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【香港保衛戰當年今日・十四】

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Meatgrinder

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The CLOUD Act

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The CLOUD Act

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diff --git a/columns.xml b/columns.xml index ec83d451..4457bade 100644 --- a/columns.xml +++ b/columns.xml @@ -1,4 +1,4 @@ -Jekyll2023-11-02T19:34:48+08:00https://agorahub.github.io/pen0/columns.xmlThe Republic of Agora | ColumnsUNITE THE PUBLIC ♢ VOL.34 © MMXXIII怪谁？2023-10-19T12:00:00+08:002023-10-19T12:00:00+08:00https://agorahub.github.io/pen0/columns/who-is-to-blame<p>拒绝考虑巴以冲突的原委，是一场道德灾难。</p> +Jekyll2023-11-04T10:11:04+08:00https://agorahub.github.io/pen0/columns.xmlThe Republic of Agora | ColumnsUNITE THE PUBLIC ♢ VOL.34 © MMXXIII怪谁？2023-10-19T12:00:00+08:002023-10-19T12:00:00+08:00https://agorahub.github.io/pen0/columns/who-is-to-blame<p>拒绝考虑巴以冲突的原委，是一场道德灾难。</p> <!--more--> diff --git a/feed.xml b/feed.xml index 0fe2b010..3005c56d 100644 --- a/feed.xml +++ b/feed.xml @@ -1 +1 @@ -Jekyll2023-11-02T19:34:48+08:00https://agorahub.github.io/pen0/feed.xmlThe Republic of AgoraUNITE THE PUBLIC ♢ VOL.34 © MMXXIII \ No newline at end of file +Jekyll2023-11-04T10:11:04+08:00https://agorahub.github.io/pen0/feed.xmlThe Republic of AgoraUNITE THE PUBLIC ♢ VOL.34 © MMXXIII \ No newline at end of file diff --git a/heros.xml b/heros.xml index 1152d162..da2f45be 100644 --- a/heros.xml +++ b/heros.xml @@ -1,4 +1,4 @@ -Jekyll2023-11-02T19:34:48+08:00https://agorahub.github.io/pen0/heros.xmlThe Republic of Agora | HerosUNITE THE PUBLIC ♢ VOL.34 © MMXXIII自由主义的四次“左右之争”（下）2023-10-16T12:00:00+08:002023-10-16T12:00:00+08:00https://agorahub.github.io/pen0/heros/Byron-a1_c-chinese-liberalists-four-left-right-debates-part-2<p>如果说在2016年改良与变革之争时，自由主义者里的变革派尚且缺乏一个“现实基础”，那到2018年时，这个现实基础来了，就是轰轰烈烈的#MeToo运动。</p> +Jekyll2023-11-04T10:11:04+08:00https://agorahub.github.io/pen0/heros.xmlThe Republic of Agora | HerosUNITE THE PUBLIC ♢ VOL.34 © MMXXIII自由主义的四次“左右之争”（下）2023-10-16T12:00:00+08:002023-10-16T12:00:00+08:00https://agorahub.github.io/pen0/heros/Byron-a1_c-chinese-liberalists-four-left-right-debates-part-2<p>如果说在2016年改良与变革之争时，自由主义者里的变革派尚且缺乏一个“现实基础”，那到2018年时，这个现实基础来了，就是轰轰烈烈的#MeToo运动。</p> <!--more--> diff --git a/hkers.xml b/hkers.xml index 5ad0d7c6..7c366571 100644 --- a/hkers.xml +++ b/hkers.xml @@ -1,4 +1,142 @@ -Jekyll2023-11-02T19:34:48+08:00https://agorahub.github.io/pen0/hkers.xmlThe Republic of Agora | HkersUNITE THE PUBLIC ♢ VOL.34 © MMXXIIIPaper Tiger or Pacing Threat?2023-10-19T12:00:00+08:002023-10-19T12:00:00+08:00https://agorahub.github.io/pen0/hkers/paper-tiger-or-pacing-threats<p><em>China has long couched its engagement with Latin America and the Caribbean in primarily economic terms. However, China is becoming increasingly strident in its efforts to bolster defense and security initiatives in the Western Hemisphere.</em> <excerpt></excerpt> <em>Chinese defense and security engagements manifest along a spectrum, including dual-use civilian and military infrastructure projects, public safety assistance, humanitarian assistance and disaster relief, arms sales, and joint military-to-military exchanges and trainings. An expanded military and security presence in the hemisphere poses significant concerns for the United States in the event of a potential conflict or crisis, imperils regional stability by empowering criminal regimes in the hemisphere, and risks eroding democratic norms within regional militaries and police forces.</em></p> +Jekyll2023-11-04T10:11:04+08:00https://agorahub.github.io/pen0/hkers.xmlThe Republic of Agora | HkersUNITE THE PUBLIC ♢ VOL.34 © MMXXIIIBlockchain For Democracies2023-10-25T12:00:00+08:002023-10-25T12:00:00+08:00https://agorahub.github.io/pen0/hkers/blockchain-for-democracies<p><em>In a world increasingly overflowing with data, blockchain is neither a panacea nor solely an instrument of cryptocurrencies but rather a tool that offers intriguing applications to support democratic governance, including in Ukraine.</em></p> + +<excerpt /> + +<h3 id="introduction">Introduction</h3> + +<p>Rapid technological change has led to a global deluge of data. Certain aspects of shared information — authenticity, verification, speed, and integrity — are key to good governance and to helping democracies deliver for their citizens. Blockchain and other types of distributed ledger technology (DLT) offer potential benefits that institutions and governments can leverage in various ways to support democratic governance. Blockchain’s increasing use for identity management, land rights, citizen representation, the tracking of goods and services, and other uses necessitates deeper and broader understanding by U.S. foreign policy stakeholders. Given that U.S. foreign policy prioritizes strengthening democratic governance around the world, including through more inclusive access to services and greater transparency, accountability, and integrity in the public sphere, U.S. policymakers must seriously grapple with the opportunities and challenges associated with the increased integration of blockchain technology. Ukraine’s embrace of digitization and use cases for blockchain offer helpful insights into how and in which contexts this technology may be applied.</p> + +<p>Whenever there is a lack of transparency in elections, government transactions, bureaucratic systems, and media, there is an opportunity for corruption to ensue, diluting citizens’ trust in democratic institutions. Certain technological advancements can potentially be a valuable tool for increasing the transparency and accountability of democracies. One such innovative tool is blockchain, a form of DLT that allows a group of users to cooperatively maintain a record of transactions.</p> + +<p>Blockchain is often associated with the use case of cryptocurrency, but it can be applied to other domains to track both tangible and intangible goods and transactions. Blockchain is a form of tamper-resistant DLT that ensures that all transactions are recorded and validated. This technology achieves extraordinary levels of data integrity for information once it is loaded into the shared ledger. Essentially, the movement or transfer of anything of value can be logged and verified, instilling trust and confidence by raising the costs of malicious activity during that process. This opens the technology to a wide range of applications. Within governance and democratic strengthening efforts, blockchain has recently been introduced in various places to increase government accountability, combat misinformation, reduce costs and the mishandling of data, and quickly trace financial transactions.</p> + +<blockquote> + <h4 id="box-1-what-is-blockchain"><code class="highlighter-rouge">Box 1: What Is Blockchain?</code></h4> +</blockquote> + +<p><em><code class="highlighter-rouge">Distributed ledger technology (DLT) describes a category of technologies that enables the storage of data within and transfer between multiple data stores. Network participants share this ledger of transactions, allowing for synchronized data recording with no central storage hub. Instead, peer-to-peer transmission takes place, recording the same information across many devices. The “ledger” is stored across multiple locations and is visible to all parties.</code></em></p> + +<p><em><code class="highlighter-rouge">Blockchain is not singular in design. It can be classified into different types based on which access and governance models are used. The two main categories are private and public blockchains. Private blockchains restrict access to a specific group of participants, while public blockchains allow anyone to join, build, and use applications on the network. Within each of these categories, there are also permissioned and permissionless blockchains. Permissioned blockchains require participants to have explicit permission to host infrastructure and validate network transactions, whereas permissionless blockchains allow anyone to be a validator.</code></em></p> + +<p><em><code class="highlighter-rouge">Blockchains that are public and permissioned offer several advantages. They can provide high performance and scalability, processing thousands of transactions per second, and can ensure fast and secure transaction finality. Permissioned governance that provides security, efficiency, and visibility into who is involved in decisionmaking processes and network operation can be combined with public accessibility to all citizens, making the technology a compelling choice for many applications.</code></em></p> + +<p>While blockchain and DLT have the capability to help address global challenges and strengthen democratic institutions, the innovative applications of blockchain are still in early stages and not fully understood by key stakeholders in Washington. The United States and its strategic partners must assess and play a role in shaping the next innovative applications of blockchain technology before the opportunity passes. In some respects, China is already possibly years ahead of the United States and many other countries in applying this rapidly evolving technology. Users of the digitized Chinese yuan number over 120 million in China (although conflicting reporting creates some doubt about how widely this currency is actually being used). To create a regulatory and policy environment in which the implementation of DLT strengthens democracy without compromising privacy or muzzling technological innovation, policymakers need a comprehensive understanding of the opportunities as well as the limitations on where and how this technology can be most readily and helpfully adopted. The strategic application of blockchain technology in certain scenarios can enhance trust and better protect information, but implementers must also be mindful of the technology’s shortcomings and challenges.</p> + +<p><strong><em><code class="highlighter-rouge">The United States and its strategic partners must assess and play a role in shaping the next innovative applications of blockchain technology before the opportunity passes.</code></em></strong></p> + +<h3 id="blockchain-and-democracy">Blockchain and Democracy</h3> + +<p>Democratic backsliding around the world should be a concern for democracies everywhere. Democracy is in a worldwide recession in terms of both quality and prevalence, the causes of which are contested. The cornerstones of flourishing democracies, however, are widely agreed upon and include free and fair elections; a free press; individual rights; economic, political, and religious freedom; and a rule of law equally applied. Governments and societies grappling with how best to support and strengthen democracies should assess how technologies such as blockchain can be applied as practical tools to uphold these foundational principles. The applications may vary considerably, as demonstrated by the following non-exhaustive examples.</p> + +<h4 id="protecting-digitized-government-documents">PROTECTING DIGITIZED GOVERNMENT DOCUMENTS</h4> + +<p>Identity is inextricably intertwined with democracy. There are clear incentives for all governments, democratic or otherwise, to provide their citizens with means of unique identification, such as for the delivery of key services and benefits. Democracies have a special interest in ensuring individuals’ identities are protected so that the rights and privileges guaranteed to those individuals can be preserved. For example, government-issued identification is a key ingredient for voting, a core democratic responsibility. Likewise, passports assign unique “international standard serial numbers” which allow customs officials to quickly verify identity and citizenship as well as which travel privileges may apply to an individual. Government agencies such as the U.S. Social Security Administration assign identifiers to help administer medical benefits, financial aid, and other social services and benefits.</p> + +<p>Worldwide, nearly 1 billion people have no proof of legal identity and are excluded from services and the formal economy. Digital identity can serve to close this “identity gap” by helping deliver immutable and easily accessible identification to those lacking verifiable identity documents, as well as by strengthening the resiliency of existing paper identification. During natural disasters, conflicts, and other crises, citizens may not have the time or ability to grab their paper government documentation, which is necessary to freely move and receive services. DLT’s ability to safely guard such digitized information could alleviate the difficulty of attempting to verify a person’s identity during hectic scenarios in which physical documents are destroyed or inaccessible. Governments could be better equipped to manage refugee crises and natural disasters and administer standard social services, while individuals could have more control of their data. An important factor in realizing this vision entails working toward applications of digital identity systems that empower people rather than surveil and exclude them.</p> + +<h4 id="securing-land-registration">SECURING LAND REGISTRATION</h4> + +<p>Land title registries track the ownership of land and property for a given region. The efficient registration of land is an essential component of ensuring property rights, a backbone of any free society. Land registration poses another set of government records for which an agency could maintain a blockchain to improve efficiency and ensure the quality of data storage and transfers. Some countries are already experiencing positive results from deploying DLT in the land registration process. For Georgia, the collapse of the Soviet Union and persistent corruption during early independence caused many property disputes. In response, Georgia was an early adopter of blockchain-based land registration, registering more than 1.5 million land titles in 2018. The Georgian government was able to provide citizens with digital certificates, legitimizing ownership with a timestamp and other cryptographic proof in under three minutes. Importantly, blockchain may help streamline the land registration process, but oversight is still critical to ensure the initial integrity of the data.</p> + +<p>Similar technology can be applied to other asset registrations and government services. For example, the private sector uses blockchain technology to track the shipment of goods and monitor supply chains. Likewise, government agencies have the potential to reduce labor costs and waste by incorporating blockchain in some types of foreign aid delivery and monitoring, the tracking of welfare funds, and the registration of voters, vehicles, and intellectual property.</p> + +<h4 id="facilitating-fast-and-direct-financial-transfers-and-other-economic-applications">FACILITATING FAST AND DIRECT FINANCIAL TRANSFERS AND OTHER ECONOMIC APPLICATIONS</h4> + +<p>The financial services industry is already advancing applications of blockchain technology. Blockchain’s peer-to-peer system has enabled the excision of some intermediaries, instantaneous processing, and the elimination of fees when sending money anywhere in the world. Blockchain technology is not a digital currency, but it is highly associated with digital currencies because decentralized cryptocurrencies such as Bitcoin function using blockchain.</p> + +<p>Yet cryptocurrency is only a small subset of how blockchain can be and is being used by governments and financial institutions globally. For example, stablecoins, as the name suggests, attempt to provide a stable value by pegging their worth to a real-world “reference” asset such as the U.S. dollar. They can be used to pay for goods and services while benefiting from the low transaction costs of some blockchains. Blockchain technology has also induced the majority of the world’s governments to actively explore managing their national currencies by incorporating central bank digital currencies, with China, Sweden, and others actively exploring their use.</p> + +<p><strong><em><code class="highlighter-rouge">Cryptocurrency is only a small subset of how blockchain can be and is being used by governments and financial institutions globally.</code></em></strong></p> + +<p>There are also other applications for blockchain in the realm of financial inclusion. Pilot projects in the Global South are looking into how blockchain can be used to issue insurance policies, administer payouts to farmers, close credit gaps, and provide a way to save for those who do not have a savings account. For example, moving money is often made expensive due to bank fees. Leaf, a Rwandan-based project, uses blockchain to enable money transfers without banking fees. The Leaf wallet uses the public Stellar blockchain to help people send, save, and transfer money directly from their mobile phone without the need for personal banking history or in-depth financial literacy. Likewise, smart contracts are being used to carry out insurance agreements with African farmers to protect their livelihoods during extreme weather. If a predetermined amount of rain is recorded within 24 hours in the insured farmer’s region, which can result in destruction of crops, the farmer will receive an automated payment. Blockchain technology is increasingly being incorporated into specific finance-related applications while also helping to create global networks of interoperable financial systems.</p> + +<h4 id="contending-with-a-proliferation-of-deepfakes">CONTENDING WITH A PROLIFERATION OF DEEPFAKES</h4> + +<p>In a rapidly approaching future with generative artificial intelligence and pervasive deepfake technology, it will be imperative for both governments and private consumers of information to be able to discern what is credible. In many respects, this eventuality has already arrived. The health of democracies is uniquely reliant on an informed citizenry. The intentional dissemination of false information, such as propaganda from authoritarian nations and extremist organizations, often aims to obfuscate reality. The need for verifiable information and data is additionally intensified amid the fog of war, when manipulative information operations are pervasive and the accuracy of situational understanding can be a matter of life and death.</p> + +<p>The use of emerging technologies by state actors for strategic disinformation campaigns is a national security issue. For this reason, the United States adopted its first federal laws related to deepfakes in 2019. The FY 2020 National Defense Authorization Act (NDAA) required a report on the weaponization of deepfake technology by foreign entities and established a competition with a $5 million prize to stimulate research on machine-manipulated media. Such efforts are not preventative but merely raise awareness of the issue at hand. Beyond increasing awareness, InterAction’s Disinformation Toolkit 2.0 notes how some internationally focused organizations are exposing disinformation campaigns, conducting forensic analyses, coordinating with technology companies, providing digital literacy training, and collaborating with global policymakers. This landscape of mounting policy attention and analysis related to disinformation and deepfakes shapes the context in which applications of blockchain technology are finding their footing.</p> + +<p>DLT may offer opportunities to counteract the nefarious aims of certain categories of deepfakes. The Starling Lab for Data Integrity is experimenting with innovative applications of blockchain technology and decentralized systems of storage to bolster trust in digital media. The persistence and safety of digital ledgers support the creation of more trustworthy digital assets where details are corroborated by independent third parties acting as notaries public. Decentralized storage pools can guarantee the safekeeping of information for the long term.</p> + +<p>News agencies are beginning to explore applications for DLT to better record their reporting and make data, such as the location and date of photographs, permanently accessible. Reuters, for example, has partnered with Canon to develop a professional camera and in-house workflow for photojournalists that freezes and stamps the pixels of a picture the moment a photo is snapped and then registers the photo and corresponding details onto a public blockchain. Especially considering Russia’s propaganda campaigns against Ukraine, blockchain’s potential to verify what information has been altered could be instrumental as authoritarians increasingly deploy gray zone tactics that rely on manipulating the information environment. This verification of alterations only applies to information once it has been stored in a blockchain and cannot account for manipulation prior to that point.</p> + +<h4 id="advancing-justice-and-the-rule-of-law">ADVANCING JUSTICE AND THE RULE OF LAW</h4> + +<p>A transparent judicial system is key to the rule of law that undergirds functioning democracies. DLT’s capturing, storing, and verifying of data could be used to better manage court judgments, warrants, and criminal histories. Researchers are exploring blockchain’s ability to corroborate data on several systems as a tool for preserving evidence. The United Kingdom’s Ministry of Justice proposed using DLT to preserve and protect mass quantities of body camera footage to be used in court. Similar applications could be useful for international courts and other human rights watchdogs.</p> + +<p>The recent hacking of the computer systems of the International Criminal Court (ICC) raises concerns over the safety of centrally located data that could later be used to prosecute the most serious of crimes. The use of blockchain to store and verify data related to war crimes and atrocities aims to assist the courts by providing more trusted and tamper-resistant data for associated proceedings. Governments or other entities seeking to achieve accountability for large-scale human right abuses or wartime atrocities for the purposes of transitional justice may particularly benefit from the use of blockchain to ensure evidence has not been manipulated and to support chain of custody for documentation of abuse.</p> + +<p>Additionally, “smart contracts,” which automate transactions once the coded conditions are met, could help judicial systems by minimizing disputes, alleviating stress on courts, and making business and government services more efficient.</p> + +<h4 id="elevating-citizen-representation-and-voice">ELEVATING CITIZEN REPRESENTATION AND VOICE</h4> + +<p>According to a 2021 CSIS report, blockchain-based voting systems hold some potential benefits for securing elections, though they also present a range of risks. Generally speaking, blockchain could reduce the risk of election tampering, as such a system would require the collusion of multiple major entities to alter recorded ballots. There may also be potential for the use of blockchain to further augment trust in mobile and internet voting, which can, in turn, result in greater turnout and reduce voter error. Blockchain-backed e-voting could additionally enhance the physical safety of voters and remove certain types of voter coercion associated with in-person polling, although coercion in private settings can also pose a significant problem. Election transparency may be another benefit, as civil society groups could monitor the election results if granted access to the blockchain network and armed with the requisite technical knowledge to understand it. The transparency associated with blockchains also needs to be balanced with privacy rights associated with voters’ abilities to keep their individual voting selection secret. Further possible advantages include stronger resiliency against network disruptions compared to other internet voting schemes, more secure voter registries, and timely election night reporting systems.</p> + +<p>While there have not been many pilot projects related to blockchain voting, the Voatz mobile blockchain voting system, used during the 2018 U.S. midterm elections in West Virginia, for example, may have contributed to higher voter turnout on the scale of 3 to 5 percentage points. However, other studies have demonstrated the opposite. For example, in Belgium a similar pilot project resulted in a slightly negative effect on voter turnout. As uses of blockchain expand, there is also increased attention to theoretical applications of blockchain to voting. For example, the concept of liquid democracy, a modern and flexible approach to direct democracy with implications for referendums, voting proxies, and mass-scale voting, could be propelled by blockchain to help verify that votes cast are the same as votes counted.</p> + +<p>One key challenge is that although blockchain may help with the prevention of some ballot tampering, election systems and platforms are still dependent on other hardware and software that may make them vulnerable to exploitation that is difficult or even impossible to control. Therefore, at a fundamental level, blockchain is not a silver bullet for solving the insecurity of online voting.</p> + +<h3 id="the-ukrainian-context">The Ukrainian Context</h3> + +<p>Ukraine, sitting at the cutting edge of the digital revolution, offers a unique context that is experimenting in the digital and blockchain space.</p> + +<h4 id="technological-readiness">TECHNOLOGICAL READINESS</h4> + +<p>Ukraine’s information and communications technology (ICT) industry was immensely successful before Russia’s full-scale invasion in February 2022, with some dubbing it the “emerging tiger of Europe.” In fact, despite challenges posed by the war, it is the only sector of the Ukrainian economy that has grown amid the conflict, exhibiting growing export volumes from 2021 to 2022. The Ukrainian government has also proactively not drafted IT workers as soldiers and has extended tax breaks to small and medium-sized businesses in the industry. These measures have allowed ICT businesses to stay solvent and continue operating and exporting services. The challenges Ukraine is facing are in many ways unique, but this also means that it can serve as a breeding ground for unique innovations. Equipped with over 200,000 skilled IT workers and the demand for creative solutions due to the war, Ukraine is primed to rapidly test technologies.</p> + +<p>Ukraine demonstrated its technological adaptability with the embrace of cryptocurrency in early fundraising efforts when banks lacked liquidity following Russia’s full-scale invasion. MoneyGram halted payments to Ukraine until it could confirm its banking partners in the country were operational. The Ukrainian government, ranked fourth globally for cryptocurrency adoption, began publicly soliciting cryptocurrency donations online days after the invasion. Cryptocurrency’s capability to facilitate transactions instantly across borders was attractive for the nation as it entered total war. At least 20 million dollars in cryptocurrency were deposited directly to the Ukrainian government in the first months of the war.</p> + +<p>Ukraine had more mobile phone subscriptions than people in 2020, but the war has damaged the digital infrastructure necessary for mobile subscriptions to be operable. Since Russia’s invasion, more than 4,000 Ukrainian telecommunication stations have been seized or destroyed and over 60,000 kilometers of fiber-optic lines have been compromised. The restoration of many lost towers can be attributed to the bravery of Ukrainian telecommunication workers. The public-private partnership between the Department of Defense and SpaceX’s Starlink has enabled battlefield communications at the cost of approximately $20 million per month. Without investments in digital infrastructure, all digital solutions, including those involving blockchain, are futile.</p> + +<h4 id="commitment-to-digitization">COMMITMENT TO DIGITIZATION</h4> + +<p>Digitization is synonymous with resiliency, a characteristic often ascribed to Ukraine in its battle against Russia. Prior to the war, Ukraine committed to going paperless in September 2021 with a bill prohibiting officials from requiring paper documents. The bill was the latest advancement in digitization following the successful experimentation with electronic identification cards and international passports by the application Diia. Ukraine had issued nearly a million biometric travel passports to Ukrainian citizens in the Russian-controlled Donbas region before the war. Diia, a premier government application used by half of Ukraine’s population, offers an expanding list of digital documents, including identification cards, driver’s licenses, and Covid-19 vaccination certificates. In a unique blend of entertainment and education, Diia has trained almost 1.5 million citizens in digital skills through over 90 free-to-access educational series based on European standards. Given the wartime reliance on social services, digitization efforts have accelerated since the war’s outbreak. Kostiantyn Koshelenko, deputy minister of social policy for digital transformation, recently expressed his commitment to making government services more resilient and client oriented. Applying to be a candidate for child adoption, for example, is now an online government service in Ukraine. The Ministry of Digital Transformation’s mission to “move 100% of government services online” is a core element of Ukraine’s war strategy and a key ingredient for large-scale utilization of blockchain-enabled applications.</p> + +<h4 id="applications-of-blockchain">APPLICATIONS OF BLOCKCHAIN</h4> + +<p>Supported by a government that has trumpeted digitization as critical to the country’s future, Ukraine and its partners have combined blockchain technology and photogrammetry to counter disinformation and to document and preserve evidence of Russian war crimes. E-Enemy, for example, is a government-built app that allows users to photograph and geolocate any attacks, thereby providing a first-person perspective of atrocities for posterity and eliminating the potency of deepfakes. War crimes investigators can then “hash” data on war crimes, thereby enabling future prosecution of these heinous acts. Starling Lab, a joint Stanford University–USC Shoah Foundation research center, in partnership with social enterprise Hala Systems, has been preserving possible evidence of Russia’s war crimes in Ukraine via a cryptographic dossier. The aforementioned hacking of the ICC combined with Russia’s espionage efforts to covertly infiltrate the court hint at the urgent need to ensure greater protection for evidence of war crimes.</p> + +<p>Ukraine’s president Volodymyr Zelensky himself has noted the importance of digitizing all accounting of military supplies, an effort that could potentially benefit from blockchain technology. Furthermore, the UN Refugee Agency was awarded the Best Impact Project Award during the 2023 Paris Blockchain Week for a pilot project in Ukraine where it used blockchain to provide financial assistance to displaced people; this assistance could be converted into cash and used for rent, food, utilities, and medical expenses.</p> + +<h4 id="property-registration-and-blockchain">PROPERTY REGISTRATION AND BLOCKCHAIN</h4> + +<p>Digital solutions for Ukraine’s economic modernization and resilience go beyond the more obvious war effort. Some of the first Ukrainian pilot projects using blockchain were electronic land auctions. In May 2017, the Cabinet of Ministers of Ukraine formally agreed to implement blockchain to help manage the State Register of Property Rights on Real Estate as well as the System of Electronic Trading in Arrested Property. A complaint of foreign investors is that land ownership is still not a possibility in Ukraine given current laws. Legal reform is needed to change this reality, and there is an argument that Kyiv should amend its laws to inspire foreign investors to participate in the country’s economic recovery. This demand may incentivize the Ukrainian government to further explore incorporating blockchain technology in land registration.</p> + +<h3 id="additional-considerations-and-challenges">Additional Considerations and Challenges</h3> + +<p>Despite the benefits of blockchain for advancing democratic institutions, the technology is clearly a neutral tool and can be used by good actors as well as malign ones. There are some underlying concerns regarding the risks that DLT systems pose for democracy.</p> + +<h4 id="malign-foreign-activity">MALIGN FOREIGN ACTIVITY</h4> + +<p>Foreign actors are known to use blockchain technology for adversarial activity against the United States and its partners. For example, Russia has attempted to use the anonymity associated with some cryptocurrencies to bypass sanctions. The terrorist organization Hamas and two other militant groups — Palestinian Islamic Jihad and Hezbollah — have also used cryptocurrency to evade sanctions in order to raise funds for their notorious terrorist attacks. Hamas and Palestinian Islamic Jihad raised more than $100 million via cryptocurrency between August 2021 and June 2023.</p> + +<p>It is not clear, however, how much longer cryptocurrency will be thought of as a safe haven for illicit behavior since Bitcoin and other cryptocurrencies are more traceable than other forms of payment. Investigators have been able to quickly identify and prosecute criminal activity through logged cryptocurrency transactions. For example, within days of the Hamas attack on Israel on October 7, 2023, the U.S. Treasury sanctioned two senior Hamas officials along with cryptocurrency exchange Buy Cash Money and Money Transfer Company, as well as six other individuals involved in the financial operation to fund terrorism. Additionally, the arrest of the perpetrators behind the 2016 Bitfinex hack, in which 119,754 bitcoins were stolen, was only possible, in large part, thanks to the immutable ledger that undergirds Bitcoin. (It is important to note, however, that blockchain’s traceability is irrelevant without oversight.)</p> + +<h4 id="accessibility">ACCESSIBILITY</h4> + +<p>The accessibility of blockchain technology to the public is also a concern. Whether due to lack of technological familiarity, high expenses, or lack of the necessary equipment to facilitate participation, many communities across the globe are not in a position to use blockchain, which in turn limits democratic participation via DLT systems. Citizens need smartphones and reliable internet access to participate. Digital literacy is another aspect of the divide preventing massive rollout of blockchain-backed government solutions, as technology often faces obstacles to adoption and may be cumbersome, particularly for those who lack digital skills. Tech companies and government entities should collaborate to ensure that such tools are accessible and user friendly. The barrier of entry for users must be lowered before scaling is possible.</p> + +<h4 id="lack-of-accountability-and-selective-data">LACK OF ACCOUNTABILITY AND SELECTIVE DATA</h4> + +<p>Without proper reform, blockchain runs the risk of merely reinforcing the status quo. What prevents corrupt regimes from allowing only state-approved, potentially faulty information to be entered onto a blockchain? Is blockchain the next tool to be used by oppressive regimes to fabricate transparent democracy? For example, since 2018, China has permitted the use of blockchain-stored evidence in the country’s courts, which may actually be a worrying development given the fact that China, an authoritarian regime, can be very selective with which data to store.</p> + +<h4 id="energy-consumption">ENERGY CONSUMPTION</h4> + +<p>Blockchain technology traditionally has had a reputation of being highly energy intensive. Though there has been some progress on this front — and the high energy use is mainly attributed to cryptocurrency — there remain environmental concerns regarding the technology due to its carbon footprint as well as the affordability of energy in specific communities. However, there is hope that the technology will become more efficient, based on analysis showing that with different technological design options, digital currencies can be configured in a manner that is more energy efficient than popular current payment systems like credit and debit cards.</p> + +<h3 id="conclusion">Conclusion</h3> + +<p>As the world increasingly overflows with data, U.S. policymakers should consider how to best utilize blockchain and other types of DLT to support democratic governance, including identity management, land rights, and the tracking of goods and services. If U.S. lawmakers do not take greater steps to shape the policy and regulatory environment for blockchain-related activity, there is also a risk of damage to U.S. competitiveness. Policymakers should explore new ways democracies can preserve and advance their principles while more efficiently delivering basic government services. At the same time, blockchain must be viewed neither as a panacea nor as solely an instrument of cryptocurrencies. It is a tool that offers intriguing applications for social and governmental progress.</p> + +<p>Before proceeding with policy decisions related to blockchain technology, Congress should be equipped with knowledge of how exactly the technology can be applied (or misapplied), and make sure that the populations who are meant to benefit from these technologies are also fluent in their use and have access to the necessary digital public infrastructure. This will allow lawmakers to create a broader system and approach in dealing with DLT so that its benefits can be instrumentalized in service of democratic governance.</p> + +<hr /> + +<p><strong>Noam Unger</strong> is the director of the Sustainable Development and Resilience Initiative at the Center for Strategic and International Studies (CSIS), and a senior fellow with the Project on Prosperity and Development.</p> + +<p><strong>Austin Hardman</strong> is a research assistant for the Project on Prosperity and Development (PPD) at CSIS. In this role, he supports the team’s research agenda, business development opportunities, and event coordination.</p> + +<p><strong>Ilya Timtchenko</strong> is an intern with the Project on Prosperity and Development at CSIS.</p>Noam Unger, et al.In a world increasingly overflowing with data, blockchain is neither a panacea nor solely an instrument of cryptocurrencies but rather a tool that offers intriguing applications to support democratic governance, including in Ukraine.Paper Tiger or Pacing Threat?2023-10-19T12:00:00+08:002023-10-19T12:00:00+08:00https://agorahub.github.io/pen0/hkers/paper-tiger-or-pacing-threats<p><em>China has long couched its engagement with Latin America and the Caribbean in primarily economic terms. However, China is becoming increasingly strident in its efforts to bolster defense and security initiatives in the Western Hemisphere.</em> <excerpt></excerpt> <em>Chinese defense and security engagements manifest along a spectrum, including dual-use civilian and military infrastructure projects, public safety assistance, humanitarian assistance and disaster relief, arms sales, and joint military-to-military exchanges and trainings. An expanded military and security presence in the hemisphere poses significant concerns for the United States in the event of a potential conflict or crisis, imperils regional stability by empowering criminal regimes in the hemisphere, and risks eroding democratic norms within regional militaries and police forces.</em></p> <p>Taken together, these trendlines place the United States at an inflection point — it remains a preferred security partner for most countries in the hemisphere but must act now to preserve this status, lest it slip at a precarious moment. To fortify security partnerships with countries in the region, and counter Chinese influence in the security and defense space, the United States should pursue the following lines of effort:</p> @@ -300,7 +438,106 @@ <p><strong>Ryan C. Berg</strong> is director of the Americas Program and head of the Future of Venezuela Initiative at the Center for Strategic and International Studies (CSIS). He is also an adjunct professor at the Catholic University of America and visiting research fellow at the University of Oxford’s Changing Character of War Programme. His research focuses on U.S.-Latin America relations, authoritarian regimes, armed conflict, strategic competition, and trade and development issues. He also studies Latin America’s criminal groups and the region’s governance and security challenges.</p> -<p><strong>Henry Ziemer</strong> is a research associate with the Americas Program at CSIS, where he supports the program’s research agenda and coordinates event planning and outreach.</p>Ryan C. Berg and Henry ZiemerChina has long couched its engagement with Latin America and the Caribbean in primarily economic terms. However, China is becoming increasingly strident in its efforts to bolster defense and security initiatives in the Western Hemisphere.Israel Confronts Hamas2023-10-16T12:00:00+08:002023-10-16T12:00:00+08:00https://agorahub.github.io/pen0/hkers/israel-confronts-hamas<p><em>The legal and ethical challenges of operating in densely populated areas are going to be a tragic constant of 21st century warfare, with no easy solutions.</em></p> +<p><strong>Henry Ziemer</strong> is a research associate with the Americas Program at CSIS, where he supports the program’s research agenda and coordinates event planning and outreach.</p>Ryan C. Berg and Henry ZiemerChina has long couched its engagement with Latin America and the Caribbean in primarily economic terms. However, China is becoming increasingly strident in its efforts to bolster defense and security initiatives in the Western Hemisphere.The Orient Express2023-10-16T12:00:00+08:002023-10-16T12:00:00+08:00https://agorahub.github.io/pen0/hkers/the-orient-express<p><em>Dozens of high-resolution satellite images taken in recent months reveal that Russia has likely begun shipping North Korean munitions at scale, opening a new supply route that could have profound consequences for the war in Ukraine and international security dynamics in East Asia.</em></p> + +<excerpt /> + +<p>Just a few weeks after the momentous visit of Russia’s Defence Minister Sergei Shoigu to North Korea, in July, three Russian cargo vessels connected to Moscow’s international military transportation networks embarked on an unusual journey.</p> + +<p>Their destination was an inconspicuous naval facility tucked away in the secluded Russian port of Dunai, situated in the remote eastern reaches of the country. Once identified by the CIA at the height of the Cold War as a Soviet submarine base, the Dunai facility sits approximately nine kilometres south of the town of Fokino, a closed administrative-territorial entity south of Vladivostok, where movement and residency are strictly controlled for military and security reasons</p> + +<p>While the unremarkable port facility at Dunai had largely been relegated to the annals of Cold War history, recent deliveries by the Russian-flagged Angara, Maria and Lady R of what are likely to be North Korean munitions have thrust it into the international spotlight, and place it at the centre of the burgeoning relationship between Pyongyang and Moscow.</p> + +<p>Embroiled in a grinding attritional conflict in Ukraine, Moscow has scoured the globe for munitions to supply its armed forces, which are currently attempting to repel a determined Ukrainian counteroffensive. But while Iran answered Moscow’s call, supplying the country with hundreds of Shahed loitering munitions, other UAVs and weapons, North Korean arms have yet to appear in significant quantities on the battlefield.</p> + +<p>That, however, is about to change. Dozens of high-resolution images, revealed here for the first time and captured in recent months over Dunai and the North Korean port of Rajin, show the three cargo vessels repeatedly transporting hundreds of containers likely packed with North Korean armaments.</p> + +<p><img src="https://i.imgur.com/sd1C6tl.png" alt="image01" /> +<em>▲ <strong>Figure 1: Angara and Maria shipments between Dunai and Rajin.</strong> Source: Planet Labs, RUSI Project Sandstone.</em></p> + +<p>Although it is difficult to determine the specific contents of these containers from imagery alone, the US government accused the North Koreans of supplying munitions and military material to Russia on 13 October. These claims were accompanied by imagery detailing the alleged end-destination of these shipments in Tikhoretsk, a small town in Russia’s Krasnodar region, facing the Kerch Strait and Russian-occupied Crimea.</p> + +<p>High-resolution imagery collected in recent weeks in the vicinity of Tikhoretsk confirms the rapid expansion of a munitions storage facility here beginning in August 2023 – the same time that North Korea’s shipments from Rajin began. Crucially, these images also appear to show trains delivering the same size and colour of cargo containers as those shipped from North Korea to Russia’s far east.</p> + +<p><img src="https://i.imgur.com/ICMWguj.png" alt="image02" /> +<em>▲ <strong>Figure 2: Renovations as the Tikhoretsk munitions depot.</strong> Source: Planet Labs, RUSI Project Sandstone.