© REUTERS/Jonathan Ernst

In an address given in London earlier in June, NATO Secretary General Jens Stoltenberg quoted the words of Lord Hastings Ismay, the first Secretary General of the alliance, who said “there will be persistent efforts to drive a wedge between us” and “we shall have our little quarrels” in a 1952 broadcast.

Today, we are actually talking more about serious transatlantic disagreements than about “little quarrels.” Without a doubt, these are particularly challenging circumstances for a NATO summit. The list of contentious issues between the US and its allies is long and touches on fundamental matters, from trade to the Iran deal (JCPOA), and from the Paris accords to the Middle East. Concerned voices are asking how NATO can, under these circumstances, continue to project the essential characteristics of any alliance, namely unity and resolve.

A closer look shows, however, that the alliance has so far felt hardly any tremors from the various transatlantic disagreements. The two years since the summit in Warsaw have been remarkably positive for the alliance, precisely because of its unity and resolve. NATO, far from being obsolete, has delivered on all promises given in Wales and Warsaw. The Trump administration has reconfirmed Article 5 (which stipulates that an armed attack against one or more NATO members is considered an attack against them all) and redeployed troops to Europe. The alliance has boosted its collective defense efforts. European allies have reversed the downward trend and are now increasing defense spending (more on spending targets later). NATO is willing to do more to project stability beyond the alliance’s borders and to combat international terrorism. We have systematically enhanced our cooperation with the EU. And we are adapting to new security challenges in the fields of cyberspace and hybrid threats. Comprehensive institutional adaptation processes, such as the reform of the NATO command structure, have been set in motion to deal with these new and complex challenges. Looking at the pace at which the alliance has kept on adapting to a fundamentally changed security environment since 2014, the remarkable unity and resolve of the alliance becomes obvious. Despite the aforementioned differences, the 29 members of NATO have been able to unite around the core task of standing together and protecting each other.

As we now move to the summit, we need to build on these achievements and concentrate on those areas where NATO makes the difference.

First and foremost among them is NATO’s core business, Euro-Atlantic security. Since Russia’s illegal annexation of Crimea and destabilization of eastern Ukraine, the alliance has undertaken far-reaching steps to enhance its defense and deterrence, for example by establishing an enhanced Forward Presence in Poland and the three Baltic states as well as a tailored Forward Presence in Romania and Bulgaria. But more needs to be done, while of course maintaining the defensive nature of the alliance.

We need to improve the mobility of our troops across the Atlantic and on the continent and improve their operational readiness. That is why NATO is adapting its command structure, in part by increasing the size of its staff by 1,200. NATO will also set up two new HQs—one new command post in Norfolk, Virginia, to handle the deployment of troops across the Atlantic, and then another in Ulm, Germany. This Joint Support and Enabling Command (JSEC) will be in charge of coordinating deployments, transport, and supplies around the continent. This underlines how seriously Germany takes its responsibility when it comes to making the alliance stronger and more effective.

In addition, we also need to improve our armed forces’ readiness. That is the goal of the NATO Readiness Initiative, which aims at allies having 30 land battalions, 30 air squadrons, and 30 combat vessels ready to use within 30 days. This important and challenging initiative is to be formalized at the summit.

These and other measures to strengthen NATO’s deterrence and defense have essentially been caused by Russia’s actions since 2014. Nevertheless, we agreed at the Warsaw summit that the offer of dialogue would remain open to Russia. The Brussels summit should reaffirm that dual-track policy. True, we won’t get back to business as usual until Russia changes its behavior, in particular contributing more constructively to the implementation of the Minsk agreements in Ukraine. However, there are subjects on which we need to maintain dialogue with Russia in order to reduce risks and prevent misunderstandings and unintended escalation. The NATO-Russia Council remains the key forum for such dialogue.

Projecting Stability

At the Brussels summit, leaders will need to look at what NATO can do to project stability into the troubled regions to the South and to combat terrorism. Together with Afghan leaders and partners, they will discuss the way ahead in Afghanistan. The Resolute Support Mission in Afghanistan, which provides training and advice for the Afghan security forces, will have to be continued as the most visible element of NATO’s engagement in the southern arc of crisis in the fight against terrorism. That is why NATO recently raised the troop numbers again, from 13,000 to 16,000, with Germany bringing up its troop ceiling from 980 to 1,300, making it the second-most important troop provider.

But the alliance’s role in the south is not limited to Afghanistan. NATO is not the main player in this region, but with its unique expertise in defense capacity building, it can help its partners improve their resilience and put them in a position to more effectively defend themselves against terrorist threats. In this vein, NATO will enhance its defense capacity building activities in Jordan, Tunisia, and – by establishing a non-combat train and advise mission – in Iraq.

As the situation in the south makes clear, NATO cannot deal with the manifold security challenges alone. It depends on cooperation, with the EU primarily – and vice versa. For all their dissimilarities, the two organisations do share values, interests, and security challenges. They are natural partners in a truly strategic collaboration. The joint declaration on reinforcing NATO-EU cooperation issued by Secretary General Stoltenberg and Presidents Donald Tusk and Jean-Claude Juncker at the Warsaw summit was a milestone. Since then, we have opened up a new chapter in NATO-EU cooperation, working on implementing an action plan with 74 measures. In recognising the need to strengthen military mobility on our continent, NATO and EU have now identified a new, ambitious flagship project for their cooperation. The Brussels summit will be an excellent opportunity to give guidance for further developing NATO-EU cooperation, based on a common understanding that NATO will remain indispensable for our collective defense. At the same time, developing stronger European capabilities will also contribute to better transatlantic burden-sharing.

Among the many issues to be discussed at the Brussels summit, burden-sharing will be the trickiest. Clearly, the European allies need to do more for transatlantic security: after all, the United States and Europe have roughly the same economic clout, but Europe spends a lot less on defense than the US does. We take the implications of this imbalance very seriously, and a Europe capable of effective security policy needs considerable European investment, not least in military capabilities. For both those reasons, it is worth taking the commitments agreed at the Wales summit seriously.

Increasing Defense Spending

There are three aspects to the pledge. First, the allies made a commitment to reverse the downward trend in defense spending. Second, they pledged to aim to move within a decade towards spending 2 percent of GDP on defense, with 20 percent of that going into investment and procurement in order to fill shortfalls in strategically defined alliance capabilities. This is not about simply pouring more money into defense; it is about channelling investment specifically into the capabilities that the alliance as a whole needs for the tasks it faces. And third, the allies pledged to increase their contributions to, for example, alliance missions and operations.

And there has been progress in these areas. We have reversed the trend in defense spending. In 2016, expenditure by the European allies and Canada rose by 3.8 percent; an increase of 4.3 percent is expected for 2017. Since 2014, the European allies and Canada have spent some additional $87 billion dollars. Germany has increased its defense spending by around 20 percent since 2014 and has now announced that it intends to be spending 1.5 percent of its GDP on defense by 2024. That’s an 80 percent rise in spending compared to 2015.

Germany has furthermore acknowledged all the targets in the current NATO Defense Planning Process and has built its national plans around meeting those targets. And finally, Germany is NATO’s second-largest troop contributor, thus providing substantial support to missions and operations. All that being said, no one will deny that we are not yet where we should be on capabilities.

Looking at the whole range of topics on NATO’s agenda, the ingredients for a successful summit are there. NATO delivers, and it is adapting to the changing security environment. And we largely agree on what to do next. After the agreement between Athens and Skopje on the name dispute, NATO is even looking at the prospect of accession talks with a possible 30th member. With regard to the difficult topic of burden-sharing, we are at least moving in the right direction. For all our shortcomings, we are on the right path.

However, it is key that allied leaders actually broadcast that overall positive message come July. After all, unlike the G7, NATO is about the security of hundreds of millions of people. It is a cornerstone of the rules-based order and the very core of the transatlantic bond, which we need to maintain particularly in these difficult times. That is why it is so important that the Brussels summit send out a strong message of allied unity and resolve. Only if allies maintain their unity as their center of gravity will the alliance be able to protect its nations on both sides of the Atlantic into the future.

N.B. The views expressed in this article are the author’s own.

The post Still the Greatest Alliance appeared first on Berlin Policy Journal - Blog.

Source: Eurostat

US President Donald Trump does not, to put it lightly, have a warm relationship with Germany, nor with German Chancellor Angela Merkel, against whom he has held a deep but somewhat inexplicable grudge since his emergence on the political scene. Among the topics which he likes to needle the chancellor about – a fictional crime wave this week, the disintegration of the EU the next—there is one to which he always returns: trade.

Trump has endlessly bemoaned Germany’s trade surplus, blaming both an artificially devalued euro and high tariffs for what he sees as a tilted playing field. In March, he tweeted: “The European Union, wonderful countries who treat the US very badly on trade, are complaining about the tariffs on Steel & Aluminum. If they drop their horrific barriers and tariffs on US products going in, we will likewise drop ours. Big Deficit. If not, we Tax Cars etc. FAIR!”

The US president—again, to say it diplomatically—does not devote much attention to the finer points of international trade. There are, in fact, trade asymmetries between the United States and the European Union: The average EU customs duty is 5.2 percent, while the average American customs duty is 3.5 percent; the disparity in customs duties applied to cars is particularly stark, at 10 percent and 2.5 percent, respectively.

There are several sectors, however, where steep duties are levied on the American side as well: The US places a 25 percent tax on small truck imports from the EU, for example. More importantly, because of the degree to which American and European industries are intertwined, implementing retaliatory tariffs—rather than negotiating lower trade barriers in general—is completely self-defeating.

