontation (over finite resources) – to which the MENA calamities are only a tip of an iceberg. Therefore, this highly addictive construct logically permits only a (technological) modernization which is defensive, restrictive and reactive. No wonder that democracy is falling short.
Anything terrific between Arctic and Pacific?
“…bold Russian Arctic policy is (yet) another signal that the Federation… will increase its (non territorial leverage and geopolitical) projection as a major energy supplier of the world throughout the 21st century…” – I noted in 2009. To clarify: Neither Russian territorial size and historical passions, nor pride and socio-economic necessity will cause Moscow to sink down to a second-rank power status. How will the Federation meet its strategic imperative? We have already discussed the two important pillars of the US strength (the so-called ‘East Coast twin might’: the Pentagon and Wall Street). Well, there is the ‘Pacific Coast twin might’ too. The post-Soviet Russia has neither the ideology – global soft power appeal of the US entertainment industry and its ravenous (Hollywood), nor has it the vibrant, world-leading and highly lucrative High-Tech and IT sector (Silicon Valley) that the US possesses.
Let us generously assume the quantitative and qualitative parity between the US and Russia’s armed forces. Still, military modernization requires constant cash injections. How to maintain that? Moscow holds a big advantage: the US imports hydrocarbons while the Federation exports it. Nevertheless, Wall Street controls the international (petrodollar) monetary flow – even the post-Soviet republics are not trading oil in Rubles, but in US dollars. Hence, to meet and finance its strategic imperatives, as well as to respond to the growing international energy demands and to the domestic pressures, Moscow has only non-high tech exports – fossil-fuels – at convenient disposal (no Silicon Valley, no Hollywood). Ergo, Russia is more exposed and vulnerable than the US, and therefore it is an even stronger supporter of both current international market conditions and the hydrocarbon status quo.
On the eastern, ascendant flank of the Eurasian continent, the Chinese vertigo economy is overheated and too-well integrated in the petrodollar system. Beijing, presently, cannot contemplate or afford to allocate any resources in a search for an alternative. The Sino economy is low-wage- and labor intensive-centered one. Chinese revenues are heavily dependent on exports and Chinese reserves are predominantly a mix of the USD and US Treasury bonds. To sustain itself as a single socio-political and formidably performing economic entity, the People’s Republic requires more energy and less external dependency. Domestically, the demographic-migratory pressures are huge, regional demands are high, and expectations are brewing. Considering its best external energy dependency equalizer (and inner cohesion solidifier), China seems to be turning to its military upgrade rather than towards the resolute alternative energy/Green Tech investments – as it has no time, plan or resources to do both at once. Inattentive of a broader picture, Beijing (probably falsely) believes that lasting containment, especially in the South China Sea, is unbearable, and that – at the same time – fossil-fuels are available (e.g., in Africa and the Gulf), and even cheaper with the help of warships.
Opting for either strategic choice will reverberate in the dynamic Asia–Pacific theatre. However, the messages are diametrical: An assertive military – alienates, new technology – attracts neighbors. Finally, armies conquer (and spend) while technology builds (and accumulates)! At this point, any eventual accelerated armament in the Asia-Pacific theatre would only strengthen the hydrocarbon status quo. With its present configuration, it is hard to imagine that anybody can outplay the US in the petro-security, petro-financial and petro-military global playground in the following few decades. Given the planetary petro-financial-tech-military causal constellations, this type of confrontation is so well mastered by and would further only benefit the US and the closest of its allies.
To complete the picture, both Russia and China are supporting the hydrocarbon status quo. Other major theaters are all too dependent geo-economically: on a supply end (Central Asian republics, Brazil, Canada, Mexico, Norway, Venezuela, etc.) and on a receiving end (India, Australia, South Africa, etc.) – none is geopolitically emancipated enough to seriously consider any significant tilt towards de-carbonization.
EU-genic or Dynamic?
