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41. Behind the rise of ransomware

Author:
John Sakellariadis
Publication Date:
08-2022
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
This issue brief investigates the drivers of the ransomware surge that menaced the United States in the summer of 2021, explains why these attacks remain a persistent threat today, and offers recommendations for mitigating the problem in the future. The 2021 surge in ransomware activity stems from a change in how criminals launch ransomware attacks. Between 2016 and 2019, cybercriminals shifted away from automated ransomware campaigns that emphasized scale to targeted extortion operations against organizations and established businesses. This adaptation made ransomware more disruptive and more profitable, eventually attracting the attention of well-organized cybercrime gangs. The intensification of the ransomware epidemic from that point until the attack on Colonial Pipeline resulted from the growing adoption of this new extortion model among criminals. Though the US government has devoted more attention to ransomware over the ensuing months, ransomware remains a significant and long-term threat to the US economy. Three factors drive the persistence of the problem: the presence of a vast pool of security-poor organizations, the availability of a poorly regulated monetization pipeline in the form of cryptocurrency, and criminals’ ability to evade law enforcement by exploiting jurisdictional boundaries. Mitigating just one of these conditions, let alone all three, will demand years of sustained effort. Because the US government cannot eliminate ransomware overnight, it must begin planning how to manage the problem over the long term. To do so, it should start by investing in new efforts to improve the defenses of small- to medium-sized entities. The ease of compromising these organizations has been key to fueling the appetite for ransomware attacks. Yet, many of these organizations lack the personnel, incentives, and contracting power to secure their own networks. Moreover, the US government should require all US-based organizations to report ransomware payments to the government and publish quarterly reports with anonymized versions of the data. Comprehensive payment transparency offers the best way to measure success against ransomware over the long term. It will ensure that success against targeted ransomware is judged in terms of the overall volume of ransomware payments, not just the absence of attacks on high-risk or high-profile entities.
Topic:
Science and Technology, Cybersecurity, and Ransomware
Political Geography:
North America and United States of America

42. Space Traffic Management: Time for Action

Author:
Mir Sadat and Julia Siegel
Publication Date:
08-2022
Content Type:
Working Paper
Institution:
Atlantic Council
Abstract:
Outer space has long been characterized as “contested, congested, and competitive.” More than four thousand eight hundred active satellites currently orbit Earth, representing over forty nations, and nearly twenty-five thousand satellites are projected to join by 2030. Moreover, spacefaring entities are testing the limits of space exploration: Visionary space companies are aiming to launch space tourism programs and send humans to space within the decade, and governments and militaries are increasing activity in cislunar space—the sphere formed by the Earth-Moon radius—to leverage advantageous orbital regions. As humanity expands its frontiers deeper into the galaxy, the threats to US and allied space capabilities will continue to increase. Yet, despite the proliferation of space activity, the ability of international and national bodies to track and regulate space objects—often referred to as space traffic management (STM)—reflects a past era wherein few actors conducted limited operations in space. The current state of STM can be more aptly described as space situational awareness (SSA), or the mere knowledge of objects in orbit. Global actors (including national governments, corporations, and international organizations) track space objects and notify satellite operators when the probability of collision is notable. While collision avoidance maneuvers are standard when there is a one in ten thousand chance of collision, it is ultimately up to the operators to determine whether and when they will move. The limits of this decentralized approach to SSA were illustrated in September 2019 when a European Space Agency satellite veered off path to avoid a Starlink satellite whose operator missed an email notification signaling a high probability of collision.
Topic:
Security, Defense Policy, National Security, and Space
Political Geography:
Russia, China, Eurasia, Asia, and United States of America