But even a stopped clock is right twice a day, and the US president, despite his best efforts, has made a valid point: most of the EU member states are running significant trade surpluses, and these surpluses are becoming dangerous—for the EU most of all. Since all of the member states are trying to sell their way to solvency and cut domestic spending, there’s no one to buy; and if intra-EU consumption doesn’t grow commensurately with productivity, member states will find themselves dividing up an ever-shrinking cake. At its core, a trade surplus is an excess of national saving over domestic investment. Low domestic investment means slower growth and crumbling infrastructure.

The EU’s aggregate trade surplus of about 3 percent of GDP is not spread evenly across all the member states, but nearly all member states run a surplus: According to the OECD, Germany’s 2016 trade surplus was 8.57 percent of GDP, the Netherlands’ was 8.46 percent, Hungary’s 6.01 percent, Sweden’s 4.25 percent, and Italy’s 2.56 percent. Incidentally, European regulations stipulate that no country’s surplus should surpass 6 percent of GDP. France and the United Kingdom were among the few member states with deficits, at -0.85 percent and -5.78 percent, respectively.

This would be less of a problem for Europe if these countries were trading primarily with external partners. The trouble is that, for the most part, they are not: most EU member states count other member states among their primary trade partners. And as they have all more or less diligently followed the prescribed course of austerity and export-orientation—largely following Germany’s model—the EU has become a shop with 28 salespeople and no customers. By cutting domestic spending, member states are reducing domestic demand for goods other member states might want to sell. And export-led growth has a tendency to merely reinforce existing imbalances in the union: Any eurozone-wide policy to stimulate exports from Greece cannot help but do the same for exports from Germany, preventing the member states with lagging economies from ever catching up.

The countries that have global trade surpluses tend to have surpluses within the EU as well: In 2016, the Netherlands had an intra-EU surplus of €177 billion, Germany €73 billion, Hungary €9 billion, and Italy €10 billion; meanwhile, France had an intra-EU trade deficit of €87 billion, and the UK €115 billion.

Europe’s focus on foreign markets also extends to investment: as the Financial Times reported last year, there’s been a steady drop in investment within the EU since the summer of 2012. Part of this stems from a lack of domestic spending during the various economic crises; but a great deal can also be attributed to the European Central Bank’s decision to maintain near-zero interest rates and the insistence that individual member states reduce their deficits. In an attempt to simultaneously spur growth and balance the books, the EU seems to have plugged some of the leaks in its member states’ coffers, but it’s made itself a less attractive place to invest and reduced the debt instruments with which interested parties might do so.

It should be noted that the Germans themselves have called attention to the problem. German Finance Minister Wolfgang Schäuble told the Tagesspiegel last year that he believed the euro was undervalued, saying, “When ECB chief Mario Draghi embarked on the expansive monetary policy, I told him he would drive up Germany’s export surplus.” But Germany also shoulders a great deal of the blame: Citing its “debt brake,” Berlin has resisted running a deficit even when it could have borrowed at near-zero interest rates, choking off one of the potential sources of liquidity—and demand—within the common market.

Trump’s actions will almost certainly do more harm than good, to his own country most of all. But he is not wrong in pointing out that the game is unfair.

The post Europe by Numbers: Trading Figures appeared first on Berlin Policy Journal - Blog.

© picture alliance/AP Photo/Jeff Chiu

There are many other networks in the world… But the internet is a network that magnifies the power and potential of all others.” When Hillary Clinton, then US Secretary of State, tried to explain the importance of the internet for foreign and security policy in January 2010, many experts thought it was a waste of time. Should this really be a priority of US foreign policy? After all, as the general thinking went, there were more important issues, like the earthquake in Haiti or global terrorism.

Over eight years later, after the revelations of Edward Snowden, the digital offensive of the so-called Islamic State and the debate over “fake news,” hardly anyone is dismissing the internet as a distraction from serious foreign policy—even if many no longer regard the internet as a great blessing. (Clinton herself discovered the Internet’s dark side in the most painful of ways during the 2016 presidential election.) Foreign policy without the internet is no longer conceivable. This shift in opinion should be a warning to all those who today dismiss another technology as irrelevant for foreign policy: Artificial intelligence (AI). Just as the internet has pervaded politics, the economy, and society over the last ten years, AI will in the next ten years appear everywhere and disrupt everything. Any country that tries to ignore this development will lose relevance.

Looking around the Berlin foreign-policy world and beyond, one quickly gets the impression that for many people, AI is still uncharted territory. People either think it’s a new buzzword from California —“Yesterday it was Big Data, right?” Or they spread the word that the world’s going under. Soon, they say, AI will create an all-powerful super intelligence that will try to subjugate humanity, like in the action movie “Terminator.”

Better than Humans

Misperceptions like this are based on an incomplete understanding of what AI actually is. It is often confused with full (strong) Artificial intelligence which is seen as superior to human thinking. But that will remain Science Fiction for the foreseeable future or even forever. The AI of today is better understood as a “collective intelligence”: it is often about the digital extraction of data created by humans. Machine learning, a category into which nearly all important AI technologies fall, usually has two stages. First, neural networks—statistical systems inspired by the human brain—are fed vast amounts of data (for example cat pictures), so that they learn to recognize patterns (what cats look like). Then in the second stage, new data is presented, to which the networks apply what they have learned. Simply put: unlike other software, AI code isn’t written by programmers, but by data.

Thanks to the huge computational power of cloud computing firms like Amazon and Microsoft, AI services can often already recognize objects and language better than humans can. The best facial-recognition software already has 99 percent success rate at identifying faces, though only in laboratory conditions. Language recognition services achieve results that are nearly as good. Other programs can comfortably read scrawled handwriting, once they’ve digested about a hundred pages of it.

Companies can apply basic services like this to complicated tasks, as online-giant Google showed at a conference in California in May. Its latest AI-design, Google Duplex, was able to book a haircut appointment on the phone without the other person realizing that he was talking to a machine. For this demonstration, Google had to combine at least three AI services: language recognition, sentence understanding, and word formation.

AI as a Growth Factor

Big technology firms dominate the AI industry. They possess the most and the best data, programmers, and computer systems. But recently other businesses have begun to make use of AI, too. For example, the clothing retailer H&M uses it to detect fashion trends. Unilever, a producer of household and consumer goods, utilizes AI to evaluate job applicants. The energy company Repsol wants to use AI to make its refineries more efficient, while Siemens is using it to optimize the operation of its gas turbines.

It’s hard to predict how much growth AI will create. But the figures will not be small. Accountants from PricewaterhouseCoopers estimate that by 2030, AI will increase world economic output by 16 trillion dollars—more than China and India combined generate today. That figure is about five times the German GDP. According to Ajay Agrawal, Professor at the University of Toronto and author of the new book “Prediction Machines,” the most important economic effect of AI is that it will sharply reduce the cost of prediction, thus making businesses more productive. Just as electricity made light much cheaper—prices soon became 400 times cheaper than at the start of the 19th century—AI will make it much easier to look into the future.

“AI is like electrical power,” experts say. One day it will be used everywhere. And it’s only a matter of time until that is also the case in foreign and security policy—and in the German foreign ministry. But in what form? In a study released in early 2018, the Berlin think tank Stiftung Neue Verantwortung (SNV) identified three focal points: autonomous weapons, economic effects, and consequences for democracy and society.

Autonomous weapons, which take decisions on their own with the help of AI, are perhaps the most threatening consequence of technological development. They can take various different forms, from automated hacker attacks to self-controlling drone swarms. They raise a number of difficult questions, not least how much control of these systems humans can and should have. Arms experts in the US fear ethical asymmetry above all: countries like China could complete dispense with the “human in the loop,” while Western states potentially refuse to cross this red line.

After long internal discussions, Google decided in May to end its participation in Project Maven, a Pentagon program to develop software that can distinguish between people and things in images made by drones. For Chinese firms like Alibaba and Tencent, there are few concerns about such programs, because these companies are already involved in the “civil-military fusion,” as the government in Beijing calls its close cooperation with tech firms.

AI‘s Impact on Policy

As far as the economic consequences of AI are concerned, the effects on foreign policy are hard to evaluate. The technology could help some countries skip over entire levels of development. China wants to become the world leader in the industry and plans to build an AI-economy worth nearly 60 billion a year by 2030. Other countries will lose out, Germany probably among them. The country is considered a straggler. There are fears everywhere that many jobs will be lost, though such fears are probably exaggerated. The McKinsey Global Institute estimates that only five percent of all professions can be automated away using currently known technology (though machines could do part of the work for more than half of all activities).

The question of economic concentration comes up more and more: Amazon, Google, Facebook, and Apple are already dominant worldwide, and AI could make them even more powerful. Denmark’s decision to send an ambassador to Silicon Valley was dismissed in many capitals as a publicity stunt, but it could prove to be forward-thinking.

AI’s impact on democracy and society will likely present major challenges for foreign policy. The internet has already shown that human rights and technology don’t always fit together. While Hillary Clinton in 2010 praised “the network of all networks,” the NSA used it to wiretap masses of people worldwide, as the revelations of former NSA employee Edward Snowden showed a few years later.

AI makes these “Snowden contradictions,” as the authors of the SNV study call them, even more clear. The technology isn’t just the perfect surveillance tool: video cameras equipped with special chips already follow people automatically. AI can also be used for mass manipulation that goes well beyond the most recent disinformation campaigns. American researchers recently discovered that the Chinese government is the source of nearly 450 million online comments per year whose main goal is to distract. Most of them are still written by humans, but in the future more and more artificially intelligent bots could be used.

As well as such fundamental problems, practical issues arise. Data is the most important raw material for AI. China possesses the world’s deepest data pool, especially when it comes to consumers. The country’s 772 million internet users are open to new things and ideas: many of them don’t carry cash in their wallets and only pay with their smartphones. Other countries, particularly Germany, are much poorer in data for cultural and legal reasons. In the future, data, like other resources, may be managed on a national level. And data protectionism is an ever-growing problem for global firms, as the Financial Times recently reported. The number of laws that forbid firms from exporting data has nearly tripled in the last ten years.

