ITK Daily | February 4
Happy Saturday.
Here’s today’s ITK Daily.
To be ITK, know this:
Blinken postpones China trip over alleged spy balloon above US: WSJ reports the State Department has indefinitely postponed Secretary of State Antony Blinken’s trip to Beijing after what US officials identified as a Chinese reconnaissance balloon was detected loitering above the continental US.
Blinken postpones China trip over spy balloon incident: Nikkei reports US blasts 'clear violation' of sovereignty, says secretary will visit 'when conditions allow.'
+ The administration is still unsure what China, whose officials claimed the device was a “civilian airship,” meant to achieve.
+ A second US defense official said there’s still no clear intelligence assessment about Beijing’s goals.
Spy balloons: What are they and why are they still being used??The idea emerged during the French revolutionary wars, so what is their appeal now, in the age of the satellite??Guardian
+ John Blaxland, professor of international security and intelligence studies at the Australian National University, thinks it’s unlikely that the Chinese weren’t expecting to be caught: being caught was probably the goal, with two outcomes in mind.
+ The first reason the balloon was launched, he believes, was to embarrass the US and all the better if it captured some intelligence along the way.
+ The second reason is to make the US aware of the fact that China has been secretly keeping up with its technology and replicating it.
+ “Chinese security agencies are masterful at copycat behavior. They’re very, very good at establishing what technology is and then seeking to replicate it,” Blaxland says.
+ Singapore-based security analyst Alexander Neill told Reuters that while the balloon was likely to provide a fresh irritant to China-US ties, it was probably of limited intelligence value compared with other elements China’s modernizing military has at its disposal.
Why China sent a spy balloon over the US: US officials said the craft has been flying over the United States for several days. The?Telegraph
+ The images of a Chinese spy balloon drifting so easily over US territory may have been intended to embarrass the White House ahead of Sec. Blinken's landing in Beijing to meet president Xi Jinping this weekend.
+ The timing is also auspicious coming after the US announced a string of new military deals with allies directly facing China amid growing tensions over Taiwan.
+ Alexander Neill, an analyst at Hawaii’s Pacific Forum think tank, said the balloon's intelligence gathering was likely limited, suggesting its real intention may be more political.
+ "China has its own constellation of spy and military satellites that are far more important and effective in terms of watching the US, so I think it is a fair assumption that the intelligence gain is not huge," Mr. Neill said.
What China wanted out of Blinken’s now postponed visit?WP
+ “It’s like we are using two different yardsticks. The two sides are agreed that it would be useful for ourselves and for the world to manage the relationship responsibly. But for the modus operandi, there’s a big gap of what the expectations are."
+ Here are three things that China wanted out of the meeting and any future Blinken visit:
- Establish the red lines
- Show that China is back
- Stop those Taiwan trips
What I am thinking today:
Beijing is a factions hothouse...
January: "We're open for business" + "wolf warrior" diplomacy pushed aside
February: Spy balloon over North America
CCP... Not one C stands for centralized.
Xi's biggest domestic challenge is keeping the PLA happy.
Hard to think Xi approved the use of a spy balloon days before Sec. Blinken's visit.
The CCP is rife with factions.
+ @SenatorRomney: A big Chinese balloon in the sky and millions of Chinese TikTok balloons on our phones. Let’s shut them all down.
+ House Oversight Committee Chair James Comer to Fox News: "My concern is that the federal government doesn't know what's in that balloon. Is that bioweapons in that balloon? Did that balloon take off from Wuhan?"
The headbangers are driving America's foreign policy.
In the last few weeks...
The US has expanded its Marine base in Guam, secured four bases in the Philippines, added an embassy to the Solomon Islands, and got both S. Korea and Japan to commit more funds for military spending.
Meanwhile, China has confirmed its relationship with Putin and sent a balloon.
Pro-tip... It is a bad day for America's multinationals.
Pro-tip... Capitol Hill is now driving America's China policy.