Less explicitly, the EU (as the post-Westphalian concert of 4 Europes – conglomerate of the Atlantic, Central, Eastern and Scandinavian Europe) will turn consensual to the hydrocarbon status quo, too. If taking a closer look at any of the previous and current Brussels’ transportation and energy policy initiatives, it would clearly show us that the notion was primarily driven by the closest common security consideration denominator – as an attempt to decrease the external vulnerabilities, that includes those of an energy dependency (e.g. energy efficiency initiatives: EEP, Europe 2020, EUFORES, etc.).
Hence, the Union was first and still is most of all a peace treaty for the post WWII Europe recovery. Therefore, both settings (ECSC and EuroAtom) served the confidence building purpose, not as energy-related clearing house/s. The energy policy (suppliers for and composition of the primary energy mix, taxation, etc.) as well as the transportation (means and modes) strictly resides in the individual competence of the Block’s Member States (MS). Any change in the present status quo would assume the common platform of the MS via the Council of the EU (and the subsequent formalization of such a position, at least through the EU Parliament’s promulgation). The absence of such a commonly agreed policy means more of the hydrocarbon status quo. Lastly, it is not only that Atlantic Europe and Central Europe manage their respective energy inflow, its composition and external dependences differently (and selectively). The issue of the hydrocarbon status quo is closely related to the very question of the Euro (and the US dollar-alternate/reserve currency: the British Pound).
For the severely exposed Euro-zone (unsettled global financial crisis), it is a bitter choice between a petrol-pampered dollar (as a stability pillar) and the return to gold (meaning to the pre-Nixon Shock times, before the Bretton Woods consensus was renounced). Brussels and the European Central Bank (ECB) believe they can exercise an influence on the American dollar, via the US Federal Reserves, while nowadays gold resides everywhere – least of all in the US or EU reserves or their mines. Simply put, the post-Nixon currency/ies is/are negotiable; gold is a solid, non-corrosive metal. Also, one should never forget that the politically most influential segment of the Union – Atlantic Europe – shares the same ocean with the US, and all that comes with it (including the ‘monetary nationalism/exceptionalism’).
However, besides Japan, Brussels will remain a main promoter of the “Kyoto II” mechanism. The UN Framework Convention on Climate Change (UNFCCC) with its protocol from Kyoto of 1997 placed China and India in the “emissions tolerant” Annex II, so both subsequently ratified the Instrument. The US and Russia were situated in the much less forgiving Annex I. Past the collapse of the Soviet Union and contraction of the post-Soviet economy and demographics, Kremlin knew it could easily meet the pre-1990 emissions target. Still, it was bargaining until the end of 2004. With the 17% pollution allocation, Russia’s ratification was sufficient enough to activate Kyoto, which eventually entered into force shortly after, in 2005.
The EU’s formal support to the Kyoto protocol and “spirit of UNFCCC/IPCC” has several reflex levels. Without ambition to elaborate it all in detail, let us just note that the Union’s reasons are of political (declared principles) and economic (pragmatic) nature. As the conglomerate of states committed to the supranational principle rituality, it is natural for the Block to (at least declaratively) support any multilateral endorsement, which assumes the supranational notion as well as the full horizontality of implementation and monitoring of compliance mechanism.
The Kyoto provisions of the late 1990s were in perfect harmony with the two grand strategy roadmaps of the EU: the Lisbon (2000) and Goteborg (2001) – hence, the EU’s voluntary self-endorsement via the Emissions Trading Scheme (ETS). This virtue out of necessity was clear: in the globalized competitive world, the Union of modest economical and of no demo-graphic growth has only the option to become a knowledge based economy, re-architectured as the fair and balanced post-industrial society. Both strategies were gradually abandoned, the Block enlarged (to Eastern Europe, mostly the states whose economies also contracted past the breakup of the Warsaw Pact lager countries – meaning, who are able to meet the Kyoto targets), and the Union’s post-industrial Green-tech renewal waits for better days.
How swift is the shift?
