Economic and Political Security today


July 10, 2018

Economic and Political Security today

by Editorial Board, ANU

http://www.eastasiaforum.org/2018/07/09/economic-and-political-security-today/
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The Trump administration in Washington has invoked security threats under Section 232 of the Trade Expansion Act of 1962 to impose punitive tariffs on imports of steel and aluminium. The next target is automobiles and parts and US$34 billion of Chinese imports. While it may sound plausible that dependence on these crucial industrial imports from potential adversaries might affect national security interests, there’s absolutely no responsible analysis that suggests they do. Security policy is dominating broader national strategy in the United States, while economic considerations affecting security in more important ways are taking a back seat.

 

Only 2 per cent of US military steel supplies are sourced abroad. As for automobiles, as the global auto association recently pointed out, ‘America does not go to war in a Ford Fiesta’. The national defence requirement for imported cars and parts is virtually zero. If US capacity for the production of civilian autos and trucks is relevant to national defence, it is stronger now as a result of trade and import competition than it has ever been. As the US National Association of Manufacturers says, import restrictions simply give an edge to foreign production. The unilateral imposition of tariffs or quotas under Section 232 would undermine the sector and broader manufacturing production and jobs in the United States, the association suggests. A weaker American economy undermines America’s military power.

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Donald Trump declares a Tariff War on China

National security arguments for these tariffs simply provide a fig leaf of ‘legal’ authority for President Trump to impose penalties on US trading partners, including Europe, Japan, China (which incidentally supplies only 3 per cent of US steel imports), South Korea and Canada — Australia having done a WTO-illegal deal to wriggle out — for totally spurious reasons.

False claims about the relationship between trade and national security are not just a figment of Mr Trump’s fantastical imagination. They are reflected in US National Security statements and the pronouncements of national security authorities in other countries, including in Australia. The Trump administration’s first National Security Strategy called China a ‘revisionist power’ that seeks to ‘displace the United States in the Indo-Pacific region’ and ‘shape a world antithetical to US values and interests’. It said that the engagement policy had ‘failed’ and that ‘great power competition’ had returned between the United States, China, and Russia. Soon after, the National Defense Strategy changed the primary focus of US strategy from fighting terrorism to preventing the threat to ‘US prosperity and security’ and ‘international order’ posed by China’s quest for ‘global pre-eminence’ and the leadership of an ‘authoritarian’ world.

It’s not that these claims should not be seriously evaluated; that’s exactly what should happen. But they should not be accepted as unchallengeable holy writ and dominate the national strategies of the United States and other countries. The issues in national economic strategy at stake for the people of the United States and other countries extend well beyond the competence of the security policy establishment, just as security issues extend beyond the competence of the economic policy establishment. Each needs to inform the other.

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Peter Drysdale and Shiro Armstrong in our lead essay this week look at better processes for getting the hard choices that Australia faces in strategic policy right. Like a number of other countries in Asia, the United States is Australia’s principal security partner and its major trading partner is China. Australia’s national interest comprehends both China and the United States — and security and economics need to be integrated into strategic decision making from the outset. Australia needs to be better placed to deal with the ongoing challenges from both countries (and others) in a world that’s become more complex.

‘The problem’, Drysdale and Armstrong suggest, ‘lies in how Australia’s strategic policy choices are currently being framed and made’.

‘Strategic policy is overwhelmingly framed from a security perspective in political–military terms. Yet the economic dimension of national power and influence is also central to the hard choices to be made on strategic policy. Economic policy and engagement reinforce and habituate a rules-based international order and, significantly, they create bigger, broader interests and pluralities in countries. Incorporating economic options with political–military elements in thinking about strategic policy broadens options for attaining both national security and prosperity’.

