Friday News Roundup — March 24, 2023
Greetings from Washington, D.C., where the week’s news focused on the continued uncertainty around the nation’s mid-sized and regional banks; hearings on TikTok; and the legal rumors surrounding former President Trump and a grand jury indictment in New York City. While the Federal Reserve was clear in moving ahead with a 25-basis-point rate increase, Chairman Powell noted the expected tightening of credit at regional banks. Further uncertainty surrounded what protections were in place to backstop deposit insurance above the FDIC’s $250,000 limit as Secretary Yellen’s testimony was inconsistent on the matter of what the Fed and Treasury could do absent further Congressional action. The timing of a recession or controversy over bank bailouts looks likely to shape voters’ economic perceptions headed towards 2024.
Thursday saw fiery hearings over the controversial TikTok media platform, as CEO Shou Zi Chew did little to assuage lawmakers’ concerns. Dan Mahaffee covers what the hearing tells us about domestic tech policy and international tech competition.
In Manhattan, the focus was on the Manhattan District Attorney Alvin Bragg and the grand jury investigating the affair with Stormy Daniels and hush money payments. While the former president has made increasingly concerning comments about potential unrest in the event of any indictment, he is also continuing to consolidate his lead in the 2024 GOP primary polling. As the former president elevates what observers consider one of the weaker legal cases against him, he conflates the more serious investigations in Georgia over the 2020 election, as well as the work of Special Counsel Jack Smith. This week, Smith won a ruling, upheld rapidly by the D.C. Circuit Court of Appeals, permitting the Department of Justice to bypass attorney-client privilege regarding the classified materials at Mar-a-Lago case.
Senior Fellow Robert Gerber was a keynote speaker on March 21 at a Nordic Business Exchange conference in Sandy Springs, Georgia, where delivered remarks on the U.S.-European trade landscape.
This week, Joshua C. Huminski, the Director of the Mike Rogers Center for Intelligence and Global Affairs, reviewed Olga Onuch and Henry E. Hale’s “The Zelensky Effect”. Part bio about Ukraine’s president, part history of Ukraine’s post-Soviet history and politics, the authors show how the “Independence Generation” shaped the country and from where the wellspring of resolve in the face of Russian aggression originates.
In this weeks roundup, as mentioned, Dan dives into what was at stake in the TikTok hearings. Ethan Brown reflects on the 20th anniversary of the Iraq War. Veera Parko and Robert Gerber provide respective updates on NATO spending and Congressional comments on trade. Hidetoshi Azuma covers Japanese Prime Minister Kishida’s visit to Ukraine.
As a note to our readers, the roundup team will be back with our analysis on April 14th.
TikTok Hearing Illustrates Tech Shifts
Dan Mahaffee
During Thursday’s hearing of the House Energy & Commerce Committee and TikTok CEO Shou Zi Chew, it was clear that the popular social media app faces two simultaneous challenges, finding itself at the center of two simultaneous shifts in technology policy and geopolitics: on one hand, a push to regulate “big tech” and social media by U.S. policymakers, on the other, the decoupling of the United States and China into separate tech powers. In the case of TikTok, one amplifies the other — and combined with various scandals, concerns, and perceptions of the app’s content, algorithm, censorship, privacy, ownership, and impact — Mr. Chew walked into what Punchbowl News called, without hyperbole, a buzzsaw. As Congress now considers proposals to ban the app, as well as national privacy legislation referenced by the Committee Chairwoman Cathy McMorris Rodgers (R-WA), it is worth diving into the precedents that could be set at home and abroad by what comes next.
At home, the debate over big tech has demonstrated much in the way of bipartisan concern, but little in the way of bipartisan answers. However, Chairwoman McMorris Rodgers and Ranking Member Frank Pallone (D-NJ) had moved ahead last year with a national privacy standard, and while it did not move forward in the House during the previous Congress, several states have taken it up as model legislation to move towards forcing a de facto national privacy standard. Still, as part of the TikTok discussion and the broader debate over digital regulation, privacy is only one aspect of it.
As CSPC has analyzed domestic and international issues related to concepts of digital society, digital freedom, and balanced regulation, the concept of open digital societies rest on three pillars: first, that one can trust and are safe in the data and content they see; second, that one can trust that their data is being protected and used in ways that they understand and consent to; and, third, that the underlying digital infrastructure, hardware and software, networks, algorithms, and apps, all can be trusted. In each of these other areas, the challenges with TikTok — content moderation, data privacy, access by data brokers, impact on users’ health — are similar to others in the social media industry.
