Monthly Archives: June 2023

What Eats Alive the Global Banks of China

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Eight years after Chinese leader Xi Jinping and his counterparts from Brazil, Russia, India and South Africa established the New Development Bank, with headquarters in Shanghai, it has all but stopped making new loans and is having trouble raising dollar funds to repay its debts…The New Development Bank is the lesser-known of two China-based multilateral lenders. Its larger cousin, the Asian Infrastructure Investment Bank (AIIB), in June 2023 landed in the middle of a public-relations crisis after a disgruntled executive accused it of being controlled by members of China’s Communist Party. 

Trouble at both banks, as well as at China’s giant Belt and Road infrastructure push, which has seen China spend $1 trillion to expand its influence across Asia, Africa and Latin America, spotlights growing difficulties for Beijing’s strategy to rearrange an international order it considers biased in favor of the West.  Both the AIIB and the New Development Bank were set up in large part to reduce developing countries’ dependence on dollar-based funding—alternatives to the International Monetary Fund that would help finance development in some of the world’s fastest-growing economies. 

The AIIB operates on a much larger scale than the New Development Bank, counting many Western countries such as the U.K. and Canada among its more than 100 members. The bank found itself in a political firestorm this week after its Canadian communications chief resigned and accused the bank’s management of being “dominated by the Communist Party,” allegations that the AIIB called baseless. Nonetheless, Canada’s government said it would halt all activity with the bank while it reviews the allegations, and the bank said it would conduct an internal review.

Meanwhile, the New Development Bank is fighting for its very survival, threatened by its own reliance on the U.S. currency. Two-thirds of the bank’s borrowings are dollar-denominated—hardly in line with the bank’s stated aim to break its members’ reliance on the dollar. 

Soon after Russian troops marched into Ukraine in February 2022, the bank froze all new lending to Russia to assure investors that it was complying with Western sanctions. However, Wall Street quickly became wary of lending to a bank nearly 20% owned by Russia. Xi’s deepening alignment with Russian President Vladimir Putin was another deterrent. Since then, the bank has had to take on increasingly expensive debt to service old borrowings and stay current with its own liquidity requirements. To bolster its resources, the bank is in talks with Saudi Arabia, Argentina and Honduras about becoming members…

Excerpts from Alexander Saeedy and Lingling Wei, A Bank China Built to Challenge the Dollar Now Needs the Dollar,  WSJ, June 17, 2023
 

The Law of the Jungle for Personal Data: Who Benefits?

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The vast amount of Americans’ personal data available for sale has provided a rich stream of intelligence for the U.S. government but created significant threats to privacy, according to a newly released report by the U.S.’s top spy agency. Commercially available information, or CAI, has grown in such scale that it has begun to replicate the results of intrusive surveillance techniques once used on a more targeted and limited basis, the report found. “In a way that far fewer Americans seem to understand, and even fewer of them can avoid, CAI includes information on nearly everyone that is of a type and level of sensitivity that historically could have been obtained” through targeted collection methods such as wiretaps, cyber espionage or physical surveillance, the report concluded. 

In recent years, data brokers’ offerings have grown from basic address history and demographic information to include the trail of information generated by smartphone devices and apps, social-media platforms, automobiles and location trackers such as fitness watches. Such detailed information can now “cause harm to an individual’s reputation, emotional well-being, or physical safety,” said the report, which urged the intelligence community to develop better policies, procedures and safeguards around its acquisition of such information.  Virtually anyone can purchase the data, and the marketplace is loosely regulated in the U.S., which has no comprehensive national privacy law. 

Much of that data is sold to the government by vendors who claim it is “anonymized”—stripped of personal information such as names or addresses. But privacy advocates and researchers say that in the case of geolocation information on phones or cars, a name can often be inferred: Individuals typically park their cars at night and set down their phones at their homes. In the case of certain internet data, browsing behavior also can reveal personal information.

