Ever since China opened itself to the outside world and joined the global economy, its national economic growth has been nothing short of miraculous. Between 1989 and 2018, the average Chinese annual growth rate was 9.58 percent; however, as of December 2018, China’s year-on-year advancement was at 6.4 percent. The set of factors that have affected this change are numerous and multi-faceted, and they include demographics, the transformation of the Chinese economy into a system with market driven prices, the decline of Chinese exports, and the trade war with the US. This slowdown will negatively impact the world economy, given that it was Chinese growth that prevented the world from sliding into a global recession. The slowdown also generates a more unpredictable and less promising environment to possible investors. In addition to its effect on the global economy, the Chinese economic slowdown also brings great uncertainty to the country’s political future.
Ever since its formation as an independent state in 1947, Pakistan has seen its share of adversity. Wars and rivalry with India have become more toxic since the two countries acquired nuclear weapons in 1998. This has become an integral part of the country’s history and daily experience, along with the conflict in Afghanistan, struggles with Islamic extremism, military dictatorships, and tackling socio-economic troubles. One can say that Pakistan has always been on the verge of becoming a failed state. However, Pakistan currently faces a challenge that truly threatens to send it over the edge. Namely, the country’s depletion of drinking water has the potential to endanger its economy and security. As a result, this country of over 200 million people, armed with nuclear weapons in one of the most geopolitically sensitive regions in the world, could face a new crisis with an unpredictable outcome.
A new partnership is emerging between Russia and Iran that includes political, security and economic dialogue. This new partnership has been the product of regional and global circumstances that brought the interest of the two countries into alignment. This relationship should be taken seriously as the two countries are geopolitically pivotal countries in Eurasia and their partnership has global ramifications, despite the limitations extant in this relationship.
The term “failed state” usually refers to a country whose state apparatus is not capable of effectively controlling and policing its territory, and is unable to provide basic social and public services to its citizens. These types of states are generally characterized by rampant corruption and socioeconomic plights. However, they also become generators of internal conflicts, organized crime, terrorism, refugees, and arms proliferation, among others, thereby impacting the well-being of their neighbors. Failed states are usually associated with places like Afghanistan and sub-Saharan Africa, as well as with the conflict-ridden countries of the Middle East and North Africa, such as Yemen and Libya. The year 2019, however, has the potential of adding another country to that list. This country, however, lies in South America, as thanks to political mismanagement, Venezuela has started moving in the direction of being a failed state. This lies in great contrast to its days as one of the wealthiest countries in South America.
Jack Ma, the co-founder and chairman of Alibaba Group, the Chinese conglomerate with a presence in diverse sectors, including internet, e-commerce, and retail, is one of the symbols of Chinese economic success. Indeed, Ma was named China’s richest man by Forbes magazine and also numbers 20th on the list of the world’s richest people. Alibaba Group is ranked number 300 on the global ranking of Fortune 500. However, on 26 November 2018, Jack Ma, was revealed to be a member of the Chinese Communist Party. This information was brought to light by a newspaper of the Chinese Communist Party, which identified Ma as being among a group of people deserving of reforming and opening China.
The Islamic State is no longer characterized in the media and among security policy specialists as the greatest security threat emanating from the Middle East. In 2017, the Islamic State suffered some of its worst defeats. First, Iraqi security forces took over its biggest stronghold in the Iraqi city of Mosul. Soon after, it lost its capital, the city of Raqqa in Syria, under the offensive of US-backed forces. Since September 2018, one of the group’s last strongholds in the Syrian city of Hajin has been under attack by a US-backed coalition. However, while it may appear that we are seeing the end of the Islamic State, this terror group will likely return, as those who diagnose its demise neglect its history of adapting. Moreover, social forces in the region provide a fertile ground for its return.
As of 2017, the global financial system has become exposed to stricter financial regulations through the European Union’s “4th Anti-Money Laundering Directive,” the Canadian Financial Action Task Force (FATF), and the U.S.’s finCEN and its “Customer Due Diligence (CDD) Requirements for Financial Institutions” rule. These were brought forward after a series of offshore document leaks over the past two years, it is apparent that close to 10 percent of the global GDP is actually “hidden” in offshore jurisdictions and tax havens.
Egyptian president Abdel Fattah el-Sisi’s four-year-long rule of Egypt has been marked by a campaign of repression that has now reached his own government. Following the military coup in 2013, Sisi arrested or exiled Islamists, youth activists, leftists, liberals, authors, and even comedians. Earlier in 2018, however, Sisi turned his attention to regime loyalists in preparation for the presidential elections.
Traditionally, the relationship between Iran and Pakistan has been formal and friendly, though with differences on major strategic issues. The appointment of the new Pakistani Prime Minister Imram Khan, former cricket player and social conservative, led many to believe that Pakistan will form a closer relationship with Iran. This notion became even stronger when Iranian President Hassan Rowhani telephoned Khan to congratulate him on his election, while Khan accepted the invitation to visit Iran at some point. Wider regional developments are forcing the two sides to reinforce their ties, although they are far from any high-profile partnership.