</em></p> + +<h3 id="the-orient-express">The Orient Express</h3> + +<p>The first stop for North Korea’s shipments to Russia is in Dunai, a secure military facility with controlled entrances, disguised storage areas and a number of secure berths often frequented by Russian naval assets. High-resolution satellite imagery captured in recent months shows that containers are regularly delivered and removed from here by semi-trailers and railway wagons, likely for transport across Russia towards Tikhoretsk and the border with Ukraine.</p> + +<p><img src="https://i.imgur.com/0EgNHC4.jpg" alt="image03" /> +<em>▲ <strong>Figure 3: The Secure Facility at Dunai, Russia.</strong> Source: Airbus Defence and Space, RUSI Project Sandstone.</em></p> + +<p>The initial shipment of hundreds of containers was loaded on to the Angara at Dunai in late August, before the vessel made its way to the North Korean port of Rajin on the country’s eastern coast. Notably, the vessel also switched off its AIS transponder, obscuring its movements between the two countries. Once in North Korea, satellite imagery shows the vessel unloading these containers onto a berth with a dedicated rail line.</p> + +<p><img src="https://i.imgur.com/ZBekepl.png" alt="image04" /> +<em>▲ <strong>Figure 4: The Angara loading and unloading containers in Rajin, North Korea.</strong> Source: Planet Labs, RUSI Project Sandstone.</em></p> + +<p>Since this first shipment, the Angara has regularly shuttled containers from the port of Rajin to the Russian facility at Dunai, being joined by a second cargo vessel named the Maria on 12 September and a third vessel named the Lady R on 6 October. While the vessels are still operating without transmitting on their AIS transponders, dozens of satellite images show the vessels continually loading and delivering cargo from North Korea to Russia.</p> + +<p><img src="https://i.imgur.com/K4C65G1.png" alt="image05" /> +<em>▲ <strong>Figure 5: The Maria in Dunai, 14 October 2023.</strong> Source: Planet Labs, RUSI Project Sandstone.</em></p> + +<p>Over the course of the last three months, the Angara has made at least three trips between Russia and North Korea, while the Maria made one trip in September and recently completed another round trip on 14 October. The Lady R also appears to have made a trip, visiting Rajin on 6 October.</p> + +<p>All three vessels appear to first unload containers at the northern pier in Rajin, before moving to a second berth to then load containers for delivery to Dunai. Over the course of these voyages, satellite imagery indicates the Angara and Maria have moved several hundred containers to and from North Korea.</p> + +<p><img src="https://i.imgur.com/9GtccHr.png" alt="image06" /> +<em>▲ <strong>Figure 6: The Angara and Maria at Dunai and the Angara at Rajin, North Korea.</strong> Source: Airbus Defence and Space, Planet Labs and RUSI Project Sandstone.</em></p> + +<h3 id="suspect-couriers">Suspect Couriers</h3> + +<p>While the Angara was sanctioned by the US government in May 2022, the Maria has yet to be designated. However, both vessels are owned and operated by companies with connections to Russia’s military logistics networks. For instance, the companies that own and operate the Angara – M Leasing and Marine Trans Shipping – were both sanctioned by the US soon after Russia’s 2022 invasion of Ukraine for transporting weapons on behalf of the Russian government.</p> + +<p>But the Angara’s links to Moscow’s weapons handlers stretch much further back. For several years, the Angara – which then sailed under the name Ocean Energy – was owned by the Kaalbye Group, a company accused of transporting Russian arms to Syria and South Sudan. During this time, media reports identified the Ocean Energy delivering Russian T-90 tanks from Russia to Iraq.</p> + +<p>Notably, M Leasing’s two other Ro-Ro vessels, the Adler and Ascalon, have also been sanctioned. Both of these vessels, under different identities, had reportedly shipped missiles for the S-400 surface-to-air missile system to China in 2018.</p> + +<p><img src="https://i.imgur.com/dz1zuD5.png" alt="image07" /> +<em>▲ <strong>Figure 7: Ownership and management chart for the Angara and Maria.</strong> Source: IHS Maritime, Corporate Records, OFAC and RUSI Project Sandstone.</em></p> + +<p>The Maria’s owner, on the other hand, is a subsidiary of Cyprus-based Azia Shipping Holdings; the latter also serves as its operator. Azia Shipping Holdings owns several vessels, one of which was allegedly involved in the shipment of Russian weapons to Myanmar in January 2022. Notably, several employees of the Maria’s DOC company JSC Sovfracht were indicted by the US Treasury in 2018 for allegedly operating a scheme to supply Syria with jet fuel.</p> + +<p>Meanwhile, the vessel’s Vladivostok-based technical manager, the similarly named Azia Shipping Company, was formerly part-owned by Russia’s sanctioned Oboronlogistics LLC. This Moscow-based company was allegedly created to oversee logistics for the Russian Ministry of Defence, and is the owner of the sanctioned SPARTA IV, a vessel recently engaged in moving Russian military equipment from Syria to Russia.</p> + +<p>Like both the Angara and the Maria, the Lady R has been linked to Moscow’s military transportation networks. The vessel’s owner, TransMorFlot LLC, has been sanctioned by U.S, UK and Ukraine for being involved in arms shipments on behalf of the Russian government.</p> + +<h3 id="final-destination">Final Destination</h3> + +<p>The final destination of these shipments appears to be a munitions depot in the Russia town of Tikhoretsk, approximately 200 km from the Ukrainian border.</p> + +<p><img src="https://i.imgur.com/1WUHQSt.png" alt="image08" /> +<em>▲ <strong>Figure 8: Map of Tikhoretsk ammunition depot.</strong> Source: Planet Labs, RUSI Project Sandstone.</em></p> + +<p>Beginning in mid-August 2023, high-resolution imagery shows that the ammunition depot has undergone a rapid overhaul, with excavators digging over 100 new munitions pits with earth berms designed to divert the force of a blast in case of an explosion.</p> + +<p>Recent imagery from 28 September also shows trains arriving at the facility, delivering dozens of containers of the same size and colours as those being loaded in North Korea. In these images, containers can be seen placed next to newly dug munitions pits, which are potentially being loaded with munitions boxes.</p> + +<p><img src="https://i.imgur.com/X2w1kaq.png" alt="image09" /> +<em>▲ <strong>Figure 9: Map of Tikhoretsk ammo depot and active work there.</strong> Source: Planet Labs, RUSI Project Sandstone.</em></p> + +<p>From here, North Korean weapons and munitions could be shipped to logistics depots on the border of Ukraine for distribution to frontline units.</p> + +<h3 id="tectonic-shifts">Tectonic Shifts</h3> + +<p>Having prepared for a massive conventional war with South Korea for decades, North Korea’s supplying of significant quantities of munitions to Moscow will have profound consequences for the war in Ukraine. For the Russians, a major North Korean supply line will alleviate shortages of munitions for what has proven to be an ordinance-hungry conflict and enable the Russian armed forces to feed their frontline troops as they try to repel a Ukrainian counteroffensive. Ukraine and its supporters will also have to contend with this new reality, potentially escalating their support by providing additional quantities of weapons and munitions to Ukraine’s defenders.</p> + +<p>But the impact will be felt much further than the battlefield in Ukraine. The sale of such quantities of munitions will fill the coffers of the cash-strapped regime in Pyongyang, which has traditionally used the proceeds of arms deliveries to develop its own nuclear and ballistic missile programme in violation of UN sanctions. Moreover, in addition to the pecuniary benefits, North Korea may seek other assistance from Russia in return for its support, including the provision of missile and other advanced military technologies.</p> + +<p>As a result, North Korea’s agreements with Moscow will also cause significant alarm in Japan and South Korea, countries already on the sharp end of Pyongyang’s ongoing provocations. Confronted with a strengthening alliance between North Korea and Russia, Tokyo and Seoul might explore additional avenues to offset the North Korean threat while extending further support to Ukraine’s efforts to oust Russian forces from its territory.</p> + +<p>However, Pyongyang’s decision to deliver munitions at scale once again underscores the grave threat that North Korea poses to international security, this time feeding a conflagration on European soil that has already cost the lives of tens of thousands of Ukrainians and consumed tens of billions of dollars in Western military support.</p> + +<p><img src="https://i.imgur.com/CxxXKP5.png" alt="image10" /></p> + +<hr /> + +<p><strong>James Byrne</strong> is Director of the Open-Source Intelligence and Analysis (OSIA) Research Group.</p> + +<p><strong>Joe Byrne</strong> is a Research Fellow at RUSI’s OSIA Research Group.</p> + +<p>__Gary Somervill__e is a Research Fellow at RUSI’s OSIA Research Group.</p>James Byrne, et al.Dozens of high-resolution satellite images taken in recent months reveal that Russia has likely begun shipping North Korean munitions at scale, opening a new supply route that could have profound consequences for the war in Ukraine and international security dynamics in East Asia.Israel Confronts Hamas2023-10-16T12:00:00+08:002023-10-16T12:00:00+08:00https://agorahub.github.io/pen0/hkers/israel-confronts-hamas<p><em>The legal and ethical challenges of operating in densely populated areas are going to be a tragic constant of 21st century warfare, with no easy solutions.</em></p> <excerpt /> @@ -340,7 +577,29 @@ <hr /> -<p><strong>Jack Watling</strong> is Senior Research Fellow for Land Warfare at the Royal United Services Institute. Jack works closely with the British military on the development of concepts of operation, assessments of the future operating environment, and conducts operational analysis of contemporary conflicts.</p>Jack WatlingThe legal and ethical challenges of operating in densely populated areas are going to be a tragic constant of 21st century warfare, with no easy solutions.Integrate Offence And Defence2023-10-11T12:00:00+08:002023-10-11T12:00:00+08:00https://agorahub.github.io/pen0/hkers/integrate-offence-and-defence<p><em>This article articulates pathways forward in a future operating environment dominated by stalemates and threats to national homelands.</em></p> +<p><strong>Jack Watling</strong> is Senior Research Fellow for Land Warfare at the Royal United Services Institute. Jack works closely with the British military on the development of concepts of operation, assessments of the future operating environment, and conducts operational analysis of contemporary conflicts.</p>Jack WatlingThe legal and ethical challenges of operating in densely populated areas are going to be a tragic constant of 21st century warfare, with no easy solutions.Change Or False Alarm?2023-10-13T12:00:00+08:002023-10-13T12:00:00+08:00https://agorahub.github.io/pen0/hkers/change-or-false-alarm<p><em>A potential shift in China’s approach to nuclear weapons could indicate that it is taking a page from Moscow’s book.</em></p> + +<excerpt /> + +<p>China recently released its proposal for a new global order: “Proposal of the People’s Republic of China on the Reform and Development of Global Governance”. The blueprint repeats several earlier talking points on how China aims to change the global order. The pillars of the new order lean heavily on Xi Jinping’s Global Security Initiative, Global Development Initiative, and Global Civilisation Initiative. As an unprecedently open step towards a global order that mirrors the governance of a one-party state, the proposal deserves in-depth analysis beyond the scope of this article. A significant issue examined here is China dropping its long-term No First Use of nuclear weapons policy from the proposal; this raises eyebrows as global security risks intensify with a protracted Russian war of aggression against Ukraine (where China is siding with Russia), along with China’s aggressive behaviour around Taiwan.</p> + +<p>China officially became the world’s fifth nuclear weapon-possessing state in 1964 and was then recognised under the Nuclear Non-Proliferation Treaty (NPT). For decades, China carefully advanced its nuclear arsenal to maintain its minimum deterrent strategy. However, in recent years, China has clearly abandoned this strategy, heavily increasing its count of nuclear weapons and becoming the world’s third-largest nuclear weapons power. The Pentagon has estimated that if the current trajectory continues, China could field approximately 1,500 warheads by 2035.</p> + +<p>In August 2023, at the NPT Review Conference, the Director-General of the Department of Arms Control of the Foreign Ministry of China, Sun Xiaobo, reaffirmed China’s 1964 policy “not to be the first to use nuclear weapons at any time and under any circumstances” and “not to threaten to use nuclear weapons against non-nuclear-weapon states”.</p> + +<p>Nonetheless, a month later, China’s proposal for global governance seems to have dropped this decades-old policy. Up until August 2023, China had repeatedly reaffirmed its No First Use policy from 1964 onwards, although on some occasions Beijing has stretched it to exclude other nuclear powers, especially the US. The dual pledges of No First Use and No Threatening to Use nuclear weapons have long been cornerstones of China’s nuclear strategy. The fact that China’s proposal on global governance omits these commitments – while otherwise expressing China’s positions in a detailed manner – could indicate a change in China’s position on nuclear weapons, especially because China has never previously wavered or appeared ambiguous about these commitments.</p> + +<p><strong><em><code class="highlighter-rouge">China may have learned from Moscow’s capitalisation on European fear regarding Russian nuclear weapons use</code></em></strong></p> + +<p>China’s ultimate aim in its 1964 policy on the use of nuclear arms was “to deter others from using or threatening to use” nuclear weapons against China. Could dropping this from an important policy document simply be a mistake, or is this a deliberate new shift in policy, perhaps based on Xi Jinping’s analyses of “changes not seen in a hundred years”, or influenced by Russia’s threatening rhetoric directed at NATO allies regarding nuclear weapons?</p> + +<p>While China’s proposal for global governance demands that the international community oppose the threat or use of nuclear weapons, China appears to have excluded its unilateral pledge to do so. Beyond this, China’s tacit support for Russia in its invasion of Ukraine has cemented talking points on “invisible security” and how countries’ national security should not threaten that of others. China sees this as the root cause of the war in Ukraine. In Beijing’s view, “the crisis” – China still refuses to call the war anything else – stems from a flawed, unbalanced European security architecture, where other parties’ security concerns are ignored. In this context, multiple Chinese researchers have sided with Russia. Furthermore, following Finland’s NATO accession, a number of Chinese researchers took the view that since Russia could not match NATO’s conventional deterrence, Russia had no other option but to increase its nuclear arsenal.</p> + +<p>The consequences of China abandoning its No First Use/No Threatening to Use policy are minor at most; China has in any case refused to engage in any arms-control dialogue with the US. Thus, its policy promises have often been taken with a grain of salt. Nevertheless, two immediate implications of China’s potential new approach still come to mind. First, China’s quick nuclear build-up means that the US will face two nuclear-armed powers, China and Russia, working together as its adversaries. Second, China may have learned from Moscow’s capitalisation on European fear regarding Russian nuclear weapons in order to, at a minimum, delay help for Ukraine. Similarly, triggering fear by threatening the use of nuclear weapons could rein in Japan’s and other US allies’ willingness to defend Taiwan, if the People’s Liberation Army tries to take the island by force.</p> + +<hr /> + +<p><strong>Sari Arho Havrén</strong> is a RUSI Associate Fellow based in Brussels. She specialises in China’s foreign relations, China foresight, and in great power competition. She is also a visiting scholar at the University of Helsinki.</p>Sari Arho HavrénA potential shift in China’s approach to nuclear weapons could indicate that it is taking a page from Moscow’s book.Integrate Offence And Defence2023-10-11T12:00:00+08:002023-10-11T12:00:00+08:00https://agorahub.github.io/pen0/hkers/integrate-offence-and-defence<p><em>This article articulates pathways forward in a future operating environment dominated by stalemates and threats to national homelands.</em></p> <excerpt /> @@ -420,67 +679,423 @@ <p>Moreover, the challenges faced in the Second Lebanon War, while by no means insurmountable, were harbingers of a trend that challenges manoeuvre. The defence of fortified and urban terrain by Hezbollah and the group’s adept use of anti-tank guided missiles was emulated by the Houthis in encounters such as the Battle of Aden. Another point emerging from Yemen is that defeating an adversary’s ground forces does not necessarily guarantee the immediate elimination of a well-hidden missile threat in any given sector – a process which, as pointed out by IDF Major General Yaakov Amidror, may involve months of gruelling searches of prepared hiding spots. Trends such as the growing concentration of populations in increasingly large urban nodes will only exacerbate the challenge of manoeuvre, and will create new complex terrain within which missile threats can be hidden. Moreover, even in the open, field fortifications can represent a formidable obstacle, as shown in Ukraine.</p> -<p>In a European context, one might consider the additional challenges of needing to suppress sophisticated air defence and electronic warfare systems as well as nuclear risk when assaulting adversary forces, generating fires from urban nodes like Kaliningrad in which potentially nuclear-armed capabilities like the Iskander are based. Furthermore, some launch platforms that are relevant in a European context are held at a depth which means they cannot be overrun.</p> +<p>In a European context, one might consider the additional challenges of needing to suppress sophisticated air defence and electronic warfare systems as well as nuclear risk when assaulting adversary forces, generating fires from urban nodes like Kaliningrad in which potentially nuclear-armed capabilities like the Iskander are based. Furthermore, some launch platforms that are relevant in a European context are held at a depth which means they cannot be overrun.</p> + +<p>A major challenge with which any manoeuvrist vision of warfare must contend, then, is that it lacks an explanation of how the conditions for the collapse of an opponent can be set under the contemporary fires-centric context. It is just as likely that offensive ground actions must necessitate the sort of protracted fighting and possibly sustained occupation of hostile territory which most democratic states would wish to avoid. Moreover, as illustrated by the ongoing war in Ukraine, ground manoeuvre exacts a cost in life that many states will struggle to pay. Democracies are often relatively casualty-averse, which will be a consideration here – especially for states like Israel which rely on national service to force generate.</p> + +<p>However, the fire and defend school faces its own challenges – specifically, the difficulty of sustaining a battle of attrition. Air defence interceptors are generally much more expensive than most of the capabilities that they must intercept, and the emergence of new forms of air threat such as comparatively cheap UAVs only compounds this. Bottlenecks in areas such as electronics will only exacerbate the issue if they persist. The interceptor shortfalls faced by Ukraine – a country that had Europe’s largest air defence arsenal at the war’s outset, augmented with Western systems – acutely illustrates this. Most opponents will not have as many cruise and ballistic missiles as Russia, but they can certainly generate a weight of fire with UAVs, multiple-launch rock systems and a limited number of cruise and ballistic missiles. Nor can it be assumed that this threat will be thinned out at the outset of a conflict – opponents have a range of palliative options, from underground shelters and hiding among the population to the employment of proliferating air defence systems and electronic warfare assets. A passive defence carries the risk of saturation by sheer weight of fire.</p> + +<p>Countries will increasingly have to make a choice between developing forces to achieve decision, and forces that give them the endurance to last in what may well be indecisive wars. This will require adjudicating between requirements to defend the homeland and protect manoeuvre elements, which will be politically challenging. It will also require the careful balancing of imperatives between different elements of individual services, which will adhere to either manoeuvre or endurance as national ideals.</p> + +<p>Ultimately, neither model provides a complete solution. It would be a mistake for any modern state to plan on decisive manoeuvre – history shows that wars between peers are often protracted affairs. However, a reactive approach based on endurance may be both financially difficult and politically intolerable. While it is often presumed that countries can simultaneously defend their homelands and achieve strategic effects at the front if they invest the right resources into doing so, in practice they will often face trade-offs between these important but competing imperatives. The core question they will face, then, is whether to aim for shortening the wars they fight or adapting their force structures to the reality of protracted missile warfare. Ultimately, an effective solution will need to involve a synthesis of the two schools – individually, each provides only imperfect answers under contemporary operating conditions.</p> + +<hr /> + +<p><strong>Sidharth Kaushal</strong> is the Research Fellow of Sea Power at RUSI. His research covers the impact of technology on maritime doctrine in the 21st century and the role of sea power in a state’s grand strategy.</p> + +<p><strong>Eran Ortal</strong> is the current commander of The Dado Center for Interdisciplinary Military Studies. Ortal is also the founder of the Israel Defense Force Dado Center journal, dedicated to Operational art and military transformation.</p> + +<p><strong>Ran Kochav</strong> is an Israel Defense Forces brigadier general who has served as the commander of the Israeli Air and Missile Defense Forces. General Kochav has held a number of command roles within the IDF, including as the commander of the 66th battalion the divisional anti-aircraft officer of the 91st Division before the 2006 Lebanon war and head of the special forces section in the Air Group of IAF (2005-2006).</p>Sidharth Kaushal, et al.This article examines the points of divergence between two major schools of thought within the Israel Defense Forces regarding how best to defend the state against evolving threats.Israel And The Palestinians2023-10-09T12:00:00+08:002023-10-09T12:00:00+08:00https://agorahub.github.io/pen0/hkers/israel-and-the-palestinians<p><em>Nothing will be the same after the weekend’s carnage in Israel. The Palestinian question is back on the agenda, and with a vengeance. So will be Israel’s response.</em></p> + +<excerpt /> + +<p>On Saturday, 7 October, Hamas launched an unprecedented surprise attack on Israel. Under a barrage of thousands of rockets fired from Gaza, hundreds of Hamas fighters managed to cross the heavily guarded border into Israel. They were able to briefly take over parts of Israeli towns – most notably Sderot – and military positions. An as yet unknown number of Israeli civilians and military personnel, possibly in the dozens, were taken hostage and transferred to Gaza; by Monday morning more than 700 Israelis and more than 400 Palestinians had been killed. Hours after the beginning of the attack, Israeli Prime Minister Benjamin Netanyahu declared: “Citizens of Israel, we are at war. Not an operation, not a round [of fighting,] at war.”</p> + +<p>The attack must have been planned for months. Even as chaos of the Saturday morning assault is still unfolding, Hamas social media outlets have published apparently professionally produced footage of militants using paragliders to fly into Israel, and later of drones dropping grenades onto tanks and positions of the Israeli Defense Forces (IDF). The date for the launch of the attack also does not appear to be accidental coming as Israelis marked the Jewish holiday of Shemini Atzeret. It also came exactly 50 years and a day after Egypt and Syria launched the Yom Kippur War, also known as the October War, against Israel on 6 October 1973. While the eventual scale of this current conflagration is still unclear, 7 October seems certain to become another infamous turning point in the Palestinian-Israeli conflict, and possibly for the wider geopolitics of the Middle East.</p> + +<p>The violence unleashed by Hamas this weekend will continue for weeks to come, and its full implications will take months to become apparent. An escalation of this scale was not on anyone’s radar – including Israeli intelligence – so it is prudent to be cautious with definitive conclusions about what this will mean. But there are a few early assumptions that can be made, including with regards to the conflict between Israel and the Palestinians, the ongoing speculations about a potential agreement between Israel and Saudi Arabia to normalise relations and the trend towards de-escalation and rapprochement that has prevailed in the region for the past three years.</p> + +<h3 id="a-new-phase-of-palestinian-israeli-conflict">A New Phase of Palestinian-Israeli Conflict</h3> + +<p>Hamas’ attack on Saturday morning was unprecedented in its sophistication and ferocity, and Israel’s response will likely far exceed any previous operations carried out by the IDF in Gaza over the past two decades. This is not simply a continuation, or even an intensification, of the already high levels of tensions and violence between Israel and Palestinian factions in Gaza and – especially – the West Bank over the past two years. This war opens a new chapter in the Palestinian-Israeli conflict. It is too early to compare it to the Intifadas of the late 1980s and early 2000s, but it certainly seems to have the potential to be as significant.</p> + +<p><strong><em><code class="highlighter-rouge">Once the fighting eventually settles, serious questions will be asked about how a Hamas surprise attack of this scale could have been possible, leaving Prime Minister Netanyahu and his government vulnerable</code></em></strong></p> + +<p>One key question in this regard is whether the violence will primarily remain contained in and around Gaza, or whether it will spread to the West Bank (thus far, there have been several deadly clashes, but nothing of the scale of what has been happening in Gaza and southern Israel). Moreover, it is also still unclear whether the Lebanese Hezbollah will fully intervene; thus far it has only rhetorically expressed solidarity with Hamas and launched seemingly intentionally limited drone attacks on the disputed Shebaa Farms in the Golan Heights, resulting in limited Israeli artillery strikes into southern Lebanon. In short, an expansion of the war is not inevitable, but certainly a possibility.</p> + +<p>In Israel, this weekend’s attack and the war that now follows will shape politics going forward. Initially, there is likely to be a rallying-around-the-flag effect with the deep divisions that have characterised Israeli domestic politics for the past year fading into the background. However, once the fighting eventually settles, serious questions will be asked about how a Hamas surprise attack of this scale could have been possible, leaving Prime Minister Netanyahu and his government vulnerable. In fact, while he will probably remain in office for as long as this war takes, Netanyahu’s political career may well be finished; upended not by his legal troubles, but by having what looks to be one of the most catastrophic breakdowns of security in Israel happen on his watch. He may well have to follow in the footsteps of Golda Meir and Menachem Begin. Both built reputations as staunch security-first prime ministers but were ousted after major perceived security and military failures – the Yom Kippur War and the botched Lebanon invasion in the early 1980s, respectively. At the same time, the brutality of the attack, and especially Hamas’ killing and kidnapping of many civilians, including women and children, could well bolster the positions of those with the most uncompromising stands vis-à-vis the Palestinians, including Netanyahu’s right-wing coalition allies.</p> + +<p>On the Palestinian side, meanwhile, the attack has once again exposed the ineffectiveness and fecklessness of the Palestinian Authority (PA) under aging President Mahmoud Abbas. If the PA has already struggled – and woefully failed – to assert itself meaningfully as the leadership of the Palestinian people in recent years, especially in the West Bank, this weekend’s attack has exposed it as little more than a powerless bystander. The debate about the future of the Palestinian leadership will continue until Abbas vacates his position, but for the moment all the initiative clearly belongs to Hamas and other militant factions.</p> + +<p>The perhaps most important early takeaway from this weekend – and certainly one that the UK and other Western governments concerned about stability in the Middle East must heed – is that the Palestinian-Israeli conflict still matters and cannot be relegated to the status of a permanent but ultimately manageable feature of regional politics as has arguably been the case in recent years. Hamas’ attack and the war that now rages is primarily about Israel and the Palestinian territories. This escalation of violence will make finding a way to make progress towards a sustainable resolution of the Palestinian-Israeli conflict even more difficult. But it also highlights that ignoring it is something no one can afford – least of all the Israelis and Palestinians, but also not policymakers in London, Washington or European capitals.</p> + +<p>Nevertheless, this new phase in the Palestinian-Israeli conflict is also likely to have repercussions for wider regional dynamics.</p> + +<h3 id="a-setback-for-arab-israeli-normalisation">A Setback for Arab-Israeli Normalisation</h3> + +<p>Much early commentary in the immediate aftermath of Hamas’ attack has focused on what this means for the prospects of further normalisation of relations agreements between Israel and Arab states, especially between Israel and Saudi Arabia. Some have even suggested that the attack was Hamas’ – and by extension its supporter Iran’s – way to sabotage Israeli-Saudi normalisation talks. Although statements by leaders of Hezbollah and Palestinian Islamic Jihad warning Arab states not to engage with Israel obviously fuel such analysis, it is far too simplistic. It risks overlooking the fact that the Palestinian-Israeli conflict, more so than regional politics, is the root cause of the violence, as noted above.</p> + +<p><strong><em><code class="highlighter-rouge">Hamas’ attack this weekend has dramatically highlighted the fundamental flaw in the de-escalation and rapprochement narrative about dynamics in the Middle East that has taken hold in many Western capitals over the past couple of years</code></em></strong></p> + +<p>Still, this weekend’s events will have an impact. In the long-term, Saudi-Israeli normalisation remains likely – the shared strategic interests that have driven the talks to date (and the engagement between the Gulf Arab states and Israel, more generally) will remain unchanged. That said, the obstacles for a Saudi-Israeli agreement are now greater than they were a week ago. Whether or not Netanyahu’s government would be willing and able to make the necessary concessions to the Palestinians, which Saudi Arabia has consistently insisted it needs in order to officially recognise Israel, was always one of the main questions. In light of Hamas’ attack, any Israeli government – consisting of Netanyahu’s and his right-wing allies or of any other political parties – will find it extraordinarily difficult to make any meaningful concessions to the Palestinians at all in the coming months (even if these will be needed in the long-run).</p> + +<p>Saudi Arabia itself has removed any doubt regarding its stance on the matter. It called for “an immediate halt to the escalation between the two sides, the protection of civilians, and restraint.” But its statement, published on Saturday, also noted that the Kingdom had repeatedly warned of “the dangers of the explosion of the situation as a result of the continued occupation, the deprivation of the Palestinian people of their legitimate rights,” and called for a “credible peace process that leads to the two-state solution.”</p> + +<p>Across the region, including in the countries that have already normalised relations with Israel, governments and populations will have been shocked by Hamas’ violence against Israeli civilians, but they will also be devastated and outraged by the violence of the IDF against Palestinian civilians over the coming days and weeks. Throughout it all, the Arab-Israeli conflict – to the extent that it is separate from the Palestinian-Israeli conflict – will live on too.</p> + +<h3 id="a-blow-to-regional-de-escalation">A Blow to Regional De-escalation</h3> + +<p>Finally, Hamas’ attack this weekend has dramatically highlighted the fundamental flaw in the de-escalation and rapprochement narrative about dynamics in the Middle East that has taken hold in many Western capitals over the past couple of years. The end of the Gulf Crisis between Qatar and its neighbours, the re-engagement between Turkey and Saudi Arabia and the UAE, the rapprochement between Iran and the Gulf Arab states (most spectacularly illustrated by the agreement to resume diplomatic relations between Saudi Arabia and Iran, overseen by China, in March this year), and the reduction in at least the most egregious violence in the conflicts in Libya, Syria and Yemen had fuelled a sense that the Middle East was settling into a more stable equilibrium. To be clear, these efforts at de-escalation, pursued by almost all regional governments and some non-state actors, were real and commendable. However, they also routinely represented agreements to disagree and turn to other matters (especially to focus on economic development objectives), rather than actual resolution of the strategic, political and ideological differences that led to the tensions and conflicts – and with them regional instability – in the first place. The unprecedented and unexpected re-eruption of the Palestinian-Israeli conflict this weekend should serve as a reminder of the destructive force suppressed and unaddressed conflicts across the region can have.</p> + +<hr /> + +<p><strong>Tobias Borck</strong> is Senior Research Fellow for Middle East Security Studies at the International Security Studies department at RUSI. His main research interests include the international relations of the Middle East, and specifically the foreign, defence and security policies of Arab states, particularly the Gulf monarchies, as well as European – especially German and British – engagement with the Middle East.</p>Tobias BorckNothing will be the same after the weekend’s carnage in Israel. The Palestinian question is back on the agenda, and with a vengeance. So will be Israel’s response.In Chip Race2023-10-06T12:00:00+08:002023-10-06T12:00:00+08:00https://agorahub.github.io/pen0/hkers/in-chip-race<p><em>With a new smartphone and new chip, Huawei has returned to the 5G smartphone business in defiance of U.S. sanctions. This report assesses the implications from this latest development for China’s AI industry and the future of semiconductor export controls.</em></p> + +<excerpt /> + +<h3 id="introduction">Introduction</h3> + +<p>On August 29, Huawei launched its new Mate60 Pro smartphone. Normally, smartphone launches do not attract attention in U.S. national security circles. However, this one did, and rightfully so. The Mate60 Pro dramatically marked Huawei’s return to the 5G smartphone business after years of ever-tightening U.S. Department of Commerce export controls effectively cut Huawei off from 5G technology. How? By restricting Huawei’s access to U.S. semiconductor technology, especially chips, chip design software, and chipmaking equipment.</p> + +<p>The mobile application processor chip at the heart of the new Huawei phone has an integrated 5G modem. The chip was designed by Huawei’s HiSilicon subsidiary and manufactured by a Chinese company, Semiconductor Manufacturing International Corporation (SMIC). In March 2023, China’s government reportedly made Huawei and SMIC, along with two leading Chinese semiconductor equipment companies, Advanced Micro-Fabrication Equipment (AMEC) and Naura, the heart of a new government initiative for semiconductor self-reliance. Huawei is effectively the leader of the Chinese government-backed team, with a privileged position to influence semiconductor policymaking.</p> + +<p>SMIC manufactured the new chips at the advanced 7-nanometer (nm) technology node (N+2 in SMIC process naming conventions), raising questions in U.S. national security circles about whether the effectiveness of U.S. technology export controls on Huawei — and perhaps China more broadly — is coming to an end.</p> + +<p>That was certainly the message that China wanted to send. Chinese state-run media outlets were exuberant, arguing in editorials that Huawei’s new phone “shows how ineffective Washington’s tech sanctions have been” and that “extreme suppression by the US has failed.” The new phone was announced during Secretary of Commerce Gina Raimondo’s visit to China, which placed a double emphasis on the phone’s significance toward U.S. export controls.</p> + +<p>However, there is a big difference between claiming that Chinese technological progress proves the current approach to export controls is not achieving all of its desired effects and claiming that Chinese technological progress proves that those same export controls are strategically useless. In principle, either might or might not be true, but the former does not inherently imply the latter.</p> + +<p>In the case of the 7 nm chip powering the new Mate60 smartphone, this is a legitimate breakthrough on China’s part, not in terms of reaching the global state of the art, but in continuing to make technological progress despite U.S. and allied restrictions. The Trump administration’s entity list-based export controls on Huawei and its primary chip manufacturer SMIC had explicitly sought to prevent Huawei and SMIC from designing and manufacturing chips more advanced than 10 nm and from producing 5G chips. The same is true of the Biden administration’s October 7, 2022, semiconductor export control policy, which restricted exports to China of, among other things, advanced semiconductor manufacturing equipment.</p> + +<p>While the Huawei phone is not itself a major national security issue for the United States, what the chip inside signals about the state of the Chinese semiconductor industry absolutely is. The 7 nm chips at the heart of the new Huawei phone provide many data points regarding the current and likely future state of the Chinese semiconductor industry. In short, China is still not at the global state of the art for semiconductor manufacturing, but the gap between the peak technological level of China and that of the rest of the world has shrunk, even despite the many hurdles that the U.S. government has attempted to place in SMIC’s way.</p> + +<p>These advanced chip production capabilities will inevitably be made available to the Chinese military if they have not been already. Thus, the Huawei and SMIC breakthrough raises many tough questions about the efficacy of the current U.S. approach. In fairness to the Biden administration, however, their desired approach — a multilateral one — has only just begun.</p> + +<p>This paper will analyze the strategic implications of the Huawei Mate60 Pro and its SMIC 7 nm chip in the context of U.S. and allied export controls on the two companies and on China more generally. It concludes by presenting a list of tough questions where U.S. and allied country policymakers urgently need answers.</p> + +<h3 id="background-on-the-trump-administration-export-controls-on-huawei-and-smic">Background on the Trump Administration Export Controls on Huawei and SMIC</h3> + +<p>In Washington, Huawei is mostly known for its telecommunications infrastructure business, but the company was at the forefront of China’s remarkable rise in the smartphone, computer, and artificial intelligence (AI) semiconductor chip design industry during the 2010s. In late 2018, there were only two companies in the world selling smartphones with 7 nm mobile application processors, Apple and Huawei, both of which designed the chips in house and outsourced manufacturing to the Taiwan Semiconductor Manufacturing Company (TSMC).</p> + +<p>The original stated intention of adding Huawei to the entity list in May 2019 was to punish the company for selling technology to Iran in violation of U.S. sanctions, and especially for repeatedly lying to U.S. officials, destroying evidence, and otherwise trying to obstruct justice. The U.S. government also expressed a broader goal of preventing the company from using U.S. technology in ways that contradicted U.S. national security interests. The national security issue was initially focused on Huawei’s business in 5G telecommunications infrastructure, not smartphones. However, the national security focus grew to include ensuring that Huawei did not use U.S. technology to assist it in evading the reach of U.S. export controls, which thereafter led to a more generalized focus on Huawei’s activities related to chip design and chip manufacturing, including for base stations and smartphones.</p> + +<p>As described in a previous CSIS paper, the 2019 U.S. export controls on Huawei — as well as the earlier April 2018 export controls on Chinese telecom firm ZTE — were a landmark in the Chinese national security policy community. China’s pursuit of semiconductor self-sufficiency had already been a top Chinese industrial policy priority from the Made in China 2025 policy of 2015 and even earlier with China’s establishment of its “Big Fund” in 2014. However, after 2018, semiconductor self-sufficiency became a top Chinese national security priority, not just an industrial policy one. Semiconductor self-sufficiency received more than $100 billion in Chinese government financial support and regularly attracted the personal attention of Chinese Communist Party general secretary Xi Jinping.</p> + +<p>De-Americanization of the supply chain became a priority not just for Huawei and the Chinese government, but also for many leading Chinese chipmakers. For example, in May 2021, Nikkei Asia reported that Yangtze Memory Technologies Corporation (YMTC), one of China’s most advanced semiconductor manufacturers, had already been engaged in a full-blown de-Americanization campaign involving the full-time work of more than 800 staff for two years. This included the establishment of multiple major partnerships with domestic Chinese equipment producers. Industry sources told CSIS that YMTC also conducted a close examination of the foreign sources within the supply chain of U.S. equipment manufacturers and launched an effort to begin direct purchases from the foreign suppliers of U.S. firms.</p> + +<p>In May 2020, the Department of Commerce concluded that the 2019 Huawei entity listing had an effect but failed to achieve its goals: U.S. chip manufacturers such as Intel, Qualcomm, and Xilinx continued selling many types of advanced chips directly to Huawei, as many of their chips were not produced in the United States and therefore were not subject to the export controls as written at the time. More importantly, however, Huawei was successfully designing replacement chips (using U.S. chip design software) and contracting with chip foundries outside of China to manufacture them (in facilities that relied heavily on U.S. chip manufacturing equipment). Industry sources told CSIS that U.S. companies were losing revenue not as a direct result of no longer selling to Huawei, but rather because Huawei was replacing U.S. chips with their own self-designed versions.</p> + +<p>Then secretary of commerce Wilbur Ross put it this way: “Despite the Entity List actions the Department took last year, Huawei and its foreign affiliates have stepped-up efforts to undermine these national security-based restrictions through an indigenization effort. However, that effort is still dependent on U.S. technologies.”