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Corporate World Influencing the Government and Geopolitics

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Corporates influencing governmentThe lines between corporations and governments from all over the world are blurred more and more. We can see examples all over the world. Just think about Gazprom and Russia, Sinopec and the Chinese government or the major Wall Street players and the US government. Usually, this relationship is a poorly understood one.

We can imagine the correlation between corporate world and governments as an equation based on supply and demand. The corporate world asks for more political freedom, limited governmental actions and on the other side the governments try to offer market discipline, governance platforms for value creation systems and regulations.

From a theoretical standpoint the amount of influence that the corporate world can exert at the governmental level is shaped by 4 elements. The first one is the legal heritage of a country: common law countries (US, UK, Australia) versus civil law countries (the majority of EU states, China and Russia). Traditionally the common law system offers greater political freedom and limited governmental actions and civil law systems based on the principle ceteris paribus (all other things being equal) gives less influence to the corporate world. Another element is the degree of decentralization – a horizontal economy is increasing the number of entry points so it is easier to influence the political life of that system. The third element is the industry structure: in an oligopolistic industry is easier to influence the government because there are a few corporate giants which have access to all the necessary means: human and financial capital and pressure groups – think about the oil industry where we have huge companies like Exxon, BP or Shell. The last element is the structure of the company: the size of the company is proportional with the amount of influence.

When we hear the word geopolitics we must think about influence and control. This is a “battle” of ideas, strategic interests and models. With the background established by the globalization process now more than ever our future is uncertain. In July 2007 Russia’s Duma passed a bill for Gazprom (natural gas) and Transneft (oil pipeline network) which gives the right to create private, internal armies. Also Gazprom can use drones in order to protect its assets. Russian energy can be used as a weapon of diplomacy and Gazprom plays an important role in this gambit. But what will happen when the agenda of Gazprom will collide with the interests of Kremlin? This is a difficult question.

Let’s move to Asia. The Asian Crisis of 1997 proved that the governance system at the state and corporate level is inefficient. This crisis was the result of a huge amount of non-performing loans. The “peaceful rise” of China is connected with “the rise of the Rest” as journalist Fareed Zakaria once said. For example, China Investment Corporation which is a sovereign wealth fund bought a 10% stake from Morgan Stanley (US financial company). When we are talking about this relationship between the Chinese government and the corporate world we always must have in mind the fact that in China there are a lot of SOEs (state owned enterprises). The rise of China, Russia, India, Indonesia and Brazil undermined the position of United States and generally speaking the position of the West. Even if we are talking about a multipolar world America continues to be a giant in the sphere of geopolitics and foreign affairs. There are many corporations, powerful ones, which can influence the public opinion or the political decisions in the United States. A good example here is the debate on climate change and all the related issues. In the time frame 2002 – 2010 ConocoPhillips, an oil company, invested more than $60 millions in lobbying and the funding ratio of anti-climate to pro-climate members of Congress was 15.4 to 1. The funding ratio for Murphy Oil was 29:1 and for Exxon Mobil was 10.1 to 1 (UOCS, A climate for corporate control, 2012).Another good example is the situation from Rosia Montana and the connection between the Canadian company Gabriel Resources and the Romanian government. Rosia Montana is a small community with a millennial history that dates back to the Roman Empire. In this area there is a huge deposit of gold and silver (300 tons of gold and 1.600 tons of silver). There are also rare metals like vanadium, titan, nickel and cobalt. According to some visions from the academic sphere the value of these metal deposits is four times bigger than the value of the gold and silver which can be extracted from Rosia Montana. Gabriel Resources created Rosia Montana Gold Mining Corporation and they want to use cyanide in order to extract everything. Behind Gabriel Resources there are 4 persons and their combined fortune represents 12% of Romania’s GDP. There are two major problems in this debate. The local environment can be damaged irreversibly by the cyanide mining process and the royalty payment towards the Romanian government is small. The decision of the Romanian government to allow Gabriel Resources to implement their mining plan generated extensive street movements and media debates.We live in a world ruled by complex networks. “Guanxi” is a Chinese word which means: the style of leadership used to create relationships in networks of influence.