“If the government can buy its way around Fourth Amendment due-process, there will be few meaningful limits on government surveillance,” Wyden said in a statement, referring to the U.S. Constitution’s protections against “unreasonable searches and seizures.”

Excerpts from Byron Tau and Dustin Volz, U.S. Spy Agencies Buy Vast Quantities of Americans’ Personal Data, WSJ,, June 13, 2023

Saving the Climate by Fouling the Oceans

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The Norwegian government in June 2023 opened the door for deep-sea mining in its waters, despite opposition from environmental groups and a growing list of nation states arguing to ban the practice.  The government said it was proposing parts of the Norwegian continental shelf be opened for deep sea mining and other commercial seabed mineral activities…Companies and countries are scouring the planet to find and secure additional sources of metals and minerals critical for the energy transition, including cobalt, manganese and nickel.  To date deep-sea mining has focused on the extraction of seabed nodules—tennis-ball sized pieces of rock which contain manganese, cobalt and nickel, all of which are used in electric-vehicle batteries. 

So far much of the attention has centered on the Clarion Clipperton Zone in the Pacific Ocean: An area of water between Mexico and Hawaii that contains millions of tons of nodules.  In Norway however, the focus will be on seabed crusts on the country’s continental shelf. The target crusts contain copper, zinc and cobalt, as well as some rare-earth elements, according to the Norwegian Petroleum Directorate…

Countries including France and Germany have called for moratoriums on deep-sea mining, while in May 2023 a report found that when researching the pacific seabed, 90% of the more than 5,000 marine creatures found living in the Clarion Clipperton Zone were new species. Companies including Maersk and Lockheed Martin have also been divesting their deep-sea mining investments. 

Excerpts from Yusuf Khan, Norway Opens Door for Deep-Sea Mining of Copper and Other Critical Materials, WSJ, June 20, 2023

Wielding the Weapon of Nuclear Expertise: Russia

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Cutting the heart out of a nuclear power plant, the dismantling of a nuclear power plant, is a surgical procedure that only a few specialists are equipped to handle. The process begins by launching plasma-torch-wielding robots into an empty pool surrounded by thick concrete walls. From there, the remote-controlled machines make circular cuts, as if slicing pineapple rings, through a 600-ton steel vessel that contains radiation generated over decades of splitting atoms. These rings are then diced into meter-long pieces and transported via secure convoy to radioactive waste repositories, where they are left to cool down — indefinitely.

Behind the scenes, scores of nuclear engineers, radiation safety experts and state regulators monitor this operation, which can cost upwards of a billion dollars and take years to plan and execute. The expertise needed to pull this off without error is why “there are only a handful of players” in the high-radiation decommissioning (dismantling) business, said Uniper SE’s Michael Baechler, who is supervising the dismantling of Sweden’s Barsebaeck Nuclear Power Plant.

Among the oldest and most experienced is Germany’s Nukem Technologies Engineering Services GmbH, which for decades has offered its unique services in Asia and Africa and across Europe. Nukem engineers helped contain radiation from the destroyed reactors in Chernobyl and Fukushima. They helped lead the clean-up of an atomic-fuel factory in Belgium. In France, the company devised ways to treat waste from the International Thermonuclear Experimental Reactor. With researchers predicting that cleaning up after aging nuclear power plants will evolve into a $125 billion global business in the near future, Nukem should be ideally positioned to capitalize on the moment.

Except for one thing: the company is wholly owned by Rosatom Corp., the Kremlin-controlled nuclear giant, putting it in the center of an uncomfortable standoff…Unlike Germany’s seizure of Russian storage and refining assets after the war with Ukraine, Nukem does not have as much fixed infrastructure to go after. If sanctions were to be imposed, Rosatom might simply close shop or move Nukem’s headquarters to a friendlier jurisdiction… But this presents a problem because “Nukem presides over a large pool of know-how.” Its valuable asset being its 120 mostly German engineers who can work across the nuclear supply chain from the building to the decommissioning of nuclear power plants. The International Atomic Energy Agency has warned of an acute shortage of decommissioning workers.

