{"id":4955,"date":"2020-01-13T13:49:52","date_gmt":"2020-01-13T12:49:52","guid":{"rendered":"https:\/\/www.newmoneyreview.com\/?p=4955"},"modified":"2020-01-25T18:44:04","modified_gmt":"2020-01-25T17:44:04","slug":"choke-points","status":"publish","type":"post","link":"https:\/\/newmoneyreview.com\/index.php\/2020\/01\/13\/choke-points\/","title":{"rendered":"Choke points"},"content":{"rendered":"

US cyberspies fly to the UK<\/a> to try to stop Britain signing a new deal with Huawei. The US threatens to cut off Iraq<\/a> from the global financial infrastructure. A cryptocurrency user falls foul<\/a> of new regulations on money movements.<\/p>\n

The three events are plot turns in a single story\u2014an unfolding conflict over control of the world\u2019s information and financial systems.<\/p>\n

\u201cThe US and China are weaponising global trade networks,\u201d two US professors, Abraham Newman and Henry Farrell, warned in a September article in the Financial Times<\/em><\/a> (subscription required).<\/p>\n

\u201cThe US began converting networks into tools of domination after the September 11 terror attacks. The internet became a distributed system of surveillance, while the US press-ganged global finance into service,\u201d Farrell and Newman said.<\/p>\n

The fact that US dollar payments have to pass through US-based banks gives the American government de facto<\/em> power<\/a> to cut off states it doesn\u2019t like from the global financial system.<\/p>\n

In a new article for \u2018Foreign Affairs<\/em>\u2019<\/a>, Farrell and Newman describe how the US can assert pressure on what it sees as non-compliant actors.<\/p>\n

\u201cWashington has tied down massive firms and entire national economies by targeting vulnerable points in global supply chains\u201d<\/p><\/blockquote>\n

\u201cThe US Department of the Treasury uses the international financial system to punish rogue states and errant financial institutions,\u201d they say.<\/p>\n

\u201cIn service of its trade war with China, Washington has tied down massive firms and entire national economies by targeting vulnerable points in global supply chains.\u201d<\/p>\n

In anticipation of the fallout from the conflict, some countries\u2014especially those on or near the frontline\u2014have been testing whether they can go it alone.<\/p>\n

On Christmas Eve, Russia announced it had successfully tested<\/a> what it calls the \u2018sovereign internet\u2019, a version of the internet subject to domestic controls on the free flow of information.<\/p>\n

Russia\u2019s sovereign internet relies on government access to the choke points of the domestic internet infrastructure, the local internet service providers (ISPs).<\/p>\n

“The sovereign internet initiative would effectively get ISPs and telcos to configure the internet within their borders as a gigantic intranet, just like a large corporation does,” Alan Woodward, a professor in computer science at the University of Surrey, told the BBC.<\/p>\n

In November, Iran went further during a period of domestic protests, attempting to block all internet connections rather than just those with entities outside the country<\/a>.<\/p>\n

However, the internet blackout was only partially successful.<\/p>\n

Cited in Wired <\/em>magazine, Alp Toker, director of connectivity tracking group NetBlocks, said it took Iranian authorities about 24 hours to completely block the nation’s inbound and outbound internet communications.<\/p>\n

But there was still some residual information leakage\u2014traffic didn\u2019t fall below 5 percent of normal connectivity levels. The Twitter account of Ali Khamenei, Iran’s supreme leader, continued to function.<\/p>\n

Paul Bernal, a lecturer in information technology, law and cybercrime at the University of East Anglia (UEA), told New Money Review<\/em> how difficult it is to shut down internet connectivity completely.<\/p>\n

\u201cThe only people who have done this in the past are small Gulf states, who literally have a single cable running into their state,\u201d said Bernal.<\/p>\n

The only other way to ensure a truly domestic internet is to build it from scratch, added Bernal.<\/p>\n

\u201cFor that you need a sufficiently authoritarian regime, like in China,\u201d he said.<\/p>\n

China<\/a> and India<\/a> have already set up nationwide digital identity systems, in each case with more than a billion participants. These digital ID schemes now underlie national payment systems and an increasingly large proportion of domestic economic activity.<\/p>\n

\u201cIf you build systems to attack other countries, you leave yourself open to attack\u201d<\/p><\/blockquote>\n

According to US professors Farrell and Newman, it\u2019s already too late to decouple global information systems without incurring severe economic damage. But that doesn\u2019t mean nations won\u2019t start fights over access to the financial infrastructure, they warn.<\/p>\n

\u201cStates will be bound together by interdependence that will tempt them to strangle their competitors through economic coercion and espionage, even as they try to fight off their rivals\u2019 attempts to do the same,\u201d Farrell and Newman wrote in Foreign Affairs<\/em>.<\/p>\n

Such conflicts could easily descend into a tit-for-tat battle, says the UEA\u2019s Bernal.<\/p>\n

\u201cIf you build systems to attack other countries, you leave yourself open to attack as well. You can either open up the internet or close it, you can\u2019t make it open one-way only,\u201d he told New Money Review<\/em>.<\/p>\n

There may already be a barometer of the global trend towards disintegration and cyberwar\u2014bitcoin.<\/p>\n

\u201cCryptocurrencies could find a use if we enter a period of political isolationism, where some countries decide not to cooperate with each other through the international banking system,\u201d Bernal said.<\/p>\n

\u201cPerhaps it is the US government who will finally give cryptocurrencies an actual mass-market use case?\u201d Dave Birch, a technologist and payments expert, said on Twitter this weekend<\/a>, commenting on reported US threats to close down Iraq\u2019s account at the Federal Reserve.<\/p>\n

Don\u2019t miss any more New Money Review content:\u00a0sign up here<\/strong><\/a>\u00a0for our newsletter<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

US cyberspies fly to the UK to try to stop Britain signing a new deal with Huawei. The US threatens to cut off Iraq from the global financial infrastructure. 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