Drysdale and Armstrong illustrate the problem through the lens of responses to China’s infrastructure initiatives such as the Asia Infrastructure Investment Bank (AIIB) and the Belt and Road Initiative (BRI). The security community in the United States frames these initiatives in concerns about territorial disputes and political developments in China, and represents them to their allies in Asia as designed to compromise willing partners in Chinese debt. That’s clearly not the whole story: though the AIIB and BRI do provide China with a means ‘to increase its influence, as other countries like Japan have in the past, [they are] also a way for China to support economic development and poverty reduction by building infrastructure and creating economic links between countries, and [for China] to become a responsible global and regional player commensurate with its growing economic size and power’.

‘The responses of the security specialist and the economist are each inadequate in themselves. But bringing them together offers a path of constructive and active engagement that can support both security and prosperity. Drawing away is not going to stop China pursuing the BRI, while engaging intelligently and systematically can mitigate some of the downside risks and help lift global prosperity and security’, Drysdale and Armstrong point out.

This problem is not limited to choices about China. Australia and its partners in Asia are now confronted with the reality that the United States, their primary security alliance partner is actively engaged in seeking to destroy the rules-based economic regime on which their prosperity and their political security is fundamentally based. This is an immediate and existential threat. The medium to longer term consequence of the United States’ own self-inflicted harm will, on all rational calculations, shrink its economic power and political influence. Where’s that reflected anywhere in Australia’s national strategy at this time?

The Drysdale–Armstrong analysis leads to the powerful conclusion that Australia’s national strategy policymaking is deeply flawed in the marriage of these two arms of the national interest. The system worked well when Australia’s main security and economic partners were the same. But that world has changed, and the way in which top political decisions on national strategy are framed as well as the foundations of policy advice on which they depend are overdue for significant reform.

The EAF Editorial Board is located in the Crawford School of Public Policy, College of Asia and the Pacific, The Australian National University.

Data Driven Preventive Diplomacy For ASEAN Member States


July 6, 2018

Data Driven Preventive Diplomacy For ASEAN Member States

by Hana Hanifah and Askabea Fadhilla, The Habibie Center

http://www.eastasiaforum.org

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ASEAN countries are no strangers to conflict and violence. As a region comprising diverse nation-states, Southeast Asia has experienced a number of inter- and intra-state conflicts. Political stability in the region has improved over the last decade, especially due to a decline in inter-state disputes. But intra-state disputes in the form of ethnic conflicts, violence against minorities and violent extremism — including terrorism — are gaining ground.

 

There are ongoing reports about Rohingya trying to escape from Myanmar and seeking refuge in Malaysia. Amid the Myanmar army’s denial of its alleged atrocities against the Rohingya, about 700,000 Rohingya have reportedly fled the country since August 2017.

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Meanwhile, according to the Global Peace Index, the Philippines is one of the least peaceful countries in the region due to its bloody war against drugs and crime that has resulted in increasing rates of homicide, incarceration and extrajudicial killings. Based on the same report, Indonesia had the greatest performance drop in the Asia Pacific in terms of peacefulness due to an increase in politically-motivated terrorism and growing tensions between hard-line fundamentalists and minority groups. Indonesia is also more and more vulnerable to the threat of an alliance between the so-called Islamic State, Darul Islam and some local violent extremist groups, as shown in the recent Surabaya bombing.

Even decades before the United Nations’ An Agenda for Peace report in 1992, ASEAN had committed to maintaining peace in the region without using the label of ‘preventive diplomacy’. From its inception, ASEAN was intended to be a regional conflict-prevention mechanism that internalised the practices of peaceful dialogue, consultation and consensus building among its members, amid the geopolitical uncertainty and diplomatic breakdowns that characterised the Cold War period.

The ASEAN Regional Forum defined preventive diplomacy for ASEAN in 2001 as member states’ diplomatic or political action to prevent disputes or conflicts that could pose a threat to regional stability, with the purpose of preventing such disputes from escalating to armed confrontation and minimising the impact of those conflicts and disputes on the region.

But in practice, preventive diplomacy in ASEAN is limited to the execution of forums and meetings that do not necessarily producing binding mechanisms to resolve potentially destabilising intra-state conflicts. ASEAN seems to be stuck in confidence-building measures and has not completely implemented preventive diplomacy as envisioned by the United Nations.