How the US is boosting military alliances to counter China?AP
+ The US is expanding it military presence in Asia, in a string of moves aimed at countering Beijing and reassuring Indo-Pacific allies that America will stand with them against threats from China and North Korea.
+ US actions stretch from Japan to the Solomon Islands.
Biden aims to deter China with greater US military presence in Philippines: US officials say they are preparing to surge forces in the event of a conflict with China, including over Taiwan, but do not intend to build up permanent bases.?NYT
Can US-Philippines deal save Taiwan from China’s clutches??Tim Marshall
Challenging the US is a historic mistake: Like Nazi Germany and Imperial Japan, today’s China is a rising power determined to dominate its region and convinced that American strength is waning. It runs the risk of experiencing a similar fate if it attacks Taiwan.?Robert Kagan
+ Chinese foreign policy under Xi Jinping rests on certain basic assumptions: that in a just world, China should be hegemonic in East Asia, the center of a system in which the other regional powers pay their respect and take direction from China, as was the case for two millennia prior to the 19th century.
Why Chinese companies are investing billions in Mexico: Alarmed by shipping chaos and geopolitical fractures, exporters from China are setting up factories in Mexico to preserve their sales to the United States.?NYT
+ Tracing a path forged by Japanese and South Korean companies, Chinese firms are establishing factories that allow them to label their goods “Made in Mexico,” then trucking their products into the United States duty-free.
+ The interest of Chinese manufacturers in Mexico is part of a broader trend known as nearshoring.?
+ Chinese companies have no intention of forsaking the American economy, still the largest on earth. Instead, they are setting up operations inside the North American trading bloc as a way to supply Americans with goods, from electronics to clothing to furniture.
+ “Nuevo León is having a geopolitical planetary alignment.”
+ Lizhong’s largest customers, including Ford and General Motors, had pressed the company to open a factory in North America.
Indonesia's nickel riches spur local company EV, battery ambition: Old economy conglomerates, businesses pounce as government pushes industry takeoff.?Nikkei
+ From coal miners to conglomerates, Indonesia's burgeoning electric vehicle and battery scene is attracting broad local corporate interest buoyed by the country's rich nickel resources and government promises of incentives.
+ "Indonesia has a significant advantage when it comes to EV adoption. We expect a significant uptake in Indonesia going forward. And this is across the EV value chain."?
+ McKinsey in an October note said Indonesia's revenue pool from that chain is projected to reach nearly $50 billion by 2035.
+ The government is also preparing incentives, including subsidies, and is targeting increasing electric car sales to 20% of total car sales in 2025.
+ Indonesia's electric car sales shot to over 10,000 vehicles last year, from around 600 in 2021, according to wholesale data from the Association of Indonesia Automotive Industries, or Gaikindo.?
+ Over one million gasoline cars were sold in the same year.
The Adani affair: The fallout for Modi’s India?FT
Bloomberg: US to send Ukraine Boeing’s ground-launched, GPS-guided bombs
+ Boeing-Saab weapon is seen as doubling Ukraine Himars strike range.
+ Rocket to be tipped with a small-diameter bomb that flies on its own.
AP: US to send Ukraine longer-range bombs in latest turnaround
AFP: US sending longer-range precision rockets to Ukraine
AP: Along Ukraine-Belarus border, a war of nerves — and drones
Ukraine hopes new bombs from US will help it push back Russia: WSJ reports small-diameter bombs would extend Ukraine’s strike range, putting more Russian positions in danger.
Russian forces strengthen positions as Ukraine braces for new offensive: WSJ reports as Moscow edges forward in the east, Zelensky warns that Ukrainians will have to dig deep to prevail.
How Putin’s plans to blackmail Europe over gas supply failed: Within eight months of Russia invading Ukraine, the EU’s 27 states had replaced about 80% of the natural gas they used to get from Moscow.?Guardian
+ Within eight months of Russian troops setting foot on Ukrainian soil, the bloc of 27 European states replaced about 80% of the natural gas it used to draw through pipelines with Russia, by rapidly building up new infrastructure for liquid natural gas, finding creative ways to help each other out amid shortages, and successfully pursuing energy-saving policies.