</p> + +<p>The May 2020 updated export controls therefore applied a revised version of the Foreign Direct Product Rule (FDPR) to prevent foreign entities from assisting Huawei and its chip design subsidiary HiSilicon in designing or manufacturing chips that were a “direct product” of U.S. technology. Overnight, Huawei’s access to semiconductors shrank drastically to only three sources: the less technologically advanced subset of chips for which U.S. licenses were still being approved, the vast set of U.S. and foreign chips that were manufactured or assembled outside of the United States and were therefore not subject to the U.S. rules, and the enormous stockpile of critical chips that Huawei had amassed by making purchases when they were still legal. The Chinese chip manufacturers that were still willing to work with Huawei generally had dramatically inferior technology. Even the initial application of the FDPR in May 2020 did not affect chips produced outside of the United States, with the exception of those designed by HiSilicon. This allowed Huawei to engage in a massive stockpiling effort.</p> + +<p>Then, the Trump administration decided to finally cut off Huawei’s access to chips and updated the FDPR in August of 2020 to apply not only to Huawei and HiSilicon’s own chips but to all chips produced using U.S. technology that was being sold to Huawei.</p> + +<p>Despite Huawei’s stockpiling, the May and August 2020 controls eventually did serious damage. Huawei’s worldwide revenue declined 28.5 percent between 2020 and 2021. The damage was especially severe in Huawei’s smartphones business, which required a much higher volume of advanced chips and was essentially cut off from 5G technology. Early in 2023, Huawei told its investors that it optimistically hoped to sell a mere 30 million phones that year, an 88 percent decline from the 240 million it sold in 2019. Huawei had to take dramatic steps, such as selling off the majority of its consumer smartphone business to a new spinoff known as Honor, as well as its Intel-based X86 server business, which is now known as “XFusion.” These moves allowed Huawei to conserve its massive chip stockpile for more strategic parts of its business such as network infrastructure and premium smartphone products.</p> + +<p>The Mate60 Pro marks Huawei’s return to the 5G smartphone business and thereby proves that the effects of the Trump-era controls are rapidly coming to an end as Huawei redesigns its supply chain to rely more on its HiSilicon subsidiary for chip design and more on SMIC (as opposed to TSMC of Taiwan) for manufacturing. Huawei’s revised sales projections for 2023 suggest that it expects to sell roughly 40 million smartphones in 2023, of which roughly half will use the new 7 nm chips. Industry analysts with ties to Huawei’s supply chain report that Huawei expects to sell 60 million smartphones in 2024, of which most or all will use Huawei-designed, SMIC-manufactured mobile application processors with integrated 5G modems. The Mate60 Pro’s memory chips are manufactured by SK Hynix of South Korea. SK Hynix has stated that it stopped doing business with Huawei after the introduction of U.S. sanctions and that it is investigating how Huawei came to use its chips. Though selling 60 million smartphones would still be a significant decrease from Huawei’s 2019 peak, it likely signals the start of a comeback for the company.</p> + +<p>The sophistication of the Huawei chip from a design perspective — it is at least equal to and often better than the best Western-designed smartphone chips of the 7 nm era — indicates that there has been no significant erosion in HiSilicon’s design excellence. Moreover, Huawei’s integration of the 5G modem onto the same silicon die as the mobile application processor brings many technological performance benefits. Huawei has achieved this three years before Apple currently expects to do so. Radio-frequency engineering, the critical technology involved in developing modems, is the technical core of Huawei’s business, and industry sources told CSIS that Huawei is far ahead of most companies in this space.</p> + +<p>While this supply chain is still critically dependent upon U.S. technology, some of the pre-October 2022 export controls and entity list restrictions on Huawei’s suppliers were not especially well designed for a goal of blocking SMIC from producing 7 nm chips, despite that being their explicit goal. For example, the entity list license review policy for SMIC established in December 2020 states that license applications to export to SMIC will be reviewed under a policy of “presumption of denial for items uniquely required for production of semiconductors at advanced technology nodes (10 nanometers and below, including extreme ultraviolet technology); Case by case for all other items.”</p> + +<p>The problem with this standard is the “uniquely required” phrase. This is both vague and a poor fit for the reality of semiconductor manufacturing. Nearly all semiconductor manufacturing equipment that can be used to produce 10 nm and below chips can also be used to produce less advanced 14 nm and above chips and vice versa. This is known as “capex recycling” by the semiconductor industry, and industry sources told CSIS that equipment reuse rates between these nodes are sometimes higher than 90 percent. Furthermore, the rules only applied to “U.S. origin items and technology” which did not include a major portion of semiconductor capital equipment produced by U.S. firms outside of the United States in locations such as Singapore and Malaysia. In some cases, the companies did not even need to apply for a license, as their equipment was not technically U.S. origin and was therefore not even subject to the rules.</p> + +<p>The companies applying for export licenses simply stated this truth in their export license applications, at which point the Department of Commerce frequently approved them. Department of Commerce license application reviewers are (understandably) trained to follow the letter of the law, even if that law’s text is a poor fit for what department leadership describes as the goal of that law. According to a Reuters analysis of Department of Commerce documents, “113 export licenses worth $61 billion were approved for suppliers to ship products to Huawei (HWT.UL) while another 188 licenses valued at nearly $42 billion were greenlighted for Semiconductor Manufacturing International Corp (SMIC) (0.981.HK)” between November 2020 and April 2021. However, industry sources told CSIS that nearly all applications for export licenses to SMIC’s most advanced facilities were typically denied after August 2021.</p> + +<p>Thus, almost the only types of sales that the December 2020 SMIC entity listing definitively blocked were for the technology that it specifically stated would be prohibited, namely extreme ultraviolet (EUV) lithography equipment, which United States companies do not principally supply. Thus, blocking EUV sales required a policy change by the Dutch government since the sole supplier of complete EUV lithography machines is a Dutch company, ASML. The Trump administration reportedly reached an informal agreement with the Dutch government in early 2020. According to a later published Dutch government document, the Dutch Ministry of Defence was a strong supporter of limiting EUV exports to China at the time.</p> + +<p>Industry sources told CSIS that, at the time, ASML was poised to ship EUV tools to China and that SMIC was planning to work with key research labs in Europe such as the Interuniversity Microelectronics Centre (IMEC) to help develop their EUV-based manufacturing process.</p> + +<p>Blocking China from acquiring EUV technology has complicated China’s path to producing chips at technology nodes more advanced than 7 nm. However, it actually did not block SMIC from legally acquiring all the equipment required to manufacture 7 nm chips, since much of the advanced deposition, etching, inspection, and metrology equipment was not blocked from purchase. Moreover, advanced deep ultraviolet (DUV) lithography equipment can be used as an alternative to EUV for the production of 7 nm chips.</p> + +<p>The clearest proof of this is the fact that SMIC was already producing and selling 7 nm chips no later than July 2022 and potentially as early as July 2021, despite having no EUV machines. TSMC, the Taiwanese semiconductor manufacturing giant, achieved 7 nm mass production by 2018 without using EUV technology. Adopting EUV, however, brings benefits in production reliability, speed, scale, and therefore economic competitiveness.</p> + +<p>SMIC’s initial 7 nm chips (using SMIC’s N+1 process) were specialized chips for cryptocurrency mining. Such chips are less complicated to manufacture than a smartphone’s application processor due to their lack of dense static random-access (SRAM) memory. For SMIC, the barrier to making more complex 7 nm chips in 2021 was a need for improved operational experience and skill in using the equipment it already had to improve its 7 nm production process and then reliably operate it at scale, not necessarily a need for additional equipment.</p> + +<p>The Huawei chip (using SMIC’s N+2 process) proves that SMIC’s skill in manufacturing at the 7 nm node has advanced significantly since July 2022, despite the Biden administration’s new semiconductor export control architecture that was launched on October 7, 2022. It is worth noting, however, that SMIC’s work on N+2 has been underway at least since early 2020. Thus, much of the relevant development work took place long before October 7. Industry sources told CSIS that, both before and after October 7, SMIC was the beneficiary of significant foreign technical advice, though after October 7, this advice was limited to non-U.S. persons.</p> + +<h3 id="huawei-mate60-pro-and-smic-7-nm-chip-implications-for-biden-era-export-controls">Huawei Mate60 Pro and SMIC 7 nm Chip Implications for Biden-Era Export Controls</h3> + +<p>The Biden administration’s October 7 export controls doubled down on the Trump administration’s attempt to restrict the export of U.S. advanced semiconductor manufacturing equipment to China. However, the Biden administration went significantly further in an effort to not only restrict the pace of China’s technological progress but also to, as much as possible, actively degrade the current state of the art back to a pre-14 nm manufacturing level.</p> + +<p>The policy also went beyond mere entity listings and put blanket restrictions on all of China that sought to, in some instances, cut off SMIC and other advanced Chinese chipmakers from the supply of U.S. equipment, spare parts, software updates, components, maintenance, and even expert advisory services. The goal was to force existing Chinese chip manufacturers to shut down or reconfigure their advanced product lines to focus on legacy technologies. SMIC is the most advanced logic chip foundry in China, so it was absolutely a target of this policy.</p> + +<p>Technology degrading did indeed happen in the case of YMTC, which was forced to abandon — perhaps only temporarily — plans for a 232-layer NAND flash memory product. However, the Huawei Mate60 Pro demonstrates that SMIC’s peak manufacturing technological capability has not only not been degraded, but it has advanced.</p> + +<p>For the Biden administration, the Mate60 Pro launch is an important data point that raises legitimate questions regarding the key assumptions underlying their signature semiconductor export control policy. Most obviously, this development suggests that the October 7 export control policy, and especially the recently updated export control policies of the Japanese and Dutch governments, were needed earlier to have a realistic opportunity to achieve all their intended effects. However, it also shows one of the key mechanisms of the policy — end-use restrictions on advanced semiconductor manufacturing equipment — is not working as intended and will require an update to close existing loopholes.</p> + +<p>Industry experts consistently told CSIS that no combination of Chinese semiconductor manufacturing equipment companies can produce even 10 percent of the diverse types of advanced equipment required to operate a 7 nm chip foundry. In fact, there is no 7 nm fab in the world that does not rely upon controlled U.S. technology, so it is quite clear that SMIC is using U.S. technology — machines, components, spare parts, and materials — in producing these chips for Huawei.</p> + +<p>It is also highly likely that Huawei designed these chips using software tools from U.S. electronic design automation (EDA) companies. Huawei only announced in March 2023 that it had finally made a breakthrough on 14 nm software tools after years of work. These claims have yet to be verified externally. The idea that Huawei had completed development of its more advanced 7 nm EDA tools in time to design the core processors for a phone that launched in September is not consistent with typical industry chip design or EDA tool development timelines.</p> + +<p>The companies that do have mature EDA software available for designing 7 nm chips are all American. Prior to Huawei’s entity listing, Huawei was legally allowed to license this software from the companies and did so. That was how Huawei designed its first 7 nm chip back in 2018. However, the U.S. providers of EDA software have been prohibited from renewing Huawei’s software licenses or providing software updates since 2020. Industry officials told CSIS that the Huawei chip was most likely designed with a pirated version of U.S. EDA tools. Chinese software piracy is a well-known problem in the EDA industry.</p> + +<p>Thus, the fact that Huawei and SMIC used U.S. technology is not controversial. It is clearly the case. Determining whether Huawei and SMIC’s use of U.S. technology involved violations of U.S. law — either by those companies, by their Chinese suppliers, or by the U.S. companies that produce the technology — is not quite as obvious. However, there are many suspicious circumstances that deserve immediate inquiry. The following sections of this paper will detail the regulatory mechanisms by which the October 7 export controls were intended to address the gaps in the Trump administration policy and also assess the questions that U.S. policymakers should be asking as they consider updated controls.</p> + +<h3 id="analysis-of-existing-us-regulatory-mechanisms-to-prevent-7-nm-chip-fabrication">Analysis of Existing U.S. Regulatory Mechanisms to Prevent 7 nm Chip Fabrication</h3> + +<p>The Trump administration took three major actions in the semiconductor sector. First, it placed entity list restrictions on hundreds of Chinese companies, including ZTE (later removed), Fujian Jinhua, Huawei, and SMIC. Second, the Trump administration adjusted the scope and application of the FDPR. Third, it persuaded the Dutch government to restrict sales of EUV machines to China as a whole based on an informal agreement to deny a license for technology that was already controlled on a multilateral basis through the Wassenaar Arrangement control list.</p> + +<p>The Biden administration did not reverse or weaken any Trump-era semiconductor trade restrictions and added to them significantly by adopting new restrictions that applied to China as a whole. Most importantly, the Biden administration’s October 7, 2022, policy was focused on restricting China’s access to advanced chips for AI development, but that policy significantly expanded export regulations related to semiconductor manufacturing equipment in order to prevent China from domestically producing alternatives to the advanced AI chips that the United States no longer allowed exporting.</p> + +<p>The policy’s chip equipment restrictions were split into three broad categories:</p> + +<ul> + <li> + <p><strong>Blanket prohibition of exports of a narrow set of advanced deposition equipment to all of China, as well as all parts and accessories related to that equipment:</strong> These restrictions took the form of creating a new Export Control Classification Number (ECCN) 3B090, which was restricted under a Regional Security (“RS-China”) justification.</p> + </li> + <li> + <p><strong>End-use prohibition of exports intended for use in advanced node semiconductor manufacturing or where the manufacturing node is not clear:</strong> The second major restriction was the creation of a new license restriction based on end use with a presumption of denial, by adding section 744.23 to the Export Administration Regulations (EAR). This effectively imposed a blanket ban on exports to China in cases where the exporter in question has “knowledge” that the exported goods will be used for a restricted end use. The restricted end uses in question are production of advanced node semiconductors — defined as logic chips at or below 16 nm, DRAM memory chips at or below 18 nm, and NAND storage at or above 128 layers — or supporting Chinese production of any semiconductor manufacturing equipment, components, or parts. An additional near-blanket prohibition exists for selling to any facility in which the seller knows that the facility produces chips but does not know whether or not the chips produced at that facility are at an advanced technology node.</p> + </li> + <li> + <p>To ensure that shipments of U.S. technology for restricted goods (or even transfers of relevant subject matter expertise) would not occur through foreign subsidiaries, joint ventures, or partnerships, the regulations modified section 744.6 of the EAR, the so-called “U.S. persons rule,” which dramatically expanded licensing requirements. It also applies an updated FDPR provision, section 742.6(a)(6), to prevent foreign firms from using U.S. technology to assist China in pursuing the end uses specified in section 744.23. These restrictions apply on a China-wide basis, though only for restricted end uses and end users.</p> + </li> + <li> + <p>The broader set of equipment and components restricted by section 744.23 includes all items subject to the EAR, of which ECCNs 3B001, 3B002, 3B090, 3B611, 3B991, and 3B992 directly pertain to semiconductor manufacturing equipment and components. This equipment is still generally allowed to be sold to China in cases where two criteria are met. First, the exporter must not have specific knowledge that the buyer intends to use the equipment for advanced node manufacturing. Second, the equipment must not be destined for end use at a facility in which the equipment provider does not know whether or not it is engaged in advanced node manufacturing. For the newly restricted types of chip equipment covered under 3B991 and 3B992, the exporter does not even have to apply for a license to export the goods to China in cases where the exporter has no specific knowledge that they are going toward a prohibited end use or end user.</p> + </li> + <li> + <p><strong>Blanket export ban to YMTC, China’s most advanced NAND company:</strong> Two months later, in December 2022, the U.S. government also added YMTC to the entity list under a blanket presumption of denial for exporting “all items subject to the EAR.” Any purchase of semiconductor manufacturing equipment or components by YMTC after December 2022 would have been in some way illegal under U.S. law, unless the U.S. government had approved a license.</p> + </li> +</ul> + +<p>The Biden administration adopted these new rules in an attempt to degrade the peak technology level of the Chinese chipmaking sector through the loss of access to spare parts, maintenance, and advisory services. It would, for example, be illegal for any U.S. company to provide SMIC with spare parts or new equipment if the U.S. company had knowledge that SMIC was using the equipment to support its 7 nm manufacturing line. In practice, this means that all shipments to SMIC’s SN1 and SN2 fab facilities in Shanghai are prohibited. For shipments to other SMIC facilities, the October 7 policy instructs companies to follow official “Know Your Customer” guidance and best practices, including obtaining a signed end-use statement from the customer and also evaluating “all other available information to determine whether a license is required pursuant to § [section] 744.23.”</p> + +<p>Overall, this is a significantly stricter due diligence requirement than is typical for Department of Commerce export controls, but it still raises the question of just how much leverage the U.S. government will have to punish companies that use already-installed equipment for prohibited end uses. It also raises the question of whether SMIC and other Chinese firms could be deceiving U.S. firms about the true end uses of their purchases.</p> + +<h3 id="why-did-the-october-7-export-controls-fail-to-prevent-smic-from-advancing-7nm-production">Why Did the October 7 Export Controls Fail to Prevent SMIC from Advancing 7nm Production?</h3> + +<p>It is clear at this point that the October 7 policy has thus far failed to degrade SMIC’s peak technological capability, but that is not especially surprising. SMIC had already begun a ferocious capacity-expansion and equipment-buying campaign both before and after its December 2020 entity listing. As noted above, the U.S. restrictions prior to October 7 did very little to limit SMIC’s purchase of advanced semiconductor manufacturing equipment, even when that equipment was known to be directly supporting a 7 nm production line. SMIC had 14 nm fin-shaped field-effect transistor (FinFet) production commercially available in 2019 and thus had nearly all the equipment it needed to advance to 7 nm due to the ability to “recycle” the equipment for future nodes.</p> + +<p>In much the same way that Huawei had stockpiled a two-year supply of chips prior to U.S. entity restrictions taking effect, SMIC has amassed a large number of machines and potentially also a large stockpile of spare parts that it can draw from. In recent years, Chinese semiconductor manufacturing equipment purchases have been so extensive that non-Chinese chip manufacturers have been complaining that it is delaying equipment providers from completing their non-Chinese orders on time. Industry sources told CSIS that equipment providers routinely refer to Chinese customers under the label of “non-market demand,” meaning that the customers were buying for strategic reasons unrelated to market conditions or profit maximization.</p> + +<p>Moreover, industry sources told CSIS that, prior to the October 7 regulations, some semiconductor manufacturing equipment, components, and spare parts from U.S. companies were exported to China without a license via foreign-headquartered partners. In the absence of the application of the FDPR or the U.S. persons rule, this is not necessarily a violation of U.S. law. Industry sources also told CSIS that SMIC has set up a network of shell companies and partner firms in China through which it has been able to continue acquiring U.S. equipment and components by deceiving U.S. exporters. If true, sales to such shell companies would involve violations of U.S. law by SMIC, though not necessarily by U.S. companies, so long as the U.S. firm had no knowledge of the fact that the shell company was acting on behalf of SMIC.</p> + +<p>In cases where SMIC did face a legitimate problem due to U.S. restrictions, it was, until very recently, largely unrestricted in its ability to purchase equipment and spare parts from the Netherlands, Japan, South Korea, and Taiwan. According to a Financial Times analysis of Chinese customs data, the total value of Chinese imports of semiconductor manufacturing equipment increased from $2.9 billion over the two months in June and July 2022 to $5.0 billion over the same two months in 2023. The analysis further found that “most of the imports came from the Netherlands and Japan.” Japan’s export controls only took effect in late July 2023. The Netherlands’ export controls only took effect in September, and Dutch companies are being allowed to complete the delivery of previously approved licensed exports to China even if those deliveries occur after September 2023, so long as the shipment is completed by January 1, 2024.</p> + +<p>The Chinese customs data analyzed by the Financial Times includes finished and fully integrated manufacturing equipment but does not include components, spare parts, and materials. One industry source told CSIS that, because of this omission, the customs data significantly understates the extent to which U.S. technology is being displaced by foreign suppliers. This individual said that as U.S. equipment firms have been forced to reduce their presence in the market, “Japanese firms have been gorging themselves on Chinese revenue from selling fully integrated machines. Korean firms have been gorging themselves on selling subsystems and spare parts.” In conversations with CSIS, multiple industry sources highlighted the problem of South Korean firms backfilling export-controlled U.S. technology and also training Chinese staff in both equipment maintenance and fab operations.</p> + +<p>In early 2021, SMIC told its Chinese government investors that its goal for the SN1 chip fab — SMIC’s second most advanced facility and the one which produces 14 nm node wafers — was production capacity of 35,000 finished wafers per month (WPM).</p> + +<p>SMIC’s most advanced chip fab is SN2, which is part of the same SMIC Southern Shanghai campus as SN1. SN2 is the facility where SMIC conducts advanced node research and development (R&amp;D) and is also the facility where SMIC has begun mass production of its 7 nm (N+1 and N+2) processes. According to a June 2020 report by Guolian Securities, a Chinese investment advisory firm, SMIC planned for 7 nm production capacity at SN2 to also reach 35,000 WPM on an unspecified timeframe. According to one Chinese semiconductor industry analyst, SMIC also planned as recently as September 2022 to eventually pursue 5 nm production at SN2 despite lacking access to EUV machines. For comparison, TSMC first achieved 7 nm mass production without EUV but later upgraded its 7 nm process to use EUV. No major international chipmaker has ever engaged in mass production of 5 nm chips without using EUV lithography machines.</p> + +<p>Both the SN1 and SN2 projects were announced in 2017. The SN1 facility was producing 3,000 WPM in late 2019, 6,000 WPM at the 14 nm node in June 2020, and in February 2021 SMIC claimed that SN1 had achieved 15,000 WPM production capacity by the end of 2020. According to a SMIC press release in early 2020, SMIC had originally anticipated hitting the 35,000 WPM production target for SN1 by the end of 2022. More likely than not, SMIC has by now hit this SN1 production capacity target. SMIC stated in February 2023 that it would accelerate capacity expansion despite weakening demand and market oversupply. DigiTimes Asia reported in June 2023 that SMIC was continuing to offer and deliver 14 nm production to customers.</p> + +<p>One industry source told CSIS that SMIC’s FinFET production capacity across both SN1 and SN2 is currently 35,000 WPM and that roughly one-third of this capacity is currently being devoted to 7 nm production.</p> + +<p>No data is publicly available on SN2’s progress in production capacity ramp up. T.P. Huang, an independent semiconductor industry analyst, estimates that by the end of 2023, SMIC will have legally acquired enough advanced DUV lithography machines across all SMIC facilities to eventually support production of more than 50,000 FinFET WPM, which would have to be split across the 14 nm and 7 nm production. It is unclear what share of these machines currently resides at SN1 and SN2. Based on analysis of a SMIC notice, Huang projects that all SN2 equipment installations will be completed by July 2024.</p> + +<p>Industry sources told CSIS that this estimate is reasonable and that SMIC will likely reach production capacity of 50,000 WPM across SN1 and SN2 by the end of 2024. SMIC has existing customers for its 14 nm capacity, so presumably it will not immediately reallocate all of its machines to 7 nm. In lithography, the Dutch export controls only restrict exports of EUV machines and the most advanced DUV machines, so it is possible that additional future purchases could increase SMIC’s potential 7 nm production even beyond 50,000 WPM.</p> + +<p>For most new semiconductor manufacturers, manufacturing yield (the share of the chips on the finished wafer that are usable) starts at a low level and then improves as the company’s mastery of a new technology node and production process improves. Industry sources told CSIS that SMIC’s current yield is roughly 50 percent. By comparison, TSMC’s early production with 7 nm was already achieving 76 percent yield in 2017, even before introducing EUV technology. It is reasonable to assume that SMIC’s yield will improve over time, as more of ASML’s most advanced DUV lithography machines are delivered and as SMIC gains operational experience with the N+2 process node. However, SMIC may never match the high yields that TSMC achieved after introducing EUV.</p> + +<p>The yield rate directly relates to the economics of chip production. Costs are incurred on a per-wafer basis, so increasing the number of usable chips per wafer is equivalent to increasing output without increasing costs. Per chip costs are not typically made publicly available, but Fomalhaut Techno Solutions, a Tokyo-based research company, estimated in 2022 that Apple paid TSMC $110 per chip for its 4 nm production, up from $46 per chip for TSMC’s 5 nm production. TSMC’s 5 nm production process, which used EUV, reportedly achieved excellent yields early in its history.</p> + +<p>If SMIC hypothetically had 100 percent yield and 35,000 7 nm WPM production capacity at SN2 with 550 Huawei chips per wafer, then SMIC could produce enough chips for 231 million phones over the course of a year. As mentioned previously, Huawei only expects to sell 60 million such phones in 2024.</p> + +<p>This is no doubt exactly what Huawei hopes for: to win back the customers it lost to Apple and other competitors during the years it was cut off from 5G chips. The Chinese government’s instructions to all employees of the Chinese government and all state-owned enterprises not to use Apple phones might soon be followed by nationalist pressure to buy Huawei’s alternative, even if the technical performance is inferior. If SMIC’s yield remains low, Huawei’s 5G smartphone business may require significant subsidization or a protected domestic market to be economically viable. Assuming that Huawei is paying SMIC’s per wafer prices comparable to what Apple paid TSMC for 7 nm capacity — $10,000 per wafer — then $4.2 billion in annual subsidies would be enough to pay for Huawei buying the entirety of SMIC’s annual 7 nm production assuming 35,000 WPM.</p> + +<p>Smartphone companies tend to be early adopters of new semiconductor technology nodes. If the production capacity was directed not toward phones but other uses, such as manufacturing AI chips, which tend to be far larger, then SMIC could manufacture perhaps 10 million per year even at low yields. AI chips tend to be much larger and thus put more of their production investment at risk from manufacturing defects. AI chip producers tend to adopt a manufacturing process node roughly two years after the smartphone early adopters because by that time the defect rate has come down considerably. Further analysis of the implications of this chip for China’s AI sector is included later in this report.</p> + +<p>It is currently unclear based on the available information whether or not SMIC has also benefitted from illegal technology purchases made in violation of the October 7 or other U.S. export controls. Dylan Patel, Afzal Ahmad, and Myron Xie of the semiconductor consulting firm Semianalysis have argued forcefully, however, that this is indeed the case. Their provocative claims are worth quoting at length:</p> + +<blockquote> + <p>The equipment companies such as Applied Materials, Lam Research, Tokyo Electron, KLA, Screen, ASM International, Kokusai, etc. are selling basically every tool they offer to China. This is because most deposition, etch, metrology, cleaning, coaters, developers, ion implant, epitaxy, etc. tools for 7nm and even 5nm can also plausibly be used in 28nm. These tools are being sold to SMIC for “28nm,” but, in reality, SMIC is lying to the firms’ faces and using them for 7nm.</p> +</blockquote> + +<blockquote> + <p>While SMIC is expanding 28nm and other trailing edge nodes, it is much less than they claim as these tools are being rerouted to leading edge. It’s even possible that people within these equipment firms know what’s happening, but are turning a blind eye.</p> +</blockquote> + +<p>The Semianalysis authors did not specifically disclose the sources for these claims in their article but elsewhere cited “rumors from China.” One industry source told CSIS that illegal diversion of U.S. exports in materials and spare parts to prohibited Chinese end uses and end users was “rampant” even after October 7, 2022, and that the end-use controls outlined in section 744.23 were being intentionally violated by SMIC and other advanced Chinese chip manufacturers. Other industry sources told CSIS that rumors of diversion at the fully integrated equipment level were entirely false and that diversion at the subsystem and part levels was done by third parties, not U.S. firms. These accusations may or may not be true, and there has been no proof provided to verify or disprove the accusations. Nevertheless, they deserve immediate investigation by the U.S. government.</p> + +<p>If exports are being diverted from their legally licensed destination toward fabs that are operating toward prohibited end uses, that is strong legal justification for the U.S. government and its allies to strengthen export control restrictions. It is at a minimum plausible that SMIC’s claims to be expanding capacity at 28 nm are disingenuous. Other Chinese chipmaking companies have built fabs with the explicit intention of starting production at 28 nm and later shifting production to more advanced technology nodes. In February 2021, a Chinese news outlet reported that SMIC’s Huahong Factory No. 6 in Shanghai would begin production at 28 nm but that SMIC ultimately planned to upgrade the facility to 14 nm with a production capacity of 40,000 WPM. However, SMIC does have a large and growing set of customers for 28 nm production, so this transition to 7 nm, even if planned, may be well in the future.</p> + +<h3 id="impacts-of-export-controls-on-chinas-chipmaking-and-chip-equipment-industries">Impacts of Export Controls on China’s Chipmaking and Chip Equipment Industries</h3> + +<p>However, even if there are legal grounds for expanded export controls, the U.S. government must have a clear sense of what effect strengthened export controls are realistically going to have and how the United States would know whether or not its efforts are succeeding.</p> + +<p>YMTC is the clearest test case for the power of unilateral U.S. semiconductor export controls against Chinese chipmakers. With a blanket export ban adopted in December 2022, YMTC’s entity list restrictions are far stronger than anything that the United States placed on SMIC or included in the October 7 regulations. Reporting by the Financial Times and South China Morning Post claims that YMTC was initially hit hard by the controls, but that a combination of government subsidies, Dutch and Japanese equipment, previously purchased U.S. equipment, and the improving quality of Chinese equipment suppliers has given YMTC the confidence to restart advanced NAND memory production and make major investments.</p> + +<p>It is worth emphasizing again that YMTC had been extensively preparing for U.S. export controls since 2019 — three-and-a-half years before the time they arrived. Furthermore, YMTC will have arguably had more than four-and-a-half years of preparation by the time Dutch controls take full effect in January 2024.</p> + +<p>At the same time, China’s domestic semiconductor equipment sector is experiencing significant growth and collectively organizing itself around the goal of producing alternatives to U.S. equipment, components, and spare parts. Analysis by CINNO Research, a Chinese consultancy, finds that the 10 largest Chinese semiconductor manufacturing equipment firms have seen their revenue increase 39 percent compared with 2022, totaling $2.2 billion for the first half of 2023. This builds on progress that was already underway even before October 2022. Dr. Doug Fuller of the Copenhagen Business School claims that Chinese semiconductor equipment firms have increased their share of China’s domestic market from 8.5 percent in 2020 to 25 percent in the first 10 months of 2022, though these sales were overwhelmingly concentrated at legacy nodes and far from the state of the art. Chinese equipment firms are also concentrated in non-critical processes.</p> + +<p>Moreover, after October 7, the Chinese government has further increased its already massive subsidization of the semiconductor industry. In September, Reuters reported that China is preparing to launch a new $40 billion state-backed investment fund for its semiconductor sector. This follows similarly massive funds launched in 2014 and 2019. On September 18, 2023, the Chinese government strengthened R&amp;D tax incentives such that 120 percent of the cost of all R&amp;D by Chinese semiconductor companies can now be deducted from taxes. The semiconductor industry is among the most R&amp;D-intensive industries worldwide, so this is a massive subsidy stacked on top of many other massive subsidies that remain in effect.</p> + +<p>The Dutch and Japanese export controls are a license requirement with unclear (at least in terms of publicly available information) license approval criteria. It is possible that the Dutch and Japanese licensing restrictions will be enforced similarly to the U.S. framework, which applies extremely broad restrictions for the advanced fabs such as the one that YMTC is building. If that is indeed the case, YMTC will be cut off from nearly every foreign machine that it needs to build and maintain its advanced fab legally. Whether or not illegal means are available will depend upon the strength of enforcement capacity.</p> + +<p>However, it is worth asking whether or not Dutch or Japanese export controls can be truly effective in the absence of Dutch and Japanese legal equivalents to the U.S. FDPR and U.S. persons rule. The absence of such provisions has been a challenge for earlier Japanese export controls. Most notably, a recent World Bank analysis of Japan’s 2019 export controls on the sale of semiconductor manufacturing chemicals to South Korea found that Japanese chemical suppliers responded by simply shifting some production of the chemicals from Japan to their subsidiary companies headquartered in South Korea or by forming joint ventures with South Korean firms.</p> + +<p>This was not in legal violation of Japanese export controls, though it was obviously in violation of the policy’s intent. If sales and shipments of Dutch and Japanese equipment, components, and spare parts are simply routed through foreign subsidiaries or distributors, then the export controls will have limited effect on China’s ability to expand advanced node production. Many Dutch and Japanese business executives will likely use all legal means available to continue sales to China. At least one Japanese business executive has already stated his intention to “develop duplicate supply chains — one for the U.S.-led economic bloc and one for the China-led bloc.”</p> + +<p>One industry source told CSIS that “we’re definitely seeing the Chinese equipment industry making progress faster than previously expected.” The degree of dominance of U.S. firms in certain categories of semiconductor manufacturing equipment at the fully integrated systems level is real, but that is as the manager of a global supply chain in which other countries provide many components and subsystems that make up important parts of the finished system.</p> + +<p>Industry sources told CSIS that Chinese semiconductor equipment companies have worked aggressively to map U.S. equipment firms’ supply chains and to develop independent purchasing relationships with U.S. equipment companies’ non-U.S. suppliers. Because Chinese semiconductor equipment and component firms have already been subject to blanket U.S. export controls and have weak prospects for sales outside of China, they have little incentive to respect U.S. intellectual property, export controls, or other laws. Thus, these firms take advantage of non-U.S. suppliers where they are can and seek to reverse engineer U.S. or allied technology where they must.</p> + +<p>One Chinese equipment company, AMEC, claimed at an August 2023 investor relations meeting that they have 35 different types of etching equipment tools under development that are designed to provide full coverage of the etching processes required for manufacturing sub-20 nm DRAM memory. Of these 35, AMEC claims that 14 of the tools are already in mass production, while the other 21 have completed laboratory verification. An industry source told CSIS that AMEC’s tools that have completed laboratory verification are two to five years away from being viable for mass production under ideal conditions, and that the actual time to availability may be longer. Regardless, this still represents significant progress from where AMEC was three years ago. As mentioned above, AMEC is part of the China’s new approach of centralizing collaboration between the Chinese government and leading private sector semiconductor firms, a collaboration led by Huawei.</p> + +<p>Industry sources also told CSIS that South Korean, European, and Japanese subsystems suppliers are aggressively pursuing the Chinese market that has been opened up in the wake of U.S. export controls. Two sources specifically stated that South Korean firms have been instrumental in providing spare parts, maintenance, and advisory services related to U.S. equipment.</p> + +<p>YMTC likewise has little incentive to comply with U.S. laws. As long as sales of components and materials are continuing through distributors in China, genuinely cutting YMTC off will be difficult unless the United States and its allies are willing to tighten restrictions on a China-wide basis. One industry expert told CSIS that the Department of Commerce has failed to effectively identify all the shell companies and industry partners that YMTC uses to continue receiving U.S. technology in violation of export controls. Multiple industry sources said the same was true of SMIC.</p> + +<p>CMXT, a Chinese DRAM memory producer, is reportedly spending hundreds of millions of dollars to purchase legacy equipment suitable for producing large quantities of legacy DRAM that is less advanced than the performance specifications in the October 7 controls. If CMXT’s intentions are sincere, then this is arguably a success story for the October 7 policy since CMXT had previously been planning to expand advanced node capacity. However, one industry analyst told CSIS that the composition of equipment purchases by CMXT is inconsistent with an intention of producing legacy DRAM chips and would make far more sense if CMXT’s true intention was to produce chips more advanced than those prohibited by the October 7 end-use controls. If true, this would suggest that CMXT is deceiving U.S. companies and regulators in order to amass a stockpile of U.S. equipment that will at some point be redirected to restricted end uses. Another industry source told CSIS that CMXT is open with its Dutch and Japanese equipment suppliers about its intention to produce chips more advanced than those allowed under U.S. export controls.</p> + +<p>The October 7 export controls — and especially the Dutch and Japanese restrictions — were too late to prevent SMIC from bringing online a facility that will likely soon achieve 35,000 WPM of 7 nm production capacity with decent, if not world-leading, yield. This is a genuine threat to U.S. and allied national security, not least because of what it likely means for the Chinese military’s access to domestically produced AI chips.</p> + +<p>The highest levels of leadership in both the United States and China — including Xi Jinping — believe that leading in AI technology is critical to the future of global military and economic power. In May 2023, a group of AI industry and academic leaders issued a statement warning that the risks of advanced AI should be viewed in the same way as pandemics and nuclear war. None of those risks will be any easier to manage if China achieves its vision of becoming an AI-enabled authoritarian superpower.</p> + +<h3 id="potential-implications-for-chinas-ai-and-ai-chip-sector">Potential Implications for China’s AI and AI Chip Sector</h3> + +<p>Huawei’s new chip and 5G phone attracted the bulk of the media attention during and after Secretary Raimondo’s August 2023 visit to China. However, the more strategically important disclosure related to Huawei’s progress on AI chips. On August 27, the chairman of iFlytek, one of China’s largest and most technologically sophisticated AI companies, said at a conference that “I am particularly happy to tell you that Huawei’s GPU capabilities are now the same as Nvidia’s A100. [Huawei CEO] Ren Zhengfei attaches great importance to it, and three directors of Huawei have gone to work in iFlytek at HKUST [Hong Kong University of Science and Technology]. Now they have benchmarked against Nvidia’s A100 [Google automated translation].”