Brussels is well-positioned, but it will not be a global frontrunner in any technology shift. For such a (hydrocarbon de-psychologization) turn, it has neither an inner coherence, visionary strength, nor an external posture. The EU’s economic growth is very symbolic, despite all the huge territorial enlargements of the past decade. Actually, the Union’s growth could be portrayed as negative in many categories. It always serves as a good reminder that a Europe of (economic and demographic) growth was a Europe of might. Europe without growth is a Europe of principles (or to say: of administrative frameworks’ colonialism). The Eastern enlargement of the EU was this very virtue out of necessity: a last territorial expansion, exceptionally based not on coercion but on an ‘attraction’ of the EU’s transformative power.
Within the OECD/IEA grouping, or closely; the G-8 (the states with resources, infrastructure, tradition of and know-how to advance the fundamental technological breakthroughs), it is only Japan that may seriously consider a Green/Renewable-tech U-turn. Tokyo’s external energy dependencies are stark and long-lasting. After the recent nuclear trauma, Japan will need a few years to (psychologically and economically) absorb the shock – but it will learn a lesson. For such an impresive economy and considerable demography, situated on a small landmass, which is repeatedly brutalized by devastating natural catastrophes (and dependent on yet another disruptive external influence – Arab oil), it might be that a decisive shift towards green energy is the only way to survive, revive, and eventually to emancipate.
An important part of the US–Japan security treaty is the US energy supply lines security guaranty given to (the post-WWII demilitarized) Tokyo. After the recent earthquake-tsunami-radiation armageddon, as well as witnessing the current Chinese military/naval noise, Japan will inevitably rethink and revisit its energy policy, as well as the composition of its primary energy mix. That indicates the Far East as a probable zone of the Green-tech excellence and a place of attraction for many Asians in the decade to come.
(Based on the public lecture “Asia – Pacific: The Hydrocarbon Status Quo and Climate Change”, Chulalongkorn University, Mahachulalongkorn/MEA Think-Tank; Thailand, Bangkok 04 OCT 2011)
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Girls Don’t Code? In The Caribbean, They Lead Tech Startups
Research shows that science, technology, engineering, and mathematics (STEM) are still male-dominated fields. According to the U.S. Department of Commerce, in 2011 women occupied less than 25% of STEM jobs. Automation and advancements in technology seem to penalize women: the World Economic Forum estimates that per every 20 jobs lost to the fourth industrial revolution, women will only gain one new STEM job. For men, there will be a new STEM job for every four lost.
Luckily, a growing number of women is pursuing STEM careers, as developers, coders, or even tech entrepreneurs. The success of these women not only creates jobs and promotes economic growth; it also inspires more and more women to look beyond conventional career roles and take full advantage of the new opportunities offered by the digital revolution.
Last month, in the Caribbean, women entrepreneurs swept all five top places in the second PitchIt Caribbean Challenge, a mobile-tech startup competition organized by the Entrepreneurship Program in the Caribbean (EPIC) and sponsored by the World Bank’s infoDev program and the government of Canada.
Here, these talented women talk about their journey to the finals.
For a long time, Monique Powell worked late hours. By the time she got home, she would have no choice than to order food for delivery. “I realized you were more or less limited to pizza,” she recalls. “There was no reliable way to order from different restaurants and have the food delivered.”
She found that many Jamaicans shared her frustration.
It didn’t take Monique long to reach for a web- or app-based solution. “My professional background spanned web development, e-commerce, and marketing. With this knowledge, plus my determination to make the business work, I’d be able to lead the team and get the company off the ground.”
After partnering with many of Kingston’s popular eateries, in 2016 she launched QuickPlate, a mobile app that promises to help people “get good food fast” from anywhere. Customers can easily pay for meals online and track their delivery status from their phone or computer.
