It’s just over one month since the Hornsdale power reserve was officially opened in South Australia. The excitement surrounding the project has generated acres of media interest, both locally and abroad.
The aspect that has generated the most interest is the battery’s rapid response time in smoothing out several major energy outages that have occurred since it was installed.
Following the early success of the SA model, Victoria has also secured an agreement to get its own Tesla battery built near the town of Stawell. Victoria’s government will be tracking the Hornsdale battery’s early performance with interest.
Generation and Consumption
Over the full month of December, the Hornsdale power reserve generated 2.42 gigawatt-hours of energy, and consumed 3.06GWh.
Since there are losses associated with energy storage, it is a net consumer of energy. This is often described in terms of “round trip efficiency”, a measure of the energy out to the energy in. In this case, the round trip efficiency appears to be roughly 80%.
The figure below shows the input and output from the battery over the month. As can be seen, on several occasions the battery has generated as much as 100MW of power, and consumed 70MW of power. The regular operation of battery moves between generating 30MW and consuming 30MW of power.
As can be seen, the the generation and consumption pattern is rather “noisy”, and doesn’t really appear to have a pattern at all. This is true even on a daily basis, as can be seen below. This is related to services provided by the battery.
Frequency Control Ancillary Services
There are eight different Frequency Control Ancillary Services (FCAS) markets in the National Electricity Market (NEM). These can be put into two broad categories: contingency services and regulation services.
Contingency services essentially stabilise the system when something unexpected occurs. This are called credible contingencies. The tripping (isolation from the grid) of large generator is one example.
When such unexpected events occur, supply and demand are no longer balanced, and the frequency of the power system moves away from the normal operating range. This happens on a very short timescale. The contingency services ensure that the system is brought back into balance and that the frequency is returned to normal within 5 minutes.
In the NEM there are three separate timescales over which these contingency services should be delivered: 6 seconds, 60 seconds, and 5 minutes. As the service may have to increase or decrease the frequency, there is thus a total of six contingency markets (three that raise frequency in the timescales above, and three that reduce it).
This is usually done by rapidly increasing or decreasing output from a generator (or battery in this case), or rapidly reducing or increasing load. This response is triggered at the power station by the change in frequency.
To do this, generators (or loads) have some of their capacity “enabled” in the FCAS market. This essentially means that a proportion of its capacity is set aside, and available to respond if the frequency changes. Providers get paid for for the amount of megawatts they have enabled in the FCAS market.
This is one of the services that the Hornsdale Power Reserve has been providing. The figure below shows how the Hornsdale Power Reserve responded to one incident on power outage, when one of the units at Loy Yang A tripped on December 14, 2017.
The regulation services are a bit different. Similar to the contingency services, they help maintain the frequency in the normal operating range. And like contingency, regulation may have to raise or lower the frequency, and as such there are two regulation markets.
However, unlike contingency services, which essentially wait for an unexpected change in frequency, the response is governed by a control signal, sent from the Australian Energy Market Operator (AEMO).
In essence, AEMO controls the throttle, monitors the system frequency, and sends a control signal out at a 4-second interval. This control signal alters the output of the generator such that the supply and demand balanced is maintained.
This is one of the main services that the battery has been providing. As can be seen, the output of the battery closely follows the amount of capacity it has enabled in the regulation market.
More batteries to come
Not to be outdone by it’s neighbouring state, the Victorian government has also recently secured an agreement for its own Tesla battery. This agreement, in conjunction with a wind farm near the town of Stawell, should see a battery providing similar services in Victoria.
This battery may also provide additional benefits to the grid. The project is located in a part of the transmission network that AEMO has indicated may need augmentation in the future. This project might illustrate the benefits the batteries can provide in strengthening the transmission network.
It still early days for the Hornsdale Power Reserve, but it’s clear that it has been busy performing essential services and doing so at impressive speeds. Importantly, it has provided regular frequency control ancillary services – not simply shifting electricity around.
With the costs and need for frequency control service increasing in recent years, the boost to supply through the Hornsdale power reserve is good news for consumers, and a timely addition to Australia’s energy market.
A week after the release of a book depicting him as not intelligent enough and not mentally fit to be trusted as commander-in-chief, Donald Trump has done it again. On the same day he cancelled a visit to London to open the new US embassy there, a move many interpreted as an attempt to avoid embarrassing protests, he embarrassed himself further by demanding to know why the US deigns to accept immigrants from “shithole countries”.
Before this latest outburst, the White House had spent a week trying in vain to rise above the account of Michael Wolff’s Fire and Fury, which uses the words of people in Trump’s White House and inner circle to argue that Trump, in the alleged private words of secretary of state, Rex Tillerson, is a “fucking moron”. Having failed to block the book’s publication and instead hastened it, the White House pivoted instead to denigrating Wolff and one of his primary sources, the former White House chief strategist and Trump ally Steve Bannon.
Trump pursued the mission with both anger and enthusiasm via his favourite medium, Twitter, slamming the book as “really boring and untruthful” and dismissing Bannon as “Sloppy Steve”.
Besides reinforcing his image as a temperamental, ill-informed man-child, Trump’s counter-attack misses the point. Even if Wolff is a huckster peddling dubious quotes, as more than a few journalists claim, others have been spreading the message publicly and privately since the day Trump took office.
Chief among them, via his own actions and words, is Trump himself. But there’s also Democratic senator Jack Reed, who in July 2017 told his Republican counterpart Susan Collins, “I think – I think he’s crazy. I mean, I don’t say that lightly and as a kind of a goofy guy.” Collins responded: “I’m worried.” Republican senator Bob Corker, the chair of the Senate Foreign Relations Committee, first said that Trump “has not yet been able to demonstrate the stability nor some of the competence that he needs to demonstrate in order to be successful” and later called the White House “an adult day care centre”.
The cabinet, too, are more than worried. Besides Tillerson’s reported contempt, Trump’s secretary of defence, James Mattis, and his chief of staff, John Kelly have reportedly made a pact that one of them will be in the US at all times.
But in Wolff’s account, the foremost figure to question Trump’s faculties is Steve Bannon, the hard-right ideologue who arguably propelled Trump to victory.
Treasonous and unpatriotic
Wolff depicts a Bannon out for himself and his agenda, even at the cost of tearing down Trump and his family. “Javanka”, the husband-wife team of Trump’s son-in-law Jared Kushner and daughter Ivanka, meet with Bannon’s unbridled derision: Kushner is financially compromised, including by Russians, and Ivanka is “dumb as a brick”. The elder Trump himself, meanwhile, is a pliable simpleton.
But far more importantly, Wolff’s Bannon inserts the Trumps into the middle of the alleged collusion with Russia during the 2016 campaign. Donald Trump Jr., Kushner, and then-campaign manager Paul Manafort are “treasonous” and “unpatriotic” for a June 2016 meeting with three Kremlin-linked envoys in Trump Tower in New York City, arranged by Trump Jr. to discuss Russia’s provision of material damaging to Hillary Clinton.