Finally, there’s the question of how the German foreign ministry and related institutions will themselves use AI. A study published in June by the British think tank Chatham House lays out three possible applications for governments: AI could create models of international negotiations, thus simplifying them; it could predict geopolitically important events; and it could help assess compliance with international arms control treaties. At least in the last two cases, we are no longer talking about the future. Record Future, a Swedish-American firm, is already using machine learning for early recognition of hacker attacks and other threats. And software from Palantir, a Silicon Valley firm partially funded by the Pentagon, helps inspectors from the Vienna-based International Atomic Energy Agency (IAEA) in their work in Iraq.

Germany the Laggard

How can politics react to all these challenges? A good AI foreign policy begins with a good AI domestic policy. A number of countries have made this key technology a national priority and published detailed strategy plans. Among them are the US and China, but also France, South Korea, and even smaller countries like Finland. By contrast, the government in Germany—a country that struggles with digitalization in general—has only now begun to seriously engage with the issue.

In terms of the development and use of AI, Germany is average at best. According to a response to a parliamentary inquiry, the federal government spends about 27 million Euros a year promoting AI research, which appears quite low compared to other developed nations, though there are no exact figures for comparison. And with few exceptions, German companies are not at the front of the pack: in early 2018, the Expert Committee on Research and Innovation came to the conclusion that other countries are “much more dynamic” in many areas of AI.

Not being a pioneer means that Germany can learn from other countries’ experiences, the SNV argued in a separate paper published in early June (“Cornerstones of a national strategy for AI”). The federal government, the study said, should have greater ambitions than just better promotion of individual AI technologies. Rather, it “should focus on building and supporting a strong, internationally competitive AI ecosystem.”

In short: we need a stool with lots of legs. Promoting research is certainly one of them, but probably not the most important. More important is a strong base. AI competence can’t only be taught in computer science; it also has to be included in other courses of study. Sufficient computational power and venture capital have to be more easily available. Instead of concentrating on the quantity of data, as China and the US do, Germany should prioritize the quality of data, since smaller quantities of relevant, well standardized data often achieve better results. If the mixture is right, an ecosystem like this will create competitive AI services—faster than would government research programs.

For foreign policy, guidelines for action still need to be written. But some basic principles are already clear. The most important is that going it won’t work. Germany is too small to keep up with the competition on its own. Germany strategy has to be integrated into a European strategy. The most obvious partner is France, which is already much farther ahead in terms of developing and using AI.

Competition for Top Talent

Germany also has to figure out which sort of AI it wants to stand for. There’s a lot of space between China’s state-capitalism approach and the American data monopolies, and that’s where Germany can make its name. It’s not just about the ethics of using AI, but about a new, smart operating system for the data economy. How can markets be organized around this unusual resource? How can personal data be anonymized? Should people be paid for the data they create?

The answers will also have consequences for the labor supply. AI is about computational power and, of course, data, but without a critical mass of data experts, Germany will struggle to keep up with the rest of the world. Attracting and keeping these people is not just a question of salary, although that area can’t be neglected. Even OpenAI, a non-profit organization in Silicon Valley, pays its top scientists almost two million dollars a year. It’s more important that Germany is considered an attractive AI location. There are implications for foreign ministries, too: if you don’t attract or train employees with AI skills, you will become less important.

The foreign-policy impact of the internet, described early on by Hillary Clinton, took a long-time to become clear. But then the internet showed its global political impact with full force. It will probably be the same with artificial intelligence. Foreign-policy specialists should be prepared, if they don’t want to play catchup.

The post Everything is AI appeared first on Berlin Policy Journal - Blog.

© Bundeswehr

How would you define artificial intelligence and why is it such an important topic for security? That’s a difficult question because we don’t even have a clear and broadly accepted definition for human intelligence. But I would say artificial intelligence is the attempt to recreate human intelligence—the ability to read, recognize patterns, answer questions, and so on—with machines. It’s an old dream in the history of mankind—think of golem in Jewish mythology, for example. In technical terms, AI means computer programs based on so-called deep learning algorithms. They mimic the structure of the brain in the form of neural networks which then are fed with large amounts of data. They are able to learn and adapt on their own…

…in order to replace humans? In some tasks and functions, yes, but completely? No. The type of AI we have now is called “weak AI,” a tool that can carry out specific tasks—for example, anticipating when a specific machine component fails (predictive maintenance), or running the voice control function on your cell phone. You can teach a machine to play the game “Go,” but it’s a long way from being able to play chess.
When you ask a machine a complex question, you might get “42” as a response—just like in the novel The Hitchhiker’s Guide to the Galaxy by Douglas Adams, when the computer is asked the “ultimate question of life, the universe, and everything.” Yet if someday the development of so-called strong AI succeeds and machines achieve abilities equal to or even superior to the intelligence of man, it would create a completely new reality that would affect all areas of life.
We are witnessing various developments coming together. When we talk about AI, we are essentially talking about four components: the algorithms or programs, the computing power, data, and then the people steering it—programmers and app developers. Looking at the latest in algorithms and AI, there haven’t been any revolutionary developments. I did my PhD on neural networks in the late 90s; the mathematic models are far better today and the networks are more complex, but innovations in methodology alone do not indicate a quantum leap.

So what would be a quantum leap? In addition to the development of strong AI that I already mentioned, quantum computing would be another non-linear leap. In terms of cryptology, quantum computers would change everything overnight. Take encryption that we’d currently need a million years to crack—a quantum computer could crack it in a millisecond. Everything will happen at unprecedented speed.

And that would affect security policy as well? Yes, in a fundamental way! Image what would happen if all encryption is suddenly insecure. But back to AI: there is significantly more data now because we have sensors everywhere. Everything is connected—there are chips in our cell phones, our cars, our cameras, and soon even our clothes. At the same time, there is plenty of low-cost computing power to process these huge amounts of data.
AI lives on data to learn and adapt. That is what an AI does – it processes and matches vast amounts of data, getting better and better at solving specific problems in the process. New applications emerge almost daily, including in the military sector with corresponding security policy implications. AI is a central component of the “digital battlefield” or, to put it in more dramatic terms, AI can be used as a weapon.

And that brings us to the controversy over “killer robots,” as they’ve been called… It’s important to be clear here: what are killer robots? Ultimately we’re talking about autonomous weapons systems. And of course, the automation of individual weapon system functions is already happening today, from temperature regulation to flight stabilization. The Eurofighter jet has more than 80 built-in computers, and few people have a problem with that. What’s really at stake in this debate is the autonomous use of kinetic force against humans. And again it is important to be clear in the definition here. The air defense systems on naval ships, called Rolling Airframe Missile (RAM), also shoot automatically and adjust to their targets autonomously. But those targets are not humans—they are other missiles approaching at high speed, and RAMs are far superior to humans in their precise ability to respond. The majority doesn’t consider that problematic, either.
The key question is whether kinetic violence against humans can be decided autonomously. The German government has clearly said no—there always needs to be a person is involved in such a decision. What other countries do is unfortunately not under our control. But Germany has ruled it out and is calling, rightly so, for more international regulation, as difficult as that may be. The rapid pace of technological development is constantly generating new questions and gray areas.

What developments do you expect to see on the digital battlefield or with AI used as a weapon? There are more and more sensors on the battlefield, but also satellite images, internet data, mobile data, and so on. By digitizing, processing, and presenting all that data, one can gain a competitive advantage. Those who have better information, who manage to put all that information together, win. They have a perspective on who the attacker is, how the attacker is equipped, and so on.
But conversely, the more interconnected or digital a system is—whether it’s the Eurofighter or the Puma armored car—the more vulnerable it is. Digitalization means everything is connected digitally, and the downside is the existence of cyber threats: everything can be hacked. That’s why cyber security—protecting against attacks on computers and programs—is so important. That brings us to the question of what role AI plays in cyberspace. AI can be used as a tool to fend off cyber attacks, and it can detect attack patterns. Whoever manages to develop the best AI will have an advantage in defending and attacking. As with any technology, it’s all about supremacy. We find ourselves in the middle of a global competition, particularly between the US and China. Beijing published its AI strategy about a year ago. It is a very ambitious plan that aims to make China a world leader by 2025.

Google’s AlphaGo program beat Ke Jei, one of the world’s best players, at a game of Go in May 2017. That was considered a sort of wake-up call for the Chinese, wasn’t it, on par with the Sputnik shock of 1957? Yes, I think it was. There is a glut of data in China; people there appear to be more willing to relinquish their data. China has a different relationship to privacy and data protection. And highly-developed sensors and processors are everywhere, in cell phones, cameras, computers, etc. There are around 1.5 billion people in China, and many are very tech savvy—early adopters who take every new innovation on board. The West needs to reconsider its attitude towards China. The theory has been that the Chinese can only copy, not innovate. But that image needs an urgent overhaul. The focus in AI right now is on implementation, and China can do that in a big way. When the Chinese want to achieve something—well, just look at the Belt and Road initiative.

Who is actually driving development in AI—is it governments, or is it multinationals like Google or Apple? That lies at the core of many AI debates, in particular the question of what Germany and Europe’s path should be compared to the US, where primarily companies drive innovation, or China, where the state steers developments. It is important to design how we want to deal with data, from regulating access to data for instance in the public sector to data science in schools. This needs to be done with transparency and with a balanced perspective on both the opportunities and risks.
Besides the US and China, are there other leading AI countries? Russia’s President Vladimir Putin said recently that whoever leads on AI will rule the world… I’m afraid that’s true. I can’t adequately assess Russia’s skills. But it’s clear that we have a state actor that is very active in information and cyberspace.

