Japan: Tech attack.
Also: China, Britain, Germany, Mali and Palau.
JAPAN. Tech attack.
A serious breach alarms allies.
The National Centre of Incident Readiness and Strategy for Cybersecurity, Japan’s principal cyber security agency, suffered a major attack, the Financial Times reported on Tuesday. The breach was allegedly undetected for months.
INTELLIGENCE. The Financial Times reported that China was behind the attack, which began in the second half of 2022 and was only recently discovered. The breach is another setback for Japan’s cyber-defence credibility, following a report that Japan’s defence networks were compromised by Chinese hackers in 2020. For partners already worried about Japan’s data integrity, it creates further unease about deepening military planning and intelligence sharing.
FOR BUSINESS. Government infrastructure is not the only target of cyber-attacks, with cyber security an increasing problem for business operations. The Port of Nagoya was briefly shut earlier this year due to a ransomware attack. Toyota said on Tuesday it had halted operations in its 14 factories in Japan due to a technical glitch (but did not confirm a cyber-attack). For hackers, even state-based, both private and public infrastructure is considered fair game.
JAPAN. CHINA. Toxic relationship.
The reaction to radioactive water goes nuclear.
Japan threatened on Tuesday to take China to the WTO over its decision to ban seafood imports, following the release of wastewater from the Fukushima plant. Japanese firms have reported harassment calls from Chinese numbers.
INTELLIGENCE. The scientific data appears to back up the Japanese side, with the UN’s nuclear body deeming the radioactive tritium in the released water to be at a safe level. China’s nuclear power plants, in fact, regularly release water with higher levels of tritium. But taking any claim to the WTO is likely to be a drawn-out affair, and China can always try to rely on the WTO’s public health exception. In any case, the WTO (still) has no enforcement mechanism.
FOR BUSINESS. Japanese businesses, including bakeries and aquariums, have reported abusive calls from unknown Chinese numbers. Stones have been thrown at Japanese schools. Scientific reports aside, the abuse shows the continued public fear around nuclear technology, and the continued difficulty in disposing of radioactive waste in a publicly acceptable manner. A public messaging campaign is needed to avoid further backlash to business.
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BRITAIN. CHINA. Clever moves.
The UK follows the US in resuming high-level visits.
UK Foreign Secretary James Cleverly travelled to Beijing on Wednesday, the first senior UK minister to visit since 2018, before mounting disagreements over the former colony of Hong Kong triggered a breakdown in bilateral relations.
INTELLIGENCE. The Foreign Secretary will meet with China's foreign affairs minister and vice-president. While the trip has received criticism by human rights advocates in the UK, a recent increase in visits by senior US officials has smoothed the way. Cleverly has said he would raise Hong Kong, human rights, cyber security, sanctions on UK MPs and the Ukraine war. China will likely raise its bid to join the CPTPP trade agreement, where Britain is a member.
FOR BUSINESS. The UK has remained hawkish on China while partners, including France, the US and Australia have sought to de-escalate trade and economic tensions. But the ‘Global Britain’ brand, post-Brexit, needs the world’s largest economy on its side. China remains the UK’s fourth largest trading partner, accounting for 6.1% of its total trade. The UK wants to make sure it is not left behind as trade and investment rebound with its competitors.
GERMANY. Guten tax.
Berlin aims to revive a faltering economy.
Germany announced a massive corporate tax relief program on Tuesday amid a slumping economy. The measure is also designed to revive the fortunes of Germany’s three-party coalition government, which is losing support to the right..
INTELLIGENCE. Germany’s economy dipped into a recession at the start of 2023 and recent growth has been flat. Prices for energy and food continue to climb, standing at 6.2% in July – well above the Eurozone average. German wages rose at record levels in the second quarter, and the IMF predicts Germany will be the only major economy to shrink in 2023. The war in Ukraine continues to impact Europe’s largest economy, as do controversial energy policies.
FOR BUSINESS. The package is aimed at squarely at the Mittelstand, the small and medium-sized enterprises that form the backbone of Germany’s export-led economy. It includes enticements for energy-saving investments and rules making it easier to write off losses. But energy problems remain in Germany, with renewables unable to make up for Russian gas or domestic nuclear power without the help of lignite coal and electricity from across the border.
With the brevity of a media digest, but the depth of an intelligence assessment, Daily Assessment goes beyond the news to outline the implications.
MALI. Lured by gold.
A concerning sign of economic nationalism.
Mali signed a new mining code late Monday, allowing its military junta to increase ownership in gold concessions throughout the West African country. Since a 2021 coup, Mali has grown increasingly reliant on Russia’s Wagner group.
INTELLIGENCE. The new code allows state and local investors up to a 35% stake in mining projects, compared to around 20% now. Finance Minister Alousséni Sanou said the state wanted to recover between $497 and $995 million – the result of exploitation of tax exemptions. Despite recent improvements in the Mali’s economic environment, including the removal of ECOWAS trade sanctions, the lure of gold revenue is clearly hard to resist.
FOR BUSINESS.The details of the new law are yet to be finalised, awaiting implementing decrees. It’s unclear how existing projects will be affected. However, the government has already said it wants to recover what is possible, suggesting it aims to extract additional money from firms. The junta has for months pledged to make ‘gold shine for Malians’ suggesting tough negotiations ahead for major foreign firms such as Barrick, Resolute and Hummingbird.
PALAU. Free to roam.
A Pacific state grants the US policing power.
The US and Palau agreed to arrangements on Tuesday giving American ships the power to enforce maritime regulations in Palau’s exclusive economic zone. Though independent since 1994, Palau remains in free association with the US.
INTELLIGENCE. The agreement with the US Coast Guard comes after Palau’s president made a plea for help against China’s ‘unwanted activities’ around the tiny island nation. The agreement gives the US power to enforce laws without the presence of any Palauan officers, effectively expanding the US’s maritime policing jurisdiction. While publicly aimed at fishing, it has clear strategic intent, allowing the US to deter Chinese military vessels in Palauan waters.
FOR BUSINESS. Palau is one of the few countries to recognise Taiwan, causing tension with Beijing, which has sought to increase its influence through tourism and investment. This agreement should give shipping lines and fishing vessels some additional level of protection from harassment around Palauan waters. It follows a similar agreement the US concluded in late 2022 with nearby Micronesia, another freely associated state and former trust territory.
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