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Hard Numbers: Chipmaking under lockdown, UN veto power questioned, Russian oil for India, crypto CAR
2/3: Two-thirds of workers at a major semiconductor company in Shanghai haven't gone home since China's largest city locked down a month ago. Xi Jinping won’t let zero-COVID stop Chinese factories from churning out chips to sustain the country's supply while the world is still running low.
5: The tiny European principality of Liechtenstein punched way above its diplomatic weight on Tuesday by getting the UN General Assembly to pass its resolution obliging the five permanent members of the Security Council — China, France, Russia, the UK, and the US — to justify their vetoes. China and Russia were not amused.
26: India has bought some 26 million barrels of Russian oil since the war in Ukraine began — more than it did in all of last year. Why? The Indians, who remain ambivalent on Russia's invasion, are getting it at a steep discount.
2: After El Salvador, the Central African Republic became on Wednesday the world’s second country to adopt Bitcoin as legal tender. Crypto bros must be excited, but it’s certainly a strange move in a country where only a tenth of the population is online.
China data privacy law limits big tech, but has few rights protections
Marietje Schaake, International Policy Director at Stanford's Cyber Policy Center, Eurasia Group senior advisor and former MEP, discusses trends in big tech, privacy protection and cyberspace:
How does China's recently passed privacy law compare to other countries?
While China's new law is said to be similarly comprehensive as the EU's General Data Protection Regulation and would indeed limit the decision-making power of its big tech companies. However, no law exists just on paper. There's always a context. And in the case of China, there are very few rights protections for people. While in the EU, fundamental rights protections were the main aim of the GDPR. For all geopolitical blocs with new data governance laws, China, India or the EU, we see a balancing act between national security arguments, rights protections, and economic development ambitions. But conspicuously absent from the list is the United States, which still does not have a federal data protection law.
With PayPal launching a cryptocurrency service in the UK, are digital currencies going mainstream now?
Whether or not cryptocurrencies go mainstream does not only depend on what you can buy with them today, but also on what regulators will be doing in the future. Only this week, the UK's FCA said it's not capable of supervising Binance. And I suspect that that dynamic, where a supervisory authority cannot perform its core tasks because of cryptocurrencies won't be accepted much longer.
What We're Watching: China tackles delta, Bolsonaro fans hit the streets for receipts, Nigeria's crypto conundrum
China tackles delta: China is the latest country to express serious concern over the highly contagious delta variant, after recording 300 cases in 10 days. Authorities there are trying to trace some 70,000 people who may have attended a theatre in Zhangjiajie, a city in China's Hunan province, which is now thought to have been a delta hotspot. Making matters worse, a busy domestic travel season in China saw millions recently on the move to visit friends and family just as delta infections spiked in more than a dozen provinces. Authorities have enforced new travel restrictions in many places, including in central Hunan province, where more than 1.2 million people have been told to stay in their homes for three days while authorities roll out a mass testing scheme. The outbreak has reached Beijing, too, with authorities limiting entrance to the capital to "essential travelers" only. Indeed, the outbreak has raised fresh concerns about Chinese vaccines' protection against delta, because China has not provided efficacy results for the variant.
Bolsonaro hit the streets for receipts: Ahead of what looks like an increasingly tough fight for reelection in 2022, Brazil's provocative right-wing president Jair Bolsonaro has been calling into question the integrity of the vote itself. Recently, he has alleged, without evidence, that there was "fraud" in the first round of the 2018 election, which he won in a runoff. Now, as Bolsonaro trails his most likely 2022 competitor, the popular leftist former president Lula, by double digits in early polling, he has suggested that Brazil's electronic voting systems are vulnerable to new mischief. On Sunday, a few thousand of his supporters took to the streets to support his demand that every vote cast electronically in 2022 come with a paper receipt for easy recounts. To be clear, there is zero evidence that vote tampering of this kind is a real problem in Brazil. Observers worry that Bolsonaro, who has badly mishandled the pandemic and faces potential corruption allegations that could open the way to impeachment, is laying a fictitious groundwork to contest an election that he might lose. Sound familiar?
