ITK Daily | May 4

Global Street Smarts.

Happy Thursday.

Here’s today’s ITK Daily.

To be ITK, know this:?

Sudan’s war is home-grown, but risks drawing in outsiders: The Horn of Africa sits astride key trade routes.?Economist

Sudan: Region's political Islamist movement plays key role in conflict: Supporters of the Islamist regime of ousted former president Omar al-Bashir are believed to have played a key role in triggering the conflict. Some experts suspect them of manipulating the Sudanese army led by General al-Burhan.?Le Monde

How France led the evacuation of foreigners from Khartoum: A presidential phone call and a secret C-130 landing helped build a corridor out of chaos.?1843 Magazine

AP: Syria and Iran sign long-term oil and trade agreements

Iran’s Raisi in Syria; visit hailed as ‘strategic victory’: Al Jazeera resident’s deputy says it also represents a failure of US policies in the region.

Kremlin drone attack...?Russia accused Ukraine of trying to assassinate Vladimir Putin last night. Russia ‘acted timely’ to shoot down two drones that attacked the Kremlin.

What’s the truth about the Kremlin drone attack??An attack on Vladimir Putin would risk escalation.?Mark Galeotti

Russian spy network smuggles sensitive EU tech despite sanctions: Covert FSB procurement chain acquires goods for war in Ukraine even after operatives were apprehended last year.?FT

The Times: Russia has mined European undersea pipelines and cables, NATO fears

Who is Kemal Kilicdaroglu, a leading challenger to Erdogan in Turkey's election??NPR

+ Accurate polling can be hard to find in Turkey. Some recent polls see Erdogan and Kilicdaroglu in a tight race with neither winning more than 50%, which would lead to a second round between the two top candidates on May 28.

Is Turkey finally ready to throw out Erdogan??Turkey's strongman Recep Tayyip Erdogan faces his greatest challenge in two decades in power – from an older, soft-spoken presidential candidate and a unified opposition appealing to voters fatigued by economic decline and the endless stoking of social and sectarian divisions.?Haaretz

Turkish elections: For Kurdish youth in Diyarbakir, 'armed resistance is no longer an option': Tired of identity politics and violent repression, some of the young people in this Kurdish-majority city are turning to other left-wing parties.?Le Monde

NATO to open Japan office, deepening Indo-Pacific engagement: Two sides to upgrade cooperation on cyber, disruptive tech, and disinformation.?Nikkei

NATO has no limits now.

The world is the North Atlantic.

+ NATO is planning to open a liaison office in Tokyo, the first of its kind in Asia, Nikkei Asia has learned.

+ The station will allow the military alliance to conduct periodic consultations with Japan and key partners in the region such as South Korea, Australia and New Zealand as China emerges as a new challenge, alongside its traditional focus on Russia.

+ NATO and Japan will also upgrade their cooperation, aiming to sign an Individually Tailored Partnership Programme (ITPP) before the NATO Summit in Vilnius, Lithuania, on July 11-12.

+ Japan plans to create an independent mission to NATO, separating it from the Embassy in Belgium, where it is currently based.?

+ A new ambassador will be dispatched, to relieve the NATO duties of Ambassador to Belgium Masahiro Mikami. Kishida told Stoltenberg of the plans at the January meeting.

+ Michito Tsuruoka, an associate professor at Keio University, said that the war in Ukraine has changed the way NATO sees China. "In addition to the problems China poses by itself, a new dimension has been added: that of China as a supporter of Russia. This now becomes directly related to Europe's security."

US and Philippines to share real-time military intel on China: Nikkei reports defense guidelines unveiled amid growing concerns over Taiwan crisis.

G7 heads weigh first statement urging China to be 'responsible': Nikkei reports the summit communique to include a separate section for Beijing-related concerns.

Don’t bother investing in China unless you’re Chinese: Only a local can properly circumvent the country’s infamous firewall. Even asset managers in Hong Kong no longer have a clear picture of the mainland.?Shuli Ren

Police arrest 150 in global crackdown on Italian mafia group: ’Ndrangheta suspected of laundering drug money through hotels, restaurants, and ice cream shops.?FT

Today: More than 8,000 council seats in England are up in local elections.

+ When are the local election results expected? This will depend on the local authority. Some will start counting their votes straight after the polls close at 22:00 BST (5:00 pm ET) on 4 May. Others will wait until the following morning to start counting.

Anything less than 10-point lead in local elections should worry Labour?John Curtice

AFP: Young Britons 'indifferent' to King Charles coronation

Belizeans question the role of the British monarchy ahead of coronation: The Central American nation is a British commonwealth realm with King Charles III as its monarch and head of state.?WP

University of Waterloo ends research partnerships with Huawei: Toronto Star reports the move is ‘extremely significant’ for Canada’s top research university and is seen as a possible precedent-setter for other institutions.