We, as a society, must understand that this Asian concept is very important for our development because we need to mitigate greed with the fear of losses using prudential regulation and supervision. When we will be able to use this balanced leadership style, disasters like the collapse of Lehman Brothers in 2008 will become easier to predict and control.So what do you think? Who is ruling the world today? Are Governments strong enough to resist corporate pressures? Have multinational companies become much stronger and political leaders too corrupt to hold against their sometimes over-the-top demands?

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Opinion

Is there such thing as cyberwar?

Alexandra Goman

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Two decades have passed after Arquilla and Ronfeldt in 1993 warned the public about an upcoming. They were also the first to introduce a concept of cyberwar and give an elaborated opinion. They referred to a conduct and preparation of military operations using information-related principles and also invoked a link between intelligence (the collection of information for political or military purpose) and cyber operations. Now, the scale of intelligence has significantly expanded.

Interestingly, before cyber appeared, there was a radio which was used for intelligence purposes and was weaponized later in the World War II. From that time on, electronic warfare became standard characteristics of a modern conflict. Despite this, there is a key difference between electronic warfare and a cyber one. Traditional electronic warfare aimed to guide, target, or protect weapons systems (Ibid., p. 24). In contrast, cyber makes today’s weapons and military systems smarter but also more vulnerable for an attack.

At the moment everyone still wonders what the whole idea of cyberwar means. There is no accepted interpretation or definition. Furthermore, many experts even say that such war does not even exist (or cannot be referred to the notion of “war”). Perhaps, it is due to the fact that a war in cyberspace has not yet happened. To make it clear, cyber capability has not actually killed anyone and a code has not been used as the use of force.

Similarly, the dangers of a nuclear bomb were recognized only after its use, the same goes to the notion of “nuclear war”. Although there have been many cyberattacks, none of them have been raised to the level of war because none of them, in fact, caused the level of damage which could be adhered to the level of a large-scale conflict.

Cyber warfare has derived from different aspects of conventional warfare and traditional definitions of war. It usually involves organized units within nation-state in offensive or defensive operations which are part of a war or a conflict.

In general, since cyber study is relatively new, there are many competing terms and definitions to explain cyber phenomenon. The following concepts – the revolution in military affairs, electronic warfare, information warfare, and cyber war – have been all offered to describe the new emerging area of conflict. Experts do not agree on any particular term, more often using different notions when talking about cyber issues. Nonetheless, it is vital to understand the facts of the 21st century similarly to the need that rose along with the invention of atomic reaction. A major concern now is no longer weapons of mass destruction, but weapons of mass disruption. (2009, p. 47).

One of the central elements to define a cyberwar, is that it has to meet the same criteria, applied to any other type of war. Vandalism or spying is an act of crime, but they do not start wars. So, assumingly, there has to be physical destruction and casualties in order to declare a war.

Therefore, a cyberwar should have real world damage similar to a conventional war. For this matter, it should probably take place in a digital world. What is not clear, however, is whether it should be fought exclusively in cyberspace or it can accompany a conventional attack too. This aspect is quite interesting, because cyberattacks can easily be used in combination with a kinetic attack and can multiply the force and power of the attacker.

In this case, it does not make sense to create a new term “cyberwar” as it falls down under the same definition of war. It is the same example when aerial bombings supported the attacks on the ground during the World War I, but in the end we called it a war, not a particular type of war. Consequently, cyber introduction resembles more a revolution in military affairs, rather that a new emerging type of warfare.

What is clear, though, is that the difference in definitions complicates the matters of regulating cyberspace and prevents achieving a common ground on cyber issues and/or developing new treaties and agreements between the states. So far there is no international agreement on the cyber principles, despite some attempts of the states to engage into negotiations (Budapest Conference on Cyberspace, the World Conference on International Telecommunications). There is, however, the Convention on Cybercrime, the first international agreement that addresses compute crime, adopted by the Council of Europe. Interestingly enough, Russia (as a part of the Council) neither signed nor ratified the agreement, whereas US (not part of the Council) recognized it and ratified it.

Apart from these difficulties in defining cyberwar, there has been a hyperbolic use of the word itself, mostly by media and tabloids (e.g. The Washington Post, “We are at cyberwar and we are our own enemy”; The New York Times, “How to prevent Cyberwar”; Zdnet, “Cyberwar: a guide to the frightening future of online conflict”; Komsomolskaya Pravda, “Are we expecting the First World Cyberwar?” etc.). They do not usually give any concrete information but are eager to use this term and apply it randomly to different cases just because it sounds good.  All in all, uninformed public use of the word has enormously contributed into the heat surrounding cyber implications.