Nigeria's crypto conundrum: The Nigerian government has tried to crack down on cryptocurrency trading over the past year, but recent figures show that the strategy is backfiring: Nigerians traded 50 percent more in the first five months of 2021 than during the same period last year, according to a Helsinki-based crypto platform. Many factors, including a stagnant economy, corruption, and a pandemic-related drop in remittances and the value of the local currency, have caused the surge in crypto trading in Nigeria, where 62 percent of the population is under the age of 25. (Nigeria is now second only to the US for Bitcoin trading.) Trying to reduce incentives for Nigerians to trade in unregulated currencies, in February the government banned cryptocurrency transactions through licensed banks, a measure that was largely ignored. The government, for its part, says the move is intended to protect users from a volatile and unregulated industry; critics say it's about excessive government control. Indeed, recent events show that any central bank must tread carefully when attempting to regulate crypto, which is fast becoming a major conundrum for monetary authorities around the world. Nigeria's central bank recently announced that it would pilot the launch of its own digital currency in October as an alternative, but none of these measures seem to have changed Nigerians' behaviors for now.
Bitcoin's volatility may dim its appeal; China's crypto crackdown
Marietje Schaake, International Policy Director at Stanford's Cyber Policy Center, Eurasia Group senior advisor and former MEP, discusses trends in big tech, privacy protection and cyberspace:
Should Bitcoin enthusiasts be alarmed at its plunging value?
Well, I can only imagine it makes them a little less enthusiastic, although the value of Bitcoin is still a lot higher than it was a year ago. So I guess the level of concern much depends on when the enthusiasts started to invest in this volatile currency, which is also seeing more and more regulations coming its way. So if people choose to get out now, it further pushes down the value and so on. I'll be watching what happens next.
Why is China cracking down on cryptocurrency trading?
Well, the Chinese government, not unlike central banks and regulators in other parts of the world, is concerned about the monetary policy effects of massive value creation without oversight. So after a period of a hands-off, watch-and-see approach all over the world, calls for regulation or the creation of digital currencies that are tied to central banks are now taking up. The Basel Committee lamented the creation of walled gardens and big tech for working against the public interest and said Bitcoin in particular has few redeeming public interest attributes when also considering its wasteful energy footprint. So regulation of Bitcoin is coming from different angles and there is no escaping it.
What We’re Watching: China’s vaccination blitz, Nicaraguan opposition crackdown, Dems/GOP vs China
China goes big on vaccination: China is now vaccinating about 20 million people a day against COVID, accounting for more than half of the world's daily shots. Following a sluggish initial rollout, Chinese vaccine makers have scaled up production in recent months. That's good news for the world, particularly for developing countries that rely on vaccines distributed through the COVAX global facility, which now includes China's WHO-approved Sinopharm and Sinovac jabs. It's also good news for China's government, which for months has struggled to make its production capacity match its ambitious vaccine diplomacy program (though it has already supplied a whopping 350 million doses to more than 75 countries). And finally, it's good news for the Chinese people, who can travel without restrictions, both inside and outside China, once they're vaccinated. It's not good news for India, which earlier this year had a window of opportunity to compete with the Chinese on doling out jabs to low-income countries but then had to suspend exports in order to address its own COVID crisis.
Don't try to run for president in Nicaragua: Nicaraguan police have arrested four prominent opposition figures as part of a widening crackdown on challengers to strongman President Daniel Ortega. Two of those jailed were planning to run in November elections to try to deny Ortega a fifth presidential term. In recent years, Ortega — a former guerrilla who reinvented himself as a pious, business-friendly nepotist — has faced increasing protests over corruption and authoritarianism. Last fall he passed a law that permits him to detain any citizens considered "terrorists" or "traitors." And his handling of the pandemic has been epically bad: after refusing to take any public health measures, he and his wife simply disappeared for a month. The US has imposed sanctions and labeled Ortega a "dictator," but Washington must tread carefully — the last thing this White House wants right now is more instability in Central America that will encourage more migrants to head for the US southern border. But for many Nicaraguans, the last thing they want is more Ortega.
China's hottest new export: US bipartisanship: Democrats and Republicans agree on almost nothing these days, but lawmakers of both parties fear that a rising China threatens US global dominance. That's why on Tuesday evening senators flashed a rare moment of bipartisan unity by voting overwhelmingly to pour $250 billion worth of subsidies and grants into developing advanced technologies like semiconductors, artificial intelligence, and quantum computing. One of the bill's sponsors, Senate Majority Leader Chuck Schumer (D-NY), framed it explicitly as a bid to combat the "authoritarian image [that] President Xi Jinping would like to impose on the world." The bill now moves to the House, where it faces a few obstacles but will likely pass. Thought bubble: 20 years ago, the US thought that bringing Beijing into the "rules-based" order would make China more like the US politically. Instead, China's state capitalist model has forced the US to become a bit more like China economically — as the US develops ambitious and expensive state-driven industrial policies of its own.
What We're Watching: AMLO's bittersweet victory, Boko Haram's leader is (maybe) dead, El Salvador's move towards crypto
Did AMLO win in Mexico's midterms? The governing Morena party of President Andrés Manuel López Obrador lost its two-thirds lower-house majority in Sunday's midterms, dealing a blow to the leftwing nationalist leader's bid to radically transform Mexico. Although Morena and its allies are projected to hang on to a simple majority in the lower house, winning as many as 292 of the 500 seats up for grabs, that two-thirds margin was crucial for López Obrador's ability to change the constitution, something he's threatened to do in order to carry out what he calls a "Fourth Revolution" that remakes Mexico's economy in the interests of the poor and working class. Still, López Obrador remains in a commanding position: Morena and its allies look to have picked up more than half a dozen state governorships, and they still control both houses of Congress. Most importantly, despite failing to tackle crime, corruption, or poverty since his election in 2018, the left-populist López Obrador remains immensely popular in a country where traditional conservative politicians are reviled. Chastened as he may be by the result, as he heads into the final three years of his six-year term, López Obrador isn't likely to give much ground to his rivals. Read our full write-up of the election and its implications here.
Is Boko Haram's leader dead? Abubakar Shekau, head of the Nigerian-based Boko Haram terror group, is reportedly dead, with rival militant groups saying that Shekau strapped ammunition to his body and killed himself. (Neither Boko Haram nor the Nigerian government has confirmed the report.) Since Shekau took over the group seven years ago, he has overseen a steady stream of bloody attacks, most notably in 2014 when Boko Haram militants kidnapped hundreds of school girls in Borno state, many of whom remain missing. Since then, more than 30,000 Nigerians have been killed and millions displaced. In more recent years, Boko Haram has been locked in a bloody battle for dominance with the Islamic State's West African offshoot — ISWAP. Analysts say that while Shekau's death might lower the temperature between the two rival groups, it's unlikely to change the cadence of violent attacks — though some speculate that ISWAP may try and recruit Boko Haram fighters. Whether Skekau is dead or not, Islamist violence will continue to gain momentum in West African countries like Mali, Niger, and Burkina Faso, that have been gripped by violent insurgencies in recent years.
El Salvador to adopt crypto: Nayib Bukele, El Salvador's very online millennial president, said this week that his country would be the first to accept cryptocurrency as legal currency. If Bukele does send legislation to Congress in the near term it's likely to pass, given that his New Ideas party won a decisive legislative victory in February, giving Bukele a supermajority. Enthusiastic Bitcoin Bros say that there's little to lose; given that some 70 percent of El Salvadorians don't have a bank account, this shake-up would allow poor people to have increased access to personal finances. However, other analysts say that there needs to be global cryptocurrency regulation in place before national governments start accepting crypto as legal tender. Still, massive issues persist regarding how to regulate the extremely volatile and environmentally-damaging currency that is oft-used by those wanting to bypass government tracking and regulation. Indeed, if El Salvador pulls this off, it's likely that other states will follow suit.
