Gordon Campbell on how private profits are driving Defence spending

cfe8e7774fc56ef1ac326d185db4edd8Speak of the devil. The Australian website Crikey has just launched an investigative series about the notorious lobbying firm Crosby Textor, or C/T as it now prefers to be called. It transpires that two clients of C/T’s American subsidiary will benefit greatly from the AUKUS defence pact between the US, the UK, and Australia:

General Dynamics, is the lead contractor for constructing the US navy’s fleet of nuclear-powered submarines. The other company, Centrus Energy, is the leading provider of nuclear fuel for US national security purposes and for naval reactors.

These two firms are central to the building of Australia’s new fleet of Virginia-class nuclear submarines, and to the transfer of the nuclear technology involved.

C/T has strong historical ties to all three AUKUS partners. The firm ran the successful London mayoral campaign that launched the political career of Boris Johnson. In Australia, the firm advised on John Howard’s successful 2001 election strategies, which included the bogus claim that Tampa boat people had been throwing their babies into the seas in an attempt to blackmail Australia into allowing them entry. According to Crikey , the firm reached peak influence in Australia when Yaron Finkelstein, at the time the CEO of C/T in Australia, left the firm to join Scott Morrison’s staff in 2018 as his principal private secretary.

Here in New Zealand, Crosby Textor advised on the Don Brash-led National Party election campaign of 2005, and the John Key-led campaign of 2008. Links to the Crikey series on C/T are here. Nicky Hager’s 2009 backgrounder on Crosby Textor can be found here.

Hager’s description of the firm’s media advice to Key still makes for interesting reading in the light of Christopher Luxon’s very similar media tactics since becoming leader of the National Party.

The new military/industrial complex

I’m not saying (or implying) C/T has done anything illegal. But C/T’s client list is a useful reminder that defence and security spendups don’t occur in a commercial vacuum. In reality, the AUKUS contracts will shower hundreds of billions of dollars over the well-connected firms and individuals involved. Such riches create an obvious incentive for spooking the public about the military threat posed by China.

There is nothing new about being worried that private commercial gain may end up driving public policy on defence. Over 60 years ago, US President Dwight D. Eisenhower coined the term “the military industrial complex.” In a remarkable farewell speech from the Oval Office, the former general warned of the dangers of allowing profit opportunities to sway the decisions being made about the nation’s defence needs. As Eisenhower put it:

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. We must never let the weight of this combination endanger our liberties or democratic processes. …..Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals….

In Eisenhower’s day, the military industrial complex was dominated by arms makers and by traditional manufacturers. More recently, digital technology has begun to play an increasingly prominent role on the modern battlefield. Silicon Valley tech firms are coming to the fore in various ways: To build secure and integrated systems, to defend, command and control communications, and to help to cripple the enemy’s own digital systems across the field of combat.

Volt Typhoon

Here’s a small but typical example of how high tech and military capabilities are being fused with profit opportunities by Silicon Valley. Last week, the Five Eyes security alliance issued a warning advisory to its members – including to New Zealand’s National Cyber Security Centre – about the actions and methods of a state-sponsored Chinese hacking group called Volt Typhoon. Allegedly, the Chinese hackers had been targeting US digital communications to and from the US military bases on Guam.

In response, an angry China Foreign Ministry official found it “ironic” that the Five Eyes alliance should be calling out anyone else for hacking when in China’s estimation, Five Eyes is the world’s largest intelligence association and the US National Security Agency (NSA) is the “empire of hacking.” Pot : kettle etc.

So far, so predictable. What I thought was interesting was that the initial alarm bells about the Volt Typhoon Guam hacks seems to have been raised by a Microsoft blog available here. It is one thing for Five Eyes to use the expertise of private sector firms to make its own assessments and decisions. It is quite another thing if firms such as Microsoft are alerting Five Eyes to intrusions, and driving the response. The China Foreign Ministry response pointedly called out Microsoft for its role in the Volt Typhoon affair.

This digital crossover seems very relevant at a time when the nature of our future participation in the AUKUS alliance is still being worked out. New Zealand’s anti-nuclear stance means that cannot be a direct participant in the AUKUS nuclear pact. But hey, it seems we can still keep our anti-nuclear virginity intact while helping out our AUKUS friends, through playing a “secondary” role in their nuclear partnership. Nuclear participant ? No. Nuclear accomplice? Hell, yes.

The reward being dangled in front of us for our involvement with AUKUS is the promise of access to the advances in military cyber technology being developed by the likes of Microsoft and other denizens of Silicon Valley.