</p> + +<p>In short, at the same time that Huawei was announcing its return to the 5G smartphone market, it was also announcing its return to the GPU (also known as AI chip) market. In contrast to more general-purpose processors, AI chips are specially designed to increase speed and reduce the power consumption of developing (referred to in the industry as “training”) and operationally using (referred to as “inference”) machine learning AI models.</p> + +<p>Huawei has sold AI accelerator chips under its Ascend product line since 2019. These chips were designed by HiSilicon and manufactured by TSMC. This halted in May 2020 after the first Huawei FDPR rule. However, Huawei was rumored to have amassed a major stockpile of these chips, allowing the company to continue winning major data center contracts across China. Independent testing by Chinese university scholars in September 2022 found that that Huawei’s Ascend chips were inferior to Western competitor products, most notably Nvidia, on nearly all performance metrics related to chip design and hardware.</p> + +<p>However, in the case of Nvidia, its competitive dominance is based not only on the performance of its chips but also on the strength of the software ecosystem that is based upon Nvidia standards, particularly Nvidia’s CUDA software ecosystem. CUDA makes it much easier for programmers to write massively parallelized software (as all modern AI software is) and ensures backward and forward compatibility so that older chips can still run newer software and vice versa. Any customer who seeks to stop using Nvidia chips has to leave the CUDA ecosystem, which requires solving a lot of incredibly hard software problems for which CUDA already provides free answers. Those free answers reflect billions of dollars of investment in the CUDA platform by both Nvidia and its customers.</p> + +<p>The strength of the combined offering of CUDA software and Nvidia hardware goes a long way toward explaining why Nvidia accounted for 95 percent of AI chip sales in China in 2022, according to estimates by Fubon Securities Investment Services.</p> + +<p>Even in 2019, Huawei’s strategy for competing with Nvidia in the AI chip hardware market included creating a software alternative to CUDA, which Huawei refers to as its Compute Architecture for Neural Networks (CANN). According to Huawei, “CANN is not only a software platform, but also a development system that includes a programming language, compilation and debugging tools, and programming models. CANN creates a programming framework based on Ascend AI Processors.” Huawei claimed in September 2022 that Ascend and CANN were generating traction: “More than 900,000 developers have launched more than 1,100 AI solutions based on Ascend, which are widely used in government, telecommunications, finance, electricity, internet and other fields.”</p> + +<p>iFlyTek is one AI firm that has close ties to the Chinese government, including developing AI technologies used in the surveillance and repression of China’s Uyghur minority. For this reason, iFlyTek was placed on the U.S. entity list in 2019. iFlyTek is therefore a natural target customer for Huawei’s AI chips, since its access to U.S. alternatives is restricted. Prior to the entity listing, iFlyTek primarily used Nvidia products.</p> + +<p>More recently, Huawei claimed in July 2023 that the number of Ascend and CANN developers has doubled to 1.8 million. It is unclear how Huawei is measuring the number of Ascend and CANN developers or how active an average Ascend developer is. For comparison, Nvidia said in May 2023 that CUDA has 4 million active developers and that CUDA has been downloaded more than 40 million times, including 25 million times in just the past year. Despite the October 2022 export controls, Nvidia’s chips that are legally approved for export to the Chinese market, the A800 and H800, are reportedly in high demand by Chinese hyperscale cloud computing vendors. The A800 and H800 are degraded versions of the A100 and H100 chips, respectively. Specifically, the A800 and H800 have equivalent processing power to their non-degraded counterparts but significantly reduced interconnect speed that is below the export control thresholds.</p> + +<p>Nvidia’s A100 models (launched in 2020) are manufactured by TSMC on their 7 nm process, while its H100 models (launched in 2022) use a custom TSMC 4 nm process node. Nvidia has not announced the release date for its forthcoming B100 product line, but it will reportedly use TSMC’s 3 nm process node and launch in either late 2024 or early 2025.</p> + +<p>All of this suggests that even Nvidia’s products that are degraded to comply with export controls will be more attractive than Huawei’s alternatives for at least the next few years. Huawei and SMIC do not have a clear path to producing chips beyond the 5 nm node, and SMIC will likely have poor unit economics to produce 5 nm chips without access to EUV technology. The greater maturity of the CUDA software ecosystem also makes Nvidia chips more attractive.</p> + +<p>However, if the performance thresholds specified in the October 7 export controls are held constant, then the attractiveness of Nvidia products compared with Huawei alternatives could change significantly in the future. The current performance penalty for training large AI models with the degraded Nvidia chips is reportedly in the range of 10 to 30 percent. This is significant, but able to be overcome by Chinese AI firms that benefit from both government subsidies and a protected domestic market.</p> + +<p>Industry sources told CSIS that the performance penalty will grow over time as the consequences of capped interconnect speed become more and more pronounced. This could potentially mean that Huawei chips, which would obviously not comply with interconnect speed restrictions, could have superior overall performance even if they are manufactured on an inferior semiconductor process node. Moreover, there are other sources of improvement to chip performance besides adopting a superior manufacturing process node. Nvidia’s chief scientist Bill Dally recently said that of the 1,000-fold performance improvement that AI model training on Nvidia chips has undergone over the past 10 years, semiconductor manufacturing process node improvements were only the third most important factor. More specifically, he said that process node improvements had delivered a two-and-a-half times performance boost between the 28 nm node and 5 nm node.</p> + +<p>This suggests that — even if export controls were able to effectively constrain China’s AI development to the 28 nm node as was their original intent — there are limits to how much export controls on Nvidia and related firms can degrade the performance of U.S. AI chips before Chinese firms will make an economically rational choice to buy domestic alternatives, such as those designed by Huawei, Biren, or Cambricon. Chinese AI firms would likely prefer a 28 nm Chinese chip over a 7 nm U.S. chip if the U.S. chips’ interconnect speed limitations degrade AI model training performance more than the use of an older node degrades the Chinese chips’ performance.</p> + +<p>However, the 28 nm target might now be out of reach, unless the United States and its allies are willing to engage in dramatically more aggressive restrictions. If SMIC is able to build out Chinese domestic availability of 7 nm production capacity with adequate reliability and yield, that would significantly accelerate the timeframe in which Chinese AI development firms such as Alibaba and Baidu might find Huawei chips attractive in comparison to those of Nvidia. There are, of course, significant switching costs to leaving the CUDA ecosystem.</p> + +<p>Along with the Chinese government and its corporate partners, Huawei is now engaged in a project to build a Chinese computing ecosystem that is entirely independent of the United States. The list of projects that Huawei and its partners have underway at varying levels of maturity is extraordinary. It includes at a minimum the following:</p> + +<ul> + <li> + <p>EDA chip design software;</p> + </li> + <li> + <p>Chip manufacturing equipment;</p> + </li> + <li> + <p>Chip manufacturing facilities;</p> + </li> + <li> + <p>Chip designs for personal computers, smartphones, and data centers;</p> + </li> + <li> + <p>AI chip enablement software ecosystems;</p> + </li> + <li> + <p>AI software development frameworks;</p> + </li> + <li> + <p>AI models;</p> + </li> + <li> + <p>Computer and smartphone software operating systems;</p> + </li> + <li> + <p>Computer, smartphone, and data center hardware systems; and</p> + </li> + <li> + <p>Cloud computing.</p> + </li> +</ul> + +<p>In much the same way that one of the first major initial uses of the Chinese yuan currency for international trade transactions was avoiding U.S. sanctions, the initial customer base for Huawei’s alternative AI computing ecosystem is sanctioned and entity-listed actors in China. That may soon grow to include other countries such as Russia and Iran. Within China, entity-listed firms and government agencies comprise a larger and more technologically sophisticated customer base than is commonly understood in Western policy circles. iFlyTek, for example, has routinely published research papers at leading international AI conferences. Even after being sanctioned, iFlyTek has 40 percent market share in China’s automotive voice recognition market.</p> + +<p>Beyond the Chinese domestic market, the other critical market for Huawei’s technology stack is exports, especially to the global South.</p> + +<h3 id="the-need-for-timely-us-intelligence-collection-and-technology-analysis-on-chinas-semiconductors">The Need for Timely U.S. Intelligence Collection and Technology Analysis on China’s Semiconductors</h3> + +<p>Perhaps the most surprising fact about the Huawei breakthrough is that so many U.S. government leaders were evidently surprised. Asked about the chip on September 6, National Security Advisor Jake Sullivan stated that “I’m going to withhold comment on the particular chip in question until we get more information about precisely its character and composition.” Similarly, a group of Republican members of Congress wrote a letter to Department of Commerce leadership in which they expressed being “extremely troubled and perplexed” by what the Huawei phone suggests about the efficacy of U.S. export controls.</p> + +<p>None of these statements give confidence that these U.S. leaders in either the White House or Congress are receiving good intelligence about the state of China’s quest for semiconductor self-sufficiency. If this is indeed the case, it is simply unacceptable. It is possible, of course, that the U.S. intelligence community has more answers than the U.S. government is making public.</p> + +<p>The October 7 export controls were one of the most important foreign policy moves that the Biden administration adopted in 2022, perhaps second only to supporting Ukraine against the Russian invasion. Senior U.S. national security and foreign policy leaders need to know to what extent that policy is having the intended effect, and they need to learn that before China rubs it in a U.S. cabinet secretary’s face during a trip to China.</p> -<p>A major challenge with which any manoeuvrist vision of warfare must contend, then, is that it lacks an explanation of how the conditions for the collapse of an opponent can be set under the contemporary fires-centric context. It is just as likely that offensive ground actions must necessitate the sort of protracted fighting and possibly sustained occupation of hostile territory which most democratic states would wish to avoid. Moreover, as illustrated by the ongoing war in Ukraine, ground manoeuvre exacts a cost in life that many states will struggle to pay. Democracies are often relatively casualty-averse, which will be a consideration here – especially for states like Israel which rely on national service to force generate.</p> +<p>The Huawei phone and SMIC chip were not well-kept secrets. Reports of Huawei returning to the 5G market with a SMIC-manufactured 7 nm chip were already widespread enough in July of this year that Chinese industry executives were publicly commenting on it.</p> -<p>However, the fire and defend school faces its own challenges – specifically, the difficulty of sustaining a battle of attrition. Air defence interceptors are generally much more expensive than most of the capabilities that they must intercept, and the emergence of new forms of air threat such as comparatively cheap UAVs only compounds this. Bottlenecks in areas such as electronics will only exacerbate the issue if they persist. The interceptor shortfalls faced by Ukraine – a country that had Europe’s largest air defence arsenal at the war’s outset, augmented with Western systems – acutely illustrates this. Most opponents will not have as many cruise and ballistic missiles as Russia, but they can certainly generate a weight of fire with UAVs, multiple-launch rock systems and a limited number of cruise and ballistic missiles. Nor can it be assumed that this threat will be thinned out at the outset of a conflict – opponents have a range of palliative options, from underground shelters and hiding among the population to the employment of proliferating air defence systems and electronic warfare assets. A passive defence carries the risk of saturation by sheer weight of fire.</p> +<p>Hopefully, this incident merely reflects a failure of the relevant information to reach U.S. leaders and not a genuine gap in the capabilities of the U.S. intelligence community. During the Cold War, the U.S. intelligence community produced exceptionally good analyses of the Soviet semiconductor industry and the effectiveness of U.S. semiconductor export controls. Today, there are a host of critical questions about the Chinese semiconductor industry and the effectiveness of U.S. export controls where the U.S. intelligence community needs to supply senior U.S. decisionmakers with timely intelligence. Here is just a sample:</p> -<p>Countries will increasingly have to make a choice between developing forces to achieve decision, and forces that give them the endurance to last in what may well be indecisive wars. This will require adjudicating between requirements to defend the homeland and protect manoeuvre elements, which will be politically challenging. It will also require the careful balancing of imperatives between different elements of individual services, which will adhere to either manoeuvre or endurance as national ideals.</p> +<ul> + <li> + <p>Are SMIC or CMXT deceiving U.S. semiconductor equipment companies when they claim that post-October 7 equipment purchases are going to be exclusively used for production less advanced than the October 7 technology thresholds?</p> + </li> + <li> + <p>How much advanced chip production capacity does SMIC intend to build out? At what technology nodes will this occur and over what timeframe?</p> + </li> + <li> + <p>Does the Chinese government intend to pressure Chinese businesses and consumers to purchase Huawei smartphones and chips (and not to purchase U.S. alternatives) in order to drive economies of scale? If so, what will be the likely costs to U.S. firms in terms of lost sales?</p> + </li> + <li> + <p>How are SMIC and YMTC getting spare parts to continue operating their advanced node U.S. equipment? Are they illegally diverting U.S. exports via shell companies or other tactics? Are they being supplied by foreign firms that manufacture viable alternatives? Or are there Chinese companies with adequate technology to supply them?</p> + </li> + <li> + <p>Are reports that YMTC is close to restarting advanced production with improved Chinese domestic equipment alternatives true? Is YMTC also benefitting from equipment and components acquired in violation of U.S. export controls?</p> + </li> + <li> + <p>How much technological progress have domestic Chinese equipment makers made, and in what areas? How much foreign help are they receiving, and from what sources?</p> + </li> + <li> + <p>What level of Chinese government subsidization are Huawei and SMIC specifically receiving to support their advanced node manufacturing? Do the firms have a credible path to profitable 7 nm products without government support? Is the Chinese government prepared to sustain or increase this support indefinitely?</p> + </li> + <li> + <p>How has China’s crackdown on foreign consulting firms impacted the ability of U.S. compliance companies to engage in substantive due diligence prior to selling to Chinese companies?</p> + </li> +</ul> -<p>Ultimately, neither model provides a complete solution. It would be a mistake for any modern state to plan on decisive manoeuvre – history shows that wars between peers are often protracted affairs. However, a reactive approach based on endurance may be both financially difficult and politically intolerable. While it is often presumed that countries can simultaneously defend their homelands and achieve strategic effects at the front if they invest the right resources into doing so, in practice they will often face trade-offs between these important but competing imperatives. The core question they will face, then, is whether to aim for shortening the wars they fight or adapting their force structures to the reality of protracted missile warfare. Ultimately, an effective solution will need to involve a synthesis of the two schools – individually, each provides only imperfect answers under contemporary operating conditions.</p> +<h3 id="conclusion-the-future-of-export-controls">Conclusion: The Future of Export Controls</h3> -<hr /> +<p>Limiting China’s access to advanced AI chips is a highly desirable national security outcome. However, given the flaws and long timelines for how the Trump and Biden administrations have pursued export control policies, it is difficult to see how the United States could degrade China’s current technological state of the art without dramatically expanding export controls and significantly increasing resources devoted to identifying and patching loopholes and strictly enforcing violations.</p> -<p><strong>Sidharth Kaushal</strong> is the Research Fellow of Sea Power at RUSI. His research covers the impact of technology on maritime doctrine in the 21st century and the role of sea power in a state’s grand strategy.</p> +<p>It is not clear, for example, that even a complete entity listing of SMIC with presumption of denial for all products would cause the SN1 and SN2 fabs to shut down. With the current staffing and budget given to the Department of Commerce for export controls, there are reasons to doubt that the U.S. government can identify shell companies at the rate that Huawei, SMIC, and their partners can create them. Only China-wide restrictions imposed simultaneously and without advance notice by the United States, Japan, and the Netherlands on multiple categories of exports, especially raw materials, would have a clear path to shutting down the SMIC fabs.</p> -<p><strong>Eran Ortal</strong> is the current commander of The Dado Center for Interdisciplinary Military Studies. Ortal is also the founder of the Israel Defense Force Dado Center journal, dedicated to Operational art and military transformation.</p> +<p>If SMIC has indeed been engaged in a massive campaign of export control evasion and has been providing false information to U.S. firms for their export license applications, then the case for such an option is stronger. It would provide strong evidence that China is already sprinting full out toward its own strategy for semiconductor decoupling without the slightest care of complying with U.S. law or preserving room for reaching an understanding with the United States.</p> -<p><strong>Ran Kochav</strong> is an Israel Defense Forces brigadier general who has served as the commander of the Israeli Air and Missile Defense Forces. General Kochav has held a number of command roles within the IDF, including as the commander of the 66th battalion the divisional anti-aircraft officer of the 91st Division before the 2006 Lebanon war and head of the special forces section in the Air Group of IAF (2005-2006).</p>Sidharth Kaushal, et al.This article examines the points of divergence between two major schools of thought within the Israel Defense Forces regarding how best to defend the state against evolving threats.Israel And The Palestinians2023-10-09T12:00:00+08:002023-10-09T12:00:00+08:00https://agorahub.github.io/pen0/hkers/israel-and-the-palestinians<p><em>Nothing will be the same after the weekend’s carnage in Israel. The Palestinian question is back on the agenda, and with a vengeance. So will be Israel’s response.</em></p> +<p>In such a case, the United States might conclude that it is better for semiconductor decoupling to happen when it is inconvenient for China rather than wait for China to do it when it is more convenient and on China’s terms.</p> -<excerpt /> +<p>But it will likely be more difficult to persuade U.S. allies to go along with such extreme measures if SMIC’s achievement has been done entirely or almost entirely through equipment purchases made in full compliance with U.S. law.</p> -<p>On Saturday, 7 October, Hamas launched an unprecedented surprise attack on Israel. Under a barrage of thousands of rockets fired from Gaza, hundreds of Hamas fighters managed to cross the heavily guarded border into Israel. They were able to briefly take over parts of Israeli towns – most notably Sderot – and military positions. An as yet unknown number of Israeli civilians and military personnel, possibly in the dozens, were taken hostage and transferred to Gaza; by Monday morning more than 700 Israelis and more than 400 Palestinians had been killed. Hours after the beginning of the attack, Israeli Prime Minister Benjamin Netanyahu declared: “Citizens of Israel, we are at war. Not an operation, not a round [of fighting,] at war.”</p> +<p>What if SMIC has simply been exploiting legal loopholes in the Trump administration approach and taking advantage of the Biden administration’s very slow onboarding of Japan and the Netherlands? What if SMIC is sincere in its statements that the massive expansion of fab capacity that it is bringing online will exclusively be used for 28 nm production?</p> -<p>The attack must have been planned for months. Even as chaos of the Saturday morning assault is still unfolding, Hamas social media outlets have published apparently professionally produced footage of militants using paragliders to fly into Israel, and later of drones dropping grenades onto tanks and positions of the Israeli Defense Forces (IDF). The date for the launch of the attack also does not appear to be accidental coming as Israelis marked the Jewish holiday of Shemini Atzeret. It also came exactly 50 years and a day after Egypt and Syria launched the Yom Kippur War, also known as the October War, against Israel on 6 October 1973. While the eventual scale of this current conflagration is still unclear, 7 October seems certain to become another infamous turning point in the Palestinian-Israeli conflict, and possibly for the wider geopolitics of the Middle East.</p> +<p>U.S. allies will be more willing to restrict the actions of their companies and citizens if they understand the evidence of reverse engineering and illegal purchases of equipment, as well as how China’s plans are not in their own national interest. This underscores the need for timely and high-quality intelligence.</p> -<p>The violence unleashed by Hamas this weekend will continue for weeks to come, and its full implications will take months to become apparent. An escalation of this scale was not on anyone’s radar – including Israeli intelligence – so it is prudent to be cautious with definitive conclusions about what this will mean. But there are a few early assumptions that can be made, including with regards to the conflict between Israel and the Palestinians, the ongoing speculations about a potential agreement between Israel and Saudi Arabia to normalise relations and the trend towards de-escalation and rapprochement that has prevailed in the region for the past three years.</p> +<p>There are other aspects of this story where SMIC could be in violation of U.S. law besides whether SMIC’s post-October 2022 equipment purchases were intended for 7 nm manufacturing. The FDPR as applied to Huawei has thus far restricted the ability of firms that use U.S. equipment to produce chips on behalf of Huawei, regardless of when that equipment was purchased. The rule, as written, also includes coverage of more than exports, including in-country transfers (such as the SMIC’s sale of chips to Huawei). A group of U.S. members of Congress sent a letter to the Department of Commerce directly alleging that SMIC’s production on behalf of Huawei was in violation of U.S. export controls. As mentioned above, this does indeed seem to be the case.</p> -<h3 id="a-new-phase-of-palestinian-israeli-conflict">A New Phase of Palestinian-Israeli Conflict</h3> +<p>The U.S. government’s response will have to take this into account. After all, if the United States fails to respond to export control violations by Chinese entities, firms in Taiwan, South Korea, Europe, and elsewhere will feel they are being unfairly treated when the U.S. government requires them to comply.</p> -<p>Hamas’ attack on Saturday morning was unprecedented in its sophistication and ferocity, and Israel’s response will likely far exceed any previous operations carried out by the IDF in Gaza over the past two decades. This is not simply a continuation, or even an intensification, of the already high levels of tensions and violence between Israel and Palestinian factions in Gaza and – especially – the West Bank over the past two years. This war opens a new chapter in the Palestinian-Israeli conflict. It is too early to compare it to the Intifadas of the late 1980s and early 2000s, but it certainly seems to have the potential to be as significant.</p> +<p>One area where it makes obvious sense to expand restrictions is in preventing U.S. and allied companies from supporting the maturation of Chinese equipment and component companies. There is little strategic sense in allowing U.S. and allied companies to help China to prepare for decoupling with the United States and its allies. It is not in South Korea’s national interest, for example, for South Korean equipment and spare parts firms to aid China’s equipment indigenization effort. Nor is it in South Korea’s interest to allow South Korean consultants to train Chinese engineers on how to improve the yields of their memory production fabs. Both of these will inevitably be used to break South Korea’s leadership in semiconductor manufacturing.</p> -<p><strong><em><code class="highlighter-rouge">Once the fighting eventually settles, serious questions will be asked about how a Hamas surprise attack of this scale could have been possible, leaving Prime Minister Netanyahu and his government vulnerable</code></em></strong></p> +<p>Similarly, the United States and its allies need to crack down on third-party sales of spare parts and components.</p> -<p>One key question in this regard is whether the violence will primarily remain contained in and around Gaza, or whether it will spread to the West Bank (thus far, there have been several deadly clashes, but nothing of the scale of what has been happening in Gaza and southern Israel). Moreover, it is also still unclear whether the Lebanese Hezbollah will fully intervene; thus far it has only rhetorically expressed solidarity with Hamas and launched seemingly intentionally limited drone attacks on the disputed Shebaa Farms in the Golan Heights, resulting in limited Israeli artillery strikes into southern Lebanon. In short, an expansion of the war is not inevitable, but certainly a possibility.</p> +<p>In the absence of good intelligence, however, the United States will continue to be faced with an undesirable choice between taking strong action early enough to have an impact (but in a way that might seem premature or unjustified to allies) or on the other hand waiting until the justification is clear, at which point it might be too late to have an impact in the wake of Chinese equipment stockpiling and indigenization campaigns.</p> -<p>In Israel, this weekend’s attack and the war that now follows will shape politics going forward. Initially, there is likely to be a rallying-around-the-flag effect with the deep divisions that have characterised Israeli domestic politics for the past year fading into the background. However, once the fighting eventually settles, serious questions will be asked about how a Hamas surprise attack of this scale could have been possible, leaving Prime Minister Netanyahu and his government vulnerable. In fact, while he will probably remain in office for as long as this war takes, Netanyahu’s political career may well be finished; upended not by his legal troubles, but by having what looks to be one of the most catastrophic breakdowns of security in Israel happen on his watch. He may well have to follow in the footsteps of Golda Meir and Menachem Begin. Both built reputations as staunch security-first prime ministers but were ousted after major perceived security and military failures – the Yom Kippur War and the botched Lebanon invasion in the early 1980s, respectively. At the same time, the brutality of the attack, and especially Hamas’ killing and kidnapping of many civilians, including women and children, could well bolster the positions of those with the most uncompromising stands vis-à-vis the Palestinians, including Netanyahu’s right-wing coalition allies.</p> +<p>This is the same unattractive choice that the United States has faced again and again since the Trump administration began using semiconductor export controls as a tool of foreign policy in 2018. Thus far, the United States has chosen repeatedly to enact export controls that are threatening enough to incentivize Chinese firms to stockpile and to de-Americanize their supply chains, but not strongly enough written or enforced to prevent China from succeeding in their indigenization and stockpiling efforts.</p> -<p>On the Palestinian side, meanwhile, the attack has once again exposed the ineffectiveness and fecklessness of the Palestinian Authority (PA) under aging President Mahmoud Abbas. If the PA has already struggled – and woefully failed – to assert itself meaningfully as the leadership of the Palestinian people in recent years, especially in the West Bank, this weekend’s attack has exposed it as little more than a powerless bystander. The debate about the future of the Palestinian leadership will continue until Abbas vacates his position, but for the moment all the initiative clearly belongs to Hamas and other militant factions.</p> +<p>The United States has incurred essentially all of the costs of an aggressive export control policy toward China, but it has done so in a way that does not provide all the potential strategic benefits of actually constraining China’s future technological capabilities. The U.S. and allied approach does appear to have limited China’s access to nodes more advanced than 7 nm in economically competitive terms and more advanced than 5 nm in absolute terms.</p> -<p>The perhaps most important early takeaway from this weekend – and certainly one that the UK and other Western governments concerned about stability in the Middle East must heed – is that the Palestinian-Israeli conflict still matters and cannot be relegated to the status of a permanent but ultimately manageable feature of regional politics as has arguably been the case in recent years. Hamas’ attack and the war that now rages is primarily about Israel and the Palestinian territories. This escalation of violence will make finding a way to make progress towards a sustainable resolution of the Palestinian-Israeli conflict even more difficult. But it also highlights that ignoring it is something no one can afford – least of all the Israelis and Palestinians, but also not policymakers in London, Washington or European capitals.</p> +<p>It is possible that China’s extremely expensive efforts to indigenize everything will prove to be a strategic error: forcing China’s government to perpetually subsidize an often-corrupt semiconductor industry that produces products that are uncompetitive in Chinese or global markets. Such was the case with the Soviet semiconductor industry.</p> -<p>Nevertheless, this new phase in the Palestinian-Israeli conflict is also likely to have repercussions for wider regional dynamics.</p> +<p>However, it is also possible that China’s domestic champions will ultimately achieve some degree of financial sustainability, driven by partially or fully protected sales in the large Chinese home market as well as successful exports abroad. Such was the case with China’s automotive and solar cell manufacturing industries.</p> -<h3 id="a-setback-for-arab-israeli-normalisation">A Setback for Arab-Israeli Normalisation</h3> +<p>Imposing these costs upon China is not without strategic value, both in terms of slowing its military development and in preserving U.S. technological leadership. Ben Thompson of Stratechery argues that China’s obsession with achieving 7 nm production in violation of U.S. export controls may actually slow China’s overall technological development: “Every year that China stays banging its head on the wall at 7nm instead of focusing on moving down the learning curve from a fully indigenous .13 micron process to 90nm to 65nm to 40nm to 28nm to 22nm to 16nm to 10nm to 7nm is another year that China doesn’t break the 5nm barrier.”</p> -<p>Much early commentary in the immediate aftermath of Hamas’ attack has focused on what this means for the prospects of further normalisation of relations agreements between Israel and Arab states, especially between Israel and Saudi Arabia. Some have even suggested that the attack was Hamas’ – and by extension its supporter Iran’s – way to sabotage Israeli-Saudi normalisation talks. Although statements by leaders of Hezbollah and Palestinian Islamic Jihad warning Arab states not to engage with Israel obviously fuel such analysis, it is far too simplistic. It risks overlooking the fact that the Palestinian-Israeli conflict, more so than regional politics, is the root cause of the violence, as noted above.</p> +<p>In a similar argument, Bloomberg’s Tim Culpan argued that the Huawei chip shows that U.S. curbs “are porous, not useless.”</p> -<p><strong><em><code class="highlighter-rouge">Hamas’ attack this weekend has dramatically highlighted the fundamental flaw in the de-escalation and rapprochement narrative about dynamics in the Middle East that has taken hold in many Western capitals over the past couple of years</code></em></strong></p> +<p>Still, this will be an unsatisfying outcome for those who hoped for more from the October 7 policy. Export controls as a tool rarely deliver perfect solutions, especially not with regards to countries as large and technologically advanced as China. To the extent that export controls worked against the Soviet Union during the Cold War, it was because there was so little economic engagement between the camps to begin with and because they were so broadly enforced. To the extent that export controls worked after the Cold War, it was because the aims were quite limited and because even governments that could agree on little else could agree that they were opposed to terrorists and rogue states acquiring nuclear weapons.</p> -<p>Still, this weekend’s events will have an impact. In the long-term, Saudi-Israeli normalisation remains likely – the shared strategic interests that have driven the talks to date (and the engagement between the Gulf Arab states and Israel, more generally) will remain unchanged. That said, the obstacles for a Saudi-Israeli agreement are now greater than they were a week ago. Whether or not Netanyahu’s government would be willing and able to make the necessary concessions to the Palestinians, which Saudi Arabia has consistently insisted it needs in order to officially recognise Israel, was always one of the main questions. In light of Hamas’ attack, any Israeli government – consisting of Netanyahu’s and his right-wing allies or of any other political parties – will find it extraordinarily difficult to make any meaningful concessions to the Palestinians at all in the coming months (even if these will be needed in the long-run).</p> +<p>Trying to draw neat export control lines that achieve ideal and durable technological outcomes for dual-use technologies in the U.S.-China relationship is significantly more difficult. Broader controls, especially multilateral ones, have a better chance of success, but the political coordination and enforcement challenges are still difficult. The United States has imposed significant costs upon China, but not so significant that they have changed the Chinese government’s position on issues such as military AI development, human rights violations, sanctions violations, or intellectual property theft. Rather than change its ways, China is now spending hundreds of billions of dollars to decouple itself from multiple parts of the U.S. semiconductor and related technology ecosystem.</p> -<p>Saudi Arabia itself has removed any doubt regarding its stance on the matter. It called for “an immediate halt to the escalation between the two sides, the protection of civilians, and restraint.” But its statement, published on Saturday, also noted that the Kingdom had repeatedly warned of “the dangers of the explosion of the situation as a result of the continued occupation, the deprivation of the Palestinian people of their legitimate rights,” and called for a “credible peace process that leads to the two-state solution.”</p> +<p>Beginning in 2018, the United States has imposed costs upon China that are severe enough to persuade China to accelerate the indigenization of its semiconductor supply chain, but the United States and its allies have not — at least thus far — implemented export controls that are tight enough and multilateral enough to definitively prevent China from succeeding in indigenizing. Previously, the United States allowed Huawei to stockpile U.S. chips before cutting Huawei off. More recently, the United States has allowed Chinese chip fabs to stockpile U.S., Dutch, and Japanese equipment before imposing broad restrictions on the sale of such equipment. Even now, China is still acquiring significant technology and knowhow from South Korean and other firms.</p> -<p>Across the region, including in the countries that have already normalised relations with Israel, governments and populations will have been shocked by Hamas’ violence against Israeli civilians, but they will also be devastated and outraged by the violence of the IDF against Palestinian civilians over the coming days and weeks. Throughout it all, the Arab-Israeli conflict – to the extent that it is separate from the Palestinian-Israeli conflict – will live on too.</p> +<p>These are all enormous shifts underway, and the future is far from certain. What is clear, however, is that the existing export controls need to be expanded to include South Korea, Germany, and ideally the entire European Union. It is also clear that U.S. allies need to strengthen their export control regimes to be effective, which means creating legal authorities that restrict knowledge transfers and the actions of overseas subsidiaries.</p> -<h3 id="a-blow-to-regional-de-escalation">A Blow to Regional De-escalation</h3> +<p>Finally, it is clear that all allied governments need improved intelligence and improved economic and technological analytic capacity as well as improved export control enforcement capacity. Even though export controls are central to U.S. foreign policy toward both Russia and China, Congress is now poised to deny the Department of Commerce’s export controls bureau its meager request for funds needed to keep a flat budget after accounting for inflation. This is, in real dollar terms, a budget cut — and a shocking error given how much of U.S. national security and economic security now depends upon the efficacy of the U.S. export controls system.</p> -<p>Finally, Hamas’ attack this weekend has dramatically highlighted the fundamental flaw in the de-escalation and rapprochement narrative about dynamics in the Middle East that has taken hold in many Western capitals over the past couple of years. The end of the Gulf Crisis between Qatar and its neighbours, the re-engagement between Turkey and Saudi Arabia and the UAE, the rapprochement between Iran and the Gulf Arab states (most spectacularly illustrated by the agreement to resume diplomatic relations between Saudi Arabia and Iran, overseen by China, in March this year), and the reduction in at least the most egregious violence in the conflicts in Libya, Syria and Yemen had fuelled a sense that the Middle East was settling into a more stable equilibrium. To be clear, these efforts at de-escalation, pursued by almost all regional governments and some non-state actors, were real and commendable. However, they also routinely represented agreements to disagree and turn to other matters (especially to focus on economic development objectives), rather than actual resolution of the strategic, political and ideological differences that led to the tensions and conflicts – and with them regional instability – in the first place. The unprecedented and unexpected re-eruption of the Palestinian-Israeli conflict this weekend should serve as a reminder of the destructive force suppressed and unaddressed conflicts across the region can have.</p> +<p>Even if the future will often be foggy, the U.S. government must be willing to invest heavily in an improved ability to see clearly and to act effectively.</p> <hr /> -<p><strong>Tobias Borck</strong> is Senior Research Fellow for Middle East Security Studies at the International Security Studies department at RUSI. His main research interests include the international relations of the Middle East, and specifically the foreign, defence and security policies of Arab states, particularly the Gulf monarchies, as well as European – especially German and British – engagement with the Middle East.</p>Tobias BorckNothing will be the same after the weekend’s carnage in Israel. The Palestinian question is back on the agenda, and with a vengeance. So will be Israel’s response.Waterfall’s Shadow In Mekong2023-09-29T12:00:00+08:002023-09-29T12:00:00+08:00https://agorahub.github.io/pen0/hkers/waterfalls-shadow-in-mekong<excerpt /> +<p><strong>Gregory C. Allen</strong> is the director of the Wadhwani Center for AI and Advanced Technologies at the Center for Strategic and International Studies (CSIS). Prior to joining CSIS, he was the director of strategy and policy at the Department of Defense (DOD) Joint Artificial Intelligence Center, where he oversaw development and implementation of the DOD’s AI Strategy, drove policy and human capital reforms to accelerate the DOD’s adoption of AI, and developed mechanisms for AI governance and ethics.</p>Gregory C. AllenWith a new smartphone and new chip, Huawei has returned to the 5G smartphone business in defiance of U.S. sanctions. This report assesses the implications from this latest development for China’s AI industry and the future of semiconductor export controls.Waterfall’s Shadow In Mekong2023-09-29T12:00:00+08:002023-09-29T12:00:00+08:00https://agorahub.github.io/pen0/hkers/waterfalls-shadow-in-mekong<excerpt /> <p><em>Infrastructure programs like China’s Belt and Road Initiative further authoritarian influence in climate and water-stressed regions. The United States needs strategies that simultaneously advance water security and national security to compete with China.</em></p> @@ -8978,415 +9593,4 @@ <hr /> -<p>案件編號：HCCC69/2022</p>獨媒報導李予信稱獲楊岳橋指示報名參選港島後被叫停、理解非鄭達鴻「Plan B」 李予信指楊岳橋否決財案「莊嚴承諾」未必兌現、不會跟黨立場投票Put UK Defence Into Context2023-08-21T12:00:00+08:002023-08-21T12:00:00+08:00https://agorahub.github.io/pen0/hkers/put-uk-defence-into-context<p><em>We offered some <a href="https://rusi.org/explore-our-research/publications/commentary/how-refreshing-initial-assessment-uks-integrated-review-refresh">initial commentary</a> on the Integrated Review Refresh (IRR) in March.</em> <excerpt></excerpt> <em>This piece does not try to apply to the Defence Command Paper Refresh (DCPR) the five “tests” of the analytical framework for assessing the main post-Cold War reviews which we proposed in our <a href="https://rusi.org/explore-our-research/publications/occasional-papers/five-tests-integrated-review">December 2020 report</a>. Instead, it briefly assesses the policy ideas and approaches in the DCPR and makes suggestions for how the Department could sharpen its thinking and approach ahead of the next major review, likely due after the next general election.</em></p> - -<h3 id="overall-assessment">Overall Assessment</h3> - -<p>We offer three headline assessments of the DCPR.