What is different in the case of TikTok, however, is the Chinese parentage through the ByteDance company and its ties to the Communist Party of China. Here the divergence between the U.S. and Chinese tech and economic models comes into full display. While Chew could repeat the company’s plans to isolate data in the U.S. and create separate management structures, he could not provide lawmakers certainty that U.S. data would not be seen by Chinese workers, nor did he acknowledge the reality of China’s intelligence and security laws that compel, without due process, cooperation by companies and individuals with Chinese state interests.
At the same time, when lawmakers demanded why controversial or harmful content that appeared on TikTok did not appear in its Chinese cousin app Douyin, the answer that neither Chew nor policymakers seemed to grasp was that Beijing has tools, both in terms of laws and the legions of online censors, automated and human, to control the nation’s social media. This is done in a way that we as Americans, constitutionally and ethically, should never consider, but it is at the crux of the difficult debate we must have over content moderation and censorship. Combined with lawmakers’ questions, and what appeared to be unsatisfactory answers, over how the app might be manipulated by the company or Beijing to influence users.
Ultimately, this comes down to the struggle for control between Beijing and Washington. While Chew emphasized that ByteDance and TikTok were private companies, the line between public and private companies no longer exists in Communist China. Sure there are legal frameworks, but Xi’s and the party’s deepening control of the economy and technology make it clear how the CCP sees the private sector as a tool to serve its interests. It also reflects the growing struggle to restrict the outflow of critical technologies, as Beijing points to its own restrictions preventing algorithmic exports to raise a barrier to a divestiture of TikTok’s U.S. operations.
As Congress moves forward in addressing concerns about TikTok, it will be setting important precedents for technology policy that will be part of the “American model” that competes with Beijing’s vision of an authoritarian internet. Some of these issues, like location of physical data sites and privacy protections, threaten to break the global model of the internet and raise disagreements even with our closest allies. Looking at domestic politics, if restrictions on TikTok go ahead, policymakers will need to explain to the public why they felt the need to crack down on an app used by nearly half the population. Some of the proposed legislative fixes will have significant implications for U.S. companies’ operations at home and abroad. Legislation like the proposed RESTRICT Act is bipartisan, but it will also greatly expand the scope of what technologies are subject to government review over the threats posed by China, Russia, and other bad actors. Whatever solutions reached will need to be driven by a bipartisan and Executive-Legislative approach — not one that turns the fate of this app, and our broader approach to digital regulation, into a political football.
The complexity of these issues is raised not to suggest inaction, but to caution against simple solutions and to take stock of the second and third-order effects. How we address TikTok will be one of the next big steps in the U.S. positioning for long-term tech competition and the message we want to send to the world about how we do business.
Iraq’s scars and lessons
Ethan Brown
Across the thought-pieces of the defense and natsec mediums, one is certain to have come across many “recalling Iraq” memoirs. After all, this week marks the twenty-year anniversary of one of America’s most ambitious, but fundamentally flawed geopolitical and military endeavors, arguably ever.
Invading Iraq for the second time achieved two positive outcomes: it removed a tyrant in Saddam Hussein whose human rights record and general appetite for smothering liberal values and rule of law was a blemish on society. Second, it served to unify the liberal world order which enabled a new generation of joint force military cooperation and combat experience which otherwise may have never sharpened those same tools.
But Iraq achieved two broader influences in America’s recent history of foreign affairs and interventionism: It ended the unipolar moment which was clinging to life support at the turn of the century, and set the United States on course for the folly and wayward strategy of exporting liberal democracy haphazardly, which ultimately eroded our constancy and world standing.
Policy decisions today continue to reflect the influence of Iraq in our national security efforts: our desire to avoid direct entanglement in conflicts like Syria (there, instead, preferring to utilize special operations forces, close air support, and limited security force assistance over large invasions), Libya (where the air campaign and proxy engagement of militias toppled Moammar Khaddafi’s ruthless rule), and more recently, the compounding support for Ukraine against Moscow’s own wayward intervention last year.