In Wolff’s rendering, Bannon thinks the ultimate downfall of Trump and Co. will be revelations of Russian financial input into the campaign: “It goes through Deutsche Bank and all the Kushner shit. The Kushner shit is greasy. They [Mueller’s team] are going to go right through that.”
After the book dropped, Bannon did not deny any of his statements. Under pressure from his billionaire backers the Mercer family, he clarified that the words “treasonous” and “unpatriotic” refer only to Manafort, who is already under indictment on financial, tax and lobbying charges related to the Trump-Russia investigation.
Bannon has become the most conspicuous casualty of the Fire and Fury fallout, not only dismissed as “sloppy” by Trump but now ousted from his position at far-right soapbox Breitbart. But even with Bannon mostly stripped of his influence, the complaints against Trump raise a disturbing question: why are so many people who think Trump is mentally unfit still willing for him to remain in office?
The answer is that no matter how unstable and vacuous he may be, Trump is a very useful vehicle for other people’s ambitions.
The useful idiot
Even after his supremely unedifying first year, Trump still serves as a conveniently empty vessel for all manner of enablers. Having resuscitated his career after six bankruptcies by playing a businessman on reality TV, he now plays the role of chief executive so industries can get pesky regulations rolled back.
As he keeps up his stream of offensive, irresponsible pronouncements, GOP legislators put up with it so they can finally secure their $1.5 trillion tax giveaway. And as white supremacists proclaim their moment has come: as David Duke, former KKK Grand Wizard, explained at the violent Charlottesville march in August 2017: “We are going to fulfil the promises of Donald Trump. That’s what we believed in.”
As long as Trump serves that purpose, it does not matter how many conflicts of interest he has, how many women accuse him of sexually harassing or assaulting them. It does not matter how many memoranda or constitutional clauses he does not read or understand. And it does not matter how many Russians he and his inner circle might have met and assisted.
But Trump’s usefulness might well expire when Robert Mueller completes his work. That could be sooner than many people would like – with Manafort indicted and former national security advisor Michael Flynn pleading guilty to lying to the FBI, the next probable target is Kushner – and from there, it’s only one rung up the ladder to Trump himself. Then again, Mueller’s probings could take months or years more to get there. Until then, this emperor’s new clothes nightmare continues with no end in sight.
George Orwell warns us in his dystopian novel 1984 that authoritarianism begins with language. In the novel, “newspeak” is language twisted to deceive, seduce and undermine the ability of people to think critically and freely.
Donald Trump’s unapologetic bigoted language made headlines again Thursday when it was reported he told lawmakers working on a new immigration policy that the United States shouldn’t accept people from “shithole countries” like Haiti. Given his support for white nationalism and his coded call to “Make America Great (White) Again,” Trump’s overt racist remarks reinforce echoes of white supremacy reminiscent of fascist dictators in the 1930s.
His remarks about accepting people from Norway smack of an appeal to the sordid discourse of racial purity. There is much more at work here than a politics of incivility. Behind Trump’s use of vulgarity and his disparagement of countries that are poor and non-white lies the terrifying discourse of white supremacy, ethnic cleansing and the politics of disposability. This is a vocabulary that considers some individuals and groups not only faceless and voiceless, but excess, redundant and subject to expulsion. The endpoint of the language of disposability is a form of social death, or even worse.
As authoritarianism gains strength, the formative cultures that give rise to dissent become more embattled, along with the public spaces and institutions that make conscious critical thought possible.
Words that speak to the truth to reveal injustices and provide informed critical analysis begin to disappear, making it all the more difficult, if not dangerous, to judge, think critically and hold dominant power accountable. Notions of virtue, honour, respect and compassion are policed, and those who advocate them are punished.
I think it’s fair to argue that Orwell’s nightmare vision of the future is no longer fiction in the United States. Under Trump, language is undergoing a shift: It now treats dissent, critical media coverage and scientific evidence as a species of “fake news.”
The Trump administration, in fact, views the critical media as the “enemy of the American people.” Trump has repeated this view of the media so often that almost a third of Americans now believe it and support government-imposed restrictions on the media, according to a Poynter survey.
Thought crimes and fake news
Trump’s cries of “fake news” work incessantly to set limits on what is thinkable. Reason, standards of evidence, consistency and logic no longer serve the truth, according to Trump, because the latter are crooked ideological devices used by enemies of the state. Orwell’s “thought crimes” are Trump’s “fake news.” Orwell’s “Ministry of Truth” is Trump’s “Ministry of Fake News.”
The notion of truth is viewed by this president as a corrupt tool used by the critical media to question his dismissal of legal checks on his power, particularly his attacks on judges, courts and any other governing institutions that will not promise him complete and unchecked loyalty.
Under Trump, the language of civic literacy and democracy has become unmoored from critical reason, informed debate and the weight of scientific evidence, and is now being reconfigured and tied to pageantry, political theatre and a deep-seated anti-intellectualism.
One consequence, as language begins to function as a tool of state repression, is that matters of moral and political responsibility disappear and injustices proliferate.
Fascism starts with words
What is crucial to remember here, as authoritarianism expert Ruth Ben-Ghiat notes, is that fascism starts with words. Trump’s use of language and his manipulative use of the media as political spectacle are disturbingly similar to earlier periods of propaganda, censorship and repression.
Under fascist regimes, the language of brutality and culture of cruelty was normalized through the proliferation of strident metaphors of war, battle, expulsion, racial purity and demonization.
As German historians such as Richard J. Evans and Victor Klemperer have made clear, dictators like Adolf Hitler did more than simply corrupt the language of a civilized society, they also banned words.
Soon afterwards, the Nazis banned books and the critical intellectuals who wrote them. They then imprisoned those individuals who challenged Nazi ideology and the state’s systemic violations of civil rights.
The end point was an all-embracing discourse of disposability — the emergence of concentration camps and genocide fuelled by a politics of racial purity and social cleansing.
Echoes of the formative stages of such actions are upon us now. An American-style neo-fascism appears to be engulfing the United States after simmering in the dark for years.
More than any other president, Trump has normalized the notion that the meaning of words no longer matters, nor do traditional sources of facts and evidence. In doing so, he has undermined the relationship between engaged citizenship and the truth, and has relegated matters of debate and critical assessment to a spectacle of bombast, threats, intimidation and sheer fakery.
This language of fascism does more than normalize falsehoods and ignorance. It also promotes a larger culture of short-term attention spans, immediacy and sensationalism. At the same time, it makes fear and anxiety the normalized currency of exchange and communication.
In a throwback to the language of fascism, Trump has repeatedly positioned himself as the only one who can save the masses — reproducing the tired script of the model of the saviour endemic to authoritarianism.
