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Information as an offensive tool of economic warfare

Gagliano Giuseppe

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In his “Warfare and counter-warfare of economic information” initially published by Revue Echanges in 1994, P.J. Gustave wrote about the information warfare, or info-war, maintaining that at this stage it is more important to find solutions not to lose the economic war, rather than discussing whether or not to engage in it. Increasing competition and geostrategic balance contribute to develop the offensive use of economic practices. On the one hand the most competitive economic powers managed to use information as a strategic tool; on the other hand, economic warfare intelligence operations replaced the Cold War methods and accompanied the transition from geopolitics to geo-economics.

In this new warfare framework, the role of information is twofold. Firstly, it is a fundamental resource for the enterprise, as it allows access to all kinds of goods and services; secondly, information is the main tool for economic warfare, since it works both as offensive and defensive weapon at the same time. The radicalization of economic competition triggers a radicalization of information, disinformation and counter-information mechanisms, in which the importance of intelligence techniques is growing significantly.

Disinformation is one of the most ancient combat techniques and dates back to primitive times, when it was used for hunting. It was particularly for primitive men to make their opponent fall right into the trap without risking self-exposure. There is a trace of the use of disinformation tools even in Chinese warfare writings (2000 B.C.) and in the Bible. In contrast to what is commonly believed, these techniques were not born in the former Soviet Bloc. At the beginning of 20th century, disinformation was already used even by the British to gain advantages on the battle field and to perform important financial hits. At the present moment, there are a number of different forms of deception techniques. Technological disinformation, for example, provides wrong information on plausible projects – that are consistent with a global strategy – through filing unusable patents.

Disinformation can be extremely helpful to protect the secrecy of sensitive information while playing with space and time. Since the rising of physical barriers is a clear indicator of the presence of hidden sensitive material, more and more enterprises are adopting a different approach that consists in giving contradictory signals. This practice allows shadowing the company’s strategy while presenting a false but clear and transparent image to the opponent; this increases security since it consists in the combination of defense-offense techniques. Nonetheless, every company is vulnerable to information attacks that are difficult to neutralize, especially when the victims are not familiar with the offensive methods used and with the necessary countermeasures. Information attacks are even more dangerous when conducted while trade negotiations are taking place.

This disinformation technique is usually adopted in “grey” or “black” operations, whose destructive potential is enhanced only through the mass media diffusion. It basically consists in provoking an event or a harmful accident for the targeted company and spread the news on media outlets. This actually causes more damages than the accident itself. Besides, since there are no geographical boundaries containing the spreading of the news, these attacks can very rapidly achieve a catastrophic scale. Their main characteristic is the invisibility of the attacker and the extraordinary cost-effectiveness.

Most times, disinformation consists in a wanton and purely informative attack aimed at distorting or destroying the competitors’ image: while the news is based on real facts, the consequences are always misrepresented and usually transmitted through media outlets that amplify it. The case of the traces of benzene found in French company Perrier’s bottles of gas water is an interesting example of how a leak in the information security can turn into significant losses for a healthy firm and how an effective communication system can partially neutralize the attack. This episode originated from a human error in sanitary procedures in the Vergèze factory, where the late replacement of the filters caused an increase in the benzene level in the bottles of water to be shipped to the United States. Although this error could have been easily corrected through filter substitution, the presence of a competitor ‘agent’ in the factory increased the echo of what happened.

At the end of 1989 Perrier was a healthy company, whose financial stability was severely threatened by this attack. After the competitor ‘agent’ had informed the United States about the presence of benzene in the bottles of water, the Food and Drug Administration conducted further analyses that confirmed the suspect. In the following days, Perrier was obliged to withdraw thousands of crates of water from the U.S. and Japanese markets and eventually suspend the sales in many other countries with significant incurring losses. Nevertheless, Perrier managed to quickly react to the attack using information tools. Gustave Leven, Perrier’s CeO, adopted a successful counter-information strategy and admitted the human error had taken place. Despite the tests conducted on the sources of water came out clean, Leven announced the worldwide withdrawal of all Perrier bottles and that Perrier took public responsibility of the cost of 160 million bottles. Within a couple of days, the rating of Perrier stocks rose again and all other attacks from Perrier’s competitor were neutralized.

