Friday greetings from Washington, D.C., where the focus has continued to be largely on the debt ceiling negotiations. Both political pundits and markets appear buoyed by positive rhetoric coming from leaders, and many suggest that the narrowing of the negotiators in the room suggest that compromise proposals could be closer. Still the various proposals on the negotiating table and hot button issues ranging from spending caps to work requirements to the length/amount of the ceiling “lift” will need to become legislative reality, and then the narrow margins in the House and Senate come into play. How markets may interpret or misinterpret political posturing remains to be seen, but it appears we could see details this weekend. Majority Leader Schumer is confident that the Senate can maintain its scheduled recess, but reminded the body to be ready to return to Washington on short notice.

In last week’s roundup, we also noted the expiration of Title 42 and the expected surge at the southern border. While the numbers have not spiked as high as expected, the issue of immigration remains one that has House Republicans and the administration in increasing conflict. Suggestions of an impeachment of Homeland Security Secretary Alejandro Mayorkas have gained steam within the caucus, and despite the worst case scenarios not manifesting themselves, migration is becoming a more contentious issue even among the Democratic mayors in the cities now hosting resettled migrants.

On the global stage, much of the focus has been on the G7 summit, which Dan Mahaffee and Hidetoshi Azuma cover in greater detail below this week. In Ukraine, we have seen the fighting continue to escalate along the front, along with Russian air strikes on Kyiv. However, it appears that supplies of western air defense have blunted the worst. The United Kingdom has also supplied longer-range cruise missiles that have allowed the Ukranians to strike further behind the Russian lines. While the west looks at the long-looming Ukrainian offensive as well as the pipeline of military support, the Pentagon found that resolving an accounting error overestimating the cost of previous support means an additional $3 billion is available for assistance to Ukraine.

This week, Joshua Huminski contributed to Breaking Defense with an analysis of what lessons being learned in Ukraine can be applied to Taiwan and how to avoid the wrong ones.

While Dan Mahaffee covers the G7 summit, Ethan Brown reports on the renaming of Army bases that had honored Confederates. Veera Parko has details on an escalating diplomatic spat between Finland and Russia, while Robert Gerber has a rundown on the most recent hearing of the Select Committee on the CCP. Hidetoshi Azuma provides insights into the Japanese prime minister Fumio Kishida’s agenda for the G7 summit in his hometown of Hiroshima.

G7 Displays the Western Coalition & its Limitations

Dan Mahaffee

G7 leaders at the Hiroshima Peace Memorial wreath laying (https://twitter.com/kantei)

The images and rhetoric from Hiroshima suggest unity among the western coalition. Japan’s hosting of the G7 summit has come at a historic time, with leaders from Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States gathering to discuss the war in Ukraine and the scope of competition with China. In the post Cold War era, the then G-8 seemed more a globalization talking shop. Oftentimes the protestors drew more attention than the outcome of the meeting. This week we have seen how the return of geopolitics to the front pages has given this meeting greater meaning, while also demonstrating the limits of western unity — or even the limits of what we can do when unified.

Early coverage of the summit has covered how the powers are working together to coordinate further tightening of sanctions on Russia, with new efforts to track Russian diamond exports and expansion of the Russian firms, aircraft, and ships subject to U.S. sanctions and entity list restrictions. Other efforts will look to restrict Russian exports of minerals and resources, though there is divergence among the G7 countries with some dependence remaining on Russia. Currently, Ukrainian President Volodmyr Zelensky is also en route to the summit via a meeting with Arab leaders in Saudi Arabia, as the G7 will further cement its support for Kyiv in this conflict.

The summit’s efforts to address the competition with China are affected by the difference in perception of the scope of competition with China among the members. That said, there is agreement on the need for the members to address China and particularly the methods of economic coercion that China uses in its dealings with other countries. Skeptics will say that many of these statements regarding China merely note or admire the problem; the optimist will reply that we are at least seeing consensus on pointing out Chinese misbehavior and that admitting the problem is the first step for action.