</p> - -<p>First, because of the fiscal constraints under which it was produced, the DCPR centres on policy ideas and approaches rather than on new capabilities. The white paper contains a large number of policy ideas. But, as the chapter-by-chapter analysis below indicates, very few of them are new. We suggest that those who will be planning and leading the next major review would benefit from familiarising themselves with what has gone before, including the 2010 and 2015 white papers (and previous ones) and the defence green paper in early 2010. The DCPR arguably – even if not deliberately – serves a similar function to that green paper, setting out a broad menu of issues that will need to be considered again in the next major review.</p> - -<p>Second, the DCPR sets out a series of worthy high-level goals but is very light on detail and contains no clear sense of prioritisation. The original Integrated Review, Defence Command Paper (DCP) and Defence and Security Industrial Strategy (DSIS) were crammed with commitments – anecdotally, they added up to more than 250 in total. The DCPR contains dozens more. We suggest that those leading the next major review should consider carefully how to prioritise the key outcomes relating to force structure, capabilities and policy and planning approaches. It would be much more useful to select a dozen or so major targets and to build robust implementation and monitoring functions to ensure that these key outcomes are being delivered effectively.</p> - -<p>Third, we observe that, despite the rhetoric, the “Integrated Review” has hardly lived up to its billing. The 2010 Strategic Defence and Security Review (SDSR) was the first attempt to conduct an integrated defence and wider national security review, and even then produced two back-to-back white papers. The 2015 SDSR produced a single, integrated white paper. The 2021 exercise produced three separate white papers. In all cases, these major reviews were followed by minor ones only a few years later, as with this year’s “refreshes”. Those designing the process for the 2025 reviews should consider in advance which of these models they would prefer.</p> - -<h3 id="the-mods-strategic-approach">The MoD’s Strategic Approach</h3> - -<p>The new purpose for Defence proposed by the DCPR – “to protect the nation, and to help it prosper” – is clear. And the six “design principles” that will inform the Ministry of Defence’s (MoD) approach – threat-led, adaptable, Allied by design, integrated, innovative and digitised – look sensible, although none are new.</p> - -<p>The inverted structure of the body of the DCPR – with chapters on the key elements of the “Defence Enterprise” in Part 1 and on the more traditional policy fare of white papers in Part 2 – suits the limited ambition of this document, but would not work so well for a full-scale review.</p> - -<h4 id="part-1--securing-and-maintaining-strategic-advantage">Part 1 – Securing and Maintaining Strategic Advantage</h4> - -<p>The DCPR can be applauded for literally putting people first, in Chapter 1. It challenges the notion that headcount is the appropriate measure of the “size” of the UK’s armed forces and their capability – a notion that takes little account of the mechanisation of warfare and the latter-day profusion of uncrewed and lightly-crewed systems.</p> - -<p>The chapter commits to “taking forward” the recommendations of the recent Haythornthwaite Review on the terms and conditions of military service. Many of these – for example, “zig zag or portfolio careers” – are not new. The key test will be how quickly the MoD implements them.</p> - -<p>Another major theme is skills, with a particular focus on enhancing digital skills. It is good to see the Defence Academy put at the forefront of this – and the commitment to working closely across government and with industry and academia. But the paper gives little sense of how Defence collectively and the Defence Academy in particular will drive through the skills agenda with the energy and pace required.</p> - -<p>MoD civil servants will be disappointed by the single – and largely boilerplate – paragraph on the vital contribution of “our Civil Servants”. The next review should not treat the MoD’s civil service workforce as an afterthought.</p> - -<p>Chapter 2 follows several earlier reviews in emphasising the MoD’s intention to modernise and transform defence through science, innovation and technology. The MoD says it will increase its investment in advanced research and development and align its Science &amp; Technology (S&amp;T) programmes with the five critical technologies identified by the National S&amp;T Council: Artificial Intelligence, Engineering Biology, Future Telecommunications, Semiconductors and Quantum Technologies. The MoD also plans to develop its capabilities in robotics, human augmentation, directed energy weapons and advanced materials.</p> - -<p><strong><em><code class="highlighter-rouge">Improving operational efficiency and cost-effectiveness has featured in every major post-Cold War defence review. Unless a markedly different approach is taken this time, it is difficult to see how there will be decisive change</code></em></strong></p> - -<p>Building on lessons learned from how the Ukrainian armed forces have operated, these steps aim to accelerate the speed of operational decision-making, contribute to increased productivity in the force and improve lethality. Pound for pound, investment in these technologies collectively has the potential to increase the battlefield capability of the UK armed forces to a much greater extent than any increase in personnel numbers, although it will likely require significant re-rolling and upskilling of current personnel and the recruitment of new personnel with the skills required to operate such technologies.</p> - -<p>Sensible too is the move away from a platform-centric approach in favour of focusing on the military effects that are required, along with autonomy, digital and data-centric capabilities. It remains to be seen whether the MoD will reduce its investment in major platforms and how it will prioritise the development of these promising ideas to the extent required to really move the dial on the technology-led modernisation of the armed forces.</p> - -<p>Chapter 3 covers plans to improve the Department’s performance in the acquisition of defence capabilities. Like other Western defence departments, the MoD has grappled with this challenge for decades with limited success.</p> - -<p>The document declares that “….we must buy simpler platforms more quickly and design into them the capacity to upgrade at speed…” and “[we] must force ourselves to accept solutions that are good enough…” Amen – but how is this to be achieved? Open-systems architecture, spiral development, more emphasis on exportability, encouraging project leaders to remain in post for longer, and greater attention to front-end planning are all laudable, but they are not new ideas.</p> - -<p>So, what is new? The stress on timely delivery over perfection may not be, but it is described with greater conviction (and aligns with one of the conclusions of the recent Australian Defence Strategic Review). It would be good to hear a ringing endorsement from industry. Setting a maximum five-year commitment for acquisition programmes (three years for digital) is new, but it is not clear how this will be enabled or enforced. And, how will a thematic (as opposed to domain-centric) approach to capability development contribute to the improvements sought, and how will this work in practice? Further detail and clearer plans will be required to measure progress towards achieving these goals.</p> - -<p>In his annual RUSI lecture in December 2022, the Chief of the Defence Staff foreshadowed a major drive to increase the productivity of the armed forces through greater levels of lethality and readiness. We had expected to see more detail in the DCPR, but Chapter 4 does not provide this clarity. Improving operational efficiency and cost-effectiveness has featured in every major post-Cold War defence review. Unless a markedly different approach is taken this time, it is difficult to see how the DCPR will deliver decisive change.</p> - -<p>We are encouraged to see that work is now underway to review the current Defence Operating Model. In our view, the recommendations of the 2011 Levene report on Defence Reform were applied in a one-sided manner. The delegation of financial authority to the Commands was not accompanied by the strengthening of the corporate framework and the Centre of the Department which Levene had envisaged – resulting in an erosion of financial discipline and a model which is ill-suited to making the defence-wide adjustments that the contemporary strategic context requires.</p> - -<h4 id="part-2--operational-ambition">Part 2 – Operational Ambition</h4> - -<p>In relation to the debate over UK defence and security policy during the seven years since the Brexit referendum, perhaps the most significant phrase in the DCPR is: “… we will develop a force that is optimised to warfight in the Euro-Atlantic and in defence of our homeland”. Such clarity is overdue and very welcome – as is the focus on deterrence in Chapter 5. This paper follows the IRR in speaking of “An Integrated Approach to Deterrence and Defence”; why both documents could not have used the simpler US formula of “Integrated Deterrence” is a mystery. While the paper updates the reader on the Defence strands of deterrence, it does not adequately fill the gap we identified in the IRR: it says little about the integration of defence and civil capabilities to enhance deterrence.</p> - -<p>On nuclear, the DCPR notes that “we have… committed to a once-in-two-generations programme of modernisation of our nuclear forces” – a decision taken many years ago which sustains the concept of nuclear deterrence we have had since the late 1990s. Like the IRR, it says little about the fundamental changes in the global strategic balance since then, not least the dramatic growth in China’s nuclear capabilities.</p> - -<p>The opening message of Chapter 6 is that the MoD will “evolve” the previous DCP’s concept of “persistent engagement” to a “global campaigning approach”. We expressed some scepticism about the former in our commentary at the time – and the DCPR does not entirely still our doubts. In principle, a “campaigning approach” makes sense. But it is hard to see how Defence will “double the effect that we seek to achieve in the world” by 2030. The specific commitment to create a “Global Response Force” does not appear much different from the Joint Rapid Reaction Force announced in the Strategic Defence Review of 1998 and updated in most of the major reviews since then.</p> - -<p><strong><em><code class="highlighter-rouge">While it may be true that the security of the Euro-Atlantic and Indo-Pacific regions is indivisible, it is important that all concerned have a shared understanding of the limits of the military commitment</code></em></strong></p> - -<p>The intention to continue to grow the Global Defence Network is welcome. The chapter also records the decision (taken since the previous DCP) to transfer leadership of the Network to Strategic Command – but does not explain how this will make a difference in practice.</p> - -<p>The measures to increase defence exports are sensible, although few are new. UK defence exports appear to have grown significantly during the international turbulence since the start of Russia’s war on Ukraine. But some of the longer-term trends may be less favourable, including the increasing demand from key customer states for higher levels of indigenous development and production. A more penetrating examination of this area will be required in the next review.</p> - -<p>Chapter 7 covers international relationships. One of the UK’s strengths, in contrast to its adversaries, is its extensive array of alliances and partnerships. Bringing this subject to life without descending into a long list of friendly states around the globe is a familiar editorial and diplomatic challenge. The most striking features are the resurfacing of the EU and the space given to the Five Eyes and other Indo-Pacific partners.</p> - -<p>We applaud the renewed acknowledgement of the importance of the EU to UK security: “The UK will use the new momentum in the relationship to develop forms of direct cooperation, as we already intend to do through the PESCO project on military mobility”. A key task will be to ensure that the UK is not frozen out of EU capability cooperation programmes which would benefit UK Defence in the round, including the defence industry.</p> - -<p>While it may be true in one sense that the security of the Euro-Atlantic and Indo-Pacific regions is indivisible, it will be important that all concerned have a shared understanding of the limits of the military commitment. The DCPR manages to tread this fine line, including by apparently stepping back from the somewhat bolder language in the March 2023 AUKUS statement on the deployment of submarines to Western Australia. Continuing to tread this line successfully in the future will be testing.</p> - -<p>The language on Strategic Resilience in Chapter 8 is the clearest sign yet that the MoD has fully absorbed its importance in an era of great power confrontation. We welcome the commitment to work with other government departments to implement the government’s 2022 Resilience Strategy. This will be a huge undertaking, made more challenging by the state of the economy and the public finances. The skills and capabilities of the UK’s armed forces are widely acknowledged. But the MoD will need to strike a balance between playing its full part and recognising where the lead falls to other departments.</p> - -<p>The emphasis placed on the Reserves is striking. Finding a way to make service in the Voluntary Reserves more attractive, particularly to young people of all backgrounds, should be a priority. The MoD should expand on its plans to turn the ex-regular reserve forces into a “Strategic Reserve”. We have always found it odd that so little use is made of ex-regular forces for defence purposes, even though adequate incentives and the cooperation of civilian employers would be a prerequisite.</p> - -<p>Another area where the MoD will need to elaborate publicly on its plans is the commitment to introducing an integrated air and missile defence system. Questions include how the maximum benefit will be secured from close engagement with NATO’s system, and how it will improve the dispersibility of UK forces for self-protection, given the substantial contraction in the number of airbases and other defence sites in recent decades. We wonder whether the MoD really has the bandwidth to engage effectively in the range of resilience-related activities mentioned in this chapter.</p> - -<h3 id="conclusion">Conclusion</h3> - -<p>There has been relatively little commentary on the DCPR, likely because of the timing of its publication, but also due to its modest content. The MoD did not expect to have to update the 2021 DCP so quickly – although the history of defence planning suggests this was likely. As this article has brought out, the DCPR contains a range of worthy ideas but sparse detail on how these will be delivered, so leaves many questions unanswered. There will be important decisions on force structure, capabilities and planning approaches to be made in the 2025 review. Whether that review leads to the acceleration of plans to further modernise the UK’s armed forces and wider defence capabilities will depend on whether the incoming government decides to make further significant investment in defence. No doubt preparatory work is underway in the MoD to make the case for doing so.</p> - -<hr /> - -<p><strong>Will Jessett</strong> CBE is a Senior Associate at SC Strategy Ltd. He recently (early 2019) retired from the UK Ministry of Defence after 33 years in a wide range of policy, operational, crisis and change management roles. He spent a third of his career overseas (USA, Poland, Cyprus, Namibia) working closely with those governments. He has specialised in strategic defence planning, particularly in the last decade, shaping and leading MOD’s work on the major strategic defence and security reviews in 2010 and 2015, the 2017 National Security Capability Review and overseeing the Modernising Defence Programme which concluded at the end of 2018.</p> - -<p><strong>Tom McKane</strong> is a Distinguished Fellow of the Royal United Services Institute and a Visiting Senior Fellow at the London School of Economics and Political Science (LSE). He is also a senior member of the European Leadership Network.</p> - -<p><strong>Peter Watkins</strong> left the MoD in 2018. Between 2014–18 he was, successively, Director General Security Policy and Director General Strategy &amp; International in the MoD. During a career spanning 38 years, Peter worked in a variety of roles in the MoD and overseas, including many years in defence acquisition.</p>Will Jessett, et al.We offered some initial commentary on the Integrated Review Refresh (IRR) in March.【初選47人案・審訊第 109 日】2023-08-18T12:00:00+08:002023-08-18T12:00:00+08:00https://agorahub.github.io/pen0/hkers/trial-of-hk-democrat-primary-elections-day-109<ul> - <li>李予信稱曾因財政問題被公民黨拒出選超區、被捕後改獲黨支持</li> -</ul> - -<excerpt /> - -<p><img src="https://i.imgur.com/0m9XZ9k.png" alt="image01" /></p> - -<p>【獨媒報導】47人涉組織及參與民主派初選，被控「串謀顛覆國家政權」罪，16人不認罪，今（18日）踏入審訊第109天。前公民黨東區區議員李予信繼續作供，就他拒任鄭達鴻第二，但其後改參選超區，李解釋自己想做立法會議員，但「排第二係唔會做到」，而當時譚文豪曾問他參選意向。李指曾與譚會面，提及他所倡的政策理念或與公民黨否決所有撥款和議案的立場有出入，譚指他可繼續講其主張，李理解其言下之意是黨就否決的立場「有彈性」、他成功出線再算。李其後申請黨內「徵召機制」參選超區被拒，理解黨因他勝算不高無法全數資助其40萬初選經費。不過李於6.12一周年涉非法集結被捕後，獲告知引起黨內高層和黨員關注，並獲得捐獻，黨遂重新考慮支持他出選，李終於6月19日宣布參選，但於初選落敗。</p> - -<p>就公民黨簽署的「墨落無悔」聲明，李指與他無關，因他當時並非公民黨潛在候選人，「我冇去關心」；而他無出席過協調會議，決定參選後不知道初選規則，向黨查詢方獲告知超區「坐三望四」，理解是協調目標。李亦指，提及否決財案的選舉單張為公民黨共用，但《國安法》後無再派發亦刪去相關字眼。</p> - -<h4 id="被問為何改選超區-李稱想做立會議員但排第二係唔會做到">被問為何改選超區 李稱想做立會議員但「排第二係唔會做到」</h4> - -<p>前公民黨東區區議員李予信今繼續作供，他昨供稱，曾拒絕參選港島的前黨友鄭達鴻提議排其名單第二，但其後報名黨內「徵召機制」參選超區。法官李運騰關注李曾告訴鄭他想專注地區工作，但兩三星期後突然又下定決心獨自參選，為何會有此心意的改變？李欲回答時，法官押至今處理。</p> - -<p>李今解釋，「其實當時我可以形容我係想做立法會議員」，而與之前心態不同在於「排第二係唔會做到立法會議員嘅」。李並指，他想做立會議員是因當時或因社會政治氣氛較緊張，政府代表不太聆聽區議員意見；他亦望為被政府於抗疫基金遺忘的業界爭取撥款。</p> - -<p><img src="https://i.imgur.com/nFdKTqI.png" alt="image02" /> -▲ 李予信</p> - -<h4 id="李稱黨高層找人填補黃文萱位置-譚文豪曾問他有無意向參選">李稱黨高層找人填補黃文萱位置 譚文豪曾問他有無意向參選</h4> - -<p>李續指，就時任公民黨沙田區議員黃文萱原欲參選超區但及後退出，他5月最後一星期得悉黨高層正找人填埔黃的位置，而當時譚文豪曾致電他，言下之意問他有無意向參選超區，李回答「有」，並談及一系列政策和問題想透過立法會處理。</p> - -<p>李並指一兩日後，應在5月27至30日之間，譚相約他到其立法會議員辦事處再傾談，李指會面很短暫，他向譚指有一系列政策和理念想透過立法會選舉說出來，惟它們有機會與早前黨稱否決所有撥款和議案的主張「有出入」，「簡單啲嚟講我係要錢，而之前黨有啲講法就係反對撥款，即係唔要錢，但我選舉嘅主線將會係不斷講一啲需要錢嘅項目。」</p> - -<h4 id="李指其政綱要錢與黨有矛盾-理解譚文豪言下之意有彈性">李指其政綱「要錢」與黨有矛盾 理解譚文豪言下之意有彈性</h4> - -<p>李記得譚回應，「選超區呢最緊要嘅係知名度，而依樣嘢係我當其時欠缺嘅」，故譚建議他應好好運用他「社工區議員」及「街頭藝術舞蹈家」的兩個身分，「因為佢知道我跳咗十幾年街舞。」</p> - -<p>李並指，就其政策和理念與黨說法有矛盾，譚無正面去解決，但譚有提及「你可以繼續講你想爭取嘅嘢」，因這些東西與其身分有很密切的關係。李理解譚言下之意，是黨就否決所有撥款和議案的立場「係有彈性嘅，亦都唔係一個已經決定咗或者係好實在嘅一個講法，係一個 undecided 嘅議題」，譚亦認為「我成功出線到初選，先至再算啦」。</p> - -<p><img src="https://i.imgur.com/JJEsfyq.png" alt="image03" /> -▲ 譚文豪（資料圖片）</p> - -<h4 id="李稱黨因財政和勝算問題-拒絕其徵召機制申請">李稱黨因財政和勝算問題 拒絕其徵召機制申請</h4> - -<p>李予信同意，6月2日中午向公民黨秘事處總行政主任 Pancy Ho 發電郵，提交5個區議員名單報名參與「徵召機制」，其中一位是黃文萱。李6月5日獲確認報名，顯示他是唯一表示有意參加的公民黨區議員。李同日晚上接受公民黨選舉策略委員會的面試，展示政綱及選舉的財政預算和計劃，「因為我當其時希望黨可以資助到我，我冇咁多錢」。李解釋就超區初選和正選分別保守估計需40萬和160萬元，他當時望黨可以全額資助初選，就正選費用則可借貸、如他成功當選再分期付款歸還，但「結果係傾唔成功」，委員會告知他就初選經費，「佢哋 expect 係 grant（資助）7萬蚊。」</p> - -<p>李續指，於6月6日出席諮詢會，向黨內區議員介紹參選理念和政綱，約於6月8日再接受品格審查委員會面試。辯方大律師關文渭指會上是否問及他有否隱瞞的事及可能被對手利用的黑材料，例如有多於一個女朋友，李同意。法官陳慶偉續笑着問：「有多於一個女朋友有什麼問題？（“What’s wrong with more than one girlfriend?”）」多人發笑，陳再說：「如果他是未婚（single），有什麼問題？」</p> - -<p>李續指，他6月9日收到時任副主席賴仁彪電話，表示經過上述3次面試，「有時黨都要作出一啲困難嘅決定」，並告知李其徵召機制申請不成功。李不記得賴解釋時的確實用字，但「最尾我哋 come up 咗係同財政關係」，理解賴言下之意是勝算和經費上，「個情況就好似一個投資嘅決定咁樣，佢覺得我開出嗰個 financial 嘅要求呢，黨滿足唔到呀。」李認為，初選的40萬資助是「最大嘅問題」，因黨僅可資助其中7萬，其餘33萬需由他向黨借貸。法官陳慶偉問，因李勝算不高，所以黨無法借33萬給他？李答：「我係咁樣理解嘅。」</p> - -<h4 id="李稱公民黨於610宣布重啟徵召機制">李稱公民黨於6.10宣布重啟徵召機制</h4> - -<p>李予信同意，秘書處於翌日、即6月10日再向所有黨內區議員發電郵公布決定，提及徵召機制再啟動，李撤回申請，李稱「依個係佢哋嘅說法」，並重申前一日與賴仁彪通電話後，「我就知我自己唔能夠代表公民黨參加選舉。」李指他遂重整心態，「決定再做返自己區議員應該做嘅嘢。」</p> - -<p>法官陳慶偉一度問及李的財政狀況，李指2019年畢業後至2020年間，主要任陳淑莊兼職助理，月入約6至7千元，亦很偶爾會有街舞表演收入；而他任區議員後月薪約3萬5千元，至2020年6月時銀行存款約有3至5萬元。</p> - -<h4 id="李稱不知道69初選記者會與墨落無關因當時非潛在候選人">李稱不知道6.9初選記者會、與「墨落」無關因當時非潛在候選人</h4> - -<p>就6月9日初選記者會，李稱當時不知道，亦不知道組織者會上說的話，因當時尚未確認黨是否接納他參選，故只是埋首關於籌備選舉的工作、是「預備埋班去選」的心態，如接納就可「去馬」。</p> - -<p>就鄒家成等人6月10日晚發起「墨落無悔」聲明，公民黨於翌日中午以黨名義簽署，李亦表示「我沒有參與黨內任何關於『墨落無悔』聲明嘅討論」，與「墨落」無任何關係。陳慶偉問，是因為李在公民黨的階級太低嗎？因他只是支部黨員。李稱是其中一個原因，而且「我當時並不是公民黨嘅潛在候選人，我冇去關心」。李亦同意，他曾於 Facebook 轉發3月25日公民黨記者會帖文，但沒有轉發黨有關「墨落無悔」的帖文。</p> - -<h4 id="李稱612一周年被捕後獲捐獻支持-黨重新考慮派他出選超區">李稱6.12一周年被捕後獲捐獻支持 黨重新考慮派他出選超區</h4> - -<p>就李予信其後為何重新出選超區，鄭達鴻曾供稱李2020年6月12日參與街頭活動「被邀請入警署」後，黨才討論找李參選超區，因黨擔心在街頭「貢獻」不足，想被攻擊時「可以有呢樣嘢講出嚟」。</p> - -<p>李予信今指2020年6月12日，即6.12一周年紀念日，有北角街坊向他表示「佢啲仔女都落咗去」，而在場很多防暴警察、他很擔心，故「叫我去睇吓」。李遂去了銅鑼灣，及後被警方以非法集結罪名拘捕，李稱當晚是用區議員身分到場，惟法官李運騰打斷指不是要就該案審訊。</p> - -<p><img src="https://i.imgur.com/ex5meLG.png" alt="image04" /> -▲ 2020年6月12日 李予信於銅鑼灣被捕（資料圖片）</p> - -<p>李續指，其後被帶到東區醫院，獲公民黨三名律師楊岳橋、梁嘉善和彭皓昕探望，他翌日獲得警署擔保。法官李運騰問李予信之後參選超區，與被捕有關嗎？李指有關係，提及是「基於警暴」；又指賴仁彪其後致電他，指李被捕後引起了一些黨內高層和黨員關注，故有一些來自他們的捐獻支持李出選超區，「所以之前呢，因為財政理由退出呢，而家黨就可以重新考慮，去解決我之前嘅財政問題，支持我出選超區」，賴並提及因有捐獻，故可達到李當初提出40萬的財政要求，意味李初選可獲得全數資助，而賴「冇多講勝算」。</p> - -<h4 id="李稱不知初選規則曾向黨查詢-獲告知超區民主派坐三望四">李稱不知初選規則曾向黨查詢 獲告知超區民主派「坐三望四」</h4> - -<p>李續指，賴仁彪其後「要好從速咁 resume（重啟）返嗰個徵召機制嘅程序」，李亦要再取得15名黨內區議員支持和再辦多一次區議員大會。李指當時並不知道初選的規則，亦無出席5月13日的超區初選協調會議，而他曾於6月17日向公民黨秘書處總幹事、「大內總管」歐飛發訊息稱：「HI AUFEI，有點急…我想知道超區初選既規則係點？我係阿信」，庭上展示相關紀錄。</p> - -<p>李指當時是與賴仁彪通電話兩三日後，他正「好急咁籌備緊我要參加超區初選」，而李當時就初選規則的概念是每區均有目標議席，並要就該目標做決定。李指發訊息後，歐飛即時致電他講解初選規則的前設，指超區形勢是民主派在五席內可「坐三望四」，視乎建制派出多少張名單，而第五張名單不可報名，且投票率要夠高等。李指他曾追問「條數點計」，歐飛着他找賴仁彪。</p> - -<p>辯方續展示公民黨區議員群組的紀錄，顯示6月18日賴仁彪曾發訊息提及「早前李予信議員曾表達有意參加區二立選，但由於經濟負擔問題，所以主動要求中止程序。612晚上阿信被無理拘捕事件得到極大關注，有心人得知阿信出現選舉經費問題，因而向他表達願意捐款支持鼓勵他重新考慮出選。立法會黨團及候選人即時作出討論，並支持重啟相關程序」，並重新安排於6月18日及23日舉行區議員諮詢會。</p> - -<h4 id="李619首次公開宣布參加初選無提及否決預算案">李6.19首次公開宣布參加初選、無提及否決預算案</h4> - -<p>李其後於6月19日發訊息予賴仁彪，問「我想知道更詳細取四席條數係點計」，賴遂將一份公民黨有關超區選情內部分析的簡報發給他。李同日出席公民黨於中環的初選街站，首次公開宣布參加初選，並指當時從無講過否決預算案，街站發言期間亦無人提及，但其後的問答環節有人提及。李同日於 Facebook 發文宣布參選，但同樣無提過否決預算案。</p> - -<p><img src="https://i.imgur.com/BE0wRHX.png" alt="image05" /> -▲ 2020年6月19日 公民黨於中環舉辦初選街站（資料圖片）</p> - -<h4 id="李稱國安法前就初選投票拍片-事前僅獲發自己講稿無參與發布決定">李稱《國安法》前就初選投票拍片 事前僅獲發自己講稿、無參與發布決定</h4> - -<p>而就公民黨7月10日在 Facebook 發布的「【7.11 7.12 初選】兩分鐘睇初選點投票」片段，楊岳橋片中承諾若特首未能落實五大訴求，公民黨將否決政府法案和預算，鄭達鴻曾稱片段講稿因《國安法》作出刪改。</p> - -<p>李確認，公民黨秘書處職員「KAYEE」於6月19日曾發訊息給他，提到就初選投票拍片，並通知李和楊岳橋、譚文豪、鄭達鴻及郭家麒5名參選人於翌日拍攝的時間地點。李指拍攝前獲發他自己的講稿，不知道其他人確實會說什麼，但據其認知均是教人投票的內容，而當天到達時鄭達鴻剛拍攝完成。李並指由拍攝片段至發布期間，均無看過片段成品。</p> - -<p>辯方展示第八次選舉經理會議紀錄，提及「投票片改了兩轉，預計不遲於7月2日提供 third cut，予選舉經理人提供意見」，李指他沒有出席，只有其選舉經理和代理人出席，但無印象獲告知會上情況，亦無參與片段發布的決定、沒有被諮詢。</p> - -<h4 id="李稱單張提否決財案為公民黨共用國安法後無再派發並修改單張">李稱單張提否決財案為公民黨共用、《國安法》後無再派發並修改單張</h4> - -<p>李續確認，於6月20日提交初選提名表格，理解當中「支持和認同戴耀廷和區諾軒主導之協調會議共識」，意思是民主派需要有個協調，並聯想到早前向歐飛和賴仁彪查詢超區協調目標，應是「坐三望四」，「咁我係認同呢個目標嘅。」</p> - -<p>李並確認，表格附有寫上「越打壓 越頑強」及他大頭照的政綱，提到公民黨將全力爭取議會過半35+，「以關鍵否決權促使政府落實『五大訴求』」。李指該政綱是公民黨「中央 share 用嘅政綱」，「我記得黨亦都提，交表嘅時候係用呢個政綱」，李當時亦無其他現成已設計好的政綱可以用。李並解釋5月底時已醞釀政綱的意念與倡議，至6月13日得悉可出選後就「同 designer 去夾」，當時是「一路設計緊」。</p> - -<p>李續同意，初選超區 WhatsApp 群組於6月24日建立，他是群組成員之一，但群組內無提及否決預算案。而他6月27日將設計好的單張分兩批付印，首批1,000份於6月28至29日的街站「派咗七至八成左右」，至於另外5,000份於6月30日中午才可領取，但最終他「一張都冇派到」，解釋因當時有消息指晚上《國安法》將出爐，故決定晚上「觀察住嗰個法例嘅條文，睇吓有啲咩事發生」。李最終一直保管餘下未派的單張及5,000份單張，直至被捕，亦僅就首1,000份單張、而非5,000份單張申報選舉開支。</p> - -<p>庭上展示該款單張，寫有「顛覆想像」，同樣提及公民黨將全力爭取議會過半35+，以關鍵否決權促使政府落實「五大訴求」。李重申該內容是其團隊「從黨公用嘅 template 攞返嚟」，並於《國安法》前設計和印刷。李續指，《國安法》後曾修改單張，無再提及以否決權促使政府回應五大訴求，並修改部分字眼，他於7月3日分批印刷共14,000份，全部派畢。</p> - -<h4 id="李稱初選論壇從無倡否決財案-初選落敗得票僅2">李稱初選論壇從無倡否決財案 初選落敗得票僅2%</h4> - -<p>李予信其後於7月4日出席初選論壇，同意論壇上從來無倡議否決預算案，而會上鄺俊宇曾問李是否願意入議會提倡社會福利政策幫助基層，李表示當然願意，又提及社福政策最大的流弊，「我覺得一筆過撥款係毀滅咗好多社工嘅夢想，係對於好多嘅社福界嘅機構、高層同前線出現矛盾，呢個係一定要喺議會入面繼續去跟進」，又指作為議員，「市民嘅福祉一定係要我哋去捍衛。」</p> - -<p><img src="https://i.imgur.com/6kY27lr.png" alt="image06" /> -▲ 鄺俊宇（左）（資料圖片）</p> - -<p>李並指，於7月11至12日初選投票日，附在提名表格的政綱並無張貼於票站外，而是如鄭達鴻早前供述改為「無字政綱」。鄭作供時曾展示該單張，寫有「以言入罪 無字政綱 SPEECH CRIMES ARE AGAINST FREEDOM」。而李最終於初選落敗，只有2%得票，他並於7月15日記者會公開宣布不會競逐超級區議會正式選舉。</p> - -<p><img src="https://i.imgur.com/sJbvyhD.png" alt="image07" /> -▲ 2020年7月15日 公民黨記者會（資料圖片）</p> - -<p>關文渭指尚餘約半小時提問，案件下周一（21日）續。</p> - -<hr /> - -<p>案件編號：HCCC69/2022</p>獨媒報導李予信稱曾因財政問題被公民黨拒出選超區、被捕後改獲黨支持【初選47人案・審訊第 108 日】2023-08-17T12:00:00+08:002023-08-17T12:00:00+08:00https://agorahub.github.io/pen0/hkers/trial-of-hk-democrat-primary-elections-day-108<ul> - <li>李予信稱獲通知出席公民黨記者會呼籲選民登記、會上就否決撥款「訊息混合」</li> - <li>李予信稱曾拒絕鄭達鴻提議排其名單第二 後改參選超區</li> -</ul> - -<excerpt /> - -<p><img src="https://i.imgur.com/wIojngA.png" alt="image01" /></p> - -<p>【獨媒報導】47人涉組織及參與民主派初選，被控「串謀顛覆國家政權」罪，16人不認罪，今（17日）踏入審訊第108天。參選超區的前公民黨東區區議員李予信今開始作供，表示2016年因協助公民黨立會競選而接觸鄭達鴻等人，並於2018年底獲鄭邀請參選北角錦屏區，遂加入公民黨成為支部黨員，並成功當選。惟李指支部黨員權力受限，不能出席會員大會及投票、不能參選執委等。</p> - -<p>就公民黨提及否決預算案的3月25日記者會，李稱獲秘書處通知出席，指是呼籲選民登記，他認為理所當然要幫手；並形容會上得到「混合嘅訊息」，一方面楊岳橋等提出否決所有撥款，但郭家麒則稱若預算案合理會支持。李並指當時「我從來冇表達過，亦都冇諗過參與該屆嘅立法會選舉」，他會上也無發言。而李會後曾出席公民黨「立法會選舉心戰室核心小組」會議，李指當時有如「新入公司嘅員工，入咗一間高層嘅房」，他僅曾就疫情議題發言一次，亦無人向他解釋過邀請他出席上述記招和會議的原因。</p> - -<h4 id="李予信開始作供-稱2016年獲鄭達鴻邀請代表公民黨參選區議員">李予信開始作供 稱2016年獲鄭達鴻邀請代表公民黨參選區議員</h4> - -<p>參選超區的李予信今開始作供，接受大律師關文渭主問。李今身穿黑色上衣、深啡色長褸和白色長褲，以基督教宣誓。李確認，1993年生於香港，2020年案發時26歲，明天將踏入30歲。</p> - -<p><img src="https://i.imgur.com/yI5BOiS.png" alt="image02" /> -▲ 李予信</p> - -<p>李同意，於2014年首次接觸政治，他於香港大學專業進修學院（HKU SPACE）社會科學系副學士畢業後，任街工實習生，主要關注基層和勞工權益，同年入讀中大社會學系，翌年轉讀社工學系，因「想服務香港年青人同埋基層」。而李大學於公關公司任兼職時，公司於2016年負責公民黨立法會選舉港島區競選工作，參選名單包括陳淑莊和鄭達鴻，而李獲指派與公民黨聯絡，為他與該黨的首次接觸。</p> - -<p>李續指，該次選舉後與公民黨「冇好頻密嘅接觸，可能大時大節講一兩句恭賀嘅說話咁」，而他2018年底臨近畢業時思考畢業後的出路，得出結論是他很想做一些與社區或青年政策倡議有關的工作。李並指，當時任東區丹拿選區區議員的鄭達鴻剛好電話聯絡他，表示公民黨正就2019年區議會選舉作準備，認為當時在其選區旁的錦屏區「值得新人去嘗試」，公民黨亦正找人為康怡區的區議員接班。</p> - -<p><img src="https://i.imgur.com/LDufFmK.png" alt="image03" /> -▲ 陳淑莊（右）與鄭達鴻（左）競選2016年立法會選舉港島區（資料圖片）</p> - -<p>李續指，當時鄭邀請他出席一個飯局，與會者包括時任公民黨執委陳淑莊和賴仁彪，席間他們「詳細地傾過個可能」，李最終同意以公民黨名義競逐北角錦屏區，指選擇北角主要基於其工作理念，他望為基層爭取一些資源和為舊區規劃作出一些貢獻。</p> - -<h4 id="李加入公民黨港島支部-當選區議員後倡政府防疫基金援助被遺漏業界">李加入公民黨港島支部 當選區議員後倡政府防疫基金援助被遺漏業界</h4> - -<p>李予信表示，他當時尚未加入公民黨，而同意參選後第一步便加入成為公民黨香港島支部黨員，並於2018年11月27日收到確認電郵，同意電郵提到一國兩制原則。李並解釋，支部黨員為最基本成員身分，但權力有很多限制，不能出席會員大會及於會上投票、不能參選執委會成員、不能出任黨魁、司庫、秘書長等高級人員職位。</p> - -<p>李指，他亦成為兼職地區發展主任，指是培養地區工作者的系統，要出席基本社區工作手法、法庭知識、輔導諮詢知識等訓練，並獲公民黨實報實銷資助進行地區服務；他亦於2019年1月任時任立法會議員陳淑莊的兼職議員助理，主要從地區接收投訴轉介立法會及處理文件等支援工作。李同年5月完成大學課程，7月21日成為註冊社工：「我喺19年7.21朝頭早收到社工證。」</p> - -<p>李其後於11月當選為東區錦屏選區區議員，指他上任前民建聯蔡素玉已於該區任職逾20年，近兩屆均自動當選。而李上任後任東區區議會社會福利及安老事務委員會副主席，曾提倡支援社區創傷、失業援助金等社福政策，亦爭取糖水道天橋拆卸，及處理區內交通擠塞和衞生黑點問題。李又指，2020年初政府發放第一輪防疫抗疫基金，但當時收到一些被遺忘的行業投訴，包括藝術團體、健身中心、舞台工作者、技藝教育中心如跳舞學校和拳館等，嘗試游說政府將援助覆蓋支援他們營運。</p> - -<p><img src="https://i.imgur.com/3DZXHgT.png" alt="image04" /> -▲ 李予信（資料圖片）</p> - -<h4 id="李稱不知325記者會前有籌備會議-獲悉記招呼籲選民登記無需發言">李稱不知3.25記者會前有籌備會議 獲悉記招呼籲選民登記、無需發言</h4> - -<p>公民黨3月25日舉行記者會，時任黨魁楊岳橋曾承諾若政府不回應五大訴求，會否決所有政府議案、撥款及預算案致特首下台。李予信確認有出席該次記者會，但對鄭達鴻早前供稱會前曾舉辦籌備會議並不知情。</p> - -<p>李並指，記者會前一日，一名公民黨秘書處女員工電話通知他出席，介紹是一個呼籲選民登記的記招，因當時選民登記將截止，有逼切性呼籲大家盡快登記。李指聽到介紹後，「我就覺得好理所當然要幫手嘅，因為我係新任嘅區議員，咁登記選民呢啲咁地區性嘅嘢，從來都係地區工作者去做」，故他很快答應出席。</p> - -<p>李確認，當時公民黨有32名區議員，但不知道他被揀選出席記招的原因，稱「冇人同我解釋過個原因」。而該員工亦無詳細講誰會於記者會發言、會傳遞什麼訊息，並指他並無需於會上發言。</p> - -<p>法官陳慶偉一度問，李於記者會前一天才突被要求出席，該記者會對他來說是完全意料之外（surprise）？李說「其實唔會好愕然嘅」，解釋黨很多時辦記招或街站等活動，也會邀請一些成員去撐場。</p> - -<h4 id="李稱出席記招時從無表達亦無想過參與立法會選舉">李稱出席記招時從無表達亦無想過參與立法會選舉</h4> - -<p>李續確認，記者會出席者包括時任立法會議員郭家麒、楊岳橋、郭榮鏗、譚文豪、黨主席梁家傑，東區區議員鄭達鴻、沙田區議員黃文萱、油尖旺區議員余德寶，及擬參選立法會飲食界的林瑞華和大律師梁嘉善。而當時立法會議員坐前排手持「35+選民登記生成器」的紙牌；李予信和鄭達鴻等則站在後排，手持「35+議會過半，實現五大訴求」的紙牌。</p> - -<p><img src="https://i.imgur.com/jZLXGxS.png" alt="image05" /> -▲ 2020年3月25日 公民黨記者會（資料圖片）</p> - -<p>李表示，出席記招時仍是公民黨支部黨員身分，解釋章程規定支部黨員要最少成為12個月才有資格成為普通黨員，且要申請才做到，而他當時無申請，但同意無規定支部黨員不可參選立法會選舉。</p> - -<p>就各出席者，李指黃文萱無參加初選，但其後有報名新界東正式選舉；余德寶當時無表明有意參選，「佢同我一樣都冇發言，淨係企咗喺後面」，並約於5月「公開講到明唔會參與」。他不記得梁嘉善當時是否黨員，亦不知她會否參選立法會，而梁最終無參加初選，但後被黨徵召於7月31日報名參選新界西，他不知道原因。至於李本人，他指當時「我從來冇表達過，亦都冇諗過參與該屆嘅立法會選舉」。</p> - -<h4 id="李稱記者會訊息混合-楊岳橋等稱否決所有撥款-郭家麒稱不會">李稱記者會訊息「混合」 楊岳橋等稱否決所有撥款 郭家麒稱不會</h4> - -<p>李並指，當時從記者會得到一個「混合嘅訊息」，一方面清晰聽到楊岳橋、郭榮鏗、譚文豪3人提到反對所有法案、議案和撥款，要政府回應五大訴求，並提到《基本法》就否決預算案後安排的規定。但另一方面郭家麒發言時「好強調財政預算案嘅合理性」，舉例「如果撥款係胡亂畀警察嘅開支嘅話呢、如果唔合理的話呢，咁議員係有責任否決」；但「如果預算案係合理、得到市民支持嘅話呢，無論選到35席40席呢，其實都會支持」。</p> - -<p><img src="https://i.imgur.com/0cm3fqs.png" alt="image06" /> -▲ 郭家麒（資料圖片）</p> - -<p>李亦指，林瑞華當時發言「有一個位好觸動到我」，指林提及「政府啱啱提出一個荒謬嘅禁酒令」，而李正幫助的被遺忘的業界也受政府停業令影響，故很明白林所說的「業界利益」。李續指，總括而言他會上聽到一些關於否決所有撥款的說法，但似乎郭家麒又不會否決所有撥款的說法，而林瑞華則爭取業界支持，故形容當時記者會訊息「混合」，「但有一個一致嘅訊息就係，要政府聆聽民意同埋選民登記」。李並同意，他在黨內年資很淺，會上無反對楊岳橋等人說法。</p> - -<h4 id="李稱獲邀出席心戰室核心小組會議-理解與選民登記及樁腳有關">李稱獲邀出席「心戰室核心小組」會議 理解與選民登記及「樁腳」有關</h4> - -<p>李予信續表示，記者會後，被秘書處職員邀請出席3月30日的「立法會選舉心戰室核心小組」第三次會議，除鄭達鴻和梁家傑外，曾出席記者會的人士均有參與，亦有其他區議員。被問會議目的，李指大意是記者會後「可能有啲嘅檢討同埋有啲嘅工作」，而因有些工作應與他有關，故答應出席。</p> - -<p>辯方展示會議紀錄，李表示於事後看過「心戰室核心小組」的名字，理解是關於立法會選舉籌備的討論、或一些論述思考上的會議，但當時他理解「係同我距離有啲遠嘅，因為我只係一個上任3個月嘅區議員」。</p> - -<p>李運騰問，李知道他為何被邀請出席嗎？李指有兩個理解，首先他出席了3月25日記者會，記得楊岳橋有提及他身後有一些新的區議員，「佢哋係可以幫大家做選民登記」；其次是在傳統立法會選舉，區議員有機會做「樁腳」的角色，需在選舉時做一些地區上的支持，「呢兩個就係我當其時諗到我自己嘅身分同立法會選舉有關係嘅地方。」</p> - -<h4 id="李稱會議如新入職員工進入高層房-僅發言一次">李稱會議如新入職員工進入高層房 僅發言一次</h4> - -<p>就紀錄提及「與會者同意，現階段公民黨可透過發表文章，進一步闡述星期三記招的論述」，並提及由黃文萱發表文章。李解釋當時輿論不斷講議會價值、亦有非建制派政治人物提過「議會係冇用」，故會上應有探討如何將議會價值透過文章彰顯出來。</p> - -<p><img src="https://i.imgur.com/t38fIqX.png" alt="image07" /> -▲ 黃文萱（資料圖片）</p> - -<p>關文渭續指，參與者發言均會被記錄，但看不到李發言的紀錄。法官陳仲衡指「與會者同意」一句，李會是其中一個同意的人。李續解釋，「其實嗰一日嘅會議呢，我可以形容為好似一個新入公司嘅員工，入咗一間高層嘅房⋯⋯咁呢間房入面就有啲立法會議員講緊啲立法會層次上嘅大事啦，咁我當其時其實就真係坐喺度㗎啫，咁我記得我唯一一個發言嘅時候呢，就係喺後面嘅」，而就「與會者同意」的部分，他印象中無任何決議過程。</p> - -<p>李運騰追問，但李予信同意應再發文闡述立場？李指當時理解每個記招後都會有文章解釋黨的發言和論述，認為「係一個好平常嘅工作」，亦無任何異議，但當時無跟進、不清楚黃文萱有否撰文。</p> - -<h4 id="李稱不知道屬哪個團隊">李稱不知道屬哪個團隊</h4> - -<p>陳仲衡關注紀錄亦提到「各團隊」，李指理解是不同立法會選區候選人的工作團隊。陳問李屬於那隊？李說：「我唔知道我係邊個團隊。」李運騰續指李是東區區議員，看來屬於港島團隊，李表示「其實呢個團隊冇一個好官方嘅認證，你係咪一個團隊嘅意思」，又指他有機會是港島區的「樁腳」，但在會議紀錄的文字上「我唔清楚佢係咪 regard 我 as 嗰個團隊嘅一員」。李並指，不知道會議紀錄是草稿抑或正式紀錄，同意紀錄從鄭達鴻辦公室檢取。</p> - -<h4 id="李稱會議與選民登記有關喚起關注選舉-官稱有保留">李稱會議與選民登記有關、喚起關注選舉 官稱有保留</h4> - -<p>陳慶偉續引紀錄指，會議是「心戰室核心小組」的第三次會議，李予信此前一定有參與多過一次會議。李不同意，指該會議是他第一次參與，他前兩次無出席；而他是出席會議時才知道他成為了該小組的一員。</p> - -<p>陳續問，李指楊岳橋曾稱區議員可幫助選民登記，而他們獲邀出席會議的目的就是幫助選民登記，但會議紀錄卻完全無提過？李指會議紀錄上無，但「口頭上應該有講」，紀錄「未百分百準確」；而他不記得事前有否收過會議議程，但「我理解其實呢個會入面所有嘅討論，都係同選民登記有關係」，因「選民唔會無啦啦走嚟登記」，而是需要一些論述和解釋；又指每區關注議題也有出入，故理解會議存在意義是討論有什麼重點論述可在地區層面解釋給街坊聽。</p> - -<p>李運騰指，故會議並不是關於選民登記的流程，而是關於更高層面的事？李同意，認為是「喚起關注選舉」的工作層面。陳慶偉指能理解李稱會上討論是為了吸引選民投票支持公民黨，但若李稱該些討論是為了選民登記，他則有保留，並主動稱相信大家均有在街上被人問「先生，登記咗做選民未呀？」的經驗，陳志全、林卓廷等發笑。陳續提高聲線指，「而你不會說『我們想要這、想要那，入到議會我們會做這、做那』，不！我只會給你5秒鐘時間！然後我就會走開。」陳仲衡亦指，李不會告訴選民有關會上討論的「國際戰線」。</p> - -<p>李續解釋，在傳統政黨的工作，「我哋會視肯畀我哋吸引登記做選民嘅市民呢，其實好有機會喺將來嘅選舉投返畀我哋。」陳慶偉即高聲說：「為什麼？如果你來問『先生你登記咗未，我依家同你登記』，你怎知道我會投票給你？」李續指據其地區工作經驗，如擺街站幫人登記做選民，區內就會說「阿信幫人登記緊做選民喎」，形容是讓選民知道他在服務選民的其中一個工作。</p> - -<h4 id="李稱無人解釋邀他出席記招或心戰室會議原因">李稱無人解釋邀他出席記招或心戰室會議原因</h4> - -<p>李運騰指假設李所言正確，但這是一個由黨魁主持、有立法會議員和部分區議員出席的高層次會議，關於如何喚起市民關注並幫助黨於立法會選舉的選情，而在公民黨三十多名區議員中，為何會叫作為新人的李予信出席此會議？李說：「冇人去好詳細解釋過點解我喺記招或者呢個 meeting 嘅原因。」</p> - -<h4 id="李稱會上唯一就疫情影響發言郭家麒曾關注否決財案會否阻礙振興經濟">李稱會上唯一就疫情影響發言、郭家麒曾關注否決財案會否阻礙振興經濟</h4> - -<p>李予信其後補充，登記選民時會向市民點出社會問題如疫情，並闡述議會可幫助解決，有部分是會議上提過的內容。李又指會上唯一一次發言，就是討論到關於疫情後的經濟復蘇時，立法會議員問到地區上有否關於疫情影響的聲音，他遂舉手說有，並提及有接觸被防疫基金「遺忘」的業界代表，有相約他們去立法會開會，將有行動向政府爭取援助。法官李運騰再質疑與選民登記有何關係，李稱與登記流程關連不大，但與論述層面有很密切關連，同意是爭取社會對黨的支持。</p> - -<p>李欲再解釋時，法官陳慶偉打斷問及相關性，李運騰亦指認為辯方意圖顯示被告曾提出需政府支持的方案，他想與政府合作而非反政府，指法庭已理解。李亦確認，郭家麒會上曾提及，「民主派否決預算案迫政府落實五大訴求的策略，會否阻礙振興經濟的措施，建議要求政府將警察的撥款用作救市，以爭取市民支持」，亦吻合他在記招說法。</p> - -<h4 id="李稱無收過心戰室核心小組會議紀錄">李稱無收過「心戰室核心小組」會議紀錄</h4> - -<p>李運騰其後再質疑，會議紀錄提到設計選舉文宣、開設選舉經理群組等事項，問李予信是否同意選民登記是會上次要關注，首要關注是公民黨如何於立法會爭取更多議席？李不同意，指選民登記與立法會得票和策略上的考量其實並非互相排斥，「喺思緒上係要統一咁去考量。」</p> - -<p>李並指，會後無收過這份會議紀錄，他是被捕後開審才在審訊文件夾看到；又指之後有去過多於一次「心戰室核心小組」會議，但「依一刻事隔三年之後，我的確係唔記得咗」。李又指，就所有會議均從無收過會議紀錄，理解紀錄「唔係畀我哋睇」，是供秘書處職員存檔及執行，像他這種參與者「記得有咩要做就自己去做」，如就介紹選民登記的原因和論述「用個腦記住就得喇」。</p> - -<p><img src="https://i.imgur.com/N2OxQba.png" alt="image08" /></p> - -<p>【獨媒報導】47人涉組織及參與民主派初選，被控「串謀顛覆國家政權」罪，16人不認罪，今（17日）踏入審訊第108天。李予信繼續作供，表示參選港島的前黨友、同案被告鄭達鴻，曾於2020年4至5月問他「（港島名單）排佢第二好唔好」，二人曾探討該可能性；惟李認為自己剛任區議員，忙於處理地區工作，如還要頻密落區派傳單，難以發揮其工作理念關注的議題，終在5月中向鄭表示不想做第二，並退出其選舉預備工作。李續指，其後前黨友黃文萱決定不參選超級區議會，他並於6月初報名黨內「徵召機制」參選超區。法官關注，李曾告訴鄭達鴻自己想專注地區工作，但兩至三星期後突然又下定決心獨自參選，為何會有此心意的改變？李欲回答時，法官打斷問答案是否很長，辯方確認，法官遂押至明早處理。</p> - -<h4 id="李予信稱曾探討正式選舉排鄭達鴻名單第二的可能-但無協議">李予信稱曾探討正式選舉排鄭達鴻名單第二的可能 但無協議</h4> - -<p>參選超區的前公民黨東區區議員李予信繼續作供，李的前黨友、鄭達鴻早前曾稱，李予信於3月至5月時原排其港島名單第二。李予信今指，二人「冇一個協議，只係一個可能性嘅探討」，該討論應於4至5月中進行，「有一次鄭達鴻同我講過，排佢第二好唔好。」</p> - -<p><img src="https://i.imgur.com/0ccfVTV.png" alt="image09" /> -▲ 鄭達鴻（左）、李予信（右）（資料圖片）</p> - -<p>法官關注李是於初選抑或正式選舉排鄭達鴻名單第二，李指他當時知道公民黨會參加初選，但鄭問他時無指明是初選還是正式選舉，「我淨係得悉到排第二就係9月嗰個（正式）選舉係排第二，我冇深究過關於初選嘅事情」，理解鄭是談及正式選舉。陳仲衡指，但要參與正式選舉，二人都要參加初選？李指當時是這樣猜測，「但係實質上冇人同我傾過關於初選嘅嘢。」</p> - -<p>李並指，最終於5月中，「我係冇同意做佢嘅第二」，不過該討論無向公眾公布，只有公民黨內部得知，他不清楚當時黨高層如何看，亦無從得知他們有否被通知，但當時猜測可能會有。</p> - -<h4 id="公民黨5月特別會員大會通過出選名單-鄭達鴻無安排名單第二">公民黨5月特別會員大會通過出選名單 鄭達鴻無安排名單第二</h4> - -<p>李予信同意，5月30日公民黨召開特別會員大會，他以無投票權的支部黨員身分列席。辯方展示會議紀錄，李確認有收過，會上楊岳橋宣布原有意參選超區的黃文萱決定退出，最終通過6張出選名單，其中鄭達鴻出選港島區，但沒有安排名單第二的人選，至於梁嘉善則排新東第二位，與李今早稱終報名參選新西不同。</p> - -<p><img src="https://i.imgur.com/x2hxbFI.png" alt="image10" /> -▲ 梁嘉善（左）、黃文萱（右）（資料圖片）</p> - -<p>紀錄亦顯示，會上授權執委會在無法召開特別會員大會時，決定候選人最後出選名單，主席梁家傑並匯報公民黨已參與了35+計劃，並指2019年12月成立的選舉策略委員會，會繼續尋找參選超區和替補的Plan B候選人。</p> - -<h4 id="李稱因剛上任忙地區工作遂不排鄭達鴻第二-惟與黃文萱不選超區無關係">李稱因剛上任忙地區工作遂不排鄭達鴻第二 惟與黃文萱不選超區無關係</h4> - -<p>就黃文萱不再參選超區，李予信指於5月最後一個星期，已從公民黨立法會議助聽到「阿萱唔選喇」。李運騰問，而李不屬於公民黨高層人員的圈子？李說：「係，我唔屬於嗰個圈，因為我只係支部嘅會員」，同意高層會比他更早知道該消息。</p> - -<p>李運騰續問，李予信不做鄭達鴻的名單第二，與黃文萱退選超區有關係嗎？李表示沒有關係，「但係又有啲時間上嘅巧合，都影響咗我之後嘅少少決定」，解釋5月中時曾向鄭達鴻表示「其實我就想唔做第二」，因他剛上任要處理很多地區和抗疫支援工作，很忙碌，而當時只有他與全職助理兩人，「其實都好吃力，如果我仲要好頻密做一啲落區派傳單嘅工作呢，其實我覺得喺工作理念上，唔係好發揮得到我當時關注嘅議題」，因此向鄭交代後，「我就退出咗佢個團隊喇」。</p> - -<p>李運騰問，李予信說退出團隊，即曾經加入？李指「團隊」並非「一個好official嘅認證」，指鄭有一個一起工作的選舉群組，「如果我探討緊參選可能嘅時候，都會接觸到嗰個團體」，而他最後是退出鄭的「選舉預備工作」，至5月尾就有議助傳出黃文萱不再選超區的消息。</p> - -<h4 id="李確認終循徵召機制報名超區-官問為何有心意改變">李確認終循「徵召機制」報名超區 官問為何有心意改變</h4> - -<p>辯方其後展示由公民黨秘事處總行政幹事於5月31日，向所有公民黨區議員發出題為「2020年立法會換屆選舉啟動徵召機制」的電郵，邀請他們參選超級區議會，並指有意參加者須於6月2日下午3時前收集5名區議員的支持，其後要接受面試並出席諮詢會，向所有黨內區議員介紹政綱和宣言，並要於6月9日前提交15個區議員的書面支持。</p> - -<p>李指他有回覆表示有意參選，於6月2日提交一個5名區議員的名單，表示有興趣參與該「徵召機制」，並於3日後獲回覆確認收到報名。法官李運騰問，李予信於兩日內要找5人支持，時間很緊迫，而他其後要再找多至少10人支持，且全部須為區議員？李予信一一同意。李予信續同意他是「好新」的黨員，李運騰問，那獲得15人支持是否容易？李予信說「都要花啲時間」。李運騰再問，而這需要他的一些決心？李予信回應：「都可以咁講」。</p> - -<p>李運騰續問：「你兩三星期前才告訴鄭達鴻你想專注地區工作，但兩三星期後突然又下定決心參選，而且還是獨自參選，為何會有這個心意的改變（change of heart）？」李說：「我可以解釋，正如……」，惟法官陳慶偉打斷問是否很長，關文渭笑言非常長。法官遂將案件押至明早續審。</p> - -<hr /> - -<p>案件編號：HCCC69/2022</p>獨媒報導李予信稱獲通知出席公民黨記者會呼籲選民登記、會上就否決撥款「訊息混合」 李予信稱曾拒絕鄭達鴻提議排其名單第二 後改參選超區The Road To Brazil2023-08-17T12:00:00+08:002023-08-17T12:00:00+08:00https://agorahub.github.io/pen0/hkers/the-road-to-brazil<p><em>As this year’s G20 Anti-Corruption Working Group comes to a close, are G20 countries really committed to improving global asset recovery efforts?</em></p> - -<excerpt /> - -<p>On 12 August, the G20’s Anti-Corruption Ministerial Meeting convened for the last time under the current Indian presidency. Unsurprisingly, asset recovery was a key area of focus for the G20 participants. Ministers reaffirmed their commitment to making the recovery and return of proceeds of crime a key policy objective – both at the domestic level by enforcing effective legal powers, tools and measures, and at the international level via effective coordination and communication, and timely execution of cross-jurisdictional asset recovery requests.</p> - -<p>It’s fair to say that asset recovery has been a hot topic in the world of financial crime over the last year. From Russia’s aggression in Ukraine, which led many G20 countries to step up their response to the proceeds of crime, to the Financial Action Task Force’s (FATF) increased interest in the topic, organisations and governments across the world have committed to increasing their efforts to recover stolen assets.</p> - -<p>Indeed, there are multiple reasons why policymakers should be paying more attention not only to catching criminals, but also to recovering the assets they’ve stolen. Recovering assets from criminals is an effective deterrent, underlying the principle that crime does not – or should not – pay. For countries that have been decimated by corrupt politicians, recovered assets can be reinvested in education, infrastructure and other projects, increasing public trust and strengthening the rule of law and democratic institutions.</p> - -<p>The G20 has a crucial role to play in global asset recovery efforts, not least as G20 countries are very often the destination of choice for plundered assets. The lack – or inefficacy – of asset recovery and return mechanisms has a devastating impact on the economies of the countries from which the assets are originally stolen: it halts growth, increases inequalities and corrupts democratic processes. There is, therefore, a moral imperative for G20 countries to boost their efforts in relation to asset recovery.</p> - -<h3 id="the-g20s-approach-to-asset-recovery">The G20’s Approach to Asset Recovery</h3> - -<p>Hopes were high when India was placed at the helm of the G20. The country had previously argued for the inclusion of asset recovery in the G20’s anti-corruption commitments in 2018. Under the Indian presidency, “strengthening asset recovery mechanisms related to corruption” has been identified as one of the priority areas.</p> - -<p>This commitment is echoed at the global level by the FATF’s approach to enhancing global asset recovery mechanisms. Last year, the FATF and Interpol announced an initiative to upscale the global response to asset recovery and “to deprive criminals of their dirty money”. This includes revising the FATF’s Recommendations 4 and 38, a long overdue action.</p> - -<p><strong><em><code class="highlighter-rouge">Despite some improvement over the last 15 years, it is clear that current international asset recovery mechanisms are still not good enough</code></em></strong></p> - -<p>This is not the first time, however, that asset recovery has been a focus of the G20. In 2011, the G20 adopted nine principles on asset recovery. Inter alia, the principles require countries to make asset recovery a policy priority, implement legislation to support the application of global anti-money laundering standards, establish a wide range of legislative options for asset recovery, and adopt laws that facilitate international cooperation. Under the Indian presidency, resources have been collated from a small number of G20 countries (currently Canada, Mexico, Turkey and India) to provide step-by-step guides to asset tracing, requesting mutual legal assistance and asset recovery in each jurisdiction.</p> - -<p>More broadly, G20 countries have been engaged in many initiatives to improve global asset recovery mechanisms, focused in particular on the sharing of information and expertise. For example, Argentina, Mexico and Brazil are members of the GAFILAT Asset Recovery Network which was established in 2009 to facilitate the identification, tracing and recovery of criminal proceeds. Data shows an increased number of consultations since the network’s inception, especially in relation to drug-trafficking offences.</p> - -<p>All these actions are commendable. However, despite some improvement over the last 15 years, it is clear that current international asset recovery mechanisms are still not good enough.</p> - -<h3 id="assessing-the-current-state-of-asset-recovery-in-the-g20">Assessing the Current State of Asset Recovery in the G20</h3> - -<p>While asset recovery is undeniably a key area of focus for G20 countries, at the national level the results still leave much to be desired. The latest FATF Mutual Evaluation Reports (MER) for some G20 countries provide a mixed picture.</p> - -<p>South Africa, for example, has a moderate effectiveness rating on issues related to asset confiscation. The authorities have managed to demonstrate positive results in the recovery of proceeds of crime, particularly in the areas of fraud and economic crime. However, wider efforts on recovering assets from state capture and proceeds moved to other countries have been less successful and have only been undertaken more recently. Following its mutual evaluation, South Africa was grey-listed by the FATF; as part of its action plan, it has to address issues around enhancing the identification, seizure and confiscation of proceeds and instrumentalities of a wider range of crimes.</p> - -<p>Similarly, Indonesia has also achieved a moderate level of effectiveness on asset confiscation according to the FATF. One of the key elements of the country’s anti-financial crime strategy is optimising asset recovery, and while the authorities do pursue illicit assets laundered abroad, the amounts effectively recovered transnationally are low. The most recent Mutual Evaluation Report shows the assets that have been repatriated to victims in cash, which amounted to only €4.75 million from 2017 to early 2023.</p> - -<p><strong><em><code class="highlighter-rouge">While new laws to boost recovery are welcome, what is needed from Global North countries is operational capacity and a willingness to engage with “victim” countries in the Global South</code></em></strong></p> - -<p>At the European level, MONEYVAL, the Council of Europe’s anti-money laundering and counterterrorist financing body, warned in its annual report for 2022 that the recovery of proceeds of crime against states is insufficient. According to its chair, Elżbieta Frankow-Jaśkiewicz, there is an “urgent need for [European countries] to greatly improve their results in confiscating and managing criminal assets, adopt stricter sanctions and increase the number of convictions for serious money laundering offences”.</p> - -<p>There are signs that some G20 members are listening to calls for better international cooperation and providing increased assistance to developing countries. In November 2022, France introduced a mechanism aimed at returning the proceeds of the sale of illicit assets that have been confiscated in the country. The law enables the state of origin to make requests for mutual legal assistance for the return of assets. States can now bring an action before French courts to seek redress and have rights of ownership – this can be done via the opening of an independent investigation in France or by starting civil proceedings. While new laws to boost recovery are welcome, however, what is needed from Global North countries is operational capacity and a willingness to engage with “victim” countries in the Global South. This is currently one of the main weaknesses of G20 countries.</p> - -<p>An exception, Italy, has been regarded by many as a “beacon” for asset recovery efforts. Italians understood quite early on that mafia members could still operate from inside prison walls. What really hurt them was taking their assets. The country is now one of the leaders in the recovery of assets globally and has created dedicated asset recovery liaisons in relevant host countries. Early this year, the country’s Guardia di Finanza also hosted a Learning and Development Forum on behalf of the FATF to share best practices and “make a difference in the fight against financial crime”.</p> - -<h3 id="what-more-do-g20-countries-need-to-do">What More Do G20 Countries Need to Do?</h3> - -<p>It was argued in a previous commentary on G7 commitments that stale thinking and paraphrased commitments were the main threat to the group’s efficacy in the fight against illicit finance. The same can be said about the commitments made by the G20. There are clearly pockets of good practice across the G20, and G20 countries are rightly promising higher international standards. But, as ever, these promises need to be followed by concrete action, particularly when it comes to areas where the G20 should excel, like information sharing and international collaboration. The step-by-step guides referenced above are a case in point; so far, only four G20 countries have contributed, but these could prove to be an invaluable resource.</p> - -<p>As India’s presidency of the G20 comes to a close, its successor, Brazil, should continue to prioritise asset recovery and – in particular – the G20’s commitments around improved international collaboration and coordination. The last Ministerial Meeting noted the countries’ commitment to update their information on existing guides to international cooperation requests, which is a promising start. If asset recovery remains a priority for the G20 – and if G20 countries can deliver on their commitments – the fight against corruption might stand a chance of seeing some much-needed improvement.</p> - -<hr /> - -<p><strong>Maria Nizzero</strong> is a Research Fellow at the Centre for Financial Crime and Security Studies at RUSI. Her research examines the UK economic crime landscape, asset recovery, with a focus on sanctioned frozen assets and proceeds of kleptocracy, and the foreign policy dimension of illicit finance, including active financial measures. Her other research interests include the EU financial crime response, the serious and organised crime-terror nexus, and financial crime involving high value goods.</p> - -<p><strong>Maria Sofia Reiser</strong> is a Research Analyst at RUSI’s Centre for Financial Crime and Security Studies. Her recent work has focused on restricting kleptocracy by empowering civil society activists and investigative journalists in East Africa, the Western Balkans and Latin America with greater knowledge of domestic and international anti financial crime standards.</p>Maria Nizzero and Maria Sofia ReiserAs this year’s G20 Anti-Corruption Working Group comes to a close, are G20 countries really committed to improving global asset recovery efforts? \ No newline at end of file +<p>案件編號：HCCC69/2022</p>獨媒報導李予信稱獲楊岳橋指示報名參選港島後被叫停、理解非鄭達鴻「Plan B」 李予信指楊岳橋否決財案「莊嚴承諾」未必兌現、不會跟黨立場投票 \ No newline at end of file diff --git a/hkers/2023-10-06-in-chip-race.html b/hkers/2023-10-06-in-chip-race.html new file mode 100644 index 00000000..8d08a932 --- /dev/null +++ b/hkers/2023-10-06-in-chip-race.html @@ -0,0 +1,449 @@ + + + + + + + + + + In Chip Race · The Republic of Agora + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + +
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In Chip Race

