Signal: Italy adrift?—?Libya’s lessons?—?reining in AI

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THE BIGGER PICTURE IN ITALY

The ongoing political saga in Italy, which saw the president, Sergio Mattarella, jettison what would have been the country’s first all-populist government has roiled global markets and spread fear to Brussels.

The political dynamics could take months to sort out, as Alex wrote yesterday. The bigger risk is more immediate: a self-fulfilling investor-driven economic crisis that reverberates throughout Europe.

Here’s Gabe on what has people spooked:

Economic fragility — The Italian economy is brittle, despite marginal improvements over the past few years. Widespread indebtedness and a weak banking sector mean the country remains vulnerable to economic shocks. If outside investors lose confidence in Italian banks, or start to think government expenses are on an unsustainable path, it could trigger a domino effect that ripples through the entire country (and beyond).

A collision course — With new elections likely this Fall, Rome and Brussels are heading for conflict. Both Lega and Five Star have committed to massive increases in government spending, in contravention of EU rules. But a tussle with Brussels may only further exacerbate the political dynamics that led to these parties’ popularity in the first place, driving a deeper wedge within Europe.

Size matters — Italy is too big to fail and too big to save–it accounts for about 15 percent of eurozone GDP and 23 percent of the bloc’s public debt. It’s far more important to the EU economy than Greece, whose financial meltdown contributed to problems across Europe’s southern periphery eight years ago. Yet Italy’s considerable size also means that other EU members might balk at any attempt to bail it out. For investors, that seems like an unsustainable situation that’s bound to break down.

What’s at stake: Despite the focus on the political drama in Rome, a deeper meltdown in markets could be the spark that ignites a wider crisis in Italy.

LET’S TALK ABOUT THE “LIBYA MODEL”

You have probably heard why North Korean dictator Kim Jong-un is wary of the “Libya model” for disarmament — in short, Libyan dictator Muammar Gaddafi gave up his nukes, only to meet a gruesome end in a NATO-backed uprising several years later.

With the country’s various factions meeting in Paris yesterday (pictured above) to take their first, tentative steps towards national elections following a multi-year civil war — and Trump and Kim apparently working to reboot their June 12summit after it was derailed amid a spat over the US administration’s talk about a “Libya model” for North Korea — the consequences of Gaddafi’s removal outside of Libya also merit a closer look.

Here’s Alex with the breakdown:

A leaderless Libya quickly became a haven for jihadists. By 2014, ISIS had taken root. The westward outflow of looted weapons and battle-hardened militants from Libya boosted jihadist groups like Boko Haram and Al-Qaeda in West Africa, while exacerbating regional conflicts over religion and land in Mali, Niger, and Nigeria.

In Europe, Libya’s lawlessness and proximity to Italy made it the primary departure point for migrants and refugees risking the perilous Mediterranean crossing. Although a maritime policing deal between Rome and Tripoli has slowed those flows in recent years, the political impact of the refugee crisis on Europe broadly — and on Italy specifically — has already reshaped the continent’s politics.

Despite the apparent progress in Paris, Libya is a reminder that regime change is the easy part. As Pyongyang and Washington work to resurrect their historic meeting, it’s not only Kim Jong-un who should be wary of an approach that leads to a Gaddafi-like denouement.

A message from Microsoft:

How Microsoft Is Looking to the Past to Help Shape the Future

In the Today in Technology series, Microsoft’s Brad Smith and Carol Ann Browne explore the future of technology through the lessons of history. Join them as they visit places like Switzerland to retrace Cold War negotiations between a Russian and an American, and to Appleton, Wisconsin, to look at innovation in the heart of 1880s America. Watch videos and explore the series here.

AMAZON, AI, AND THE ACLU

Next, we head to Silicon Valley, where US tech giants face a growing backlash over their collaboration with governments on artificial intelligence. Consider the following:

• Last week, a coalition of activists led by the American Civil Liberties Union wrote to Amazon founder Jeff Bezos demanding that the company stop selling its advanced image recognition software to law enforcement agencies. They argued that it handed “dangerous surveillance powers directly to the government,” and that the technology would inevitably be abused.
• Last month, the New York Times reported that a few thousand Google employees had signed a petition demanding that the company stop participating in a Pentagon project to develop advanced image recognition, arguing that it could end up being used in drone strikes. A few dozen staffers have reportedly resigned over the issue.

There are three groups that can apply serious political pressure to tech companies: governments, through regulation; the public (subscribers and shareholders), by withholding their business; and employees, by withholding their labor. Grassroots activism around AI has the potential to energize all three constituencies.

But will it be enough to make a difference? One view holds that, unlike most companies that sell to governments, Amazon, Google and other Silicon Valley giants have consumer-facing businesses vulnerable to public pressure. The other is skeptical that many of us will stop Googling or Amazoning over this, or that large numbers of their employees will walk away from the sizeable salaries, benefits, and stock options they offer. It’ll take regulation to stop tech companies from selling AI to governments, and that’s not something any Congress worried about appearing soft on crime or terrorism is likely to embrace.

We’re curious to know what Signal readers think: Can grassroots pressure act as an effective brake on controversial uses of AI? Send us your thoughts.

PHOTO OF THE WEEK: TAKING ATOLL

Over the past two weeks, the following things have happened on, near, or because of Woody Island (pictured above), a controversial Chinese military outpost in the South China Sea:

• China landed nuclear-capable long-range bombers on an airstrip on the island.
• The US disinvited China from a major international naval exercise in Hawaii, citing missile installations elsewhere in the region and the bomber landings as factors in rising tensions.
• A US destroyer and guided missile cruiser steamed within a few nautical miles of shore, prompting sharp objections from Beijing.

Normally, this wouldn’t be all that remarkable. China’s military ambitions in the South China Sea are well known, and strategic tit-for-tat is commonplace. But the latest ratcheting up of military activity and rhetoric comes at a time when the US and China are engaged in delicate negotiations on other key issues like US-China trade and North Korea.

Stuff happens–particularly when there is heavy hardware operating at close quarters. And we live in a complex and interconnected world, where a miscalculation or accident in one arena can have knock-on effects elsewhere. Rising tensions in the South China Sea add another layer of complexity to what was already a volatile mix of competing national interests.

HARD NUMBERS

351,000: Some 351,000 Chinese students studied in the United States during the 2016–2017 academic year, according to the Migration Policy Institute. Under new rules being prepped by the Trump administration, Chinese students specializing in robotics, aviation, advanced manufacturing and other fields strategically important to Beijing could be subject to new visa restrictions, according to the Associated Press.

1,770: Chinese President Xi Jinping is looking to burnish his legacy with a massive urban development, the Xiong’an New Area, that will cover an area of 1,770 kilometers, more than twice the size of New York City. It will include an estimated 20,000 sensors for facial and sound recognition.

75: Up to 75 percent of the land in northern Nigeria, where the economy is heavily dependent on agriculture, has become desert over the past few decades, according to the International Crisis Group. That’s fueling tensions between predominantly Christian farming communities and Muslim herdsman.

44: Just 44 percent of Italians say their country has benefited from membership in the European Union, according to a recent survey. That’s the lowest of any country in the 28-member bloc.

2.5: The United Nations has warned that a drought in Afghanistan could lead to a shortage of 2.5 million tons of wheat this year, with two-thirds of the heavily bread-dependent country gripped by drought.

This edition of Signal was prepared with editorial support from Kevin Allison (@KevinAllison), Gabe Lipton (@gflipton) and Leon Levy (@leonmlevy). Spiritual counsel from Willis Sparks.

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