Trump is also the master of manufactured illiteracy, and his obsessive tweeting and public relations machine aggressively engages in the theatre of self-promotion and distractions. Both of these are designed to whitewash any version of a history that might expose the close alignment between his own language and policies and the dark elements of a fascist past.
Trump also revels in an unchecked mode of self-congratulation bolstered by a limited vocabulary filled with words like “historic,” “best,” “the greatest,” “tremendous” and “beautiful.”
Those exaggerations suggest more than hyperbole or the self-indulgent use of language. When he claims he “knows more about ISIS than the generals,” “knows more about renewables than any human being on Earth” or that nobody knows the U.S. system of government better than he does, he’s using the rhetoric of fascism.
As the aforementioned historian Richard J. Evans writes in The Third Reich in Power:
“The German language became a language of superlatives, so that everything the regime did became the best and the greatest, its achievements unprecedented, unique, historic and incomparable …. The language used about Hitler … was shot through and through with religious metaphors; people ‘believed in him,’ he was the redeemer, the savior, the instrument of Providence, his spirit lived in and through the German nation…. Nazi institutions domesticated themselves [through the use of a language] that became an unthinking part of everyday life.”
Under the Trump regime, memories inconvenient to his authoritarianism are now demolished in the domesticated language of superlatives so the future can be shaped to become indifferent to the crimes of the past.
Trump’s endless daily tweets, his recklessness, his adolescent disdain for a measured response, his unfaltering anti-intellectualism and his utter ignorance of history work in the United States. Why? Because they not only cater to what historian Brian Klass refers to as “the tens of millions of Americans who have authoritarian or fascist leanings,” they also enable what he calls Trump’s attempt at “mainstreaming fascism.”
The language of fascism revels in forms of theatre that mobilize fear, hatred and violence. Author Sasha Abramsky is on target in claiming that Trump’s words amount to more than empty slogans.
Instead, his language comes “with consequences, and they legitimize bigotries and hatreds long harbored by many but, for the most part, kept under wraps by the broader society.”
Surely, the increase in hate crimes during Trump’s first year of his presidency testifies to the truth of Abramsky’s argument.
Fighting Trump’s fascist language
The history of fascism teaches us that language operates in the service of violence, desperation and troubling landscapes of hatred, and carries the potential for inhabiting the darkest moments of history.
It erodes our humanity, and makes too many people numb and silent in the face of ideologies and practices that are hideous acts of ethical atrocity.
Trump’s language, like that of older fascist regimes, mutilates contemporary politics, empathy and serious moral and political criticism, and makes it more difficult to criticize dominant relations of power.
His fascistic language also fuels the rhetoric of war, toxic masculinity, white supremacy, anti-intellectualism and racism. But it’s not his alone.
It is the language of a nascent fascism that has been brewing in the United States for some time. It is a language that is comfortable viewing the world as a combat zone, a world that exists to be plundered and a view of those deemed different as a threat to be feared, if not eliminated.
A new language aimed at fighting Trump’s romance with fascism must make power visible, uncover the truth, contest falsehoods and create a formative and critical culture that can nurture and sustain collective resistance to the oppression that has overtaken the United States, and increasingly many other countries.
No form of oppression can be overlooked. And with that critical gaze must emerge a critical language, a new narrative and a different story about what a socialist democracy will look like in the United States.
Reclaiming language as a force for good
There is also a need to strengthen and expand the reach and power of established public spheres, such as higher education and the critical media, as sites of critical learning.
We must encourage artists, intellectuals, academics and other cultural workers to talk, educate, make oppression visible and challenge the common-sense vocabulary of casino capitalism, white supremacy and fascism.
Language is not simply an instrument of fear, violence and intimidation; it is also a vehicle for critique, civic courage and resistance.
A critical language can guide us in our thinking about the relationship between older elements of fascism and how such practices are emerging in new forms.
Without a faith in intelligence, critical education and the power to resist, humanity will be powerless to challenge the threat that fascism and right-wing populism pose to the world.
Those of us willing to fight for a just political and economic society need to formulate a new language and fresh narratives about freedom, the power of collective struggle, empathy, solidarity and the promise of a real socialist democracy.
We would do well to heed the words of the great Nobel Prize-winning novelist, J.M. Coetzee, who states in a work of fiction that “there will come a day when you and I will need to be told the truth, the real truth ….no matter how hard it may be.”
Democracy, indeed, can only survive with a critically informed and engaged public attentive to a language in which truth, rather than lies, become the currency of citizenship.
In 2018 there will be elections in the Australian states of Victoria, South Australia and Tasmania, as well as in Italy, the US and Mexico.
Essential has released polling for the five mainland Australian states, conducted from October to December. Figures are given by month for the three eastern seaboard states.
In South Australia, Labor led 51-49 in October to December, a one-point gain for the Liberals since July to September. Primary votes were 34% Labor (down three), 31% Liberals (up one), 22% for Nick Xenophon’s SA-BEST (up four) and 8% Greens (up two). The South Australian election will be held on March 17.
Newspoll had SA-BEST at 32% from polling conducted in the same period as Essential. Essential is assuming SA-BEST preferences flow to the Liberals at a 60-40 rate, but at the 2016 federal election, these preferences flowed to Labor at a 60-40 rate. Essential’s justification is that the Liberals have lost far more primary votes than Labor since the 2014 state election.
In Victoria, the Coalition led 51-49 in December, a two-point gain for the Coalition since November. Primary votes were 46% Coalition (up three), 37% Labor (steady) and 9% Greens (down one). For the October to December period, Labor was just ahead, 51-49. The Victorian election will be held November 24.
The Age commissioned ReachTEL polls of the Labor-held Victorian seats of Tarneit and Cranbourne on January 5. On the primary votes, there is a substantial anti-Labor swing in Tarneit, but little swing in Cranbourne.
There were many questions in the ReachTEL polls on youth crime. About two-thirds in both seats said the main youth crime issue was African gangs, and more than 55% said they were less likely to go out at night. A positive for Labor was that Premier Daniel Andrews had a large lead over Opposition Leader Matthew Guy on dealing with crime.
In the New South Wales Essential poll, Labor led 52-48 in December, a three-point gain for Labor since November. Primary votes were 40% Coalition (down three), 40% Labor (up three) and 9% Greens (steady). For October to December, Labor led 51-49.
I believe this is the first time Labor has led in a NSW state poll since shortly after the 2007 state election. The next NSW election will be held in March 2019.
In Queensland, Labor led 55-45 in December, a four-point gain for Labor since the November election. In Western Australia, Labor led 57-43 in October to December, a three-point gain for Labor since July to September.
The Tasmanian election is likely to be held in March, and it appears Labor is ahead under its popular leader Rebecca White.