For example: Peter Thiel’s firm Palantir is reportedly investing heavily in AI that has a military application.

Palantir already sells its domestic surveillance services to US Immigration and Customs Enforcement, so it should come as no surprise that the company founded by billionaire Peter Thiel is working to make inroads into the Pentagon as well. On Tuesday, the company released a video demo of its latest offering, the Palantir Artificial Intelligence Platform (AIP).

Palantir says that its platform will integrate AI into military decision-making in “legal” and “ethical” ways. Phew. Thank goodness we can always trust Peter Thiel to act scrupulously.

Defence Gong Digital

Over time, the world has got used to the likes of Boeing, Lockheed, Raytheon etc being parties to the enhancement of the West’s military capabilities. Now, we have Microsoft, Palantir and other tech firms competing for access to the Pentagon’s money trough. Last December, more details were released about The Big Pinata of digital militarism. Some $9 billion in Pentagon spending will be shared between Google, Oracle, Microsoft and Amazon via this project :

The Joint Warfighter Cloud Capability is envisioned to provide access to unclassified, secret and top-secret data to military personnel all over the globe. It is anticipated to serve as a backbone for the Pentagon’s modern war operations, which will rely heavily on unmanned aircraft and space communications satellites, but will still need a way to quickly get the intelligence from those platforms to troops on the ground.

That bonanza aside, there is even a website – the Pentagon’s Defense Innovation Unit – that promises to award “scalable contracts to companies offering solutions to national security challenges across a variety of technology areas.”

The fusion of military policy making with the commercial interests of private high-tech firms means that any claims by politicians of an imminent military threat need to be treated with a level of healthy scepticism. Chances are, commerce will be driving those threat perceptions just as surely as the missiles and the blustery rhetoric from Beijing.

Given the monetary incentives in play, we need to see a lot more evidence about the military threat posed by China. As things stand, the balance of military power in the Asia/Pacific region remains overwhelmingly in favour of the US and its allies. Arguably, China’s military build-dup and its nationalist rhetoric are primarily defensive in nature and are mainly for domestic consumption. Longer term, the West may have to accept that the US is not the only superpower with a legitimate right to a presence in all parts of the globe.

If there is a change of government here this year, we already have National’s coalition partner pledging to double our ratio of military spending from roughly 1% to 2% of GDP – a spending increase of over $3 billion a year, at the very least. To keep that 2% of GDP commitment, a centre-right government would need to either borrow the money, cut public services drastically or raise taxes. Guess which option the ACT Party would be likely to favour.

Meanwhile, there is an absence of solid evidence that China’s limited presence in the Pacific is anything more than an excuse for political posturing, and private sector profit-taking.

Footnote One: ACT’s wild rhetoric reminds us that defence spending comes at a significant opportunity cost in social spending. Evidently, inflation of one sort or another has been plaguing the Pentagon for decades. This chart shows how the social costs have risen since the Eisenhower era of military spending, and what is having to be foregone today:

Costs Defence

Footnote Two: All year, we’ve been told that Tik Tok poses an existential threat to us all, mainly because – hey – it was developed and is owned by a Chinese firm that could (conceivably) harvest the personal data of citizens and feed it back to Beijing to advance the cause of global communism.

Leave aside that (a) no reliable evidence of this harvesting of Tik Tok data has surfaced and (b) that Tik Tok’s owners have offered to spend billions to ensure that the data in question is held in the US, and managed solely by the US firm, Oracle.

Once again, this kind of moral panic comes with a significant double standard. If we’re truly worried about social media privacy, the Brennan Center in the US has tallied the roster of US federal agencies that are actively engaged in social media monitoring.

The list includes the Department of Homeland Security, the FBI, the State Department, the Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, Fire-arms and Explosives, the Internal Revenue Service, the US Marshals Service, the Social Security Administration and the US Postal Service. Paranoids, take note.

Meaning: There are threats to digital privacy far closer to home than Red China. As the Brennan Center adds:

Because social media can reveal a wealth of personal information — including about political and religious views, personal and professional connections, and health and sexuality — its use by the government is rife with risks for freedom of speech, assembly, and faith, particularly for the Black, Latino, and Muslim communities that are historically targeted by law enforcement and intelligence efforts.

These risks are far from theoretical: many agencies have a track record of using these programs to target minority communities and social movements. For all that, there is little evidence that this type of monitoring advances security objectives; agencies rarely measure the usefulness of social media monitoring and [Homeland Security’s] own pilot programs showed that they were not helpful in identifying threats.

In other words: Forget Tik Tok. Social minorities have a lot more to fear from the homegrown versions of social media monitoring.