Ireland's responses to ransomware attack; cryptocurrency scams
Marietje Schaake, International Policy Director at Stanford's Cyber Policy Center, Eurasia Group senior advisor and former MEP, discusses trends in big tech, privacy protection and cyberspace:
What options does Ireland have responding to the ransomware attack on the country's healthcare system?
Well, authorities are making resources available to decrypt and restore, which is a good step. And they also insist on not paying ransom to the criminals. But after the immediate fallout, they should do a scan on weaknesses in legacy software systems used across the country to make clear who is expected to protect and where weaknesses might exist. Then imposing information sharing standards could help the needed facts to come together and to facilitate both resilience and damage control in the future. There's also an opportunity to cooperate on attribution and accountability with like-minded countries. This should really push to end the impunity with which these crimes are perpetrated.
How can consumers protect themselves from cryptocurrency scams?
Well here, my best advice is to use common sense. If a deal seems too good to be true, it probably is. And if there is no way to verify who runs a Bitcoin operation, then you have to ask yourself what an acceptable level of risk is in relation to your precious savings.
What We’re Watching: China bans crypto, commandos kill Jesús, EU opens anew
China bans cryptocurrency: China has banned financial institutions and payment companies from processing online transactions in cryptocurrencies. The move, which follows an earlier ban on cryptocurrency trading by Chinese firms, is a clear sign of China's suspicion of any digital currencies that it cannot control. In fact, what China really wants is to promote its own digital yuan that would track every single transaction. Other governments would love to do the same, of course, but they don't have nearly as much financial firepower as China. Meanwhile, the news from Beijing made the price of Bitcoin — the world's most prominent cryptocurrency — plunge to its lowest in three months. Who would have guessed just a couple of weeks ago, when everyone was still frantically buying Bitcoin, Etherium or Dogecoin on RobinHood, that all it would take to burst the digital currency bubble would be an Elon Musk tweet and China.
Is Jesús dead? One of Colombia's most famous rebel commanders was reportedly killed in Venezuela earlier this week in an incident that could inflame tensions between the two countries. Seuxis Hernández Solarte — better known by his nombre de guerra Jesús Santrich — was a top leader of the FARC rebel group for decades, and helped negotiate the historic 2016 peace accord that ended a half century of conflict that had killed more than 200,000 people. But the ink was barely dry on the document before Santrich was jailed for returning to the drug trade, and after his release he joined a fresh call to arms among disaffected former FARC fighters. Santrich's own criminal gang says he was ambushed by Colombian commandos who stole across the border, killed him, and cut off one of his fingers before flying off in a helicopter. Colombian officials have not confirmed any of that story yet, but Bogotá has long claimed that Santrich was active in Venezuela, which for years harbored various FARC-affiliated groups.
EU to welcome (vaccinated) tourists: The European Union will allow tourists from non-EU member states that have been vaccinated with EU-approved jabs or considered safe from COVID to visit the bloc this summer. That's great news for tourism-reliant economies such as Greece or Spain which are eager to welcome visitors again from countries like the UK and the US. But other EU member states that depend less on tourists are skeptical — they want to be more cautious, for instance, about mixing vaccinated and unvaccinated groups of people. Either way, Brussels will let each member state decide its own policy, while working to ensure enough jabs are doled out by the fall to avoid getting crushed by another COVID wave. What still needs to be ironed out, however, is the EU-wide vaccination certificate, and whether the UK and the US will reciprocate by allowing EU visitors to go there without restrictions as the bloc (slowly) ramps up vaccinations. Expect a lot of back-and-forth on both issues in the coming weeks.