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In Chip Race, China Gives Huawei the Steering Wheel: Huawei’s New Smartphone and the Future of Semiconductor Export Controls

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Gregory C. Allen | 2023.10.06

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With a new smartphone and new chip, Huawei has returned to the 5G smartphone business in defiance of U.S. sanctions. This report assesses the implications from this latest development for China’s AI industry and the future of semiconductor export controls.

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Introduction

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On August 29, Huawei launched its new Mate60 Pro smartphone. Normally, smartphone launches do not attract attention in U.S. national security circles. However, this one did, and rightfully so. The Mate60 Pro dramatically marked Huawei’s return to the 5G smartphone business after years of ever-tightening U.S. Department of Commerce export controls effectively cut Huawei off from 5G technology. How? By restricting Huawei’s access to U.S. semiconductor technology, especially chips, chip design software, and chipmaking equipment.

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The mobile application processor chip at the heart of the new Huawei phone has an integrated 5G modem. The chip was designed by Huawei’s HiSilicon subsidiary and manufactured by a Chinese company, Semiconductor Manufacturing International Corporation (SMIC). In March 2023, China’s government reportedly made Huawei and SMIC, along with two leading Chinese semiconductor equipment companies, Advanced Micro-Fabrication Equipment (AMEC) and Naura, the heart of a new government initiative for semiconductor self-reliance. Huawei is effectively the leader of the Chinese government-backed team, with a privileged position to influence semiconductor policymaking.

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SMIC manufactured the new chips at the advanced 7-nanometer (nm) technology node (N+2 in SMIC process naming conventions), raising questions in U.S. national security circles about whether the effectiveness of U.S. technology export controls on Huawei — and perhaps China more broadly — is coming to an end.

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That was certainly the message that China wanted to send. Chinese state-run media outlets were exuberant, arguing in editorials that Huawei’s new phone “shows how ineffective Washington’s tech sanctions have been” and that “extreme suppression by the US has failed.” The new phone was announced during Secretary of Commerce Gina Raimondo’s visit to China, which placed a double emphasis on the phone’s significance toward U.S. export controls.

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However, there is a big difference between claiming that Chinese technological progress proves the current approach to export controls is not achieving all of its desired effects and claiming that Chinese technological progress proves that those same export controls are strategically useless. In principle, either might or might not be true, but the former does not inherently imply the latter.

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In the case of the 7 nm chip powering the new Mate60 smartphone, this is a legitimate breakthrough on China’s part, not in terms of reaching the global state of the art, but in continuing to make technological progress despite U.S. and allied restrictions. The Trump administration’s entity list-based export controls on Huawei and its primary chip manufacturer SMIC had explicitly sought to prevent Huawei and SMIC from designing and manufacturing chips more advanced than 10 nm and from producing 5G chips. The same is true of the Biden administration’s October 7, 2022, semiconductor export control policy, which restricted exports to China of, among other things, advanced semiconductor manufacturing equipment.

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While the Huawei phone is not itself a major national security issue for the United States, what the chip inside signals about the state of the Chinese semiconductor industry absolutely is. The 7 nm chips at the heart of the new Huawei phone provide many data points regarding the current and likely future state of the Chinese semiconductor industry. In short, China is still not at the global state of the art for semiconductor manufacturing, but the gap between the peak technological level of China and that of the rest of the world has shrunk, even despite the many hurdles that the U.S. government has attempted to place in SMIC’s way.

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These advanced chip production capabilities will inevitably be made available to the Chinese military if they have not been already. Thus, the Huawei and SMIC breakthrough raises many tough questions about the efficacy of the current U.S. approach. In fairness to the Biden administration, however, their desired approach — a multilateral one — has only just begun.

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This paper will analyze the strategic implications of the Huawei Mate60 Pro and its SMIC 7 nm chip in the context of U.S. and allied export controls on the two companies and on China more generally. It concludes by presenting a list of tough questions where U.S. and allied country policymakers urgently need answers.

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Background on the Trump Administration Export Controls on Huawei and SMIC

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In Washington, Huawei is mostly known for its telecommunications infrastructure business, but the company was at the forefront of China’s remarkable rise in the smartphone, computer, and artificial intelligence (AI) semiconductor chip design industry during the 2010s. In late 2018, there were only two companies in the world selling smartphones with 7 nm mobile application processors, Apple and Huawei, both of which designed the chips in house and outsourced manufacturing to the Taiwan Semiconductor Manufacturing Company (TSMC).

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The original stated intention of adding Huawei to the entity list in May 2019 was to punish the company for selling technology to Iran in violation of U.S. sanctions, and especially for repeatedly lying to U.S. officials, destroying evidence, and otherwise trying to obstruct justice. The U.S. government also expressed a broader goal of preventing the company from using U.S. technology in ways that contradicted U.S. national security interests. The national security issue was initially focused on Huawei’s business in 5G telecommunications infrastructure, not smartphones. However, the national security focus grew to include ensuring that Huawei did not use U.S. technology to assist it in evading the reach of U.S. export controls, which thereafter led to a more generalized focus on Huawei’s activities related to chip design and chip manufacturing, including for base stations and smartphones.

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As described in a previous CSIS paper, the 2019 U.S. export controls on Huawei — as well as the earlier April 2018 export controls on Chinese telecom firm ZTE — were a landmark in the Chinese national security policy community. China’s pursuit of semiconductor self-sufficiency had already been a top Chinese industrial policy priority from the Made in China 2025 policy of 2015 and even earlier with China’s establishment of its “Big Fund” in 2014. However, after 2018, semiconductor self-sufficiency became a top Chinese national security priority, not just an industrial policy one. Semiconductor self-sufficiency received more than $100 billion in Chinese government financial support and regularly attracted the personal attention of Chinese Communist Party general secretary Xi Jinping.

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De-Americanization of the supply chain became a priority not just for Huawei and the Chinese government, but also for many leading Chinese chipmakers. For example, in May 2021, Nikkei Asia reported that Yangtze Memory Technologies Corporation (YMTC), one of China’s most advanced semiconductor manufacturers, had already been engaged in a full-blown de-Americanization campaign involving the full-time work of more than 800 staff for two years. This included the establishment of multiple major partnerships with domestic Chinese equipment producers. Industry sources told CSIS that YMTC also conducted a close examination of the foreign sources within the supply chain of U.S. equipment manufacturers and launched an effort to begin direct purchases from the foreign suppliers of U.S. firms.

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In May 2020, the Department of Commerce concluded that the 2019 Huawei entity listing had an effect but failed to achieve its goals: U.S. chip manufacturers such as Intel, Qualcomm, and Xilinx continued selling many types of advanced chips directly to Huawei, as many of their chips were not produced in the United States and therefore were not subject to the export controls as written at the time. More importantly, however, Huawei was successfully designing replacement chips (using U.S. chip design software) and contracting with chip foundries outside of China to manufacture them (in facilities that relied heavily on U.S. chip manufacturing equipment). Industry sources told CSIS that U.S. companies were losing revenue not as a direct result of no longer selling to Huawei, but rather because Huawei was replacing U.S. chips with their own self-designed versions.

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Then secretary of commerce Wilbur Ross put it this way: “Despite the Entity List actions the Department took last year, Huawei and its foreign affiliates have stepped-up efforts to undermine these national security-based restrictions through an indigenization effort. However, that effort is still dependent on U.S. technologies.”

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The May 2020 updated export controls therefore applied a revised version of the Foreign Direct Product Rule (FDPR) to prevent foreign entities from assisting Huawei and its chip design subsidiary HiSilicon in designing or manufacturing chips that were a “direct product” of U.S. technology. Overnight, Huawei’s access to semiconductors shrank drastically to only three sources: the less technologically advanced subset of chips for which U.S. licenses were still being approved, the vast set of U.S. and foreign chips that were manufactured or assembled outside of the United States and were therefore not subject to the U.S. rules, and the enormous stockpile of critical chips that Huawei had amassed by making purchases when they were still legal. The Chinese chip manufacturers that were still willing to work with Huawei generally had dramatically inferior technology. Even the initial application of the FDPR in May 2020 did not affect chips produced outside of the United States, with the exception of those designed by HiSilicon. This allowed Huawei to engage in a massive stockpiling effort.

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Then, the Trump administration decided to finally cut off Huawei’s access to chips and updated the FDPR in August of 2020 to apply not only to Huawei and HiSilicon’s own chips but to all chips produced using U.S. technology that was being sold to Huawei.

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Despite Huawei’s stockpiling, the May and August 2020 controls eventually did serious damage. Huawei’s worldwide revenue declined 28.5 percent between 2020 and 2021. The damage was especially severe in Huawei’s smartphones business, which required a much higher volume of advanced chips and was essentially cut off from 5G technology. Early in 2023, Huawei told its investors that it optimistically hoped to sell a mere 30 million phones that year, an 88 percent decline from the 240 million it sold in 2019. Huawei had to take dramatic steps, such as selling off the majority of its consumer smartphone business to a new spinoff known as Honor, as well as its Intel-based X86 server business, which is now known as “XFusion.” These moves allowed Huawei to conserve its massive chip stockpile for more strategic parts of its business such as network infrastructure and premium smartphone products.

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The Mate60 Pro marks Huawei’s return to the 5G smartphone business and thereby proves that the effects of the Trump-era controls are rapidly coming to an end as Huawei redesigns its supply chain to rely more on its HiSilicon subsidiary for chip design and more on SMIC (as opposed to TSMC of Taiwan) for manufacturing. Huawei’s revised sales projections for 2023 suggest that it expects to sell roughly 40 million smartphones in 2023, of which roughly half will use the new 7 nm chips. Industry analysts with ties to Huawei’s supply chain report that Huawei expects to sell 60 million smartphones in 2024, of which most or all will use Huawei-designed, SMIC-manufactured mobile application processors with integrated 5G modems. The Mate60 Pro’s memory chips are manufactured by SK Hynix of South Korea. SK Hynix has stated that it stopped doing business with Huawei after the introduction of U.S. sanctions and that it is investigating how Huawei came to use its chips. Though selling 60 million smartphones would still be a significant decrease from Huawei’s 2019 peak, it likely signals the start of a comeback for the company.

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The sophistication of the Huawei chip from a design perspective — it is at least equal to and often better than the best Western-designed smartphone chips of the 7 nm era — indicates that there has been no significant erosion in HiSilicon’s design excellence. Moreover, Huawei’s integration of the 5G modem onto the same silicon die as the mobile application processor brings many technological performance benefits. Huawei has achieved this three years before Apple currently expects to do so. Radio-frequency engineering, the critical technology involved in developing modems, is the technical core of Huawei’s business, and industry sources told CSIS that Huawei is far ahead of most companies in this space.

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While this supply chain is still critically dependent upon U.S. technology, some of the pre-October 2022 export controls and entity list restrictions on Huawei’s suppliers were not especially well designed for a goal of blocking SMIC from producing 7 nm chips, despite that being their explicit goal. For example, the entity list license review policy for SMIC established in December 2020 states that license applications to export to SMIC will be reviewed under a policy of “presumption of denial for items uniquely required for production of semiconductors at advanced technology nodes (10 nanometers and below, including extreme ultraviolet technology); Case by case for all other items.”

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The problem with this standard is the “uniquely required” phrase. This is both vague and a poor fit for the reality of semiconductor manufacturing. Nearly all semiconductor manufacturing equipment that can be used to produce 10 nm and below chips can also be used to produce less advanced 14 nm and above chips and vice versa. This is known as “capex recycling” by the semiconductor industry, and industry sources told CSIS that equipment reuse rates between these nodes are sometimes higher than 90 percent. Furthermore, the rules only applied to “U.S. origin items and technology” which did not include a major portion of semiconductor capital equipment produced by U.S. firms outside of the United States in locations such as Singapore and Malaysia. In some cases, the companies did not even need to apply for a license, as their equipment was not technically U.S. origin and was therefore not even subject to the rules.

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The companies applying for export licenses simply stated this truth in their export license applications, at which point the Department of Commerce frequently approved them. Department of Commerce license application reviewers are (understandably) trained to follow the letter of the law, even if that law’s text is a poor fit for what department leadership describes as the goal of that law. According to a Reuters analysis of Department of Commerce documents, “113 export licenses worth $61 billion were approved for suppliers to ship products to Huawei (HWT.UL) while another 188 licenses valued at nearly $42 billion were greenlighted for Semiconductor Manufacturing International Corp (SMIC) (0.981.HK)” between November 2020 and April 2021. However, industry sources told CSIS that nearly all applications for export licenses to SMIC’s most advanced facilities were typically denied after August 2021.

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Thus, almost the only types of sales that the December 2020 SMIC entity listing definitively blocked were for the technology that it specifically stated would be prohibited, namely extreme ultraviolet (EUV) lithography equipment, which United States companies do not principally supply. Thus, blocking EUV sales required a policy change by the Dutch government since the sole supplier of complete EUV lithography machines is a Dutch company, ASML. The Trump administration reportedly reached an informal agreement with the Dutch government in early 2020. According to a later published Dutch government document, the Dutch Ministry of Defence was a strong supporter of limiting EUV exports to China at the time.

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Industry sources told CSIS that, at the time, ASML was poised to ship EUV tools to China and that SMIC was planning to work with key research labs in Europe such as the Interuniversity Microelectronics Centre (IMEC) to help develop their EUV-based manufacturing process.

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Blocking China from acquiring EUV technology has complicated China’s path to producing chips at technology nodes more advanced than 7 nm. However, it actually did not block SMIC from legally acquiring all the equipment required to manufacture 7 nm chips, since much of the advanced deposition, etching, inspection, and metrology equipment was not blocked from purchase. Moreover, advanced deep ultraviolet (DUV) lithography equipment can be used as an alternative to EUV for the production of 7 nm chips.

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The clearest proof of this is the fact that SMIC was already producing and selling 7 nm chips no later than July 2022 and potentially as early as July 2021, despite having no EUV machines. TSMC, the Taiwanese semiconductor manufacturing giant, achieved 7 nm mass production by 2018 without using EUV technology. Adopting EUV, however, brings benefits in production reliability, speed, scale, and therefore economic competitiveness.

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SMIC’s initial 7 nm chips (using SMIC’s N+1 process) were specialized chips for cryptocurrency mining. Such chips are less complicated to manufacture than a smartphone’s application processor due to their lack of dense static random-access (SRAM) memory. For SMIC, the barrier to making more complex 7 nm chips in 2021 was a need for improved operational experience and skill in using the equipment it already had to improve its 7 nm production process and then reliably operate it at scale, not necessarily a need for additional equipment.

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The Huawei chip (using SMIC’s N+2 process) proves that SMIC’s skill in manufacturing at the 7 nm node has advanced significantly since July 2022, despite the Biden administration’s new semiconductor export control architecture that was launched on October 7, 2022. It is worth noting, however, that SMIC’s work on N+2 has been underway at least since early 2020. Thus, much of the relevant development work took place long before October 7. Industry sources told CSIS that, both before and after October 7, SMIC was the beneficiary of significant foreign technical advice, though after October 7, this advice was limited to non-U.S. persons.

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Huawei Mate60 Pro and SMIC 7 nm Chip Implications for Biden-Era Export Controls

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The Biden administration’s October 7 export controls doubled down on the Trump administration’s attempt to restrict the export of U.S. advanced semiconductor manufacturing equipment to China. However, the Biden administration went significantly further in an effort to not only restrict the pace of China’s technological progress but also to, as much as possible, actively degrade the current state of the art back to a pre-14 nm manufacturing level.

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The policy also went beyond mere entity listings and put blanket restrictions on all of China that sought to, in some instances, cut off SMIC and other advanced Chinese chipmakers from the supply of U.S. equipment, spare parts, software updates, components, maintenance, and even expert advisory services. The goal was to force existing Chinese chip manufacturers to shut down or reconfigure their advanced product lines to focus on legacy technologies. SMIC is the most advanced logic chip foundry in China, so it was absolutely a target of this policy.

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Technology degrading did indeed happen in the case of YMTC, which was forced to abandon — perhaps only temporarily — plans for a 232-layer NAND flash memory product. However, the Huawei Mate60 Pro demonstrates that SMIC’s peak manufacturing technological capability has not only not been degraded, but it has advanced.

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For the Biden administration, the Mate60 Pro launch is an important data point that raises legitimate questions regarding the key assumptions underlying their signature semiconductor export control policy. Most obviously, this development suggests that the October 7 export control policy, and especially the recently updated export control policies of the Japanese and Dutch governments, were needed earlier to have a realistic opportunity to achieve all their intended effects. However, it also shows one of the key mechanisms of the policy — end-use restrictions on advanced semiconductor manufacturing equipment — is not working as intended and will require an update to close existing loopholes.

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Industry experts consistently told CSIS that no combination of Chinese semiconductor manufacturing equipment companies can produce even 10 percent of the diverse types of advanced equipment required to operate a 7 nm chip foundry. In fact, there is no 7 nm fab in the world that does not rely upon controlled U.S. technology, so it is quite clear that SMIC is using U.S. technology — machines, components, spare parts, and materials — in producing these chips for Huawei.

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It is also highly likely that Huawei designed these chips using software tools from U.S. electronic design automation (EDA) companies. Huawei only announced in March 2023 that it had finally made a breakthrough on 14 nm software tools after years of work. These claims have yet to be verified externally. The idea that Huawei had completed development of its more advanced 7 nm EDA tools in time to design the core processors for a phone that launched in September is not consistent with typical industry chip design or EDA tool development timelines.

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The companies that do have mature EDA software available for designing 7 nm chips are all American. Prior to Huawei’s entity listing, Huawei was legally allowed to license this software from the companies and did so. That was how Huawei designed its first 7 nm chip back in 2018. However, the U.S. providers of EDA software have been prohibited from renewing Huawei’s software licenses or providing software updates since 2020. Industry officials told CSIS that the Huawei chip was most likely designed with a pirated version of U.S. EDA tools. Chinese software piracy is a well-known problem in the EDA industry.

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Thus, the fact that Huawei and SMIC used U.S. technology is not controversial. It is clearly the case. Determining whether Huawei and SMIC’s use of U.S. technology involved violations of U.S. law — either by those companies, by their Chinese suppliers, or by the U.S. companies that produce the technology — is not quite as obvious. However, there are many suspicious circumstances that deserve immediate inquiry. The following sections of this paper will detail the regulatory mechanisms by which the October 7 export controls were intended to address the gaps in the Trump administration policy and also assess the questions that U.S. policymakers should be asking as they consider updated controls.

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Analysis of Existing U.S. Regulatory Mechanisms to Prevent 7 nm Chip Fabrication

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The Trump administration took three major actions in the semiconductor sector. First, it placed entity list restrictions on hundreds of Chinese companies, including ZTE (later removed), Fujian Jinhua, Huawei, and SMIC. Second, the Trump administration adjusted the scope and application of the FDPR. Third, it persuaded the Dutch government to restrict sales of EUV machines to China as a whole based on an informal agreement to deny a license for technology that was already controlled on a multilateral basis through the Wassenaar Arrangement control list.

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The Biden administration did not reverse or weaken any Trump-era semiconductor trade restrictions and added to them significantly by adopting new restrictions that applied to China as a whole. Most importantly, the Biden administration’s October 7, 2022, policy was focused on restricting China’s access to advanced chips for AI development, but that policy significantly expanded export regulations related to semiconductor manufacturing equipment in order to prevent China from domestically producing alternatives to the advanced AI chips that the United States no longer allowed exporting.

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The policy’s chip equipment restrictions were split into three broad categories:

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    Blanket prohibition of exports of a narrow set of advanced deposition equipment to all of China, as well as all parts and accessories related to that equipment: These restrictions took the form of creating a new Export Control Classification Number (ECCN) 3B090, which was restricted under a Regional Security (“RS-China”) justification.

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    End-use prohibition of exports intended for use in advanced node semiconductor manufacturing or where the manufacturing node is not clear: The second major restriction was the creation of a new license restriction based on end use with a presumption of denial, by adding section 744.23 to the Export Administration Regulations (EAR). This effectively imposed a blanket ban on exports to China in cases where the exporter in question has “knowledge” that the exported goods will be used for a restricted end use. The restricted end uses in question are production of advanced node semiconductors — defined as logic chips at or below 16 nm, DRAM memory chips at or below 18 nm, and NAND storage at or above 128 layers — or supporting Chinese production of any semiconductor manufacturing equipment, components, or parts. An additional near-blanket prohibition exists for selling to any facility in which the seller knows that the facility produces chips but does not know whether or not the chips produced at that facility are at an advanced technology node.

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    To ensure that shipments of U.S. technology for restricted goods (or even transfers of relevant subject matter expertise) would not occur through foreign subsidiaries, joint ventures, or partnerships, the regulations modified section 744.6 of the EAR, the so-called “U.S. persons rule,” which dramatically expanded licensing requirements. It also applies an updated FDPR provision, section 742.6(a)(6), to prevent foreign firms from using U.S. technology to assist China in pursuing the end uses specified in section 744.23. These restrictions apply on a China-wide basis, though only for restricted end uses and end users.

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    The broader set of equipment and components restricted by section 744.23 includes all items subject to the EAR, of which ECCNs 3B001, 3B002, 3B090, 3B611, 3B991, and 3B992 directly pertain to semiconductor manufacturing equipment and components. This equipment is still generally allowed to be sold to China in cases where two criteria are met. First, the exporter must not have specific knowledge that the buyer intends to use the equipment for advanced node manufacturing. Second, the equipment must not be destined for end use at a facility in which the equipment provider does not know whether or not it is engaged in advanced node manufacturing. For the newly restricted types of chip equipment covered under 3B991 and 3B992, the exporter does not even have to apply for a license to export the goods to China in cases where the exporter has no specific knowledge that they are going toward a prohibited end use or end user.

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    Blanket export ban to YMTC, China’s most advanced NAND company: Two months later, in December 2022, the U.S. government also added YMTC to the entity list under a blanket presumption of denial for exporting “all items subject to the EAR.” Any purchase of semiconductor manufacturing equipment or components by YMTC after December 2022 would have been in some way illegal under U.S. law, unless the U.S. government had approved a license.

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The Biden administration adopted these new rules in an attempt to degrade the peak technology level of the Chinese chipmaking sector through the loss of access to spare parts, maintenance, and advisory services. It would, for example, be illegal for any U.S. company to provide SMIC with spare parts or new equipment if the U.S. company had knowledge that SMIC was using the equipment to support its 7 nm manufacturing line. In practice, this means that all shipments to SMIC’s SN1 and SN2 fab facilities in Shanghai are prohibited. For shipments to other SMIC facilities, the October 7 policy instructs companies to follow official “Know Your Customer” guidance and best practices, including obtaining a signed end-use statement from the customer and also evaluating “all other available information to determine whether a license is required pursuant to § [section] 744.23.”