Excerpt from The Russian nuclear company the West can’t live without, Bloomberg News, May 13, 2023

Genetic Surveillance based on Stray DNA

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Everywhere they go, humans leave stray DNA. Police have used genetic sequences retrieved from cigarette butts and coffee cups to identify suspects; archaeologists have sifted DNA from cave dirt to identify ancient humans. But for scientists aiming to capture genetic information not about people, but about animals, plants, and microbes, the ubiquity of human DNA and the ability of even partial sequences to reveal information most people would want to keep private is a growing problem, researchers from two disparate fields warn this week. Both groups are calling for safeguards to prevent misuse of such human genomic “bycatch.”

Genetic sequences recovered from water, soil, and even air can reveal plant and animal diversity, identify pathogens, and trace past environments, sparking a boom in studies of this environmental DNA (eDNA). But the samples can also contain significant amounts of human genes, researchers report today in Nature Ecology & Evolution. In some cases, the DNA traces were enough to determine the sex and likely ancestry of the people who shed them, raising ethical alarms…Similarly, scientists have for decades analyzed the genetic information in fecal matter to reveal the microbes in people’s intestines—the gut microbiome, which plays dramatic roles in human health and development.

The power to extract personal data from eDNA and microbiome samples will continue to increase, both groups of authors warn. That raises concerns about misuse by police or other government agencies, collection by commercial companies, or even mass genetic surveillance, says Natalie Ram, a law and bioethics scholar at the University of Maryland Francis King Carey School of Law. In the United States, she says, researchers and funding agencies should make greater use of federal Certificates of Confidentiality. They prohibit the disclosure of “identifiable, sensitive research information” to anyone not connected with a study, such as law enforcement, without the subject’s consent….

“Which companies and governments are going to pay and license to have poop-based surveillance technology?” he asks. “Imputing people’s identity based on their poop is compelling and interesting, for a number of reasons, and most of them are all the wrong reasons.”

Excerpts from Gretchen Vogel, Privacy concerns sparked by human DNA accidentally collected in studies of other Species, Science, May 15, 2023

Perpetual Attack: 25-Year Cyberattack, Russia v. US

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They US Federal Bureau of Investigation (FBI)  disabled a piece of malware Russia’s intelligence agency has allegedly used for two decades (!) to steal documents from NATO-allied governments and others, in an operation that highlights the FBI’s increasing efforts to go beyond arresting hackers and find new ways to disrupt cyberattacks.

In an affidavit filed in federal court in Brooklyn, a Federal Bureau of Investigation agent said the bureau had identified a long-running cyber-espionage campaign by officers in a unit of Russia’s Federal Security Service, or FSB, to take documents from other governments’ defense and foreign ministries, journalists and others, and route them through infected computers in the U.S. to cover their tracks. Security researchers have sometimes referred to the group of hackers as “Turla,” who are known to use a malware called “Snake.”

FBI agents identified U.S. computers infiltrated with the Snake malware, including in Oregon, South Carolina and Connecticut, and obtained court approval to issue commands to the malware to permanently disable it on those computers, officials said. The operation is the latest example of the FBI using an obscure legal authority to proactively disrupt Russian or Chinese cyberattacks by essentially infiltrating their systems. Investigators tracked the group’s daily activities to an FSB facility in Ryazan, outside Moscow.

Cybersecurity experts and U.S. officials said that Turla’s espionage activities can be traced back more than 25 years, though with rare exception the group’s hackers are adept at infiltrating systems without being noticed. For example, the group was linked to a major breach of U.S. classified systems in the late 1990s that compromised the Pentagon, other government agencies and defense contractors and was considered a watershed cyberattack that demonstrated the national security threat posed by Russian government hackers. In that case, it took years before the U.S. discovered the campaign (!).

Aruna Viswanatha and Dustin Volz, FBI Disables Malware Russia Allegedly Used to Steal Documents from NATO Allies, WSJ, May 9, 2023