+ The Netherlands, for example, the EU’s largest natural gas producer, had relied on Russian gas for 15-20% of its supplies as it wound down its huge Groningen field, but doubled its LNG import capacity with storage and regasification units in Rotterdam and Eemshaven.
+ The Nordic countries were even more successful at reducing gas consumption, with Denmark cutting total demand – for power generation, industry and domestic heating – by 24%, Sweden by 36% and Finland by a mighty 47% (although natural gas accounted for only 5% of its overall energy needs).
+ In France, the energy-saving effort became an uphill struggle because several key French nuclear reactors were undergoing maintenance or safety work just as they were needed more than ever.
Bloomberg: US raises pressure on Turkey and UAE to curb Russia trade ties
+ Senior US Treasury official in Turkey and UAE on a regional tour.
+ US said export-controlled goods were being sent to Russia.
Germany grapples with the limits of pacifism?FT
The long road to extending life of French nuclear reactors: France's EDF seeks to amortize its 56 existing nuclear reactors as much as possible in view of possibly extending their lifespan to up to 80 years of age.?Le Monde
+ Amortize France's 56 existing nuclear reactors as much as possible – which are 37 years old on average currently – is part of EDF's strategy.
+ The highly-indebted company, which is in the process of becoming 100% state-owned again, intends to "make the best use" of its "industrial heritage."
+ In theory, reactors in the country operate with no time limit, much to the annoyance of the anti-nuclear movement, anxious over the issue of radioactive waste.
+ Every ten years, however, a thorough review of each unit determines whether it is fit to operate for another ten years.
+ Switzerland is currently home to the world's-oldest reactor still in commercial operation.?
+ Beznau 1 is 53 years old.?
+ In the US, an initial 40-year term can be extended by 20-year periods, pending approval of the Nuclear Regulatory Commission.?
+ Several reactors in the US have already closed much earlier than expected for economic reasons, mainly because of competition from shale gas, despite its harmful climate effects.
+ The US Inflation Reduction Act "has provided a $15 per megawatt-hour subsidy for existing nuclear reactors."
WP: Pope Francis tells leaders of troubled South Sudan: Enough!
AFP: Ethiopia PM holds first post-peace deal meeting with Tigray leaders
Is Toronto’s transit system entering a death spiral??Joe Fish
Joe Biden’s effort to remake the economy is ambitious, risky—and selfish: But America’s plan to spend $2trn could help save the planet.?Economist
+ In the past two years Congress has passed three bills, on infrastructure, semiconductor chips and greenery, that will make $2trn available to reshape the economy.
+ The idea is that, with government action, America can reindustrialise itself, bolster national security, revive left-behind places, cheer up blue-collar workers and dramatically reduce its carbon emissions all at the same time.
Jobs blowout: What the employment report means for Biden and Powell: Politico reports President Joe Biden and the White House can celebrate the report as evidence the economy is continuing to hum along.
The Hill: Jobs report gives Biden pre-State of the Union boost
+ Payrolls rise by 517,000 while the jobless rate is the lowest since 1969.
Restaurants can’t find workers because they’ve found better jobs: Nearly 2 million hospitality and leisure jobs remain unfilled in what economists call a ‘deep, profound’ shift in the labor market.?WP
The powerful lobbyist behind Kevin McCarthy: Jeff Miller is the new House speaker’s top fund-raiser and closest confidant. He is also one of Washington’s most prominent corporate lobbyists, an arrangement that is drawing scrutiny.?NYT
+ Rarely has a lobbyist enjoyed the access to a House speaker that Miller has with McCarthy.
+ Miller’s clients include Apple, Anheuser-Busch, Dow, General Electric, the Wall Street giant Blackstone, Occidental Petroleum, the drugmaker trade group PhRMA, and Elon Musk’s SpaceX.
+ Miller declined to be interviewed.
+ McCarthy also declined to be interviewed.
+ Miller warned Republican political consultants to stop working for Representative Liz Cheney’s re-election campaign in Wyoming after her criticism of Trump.
