Which Way is Up?
Global Security Initiative, Nordstream Investigation, Democracy versus Autocracy, Big 4 Accounting Scandals, Plummeting US Literacy Rates.
UPDATE: The Long Mekong Daily offers a short list of articles to determine ‘which way is up’?
Wang Yi mentioned “peace” more than thirty times in Munich, Antony Blinken issued China a “warning” based on zero evidence.
The Munich security conference, however, revealed that most, yes most, of the world wants peace and are far less concerned about US hysteria than they are about climate change, inflation and natural disasters.
However, on the ground in Ukraine, Russia dominates and advances while Zelenskyy follows Washington’s orders to fight to the last man.
Biden’s one day trip to Kyiv was “as long as it takes - for as long as it takes” to reveal diminishing real US support for money, munitions and material.
For weeks, the US has positioned a big balloon on global media screens to obscure Nordstream II sabotage and side-line China’s rapidly coalescing peace initiatives.
Wang Yi’s trip to Moscow was not about weapons, but setting the stage for the Global Security Initiative and the forthcoming “position paper” on a peaceful settlement of the Ukraine crisis.
The US and NATO are now desperately searching for bargaining chips to not let China and the Global South set the terms of peace and the future direction of global order.
Also on the which way is up? edition: China has responded to the scandal hit big four accounting firms by requesting Chinese companies switch to local accounting firms. And, US literacy rates are plummeting from no less a source than former school teacher and first-lady Barbara Bush.
Global Security Initiative
China has released The Global Security Initiative Concept Paper, which expounds core concepts and principles of the Global Security Initiative (GSI) and lays out 20 priorities of cooperation and five platforms and mechanisms of cooperation. It fulfils an action-oriented guiding role. The release of the concept paper marks an important step for China in putting its previously proposed GSI into practice, demonstrating China's responsibility for maintaining world peace and its firm determination to safeguard global security. At a historical crossroads, as new cold war clouds are hanging over the world, the concept paper is another major public good offered by China to the world, a Chinese solution to solve the systemic security dilemma, and a new exploration for human society, with crucial historical significance.
The release of the concept paper comes against the backdrop of unprecedented global security challenges, which gives it stronger practical significance. February 24 marks the first anniversary of the outbreak of the Russia-Ukraine conflict, which is the most prominent manifestation of Europe's security dilemma. Meanwhile, other parts of the world are not peaceful either. Conflicts in old hotspots have not ceased, while new security crises are brewing. If the fuse cannot be dismantled in time, it will lead to more serious consequences. If security dilemmas cannot be resolved, they will lead to war. Humanity has already suffered enough painful lessons in this regard. The GSI was born in response to the challenges of the times.
This concept paper further enriches and elaborates on the GSI, with strong practical relevance and operability, aiming to promote a new path of security that emphasizes dialogue instead of confrontation, partnership instead of alliance, and win-win instead of zero-sum. The concept paper meets the universal expectations of the international community, helps the international community to fully understand China's principles and concepts on global security issues, and guides relevant parties to find effective ways to deal with security disputes and address security dilemmas.
"China's development cannot be separated from a stable international environment. Similarly, without China's security, there will be no global security." China is the only country in the world that has pledged to "keep to a path of peaceful development" in its Constitution.
Security is a common concern for all mankind, and great powers should set an example. Currently, there is too much hype about "threats" in the world, and too little discussion of the paths to achieve peace. What people see in reality is the acceleration of actions that create panic and division under the banner of "peace," and the tragedy of great power confrontation drawing closer once again.
Read full article here.
UN Security Council Session on the Nord Stream Pipeline Destruction Testimony (edited)
Professor Jeffrey D. Sachs, University Professor at Columbia University
The destruction of the Nord Stream pipelines on September 26, 2022 constitutes an act of international terrorism and represents a threat to the peace. It is the responsibility of the UN Security Council to take up the question of who might have carried out the act, in order to bring the perpetrator to international justice, to pursue compensation for the damaged parties, and to prevent future such actions.
The consequences of the destruction of Nord Stream 2 are enormous. They include not only the vast economic losses related to the pipelines themselves and their future potential use, but also the heightened threat to transboundary infrastructure of all kinds: submarine internet cables, international pipelines for gas and hydrogen, transboundary power transmission, offshore wind farms, and more. The global transformation to green energy will require considerable transboundary infrastructure, including in international waters. Countries need to have full confidence that their infrastructure will not be destroyed by third parties. Some European countries have recently expressed concern over the safety of their offshore infrastructure.
The destruction of the Nord Stream pipelines required a very high degree of planning, expertise, and technological capacity. The Nord Stream 2 pipelines are a marvel of engineering (see, for example, here and here). Only a handful of state-level actors have both the technical capacity and access to the Baltic Sea to have carried out this action. These include Russia, the United States, the United Kingdom, Poland, Norway, Germany, Denmark, and Sweden, either individually or in some combination. Ukraine lacks the necessary technologies, as well as access to the Baltic Sea.