How do the lessons of our venture into Iraq inform policy makers of the future? Some are eerily similar to what we (should have) learned from Afghanistan: our Jeffersonian democracy is not built for mass export, especially in cultures and locals that do not reflect the same context as our own. Iraq, unlike Afghanistan, was already a functional state (albeit a dictatorship), and the ruthlessness of the Baathist party served as a mechanism of stability that our intervention removed in the span of a few months. We failed to recognize this, believing that our socially-imprinted desire for human rights, liberalism, and diversity of cultures and demographics would echo from Mosul to Basra in like fashion. But the culture, the sectarianism, and the indigenous fibers of the Iraqi society were so deeply rooted there, that our efforts to change Iraq in a decade were insufficient.
In Afghanistan, we had two options that might have resulted in success, at least an enduring version of ‘good enough’: get out as soon as the Taliban and Al Qaeda were broken, and let the Afghan people determine their own future, or remain there for the long haul like we did in South Korea, Germany, and Japan after the Korean and Second World Wars.
Iraq would be no less complicated than Afghanistan, indeed, we remain engaged there as part of the security force assistance mission — one that endures in order to deter the threat of the residual Islamic State caliphate, and efforting deterrence against Iranian hegemony in the Levant writ large. But like much else in our foreign policy, while we have broad, generic themes that dictate our policy and grand strategy abroad, the nuts and bolts of what we aim to do with our engagements in places like Iraq lacks a clear, defined end state which our defense and security enterprise can navigate towards.
In Iraq, 4,431 U.S. service members and contractors paid the ultimate sacrifice for our endeavors there. And though their gift of life was offered, and the crucible of war collected as much, knowing that their lives were spent to protect innocent civilians and for the hope of a better future for the people of Iraq and the region, that price weighs heavy on our society as we look back at the roadmap that led us to this intervention.
The Global War on Terror cost the United States in much more than money, tools, and even the tragic human lives as we contested with a new and poorly understood threat from violent extremism. Iraq altered that paradigm when our policy tried to pigeonhole that threat from terror groups into a state apparatus that endured through a rollercoaster relationship with the West for decades. Afghanistan might have been justified, if we had stayed true to our national and international interests and built up a stable nation in a sea of competitors that would demonstrate our reach, integration, and ability to defeat an enemy that threatened the world. But Iraq laid those best-made plans aside. The wayward detour to Iraq twenty years ago led to the deterioration of initiative in Afghanistan, and as a result, we failed to win either theater. Those two wars — and there were indeed separate, distinct wars within one umbrella — bled white American resolve to win confrontations with the adversary. Support for foreign engagements is a scarce domestic resource which the makers of policy must spend carefully, but stretched like credit for far too long, it led to public dissent over the value of sending American forces overseas, even when the crisis abroad calls for such actions.
It’s a broken record at this point, much as I pointed out last week when analyzing the congressional investigation into the chaotic withdrawal from Afghanistan: there are no positive lessons to take from Iraq, but victories do not serve well for improvement. Failures, rather, is where we glean the most impactful lessons. This lesson of the Folly and Scars from Iraq is that we cannot, should not, engage abroad when we ourselves cannot define what we hope the endstate to be. And until those outcomes are established — something our adversaries do much better than we — it is an impossibility to strategize how to get there using our considerable and expansive resources, alliances and partnerships, and most importantly — national willpower.
As if to foot-stomp this point, the American congress too has turned its efforts towards moving forward from Iraq and its follies. On the same anniversarial timeline, the Senate voted 68–27 to remove the 2002 Authorization for the Use of Military Force, which then-President Bush used to justify the invasion of Iraq. Later administrations, notably President Trump, would use this decades-old legislation to target designated threats to U.S. security through drone strikes and other clandestine affairs ranging far beyond Iraq’s geography. The effort to repeal the 2002 AUMF and one of its standing predecessors (a 1991 Gulf War provision) is backed by the Biden administration (who it should be noted has also taken advantage of the sweeping powers granted in the AUMF), facing only a slim GOP-majority in the House that could undo the change, but it has bipartisan support across the Hill. This is but one step in correcting the wayward policies that Iraq produced in American political machina, a small, but necessary one.
As Senate Majority Leader Chuck Schumer (D-NY) noted with unmistakable gravity: “Americans are tired of endless wars in the Middle East.”
