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April 13, 2017

Did Russia influence the Brexit vote?

One of the issues to watch out for in the coming elections is the influence of Russia and other foreign powers. There is clear evidence that Russia in particular has stepped up its cyberwarfare. Russian bots were behind an attack on the Bundestag in 2015, which resulted in the leaking to WikiLeaks of some classified documents from the secret services committee. 

A House of Commons committee is now making a similar claim of Russian involvement in respect of a cyberattack on a voter registration website in the UK last year, as reported by the Guardian among others. The attack led to the extension of the voter registration deadline for the Brexit referencum beyond the original cut-off date of June 7. What seemed to have happened, according to the committee, is a so-called "distributed-denial-of-service attack", also known by its initials DDOS. DDOS uses botnets, networks of computers infected with malware, to overwhelm a target site. The committee has no direct proof of Russian involvement, but it is confident in its analysis that this was a DDOS attack, the scale of which only government agents have the resources to organise. This passage in the report struck us as particularly interesting:

“The US and UK understanding of ‘cyber’ is predominantly technical and computer network-based. For example, Russia and China use a cognitive approach based on understanding of mass psychology and of how to exploit individuals. The implications of this different understanding of cyber-attack, as purely technical or as reaching beyond the digital to influence public opinion, for the interference in elections and referendums are clear.”

Nobody claims that this issue in any way affected the outcome of the referendum. But it was mostly young people who either registered late or not at all, and the young were overwhelmingly in favour of Remain. The issue is not so much whether Russia got the result it wanted, but the simple fact that Russia may be consistently using DDOS attacks to undermine western democracy. Attacks may be getting more sophisticated and powerful over time.

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April 13, 2017

All good between Germany and the US now?

Ulrich Speck is one of the more sure-footed German foreign policy analysts, but we disagree with his latest article. He says that relations between the US and Germany are on the way to normalisation after the initial shocks of Donald Trump’s election.

While normalisation is clearly possible, we think it is too early to come to the conclusion that

“beyond all the media chatter, the German-American relationship is slowly getting back on track.”

There are clearly people inside the German government who would want us to believe the story. Speck's conclusion is ultimately based on the idea that the pragmatists within the Trump administration are winning over the ideologues, citing Steve Bannon’s recent demotion as evidence. On this point, we note the more nuanced take by Ed Luce, who argues that Bannon will continue to wield important influence over Trump. 

We also think Speck underestimates the potential conflict over Germany’s current account suplus. We have yet to meet a German-based economists or political analysts who thinks than a 9% current account surplus should be a big deal. But it is a big deal to Trump, who has ordered a 90-day investigation by the US Commerce department into the nature of bilateral deficits, together with recommendations of how to address them. This is not a criticism the Germans will be able to brush off in the way they are brushing off similar criticism from the European Commission. The soothing words of Merkel about trade as a win-win game, which Speck quotes, are not going to change that. He concludes that the main sticking point is military spending.

His overall point is that US-German relations are moving towards continuity, with a risk of disruption. We think this danger is clear and present because Germany - through mercantilistic economic policies and a defence spending commitment it has no intention of fulfilling - has made itself vulnerable to criticism from this particular US administration.

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