The Renminbi on the Tracks of the U.S. Dollar?

China has entered a “new era” where it should “take centre stage in the world” said President Xi Jinping during his opening speech at the 19th National Congress of the Communist Party of China (18-24 October) (Xi Jinping: “Time for China to take centre stage”, BBC News, 18 October 2017). This is poised to have formidable effects on the global economy as well as on the international currency system. Furthermore, to see this happening, we may wonder if the Chinese currency needs not becoming supreme in the international currency system. What is thus the current international state of play for the renminbi and which factors could preside to its future international reign?

Executive Summary

This article focuses on assessing the possibility to see China’s Yuan rivalling or replacing the U.S. dollar as the world’s reserve currency, with all the consequent benefits.

As far as the current position of the “redback” is concerned, our analysis shows an increased internationalization as, for example, the Renminbi has been included in the basket of currencies on which the values of the IMF-issued Special Drawing Rights is based. The U.S. dollar, however, is still much more used in foreign-exchange trading and as a store of value at the official level. The greenback, all things being equal, is therefore likely to retain a dominant position in the foreseeable future.

However, keeping in mind that events rarely remain equal and follow expected trends, as first elements towards detailed scenario analysis for the future, we then analyse certain components of the Chinese economy that could help the renminbi in rivalling the international stance of the U.S. dollar. China’s extensive internal market and Beijing’s commercial depth are likely to help the renminbi in strengthening its position on global markets, while China’s financial markets still seem underdeveloped. This is why China’s economic authorities have announced that they will undertake dramatic reforms. Nonetheless, the facts that the judicial system is still controlled by the Communist Party and that the yuan is not fully convertible could hinder the possibilities for the renminbi to rival the dollar, at least in the short-term.

As a conclusion, the reform of the financial markets will be crucial to establish a truly global currency that could have the possibility to be on a par with the U.S. dollar, the two coexisting at the top of the currencies’ ladder. Other events, however, deserve further consideration for a fully detailed and final estimate.

Full article 2605 words – approx. 6 PAGES 

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Featured image: China-CEEC Matchmaking Event 2017. Taken on the 27th of November, 2017 by Elekes Andor (Own work) [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons.

About the author:  Leonardo Frisani (MA Paris) focuses currently on challenges to the US Dollar supremacy. Beyond that, his specialisation is in international security, and his main interests are in geopolitics, macroeconomics, climate change, international energy and history.

Main references:

Bank for International Settlements (2016) Foreign Exchange Turnover in April 2016, Triennal Central Bank Survey, Monetary and Economic Department: September 2016.

Blinken, A. J. (2017), “Trump is Ceding Global Leadership to China”, The New York Times, 8 November 2017.

Bradsher, K. (2015), “China’s Renminbi Is Approved by I.M.F. as a Main World Currency”, The New York Times, 30 November 2015.

Eichengreen, B. (2017), “The Demise of Dollar Diplomacy?”, Project Syndicate, 11 October 2017.

Eichengreen, B., Mehl, A,. and Chitu, L. (2012), “When did the dollar overtake sterling as the leading international currency? Evidence from the bond markets”, Vox, 23 May 2012.

Frankel, J. (2013), “The latest on the dollar’s international currency status”, Vox, 6 December 2013.

Frisani, L. (2017), “Challenges Looming Over the Petrodollar System”, The Red (Team) Analysis Society, 20 November 2017.

Galbraith, A. (2017), “Foreign holdings of Chinese debt up in July, Bond Connect impact limited”, CNBC, 3 August 2017.

Lavoix, H. (2017), “Signals: China’s Xi Jinping Thought, Real Economy And… Global Finance”, The Red (Team) Analysis Society, 24 October 2017.

Maavak, M. (2017), “My Say: Is China set to junk the global dollar hegemony?”, The Edge Markets, 28 September 2017.

Mutethya, E. (2017), “2nd China-Africa Investment Forum begins in Morocco”, China Daily, 28 November 2017.

Nakazama, K. (2017), “Communist China’s Third Era: 2012 to 2035?”, Nikkei Asian Review, 4 December 2017.

O’Neill, J. (2017), “What’s Really at Stake at the CCP Congress?”, Project Syndicate, 18 October 2017.

Prasad, E. (2017), “The Perils of a Trumped Fed”, Project Syndicate, 27 October 2017.

Ren, S. (2016), “Move Over Oil, Gold: 7 Of Top 10 Commodities Futures Are Now Traded In China”, Barron’s, 4 May 2016.

Roach, S. S. (2017), “Rethinking the Next China”, Project Syndicate, 25 May 2017.

Sanderson, H. (2016) “China launches renminbi-denominated gold benchmark”, Financial Times, 19 April 2016.

Spence, M. (2017), “The Global Economy’s New Rule Maker”, Project Syndicate, 29 August 2017.

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Valantin, J. (2017), “Artificial Intelligence on the Chinese Silk Road”, The Red (Team) Analysis, 4 December 2017.

Wildau, G. and Lockett, H. (2017), “China pledges to open finance sector to more foreign ownership”, Financial Times, 10 November 2017.

Yao, K. and Glenn, E. (2017), “China’s central bank warns of ‘Minsky moment’ as economy powers ahead”, Reuters,  19 October 2017.

Yongding, Y. (2017), “Should China Deleverage?”, Project Syndicate, 29 June 2017.

Zhao, C. (2017), “Stop worrying about Chinese debt, a crisis is not brewing”, Financial Times, 4 December 2017.