43. Beyond munitions: A gender analysis for Ukrainian security assistance

Author:
Cori Fleser
Publication Date:
08-2022
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
From the hospitals of Mariupol to the streets of Bucha, the Russian war in Ukraine has extracted an unacceptably high cost, while banding NATO allies and partners together in an unprecedented tide of support. In bilateral and multilateral security assistance packages, the transatlantic community has sent Ukraine javelins, High-Mobility Artillery Rocket Systems (HIMARs), and all manner of weapons to defend against the Russian invasion. Still, Russia’s war continues against the nation of Ukraine and its people. So how should future military assistance account for the different impacts of the war on Ukrainian civilians? What strategies remain for NATO allies and partners to enhance their support beyond weapons and materiel? The answers lie in using gender analyses to zero in on the unique human security challenges facing Ukraine. When we overlook the role of gender in conflict, we miss the opportunity to both lead with our values and make our military support more effective. Applying a gender analysis to our security assistance is a solution that allies and partners have already agreed to implement in forums from the United Nations to NATO. In fact, it’s a tool that many allies have already developed within their own militaries. Now is the time to employ it in support of Ukraine. This starts with acknowledging the Women, Peace, and Security (WPS) Agenda. The WPS Agenda, passed under United Nations Security Council Resolution 1325 in 2000, recognizes the disproportionate impact of conflict on women and girls, and their critical role in reconstructing societies. Militaries can apply gender analyses to better understand and tailor assistance to the unique security environments in which they operate. To help policymakers think through how a gender analysis can shape what security assistance should look like—and, in many cases, how allied militaries can implement solutions at scale, and consistent with political decisions that have already been made—we are proud to offer this issue brief. Our intention is to demonstrate to global decision makers that incorporating gender can and should be integrated in real-time conflicts to achieve real results. Our support to Ukraine must not waver, but more can be done to mitigate the severe impact of Russia’s war on the Ukrainian people. Allies and partners already have the political mandate to integrate the WPS Agenda into their operations. They already have the tools, training, and technical expertise to implement it in the field. The next step is making this common practice. This issue brief spells out ten steps for how to do so in Ukraine.
Topic:
Security, Defense Policy, NATO, Women, Partnerships, Resilience, Society, Gender, and Russia-Ukraine War
Political Geography:
Russia, Europe, and Ukraine

44. Sweden and Finland are on their way to NATO membership. Here’s what needs to happen next.

Author:
John R. Deni
Publication Date:
08-2022
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
Sweden and Finland have just cleared a big hurdle on their path to NATO membership with the US Senate’s overwhelming vote to welcome them into the Alliance. While several other allies still need to ratify the expansion, Finnish and Swedish membership in NATO is now not a question of whether but when. Even though some analysts have posited that these two countries—especially Finland, which has an 830-mile border with Russia—bring disqualifying liabilities, most Alliance leaders, NATO-watchers, and European security experts argue these newest aspirants will strengthen the Alliance. This is especially so in terms of military capabilities and capacity, but also in terms of strategic culture and geostrategic outlook. Nonetheless, in the days, weeks, and months after Finland and Sweden officially become members, there is an array of subsequent questions that these two aspirants, other allies, and NATO as an organization will need to consider—and ultimately answer. After examining the key strengths that Finland and Sweden are likely to bring into NATO, this issue brief will consider several of these critical topics. These include defense planning, operational planning, and readiness concerns.
Topic:
Security, Defense Policy, NATO, Diplomacy, National Security, Politics, and Russia-Ukraine War
Political Geography:
Russia, Europe, Eurasia, Ukraine, Finland, and Sweden

45. Afghanistan under the Taliban: Regional recalibrations, challenges, and ways forward

Author:
Hameed Hakimi
Publication Date:
09-2022
Content Type:
Special Report
Institution:
Atlantic Council
Abstract:
Despite the spectacular and unprecedented events following the Taliban’s takeover of Afghanistan in August 2021, the global spotlight steadily shifted away from the country. Because of the war in Ukraine, among other global issues, Afghans have been competing for attention from the international community and for media coverage of the multiple crises unfolding in Afghanistan. Some of the crises facing Afghans predate the Taliban’s seizure of power in August 2021, such as unemployment, migration and displacement, natural disasters, weak governance, and infrastructural challenges. Yet the profound loss of major gains of the past twenty years because of the Taliban’s return to power cannot be underestimated.
Topic:
Diplomacy, Politics, Economy, and Business
Political Geography:
Afghanistan, South Asia, and Taliban