Beyond the twin giant challenges of the conflict in Ukraine and competition with China, the summit also will attempt to tackle some of the broader issues that are shared global challenges as well as issues that democracies find themselves needing to address. Reinvigorating trade amongst like-minded countries is an important avenue towards creating more resilient, secure, friendshored supply chains, but protectionism, politics, and green subsidies have done more to divide, not unite the west. Given the importance of data and digital trade, as well as protecting our digital freedom, the agenda will also include a range of matters from digital and data trust among like-minded countries (building on Japan’s Data Free Flow with Trust concept) as well as promotion of digital freedom and secure digital infrastructure. Still, the headwinds of politics (around trade) and empty coffers (infrastructure investments) raise questions about what the G7 can accomplish.

The G7 leaders also face their own domestic challenges. The most visible, of course, is seen with President Biden making the G7 summit but cutting short the rest of the Papua New Guinea and Australia portions of the trip. The United States is trying to project strength and leadership abroad while consumed by political and fiscal brinkmanship at home. The domestic foundations of strength in many of the G7 countries are beset by economic, demographic, and political ailments — and often politics unable to respond to these challenges.

On the global stage, Japan also did well to demonstrate that the G7 and its shared interests extend beyond the largely European and North American membership. It also matters given that the G7 share of world GDP is now 44%, as opposed to nearly 70% in the 90s. The summit also included not only leaders from the European Union as is now traditional, but also Australia, Brazil, Comoros (on behalf of the African Union), the Cook Islands (for the Pacific Islands Forum), India, Indonesia, South Korea, and Vietnam. The systemic competition we face is a global one, and it will be important to incorporate other political, military, and security partners in these discussions. Expanding the group to include Australia, India, and South Korea is economic and political common sense. Further outreach to the Global South will be vital to the success of these efforts.

The G7 faces a simultaneous near-term crisis, Ukraine, and the long-term strategic competition with China. This is a policymaking tango in the best of times, and right now the western democracies face a myriad of challenges that make it hard to keep the right tempo. Furthermore, the deficit of trust in many of our domestic politics makes it harder and harder for leaders to focus on statesmanship — where we call for architects rather than managers to develop new methods and models for addressing the 21st century competition rather than applying 20th century ways and hoping for the best. There are many difficulties that we see, but we can salute the unity on display as a foundation for addressing these challenges.

Army Bases change names (finally) — and it matters

Ethan Brown

A government contractor prepares the new signage at Fort Cavazos (Photo Credit Eric Franklin Joint Base San Antonio — DOD Photo)

This week, two iconic military bases were rebranded under new auspices — Fort Hood in Killeen Texas and Fort Benning in Columbus, Georgia — are now officially Forts Cavazos and Moore, respectively. This follows the change starting with the iconic Fort Bragg in North Carolina, who became Fort Liberty in March of last year. Several more U.S. Army bases still bear the names of Confederate soldiers (Rucker in Alabama, Polk in Louisiana, Gordon in Georgia, and Forts A.P. Hill, Lee, and Pickett in Virginia), but those changes are coming, pending suitably representative and appropriately vetted servicemembers who more equitably represent the United States in other times of crisis.

In this space, where our panel of CSPC experts collate analysis on weekly events, I’ve made an effort to steer clear of two things: domestic policy topics (unless it expressly relates to issues of military readiness), and reliance on my own personal military experience (save for when that experience substantiates analysis on capabilities or requirements on hardware/training/etc). This isn’t an opinion column, it’s where our pool of experts weigh in on current events.

Changing the names of our military bases from Confederate soldiers to more diverse representation is a good thing for our military readiness, professionalism, and presentation to the world.

Let’s start with the volatile bit of the name change: opponents to removing the names of Confederate soldiers. First off, the position is indefensible. Former President Donald Trump notoriously pandered to the more hardcore partisan base by tweeting “my administration will not even consider the renaming of these Magnificent and Fabled Military Installations. Our history as the Greatest Nation in the World will not be tampered with. Respect our Military!” in response to a bipartisan senate approval of the name-change amendment in the 2021 National Defense Authorization Act; a provision proposed by Senator Elizabeth Warren (D-MA) and wholly supported by the then-GOP led Senate Armed Services Committee.