She sees the irony of the scarcity of female tech entrepreneurs in an increasingly industrialized world. “I’m always excited when women stand out and shine in male-dominated fields,” she says. “There are more and more programs designed to introduce girls to coding and web development, and I can’t wait to see what the next generation of female tech entrepreneurs will come up with.”
The Interview JM, Jamaica
“My parents were always trying to help someone find a job,” Angela Tait says. “As I grew older, they would ask me to review resumes or look for openings. Later, I started an informal job network to help match youth with entry-level jobs at small businesses. The struggles I saw on both sides, the job seekers’ and the small business owners’, eventually led to The Interview JM.”
Angela’s company facilitates the recruitment process for both employers and job seekers by using “innovative and modern assessment/training tools to help clients leverage their strengths.” She plans to grow the business into something that can change the talent management landscape in the Caribbean.
Angela commands her company’s technology. She handles operations and strategy, as well as negotiations with software partners. This, she says, requires “an intimate knowledge of all technical processes and core software we use.”
“It’s important to have diversity when we are talking about solving problems, which is what tech innovation does most of the time. We’ve seen that women can do anything and everything, so I decided that 2016 would be my ‘year of yes.’ I registered for the PitchIt pre-accelerator and then the competition.”
Indetours App, Montserrat
Nerissa Golden always considered herself ‘a solutionist.’ In Montserrat, she has been looking for “ways to leverage our uniqueness in a way that preserves our identity but allows residents to make money from it.” Her team has built an app that will help taxi drivers and tour operators find travelers quickly and inexpensively.
With more than 17 years of Internet experience, Nerissa is used to the idea of women as mobile tech entrepreneurs. “I taught myself about web development. I code. In 2014, I did a Caribbean Girls Can Code campaign to feature a few of the women I know who do code and are using it to change lives,” she says. “Now I leave the coding to others but I try to keep up with what is changing.”
SKED, Trinidad & Tobago
For Kelly-Ann Bethel it all began in August 2016 at the TV contest ‘Planting Seeds’. Her $30,000 prize gave her the funding she needed to develop SKED, a business appointment-management app that allows consumers to book meetings with a wide range of businesses without having to make a phone call.
“I always loved technology businesses. Although I am not a developer myself, the scalability of tech was always attractive,” she says, highlighting that the gist of her business idea is “simpler appointment booking for the Caribbean.”
Kelly-Ann agrees that women are underrepresented in technology, “but that doesn’t negate the women’s ability to be awesome tech entrepreneurs. Although we were outnumbered at the beginning of this PitchIT competition, we still managed to win big! Girls don’t code? Really?”
She wears an impressive number of hats: “I am the quintessential go-getter: I do everything except for the actual tech. I know the vision for SKED, I am the product manager, business development lead, marketer, pitch maker, finance manager…”
In the first quarter of 2017, SKED will focus on finishing the beta stage before launching, as she says, “to the many businesses that are excited and have expressed interest in using the product.”
Kelly-Ann hopes to participate in an international accelerator and get enough funding to realize the vision.
D Carnival Scene, Trinidad & Tobago
In 2011, Ayanna St. Louis started to work on her idea of ‘a mobile carnival concierge’ to serve revelers at the carnival in Trinidad & Tobago. “I have always loved carnivals and took an interest in carnivals around the world,” she explains. “Being from Trinidad & Tobago – where the carnival is the best in the world – I have always found that most other carnivals in the Caribbean are lacking in elements of ‘completeness’ and ‘structure.’ ”
For PitchIt Caribbean, she competed her registration at the last minute, and she wasn’t quite ready with a ‘defined’ pitch. When she had to pitch, she says, “everything truly came from within. For the Q&A round, I answered truthfully — as if I were using the product — how it would impact my life positively.”
“I am no ‘techie’,” Ayanna confesses. Unlike several of the other winners, Ayanna admits that she focused primarily on a problem-solving idea, rather than a new technology. As for her next move, Ayanna is currently working on an application for another pitch event.