46. Will economic statecraft threaten western currency dominance? Sanctions, geopolitics, and the global monetary order

Author:
Carla Norrlof
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Atlantic Council
Abstract:
The return of great power rivalry is stoking renewed fears of weakening Western currency dominance. Financial sanctions are becoming the preferred economic tool for accomplishing geopolitical goals. These instruments are especially popular with the United States and Europe. In response, rival great powers, notably China and Russia, are diversifying away from Western currencies and developing counterstrategies to maintain economic and foreign policy autonomy. As other countries are hit by increasingly punishing Western sanctions, the incentive to join Russia and China’s alternative international monetary order increases. New analysis, published in this report, shows early signs that some countries may be trying to diversify away from the dollar. A growing circle of countries attempting to evade the Western-centric financial and currency order may over time erode the dollar and the euro’s sizeable lead, though will likely fall well short of ending their global dominance. This report analyzes these trends and quantifies the extent of reserve diversification following Russia’s 2022 war on Ukraine. It also assesses the polarity of the international currency order since the onset of the euro in 2002. Reserve diversification out of the dollar, and into the euro, has been modest, though Chinese renminbi reserves grew after Russia’s February offensive in Ukraine. Dollar unipolarity declined acutely in 2017 as the number of countries sanctioned by the United States increased and the US President Donald J. Trump threatened to revoke alliance commitments. Using economic statecraft while retaining global economic influence will require the United States to keep its economic house in order and allies close, if the current unipolar currency order is to survive.
Topic:
Economics, Monetary Policy, Sanctions, and Geopolitics
Political Geography:
China, Europe, and Asia

47. The international role of the euro and the dollar: Forever in the lead?

Author:
Martin Mühleisen
Publication Date:
09-2022
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
The international monetary system has been surprisingly resilient over the past two years, considering the size of pandemic and geopolitical shocks that hit markets during this period. Liquidity injections by the major central banks helped stabilize economic activity and avoid disruptions to capital flows or foreign exchange markets. Major exchange rates remained range-bound throughout most of the crisis, even if the dollar has appreciated sharply in recent months. Volatility is likely to pick up as monetary policy responds to high inflation, but there should be no doubt that the dollar-based monetary order has withstood a major test during the past two years. This feat has been even more remarkable as the global security landscape has deteriorated in dramatic fashion, and Russia’s invasion of Ukraine has brought international tensions to a level not seen since the 1961 Cuban missile crisis. Moreover, while the dollar’s safe haven status remains firmly established, the center of global economic activity has been shifting east. Asia has become an economic powerhouse, and China is on course to become the world’s largest economy over the next few years. It is a natural question whether China will challenge the United States and Europe for global economic leadership, and whether the renminbi will appear as a leading, if not dominant, currency. This paper argues that this is unlikely for the foreseeable future, in part because a larger global role for the renminbi would be inconsistent with the Chinese leadership’s current policy priorities. However, there is no room for complacency. With the post-World War II international order in gradual decline, the world could again reach a moment where unforeseen geopolitical events might lead to changes in long-held political and economic paradigms. The United States and Europe can reduce this risk by making their growth models more robust and sustainable. Moreover, keeping their global alliances intact could prevent a loss of influence that has heralded changes in the international monetary system in the past.
Topic:
Economic Growth, Currency, Financial Institutions, Digital Policy, Digital Currency, Dollar, and Euro
Political Geography:
Europe and United States of America