Opposition to the name change is rooted in the argument that doing so is rewriting history. This argument carries no water, nor do we live in a United States attempting its best George Orwell Ministry of Truth impression. The name change does nothing but stencil new letters on the front gates, websites, and AAFES shopping center gift shoppes. All told, for roughly $60 million, the U.S. military is no longer venerating individuals who fought against our democracy.

The issue goes hand-in-hand with the broader social effort to remove or replace Confederate iconography in the public forum as a celebratory display, where over the past three years, statues and other monuments have been renamed or removed in a similar fashion. This veteran does not think we should remove such pieces of our history entirely, but they absolutely need to be put into the correct context and platform: as a permanent warning against the worse episodes of our history as we continually strive to be our best selves. Those Confederate monuments belong in museums where their role in shaping this country are properly contextualized and remembered for who and what they were: defenders of an indefensible societal organization.

Above all that, those icons and lowlights of our history have no place branding the men and women who serve this country in uniform.

Now to the new names and legacies, and their apropos selection. In Killeen, Texas, the installation was once named for a Confederate Texas Brigade Commander — John Bell Hood — in 1942 for no deeper reason than the Army needed a name of someone who was affiliated with Texas. No naming committee or vetting process was utilized to brand the home of the U.S. Army’s premier 1st Cavalry Division and III Armored Corps. Today, the base is named for General Richard Cavazos, a native of Kingsville, Texas who passed away in 2017. Over a thirty-year career, Cavazos distinguished himself in the Korean and Vietnam Wars, leading a Spanish-speaking unit called the Borinqueneers in Korea, earning a Silver Star and two Distinguished Service Crosses for his heroism in combat in both wars. Cavazos was also the first Hispanic-American to earn the rank of Four-Star General in the history of the U.S. Army.

Renaming Fort “Beginning” (Benning), as it is affectionately dubbed by many across the service, is just as weighty of a change. Former Benning is the home of the Army’s basic training command, Advanced Infantry Training, Officer Candidate School (for enlisted crossovers), and hosts the iconic 4th Infantry Division and 75th Ranger Regiment, among many other distinguished schools (Airborne, Jumpmaster, and Ranger School). Soldiers refer to the Columbus, GA post as “Fort Beginning” because nearly everyone in the Army goes there at some point, most often to begin their lives as soldiers.Brigadier General Henry Benning commanded the 17th Georgia Infantry, was a close advisory to Confederate President Jefferson Davis, and had the distinction of leading his troops on the right flank of the Battle of Antietam where he earned the nickname “Old Rock.” He also had the distinction of losing the Battle of Chattanooga in 1863 and was alongside Robert E. Lee when the Confederacy surrendered at Appomattox.

Benning is now Fort Moore, named for Colonel Hal Moore whose role in Vietnam was immortalized by Mel Gibson in the movie “We Were Soldiers Once…and young”, based on the book of the same name. Moore too would receive multiple distinguished service commendations and valorous awards, earning the label of the “General Patton of Vietnam” for regularly fighting directly alongside his men, including in the first collision of U.S. and North Vietnamese forces in the war. Hal Moore, and his wife Julia, spent their post-military lives dedicated to improving the Army’s death-of-kin notification process to better support the families and dependents of soldiers killed in combat and training. Should you ever find yourself in the Columbus, GA area, I would strongly recommend visiting the National Infantry Museum, where Colonel Moore’s helmet remains on display among the Vietnam exhibit (replete with a bullet-carved dent on the side). Moore stood up against racism in the military and led diverse units into combat, and called formerly Fort Benning home for much of his career.

These name changes properly venerate icons of American military history, and in terms of readiness, demonstrate a statement that the military recognizes mistakes it has made in branding. Such actions could well improve recruiting by making our defense enterprise more obviously aware of the importance of personnel diversity, by no longer honoring the names of men who fought against the idea that we were all created equal.

The name changes are long overdue. And they matter.