Europol’s European Cybercrime Center hosted a conference in June 2018 discussing virtual currencies and how to foster the legitimate use of this monetary system that is frequently abused by hackers, international drug dealers, and organized crime movers. Since then, there has been a big push to monitor cryptocurrencies. But what is the realm of possible? While there are currently no cryptocurrencies that are fully untraceable, the technology is advancing rapidly. As such, it is crucial for intelligence agencies to stay ahead of innovation in order to keep their edge over rogue actors using cryptocurrencies.
In this day and age, data has become the most cherished commodity in the world. Massive amounts of personal data are constantly being produced and managed by a growing group of operators across nations, often without any control on the part of individuals. While conventional wisdom has been that data is acquired and owned by companies, the European Union’s General Data Protection Regulation (GDPR) has set to bring that control back to the individuals. Considering this complete regulatory shift, the new order of data management will have the biggest impact on information technologies, artificial intelligence, and big data analytics, all of which are components of operations in the financial industry.
In May 2018, the European Union (EU) launched its newest data protection legislation, known as the General Data Protection Regulation (GDPR). Next to it representing the largest overhaul of the world’s privacy rules in the last 20 years, the regulation is Europe’s attempt to extend its influence and regulatory might globally. Companies were presented a choice – comply with the EU’s standards or face being shut out of a market of 500 million consumers in one of the richest regions of the world. Today, six months after the rollout of the GDPR, it is time to ask whether the effects of the regulation are in line with the EU’s goals and what changes it has brought around the world.
As a conclusion to the 2018 calendar year, Brasidas Group has compiled a newsletter touching on the current state of affairs on select noteworthy topics. From analyses of certain countries’ political situations to discussions of the changing nature of privacy in today’s world, we have compiled articles that will provide an overview of these relevant topics. In providing this overview, we aim to inform and educate our clients and partners about themes that are not only newsworthy, but that can also impact decision making from a strategic standpoint.
Ian Bremmer and Nouriel Rubini, in their prescient article for the Foreign Affairs March/April 2011 issue, predicted that this new paradigm of a G-zero world would lead to “conflict, not cooperation.” Indeed, in the years since, we have seen a marked change in the world order – one that has slowly come into place over decades, becoming all the more apparent in light of new geopolitical challenges, shifting alliances, and dynamic power structures.
Brasidas Group’s May 2018 newsletter seeks to explore this theme in depth, breaking down the important actors in Bremmer and Rubini’s G-Zero world and analyzing the implications of these interplays of power, especially in the context of global security issues.
Advancements in artificial intelligence (AI) and machine learning have streamlined the compliance process utilizing algorithms designed to identify general risk categories. While these advancements have undoubtedly closed the intelligence gap to some extent, technology still cannot be completely relied upon to substitute human intelligence and nuanced analysis.
2017 saw a prevalence of political crises and unresolved disputes between countries. The war on terror continues to be fought both at home and abroad. We also saw record highs for the values of crypto-currencies. After such a year, what does 2018 hold? In Brasidas Group’s first newsletter of the year, we look at potential events or “grey swans” that could occur given the right circumstances.
Brasidas Group was pleased to host its annual cocktail in Belgrade on 8 December 2017, honoring our clients, partners, and employees. We were joined by representatives of some of the best known and most successful companies in Serbia, as well as representatives of both Serbian and international organizations.
Brasidas opened its office in Serbia over three years ago and we consider this affiliate office a success story in every respect.
Brasidas Group is pleased to announce that two of its team members, Dusan Mladenovic and Milos Radic, recently won first place in the Cloud & IoT Hackathon organized by DevTech in Belgrade. The hackathon took place in the offices of DevTech, a cloud strategy consulting company based in Novi Sad, Serbia.
Security has become a shared global concern over the past decade, as it has become evident that no single nation has all the necessary resources to protect its citizens. As such, the need for intelligence sharing is more vital now than in any other point in history. Indeed, while technological advancements have brought the world closer together in the figurative sense, they have created new types of threats that can be launched remotely and have a devastating impact on entire societies.
Themes of this event included the growing need for succession planning in family offices, wealth preservation for the next generation, with discussions centering around necessary elements for their successful implementation, including professional and high caliber staff a with clear understanding of long-term family office business strategy. During the course of two days, various experiences and strategic views of family offices were exchanged, and the participants had the opportunity to learn more about social, ecological & environmental impact investing, geopolitical risk analysis, and risk mitigation, including security and fraud investigation.
On 12 June 2017, Brasidas Group took part in a conference titled “The First National Conference on Cyber Security – Partnerships for a Secure Cyber Space” at the Hyatt Regency Hotel in Belgrade. The event was organized by the Organization for Security and Co-operation in Europe (OSCE), a security-oriented intergovernmental organization. The first public-private partnership in the cybersecurity domain in Serbia was announced at the event, with over 120 representatives of state institutions, the private sector, academia, and civil society organizations attending.
