About Alex Harrowell

Alex Harrowell is a 33-year old research analyst for a start-up telecoms consulting firm. He's from Yorkshire, now an economic migrant in London. His specialist subjects are military history, Germany, the telecommunications industry, and networks of all kinds. He would like to point out that it's nothing personal. Writes the Yorkshire Ranter.

Ukraine, Snowden, and SIGINT proliferation

OK, so what do EU chief diplomat Catherine Ashton, US assistant secretary of state Victoria Nuland, Estonian foreign minister Urmas Paet, Russian ambassador to Eritrea Sergei Bakharev, and his colleague in Zimbabwe Igor Chubarev all have in common? They’ve all had their mobile phone calls intercepted and leaked onto the web.

The first three, well, Russia, obviously. The bizarrely distant ambassadors are presumably a gesture by the US to demonstrate the reach of the NSA. At least that is what you might have said a few years ago. But we live in an age of intelligence proliferation today.

If you want to intercept GSM calls these days, you need a USRP, a few hundred dollars’ worth, and copies of GNU Radio, OpenBTS, and a few other open-source software packages, all of which are entirely free. Osmocom will be useful too, also free. A couple of £15 Motorola C115 phones. And of course a laptop. (If you just want to listen to voicemail, well, call Glenn Mulcaire.)

The same computational abundance that made it possible for the NSA and friends to overreach so spectacularly has also brought capability that not so long ago was reserved to them within the power of hayseed cops, nonstate groups, and competent individuals with a few hundred bucks. It didn’t have to be the Russians; it could have been Yanuk’s cops, or freelance anti-Maidan activists, or even rebels hoping to force the EU to act. It’s now probably easier to intercept real traffic and edit the recording before leaking it than it is to fake the whole thing.

You’d think people would take more care – someone should point the EU SITCEN at the Blackphone project at least – but then I learned something interesting. The State Department, after all, has all the secure communications it needs, but they have the problem that they are not secure against the boss, and fairly often it is necessary to say things you don’t want to send back to Washington. It’s a fascinating lesson.

In the other direction, here’s a detailed discussion of the Mexican Zetas’ radio network, although sadly lacking in technical content.

In general, we should expect much more of this.

This interacts with the whole Snowden affair in complicated ways. There’s a reassuring story (well, for some people) that says: Look, the silly Europeans and journalists and such have run into the Russians now. It’s like the Cold War. I’m young again!

Of course, it’s actually true that NATO member states near the borders are worried and are asking urgently for the alliance’s forces to be seen more often. But we shouldn’t be fooled that the case is now closed. Those same states are also exposed to information security threats, and the NSA (and friends) interference with major security infrastructure projects has exposed them further. It has also harmed the degree of confidence their allies can offer them. It’s in the nature of the technology that once you create an exploit, you can’t guarantee others won’t find it.

This also matters for less macro-scale politics. Back in 2007, I played a minor role in Dan Hardie’s campaign to get the British Army’s Iraqi employees landed in the UK. This involved communicating with people in places like Syria who were under varying degrees of threat, and Dan asked me for advice. At the time, you could be reasonably confident in Skype’s encryption and its distributed architecture, and that’s what we used. It had the huge advantage that it was utterly uncontroversial software that anyone might have, and that didn’t require us to distribute code or key material securely. I gave quite a bit of thought to this, in case it became necessary, and never arrived at any solution I found even close to convincing myself, let alone anyone else.

Today, thanks to the subversion of Skype, I would have to come up with some sort of scheme to deploy one of the hardened messaging apps, probably circumventing censorship en route, generate keys, and get them deployed and configured. Granted, most of the users would have a smartphone or netbook or tablet with them rather than using untrusted public machines, but on the other hand, potential interceptors are so much more aware of the possibilities now I think I might not try. In the current case, this activist in Belarus appears to have had his Skype calls intercepted.

This is a pity. Eli Lake reckons the US won’t share satellite imagery with Ukraine, but I’m not sure of the sourcing and I keep seeing US diplomats tweeting overhead photos. Do they need to, though? Proliferation cuts both ways. As I was saying with Dr Strauss, advice on working with the new tool set might be as good or better. Like this. Or this:

There’s a better photo here – the ones with the bubble under the nose are the Mi-24 attack helicopters.