Can the development of AI be compared to the invention of the nuclear bomb? AI definitely has the potential to change the dynamics in cyberspace and the balance of power. This goes to the very core of security, especially because we have not yet been able to establish international regulations or controls. And there are other aspects that could further shape security policy and also need to be considered: AI is changing the economy as well. What happens when a country is economically superior or even has a monopoly because of AI? What are the implications for global value chains?

Historically speaking, technological innovations often change all aspects of society. What is special about AI? That’s correct, every industrial revolution has also had an impact on security. But today, things are moving much faster. When the assembly line was created, for example, there was a clear impact on the defense sector as well – you could produce weapons much faster. Or when airplanes were invented, airspace took on a military dimension as well.
But AI’s technological development has a far more immediate and broader impact globally. It’s as if you replaced your bow and arrow with a state-of-the-art fighter jet that doesn’t cost much and easily goes unnoticed. That is why AI worries me so much—especially because a terrorist group could hijack these technologies. The potential for abuse is enormous. Abusing AI costs nothing, and it isn’t immediately clear when someone develops or steals AI. You don’t see, hear, or smell anything, and you can’t see it on a satellite image.

Are you talking about physical attacks, on infrastructure? Or psy-ops that influence public opinion? Everything. You have to look at the whole range. Policymakers in security have to be ready for all sorts of scenarios. I’m most concerned by the real, physical impact we’ll see when encryption or security systems are cracked. An opponent could derail trains or control medical devices or, as was saw in Ukraine’s energy grid, simply turn the lights off. The scenarios are endless and potentially devastating.

Is the German government taking the problem seriously enough? Yes, it is. Look at what we saw happen in the Bundeswehr over the last parliamentary period. Cyber has been established as an independent military branch, with the build-up of a cyber command center; there were innovative experiments like the Cyber Innovation Hub and the cyber degree programs at the Bundeswehr University in Munich as well.

Will that be enough? That’s hard to tell. But ultimately it’s just like developing a new European fighter jet. The Chinese and Americans are doing things on a completely different level. But does that mean we shouldn’t develop our own? No—we should.

Do we in the West need to reconsider our privacy policies? I think we need to discuss how we deal with data and especially algorithms. The crucial question is: how do we make sure we know what the algorithms are doing? Who controls the algorithms? This requires a broad discussion, and it’s also a security issue. Take the example of early crisis detection—if an algorithm tells us: “There is 35 percent chance that a crisis will erupt in country in eight months’ time.” What do we do with that information?
We ultimately need more social debates. At the moment there are often undifferentiated perspectives—sometimes ignorance or even flat refusal to deal with the issues at hand. But there is no way around digitalization. We have to talk about data and algorithms, about the future of work, and education. And how we want to live together, in a world full of AI.

The post “AI Can Change the Balance of Power” appeared first on Berlin Policy Journal - Blog.

© REUTERS/Kevin Lamarque

Whenever Angela Merkel considers a political issue to be of pressing importance, she invites experts to the Federal Chancellery. The evening of May 29, 2018 was no exception: Merkel convened a group of 20 experts from business and science to discuss artificial intelligence. The chancellor has long been worried that Germany and the EU may miss out on this groundbreaking technology.

To also give her cabinet the benefit of the specialists’ urgent message, Merkel asked a number of ministers to attend, including her close confidant, economics minister Peter Altmaier, and labor minister Hubertus Heil of her coalition partner, the SPD. Germany is meant to have an AI strategy by the end of the year, so the cornerstones of a strategy have to be in place before the Bundestag’s summer break in July.

The chancellor has long been clear: Dominance in AI could entirely restructure the geopolitical order—or serve to cement American supremacy and Chinese power. There is resistance to this latter outcome, above all in Berlin and Paris. If there is one thing that French President Emmanuel Macron and Merkel are in absolute agreement about, it is the strategic importance of AI.

Since taking office, Macron has been talking of Europe’s need to defend its “strategic sovereignty”, adding that this will be a battle fought on many fronts, including technology. In a June 3 interview with the conservative Frankfurter Allgemeine Sonntagszeitung, Merkel emphasized that as early as 2017, she has been calling for Europe to take its destiny more into its own hands. Most have taken those statements as references to Europe’s security dependence on the United States. But she was also taking about technology.

It was in 2013, in the wake of the NSA spying scandal, Merkel first had to acknowledge how being dependent on American software and Chinese hardware could limit a country’s capacity to act. Five years later, during a visit to China, Merkel took a detour to the high-tech city Shenzhen, where she visited the Chinese startup iCarbonX and saw how far advanced China is in the usage of big data for the health sector. It was a painful reminder for a chancellor who, for all her time in office, has yet to witness a successful introduction of an electronic health card in Germany.

As always after a trip to China, Merkel returned to Germany impressed and worried by the pace of change. While she is quick to stress that certain aspects of communist China—be it the desire to control citizens or the lack of data protection—could never be replicated in in a democracy, that doesn’t change the fact that German companies have to compete on the same field as American and Chinese tech giants.

Ever Louder Warnings

Warnings about the explosive potential of AI development have been getting louder and louder. Military officials believe that AI is already in the process of revolutionizing warfare. The US and China have been long been experimenting with autonomous weapon systems, drones, and ship fleets that can organize themselves. While Germany was debating whether its conventional weapons systems are even operational, or if there are enough boots and protective vests for its soldiers, other places were developing the technology that will decide future wars. The technological gap is widening even more rapidly—and in the outdated German security debate, nobody seems to have noticed.

Merkel on numerous occasions, even to her coalition partners, has warned of the need for increased spending on German defense. But she has so far avoided a debate about the possibilities and dangers of these new types of weapons. In the meantime, Germany’s Foreign Office has begun to consider how AI will change foreign policy. An international debate over the ethics of using automated and autonomous weapons has begun.

Merkel has, to this point, limited her attention to the shortcomings of digitalization in the civil sector. She has been pushing the issue since 2012. Her initial efforts attracted ridicule after she described the unpredictable consequences of the internet for society as Neuland—terra incognita. Then she threw her weight behind Industry 4.0, a campaign meant to push German companies to understand and implement the digitalization of production, administration, research, and sales. Merkel warned that, unless Germans master Big Data and the specialized manufacturing technology of digital-age products, proud German industry could simply become the work bench for American IT firms.

In 2016, the term “artificial intelligence” finally appeared in the chancellor’s vocabulary when Merkel, a trained physicist, realized during conversations with entrepreneurs and scientists that artificial intelligence would massively accelerate the fusion of otherwise separate research domains. “I’ll put it bluntly: It is not entirely clear to me in which fields we are actually top-notch; in which fields we need to buy more knowledge; what the interconnection of diverse fields will look like one day; and if we will, by then, have all of the technological capabilities that we need to be at the front of the pack,” she acknowledged at a research summit on June 12, 2016. Afterwards, Merkel called even more urgently for Germany to go on the offensive in AI research. If necessary, Germany should protect its AI companies from being taken over by American or Chinese firms.

Three Competing Ministries

One reason Merkel was turning up the heat was her improved understanding of the complex effects of AI, which she now describes as “disruptive” or “revolutionary.” Another was the realization, at the end of the 2017 legislative period, that the grand coalition’s digitalization efforts have had little success. For example, though national broadband expansion was ranked among one of the government’s top priorities in 2013, Germany’s position in the international rankings for data connectivity has continued to worsen.

The chancellor credits herself for the steady expansion of Germany’s research budget. But research expenditure was not tax deductible—an issue especially important small and medium-sized businesses—until 2017. Venture capital has also been slow to arrive. In the last election campaign, politicians of all stripes complained that having three ministries, run by three different parties, responsible for digitalization didn’t exactly speed things up. On top of that, critics said that the government had made too many special considerations for Deutsche Telekom. By allowing Telekom to increase network speeds by “vectoring” preexisting copper cables, they cut costs in the short run, but only delayed the expensive and inevitable transition to fiber-optic cables.

In response, Merkel insisted during the campaign that the chancellery should centrally manage all digitalization activities in the future. In her new grand coalition, she has two senior figures dealing with the issue: Helge Braun, head of the federal chancellery, and Dorothee Bär, federal government commissioner for digitalization. Additionally, she created a new department responsible for digital issues in the central government office and integrated it with other departments from the interior ministry. In short, Merkel wants to speed things up. Her May 2018 meeting with AI experts only reinforced the point that Germany was lagging behind and needed to take decisive action. One element is to make it clear to small and medium-sized companies that if they want to survive, they have to engage with AI technologies.

In the battle to win back some technological sovereignty, lots of levers need to be pulled at the same time. That is not easy given Germany’s federal structures and the distance between politics and the economy. Unlike Beijing, Berlin cannot “rule from the top.” And unlike in the US, there are not huge sums of private money ready to be spent on scaling up start-ups or accelerating IT research. In Germany, the federal government has to ask the states to reform their educational systems in order to meet new technological challenges. And when the big companies in China or the US come calling, company managers naturally think about their own interests or the firm’s interests—not necessarily about Europe’s strategic needs.

The Complete Value Chain

In the tech age, a region only has technological sovereignty if it can produce the complete value chain of digital products. Whether it be computer chips, computers, batteries, or software, the European countries have collectively given up on competing at the top. Instead, they have become customers for other nations’ companies. The US and China dominate the market for software, hardware, and social media platforms, which have an ever-greater impact on daily life. And when there are interesting technological developments from German startups or companies, the large American and Chinese firms eagerly buy them out.

These problems are why the 2016 Chinese acquisition of the German robotics company Kuka generated such a passionate debate in the government about foreign investors. Should foreign takeovers of strategically important companies be more strongly controlled? “We need to exercise caution, so we can maintain a foundation, so that not everything will be bought out from us,” warned Merkel in May 2017. Merkel also called for more flexible European aid rules that would allow member-states to better support AI firms.