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Overall, this is a significantly stricter due diligence requirement than is typical for Department of Commerce export controls, but it still raises the question of just how much leverage the U.S. government will have to punish companies that use already-installed equipment for prohibited end uses. It also raises the question of whether SMIC and other Chinese firms could be deceiving U.S. firms about the true end uses of their purchases.

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Why Did the October 7 Export Controls Fail to Prevent SMIC from Advancing 7nm Production?

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It is clear at this point that the October 7 policy has thus far failed to degrade SMIC’s peak technological capability, but that is not especially surprising. SMIC had already begun a ferocious capacity-expansion and equipment-buying campaign both before and after its December 2020 entity listing. As noted above, the U.S. restrictions prior to October 7 did very little to limit SMIC’s purchase of advanced semiconductor manufacturing equipment, even when that equipment was known to be directly supporting a 7 nm production line. SMIC had 14 nm fin-shaped field-effect transistor (FinFet) production commercially available in 2019 and thus had nearly all the equipment it needed to advance to 7 nm due to the ability to “recycle” the equipment for future nodes.

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In much the same way that Huawei had stockpiled a two-year supply of chips prior to U.S. entity restrictions taking effect, SMIC has amassed a large number of machines and potentially also a large stockpile of spare parts that it can draw from. In recent years, Chinese semiconductor manufacturing equipment purchases have been so extensive that non-Chinese chip manufacturers have been complaining that it is delaying equipment providers from completing their non-Chinese orders on time. Industry sources told CSIS that equipment providers routinely refer to Chinese customers under the label of “non-market demand,” meaning that the customers were buying for strategic reasons unrelated to market conditions or profit maximization.

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Moreover, industry sources told CSIS that, prior to the October 7 regulations, some semiconductor manufacturing equipment, components, and spare parts from U.S. companies were exported to China without a license via foreign-headquartered partners. In the absence of the application of the FDPR or the U.S. persons rule, this is not necessarily a violation of U.S. law. Industry sources also told CSIS that SMIC has set up a network of shell companies and partner firms in China through which it has been able to continue acquiring U.S. equipment and components by deceiving U.S. exporters. If true, sales to such shell companies would involve violations of U.S. law by SMIC, though not necessarily by U.S. companies, so long as the U.S. firm had no knowledge of the fact that the shell company was acting on behalf of SMIC.

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In cases where SMIC did face a legitimate problem due to U.S. restrictions, it was, until very recently, largely unrestricted in its ability to purchase equipment and spare parts from the Netherlands, Japan, South Korea, and Taiwan. According to a Financial Times analysis of Chinese customs data, the total value of Chinese imports of semiconductor manufacturing equipment increased from $2.9 billion over the two months in June and July 2022 to $5.0 billion over the same two months in 2023. The analysis further found that “most of the imports came from the Netherlands and Japan.” Japan’s export controls only took effect in late July 2023. The Netherlands’ export controls only took effect in September, and Dutch companies are being allowed to complete the delivery of previously approved licensed exports to China even if those deliveries occur after September 2023, so long as the shipment is completed by January 1, 2024.

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The Chinese customs data analyzed by the Financial Times includes finished and fully integrated manufacturing equipment but does not include components, spare parts, and materials. One industry source told CSIS that, because of this omission, the customs data significantly understates the extent to which U.S. technology is being displaced by foreign suppliers. This individual said that as U.S. equipment firms have been forced to reduce their presence in the market, “Japanese firms have been gorging themselves on Chinese revenue from selling fully integrated machines. Korean firms have been gorging themselves on selling subsystems and spare parts.” In conversations with CSIS, multiple industry sources highlighted the problem of South Korean firms backfilling export-controlled U.S. technology and also training Chinese staff in both equipment maintenance and fab operations.

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In early 2021, SMIC told its Chinese government investors that its goal for the SN1 chip fab — SMIC’s second most advanced facility and the one which produces 14 nm node wafers — was production capacity of 35,000 finished wafers per month (WPM).

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SMIC’s most advanced chip fab is SN2, which is part of the same SMIC Southern Shanghai campus as SN1. SN2 is the facility where SMIC conducts advanced node research and development (R&D) and is also the facility where SMIC has begun mass production of its 7 nm (N+1 and N+2) processes. According to a June 2020 report by Guolian Securities, a Chinese investment advisory firm, SMIC planned for 7 nm production capacity at SN2 to also reach 35,000 WPM on an unspecified timeframe. According to one Chinese semiconductor industry analyst, SMIC also planned as recently as September 2022 to eventually pursue 5 nm production at SN2 despite lacking access to EUV machines. For comparison, TSMC first achieved 7 nm mass production without EUV but later upgraded its 7 nm process to use EUV. No major international chipmaker has ever engaged in mass production of 5 nm chips without using EUV lithography machines.

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Both the SN1 and SN2 projects were announced in 2017. The SN1 facility was producing 3,000 WPM in late 2019, 6,000 WPM at the 14 nm node in June 2020, and in February 2021 SMIC claimed that SN1 had achieved 15,000 WPM production capacity by the end of 2020. According to a SMIC press release in early 2020, SMIC had originally anticipated hitting the 35,000 WPM production target for SN1 by the end of 2022. More likely than not, SMIC has by now hit this SN1 production capacity target. SMIC stated in February 2023 that it would accelerate capacity expansion despite weakening demand and market oversupply. DigiTimes Asia reported in June 2023 that SMIC was continuing to offer and deliver 14 nm production to customers.

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One industry source told CSIS that SMIC’s FinFET production capacity across both SN1 and SN2 is currently 35,000 WPM and that roughly one-third of this capacity is currently being devoted to 7 nm production.

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No data is publicly available on SN2’s progress in production capacity ramp up. T.P. Huang, an independent semiconductor industry analyst, estimates that by the end of 2023, SMIC will have legally acquired enough advanced DUV lithography machines across all SMIC facilities to eventually support production of more than 50,000 FinFET WPM, which would have to be split across the 14 nm and 7 nm production. It is unclear what share of these machines currently resides at SN1 and SN2. Based on analysis of a SMIC notice, Huang projects that all SN2 equipment installations will be completed by July 2024.

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Industry sources told CSIS that this estimate is reasonable and that SMIC will likely reach production capacity of 50,000 WPM across SN1 and SN2 by the end of 2024. SMIC has existing customers for its 14 nm capacity, so presumably it will not immediately reallocate all of its machines to 7 nm. In lithography, the Dutch export controls only restrict exports of EUV machines and the most advanced DUV machines, so it is possible that additional future purchases could increase SMIC’s potential 7 nm production even beyond 50,000 WPM.

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For most new semiconductor manufacturers, manufacturing yield (the share of the chips on the finished wafer that are usable) starts at a low level and then improves as the company’s mastery of a new technology node and production process improves. Industry sources told CSIS that SMIC’s current yield is roughly 50 percent. By comparison, TSMC’s early production with 7 nm was already achieving 76 percent yield in 2017, even before introducing EUV technology. It is reasonable to assume that SMIC’s yield will improve over time, as more of ASML’s most advanced DUV lithography machines are delivered and as SMIC gains operational experience with the N+2 process node. However, SMIC may never match the high yields that TSMC achieved after introducing EUV.

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The yield rate directly relates to the economics of chip production. Costs are incurred on a per-wafer basis, so increasing the number of usable chips per wafer is equivalent to increasing output without increasing costs. Per chip costs are not typically made publicly available, but Fomalhaut Techno Solutions, a Tokyo-based research company, estimated in 2022 that Apple paid TSMC $110 per chip for its 4 nm production, up from $46 per chip for TSMC’s 5 nm production. TSMC’s 5 nm production process, which used EUV, reportedly achieved excellent yields early in its history.

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If SMIC hypothetically had 100 percent yield and 35,000 7 nm WPM production capacity at SN2 with 550 Huawei chips per wafer, then SMIC could produce enough chips for 231 million phones over the course of a year. As mentioned previously, Huawei only expects to sell 60 million such phones in 2024.

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This is no doubt exactly what Huawei hopes for: to win back the customers it lost to Apple and other competitors during the years it was cut off from 5G chips. The Chinese government’s instructions to all employees of the Chinese government and all state-owned enterprises not to use Apple phones might soon be followed by nationalist pressure to buy Huawei’s alternative, even if the technical performance is inferior. If SMIC’s yield remains low, Huawei’s 5G smartphone business may require significant subsidization or a protected domestic market to be economically viable. Assuming that Huawei is paying SMIC’s per wafer prices comparable to what Apple paid TSMC for 7 nm capacity — $10,000 per wafer — then $4.2 billion in annual subsidies would be enough to pay for Huawei buying the entirety of SMIC’s annual 7 nm production assuming 35,000 WPM.

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Smartphone companies tend to be early adopters of new semiconductor technology nodes. If the production capacity was directed not toward phones but other uses, such as manufacturing AI chips, which tend to be far larger, then SMIC could manufacture perhaps 10 million per year even at low yields. AI chips tend to be much larger and thus put more of their production investment at risk from manufacturing defects. AI chip producers tend to adopt a manufacturing process node roughly two years after the smartphone early adopters because by that time the defect rate has come down considerably. Further analysis of the implications of this chip for China’s AI sector is included later in this report.

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It is currently unclear based on the available information whether or not SMIC has also benefitted from illegal technology purchases made in violation of the October 7 or other U.S. export controls. Dylan Patel, Afzal Ahmad, and Myron Xie of the semiconductor consulting firm Semianalysis have argued forcefully, however, that this is indeed the case. Their provocative claims are worth quoting at length:

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The equipment companies such as Applied Materials, Lam Research, Tokyo Electron, KLA, Screen, ASM International, Kokusai, etc. are selling basically every tool they offer to China. This is because most deposition, etch, metrology, cleaning, coaters, developers, ion implant, epitaxy, etc. tools for 7nm and even 5nm can also plausibly be used in 28nm. These tools are being sold to SMIC for “28nm,” but, in reality, SMIC is lying to the firms’ faces and using them for 7nm.

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While SMIC is expanding 28nm and other trailing edge nodes, it is much less than they claim as these tools are being rerouted to leading edge. It’s even possible that people within these equipment firms know what’s happening, but are turning a blind eye.

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The Semianalysis authors did not specifically disclose the sources for these claims in their article but elsewhere cited “rumors from China.” One industry source told CSIS that illegal diversion of U.S. exports in materials and spare parts to prohibited Chinese end uses and end users was “rampant” even after October 7, 2022, and that the end-use controls outlined in section 744.23 were being intentionally violated by SMIC and other advanced Chinese chip manufacturers. Other industry sources told CSIS that rumors of diversion at the fully integrated equipment level were entirely false and that diversion at the subsystem and part levels was done by third parties, not U.S. firms. These accusations may or may not be true, and there has been no proof provided to verify or disprove the accusations. Nevertheless, they deserve immediate investigation by the U.S. government.

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If exports are being diverted from their legally licensed destination toward fabs that are operating toward prohibited end uses, that is strong legal justification for the U.S. government and its allies to strengthen export control restrictions. It is at a minimum plausible that SMIC’s claims to be expanding capacity at 28 nm are disingenuous. Other Chinese chipmaking companies have built fabs with the explicit intention of starting production at 28 nm and later shifting production to more advanced technology nodes. In February 2021, a Chinese news outlet reported that SMIC’s Huahong Factory No. 6 in Shanghai would begin production at 28 nm but that SMIC ultimately planned to upgrade the facility to 14 nm with a production capacity of 40,000 WPM. However, SMIC does have a large and growing set of customers for 28 nm production, so this transition to 7 nm, even if planned, may be well in the future.

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Impacts of Export Controls on China’s Chipmaking and Chip Equipment Industries

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However, even if there are legal grounds for expanded export controls, the U.S. government must have a clear sense of what effect strengthened export controls are realistically going to have and how the United States would know whether or not its efforts are succeeding.

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YMTC is the clearest test case for the power of unilateral U.S. semiconductor export controls against Chinese chipmakers. With a blanket export ban adopted in December 2022, YMTC’s entity list restrictions are far stronger than anything that the United States placed on SMIC or included in the October 7 regulations. Reporting by the Financial Times and South China Morning Post claims that YMTC was initially hit hard by the controls, but that a combination of government subsidies, Dutch and Japanese equipment, previously purchased U.S. equipment, and the improving quality of Chinese equipment suppliers has given YMTC the confidence to restart advanced NAND memory production and make major investments.

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It is worth emphasizing again that YMTC had been extensively preparing for U.S. export controls since 2019 — three-and-a-half years before the time they arrived. Furthermore, YMTC will have arguably had more than four-and-a-half years of preparation by the time Dutch controls take full effect in January 2024.

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At the same time, China’s domestic semiconductor equipment sector is experiencing significant growth and collectively organizing itself around the goal of producing alternatives to U.S. equipment, components, and spare parts. Analysis by CINNO Research, a Chinese consultancy, finds that the 10 largest Chinese semiconductor manufacturing equipment firms have seen their revenue increase 39 percent compared with 2022, totaling $2.2 billion for the first half of 2023. This builds on progress that was already underway even before October 2022. Dr. Doug Fuller of the Copenhagen Business School claims that Chinese semiconductor equipment firms have increased their share of China’s domestic market from 8.5 percent in 2020 to 25 percent in the first 10 months of 2022, though these sales were overwhelmingly concentrated at legacy nodes and far from the state of the art. Chinese equipment firms are also concentrated in non-critical processes.

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Moreover, after October 7, the Chinese government has further increased its already massive subsidization of the semiconductor industry. In September, Reuters reported that China is preparing to launch a new $40 billion state-backed investment fund for its semiconductor sector. This follows similarly massive funds launched in 2014 and 2019. On September 18, 2023, the Chinese government strengthened R&D tax incentives such that 120 percent of the cost of all R&D by Chinese semiconductor companies can now be deducted from taxes. The semiconductor industry is among the most R&D-intensive industries worldwide, so this is a massive subsidy stacked on top of many other massive subsidies that remain in effect.

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The Dutch and Japanese export controls are a license requirement with unclear (at least in terms of publicly available information) license approval criteria. It is possible that the Dutch and Japanese licensing restrictions will be enforced similarly to the U.S. framework, which applies extremely broad restrictions for the advanced fabs such as the one that YMTC is building. If that is indeed the case, YMTC will be cut off from nearly every foreign machine that it needs to build and maintain its advanced fab legally. Whether or not illegal means are available will depend upon the strength of enforcement capacity.

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However, it is worth asking whether or not Dutch or Japanese export controls can be truly effective in the absence of Dutch and Japanese legal equivalents to the U.S. FDPR and U.S. persons rule. The absence of such provisions has been a challenge for earlier Japanese export controls. Most notably, a recent World Bank analysis of Japan’s 2019 export controls on the sale of semiconductor manufacturing chemicals to South Korea found that Japanese chemical suppliers responded by simply shifting some production of the chemicals from Japan to their subsidiary companies headquartered in South Korea or by forming joint ventures with South Korean firms.

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This was not in legal violation of Japanese export controls, though it was obviously in violation of the policy’s intent. If sales and shipments of Dutch and Japanese equipment, components, and spare parts are simply routed through foreign subsidiaries or distributors, then the export controls will have limited effect on China’s ability to expand advanced node production. Many Dutch and Japanese business executives will likely use all legal means available to continue sales to China. At least one Japanese business executive has already stated his intention to “develop duplicate supply chains — one for the U.S.-led economic bloc and one for the China-led bloc.”

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One industry source told CSIS that “we’re definitely seeing the Chinese equipment industry making progress faster than previously expected.” The degree of dominance of U.S. firms in certain categories of semiconductor manufacturing equipment at the fully integrated systems level is real, but that is as the manager of a global supply chain in which other countries provide many components and subsystems that make up important parts of the finished system.

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Industry sources told CSIS that Chinese semiconductor equipment companies have worked aggressively to map U.S. equipment firms’ supply chains and to develop independent purchasing relationships with U.S. equipment companies’ non-U.S. suppliers. Because Chinese semiconductor equipment and component firms have already been subject to blanket U.S. export controls and have weak prospects for sales outside of China, they have little incentive to respect U.S. intellectual property, export controls, or other laws. Thus, these firms take advantage of non-U.S. suppliers where they are can and seek to reverse engineer U.S. or allied technology where they must.

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One Chinese equipment company, AMEC, claimed at an August 2023 investor relations meeting that they have 35 different types of etching equipment tools under development that are designed to provide full coverage of the etching processes required for manufacturing sub-20 nm DRAM memory. Of these 35, AMEC claims that 14 of the tools are already in mass production, while the other 21 have completed laboratory verification. An industry source told CSIS that AMEC’s tools that have completed laboratory verification are two to five years away from being viable for mass production under ideal conditions, and that the actual time to availability may be longer. Regardless, this still represents significant progress from where AMEC was three years ago. As mentioned above, AMEC is part of the China’s new approach of centralizing collaboration between the Chinese government and leading private sector semiconductor firms, a collaboration led by Huawei.

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Industry sources also told CSIS that South Korean, European, and Japanese subsystems suppliers are aggressively pursuing the Chinese market that has been opened up in the wake of U.S. export controls. Two sources specifically stated that South Korean firms have been instrumental in providing spare parts, maintenance, and advisory services related to U.S. equipment.

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YMTC likewise has little incentive to comply with U.S. laws. As long as sales of components and materials are continuing through distributors in China, genuinely cutting YMTC off will be difficult unless the United States and its allies are willing to tighten restrictions on a China-wide basis. One industry expert told CSIS that the Department of Commerce has failed to effectively identify all the shell companies and industry partners that YMTC uses to continue receiving U.S. technology in violation of export controls. Multiple industry sources said the same was true of SMIC.

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CMXT, a Chinese DRAM memory producer, is reportedly spending hundreds of millions of dollars to purchase legacy equipment suitable for producing large quantities of legacy DRAM that is less advanced than the performance specifications in the October 7 controls. If CMXT’s intentions are sincere, then this is arguably a success story for the October 7 policy since CMXT had previously been planning to expand advanced node capacity. However, one industry analyst told CSIS that the composition of equipment purchases by CMXT is inconsistent with an intention of producing legacy DRAM chips and would make far more sense if CMXT’s true intention was to produce chips more advanced than those prohibited by the October 7 end-use controls. If true, this would suggest that CMXT is deceiving U.S. companies and regulators in order to amass a stockpile of U.S. equipment that will at some point be redirected to restricted end uses. Another industry source told CSIS that CMXT is open with its Dutch and Japanese equipment suppliers about its intention to produce chips more advanced than those allowed under U.S. export controls.

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The October 7 export controls — and especially the Dutch and Japanese restrictions — were too late to prevent SMIC from bringing online a facility that will likely soon achieve 35,000 WPM of 7 nm production capacity with decent, if not world-leading, yield. This is a genuine threat to U.S. and allied national security, not least because of what it likely means for the Chinese military’s access to domestically produced AI chips.

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The highest levels of leadership in both the United States and China — including Xi Jinping — believe that leading in AI technology is critical to the future of global military and economic power. In May 2023, a group of AI industry and academic leaders issued a statement warning that the risks of advanced AI should be viewed in the same way as pandemics and nuclear war. None of those risks will be any easier to manage if China achieves its vision of becoming an AI-enabled authoritarian superpower.

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Potential Implications for China’s AI and AI Chip Sector

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Huawei’s new chip and 5G phone attracted the bulk of the media attention during and after Secretary Raimondo’s August 2023 visit to China. However, the more strategically important disclosure related to Huawei’s progress on AI chips. On August 27, the chairman of iFlytek, one of China’s largest and most technologically sophisticated AI companies, said at a conference that “I am particularly happy to tell you that Huawei’s GPU capabilities are now the same as Nvidia’s A100. [Huawei CEO] Ren Zhengfei attaches great importance to it, and three directors of Huawei have gone to work in iFlytek at HKUST [Hong Kong University of Science and Technology]. Now they have benchmarked against Nvidia’s A100 [Google automated translation].”

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In short, at the same time that Huawei was announcing its return to the 5G smartphone market, it was also announcing its return to the GPU (also known as AI chip) market. In contrast to more general-purpose processors, AI chips are specially designed to increase speed and reduce the power consumption of developing (referred to in the industry as “training”) and operationally using (referred to as “inference”) machine learning AI models.

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Huawei has sold AI accelerator chips under its Ascend product line since 2019. These chips were designed by HiSilicon and manufactured by TSMC. This halted in May 2020 after the first Huawei FDPR rule. However, Huawei was rumored to have amassed a major stockpile of these chips, allowing the company to continue winning major data center contracts across China. Independent testing by Chinese university scholars in September 2022 found that that Huawei’s Ascend chips were inferior to Western competitor products, most notably Nvidia, on nearly all performance metrics related to chip design and hardware.

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However, in the case of Nvidia, its competitive dominance is based not only on the performance of its chips but also on the strength of the software ecosystem that is based upon Nvidia standards, particularly Nvidia’s CUDA software ecosystem. CUDA makes it much easier for programmers to write massively parallelized software (as all modern AI software is) and ensures backward and forward compatibility so that older chips can still run newer software and vice versa. Any customer who seeks to stop using Nvidia chips has to leave the CUDA ecosystem, which requires solving a lot of incredibly hard software problems for which CUDA already provides free answers. Those free answers reflect billions of dollars of investment in the CUDA platform by both Nvidia and its customers.

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The strength of the combined offering of CUDA software and Nvidia hardware goes a long way toward explaining why Nvidia accounted for 95 percent of AI chip sales in China in 2022, according to estimates by Fubon Securities Investment Services.

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Even in 2019, Huawei’s strategy for competing with Nvidia in the AI chip hardware market included creating a software alternative to CUDA, which Huawei refers to as its Compute Architecture for Neural Networks (CANN). According to Huawei, “CANN is not only a software platform, but also a development system that includes a programming language, compilation and debugging tools, and programming models. CANN creates a programming framework based on Ascend AI Processors.” Huawei claimed in September 2022 that Ascend and CANN were generating traction: “More than 900,000 developers have launched more than 1,100 AI solutions based on Ascend, which are widely used in government, telecommunications, finance, electricity, internet and other fields.”

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iFlyTek is one AI firm that has close ties to the Chinese government, including developing AI technologies used in the surveillance and repression of China’s Uyghur minority. For this reason, iFlyTek was placed on the U.S. entity list in 2019. iFlyTek is therefore a natural target customer for Huawei’s AI chips, since its access to U.S. alternatives is restricted. Prior to the entity listing, iFlyTek primarily used Nvidia products.

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More recently, Huawei claimed in July 2023 that the number of Ascend and CANN developers has doubled to 1.8 million. It is unclear how Huawei is measuring the number of Ascend and CANN developers or how active an average Ascend developer is. For comparison, Nvidia said in May 2023 that CUDA has 4 million active developers and that CUDA has been downloaded more than 40 million times, including 25 million times in just the past year. Despite the October 2022 export controls, Nvidia’s chips that are legally approved for export to the Chinese market, the A800 and H800, are reportedly in high demand by Chinese hyperscale cloud computing vendors. The A800 and H800 are degraded versions of the A100 and H100 chips, respectively. Specifically, the A800 and H800 have equivalent processing power to their non-degraded counterparts but significantly reduced interconnect speed that is below the export control thresholds.

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Nvidia’s A100 models (launched in 2020) are manufactured by TSMC on their 7 nm process, while its H100 models (launched in 2022) use a custom TSMC 4 nm process node. Nvidia has not announced the release date for its forthcoming B100 product line, but it will reportedly use TSMC’s 3 nm process node and launch in either late 2024 or early 2025.

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All of this suggests that even Nvidia’s products that are degraded to comply with export controls will be more attractive than Huawei’s alternatives for at least the next few years. Huawei and SMIC do not have a clear path to producing chips beyond the 5 nm node, and SMIC will likely have poor unit economics to produce 5 nm chips without access to EUV technology. The greater maturity of the CUDA software ecosystem also makes Nvidia chips more attractive.

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However, if the performance thresholds specified in the October 7 export controls are held constant, then the attractiveness of Nvidia products compared with Huawei alternatives could change significantly in the future. The current performance penalty for training large AI models with the degraded Nvidia chips is reportedly in the range of 10 to 30 percent. This is significant, but able to be overcome by Chinese AI firms that benefit from both government subsidies and a protected domestic market.

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Industry sources told CSIS that the performance penalty will grow over time as the consequences of capped interconnect speed become more and more pronounced. This could potentially mean that Huawei chips, which would obviously not comply with interconnect speed restrictions, could have superior overall performance even if they are manufactured on an inferior semiconductor process node. Moreover, there are other sources of improvement to chip performance besides adopting a superior manufacturing process node. Nvidia’s chief scientist Bill Dally recently said that of the 1,000-fold performance improvement that AI model training on Nvidia chips has undergone over the past 10 years, semiconductor manufacturing process node improvements were only the third most important factor. More specifically, he said that process node improvements had delivered a two-and-a-half times performance boost between the 28 nm node and 5 nm node.

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This suggests that — even if export controls were able to effectively constrain China’s AI development to the 28 nm node as was their original intent — there are limits to how much export controls on Nvidia and related firms can degrade the performance of U.S. AI chips before Chinese firms will make an economically rational choice to buy domestic alternatives, such as those designed by Huawei, Biren, or Cambricon. Chinese AI firms would likely prefer a 28 nm Chinese chip over a 7 nm U.S. chip if the U.S. chips’ interconnect speed limitations degrade AI model training performance more than the use of an older node degrades the Chinese chips’ performance.

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However, the 28 nm target might now be out of reach, unless the United States and its allies are willing to engage in dramatically more aggressive restrictions. If SMIC is able to build out Chinese domestic availability of 7 nm production capacity with adequate reliability and yield, that would significantly accelerate the timeframe in which Chinese AI development firms such as Alibaba and Baidu might find Huawei chips attractive in comparison to those of Nvidia. There are, of course, significant switching costs to leaving the CUDA ecosystem.

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Along with the Chinese government and its corporate partners, Huawei is now engaged in a project to build a Chinese computing ecosystem that is entirely independent of the United States. The list of projects that Huawei and its partners have underway at varying levels of maturity is extraordinary. It includes at a minimum the following:

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    EDA chip design software;

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    Chip manufacturing equipment;

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    Chip manufacturing facilities;

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    Chip designs for personal computers, smartphones, and data centers;

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    AI chip enablement software ecosystems;

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    AI software development frameworks;

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    AI models;

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    Computer and smartphone software operating systems;

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    Computer, smartphone, and data center hardware systems; and

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    Cloud computing.

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In much the same way that one of the first major initial uses of the Chinese yuan currency for international trade transactions was avoiding U.S. sanctions, the initial customer base for Huawei’s alternative AI computing ecosystem is sanctioned and entity-listed actors in China. That may soon grow to include other countries such as Russia and Iran. Within China, entity-listed firms and government agencies comprise a larger and more technologically sophisticated customer base than is commonly understood in Western policy circles. iFlyTek, for example, has routinely published research papers at leading international AI conferences. Even after being sanctioned, iFlyTek has 40 percent market share in China’s automotive voice recognition market.

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Beyond the Chinese domestic market, the other critical market for Huawei’s technology stack is exports, especially to the global South.

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The Need for Timely U.S. Intelligence Collection and Technology Analysis on China’s Semiconductors

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Perhaps the most surprising fact about the Huawei breakthrough is that so many U.S. government leaders were evidently surprised. Asked about the chip on September 6, National Security Advisor Jake Sullivan stated that “I’m going to withhold comment on the particular chip in question until we get more information about precisely its character and composition.” Similarly, a group of Republican members of Congress wrote a letter to Department of Commerce leadership in which they expressed being “extremely troubled and perplexed” by what the Huawei phone suggests about the efficacy of U.S. export controls.

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None of these statements give confidence that these U.S. leaders in either the White House or Congress are receiving good intelligence about the state of China’s quest for semiconductor self-sufficiency. If this is indeed the case, it is simply unacceptable. It is possible, of course, that the U.S. intelligence community has more answers than the U.S. government is making public.

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The October 7 export controls were one of the most important foreign policy moves that the Biden administration adopted in 2022, perhaps second only to supporting Ukraine against the Russian invasion. Senior U.S. national security and foreign policy leaders need to know to what extent that policy is having the intended effect, and they need to learn that before China rubs it in a U.S. cabinet secretary’s face during a trip to China.

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The Huawei phone and SMIC chip were not well-kept secrets. Reports of Huawei returning to the 5G market with a SMIC-manufactured 7 nm chip were already widespread enough in July of this year that Chinese industry executives were publicly commenting on it.

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Hopefully, this incident merely reflects a failure of the relevant information to reach U.S. leaders and not a genuine gap in the capabilities of the U.S. intelligence community. During the Cold War, the U.S. intelligence community produced exceptionally good analyses of the Soviet semiconductor industry and the effectiveness of U.S. semiconductor export controls. Today, there are a host of critical questions about the Chinese semiconductor industry and the effectiveness of U.S. export controls where the U.S. intelligence community needs to supply senior U.S. decisionmakers with timely intelligence. Here is just a sample:

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    Are SMIC or CMXT deceiving U.S. semiconductor equipment companies when they claim that post-October 7 equipment purchases are going to be exclusively used for production less advanced than the October 7 technology thresholds?

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    How much advanced chip production capacity does SMIC intend to build out? At what technology nodes will this occur and over what timeframe?

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    Does the Chinese government intend to pressure Chinese businesses and consumers to purchase Huawei smartphones and chips (and not to purchase U.S. alternatives) in order to drive economies of scale? If so, what will be the likely costs to U.S. firms in terms of lost sales?

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    How are SMIC and YMTC getting spare parts to continue operating their advanced node U.S. equipment? Are they illegally diverting U.S. exports via shell companies or other tactics? Are they being supplied by foreign firms that manufacture viable alternatives? Or are there Chinese companies with adequate technology to supply them?

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    Are reports that YMTC is close to restarting advanced production with improved Chinese domestic equipment alternatives true? Is YMTC also benefitting from equipment and components acquired in violation of U.S. export controls?

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    How much technological progress have domestic Chinese equipment makers made, and in what areas? How much foreign help are they receiving, and from what sources?

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    What level of Chinese government subsidization are Huawei and SMIC specifically receiving to support their advanced node manufacturing? Do the firms have a credible path to profitable 7 nm products without government support? Is the Chinese government prepared to sustain or increase this support indefinitely?

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    How has China’s crackdown on foreign consulting firms impacted the ability of U.S. compliance companies to engage in substantive due diligence prior to selling to Chinese companies?

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Conclusion: The Future of Export Controls

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Limiting China’s access to advanced AI chips is a highly desirable national security outcome. However, given the flaws and long timelines for how the Trump and Biden administrations have pursued export control policies, it is difficult to see how the United States could degrade China’s current technological state of the art without dramatically expanding export controls and significantly increasing resources devoted to identifying and patching loopholes and strictly enforcing violations.

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It is not clear, for example, that even a complete entity listing of SMIC with presumption of denial for all products would cause the SN1 and SN2 fabs to shut down. With the current staffing and budget given to the Department of Commerce for export controls, there are reasons to doubt that the U.S. government can identify shell companies at the rate that Huawei, SMIC, and their partners can create them. Only China-wide restrictions imposed simultaneously and without advance notice by the United States, Japan, and the Netherlands on multiple categories of exports, especially raw materials, would have a clear path to shutting down the SMIC fabs.

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If SMIC has indeed been engaged in a massive campaign of export control evasion and has been providing false information to U.S. firms for their export license applications, then the case for such an option is stronger. It would provide strong evidence that China is already sprinting full out toward its own strategy for semiconductor decoupling without the slightest care of complying with U.S. law or preserving room for reaching an understanding with the United States.

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In such a case, the United States might conclude that it is better for semiconductor decoupling to happen when it is inconvenient for China rather than wait for China to do it when it is more convenient and on China’s terms.

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But it will likely be more difficult to persuade U.S. allies to go along with such extreme measures if SMIC’s achievement has been done entirely or almost entirely through equipment purchases made in full compliance with U.S. law.

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What if SMIC has simply been exploiting legal loopholes in the Trump administration approach and taking advantage of the Biden administration’s very slow onboarding of Japan and the Netherlands? What if SMIC is sincere in its statements that the massive expansion of fab capacity that it is bringing online will exclusively be used for 28 nm production?

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U.S. allies will be more willing to restrict the actions of their companies and citizens if they understand the evidence of reverse engineering and illegal purchases of equipment, as well as how China’s plans are not in their own national interest. This underscores the need for timely and high-quality intelligence.

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There are other aspects of this story where SMIC could be in violation of U.S. law besides whether SMIC’s post-October 2022 equipment purchases were intended for 7 nm manufacturing. The FDPR as applied to Huawei has thus far restricted the ability of firms that use U.S. equipment to produce chips on behalf of Huawei, regardless of when that equipment was purchased. The rule, as written, also includes coverage of more than exports, including in-country transfers (such as the SMIC’s sale of chips to Huawei). A group of U.S. members of Congress sent a letter to the Department of Commerce directly alleging that SMIC’s production on behalf of Huawei was in violation of U.S. export controls. As mentioned above, this does indeed seem to be the case.

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The U.S. government’s response will have to take this into account. After all, if the United States fails to respond to export control violations by Chinese entities, firms in Taiwan, South Korea, Europe, and elsewhere will feel they are being unfairly treated when the U.S. government requires them to comply.

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One area where it makes obvious sense to expand restrictions is in preventing U.S. and allied companies from supporting the maturation of Chinese equipment and component companies. There is little strategic sense in allowing U.S. and allied companies to help China to prepare for decoupling with the United States and its allies. It is not in South Korea’s national interest, for example, for South Korean equipment and spare parts firms to aid China’s equipment indigenization effort. Nor is it in South Korea’s interest to allow South Korean consultants to train Chinese engineers on how to improve the yields of their memory production fabs. Both of these will inevitably be used to break South Korea’s leadership in semiconductor manufacturing.

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Similarly, the United States and its allies need to crack down on third-party sales of spare parts and components.

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In the absence of good intelligence, however, the United States will continue to be faced with an undesirable choice between taking strong action early enough to have an impact (but in a way that might seem premature or unjustified to allies) or on the other hand waiting until the justification is clear, at which point it might be too late to have an impact in the wake of Chinese equipment stockpiling and indigenization campaigns.

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This is the same unattractive choice that the United States has faced again and again since the Trump administration began using semiconductor export controls as a tool of foreign policy in 2018. Thus far, the United States has chosen repeatedly to enact export controls that are threatening enough to incentivize Chinese firms to stockpile and to de-Americanize their supply chains, but not strongly enough written or enforced to prevent China from succeeding in their indigenization and stockpiling efforts.

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The United States has incurred essentially all of the costs of an aggressive export control policy toward China, but it has done so in a way that does not provide all the potential strategic benefits of actually constraining China’s future technological capabilities. The U.S. and allied approach does appear to have limited China’s access to nodes more advanced than 7 nm in economically competitive terms and more advanced than 5 nm in absolute terms.

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It is possible that China’s extremely expensive efforts to indigenize everything will prove to be a strategic error: forcing China’s government to perpetually subsidize an often-corrupt semiconductor industry that produces products that are uncompetitive in Chinese or global markets. Such was the case with the Soviet semiconductor industry.

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However, it is also possible that China’s domestic champions will ultimately achieve some degree of financial sustainability, driven by partially or fully protected sales in the large Chinese home market as well as successful exports abroad. Such was the case with China’s automotive and solar cell manufacturing industries.

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Imposing these costs upon China is not without strategic value, both in terms of slowing its military development and in preserving U.S. technological leadership. Ben Thompson of Stratechery argues that China’s obsession with achieving 7 nm production in violation of U.S. export controls may actually slow China’s overall technological development: “Every year that China stays banging its head on the wall at 7nm instead of focusing on moving down the learning curve from a fully indigenous .13 micron process to 90nm to 65nm to 40nm to 28nm to 22nm to 16nm to 10nm to 7nm is another year that China doesn’t break the 5nm barrier.”

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In a similar argument, Bloomberg’s Tim Culpan argued that the Huawei chip shows that U.S. curbs “are porous, not useless.”

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Still, this will be an unsatisfying outcome for those who hoped for more from the October 7 policy. Export controls as a tool rarely deliver perfect solutions, especially not with regards to countries as large and technologically advanced as China. To the extent that export controls worked against the Soviet Union during the Cold War, it was because there was so little economic engagement between the camps to begin with and because they were so broadly enforced. To the extent that export controls worked after the Cold War, it was because the aims were quite limited and because even governments that could agree on little else could agree that they were opposed to terrorists and rogue states acquiring nuclear weapons.

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Trying to draw neat export control lines that achieve ideal and durable technological outcomes for dual-use technologies in the U.S.-China relationship is significantly more difficult. Broader controls, especially multilateral ones, have a better chance of success, but the political coordination and enforcement challenges are still difficult. The United States has imposed significant costs upon China, but not so significant that they have changed the Chinese government’s position on issues such as military AI development, human rights violations, sanctions violations, or intellectual property theft. Rather than change its ways, China is now spending hundreds of billions of dollars to decouple itself from multiple parts of the U.S. semiconductor and related technology ecosystem.

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Beginning in 2018, the United States has imposed costs upon China that are severe enough to persuade China to accelerate the indigenization of its semiconductor supply chain, but the United States and its allies have not — at least thus far — implemented export controls that are tight enough and multilateral enough to definitively prevent China from succeeding in indigenizing. Previously, the United States allowed Huawei to stockpile U.S. chips before cutting Huawei off. More recently, the United States has allowed Chinese chip fabs to stockpile U.S., Dutch, and Japanese equipment before imposing broad restrictions on the sale of such equipment. Even now, China is still acquiring significant technology and knowhow from South Korean and other firms.

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These are all enormous shifts underway, and the future is far from certain. What is clear, however, is that the existing export controls need to be expanded to include South Korea, Germany, and ideally the entire European Union. It is also clear that U.S. allies need to strengthen their export control regimes to be effective, which means creating legal authorities that restrict knowledge transfers and the actions of overseas subsidiaries.

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Finally, it is clear that all allied governments need improved intelligence and improved economic and technological analytic capacity as well as improved export control enforcement capacity. Even though export controls are central to U.S. foreign policy toward both Russia and China, Congress is now poised to deny the Department of Commerce’s export controls bureau its meager request for funds needed to keep a flat budget after accounting for inflation. This is, in real dollar terms, a budget cut — and a shocking error given how much of U.S. national security and economic security now depends upon the efficacy of the U.S. export controls system.

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Even if the future will often be foggy, the U.S. government must be willing to invest heavily in an improved ability to see clearly and to act effectively.

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Gregory C. Allen is the director of the Wadhwani Center for AI and Advanced Technologies at the Center for Strategic and International Studies (CSIS). Prior to joining CSIS, he was the director of strategy and policy at the Department of Defense (DOD) Joint Artificial Intelligence Center, where he oversaw development and implementation of the DOD’s AI Strategy, drove policy and human capital reforms to accelerate the DOD’s adoption of AI, and developed mechanisms for AI governance and ethics.

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Change Or False Alarm?

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Weapons Policy: Change or False Alarm?

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Sari Arho Havrén | 2023.10.13

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A potential shift in China’s approach to nuclear weapons could indicate that it is taking a page from Moscow’s book.