This example shows the power of information attacks and its implementation through the rapidity of the circulation of information and event orchestration. The attack on Perrier costed the company several hundred million Francs and was more effective than a financial speculative attack. This gives room for reflection about the need of protecting information and about the power of counter-information. As scholars like Marc Ehlias and Laurent Nodinot remarked, counter-information is a subversive concept that Renato Curcio and Toni Negri invented in Italy at the beginning of the ‘70s. At that time, the leaders of terrorist organization Brigate Rosse and political movement Autonomia Operaia were trying to find common ground on how to “break the siege of the bourgeois press”. They decided to establish a new magazine called Counter-Information, whose editorial mission was providing fact-checking on the ‘biased information published on the bourgeois press’ through fairly “offensive” articles and investigations.

The subversive balance of Counter-Information is based on the following points: search for information for strategic and tactic goals; systematic attack on the opponent’s contradictions; operative continuity between those who collect the information and those who exploit it; supporting the information through field work; providing evidence for the facts presented; spotting the audience niches that could spontaneously spread and amplify the information. In contrast to manipulative operations, this case is about exploiting the open-access information that has not been adjusted to a given purpose. There are very few companies that have proven able to push the potential of information beyond the commercial and financial purposes.

While Perrier carried out a defensive counter-information, the advertising campaign launched in the spring 1993 by the Union of French Textile Industries (UIT) can be considered as an innovative use of information for offensive purposes. This focus of this campaign was the employment and the slogans used were supported by sensational facts able to engage public opinion; the overall aims were Brussels and the Blair- House pre-agreement. Famous and opinion-leading businessmen contributed to this campaign by delivering harsh speeches on this subject. The subtlety consisted in using French people as testimonials opposing the EU negotiators without attacking the French government, which was the real target of the campaign, given its role in conducting trade negotiations.

The success of the UIT campaign (encouraging the dialogue with Brussels, Longuet’s favorable reaction, reconsideration of the EU positions, and relative success of Marrakech Agreement) was due to the use of the propaganda techniques mentioned above with regard to the Counter-Information subversive approach. In particular, the UIT campaign focused on the main contradictory aspect of the issue concerning the European textile industry: 11 out of 12 representatives opposed the proposal of the EU Commission that was supposed to represent their interests. Counter-information is therefore an indirect strategy that aims at using misinformed and manipulated public opinion to surround the target and influence opinion leaders. In order to launch the information at the right time and place, it is necessary to have a perfect understanding of the media and opinion leaders. In practice, counter-information uses the same channels of disinformation. However, as far as its defensive aspect is concerned, it needs a permanent intelligence of the above-mentioned system in order to be reactive and effective.

The idea of using information in economic competition as a disinformation or counter-information weapon shows that the info-war has now become a real issue that needs to be tackled. Sustainable solutions should consist in observing practices through non-ideological lenses and through integrating knowledge that do not strictly relate to the economic field.  In particular, since offensive and defensive economic competition techniques are increasingly looking at military methods, it is necessary to combine economic and military knowledge in a legal framework. While some countries have a traditional approach to economic intelligence that allows a natural integration, some others do not. These latter can no longer postpone a broad reflection on the role of information in the economic warfare, since it is ultimately based on information and knowledge.

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Economy

New UNWTO Report Helps Cities Manage Impact of Tourism

MD Staff

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A new World Tourism Organization (UNWTO) report aims to help manage growing urban tourism flows and their impact on cities and residents. ‘Overtourism’? Understanding and managing urban tourism growth beyond perceptions’, was launched today during the 7th UNWTO Global Summit on Urban Tourism, in Seoul, Republic of Korea (16-19 September 2018).

The report examines how to manage tourism in urban destinations to the benefit of visitors and residents alike. It proposes eleven strategies and 68 measures to help understand and manage visitor growth. The report is the result of collaboration between UNWTO, the Centre of Expertise Leisure, Tourism & Hospitality (CELTH), Breda University of Applied Sciencesm and the European Tourism Futures Institute (ETFI) of NHL Stenden University of Applied sciences.