The Italian election will be held on March 4. 37% of seats in both chambers of the parliament will be elected using first-past-the-post voting, while the rest use proportional representation.
Polling gives the right-wing coalition about 37%, the left-wing coalition about 27%, and the left-wing populist Five Star Movement about 28%. As the left is more split than the right, the right will have an advantage in the first-past-the-post seats, though it will probably be short of an overall majority.
The Mexican election will be held on July 1. The president is elected by first-past-the-post, and the left-wing candidate, Andrés Manuel López Obrador, is currently ahead. By antagonising Mexicans, US President Donald Trump could cause the election of a left-winger who would strongly oppose the proposed border wall.
The FiveThirtyEight poll aggregate currently gives Democrats a 11-point lead over Republicans in the race for the US Congress. Midterm elections will be held in early November, in which all 435 House of Representatives members and one-third of the 100 Senators are up for election. The Senate seats up this year went to Democrats by 25-8 in 2012, and a few Democrats will be defending states Trump won easily in 2016.
Even though Republicans only have a 51-49 Senate majority, the House of Representatives is more likely to switch party control than the Senate.
Left-wing parties performed better than expected in 2017 elections
In 2016, Trump was elected US president, and the UK voted to leave the European Union. Trump and Brexit were triumphs for the populist right, and it was expected that the left would also struggle in 2017. However, in both Australian and overseas elections held in 2017, the left generally performed better than expected.
At the March 2017 Western Australian election, Labor won a landslide, with 41 of the 59 lower house seats.
At the November Queensland election, Labor won a majority, and One Nation won just one seat. There had been much speculation that One Nation would win many seats and hold the balance of power.
A year after Trump’s victory, US Democrats easily won the Virginia and New Jersey gubernatorial elections. In the Alabama Senate byelection, Democrat Doug Jones defeated Republican Roy Moore by a 50.0-48.3 margin, overturning Trump’s 62-34 Alabama margin over Hillary Clinton in 2016.
Jones was sworn in as a US senator on January 3, replacing Luther Strange, who had been appointed by the Alabama governor after Jeff Sessions resigned to become attorney-general. Republicans now have a 51-49 majority in the US Senate, down from 52-48.
In an April article published after Theresa May called the June 8 UK general election, I said a Conservative landslide was likely – a widely held view. Under Jeremy Corbyn, Labour’s vote instead increased almost ten points from 2015, and the Conservatives failed to win a majority – though they clung to power with support from Northern Ireland’s Democratic Unionist Party.
In the May French presidential election run-off, Emmanuel Macron crushed Marine Le Pen 66-34. While Macron is a centrist and not a left-winger, he is clearly preferable to a conservative or Le Pen from a left perspective.
In October, Labour won the New Zealand election (which was held in September) after securing a coalition agreement with NZ First. Labour had been polling in the mid-20s before Jacinda Ardern became its leader in August.
While 2017 was generally a good year for the left, there were two poor results. At the October Austrian election, a conservative/far-right government was formed after more than a decade of coalition governments between the major left and right-wing parties.
At the German election in September, the far-right achieved its highest vote share since the second world war (12.6%). The major parties had formed a grand coalition, and both slumped, with the Social Democrats falling to their lowest vote (20.5%) since 1932. Despite this terrible result, it appears likely there will be another grand coalition government led by Angela Merkel.
Where there has been a clear difference between the major left and right-wing parties (the UK, the US and New Zealand), the left-wing party has performed strongly. The dismal results for the left in Germany and Austria have occurred in left/right coalitions, where there was perceived to be little difference between the left and right.
Furthermore, embracing a left-wing agenda neutralises some of the far-right’s appeal. The UK Independence Party won just 1.8% of the vote at the 2017 election, down almost 11 points from 2015, though some of this fall was caused by the Conservatives’ support for Brexit. Macron vigorously attacked Le Pen’s policies, and thrashed her by a bigger than expected margin.
The far-right tends to perform best when voters perceive little difference between the major left- and right-wing parties.
On January 8, former Malaysian prime minister Mahathir Mohamad announced his intention to contest the next general election, due sometime before August this year.
In an unprecedented political turnaround, Mahathir is now leader of the alliance of opposition parties bidding to oust the incumbent, Najib Razak. Mahathir handpicked Najib in 2009 to head his former party, the United Malays National Organisation (UMNO), and the coalition it has led since the 1970s, Barisan Nasional.
To add further intrigue, Mahathir now appears to be on a unity ticket with his old enemy, Anwar Ibrahim, for control of the country.
Mahathir, who first rose through UMNO ranks to become prime minister in 1981, is 92. His decision to stand again has raised questions about the state of politics in this young nation, whose median age is 28. Malaysian and international media outlets alike have carried comments along the lines that nominating somebody so old is a “laughable” choice.
Yet the key to this decision is not in the nation’s age profile but the calculus of building electoral coalitions in a diverse nation bearing the scars of political battles fought since 1998.
Look also to Mahathir’s singular skillset in building such coalitions over decades, through a combination of Malay nationalism, a pro-capitalist Islamist ethic and selective minority representation. During his career, Mahathir mastered the use of such political themes, alongside tactics such as granting favours and opportunities to allies while exerting civil and judicial pressure on opponents.
Mahathir led Malaysia for 22 years. In that time, he transformed the nation for better and for worse, depending on which constituency you consult. He resigned in 2003, after famously sacking his deputy and finance minister, Anwar Ibrahim, in 1998.
Anwar, who became his most formidable opponent, has since led the opposition alliance that Mahathir now heads, with Anwar’s wife, Wan Azizah, as his deputy.
Anwar himself has nearly completed a second prison term – the first instigated by Mahathir, the second by Najib – and is only due for release in June, at which point he is likely to seek a royal pardon to readmit himself to political life. Anwar’s convictions have resulted from charges of corruption and sodomy – a criminal offence in Malaysia – both of which he has consistently denied.
Unless Anwar wins a pardon from the king, he will not be able to participate in politics for an additional five years after his release. Nonetheless, the plan is to find a way for Anwar to take over – presumably from Mahathir, or potentially from Wan Azizah.
In 2013, at the last election, Anwar led the opposition parties to win the national popular vote. But he did not win sufficient seats to form government, which Barisan retained.
Anwar has perfected a form of political code-switching, which allows him to argue for democratic reforms using both Islamic and secular liberal principles. This is a skill many voters, Muslim and non-Muslim, consider impressive.
Nevertheless, he failed to win important rural seats – whose largely Malay Muslim voters hold disproportionate power in this largely urban nation. Many voters in these seats view their economic and political interests as tied up with UMNO and Barisan, along with their development schemes, subsidies and loans that have propelled many Malay Muslims into better jobs in a modernising economy.
