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Supporters of Kenyan opposition leader Raila Odinga throw stones at riot cops in Nairobi.
What We’re Watching: Kenyan protest politics, twice the Ma in China, SNP names new leader
Anti-government protests escalate in Kenya
On Monday, hundreds of protesters stormed a controversial farm owned by Kenya’s former President Uhuru Kenyatta. The rioters stole livestock, cut down trees, and then set the land on fire.
The motive likely has something to do with the ongoing protests against the government of President William Ruto captained by opposition leader Raila Odinga, who narrowly lost the 2022 election to Ruto, Kenyatta’s ex-VP. (The members of this political threesome have all worked with each other in the past in Kenya, where elite business and politics are about as tight as can be.)
This behavior is nothing new for Odinga. While the protests are outwardly about the rising cost of living, Eurasia Group analyst Connor Vasey says that the opposition is just “taking his politics to the streets,” using inflation and other grievances as a “lightning rod to ensure turnout”. And while he is officially trying to overturn Ruto’s victory, Vasey believes that what Odinga really wants is an unofficial executive role in government.
From here, we can expect a test of political willpower. Odinga is threatening more rallies, while Ruto says he’ll continue to deploy the security forces against the protesters. The president hopes that if his rival doesn’t get his political concessions soon, popular support for his mobilization will subside.
The Mas go to China
On Monday, Alibaba founder Jack Ma appeared in public in China for the first time since late 2020, when he got caught in the crosshairs of Xi Jinping's tech crackdown after criticizing Chinese regulators. The billionaire, once China's richest man, paid the price by giving up control of his fintech company Ant Group, which was also blocked from going public and fined a record $7.5 billion for antitrust violations.
Meanwhile, Ma Ying-jeou (no relation) became the first former president of Taiwan to set foot in China since 1949. Ma — who is also the only Taiwanese leader to have met the sitting Chinese leader — is visiting this week as a private citizen, but anything Taiwan-related is always politically sensitive. What's more, his trip comes just days before current Taiwanese President Tsai Ing-wen travels to Central America and the US amid bubbling cross-strait tensions.
The Ma trips are unrelated and probably coincidental. Still, Jack Ma's resurfacing might be a sign that Xi is no longer going after China's tech titans because he needs them to help the economy recover from zero-COVID. For his part, Ma Ying-jeou probably wants to pitch the opposition Kuomintang party's softer touch with China in contrast with Tsai's hardline diplomacy ahead of the presidential elections in 2024.
Yousaf will lead Scotland’s divided governing party
“We will be the generation to win independence for Scotland.” So pledges Humza Yousaf, who was named leader of the Scottish National Party on Monday following a two-week-long election. Parliament will officially vote him in on Tuesday, naming him Scotland’s sixth first minister, the head of its devolved government.
Press attention will focus on the novelty of his win. Yousaf is the first Muslim to lead a major party in Britain. But he’s also now the first person to lead the SNP following the shock resignation of the still-popular Nicola Sturgeon, whose departure was seen by many as an admission that a new Scottish independence referendum is highly unlikely for the foreseeable future.
Yousaf’s razor-thin victory margin – he won just 52.1% of the vote against rival Kate Forbes – raises the thorny question of whether the party can remain strong without a credible call for a near-term independence vote to keep the party united despite its many differences on other issues.
“We are family,” says Yousaf of the party he now leads. How functional a family? We’re about to find out.
What We’re Watching: Chinese stocks, Iran nuclear deal
Chinese economic jitters
The Hang Seng Index, Hong Kong’s benchmark equity market index, dropped to a six-year low on Tuesday. Why are investors so worried? Here are three possible reasons.
First, China’s zero-COVID policy, a top geopolitical risk Eurasia Group has highlighted for clients, is causing severe economic damage. Hong Kong now has the world’s highest death rate per capita, due in part to low vaccination rates among the elderly. Over the weekend, the southern city and tech hub of Shenzhen was put into lockdown with plans to test its entire population of 17.5 million after 60 cases of omicron were detected there. Trouble is, lockdowns are bad for business. Apple supplier Foxconn, for example, was forced to suspend operations at its plant in Shenzhen, which is also home to prominent Chinese tech firms such as Huawei Technologies and Tencent Holding. If zero-COVID drags on, it’ll further disrupt production and create bottlenecks for global supply chains.