48. Privacy in cross-border digital currency: A transatlantic approach

Author:
Giulia Fanti and Nadia Pocher
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Atlantic Council
Abstract:
As a growing number of countries explore Central Bank Digital Currencies (CBDCs) for the domestic context, multi-country cross-border CBDCs pilots are also proliferating. Cross-border CBDCs could make cross-border payments faster, cheaper, and simpler. However, for any cross-border CBDC to unlock these benefits and be widely adopted, it must address key concerns, chief among them risks around privacy and transparency of data. This article illustrates how various technical design choices can affect the privacy and transparency of cross-border CBDCs. For instance, architectural choices about the structure of a cross-border CBDC and representational choices about how transactions are encoded in the underlying software can have far-reaching implications for privacy and transparency—both in a domestic context and for cross-border transactions. Many of the cross-border CBDC pilot studies to date have (understandably) adopted the technical designs provided by enterprise distributed ledger platforms. However, some of these designs make tradeoffs regarding privacy, efficiency, and/or security. Whether these tradeoffs are acceptable is a matter of policy, and requires coordination between different regulators and central banks. In view of these implications—and some of the corresponding tensions that arise—we argue that the US and the EU should work together alongside other partners to create the technological and regulatory environment to enable privacy-preserving cross-border CBDCs. The US and the EU should seize the emergence of CBDCs as an opportunity to finally establish a transatlantic privacy framework, and clarify its interplay with the prevention of money laundering and financing of terrorism (AML/CFT/CPF). More broadly, both should harness the clout of their combined financial systems to develop digital asset regulation and standards with a global reach and democratic values. These regulatory developments would not only streamline regulatory guidelines, but they could also directly impact and ease the technical development of a cross-border CBDC.
Topic:
Privacy, Currency, Transatlantic Relations, and Digital Currency
Political Geography:
Europe, Canada, North America, and United States of America

49. The data divide: How emerging technology and its stakeholders can influence the fourth industrial revolution

Author:
Joseph T. Bonivel Jr. and Solomon Wise
Publication Date:
10-2022
Content Type:
Special Report
Institution:
Atlantic Council
Abstract:
The Fourth Industrial Revolution is highlighted by the interconnection of devices and sensors to the internet. The computing and communication capabilities of these devices allow for roughly 2.5 quintillion byes of data to be produced, stored, and analyzed daily. For example, every second, an exponential amount of healthcare data is generated and mined for valuable insights. Today, approximately 30% of the world’s data volume is being generated by the healthcare industry. By 2025, the compound annual growth rate of data for healthcare will reach 36%. This data is fed into machine learning and artificial intelligence models that have strong impacts on multiple healthcare domains that have the potential to impact the socioeconomic statuses of billions of people across the world. Those entities that have functional access to data capital have more options than those that do not. The data divide is the gap that exists between individuals who have access, agency, and control with respect to data and can reap the most benefits from data driven technologies, and those who do not. The data divide can only be reduced if the there is optimization in the data process, monitoring and evaluation of the policies and programs from major stakeholders, and alignment of public private partnerships for social good.
Topic:
Science and Technology, Communications, Innovation, Data, and Fourth Industrial Revolution
Political Geography:
Global Focus

50. China’s surveillance ecosystem and the global spread of its tools

Author:
Bulelani Jili
Publication Date:
10-2022
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
This paper seeks to offer insights into how China’s domestic surveillance market and cyber capability ecosystem operate, especially given the limited number of systematic studies that have analyzed its industry objectives. For the Chinese government, investment in surveillance technologies advances both its ambitions of becoming a global technology leader as well as its means of domestic social control. These developments also foster further collaboration between state security actors and private tech firms. Accordingly, the tech firms that support state cyber capabilities range from small cyber research start-ups to leading global tech enterprises. The state promotes surveillance technology and practices abroad through diplomatic exchanges, law enforcement cooperation, and training programs. These efforts encourage the dissemination of surveillance devices, but also support the government’s goals concerning international norm-making in multilateral and regional institutions. The proliferation of Chinese surveillance technology and cyber tools and the associated linkages between both state and private Chinese entities with those in other states, especially in the Global South, is a valuable component of Chinese state efforts to expand and strengthen their political and economic influence worldwide. Although individual governments purchasing Chinese digital tools have their local ambitions in mind, Beijing’s export and promotion of domestic surveillance technologies shape the adoption of these tools in the Global South. As such, investigating how Chinese actors leverage demand factors for their own aims, does not undercut the ability of other countries to detect and determine outcomes. Rather it demonstrates an interplay between Chinese state strategy and local political environments. This paper specifically focuses on key features in China’s surveillance ecosystem, while the companion to this report will focus on the key ‘pull factors’ from African countries and their significance for US interests.
Topic:
Science and Technology, Cybersecurity, Surveillance, and Public-Private Partnership
Political Geography:
China, Asia, and Global Focus