The recent growth of urban tourism requires the sector to ensure sustainable policies and practices that minimize adverse effects of tourism on the use of natural resources, infrastructure, mobility and congestion, as well as its socio-cultural impact. Increased reports of negative attitudes among local populations towards visitors, due to perceived overcrowding, noise and other issues, have led to the spread of terms such as ‘overtourism’ and ‘tourismphobia’ in the media.

“Governance is key. Addressing the challenges facing urban tourism today is a much more complex issue than is commonly recognized. We need to set a sustainable roadmap for urban tourism and place tourism in the wider urban agenda,” said UNWTO Secretary-General Zurab Pololikashvili. “We must also ensure local communities see and benefit from the positive aspects of tourism”, he added.

To better understand visitor management challenges in urban contexts, particularly the relationship between residents and visitors, the report includes an analysis of residents’ perceptions towards tourism in eight European cities – Amsterdam, Barcelona, Berlin, Copenhagen, Lisbon, Munich, Salzburg and Tallinn.

“There is no one-size-fits-all solution to deal with overtourism. Instead tourism needs to be part of a city-wide strategy for sustainable development”, Dr. Ko Koens of the Centre of Expertise Leisure, Tourism & Hospitality (CELTH) and Breda University of Applied Sciences concludes. The report recommends a common strategic vision among all stakeholders involved, bringing residents and visitors together and adopting careful planning which respects the limits of capacity and the specificities of each destination. “The involvement and support of local residents is key in achieving sustainable tourism”, Professor Albert Postma of CELTH and NHL Stenden University of Applied Sciences explains. “Building shared responsibility amongst stakeholders directly or indirectly involved in tourism development is a key for ensuring long-term sustainability”, involved researcher Bernadett Papp concludes.

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The Geopolitical Impact of Petro-Yuan

Lorenzo Beriozza

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A few months ago, a piece of news shook the global oil future market: yuan-denominated oil contracts have begun trading for the first time in Shanghai on March 26, 2018. By widening the gaze beyond the next few years, this fact is poised to change how oil (a potentially other commodities and hard assets) are traded globally. It is obvious to register this will enhance the role of the yuan as a global trading currency, and compel investors to increase their allocations to Chinese financial assets.

Some facts to begin with: China became the world’s largest oil consumer at the end of 2016 (source: Bloomberg). As a consequence of this achievement, China is progressively manifesting a strong desire to pay for its huge import bill in its own currency, rather than resorting to employ USD. Additionally, China’s quite open aspiration with this new oil trading plan is to promote the internationalization of yuan and it intends to achieve this goal by aggressively promoting a wider adoption of the yuan as a global trading currency. Switching to yuan payments for major imports is a fundamental cornerstone of this process and the internationalization of the yuan is clearly one of the main priorities now for People’s Bank of China and other Chinese regulators.

Shall this plan be successful (at least to a certain degree in the short run), China can start thinking about replicating this model for other commodities purchases. Furthermore, the Chinese are, according to a number of sources, planning to devise active measures to persuade oil exporting countries to accept payment for their crude oil in yuan, which would be the logical next step from the new futures contract.

The emergence of petro-yuan revenues collected by the world’s largest oil producers is a natural development from this process and it is expected to become the third global price benchmark alongside Brent and West Texas Intermediate crude. As evidence of the seriousness of the Chinese new policy, a few top global energy traders, such as Glencore and Trafigura, have decided to start trading in the new contracts.

Carl Weinberg, chief economist and managing director at High Frequency Economics, in a recent interview stated: “Moving oil trade out of dollars into yuan will take right now between $600 billion and $800 billion worth of transactions out of the dollar… (That) means a stronger demand for things in China, whether it is securities or whether it is goods and services. It is a growth plus for China and that’s why they want this to happen”.

Obviously, the petro-yuan will encounter many challenges on its way of various nature: the most evident is the exchange policy designed by China in the past two decades. In 1994 the Chinese Yuan was pegged to the US Dollar, and it was only in 2005 that the country shifted to a “managed float” system and was allowed to appreciate. It now fluctuates in the forex market in accordance with a basket of major foreign currencies, and the Chinese government has always been very keen to keep the yuan undervalued as it is understandably a means of promoting the country’s exports.