Yet the attempts to redress Europe’s deficiencies seem modest given the speed of innovation elsewhere. For years, Merkel has worked in the background with some similarly minded European leaders to try and develop an independent European computer chip factory, or perhaps a European battery factory. But the fragmentation of the EU internal market, national reservations, and the lack of strategic direction have hindered progress. Only in 2018 did the European Union implement its General Data Protection Regulation, which provides a common legal framework for handling data in the EU. Everything is too slow.

A Three Percent Benchmark

Merkel and Macron want to kindle a new research dynamic—or at least expand on current basic research and its applications. For the chancellor and the French president, the possibilities of AI are so revolutionary that the research needs to be revolutionary too. The model is the Pentagon’s DARPA program for defense research which has regularly boosted civilian R&D. But accepting that research projects will sometimes fail conflicts with the German approach of accounting for every penny spent.

The leaders of France and Germany argue that such a cautious, rigid approach makes it impossible to discover the necessary “game changers” or “technological leaps” that could secure the survival of European industry. They believe that the EU should use the European Innovation Council to support high-risk research projects—even if nine out of every ten projects will ultimately fail.

It is not clear whether the drive to catch up will work. China and the American tech giants have been following forward-looking strategies for years, investing tens of billions in new technologies. In an aging Europe, on the other hand, the debate focuses almost exclusively on the distribution of social benefits and fears of migration. The EU will still have around 450 million citizens after Brexit, but no functional European digital market to serve them.

On top of that, there is the general lack of awareness about the importance of innovation. Much of the EU is absorbed by passionate debates about NATO members’ commitment to spend two percent of GDP on defense. Yet nobody seems to be noticed that almost all EU member states are seriously neglecting another, more important commitment that dates back to 2010: they should all be spending three percent of their economic performance on research and innovation.

The post A Question of Sovereignty appeared first on Berlin Policy Journal - Blog.

© REUTERS/Benoit Tessier

What is the best way to a collective European strategy for artificial intelligence (AI)? This past March, Cédric Villani, a member of the French parliament, established an important landmark to guide development. He wrote a parliamentary report titled “For a Meaningful Artificial Intelligence,” that has sparked passionate discussions across France.

Villani is a prominent public figure—a renowned mathematician who received the Fields Medal, one of the highest distinctions awarded to mathematicians, in 2010. In France’s political landscape, scholars like Villani are a rarity. His distinctive style of clothing and enthusiasm for technology have turned him into a public celebrity. “Artificial intelligence must be a topic of discussion for the general public, otherwise we lose our foundation,” Villani is often quoted as saying.

His AI strategy for France and Europe has three key features. First, it must be a joint European endeavor because only a collaborative Europe has the necessary diversity and scale for an ideal AI development. Second, the strategy must be cross-cutting, which means that experts from multiple disciplines, private companies, and startups should all contribute to AI development and research. Moreover, simplified administrative procedures should enable and guide this collaboration. Third, Villani explains that the AI strategy must be inclusive. Inclusivity means not only expanding discussion to include as many people as possible, but also protecting citizens and investing in education. Villani recommends that this European strategy should focus on four key sectors: transport, healthcare, defense, and environment.

The Franco-German collaboration on artificial intelligence must be prioritized, emphasizes Villani, who in his research over the past months has traveled several times to Germany. Both countries have no shortage of top mathematicians and computer scientists, he said during a talk hosted at the French Embassy in Berlin in early March. “Everybody admires the strength of the German industry and also the facility of German research and industry to collaborate. These things are very key in the development of AI.”

Competing for Talent

What Villani did not say is that German industry is still very much dominated by traditional sectors, like cars, chemical sciences, and industrial machinery. And it is precisely the success of these industries that has contributed to lagging development in digitalization, particularly for small- and medium-sized companies.

Industry in France is not as dominant as in Germany, yet France has succeeded in initiating a dynamic modernization process. French President Emmanuel Macron has managed to push through numerous reforms, and there is additional pressure on companies to invest in France. France’s overall strategy of providing public support for startups is beginning to produce results: the country is slowly gaining a reputation for innovation. At the 2018 Consumer Electronics Show in Las Vegas, the most important convention for technological innovation, France represented the largest international contingent with 270 startups.

In the development of AI, the relative strengths of the French and German economies could excellently complement one another. However, both countries suffer from a similar brain drain of artificial intelligence experts. “The competition for talented and skilled workers is going to be one of the largest European challenges,” warned German Chancellor Angela Merkel at the end of May during a visit to Porto. One example of this challenge is the French AI expert Yann LeCun, who left his country to become Chief AI Scientist for Facebook AI Research (FAIR). Not all specialists leave their native country: Antoine Bordes leads Facebook’s AI Research Center in Paris. Google also wants to build an AI laboratory in the French capital. In order to combat this brain drain threat, Villani suggests providing higher salaries and better working conditions for AI researchers at public institutions in Europe.

A Franco-German Research Network

It took Chancellor Merkel a very long time to put together a government coalition, and this summer is seeing new challenges to her authority. But for now, Chancellor Merkel can finally work more closely with Paris. Talks are already underway on an effort to establish a joint Franco-German center for AI, as proposed in the coalition government agreement. Such a center could make use of German institutions already established near the border with France which could be expanded to provide a joint research network.

There is a German Research Center for Artificial Intelligence in Saarbrücken, which was founded in 1998 as a public-private partnership. The Saarbrücken AI Center is the best funded AI research center in the world, receiving resources from both the German federal budget as well as from major corporations like BMW, Volkswagen, Airbus, Bosch, SAP, German Telekom, Google, Intel, and Microsoft. Additionally, in 2016, a research network called “Cyber Valley” was founded in Baden-Württemberg, not far from the French border. It is supported principally by the Max Planck Institute for Intelligent Systems, which draws resources from research centers in Tübingen and Stuttgart. Cyber Valley receives national funds, but it also works with groups like Bosch, Daimler, Porsche, IAV (Engineering Society for Automobiles and Traffic), ZF Friedrichshafen, and the internet giant Amazon. Its research focus is primarily on self-driving vehicles—an important challenge for Germany, considering its large dependence on the automobile industry.

Aside from the location of the planned Franco-German Research Center, there is much more pressing question which needs to be discussed: Is this center really the best answer to the challenges and opportunities presented by AI? France and Germany already have outstanding research facilities, but they haven’t benefited much in terms of marketable innovations. This is precisely why some experts recommend that to create an effective European AI ecosystem, Europe needs to pursue a broader approach by combining funding for AI research with increased support for startups and middle-sized companies. This is exactly what Villani champions when he speaks of the necessity for “agile and widely usable” research—a research strategy characterized by more proximity to the market.

A report from the consulting firm Roland Berger titled “Artificial Intelligence—A strategy for European startups” follows a very similar line of thought. “Rather than coming from multinational firms as in the past, innovation now stems largely from research laboratories, digital platforms, and startups. These are the players creating algorithms and developing use cases, they are the brains behind innovations in image recognition, natural language processing and automated driving,” said the report’s authors.

Almost 40 percent of all startups active in AI are located in the US. In order to compete, the consulting firm calls for creating a European legal status for startups as well as increased incentives for financing European AI-startups, which have less access to capital than their American and Chinese competitors. The Berlin-based Stiftung Neue Verantwortung, a think tank focused on the interaction between technology and society, also recommends developing structures to help medium-sized companies integrate AI solutions into their business models.

Data Protection as a Plus

The acceptance and integration of AI technology in the general public and in middle-sized companies will be the key challenge in Europe’s development of artificial intelligence. Whether we look at nuclear energy, genetically modified food, or at the Volkswagen emissions scandal and uproar over diesel engines: no technology can prevail if it is rejected by a significant portion of the population. AI is not only fascinating for many people—it is frightening as well. Many are worried by the ethical problems of the emergent technology and scared by scenarios of enormous job losses caused by AI.

Meanwhile, medium-sized companies are concerned that technological innovations from AI, particularly with regards to computing power, might leave them behind or replace them entirely. These concerns also require a European solution that could be based, in part, on the EU General Data Protection Regulation (GDPR), which went into effect on May 25. The GDPR enables Europe to distinguish itself from its competitors as a region in which technology respects the boundaries of personal privacy.

The ethical dimension of EU data protection contributes to the attractiveness and competitiveness of Europe—just look at the US where numerous AI researchers have expressed their discomfort with the handling and processing of personal data. It is a distinctly European conviction that data privacy can in most cases be protected without sacrificing results by using anonymized data. This regulation is reassuring for citizens, but also for companies seeking to use data without compromising on quality or their protection of clients and partners. As a result of this added security and protection, businesses increase their ability to become integral parts of the AI ecosystem.

Without data, even the best algorithms are useless—and only the companies that know how to collect, analyze, and protect data in the long-run can reap the benefits of AI. Europe as a whole needs to strongly defend its values of human security and privacy. Only then can they serve as the necessary foundation for a competitive artificial intelligence that is “Made in Europe.”

The post Made in Europe appeared first on Berlin Policy Journal - Blog.

© REUTERS/Ted S. Warren/Pool

In Beijing’s Zhongguancun district, a non-descript skyscraper rises between a subway station and an electronics store; the name on the facade: Sea Dragon Buildings. The windows on the ground floor are boarded up and the businesses have long since been shuttered. Yet a few floors above, some of China’s most sophisticated start-ups are developing cutting-edge technology. One of them is Horizon Robotics, a company that is just three years old, but already a globally known name in artificial intelligence.