Appointing Mahathir as opposition figurehead is a bid to win these seats: the one missing ingredient in the opposition parties’ 2013 bid for power. It is for this reason that the “nonagenarian”, as Najib calls him, is suddenly running again. He is a critical component of an opposition pitch to these voters, sending the message that the opposition will not turn their lives or the polity upside down, as many fear it will.
That these fears exist is not a mystery. They circulate in comments made in public forums both by government ministers and by other figures linked to UMNO and its affiliated NGOs. They include the assertion that the opposition is un-Islamic because it includes parties like the Democratic Action Party, whose membership is largely ethnic Chinese.
Allowing this coalition to come to power, the argument goes, would allow it to dismantle the web of state protections that protects Malay Muslims not only from poverty but also from the country’s other “races.” It would also lead to an ethnic Chinese bid for power that would displace Malay Muslims in their own nation – from which they only ejected their last group of colonisers at independence in 1957.
Installing Mahathir as a figurehead is a signal to these voters – and their political patrons – that there will be no dismantling of Malay Muslim privileges. Nor will there be a public reckoning for members and officials of UMNO if their party falls, as Mahathir signalled earlier this week.
Instead, the logic goes, voting for the opposition will only rewind and reset the nation at the point it had reached 20 years ago – when Mahathir and Anwar were last leading the nation together, as the leaders of the very same Barisan that these voters continue to support.
There are two important additional constituencies that Mahathir aims to reassure, even while they express concern over a potential second era of “Mahathirism” and seek to delimit how much power he might wield in a new government.
These are non-Muslim Chinese, Indian and “other” minorities, along with so-called “liberal” Malay Muslims – a term generally given to urban professionals comfortable with interracial and mixed-gender politics. Many of these voters are already comfortable with the opposition, and may fear not only Barisan, but also the government’s new apparent allies, the Pan-Malaysian Islamic Party (PAS).
PAS has left the opposition alliance and is now working in co-ordination with Barisan. It commands a large following of supporters, although it has lost some leaders and supporters to a new party that subsequently split from it, Amanah, which has remained in the opposition.
If the opposition fails, and Barisan wins decisively, minorities and liberals will not like the price PAS will likely extract from Barisan in return for its support – which many fear includes hudud laws and a wholesale Islamisation of the state and public life. But such a transformation would be risky for Malaysia, and destroy its cultivated reputation as a safe and diverse nation in which “moderate” Islam prevails.
Through the 1990s, Mahathir presented himself to these voters as a bulwark against PAS, which he has characterised as similar to the Taliban and opposed to minority rights. A strong argument along these lines might disrupt Barisan-PAS co-ordination, and potentially deliver Barisan a weak win, whose legitimacy the opposition parties will likely challenge.
Najib has instigated a new battery of national security laws that he might consider using if political disaffection continues after a weak result. But, again, using them will be risky, as Malaysia also projects itself as a democracy.
As for the likelihood of an outright opposition win – this would take a surge of energy that seems not to be evident in supporters demoralised by the seeming impossibility of dislodging Barisan and especially UMNO. Even the multi-billion-dollar scandal that broke in 2015, and which remains the subject of a Department of Justice investigation in the US, seems not to have weakened its position.
Nonetheless, the campaign has begun in all but formal terms.
In 2017, we saw the consolidation of China’s power and influence globally, and of Communist Party leader Xi Jinping’s power nationally. This year, the party will try to use this to tackle some of its biggest economic hurdles such as financial risk, environmental pollution and maintaining social cohesion.
A first and overriding priority will be managing and preventing major financial risks within the Chinese economy. China will continue to clean up and tighten controls over its financial sector.
Regulators have also issued a 36-point code of conduct for the country’s private enterprises to follow when investing overseas. This is part of a move to clip the wings of China’s most aggressive global deal makers, firms like HNA Group and Fosun International. These businesses responded enthusiastically to the government’s “going out” policy to link China to the rest of the global economy, launched at the beginning of the century.
On the one hand, China has banned investments in gambling and “sensitive” industries and restricted investments in property, hotel, film and sports. But projects linked to China’s ambitious Belt and Road initiative are actively encouraged. So 2018 should see a continuation of China’s expanding economic influence globally through infrastructure and other major projects.
Tackling pollution, of all kinds
In line with the party’s focus on stability and risk minimisation is a clear determination to move away from high-speed growth to high-quality growth. “Quality” here means an economy that is cleaner and more user friendly.
The government is trying to reduce pollution. Measures to close down polluting factories and make local officials more accountable for environmental damage are starting to make a difference.
A major component of the shift to a cleaner economy is China’s determination to free itself from any reliance upon carbon imports.
This has potentially major implications for the Australian economy, which has done so well over the past few decades largely because of its commodity exports to China.
China is also no longer willing to accept imports of Australian waste, leaving Australia with the question of how else to deal with its accumulating stockpiles.
Social stability for economic and political stability
In an unusual move during last year’s annual end-of-year economic convention, the government detailed concerns from the wider public on issues such as online scams, sex discrimination in the workplace and a lack of kindergarten services in certain regions. This reflects the party’s concern with social cohesion.
Maintaining a harmonious society has long been a concern of China’s leaders. In 2018, the anti-poverty campaign – one of Xi Jinping’s pet projects – will accelerate, with millions of rural poor being relocated to new housing with water and power. This will not only boost GDP and economic growth figures, it’s also aimed at promoting support for the party and its leaders.
Chinese leadership’s emphasis on social harmony extends to supporting the party in its policy endeavours. A series of recent measures have been aimed at strengthening party organisations in business and civil society organisations.
In line with existing provisions in China’s Company Law, these measures seek to ensure that all organisations in China (local and foreign, commercial and non-profit) make room within the organisation for the operations of a Communist Party cell. This allows the party to monitor and influence the operations of any organisation.
The rolling out of a social credit system is also aimed at monitoring and influencing the behaviour of both organisations and individuals. It operates by awarding social credit points for good social behaviour, whether it be corporate philanthropy or an individual picking up rubbish on the kerbside. It also deducts points for bad behaviour, such as traffic law violations, failing to pay bills on time or domestic violence. There are even “blacklists” for the worst offenders.
Beijing’s agenda is clear and the message from the centre is tightly controlled. But the messiness and the unknowns will lie in its local implementation.
China has always struggled, and always will struggle, with the question of how to balance direction from a central government with local implementation for local circumstances.
For example, a recent decree requiring all local areas to move away from coal fired heating, towards natural gas, hit a snag when thousands of houses and schools were left without heating in freezing conditions in northern China. It forced authorities to back-track on implementing the policy.
The key for the government will be to strike a balance between reform and preserving stability. Aggressive reforms will be duly countered by other policies if they are seen as posing risks to economic stability.
If successful, China’s reforms will allow its economy to take the lead in adapting to a dynamic world. But the sheer size of its ambitions (both global and local) also contains the risk that failures, if they occur, could have devastating impacts.