Second, the tech crackdown continues. Last year, the ruling Communist Party took aim at China’s tech titans, targeting them with huge fines and tough regulation for allegedly violating anti-monopoly legislation. Now, Tencent, which owns the immensely popular WeChat app, faces a record fine for breaching anti-money-laundering laws. The more uncertain the regulatory environment becomes, the less likely tech investors are going to want to continue pouring money into China.
Third, the looming sanctions threat. Hours before top US and Chinese officials met in Rome on Monday to discuss the war in Ukraine, the American media leaked that Russia had asked China for arms to fight the Ukrainians (and later that China was open to it). The Chinese have denied it, but it certainly looks like the Biden administration is sending a message to Xi Jinping: don’t you dare help the Russians, or else. That could mean slapping economic sanctions on China if it tries to lend Moscow covert support for the war in Ukraine, which would badly hurt the Chinese economy and likely result in a global recession. We’re not there (yet), but the chatter has spooked investors at the worst possible time for Xi, who later this year is expected to “run” for a norm-defying third term as China's president.
Iran nuclear deal … back on?
Russian Foreign Minister Sergei Lavrov said on Tuesday that the US has promised that Russia can take on “all projects and areas of activity” with Iran within the terms of a revived Iran nuclear deal. Iran’s Foreign Minister Hossein Amir-Abdollahian then announced that Russia would not block a new agreement. The war in Ukraine ensures that no pledges can be taken at face value, but this latest news makes a revival of the Iran nuclear deal more likely.Who’ll rule the digital world in 2022?
Apple this week became the first company ever to surpass $3 trillion in market value — the latest milestone in the growing influence of Big Tech.
This was already happening before the pandemic, but COVID accelerated the trend. More people now buy stuff online, keep in touch on social media, and use apps to serve their daily needs than before the virus upended both the "real" and the digital world.
As Big Tech gains more clout, governments are increasingly struggling to exercise sovereignty over the digital space. Our very own Ian Bremmer argues that a handful of tech firms are now as powerful as nation-states: geopolitical actors with unprecedented influence over the information we get access to — and not — via their algorithms.
But governments don't like playing second fiddle to Big Tech in the "technopolar world," a new global order in which tech companies dominate the online world, but don’t rule it (yet). Eurasia Group, our parent company, considers a rapidly expanding digital space that neither governments nor tech firms can effectively control the #2 top geopolitical risk for 2022.
Throughout 2021, governments have tried hard to get the upper hand. Some were more successful than others.
China grabbed headlines when Xi Jinping cracked down on e-commerce behemoth Alibaba, ride-hailing app Didi, cryptocurrencies, and even online gaming. Depending on who you ask, Xi did so because these firms were enriching themselves at the expense of what Beijing calls “societal harmony,” or rather threatening to become more influential than the ruling CCP. Since then, China’s tech giants have tempered their ambitions and signaled they’ll play ball — to Xi’s delight and their own chagrin.
In the US, meanwhile, an hours-long global outage of Facebook and its sister apps Instagram and WhatsApp — along with bombshell whistleblower revelations about the company putting profits over people — prompted a wave of congressional hearings about how Facebook’s algorithm hurts children and promotes online rage. But the momentum for Facebook to have its “Big Tobacco moment” was soon zapped by partisan gridlock in Washington, which is all but assured to continue this year.
The EU arguably made more progress than the Americans or the Chinese on regulating Big Tech. Brussels recently agreed to pass in 2022 a new law that'll punish anti-competitive practices in the digital realm by companies worth at least $80 billion. Separately, the EU is also working on legislation that would ban targeted ads for minors, as well as force Google and Facebook to open up their algorithms, combat disinformation, and be more transparent with users.
Still, none of this is enough for governments to seriously undercut Big Tech's wealth and influence. Nor to diminish its ability to invest in things like artificial intelligence, machine learning, or quantum computing — all of which will in the near future continue to shift the balance of virtual power in favor of tech companies.
What's more, governments won't rock the boat because their citizens are addicted to tech — more so in pandemic times. For almost two years, billions of people have relied on tech solutions to meet almost all their daily needs amid COVID restrictions. Most Chinese communicate, shop and pretty much do everything online on a single app: WeChat, whose use is so widespread that blocking it to punish its owner Tencent would be a non-starter even for the all-powerful Xi.
Tech firms, for their part, also have skin in the game. Big Tech also needs the digital space to be less a free-for-all because tech firms are now providing essential online infrastructure and other public goods that governments have traditionally been responsible for, such as national defense. Apple, Google, and Microsoft have committed billions to help the US government and American businesses bolster their cybersecurity.