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Critics point to the development gap and significant political differences between ASEAN member states. The ‘ASEAN way’ that rests on the principles of consensus building and non-intervention is often cited as one of the factors that undermine a deeper commitment to implementing preventive diplomacy. ASEAN’s limited definition of preventive diplomacy is also criticised for constraining the practice of preventive diplomacy in the region to only include conflicts between and among states. This excludes non-state and intra-state conflicts or violence, which are seemingly growing in the post-Cold War era.

But the biggest challenge to preventive violence in ASEAN yet to be taken seriously is the lack of knowledge about conflicts and violence. To this day, it remains a challenge to pinpoint the general trend and exact number of violent events and conflicts within ASEAN. Some instances were allegedly perpetrated by the state, while others were committed by non-state entities and individuals. Although some reports intuitively indicate that violence in ASEAN is increasing, it is hard to identify the exact number of incidents because the data is scarce and rarely updated.

The limited reliable data that is available reveals that each country in Southeast Asia has its own patterns and characteristics of conflict and violence. In terms of intensity, there are also differences in the number of casualties and frequency of incidents. The types of violence also differ and include civil wars, insurgency, crimes, communal conflicts and violence against minority groups.

Relatively little data on violent incidents existed until recently, and the data is generally focused at the national level. Data on regional trends is patchy and scattered across various sources, which makes it difficult to generate a quick and accurate analysis to aid policy making processes. Not all countries have the capacity to record such data, which itself can be a controversial process in a number of ASEAN member states where conflicts are sometimes highly political.

Knowledge about the distinct features of violence in ASEAN is crucial to enable policymakers and stakeholders to identify shortcomings in the region’s approach to responding and preventing conflict. Such knowledge would also equip them to come up with effective policies and strategies to promote peace and stability in ASEAN.

A knowledge-based approach would enable stakeholders to resolve conflicts more effectively — not only by managing the impacts but also by preventing the escalation of future conflicts and violence. It would also encourage better practices of data collection and recording violence in and between ASEAN member states — which is essential to monitoring and evaluating preventive diplomacy and progress towards peace in the region.

Hana Hanifah and Askabea Fadhilla are Researchers at the ASEAN Studies Program, The Habibie Center, Jakarta.

 

Singapore Summit: China is the biggest winner


June 14, 2014

The Biggest Winner at the U.S.-North Korea Summit: China

by Evan Osnos

https://www.newyorker.com

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Honestly, I think he’s going to do these things,” President Trump told reporters in Singapore on Tuesday night, after signing a page of loose declarations with Kim Jong Un. “I may stand before you in six months and say,‘Hey, I was wrong.’ I don’t know that I’ll ever admit that, but I’ll find some kind of an excuse.” Perhaps no truer words were spoken at the Singapore summit, where Donald Trump, with a handshake and a shrug, opened a new phase in Asia that will eventually reveal him to be either a visionary who saw a path to peace where others did not or a dupe who squandered American credibility. He announced the opening of contact with North Korea with the bonhomie of a developer at a groundbreaking: he hailed an “excellent relationship” with a “talented” counterpart, and shooed away questions about timetables and the risk of default. He made no mention of Kim’s accelerated testing of missiles and nuclear weapons, or of his own threats, via Twitter last year, to “totally destroy” North Korea. He handed off the substantive work to his Cabinet, a team that is already sharply divided between Secretary of State Mike Pompeo, who has expressed high hopes for peace, and the national-security adviser, John Bolton, who has argued for years that North Korea cannot be trusted.