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China recently released its proposal for a new global order: “Proposal of the People’s Republic of China on the Reform and Development of Global Governance”. The blueprint repeats several earlier talking points on how China aims to change the global order. The pillars of the new order lean heavily on Xi Jinping’s Global Security Initiative, Global Development Initiative, and Global Civilisation Initiative. As an unprecedently open step towards a global order that mirrors the governance of a one-party state, the proposal deserves in-depth analysis beyond the scope of this article. A significant issue examined here is China dropping its long-term No First Use of nuclear weapons policy from the proposal; this raises eyebrows as global security risks intensify with a protracted Russian war of aggression against Ukraine (where China is siding with Russia), along with China’s aggressive behaviour around Taiwan.

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China officially became the world’s fifth nuclear weapon-possessing state in 1964 and was then recognised under the Nuclear Non-Proliferation Treaty (NPT). For decades, China carefully advanced its nuclear arsenal to maintain its minimum deterrent strategy. However, in recent years, China has clearly abandoned this strategy, heavily increasing its count of nuclear weapons and becoming the world’s third-largest nuclear weapons power. The Pentagon has estimated that if the current trajectory continues, China could field approximately 1,500 warheads by 2035.

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In August 2023, at the NPT Review Conference, the Director-General of the Department of Arms Control of the Foreign Ministry of China, Sun Xiaobo, reaffirmed China’s 1964 policy “not to be the first to use nuclear weapons at any time and under any circumstances” and “not to threaten to use nuclear weapons against non-nuclear-weapon states”.

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Nonetheless, a month later, China’s proposal for global governance seems to have dropped this decades-old policy. Up until August 2023, China had repeatedly reaffirmed its No First Use policy from 1964 onwards, although on some occasions Beijing has stretched it to exclude other nuclear powers, especially the US. The dual pledges of No First Use and No Threatening to Use nuclear weapons have long been cornerstones of China’s nuclear strategy. The fact that China’s proposal on global governance omits these commitments – while otherwise expressing China’s positions in a detailed manner – could indicate a change in China’s position on nuclear weapons, especially because China has never previously wavered or appeared ambiguous about these commitments.

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China may have learned from Moscow’s capitalisation on European fear regarding Russian nuclear weapons use

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China’s ultimate aim in its 1964 policy on the use of nuclear arms was “to deter others from using or threatening to use” nuclear weapons against China. Could dropping this from an important policy document simply be a mistake, or is this a deliberate new shift in policy, perhaps based on Xi Jinping’s analyses of “changes not seen in a hundred years”, or influenced by Russia’s threatening rhetoric directed at NATO allies regarding nuclear weapons?

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While China’s proposal for global governance demands that the international community oppose the threat or use of nuclear weapons, China appears to have excluded its unilateral pledge to do so. Beyond this, China’s tacit support for Russia in its invasion of Ukraine has cemented talking points on “invisible security” and how countries’ national security should not threaten that of others. China sees this as the root cause of the war in Ukraine. In Beijing’s view, “the crisis” – China still refuses to call the war anything else – stems from a flawed, unbalanced European security architecture, where other parties’ security concerns are ignored. In this context, multiple Chinese researchers have sided with Russia. Furthermore, following Finland’s NATO accession, a number of Chinese researchers took the view that since Russia could not match NATO’s conventional deterrence, Russia had no other option but to increase its nuclear arsenal.

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The consequences of China abandoning its No First Use/No Threatening to Use policy are minor at most; China has in any case refused to engage in any arms-control dialogue with the US. Thus, its policy promises have often been taken with a grain of salt. Nevertheless, two immediate implications of China’s potential new approach still come to mind. First, China’s quick nuclear build-up means that the US will face two nuclear-armed powers, China and Russia, working together as its adversaries. Second, China may have learned from Moscow’s capitalisation on European fear regarding Russian nuclear weapons in order to, at a minimum, delay help for Ukraine. Similarly, triggering fear by threatening the use of nuclear weapons could rein in Japan’s and other US allies’ willingness to defend Taiwan, if the People’s Liberation Army tries to take the island by force.

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Sari Arho Havrén is a RUSI Associate Fellow based in Brussels. She specialises in China’s foreign relations, China foresight, and in great power competition. She is also a visiting scholar at the University of Helsinki.

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The Orient Express

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North Korea’s Clandestine Supply Route to Russia

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James Byrne, et al. | 2023.10.16

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Dozens of high-resolution satellite images taken in recent months reveal that Russia has likely begun shipping North Korean munitions at scale, opening a new supply route that could have profound consequences for the war in Ukraine and international security dynamics in East Asia.

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Just a few weeks after the momentous visit of Russia’s Defence Minister Sergei Shoigu to North Korea, in July, three Russian cargo vessels connected to Moscow’s international military transportation networks embarked on an unusual journey.

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Their destination was an inconspicuous naval facility tucked away in the secluded Russian port of Dunai, situated in the remote eastern reaches of the country. Once identified by the CIA at the height of the Cold War as a Soviet submarine base, the Dunai facility sits approximately nine kilometres south of the town of Fokino, a closed administrative-territorial entity south of Vladivostok, where movement and residency are strictly controlled for military and security reasons

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While the unremarkable port facility at Dunai had largely been relegated to the annals of Cold War history, recent deliveries by the Russian-flagged Angara, Maria and Lady R of what are likely to be North Korean munitions have thrust it into the international spotlight, and place it at the centre of the burgeoning relationship between Pyongyang and Moscow.

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Embroiled in a grinding attritional conflict in Ukraine, Moscow has scoured the globe for munitions to supply its armed forces, which are currently attempting to repel a determined Ukrainian counteroffensive. But while Iran answered Moscow’s call, supplying the country with hundreds of Shahed loitering munitions, other UAVs and weapons, North Korean arms have yet to appear in significant quantities on the battlefield.

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That, however, is about to change. Dozens of high-resolution images, revealed here for the first time and captured in recent months over Dunai and the North Korean port of Rajin, show the three cargo vessels repeatedly transporting hundreds of containers likely packed with North Korean armaments.

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image01 +▲ Figure 1: Angara and Maria shipments between Dunai and Rajin. Source: Planet Labs, RUSI Project Sandstone.

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Although it is difficult to determine the specific contents of these containers from imagery alone, the US government accused the North Koreans of supplying munitions and military material to Russia on 13 October. These claims were accompanied by imagery detailing the alleged end-destination of these shipments in Tikhoretsk, a small town in Russia’s Krasnodar region, facing the Kerch Strait and Russian-occupied Crimea.

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High-resolution imagery collected in recent weeks in the vicinity of Tikhoretsk confirms the rapid expansion of a munitions storage facility here beginning in August 2023 – the same time that North Korea’s shipments from Rajin began. Crucially, these images also appear to show trains delivering the same size and colour of cargo containers as those shipped from North Korea to Russia’s far east.

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image02 +▲ Figure 2: Renovations as the Tikhoretsk munitions depot. Source: Planet Labs, RUSI Project Sandstone.

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The Orient Express

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The first stop for North Korea’s shipments to Russia is in Dunai, a secure military facility with controlled entrances, disguised storage areas and a number of secure berths often frequented by Russian naval assets. High-resolution satellite imagery captured in recent months shows that containers are regularly delivered and removed from here by semi-trailers and railway wagons, likely for transport across Russia towards Tikhoretsk and the border with Ukraine.

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image03 +▲ Figure 3: The Secure Facility at Dunai, Russia. Source: Airbus Defence and Space, RUSI Project Sandstone.

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The initial shipment of hundreds of containers was loaded on to the Angara at Dunai in late August, before the vessel made its way to the North Korean port of Rajin on the country’s eastern coast. Notably, the vessel also switched off its AIS transponder, obscuring its movements between the two countries. Once in North Korea, satellite imagery shows the vessel unloading these containers onto a berth with a dedicated rail line.

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image04 +▲ Figure 4: The Angara loading and unloading containers in Rajin, North Korea. Source: Planet Labs, RUSI Project Sandstone.

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Since this first shipment, the Angara has regularly shuttled containers from the port of Rajin to the Russian facility at Dunai, being joined by a second cargo vessel named the Maria on 12 September and a third vessel named the Lady R on 6 October. While the vessels are still operating without transmitting on their AIS transponders, dozens of satellite images show the vessels continually loading and delivering cargo from North Korea to Russia.

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image05 +▲ Figure 5: The Maria in Dunai, 14 October 2023. Source: Planet Labs, RUSI Project Sandstone.

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Over the course of the last three months, the Angara has made at least three trips between Russia and North Korea, while the Maria made one trip in September and recently completed another round trip on 14 October. The Lady R also appears to have made a trip, visiting Rajin on 6 October.

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All three vessels appear to first unload containers at the northern pier in Rajin, before moving to a second berth to then load containers for delivery to Dunai. Over the course of these voyages, satellite imagery indicates the Angara and Maria have moved several hundred containers to and from North Korea.

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image06 +▲ Figure 6: The Angara and Maria at Dunai and the Angara at Rajin, North Korea. Source: Airbus Defence and Space, Planet Labs and RUSI Project Sandstone.

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Suspect Couriers

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While the Angara was sanctioned by the US government in May 2022, the Maria has yet to be designated. However, both vessels are owned and operated by companies with connections to Russia’s military logistics networks. For instance, the companies that own and operate the Angara – M Leasing and Marine Trans Shipping – were both sanctioned by the US soon after Russia’s 2022 invasion of Ukraine for transporting weapons on behalf of the Russian government.

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But the Angara’s links to Moscow’s weapons handlers stretch much further back. For several years, the Angara – which then sailed under the name Ocean Energy – was owned by the Kaalbye Group, a company accused of transporting Russian arms to Syria and South Sudan. During this time, media reports identified the Ocean Energy delivering Russian T-90 tanks from Russia to Iraq.

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Notably, M Leasing’s two other Ro-Ro vessels, the Adler and Ascalon, have also been sanctioned. Both of these vessels, under different identities, had reportedly shipped missiles for the S-400 surface-to-air missile system to China in 2018.

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image07 +▲ Figure 7: Ownership and management chart for the Angara and Maria. Source: IHS Maritime, Corporate Records, OFAC and RUSI Project Sandstone.

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The Maria’s owner, on the other hand, is a subsidiary of Cyprus-based Azia Shipping Holdings; the latter also serves as its operator. Azia Shipping Holdings owns several vessels, one of which was allegedly involved in the shipment of Russian weapons to Myanmar in January 2022. Notably, several employees of the Maria’s DOC company JSC Sovfracht were indicted by the US Treasury in 2018 for allegedly operating a scheme to supply Syria with jet fuel.

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Meanwhile, the vessel’s Vladivostok-based technical manager, the similarly named Azia Shipping Company, was formerly part-owned by Russia’s sanctioned Oboronlogistics LLC. This Moscow-based company was allegedly created to oversee logistics for the Russian Ministry of Defence, and is the owner of the sanctioned SPARTA IV, a vessel recently engaged in moving Russian military equipment from Syria to Russia.

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Like both the Angara and the Maria, the Lady R has been linked to Moscow’s military transportation networks. The vessel’s owner, TransMorFlot LLC, has been sanctioned by U.S, UK and Ukraine for being involved in arms shipments on behalf of the Russian government.

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Final Destination

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The final destination of these shipments appears to be a munitions depot in the Russia town of Tikhoretsk, approximately 200 km from the Ukrainian border.

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image08 +▲ Figure 8: Map of Tikhoretsk ammunition depot. Source: Planet Labs, RUSI Project Sandstone.

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Beginning in mid-August 2023, high-resolution imagery shows that the ammunition depot has undergone a rapid overhaul, with excavators digging over 100 new munitions pits with earth berms designed to divert the force of a blast in case of an explosion.

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Recent imagery from 28 September also shows trains arriving at the facility, delivering dozens of containers of the same size and colours as those being loaded in North Korea. In these images, containers can be seen placed next to newly dug munitions pits, which are potentially being loaded with munitions boxes.

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image09 +▲ Figure 9: Map of Tikhoretsk ammo depot and active work there. Source: Planet Labs, RUSI Project Sandstone.

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From here, North Korean weapons and munitions could be shipped to logistics depots on the border of Ukraine for distribution to frontline units.

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Tectonic Shifts

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Having prepared for a massive conventional war with South Korea for decades, North Korea’s supplying of significant quantities of munitions to Moscow will have profound consequences for the war in Ukraine. For the Russians, a major North Korean supply line will alleviate shortages of munitions for what has proven to be an ordinance-hungry conflict and enable the Russian armed forces to feed their frontline troops as they try to repel a Ukrainian counteroffensive. Ukraine and its supporters will also have to contend with this new reality, potentially escalating their support by providing additional quantities of weapons and munitions to Ukraine’s defenders.

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But the impact will be felt much further than the battlefield in Ukraine. The sale of such quantities of munitions will fill the coffers of the cash-strapped regime in Pyongyang, which has traditionally used the proceeds of arms deliveries to develop its own nuclear and ballistic missile programme in violation of UN sanctions. Moreover, in addition to the pecuniary benefits, North Korea may seek other assistance from Russia in return for its support, including the provision of missile and other advanced military technologies.

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As a result, North Korea’s agreements with Moscow will also cause significant alarm in Japan and South Korea, countries already on the sharp end of Pyongyang’s ongoing provocations. Confronted with a strengthening alliance between North Korea and Russia, Tokyo and Seoul might explore additional avenues to offset the North Korean threat while extending further support to Ukraine’s efforts to oust Russian forces from its territory.

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However, Pyongyang’s decision to deliver munitions at scale once again underscores the grave threat that North Korea poses to international security, this time feeding a conflagration on European soil that has already cost the lives of tens of thousands of Ukrainians and consumed tens of billions of dollars in Western military support.

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James Byrne is Director of the Open-Source Intelligence and Analysis (OSIA) Research Group.

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Joe Byrne is a Research Fellow at RUSI’s OSIA Research Group.

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__Gary Somervill__e is a Research Fellow at RUSI’s OSIA Research Group.

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Blockchain For Democracies

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Analyzing the Role of Blockchain Technology in Strengthening Democracies

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Noam Unger, et al. | 2023.10.25

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In a world increasingly overflowing with data, blockchain is neither a panacea nor solely an instrument of cryptocurrencies but rather a tool that offers intriguing applications to support democratic governance, including in Ukraine.

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Introduction

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Rapid technological change has led to a global deluge of data. Certain aspects of shared information — authenticity, verification, speed, and integrity — are key to good governance and to helping democracies deliver for their citizens. Blockchain and other types of distributed ledger technology (DLT) offer potential benefits that institutions and governments can leverage in various ways to support democratic governance. Blockchain’s increasing use for identity management, land rights, citizen representation, the tracking of goods and services, and other uses necessitates deeper and broader understanding by U.S. foreign policy stakeholders. Given that U.S. foreign policy prioritizes strengthening democratic governance around the world, including through more inclusive access to services and greater transparency, accountability, and integrity in the public sphere, U.S. policymakers must seriously grapple with the opportunities and challenges associated with the increased integration of blockchain technology. Ukraine’s embrace of digitization and use cases for blockchain offer helpful insights into how and in which contexts this technology may be applied.

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Whenever there is a lack of transparency in elections, government transactions, bureaucratic systems, and media, there is an opportunity for corruption to ensue, diluting citizens’ trust in democratic institutions. Certain technological advancements can potentially be a valuable tool for increasing the transparency and accountability of democracies. One such innovative tool is blockchain, a form of DLT that allows a group of users to cooperatively maintain a record of transactions.

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Blockchain is often associated with the use case of cryptocurrency, but it can be applied to other domains to track both tangible and intangible goods and transactions. Blockchain is a form of tamper-resistant DLT that ensures that all transactions are recorded and validated. This technology achieves extraordinary levels of data integrity for information once it is loaded into the shared ledger. Essentially, the movement or transfer of anything of value can be logged and verified, instilling trust and confidence by raising the costs of malicious activity during that process. This opens the technology to a wide range of applications. Within governance and democratic strengthening efforts, blockchain has recently been introduced in various places to increase government accountability, combat misinformation, reduce costs and the mishandling of data, and quickly trace financial transactions.

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Box 1: What Is Blockchain?

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Distributed ledger technology (DLT) describes a category of technologies that enables the storage of data within and transfer between multiple data stores. Network participants share this ledger of transactions, allowing for synchronized data recording with no central storage hub. Instead, peer-to-peer transmission takes place, recording the same information across many devices. The “ledger” is stored across multiple locations and is visible to all parties.

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Blockchain is not singular in design. It can be classified into different types based on which access and governance models are used. The two main categories are private and public blockchains. Private blockchains restrict access to a specific group of participants, while public blockchains allow anyone to join, build, and use applications on the network. Within each of these categories, there are also permissioned and permissionless blockchains. Permissioned blockchains require participants to have explicit permission to host infrastructure and validate network transactions, whereas permissionless blockchains allow anyone to be a validator.

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Blockchains that are public and permissioned offer several advantages. They can provide high performance and scalability, processing thousands of transactions per second, and can ensure fast and secure transaction finality. Permissioned governance that provides security, efficiency, and visibility into who is involved in decisionmaking processes and network operation can be combined with public accessibility to all citizens, making the technology a compelling choice for many applications.

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While blockchain and DLT have the capability to help address global challenges and strengthen democratic institutions, the innovative applications of blockchain are still in early stages and not fully understood by key stakeholders in Washington. The United States and its strategic partners must assess and play a role in shaping the next innovative applications of blockchain technology before the opportunity passes. In some respects, China is already possibly years ahead of the United States and many other countries in applying this rapidly evolving technology. Users of the digitized Chinese yuan number over 120 million in China (although conflicting reporting creates some doubt about how widely this currency is actually being used). To create a regulatory and policy environment in which the implementation of DLT strengthens democracy without compromising privacy or muzzling technological innovation, policymakers need a comprehensive understanding of the opportunities as well as the limitations on where and how this technology can be most readily and helpfully adopted. The strategic application of blockchain technology in certain scenarios can enhance trust and better protect information, but implementers must also be mindful of the technology’s shortcomings and challenges.

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The United States and its strategic partners must assess and play a role in shaping the next innovative applications of blockchain technology before the opportunity passes.

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Blockchain and Democracy

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Democratic backsliding around the world should be a concern for democracies everywhere. Democracy is in a worldwide recession in terms of both quality and prevalence, the causes of which are contested. The cornerstones of flourishing democracies, however, are widely agreed upon and include free and fair elections; a free press; individual rights; economic, political, and religious freedom; and a rule of law equally applied. Governments and societies grappling with how best to support and strengthen democracies should assess how technologies such as blockchain can be applied as practical tools to uphold these foundational principles. The applications may vary considerably, as demonstrated by the following non-exhaustive examples.

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PROTECTING DIGITIZED GOVERNMENT DOCUMENTS

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Identity is inextricably intertwined with democracy. There are clear incentives for all governments, democratic or otherwise, to provide their citizens with means of unique identification, such as for the delivery of key services and benefits. Democracies have a special interest in ensuring individuals’ identities are protected so that the rights and privileges guaranteed to those individuals can be preserved. For example, government-issued identification is a key ingredient for voting, a core democratic responsibility. Likewise, passports assign unique “international standard serial numbers” which allow customs officials to quickly verify identity and citizenship as well as which travel privileges may apply to an individual. Government agencies such as the U.S. Social Security Administration assign identifiers to help administer medical benefits, financial aid, and other social services and benefits.

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Worldwide, nearly 1 billion people have no proof of legal identity and are excluded from services and the formal economy. Digital identity can serve to close this “identity gap” by helping deliver immutable and easily accessible identification to those lacking verifiable identity documents, as well as by strengthening the resiliency of existing paper identification. During natural disasters, conflicts, and other crises, citizens may not have the time or ability to grab their paper government documentation, which is necessary to freely move and receive services. DLT’s ability to safely guard such digitized information could alleviate the difficulty of attempting to verify a person’s identity during hectic scenarios in which physical documents are destroyed or inaccessible. Governments could be better equipped to manage refugee crises and natural disasters and administer standard social services, while individuals could have more control of their data. An important factor in realizing this vision entails working toward applications of digital identity systems that empower people rather than surveil and exclude them.

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SECURING LAND REGISTRATION

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Land title registries track the ownership of land and property for a given region. The efficient registration of land is an essential component of ensuring property rights, a backbone of any free society. Land registration poses another set of government records for which an agency could maintain a blockchain to improve efficiency and ensure the quality of data storage and transfers. Some countries are already experiencing positive results from deploying DLT in the land registration process. For Georgia, the collapse of the Soviet Union and persistent corruption during early independence caused many property disputes. In response, Georgia was an early adopter of blockchain-based land registration, registering more than 1.5 million land titles in 2018. The Georgian government was able to provide citizens with digital certificates, legitimizing ownership with a timestamp and other cryptographic proof in under three minutes. Importantly, blockchain may help streamline the land registration process, but oversight is still critical to ensure the initial integrity of the data.

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Similar technology can be applied to other asset registrations and government services. For example, the private sector uses blockchain technology to track the shipment of goods and monitor supply chains. Likewise, government agencies have the potential to reduce labor costs and waste by incorporating blockchain in some types of foreign aid delivery and monitoring, the tracking of welfare funds, and the registration of voters, vehicles, and intellectual property.

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FACILITATING FAST AND DIRECT FINANCIAL TRANSFERS AND OTHER ECONOMIC APPLICATIONS

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The financial services industry is already advancing applications of blockchain technology. Blockchain’s peer-to-peer system has enabled the excision of some intermediaries, instantaneous processing, and the elimination of fees when sending money anywhere in the world. Blockchain technology is not a digital currency, but it is highly associated with digital currencies because decentralized cryptocurrencies such as Bitcoin function using blockchain.

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Yet cryptocurrency is only a small subset of how blockchain can be and is being used by governments and financial institutions globally. For example, stablecoins, as the name suggests, attempt to provide a stable value by pegging their worth to a real-world “reference” asset such as the U.S. dollar. They can be used to pay for goods and services while benefiting from the low transaction costs of some blockchains. Blockchain technology has also induced the majority of the world’s governments to actively explore managing their national currencies by incorporating central bank digital currencies, with China, Sweden, and others actively exploring their use.

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Cryptocurrency is only a small subset of how blockchain can be and is being used by governments and financial institutions globally.

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There are also other applications for blockchain in the realm of financial inclusion. Pilot projects in the Global South are looking into how blockchain can be used to issue insurance policies, administer payouts to farmers, close credit gaps, and provide a way to save for those who do not have a savings account. For example, moving money is often made expensive due to bank fees. Leaf, a Rwandan-based project, uses blockchain to enable money transfers without banking fees. The Leaf wallet uses the public Stellar blockchain to help people send, save, and transfer money directly from their mobile phone without the need for personal banking history or in-depth financial literacy. Likewise, smart contracts are being used to carry out insurance agreements with African farmers to protect their livelihoods during extreme weather. If a predetermined amount of rain is recorded within 24 hours in the insured farmer’s region, which can result in destruction of crops, the farmer will receive an automated payment. Blockchain technology is increasingly being incorporated into specific finance-related applications while also helping to create global networks of interoperable financial systems.

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CONTENDING WITH A PROLIFERATION OF DEEPFAKES

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In a rapidly approaching future with generative artificial intelligence and pervasive deepfake technology, it will be imperative for both governments and private consumers of information to be able to discern what is credible. In many respects, this eventuality has already arrived. The health of democracies is uniquely reliant on an informed citizenry. The intentional dissemination of false information, such as propaganda from authoritarian nations and extremist organizations, often aims to obfuscate reality. The need for verifiable information and data is additionally intensified amid the fog of war, when manipulative information operations are pervasive and the accuracy of situational understanding can be a matter of life and death.

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The use of emerging technologies by state actors for strategic disinformation campaigns is a national security issue. For this reason, the United States adopted its first federal laws related to deepfakes in 2019. The FY 2020 National Defense Authorization Act (NDAA) required a report on the weaponization of deepfake technology by foreign entities and established a competition with a $5 million prize to stimulate research on machine-manipulated media. Such efforts are not preventative but merely raise awareness of the issue at hand. Beyond increasing awareness, InterAction’s Disinformation Toolkit 2.0 notes how some internationally focused organizations are exposing disinformation campaigns, conducting forensic analyses, coordinating with technology companies, providing digital literacy training, and collaborating with global policymakers. This landscape of mounting policy attention and analysis related to disinformation and deepfakes shapes the context in which applications of blockchain technology are finding their footing.

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DLT may offer opportunities to counteract the nefarious aims of certain categories of deepfakes. The Starling Lab for Data Integrity is experimenting with innovative applications of blockchain technology and decentralized systems of storage to bolster trust in digital media. The persistence and safety of digital ledgers support the creation of more trustworthy digital assets where details are corroborated by independent third parties acting as notaries public. Decentralized storage pools can guarantee the safekeeping of information for the long term.

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News agencies are beginning to explore applications for DLT to better record their reporting and make data, such as the location and date of photographs, permanently accessible. Reuters, for example, has partnered with Canon to develop a professional camera and in-house workflow for photojournalists that freezes and stamps the pixels of a picture the moment a photo is snapped and then registers the photo and corresponding details onto a public blockchain. Especially considering Russia’s propaganda campaigns against Ukraine, blockchain’s potential to verify what information has been altered could be instrumental as authoritarians increasingly deploy gray zone tactics that rely on manipulating the information environment. This verification of alterations only applies to information once it has been stored in a blockchain and cannot account for manipulation prior to that point.

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ADVANCING JUSTICE AND THE RULE OF LAW

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A transparent judicial system is key to the rule of law that undergirds functioning democracies. DLT’s capturing, storing, and verifying of data could be used to better manage court judgments, warrants, and criminal histories. Researchers are exploring blockchain’s ability to corroborate data on several systems as a tool for preserving evidence. The United Kingdom’s Ministry of Justice proposed using DLT to preserve and protect mass quantities of body camera footage to be used in court. Similar applications could be useful for international courts and other human rights watchdogs.

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The recent hacking of the computer systems of the International Criminal Court (ICC) raises concerns over the safety of centrally located data that could later be used to prosecute the most serious of crimes. The use of blockchain to store and verify data related to war crimes and atrocities aims to assist the courts by providing more trusted and tamper-resistant data for associated proceedings. Governments or other entities seeking to achieve accountability for large-scale human right abuses or wartime atrocities for the purposes of transitional justice may particularly benefit from the use of blockchain to ensure evidence has not been manipulated and to support chain of custody for documentation of abuse.

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Additionally, “smart contracts,” which automate transactions once the coded conditions are met, could help judicial systems by minimizing disputes, alleviating stress on courts, and making business and government services more efficient.

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ELEVATING CITIZEN REPRESENTATION AND VOICE

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According to a 2021 CSIS report, blockchain-based voting systems hold some potential benefits for securing elections, though they also present a range of risks. Generally speaking, blockchain could reduce the risk of election tampering, as such a system would require the collusion of multiple major entities to alter recorded ballots. There may also be potential for the use of blockchain to further augment trust in mobile and internet voting, which can, in turn, result in greater turnout and reduce voter error. Blockchain-backed e-voting could additionally enhance the physical safety of voters and remove certain types of voter coercion associated with in-person polling, although coercion in private settings can also pose a significant problem. Election transparency may be another benefit, as civil society groups could monitor the election results if granted access to the blockchain network and armed with the requisite technical knowledge to understand it. The transparency associated with blockchains also needs to be balanced with privacy rights associated with voters’ abilities to keep their individual voting selection secret. Further possible advantages include stronger resiliency against network disruptions compared to other internet voting schemes, more secure voter registries, and timely election night reporting systems.

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While there have not been many pilot projects related to blockchain voting, the Voatz mobile blockchain voting system, used during the 2018 U.S. midterm elections in West Virginia, for example, may have contributed to higher voter turnout on the scale of 3 to 5 percentage points. However, other studies have demonstrated the opposite. For example, in Belgium a similar pilot project resulted in a slightly negative effect on voter turnout. As uses of blockchain expand, there is also increased attention to theoretical applications of blockchain to voting. For example, the concept of liquid democracy, a modern and flexible approach to direct democracy with implications for referendums, voting proxies, and mass-scale voting, could be propelled by blockchain to help verify that votes cast are the same as votes counted.

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One key challenge is that although blockchain may help with the prevention of some ballot tampering, election systems and platforms are still dependent on other hardware and software that may make them vulnerable to exploitation that is difficult or even impossible to control. Therefore, at a fundamental level, blockchain is not a silver bullet for solving the insecurity of online voting.

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The Ukrainian Context

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Ukraine, sitting at the cutting edge of the digital revolution, offers a unique context that is experimenting in the digital and blockchain space.

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TECHNOLOGICAL READINESS

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Ukraine’s information and communications technology (ICT) industry was immensely successful before Russia’s full-scale invasion in February 2022, with some dubbing it the “emerging tiger of Europe.” In fact, despite challenges posed by the war, it is the only sector of the Ukrainian economy that has grown amid the conflict, exhibiting growing export volumes from 2021 to 2022. The Ukrainian government has also proactively not drafted IT workers as soldiers and has extended tax breaks to small and medium-sized businesses in the industry. These measures have allowed ICT businesses to stay solvent and continue operating and exporting services. The challenges Ukraine is facing are in many ways unique, but this also means that it can serve as a breeding ground for unique innovations. Equipped with over 200,000 skilled IT workers and the demand for creative solutions due to the war, Ukraine is primed to rapidly test technologies.

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Ukraine demonstrated its technological adaptability with the embrace of cryptocurrency in early fundraising efforts when banks lacked liquidity following Russia’s full-scale invasion. MoneyGram halted payments to Ukraine until it could confirm its banking partners in the country were operational. The Ukrainian government, ranked fourth globally for cryptocurrency adoption, began publicly soliciting cryptocurrency donations online days after the invasion. Cryptocurrency’s capability to facilitate transactions instantly across borders was attractive for the nation as it entered total war. At least 20 million dollars in cryptocurrency were deposited directly to the Ukrainian government in the first months of the war.

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Ukraine had more mobile phone subscriptions than people in 2020, but the war has damaged the digital infrastructure necessary for mobile subscriptions to be operable. Since Russia’s invasion, more than 4,000 Ukrainian telecommunication stations have been seized or destroyed and over 60,000 kilometers of fiber-optic lines have been compromised. The restoration of many lost towers can be attributed to the bravery of Ukrainian telecommunication workers. The public-private partnership between the Department of Defense and SpaceX’s Starlink has enabled battlefield communications at the cost of approximately $20 million per month. Without investments in digital infrastructure, all digital solutions, including those involving blockchain, are futile.

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COMMITMENT TO DIGITIZATION

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Digitization is synonymous with resiliency, a characteristic often ascribed to Ukraine in its battle against Russia. Prior to the war, Ukraine committed to going paperless in September 2021 with a bill prohibiting officials from requiring paper documents. The bill was the latest advancement in digitization following the successful experimentation with electronic identification cards and international passports by the application Diia. Ukraine had issued nearly a million biometric travel passports to Ukrainian citizens in the Russian-controlled Donbas region before the war. Diia, a premier government application used by half of Ukraine’s population, offers an expanding list of digital documents, including identification cards, driver’s licenses, and Covid-19 vaccination certificates. In a unique blend of entertainment and education, Diia has trained almost 1.5 million citizens in digital skills through over 90 free-to-access educational series based on European standards. Given the wartime reliance on social services, digitization efforts have accelerated since the war’s outbreak. Kostiantyn Koshelenko, deputy minister of social policy for digital transformation, recently expressed his commitment to making government services more resilient and client oriented. Applying to be a candidate for child adoption, for example, is now an online government service in Ukraine. The Ministry of Digital Transformation’s mission to “move 100% of government services online” is a core element of Ukraine’s war strategy and a key ingredient for large-scale utilization of blockchain-enabled applications.

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APPLICATIONS OF BLOCKCHAIN

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Supported by a government that has trumpeted digitization as critical to the country’s future, Ukraine and its partners have combined blockchain technology and photogrammetry to counter disinformation and to document and preserve evidence of Russian war crimes. E-Enemy, for example, is a government-built app that allows users to photograph and geolocate any attacks, thereby providing a first-person perspective of atrocities for posterity and eliminating the potency of deepfakes. War crimes investigators can then “hash” data on war crimes, thereby enabling future prosecution of these heinous acts. Starling Lab, a joint Stanford University–USC Shoah Foundation research center, in partnership with social enterprise Hala Systems, has been preserving possible evidence of Russia’s war crimes in Ukraine via a cryptographic dossier. The aforementioned hacking of the ICC combined with Russia’s espionage efforts to covertly infiltrate the court hint at the urgent need to ensure greater protection for evidence of war crimes.

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Ukraine’s president Volodymyr Zelensky himself has noted the importance of digitizing all accounting of military supplies, an effort that could potentially benefit from blockchain technology. Furthermore, the UN Refugee Agency was awarded the Best Impact Project Award during the 2023 Paris Blockchain Week for a pilot project in Ukraine where it used blockchain to provide financial assistance to displaced people; this assistance could be converted into cash and used for rent, food, utilities, and medical expenses.

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PROPERTY REGISTRATION AND BLOCKCHAIN

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Digital solutions for Ukraine’s economic modernization and resilience go beyond the more obvious war effort. Some of the first Ukrainian pilot projects using blockchain were electronic land auctions. In May 2017, the Cabinet of Ministers of Ukraine formally agreed to implement blockchain to help manage the State Register of Property Rights on Real Estate as well as the System of Electronic Trading in Arrested Property. A complaint of foreign investors is that land ownership is still not a possibility in Ukraine given current laws. Legal reform is needed to change this reality, and there is an argument that Kyiv should amend its laws to inspire foreign investors to participate in the country’s economic recovery. This demand may incentivize the Ukrainian government to further explore incorporating blockchain technology in land registration.

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Additional Considerations and Challenges

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Despite the benefits of blockchain for advancing democratic institutions, the technology is clearly a neutral tool and can be used by good actors as well as malign ones. There are some underlying concerns regarding the risks that DLT systems pose for democracy.

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MALIGN FOREIGN ACTIVITY

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Foreign actors are known to use blockchain technology for adversarial activity against the United States and its partners. For example, Russia has attempted to use the anonymity associated with some cryptocurrencies to bypass sanctions. The terrorist organization Hamas and two other militant groups — Palestinian Islamic Jihad and Hezbollah — have also used cryptocurrency to evade sanctions in order to raise funds for their notorious terrorist attacks. Hamas and Palestinian Islamic Jihad raised more than $100 million via cryptocurrency between August 2021 and June 2023.

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It is not clear, however, how much longer cryptocurrency will be thought of as a safe haven for illicit behavior since Bitcoin and other cryptocurrencies are more traceable than other forms of payment. Investigators have been able to quickly identify and prosecute criminal activity through logged cryptocurrency transactions. For example, within days of the Hamas attack on Israel on October 7, 2023, the U.S. Treasury sanctioned two senior Hamas officials along with cryptocurrency exchange Buy Cash Money and Money Transfer Company, as well as six other individuals involved in the financial operation to fund terrorism. Additionally, the arrest of the perpetrators behind the 2016 Bitfinex hack, in which 119,754 bitcoins were stolen, was only possible, in large part, thanks to the immutable ledger that undergirds Bitcoin. (It is important to note, however, that blockchain’s traceability is irrelevant without oversight.)

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ACCESSIBILITY

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The accessibility of blockchain technology to the public is also a concern. Whether due to lack of technological familiarity, high expenses, or lack of the necessary equipment to facilitate participation, many communities across the globe are not in a position to use blockchain, which in turn limits democratic participation via DLT systems. Citizens need smartphones and reliable internet access to participate. Digital literacy is another aspect of the divide preventing massive rollout of blockchain-backed government solutions, as technology often faces obstacles to adoption and may be cumbersome, particularly for those who lack digital skills. Tech companies and government entities should collaborate to ensure that such tools are accessible and user friendly. The barrier of entry for users must be lowered before scaling is possible.

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LACK OF ACCOUNTABILITY AND SELECTIVE DATA

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Without proper reform, blockchain runs the risk of merely reinforcing the status quo. What prevents corrupt regimes from allowing only state-approved, potentially faulty information to be entered onto a blockchain? Is blockchain the next tool to be used by oppressive regimes to fabricate transparent democracy? For example, since 2018, China has permitted the use of blockchain-stored evidence in the country’s courts, which may actually be a worrying development given the fact that China, an authoritarian regime, can be very selective with which data to store.

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ENERGY CONSUMPTION

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Blockchain technology traditionally has had a reputation of being highly energy intensive. Though there has been some progress on this front — and the high energy use is mainly attributed to cryptocurrency — there remain environmental concerns regarding the technology due to its carbon footprint as well as the affordability of energy in specific communities. However, there is hope that the technology will become more efficient, based on analysis showing that with different technological design options, digital currencies can be configured in a manner that is more energy efficient than popular current payment systems like credit and debit cards.

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Conclusion

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As the world increasingly overflows with data, U.S. policymakers should consider how to best utilize blockchain and other types of DLT to support democratic governance, including identity management, land rights, and the tracking of goods and services. If U.S. lawmakers do not take greater steps to shape the policy and regulatory environment for blockchain-related activity, there is also a risk of damage to U.S. competitiveness. Policymakers should explore new ways democracies can preserve and advance their principles while more efficiently delivering basic government services. At the same time, blockchain must be viewed neither as a panacea nor as solely an instrument of cryptocurrencies. It is a tool that offers intriguing applications for social and governmental progress.

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Before proceeding with policy decisions related to blockchain technology, Congress should be equipped with knowledge of how exactly the technology can be applied (or misapplied), and make sure that the populations who are meant to benefit from these technologies are also fluent in their use and have access to the necessary digital public infrastructure. This will allow lawmakers to create a broader system and approach in dealing with DLT so that its benefits can be instrumentalized in service of democratic governance.

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Noam Unger is the director of the Sustainable Development and Resilience Initiative at the Center for Strategic and International Studies (CSIS), and a senior fellow with the Project on Prosperity and Development.

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Austin Hardman is a research assistant for the Project on Prosperity and Development (PPD) at CSIS. In this role, he supports the team’s research agenda, business development opportunities, and event coordination.

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Ilya Timtchenko is an intern with the Project on Prosperity and Development at CSIS.

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Blockchain For Democracies

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Noam Unger, et al. | 2023.10.25
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In a world increasingly overflowing with data, blockchain is neither a panacea nor solely an instrument of cryptocurrencies but rather a tool that offers intriguing applications to support democratic governance, including in Ukraine.

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Paper Tiger or Pacing Threat?

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The Orient Express

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James Byrne, et al. | 2023.10.16
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Dozens of high-resolution satellite images taken in recent months reveal that Russia has likely begun shipping North Korean munitions at scale, opening a new supply route that could have profound consequences for the war in Ukraine and international security dynamics in East Asia.

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Project Atom 2023

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In Chip Race

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Heather Williams, et al. | 2023.09.29
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How can the United States deter two peer competitors? To assist U.S. policy makers in addressing this question, the Project on Nuclear Issues (PONI) invited a group of experts to develop competing strategies for deterring Russia and China through 2035.

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Gregory C. Allen | 2023.10.06
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With a new smartphone and new chip, Huawei has returned to the 5G smartphone business in defiance of U.S. sanctions. This report assesses the implications from this latest development for China’s AI industry and the future of semiconductor export controls.

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In The Shadow Of Ukraine

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Seth G. Jones | 2023.09.29
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Russian leaders are committed to a reconstitution of the Russian military — especially the Russian army — over the next several years, though achieving this goal will be challenging. In addition, Russia views the United States as its main enemy for the foreseeable future.

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The Post-October 7 World

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Gregory C. Allen, et al. | 2023.09.28
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On October 7, 2022, U.S.-China relations were reshaped with export controls on military AI, shifting global semiconductor manufacturing and distribution and complicating the global economy. This report outlines U.S. allies’ perspectives on “the new oil” in geopolitics.

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