51. Advancing a framework for the stabilization and reconstruction of Ukraine

Author:
Patrick Quirk and Prakhar Sharma
Publication Date:
10-2022
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
Russia’s illegal and unprovoked war on Ukraine has shattered peace on the European continent and created tectonic shifts in the transatlantic security architecture. The Kremlin’s invasion has decimated Ukraine’s economy and infrastructure, and left tens of thousands of innocent civilians wounded or dead as part of a war-crime ridden military campaign. At the time of writing, Kyiv is making slow advances in the South and East with the help of significant Western military and economic aid, yet the outcome of the conflict continues to hang in the balance. A prolonged stalemate and some variation of a negotiated settlement seem most likely, with a Russian victory remaining a distant possibility.1 Absent an absolute Kremlin victory, Ukraine will need to stabilize vast swathes of its territory and reconstruct the social and industrial infrastructure therein.2 Due to their proximity to Ukraine and long-standing economic, political, and social connections, transatlantic allies and partners will most likely be deeply involved in this effort and will be significantly affected by its end result. The purpose of this issue brief then is to help Ukrainian, North American, and European policymakers consider stabilization and reconstruction needs and have a playbook in place regardless of the circumstances or outcome.
Topic:
Security, Defense Policy, Diplomacy, Science and Technology, Reconstruction, Economy, Business, Innovation, Resilience, Russia-Ukraine War, and Stabilization
Political Geography:
Russia, Ukraine, Eastern Europe, and United States of America

52. Engaging the Pacific Islands is no longer about the why, but about the how

Author:
Marie Jourdain and Charles Lichfield
Publication Date:
10-2022
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
Over the past year, US and European engagement in the South Pacific has noticeably accelerated. Wooing these islands away from Chinese influence is clearly a priority but there are many dimensions to this. The “Blue Pacific” is more than a consortium of scattered islands. They see themselves as large ocean states, which collectively make up the second-largest Exclusive Economic Zone in the world. While they are important as we game out Taiwan scenarios, the peoples of the South Pacific want their region to remain immune from “great-power games.” This calls for a subtle Transatlantic strategy emphasizing partnership. This report acknowledges the mistakes of past engagement strategies, which didn’t approach the region as a coherent whole, lacked sustained and continuous effort, and always came second to other priorities in the Indo-Pacific region.
Topic:
Security, Foreign Policy, Defense Policy, European Union, and Engagement
Political Geography:
Europe, United States of America, Indo-Pacific, and Pacific Islands

53. KRI positioned in prominent role in global gas markets

Author:
Ahmed Tabaqchali
Publication Date:
11-2022
Content Type:
Special Report
Institution:
Atlantic Council
Abstract:
The Kurdistan Region of Iraq (KRI) has proven gas reserves of over 25 trillion cubic feet—or 20 percent of Iraq’s total proven reserves. Its current gas production of 5.4 billion cubic meters per year could nearly triple production by 2030 and even sextuple by 2040. This increase would meet current and future domestic KRI demand and generate essential export revenue for the region. The report, The Kurdistan Region of Iraq’s Gas-Export Potential: Deja Vu All Over Again, authored by senior fellow Ahmed Tabaqchali considers the potential of the KRI’s proven and probable gas reserves.
Topic:
Environment, Markets, Oil, Gas, Economy, and Energy
Political Geography:
Iraq, Middle East, and Kurdistan Region of Iraq (KRI)