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Kim-Trump Singapore Summit

Compared with the expectations for the summit—or with previous agreements—there was much that Trump failed to get. There was no exchange of liaison offices and no pledge to improve human rights. “I do not see what can really possibly hold in this remarkably imprecise and nonbinding document,” Andrei Lankov, a longtime North Korea watcher at Kookmin University, in Seoul, said. “It is truly remarkable how Donald Trump, being in such a strong negotiating position, has managed to get so little from the North Koreans.” For Trump, the goal, apparently, was the handshake itself. In his view, cheerful patter is easy and inexpensive, and he can renounce the positive vibes on a whim, as needed. In the annals of diplomacy, though, the risks of casual declarations abound. Most apropos in this case is George W. Bush’s first official trip to Europe as President, when he was asked if he trusted Vladimir Putin, and famously replied, “I looked the man in the eye. I found him very straightforward and trustworthy—I was able to get a sense of his soul.” (Condoleezza Rice later lamented that response, writing, “We were never able to escape the perception that the President had naïvely trusted Putin and then been betrayed.”)

Trump appears to have decided that the chance of a breakthrough is worth the risk of looking naïve. “I do trust him, yeah,” he told ABC’s George Stephanopoulos, in answer to the inevitable question about Kim. “He really wants to do a great job for North Korea. He’s de-nuking the whole place, and I think he’s going to start very quickly. He really wants to do something, I think, terrific for their country.”

What Kim really wants, however, may not be what Trump has in mind. “North Korean media wrote at remarkable length about Kim Jong Un’s trip to Singapore,” Lankov told me. State cameramen made a point of filming attentive, prosperous Singaporeans, a montage that will be used to fortify Kim’s image and to promote the prospect of economic reforms. The Rodong Sinmun, North Korea’s major official newspaper, dedicated a large part of its front page to celebrating Singapore’s authoritarian capitalism. “The island state was praised on a scale one seldom sees in the North Korean newspapers,” Lankov added. But, in its early reports, North Korean media made conspicuously little mention of the substance of the summit, and Pyongyang gave no sign that the state is preparing its public to stop celebrating nuclear weapons as a singular achievement.

In fact, as expected, North Korea made no specific commitments about dismantling its nuclear program. In the joint statement, Kim “reaffirmed his firm and unwavering commitment to complete denuclearization of the Korean Peninsula”—a reference to previous agreements, going back to 1992, which have not held. By far, the largest concession in the talks came from Trump, who announced his willingness to freeze joint military exercises with South Korean forces. For months, Trump’s aides described a freeze as a non-starter, but, on Tuesday, he adopted North Korea’s view that the exercises are, as he put it, “very provocative” and said that the suspension would “save us a tremendous amount of money.”

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Trump freezes joint military exercises with South Korean forces.That is no minor concession

That is no minor concession. The next round of war games with South Korea was scheduled to take place in August. After the announcement, Patrick Cronin, an Asia specialist at the Center for a New American Security, told me that joint exercises are designed to deter North Korea from attacks on the South, such as the sinking, in 2010, of the Cheonan, a naval vessel, which killed forty-six seamen. Deterrence relies on “a degree of professionalism and readiness for crisis response that can only come through military training and exercises,” he said. “If North Korea is not moving toward significant disclosure of its nuclear forces and then taking significant, verifiable steps in the direction of denuclearization, then we should resume pressure, including major exercises, by next spring.”

More surprising still, Trump raised the previously taboo prospect of withdrawing some of America’s nearly thirty thousand troops in South Korea. “I want to get our soldiers out. I want to bring our soldiers back home,” he said. That may have been improvisation. Hours earlier, Defense Secretary James Mattis had told reporters, “I don’t believe” that troops were up for negotiation. Senator Lindsey Graham, a South Carolina Republican, and usually a Trump defender, said on NBC that he would “violently disagree” with any removal of troops from South Korea.

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“Trump may have also precipitated an outcome that he does not fully grasp: by suspending military exercises, and alluding to removing troops from South Korea, he will stir doubts about the strength of America’s commitment to its allies in Asia, including Japan, Taiwan, and Australia. They will have no choice but to begin to reimagine America’s role in the region, and their relationships to Beijing.”–Evan Osnos

Nobody greeted the news from Singapore with more delight than China. For years, Chinese officials have urged Trump to freeze military exercises in South Korea, which Beijing regards as a threatening gesture in its neighborhood. Shortly after the announcement, the Global Times, a nationalist state newspaper in Beijing, hailed Trump’s move in an editorial headlined “End of ‘War Games’ Will Be a Big Step Forward for Peninsula.” Elizabeth Economy, a China specialist at the Council on Foreign Relations, told me, “The Chinese are breathing a deep sigh of relief. They got what they most wanted.” She added, “And, best of all, it came out of President Trump’s mouth. The Chinese didn’t even have to rely on Kim Jong Un to do their bidding.”