A recent report by the Washington Post revealed that the intelligence agencies of the NATO countries have privately concluded that there is no evidence whatsoever that Russia carried out this action. This also comports with the fact that Russia had no obvious motive to carry out this act of terrorism on its own critical infrastructure. Indeed, Russia is likely to bear considerable expenses to repair the pipelines.
Three countries have reportedly carried out investigations of the Nord Stream terrorism: Denmark, Germany, and Sweden. These countries presumably know much about the circumstances of the terrorist attack. Sweden, in particular, has perhaps the most to tell the world about the crime scene, which its divers investigated. Yet instead of sharing this information globally, Sweden has kept the results of its investigation secret from the rest of the world. Sweden has refused to share its findings with Russia, and turned down a joint investigation with Denmark and Germany. In the interest of global peace, the UN Security Council should require these countries to immediately turn over the results of their investigations to the UN Security Council.
There is only one detailed account to date of the Nord Stream destruction, the one recently put forward by investigative journalist Seymour Hersh, ostensibly based on information leaked to Hersh by an unnamed source. Hersh attributes the Nord Stream destruction to a decision ordered by US President Joe Biden and carried out by US agents in a covert operation that Hersh describes in detail. The White House has described Hersh’s account as “completely and utterly false,” but did not offer any information contradicting Hersh’s account and did not offer any alternative explanation.
Senior US officials made statements before and after the Nord Stream destruction that showed the US animus towards the pipelines. On January 27, 2022, Under-Secretary of State Victoria Nuland tweeted, "If Russia invades Ukraine, one way or another, Nord Stream 2 will not move forward.” On February 7, 2022, President Biden said, "If Russia invades... again, then there will be longer Nord Stream 2. We will bring an end to it." When asked by the reporter how he would do that, he responded, "I promise you we will be able to do it."
On September 30, 2022 immediately following the terrorist attack on the pipeline, Secretary of State Antony Blinken declared that the destruction of the pipeline is “also a tremendous opportunity. It’s a tremendous opportunity to once and for all remove the dependence on Russian energy and thus to take away from Vladimir Putin the weaponization of energy as a means of advancing his imperial designs.” On January 28, 2023, Under-Secretary Nuland declaredto Senator Ted Cruz, "I am, and I think the administration is, very gratified to know that Nord Stream 2 is now, as you like to say, a hunk of metal at the bottom of the sea."
A UN Security Council objective investigation of the Nord Stream terrorism, in which all countries contribute what they know, is important for the global confidence in this body and most importantly, for global peace and sustainable development.
Read original here.
Democracy-autocracy divide will not serve global – or even Western – interests (edited)
By Wang Huiyao | Founder of the Center for China and Globalization(CCG)
National leaders and foreign policy experts gathered in Bavaria last week for the Munich Security Conference, also known as the “Davos for Defence”. In the early years the conference focused on the Cold War and nuclear threats and served to project the strength and cohesion of the transatlantic alliance. After the end of the Cold War, the conference agenda widened to cover issues like climate change, terrorism and cyber threats.
It remains a Nato-centric event, but as the balance of power in the world has shifted, representation from emerging powers like China and India has also grown. This includes participation by our think tank, the Centre for China and Globalisation, which this year held a side event on China-US relations.
Russian President Vladimir Putin’s invasion of Ukraine and hype about the “China threat” have galvanised the West with a new sense of purpose: a grand clash between democracy and autocracy.
The meeting held on the sidelines of the conference between China’s top diplomat Wang Yi and US Secretary of State Antony Blinken served to highlight the division of the world into two camps. This dichotomy has come to dominate strategic discussions in the West. It permeates US President Joe Biden’s national security strategy and the European Union’s Strategic Compass released last year. It is also prominent in the Munich Security Conference report released ahead of the conference, which warned of a growing divide between “competing order[s]”.
Despite the ascendancy of this vision, it is far from clear that framing the world as a competition between is the best way to address the complex and evolving threats of our age, even for the interests of Western countries.
The simplistic binary of democracy and autocracy doesn’t match the messy multipolar reality of today’s world. Many democracies have not lined up against Russia; these include India and South Africa, which abstained in UN resolutions against Moscow last year. Conversely, not all autocracies support Russia. The picture on sanctions is also mixed. Singapore has joined the sanctions campaign against Russia, but Israel has not.
The framing of democracy versus autocracy doesn’t resonate well in many countries, according to a survey of 12,000 people from the G7, China, Brazil, India, South Africa and Ukraine. For example, people in countries like India and South Africa see “rich versus poor countries” as the main fault line in global politics. Even in G7 countries, the democracy versus autocracy dichotomy is far from dominating the perceptions of citizens.
The West’s push to frame the world as a competition between democratic and non-democratic states risks alienating people and states destined to play a greater role in global affairs as they gain economic and demographic weight, states which should be encouraged to participate in shaping the international order if we are to keep multilateralism alive.
The democracy versus autocracy lens does not capture the risks and challenges people are most concerned about. This year’s Munich Security Index records an increase in 20 risk indicators that reflect a new age in global politics marked by an “omnipresent sense of insecurity”. The top risk is an economic or financial crisis, likely fuelled by rampant global inflation. Climate change, the destruction of natural habitats, and extreme weather and forest fires are the second, third and fourth highest risks respectively. Energy disruption also ranks high, claiming the top spot in South Africa and the United Kingdom.