54. The future of immunization financing in Latin America and the Caribbean

Author:
Miguel Betancourt-Cravioto and Pepe Zhang
Publication Date:
11-2022
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
Latin America and Caribbean countries have a long history of effective implementation of national immunization programs (NIPs), which has led to the successful control of infectious diseases such as smallpox, measles, and poliomyelitis, among many others. Yet challenges such as inequity, rising costs, growing population needs, and the fallout of the COVID-19 pandemic have negatively impacted the operation of NIPs in the region. This has led to a significant reduction in vaccine coverage rates (VCRs), putting the population at risk of severe, preventable diseases. Addressing these and other challenges facing NIPs requires sustained sources of funding that are capable of expansion according to national needs. So far, the region has coped with domestic public resources and the important support of international mechanisms including the Pan American Health Organization’s (PAHO) Revolving Fund (RF). Innovative financing is particularly useful in today’s context of fiscal constraints, as it helps public institutions maintain and enhance immunization programs by supplementing available resources with new sources of funding and/ or expanding the impact of existing financing structures. Considering that immunization is a multidimensional endeavor requiring efficient management of demand, supply, delivery, and many other issues, a holistic, health-system approach to immunization is essential to stimulating innovative financing and maximizing its benefits. This issue brief built upon findings from a private, nonpartisan strategy session as part of the Adrienne Arsht Latin America Center’s #FutureofHealth Series, which aims to provide a practical, forward-looking approach to target key policy issues at the intersection of health and the economy in Latin America and the Caribbean.
Topic:
Vaccine, Resilience, COVID-19, Society, and Immunization
Political Geography:
Latin America and Caribbean

55. How the Chinese government is financing its way to becoming a techno-superpower

Author:
Ngor Luong
Publication Date:
11-2022
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
On October 7, the Biden administration announced a new rule to control exports of advanced-computing semiconductor chips to China. As the United States works to cut off technology and capital flows to China, Beijing’s desire to achieve technological self-sufficiency is greater than ever. In fact, during the 20th Party Congress in the following week, Xi Jinping further pledged self-reliance in technology to gain a competitive edge in the tech competition with the United States. Under Xi Jinping’s leadership, China has sought technology-focused securitization to build an innovation system that supports its broader economic, societal, and geostrategic goals. In response to the economic impact ranging from the ongoing COVID-19 pandemic to the US-China trade and technology war, the Chinese Politburo unveiled the new “dual circulation” strategy at a Central Financial and Economic Commission meeting in 2020. At its core, dual circulation aims to reduce China’s vulnerability to external shocks, and to increase the country’s self-reliance to better guard against global volatility. The Chinese government works to improve China’s innovation-building capacity by attracting foreign capital and technology know-how in order to maximize their benefits while retaining overall control of the system. Beijing is committed to becoming a state-led and self-sufficient techno-superpower. In doing so, the Chinese government is consolidating its influence in both the domestic market and overseas markets where Chinese firms are active, while simultaneously mobilizing public, private, and public-private investment vehicles to support these tech ambitions. A number of its financial mechanisms have already spanned decades, but others have emerged recently. The decade-long mechanisms have yielded mixed results, while the successes of the new ones remain to be seen. It can thus be expected that the Chinese government will continue to further assert itself in all aspects of the innovation system by providing financial support and political guidance for critical and strategic industries. Within this context, this paper examines the various forms of financing vehicles that involve a range of diverse actors to support China’s whole-of-nation approach in an effort to achieve self-reliance in technology. To conclude, this paper assesses the mechanisms’ successes and shortcomings as well as areas to monitor going forward.
Topic:
Science and Technology, Economy, Business, and Innovation
Political Geography:
China and Asia

