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Blackwater USA | Daily Brief

Impeachment

  • The White House released an unredacted rough transcript from Pres. Trump’s call with Ukrainian Pres. Zelensky, from which everyone saw what they wanted to see:
    • Pres. Trump says it proves he put “no pressure” on Zelensky, and Fox agrees.
    • The Washington Post says it’s a “devastating indictment of our president.”
  • Zelensky himself told reporters yesterday that “nobody pushed me” during that call, but that’s not stopping Democrats from celebrating the transcript as a smoking gun: House Dems reached a majority for impeachment last night, and I’m sure we’ll hear more after Acting DNI Joseph Maguire testifies today.

China

  • The WSJ printed an excellent article about a new report from nonprofit C4ADS that warns of rising “military-civil fusion”—coercion of private companies into doing the military’s bidding—in China. It also says Western firms may unknowingly be helping the effort by selling technology to Chinese private firms, who then pass it along for use in military applications. The article is pasted below, and the original report is here.

Hong Kong

  • Hong Kong’s chief executive penned an NYT op-ed (pasted below) ahead of her first “community dialogue” session tonight, but it may do her more harm than good: she spends most of the essay reiterating the same tired, pro-China lines as before, and only pays brief lip service to protesters’ complaints.
  • The short version:
    • “The police must carefully weigh the people’s right to protest against the risks of violent disruption to public order”—in line with China’s characterization of protesters as “terrorists”
    • “…this administration cannot accede to some protesters’ demand that all charges be dropped against those who have been arrested. Doing so would run counter to the rule of law.”—shuts down protesters’ primary outstanding demand
    • “Hong Kong’s business community has made it clear that the successful implementation of ‘One Country, Two Systems’ is the make-or-break condition of the city’s continued prosperity”—maybe so, but most analysts think Hong Kong’s business community is just trying to stay out of the fray and avoid angering China
    • And then finally, at the end: “I am in listening mode for my first community dialogue session.”

Afghanistan

  • The Post and several other media outlets warn that this weekend’s Afghan election may be bloodier than past polls, now that the Taliban seems more willing to harm civilians to meet its needs than it was in the past—it even warned civilians to stay away from voting sites. I’m surprised there hasn’t been more pre-election violence this week, and hope it’s not because the Taliban is busy planning big attacks on election day.

Libya

  • The U.S. conducted a second airstrike against IS in southern Libya in a week, which suggests they’re onto some hideouts (the last strike before these took place over a year ago). The Pentagon says this one killed 11 militants near Murzuq.
  • These airstrikes appear to have been coordinated with Haftar’s GNA, which has been bombing Murzuq for months now.

Israel

  • Against what pundits thought were long odds, PM Netanyahu is getting another go at forming a government; however, if he can’t do so in 28 days, Blue & White’s Benny Gantz will get a try.

Iran

  • French Pres. Macron reportedly tried to broker a surprise meeting between Presidents Trump and Rouhani on Tuesday. As much as Trump loves a good surprise meeting with a shocking counterparty, it wasn’t meant to be: Iran reportedly refused to meet unless the U.S. could commit to easing sanctions, which the U.S. couldn’t do.
  • The U.S. then turned around and barred some senior Iranian officials from entering the country, and also announced sanctions on 11 Chinese nationals accused of violating U.S. sanctions to buy Iranian oil.
  • Several reports say Saudi is patiently awaiting the outcome of an investigation into who carried out the recent attacks on its oil assets, even though all signs point to Iran, while it quietly recruits allies to its side.

Immigration

  • The U.S. and Honduras signed a deal allowing the U.S. to send some third-country asylum seekers to Honduras—similar to the deal the U.S. signed last Friday with El Salvador. In return, the U.S. pledged support to “build up the respective countries’ almost nonexistent asylum capacity” (in the WSJ’s words).
  • Since the U.S. signed a similar deal with Guatemala in July, it now has agreements with all three Northern Triangle countries.

Guyana

  • Pres. Granger announced an “earliest possible date” for elections of March 2, 2020, but said his government “must” ask the National Assembly for an extension beyond that when it reconvenes on October 10th, because the country isn’t prepared for an election (the opposition plans to oppose an extension).