“Our mission is to create one of the leading platforms for AI worldwide,” said the company’s founder Yu Kai. He was head of the Institute for Neural Networks for Chinese IT conglomerate Baidu before breaking off to start Horizon Robotics. The company builds chips and software that resemble those neural networks and drive AI. Their technology can recognize and interpret patterns and situations—invaluable for companies working in the auto, aviation, and robotics sectors.

Horizon is a paragon of China’s booming AI scene. The country is well on its way to dominating what has become a crucial 21st century technology. The State’s Council announced at the end of last year that China is aiming to develop world-class AI technology by 2020: “The use of AI should underpin our aspiration to be on equal footing with other innovation leaders,” wrote China’s top state planners in a July 2017 directive. “This is the new focus of international competition and the strategic technology of the future.”

In other words, China is not only endeavoring to be a central production site for the next generation. It wants to even the playing field with its global rival, the United States. After all, the country that dominates AI will, according to experts, also gain a key military and geopolitical edge. And China has left no doubt about its ambition: to be a “technical-economic great power,” according to the directive.

It is no wonder, then, that AI has top priority. In an address last year, President Xi Jinping called the technology one of the pillars of his economic policy. “It is important to promote the deep integration of the internet, big data, artificial intelligence, and the real economy,” he said in his 2017 party speech. And if China sets itself an objective, things start happening. Billions have been invested in innovation and start-ups, and the country’s provinces are competing to have AI companies settle in their regions. In its 2017 Global Artificial Intelligence Study, consulting firm Price WaterhouseCoopers dubbed the growing competition between China and the US a “global AI arms race,” where the great powers will compete—and where the “war over research, investment, and capable minds” will eclipse any trade dispute.

AI Starts Early

The Chinese planning apparatus is indeed pursuing a long-term approach and investing heavily in training. AI has been a nationwide subject in computer science education for a few months now; the first lessons begin in primary school. Initially, 40 select schools are offering courses for secondary school classes—at a level that elsewhere in the world would be considered appropriate for universities. The Ministry of Education started issuing its own textbook on AI in April, according to the Hong Kong-based daily South China Morning Post. Colleges and universities, meanwhile, encourage students to start their own companies.

China has already acquired considerable knowledge and success in AI. The Beijing City Council counts some 400 AI companies in the vicinity of the Horizon Robotics office alone. And according to a study by the Japanese engineering company Astamuse, China is second in the world in patent applications, only behind the US. But they are catching up fast. Also, AI is already in regular use in China for a wide range of applications. Facial recognition, for example, is widely employed. In some public bathrooms, a machine will only dispense toilet paper to people who first look into a camera—and they only receive four pieces of paper. If the same person tries to return for more, the machine refuses. The idea is to stop people from stealing toilet paper (a rampant problem authorities are trying to stamp out). Then there are university entrance exams: schools are required to register students with a biometric photo to prevent them from sending a substitute to sit for a test.

The biggest client, however, is the police. One of their contractors is Megvii, or Mega Vision, also located in Beijing’s Zhongguancun engineering district. The company’s facial recognition software is based on neural networks and can pick out and positively identify people from blurred images and in huge crowds. Beijing police are now able to catch suspects who make the mistake of walking down the street in a camera’s line of sight. Some 400 million cameras will be installed in public spaces across the country; soon, culprits will have no chance of moving around unnoticed.

In this way, an authoritarian state is gaining a sizeable technical advantage over the West. It is a paradox to many observers who believe democracy goes hand in hand with technological supremacy. “The reason for China’s success in AI and data mining, however, is precisely the lack of data protection,” says Dong Tao, a China economist at Credit Suisse.

The Chinese communication app Wechat, for example, processes seven billion photos per day that the government and AI researchers can access. As the Davos World Economic Forum pointed out, the explosion of patent applications in China is thanks in part to having the world’s largest digital user base.

Alibaba vs. Amazon

Alibaba is another example of how China appears to be gaining an edge. Like Amazon, Alibaba is a platform for selling items online. The company uses adaptive learning methods to improve its suggestions for the customer’s next purchase, pointing them to its shopping sites like Taobao. With its algorithms, Alibaba can align and adjust its own forecasts to match actual customer behavior; the quality of Alibaba’s suggestions, therefore, are better than Amazon—according to their own statement, at least.

Horizon Robotics, meanwhile, is gearing up for the use of its AI chips in self-driving cars. For Beijing, it’s crucial to have key technologies in Chinese hands. The state does not directly fund Horizon Robotics, but it does so indirectly: if you want to sell high-tech products in the Chinese market, you have to demonstrate a minimum added value from a Chinese company. That’s why Audi is interested in using Horizon’s technology for developing self-driving cars in China. In other markets, however, the carmaker has turned to competitors, like US company Nvidia.

More and more, the Chinese appear to be surpassing the Americans in technology. Horizon’s cameras do not merely capture a pixel pattern, like traditional devices: They understand what they see and assign parts of the picture to a corresponding meaning. A cyclist is recognized and assigned a code; so is a building, a pedestrian crossing, or a mother with a stroller. And the chip even provides predictions on what might happen in the next few seconds. A yellow traffic light, for example, will turn red (it was just green); a cyclist will be one meter to the left (riding from the right); the mother with the stroller will likely stop (the pedestrian light is flashing red). The chips then feed that data to the central computer board, which uses the information to decide on the car’s next move.

AI on the Battlefield

Horizon doesn’t talk much about future uses of its technology, but it’s clear the possibilities are endless. Take aviation, where improved autopilot systems and autonomous aircrafts are already in use. That brings us to the military. In sealed-off research facilities, the People’s Liberation Army is furiously at work on mapping the future of warfare and its consequences.

In an essay that has since been taken off the internet, Officer Chen Hanghui from the Army College in Nanjing debated how artificial intelligence could “change the rules of warfare.” He came to the conclusion that technological singularity on the battlefield is imminent. Technological singularity is the theory that radical and rapid developments in AI will means that machines will overtake humans. Thinking systems can learn, adapt, and reprogram themselves, creating super-intelligence.

China’s military is already looking ahead to the time when traditional armies will not be able to compete with AI-driven, automated armies. The country’s air force considers the introduction of highly intelligent systems to its fleet an utmost priority.

“In the future, mobility of information will be a decisive factor in aerial combat, electromagnetic attacks, or cyber operations,” Yang Wei, Vice President of the Commission for Science and Technology at the state-owned Aviation Industry Corporation of China (AVIC), told the official state newspaper in July 2017. That opens an opportunity for China to “overtake the West,” he added.

Most Chinese defense experts have remained sober in their assessment of AI on the battlefield, describing instead the practical applications the technology can provide. Their attitude is mostly defensive: it’s about ensuring that China has the capability to defend itself should the need arise.

And for good reason. Militaries around the world are weighing up the same issues. The combat machine of the future is unassailable: It no longer has a human form; it distinguishes between friend and foe in a matter of milliseconds, and it reacts without hesitation, with minimal doubt. Experts have long since been raising the alarm bells over the dangers of such fighting machines, but as China’s military websites repeatedly point out, anyone who wants to survive in international competition needs that technology. If AI determines who rules the world, as Vladimir Putin recently noted, China is ready for the challenge.

The post AI for Xi appeared first on Berlin Policy Journal - Blog.

Artwork © Dominik Herrmann

Sebastian Kurz knows how to party. Last Wednesday, he invited all of Vienna to a Sommerfest in the baroque Schönburg Palace, and he didn’t miss the opportunity to welcome every guest with a handshake. Wearing no tie, yet flawlessly dressed up, Kurz represented the new feeling in Vienna: In Europe, we are somebody again.

“Yes, but who?”, asked a few guests who had observed Kurz’s recent political travels. Austria’s conservative chancellor had just journeyed to Bavaria to visit the state’s Premier Markus Söder and support him in the “asylum fight” against Merkel. Meanwhile his Vice Chancellor Heinz-Christian Strache visited Italy’s new interior minister and agitator in chief, Matteo Salvini, and rhapsodized about a “Copernican Revolution in Europe’s asylum policy.” Two days after that, Kurz went to Budapest for a summit of Visegrad leaders, whom he has been defending from criticism. Kurz has even had time to call for an “axis of the willing”—an alliance of countries that want to proceed with a restrictive refugee policy. Kurz counts Vienna, Rome, and Berlin (or rather the CSU as the most conservative party in Angela Merkel’s government) among the willing, but also Copenhagen and Amsterdam. Kurz envisions these countries supporting militarized border controls and “protection centers” outside EU borders instead of the internal redistribution of refugees.

Is Kurz really the “rock star” of Europe’s new conservatives, as Trump’s ambassador in Berlin, Richard Grenell, declared to the right-wing readers of Breitbart? Is he really, right at the start of Austria’s presidency, aligning himself with Angela Merkel’s opponents and thereby positioning himself as a future conservative president of the EU Commission? The next EU elections are in 2019, the following ones in 2024—when Kurz will still only be 37 years old.

Perhaps is it really “the hour of Merkel’s antagonists,” time for the “axis of no principles”. That’s how Matthias Strolz, the former leader of Austria’s liberal and pro-European party NEOS, described the situation in an article in the German weekly DIE ZEIT. Strolz and Kurz were once friends. Today, Strolz does not hesitate to paint the Austrian chancellor as a henchman of international right-wing populists and Trump supporters—a man so perfectly equipped to destabilize Europe as if he had been designed for that purpose.

Perhaps Kurz is just a child of his time. A prototype of the next generation of European politicians, for whom the EU is not an indispensable union that arose out of the ashes of World War II, but an aging vehicle that must be completely renovated if it is to remain attractive for a generation that only knows the Iron Curtain from history books.