It's US or them time...

US-China rivalry could trample Panama underfoot: Beijing’s increased investment in the strategic nation has raised America’s hackles.?Michael Stott?

+ The former Spanish colony finds itself caught in a tug of war between its old protector, the US, and the rising power of China.

US senators launch renewed push to thwart China: AFP reports US Senators announced a major cross-party effort Wednesday to combat China's growing global influence by limiting the flow of investment and state-of-the-art technology to the Asian giant while deterring any potential threat to Taiwan.

+ Launching the latest legislative drive in the Democratic-led Senate, majority leader Chuck Schumer framed the fight to rein in Xi Jinping's Chinese Communist Party (CCP) as an epochal struggle.

The Biden administration just declared the death of neoliberalism?Eric Levitz

+ In a speech at the Brookings Institution, Biden’s national security adviser, Jake Sullivan, detailed the tenets of a “new Washington consensus” in global economic policy, one that would encourage state direction of development instead of punishing it, strengthen labor standards instead of eroding them, sustain the climate instead of despoiling it, and reduce economic interdependence between rival powers instead of increasing it.

+ Sullivan’s rhetoric, and the policies undergirding it, represent a triumph for a certain contingent of progressive-policy intellectuals.

+ The promise of Global Bidenism is considerable. It aims to humanize the global economy while simultaneously increasing its growth potential. And contrary to the fears of U.S. allies, America’s gains under this new paradigm need not come at the rest of the world’s expense.

+ Integrating China into the global economic order did not liberalize its politics or temper its martial ambitions. To the contrary, the Chinese Communist Party has grown more authoritarian and geopolitically ambitious as its nation has grown wealthier and more economically integrated with the west.

+ Bidenism posits industrial policy as the core answer to all of these problems.

+ Sullivan declared, “We will unapologetically pursue our industrial strategy at home — but we are unambiguously committed to not leaving our friends behind. We want them to join us.”

+ The old Washington consensus punished developing nations that sought to promote their export industries through state subsidization. The new one not only officially encourages such public investment, but also seeks to facilitate it by “mobilizing trillions in investment into emerging economies.”

+ Neoliberalism’s loosening grip over American political and intellectual life has created an opening for a progressive reformation of global economic governance.

America hits bottom with Trump and Biden in 2024: There was once a time when candidates for high office were expected at least to seem morally fit.?Joseph Epstein

+ A forthcoming presidential election between these two men would only seem to prove the sad wisdom of Joseph de Maistre, who wrote that “every country gets the government it deserves.”

PacWest shares plummet 50% as it explores potential sale: FT reports the California lender is latest to seek financial lifeline amid worst industry crisis since 2008.

Bloomberg: PacWest is weighing strategic options, including possible sale

Dyson?is to spend ￡100 million on a new technology center in Bristol as part of a five-year program of investments totaling ￡2.75 billion.

Exxon has 40 billion reasons to go shopping: A gusher of cash and a richly priced stock could steer the supermajor toward a deal.?WSJ

Samsung is a case study in how manufacturers leave China: Company still has significant operations in China, but its smartphone manufacturing business pulled up stakes years ago.?WSJ

+ “De-risking” is the latest buzzword describing Western governments’ strategy toward China. While it sounds less ambitious than “decoupling,” the basic idea is similar: reducing reliance on China for manufacturing, especially for key technological goods.

+ Samsung had over 60,000 employees in China in 2013 according to its 2014 Sustainability Report, but that number had fallen to less than 18,000 by 2021. Samsung closed its last smartphone factory there in 2019.

+ An issue for both Apple and Samsung is that even if the final assembly of gadgets is moved outside of China, manufacturers will still depend on many suppliers there.?

IBM?estimates it could replace 7,800 jobs with AI.

Unclear if a human or a machine made this calculation.

Bloomberg: Alphabet and Microsoft are among firms attending White House meeting on AI safeguards

+ Biden officials aim to mitigate risks from emerging technology.

+ Generative AI has come under scrutiny as popular use explodes.

AI: The petition championed by Elon Musk cut through two fundamentals of Silicon Valley ideology: The cult of performance and the parasitism of the state.?Jean-Baptiste Bouzige

+ "The call by a hundred experts for a 'pause' in AI research could be a reversal of Silicon Valley's dysfunctional hierarchy of placing performance over impact."

Regulating AI will put companies and governments at loggerheads: AI developers and lawmakers would benefit from a deeper understanding of each other.?Marietje Schaake?