Signal: Libya and Italy Increase Efforts to Combat Migrant Smuggling

Impacts and Consequences

If the planned center truly becomes operational and efficient, which cannot be estimated with confidence currently considering unknowns,

  • Increased likelihood to mitigate spillover from the Libyan conflict

Facts and analysis

Related

On 9 December 2017, Libya’s Government of National Accord and Italy agreed to launch an operations center for combatting the migrant smuggling networks that facilitate the migrant flow across the Mediterranean. According to GNA Prime Minister Serraj, the operations center will include “representatives from the coastguard, the illegal migration department, the Libyan attorney general and the intelligence services, along with their Italian counterparts.”

With no details provided on how this center will operate, as well as seeing the GNA’s limited influence over militias, the effectiveness of this joint operations center and its impact on Libya’s spillover remains to be seen. Over the coming months, the center’s activities and any measurable effects will need to be monitored.

Impact on Issues

Critical uncertainty: capability to truly operationalise with efficiency the center on the shorter term

 Mitigating spillover from the Libyan conflict

Libya and Italy to set up operations room to tackle migrant smuggling

TRIPOLI (Reuters) – Libya’s U.N.-backed government agreed with Italy on Saturday to establish a joint operations room for tackling migrant smugglers and traffickers as part of efforts to curb migrant flows toward Europe, according to a statement.

Signal: U.S. President Trump’s Statement on Jerusalem

On 6 December 2017, U.S. President Donald Trump declared that the U.S. recognises Jerusalem as the capital of Israel and, as a result will move its embassy there (see sources below), while also reasserting commitment to the peace process and specifying that the U.S. would support a two-state solution, if approved by both the Israelis and the Palestinians. Despite stress on peace, this declaration is highly likely to add fuel to the fire in the Middle East.

The U.S. itself is well aware of this danger as the State Department has asked “staff to defer all but essential travel to Israel, Jerusalem and the West Bank until 20 December”, according to Reuters.

It is highly likely that the fragile equilibrium that was very slowly being rebuilt despite, for example, the Hariri crisis, where most actors showed restraints, and despite the remaining difficulties related to working towards a constructive peace in Syria will be shattered.

Indeed, with this move, the U.S. forces all actors to take strong stances, which they cannot not take, but which are most probably not in the interest of a more peaceful region. These stances will also make subtle diplomatic negotiations and convergence of interests, such as those for example that developed between Saudi Arabia and Israel more difficult (see e.g. Signals: China enters the Fray in the Middle East; Israel Unprecedented Interview; Saudi Arabia…).

As a result, tension has further escalated in the Middle East. Meanwhile, Israel’s position could become not more but less secure.

Considering the discussions which preceded the American President’s declaration, where most Western and Arab allies warned America against this move, a position confirmed by the first international reactions to the American declaration, we may wonder in which way the new configuration now created serves, or, on the contrary, deserves, American power and influence. The U.S. could increasingly be seen as still powerful indeed, however a power that must be contained because also ready to sow turmoil by not considering all consequences.

The coming chains of actions reactions thus triggered will need to be closely watched.

Impact on Issues and Uncertainties

? Actions, notably of Muslim actors, beyond statements (critical uncertainties)

➚  Middle East Tension
➙➚ Threat to Israel
➚ ?  Test to U.S. influence and power

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US asks officials to defer travel to Israel, West Bank to Dec. 20

WASHINGTON – The US State Department issued a cable to all its diplomatic posts worldwide on Wednesday asking its officials to defer non-essential travel to Israel, Jerusalem and the West Bank until Dec. 20 according to a copy of the cable seen by Reuters.


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Frustration and fury among Arabs at Trump’s Jerusalem declaration

CAIRO/AMMAN/BEIRUT (Reuters) – Arabs denounced President Donald Trump’s plan to move the U.S. embassy in Israel to Jerusalem as a slap in the face but few thought their governments would do much in response.

Trump’s embassy decision: Palestinians declare three ‘days of rage’ across West Bank; Arab world outraged

Palestinian factions in the West Bank announced on Tuesday that they would carry out three days of protest across the West Bank over U.S. President Donald Trump’s expected decision regarding American policy on Jerusalem.

US’ Jerusalem move may trigger new clashes in region: Erdoğan

ANKARA A potential U.S. move to recognize Jerusalem as Israel’s capital may cause indignation in the Islamic world and lead to new clashes in the region, President Recep Tayyip Erdoğan said on Dec. 6. “Any such false step may cause indignation in the Islamic world, dynamiting the ground for peace and igniting new tensions and clashes,” Erdoğan said on Dec.

Trump to recognise Jerusalem as Israel capital, upending decades of U.S. policy

President Donald Trump on Wednesday will recognise Jerusalem as Israel’s capital and set in motion the relocation of the U.S. Embassy to the ancient city, senior U.S. officials said, a decision that upends decades of U.S. policy and risks fueling violence in the Middle East.

Artificial Intelligence on the Chinese New Silk Road

On 15 May 2017, at the opening of the Belt and Road (B&R) Forum for International Cooperation, the Chinese President Xi Jinping declared:

“We should pursue innovation-driven development and intensify cooperation in frontier areas such as digital economy, artificial intelligence (AI), nanotechnology and quantum computing, and advance the development of big data, cloud computing and smart cities so as to turn them into a digital silk road of the 21st century. It is not just about physical connectivity but also digital connectivity. Internet of Things Xi_Jinping_March_2017 (1)connectivity will be an integral part of the initiative. (“Full text of President Xi’s speech at opening of Belt and Road forum”, Xinhua net, 14/05/2017).