Venezuela

  • Pres. Maduro’s Foreign Minister tried to distract public opinion from his boss’s scandals when he called Pres. Trump “shameful” and accused him of “trying to distract the public opinion of his own scandals” by meeting opposition delegates—rather than Maduro’s representatives—at UNGA.

RSS

  • George Clooney’s watchdog organization, The Sentry, continues to call for sanctions on South Sudan, but it’s not getting much traction from a recent hard-hitting report alleging that corrupt officials—with funding from a Chinese and Malaysian-backed oil company—are fueling continued war.

Other News

  • A new study from Oxford University found that at least 70 countries have engaged in various degrees of disinformation campaigns. More here.

China Taps Its Private Sector to Boost Its Military, Raising Alarms (WSJ)

Western firms risk unwittingly helping China’s defense buildup, report says

Beijing is increasingly tapping private Chinese firms to acquire foreign technology for its military, according to officials and a new report, in a strategy that is prompting calls by leaders in Washington to retool U.S. national security policy.

Chinese President Xi Jinping is pressing these companies to bid for defense contracts as part of a “military-civil fusion” drive to upgrade an arms industry long dominated by a handful of inefficient state-run contractors and research institutes.

The initiative, highlighted in a new report by nonprofit C4ADS, is alarming U.S. officials, who fear it is a central plank in Beijing’s attempt to build a world-class military capable of challenging the U.S. in Asia and beyond. C4ADS does data-driven analysis on security issues and is known for its work detailing how North Korea evades sanctions.

“China’s obfuscation and elimination of barriers between the defense and civilian sectors has troubling implications for foreign as well as domestic Chinese firms,” a senior U.S. administration official said in a statement to The Wall Street Journal.

China’s strategy is creating new risks that foreign companies and researchers inadvertently help the People’s Liberation Army, or PLA, acquire the technology and expertise it needs to enhance its already rapidly expanding capabilities, according to the C4ADS report released Wednesday.

The Washington, D.C.-based group said it has presented its findings to stakeholders including U.S. and allied government agencies and legislators, defense contractors, financial institutions and Silicon Valley startups.

Beijing has made similar attempts in the past, but what makes its renewed push different and more troubling for the U.S. is that the country’s industrial and capital base is much stronger today, and its involvement in business and research abroad far greater, C4ADS said.

There also is much more scope now for using advanced civilian technology such as drones and artificial intelligence in modern military equipment.

Mr. Xi’s vision for a more efficient defense industry is based largely on the American model. But there are significant differences between the Chinese strategy and the U.S. approach, Christopher Ashley Ford, U.S. Assistant Secretary of State for International Security and Non-Proliferation, said in an interview.

Unlike U.S. defense contractors, Chinese firms don’t have the option to spurn government overtures, he said. Companies there participating in the military buildup also engage in rampant intellectual property theft, which the U.S. doesn’t encourage firms to do, Mr. Ford said.

“We don’t think we should be sending private companies around to take advantage of their commercial relationships as thieves in the night,” he said.

Chinese state media have called U.S. allegations of intellectual-property theft a “political tool.” In a 2018 speech, Mr. Xi called military-civil fusion “a necessary choice for achieving the party’s goal of a strong military for the new era.”

The Pentagon declined to comment. China’s Defense Ministry and Ministry of Industry and Information Technology didn’t respond to requests for comment.

In one example of military-civil fusion at work, detailed in the C4ADS report for the first time, privately held Beijing Highlander Digital Technology used a series of deals across Europe and Canada to build up China’s military, including by contributing technology to the country’s first aircraft carrier.

The company touts its role in China’s defense industry on its Chinese-language website and in company filings, including a claim in its 2017 annual report that its products are featured on “all models” of Chinese warships, according to C4ADS.

Highlander has been doing deals with international technology firms that supply Western militaries since at least 2004, according to the report. It hit a snag after buying in 2016 a Canadian firm called Oceanworks International Corp., which had the U.S. Navy as a customer.

Canadian officials ordered Highlander to divest in 2017 and stipulated it couldn’t access Oceanworks’ “know-how, trade secrets or confidential information,” according to a U.S. court filing that referred to the Chinese firm throughout as “Beijing Company.” Earlier this month, Oceanworks executive Glen Omer Viau and his firm pleaded guilty to charges related to improperly sharing with China technical information about a U.S. Navy submarine rescue system.