Any negotiations in the months and years ahead will be fraught: the United States will need to get Kim to provide a full declaration of North Korea’s nuclear weapons. International inspectors will seek to verify them. Only then can the U.S. begin to imagine dismantling them. But, more immediately, Trump may have also precipitated an outcome that he does not fully grasp: by suspending military exercises, and alluding to removing troops from South Korea, he will stir doubts about the strength of America’s commitment to its allies in Asia, including Japan, Taiwan, and Australia. They will have no choice but to begin to reimagine America’s role in the region, and their relationships to Beijing. From Trump’s perspective, the encounter with Kim was an end in itself. For those who bear the consequences of his words and actions, this is just the beginning.

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  • Evan Osnos joined The New Yorker as a staff writer in 2008, and covers politics and foreign affairs. He is the author of “Age of Ambition: Chasing Fortune, Truth, and Faith in the New China.”

 

French President Macron Addresses U.S. Congress


April 26, 2018

Full Replay: French President Macron Addresses U.S. Congress

by Tim Hains

https://www.realclearpolitics.com/video/2018/04/25/full_replay_french_president_macron_addresses_us_congress.html

 

The French President took aim at several key points of Trump’s agenda in a historic speech to a joint session of Congress on Wednesday. Emmanuel Macron urged President Trump to stay in the Iran deal and got loud applause from Democrats when he said he knew the U.S. would rejoin the Paris climate pact “one day.”

The speech happened to coincide with the 58th anniversary of then-French President Charles de Gaulle’s address to a joint session of Congress.

“The 21st century has brought a series of new threats and new challenges that our ancestors might have never imagined,” Macron said. “We can build the 21st-century world order based on a new breed multilateralism, based on a more effective, accountable, and results-oriented multilateralism.”

He continued: “This requires more than ever the United States involvement as your role was decisive for creating and safeguarding this free world. The United States is the one who invented this multilateralism. You are the one who has to help now to preserve and reinvent it.”

On Iran, he said: “Our objective is clear. Iran shall never possess any nuclear weapons. Not now, not in five years, not in 10 years, never.”

“We should not abandon it if we don’t have something more substantial instead. That is my position,” Macron added. “Your President and your country … will have to take its own responsibilities regarding this issue.”

About climate change, he said: “Let us face it: There is no planet B.”

“We must find a smoother transition to a lower carbon economy,” he said.

“Because what is the meaning of our life, really, if we work and live destroying the planet while sacrificing the future of our children? … On this issue, it may happen we have disagreements between the U.s. and France, it may happen, like in all families. That for me is a short-term aggravation. In the long run, we will have to face the long-term realities… together”.

READ THIS: Macron tears down Trumpism and makes a strong case in favor of a 21st century new global world order.

https://s2.washingtonpost.com/camp-rw/?e=ZG1lcmljYW4yQGdtYWlsLmNvbQ%3D%3D&s=5ae15cd7fe1ff668a04e46d1

GE-14: What is the Economic Agenda?


April 4, 2018

GE-14: What is the Economic Agenda?

by Dr.  Shankaran Nambiar (received via e-mail)

WHAT is at stake in the next general election? There are accusations and counter-accusations being traded. Scandals are being hung for all to see – on both sides of the divide.

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Can one expect a major shift in the economic policy framework? It is not certain if the next government is going to cut the size of the civil service. Or if we are going to have high quality state-financed healthcare as in Norway, Finland or the United Kingdom. Or if higher education is going to be entirely a public sector affair as in the UK or Australia.