Five months later, on 17 October 2017, President Xi Jinping, during his speech given in front of the participants to the 19th congress of the Chinese Communist Party, also said:

“Deepen supply-side structural reform. […] Accelerate the development of advanced manufacturing sectors, promote the profound convergence of the Internet, big data, artificial intelligence and the real economy, foster new growth points and create new drivers in areas such as mid- and high-end consumption, innovative leadership, greenness and low-carbon, the sharing economy, modern supply chains, human capital services and other such areas. […] Strengthen the construction of basic infrastructure networks for irrigation, railways, roads, waterways, aviation, pipelines, the electricity grid, information, logistics, … » ” (“What did Xi Jinping say about cyberspace ?”, China Copyright and Media, October 17, 2017).

In the meantime, the Chinese State Council issued the “New Generation Artificial Intelligence Development Plan” (新一代人工智能发展规划) for the development of AI that aims at turning China into the AI world leader by 2030, through mammoth investments into research development (“China’s got a huge artificial intelligence plan”, Bloomberg Technology, 21 July 2017).

In other words, the highest levels of the Chinese government are currently coupling the development of the AI revolution with the deployment of the Belt and Road (B&R) initiative (or New Silk Road, a.k.a, previously the “One Belt, One Road” initiative). This grand strategy, launched in 2013, aims at creating a land and maritime international transport, trade, and finance Chinese infrastructure, which spans Asia, Russia, Europe, the Middle East, Africa and Latin America. Its aim is to find international reserves for the resources and products necessary to the development and enrichment of China (Jean-Michel Valantin, “China and the New Silk Road – From oil wells to the moon … and beyond”, The Red (Team) Analysis Society, July 6 2015). This endeavour is deployed on such a scale that it becomes a new political, economic and strategic force in the globalised world, for the Chinese national interest.

This coupling of the Belt&Road with the development of cyberspace and of artificial intelligence was furthered on 2 and 3 December 2017, during the Fourth World Internet Conference in Wuzhen. Then, remarks from the congratulatory letter by President Xi Jinping stated the necessity to build “a common future in the cyberspace”. On the margin of the conference, China, along with Asian, Middle Eastern and European countries – namely Serbia, Saudi Arabia, the United Arab Emirates, Laos, Thailand, and Turkey – launched the “Digital Belt and Road”. The conference  was also attended by Huawei, Beidou and Tencent, the Chinese Telecom and artificial intelligence and supercomputer giants, as well as by U.S. Apple and Tesla (Chen Qingqing, “Consensus grows at internet conference“, Global Times, 2017/12/3,).

In this article, we shall study how the spread of the B&R integrates the deployment of the “sinosphere” through the increasing use of AI as a tool to reinforce the efficiency of the international transport, information and communication infrastructures that actually shape the New Silk Road/B&R. Reciprocally, this will allow us to understand how the B&R is supporting the development of AI and how this dynamic is fostering the political influence of China. Then, we shall focus upon the political meaning of this coupling of the B&R grand strategy with the AI development.

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About the authorJean-Michel Valantin (PhD Paris) leads the Environment and Geopolitics Department of The Red (Team) Analysis Society. He is specialised in strategic studies and defence sociology with a focus on environmental geostrategy.

Featured image: By Geralt, Pixabay, Public Domain.

Signal: Latest NATO 2017 Strategic Foresight Analysis Report

Nato has released its latest 2017 Strategic Foresight Analysis Report.

According to General Denis Mercier, NATO Supreme Allied Commander Transformation (SACT) interviewed by Reuters, the report will be used with a SACT “companion report that maps out what NATO should do to respond to these trends in the spring” … “to inform the 2019 NATO political guidance”.

Some of the main points identified for the future are:

  • Increased instability
  • Increased likelihood of confrontation and war
  • Rising challenge to NATO and the West from emerging and resurgent powers (aka Russia and China)
  • Asymmetric demographic change
  • Rapid urbanization
  • Increasingly polarized societies
  • Continuous if not rising importance of new and emerging technologies, which offer enormous opportunities but also challenges and vulnerabilities
  • The impact of globalization
  • Rising importance of climate change and related cross cutting impacts, water security, food security and resource competition

Download pdf report from NATO

NATO sees growing Russia, China challenge; higher risk of war

BERLIN (Reuters) – China’s growing military strength and a resurgent Russia will pose growing challenges to the trans-Atlantic alliance in coming years, and NATO’s moves to bolster its capabilities could trigger a new Cold War-style arms race, a NATO report said.

When Artificial Intelligence will Power Geopolitics – Presenting AI

“Killer Robots” worry the international community. From 13 to 17 November 2017, the Group of Governmental Experts on Lethal Autonomous Weapons Systems (LAWS), also familiarly designed as “killer robots” met for the first time in Geneva (UN Office at Geneva). LAWS are, broadly speaking, autonomous systems (robots) animated by artificial intelligence, which can kill without human decision.  As stated in a preliminary paper, the creation of the Group shows an international concern “with the implications for warfare of a new suite of technologies including artificial intelligence and deep machine learning” (UNODA Occasional Papers No. 30, “Perspectives on Lethal Autonomous Weapon Systems” November 2017: 1).

Are we, however, certain that AI will impact only LAWS? Or, rather, could AI impact much more than that, indeed, everything related to politics and geopolitics?


Executive Summary

To introduce this section of the Red Team Analysis Society on the future, AI, politics and geopolitics, we start with giving instances of domains and human activities currently already involving AI. We then point out some of the related political and geopolitical questions emerging, which we shall address with forthcoming in-depth analysis. As understanding what is AI is a pre-requisite, this article focuses on presenting the AI field, while the next one will be devoted to Deep Learning.

Here, we look first at AI as a capability. We revise the technical definition to introduce agency, which enables us to point out intrinsic fears generated by AI. We use videos to illustrate them. We also thus identify a first area of intersection between AI development and politics, related to “AI governance.”

We then explain that AI is also a scientific field. This approach will notably allow us finding those scientists and labs working on AI, thus monitoring which advances and evolutions are taking place, and sometimes anticipating breakthrough.

Finally, at the intersection of both, capability and scientific field, we present the various types of AI capabilities that scientists seek to achieve and the ways in which they approach their research. This is crucial to understand where we stand, what to expect and identify emerging political and geopolitical issues. We explain first the difference between Artificial General Intelligence (AGI) and Narrow AI, focusing more on the first as the latest advances in terms of Narrow AI, i.e. Deep Learning, will be addressed with the next article. Here again we use videos, this time from the science fiction world, to illustrate what is AGI and some of the related issues imagined for a world where AGI exists. Synthesising existing experts polls, the time estimate for the happenstance of AGI is the middle of the century. We close with a brief presentation of the types of methodology used, Symbolic AI, Emergentist AI and Hybrid AI, stressing the dominance of the current Emergentist approach.

FULL ARTICLE 3065 WORDS – APPROX. 12 PAGES


Artificial Intelligence (AI) has become a buzz word and trendy topic throughout the world, generating media attention, heated debates among IT tycoons as well as scientists, and a corporate rush to be equipped with the latest AI advances, while capturing popular imagination through TV shows. Worldwide conference and summits on AI abound: e.g.  Beijing AI World 2017世界人工智能大会 (8 November 2017), Beijing Baidu World Technology Conference “Bring AI to Life” (16 November 2017), Boston AI world conference and expo (11-13 December 2017),  Toronto AI World Forum (27 – 28 November 2017),  London AI Congress (30-31 January 2018),  the AI Summit series, in Hong Kong (26 July 2017),  Singapore (3-4 October 2017), London (13-14 June 2018), New York (5-6 December 2017), San Francisco (18-20 September 2018).

It would seem that AI revolutionizes almost everything. Urban life with smart cities, driving with smart and often self-driving cars, or shopping with the use of AI by e-commerce giants such as Amazon or the Chinese Alibaba, which realised the biggest sale ever with a staggering amount of 163.8 billion RMB or $25.3 billion in one day with its Single’s Day have already started changing (e.g. Jean-Michel Valantin, “The Chinese Artificial Intelligence Revolution“, The Red (Team) Analysis Society, 13 Nov 2017; Jon Russell, “Alibaba smashes its Single’s Day record once again as sales cross $25 billion“, TechCrunch, 11 Nov 2017). Industry and labour continue evolving and fear of unemployment and human redundancy is paramount (e.g. Daniel Boffey, “Robots could destabilise world through war and unemployment, says UN“, The Guardian, 27 Sept 2017; UNICRI Centre for Artificial Intelligence and Robotics, “The Risks and Benefits of Artificial Intelligence and Robotics“, Proceedings workshop in Cambridge, 6-7 Feb 2017). From criminal endeavour and its corollary of combatting crime as well as crime prevention to more broadly national security and defence, AI is increasingly present, conjuring up images of cyber policemen behind screens allowing for the arrest of criminals from the “dark net”, and of “killer robots”, as with LAWS and autonomous fighting drones (e.g. Europol Cybercrime Center – EC3; Yuan Yang, Yingzhi Yang and Sherry Fei Ju, “China seeks glimpse of citizens’ future with crime-predicting AI“, Financial Times, 23 July 2017; Chelle Ann Fuertes, “AI is the Future Cyber Weapon of Internet Criminals“; EdgyLabs, Sept 2017).

If the revolution is so deep and large in scope, then it is bound to have an impact that goes even further than the pertinent but still segmented understanding of its consequences, which starts to be developing. In this new section of the Red (Team) Analysis Society, we shall focus about the futures of this AI-powered world and what it means in terms of politics and geopolitics.

Let us imagine that the highly likely forthcoming leadership of China in terms of artificial intelligence (AI) starts being perceived as threatening by an America that feels it is declining and ought to remain the sole superpower (Helene Lavoix, “Signals: China World Domination in Supercomputers and Towards Lead in Artificial Intelligence“,The Red (Team) Analysis Society, 14 Nov 2017). What would mean escalating tensions between China and the U.S. involving AI and how would they play out? How would differently “trained” AIs interact – if at all – in case of conflict?

Which are thus the emerging risks, dangers and opportunities, as well as crucial uncertainties resulting from AI-powered power struggles, politics and geopolitics? Could new completely unforeseen and so far unknown dangers emerge, beyond the LAWS? Is there an element of truth in Science Fiction’s warnings? How could the future world look like? Could the international order be fundamentally redrawn between AI Haves and Have-nots? What is power in a world where AI is increasingly present?

These are some of the questions we shall explore, while others, more precise, will emerge with our research.

To start, we need first to understand and define better what is AI and what are the conditions for its progress and development. This will give us the fundamental basis for this section, as well as the capacity to monitor and scan the horizon for evolutions and break through. One of the objectives will also be to avoid surprise, as the current emphasis on the success of one type of AI – deep learning – should not make us become blind to potential progresses in other subfields.

This first article thus presents the AI field and therefore begins identifying areas where the AI intersects with politics and geopolitics. The next article will dig deeper into Deep Learning, i.e. the AI sub-field that knows since 2015 the fastest and most wide-ranging developments and that is highly likely to impact the future political and geopolitical world.

Here, presenting the AI field, and using videos as much as possible to make the presentation more real, we look first at AI as a capability. We revise the technical definition to introduce agency, which enables us to point out intrinsic fears generated by AI. We also thus identify a first area of intersection between AI development and politics, related to “AI governance.” We then explain that AI is also a scientific field. and why this approach is useful to our strategic foresight. Finally, at the intersection of both, capability and scientific field, we present the various types of AI capabilities that scientists seek to achieve and the ways in which they approach their research.

AI as a capability

The Encyclopaedia Britannica defines AI, technically, as follows:

“Artificial intelligence (AI) is the ability of a digital computer or computer-controlled robot to perform tasks commonly associated with intelligent beings.” (B.J. Copeland, “Artificial Intelligence (AI)“, updated Jan 12, 2017).

Building upon this definition, we shall add agency and dynamics to it and reach the following definition:

Artificial intelligence (AI) is first a capability with which an initially inanimate object is endowed, at the start out of human being design, and that makes it partly or totally behave as an intelligent being. 

The way we define here AI points out two fundamental characteristics that frighten human beings and that we would have missed, had we stopped at the initial technical definition.

First, human beings, when constructing AI, fundamentally, behave as God(s) or change nature’s design (according to one’s belief-system and religion) by making an object animated, which behaves (more or less) as themselves, or as an intelligent natural being. In this framework, by so doing, human beings thus perpetrate a sacrilege. They break a taboo, which thus may only lead to their punishment. From this deep belief an unreasoned fear emerges.

Second, as the new entities thus created can fundamentally behave as intelligent beings, then they will also be able to act autonomously – to a point – and even to reproduce. Engrained here is the fear of one’s creation turning against oneself, or in a less tragic way becoming better than oneself, which nonetheless ego-centred and anthropocentric societies may have trouble accepting.

Relatedly, when the new entities endowed with AI are animal-like, then ancient atavistic and once forgotten fears linked to predators may emerge, all the more so if you image these robots equipped with various types of lethal device. This can be illustrated by this video from Google’s Boston Dynamics lab demonstrating “Spot” capabilities.

These very deep fears are crucial and must be considered as they are highly likely to bias any analysis carried out and judgement passed on AI. They must be neither denied, for example by an overemphasis on a rosy all positive image that would be given to AI nor, on the contrary, hyped. As for everything both positive and negative elements must be considered to, as much as possible try to benefit from the advantages while mitigating possible dangers. Failure to do so could only backfire. We must also keep theses deep fears in mind because they may well become operative in informing actor’s behaviour in the future, as AI is likely to spread.

For example, making AI palatable to citizens and overcoming fears may become part of “governance with AI”. China, which is pushing forward to become a leading if not the leading power in AI, as well as to use AI across all domains (Lavoix, “Signals: China World Domination…”; Jean-Michel Valantin, “The Chinese Artificial Intelligence Revolution”, 13 Nov 2017, The Red (Team) Analysis Society), made a special effort to explain AI to its population with a 10-episode documentary “In Search of Artificial Intelligence” – 《探寻人工智能》- (Sun Media Group, broadcast May 2017) aimed at laypeople and stressing how AI can help solve problems, while also interviewing scientists worldwide. Watch the first episode below, 《探寻人工智能》第1集 机器的逆袭 , Machine counter-attack (mix Mandarin and English).

The stakes may even be bigger if, from a relatively simple “allaying fears”, one moves to mobilising a whole society for AI, as seems to be the case in China. Indeed, as reported by the official Beijing Review, “It [the documentary] is not only appealing to scientists and amateurs, but also motivates society to explore AI,” said a netizen with the user ID Jiuwuhou Xiaoqing.” (Li Fangfang, “Man and The Machine“, Beijing Review, NO. 25 JUNE 22, 2017).

AI as a scientific field

AI is also a scientific field, which is defined as follows:

“Artificial Intelligence (AI) is the part of computer science concerned with designing intelligent computer systems, that is, systems that exhibit characteristics we associate with intelligence in human behaviour – understanding language, learning, reasoning, solving problems, and so on.” (Barr & Feigenbaum, The Handbook of Artificial Intelligence, Stanford, Calif.: HeurisTech Press; Los Altos, Calif. : William Kaufmann, 1981: 3).

Thinking about AI in these terms will allow us finding those scientists and labs working on AI, thus monitoring which advances and evolutions are taking place, and sometimes anticipating breakthrough.

Further, by looking at the various sub-disciplines constituting the AI field, we shall be able to locate where we shall find AI (as a capability this time) components, thus which areas of polities are likely to be transformed by AI, knowing that combinations of AI-powered elements will often be operative.

According to a JASON (independent group of elite scientists advising the U.S. government) study sponsored by the Assistant Secretary of Defense for Research and Engineering (ASD R&E) within the Office of the Secretary of Defense (OSD), Department of Defense (DoD) (“Perspectives on Research in Artificial Intelligence and Artificial General Intelligence Relevant to DoD“; January 2017), the sub-disciplines of AI are:

  • Computer Vision;
  • Natural Language Processing (NLP);
  • Robotics (including Human-Robot Interactions);
  • Search and Planning;
  • Multi-agent Systems;
  • Social Media Analysis (including Crowdsourcing);
  • Knowledge Representation and Reasoning (KRR)
  • Machine Learning “enjoys a special relationship with AI”, and is seen as the foundational basis for the latest advances in AI.

The type of AI capability(ies) with which our inanimate object is endowed, as well as which objects are concerned vary according to the AI sub-discipline or rather sub-disciplines, as most of the time different types of sub-disciplines and related AIs are mixed for one object.

If we remain in the sub-field of robots, we can see in the video below an array of animal-robots powered with AI, which could be used for a wide array of tasks, from the most benign to lethal applications, should they be equipped with lethal device. Note that for the fascinating video (watch on Youtube) by Techzone, the cover image – although then no robot-horse is presented – plays on the intrinsic fears of watchers by choosing a black horse with red eyes. The latter may only remind watchers of the Nazgul Steed in Tolkien Lord of the Rings, as adapted for the cinema by Peter Jackson.

Types of AI capabilities and research

Artificial General Intelligence (AGI) versus Narrow AI

The field is first divided between two types of capabilities that are sought to be achieved by scientific research: Artificial General Intelligence (AGI), General AI, or Strong AI on the one hand, Narrow AI, Applied AI or Weak AI on the other.

Artificial General Intelligence (AGI)

JASON gives for Strong AI the following definition:

“Artificial General Intelligence (AGI) is a research area within AI, small as measured by numbers of researchers or total funding, that seeks to build machines that can successfully perform any task that a human might do”. (Perspectives…, January 2017)

AGI is part of the Knowledge Representation and Reasoning subfield, according to JASON (p.5).

It is that type of AI which has most captured human imagination and which gives rise to the worst fears. It is best exemplified in the (excellent, fascinating and multiple-awards winner) TV series Westworld (HBO)co-created by Jonathan Nolan and Lisa Joy, where robots are all but indistinguishable from human beings.

Similar AI-related themes, although there without embodiment were somehow prefigured in the 5 seasons strong TV series Person of Interest (CBS), also created by Jonathan Nolan, with the war between “The Machine” and “Samaritan”.

We also recall a similar theme developed in the older series of films and TV series, Terminator (1984), with a world taken over by AI-powered computer system “Skynet”, which had decided to eradicate humanity. More recently (2015), Avengers: Age of Ultron used a similar narrative: the AI peacekeeping program, “Ultron” came to believe it had to destroy humanity to save the Earth. Ultron not only took over robots but  also created its own avatar. In Terminator as in Ultron the embodiments come second and are the result and creation of the initially unembodied AI.  We are here in the even more frightening case where the AI “reproduces” itself and creates new entities.

It is interesting to note that the Statement of Work from DoD/OSD/ASD (R&E) for JASON’s study includes specific questions regarding the development of Strong AI or AGI, and that the objective of the study was to find out what was missing from AGI to see the field achieving its promise (Appendix A p 57). This points out that, by early 2017, the U.S. DoD had far from given up in developing AGI and, on the contrary, could have been thinking about strengthening its efforts in the area. Yet JASON’s recommendations are as follows: “DoD’s portfolio in AGI should be modest and recognize that it is not currently a rapidly advancing area of AI. The field of human augmentation via AI is much more promising and deserves significant DoD support” (p.56).

When?

In a 2010 survey, and 2014 poll, AGI researchers estimated that “human-level AGI was likely to arise before 2050, and some were much more optimistic” and that “AGI systems will likely reach overall human ability (defined as “ability to carry out most human professions at least as well as a typical human”) around the middle of the 21st century” (Ben Goertzel, 2015, Scholarpedia, 10(11):31847, using Baum et al, 2011 and ).

In a way that is not contradictory with the previous estimates, but sounds more negative because the period of studies stops in 2030, a 2015 panel at Stanford University working on the programme One Hundred Year Study on Artificial Intelligence (AI100) estimated that

“Contrary to the more fantastic predictions for AI in the popular press, the Study Panel found no cause for concern that AI is an imminent threat to humankind. No machines with self-sustaining long-term goals and intent have been developed, nor are they likely to be developed in the near future [2030]…”(Report of the 2015 Study Panel, “Artificial Intelligence and Life in 2030”, June 2016: 4).

Narrow AI, Applied AI or Weak AI

On the opposite side of the spectrum, one finds Narrow AI, Applied AI or Weak AI, which focuses “on the pursuit of discrete capabilities or specific practical tasks” (Goertzel 2015; Goertzel and Pennachin, 2005). In other terms, the aims is to “perform specific tasks as well as well as, or better than, we humans can (Michael Copeland, “What’s the Difference Between Artificial Intelligence, Machine Learning, and Deep Learning?“, NVDIA, 29 July 2016). Face recognition on Facebook, Google or in various Apple programmes is an example of Narrow AI. Apple Iphone Siri is another instance of narrow AI.

This approach now largely dominates the AI field (Goertzel 2015). Indeed, opposing it to AGI, the AI100 continues:

“Instead, increasingly useful applications of AI, with potentially profound positive impacts on our society and economy are likely to emerge between now and 2030, the period this report considers.” (Artificial Intelligence and Life in 2030”, Ibid.)

It is here that one finds Deep Learning, which is now leading the current phase of AI’s exponential development, and upon which we shall focus in the next article.

Symbolic AI, Emergentist AI and Hybrid AI

Then, the field is also divided according the type of methodology used to achieve results.

The top-down approach, also called symbolic approach, was the main method used until the end of the 1980s. It seeks to apprehend cognition in a way that is independent from the organic structure of the brain and is still used (Copeland, 2017). Its main achievements have been expert systems (Ibid.). The most recent work focuses on developing “sophisticated cognitive architectures”, using notably “working memory” drawing on “long-term memory” (Goertzel, 2015).

The bottom-up or connectionist or also emergentist approach was used in the 1950s and 1960s, then fell into neglect before becoming important again in the 1980s (Copeland, 2017; Goertzel, 2015). It is now mainly focused on creating neural networks and is the methodology that brought the latest advances and boom in AI.

Deep Learning, for example, is composed notably of “multilayer networks of formal neurons”, as we shall see in the next article. Developmental robotics also uses the emergentist approach. Here one tries to control robots through allowing them “to learn (and learn how to learn etc.) via their engagement with the world” (Goertzel, 2015). Notably, “intrinsic motivation” is explored, i.e. robots learn to develop “internal goals like novelty or curiosity, forming a model of the world as it goes along, based on the modeling requirements implied by its goals” (Ibid.). “Juergen Schmidhuber’s work in the 1990s” is considered as foundational in this area (Goertzel, 2015 refering to Schmidhuber, 1991).

Work on hybrid systems, mixing the two approaches started emerging in the first decade of the 21st century, including for AGI (Goertzel, 2015).

With the next article, we shall focus on the “deep learning” revolution, exploring its components and starting looking at its applications and uses.

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Featured image: Titan, a hybrid-architecture Cray XK7 system with a theoretical peak performance exceeding 27,000 trillion calculations per second (27 petaflops). It contains both advanced 16-core AMD Opteron central processing units (CPUs) and NVIDIA Kepler graphics processing units (GPUs). It is installed at the Department of Energy’s (DOE) Oak Ridge National Laboratory, and still the largest system in the US, but slips down to number five in the Top500 for November 2017. From Oak Ridge National Laboratory media gallery, Public Domain, recolourized.

Signals: A Russian-backed Congress in Sochi for Future Peace in Syria?

Impacts and ConsequencesIf Russia succeeds in gathering major actors in a congress in Sochi, which we estimate as likely (55% to 70%)Increased likelihood to see, at the end of the process, a constructive peace settling in Syria Increased likelihood to see the birth of a Federal Syria Increased likelihood to see the survival of the Kurdish-led Federation of Northern Syria Increased likelihood to see a serious lowering of tensions in the Middle East and even some kind of stabilisation Increased Russian influence(Nota: The symbolic board has been moved to the end of the analysis and before the sources/signals)Facts and analysisAs stated by Russian President Putin, the overarching goal is now, for Syria, “the political settlement process, with the finalization of the …

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Signal: Russia’s Putin Hosts Syria’s Assad for Working Meeting on Future Syria at Peace

Impact on Issues and Uncertainties ? Degree of influence of Russia on Turkey compared with Turkey’s perception of threat related to a Kurdish polity on its southern flank (near future critical uncertainty)? Finding a compromise on Hezbollah and Iran presence or withdrawal from a future peaceful Syria (near future critical uncertainty) ? Are the root causes that allowed the Islamic State to rise in the region addressed (medium to longer term critical uncertainty)? ➚ ➄ to ➂ Constructive peace for Syria➚ Creation of a Federal Syria➚ ➃ to ➂ Survival of the Kurdish-led Federation of Northern Syria➘ ➃ to ➂ Middle East Tension ➚ ➃ Turkey’s perception of threat➙ Threat to Israel ➚➚ ➃ Russia influence➙ ➃ U.S. influence trial – likely leading to ➙➘ U.S. influence➚ ? ➁ U.S. Russia global tensions ?  Global spread “under cover” of Jihadism➚ ?  Strengthening of al-Qaeda➙ ? Resilience of Islamic …

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Challenges Looming over the Petrodollar System

Editor’s note: China has planned to launch a derivatives contract or crude oil futures contract at the Shanghai International Energy Exchange (INE) denominated in Yuan for the last two years. The contract should initially have started at the end of 2015, then, in September 2016 it was again delayed by one year (Henry Sanderson, Financial Times, 15 September 2016).  The contract would now be launched by the end of 2017 (RT, 25 October 2017). Assuming this indeed finally takes place, are we about to witness a challenge to the USD supremacy, all the more so that it is related to oil? What is the petrodollar system that could be thus defied? How does that “petrodollar system” relates to the overall USD supremacy? Which are the actors involved in this specific possible change? What is China’s role? These are some of the questions addressed here.

This article focuses mainly on the petrodollar system, which is at the heart of the U.S. dollar supremacy, and on the challenges it meets. Meanwhile, these trials start outlining potential futures for the international currency system. Continue reading “Challenges Looming over the Petrodollar System”

Signals: China enters the Fray in the Middle East; Israel Unprecedented Interview; Saudi Arabia…

Impact on Issues and Uncertainties

? U.S. decisions and actions regarding the region and notably Syria; Turkey’s perceptions and consequent actions regarding the region and notably the Peace settlement in Syria; Hezbollah’s perception of threat to survival (uncertainties)

(compared with previous related signal)  (conflict in Yemen) Saudi perception of Iranian expansion and resulting threat

Lebanon destabilisation
(according to Israel’s military interview) Hezbollah influence in Lebanon

➘ ➃ Conflict in Yemen: prospects for beginning of deconfliction

War in Syria
Tough diplomatic negotiations for peace in Syria

(compared with previous related signal) Iran actualization of the Shia crescent to the Mediterranean Sea
 (compared with previous related signal) Iran influence
➘ further expansion of Iranian influence (assuming Iran wants it)

 (compared with previous related signal) Threat to Israel

➘➘  (compared with previous related signal) Middle East Tension

China influence in the region and globally
➙ ? (compared with previous related signal) Russia influence
➙ ? (compared with previous related signal) U.S. influence
  (compared with previous related signal) France influence

A new state of play is emerging in the Middle East, which redraws the regional web of influence, following the military victory over the Islamic State in Iraq and Syria and the concurrent and related negotiations for the end of the war in Syria. At the global level, the current jockeying taking place in the Middle East and its result will also have consequences as it impacts perceptions of global players, as well as influence and thus capability.

As of mid-November 2017, Iran appears as having achieved its objective to establish a Shia crescent from Iran to the Mediterranean Sea. Furthermore, Iran now appears as having succeeded in becoming a major influential regional power, if not the most influential. Russia has asserted its position as major power in the Middle East, while the United States has seen its influence being winnowed away, notably in Iraq, a process started under the Obama presidency.

The situation is still evolving as the various countries of the region, here Saudi Arabia and Israel, act to at minima see their interests considered and protected, and at best to try turning the current state of play to their advantage. Meanwhile, China, as rising global major if not super power also enters the fray.

In this framework, on 16 November 2017, three significant “diplomatic events” took place (see sources below).

First Chinese President Xi Jinping and King Salman of Saudi Arabia discussed over the phone. Xi Jinping stressed that “China’s determination to deepen strategic cooperation with Saudi Arabia will not waver, no matter how the international and regional situation alters”. The Chinese President also added that “China supports Saudi Arabia’s efforts to safeguard national sovereignty and realize greater development.” Considering China’s good relations with Iran, this is a strong Chinese statement that assures Saudi Arabia that China will not take side even though the regional situation were to escalate further. The Chinese statement may even be read as a warning to Iran not to  threaten Saudi Arabia’s national sovereignty. In that, China may be seen as a stabilizing actor in the region. Both Iran and Saudi Arabia are indeed crucial to China, not only in the framework of its Belt and Road initiative, but also and relatedly as energy suppliers, to say nothing of the highly probable willingness to dethrone the USD as the supreme global currency (see forthcoming 20 November article on the Petrodollars system).

Meanwhile, Israeli chief of staff, Lt. Gen. Gadi Eisenkot gave “an unprecedented interview to Saudi newspaper” Elaph (Haaretz see below). Unsurprisingly, Eisenkot labelled there Iran the “real and largest threat to the region”, stressed that “Iran seeks to take control of the Middle East, creating a Shi’ite crescent from Lebanon to Iran and then from the [Persian] Gulf to the Red Sea”, and that “We must prevent this from happening”. He welcomed the new Trump Presidency’s policy in the region, underlining that “The United States is trying to strengthen and support the moderate Sunni axis in the region without bringing in [American] troops or fighting on the ground.”

Practically, Eisenkot stated that “We [Israel] are willing to exchange information with moderate Arab countries, including intelligence information in order to deal with Iran.”

Yet, he also set limits to what Israel was willing to do. Israel did not intent to initiate a conflict in Lebanon against the Hezbollah, while he “cautioned … that local flare-ups could “lead to a broad strategic conflict.” He then pointed out a weakening of the Hezbollah in Lebanon.

Then, Eisenkot re-emphasised that Israel had a “long-term policy not to get involved in the Syrian conflict”… as long as there was no “attempt to harm our Druze brothers”. He reiterated Israel’s demands regarding the need for the Hezbollah and Iran to leave Syria, stressing that “we will not accept Iranian consolidation in Syria in general, and their concentration west of the Damascus – Sweida Road [about 50 kilometers from the Israeli border on the Golan Heights]. We will not allow any Iranian presence, we have warned them against building factories or military bases and we will not allow it.”

Eisenkot statements are, among others, an official and public response to the Saudi highly possible intent to stop Iran and act against the Hezbollah, as expressed by Saudi Arabia’s Foreign Minister Adel Jubeir in an interview with Reuter. There, Jubeir stressed that “(The Iranians) are the ones who are acting in an aggressive manner. We are reacting to that aggression and saying: ‘Enough is enough. We’re not going to let you do this anymore’.” He added, as summarized by Reuters, that “Saudi Arabia was consulting its allies about what leverage to use against Lebanese Shi‘ite group Hezbollah — an Iranian ally — to end its dominance in the small Mediterranean nation and intervention in other countries.”

Lebanon, considering Israel’s statement, however, does not appear as a realistic theatre of operations to stop or check Iran’s influence. Israel even seems to suggest a kind of laissez-faire, that would appease the situation there. If the Saudis pay heed to Israel, considering too previous developments in the Lebanese crisis (see previous signal), as Iran did not appear to have so far poured oil on the fire, it is likely that the situation will settle in Lebanon.

In Syria, considering the state of play on the ground (see map below), it continues to be difficult to see “anti-Iranian influence” actions other than tough peace negotiations being endeavoured, except if the U.S. were willing to change enemy, which does not appear as likely. Yet not likely does not mean impossible.

Remains Yemen, where China’s position added to Israel willingness to share information could act as a stabilising influence on the conflict, without, of course, forgetting to consider the willingness of the local actors.

Thus what seems to be emerging is a stabilizing Middle East, with a stronger Iranian influence, which would be kept in check by global powers.

Potential feeling of threats and dangers to survival felt by the Hezbollah must also be closely monitored as they may engender further instability.

The way the Syrian conflict will be settled and if it is at all settled, as Turkey’s interest must also not be forgotten, will probably prove key.

 

Xi commits unwavering cooperation in phone call with Saudi king Salman – Global Times

China’s determination to deepen strategic cooperation with Saudi Arabia will not waver, no matter how the international and regional situation alters, Chinese President Xi Jinping told Saudi King Salman bin Abdulaziz Al Saud in his phone conversation with the ruler Thursday.

Israeli military chief gives unprecedented interview to Saudi media: ‘Iran is biggest threat to Mideast’

In an unprecedented move, a Saudi newspaper on Thursday published an interview with the Israeli military chief, Lt. Gen. Gadi Eisenkot. This is the first time that an Israeli chief of staff is interviewed by a media outlet in the kingdom, which doesn’t have diplomatic ties with Israel.

Saudi foreign minister tells Iran: “enough is enough”

RIYADH (Reuters) – Saudi Arabia’s Foreign Minister Adel Jubeir said on Thursday the kingdom’s actions in the Middle East were a response to what he called Iranian aggression, and hinted at future action against Lebanon’s Hezbollah. Long-standing arch-rivals, Riyadh and Tehran are waging a contest for power on several fronts across the region, notably in Yemen and Lebanon.

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