Preston Burton, a Buckley LLP lawyer who represents both defendants, declined to comment. Highlander didn’t respond to a request for comment. The U.S. attorney’s office in Washington, D.C., declined to comment.

Crafting an effective response to China’s military-civil fusion policy is taking on increasing urgency in Washington as the U.S. and China confront each other in not just a trade war, but a broader struggle for technological dominance, military supremacy in Asia and geopolitical influence world-wide.

Many in the national-security community feel the U.S. needs to do more. While Congress last year passed legislation to tighten scrutiny on U.S. exports and foreign investment in the U.S.—both tools that could block China’s efforts to get foreign technology—implementation has been fraught.

On Sept. 11, a bipartisan congressional group led by Sen. Tom Cotton (R., Ark.) and Minority Leader Chuck Schumer (D., N.Y.) wrote a letter to Defense Secretary Mark Esper, urging him to use all regulatory powers to confront the problem, including compiling a list of all Chinese military companies operating in the U.S.

The same day, Mr. Ford of the State Department warned in two speeches about the risks of China’s military-civil fusion policy. In one address, he discussed the implications of engaging with Chinese technology giants Tencent Holdings Ltd. , Alibaba Group Holding Ltd. , Baidu Inc. and Huawei Technologies Co.

Military-civil fusion means that “it is very difficult and in many cases impossible to engage with China’s high-technology sector in a way that does not entangle a foreign entity in supporting ongoing Chinese efforts to develop or otherwise acquire cutting-edge technological capacities for China’s armed forces,” he said at the time.

Baidu declined to comment. Tencent, Alibaba and Huawei didn’t respond to requests for comment.

China’s military-civil fusion efforts date to Deng Xiaoping, who launched market-opening economic reforms after taking power in 1978.

While Mr. Deng got many outdated military factories to make civilian goods instead, efforts to integrate modern civilian know-how in arms-making failed due to bureaucratic obstacles, a weak industrial base and the military’s secrecy.

Mr. Xi’s military-civilian fusion initiative, first proposed in 2015, was written into the government’s five-year plan in 2016 and formally adopted as national strategy the following year. In January 2017, a new Central Commission for Integrated Military and Civilian Development was established, chaired by Mr. Xi.

Carrie Lam: Yes, Hong Kong Does Have a Future (NYT op-ed)

I am listening. Conversation can triumph over conflict, calm can be restored, and trust can be rebuilt within the community.

By Carrie Lam: Mrs. Lam is Hong Kong’s chief executive.

Does Hong Kong have a future? It’s not the first time such a question has been asked. But the question is being asked more and more often as the city faces a 17th week of social unrest.

The future certainly is on the minds of the hundreds of thousands of protesters who have taken to the streets over the past four months. The future is an issue that occupies much of my time, too. And it will be the question we, in Hong Kong, will discuss together on Thursday evening in the first of many community dialogues to air the public’s grievances and identify the issues this society faces. Issues reflected in those dialogues will be studied and translated into concrete actions — into building a future together.

Some solutions will also be found in my upcoming annual Policy Address, which will set out bold initiatives to tackle deep-seated problems, such as access to affordable housing.

Hong Kong has faced — and overcome — momentous challenges every decade since the end of World War II. This should tell us something about the people of Hong Kong: They are resilient and resourceful. It should also tell us something about the values that the Hong Kong people share and our common aspiration for a bright future.

This summer’s unrest is another transformative process — if a painful and, at times, depressingly violent one. I reject the use of violence to achieve any political, economic or social outcomes. Violence is not among the actions or values that most people associate with Hong Kong, which has a reputation as a safe and welcoming city. The radical actions of some rioters cannot dictate how to steer Hong Kong through its current difficulties.

Both the community dialogues and my Policy Address are part of a necessary reconciliation process. Deep wounds have been opened in our society. These will take time to heal. But it remains this government’s hope that conversation will triumph over conflict and that through its actions, calm can be restored and trust can be rebuilt within the community. To help create the atmosphere necessary for the community dialogues, I announced earlier this month the formal withdrawal of the bill to amend the Fugitive Offenders Ordinance, the so-called extradition bill. The amendments, which were designed to address the shortcomings of existing mechanisms for the surrender of fugitive criminals, were the catalyst for the protests.