Ineffective governance of the digital space by either governments or Big Tech will hurt both sides. And the fallout will in turn damage business and society in the form of more widespread misinformation, stifled innovation, and a greater risk of potentially dangerous tech getting into the hands of bad actors.
Just think of the Colonial Pipeline ransomware attack on steroids.Why is Xi Jinping willing to slow down China’s economy?
China's GDP grew a lower-than-expected 4.9 percent year-on-year in the third quarter of 2021, a whopping three percentage points less than in the previous period. It's a big deal for the world's second-largest economy, the only major one that expanded throughout the pandemic — and now at risk of missing its growth target of 6 percent for the entire year.
Normally, such a drastic slowdown would have put the ruling Communist Party in a tizzy. But this time, Xi Jinping knows this is the price he must pay for his big plans to curb rising inequality and boost the middle class at the expense of the CCP's traditional economic mantra: high growth above all else.
Why is GDP growth slowing down now? For one thing, a combination of rising coal prices, tighter regulations on power consumption related to climate policy, and soaring demand in countries that buy a lot of Chinese-made stuff have all resulted in an energy crunch that'll likely worsen disruptions to global supply chains that rely heavily on China.
For another, Xi's crackdown on excessive borrowing in the real estate sector — which accounts for almost 30 percent of China's economic activity but was so in the red that it posed a systemic risk — is causing a lot of pain. Evergrande and other large property developers are missing deadlines to pay their creditors, and halting projects for homes they've already sold but have no money to build.
Finally, there's the pandemic itself, via strict local lockdowns that have hurt Chinese retail and travel in the only country in the world that still believes in zero COVID.
China's leader thinks that an economic slowdown, however painful in the short term, will be worth it in the long run because the economy needs structural reforms to narrow the income gap and deliver what Xi calls "common prosperity."
In a speech that stunned the business community two months ago, Xi confirmed that "common prosperity" means vastly expanding China's middle class, partly by raising taxes on the rich. He wants some of this wealth to be redistributed in order to make China a more equal society. (Indeed, the 1 percent have seen the writing on the wall — a single mention of regulating "excessively high incomes" prompted several panicked CEOs to immediately donate billions to charity right when Xi was going after the tech sector.)
Xi's goal is for China's GDP to continue expanding, but at a less ambitious pace so Chinese workers have time to earn more and become more productive at the same time. China, he says, should move away from mostly churning out cheap exports that pollute the planet as Chinese factories have done for decades to focus on producing high-quality, sustainably-made goods for the local market.
But it's a risky move. Winding down economic activity to the 2-3 percent annual growth levels of mature economies like the US or Germany will be a tricky balancing act for China. Sluggish growth that drags on could deter investment, and trigger social unrest if unemployment gets too high as a result.
Meanwhile, slower Chinese economic growth will have serious ripple effects for the rest of the world, given China's outsize role in the global economy.
The so-called "factory of the world" will probably continue exporting a lot of stuff, but not as much as it did before, and more of its exports will be high-value tech goods. Local companies will also likely outsource more of their manufacturing to lower-cost neighbors such as Bangladesh or Myanmar, and over time most Chinese-made products will get more expensive.
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Can China limit kids’ video game time? Risks with facial recognition
Marietje Schaake, International Policy Director at Stanford's Cyber Policy Center, Eurasia Group senior advisor and former MEP, discusses trends in big tech, privacy protection and cyberspace:
China is to ban kids from playing video games for more than three hours a week. But why and how?
Well, controlling the time that kids spend online fits in a pattern of growing paternalism from a state that wants to control its population in every possible way. This time around, the gaming industry is made responsible for enforcing the time limits in China that foresee in a true diet of gaming; one hour per day on Friday, Saturday, or Sunday. And of course, children are vulnerable. Protecting them from addictive and violent activities can be a very wise choice that parents want to make. There are also laws in a number of countries that limit advertisements that target children, for example. But whether the latest restrictions on gaming in China will work or instead will inspire a young generation to learn of clever circumvention remains to be seen.
With US agencies looking to expand the use of facial recognition tech, what are the security concerns?
Well, I see moral, legal, and operational concerns around the mass deployment of facial recognition systems. For one, they do not always work accurately and even if they do, privacy rights are at stake for all. But with false positives, innocent people end up being targets. And there's a real risk of mission creep. Black men specifically but other minorities more generally, end up being particularly vulnerable to the bias, misidentification, and abuse of facial recognition systems. So from the point of view of their safety, these systems should not be used.