This feature is an outcome of infoDev, a multi-donor program administered by the World Bank Group, with a focus on entrepreneurs in developing economies.
Technological Superiority at the Heart of China-US Confrontation
The US defense and technology sectors have become genuinely worried about Chinese significant strides in the technological sphere. Various reports have over the past couple of weeks stated that the Chinese military and technology sectors are close to achieving parity with the US.
One such report, published several days ago by the Center for New America Security, stated that China now “appears increasingly close to achieving technological parity with US operational systems and has a plan to achieve technological superiority.”
In a way, the current confrontation between the US and China fits into the biggest struggle in history: a battle between sea and land peoples. China is more of a continental power than a sea one, while the US is clearly an oceanic country. The US, like its historical predecessors, be they ancient Greeks, medieval Venetian merchants, or British and French seafarers in the 19th century, has so far successfully managed to limit Eurasian powers from rising to a prime position in the major world continent.
But with China it is different. One simple example suffices to state a surprising development. Since about 1885, the United States has not had to face a competitor or even a group of competitors with a combined Gross Domestic Product (GDP) larger than its own. China surpassed the United States in purchasing power parity in 2014 and is on track to have the world’s largest GDP in absolute terms by 2030. In comparison, America’s Cold War adversary, the Soviet Union, was bogged down by a truly unsustainable economic system that ultimately crumbled under pressure in the 1980s. At the height of the Soviet power, its GDP was roughly 40% the size of the United States’.
As said, a guarantee to win the Cold War was the US’ technological and economic preeminence. This is still at the heart of today’s global competition. Both Washington and Beijing understand that bilateral trade issues are in fact disguised by a deeper rivalry which opens up in the technology and innovation sector.
It has always been the case that sea powers possessed much fewer human resources, but attenuated this problem with much larger technological advances in comparison with continental powers. What is worrying for the US, and this constitutes a fundamental shift in global history, is China’s ability as a land power not only to confront the Americans with a larger population pool, but also with a highly competitive technological sector.
Several moves made by the Chinese government in the past week show China’s massive technological prowess. According to state media, Beijing is allegedly creating a system to protect its technology. Exactly what this system is, is not clear, but it was suggested that the system will build a strong firewall to strengthen the nation’s ability to innovate and to accelerate the development of key technologies.
The Chinese also announced that they, like the Americans are considering restricting export of Chinese technologies abroad, primarily to the US. This follows similar US moves to restrict sales to Huawei Technologies and other Chinese tech firms on national security grounds.
Thus, there are major concerns as to how the US would be able to offset the Chinese geopolitical challenge. There has always been a simple understanding in the US ruling circles, and among strategists, that it is America’s technological edge which gives it fundamental superiority. If this is no longer the case, then the very foundation of the US grand strategy is at stake. US general Paul J. Selva, Vice Chairman of the Joint Chiefs of Staff, has warned that the Chinese military could reach technological parity with the United States in the early 2020s and outpace the Pentagon in the 2030s, if the US military doesn’t respond to the challenge.
The course is set for future global instability, where the Americans will be more worried and the Chinese more assertive in pursuing their goals. This does not necessarily mean that a military confrontation would ensue, but it is highly likely that both states might end up investing billions, if not trillions, to develop future technologies.
Author’s note: first published in Georgia Today
The Huawei affair
As the experts of the sector say, all the advanced communication lines and networks are “non-deterministic”.
This means that, when built and completed, they are a whole that is greater than the sum of its parts and is not predictable in its results, given the functions of the parts taken separately.
The complication of the Web is related to the number of the parts composing it and to the number of relations, namely “nodes”, which are present in the elements that make it up.
This is not a phenomenon that can be corrected or controlled. It is a purely mathematical and inevitable effect of the Web and of the interaction between its nodes.
The Communication Assistance for the Law Enforcement Act (CALEA) is a US regulation obliging those who maintain the Networks to keep sound security mechanisms that are defined – together with those who produce them – in specific FBI directories.