It seems that the fundamental economic model is set and will not change. Nevertheless, all political parties are strongly convinced of the importance of free trade, regional integration and the role of foreign direct investment. The implementation and details will vary with each party.The devil, as usual, is in the details.

But there is no doubt that the country needs a clear agenda for economic progress. The principles guiding economic reform have to be re-visited and a framework will have to be designed.

One such list of priorities could be as follows:
» Rolling down government involvement in business
» Prioritising efficiency and the achievement of outcomes
» Creating adequate opportunities for all groups, particularly the disadvantaged
» Ensuring the economic neutrality of the country
» Affirming good governanceImage result for Malaysia in Troubled Times

From One Malaysia to Malaysia TN50–Quo Vadis, Malaysia

A little elaboration is in order. First, government participation in business cannot be ruled out. As economic theory suggests, government participation is necessary in areas that are not attractive to the private sector. The government’s involvement is usually welcome if security issues are at stake; or if the investment is risky but necessary for the public good.

The rationale for government-linked companies to invest in hospitals or private universities is a bit of a puzzle. Why should the government (even if indirectly) get in the business of healthcare and education when it should be supporting the provision of these services?

Second, the efficiency of the public sector has to be further upgraded. This includes public delivery systems (where there has been tremendous improvement in many areas) and it should also include public procurement and the decision-making on projects (particularly mega projects).

Third, the responsibility of the government should be to ensure the fair distribution of opportunities. Prioritising opportunities entirely on the basis of ethnicity can create inefficiencies. It can also de-incentivise targeted agents. People who have been selected to receive benefits can lose the motivation to maximise their performance.

Efficiency and the achievement of outcomes cannot be pushed aside. There is a debate in economics on outcomes versus opportunities. In practical terms, one cannot indefinitely defend creating an opportunity-rich environment with no regard for outcomes.

Fourth, good governance covers a range of issues including institutional integrity, the freedom to voice one’s opinions, being free from violence, transparency and zero tolerance for corruption.

The Rule of Law is a key pillar of good governance. It should stand above position, title, religious belief and political association.

Fifth, it is essential that Malaysia retain its independence and sovereignty.

Razeen Sally, a prominent academic and Sri Lanka observer, is known to have remarked at a conference that Sri Lanka should not become a vassal state of China. The same cautionary comment could be made in a different and perhaps a more general context. Malaysia should resist any attempt to reduce itself into being a vassal state of any superpower.

Politicians claim that Malaysia needs foreign direct investment and that it does not matter where this comes from. This is a naïve argument. There is a difference between an investment made for commercial reasons and one that is made so that a superpower can exert its sphere of influence.

A careful examination is necessary to decide on the economic viability of any foreign investment.

A set of criteria should be established to assess whether foreign investment should be accepted: the rates of return should be acceptable, the use of foreign labour should be allowed subject to need, there should be transfer of technology, and the terms on which loans are offered should not be unfavourable.

Malaysia has to remain economically and politically neutral, a state that is free to pursue its own agenda.If Malaysia is to be a star it needs to develop a more liberal culture in the economic and social spheres.

Dr Shankaran Nambiar is a senior research fellow at the Malaysian Institute of Economic Research. He is author of Malaysia in Troubled Times. Comments: letters@thesundaily.com

Day of Reckoning for Mark Zuckerberg and Facebook: Rebuilding Trust


March 25, 2018

Day of Reckoning for Mark Zuckerberg and Facebook: Rebuilding Trust

Revelations about the depths of Facebook’s failure to protect our data have finally pulled back the curtain, observers say

One expert said the Cambridge Analytica revelations will finally get people to ‘pay attention not just to Facebook but the entire surveillance economy’.
One expert said the Cambridge Analytica revelations will finally get people to ‘pay attention not just to Facebook but the entire surveillance economy’. Composite: Bloomberg

“Dumb fucks.” That’s how Mark Zuckerberg described users of Facebook for trusting him with their personal data back in 2004. If the last week is anything to go by, he was right.