Futher, cyberattacks are too often discussed equivalently, regardless of its impact. In this sense, minor cases like ransomware or phishing might be raised to the level of an armed attack (especially if they affect multiple computers worldwide). Yet, these cases are good examples of cybercrime, and crime is not a war. When individuals engage into this type of activity, they do not engage in a war.  The same goes for espionage in cyberspace. Catching a spy on one’s territory will certainly put pressure on bilateral relations, but it would not start a war.

This exaggeration of cyberattacks can be explained through securitization theory. The notion offered by the Copenhagen Security School describes how a certain concept can be politicized and securitized to the extent that it becomes a threat to national security (See Buzan, 2006).

To conclude, it should be mentioned that there is no guidance for the conduct of “cyberwar”.  There are no internationally agreed definitions and, to that extent, the whole idea of cyberwar so far seems unrealistic. At this moment technology is not sophisticated enough to ensure a military conduct entirely in cyberspace. Besides, any cyberattack of such scale would presumably result in a physical destruction, which consequently might provoke a conventional retaliation attack. This, in result, would cause a war we know for years, so there is no need to introduce a particular type of war. On another note, using cyber operations to support a conventional war and/or conflict is the way to go, but in this case it is just a revolution and modernization in military affairs.

I would be interested to hear your opinion about that in the comments below.

For further information see:

1)    A movie “War Games” (1983)

2)    Arquilla, J. and Ronfeldt, D. (1993). The Cyberwar is Coming! RAND Corporation, [online] Available at: https://www.rand.org/pubs/reprints/RP223.html

3)    Cetron, M. J. and Davies, O. (2009). Ten critical trends for cyber security. The Futurist, 43(5), pp. 40–49.

4)    Stiennon, R. (2015). There Will Be Cyberwar: How The Move To Network-Centric War Fighting Has Set The Stage For Cyberwar. Michigan: IT-Harvest Press.

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Opinion

On the issue of cyber security of critical infrastructures

Alexandra Goman

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There is a lot of talk in regards to cyberattacks nowadays. A regular user worries about its data and tries to secure by all means necessary. Yet, no one really thinks whether the power plants or nuclear facilities are well secured. Everyone assumes that they should be secured.

The reality, however, differs. According to many reports of cyber security companies, there is an increased risk of cyberattacks, targeting SCADA and ICS. Supervisory Control and Data Acquisition (SCADA) is used for the systems that control physical equipment – power plants, oil and gas pipelines, they can also control or monitor processes such as heating or energy consumption. Along with Industrial Control Systems (ICS) they control critical elements of industrial automation processes. Exploiting vulnerabilities of critical infrastructures can lead to the consequences of unimaginable scale. (These types of attacks are actually used in a cyberwar scenarios and hypothetical military settings).

Source: Fortinet, 2015

There are many reasons why these systems are vulnerable for attacks. First of all, the main problem is that these systems have an old design; they were built before they were connected to any networks. They were later configured to connect via Ethernet, and that’s when they became a part of a larger infrastructure. The more advanced SCADA system is becoming, the more vulnerabilities are these to exploit. The updates should be regular and on time. Secondly, there is a lack of monitoring. New devices that are connected allow remote monitoring, but not all devices have the same reporting capabilities. There are also authentication issues (weak passwords, authentication process), however, this is supposed to restrict unauthorized access (See Common SCADA Threats and Vulnerabilities at Patriot Technologies, Inc. Online).

In these scenarios, there is no certainty to know what is going to backfire because of the complexity of communications and power networks. This is also called a cascading effect of attacks. Not knowing who is connected to who may cause major disruptions. The example of the US East Coast power blackout in 2003 proves this point (a failure in one element of the grid spreads across other electrical networks). However, given this, it is also complicated for an attacker to predict consequences, if an attack executed. This kind of attack can easily escalate into more serious conflict, so it might not be the best option for states to employ such methods.

Moreover, there is a risk to damage a critical infrastructure unintentionally. That is if a virus or worm did not intend to target SCADA but happen to spread there as well. The uncontrollability of the code may seriously impair the desire to use it, especially when it comes to nation-states. For instance, in 2003 a worm penetrated a private network of the US Davis-Besse Nuclear Power Station and disabled a safety monitoring system for 5 hours. In 2009, French fighter jets could not take off because they were infected with a virus.