Nevertheless, there is much talk about the relationship – which is, indeed, non-existent – between the Chinese intelligence services and Huawei.
According to CALEA, each information network must have a control system – hence a system to check the data passing through the network, so as to know – at any time – the data running on the specific Network to be controlled.
In other words – and with harsh clarity – it is a matter of allowing interceptions, according to the US law.
Therefore, from the privacy viewpoint, the US law does not impose different and better behaviours than those of which Huawei is accused.
Recently the UK-based Huawei Cyber Security Evaluation Centre has submitted its fifth annual report.
It has clarified that – as in any Networks – the source code is extremely complex and “long”, written in a language that is naturally “insecure and unsafe”, which can be manipulated by all those who can reach the source code since the aforementioned level of complexity is such that it does not allow any security check. Neither stable nor temporary.
Hence whoever could inspect the source code of any telephone network or world wide web producer could never determine whether it is devoid of bugs or original elements, or of malicious insertions by the producer or others, and could not even trace its origin.
Therefore, every time the source code is reconstructed, it produces something different compared to the previous version. It is a direct function of the complexity of the code itself.
This means that we are never sure that the code that has succeeded the initial check is exactly the one that “works” in the next network.
Hence data security risks are not and cannot be specific to Huawei alone, but are inherently common to all network builders and to their primary and standard software. Every manufacturer’s check inserts new data and new unpredictable effects.
Therefore the pure network technique does not matter much and, in any case, the security problem, which is always relative, applies to everyone.
Hence the questions we must ask ourselves are eminently political, i.d. how long can Huawei withstand pressure from the Chinese government or to what extent Huawei itself intends to support the efforts of Chinese security agencies.
It is unlikely that the Chinese intelligence services want to undermine or restrict the global reach of a global and Chinese company, which is essential for the economic development of the country, by trivially putting it in the service of its networks. It is certainly not worth it.
Moreover, Huawei has developed its 5G model for at least ten years and it has contributed to the definition of the 5G standard globally.
The Chinese research into the 5G started in 2009 and Huawei is second only to Samsung for number of standard essential patents (SEPs) and has the highest global level of 5G evolution in various areas of use. There are really no credible competitors for Huawei – hence the pseudo-arguments on security or Huawei’s relations with the Chinese intelligence services are used.
Too trivial and too dangerous. If anything, the true goal of the Chinese intelligence services is precisely to support Huawei’s image as an impartial and global operator, certainly not as a tool for its operations.
You cannot understand the Chinese intelligence services at all – which are not childish in their approach – if you assume they behave like this.
It is rather known to all global network and IT operators that five years ago the National Security Agency (NSA) intercepted CISCO’s hardware and also infiltrated and paid RSA – the company processing numerical codes for the global market – to release manipulated cryptology standards, in addition to forcing some American companies, including Yahoo!, to collaborate in the global espionage organized by US agencies.
Precisely what of which Huawei is accused.
Who owns Huawei?
100% of it is owned by a holding company, 1% of which is directly owned by Ren Zhengfei, the founder of the company.
The remaining 99% of Huawei is owned by a “union committee” of all employees. The employees’ shares are, in effect, normal contractual rights for profit distribution.
Moreover, the purchase of the Huawei 5G network is particularly interesting from the price viewpoint, which could even offset the unlikely damage of a leak – possibly random – on a node of the Network.
A leak that obviously anyone can put in place – even using the Huawei network, without being part of the company.
Obviously you can also buy the 5G networks produced by Ericsson or Nokia.
These networks are definitely more expensive, less negatively affected by “external elements” (but is it true, considering that anyone can manipulate a network?) and created by less “dangerous” States – if we see them in a simplistic way – than China, which is currently the monstrum of the Western intelligence services that are now reduced to the minimum, including the US ones.
With specific reference to the relationship between 4G and 5G, it should be noted that, for 10 years, there is an average increase by 64 times in operational capacity for each system that arrives on the market.
The 4G is planned to run until 2023, but the 5G will increase the data processing power by as many as 5,000 times compared to the current 4G.
Nowadays, however, also the 4G has reached the “Shannon limit”, that is the maximum limit of theoretical data transfer on a network, given a predetermined “noise” level within the network itself.
However, the current 5G – namely Huawei’s – can always acquire new additional frequencies, which allow to use more channels, even simultaneously.
Nevertheless it is much more sensitive to the 4G rain.
The second advance of the 5G compared to the 4G network is the fact that the transmission cells have advanced antennas of different design compared to the current ones, capable of optimally managing different networks, even simultaneously.
Furthermore China is much more internationalized in the IT and Network sector than we may think.
Chengdu, the Chinese city with the highest density of “intel” companies, currently hosts 16,000 companies in the IT sector, including 820 ones fully owned by foreigners, in addition to Huawei’s primary competitors: Cisco, Ericsson, Microsoft, etc.
Nokia-Siemens has 14 joint-ventures and directly-owned factories in China. Alcatel-Lucent has its largest factory in China. Ericsson’s largest distribution centre in China is the point of reference for the whole network of the Swedish company in the world. Cisco has some Research & Development centres in China, but also 25% of all Cisco production is provided by Chinese factories.
The various quality controls, which in Huawei focus explicitly on the ban and detection of backdoors, i.e. hidden or secret ways to bypass normal authentication or encryption in computer operating system, which are controlled systematically, are managed – also financially – by companies known throughout the global market, such as Price Waterhouse Coopers for internal finance and accounting, IBM Consulting for IT technologies and many others. Hence how can we think that a company like Huawei, with this type of relations, controls and checks, is so “impenetrable”, as some Western media report?
Hence, apart from the rumors spread by mass media, what are the real reasons why, according to British intelligence documents, Huawei should not spread its far more cost-effective and functional 5G than the others in the West?
a) Huawei is the result of the Chinese “political ecosystem”. Well, what is the problem? How many Western companies work in China? A huge number and they all operate on the basis of local laws and China’s economic and political system. It is a hollow and generic argument.
b) According to its professional detractors, Huawei is the result of the Civilian-Military merger. However, the same principle applies also to the USA. Certainly there are CPC committees in 11 of the most technologically advanced companies in China. Nevertheless, as many studies show, including Western ones, this does not automatically transfer the expanding civilian technologies to the Chinese military system.
c) In 2010, only less than 1% of hi-tech civilian companies were connected to defence-related activities. Certainly, as happens everywhere, the connection between civilian and military activities is at the origin of Xi Jinping’s plans, namely the Made in China 2025 and the Next Generation Artificial Intelligence Plan. President Xi has also created the Central Military Commission for Integrated Military and Civilian Development. However, these are specific projects and predetermined development lines – not for the immediate use of civilian companies’ technology state of the art in military ones.
d) The Chinese power, however, has always used – and will continue to do so – market forces to reform the old State-owned companies. In fact, this is the real current goal of Chinese power in the civilian-military relationship. This is also the reason why the big global Chinese companies are left free to float and fluctuate in the world market, instead of acting as retrievers for small and minor secrets, which the Chinese intelligence services can know anyway. Indeed, some analyses by the Chinese government itself tell us that, if the public business system does not change rapidly, most of the advanced private companies in China will de facto be cut out from the defence economy and its updating process.
e) How can we also think that a country like China manipulates one of its major companies, namely Huawei, to gather confidential information? The secrets, if any, are concepts, projects and sets of news, not the talk of some Presidents or some Ministers’ phone calls to their lovers. This is at most pink press, stuff for gossip magazines we can find by hairdressers. It is never intelligence. Obviously, for many Western countries, small personal data has become the substitute for sound strategic thinking, as if the defamation of a leader were the primary goal of an agency.