Most Nato Countries Fall Short of 2 Percent Defense Spending Goal
Veera Parko
On March 21, NATO published a report on allies’ defense expenditure between 2014 and 2022. The annual report shows that in 2022, only seven countries out of 30 spent more than percent of their GDP on defense, the target agreed by NATO countries in 2014 at a Summit in Wales. Greece, Poland, the Baltic states, the United Kingdom and the United States are reaching the goal of 2 percent, while big European economies such as Italy, Spain, and Germany fall behind. France and Croatia are very close to reaching the goal.
It should be noted that defense spending across the Alliance increased by 2.2 percent in real terms from 2021, and total NATO military spending in 2022 was estimated to exceed $1 trillion. Many European countries and Canada have significantly stepped up their defense spending since 2014. Even Germany, as part of the “Zeitenwende” caused by Russia’s war in Ukraine, has pledged to increase its defense budget by up to 10 billion euros in 2024, and to reach the NATO spending target.
Despite efforts by European economies to step up their defense spending, it is obvious that the U.S. continues to outweigh other Allies. It contributes 70 percent of NATO defense expenditures, compared to the UK’s 6 percent and Germany’s 5 percent of the Alliance’s total spending. In the wake of the report, NATO Secretary General Stoltenberg urged countries to step up efforts to reach the spending target, which will be discussed at the NATO Summit in Vilnius in July. In addition to discussing percentages and spending targets, it is useful to look at the outputs and results increased spending will bring — for example, procurement issues might complicate the picture even further.
Senators Urge Biden Administration to Shift Course on Indo-Pacific Trade
Robert Gerber
U.S. Senate Finance Committee members from both parties have told U.S. Trade Representative Katherine Tai that they want to see strong market access provisions (e.g. tariff reductions), digital trade provisions, and enforcement mechanisms in the Indo-Pacific Economic Framework (IPEF), the Biden administration’s signature trade initiative in Asia. During a March 23 committee hearing, Senators also requested that the administration consult more closely with congress and submit trade agreements for congressional approval. (The IPEF and the U.S.-EU Trade and Technology Council seek to establish common regulations and standards in areas like digital trade, clean energy, labor and the environment, as well as supply chain resilience, but they do not involve tariff negotiations.) Ambassador Tai signaled some flexibility in the administration’s approach: “We remain open minded with regards to traditional trade agreements… when it is fit for the partner and the times.” Still, she reiterated her view that the modern trade environment requires a new trade framework model.
Committee Chairman Senator Ron Wyden (D-Oregon) expressed “real concern” that the U.S. trade representative’s office was not doing enough to break down barriers to trade. He urged the Biden administration to “play offense” on trade and invoked Congress’ constitutional role in the regulation of commerce. Committee Ranking Member Senator Mike Crapo (R-Idaho) echoed Senator Wyden’s comments, saying the United States should be pursuing “real trade agreements.” He said IPEF negotiations needed to include reciprocal tariff reductions and commitments that eliminate non-tariff barriers. Anything less would leave the United States at a competitive disadvantage to competitors like the PRC in markets like Vietnam, he argued. Senator John Thune (R-South Dakota) said the United States had been “absent” in the Indo-Pacific region. He asked USTR Tai when there would be progress on IPEF, and he underscored the need for the administration to request congressional trade promotion authority. Senator Steve Daines (R-Montana) said the United States should re-engage on the Trans-Pacific Partnership. He said the administration’s policy shows a lack of ambition and urged USTR Tai to “shift course.” Senators from both parties also urged vigilant enforcement of existing trade agreements, including the U.S.-Mexico-Canada regional trade agreement (USMCA).
Ambassador Tai reported that the next IPEF round would take place in Singapore and said the goal was to strengthen trade rules and boost the resilience of U.S. trading partners.
Senator Thune mentioned he had introduced a bill to provide trade promotion authority for a U.S.-UK trade agreement. USTR Tai said she was in discussions with her UK counterpart but did not give any insight into when negotiations might restart (the Biden administration suspended negotiations that began under the Trump administration).
Agriculture is a perennial top priority for members of the Finance Committee. Senators Wyden and Crapo flagged concerns over Japan’s restrictions on imports of U.S. potatoes. On the subject of Japan, Senator Maria Cantwell (D-Washington) and Senator Daines both said that Sony was restricting U.S. video game companies’ access to the Japanese market. USTR Tai said she was not aware of the issue but that she would look into it.