For months now, the world has seen Hong Kong’s people exercising their freedom of expression and freedom of protest. Peaceful protest has been a hallmark of Hong Kong society for decades, and it will remain so. The police have long facilitated such gatherings, which are 10 times more frequent now than in 1997. And the police did so this summer: From June to mid-September, more than 80 percent of requests for marches and gatherings were granted. But a worrisome pattern has emerged recently, with some organizers arranging large-scale marches that inevitably end in violent confrontations, vandalism and arson. The police must carefully weigh the people’s right to protest against the risks of violent disruption to public order. (It should also be noted that if the police object to a certain protest, the organizers may lodge an appeal before an independent body.)

I believe that the rule of law, upheld by an independent judiciary, is a bedrock of Hong Kong life; it can never be compromised. But precisely because the rule of law is a bedrock principle, violent protests and wanton vandalism must stop. This is one reason that this administration cannot accede to some protesters’ demand that all charges be dropped against those who have been arrested. Doing so would run counter to the rule of law. It would also contravene the Basic Law, which states that prosecutions must be taken forward, free from interference, by the Department of Justice.

Freedom of the press and freedom of information have also come into focus lately, partly because of the tsunami of media coverage about the protests, as well as other social, economic and political issues to do with Hong Kong. The city is a free and open economy and a global financial center, and the government understands that unfettered access to information is a prerequisite for the integrity and viability of its market — even though the media do not always paint Hong Kong in a positive or even impartial light.

And then, any discussion about Hong Kong’s future needs to consider the ongoing implementation of the “One Country, Two Systems” principle. The rule of law, freedom of expression, a free press — all are part and parcel of how this principle works in practice, and they help provide certainty in times of uncertainty. Hong Kong’s business community has made it clear that the successful implementation of “One Country, Two Systems” is the make-or-break condition of the city’s continued prosperity as a global hub for trade, finance, business, logistics and our arts and culture.

The rights and freedoms that make Hong Kong a special place within China are guaranteed under the city’s Basic Law: its high degree of autonomy, its use of common law, its own immigration and customs regimes, a separate currency, its air-services agreements and shipping register — its own Olympic team.

In other words: The institutional framework for Hong Kong’s future development already exists and it has been tested. Yet it needs to be leveraged further to make the best use of the “Two Systems” within the “One Country” and raise Hong Kong’s profile as an international city. The development plan for the Guangdong–Hong Kong–Macau Greater Bay Area unveiled earlier this year — to be implemented in strict accordance with “One Country, Two Systems” — promises to provide such opportunities.

No doubt, this summer’s protests have had an impact on the immediate future of Hong Kong’s economy, in particular its travel, hotel, retail and food-and-beverage sectors. People from all walks of life have been affected. The government is now working with those businesses to provide targeted measures to help alleviate some of their difficulties. And, as a small and highly open economy, Hong Kong will not escape the fallout of ongoing trade tensions between China and the United States. A recession is possible, if not likely, over the next year.

But we have significant fiscal reserves to draw on for countercyclical stimulus if needed. And billions of Hong Kong dollars have already been earmarked for infrastructure projects that will transform the face of our city in next few years: a third runway at our airport, a new business district in Kowloon East, a mega cultural district in West Kowloon, a new world-class sports park on the site of the old Kai Tak airport, significant new public spaces on both sides of our iconic Victoria Harbor.

Our financial markets continue to operate smoothly, and the linked exchange rate system that has served us well is as robust as ever. We have a stable currency; we continue to attract investment and I.P.O.s; there is growing interest in our development of innovation and technology, as well as arts and culture. The fundamentals are very sound, and numerous major projects and initiatives are underway that will provide thousands of jobs and opportunities for young people to explore for years to come.

For the time being, however, I am in listening mode for my first community dialogue session. No doubt, I will receive some harsh criticism. But I also hope to receive constructive suggestions to help this government meet the public’s expectations for a more inclusive and fairer Hong Kong.