No-one who reads this has any voice in the decision, but whether Insider Guy, Intelligence/Administrative Guy, or [name redacted, yes, seriously] gets the GCHQ top job is far less important than whether we decide to free the CESG security wing of the organisation and bring it back to London.

Quick debate point

An EU debate point. Martin Schulz just pointed to the German government’s scrappage bonus as an example of “protecting the hard core of German industry, automotive production, by keeping the people there” that justified an increase in sovereign debt. The reference to “keeping the people there” also implies he was thinking of kurzarbeit.

A coalition for Schulz?

Jean-Claude Juncker and Martin Schulz are debating, live on France24. Glued, of course. As someone has already said on Twitter, Schulz speaks better French than Juncker. JCJ has also said that Gerhard Schröder “introduced budget discipline in Germany”. Schröder got let off for breaking the stability pact!

Anyway, we were blogging about the European Parliament getting more partisan and at the same time, more powerful. Under a deal between the political parties, they’ve agreed to veto any candidate put forward by the governments that they don’t like. This move means, paradoxically, that the side who wins the elections might be able to name the commission president.

Last week, the parliament passed a version of the latest lot of telecoms regulations that requires intra-European roaming charges to disappear by the end of 2015, makes various changes regarding how telecoms services can be marketed, and introduces quite strong net neutrality language. This included a definition of “specialised services” that basically rules out the idea of reclassifying, say, Netflix or YouTube as a specialised service carrying a fee for preferential delivery. (There’s also some dull technical stuff about spectrum management that only people like me care about.) ETNO, the European telco lobby, had been relying on the specialised services clause to kill the net neutrality element, so this bit is crucial to the whole thing.

My point, though, is that the amendments in question, numbers 234 to 236, were introduced jointly by the Socialists, the Liberals, the Greens, and the extreme-left group. It looks like the Right chose to fold when they realised they couldn’t get rid of the amendments, as the package passed by 534 votes to 25.

This starts to look like a transition from the permacoalition between the conservatives and the socialists to an alliance between the parties of the broadest possible Left. Something similar is going on in Germany, where Der Tagesspiegel has a good discussion of how a group of SPD, Green, and Left Party politicians are putting connections in place for a potential future coalition.

Il faut sauver le soldat Juncker. Pourquoi, on ne sait pas

What about some actual European politics? Jean Quatremer has an interesting story. He starts off with a joint profile of Martin Schulz and Jean-Claude Juncker – and I presume I’ve now lost 90 per cent of the readers – but then it gets interesting.

So, the political parties in the European Parliament decided back in 2011 to name top candidates at the elections, and then to treat the winner’s top candidate as the Parliament’s candidate for President of the European Commission. All parties did this except for the extreme right and the odd new group with the British Tories in, who decided not to name a top candidate. The Parliament doesn’t get to nominate the president, but it does have a veto. This now starts to look a lot like the Parliament getting to choose, as the parties have agreed to veto anyone, expect the top candidate who wins the election. You could even call it democracy, of a sort.

It seems that Angela Merkel, and the intergovernmental wing of the EU more widely, doesn’t like this much. It is, after all, an effort by the elected branch to take over more power. Although everyone claims to want a more democratic EU, nobody wants this to happen at the expense of their own power. So, there is a plan afoot.

Juncker, the continental chief conservative, would be appointed as president of the Council immediately, on polling day. Therefore, the Parliament wouldn’t have the chance to appoint him to the Commission, and the agreement between the parties would no longer be valid as there would no longer be a conservative chief candidate.

This might throw the whole issue open, and leave it to the freies Spiel der Kräfte as they say in German politics. Alternatively, it might leave the Commission to the Left. Merkel would keep some sense that the intergovernmental power controlled things, keep Juncker in yet another of his countless eurojobs, and get a German at the Commission, although she would have to tolerate a Social Democrat.

Schulz, for his part, is setting up a coalition of the very broadest Left to back him in the case that he either wins the elections, which is possible, or that Merkel has Juncker lifted out by helicopter. This means the end of the weird longstanding coalition between Socialists and Conservatives in Brussels. Told you there was something interesting in here.

That said, I can’t help thinking that the whole manoeuvre with Juncker is exactly the sort of thing that millions of Europeans hate about the EU. He has been something pompous in the EU for the whole of my life and I can’t think of anything he has achieved with it except for protecting the Luxembourg tax haven. Now the prospect of him losing an election is greeted with some scheme to give him yet another eurojob in pursuit of an institutional politics spat maybe 0.01% of Europeans could describe.