Arguably, in order to be able to gain the investor confidence and to sustain the even greater capital inflows, Chinese policy maker might have to be forced to reconsider China’s exchange rate policy to render it more sustainable and, equally important, insulated from external shocks. This state of affairs may prove to be unattainable given the theorem of the “Impossible Trinity” which states that it is impossible, for any given country, to maintain the following three at the same time: a fixed foreign exchange rate, a regime of free capital movement (or absence of capital controls), and an independent monetary policy.

On the other side of the world, the most relevant oil actor, Saudi Arabia, seems to remain firmly committed to the dollar peg for its currency, the riyal, which has been in place for more than 30 year, and to the continued dominance of the US dollar as the medium of payment for its main export. However, the petro-yuan future contract represents an unplanned and (possibly) uncontrollable variable in Aramco’s long-term strategic planning. Aramco is the Saudi’ state controlled oil company the value of which is estimated in several hundreds of US billions

On the other hand, Saudi Arabia may benefit from the introduction of the petro –Yuan future contract in the light of the magnitude of its commercial partnership with China: the petro-yuan may ensure the establishment of a long-term eastern market for crude oil in the world’s biggest oil-consuming economy and furnish a hedge against the surge in American oil exports triggered by the shale boom.

Similarly Russia, the largest oil producer in the world, has welcomed the petro-yuan future contract with one of the national champions, Gazprom, having already made the switch from the US dollar to the yuan and other Asian currencies. The diffusion of the petro-yuan future contract will greatly benefit the Russian state politically as it allows her to further reduce its dependency on the United States (and capital denominated in US dollars) and weakens the US’ ability to wage economic war and conduct currency wars.

Nonetheless, in the long term, the petro-yuan future contract may offer a win-win solution for the two contenders on the ongoing trade and tariff war (namely, USA and China).

Let’s explore the underpinning reasons why it could turn out to be a good deal for both countries:

  • Despite the good premises and the warm welcome it has received so far, it will take many years for Chinese oil futures to establish themselves as an alternative benchmark in the oil market.
  • If the prediction above is correct, the petro-yuan future contract will have an insubstantial impact on the US economy in the short term; nonetheless, it could help to lower the value of the US dollar against other foreign currencies.
  • A slightly weaker US dollar may, in turn, make US dollar denominated exports more competitive in global markets, thus allowing the US to narrow their trade deficit, particularly with China.
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Machines Will Do More Tasks Than Humans by 2025

MD Staff

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The world is going through a workplace revolution that will bring a seismic shift in the way humans work alongside machines and algorithms, according to new research by the World Economic Forum. By 2025 more than half of all current workplace tasks will be performed by machines as opposed to 29% today. Such a transformation will have a profound effect on the global labour force, however in terms of overall numbers of new jobs the outlook is positive, with 133 million new jobs expected to be created by 2022 compared to 75 million that will be displaced.

The research, published today in The Future of Jobs 2018, is an attempt to understand the potential of new technologies to disrupt and create jobs. It is also seeks to provide guidance on how to improve the quality and productivity of the current work being done by humans and how to prepare people for emerging roles.

Based on a survey of chief human resources officers and top strategy executives from companies across 12 industries and 20 developed and emerging economies (which collectively account for 70% of global GDP), the report finds that 54% of employees of large companies would need significant re- and up-skilling in order to fully harness the growth opportunities offered by the Fourth Industrial Revolution. At the same time, just over half of the companies surveyed said they planned to reskill only those employees that are in key roles while only one third planned to reskill at-risk workers.

While nearly 50% of all companies expect their full-time workforce to shrink by 2022 as a result of automation, almost 40% expect to extend their workforce generally and more than a quarter expect automation to create new roles in their enterprise.

The report presents a vision of a future global workforce that provides grounds for both optimism and caution. Compared to a similar study by the Forum in 2016 to understand the impact of the Fourth Industrial Revolution on jobs, the outlook for job creation today is much more positive as businesses have a much greater understanding of the opportunities made available by technology. At the same time, the huge disruption automation will bring to the global labour force is almost certain to bring with it significant shifts in the quality, location, format and permanency of roles that will require close attention from leaders in the public and private sector.

“It is critical that business take an active role in supporting their existing workforces through reskilling and upskilling, that individuals take a proactive approach to their own lifelong learning, and that governments create an enabling environment to facilitate this workforce transformation. This is the key challenge of our time,” said Klaus Schwab, Founder and Executive Chairman of the World Economic Forum.

Among the set of roles set to experience increasing demand across all industries are data analysts and scientists, software and applications developers, and ecommerce and social media specialists, all of which roles that are significantly based on or enhanced by technology. Roles that leverage distinctly ‘human skills,’ such as sales and marketing professions, innovation managers and customer service workers, are also set to experience increasing demand. Jobs expected to become redundant include routine-based white-collar roles, such as data entry clerks, accounting and payroll clerks.

Jobs Outlook 2022

Within the set of companies surveyed, respondents predicted a decline of 984,000 jobs and a gain of 1.74 million jobs between now and 2022. Extrapolating these trends across those employed by large firms in the non-agricultural workforce of the 20 economies covered by the report suggests that 75 million jobs may be displaced by a shift in the division of labour between humans, machines and algorithms, while 133 million new roles may emerge that are more adapted to this new division of labour.

While we expect net positive job growth, there will be a significant shift in the quality, location, format and permanency of new roles. In fact, businesses are set to expand their use of contractors doing task-specialized work, engage workers in more flexible arrangements, utilize remote staffing, and modify the locations where their organization operates to ensure access to talent.

Workers will require new sets of skills as the division of labour between humans and machines continues to evolve. Surveyed companies report that today, 71% of total current task hours are performed by humans, compared to 29% by machines. By 2022, this average is expected to shift to 58% task hours performed by humans, 42% by machines.

Change Management Strategies

All industries expect to have sizeable skills gaps, with average skills instability of 42%, highlighting the scale of the challenge in preparing today’s workers for changes within their current roles and the emerging jobs of the future. Technology proficiency, such as technology design and programming, and distinctly human skills, such as creativity, critical thinking and persuasion, are among the competences that will be sharply increasing in importance.

“Companies need to complement their automation plans with comprehensive augmentation strategies. For businesses to remain dynamic, differentiated and competitive in an age of machines, they must in fact invest in their human capital. There is both a moral and economic imperative to do so. Without proactive approaches, businesses and workers may lose out on the economic potential of the Fourth Industrial Revolution,” said Saadia Zahidi, Head of the Centre for the New Economy and Society at the World Economic Forum.

An augmentation strategy takes into account the broader spectrum of value-creating activities that can be accomplished by workers, machines and algorithms in tandem. Fulfilling this potential will require workers to have the appropriate skills for the workplace of the future, and will require business and policymakers to lead complementary and coordinated efforts to invest in human capital.

Respondents reported three main strategies for coping with the challenges of the new world of work: hire wholly new permanent staff with the skills relevant to new technologies; automate work tasks completely; and retrain existing employees. A smaller but significant number of companies expect to allocate the work to specialist contractors, freelancers and temporary workers.

While large-scale, multistakeholder action will be needed to tackle existing and impending skills needs, 85% of companies reported that they plan to rely mainly on internal specialized departments within their organization to provide reskilling opportunities, compared to half expecting to work with public education institutions. Only 34% of the training to be delivered directly by employers is expected to result in an accreditation recognized outside of the company in question.These findings highlight both the future role of companies as learning organizations and the range of untapped reskilling and upskilling collaboration opportunities.

The Future of Jobs Across Industries

The future of jobs is not singular, and disparate impacts will be felt across industries depending on initial starting conditions, skills availability, technology adoption and adaptability of the workforce.

While there is an overall net positive outlook on the future job market, the balance of workforce expansion and contraction looks different across industries. The level of displacement is expected to vary considerably. For example the share of companies projecting jobs losses in the mining and metals, consumer and information and technology industries is higher than companies in professional services. Declining roles and skills in one industry are growing in other industries. These findings point to potential opportunities for coordinated job transition strategies across industries.

All industries expect to have sizable skills gaps, with the Aviation, Travel & Tourism industry projected to have the highest reskilling needs in the 2018-2022 timeframe. Skills gaps are also a particular concern in the Information & Communication Technology, Financial Services & Investors, and Mining & Metals industries. The broad mobility sector is least likely to look to reskill their current employees, while business leaders in the Global Health & Healthcare, Chemistry, Advanced Materials & Biotechnology sectors are most likely to retrain their workers.

“Knowing which occupations are growing and declining globally is a starting place for policymakers, educators, and employers to start conversations on how to transition the global workforce to the jobs and skills of tomorrow,” says Allen Blue, Co-founder of LinkedIn. “To help people connect to economic opportunity on the individual level, it’s important to map and understand today’s labor market dynamics at scale.”

If managed well, a combination of reskilling and the augmentation of a range of tasks today can create the opportunity for new, higher productivity growth. For example, administering and physical tasks are projected to be significantly replaced by mechanized labour, leaving room for humans to focus on higher productivity tasks.

The Future of Jobs Across Regions

The impact of automation on jobs will also vary across countries and regions, especially as global companies consider a number of strategic factors in choosing where to locate specific job roles and economic activities. 74% of companies cited the availability of skilled local talent as their foremost consideration in determining job locations. More than half of companies surveyed for this report expect that by 2022, they would consider adjusting the composition of their value chains in response to the adoption of new technologies, and just under half expect to target new talent by modifying the location of their operations. These findings point to the potential impact of workforce management strategies on the geography of jobs across the global economy.

The report finds variation among the demand for roles across regions. Region-specific roles expected to be in growing demand include Financial and Investment Advisors in East Asia and the Pacific and Western Europe; Assembly and Factory Workers in Latin America and the Caribbean, Middle East and North Africa, South Asia and Sub-Saharan Africa; and Electrotechnology Engineers in North America. Across all countries and regions, employers expect that significant reskilling will be needed by a large share of the global workforce over the 2018-2022 period. Remaining competitive in a global context and taking advantage of emerging job creation opportunities will require a well-skilled local workforce bolstered by national lifelong learning ecosystems.

Shaping a Human-Centered Future of Jobs

Harnessing the transformative potential of the Fourth Industrial Revolution will require coordinated efforts among stakeholders in all industries and regions to formulate a comprehensive workforce augmentation strategy ready to meet the challenges of this new era of change and innovation. Business, government and workers must proactively plan and implement a new vision for the global labour market.

For governments, there is an urgent need to address the impact of new technologies on labour markets through upgraded education systems aimed at raising both technical and soft skills among the future workforce; social policies aimed at supporting an ecosystem of lifelong learners; safety nets for managing the social impact of workforce transformations; and stimulating job creation taking into account local and global demand for emerging roles and skills. For industries, it will pay to support the upskilling of their current workforce toward new and higher-skilled roles as competition for skilled talent intensifies and becomes more costly over the coming years. Industries will also need to consider how these efforts may also apply to the gig, temporary and online workforces they increasingly plan to rely on. For workers, there is a need to take personal responsibility for their learning trajectory through the current transition and developing a higher degree of comfort with the concept of lifelong learning.

Methodology

The latest edition of the Future of Jobs Report aims to support individual workers, businesses, and policymakers understand the impact of automation on talent gaps, skills churn, job displacement and change management strategies for navigating the new world of work. The 2018 employer survey that formed the basis of the report gathered the views of business executives at the frontlines of the changing workforce, especially Chief Human Resource Officers, Chief Strategy Officers and Chief Executives. It covers over 300 global companies from a wide range of industry sectors. Survey responses represent more than 15 million employees, and 20 developed and emerging economies which collectively represent about 70% of global GDP. In addition to the aggregate analysis, the report contains 12 industry profiles and 29 country or regional profiles, providing detailed information for projections through to 2022. The Report also included a unique data contribution from LinkedIn, showing the key emerging and declining roles in the recent past across several industries and geographies.

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