Soft power is the ability of a country to shape other countries’ views, attitudes, perceptions and actions without force or coercion. Its importance has been acknowledged for centuries, though the term was only coined by American political scientist and author Joseph Nye in the late 1980s.
A country’s soft power depends on many factors, including its performance, global image and international reputation. A state can use soft power to attract supporters and partners towards its policies, views and actions.
Take, for instance, the case of China’s giant pandas.
In 685 AD Empress Wu Zetian of the Tang Dynasty presented two giant pandas to the Japanese emperor. More than a millennium later, in 1941, Chinese leader Chiang Kai-Shek gifted another pair to the Bronx Zoo in appreciation of the US’s wartime help. Pandas remain a hallmark of Chinese soft power even today.
These animals have become symbols of China’s efforts in wildlife preservation and environmental protection. They are a way for China to communicate a caring and genial approach and culture.
And soft power will remain a key strategy for China into the coming decades. In October 2017, at the governing party’s national congress, President Xi Jinping outlined steps to enhance China’s soft power and make its culture more globally appealing:
We will improve our capacity for engaging in international communication so as to tell China’s stories well, present a true, multi-dimensional and panoramic view of China, and enhance our country’s soft power.
China is stepping into a soft power vacuum created by the US’s new administration. Since Donald Trump was elected president, the US has eschewed soft power. It’s withdrawn from a global climate change agreement; renegotiating a number of bilateral treaties and taken an openly “America first”, and somewhat isolationist stance. Its cordial relations with many traditional allies have become strained.
China has spotted the gap and is attempting to woo many countries whose US relations are wavering. One of China’s key weapons is the “One Belt, One Road” programme, a USD$900 billion initiative that aims to strengthen land and sea transportation links through major investments in transport infrastructure in Asia, Europe and Africa.
This is the equivalent of the US’s Marshall plan, which significantly improved West European countries’ economies after World War II. This help was not altruistic; nor is China’s “One Belt, One Road” programme. Assisting other nations through economic growth is a way of wielding soft power and advancing a country’s global standing. This will be important for China, which needs to counter its reputation as a one party state with hegemonic intentions.
Culture and tourism are always important aspects of soft power. Some 138 million tourists visited China in 2016, a growth of 3.5% over 2015
Similarly, 122 million Chinese visitors went abroad in 2016, a growth of 4.3% over 2015. This increasing interchange of the visitors will give foreigners an insight into Chinese culture, history and its economic might – all of which will further enhance China’s soft power.
China is also emerging as a global leader in terms of academic and research progress. High income countries’ share of global research and development (R&D) expenditure fell from 88% to 69.3% between 1996 and 2013.
China alone filled this gap. It increased its share from a paltry 2.5% to 19.6% in 17 years. Recently, China’s average annual R&D expenditure growth has been 18.3%, compared to an anaemic growth rate in upper and middle income countries of 1.4%.
Increased educational and research activities have ensured that the number of foreign students in China is increasing rapidly. China now ranks third in attracting foreign students, after the US and UK. Its universities are climbing the global rankings. This, along with rapid internationalisation, policies that support foreign students, and affordability of study and living costs compared to the West, means China could soon become the top destination for international students.
And the reverse is also true. Of some 5 million international students pursuing higher education outside their countries, nearly 25% are Chinese. It’s another form of cultural interchange that will contribute to China’s soft power, as are the many Confucius Institutes set up around the world to showcase China’s culture, history, language, economic and social development. The idea is somewhat similar to the UK’s British Councils, Germany’s Goethe Institutes and France’s Alliance Francaise.
China fills gap left by US
American soft power, on the other hand, is now in retreat.
The asymmetry of views between leaders of the world’s two soft powers has made Xi the poster child for globalisation, free trade and international cooperation.
During the Asia-Pacific Economic Cooperation Summit in November 2017, in Vietnam, Trump reconfirmed his “America first” policy. This approach will further decrease America’s soft power.
Meanwhile, Xi is singing from a different hymn sheet. Also in Vietnam, he noted in his speech that globalisation is an “irreversible historical trend” and championed multilateral trading regimes.
He presented a vision of the future that is interconnected and invited “more countries to ride the fast train of Chinese development.”
China’s rise as the world’s leading soft power will not be without hurdles. It must tackle border issues with its neighbours; navigate the current South China Sea disputes and find solutions to its extensive environmental pollution problems, among other things.
Despite these challenges, the US’s many missteps and China’s demonstrated social and economic success – as well as its increasing use of soft power – mean that the Asian giant is on the rise.
But for most Australians, the most visible impact of this crisis has been their ever-increasing electricity bills. Electricity prices have become a political hot potato, and the blame game has been running unchecked for more than a year.
Electricity retailers find fault with governments, and renewable energy advocates point the finger at the nasty old fossil-fuel generators. The right-wing commentariat blames renewables, while the federal government blames everyone but itself.
The truth is there is no silver bullet. No single factor or decision is responsible for the electricity prices we endure today. Rather, it is the confluence of many different policies and pressures at every step of the electricity supply chain.
Four components make up your electricity bill. Each has contributed to this increase.
The biggest culprit has been the network component – the cost of transporting the electricity. Next comes the retail component – the cost of billing and servicing the customer. Then there is the wholesale component – the cost of generating the electricity. And finally, the government policy component – the cost of environmental schemes that we pay for through our electricity bills.
Each component has a different tale, told differently in every state. But ultimately, this is a story about a decade of policy failure.
Network costs form the biggest part of your electricity bill. Australia is a big country, and moving electricity around it is expensive. As the graph above shows, network costs have contributed 40% of the total price increase over the past decade.
The reason we now pay so much for the network is simply that we have built an awful lot more stuff over the past decade. It’s also because it was agreed – through the industry regulator – that network businesses could build more network infrastructure and that we all have to pay for it, regardless of whether it is really needed.
Network businesses are heavily regulated. Their costs, charges and profits all have to be ticked off. This is supposed to keep costs down and prevent consumers being charged too much.
That’s the theory. But the fact is costs have spiralled. Between 2005 and 2016 the total value of the National Electricity Market (NEM) distribution network increased from A$42 billion to A$72 billion – a whopping 70%. During that time there has been little change in the number of customers using the network or the amount of electricity they used. The result: every unit of electricity we consume costs much more than it used to.
There are several reasons for this expensive overbuild. First, forecasts of electricity demand were wrong – badly wrong. Instead of ever-increasing consumption, the amount of electricity we used started to decline in 2009. A whole lot of network infrastructure was built to meet demand that never eventuated.
Second, governments in New South Wales and Queensland imposed strict reliability settings – designed to avoid blackouts – on the networks in the mid-2000s. To meet these reliability settings, the network businesses had to spend a lot more money reinforcing their networks than they otherwise would have.