f) Again according to the detractors of its 5G leadership, Huawei is supposed to be subject to the 2017 Chinese Intelligence Law. This is a rule that allows, in principle, State control over foreign individuals and companies. What do Western intelligence services do differently instead? Not much, I think. Indeed, I am fairly certain about it.
g) The 2017 law also allows the operation of the Chinese intelligence services inside and outside China. Hence, what is wrong with it? What do we do differently? Obviously, in China’s legislation, it is also a matter of following and controlling the internal opposition. But, again, what do Western intelligence services do differently? Do they distribute snacks? Indeed, here is the connection between the various oppositions inside China and their use of, or even connection with, some Western intelligence agencies.
h) Furthermore, Western sources and media also state that the aforementioned Huawei’s structure is “opaque”. It may be so, but how is the structure of the other global hi-tech companies? Apple provides exactly the same internal data that is available to Huawei’s analysts. Considering the habit and style of granting substantial shareholdings to managers, the share ownership is equally opaque and often permits severe insider trading, often in favour of competitors. There is no reason to differentiate between Huawei’s corporate data and the one from other global IT and phone companies. Indeed, Huawei’s technical documentation is often much more detailed than the one of its global competitors. Certainly the public officials belonging to Huawei’s internal unions and control structures are accountable vis-à-vis the CPC and the State, but this holds true also for all the other Western companies that produce or sell in China. Do CISCO and Apple, who have been operating in China for many years, also in the R&D field, believe they are exempted from some security checks?
i) An apparently rational argument of Huawei’s Western competitors regards the willingness of Chinese banks to fund this company. Just think about the notorious and stupidly ill-reputed “State aid”.
j) Indeed, Chinese banks certainly fund Huawei-the last time to the tune of some billion yuan, but only and solely based on official budgets. Nowadays, Western financial companies have free access to as many as 44 trillion US dollars, which is exactly the current size of the Chinese financial market. They can also have the majority of shares. In 2030 Western financial companies plan to reach 10 billion US dollars of profits in China. The problem is that China is liquid, while Western countries are so to a lesser extent. Yet the credit institutions prefer not to invest in companies and prefer to do so in opaque financial instruments and government bonds.
k) Furthermore – and here we can see the solely political drift of the controversy against Huawei – it is supposed to have produced and updated the e-control networks operating in Xinjiang. Is it possible that the Uyghurs are wrong and China is right? What is the West’s positive bias vis-à-vis an Islamic population that is often refractory to the Chinese system, with decades of terrorism behind it, even after a great economic boom, while the Hui – another Islamic population – do not cause any problem to China? Hence if we do not accept the “authoritarian” values of the Chinese system, we should not massively invest in that economic system. This is exactly what the Western companies are increasingly doing. Conversely, if the Western companies appreciate China’s stability and efficiency, they should resign themselves to accepting also the sometimes necessary repression of vociferous or basically jihadist minorities. If the West wants the jihad liberation, possibly to counter the new “Silk Road”, it shall have the courage to openly say so.
Moreover, Google is planning to re-enter the Chinese market with a version of its search system that adapts to the new Chinese laws on censorship or on the control of dangerous news. Or even on “enemy” propaganda.
Reverting to Huawei, as already mentioned, the Chinese company has set up the Centre for Cybernetics Security in Great Britain, which is anyway in constant connection with the Government Communication Headquarters (GHCQ), the British intelligence and security organisation responsible for providing signals intelligence and information assurance, as well as for controlling networks, ciphers and the Internet.
It should also be recalled that the 5G is not only a much faster Internet downloading system than the previous ones, but it is a network that will transform companies and the information technology.
Remote Medicine, self-driving vehicles, Internet of Things (IoT), new automated production systems.
These are the fields in which the outcome of the struggle between Huawei and Western companies will be decided, in a phase in which – for the first time in recent history – the USA and European allies have significantly lower leading technology than the Chinese one. This is precisely the core of the issue – not the talk about Chinese intelligence services or the rhetoric about mass control systems in Xinjiang.
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