Since the Observer reported that the personal data of about 50 million Americans had been harvested from Facebook and improperly shared with the political consultancy Cambridge Analytica, it has become increasingly apparent that the social network has been far more lax with its data sharing practices than many users realised.

As the scandal unfurled over the last seven days, Facebook’s lackluster response has highlighted a fundamental challenge for the company: how can it condemn the practice on which its business model depends?

“This is the story we have been waiting for so people will pay attention not just to Facebook but the entire surveillance economy,” said Siva Vaidhyanathan, a professor of media studies at the University of Virginia.

Since Zuckerberg’s “dumb fucks” comment, Facebook has gone to great lengths to convince members of the public that it’s all about “connecting people” and “building a global community”. This pseudo-uplifting marketing speak is much easier for employees and users to stomach than the mission of “guzzling personal data so we can micro-target you with advertising”.

In the wake of the revelations that Cambridge Analytica misappropriated data collected by Dr Aleksandr Kogan under the guise of academic research, Facebook has scrambled to blame these rogue third parties for “platform abuse”. “The entire company is outraged we were deceived,” it said in a statement on Tuesday.

However in highlighting the apparent deceit, the company has been forced to shine a light on its underlying business model and years of careless data sharing practices.

Sure, the data changed hands between the researcher and Cambridge Analytica in apparent violation of Kogan’s agreement with Facebook, but everything else was above board. The amount of data Cambridge Analytica got hold of and used to deliver targeted advertising based on personality types – including activities, interests, check-ins, location, photos, religion, politics, relationship details – was not unusual in the slightest. This was a feature, not a bug.

 Cambridge Analytica whistleblower: ‘We spent $1m harvesting millions of Facebook profiles’ – video

‘Extremely friendly to app developers’

There are thousands of other developers, including the makers of the dating app Tinder, games such as FarmVille, as well as consultants to Barack Obama’s 2012 presidential campaign, who slurped huge quantities of data about users and their friends – all thanks to Facebook’s overly permissive “Graph API”, the interface through which third parties could interact with Facebook’s platform.

Facebook opened up in order to attract app developers to join Facebook’s ecosystem at a time when the company was playing catch-up in shifting its business from desktops to smartphones. It was a symbiotic relationship that was critical to Facebook’s growth.

“They wanted to push as much of the conversation, ad revenue and digital activity as possible and made it extremely friendly to app developers,” said Jeff Hauser, of the Center for Economic and Policy Research. “Now they are complaining that the developers abused them. They wanted that. They were encouraging it. They may now regret it but they knowingly unleashed the forces that have led to this lack of trust and loss of privacy.”

The terms were updated in April 2014 to restrict the data new developers could get hold of, including people’s friends’ data, but only after four years of access to the Facebook firehose. Companies that plugged in before April 2014 had another year before access was restricted.

“There are all sorts of companies that are in possession of terabytes of information from before 2015,” said Hauser. “Facebook’s practices don’t bear up to close, informed scrutiny nearly as well as they look from the 30,000ft view, which is how people had been viewing Facebook previously.”

Cambridge Analytica claims it helped get Trump elected by using data to target voters on Facebook.
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Cambridge Analytica claims it helped get Trump elected by using data to target voters on Facebook. Photograph: Win Mcnamee/AFP/Getty Images

For too long consumers have thought about privacy on Facebook in terms of whether their ex-boyfriends or bosses could see their photos. However, as we fiddle around with our profile privacy settings, the real intrusions have been taking place elsewhere.

“In this sense, Facebook’s ‘privacy settings’ are a grand illusion. Control over post-sharing – people we share to – should really be called ‘publicity settings’,” explains Jonathan Albright, the research director at the Tow Center for Digital Journalism at Columbia University. “Likewise, control over passive sharing – the information people [including third party apps] can take from us – should be called ‘privacy settings’.”

Essentially Facebook gives us privacy “busywork” to make us think we have control, while making it very difficult to truly lock down our accounts.