Over at the Open Europe Blog, a comment on a post about the AfD says:

The issue is that nowhere in Europe the combination between desillusioned voters and business oriented policies seem to be very appealing. It looks to be one or the other. There looks to be room for a more business oriented party in most countries.

The answer is, of course, that they’re disillusioned with the business-oriented policies and the Junckerist politics.

Price and quantity

An upshot from the last post. Markets can adjust by price, or by quantity. Economics usually assumes that they do both simultaneously, although the maths usually doesn’t work that way. There is no reason I can think of to prefer either mode of adjustment a priori, but practical applications will usually show that one or the other would be better.

In the radical view that markets are institutions that are defined by the societies that create them, it is a very important question whether a new one (or an old one undergoing change) will tend to adjust price-first or quantity-first.

Still in search of requisite variety: UK housing edition

The search for requisite variety goes on. At the moment, the big guessing game in British macroeconomics is “when does the Bank put up interest rates?” The following story suggests that this is beside the point.

The statement noted that mortgage demand was up 40% in the year to January, while surveys by the main mortgage lenders suggested prices were around 10% higher in February than a year earlier.

It said: “In a continuation of a longer-term trend, mortgages at loan-to-income ratios above four times accounted for a higher share of new mortgages in the third quarter of 2013 than at any time since the data series began in 2005. New mortgage lending at high loan-to-value ratios remained low by historical standards, though the number of mortgage products offering higher loan-to-value ratios had doubled over the previous six months.

“Given the increasing momentum, the FPC will remain vigilant to emerging vulnerabilities, will continue to monitor conditions closely and will take further proportionate and graduated action if warranted.”

Threadneedle Street intends to oblige banks and building societies to carry out stringent stress tests later this year to see whether they would find themselves in trouble in the event of a slump in house prices or a sharp rise in interest rates.

Oh jesus here we go again

Yeah. Interestingly, most of the classic bubble pathologies are showing up – try this for size – but for the first time in my life, this seems to be accompanied by dread, not euphoria. Nobody is cheering.

These stress tests are interesting. First of all, the fact that the Bank needs to audit the banks to work out if it is actually possible to increase the policy rate without triggering a major bank failure is itself evidence that the situation I described in the original In Search of Requisite Variety post is coming to pass. The rest of the economy is more than lacklustre but the housing market is going ape again.

Secondly, the version of that story that appeared in the paper contained several paragraphs that don’t appear in the web version. For example:

Amid growing concern that the central London property market is already overheating, the Bank’s financial policy committee said that from June it wanted to have the powers to set the interest rate scenarios lenders would have to consider when granting home loans

Another quotes Brian Hilliard of Société Générale as saying:

Both of these metrics, loan-to-value and loan-to-income, appear in the list of potential future tools the committee could use. The FPC would probably move first on loan-to-income. The problem with controlling loan-to-value ratios is that it might be thought to run contrary to the idea of the government’s Help to Buy scheme

What’s going on here is that the Bank is seeking requisite variety. Specifically, they’re trying to create policy tools to address a housing bubble without imposing monetary contraction on the whole economy. Setting “the interest rate scenarios lenders must consider” and then auditing them should lead the lenders to turn down more applications for very large mortgages. Setting a limit in terms of loan-to-income would have a similar effect on mortgages applied for by borrowers who might struggle to repay them. Rather than changing the price of credit economy-wide, this would mean that some new applications would be credit-rationed.

This, of course, represents finance being re-regulated. In the de-regulation era, it was thought that the big issue was the overall price of credit, which a central bank could control. Its distribution among borrowers, sectors, and geography would find its own level. Brad DeLong’s Republic of the Central Bankers gets at this weird combination of enormous central-planning power vested in the Fed, and its restriction to hugely general and rough measures.

It was hoped that this represented a sensible compromise between the need for a stabilisation policy, and the avoidance of what was thought to be harmful bureaucracy. But another way of looking at the republic of the central bankers is that it is rather like Russia – it has a stash of nuclear weapons with which it can destroy the economy and that’s basically it. Precisely because its chief policy options are “Nobody notices” and “Blow everything up”, its day to day influence is often less than it imagines. It is also superbly, peerlessly unaccountable.