Indeed, a scenario where an attacker gains access to a SCADA system and manipulates with the system, causing disruptions on a large-scale, might be hypothetical but it does not make it less possible in the future. However, the only known case so far, which affected an industrial control centre, is Stuxnet. It did not result in many deaths, yet it drew attention of the experts on the plausibility of future more sophisticated attacks. These potential upcoming attacks might cause the level of destruction, comparable to that of a conventional attack, therefore resulting in war.

Further reading:

Bradbury, D. (2012). SCADA: a Critical Vulnerability. Computer Fraud & Security, 4, p. 11-14.

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Opinion

Briefly about the Russian Political Discourse

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As you may have noticed, the recent international discourse has been rotating around Russia and its relations to other countries for a long time. Needless to say that after the events in Georgia/Ukraine, this discourse is far from friendly. Some even say that rhetoric of the Cold War has returned. What makes people abroad wonder is why Russia chooses to respond to its foreign partners in this particular way? Why is it the way it is?

To begin with, there are several reasons that shape Russian rhetoric. First of all, they are historical and cultural values. Russia sees itself as a defender of its rights and identity and someone who is not going to follow someone else’s rules. Back to the 13th century, the grand prince (rus. knyaz) Aleksander Nevsky only accepted submission  to the Golden Horde to protect the Russian culture and belief, therefore depriving the West of the opportunity to take over its territories.  This mentality still governs the minds of people. Today, current political rhetoric is doing the same by refusing the Western pressure and external interference into its business.

After the Golden Horde, Russia has managed to maintain its unity. Back then, the East saw the country to be an heir to the great Byzantine Empire. Meanwhile, the enormous size of the country was rather intimidating; and even more, when it started acquiring new territories (remember reaction to the situation with Crimea).

On the one hand, Moscow tries to present itself strong when it communicates with the Europe; on the other hand, the Western neighbours seem to use the same old-fashioned strategy to isolate the big neighbour. Since the time of Ivan the Terrible, no one really has wanted strong and stable Russia and there were steps before to prevent the unity of Eurasia.

The long history of Russia plays a big role in forming the modern mind of the citizen and current political rhetoric. Russian people and the government would not admit defeat and would do anything possible to prevail, even if it means to live in humble circumstances for some time (think of the continuous sanctions).

The tough policy of Peter the Great, the emperor of Russia, has brought the country to a new level in comparison to others. At that time already, all the international questions were only resolved with the help of Russia. In the following years, the power of the country kept growing only to solidify during the rule of Catherine the Great. The famous grand chancellor of Russia and the chief of foreign policy Bezborodko used to say, “I don’t know how it will be at your time, but at this time not a single gun is allowed to fire without our permission”[1]. Now, Russia tries to achieve similar influence.

The period after the World War II proved to be fruitful for the development of the European countries. While the US and USSR were competing, Europe was free from deciding on serious issues, so it could absorb and enjoy the time of quiet development.

Nonetheless, there has been a clear confrontation between the two ideologies, Nazism and Communism. Even though the USSR did not try to exterminate the nations, the scary ghost of the USSR keeps frightening the rest of the world. The impression of “evil USSR” flying over the international relations is still there and penetrates the minds of the people.

After the collapse of the USSR, there was a chance to promote peace and peaceful coexistence.  Russia has repeatedly expressed its interest in it, yet the Western partners have chosen another way:  NATO enlargement to the East (which is believed to be a broken promise).  Interestingly enough, George Kennan, the so-called creator of containment policy of Soviet expansion, considered the NATO expansion a tragic mistake.

All in all, abovementioned factors play a significant role in shaping the Russian political discourse. Cultural and historical values, national pride (and therefore negative feeling towards the Western sanctions) as well as the use of state symbols to unite the country are the most important rhetoric tools in the Russian language arsenal. Its constant and regular transmission through the media and other communication channels make this rhetoric influential and persuasive.

[1] [URL: http://www.istmira.com/istoriya-rossii-s-drevnejshix-vremen-do-nashix/290-kakovy-itogi-i-posledstviya-vneshnej-politiki.html] [дата обращения: 20.05.2016]

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