[kictanet] [Key Lesson: Don't wait for a crisis before you build economic resilience] Google has revoked Huawei's Android license

Tue May 21 17:24:04 EAT 2019

 Well spotted Kelvin and thank you for initiating the discussion.
Dear listers,

US sanctions against ZTE almost brought down ZTE - putting 75,000 jobs / families in China at risk (see link #1) and sent shock-waves around the world - waking up a few sleepy corporations and complacent governments to the fact that there is no assurance that tomorrow will always be a clone of today. 

China's president Xi reportedly responded by rallying the country towards greater self resilience: "We must cast away false hopes and rely on ourselves." (see link #2) But this was rather late. You don't build resilience in times of crisis - there is simply not enough time - hence Huawei's current exposure and its half-baked "plan B"! (see link #3)
Policy analysts have to see far ahead, think beyond what is comfortable today and ask tough forward looking "what if.." questions (including unpleasant / "politically incorrect" questions like what if our "best friends" of today turn into our "worst enemies" tomorrow?). This is the only way to develop robust economic resilience strategies that bring genuine prosperity and stability.
If someone had predicted, as recently as 2017, that Google would suddenly terminate its android partnership with Huawei, that person would have been sent to a mental asylum. If the person was an analyst they would have been discredited and shunned. The idea was simply unthinkable. But here we are. The unthinkable has materialized.

Just ten years ago, few companies would have perceived the lucrative US and China trade relations as an existential risk - and many relied on the two-way supply chain entanglement (dual dependencies) as the sole mitigation strategy. Indeed this entanglement has softened the blow in many ways - but is it deep enough and balanced enough to justify exclusive reliance on it? (see link #4)

The US economy grew on innovations and that is why the US government, as well as corporations, are highly IP savvy (see link #12). They managed dependency risks from day one and never outsourced the most critical technology components or know-how. They also ensured that their markets relied mostly on homegrown technologies (see link #5) and developed total global dominance in operating systems - which means that the US indirectly controls the global application ecosystem (see link #6). 

Russia (see link #7) and China only recently came to terms with these risks and have been scrambling to mitigate them by developing their home-grown tech ecosystem alternatives (including their own OS and "internet"). India is now pushing for sensitive economic data on their citizens to be stored within the country (see link #8) and prime minister Narendra Modi has been a strong advocate for "made in india" policies (see link #9) which has led to billion dollar acquisitions of home grown companies.
Compare the inbound M&A (FDI) scene for India, which was US $58 Billion in 2018 - and trending up - of which $16 Billion was the acquisition just one local tech company - Flipkart (see link #10), with Africa's ~$12.7B (of which the bulk was in SA, Nigeria and *Mauritius*) - and trending down, due to high levels of uncertainty and corruption. (see link #11).

The reason emerging super powers like China and Russia insist on homegrown technologies are both economic and geo-political (see link #13 & #14). It is the ability of countries to manage dependencies and develop strategic self sufficiency / resilience that creates a balance of power which boosts international order. You can't really claim sovereignty when your economic (thus political) stability heavily depends on another country (or a few private corporations / MNCs). That is why unilateral sanctions cripple poorly managed countries - but have less devastating effects on better managed ones (see link #22).
International relations theory describes the idea of anarchy as the fundamental basis for international relations (see link #15). There is really no such thing as a "global community" because people belong to countries which are (to varying extents) sovereign and independent. Global harmony (and trade balance) is maintained through primitive means - i.e. the threat of violence / mutual attrition risks / mutually assured destruction. Consequently it is naive (and negligent) for any country to bank on geopolitical extrapolations; and hence the need for countries to conduct regular strategic risk assessments and devise long-term risk mitigation policies.

This is why policies that promote supply chain diversity, economic resilience and homegrown technology alternatives are so important, and quite urgent (especially in laissez-faire Africa). 
Huawei has, over the years, accumulated significant soft-power over Kenya's digital economy because MPESA - a critical and dominant financial service - reportedly runs exclusively on its platforms, and the only profitable telecommunications provider (Safaricom) - which government heavily relies on for dividends, taxes, communications, security and even elections, is heavily dependent on - and apparently locked-into - Huawei infrastructure (see link #16). From a strategic policy perspective, this kind of excessive single-point dependency is unwise, dangerous and against public interest. It should not be allowed to persist as it could balloon, without warning, into unmanageable levels (see link #17 and #18). 

Imagine  a scenario where a foreign corporation can threaten government with immediate economic shut down (which can trigger countrywide riots) if it does not comply with demands that may not be in public interest. Or worse, at the behest of a foreign power, and the guise of plausible deniability, shuts down dependent services to spark dissent / chaos as leverage for advancing geopolitical agendas (like interfering with democratic elections or forcing major undesirable import/export/debt concessions against public interest). Other risks include advancing predatory (instead of growth oriented) economic policies, exacerbating poverty / inequality and stifling local MSME innovations by distorting market forces (see link #19 & #20). 

These are the kind of "unthinkable" risks that our country is increasingly exposed to, if government is not careful. I therefore urge NCS, MoICT and our political leaders to deeply and urgently study these potential "national security" risks before it is too late, and start pushing for policies that boost economic resilience while mitigating against the risks of state / regulatory capture (see link #21 for some ideas).
This is not about "nationalism" or "protectionism", it is about recognizing 21st century global realities and strategically developing long-term economic resilience, while there is still time to do so, to minimize the strategic risks associated with unmitigated economic dependencies. Global relationships are better when they are smart, strategic, realistic and meaningful.

 Those who don't understand this will accept - without question - simplistic neo-liberal propaganda narratives like "supremacy of free markets" (see link #23). Let us choose wisdom, over temporary convenience, on economic and sovereignty matters.

Good day!
Links / References:
1. ZTE -  75,000 jobs at risk (Trump's bargaining chip).
https://www.nytimes.com/2018/05/13/business/trump-vows-to-save-jobs-at-chinas-zte-lost-after-us-sanctions.html
2. Effect of US ZTE ban
 https://www.nytimes.com/2018/05/09/technology/zte-china-us-trade-war.html?module=inline
3. Huawei's "Plan B"https://www.androidauthority.com/huawei-plan-b-mobile-os-988097/
4. Is Huawei ban a bargaining chip?
 https://www.bloomberg.com/opinion/articles/2019-05-21/is-huawei-a-trump-bargaining-chip-better-hope-so
5. US Smartphone market share.
https://www.counterpointresearch.com/us-market-smartphone-share/
6. OS Marketshare in US
 http://gs.statcounter.com/os-market-share
7. Putin Signs home-grown internet bill to boost cyber-resilience
https://www.themoscowtimes.com/2019/05/01/putin-signs-internet-isolation-bill-into-law-a65461
 8. Reserve Bank of India mandates domestic storage of payments data
https://www.bankinfosecurity.com/rbi-mandates-domestic-storage-payments-data-a-10798
9. Make in India Campaign (Championed by India's Prime Minister) 
 https://www.pmindia.gov.in/en/major_initiatives/make-in-india/
10. Indian companies log record $129 Billion in M&A deals in 2018
https://www.livemint.com/Companies/VD0HHHQHCUwiCjsxeTGCLN/Indian-companies-log-record-129-bn-in-MA-deals-in-2018.html
11. Buyouts and mergers went down in Africa in 2018
http://lepoint.mu/2019/01/25/buyouts-and-mergers-in-africa/
12. Case Studies in US Trade Negotiation, Volume 1: Making the Rules
https://books.google.co.ke/books?id=NRcq3N-VbFgC&pg=PA51&lpg=PA51&dq=us+government+ip+savvy#v=onepage&q=us%20government%20ip%20savvy&f=false
13. Reasserting cyber sovereignty: how states are taking back control
https://www.theguardian.com/technology/2018/oct/07/states-take-back-cyber-control-technological-sovereignty
14. Technology and Sovereignty 
https://www.foreignaffairs.com/articles/1988-12-01/technology-and-sovereignty
15. Concept of Anarchy in International Relations.http://internationalrelations.org/anarchy-international-relations/ 

16. Kenya left in dilemma over Huawei as US-China trade war threatens to spill over
https://www.standardmedia.co.ke/business/article/2001326399/kenya-left-in-dilemma-over-huawei-as-us-china-trade-war-threatens-to-spill-over
17. Who is more powerful – states or corporations?
https://theconversation.com/who-is-more-powerful-states-or-corporations-99616
18. Corporate Capture Threatens Democratic Government
https://www.americanprogress.org/issues/democracy/news/2017/03/29/429442/corporate-capture-threatens-democratic-government/
19. Corporate power and human rights
 https://www.tandfonline.com/doi/full/10.1080/13642987.2015.1074458
20. Taming corporate power: the key political issue of our age
https://www.theguardian.com/commentisfree/2014/dec/08/taming-corporate-power-key-political-issue-alternative
21. Preventing Regulatory Capture: Special Interest Influence and How to Limit it 
https://books.google.co.ke/books?id=6bf1AAAAQBAJ&pg=PA96&lpg=PA96&dq=countering+regulatory+capture#v=onepage&q=countering%20regulatory%20capture&f=false
22. Sanctions: An Analysis
https://www.globalpolicy.org/component/content/article/202/41475.html
23. Neo-liberalism as creative destruction https://www.jstor.org/stable/25097888?seq=1#metadata_info_tab_contents
Brgds,Patrick.
Patrick A. M. Maina[Cross-domain Innovator | Independent Public Policy Analyst - Indigenous Innovations]
      On Tuesday, May 21, 2019, 10:29:50 AM GMT+3, Kelvin Kariuki via kictanet <kictanet at lists.kictanet.or.ke> wrote:  

 Dear Listers,
I hope this email finds you well, this is the current trending topic, I'd like to here your views on this topic from a Policy Perspective.

Are we overrelying on Global Techs? What are the possible repercussions if they pull out on us? Should Global Techs be declared Dominant to balance the market and reduce the risks of a failure? Feel free to add more questions. 
Looking forward to your views on this. 

-- 
Best Regards,

Kelvin KariukiAssistant Lecturer
Multimedia University of Kenya
Faculty of Computing and Information Technology
Twitter Handle: @teacherkarisAlt email: kkariuki at mmu.ac.keMobile: +2547 29 385 557

The Lord is my Shepherd 
_______________________________________________
kictanet mailing list
kictanet at lists.kictanet.or.ke
https://lists.kictanet.or.ke/mailman/listinfo/kictanet
Twitter: http://twitter.com/kictanet
Facebook: https://www.facebook.com/KICTANet/

Unsubscribe or change your options at https://lists.kictanet.or.ke/mailman/options/kictanet/pmaina2000%40yahoo.com

The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for people and institutions interested and involved in ICT policy and regulation. The network aims to act as a catalyst for reform in the ICT sector in support of the national aim of ICT enabled growth and development.

KICTANetiquette : Adhere to the same standards of acceptable behaviors online that you follow in real life: respect people's times and bandwidth, share knowledge, don't flame or abuse or personalize, respect privacy, do not spam, do not market your wares or qualifications.
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <https://lists.kictanet.or.ke/pipermail/kictanet/attachments/20190521/953fd9b2/attachment.htm>