Moscow freezes Finland´s diplomatic bank accounts in Russia

Veera Parko

On May 17, Finland´s Ministry of Foreign Affairs told the media that Russia had frozen the bank accounts of Finnish embassies in Russia already in late April. When the information became public, the Kremlin came out with a statement blaming Finland for the freeze, claiming that the freezing of bank accounts was a response to the “unfriendly acts” of the collective West. Further, Russia stated that the act was reciprocal, responding in kind to Finnish restrictions on Russian diplomatic missions.

In the diplomatic world, the freezing of diplomatic bank accounts is a somewhat exceptional move. Finland’s Foreign Minister Pekka Haavisto stated that Russia’s actions breach the Vienna Convention on Diplomatic Relations. Finland’s President Sauli Niinistö also weighed in, saying that Russia is “overreacting”. While Finland is actively involved in EU sanctions against Russia, Finnish officials said it has not frozen any Russian diplomatic bank accounts in Helsinki. In Russia, the freezing of assets affects all payments of the Finnish Embassy in Moscow and Consulate General in St. Petersburg, forcing them to resort to cash reserves.

Freezing Finland’s (and also Denmark’s) diplomatic missions’ bank accounts represents the Kremlin’s hardening stance on the collective, “unfriendly”, west, and the sanctions imposed on Russia. The move should be seen as part of a continuum of Russian recent actions. In April, for example, Russia took control of Finnish and German energy companies Fortum and Uniper’s subsidiaries in Russia as a response to “the illegal appropriation of Russian assets abroad”. Russia’s actions against the newest NATO member state are certainly not unprecedented, and, certainly, not the last of their kind. The challenge for Finland and other countries seen by Russia as “unfriendly” is how to keep a united and consistent front against the Kremlin’s demonstrative actions against the “collective West”, and not be provoked by, frankly, bullying.

Second Meeting of the Select Committee on the CCP Delivers Straight Talk and Policy Recommendations

Robert W. Gerber

Select Committee on CCP Hearing May 18, 2023 (Screenshot: Committee Feed via Youtube)

The May 18 hearing of the U.S. House of Representatives Select Committee on the CCP, labeled “Leveling the Playing Field to Counter the CCP’s Economic Coercion,” provided a trove of policy ideas to a Congress that is already strongly inclined to take up new measures to counter the PRC’s economic aggression. One member said it was the most interesting hearing he had participated in. The witnesses were former President Trump’s Trade Representative Robert Lighthizer, architect of the “Phase 1” U.S.-China agreement and Section 301 tariffs against China; Roger Robinson, former National Security Advisor to President Reagan; and Eric Schmidt, former Google CEO and Chairman of the National Security Commission on Artificial Intelligence.

In his first testimony to Congress since leaving government, Lighthizer said China’s actions against the United States, notably unfair trade practices and IP theft — amount to economic warfare. He called for “strategic decoupling” from China, a phrase that House Ways and Means Committee Chairman Jason Smith (R-MO) also used at a field hearing last week. Lighthizer endorsed suspending China’s permanent normal trade relations (also known as most favored nation status), and screening all Chinese investments in the United States, not just those in critical sectors or near military installations. These steps would be appropriate and create reciprocity given Beijing’s treatment of U.S. companies and non-compliance with the Trump-era U.S.-China “Phase I” agreement, he argued. A proponent of the theory that imports represent a “transfer of wealth” to another country, Lighthizer called for rebalancing the enormous U.S. trade deficit with China by raising tariffs and eliminating the $800 de minimus waiver that allows many Chinese products to enter the U.S. market duty free.

Schmidt said the United States must be the “dominant player” in critical technologies like AI, semiconductors, biotech, 5G, quantum, energy storage, smart manufacturing, and autonomy. He called for additional government R&D funding in these areas (note: Google’s genesis was enabled by such government R&D). He argued that the United States is a “huge control point” on these technologies and if we do not lead in these areas, the CCP will determine the future of global platforms, which would be terrible for U.S. national security and the fate of free societies worldwide. He recommended strategically targeted export controls on items that Beijing depends on for military and technological advantages. Schmidt also made an appeal for attracting foreign talent including through expanding H1B visas and strengthening domestic STEM education. Schmidt endorsed a de-risking approach rather than endorsing Lighthizer’s decoupling strategy.