56. Nuclear energy in a low-carbon future: Implications for the United States and Japan

Author:
Stephen S. Greene
Publication Date:
11-2022
Content Type:
Special Report
Institution:
Atlantic Council
Abstract:
Nuclear power has received renewed global interest as a secure source of carbon-free energy. In the context of worsening climate change and Russia’s invasion of Ukraine and resultant energy market constrictions, many countries are actively pursuing conventional and advanced nuclear development, while others are canceling or postponing scheduled shutdowns. As climate change continues to impact both energy supply and demand, nuclear energy is poised to play a major role in the reliability of the future clean energy mix. Challenges to nuclear rollout will require solutions. Construction timelines remain extended, as do licensing processes. Social constraints also hinder development prospects. These potential stumbling blocks require steadfast coordination between allies like the United States and Japan, especially as other nuclear energy heavyweights like Russia and China avoid many of those same bottlenecks in their pursuit of domestic buildout and export. Despite those issues, though, nuclear energy is forecasted to play a major role in the later stages of the energy transition, in which countries look to decarbonize the more difficult parts of their economies. The advent of advanced technologies and the completion of large-scale projects portends the arrival of nuclear energy’s reliability and versatility just as the global energy sector needs it.
Topic:
Climate Change, Nuclear Power, Carbon Emissions, and Energy
Political Geography:
Japan, Asia, North America, and United States of America

57. Improving tax policy in Latin America and the Caribbean: A balancing act

Author:
Felipe Larraín B. and Pepe Zhang
Publication Date:
12-2022
Content Type:
Special Report
Institution:
Atlantic Council
Abstract:
Latin America and the Caribbean is in the midst of a delicate economic transition, with five of the LAC6 countries attempting a tax reform before their GDPs recovered to pre-pandemic levels.1 As the region confronts rising inflation, the economic spillovers of the war in Ukraine, and budgetary pressures left behind by the pandemic, governments should improve their taxation systems to rebuild fiscal stability, stimulate growth, and enhance equity – a delicate balancing act among overlapping policy priorities. Regional taxes are a heavy administrative burden, requiring nearly twice the time to complete in LAC as in the OECD.2 At the same time, the region struggles with average tax evasion of 5.6 percent of GDP3 and a continued overreliance on corporate income taxes.4 With still-high public debts and fiscal deficits, governments must respond by implementing policies to streamline and modernize revenue collection and management. What are the pros and cons and trade-offs involved in increasing or decreasing the region’s three main taxes (VAT, PIT, and CIT)? How can governments optimize enforcement and collection without resorting to rate changes? What policies outside the tax authority are needed to support tax reforms? How can policymakers better navigate the thorny politics of tax reforms? The following pages provide new analysis and concrete recommendations to address these questions. Drawing on the powerful expertise of its authors in addition to valuable commentary and insight from private, nonpartisan strategy sessions, legal experts, and regional governments, this report is a strong addition to the Adrienne Arsht Latin America Center’s #ProactiveLAC Series, which aims to provide insight and foresight to LAC countries on how to advance economic reactivation and long-term prosperity.
Topic:
Markets, Reform, Economic Growth, Tax Systems, Macroeconomics, Fiscal Policy, Financial Institutions, and Inclusion
Political Geography:
Latin America and Caribbean

58. Securing alternative gas supplies and addressing critical infrastructure gaps in Europe

Author:
Richard L. Morningstar, András Simonyi, Olga Khakova, and Paddy Ryan
Publication Date:
12-2022
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
The Kremlin’s weaponization of natural gas exports to Europe as winter approaches has shattered any illusions that Russia could be a reliable supplier. Europe urgently needs to import gas from other suppliers to heat its homes and power its industry. In doing so, Europe can build a more secure and sustainable energy system while cutting off funds for Moscow’s war machine. Painfully high energy prices are already having a serious impact on quality of life and economic development in Europe. New natural gas supplies and expanded interconnections to bring them to market will drive down the costs of energy and reduce the likelihood of social unrest over energy poverty. The surest means to end Russia’s energy leverage over Europe include accelerating the green transformation, curtailing gas demand, and boosting energy efficiency. However, the continent cannot implement these changes overnight. Gas remains instrumental in Europe’s transition from dirtier fossil fuels, electrification of power-hungry sectors, and integration of large-scale intermittent renewables. Natural gas will likely remain a critical part of Europe’s power baseload for at least the medium term. Procuring an adequate supply of gas in the short to midterm is not at odds with the energy transition. Europe must cultivate alternative suppliers, build non-Russian-oriented import infrastructure, and accelerate decarbonization in tandem to boost energy security and affordability. Sourcing gas from non-Russian suppliers will sustain longer-term decarbonization efforts and prevent regression back to dirtier fuels amid the energy crunch. To diversify their energy systems, European states must determine how much Russian gas can be replaced and from where, as well as what new infrastructure will be necessary to enable new imports. The European Union (EU) needs to clearly articulate the anticipated natural gas supply gap to identify investment opportunities for the relevant market players. This issue brief examines potential sources of alternative gas supplies, the infrastructure required to bring new supplies to European consumers, and the financial and regulatory mechanisms needed to support diversification efforts. It offers recommendations for measures that European countries decoupling their energy supplies from Russia should take to give themselves the best chances of succeeding.
Topic:
Environment, Markets, Oil, Gas, Energy, and Energy Transition
Political Geography:
Europe