+ Any successful AI regulation must tackle three areas:

1) The power dynamics between AI developers and the rest of society need rebalancing

2) Access to information. There must be public interest safeguards to allow lawmakers to see the inner workings of AI

3) Cannot ignore the ever-changing nature of AI. Regulation needs to be flexible and firmly enforceable

TikTok launches ad product for publishers, giving 50% cut: WSJ reports TikTok said the product will make it possible for publishers to sell ads alongside their posts.

Quantum computing could break the internet. This is how: The next generation of quantum computers will open a new world of possibilities, but also pose enormous risks to our online security.?FT

+ They call it Q-day. That is the day when a robust quantum computer, like this one, will be able to crack the most common encryption method used to secure our digital data.

+ It will almost always be simpler to add more turns to a maze, or digits to a number, than to build a more powerful computer, if you want to design a problem to slow down or “stump” a computer, you usually can.

+ The biggest challenge is keeping the qubits in a stable position long enough for them to be usable. Qubits are made of notoriously fragile sub-atomic particles in delicate quantum states that are easily disrupted.

+ Noise from the surrounding environment severely limits how long quantum computers can stay in a quantum state. And this period — often measured in microseconds — may not be long enough to run a quantum algorithm.

+ The vast majority of the machine is dedicated to keeping the qubits as insulated as possible, to maintain a quantum state as long as possible and minimise errors.

+ Investors poured a record $2.35bn into quantum start-ups last year, according to data compiled by management consultants McKinsey. Many of the investors focused on quantum computing, communications, and sensing.

+ The first company to develop a reliable quantum computer could generate billions in revenues. McKinsey estimates the four industries most impacted by the development of quantum computing — automotive, chemicals, financial services, and life sciences — could potentially gain $1.3trn in value by 2035.

+ Quantum technology might help us invent new materials and drugs, develop smarter financial trading strategies and create secure new methods of communication.?

+ A “trapdoor function” — easy to compute in one direction, very difficult to do in reverse.

+ “The best quantum computers today, produced in countries like China and at Google, can do on the order of 100 operations before failure”, explains Steve Brierley, founder and chief executive of Riverlane — a company building operating systems for quantum computers. “To implement Shor’s algorithm you need something like a trillion quantum operations before failure.”

+ Even if private sector investment slows, the escalating geopolitical rivalry between the US and China will provide added impetus to develop the world’s first robust quantum computer. Neither Washington nor Beijing wants to come second in that particular race.

Central banks bow to the inevitability of digital currencies: Retail demand is still scant, but careful design can take advantage of their merits. Eswar Prasad

+ The future of retail and peer-to-peer payments is undoubtedly digital. As the use of cash plunges around the world, central bank digital currencies are an inevitable part of this transition.

+ A well-designed CBDC could play an incremental role in catalyzing payments innovation.?

+ For smaller countries with weak central banks, quicker adoption would help maintain sovereignty over domestic payments. A CBDC by itself will not make up for a central bank’s lack of credibility, though.

The dollar’s demise may come gradually, but not suddenly: Rumors of the death of the US currency are as exaggerated as they are frequently repeated.?Niall Ferguson

+ Former Treasury Secretary Larry Summers had a good line about all this back in 2019. “You cannot replace something with nothing,” he said. What other currency is preferable to the dollar as a reserve and trade currency “when Europe’s a museum, Japan’s a nursing home, China’s a jail, and Bitcoin’s an experiment”?

+ Other currencies are very welcome to compete: the euro, the renminbi — and (who knows?) maybe the future “BRICS currency” imagined by Lula in Shanghai. But do not expect “de-dollarization” to follow the Hemingway two-stage model. The world changes its monetary anchor only one way. Gradually.

United Airlines?plans to hire 50,000 workers from 2022 through 2025.

In the future, apparently, everyone will be involved in aviation.

Chinese airlines will be allowed to expand their flights to the US: FT reports the US transportation department’s decision will allow carriers from the Asian country to boost weekly round-trip flights from eight to 12.

Estée Lauder shares plunge after China slowdown hits sales: FT reports the beauty company warns on the outlook for the third straight quarter as Asia rebound disappoints.

Shein, fast fashion hit with Gen Z, tries charm to counter scrutiny: With an initial public offering expected at some point, the company is looking to change its public perception. Not everyone is buying it.?NYT

Bud Light maker offers distributors free beer, more ad spending after Dylan Mulvaney backlash: WSJ reports Anheuser-Busch wholesalers say they have faced plummeting sales and personal threats over backlash from a promotion with a transgender influencer.