I am much in favour of re-creating a variety of policy responses. I am, though, worried that the regulatory power is being re-created in the unaccountable and often explicitly anti-democratic domain of the central bank. This is evidence, though, that the political system itself lacks requisite variety. Who do I vote for to re-regulate mortgage finance? As a result, the problem landed with the people who did have enough degrees of freedom to do something: the Bank.

Mark Carney agrees.

“This focus initially made sense since one of the greatest challenges for macroeconomic policy in the late 1970s and 1980s was the fight against inflation,” he said. “However, with time, a healthy focus became a dangerous distraction.”

He described the move by Brown in 1997 to give the Bank independence to set interest rates focusing on an inflation target as a “deconstruction of the old model of central banking”.

“In my view, while there were enormous innovations of enduring value during this period, the reductionist vision of a central bank’s role that was adopted around the world was fatally flawed,” Carney said in his Mais Lecture at the Cass Business School in London.

Crimea: meet the family

Here’s something interesting: the pro-Russian paramilitary leader in the Crimea is the son of the pro-Russian paramilitary leader in Transnistria.

As that empire was pushed out of Eastern Europe, Aksyonov’s father, Valery, became the leader of a group called the Russian Community of Northern Moldova, which campaigned for the rights of ethnic Russians in a country ruled by the Moldovan majority. In 1990, the ethnic tensions in that country erupted into war, and the Russian army came to the rescue of paramilitary groups fighting the forces of the Moldovan government. Two years later, the conflict ended with the de facto secession of a breakaway state called Transnistria, a sliver of land that runs along the Dniestr River.

Today, Transnistria is still a frozen conflict zone on the map of Europe – and a state that Aksyonov reveres. Its independence is not recognized by any member of the United Nations, including Russia. It is the only part of Europe that still uses the insignia of the Soviet Union, and its economy imposes Soviet-style subsistence living on the masses while the politically-connected elite benefit from its unique black market. As an unrecognized state unbound by international law, its customs points are a clearinghouse for contraband, including tobacco, guns and counterfeit liquor. But Aksyonov sees it as a place to be emulated. “Transnistria is a bastion of Russian culture inside Moldova,” he says. “They wanted to preserve their identity. And I fully support them, because I know what kind of pressures they faced.”

Who knew frozen conflicts could be a family business? Of course, “family” and “business” are usually very ordinary words that can take on a very different significance.

He remembers Aksyonov in the 1990s as a member of a criminal syndicate called Salem, which was named for the brand of contraband cigarettes they imported and dealt in bulk. (Other accounts claim the group was named for the cafe where they hung out.) “Aksyonov was a capo for them, an enforcer,” says Los. “He had a group of ten guys that would go around collecting money.” Aksyonov’s nickname in the local underworld, says Los, was the Goblin. “Every gangster had a nickname. I was called Horns because of my surname.” (Translated from Russian, the word los means moose or elk.)

In Crimea, it looks like he’s starting with the banks. Of course. Was ist ein Einbruch in eine Bank gegen die Gründung einer Bank? I do think this fits with my idea that this is about post-Soviets vs. pre-Europeans.

Update: He may have just added two gas companies. Nothing succeeds like success.

Ukraine: it’s a thing

This piece of Galrahn’s has a great title: US Soft Power in Ukraine is Missing Hard Power’s Escalation Control. It then wanders off into generic stuff about how Obama is lacking resolve and a succession of supposed military options, all of which would lead to war with Russia.

But if we were to stick with the title, we might learn something. “Soft power” – influence, the EU as a magnet, that stuff – is very hard to “calibrate” precisely because it deals in influence over people rather than physical force. People may not be impressed for years, but then change their minds and hugely over-deliver. The participation that makes it important also makes it very difficult to use as an instrument of policy. Classical theories of innovation diffusion tell us that “reinvention”, the degree to which users make innovations their own, is a critical factor in whether this or that idea reaches enough early adopters to hit the inflection point into mass adoption. As a result, not only does it work far better than anyone expects when it works, it also goes to new and unpredictable places nobody expects.

Fair enough. It is obviously true that US and European soft power played a role in Euromaidan. They called it Euromaidan, after all. But I have been writing so far in the voice of someone who imagines they controlled the situation, explaining why they failed to control it. Saying that soft power lacks escalation control is another way of saying that you underestimated the agency of Ukrainians. This theme runs through the whole story.