59. Arms racing under nuclear tripolarity: Evidence for an action-reaction cycle?

Author:
Matthew Kroenig
Publication Date:
12-2022
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
Conventional wisdom suggests that the world is approaching a tripolar arms race among the United States, Russia, and China. As Russia attempts to dramatically revise the post-Cold War security environment in Europe, China is expected to increase its nuclear arsenal to at least 1,500 warheads by 2035. In 2021, the then-commander of US Strategic Command, Admiral Richard, laid out the challenge of nuclear tripolarity before Congress testifying that: “for the first time in our history, the nation is on a trajectory to face two nuclear-capable, strategic peer adversaries at the same time.” In this issue brief, the Scowcroft Center’s Matthew Kroenig challenges the evidence for action-reaction arms races in the post-Cold War period but warns we may be facing one in this new tripolar nuclear environment.
Topic:
Arms Control and Proliferation, Nuclear Weapons, Missile Defense, Deterrence, and Multipolarity
Political Geography:
Russia, Eurasia, North America, and United States of America

60. A next-generation agenda for US-ROK-Japan cooperation

Author:
Lauren Gilbert
Publication Date:
12-2022
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
Trilateral cooperation among the United States, Japan, and South Korea has proved challenging over the years, owing largely to historical tensions. As a result, this project has sought perspectives from next-generation leaders of the three countries to define areas where targeted, flexible, and informal cooperative arrangements can provide clear mutual benefit to all. This issue brief calls for enhanced cooperation with likeminded allies and partners in order to counter shared challenges and advance mutual interests across the areas of security and defense, science and technology, and global public goods. Taken together, several essential themes emerge. Future cooperation should center on tackling shared challenges including addressing an increasingly belligerent China through proactive yet constructive methods. In the security and defense sector, the three countries should prepare for Chinese economic reprisals by forming a united front. With regard to S&T, to protect against authoritarian threats, including those presented by China’s increasing technological prowess, the three countries should utilize multilateral frameworks, like IPEF, as tools to ensure the safety and security of scientific research and data. For public goods, the trilateral partnership can diversify away from Chinese supply chains by ally-shoring and information-sharing with trusted allies. Given the historically fraught relationship between South Korea and Japan, the United States can act as a mediator to facilitate cooperation in areas of high benefit and low sensitivity. In security and defense, the trilateral partnership should address less-sensitive, shared security challenges, which include but are not limited to maritime incursions, crisis contingency planning, and cybersecurity. S&T can explore these new frontiers and safeguard free and fair principles for digital connectivity and data governance. Although public goods are less subject to domestic political pushback, the trilateral group’s actions are more likely to succeed if they are small, yet meaningful, such as implementing the democratic building blocks. Lastly, trilateral cooperation requires both top-down institutionalization and bottom-up support from the general populace. With respect to defense and security, trilateral summits at the head-of-state level must be coupled with gaining public support. For S&T, the private sector can help advance collaboration, while the public sector helps each country remain in the bounds of domestic feasibility to prevent regional conflict. With global public goods, long-lasting trilateral progress requires coupling high-level government dialogues with civil society engagements.
Topic:
Security, Defense Policy, International Cooperation, Science and Technology, Innovation, and COVID-19
Political Geography:
Japan, Asia, South Korea, and United States of America