Private space companies in India prepare for liftoff: Startups aim to offer an alternative to Russia and China for building and launching satellites.?Bloomberg

+ Promoting India’s space sector is part of Prime Minister Narendra Modi’s strategy of offering an alternative to China for goods ranging from auto parts to iPhones. As in many other industries, India’s space startups got a late start compared with their Chinese peers, which have been allowed in the field for almost a decade and have completed several orbital launches. India didn’t start liberalizing the sector until 2020.

+ Many Indians say Russia’s isolation following last year’s invasion of Ukraine, coupled with growing tensions between China and the US, makes their country an increasingly attractive option for Western companies looking for space products or services.

+ India’s space companies have gotten backing from the likes of Singapore sovereign wealth fund GIC and Silicon Valley-based Sherpalo Ventures.

+ India has a long way to go before it can match China. As of 2020, India accounted for just 2.3% of all Earth-orbiting satellites, compared with 13.6% for China, according to the Center for Strategic and International Studies.

+ Indian space startups have attracted investments totaling $220 million from venture capitalists since 2011, according to the Indian Space Association. Chinese companies received almost five times that much last year alone.

+ “There are probably five or six countries in the world that have that kind of infrastructure and expertise to bank on. And India is one of those.”

What home cooking does that restaurants can’t: When we eat, the social context matters perhaps even more than the food.?Reem Kassis

+ I asked several friends—some chefs, others food writers, and many that are neither—and found that, given the choice between a meal at a top-notch restaurant and one in the home of a regular person who is a good cook, they would almost all choose the latter.

+ I think the love for home food that I and many others have emphasizes a deeper truth: Our emotions about what goes in our mouth are intertwined with our feelings about the person preparing the food, the conversation at the table, the cultural rituals around a dish’s consumption. When dining, the social context matters perhaps even more than the quality of the food.

+ The average American eats just three dinners a week with loved ones and spends more than half of their money that goes to food outside the home.

+ Dining out is transactional by nature: Bills are split, access depends on income, the time at your table is typically capped, and interaction with the people preparing the food tends to be nonexistent.?

+ In the home, the exchange happens in an entirely different way. You are not paying to consume a certain cuisine; you have invested in a relationship with someone and, as a result, are invited for a meal. You are not a customer; you are a guest—and that makes all the difference.

Netflix’s ‘The Diplomat’ is imbued by the spirit of the storied Winfield House: The Regent’s Park estate shown in Keri Russell’s new Netflix series was gifted to America by wild socialite Barbara Hutton.?Toronto Star

+ Although “The Diplomat” did not shoot at Winfield House — Wrotham Park in Hertfordshire was apparently used as a stand-in — its spirit imbues it. Life imitating art imitating real estate, you might say.

Variety: Prime Minister Justin Trudeau honors Gordon Lightfoot, whose songs ‘captured the Canadian spirit’

Cannes Film Festival set to celebrate Michael Douglas with honorary Palme D'Or: Le Monde reports the festival will pay tribute to the Hollywood star and present him with the award during the festival's opening ceremony on May 16.

Paris plans swimming areas for its iconic Seiine River: The city is well on its way to cleaning up the historically polluted river ahead of the 2024 Summer Olympics. Convincing Parisians to take a dip may prove more difficult.?Bloomberg

+ The opening of the river for summer frolicking and happy memory-making could also have a positive ripple effect for further climate and environmental action — by showing people that a cleaner, greener future will not just demand lifestyle changes but offer new spaces for peace and pleasure.

In a superclub’s shadow, Paris FC tries to raise its game: The team’s owner thinks his city deserves a top-flight soccer rivalry. Can local talent and its own Gulf investors close the gap on Paris St.-Germain??NYT

+ 13 percent of all registered soccer players in France are from Paris or its ring of suburbs, and a staggering 50 percent of the professionals making a living in France’s top two divisions grew up in the capital or its shadow.?

Lionel Messi is in talks for a deal worth $400 million a year to play in Saudi Arabia, the Telegraph reported.

So no Inter Miami CF or MLS...

The Messi unraveling of Paris Saint-Germain is under way: The club suspended the Argentine star following an unauthorized trip to Saudi Arabia. It appeared to signal the beginning of the end of Messi’s time in France.?WSJ

How Messi’s marriage with PSG fell apart: A missed practice, a Saudi vacation, and a brief suspension brought a sudden end to a star’s transactional relationship with Paris St.-Germain, and Qatar.?NYT

+ Messi will never play for PSG again, and both the player and the club are just fine with that.

Enjoy the ride + plan accordingly.

-Marc?

Marc A. Ross | Chief Communications Strategist @ Caracal

Caracal produces ITK Daily.

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