These risks are not zero-sum problems; the West cannot deal with them by throwing more resources into escalating competition with non-democratic states. On the contrary, risks related to the global economy, public health and the environment can only be addressed by all nations working together, regardless of their governance system. Geopolitical competition may interact with these threats, but it is not their primary driver.
Political leaders do not agree on much these days, but cleaving the world into two opposing camps has simplistic appeal as a rallying cry for the West. But it is a flawed way to understand a 21st century world that is more multipolar and interconnected than ever, not only through economic and cultural links, but also shared challenges like climate change which call for democratic and non-democratic states alike to work together.
Read original here.
China Urges State Firms to Drop Big Four Auditors on Data Risk
SOEs encouraged to use local auditors when contracts expire despite US audit deal. Chinese authorities have urged state-owned firms to phase out using the four biggest international accounting firms, signaling continued concerns about data security even after Beijing reached a landmark deal to allow US audit inspections on hundreds of Chinese firms listed in New York.
China’s Ministry of Finance is among government entities that gave the so-called window guidance to some state-owned enterprises as recently as last month, urging them to let contracts with the Big Four auditing firms expire, according to people familiar with the matter. While offshore subsidiaries can still use US auditors, the parent firms were urged to hire local Chinese or Hong Kong accountants when contracts come up, one of the people said, asking not to be identified discussing private information.
China is seeking to rein in the influence of the US-linked global audit firms and ensure the nation’s data security, as well as to bolster the local accounting industry, the people said. Beijing has been giving the same suggestion to state-backed firms for years, but recently re-emphasized that companies should use other auditors than the Big Four, the people added. No deadline has been set for the changes and replacements may happen gradually as contracts expire.
China’s finance ministry and representatives of the Chinese offices of PricewaterhouseCoopers LLP, Ernst & Young, KPMG and Deloitte & Touche LLP—collectively known as Big Four auditing firms — didn’t respond to requests seeking comment.
Read full article here.
BIG FOUR ACCOUNTING SCANDALS
Accounting standards, and accounting industry bodies now openly privilege investors above all other stakeholders. Only a few decades ago there was consensus that the public, in the form of government, media and civil society, were at least equal stakeholders in the quality of companies’ accounts. But gradually that has been undermined, leaving the owners of the capital identified above all others as the users of accounts.
The collapse of Enron in 2001 and the demise of its auditor Arthur Andersen not only reduced the Big Five accounting firms to the Big Four but forced most of them to sell their consulting divisions amid a crackdown on conflicts of interest. In the 20 years that followed, as the Enron fraud faded into history, the groups rebuilt their consulting empires, advising on everything from insolvency to cyber security. But now a fresh stream of scandals has again raised concerns that firms selling services like merger advice cannot also function effectively as auditors.
Alongside that loss of a sense of public service, or a wider role in promoting good governance, the big four have changed even more. No longer are they accounting firms, but professional services firms. They now offer a range of services to clients, including such highly lucrative ones as tax advice — even when these might, on the face of it, risk a conflict with the duty to ensure accounts are straight.
As a direct result, the big four have been shown to be central to major scandals of financial secrecy, corruption and tax abuse — from the Panama Papers to the systematic corporate tax dodging uncovered in LuxLeaks.
KPMG have had their share of scandals — for example, the arrest for alleged tax evasion of their senior partners in Northern Ireland; or KPMG’s role in the collapse of major UK bank HBOS; or the massive, $456m fine paid back in 2005 to settle allegations that it promoted illegal tax shelters in the USA – allegations that could well have seen the firm collapse if criminal prosecution had followed.
And so the departure of the senior management of KPMG in South Africa is not entirely unprecedented, within this firm or the big four more generally. Failures in respect of the audit of Gupta companies are, equally, not unheard of.
But the role of KPMG in bringing down Pravin Gordhan, then head of the most assertive and respected tax authority on the continent, stands out even against this background. It would be a surprise if apologising now for the firm’s actions in 2014 was enough to move on.
More importantly though, we should all ask ourselves what should have been expected in that situation from one of the big four. While the government might have been paying the bill (that’s you, taxpayers), the great weight of fees comes from those who see an effective SARS as the enemy, or at least the opposition. Really, what should we have expected?
Low Literacy Levels Among U.S. Adults Could Be Costing The Economy $2.2 Trillion A Year
A new study by Gallup on behalf of the Barbara Bush Foundation for Family Literacy finds that low levels of adult literacy could be costing the U.S. as much $2.2 trillion a year.
According to the U.S. Department of Education, 54% of U.S. adults 16-74 years old - about 130 million people - lack proficiency in literacy, reading below the equivalent of a sixth-grade level. That’s a shocking number for several reasons, and its dollars and cents implications are enormous because literacy is correlated with several important outcomes such as personal income, employment levels, health, and overall economic growth.
Read full report here.