AP: DeSantis eyes 2024 from afar as GOP rivals move toward runs
Nikki Haley sits in the muddy middle of the GOP polling zone?David Byler
+ Haley’s numbers aren’t great.
+ Her path is littered with obstacles. Consensus candidates often try to please everyone and fail to build a reliable base.
+ Haley’s tenure as South Carolina governor might be a hidden disadvantage. She’ll get no credit if she wins the state’s early primary, but her campaign will be pronounced dead if she loses.
Republicans revive a debate on term limits: NYT reports similar proposals to restrict lawmakers’ tenures that the party pushed in the 1990s went nowhere. In this new Congress, the result is likely to be the same.
From burgers to bagels, Biden turns to brands to boost everyman image: Biden and his would-be GOP rivals embrace but also criticize businesses to shape their message.?WP
+ Biden has leaned into his role as consumer in chief, eating Jeni’s ice cream, donning Ray-Ban sunglasses, test-driving electric vehicles and telling stories about his 1967 Corvette convertible.
+ Many presidents have made a point of patronizing picturesque small businesses, a way to show off their common touch and sometimes to accentuate a policy push.
+ But few have embraced small-time eateries and ice cream parlors, or showcased their habit of hitting local stores and boutiques, as regularly as Biden.
+ Ronald Reagan’s love for Jelly Belly jelly beans, for example, helped the supercharge company’s sales, as it became known that the 40th president had a standing order for 720 bags of its candies for the White House and other federal offices each month.
Old Bay melee: Maryland Dems circle as Cardin weighs reelection: Politico reports Maryland is one of several where ambitious Democrats are preparing for possible retirements by veteran senators.
House Bagel Caucus: Rep. Dan Goldman (D-NY) is starting the new caucus, Punchbowl News reports.
FTC prepares possible antitrust suit against Amazon: WSJ reports the Federal Trade Commission considers challenge to array of practices by Amazon, a target of criticism from Chair Lina Khan.
FT: Google invests $300mn in AI start-up Anthropic
Google will join the AI wars, pitting LaMDA against ChatGPT: Amid lackluster results, Alphabet CEO Sundar Pichai is jumping into the fight.?Parmy Olson
+ A pledge to “focus on AI” is par for the course in Big Tech right now.
+ Google has LaMDA, a large-language model trained on billions of words on the public internet, just like ChatGPT’s model.
+ It benefits from a broader array of research talent at Google and huge amounts of computing power, not to mention feedback from millions of users for constant fine-tuning.
+ One of Google’s own engineers even believed LaMDA was sentient after chatting with it.?
+ The innovator’s dilemma has forced Google to keep LaMDA hidden away, fearful it could cannibalize its own search results or make offensive remarks and wild mistakes.
+ Google will probably create an additional search category for something like “conversational answers,” to sit alongside images, maps and news, and this “companion” will serve the long tail of informational search queries that don’t make Google much money, such as finding a recipe or looking up a historic event.
+ The painful irony for Google now is that it faces being penalized for being both too dominant and not competitive enough.
How ChatGPT kicked off an AI arms race: Even inside the company, the chatbot’s popularity has come as something of a shock.?Kevin Roose - NYT
+ Two months after its debut, ChatGPT has more than 30 million users and gets roughly five million visits a day.
+ The growth has brought challenges. ChatGPT has had frequent outages as it runs out of processing power.
+ The hype surrounding ChatGPT has also annoyed some rivals at bigger tech firms, who have pointed out that its underlying technology isn’t, strictly speaking, all that new.
+ ChatGPT is also, for now, a money pit
+ To offset the costs, the company announced this week that it would begin selling a $20 monthly subscription, known as ChatGPT Plus.
+ The company recently reached a $10 billion deal with Microsoft, which plans to incorporate the start-up’s technology into its Bing search engine and other products.
+ Altman has said his goal at OpenAI is to create what is known as “artificial general intelligence,” or AGI, an artificial intelligence that matches human intellect.