Senators asked USTR Tai if she would share details on the administration’s plans — announced last week — to negotiate a critical minerals agreement with the European Union and Japan. The purpose of such an agreement would be to make EVs and batteries originating in the EU and Japan eligible for the tax credits in section 30D of the Inflation Reduction Act. Senator Eizabeth Warren (D-New York) criticized the administration for providing trade agreement proposals to foreign governments before they are shared with the American public. She also urged USTR to not undermine U.S. trading partners’ efforts to confront anti-competitive practices in the digital services sector. Ambassador Tai will testify on the administration’s trade policy agenda before the House Ways and Means Committee on March 24.
Mr. Kishida Goes to Ukraine
Hidetoshi Azuma
The spectacle of the Japanese prime minister Fumio Kishida’s surprise arrival at the Kyiv station on March 21 and his subsequent summit with the Ukrainian president Volodymyr Zelenskyy at the Mariinskyi Palace at once appeared surreal in light of his lingering strategic ambiguity toward Russia. Indeed, Kishida had long perpetuated the former prime minister Shinzo Abe’s dubious legacy of rapprochement with Russia despite his putative efforts to confront Moscow’s ongoing war in Ukraine. He had just aborted his plan to visit Ukraine as recently as this past January after the Kantei mysteriously leaked internal information on the ongoing planning for his expected trip. In this respect, Kishida’s recent Ukraine visit signified a watershed moment in Japan’s Russia policy. In other words, while Tokyo’s strategic ambiguity toward Russia may linger for a while due to domestic politics, Kishida has left no room for doubt as to the growing divergence from his predecessor’s track record.
The timing of his visit could also not have been better. Its curious coincidence with the Chinese president Xi Jinping’s trip to Moscow for a historic summit with the Russian president Vladimir Putin unmistakably signaled Japan’s resolve to counter the global rise of authoritarianism. It also signified practical effects. Kishida’s pledge of $5 billion economic aid to Ukraine effectively put Japan in geoeconomic competition for influence over postwar reconstruction. While Japan’s power projection remains limited to non-lethal aid, its real contribution to the rules-based international order is to be found in its geoeconomic power enabled by Tokyo’s robust financial capabilities, such as the Japan Bank for International Cooperation (JBIC). Indeed, few other democratic countries have comparable geoeconomic power projection capabilities, leading Japan to emerge as a sui generis player in the inevitable postwar phase.
In Kyiv, Kishida defied expectations and achieved the impossible. He became the first sitting Japanese prime minister to visit a war zone in post-WWII history. Despite his stagnant popularity rate at home in recent months, he returned to Tokyo triumphant and immediately proceeded to the floor of the legislature with unusual stamina to be debriefed on his consequential Ukraine visit carried out without a parliamentary approval. Kishida has thus attained the coveted status of a legend who has defied the impossible to put Japan back on the world stage. Whether or not he did this for his own political gains in the run-up to the upcoming Group of Seven (G7) summit in his hometown of Hiroshima is irrelevant at this point. The real question is how Tokyo can consolidate its emerging Russia policy building on Kishida’s latest accomplishment.
News You May Have Missed
Senator Menendez Calls for Suspension of Nicaragua’s Free Trade Benefits
At a March 23 Senate Finance Committee hearing, Senator Bob Menendez (D-NJ) called for suspending Nicaragua’s preferential trade access to the U.S. market, which Nicaragua enjoys as a partner to the Central American Free Trade Agreement (CAFTA-DR). Menendez said the government in Managua is a dictatorship that has committed crimes against humanity. He added that there is no other example of a repressive dictatorship that is also a U.S. free trade agreement partner. U.S. Trade Representative Katherine Tai, who testified at the committee on the administration’s trade policy agenda, acknowledged that the U.S. government was reviewing all policies vis-a-vis Nicaragua.
Vice President Harris to Visit Three African Nations
Vice President Kamala Harris will travel to Ghana, Tanzania, and Zambia next week. Her trip will highlight the hazards of Beijing’s “debt trap diplomacy” and other dependency-fostering policies to African democratic institutions and economies, according to press reporting. Notably absent from her visit is a stop in South Africa, whose government abstained from voting on the UN General Assembly resolutions condemning Russia’s invasion of Ukraine. This year marks the 20th anniversary of the PEPFAR program, widely considered to be a successful initiative in the fight against HIV/AIDS. Vice President Harris will also likely hear trading partner views on the African Growth and Opportunity Act (AGOA), which expires in 2025.