Perhaps the most eye-opening testimony, however, was Robinson’s exposé of the U.S. financial industry’s deep China ties. He argued that Wall Street financial instruments such as index funds, ETFs, debt instruments, and mutual funds that include Chinese companies were directly contributing to the power of the CCP, and that 100 million Americans were unaware that their investments are bolstering an authoritarian regime that is actively working to undermine the United States. He said U.S. banks were shirking their fiduciary duties to manage risks on behalf of investors. Robinson’s convincing testimony perspective could open a new front in Congress’ response to the “China problem.”

Some members focused on what the United States could do domestically to better compete with China. Rep. Jake Auchincloss (D-NY) said the U.S. needs early math training, more R&D funding, and a good business environment that includes better infrastructure. Rep. Ritchie Torres (D-NY) offered a complimentary perspective, “Our biggest enemy is not China, it is ourselves (our political dysfunction)… We need the three I’s: investment, immigration, and innovation.”

The hearing delivered a sobering overview of the methods Beijing has used to take advantage of WTO membership and the open U.S. trading system for the benefit of its military and global ambitions. It also provided members with policy ideas that 10 years ago would have seemed radical but now seem rational given the PRC’s economic aggression and the commensurate appetite in Congress for firm measures to counteract Beijing’s behavior.

The hearing showed broad bipartisan interest in both understanding the CCP threat and finding ways to reduce U.S. vulnerabilities to Chinese economic aggression. There is a split, however, between those who want de-risking and those who would prefer strategic decoupling. Congressional action could produce an overreaction by Beijing, perhaps preemptive retaliation against U.S. exports (soybeans would be first on the list). These types of measures would enrage U.S. exporters but also further imperil China’s economy, which is already experiencing multiple problems including high unemployment, slow growth, and heightened investment risk.

All Eyes on Fumio Kishida’s Japan

Hidetoshi Azuma

G7 leaders walk after a wreath-laying ceremony at the Hiroshima Victims Memorial Cenotaph in Hiroshima, Japan on May 19 ( Photo Credit: The Prime Minister’s Office of Japan)

This year’s Group of Seven (G7) summit began in earnest today in Hiroshima, Japan. As the chairman, the Japanese prime minister Fumio Kishida had expended enormous political energy to showcase his leadership on the world stage in his hometown. Indeed, he blazed a political trail in accelerating Japan’s security normalization for the last few years, culminating in his recent appearance on the Time Magazine cover due to his perceived desire to “make Japan a true military power.” Therefore, beyond the solemn spectacle of the joint requiem for the atomic bomb victims, the real significance of Kishida’s G7 is that he designed it to be a symbolic catalyst for Japan’s more assertive role in today’s great power competition.

Apart from Hiroshima’s political symbolism for Kishida, the G7 summit highlighted his emerging grand strategy.

Moscow’s expanded invasion of Ukraine in February 2022 goaded Kishida into crafting Japan’s new grand strategy of simultaneously checking Russia and China in Asia while remaining fully aligned with the West in defense of the rules-based international order. To this end, Kishida deepened Japan’s engagement with the West and expedited the country’s security normalization throughout 2022, culminating in the Economic Security Promotion Act of 2022 and the cabinet decision to double the defense spending from 2027. Finally, he consummated Japan’s grand strategic reorientation by visiting Ukraine in March as a symbolic show of solidarity against Russia’s aggression.

Ahead of the G7 summit, Kishida began to focus on the Global South. During the annual week-long break known in Japan as the Golden Week earlier this month, the Japanese prime minister visited Africa while sending his ministers to more regular destinations, such as Washington DC. The objective of his Africa visit was to show the region a reliable, democratic alternative to Russia and China in its perennial aspirations to economic development. Meanwhile, it was also intended as a message to India, whose policy of non-alignment Tokyo remains wary of.

Against this backdrop, Kishida designed the G7 summit in Hiroshima as a democratic unity against the global ascendancy of authoritarianism led by Russia and China. To this end, he invited non-member states, namely Australia, India, Brazil, South Korea, Vietnam, Indonesia, Comoros (representing the African Union) and even the Cook Islands (representing the Pacific Islands Forum). The selection of these countries was truly strategic in that they all are under the sway of authoritarian powers, particularly China, in one way or another. For example, the Cook Islands is embroiled in the emerging great power competition over the Pacific islands overshadowed by Beijing’s growing regional clout further compounded by climate change. Kishida’s agenda is to demonstrate Japan’s unique role as a bridge to these peripheral powers increasingly eclipsed by the global rise of authoritarianism.

In reality, however, Kishida’s vision is far from realization. In fact, the global solidarity against authoritarianism as envisioned by the Japanese prime minister is fragile, if not non-existent, beyond the G7 membership. Indeed, the Indian prime minister Narendra Modi reaffirmed the country’s continued non-alignment policy, much to Kishida’s dismay. Moreover, Vietnam and Indonesia are fundamentally dependent on Russia and China for their national survival. Even among the G7 member states, divergence on China became visible when the French president Emanuel Macron met Xi Jinping last month. More fundamentally, US commitment to the G7, let alone Kishida’s ideals, was ironically thrown into doubt due to the possibility of the US President Joe Biden’s canceled Hiroshima visit which emerged amid the domestic political fray over debt-ceiling in Washington.

Paradoxically, Japan now finds itself having to play a more assertive role precisely because the rest of the world is in disarray. Indeed, even the Ukrainian President Volodymyr Zelenskyy unveiled his last-minute plan to meet Kishida in Hiroshima, further highlighting the growing global demand for Japan. In fact, this is exactly the ideal situation favoring Tokyo’s agenda of security normalization. Under the dovish veneer of historical reconciliation and denuclearization, what is happening now in Hiroshima is the denouement of post-WWII Japan’s slow, yet steady path toward security normalization, an agenda contrary to the spirit of its pacifist constitution. Geostrategic imperatives often trump utopian ideals, but must be cloaked by a semblance of morality. The G7 summit in Hiroshima so far has been Kishida’s masterful display of virtù, a quality required for fundamentally transforming Japan into “a true military power.” All eyes are now truly on Kishida’s Japan and the country’s next move as clouds increasingly gather over Taiwan and beyond.

News You May Have Missed

Iran Executes Three In Continuing Crackdown

Majid Kazemi, 30, Saleh Mirhashemi, 36, and Saeed Yaqoubi, 37 were executed by Iranian authorities following convictions for attacks on paramilitary police during 2022 protests, following trials that international organizations said were marred by confessions under torture and unfair procedures. The Iranian regime has embarked on a series of crackdowns following protests over restrictions on women, and executions have hit the pace of 10 a week according to UN human rights officials.

Using AI to Merge Firms, Japanese 32-year old Approaches Billionaire Wealth

With Japan’s aging population, a major challenge for family owned firms is an aging owner with no clear successor — despite a strong profitable business. By building a proprietary database of such firms and using AI to find ideal mergers for such firms rather than shuttering them, 32-year old Shunsaku Sagami has amassed a net worth north of $950 billion.

U.S. Department of Justice Charges Five with Stealing Technology to Benefit Foreign Adversaries

On May 16, the U.S. Department of Justice reported five cases of stolen technology allegedly used to benefit foreign adversaries, including Iran, Russia, and China. DOJ has charged a Chinese national with providing destructive materials to the Iranian regime. Two separate cases involve “procurement networks” used by Russian forces to obtain sensitive technology; a Greek individual was charged with sharing 10 different types of technologies to Russian intelligence and two Russian nationals are charged with supplying banned commercial parts to Russian airline companies. The last two cases involve providing trade secrets to Chinese entities. Former Apple engineer Weibao Wang, one of the accused, was hired by Apple in 2016 before departing in 2017 to work for a Chinese self-driving cars project. Upon leaving Apple, the company discovered he had accumulated software and hardware data from the company. In 2018, federal authorities searched his home for “large quantities” of data; following the search, he fled to China and remains at large.

The views of authors are their own and not that of CSPC.

Friday News Roundup — May 19, 2023