Third, the way in which network businesses are regulated encourages extra spending on infrastructure. In an industry where you are guaranteed a 10% return on investment, virtually risk-free – as network businesses were between 2009 and 2014 – you are inclined to build, build, build.
The blame for this “gold-plating” of network assets is spread widely. Governments have been accused of panicking and setting reliability standards too high. The regulator has copped its share for allowing businesses too much capital spend and too high a return. Privatisation has also been criticised, which is slightly bizarre given that the worst offenders have been state-owned businesses.
The second biggest increase in your bill has been the amount we pay for the services provided to us by retailers. Across the NEM, 26% of the price increase over the past decade has been due to retail margins.
This increase in the retail component was never supposed to happen. To understand why, you must go back to the rationale for opening the retail sector to competition. Back in the 1990s, it was felt that retail energy was ripe for competition, which would deliver lower prices and more innovative products for consumers.
In theory, where competition exists, firms seek to reduce their costs to maximise their profits, in turn allowing them to reduce prices so as to grab as many customers as possible. The more they cut their costs, the more they can cut prices. Theoretically, costs are minimised and profits are squeezed. If competition works as it’s supposed to, the retail component should go down, not up.
But the exact opposite has happened in the electricity sector. In Victoria, the state that in 2009 became the first to completely deregulate its retail electricity market, the retail component of the bill has contributed to 36% of the price increase over the past decade.
On average, Victorians pay almost A$400 a year to retailers, more than any other mainland state in the NEM. This is consistent with the Grattan Institute’s Price Shock report, which showed that rising profits are causing pain for Victorian electricity consumers. Many customers remain on expensive deals, and do not switch to cheaper offers because the market is so complicated. These “sticky” customers have been cited as the cause of “excessive” profits to retailers.
But the new figures provided by the ACCC, which come directly from retailers, paint a different picture. The ACCC finds that the increase in margins in Victoria is wholly down to the increasing costs of retailers doing business.
There are reasons why competition might drive prices up, not down. Retailers now spend money on marketing to recruit and retain customers. And the existence of multiple retailers leads to duplications in costs that would not exist if a single retailer ran the market.
But these increases should be offset by retailers finding savings elsewhere, and this doesn’t seem to have happened. History may judge the introduction of competition to the retail electricity market as an expensive mistake.
So far, we have accounted for 65% of the bill increase of the past decade, and neither renewables nor coal have been mentioned once. Nor were they ever likely to be. The actual generation of electricity has only ever formed a minor portion of your electricity bill – the ACCC report shows that in 2015-16 the wholesale component constituted only 22% of the typical bill.
In the past year, however, wholesale prices have really increased. In 2015-16, households paid on average A$341 a year for the generation of electricity – far less than they were paying in 2006-07. But in the past year, that is estimated to have increased to A$530 a year.
Generators, particularly in Queensland, have been engaging in questionable behaviour, but it is the fundamental change in the supply and demand balance that means higher prices are here to stay for at least the next few years.
The truth is the cost of generating electricity has been exceptionally low in most parts of Australia for most of the past two decades. When the NEM was created in 1998, there was arguably more generation capacity in the system than was needed to meet demand. And in economics, more supply than demand equals low prices.
Over the years our politicians have been particularly good at ensuring overcapacity in the system. Most of the investment in generation in the NEM since its creation has been driven by either taxpayers’ money, or government schemes and incentives – not by market forces. The result has been oversupply.
Up until the late 2000s the market kept chugging along. Then two things happened. First, consumers started using less electricity. And second, the Renewable Energy Target (RET) was ramped up, pushing more supply into the market.
Demand down and supply up meant even more oversupply, and continued low prices. But the combination of low prices and low demand put pressure on the finances of existing fossil fuel generators. Old generators were being asked to produce less electricity than before, for lower prices. Smaller power stations began to be mothballed or retired.
Something had to give, and it did when both Alinta and Engie decided it was no longer financially viable to keep their power stations running. Far from being oversupplied, the market is now struggling to meet demand on hot days when people use the most electricity. The result is very high prices.
A tight demand and supply balance with less coal-fired generation has meant that Australia increasingly relies on gas-fired generation, at a time when gas prices are astronomical, leading to accusations of price-gouging.
Put simply, Australia has failed to build enough new generation over recent years to reliably replace ageing coal plants when they leave the market.
Is it renewable energy’s fault that coal-fired power stations have closed? Yes, but this is what needs to happen if we are to reduce greenhouse emissions. Is it renewables’ fault that replacement generation has not been built? No. It’s the government’s fault for failing to provide the right environment for new investment.
The current predicament could have been avoided if we had a credible and comprehensive emissions reduction policy to drive investment in the sector. Such a policy would give investors the confidence to build generation with the knowledge about what carbon liabilities they may face in the future. But the carbon price was repealed in 2014 and replaced with nothing.
We’re still waiting for an alternative policy. We’re still waiting for enough generation capacity to be built. And we’re still paying sky-high wholesale prices for electricity.
Green and gold
Finally, we have the direct cost of government green schemes over the past decade: the RET; the household solar panel subsidies; and the energy-efficiency incentives for homes and businesses.
They represent 16% of the price increase over the past 10 years – but they are still only 6% of the average bill.
If the aim of these schemes has been to reduce emissions, they have not done a very good job. Rooftop solar panel subsidies have been expensive and inequitable. The RET is more effective as an industry subsidy than an emissions reduction or energy transition policy. And energy efficiency schemes have produced questionable results.
It hasn’t been a total waste of money, but far deeper emissions cuts could have been delivered if those funds had been channelled into a coherent policy.
The story of Australia’s high electricity prices is not really one of private companies ripping off consumers. Nor is it a tale about the privatisation of an essential service. Rather, this is the story of a decade of policy drift and political failure.
Governments have been repeatedly warned about the need to tackle these problems, but have done very little.
Instead they have focused their energy on squabbling over climate policy. State governments have introduced inefficient schemes, scrapped them, and then introduced them again, while the federal government has discardedpolicies without even trying them.
There is a huge void where our sensible energy policy should be. Network overbuild and ballooning retailer margins both dwarf the impact of the carbon price, yet if you listen only to our politicians you’d be forgiven for thinking the opposite.
And still it goes on. The underlying causes of Australia’s electricity price headaches – the regulation of networks, ineffective retail market competition, and our barely coping generators – need immediate attention. But still the petty politicking prevails.
The Coalition has rejected the Clean Energy Target recommended by Chief Scientist Alan Finkel. Labor will give no guarantee of support for the government’s alternative policy, the National Energy Guarantee. Some politicians doubt the very idea that we need to act on climate change. Some states have given up on Canberra and are going it alone.
We’ve been here before and we know how this story ends. Crisis wasted.
China’s economic presence on world markets is actually much smaller than that of the United States of America and smaller than our key three asia-pacific allies combined.