Celebrated as a Wunderkind

Kurz is young in years but old in political experience. He’s spent half his life in politics. As a teenager, he got involved with the youth organization of the ÖVP (Austrian People’s Party). In his mid-twenties, he became state secretary for integration, and then foreign minister—understandably, he was too busy to finish his law degree. Kurz comes from a moderate, middle-class background in Vienna. His mother is a teacher, and his father worked for Siemens until he started his own business. Sebastian was an only child, well-cared for and given every support. Disruptions, detours, rebellion—there was none of that.

His private life today is also unspectacular. Kurz lives with his high-school sweetheart, no kids, no pets—though he does like dogs, he explained in one of his rare private interviews. He also likes playing tennis and hiking in the mountains, and used to go windsurfing on Lake Garda in Italy. All in all, it’s an average-Joe background, perfect to identify with for many voters. It’s noticeable how carefully Kurz orchestrates his private life and controls the reporting about it. As a child of generation Facebook, he knows how to shape his image.

Europe is watching Österreich’s new chancellor with fascination, but also growing unease. After his electoral victory, the international press celebrated him as a “Wunderkind,” practically a Mozart reborn. But recently he gets compared more often to a different figure from Austrian history, namely Klemens von Metternich, the powerful, scheming master of ceremonies at the 1815 Congress of Vienna. One thing is for sure: this 31-year-old is no longer being underestimated.

“A Europe that Protects”

The motto of Austria’s Council presidency is “A Europe that protects” (a slogan borrowed from France’s President Emmanuel Macron), and Kurz takes that literally. To create this Europe, he believes that the EU needs a new, stronger border control comprising Frontex police and military units who can also take action in third countries and at sea. It should be able to send people back to “protection centers,” camps based outside the EU, where asylum-seekers would be held and processed before any of them would be allowed to cross Europe’s borders. These camps could be on the North African coast, though the new prestige project of the Austrian government foresees establishing them in the Western Balkans, perhaps in Albania, a country eager for EU accession.

As a foreign minister, Kurz helped close the West Balkan route to Europe in 2015 against all resistance and doubters. He praised the “Australian model” of setting up internment camps on nearby islands. Now he is working on closing off Europe’s external borders, as that would make superfluous the whole debate about distributing refugees within the EU according to quotas. Kurz does not foresee any compromise on that issue during Austria’s presidency. Closing off the external borders would also take the heat off the CSU’s proposal to reject asylum-seekers at the German border.

Already in the Austrian election campaign of 2017, Kurz styled himself as the savior of the West. He took over the ÖVP, a party that had shaped much of the country’s history after World War II, and converted it into a citizen’s movement. Now, the young chancellor is in his element at the EU level. He is testing what worked for him in Austria on a greater stage.

The election researcher Fritz Plasser analyzed Kurz’s rise in a recent book. “The refugee crisis of 2015 was the fault line. It created an epochal crisis topic that drove out everything else,” he wrote. By 2016, two-thirds of Austrians had the impression that something was going wrong.

Act Like a Startup

But Kurz is smart enough to do more than promote himself as an anti-refugee rabble rouser. Of course, he rode a wave of migrant-related worry into the Chancellery. But at the same time, he remained the neat, polite, almost sycophantic son-in-law who charms the grandmother just as easily as her granddaughter. There is nothing radical about his behavior or manner, unlike his vice-chancellor Strache and many other members of his coalition partner, the far-right FPÖ (Austrian Freedom Party). He is the perfectly anodyne right-wing populist, a hardliner in the garb of a Christian Democratic Socialist.

If you’re looking for Kurz’s fundamental convictions, you will not find them on the classical axis between Christian socialist and free-market liberalism. As a teenager of the 2000s, he was shaped by September 11 and the global financial crisis. As an Austrian, the country’s “years of change” from 2000-2006 were a decisive experience. Back then, there was also a right-wing conservative coalition in power, with Wolfgang Schüssel (ÖVP) as Chancellor and the FPÖ as a junior partner. That government quickly set about dismantling Austria’s tradition of grand coalitions defined by social equilibrium and consensus. An air of neoliberalism, of freedom and personal responsibility, swept through the land. The feeling was that if you couldn’t cope, it was your own fault.

Kurz is so heavily influenced by such thinking that he doesn’t even question it. He and his political movement act like a startup looking for sponsors, crowds, and likes on the political market. Added to that is a deep skepticism about everything the establishment represents—even though Kurz himself comes from the establishment. Political correctness is “over-the-top.”

If the line about the “axis of the willing” was clumsy, given that there is a dark history of axes led by Berlin, Rome, and Vienna, it doesn’t bother Kurz. For him, the accusations from German commentators that he was using “Nazi rhetoric” are just part of senseless debates from a time when even his parents weren’t yet born. “I have a problem with people dictating which words I can use. I have a healthy grasp of history, and I don’t like to let Nazis take words like “axis” or “homeland” (Heimat) away from me,” he has argued. Older people might find that cynical, see it as calculated pandering to the politics of the past. But when Kurz uses it, it is just a sign of how much history his generation has forgotten.

The post Close-Up: Sebastian Kurz appeared first on Berlin Policy Journal - Blog.

© REUTERS/Hannibal Hanschke

Almost a decade ago, when the euro crisis brought Europe to the brink, I asked a senior official working for German Chancellor Angela Merkel why Berlin was being so ruthlessly hardline and orthodox about imposing austerity measures on already struggling crisis countries. Surely it was possible to adopt a softer touch at least in public to avoid humiliation, I suggested, “because eventually Berlin will need a favor from these countries.”

Then, the Merkel official saw things differently, but he may have changed his mind by now. Last week I watched him follow the chancellor into an informal meeting in Brussels, the so-called mini summit on migration policy, which took place less than a week before the European Council’s end-of-June meeting. Officially, it was about creating an opportunity to sound out the appetite in Europe for closer cooperation on the continent’s unresolved refugee problem. In reality, it was about favors: Merkel was testing her partners’ readiness for an expedited deal to save her coalition government, the center-right political CDU/CSU alliance, and her chancellorship.

Three years after more than a million people arrived in Germany, the migration crisis is dominating headlines again. This time it’s not about numbers—most agree they have fallen significantly, in Germany and across the continent—but about a lingering grudge match between the chancellor and her conservative Bavarian allies, the Christian Social Union (CSU).

After swallowing their pride and following Merkel’s initial open door policy in 2015/2016, they worry that unresolved asylum tensions and public security concerns will see them fall short of an absolute majority in the Bavarian state election in October for the first time since World War II.

Alarmed, CSU leader and federal interior minister Horst Seehofer has threatened to close German borders to people already refused asylum, or to those who have already been registered as asylum-seekers elsewhere in the EU. He says he will do this unless Merkel can convince her EU allies to agree to measures achieving an equivalent end before July 1.

Merkel has warned that closing Germany’s borders could trigger the domino effect across Europe she tried to avoid in 2015 by keeping borders open. If Seehofer proceeds with the closure against her wishes, she has to fire him. His CSU would then pull out of government, and her fourth-term coalition, which marked 100 days in office at the end of June, would collapse.

A CSU Gun to the Chancellor’s Head

With a CSU gun to her head, Merkel has been forced into crisis diplomacy mode, attempting to pull off in days the kind of EU refugee deal that the continent has failed to secure in more than three years. Leaving the refugee issue unresolved has resulted in a very different political climate in Europe now as compared to 2015 (even with far fewer new arrivals) and emboldened populist and right-wing governments in Italy, Austria, Central Europe, and Scandinavia. As if on cue, ahead of the mini-summit of 17 European leaders in Brussels, Italy and Malta turned back a ship filled with 239 rescued asylum-seekers.

While Merkel demands a pan-European deal, CSU pressure has forced her into seeking bi- or trilateral deals, similar to that struck with Turkey in 2016, to stop large numbers of asylum-seekers from reaching Germany and Europe. But Italy, one of the countries she needs a deal with, has a new populist government demanding an overhaul of the EU’s so-called Dublin rules. These oblige member states to process asylum-seekers that first enter the EU across its borders. They place a heavy burden on Italy, Greece, and Spain.

Rome is pushing to scrap the Dublin regulation and create offshore migrant screening centers in Africa. But, as the EU Commission has noted, no African country has come forward to host such “regional disembarkation centers,” as they’re being called. French President Emmanuel Macron, who earlier agreed to take back from Germany asylum-seekers already registered in France, criticized member states who benefit from EU solidarity yet “voice massive national selfishness when it comes to migrant issues.” New Spanish Prime Minister Pedro Sanchez agreed there is still much work to do, but that a clear, common understanding is emerging of a need for a European vision to deal with the challenge.

Not everyone is that optimistic. Italy’s Deputy Prime Minister Luigi Di Maio attacked Paris for “pushing back people” over their shared border and warned on Facebook that France could be “Italy’s No. 1 enemy on this emergency.” In Brussels, Italy’s partners remain unsure about who speaks for the new government in Rome: Di Maio, Prime Minister Giuseppe Conte, or Interior Minister Matteo Salvini of the far-right League.

In addition, Berlin officials close to Merkel—aware that they are on the back foot—are alert for horse-trading approaches from countries like Italy and Greece, on banking and sovereign debt respectively, that would be political dynamite back in Germany.

Other EU countries are clearly less interested in extracting favors from Merkel. They sense a golden opportunity to weaken or even topple the German leader. Since 2015, Poland, Hungary, and the Czech Republic have refused to accept mandatory quotas to redistribute accepted asylum-seekers across the bloc. They stayed away from the weekend gathering, with Polish Prime Minister Matteusz Morawiecki speaking for all them in dismissing “warmed-up” quota proposals “we’ve already rejected.”

Shuttling Diplomacy

Shuttling between the various camps is a relatively new leader on the European stage: Austrian Chancellor Sebastian Kurz (see also our Close-Up in this issue). From July 1, Merkel’s day of reckoning, the head of Vienna’s anti-immigration populist coalition is also the head of the EU’s rotating presidency.