+ OpenAI is an unusual company, by Silicon Valley standards. Started in 2015 as a nonprofit research lab by a group of tech leaders including Mr. Altman, Peter Thiel, Reid Hoffman and Elon Musk, it created a for-profit subsidiary in 2019 and struck a $1 billion deal with Microsoft.?
+ It has since grown to around 375 employees.
+ From the start, OpenAI has billed itself as a mission-driven organization that wants to ensure that advanced AI will be safe and aligned with human values.?
The future is AI — but will it allow humans to play a part??The Times
Why we joined TikTok (and you should, too): Ignoring the social platform could be doing your brand a disservice.?Sam Shinkle
FT: BMW plans €800mn Mexican EV and battery investment amid subsidies row
The woman who became McQueen: The quiet ascendance of Sarah Burton.?The Cut
The Premier League’s vast wealth is ruining world football: England’s financial dominance is making other European leagues uncompetitive.?Tom McTague
+ ?Britain might no longer be a particularly wealthy country, but it is home to an insanely rich football league; a league so rich, in fact, it is in danger of ruining something far more precious: the rolling operatic drama of European club football.
+ English clubs are no longer just a little bit richer than their continental counterparts, but?much?richer.?
+ According to Deloitte’s annual?football rich list,?English clubs now make up 11 of the 20 wealthiest clubs in the world —?measured by revenue?— and three of the top four.
+ Europe’s feeder clubs have turned themselves into cynical antique dealers ripping off the idiot middle classes prepared to buy any old tat for astronomical prices.?
+ The biggest sign of distress, though, was the attempted creation of the European Super League (which is still being pursued by some of the continent’s superclubs).
+ The Super League was less a challenge to the supremacy of the Premier League... it was a white flag being waved by the great European clubs, giving up and joining the English elite.
+ Today, historic clubs with giant fanbases find it almost impossible to compete in European football, just as South American clubs now simply accept their fate feeding their best players to Europe for a profit.?
FT: Ford to return to Formula 1 with Red Bull deal after two-decade absence
Paris 2024 Olympics: Head organizer hopes Russian athletes won't get banned:?The president of the 2024 Paris Olympics organizing committee said he believes Russian and Belarusian athletes should not be punished for decisions outside of their control.?Le Monde
+ The president of the 2024 Paris Olympics organizing committee, Tony Estanguet, on Friday, Feb said athletes should not "suffer" from decisions they do not control amid an escalating row over allowing Russians and Belarusians to compete
+ The International Olympic Committee (IOC) last week said it was examining a "pathway" to allow Russians to participate in Paris, probably as neutral athletes rather than under their national flag, a position backed by the United States on Thursday.
+ But?Kyiv has called for a complete ban on Russian participation, with a Ukrainian presidential aide accusing the IOC of being a "promoter of war."
+ Poland's sports minister on Thursday said he expected up to 40 countries to come out against including Russian and Belarusian athletes in Paris next year.
Beijing’s awkward Olympic legacy shows risk of venue reuse: China’s capital showed the world how to repurpose sports facilities for any season. But what happens when the games are over??Bloomberg
+ For events like the Olympics or the World Cup, figuring out what to do with multimillion-dollar — or multibillion-dollar?— facilities once the games are over has been a tricky proposition, and watching them fall into disuse has fueled public opposition to hosting in many global cities.
+ About 60% of the venues for the Beijing Winter games?were existing or temporary, according to the International Olympic Committee.
+ But no one has cracked the white-elephant issue writ large.
+ China’s capital?successfully became the first city to hold a Summer and Winter Olympics, but Beijing still needs to prove there’s life for all of?these facilities now that the games are over.?
Mud and glory as Van der Poel and Van Aert set for world title bout: AFP reports the cyclo-cross world championships, which opened on Friday with the Dutch winning the mixed relay, will culminate on Sunday with a showdown between two of the sport's biggest stars Mathieu van der Poel and Wout Van Aert.
Enjoy the ride + plan accordingly.
-Marc?
Marc A. Ross | Chief Communications Strategist @ Caracal
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