In recent years, reports by financial institutions like the World Bank have claimed China is the world’s largest economy. China’s annual gross domestic product (GDP), when converted to United States dollars using purchasing power parity exchange rates is estimated to be worth around US$19 trillion, surpassing the USA’s GDP of US$17 trillion.
China’s size is a good indicator of potential economic opportunities for Australia. But China’s rise is also creating a growing discomfort in how China will use its economic power. In both Washington and Canberra questions are being asked about how to our balance economic interests with these growing political and security concerns.
As a large country China may insist on a greater acceptance of its own ideals and priorities as a condition of economic engagement. As a dictatorship, however, its ambitions are unclear and may not align well with Australia and other democratic countries in the region.
Likewise China’s assertiveness in the South China Sea has rekindled interest in security cooperation between the region’s largest democracies, Japan, India and Australia, as well as the United States through the Quadrilateral Security Dialogue.
The concerns raised are real, but are in some ways exaggerated. Specifically, the figure of US$19 trillion is an estimate based on a purchasing power parity exchange rate, which overstates China’s impact on world markets.
This is because the purchasing power parity exchange rate tells us how much money you need in China to be as well off as you are in the US. It is a measure of how big China’s GDP would be if costs of living were the same as the US.
This can be useful, but it is not an indicator of China’s footprint in the world economy.
A reasonable measure of a country’s economic footprint on the world economy is how much it could potentially change demand or supply on world markets.
When countries export they have to accept payment based on market exchange rates. Likewise when countries import they must pay in foreign currency based on market exchange rates. This means that to compare China’s market size with the US, we need to convert China’s GDP, measured through China’s currency renminbi, to US dollars, using market exchange rates.
China’s GDP measured at market exchange rates, however, is only US$9 trillion – almost half that of the US.
This means that the impact China’s economy can potentially have on the world economy is really only about half as much as the US.
The difference in values arises for the same reason that tourists find that their money often goes much further in developing countries. That is if you convert your US dollars to renminbi, you will find that you can purchase a lot more in China than the US, especially in non traded goods and services such as haircuts or street food.
The purchasing power parity exchange rate is the rate that tells you how much you need in China to be just as well off – for example to buy the same basket of goods. It’s very useful rate for tourists and is great way to compare standards of living across countries.
But it’s not a measure of how much you can actually buy. In order to measure the potential influence of China’s economy, it is buying and selling power that matters.
The same line of reasoning also effects how we should think about the asia-pacific partnership of regional democracies. The combined GDP of India, Japan and Australia, measured at purchasing power parity rates is smaller than China.
But at market exchange rates their combined market size exceeds that of China. This is because just as purchasing power parity exchange rates make China seem too big, they make Japan seem small relative to its real buying and selling power on world markets.
The collective GDP of Japan, Australia, India and the United States represents a market that is around three times larger than China.
These differences are quite significant and they are important because they affect the way we think about the value of economic opportunities and our security alliances. When interpreted appropriately China is a large country. But it still has a long way to go before it can match the sheer economic weight of the US.
So while China is very important, the market size of regional democracies should not be underestimated.
The US election hack and the end of cyber scepticism
The big story of the past year has been the subversion of the US election process and the ongoing controversies surrounding the Trump administration. The investigations into the scandal are unresolved, but it is important to recognise that the US election hack has dispelled any lingering scepticism about the impact of cyber attacks on national and international security.
Many analysts had been debating the likelihood of a “digital Pearl Harbour”, an attack producing devastating economic disruption or physical effects. But they missed the more subtle and covert political scope of cyber attacks to coerce changes in political behaviour and subvert systems of governance. Enhancing the security and integrity of democratic systems and electoral processes will surely be on the agenda in 2018 in the Asia Pacific and elsewhere.
The growing impact of social media and the connection with cyber security has been another big story in 2017. Social media was meant to be a great liberator, to democratise, and to bring new transparency to politics and societies. In 2017, it has become a platform for fake news, misinformation and propaganda.
If we don’t trust what we see on these sites, they won’t be commercially successful, and they won’t serve as platforms to enhance international peace and security. Social media sites must not become co-opted or corrupted. Facebook should not be allowed to become Fakebook.
Holding data to ransom
The spread of the Wannacry virus was the third big cyber security story of 2017. Wannacry locked down computers and demanded a ransom (in bitcoin) for the electronic key that would release the data. The virus spread in a truly global attack to an estimated 300,000 computers in 150 countries. It led to losses in the region of four billion dollars – a small fraction of the global cyber crime market, which is projected to grow to $6 trillion by 2021. In the Asia Pacific region, cyber crime is growing by 45% each year.
Wannacry was an important event because it pointed not only to the growth in cyber crime but also the dangers inherent in the development and proliferation of offensive cyber security capabilities. The exploit to windows XP systems that was used to spread the virus had been stockpiled by the US National Security Agency (NSA). It ended up being released on the internet and then used to generate revenue.
A fundamental challenge in 2018 is to constrain the use of offensive cyber capabilities and to reign in the growth of the cyber-crime market through enhanced cooperation. This will be no small task, but there have been some positive developments.
According to US network security firm FireEye, the recent US-China agreement on commercial cyber espionage has led to an estimated 90% reduction in data breaches in the US emanating from China. Cyber cooperation is possible and can lead to bilateral and global goods.
Death of cyber norms?
The final big development, or rather lack of development, has been at the UN. The Government Group of Experts (GGE) process, established in 2004 to strengthen the security of global information and telecommunications systems, failed to reach a consensus on its latest report on the status of international laws and norms in cyberspace. The main problem has been that there is no definite agreement on the applicability of existing international law to cyber security. This includes issues such as when states might be held responsible for cyber attacks emanating from their territory, or their right to the use of countermeasures in cyber self-defence.
Some analysts have proclaimed this to be “the end of cyber norms”. This betrays a pessimism about UN level governance of the internet that is deeply steeped in overly state-centric views of security and a reluctance to cede any sovereignty to international organisations.
It is true that norms won’t be built from the top down. But the UN does and should have an important role to play in cyber security as we move into 2018, not least because of its universality and global reach.
The NATO Cooperative Cyber Defence Centre of Excellence (CCDCOE) in Tallinn, Estonia recently launched the Tallinn Manual 2.0, which examines the applicability of international law to cyber attacks that fall below the use of force and occur outside of armed conflict.
These commendable efforts could move forward hand in hand with efforts to build consensus on new laws that more accurately capture the complexity of new information and communications technology. In February 2017, Brad Smith, the head of Microsoft, proposed a digital Geneva Convention that would outlaw cyber attacks on civilian infrastructure.
In all this we must recognise that cyber security is not a binary process. It is not about “ones and zeros”, but rather about a complex spectrum of activity that needs multi-level, multi-stakeholder responses that include international organisations. This is a cyber reality that we should all bear in mind when we try to find solutions to cyber security issues in 2018.