As foreign minister in 2015, Kurz faced down Merkel by closing the so-called Balkan route without consulting Berlin. He then told the German tabloid Bild that it was “good and necessary” that she, “like most in Europe, changed her migration path massively.” The Austrian leader, who leads a coalition government with the far-right Freedom Party (FPÖ), is pushing for ironclad border controls around Europe. Crisscrossing Europe in recent days, he has picked up an impressive list of like-minded allies.

Top of the class is Bavarian state premier Markus Söder, reportedly the driving force behind the CSU push against Merkel. But for all their concern over asylum ahead of October’s state election, three quarters of Bavarians told the Forsa polling agency that they see other pressing problems that are “just as or even more important” than migration. And more than two thirds of Bavarians—68 percent—actually back Angela Merkel’s efforts to seek agreement at EU level over following a CSU national strategy.

Still, as the clock ticks down for Angela Merkel, even breaking the refugee deadlock is not certain to save her. Her Bavarian frenemies insist they will have the last word on whether any new EU measures obviate the need for national measures. They need credible proposals to rescue their looming election and save face in Berlin.

Offering them a way out of the political corner they have painted themselves into in Bavaria, and avoiding political tremors in Germany and across Europe, will require a soft, but firm diplomatic touch in Berlin—now more than ever.

The post Crunch Time for Merkel appeared first on Berlin Policy Journal - Blog.

© REUTERS/Alexander Ermochenko (the banner reads: “Russia – DNR together!”)

In the separatist-controlled areas of eastern Ukraine, some three million people are growing increasingly detached from the rest of the country. While there has been no official acknowledgement of the Kremlin’s influence, there has been plenty of evidence pointing to Russia’s role as the de-facto authority in the region. The leaders of the self-declared “People’s Republics” of Luhansk and Donetsk regularly declare that they see their future exclusively with Russia and only pay lip service to the Minsk agreement.

But the agreement, which stipulates that the government and the separatists negotiate a return to Ukraine, is deeply unpopular in Kiev as well. Legislators’ attempts to give the separatist areas a “special status,” as stipulated by the Minsk agreement, ended in August 2015, when four people were killed in clashes between police and right-wing activists outside the Ukrainian parliament. The protesters saw the move as a sell-out to Russia. Parliament subsequently failed to muster the 300 votes necessary to pass the legislation.

It was of little surprise then that a recent attempt by German Foreign Minister Heiko Maas to revive the peace process by convening his counterparts from France, Ukraine, and Russia for “Normandy Four” talks in Berlin on June 11 did not achieve an immediate breakthrough.

Instead, the bloody stalemate in Donbass looks set to continue. The frontline, dubbed “Line of Contact” by the Minsk negotiators, cuts arbitrarily through settlements and roads as well as electricity and water supply lines simply because this is where government troops and Russian-backed separatist forces came to a halt in February 2015.

It is perhaps the Minsk agreement’s only major achievement that the 500-kilometer long contact line has not been crossed since by a significant number of troops from either side. But that is due more to the consequences of military action than to actual compliance: the Ukrainians know that if they were to attack, Russia could swiftly send large military forces across the separatist-controlled border. The Russians and separatists, in turn, know that any military advance on their side is likely to be met by a much more professional and disciplined Ukrainian army—and likely another round of Western economic sanctions.

The respect for the frontline does not exclude exchange of fire, however, with wide-range indirect weapons such as artillery, mortars, and multiple rocket launchers in use by both sides. Despite the Minsk agreement’s stipulation that such heavy arms should be withdrawn from the front, they have been deployed nearly every time fighting has escalated since 2015.

The Information War

What lies behind the outbreaks of violence if they won’t achieve significant territorial gains? It has become a sad ritual in this conflict to initiate deadly battles only to make tactical gains in the perceived information war between Russia and the West. One of the bloodiest phases took place at the end of January 2017, when at least 37 people, including seven civilians, were killed in and around a town north of Donetsk called Avdiivka.

Significantly, the fighting occurred in between two phone calls: on January 28, newly-elected US President Donald Trump called his Russian counterpart Vladimir Putin for the first time and pledged to seek cooperation over Ukraine and other issues. And on February 4, Trump held his maiden phone call with Ukrainian President Petro Poroshenko, in which he told him that the US “will work with Ukraine, Russia, and all other parties involved to help them restore peace along the border.”

Whether the outbreak of fighting was more in Ukraine’s or in Russia’s interest is not entirely clear. But Kiev has shown many times that it will try for even minor advances if the opportunity arises. Since 2015, government troops have moved into a number of small settlements located in the so-called gray zone. In November 2017, Ukrainian forces entered Hladosove and Travneve, two frontline villages in the Donetsk region, just when the Donetsk “People’s Republic” was busy sending troops to support a putsch in the neighboring Luhansk “People’s Republic.”

And in May, when rumors began swirling that Putin would sack his powerful aide Vladislav Surkov as the Kremlin’s Donbass point man, Ukrainian troops entered Chyhari, a tiny Donetsk settlement just west of the separatist-held city of Horlivka.

While moving closer to the contact line does not violate the Minsk agreement’s letter, it clearly goes against its spirit by increasing the risk of escalation. In some areas, the opponents’ frontline positions now lie less than 100 meters apart.

No Sign of Compromise

Events this spring also gave the Ukrainian military reason to feel emboldened. On May 1, the “Reintegration Law” handed command of the military operation in the east from the SBU security service to the Armed Forces, and the mission was promptly named “Joint Forces Operation.” The military was further rewarded with the delivery of long awaited US Javelin anti-tank missiles.

Last but not least, Ukrainian politicians are gradually shifting into campaign mode as the country prepares for presidential and parliamentary elections in 2019. President Poroshenko is expected to stand for another five-year term, but his approval ratings are currently at a miserable seven percent, according to a June 14 poll by the Kiev-based think tank Razumkov Center. Given the widespread patriotic and anti-Russian sentiment in the country, the government is unlikely to agree to any concessions in the Donbass.

On the Russian side, any hopes for change were crushed when Putin reappointed Surkov on June 13. The move came after a month of speculation that the long-time Kremlin spin-doctor would be replaced. Instead, the Kremlin is signaling a continuation of its previous policies: despite officially adhering to the Minsk agreement, Russia supports the separatists financially and militarily, while its state-controlled media keeps publishing anti-Western and anti-Ukrainian propaganda.

Can Peacekeepers Find a Solution?

Given these multiple impasses, it is understandable that negotiators have jumped on the idea of a UN peacekeeping force, something that was long promoted by Ukraine and suddenly endorsed by Putin in the fall of 2017.

However, consensus is proving elusive here, too, because Putin’s endorsement comes with strings attached. According to the Kremlin, the peacekeepers should only be deployed along the Contact Line, in order to protect the Organization of Security and Co-operation in Europe’s existing Monitoring Mission.

In theory, a round-the-clock observation of the frontline by armed UN peacekeepers might reduce the level of violence, as the unarmed OSCE monitors do not work in darkness for security reasons. But it is unclear how such a force could offer effective protection against well-armed and entrenched troops on both sides. Overall, the Russian proposal seems mostly designed to protect the current separatist civilian and military structures.

This is why Ukraine and most of its allies reject the Russian proposal and call for a well-armed international force that should take over control of the “People’s Republics,” including the state border with Russia.

The “People’s Republics” lie at the heart of another, more fundamental, dispute. Because of their illegal foundation, Ukraine and the West demand their dissolution. Kurt Volker, the US Special Representative to Ukraine, said in March that this is central to the Minsk agreement’s purpose of restoring constitutional order. “Implementing Minsk = dissolution of these illegal structures. Unwillingness to disband = unwillingness to implement Minsk,” Volker wrote on Twitter.

Russia and the separatists reject this. In a recent interview with Russia’s RIA Novosti news agency, the Luhansk “foreign minister” Vladislav Deinego argued that his “People’s Republic” would remain an “independent subject” entering into treaties with Ukraine.

While the Minsk agreement details a list of rights that includes a law-enforcing people’s militia, it stipulates that Kiev and the separatists hold a dialogue over their exact status. Nowhere does the document mention “People’s Republics;” it speaks of “Certain Areas of the Luhansk and Donetsk Regions” instead. It is important to remember, too, that the seperatist leaders also signed all three parts (Protocol, Memorandum, and “Package of Measures”) of the agreement.

Two Billion Euros per Year

When the agreement was signed, it was expected that the conflict could be settled within weeks or months. Three years later, the “People’s Republics,” despite being recognized by nobody except separatist South Ossetia, are on their way to becoming de-facto states with their own governments (Luhansk alone boasts 19 ministries), passports, vehicle number plates, school curriculums, diplomas, and so on. Their currency is the Russian ruble, and clocks are set according to Moscow time.

The longer people live (and die) in this reality, however imagined or illegal, the harder reintegration into Ukraine will get. Some hope that their sheer size might force Moscow to give up the “People’s Republics.” The subsidies necessary to feed the region’s aging populations—many young people and skilled workers are thought to have left—and sizable armies are estimated at well over €2 billion a year.

And while Ukraine has a mixed track record of winning the local population’s hearts and minds, showing off economic success can be a promising strategy. Already today, Ukrainian wages and pensions are significantly higher: in the Donetsk “People’s Republic,” an average salary is 10,000 rubles (€136), compared to 8,927 hryvna (€287) in government-controlled areas.

Supporting Ukraine, its economy, civil society, and democratic institutions therefore seems the most promising way to end the conflict in the Donbass. With an estimated one million crossings of the Contact Line every month, Ukrainian soft power may, in the end, prove decisive.

The post Shadow States appeared first on Berlin Policy Journal - Blog.