On 19 May 2017, incumbent Iranian president Hassan Rouhani won reelection by an overwhelming majority over hardliner Ebrahim Raisi, possibly indicating a significant lean towards genuine reform in the country. Although President Rouhani’s victory is encouraging with respect to Western relations, this should not be construed as a clear indication of U.S.-Iranian rapprochement. Despite the Iranian population’s apparent lean toward reform, as evidenced by recent election results, the intentions of the country’s most influential political figure, Supreme Leader Ali Khamenei, remain unknown. Khamenei is fully aware that opening Iran to the U.S. and the West can potentially call into question the future of the theocratic government and erode the authority of hardliners. Furthermore, considering that Khamenei is 78 years old, a major concern lies in who will replace him and what the implications of this replacement will be for the country’s domestic and foreign policy.
It has been 100 days since President Trump assumed office in the White House. In any presidency, these 100 days are generally characterized as a “honeymoon” period, during which the incoming president capitalizes on the momentum of his successful campaign, as well as the surge of popularity with his electorate in order to lay out his agenda. Throughout his electoral campaign, then-candidate Trump made many promises to the American people regarding his future agenda once in the White House. Indeed, within days of his inauguration, President Trump exercised his executive power, often in the form of executive orders, to institute changes and reverse policies from the previous administration, which is not uncommon for incoming presidents to do.
Following the success of its conference, Deep Web Demystified: A Journey Through the Hidden Internet, Brasidas Group sponsored its first hackathon, titled Hacking in the Dark, at Belgrade’s StartIt Center on 31 March 2017. Eight teams participated in the 48-hour event with the objective of developing innovative solutions to address the challenges of gathering information from the Deep web and Darknet and turning this into actionable intelligence.
Russia and Turkey are restoring their ties following months of crisis over the downing of a Russian aircraft by Turkey over Syria in November 2015. The relations between these two countries subsequently deteriorated, and Moscow imposed a number of sanctions on Turkey, suspending the visa-free travel regime for Turkish citizens, restricting the import of certain Turkish products, and banning charter flights. In June 2016, Turkish President Erdogan apologized and expressed regret for the downing of the Russian bomber in a letter addressed to Russian President Vladimir Putin. This has initiated a Russian-Turkish rapprochement, leading to Erdogan and Putin meeting in August 2016 in Saint Petersburg.
The Iranian science & technology field, especially as it pertains to research and development (R&D), has been thriving even in the face of sanctions. Now, with the lifting of sanctions, we can expect increased foreign interest and injections of capital that will further help support and grow this sector.
Atypically, the economic sanctions imposed on Iran by the West have been a major factor in the growth of Iran’s R&D sector. The UNESCO report “Towards 2030,” published in 2015, states that “[t]he sanctions…have accelerated the shift from a resource-based economy to a knowledge economy by challenging policymakers to look beyond extractive industries to the country’s human capital for wealth creation… between 2006 and 2011 the number of firms declaring R&D activities more than doubled.”
From Viber, through ReWalk (a robotic exoskeleton that threatens to make wheelchairs obsolete), to Zuta Labs (a pocket-sized printer), Israeli start-ups are changing the world as we know it. With a population of only 8.5 million people, it is astonishing that 4 percent of all venture capital (VC) deals made outside the US since 2012 have taken place in Israel, which rightfully wears its “Start-up Nation” title. Similarities between Silicon Valley and its Israeli tech-centric coastal counterpart have led to the latter being labeled “Silicon Wadi” (with “wadi” being the Arabic for “valley”). There are multiple reasons behind the surprising success of Israel’s start-ups, including government incentives and cultural factors. These factors have led to an influx of creative ideas and products coming out of Israel, helping establish it as VC-friendly and worthy of attention from foreign investors.
The portmanteau “Brexit” has been one of the most overused terms in the last few months, referring to the exit of the United Kingdom from the European Union. As 23 June, the date of the referendum to determine this issue, draws closer, it has become even more difficult to ignore the implications of this event. It will affect not only the UK, but all of Europe, both economically and politically. While public opinion regarding this topic vacillates, the short- and long-term consequences of an affirmative vote can be discerned with certainty.
The former East African Federation (EAF) was founded as a means of promoting inter-territorial cooperation between countries in this region, including Kenya, Tanzania, and Uganda. This first incarnation collapsed during the 1970s. However, the idea has not died. The premise for the future of a considerably enlarged version of the EAF is in the same spirit of much larger supranational organizations, such as the European Union (EU) and the Association of Southeast Asian Nations (ASEAN). Over the next few decades, this quasi-federation has the goal of becoming a more important player in world politics and the global economy. It seeks to rid the region of its stigmatic colonial history by creating a regional trading bloc that will be competitive in the global economy.
“The show must go on” could very well be the maxim of the 2016 U.S. presidential election. Just last week, Donald Trump announced his “America First” foreign policy program and managed to further worry Americans about the future of American foreign policy. Yet traditionally, when it comes to U.S. presidential elections, neither the candidates nor their electorate have paid much notice to foreign policy issues. Indeed, foreign policy issues have historically had only a minor effect on polls, which further discourages candidates from delving into such topics. Notwithstanding, we should remember that, while foreign policy cannot decide a winner, it can certainly decide a loser.