‘The biggest issue I’ve ever seen’

Facebook is dealing with a PR minefield. The more it talks about its advertising practices, the more the #DeleteFacebook movement grows. Even the co-founder of WhatsApp Brian Acton, who profited from Facebook’s $19bn acquisition of his app, this week said he was deleting his account.

“This is the biggest issue I’ve ever seen any technology company face in my time,” said Roger McNamee, Zuckerberg’s former mentor.

“It’s not like tech hasn’t had a lot of scandals,” he said, mentioning the Theranos fraud case and MiniScribe packing actual bricks into boxes instead of hard drives. “But no one else has played a role in undermining democracy or the persecution of minorities before. This is a whole new ball game in the tech world and it’s really, really horrible.”

Facebook first discovered that Kogan had shared data with Cambridge Analytica when a Guardian journalist contacted the company about it at the end of 2015. It asked Cambridge Analytica to delete the data and revoked Kogan’s apps’ API access. However, Facebook relied on Cambridge Analytica’s word that they had done so.

When the Observer contacted Facebook last week with testimony from a whistleblower stating that Cambridge Analytica had not deleted the data, Facebook’s reaction was to try to get ahead of the story by publishing its own disclosure late on Friday and sending a legal warning to try to prevent publication of its bombshell discoveries.

Then followed five days of virtual silence from the company, as the chorus of calls from critics grew louder, and further details of Facebook’s business dealings emerged.

A second whistleblower, the former Facebook manager Sandy Parakilas, revealed that he found Facebook’s lack of control over the data given to outside developers “utterly horrifying”. He told the Guardian that he had warned senior executives at the company that its lax approach to data protection risked a major breach, but that he was discouraged from investigating further.

At around the same time, it emerged that the co-director of the company that harvested the Facebook data before passing it to Cambridge Analytic is a current employee at Facebook. Joseph Chancellor worked alongside Kogan at Global Science Research, which exfiltrated the data using a personality app under the guise of academic research.

Brittany Kaiser, former Cambridge Analytica Director: ‘I voted for Bernie’ – video

Demand for answers

Politicians on both sides of the Atlantic called for answers. In the US, the Democratic senator Mark Warner called for regulation, describing the online political advertising market as the “wild west”.

“Whether it’s allowing Russians to purchase political ads, or extensive micro-targeting based on ill-gotten user data, it’s clear that, left unregulated, this market will continue to be prone to deception and lacking in transparency,” he said.

The Federal Trade Commission plans to examine whether the social networking site violated a 2011 data privacy agreement with the agency over its data-sharing practices.

“I think they are in a very bad situation because they have long benefited from the tech illiteracy of the political community,” said Hauser.

The backlash spooked investors, wiping almost $50bn off the valuation of the company in two days, although the stock has since rallied slightly.

On Wednesday, Zuckerberg finally broke his silence in a Facebook post acknowledging that the policies that allowed the misuse of data were a “breach of trust between Facebook and the people who share their data with us and expect us to protect it”.

The social network is facing calls for answers from lawmakers on both sides of the Atlantic.
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The social network is facing calls for answers from lawmakers on both sides of the Atlantic. Photograph: Josh Edelson/AFP/Getty Images

 

Facebook’s chief operating officer, Sheryl Sandberg, added her own comment: “We know that this was a major violation of people’s trust, and I deeply regret that we didn’t do enough to deal with it.”

The company will investigate apps that had access to “large amounts of information” before the 2014 changes and audit thousands of apps that show “suspicious activity”. The company will also inform those whose data was “misused”, including people who were directly affected by the Kogan operation.

These actions don’t go far enough, said Vaidhyanathan. “Facebook has a history of putting on that innocent little boy voice: ‘Oh I didn’t know that I shouldn’t hold the cat by its tail,’” he said. “I think we’re tired of it at this point.”

These problems were pointed out by scholars years ago, said Robyn Caplan, a researcher at Data & Society, but Facebook’s response was slow and insufficient.

“They have been trying to put out a lot of little fires but we need them to build a fire department,” she said.