Vladimir Putin, famously, doesn’t believe it’s a nation and openly treats it as a colonial entity. The US imagines that some National Endowment for Democracy money and advice will solve everything in the way they would like it to be solved. The EU sees it as a fairly cynical bargaining process between Yanukovych and Yulia Tymoshenko and wouldn’t have minded Yanukovych sticking around even after all the shooting. Yanukovych, for his part, clearly didn’t think of Ukraine as a nation; he thought he owned it.

Operationally, this was meant to work like so. The conflict could be presented as a divide between (ex-Polish) western Ukrainians and (ex-Soviet) eastern ones. Experts differ. This would permit people to see it as not a proper nation, a conflict that had to be managed, or alternatively a Soviet survival that needed protecting from the IMF. At street level, this would show up as a pro-Yanuk movement big enough to be a potential political majority. But Yanuk was let down by the failure of the supposed “pro-Russian East” to show up. He was counting on it and he may have reassured Vladislav Surkov, Putin’s very influential PR expert, that it was coming when Surkov came to see him.

The problem was, though, that the “pro-Russian east” had already been a disappointment in 2004, and it was even weaker this time. Research on the ground suggests that the idea of a geographical split is misleading – the political divide is generational, and eastern Ukrainian identity does not signal support for Russia and still less for Yanuk. There is even some evidence that the linguistic picture has changed since 2004, with more people, especially young people, opting to speak Ukrainian and to adopt such an identity. This could be described as the transition from a post-Soviet to a pre-European identity. We might make a little leap of faith and argue that the EU missed this too, and the evidence is that Tymoshenko’s polls are horrible.

If the pro-Russian east didn’t show up, who did? There was a big surprise about Ukraine, and there was a big non-surprise. The surprise was the appeal of the European Union as an ideal – who expected that? – and the non-surprise was the emotional force of nationalism. This brings me to Tuesday’s standoff at Belbek airfield, Sevastopol, where Ukrainian Colonel Yuri Mamchuk led an unarmed march of the 204th Aviation Brigade’s ground crew to assert their right to access the runway and maintain the 40 or so MiG-29 aircraft there. You can watch the confrontation, with subtitles, below:

But I prefer this photo, which reminds me of Ilya Repin, perhaps a painting entitled Colonel Mamchuk Defies the Rascally Cossacks:

The imagery here is very important – the red banner is the colours of the Soviet unit whose traditions the 204th inherited, which had no fewer than six Heroes of the Soviet Union. The Ukrainians have both appropriated the Second World War heritage, and also posed the question as to who looks like the Germans here. It’s also crucial to note that the people Mamchuk led up to the Russian sentries will have been the cooks and clerks and avionics technicians you need to make an air force work, not some sort of commando elite. This is, I think, what nationhood looks like.

And as a piece of strategic nonviolence, it came close to scuppering the whole Russian plan or non-plan in the Crimea. If the Ukrainians got to use the airfield, they could resupply and indeed relieve their garrisons there. If they could fly their planes, they would evidently discredit any Russian claim to control the air. Starving them out would no longer be an option. Having both Russian and Ukrainian forces present would be very much like the Crimea pre-revolution, and therefore something close to the status quo. The degree to which Russian and Ukrainian forces coexisted there until this month is shown by the fact the 204th is a counter-air wing with the dogfighter variant of the MiG-29, and the Russian air wing up the road is a strike force with the Su-24 bomber. The Ukrainians essentially provided the Black Sea Fleet’s air defence. (SO AWKWARD.)

The upshot was a compromise – the Ukrainians didn’t get to reoccupy the airfield, but they did get to station people there. But this is progress towards the status quo. And today, this Daily Mirror piece mentions that the Ukrainian navy’s helicopters are active in Crimea and that the Mirror journalist saw one resupply the garrison he visited. If this is true, the Ukrainians can hold out a long time.

On Tuesday, both Putin’s odd self-contradictory statement and Kerry’s words in Kyiv were united in tone; they both seemed huffy, calling for OSCE monitors to check on the kids-on-lawn situation. Two old men who found they controlled the situation much less than they thought. It is worth pointing out that historically, Crimeans have usually demanded autonomy or even independence, not integration in Russia.

Sources I used beyond the ones linked in the text: