Insights April Edition

HEADWINDS & TAILWINDS

Dear Friends:

It is no surprise that India is often called the “Pharmacy of the World.” The Pharma sector currently contributes to around 1.72 per cent of the country’s GDP. While the statistics may not give the correct perspective, an average Indian can consider himself fortunate that he has access to the latest medicines at the lowest costs. But India faces serious headwinds against mounting international competition and disrupted supply chains due to geopolitical contestations. This week’s cover story features deep insights from some notable experts from academia, industry and the government on the future of the pharma ecosystem in India.

We also look at energy politics that have come to dominate global concerns.

In geopolitics, the growing bonhomie between France and China was in the spotlight. However, this relationship has not been without difficulties, especially in recent years, as tensions have increased over trade, human rights, and territorial disputes.

Saudi Arabia is breaking all pre-conceived notions about its diplomatic sagacity, and the credit should rightly go to the dynamic Crown Prince, universally acknowledged as the de-facto ruler of the Kingdom of Saudi Arabia.

For long, Synergia Foundation has advocated that businesses must learn to align their corporate

Sincerely yours

strategy with geopolitical risk management by maintaining a close collaboration between businesses and security think tanks acting as tripwires and the government. Ukraine and other global crises like the pandemic have driven home this point most emphatically.

To use a much-used cliché, when the U.S. sneezes, the world catches a cold. This is exactly what is happening in the American money supply, which is being steadily squeezed. Staying on the U.S., in recent weeks, headlines have been dominated by the latest ‘Pentagon Leaks’ this time in a messaging platform. What was leaked turned out to be a veritable treasure trove. We go on to detail the role that OSINT plays in modern intelligence operations.

The situation in Israel continues to remain worrying. The negativity has been especially noteworthy in the tech industry as the tech leaders have been most vocal about it.

In the technological segment, we do a deeper analysis of how AI will influence our economic and other activities.

We hope our esteemed readers will continue supporting us as we strive to further evidencebased research on strategic issues with global resonance.

Maj. Gen. Ajay Sah Chief Information Officer

Greetings from the Synergia Foundation!

GEO-POLITICS

FRANCO CHINA OVERTURES

French leaders have been aggravating Washington for more than fifty years, starting with President Charles De Gaulle; Macron only continues with the tradition!

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GEO-POLITICS

RECALIBERATION IN PROGRESS?

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HEADWINDS & TAILWINDS

“I think in the next 20 years, we are going to see an absolute boom in the number of small med techs companies,” says Prof Chas Bountra.

THE INDIAN PHARMA STORY

“The Indian pharmaceutical industry, with a market value of $42 billion in 2021, ranks 14th globally in terms of value and 3rd in terms of volume. As a major player in the generics market, the industry is often referred to as the “Pharmacy of the world,” Dr Satish Reddy.

HEALTH - CARE

COMING TOGETHER OF ACADEMIA & INDUSTRY

“The industry academia partnerships are important, particularly in India where we work in a highlyresource constrained environment,” Dr Radha Rangarajan, Director of CDRI, Lucknow.

HEALTH - CARE

FUTURE OF INNOVATION: AN INDIAN PERSPECTIVE

“India has missed opportunities due to a dysfunctional system, and its contribution to pharmaceutical innovation has been modest.”

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GEO-ECONOMICS

GPRS: THE NEW NORMAL FOR BUSINESS

As geopolitical risks (GPRs) reshape the corporate landscape, businesses must adapt and innovate to survive in an increasingly uncertain world.

US FED: SHUTTING THE MONEY TAP?

Are the Central banks pushing in a deep recession by over-squeezing the money supply to control inflation?

WHISTLE-BLOWER OR A BOYISH BOAST

The ‘Discord’ leak by a young U.S. National Guards Airman is turning out to be a veritable treasuretrove of intelligence. How will it impact the war in Ukraine?

Dr Ram Vishwakarma. ISRAEL

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ENERGY GEO-POLITICS

GEOPOLITICS OF ENERGY INSECURITYINSECURITY

Energy politics have

come to define current geopolitical tensions.

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ISRAELI TECH SCENE: IS IT TIME TO GO?

Israel’s powerful technological ecosphere is at an inflexion point, with many seeing little future.

THE PRICE OF A PURELY CEREMONIAL MONARCHY

Looking at Britain’s losses by having an utterly powerless head of state

OSINT: A GROWING TREND

The OSINT (Open Source Intelligence) is the new gold mine of operational and strategic intelligence, as evidenced by the Ukraine war.

AI SUFFERS A VOTE OF NO CONFIDENCE

As AI’s pioneer raises existential questions about the proper functioning and usage of the technology, it is time to examine what is at stake.

TECHNOLOGY TECHNOLOGY

AI-TRANSFORMING OUR LIVES

AI bots are quickly and insidiously infiltrating every aspect of human activity, including the economy and business. Is it safe?

HEADWINDS & TAILWINDS

“I think in the next 20 years, we are going to see an absolute boom in the number of small med techs companies,” says Prof Chas Bountra.

This article is based on a hybrid roundtable by Synergia Foundation on “Headwinds and Tailwinds Round Pharmaceutical Innovation and The Future of The Industry,” in which Prof Chas Bountra, Pro Vice Chancellor for Innovation at the University of Oxford, was the keynote speaker

The pharmaceutical industry has undergone a massive change in the last two decades, which will be much greater in scope and extent in the next decade. In fact, the industry will look nothing like it does today.

For one, the industry is going much more global. As per the CEO of Novartis, the pharmaceutical industry is going to be concentrated around three hubs-Boston (Vertex, Ironwood, Charles River, Boston Pharmaceuticals, Sarepta, Paratek, Acceleron, Agios etc.), Basel, Switzerland (Hoffmann-La Roche, Novartis, Alcon, Bayer, Lonza Group, Abbott, Galenica, Actelion, etc.), and Shanghai (Jiangsu Hengrui, BeiGene, Chongqing Zhifei, Yunnan Baiyao, Huadong, CSPC, Shanghai Fosun, Jiangsu Hansoh etc.)

However, the growth is such that it is bound to spread to other cities and hubs. In the U.S. alone, the spread stretches onto the West Coast, including San Diego and San Francisco.

Even Texas in the South is witnessing heavy investments. Similarly, globally we see the rise of Singapore and the massive investments from the Saudi royal family as it looks to diversify from oil to health research and

A paradigm shift is likely to take place in the R&D structure of the industry. The emphasis of pharma research will change from large, expensive research hubs towards more virtual and much smaller, nimble research bases spread around the world where the industry needs them and where the expertise resides.

oil-rich Qatar is following suit. In Brazil also, the pharma industry is attracting heavy investments. Of course, within the industry, a certain amount of downsizing would also be expected, with some regions benefitting at the cost of others. This is exemplified by global leaders like GSK moving from Shanghai to Japan. However, the industry’s centre of gravity continues to reside in the U.S.

Within all these churnings, India has ample opportunity to seek a role in the global pharma market.

CHANGING THE FACE OF PHARMA R&D

Big Pharma like Roche and Novartis have spent billions creating their research hubs in the past. A prime example is Cambridge, Massachusetts-based Kendall Square, known for its cluster of tech companies and Massachusetts Institute of Technology (MIT) buildings, from the Gehry-designed Stata Centre to the neoclassical Great Dome on which pharmaceutical companies have sunk an absolute fortune. The new As-

traZeneca building in Cambridge, UK, the GSK building in Stevenage and the Pfizer building in Sandwich, Kent, all cost over a billion Pounds.

A paradigm shift is likely to take place in the R&D structure of the industry. The emphasis of pharma research will change from large, expensive research hubs towards more virtual and much smaller, nimble research bases spread around the world where the industry needs them and where the expertise resides.

In the 1980s, there was a sense that the industry could do everything in-house- all the research, toxicology, and clinical development without seeking external academic collaboration. This was perhaps more of a PR ploy to show to the public, but the attitude has changed since then. The industry is acknowledging the fact that no matter how much money they put into research, it’s a tiny, tiny fraction of the research that’s happening across the planet. And so somehow, they need to build relationships with people outside, bring those ideas in, create company assets, etc. So, this is where virtual relationships will come into play.

Pharma research will not be confined to medicinal chemistry anymore. Twenty years ago, the focus was biologics and antibodies. Now there will be a revolution in terms of cell therapy, gene therapy, vaccines, RNA therapies, etc.

In Oxford, Adrian Hill has just released, with the help of colleagues in India, the new malaria vaccine, which has been approved in Ghana, and more countries are likely to follow. This one vaccine is expected to save more lives than the COVID vaccine did. And the malaria vaccine is an offshoot of all the experience gained in creating the COVID vaccine by Oxford University.

Another area where research is being concentrated is how to arrive at early diagnosis of diseases like cancer which currently are diagnosed when it is too late. Similarly, with Alzheimer’s disease, the patient has already lost big chunks of the brain by the time a correct diagnosis is made. Now scientists are working on technologies that can diagnose diseases at the earliest inception stage by measuring various parameters of blood and other body fluids.

A company called SomaLogic has a pioneering plat-

form that can measure approximately 7,000 proteins, more than twice as many as other proteomic technology platforms and is quickly moving toward 10,000 proteins. That’s half of the approximately 20,000 proteins in the human body. So, you’re getting several thousand readers in a tiny blood sample!

Another area where immense progress is being made is imaging technologies- you can image the brain, and almost all organs, detect inflammation, water content, iron content in the liver etc. The cost is also dramatically decreasing in imaging techniques, making them more accessible.

Wearable devices like smartwatches will ensure that body parameters are constantly monitored and directly transmitted to databases accessible to your physician.

Now we can measure 1000s of things in a patient longitudinally, continuously, non-invasively, and cheaply. So, diagnosis, earlier diagnosis, and therefore disease prevention will become more of a reality.

In the past two decades, many pharmaceutical companies have pulled out of Central Nervous System (CNS) and neurological and psychiatric research because it was too difficult, expensive, and unpredictable. Animal models being used were useless for cures meant for human beings.

But now, there is optimism in this field, and in the next few decades, there will be an explosion in science and new drugs for neurodegenerative and mental health conditions. There is virtually a pandemic of mental health raging globally, with over 20 per cent of adults in Europe having some mental health condition during their lifetime.

NEW SKILL SETS NEEDED

In the old days, the industry needed many medicinal chemists, pharmacologists, toxicologists, regulatory experts, people who design clinical trials, etc.

But the future of healthcare is radically changing, and today, the demand is for computational and data scientists, engineers, material scientists, etc., with many different skill sets because there’s no way that any company can concentrate all that resource and expertise in-

I think in the next 20 years, we are going to see an absolute boom in the number of small companies, med techs companies. Big pharma companies will form partnerships with this host of smaller companies and share the research load with them. We are going to see a revolution in terms of cell therapy, gene therapy, vaccines, RNA therapies. Today we do not have a single trillion-dollar pharma company, but with the way pharma is going, we will have such big pharma companies. In fact, India should aspire to create the first such company as it has all the building blocks which just need to come together.”

PROF CHAS BOUNTRA

Pro Vice Chancellor for Innovation, Oxford University, UK.

ternally. The University of Oxford is a typical example of the changing face of pharma research. It has experts from all the related areas, and in areas like toxicology or regulatory, where they face a gap, they seek external collaboration.

However, Oxford University leads the way in emerging fields like AI or machine learning, data science, computational science, material science. It can offer its expertise, virtually or otherwise, with like-minded topnotch research hubs anywhere in the world.

The field of research itself is evolving with students in top universities like Oxford refusing traditional academic degrees in favour of new combinations like PPE (Politics, Philosophy, Economics) born out of such belief that a combination study of the great modern works of economic, social, political and philosophical thought would have a transformative effect on students’ intellectual lives, and thereby on society at large.

Armed with such degrees, these students will go on to occupy the top political echelons in their native countries with a much better and more comprehensive understanding of how to find a balance between the social, economic and political pulls of their nations.

Students are no longer interested in traditional 9 to 5 jobs in traditional multinational companies. They want to create their own companies, become market leaders, learn to innovate, and be entrepreneurs.

They want to be exposed to writing business plans for start-ups, and this is bound to generate a boom with thousands of smaller, more agile companies being created. And these companies will have very deep, unique expertise in certain technologies, targets, diseases, ideas, or whatever.

And big companies are going to have to cherry-pick from these start-ups and acquire or collaborate with them. Big pharma companies are going to have to form lots more partnerships.

The research functions in these pharma companies will correspondingly decrease in size as project management, business development functions, academic collaborations, and the acquisition of small companies grow exponentially. With research bases shrinking in size, acquiring ideas and expertise externally will increase, which will result in lots more partnerships.

THE FUTURE BECKONS

What is going to cause an absolute revolution in this industry is AI and machine learning. And this is where a technology hub like Bangalore and Hyderabad has a real opportunity if they are ready to seize it.

In the U.S., there are companies on the doorstep of Stanford University worth more than a trillion dollars each- Apple, Microsoft, Amazon, and Tesla. These are all technology and data companies that have been created in the last 25 years. In the pharma field, the most

valuable company is J&J, which is around $ 440 billion and has existed for over a century! But the time is not far when somebody, some genius, will create a digital AI data-driven healthcare company that will become the first trillion-dollar pharma giant. It could happen in Bangalore!

AI machine learning will make things very exciting, helping us identify better targets for drug discovery and biomarker signatures that can be used for clinical trials and identify new drug combinations for treating complex diseases.

This technology will enable cross-usage of existing drugs because there are many drugs in use that, unknown to us, would work a lot better in other conditions too.

The biggest challenge to new technology is the high cost of its evolution- new therapies, new modalities, and new machines do not come cheap. Across the planet, governments cannot afford the escalating health care costs with ageing populations and the spiralling cost of modern treatments.

Even in developed countries, a large population cannot afford the escalating healthcare costs- emerging economies and low-income countries fare even worse.

A great deal of pharmaceutical research is being paid for by the private sector and pharmaceutical companies, apart from governments and research councils that have put a lot of money into charities. In recent years, venture capitalists are also stepping in. In the next few years, we will see much more philanthropic funding.

As life span increases, lifestyle diseases are also rising- China has nearly half a billion people who are pre-diabetic! Another area of concern is antimicrobial resistance. More than a million people a year die due to resistance to existing antibiotics.

And that number will continue to grow unless we develop a new generation of antibiotics. Big pharma is not investing in these because drugs are cheap, and the profit margins are very low.

There are nearly 7000 Rare Diseases, and it can take five to eight years for a child to get diagnosed; 30 per cent of those kids don’t reach the age of five, and 95 per cent of those individuals have no approved treatments. And the pharmaceutical industry is not working on it.

The climate emergency will worsen the magnitude because these changes are irreversible. Significant chunks of this planet will become uninhabitable, forcing massive migrations across the planet.

In the next couple of decades, the fastest population growth will be in Africa, and that’s where they’ve got a lot of young people. And in a couple of decades, there won’t be a million people trying to come into Europe, it’ll likely be 30 to 40 million people trying to come into Europe, the scale will just be much, much different.

EXCLUSIVE CONVERSATIONS

As a career civil servant who has worked in many fields like social welfare, disaster management etc., health has been the most challenging sector. This is primarily because it’s the complexity of the sector and too many moving parts to get a handle on things.

COVID was a major event in the recent past, and health became centre stage in this because till now, the funding for health has been fairly limited. Thanks to the surge in government funding during the COVID period, the healthcare infrastructure was rapidly updated in Karnataka. In March 2020, there were around 500 oxygenated beds in Karnataka and over a period of six months, these had gone up to 5000. Of course, the challenge remains taking health care into rural and remote corners of the state.

The whole of the government approach that came up during the pandemic helped to improve the healthcare infrastructure. The biggest challenge in the healthcare sector is the scale of operation; in

Karnataka itself, there are over 10,000 institutions and over 100000 people involved in the whole setup. While the government meets 30 per cent of the health care requirement, the private industry has a huge presence in the sector, making the regulatory process that much more challenging.

Inequality remains a nagging issue. In Bangalore, a city known for its innovation and change, around us in the state, close to 5000 children die, as the infant mortality rate is around 19. How do we use technology and innovation to break this cycle of inequality?

The lack of human resources is a major constraint in the health sector. What can make a difference is the availability of doctors, especially in the rural area. Changes have been brought about in the regulatory field to correct this situation, as the number of MBBS and MD degree holders decreased drastically since 2019.

The government is working on it, but it will still take eight to nine years for human resources to be made available in rural areas.

SHRI ANIL KUMAR, IAS

Principal Secretary, Department of Health & Welfare , Govt of Karnataka.

EXCLUSIVE CONVERSATIONS

The U.S. FDA, a major driver of thought and drug discovery, has said that animal testing is no longer required for drug discovery, which is a tectonic shift.

The Wyss Institute at MIT has leveraged recent insights into how Nature builds, controls and manufactures to develop new engineering innovations - a new field of research called Biologically Inspired Engineering. By emulating biological principles of self-assembly, organization and regulation, they are developing disruptive technology solutions for healthcare, energy, architecture, robotics, and manufacturing.

One of the cutting-edge areas they are researching is therapeutic discovery and diagnostics development enabled by microsystems engineering, molecular engineering, computational design, and organ-on-a-chip in vitro human experimentation technology. In simple terms, it implies that in the near future, all drug testing will be done on human organoids or digital twins.

Now trials can be done at sufficient throughput, enabling genetic diversity to be replicated and incorporated early in the preclinical trial.

Since the beginning of the 20th century, human life span has dramatically increased thanks to increased knowledge of public sanitation and the discovery of antibiotics. Another disruptor is taking place at the major pharmaceutical companies in the Bay Area trilogy. Diseases manifest only much later in life, and that is what is being broken into by research. There is a fundamental process of ageing that is underlying human physiology that it manifests in different diseases. So the disruptor is that major companies are working on increasing lifespan. Institute for Stem Cell Science and Regenerative Medicine InStem), for exam ple, builds skeletal muscle organoids in India, which will soon start testing for small molecules in human muscle cells to kill rare diseases.

DR. ARVIND RAMANATHAN

Associate Professor at Institute for Stem Cell Science and Regenerative Medicine ,National Center for Biological studies(NCBS)

Two disruptive developments have already taken place in the pharma industry.

The liver, muscle, and any other part of the human body can be replicated on a chip for trials.

EXCLUSIVE CONVERSATIONS

I’m the only practicing physician in the room today. I do medicine and haematology at the Christian Medical College. We established a centre for stem cell research at this institute in 2005, and in 2007, it became a translational unit of the Institute for Stem Cell Research and Regenerative Medicine Bangalore.

As a physician, I greatly appreciate the Indian pharmaceutical industry in terms of the range of products that they have brought to the people in this countrysmall molecules, peptides and monoclonal antibodies. I collaborated with Dr Reddy’s Laboratories for the first biosimilar they brought into the world.

Dr Cathy Charedi and Agha group collaborated to do some clinical trials that brought the first biosimilar rentex into the world.

Unfortunately, the risk appetite has not been there in India’s pharmaceutical space. It is not for lack of funds because research is much less expensive in this country than in Western countries.

We have access to a good range of conventional and classical products. But we have fallen behind when it comes to the more modern therapeutic space, like targeted therapies, more advanced monoclonal antibodies, and of course, cell and gene therapy.

And a space where it is hurting us a lot as a country is the entire car T cell therapy for cancers, where we have a neighbour-China- that did not innovate, but it is fast following in a way that now beats the leader- the U.S.-strongly.

At CMC, we realized that cell and gene therapy would be important, leading to the creation of the Centre for Stem Cell Research.

I had the privilege to have a ringside view of some of the developments in the world in the haematology space with gene therapy, and, therefore, I knew that it was possible to do this in India.

We have just put the right components together and received support from the Department of Biotechnology of the Government of India to establish the centre. In the last five to 10 years, we have innovated and established strategic collaborations with two universities in the U.S.

With that knowledge, scientists here have innovated enough that we now have proof of concept studies completed for gene therapy of three or four major unmet needs in India and the world. I’m talking about bleeding

disorders, like haemophilia, which is at the forefront of gene therapy approval products worldwide. I’m talking about the major haemoglobin disorders like sickle cell disease, where one product is approved, and more are soon to come. We have several technologies that are both vector-based as well as gene-editing approaches.

The important next step for us would be to collaborate with the industry because it’s good to complete the proof-of-concept studies at the academic level. But unless we can collaborate with the industry to take it forward, it will remain as IPs and publications.

That has been a challenge, and we have been searching for this collaboration for nearly a decade. Thankfully, in the last two or three years, there have been at least two groups that have dared to commit to this investment and engagement. India does not allow phase one studies to be done with products developed outside India. We don’t trust ourselves to understand science developed outside. We fear we would be unable to protect our participants in clinical trials if a product is made outside and not, you know, owned, or developed in India.

But things are changing. We are doing the first lentivirus Vector base mattapoisett extensor autologous transfused factory gene therapy for haemophilia with a product manufactured in a U.S. academic facility but undergoing phase one trial in India. The justification was that we had co-developed the research, and therefore, we have the license freedom to operate with that product in India.

Even though it was not manufactured here, it will be considered an Indian product because the research was collaborative.

There have been other situations where if we had trusted ourselves and our ability to evaluate science, we would allow others to bring phase one service to India, with, of course, the negotiation of allowing access to such products if they go further within our healthcare system.

These are exciting times, and there are challenges in this country. But there is also a lot of positivity about developing this area. And I’m hopeful that in the model that we’re trying to function, at least in this small space of Haematology disorders, and gene therapy, we could do something very significant in the next two to three years.

DR ALOK SRIVASTAVA, Head of Stemcell Research, Christian Medical College (CMC) Vellore.

EXCLUSIVE CONVERSATIONS

We operate in a very limited resource ecosystem in India. So rather than go for the full marathon, one can go for a low-hanging fruit. But rather than look at single-molecule drugs, one can look at the solid-state crystalline complexes, the supramolecular complexes of drugs. And this moves the innovation from 10,000 molecules or 10,000 possible molecules leading to a drug at the end of the long tunnel to something which is a much more telescoped and truncated process.

ENTRESTO, launched by Novartis, is an acute cardiac drug, a combination of supramolecular, hydrogen-bonded tri sodium pentahydrate, Hemi pentahydrate, salt of valsartan and sacubitril.

It was the first in-class drug to be approved in the category by the US FDA. And it has proved to be the best in class and has a blockbuster status today. At least half a dozen drugs are in the late stages of clinical trials and are likely to hit the market very soon.

The Indian pharmaceutical industry, which is largely a generics industry today because of historical reasons, can enter the innovation space but with a calculated risk and a timeline that is not going to be a decade long but something more like one- or two-years R&D. Another area of innovation in India could be in the con-

tinuous flow process intensification. Several academic institutes like CSIR, Institute of Chemical Technology, IIT Bombay etc., are working on this. Collaboration in the area of flow process intensification, which is more towards manufacturing rather than for drug discovery, will accelerate and bring the manufacturing process of the drugs at par with Western pharmaceutical companies.

Investors are looking at short timelines during which they want to see value for return. One way to achieve this is to move from traditional metal-based catalysis to bio-fermentation and biocatalytic processes. Pharmaceutical R&D could focus on bio-fermentation and biocatalytic enzymatic processes.

The areas which I would like to emphasize are that rather than going for the full-scale drug discovery model, we should opt for the telescoped version, the accelerating rate, med Chem discovery, and the drug development, that are supramolecular complexes.

And last but not least, spe cialized processes based on biocatalysts fermentation and handling of fluorine through the flow reactors.

PROF. ASHWINI NANGIA, Dean, School of Chemistry, at the University of Hyderabad and

EXCLUSIVE CONVERSATIONS

The industry-Academia collaboration is an important aspect. This is happening now with more interdisciplinary research activities.

There is consistency in collaboration which is critical. But there are several questions to be answered.

Is the research more application oriented? Papers are being published, but convincing scientists to collaborate with industry is taking time; change however,

The single target-based small molecule design may not work, and we should be going more towards a combination of synthetic chemistry and synthetic biology and targeting the

Nanomaterials are emerging as an important set of components that can regulate biological processes.

The knowledge we gained from biological systems and biochemistry is moving towards the chemical biology approach when using chemicals, small molecules, and other materials to regulate biological systems.

And that is where more academic research focus is going on. And in those areas, collaboration with industries is important.

Funding is a major challenge. Funding is inconsistent, and even if it comes for one year, for the second or third year, there is no assurance it will continue. So how can anyone venture into risk-oriented research without the financial wherewithal? This is the situation in many academic institutions.

Former director of NCL, Pune.

PROF MUGESH, Dean, Division of Chemical Sciences, IISC, Bangalore.

EXCLUSIVE CONVERSATIONS

The Bangalore-based National Centre for Biological Science led the building and setting up of the Bangalore Life Science cluster, a model of innovation and an academic institution with a programme that goes beyond fundamental research. This is a step towards creating an ecosystem for the start-up industry to engage with scientists.

Bangalore Life Science Cluster (BLiSC) is a unique hub of excellence in biological research in India. Nucleated by the National Centre for Biological Sciences (NCBS), a premier centre for cutting-edge biological research and training in India, the Bangalore Life Science Cluster includes two other research institutions in Bangalore – inStem and CCAMP.

Each of these additional entities has its scientific mandate but benefits from and contributes to the rich environment in basic biology already offered by NCBS.

It is envisioned that these synergistic associations at the Cluster will have a far greater impact on life sciences research than the sum of individual contributions from each institution.

The BLiSC, therefore, is, in some sense, a microcosm of a research innovation hub, utilising the power of genetic technology along with collaborators like the Tata Institute for Genetics and Society.

It is providing the wherewithal to translate DNA and nuclear nucleic acid-based technologies for the benefit of society.

This collaboration worked very well during the COVID pandemic. At the beginning of the pandemic, there were no tests for COVID, and everything had to be imported. Some of the small, medium-scale industries began to innovate. They borrowed technology and began to create the structure of COVID tests, which were exorbitantly expensive globally.

So, we took it upon ourselves to create an affordable alternative. So, affordability is also a hallmark of what the innovation industry in this country or the innovation potential in this country can lay claim to. We set up a large platform that included 200 SMEs to build the pipeline for COVID diagnostics.

From Rs 1400 per test, with a substitution of Indian-made molecules, including nucleotides, primers, probes, fluorescent dyes, or whatever is needed to make these diagnostic kits, the cost of a single test came down to Rs 15! This took about six months to set up.

Academic institutions like NCBS, IISc, Bangalore, and ICER Pune joined to provide chemistry support, collect clinical samples etc. Today, all units’ combined capacity is about 10 million tests a month.

The ecosystem is now being repurposed to make it broader-based or making it more, more disease agnostic. Several small and medium-scale industries continue to connect to the academic centres, which act like Centres of Excellence for various kinds of needs that these industries have.

So, in a sense, they have their back-to-back research structures in these industries. There is zero funding coming from the government for this support; we got all our money from outside. In fact, this whole effort was supported by the Rockefeller Foundation, of course, facilitated by the principal scientific adviser to the government.

We can always build and ramp up and pivot academic institutions towards crises. But the interest of academics, too, must be ensured. Money cannot be pumped into academic research without asking questions about the research and what is translatable. This is critical for the ecosystem, or the funding pipeline through public and private engagement will dry up.

And even more pernicious, is a nationalist sort of jingoism. Whatever we do here, is done as part of a human species and, therefore, cannot be exceptional.

This exceptionalism must not be allowed to creep into the policy sphere, or it will stifle the potential for innovation in the country. We were fortunate that we were able to get the AstraZeneca vaccine from Oxford, or we would not have fared as well as we did.

We are living in an incredibly globalised space. And it is to our advantage that we are part of that global ecosystem and play on an equal footing in this challenge of looking at the future.

India will be the brand face of climate change, which will be overwhelming. We need our innovations, but also, we need to see what is happening in the rest of the world so that we can borrow and repurpose innovations that will help us mitigate these crises.

There is a huge opportunity here for an open, engaged scientific system, well-funded with an indus try ecosystem.

MR SATYAJIT MAYOR, Former director of the National Centre for Biological Sciences, Bangalore.

THE INDIAN PHARMA STORY

“The Indian pharmaceutical industry, with a market value of $42 billion in 2021, ranks 14th globally in terms of value and 3rd in terms of volume. As a major player in the generics market, the industry is often referred to as the “Pharmacy of the world,” Dr Satish Reddy.

As per the audited figures for 2021, the Indian pharmaceutical industry ranks 14th in the world in terms of value. However, when it comes to volume, it is globally number three.

As per the Indian Economic Survey 2021, in the next decade, the domestic market is expected to grow three times, and by 2024 the market value is likely to reach $ 65 billion and touch almost 120 to 130 billion by 2030. Last year India exported drugs worth $2.196 billion, far below its potential.

It is very strong in genetics at this point in time, making India self-sufficient in meeting the medicinal needs of its population. It also has an impressive presence abroad, with one out of three generics in the U.S. coming from an Indian company. In the UK, one out of four is from an Indian company.

In terms of vaccine production, especially COVID, 60 per cent of the global production comes from India.

GOING BACK IN HISTORY

The most defining moment for the industry was the year 1970 when Prime Minister Indira Gandhi passed a law that only recognised process packets, not product patents. Prior to 1970, multinationals dominated the scene. The large pharma companies, if they sold a

However, true innovation on a large scale has yet to begin. Earlier, there was little in terms of support for the industry and in academic institutions, the focus was not on original drug discovery and little academician-industry collaboration. Therefore, India was not ripe for innovation in terms of social drug discovery. Compared to other global hubs of drug innovation, India needs to catch up in infrastructure which inhibits the unleashing of its potential.

pill at $ 1 in the U.S., it was sold in India for the equivalent in Rupees, making drugs beyond the reach of a large number of the population. The implication of the new law was that anything discovered overseas could be launched in India if done by a different process than that patented.

This sparked entrepreneurs like Dr Reddy, who started the company, Dr Reddy’s Laboratories. Being a scientist from the public sector enterprise Indian Drugs and Pharmaceutical Ltd (IDPL) and working with Russian scientists collaborating in drug manufacturing in India, Dr Reddy’s group translated lab-scale processes into commercial manufacturing. In the beginning, it was mostly penicillin and a few antibiotics.

This article is based on views expressed by Dr Satish Reddy, Chairman of Dr Reddy’s Laboratories

The industry got a boost from domestic investors as the original group of scientists had little money to grow the business. The industry initially started as a manufacturer of active pharmaceutical ingredients (API). The new patent laws also permitted the launch of new products, and in those early days, patent drugs like ibuprofen were at the forefront, using different processes that were more cost-effective.

The initial lot of scientist-entrepreneurs then tentatively started venturing into new products and starting new companies to manufacture APIs like sulfamethoxazole etc. In the decade 1990-2000, India was one of the largest API manufacturers in the world. With strong chemistry skills, India started producing various classes of API like sulfur metals etc.

Encouraged by the growth in the industry, many new companies were founded (Devi’s Lab 1990, Mankind Pharma Limited 1995 etc.). These pioneers were mostly scientists themselves, now taking on the role of entrepreneurs in a field that showed great promise. This was the period when faced with depleting foreign reserves, India had no option but to reform its economy and liberalise. Not surprisingly, the new companies in the pharma industry got an opportunity to explore the global markets making the U.S. and the USSR their biggest markets. The industry, therefore, had been given a great boost first by the amendment in the patent laws followed by liberalisation.

While India had been a mem ber of the GATT since 1948, it joined the WTO I in 1995. The WTO Doha Declara tion on the TRIPS Agreement and Public Health, agreed upon by WTO members in 2001, helped to frame the health policy context of the intellectual property system.

It stressed the need for the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) to be part of the wider national and international action to address public health problems afflicting developing countries and least-developed countries. Indian pharma companies were in a position to be new patent law compliant by 2005, making their drugs available for competition in the international market. Also, the increasing use of generic pharmaceuticals by the chain of U.S. Veteran Administration catering to the retired military community gave a boost to the market.

Another factor was the 1984 Drug Price Competition and Patent Term Restoration Act, commonly referred to as the Hatch-Waxman Act (named after Congressman Henry Waxman and Senator Orin Hatch), which gave rise to a strong generic drug industry. The Hatch-Waxman Act provided a rapid way of the generic drug approval process by permitting generic drug manufacturers to file an Abbreviated New Drug Application (ANDA). The Abbreviated New Drug Application

(ANDA) allowed approval of generic drug products by a shorter and less expensive route than for innovator drugs. Before Hatch-Waxman, only 35 per cent of innovator drugs faced generic competition after the expiry of patents; now, almost all innovator drugs faced such competition. Today the situation is that the large genetics companies in the U.S. are based on large volumes coming from India.

THE INNOVATION PARK

Encouraged by the new TRIPPs regime, many Indian pharma companies like Dr Reddy’s decided to try their luck in original drug discovery. Such a move at the time was called delusionary (as labelled by the respected magazine The Economist) because it was globally doubted how Indian pharma companies, capable of only copying drugs or re-engineering them, could come out with original patents.

But the doubters were proved wrong with Indian companies coming out with their patents. Dr Reddy’s licensed its first molecule as early as 1997 by doing pioneering work in the field of data zones. But licensing was not the end of it as the company also had to find buyers willing to invest in the new product. Slowly the licenses were recognised abroad, allowing for revenues that could be re-invested in new innovations and improved the valuation of Indian companies overseas. At times, the stock market was not very helpful and punished the pharma companies drastically.

Today Indian companies are following a totally different model, with Dr Reddy’s Laboratories alone having about 70 projects in the licencing pipeline in collaboration with big biotech companies like Exilixis, which will go all the way to clinical trials etc. Today, big Indian pharma companies have the financial means to pursue this kind of cutting-edge research.

However, true innovation on a large scale has yet to begin. Earlier, there was little in terms of support for the industry and in academic institutions, the focus was not on original drug discovery and there was little academician-industry collaboration. Therefore, India was not ripe for innovation in terms of social drug discovery. Compared to other global hubs of drug innovation, India needs to catch up in infrastructure which inhibits the unleashing of its potential.

THE WAY AHEAD

India should quickly reach that point when the pharma industry has the right kind of ecosystem- the location of academic institutions and the pharma industry, close collaboration between the two, government support, and infrastructure. Many policy changes are required, and things did move a bit thanks to COVID when the Indian pharma industry was seen in a positive light due to the vaccine supply and therapeutics on which even the U.S. was dependent. There are positive signs that the Government is planning to come out

with regulations that will facilitate drug discovery.A key move could be a research-linked incentive scheme that will encourage the pharma industry and others to increase the percentage spent on R&D.

The regulatory environment also needs an overhaul-though it is a state subject; there are central regulatory authorities also. This system has been abused, and the industry is partly to be blamed for this. Legislative changes are required to put the house in order. In addition, the regulatory system must have capabilities like the Medicines and Healthcare Products Regulatory Agency (MHRA) of UK, which employs some of the most qualified personnel, many from within the industry who understand it well and keep going back and forth between the regulator and the industry.

The industry will always be ahead of the regulator, and the regulator must do the catching up. With gene therapy coming up in a big way, the regulator has much catching up to do.

The approval process is a shambles. Many trials must be carried out outside India, like phase one clinical trials, because the up process in India is uncertain with no specific timeframe. Doing trials abroad is expensive and adds to the development cost, and this curbs innovation and adds to the long-drawn-out process.

Another issue is the academic industry collaboration. Indian needs something like the Bayh-Dole Act to incentivise collaborative research. The Bayh-Dole Act, formerly the Patent and Trademark Act Amendments, is a U.S. federal law enacted in 1980 that enables universities, non-profit research institutions and small businesses to own, patent and commercialise inventions developed under federally funded research programs

within their organisations. The act ultimately has motivated more and more universities to become actively involved in the transfer of technology from the lab to the market. On its part, the Government could consider setting up Centres of Excellence in academic and research institutions to allow the industry to engage much more closely.

Another critical component, largely missing in India, is funding; today, it is a question of a leap of faith and a certain amount of risk-taking! The industry looks at venture capital (VC) funding to rescue it. Sadly, this system does not thrive in India because the VC would like to risk their money later in the research, whereas money is critical in the earlier stages. Alternatively, they ask the Government to pitch in with 1/3 of the funds, as it happens in Israel.

China too has been having a lot of success in incentivising VCs to invest in the pharma industry by giving sovereign guarantees, which allowed many Chinese start-ups to make it into the big league. Benevolent institutions like Bill and Melinda Gates Foundation are playing a role but can form only a tiny part of the scale of investment needed.

By addressing these challenges, the Indian pharmaceutical in dustry can continue to evolve, play a sig nificant role in global innovation, and con tribute to the devel opment of life-saving drugs for people world wide.

SATHISH REDDY Chairman, Dr Reddys Laboratory, Hyderabad.

Source : CartoonStock

COMING TOGETHER OF ACADEMIA & INDUSTRY

“The industry academia partnerships are important, particularly in India where we work in a highly resource constrained environment,” Dr Radha Rangarajan, Director of CDRI, Lucknow.

Dr Kallam Anji Reddy, the founder of Dr Reddy’s Laboratories, always dreamt of developing novel drugs from within India for India and the world. It remains the responsibility of the current generation to fulfil this unfinished agenda that Dr Anji Reddy wrote about in his autobiography, “An Unfinished Agenda.”

The global pharmaceutical industry benchmark is that it takes 12 to 15 years to develop a drug all the way to the market.

It is a very high attrition business, meaning that for every 100 drugs that enter phase one trials, only about 60 advance to phase 2, about 20 enter phase three and only about 12 gain FDA approval.

For every 10,000 compounds that enter the preclinical stage in the drug discovery pipeline, only one eventually makes it all the way through.

So, this is not only a very high-risk activity but also extremely expensive; figures that are thrown around go as high as $ 2 billion to take a drug to the market. 30 to 40 years ago, this figure was not so high, but in the last two decades, it has really escalated from around $ 800 million to $2 billion!

Much of this cost increase has come from the increased cost of clinical development, which includes regulatory requirements.

The industry academia partnerships are important, particularly in India where we work in a highly resource constrained environment, both spreading the risk and sharing the revenues is the only way that we can make new drugs happen

A key aspect is the availability of patients, how data is collected, how we monitor sites etc. Preclinical development is roughly 31 per cent of the total expenditure on drug R&D.

Despite all the cost and effort involved, it is mind-boggling that the number of FDA approvals between 1980 and 2020 has increased from 20-23 to about 30 in the small molecule space.

If biologics are included, the number goes around 45; we are looking at nearly $80 billion worth of expenditure in the development during this period- a roughly eight-fold increase in R&D budgets.

There is something that needs to be fixed in this model, as throwing more money at the problem is not going to solve it, and no longer enormous advances in therapeutic solutions have been made.

From the Indian perspective, in the 1990s, there was a much higher burden of communicable diseases; infectious diseases accounted for about 61 per cent of our health burden of diseases. As per 2016 data, we have about 32 per cent burden from infectious diseases and

This article is based on the interaction with Dr Radha Rangarajan, Director CDRI

55.4 per cent from non-communicable diseases. This is a lot like the unmet picture globally. However, India continues to carry a very big infectious disease burden, a double burden of infectious diseases and bacterial infections.

There are still a lot of TB, viral diseases, parasitic diseases and the Big Four non-communicable diseases (NCDs)- cardiovascular diseases (CVDs), cancers, chronic respiratory diseases (CRDs) and diabetes which share four behavioural risk factors –unhealthy diet, lack of physical activity, and use of tobacco and alcohol.

We may have to reckon with a mixed disease burden in the foreseeable future. So, the unmet need is quite varied within India.

And underlying all this is that whatever therapeutic solutions we deliver for this country must be affordable and accessible. There is a huge need for sustainable manufacturing.

Pharmaceutical companies in India are at the forefront of this, looking at reducing the carbon footprint in manufacturing and anticipating the changes in disease burden because of climate change.

Zoonotic diseases that were not as prevalent in colder climates may be part of a shifting pattern of infectious diseases even in the West.

The Indian pharmaceutical industry has priorities that have evolved with time, largely in the manufacture of generic drugs, including APIs and finished dosage formulations, drug delivery systems, and improved generics.

And this is how we become the pharmacy to the world, and this is how, to a large extent, we’ve contributed to lowering healthcare costs, not just in India but globally.

We also have to look at the development risk versus the innovation risk. The cutting edge in drug R&D is in therapeutic solution that address specific unmet needs and are differentiated from products already in the market and in such cases, both innovation and development risk is high.

With a few exceptions, in India out of the ten drug discovery companies that exist, most are very small startups. So, India has a large pharmaceutical industry focused on generics but a non-existent small or medi um start-up.

For that matter, there is no large In dian pharmaceutical company fo cused only on drug discovery.

Earlier, there were about 40 companies work ing with more than 200 molecules in the preclini

cal pipeline in India, but the number has dwindled considerably leading to a major gap.

But this is the way drug discovery and development happens- you go from molecules to optimised lead in preclinical stage, then go to Phase 1, 2, 3 clinical developments followed by an application for a marketing approval. This is the regulatory framework that is adopted globally.

Therefore, the question remains how to make drug discovery and development sustainable in India? How can we make it repeatable? How can we take a place at the global high table for drug discovery and development?

Obviously, we need research strategies and accelerated candidate selection, which means that we need to address very specific unmet needs, we need to work on well-defined target product profiles on a mission mode.

But we need to conserve our resources and put them into very specific kinds of programmes that will take us to a common goal.

I like to give the example of the Indian space programme because it’s been hugely successful, publicly funded, at the goal and at the global forefront.

This was achieved by coming together with a set of very well-defined common goals, whether it was the Mars mission, or the moon mission, or a series of communication satellites that they wanted to launch- a very strong and unified vision.

And that sort of vision is needed in the pharmaceutical industry, in order to deliver on our unmet clinical need. It is difficult, but it can be done.

We must use more of computational technologies and AI that will drive efficiencies. And of course, we need clinical trial innovations, which, is the majority of the R&D cost.

So how can we make clinical trial innovation? How can we innovate with trial design, patient selection, site management etc.

There is a concept of patient centric clinical trials now where data collection support is provided to patients through tools that allows data to be recorded automatically and even without requiring additional interven-

We need to combine all of these things to make clinical trials more cost effective.

The industry academia partnerships are important, particularly in

India where we work in a highly resource constrained environment, both spreading the risk and sharing the revenues is the only way that we can make we can make new drugs happen.

A lot of the preclinical research is something that academic institutions and startups through partners can handle. Partnerships with academic clinical units, can be a great way to take compounds to a proof of concept in the target population.

This will de-risk the compound significantly because you will have safety and efficacy data. It is not possible for academia with its current resources to go all the way to market.

As per the European Medicines Agency’s (EMA) data from 2010 to 2019 data looking at the origin of innovation, 38 per cent of innovation in this dataset originated from large or intermediate sized companies. But 19 per cent originated from academia, public bodies, or

This is a model that has worked and, perhaps it can work much better in India. There templates that can at and many institutes in India that capable of adopting them when it comes to small molecules, biotherapeutics, pharmaceuticals, vaccines, diagnostics, medical

These existing institutions have capable scientists and

the infrastructure so there is no need to start from the scratch. CDI, for example, has end to end drug discovery research capabilities, starting with computational and drug design, all the way to toxicology.

And there are a number of platform technologies for drug delivery that are available at CDRI and a fairly decent pipeline of licensing co development opportunities, which includes small molecules, fighter pharmaceuticals cost effective generics.

When it comes to solving the R&D puzzle for India, the academia can take on high risk research programs for addressing unmet clinical need.

But this should be included in close consultation with industry and collaborators from startups.

The academia can de-risk the product or the technology up to early phases of clinical development in collaboration with start-ups. This would ensure that the academic and industry partners are really in step at all stages.

The industry has to take on late stage clinical development. In this model, academia should receive a fair share of revenues or milestones, to allow for sustainable R&D cycles.

This sort of a model would allow industry and academia together to put India on the map when it comes to addressing unmet clinical needs through new drugs. And this could apply to vaccines, biologics, diagnostics, almost anything.

DR RADHA RANGARAJAN Director, CSIR-Central Drug Research Institute, Lucknow

FUTURE OF INNOVATION: AN INDIAN PERSPECTIVE

“India has missed opportunities due to a dysfunctional system, and its contribution to pharmaceutical innovation has been modest.” Dr Ram Vishwakarma.

This article is based on the presentation given by Dr Ram Vishwakarma, Director Indian Institute of Integrative Medicine (Council of Scientific & Industrial Research) at a Synergia Foundation Hybrid Roundtable

Categorising the future of innovation in the pharma industry is a tall order to predict. The track record of pharmaceutical innovation over the last 100 years has been amazing. Today we have solutions for the majority of the problems faced by humankind.

The animal world contributed to our study of physical sciences, and then biology drove this revolution. Of course, distribution problems remain and will continue as these are managerial problems, non-scientific problems.

Science has created a multi-trillion industry globally, and within India, the employment generated by the pharmaceutical industry is amazing. ”

One clear thing is that the innovation in this sector will be driven by biology, not chemistry. Two decades back, chemistry was the driver for innovation and did phenomenally well.

But now the playing field has changed, and with the revolutions in biology, it provides opportunities for small molecules from the biological system. Small molecule therapeutic development is a fundamental shift, a renaissance in old natural products. Out of the 1500

It is concerning that disruptive changes are coming for the Indian pharmaceutical industry, especially in the regulatory environment. For example, in the U.S., there is a proposal to shift the biopharmaceutical manufacturing base back to America, and they are now heavily investing in creating these facilities

odd molecules from FDA approved list, more than half will be first in class from nature.

Nature will continue to provide solutions to problems because we now have a greater understanding.

For example, next-generation adjuvants come from our understanding of plant science, as plants share the same inherent, innate pathway humans have in their systems. And these changes are happening globally.

In this natural product area, particularly for delivery offers in class two, important contributions include synthetic biology, which will provide partial solutions to climate issues. India is involved in this phenomenal research. Then is chemical ecology, which provides a role for the small molecule.

In the past, we found a molecule and developed atorvastatin from a natural product that was hit and trial method. All this has changed as now we have a scientific understanding of the role of these molecules.

Bangalore has taken some initiative in synthetic, medicinal chemistry-driven approaches globally. Now, we can have a starting point or privileged scaffold, a particular type of protein target.

And there are new ways to look at the Protein-Protein interaction (PPI), which was not available for most of 20 to 25 years of continuous failure. Now Protein-Protein interaction inhibitors are taking shape and moving up the regulatory pipeline.

One new development, which will have a major impact, is mile orthogonal chemistry which was figured in last year’s Nobel Prize and is about what can be done with chemistry in water, a living cell.

It will allow both understanding the biology and developing thera peutics required at a site.

India has missed opportunities due to a dysfunctional system, and its contribution to pharmaceutical innovation has been modest, failing to make a mark in molecule discovery in the global market.

It is concerning that disruptive changes are coming for the Indian pharmaceutical industry, especially in the regulatory environment. For example, in the U.S., there is a proposal to shift the biopharmaceutical manufacturing base back to America, and they are now heavily investing in creating these facilities. Otherwise, these facilities were in India or China. Recently, France announced that it would manufacture all its antibiotics and oncology products domestically.

Therefore, the Indian pharmaceutical industry must recalibrate for the next 20 years. Changes are happening in Africa and the Middle East, mainly because of the mishandling by rich countries during the COVID crisis.

Now they have realised they cannot depend on the Western world to supply vaccines and therapeutics in extreme crises.

Egypt and other African countries have come together in Africa, and international philanthropic organisations are pumping money to create new manufacturing capacities. In the long run, it may be a good thing for the industry because it will move from API and generic to a much greater emphasis on

innovation. India has failed to analyse the industry topdown. If in the next 10-year India wants to develop five new therapeutics, it must be careful how much investment it can make on the best base of parameters.

Indian policymakers in India must factor in the high failure rate in industry innovation. India has reached the stage where it has a responsibility to provide solutions not only to India but also to grow for the rest of

To achieve this, some of the things will have to be addressed upfront. For example, we need greater integration with global knowledge, innovation and translation ecosystem; no country-specific therapeutic discovery exists.

There is an urgent need for government-industry jointly funded and managed transformational centres. But these should not become silos of some government departments manned by regular government servants.

For something as large a scale as India, 100 of these centres across the country could leverage the knowledge that is created in the system. There should be tax credits for innovation.

There are a lot of companies in Bangalore and Hyderabad that are the backbone of the innovation system in India and should not be considered only as service providers because the quality of the service they provide is recognised by the very best in the world.

We do not have to develop a parallel infrastructure to replace them; we should support them by whichever way we can. Human resources are critical, the physician-scientists.

There is a gap between academia and hospitals. Hospitals must be brought closer to research institutions.

On the regulatory side, broader expertise is needed with the regulator. During the COVID crisis, it was seen that many of the innovations made abroad could not be brought to India in a quick enough time frame.

The regulatory system needs to be proactive and supportive, and it should help innovators to walk through the regulatory path rather than become a hindrance.

DR RAM VISHWAKARMA.

Distinguished Scientist CSIR, New Delhi & CSIR-Central Drug Research Institute, Lucknow

GEOPOLITICS OF ENERGY INSECURITY

Energy politics have come to define current geopolitical tensions.

Suchitra Padmanabhan is the Policy Research Associate at Synergia Foundation and has Post Graduate Degree in Social Policy & Planning from the London School of Economics

Energy is an essential driver of every economy, big and small, enabling the formation of businesses, jobs, and the possibility of prosperity. Ironically, we tend to take it for granted because we are so richly blessed with energy.

In modern times, the world was first exposed to the vulnerability of energy supplies as an aftermath of the 1973 Yom Kippur War when Arab nations brought to bear the power of their energy monopoly. Then the world economies adapted themselves by tapping multiple sources of energy from across the globe, and complacency set in once until now when Russia, after being sanctioned for its Ukraine adventure, changed the rules of the game once again.

GLOBAL FRICTION POINTS

Energy security has historically been defined as the availability of sufficient supplies at affordable prices for individuals, businesses and nations. It is the essential role that energy security plays in economic development, social well-being, and national security, which has made it a key point of tension in world affairs. Geopolitical tensions can arise from energy dependence, resource competition, or disputes over energy transit routes, such as pipelines or shipping lanes.

The geopolitics of energy security refers to the in-

Energy politics has come to dominate global concerns, and experts suggest we need a combination of diversification, integration, and resilience to combat potential snags in the supply chain.

terplay between politics, international relations, and energy markets. It encompasses the political and economic strategies nations use to secure access to energy resources and markets and the conflicts and cooperation that arise. A range of factors, including resource availability, infrastructure, technology, market competition, and environmental concerns, shapes energy security’s geopolitics.

Energy insecurity has added new dimensions through the revival of great-power rivalry in an increasingly multipolar and fragmented international system, the efforts of many countries to diversify their supply chains, and the realities of climate change.

The ongoing aggression in Ukraine exemplifies Russia’s confrontation with the West and displays the fragility of the energy ecosystem. The war is a potent reminder that great-power politics never really went away. In the energy ecosystem, the U.S.-Chinese contest is of great consequence as they both try to reduce dependence on each other to realign supply chains and reinvigorate industrial policy.

Although efforts to increase domestic clean energy production are underway, the United States and other countries may not see immediate results. Till then,

they will continue to rely on China for critical minerals, clean energy components, and technologies for the foreseeable future, leaving them vulnerable to potential shocks caused by China.

CHANGING GEOPOLITICAL EQUATIONS

China has hinted that it may impose limitations on the export of solar energy materials, technologies, and expertise, in retaliation to the export restrictions that the U.S. imposed on high-end semiconductors and machinery to China in the past year. If China carries out this threat or reduces the export of advanced batteries or critical minerals to major economies, like how it halted rare earth supplies to Japan in the early 2010s, it could have a detrimental impact on significant portions of the clean energy industry.

This evolving energy landscape has also impacted traditional energy heavyweights, contributing to increased energy security risks. Alignments between the U.S. and the Middle East, particularly Saudi Arabia, have changed due to a perceived or actual decrease in U.S. strategic commitment to the Middle East. China has begun to play an important role in the region as the single largest customer for oil from Riyadh. Beijing’s role in the region has been bolstered by Riyadh’s acceptance of China as a guarantor of the recent Iranian-Saudi rapprochement.

Russia, too, has gained importance to Saudi Arabia. Despite the aggression in Ukraine, the Saudi government remains reluctant to take a strong position against Russia as it believes that the country is an essential economic partner and collaborator in managing oil-market volatility.

The pandemic and the move to diversify supply chains have also impacted this new phase of energy insecurity. In light of the current geopolitical climate, it is clear that relying too heavily on certain countries, particularly China, carries significant risks. Therefore, it is wise to take actions that reduce this dependence.

POLITICS OF CLEAN AND GREEN

Climate change has proved to be an elevated concern of our times. This has prompted many policymakers and academics to make a strong push for a transition to cleaner, greener energy. Initially, it was commonly believed that transitioning to new energy sources would help combat climate change and eliminate the problematic geopolitical issues associated with traditional energy. However, the practical implementation of this transition has proven to be tumultuous, leading to new conflicts and risks in the short term. Recent events over the past 18 months have highlighted the complex interconnection between the energy transition and geopolitics.

Concerns among American officials about an accelerated energy transition potentially leading to increased dependence on China have led to Congress creating incentives for domestic production, refining, and

processing of critical minerals. However, these moves have been seen as acts of U.S. protectionism by much of the world, sparking talk of climate-provoked trade wars.

The energy crisis of the past 18 months has widened the rift between rich and poor countries, with many developing countries objecting to pressure to diversify away from fossil fuels.

The rise in food and energy costs emanating from a European war has made this pressure even more difficult for these countries to bear. European countries have also been criticized for their perceived hypocrisy in responding to the crisis, with developing countries questioning why the developed world has not done more to finance climate change adaptation and clean energy outside its borders.

While the energy crisis may have eased in recent months, there is still cause for concern. According to the IEA, there is a projected increase in global demand for oil in 2023, nearly twice as much as the expected rise in supply due to the increasing risks to Russian oil output.

Climate change will also be a major threat to energy security in the coming decades. The IEA estimates that to reach the goal of net-zero carbon emissions by 2050, 50 per cent of global energy consumption will need to be met by electricity produced from zero-carbon sources, up from only 38 per cent today. The warming of waters and more intense droughts will pose challenges for cooling power plants, transporting fuels, and relying on hydropower.

THE THREE MANTRAS

Energy politics has come to dominate global concerns, and experts suggest we need a combination of diversification, integration, and resilience to combat potential snags in the supply chain. One solution to these problems is diversifying supply to improve energy security. However, diversifying the inputs of clean energy is no easy task. The concentration of essential technology and components, including critical minerals for batteries and solar panels, is more pronounced than oil.

Australia, the world’s largest lithium supplier, accounts for approximately 50 per cent of the global supply, while the Democratic Republic of the Congo and China, the leading cobalt and rare earths suppliers, each control about 70 per cent of these resources. Processing and refining these minerals are even more centralized, with China responsible for 60-90 per cent of these operations. Chinese companies also manufacture over three-quarters of electric vehicle batteries and a similar proportion of the wafers and cells utilized in solar energy technology.

Another critical area requiring diversification is enriched uranium, which will become more important as the use of nuclear power increases globally to meet low-carbon electricity needs. However, there is a pressing need for diversification in this area. Given the current geopolitical situation, Russia’s position as a prima-

ry supplier of nuclear fuel services to several countries creates discomfort and vulnerability. It is essential to boost uranium production, conversion, and enrichment in the United States and its Western allies to maintain the existing nuclear power plants and meet decarbonization goals.

Ensuring a secure energy system requires the ability to withstand and quickly recover from unforeseen shocks and disruptions. The foundation of this resilience lies in reliable energy infrastructure. Over the years, governments and private companies have endeavoured to safeguard energy infrastructure from various hazards, including but not limited to terrorist attacks and natural disasters such as hurricanes.

As we transition to cleaner energy sources, it is imperative that we intensify these efforts. Additionally, with the increased digitization and electrification of the clean energy sector, there is a growing risk of cyberattacks. Therefore, it is essential for private companies and governments to collaborate and coordinate efforts to prevent and respond to threats like the 2015 cyberattack that devastated significant portions of the power grid in western Ukraine.

Flexibility is another crucial component of resilience, particularly in the energy sector, where it is assessed by the capacity of each part of a system to manage losses in other parts. Given the variability of renewable energy sources like wind and solar power, alternative sources must either store or support the energy they produce. The delivery systems must also make real-time adjustments to ensure a consistent energy supply.

To address this challenge, policymakers must ensure that ample balancing resources and storage capacity complement the power grid’s expanding portion of renewable energy. This necessitates the implementation of mechanisms like “capacity markets,” which compensate energy producers for their availability to meet peak demand, even if their output is minimal most of the time. Such frameworks are essential to support a consistent and dependable electricity supply, even as the grid shifts towards decarbonization, by ensuring that companies whose resources are only occasionally required remain operational and viable.

ENERGY INDEPENDENCE

The pursuit of “energy independence” has been driven by the need for enhanced security, a goal that has persisted for several decades in the United States and other nations. Despite being vulnerable to geopolitical risks, the country remains susceptible to supply shocks globally, with impacts on prices that transcend borders. While transitioning to a net-zero carbon system is expected to reduce the influence of geopolitics, at least over the next few decades, energy security will be improved not by achieving greater autonomy but by increasing integration, as shown in the past.

The effectiveness of energy markets can be enhanced by establishing connections and ensuring their

smooth functioning. This approach strengthens energy security by allowing supply and demand to react to price signals, thereby improving the system’s ability to cope with unexpected shocks. For instance, when Hurricanes Katrina and Rita ravaged the U.S. Gulf Coast in 2005, disrupting extensive production and refining operations, energy firms averted fuel shortages by swiftly importing supplies from the global market. Similarly, after the Fukushima nuclear disaster in 2011, Japan temporarily shut down its nuclear power sector, thanks to its ability to import other fuel sources from the international market.

Maintaining and nurturing interdependence in today’s context is more challenging than at any other time in recent history. Countries worldwide increasingly adopt industrial policies that entail greater state intervention in markets, which poses a significant obstacle.

While these interventions can offer benefits such as reducing markets’ vulnerability to geopolitical adversaries, some policymakers seek to advance these policies, seeing them as a way to boost domestic employment and build political coalitions to strengthen environmental action. Paradoxically, some endeavours to promote climate action, despite being premised on transnational collaboration, could erode cooperation by exacerbating the forces of fragmentation and protectionism.

Europe’s urgent need to disconnect from Russian energy during the Ukrainian conflict has undermined the argument for energy integration. However, shocks may be felt more widely in an integrated system but are also felt less acutely.

Integration is insurance, spreading the risk of energy supply disruptions across several parties. Furthermore, if each nation attempted to manufacture and consume solely within its borders, expanding clean energy at the necessary scale and pace would not be possible. The International Energy Agency predicts that the value of global trade in critical minerals must triple to achieve net-zero emissions by 2050.

Assessment

Energy security has come to dominate geopolitics, further exacerbated by Russia’s aggression in Ukraine. As energy remains critical to economic development, social well-being, and national security, it has come to perform a crucial interplay between politics, international relations, and energy markets.

As it has come to dominate global concerns, climate change also works as a strong push for diversifying energy sources in the scramble to ensure sustainable energy supply. A complex mix of diversification, integration and resilience must be worked through to achieve geopolitical stability.

FRANCO CHINA OVERTURES

French leaders have been aggravating Washington for more than fifty years, starting with President Charles De Gaulle; Macron only continues with the tradition!

Remember the famous “Freedom Fries” when fast-food-loving Americans rejected all things French in retaliation to France’s refusal to support the American invasion of Iraq? Then French Foreign Minister Villepin had famously threatened to veto any UNSC resolution that mandated an invasion of Iraq.

We saw a replay during the recent visit of French President Emmanuel Macron when statements made on board the presidential aircraft to French journalists stirred up a veritable hornets’ nest in the U.S. and its allied countries in Europe.

The Guardian quotes President Macron as stating that it would be “a trap for Europe”, now it had developed more autonomy since the Covid pandemic, to get caught up in crises “that are not ours”. If there was an acceleration of conflict between the American and Chinese duopoly, “we will not have the time, nor the means to finance our own strategic autonomy and we will become vassals, whereas we could become the third pole [in the world order] if we have a few years to develop this”

The President was even more equivocal on Taiwan, provoking even more violent objections, when he said, as per the Guardian report, “Do we [Europeans] have an interest in speeding up on the subject of Taiwan? No. The worst of things would be to think that we Europeans must be followers on this subject and adapt

Over the years, France and China have engaged in various economic, political, and cultural exchanges, forming a robust and intricate relationship. However, this relationship has not been without difficulties, especially in recent years, as tensions have increased over trade, human rights, and territorial disputes.

ourselves to an American rhythm and a Chinese overreaction.”

Since the days of General De ’Gaulle, France has never hesitated to bait the U.S. and has always been an advocate of a European-first foreign policy which has made it an outlier amongst its European partners and the tradition lives on.

A Wall Street Journal Editorial claimed that Macron’s “unhelpful comments” could undermine the global deterrence that the U.S. and its allies had been strenuously building against the growing belligerence of China while encouraging U.S. politicians like Trump, who are keen to scale down U.S. commitments in Europe.

European allies criticized Macron’s remarks on European strategic autonomy and the conflict between the U.S. and China over Taiwan, which raised concerns about transatlantic cooperation. However, his defenders contend that the EU shares France’s desire

to increase trade with China and find common ground. Macron’s assertion that Taiwan was not Europe’s top priority undermines European arguments regarding the global significance of Ukraine’s independence and autonomy. Moreover, despite the importance of European strategic autonomy, constructive discussions and definitions are required to ensure that the concept does not undermine Europe’s alliance with the United States.

SINO FRENCH TIES: A HISTORICAL PERSPECTIVE

In the 19th Century, France was no different from other European colonial powers in a rush to seek markets and resources in the vast hinterland of China. In 1844 through the Treaty of Whampo, it was able to wrest from the Chinese Empire trading privileges identical to that of its biggest rival Great Britain. In 1900, along with Germany, Japan, Russia, Britain, France, the United States, Italy, and Austria-Hungary, it formed the Eight-Nation Alliance, which invaded China to crush the Boxer Revolt.

Only after its military debacle at Dien Bien Phu and retreat from Indo-China, it established formal diplomatic ties with Mao’s communist China in 1964.

Over the years, the two nations have engaged in various economic, political, and cultural exchanges, forming a robust and intricate relationship. However, this relationship has not been without difficulties, especially in recent years, as tensions have increased over trade, human rights, and territorial disputes.

Longstanding cultural and intellectual exchanges have shaped the relationship between France and China. French intellectuals have been attracted to Chinese philosophy, literature, and art for as long as the French have been fascinated by Chinese culture. This cultural connection has laid the groundwork for a strong diplomatic relationship between the two countries, which economic ties have bolstered. France is China’s fourth-largest trading partner in the European Union, with bilateral commerce expected to exceed 60 billion euros.

BUMPS IN SINO-FRANCO RELATIONSHIP

In recent years, France-China diplomacy has faced a variety of obstacles, including trade disputes. France, along with other Western nations, has accused China of engaging in unfair trade practices, such as dumping inexpensive products on European markets and stealing intellectual property. In response, China imposed tariffs on French products and was accused of launching cyberattacks against French businesses.

Human rights are yet another issue that has strained France-China relations. France has been a vocal critic of China’s human rights record, particularly its treatment of ethnic minorities in Xinjiang and its suppression of political dissidents in Hong Kong. In response, China

has accused France of interfering in its internal affairs and has attempted to minimize human rights concerns.

Occasionally, these issues have threatened to eclipse the broader relationship between France and China, which is founded on a lengthy history of cultural exchange and economic cooperation.

China’s foreign policy has increasingly become more assertive, pursuing its interests without regard for international norms and standards. This has caused Western nations, including France, to be concerned about China’s intentions and the implications of its rising power.

France and China have persisted in engaging in diplomatic exchanges despite these obstacles. In 2019, French President Emmanuel Macron visited China on a state visit, where he met with Chinese President Xi Jinping to discuss economic and trade cooperation. Additionally, the two leaders discussed the need for increased cooperation on global issues such as climate change and international security.

Despite these obstacles, France and China have numerous opportunities to strengthen their diplomatic ties in areas such as infrastructure development, innovation, climate change, and cultural exchange. For instance, France is a leader in high-speed rail, whereas China has made significant strides in renewable energy and artificial intelligence. By combining their strengths, France and China could resolve some of the world’s most pressing issues.

This level of cooperation will not be simple to achieve. Both France and China will face various challenges, including geopolitical tensions and domestic political pressures. Moreover, the global context is undergoing accelerated change, with new challenges and opportunities emerging daily.

THE EU FACTOR

Since France is a major player in the EU, its relationship with China cannot be in a vacuum without taking into consideration the EU-China angle. As two of the main global players, China and the EU have a substantial impact on the global economy, trade, and security. Strong relations between the two parties can result in mutual benefits, whereas tensions or conflicts can gravely affect international stability.

One of the most important areas of cooperation between China and the EU is commerce. In 2020, bilateral trade surpassed €560 billion. The EU imports electronics, machinery, and textiles from China, while China imports primarily machinery, transportation equipment, and chemicals from the EU.

A robust economic partnership can increase employment opportunities and economic expansion for both parties. Moreover, with the rise of protectionist policies and trade disputes between major powers such as the United States and China, a robust trade relation-

ship between China and the European Union can promote free and open trade globally.

Another source of contention is China’s Belt and Road Initiative (BRI), a global infrastructure and investment initiative that aims to connect China to Asia, Europe, and Africa. While some EU countries have welcomed the initiative to stimulate their economies, others have raised concerns regarding the lack of transparency and environmental standards associated with the projects. The EU has expressed its desire for the BRI to accord with EU standards and principles, such as social responsibility and sustainable development.

The pandemic of COVID-19 has also emphasized the significance of China-EU cooperation. The EU and China have collaborated to guarantee the availability of medical supplies, with China providing aid to EU nations in need. However, there have been instances of tension, such as accusations of prejudice against Chinese people in Europe and the controversy surrounding the virus’s origins.

CHANGING CONTOURS OF THE TRANSATLANTIC ALLIANCE

Since the conclusion of World War II, the United States has been a vital security partner for many European nations through NATO and bilateral agreements. In recent years, however, there has been a growing perception among some European leaders that the United States may no longer be as dependable or committed to the transatlantic alliance as it once was. Several factors have contributed to this, including the rhetoric and policies of President Trump, his criticism of NATO allies for not spending enough on defence, and his decision to withdraw from the Paris climate agreement and the Iran nuclear deal.

Consequently, some European leaders have begun to advocate for greater European strategic autonomy, enabling the EU to act independently of the United States on certain issues, especially in the defence and security sectors. This does not necessarily imply that Europe wishes to sever ties with the United States or form a new military alliance but rather to develop its capabilities and play a more assertive role in international affairs.

However, there is still considerable debate in Europe regarding the scope and character of European strategic autonomy and how it should be balanced with the transatlantic alliance. Some nations, particularly those in Eastern Europe, remain steadfastly committed to the U.S. alliance and view any move toward strategic autonomy as a potential security risk. Others, notably France, have advocated for a more assertive European role in international affairs and have been more vocal in their calls for greater autonomy. However, the drift away from the U.S. has been slowed, if not arrested, by the Russian invasion of Ukraine, which was the best thing to happen for the fading transatlantic unity. The recent controversy surrounding Macron’s remarks on Taiwan and European strategic autonomy reflects the

ongoing debate in Europe regarding the future of the transatlantic alliance and Europe’s role in the world. While there is widespread agreement that Europe must develop its capabilities and play a more assertive role, there are still significant differences among European nations regarding the most effective means of achieving this and how to strike a balance with the transatlantic partnership.

France’s membership in the European Union (EU) has complicated the country’s relationship with China. France has frequently pursued its interests, occasionally diverging from EU-wide policies. This has created tension with other European nations, who may believe France is undermining the EU’s ability to communicate with one voice on issues such as trade and human rights.

In recent years, France has endeavoured to assume a more assertive position on the international stage, positioning itself as an independent advocate on climate change and international security issues. This has led to tensions with both China and the United States, both of whom may believe France is exceeding its bounds.

Assessment

Despite the obstacles, France and China have numerous opportunities to strengthen their diplomatic relationship. Climate change cooperation is a prospective area of cooperation. China is the world’s largest emitter of greenhouse gases, while France has been a global leader in reducing greenhouse gas emissions. Another prospective area of cooperation involves cultural exchange. France and China share a diverse cultural history, and each nation could learn much from the other.

Diplomacy between France and China is intricate and multifaceted, with challenges and opportunities. France and China have continued to engage in diplomatic exchanges and have sought to strengthen their economic and cultural connections despite the trade dispute and human rights concerns. There is a great deal of potential for France and China to collaborate on global issues such as climate change and deepen their comprehension of each other’s cultures, despite numerous obstacles. Given its significance, it will be intriguing to observe how the relationship between France and China evolves over the coming years.

France has been an outspoken critic of China’s human rights record, especially its treatment of ethnic minorities in Xinjiang and its suppression of political dissidents in Hong Kong. Perhaps, its improvement of relationship could, in some remote way, help reduce the repression that the Uyghurs face in China.

RECALIBERATION IN PROGRESS?

In the last two months, there have been two events back-to-back that have changed the perspective on Saudi foreign policy, and expectedly, the credit is directed towards Crown Prince Mohammad bin Salman, the de facto ruler of the Kingdom of Saudi Arabia (KSA).

Late in March, Riyadh and Teheran agreed to re-establish formal diplomatic relations in a deal brokered by Beijing. Commenting on the deal, Iran’s mission to the UN had hinted that this breakthrough agreement would be a harbinger of a political settlement to the nearly decade-long war in Yemen.

According to the UN, over 150,000 people have been killed in Yemen, as well as estimates of more than 227,000 dead from an ongoing famine and lack of healthcare facilities due to the war. In early April, Saudi Arabia and rebel groups in Yemen agreed upon a ceasefire followed by a prisoner exchange, promising an end to the war in the near future. So, what lies behind the series of swift changes introduced to KSA’s decades-old policies? The answer lies, perhaps, in its current administration, spearheaded by the young Crown Prince Mohammad bin Salman (MSB), a much-maligned target of the Western media who seems to be growing stronger with every passing day.

RISE OF THE SHIA CRESCENT

Since Mohammad bin Salman became the crown

All the financial awakening would come to nought without international collaboration and investment. For this, Saudi Arabia must not only be peaceful from within but also live in a safe region to nurture growth and attract investments. Herein comes MBS next priority, which is to usher in a measure of geopolitical stability in an inherently unstable region. Towards this end, a rapprochement with Iran is the first crucial step.

prince, KSA has undergone significant changes. The country has been modernised in many ways. While it is alleged that the authoritarian tendencies of the House of Saud have been strengthened, there is also a clear drive to prepare the Kingdom for the inevitable decoupling of its economy from its current near-total reliance on oil. Approximately 2/3rd of the government’s revenues come from oil exports which saw oil revenues hit a record $ 326 billion thanks to the war in Ukraine.

However, the greatest changes have occurred in the country’s foreign policy realm.

Saudi Arabia is best known as a major U.S. ally in the Gulf region and the wider Middle East. Iran emerged as a strategic threat to the Saudis following the Islamic Revolution in 1979. The Iranian revolutionaries opposed any and all monarchies in the Islamic world, and

Saudi Arabia is in the process of forging an new foreign policy which can potentially change the contours of the Middle East.

RESEARCH TEAM

SYNERGIA FOUNDATION

the powerful House of Saud was their most obvious target. KSA has a significant Shia minority population in its eastern oil-rich provinces, generally kept under strict control but always a potential challenge to the Sunni monarchy. Unable to make headway in a prosperous, albeit authoritarian KSA, the Iranians turned their attention to Iraq, where they found much success as the successive turmoil revealed.

The U.S. invasion of Iraq in 2003 changed all the Saudi calculations towards Iran. Iraq was no longer a buffer state. Liberated from the shackles of Sunni dominated Baath Party of Saddam, the Shia majority rapidly gained ground in the political vacuum created mindlessly by Americans who ruthlessly purged the Baathist Sunni power centres and disbanded the Sun ni-dominated armed forces. This was an opportunity that Iran was waiting for, and it made the best of it. Despite international sanctions, Iran’s influence in the region has spread to the detriment of Saudi interests. Iran has been the major player hold ing most of the strings from Iraq to Yemen to Syria and beyond to the oil-rich Eastern Mediterranean in Libya.

The sheer momentum of events left KSA surprised, and overnight it found its influence in Baghdad vanishing. However, they recovered fast and were able to cul tivate the disparate Sunni groups fighting for their survival, leading to a sectarian war that not only tore Iraq apart but also spread insidiously to neighbouring Syria.

Iran’s nuclear ambitions have directly threatened KSA, and the Kingdom’s tradi tional shield, the U.S., has failed to assure them of foolproof security from growing Iranian ambitions. Even the much-hyped 2015 Iran nuclear agreement, formally known as the Joint Comprehensive Plan of Action (JCPOA), had been suspended since 2018 when President Trump unilat erally withdrew from it under alleged Israeli pressure.

LOSING GROUND REGIONALLY

Saudi Arabia has always considered the Gulf Arab region its geo-strategic backyard. It has tried to portray itself as the regional leader of all the Arabs in the Gulf region. These pretensions are not without basis, as KSA is the largest and the most powerful country among its Gulf Arab neighbours.

To maintain this hegemony, smaller Gulf states could not take foreign policy deci sions without consulting Riyadh first. Qatar broke this cardinal rule when it challenged Saudi hegemony through its support for the Muslim Brotherhood and its broadcast of Al Jazeera. As a re

sult, it had to pay a substantial price till it was rehabilitated last year.

The biggest shock to Saudi Arabia came with the unravelling of the Arab Spring, which began in 2011. As a status quo power, it was especially alarmed by the collapse of conservative regimes around it. The United States once again proved to be a disappointment to the Saudis as an ally. The U.S. did not stand by these regimes as they collapsed. Instead, it watched in silence, and even at times, the American media cheered on the opposition. Whatever soft corner the Saudis had for the U.S. was lost in the process. They realised that they could not blindly depend on U.S. security assurances

As the Arab Spring progressed, the Saudis saw an Iranian hand everywhere, and this was more so in its backyard in Yemen. Here the Arab Spring destabilised the country, and a civil war ensued. The Iranians backed a Shia Islamic group called the Houthis in this civil war.

DOMESTIC COMPULSIONS

Since the Iranian Revolution in 1979, Saudi Arabia has tried to counter radical Shia Islam by adhering more strictly to its conservative brand of Wahhabi Islam. But the 9/11 attacks on the United States was a moment of reckoning for the Saudi regime. Most of the people involved in this plot were Saudi nationals. There was a moment of time when American public opinion pointed an accusing finger at the Royal Family itself. So, the royal family came to realise that the Sunni radicalism it had promoted could

The House of Saud is more of a system of collegiality in the top echelons of the power structure. The Royal family is reported to comprise around 15,000 members, with an estimated worth of about $ 1.4 trillion. However, about 2000 enjoy most of the political influence, power and wealth.

The Saudi king cannot act as a dictator; he has to take into confidence the opinions of the other royal notables. Saudi Arabia is a highly tribal society, and problems are resolved through tribes, not individuals. So, the Saudi king also has to accept the viewpoints of tribal leaders before taking any decision. This system has a safety mechanism that allows dissent to be vented out. But this also means that conservative Islamic

Reportedly, Crown Prince Mohammad bin Salman completely overturned this system when he took power in his own hands and decided to implement a system of top-down modernisation.

THE RISE OF MBS

In January 2015, the current king, Salman bin Abdulaziz Al Saud ascended the throne and appointed his son MBS as the minister of defence. MBS immediately orchestrated a military campaign in Yemen against Iranian proxies. Code named Operation Decisive Story, the Yemeni intervention was planned along the lines of Desert Storm, preceded by an intensive bombing campaign, followed by a naval blockade and ground offensive against the Houthi rebels.

To the credit of MBS, he could expand the coalition to include Egypt, Morocco, Jordan, Sudan, UAE, Kuwait, Qatar and Bahrain. Many neighbouring countries provided airspace and territorial waters while the U.S, and UK pitched in with electronic intelligence, weapon systems, and logistics, including aerial refuelling and search and rescue of downed Saudi pilots. Pakistan was also asked to participate, but due to internal opposition, it declined, earning Saudi public and private reproach at the highest echelons.

In 2017, Mohammad bin Salman was appointed the Crown Prince. Since then, he has consistently been in the news, especially when the Saudi dissent and U.S. journalist Khashoggi was brutally murdered within the premises of the Saudi embassy in Turkey.

MBS has been driving the change in Saudi economic policies since 2016 when he choreographed the ambitious Vision 2030 plan, which, as he then said, would ensure “we can live without oil by 2020.” The plan included selling shares of Aramco to generate revenues, creating a sovereign wealth fund worth $ 2 trillion, amending the Kingdom’s strict visa rules to allow quali-

fied ex-pats to come and work in the country and, most importantly, diversifying the economy. He also hinted at allowing women to participate in the workforce in greater numbers and removed the notorious ban on women driving cars. In 2017, while inaugurating the start of a $500 billion investment in a new ultra-modern city and business zone, the Crown Prince announced the return of “moderate Islam” as key to his plans to modernise the Kingdom.

Aware of the vast riches of the profligate royal family, MBS launched a much-publicised anti-corruption campaign in 2017 which detained 11 princes, four sitting ministers and dozens of ex-ministers, including Prince Alwaleed bin Talal, a billionaire with huge investments in Twitter and Apple amongst others. Thus, he consolidated his power and incentivised the powerful elite to be mindful of national economic well-being by declaring their wealth and using it for the national good.

THE SAUDI TRAJECTORY FOR GROWTH

All the financial awakening would come to nought without international collaboration and investment. For this, Saudi Arabia must not only be peaceful from within but also live in a safe region to nurture growth and attract investments. Herein comes MBSs’ next priority, which is to usher in a measure of geopolitical stability in an inherently unstable region. Towards this end, a rapprochement with Iran is the first crucial step.

This is nothing new. Mohammad bin Salman has always been flexible in his foreign policy and has never shied from highlighting Saudi national interests. So, when tensions with Iran were high, the crown prince signalled a subtle shift in Saudi policy towards Israel. This eventually led to the signing of the Abraham Peace

Accords between Israel and the two Gulf Arab states of Bahrain and UAE. Under these accords, these two states officially recognised Israel. This was a big historic moment. Yet Saudi Arabia itself has still not established diplomatic relations with Israel, although it is evident that without a nod from Riyadh, Bahrain and UAE would not have dared to sign the Abraham Accord. Israel has also reportedly carried out covert security cooperation with Saudi Arabia.

In the case of Qatar, the collective regional blockade of Doha proved to be highly counter-productive. This was both in the economic and political sense. While the Qatari economy suffered from isolation, its Arab neighbours were also cut off from its dynamism. As the leader of the regional Gulf Cooperation Council (GCC), it is the duty of Saudi Arabia to see to it that Gulf Arab unity is maintained. So, Qatar could not be excluded for very long politically as well. Doha also offered an opening to Riyadh to engage with Tehran. All these factors led to the eventual re-establishment of Saudi-Qatari relations and the wider Qatar-GCC relations and the end of the inter-Arab dispute in the Gulf region. That it happened well before Qatar hosted the World Football Cup, the biggest sporting event ever held in the Gulf region, was indicative of the reawakening of a measure of Arab solidarity.

The proxy war against Iran has also been taking a heavy toll on the Saudi economy and undermining Vision 2030. Further, the Iranian advantage during the Arab Spring dissipated as Syria was completely destroyed, and the Yemen conflict remained in a stalemate. Iran is also facing increasing economic pressure from sanctions and domestic pressure from its young population demanding political and social reforms. So, the Iranians also had an interest in reconciling with Saudi Arabia. Finally, when the Chinese emerged as a mediator, both sides began to talk. Iran and Saudi Arabia each have long-standing ties with China and trust Beijing.

THE INDIA ANGLE

Saudi Arabia is a very important country for India, and it is India’s fourth-largest trading partner. More than 18 per cent of India’s crude oil imports are sourced from Saudi Arabia. During FY22 (Apr-Dec), bilateral

trade was valued at US$29.28 billion. During this period, India’s imports from Saudi Arabia were valued at US$22.65 billion, and exports to Saudi Arabia were worth US$6.63 billion. There are around 745 Indian companies registered as joint ventures/100% owned entities with investments worth approximately US$2 billion in the Kingdom. The approximately 2.2 million-strong Indian community is the largest expatriate community in the Kingdom.

Therefore, any rapprochement between Riyadh (a trusted friend) and Tehran (historically a friend but distanced due to geopolitical pressures) would be a welcome development. This would be the right time for India to restore the balance in its relationship with Tehran.

Assessment

Saudi Arabia is an important regional power, and its internal and regional stability is vital for the growth of the region and the world. Towards this end, the current diplomatic outreach of Riyadh to resolve long-festering geopolitical wounds is a step in the right direction.

The current reconciliation between Saudi Arabia and Iran does not necessarily mean that in the future, relations between these two countries will not deteriorate once again. However, cessation of competition and proxy war could contribute much to stability in this strategically important part of the globe. To bring real peace in Yemen will require much more than just Saudi Arabia talking with Iran and the Houthis.

India values its relations with Saudi Arabia, and any step forward that improves Saudi Arabian prosperity and regional relevance would be greatly welcomed by New Delhi, especially in light of the balanced view exhibited by Riyadh on all contentious issues involving India.

Source : Newyork Times

GPRS: THE NEW NORMAL FOR BUSINESS

As geopolitical risks (GPRs) reshape the corporate landscape, businesses must adapt and innovate to survive in an increasingly uncertain world.

One theme that Synergia Foundation has always persisted upon is that despite the reluctance of the corporate world to keep one eye on the fast-evolving geopolitical global scene, they have and will continue to be surprised. The Ukraine War was a rude shock to many businesses who failed to read the signs and made no provisions to secure their supply chains or customer base.

While it is true that not even the most experienced geopolitical analysts can predict with any degree of accuracy a causative event that flings nations at each other’s throats, nor can they exactly predict the course such conflicts will take place with their likely fallout for global trade.

However, one does not have to be a PhD scholar to understand the basic fact that there is an element called geopolitical risk in business circles that adversely impacts global trade and innovation.

In a rapidly evolving, globally-connected world, it is a fact of life that businesses must consider geopolitical risks as an essential mantra of their business strategy. While small insignificant businesses catering to customers in a small geographical area with basic essentials may escape unscathed from geopolitical disruptions, at least for a small period of time, larger corporations with a global footprint cannot escape the

Businesses must learn to align their corporate strategy with geopolitical risk management by maintaining a close collaboration between businesses, and security think tanks acting as tripwires and the government.

ripple effect of such events. Therefore, businesses must learn to align their corporate strategy with geopolitical risk management by maintaining a close collaboration between businesses, and security think tanks acting as tripwires and the government.

CHANGING LANDSCAPE OF POLITICAL RISK

Allianz Global Corporate and Speciality, in a survey of 2650 risk management experts from 89 countries, compiled a list of the Biggest Business Risks in 2022. This list had ‘Cyber Risks’ at the top with 44 per cent (offensive cyber is the first tool to be used in any geopolitical confrontation today, so is the shutting down of the internet), followed by ‘Business Interruption’ at a close 42 per cent. This, too, is triggered by conflict, turmoil and collapse of governance. ‘Changes in Legislation and Regulations’ at 19 per cent was listed fifth. As the Russian example showed, whatever assurances may have been given in good times by the host government, these can be revoked at a moment’s notice in times of trouble and political upheavals. Therefore, it can be surmised that Geopolitical Risks (GPR) have elements

Sambratha Shetty is the COO at Synergia Foundation and holds a Masters’ in Science from the University of Greenwich, UK.

of all these three in some form or the other and in varying degrees from event to event.

Elisabeth Braw, a columnist at Foreign Policy and a fellow at the American Enterprise Institute, quotes a survey done by WTW and the now-famous Oxford Analytica showing a massive 93 per cent multinationals recording losses due to political instability in 2021. In 2020, these percentages were only 35 per cent.

GPRs have become more prominent due to several factors, including the Russian invasion of Ukraine, tensions between China and the United States, and ongoing conflicts in North Korea and Iran. As a result, companies are now taking wars and conflicts more seriously, recognising the potential impacts on their operations and bottom lines.

The Ukraine war has finally opened the eyes of even the most reluctant non-believer of the linkage between geopolitics and corporate profits. When the Berlin Wall fell and McDonald’s opened its first fast food joint in Moscow in 1990, it heralded a boom for MNCs to flood the hungry Russian market.

As per the Investopedia website, nearly 330 MNCs have closed shop in the Russian Federation, incurring heavy losses since then. As per the Yale Chief Executive Leadership Institute, these included some of the biggest names in the commercial world-Amazon, Apple, Volkswagen, Toyota, Samsung, Alphabet, Mercedes Benz, BP, Royal Dutch Shell and ExxonMobil, to name a few. Amongst Indian companies, TATA was the biggest, which had to exit to continue with its extensive business relations with the West or face crippling sanctions.

A piqued Kremlin passed ordnance through a government commission that permitted nationalisation of the assets of these companies left behind in Russia, thus adding to their losses.

The sharpening rivalry between the U.S. and China is another geopolitical earthquake threatening to pull back all the benefits of globalisation. Meanwhile, businesses operating in China or exporting to the country face the risk of becoming targets if their home governments take actions that displease Beijing. Research has shown that companies largely relying on exports to boost their revenues face the greatest uncertainty and thus will be more risk-averse in times of higher geopolitical risk.

In a March 2022 article published in Harvard Business Review, titled “When Geopolitical Risk Rises, Innovation Stalls’, researcher statistically analysed linkages between geopolitical threats and events and innovation. All business titans owe their leadership position to their innovative prowess. The day they stop innovating, they die- look what happened to Nokia, Blackberry, Kodak etc. The researchers concluded that rising geopolitical risk substantially stifles technological innovation among U.S. companies.

The researchers found that as GPR rises, R&D is

steered towards rapidly evolving technologies (breakthrough rather than incremental) to make quick profits and reduce their exposure. In other words, companies become more risk-averse and less likely to invest in R&D involving longer-term, multidisciplinary and highly impactful innovation.

NAVIGATING GPRS

As geopolitical risk becomes a core concern for businesses, they must adapt their strategies and risk management approaches. This involves investing more time and resources in understanding and monitoring political developments in the countries where they operate. They will also need to assess their supply chains, seek alternative suppliers, and diversify their operations to minimise the impact of geopolitical shocks.

In addition, companies should be prepared to navigate complex regulatory environments and adapt to shifting political landscapes. This requires greater engagement with governments and other stakeholders to better understand different countries’ political dynamics and regulatory requirements. Furthermore, businesses should prioritise developing robust crisis-management plans and protocols to respond effectively to geopolitical crises and disruptions.

The experiences of these companies underscore the need for businesses to be prepared for the potential impacts of geopolitical risks on their operations. In response to the challenges posed by Russia and China, companies should closely monitor political developments in these countries, assess the vulnerabilities of their supply chains, and consider diversifying their operations to reduce their exposure to such risks.

The MNCs are finally waking up to the Geopolitical Risks (GPR) by covering their exposure. Oxford Analytica’s 2023 Political Risk Survey states that in 2022, 68 per cent of companies with exposure overseas went for political risk insurance to cover them against wars, civil wars, coups and government expropriations etc. In 2019, this figure was only 25 per cent.

The Role of Governments and International Cooperation

The increasing relevance of geopolitical risk to businesses is a wake-up call for executives and policymakers. It highlights the interconnectedness of global supply chains and the importance of international cooperation in maintaining a stable and predictable business environment. As geopolitical tensions continue to rise, companies and governments will have to work together to mitigate these risks’ impact and promote a more resilient global economy.

Governments can play a crucial role in helping businesses manage geopolitical risks by providing clear and consistent policy frameworks, sharing relevant information and intelligence, and supporting businesses in navigating regulatory complexities. At the same time, businesses should actively engage with governments

and participate in policy discussions to contribute their expertise and perspectives on addressing GPRs.

Moreover, international cooperation among governments is essential in addressing the root causes of geopolitical risks and promoting global stability. By working together to resolve conflicts, address economic imbalances, and promote sustainable development, governments can create a more conducive environment for businesses to thrive.

Furthermore, businesses should proactively engage with governments and other stakeholders to better understand these countries’ political dynamics and advocate for policies that support a stable and predictable business environment. By doing so, companies can better position themselves to navigate the complexities of these high-risk markets and minimise the potential impacts on their bottom lines.

THE PATH FORWARD

The new reality of geopolitical risk for businesses requires a fundamental shift in how companies approach strategy, risk management, and engagement with governments. The following are some essential mantras: -

-Businesses must acknowledge that geopolitical risks are now an integral part of the global business environment and must be addressed as a core concern in corporate strategy and risk management.

-Companies should dedicate time and resources to monitoring and analysing political developments in the

countries where they operate, enabling them to make informed decisions about their operations and investments. Think Tanks and Academic Institutions can help them on this account by acting as their tripwires and consultants.

-To minimise the impact of geopolitical shocks, businesses should consider diversifying their operations and supply chains, seeking alternative suppliers, and expanding into new markets.

-Active engagement with governments and other stakeholders is essential for businesses to better understand the political dynamics and regulatory requirements in different countries and influence policies supporting a stable business environment.

-Companies should prioritise the development of comprehensive crisis-management plans and protocols to ensure they can respond effectively to geopolitical crises and disruptions.

Businesses must come to terms with the new normal of geopolitical risk in the global business environment. Adapting to this reality will require a significant shift in corporate strategy and risk management and closer collaboration between businesses and governments. Although the challenges presented by geopolitical risks are daunting, companies that successfully navigate these complexities will be better positioned to thrive in an increasingly uncertain world. By taking proactive steps to understand, manage, and mitigate geopolitical risks, businesses can continue to grow and prosper despite the ever-changing global landscape.

US FED: SHUTTING THE MONEY TAP?

An inherent recessionary tendency characterizes the current global economic situation. Specifically, the money supply in the United States has been contracting for approximately ten months, decreasing the available monetary resources.

This phenomenon can potentially affect economic activity with a delay of approximately six to 18 months. If the Federal Reserve persists in this approach, it is likely that a severe and protracted recession, possibly of the magnitude of the 2008-2009 financial crisis, will ensue.

BANKING FAULTLINES

Central banking plays a critical role as it is the driving force behind much of the current economic activity.

A recession’s likelihood appears inevitable, particularly if central banks persist in disregarding pertinent economic signals and instead focus on extraneous noise. The current approach of over-squeezing the money supply via quantitative tightening, as executed by the Federal Reserve, the European Central Bank, and the Bank of England, is a problematic strategy that exhibits limited attention to the money supply.Experts claim these institutions lack sufficient consideration of the quantity theory of money, which establishes a rela-

The crucial factor to consider is the direction of the money supply, as it provides insights into future developments. If the money supply is still declining, it indicates that the situation will deteriorate further instead of reaching a bottom and becoming more optimistic in the next six to twelve months.

tionship between variations in the money supply and economic activity, prices, and related factors. Instead, they focus on daily data, allowing excessive noise to influence their decision-making processes. In the process, they are failing to properly attend to the money supply signal, which is the most relevant and crucial aspect of this situation.

While the most significant metric, money supply, is contracting, Central Banks have persisted in their policy of tightening. The Fed and other central banks are complicit in creating 9 per cent inflation, which they failed to address in a timely manner. As a result, they have raised rates rapidly and extensively, an unprecedented feat. Thus, there is a risk of over-tightening by the Fed and other central banks, potentially creating t the looming storm clouds of recession.

GETTING TO THE ROOT OF THE PROB -

There are two important factors to consider. First-

LEM

Are the Central banks pushing in a deep recession by over-squeezing the money supply to control inflation?

Suchitra Padmanabhan is the Policy Research Associate at Synergia Foundation and has Post Graduate Degree in Social Policy & Planning from the London School of Economics

ly, even if central banks pause their activities, there is a lag effect from previous rate hikes that can take up to a year to manifest in the economy. Additionally, lending standards are tightening, a trend that the banking crisis has aggravated. This tightening of credit serves as an additional rate hike, making it essential to wait until the next Federal Open Market Committee’s (FOMC) meeting before deciding if another rate hike is necessary.

Secondly, there is the issue of how significant these factors are in terms of contracting the economy further. This contraction could potentially force the Fed to intervene and save the system, regardless of its intention to wait until inflation has been fully tamed.

Prior to the events involving Silicon Valley Bank, First Republic Bank, and other similar incidents, the loans and leases offered by commercial banks, which make a substantial contribution to the growth of the money supply, were already experiencing significant deceleration and cutbacks.

Consequently, year-end inflation forecasts have been revised downwards to a range of two to five per cent, based on the decline in the money supply and the contraction of credit in the commercial banking system. The inflation narrative seems to have reached its conclusion, as the Fed’s actions have resulted in excessive tightening, causing inflation to emerge from the system despite their assertions to the contrary.

If we examine the money supply, we can observe that it is contracting at a rapid pace. This is a significant indicator, as inflation tends to change with a lag

of 12 to 24 months after such contraction. Consequently, we have revised our inflation forecast for the end of the year from 5 per cent to a range of two to five per cent. The importance of considering lags should not be overlooked, and one must monitor the money supply closely. The lags can be divided into two periods: the first period occurs one to nine months after the money supply begins to change significantly, resulting in changes in asset prices, such as equities, home prices, and commodity prices.

These are followed by changes in real economic activity, or real GDP, which occurs with a lag of about six to 18 months. Given the significant contraction in the money supply, a recession is expected to follow within six to 18 months.

In order to gain a proper understanding of the state of the economy, one must recognize the importance of lags. Relying on current economic data alone leads to confusion and noise in the analysis. Instead, attention should be paid to changes in the money supply over the past year, as it is a crucial factor in the economy.

Last summer, bank credit was growing at a rate of 10% year over year, but as of February, it had decreased to 5.5%. This trend is expected to continue, potentially resulting in a contraction of bank credit. Even if the Federal Reserve chooses to leave Fed Funds rates unchanged or only decrease them slightly, the ongoing reduction in the money supply will contribute to a longer recession. At present, there appears to be a widespread focus on inflation as a significant concern. However, this concern is misplaced as inflation is already weak-

ened. Instead, we should focus on what comes next. The crucial factor to consider is the money supply and what has been happening with it for the past 12 to 24 months before the inflation data becomes available. This will provide a clearer picture of the situation.

The decline of the bull market and the inflation aspect of the story have already been addressed because the Fed was excessively strict. They failed to consider the crucial factor, i.e., changes in the money supply.

The crucial factor to consider is the direction of the money supply, as it provides insights into future developments. If the money supply is still declining, it indicates that the situation will deteriorate further instead of reaching a bottom and becoming more optimistic in the next six to twelve months.

As we approach an economic downturn, the signs of trouble are becoming increasingly evident. Despite these ominous indicators, there is a disconnect between the Fed’s official stance and the market’s predictions.

While the Fed has announced its intention to continue pursuing inflation and may hike interest rates if necessary, it has also suggested that it may pause for the remainder of the year.

In contrast, the markets are forecasting a potential shift in Fed policy this summer. Furthermore, the markets have been relatively bullish this year, which appears to contradict the dire outlook being communicated by the Fed.

REGIONAL DYNAMICS

Inflation is not a global phenomenon but rather a local one that is heavily influenced by the actions of central banks in their respective countries. For example, countries such as China, Switzerland, and Japan have very different inflation rates despite not engaging in similar monetary policies.

China’s inflation rate is currently at 1%, Switzerland’s is at 3.4% year-over-year, and Japan’s is at 3.3%, despite none of these countries engaging in extensive monetary pumping. Therefore, it is crucial to examine the local actions of central banks and their impact on the money supply when assessing inflation.

With respect to global impact, the primary focus is on the United States, as the monetary conditions there have a significant impact on global economic conditions. Europe and the United Kingdom are struggling, with a sharp decline in the money supply and a squeeze on credit.

Additionally, the ongoing conflict between the United States and Russia is complicating matters further, as it’s negatively affecting both the U.S. and European economies. The third major player is China, which is gradually returning to normalcy after implementing counterproductive lockdowns.

Lockdowns have been observed to have no significant positive impact on public health but result in severe economic consequences. For instance, China implemented strict lockdown measures that caused a significant slowdown in its economy. However, China is gradually recovering from the economic impact of the lockdowns.

Meanwhile, India and Indonesia are experiencing relatively stable economic conditions. Nonetheless, the overall outlook is bleak due to the uncertainty of the severity of the economic storms that the United States, Europe, and the UK will face. Although a storm is inevitable, the exact intensity of the impact remains unknown.

In the past, recovery measures that have lifted the economy out of recessions are less likely to be effective in preventing the current looming recession. Previously, outsourcing labour to foreign countries and strict monetary policies from a more stringent

Federal Reserve helped to heal the economy during the 1980s recession. However, the present-day Federal Reserve appears determined to gradually reduce inflation through relatively moderate monetary policies.

Additionally, increasing geopolitical tensions stemming from the Russia-Ukraine conflict and growing mistrust of the Chinese government have prompted corporations to bring supply chains closer to home, leading to a hiring surge in the United States and resulting in the lowest unemployment rate since 1968. The robust strength of the labour market is likely postponing the onset of the impending recession for now.

The current economic situation seems set for a recession, given central banks’ persistent tightening of money control. Experts warn against the short-term focus on inflation, which masks the deep-rooted signs of recession which no one is paying attention to.

Central banking plays a crucial role in driving much of the current economic activity. However, experts have pointed out that central banks give more weight to extraneous noise than pertinent signals.

Despite the fact that the most significant metric, money supply, is contracting, they have persisted in their policy of tightening. Consequently, they have failed to timely address the 9% inflation they helped create. In response, they have raised rates in an unprecedentedly rapid and extensive manner. This raises the risk of over-tightening by the Fed and other central banks, potentially leading to a severe recession.

WHISTLE-BLOWER OR A BOYISH BOAST

The ‘Discord’ leak by a young U.S. National Guards Airman is turning out to be a veritable treasure trove of intelligence. How will it impact the war in Ukraine?

While the whole world was engrossed watching the war erupt in Ukraine early last year, a nondescript 21-yearold U.S. National Guard airman was happily clicking pictures of “top secret” military documents passing through his desk and assiduously posting them on ‘Discord’ a limited circulation messaging app. As per the Washington Post, Jack Teixeira enjoyed official access to the Joint Worldwide Intelligence Communication System, a hub for exchanging top-secret information in the U.S. Defence Department.

Apparently, this was no whistle-blower like Snowden, with an axe to grind with the establishment, but a young blogger with access to classified documents and a smartphone, out to impress his fellow netizens with his ‘vast knowledge’.

Swiftly tracked down and arrested by a SWAT team, Jack Teixeira now faces the grim process of a long stint in a federal penitentiary for his reckless ‘social media sharing.’ A Boston Federal Court charged Teixeira under the U.S. Espionage Act for ‘unauthorised retention and transmission of national defence information and classified documents or material.’

This is nothing new as, apparently, last year, a group of online players on War Thunder posted authentic military documents to justify their game moves and ensuing argument on the net.

As per media reports, the size of the leak is one of the largest ever. It was a veritable treasure trove for a seasoned analyst and newshound- from interesting titbits about the U.S. spying on friends and allies to letting out the secrets of Ukraine’s battle preparations and future offensive plans.

In the interim, these covert documents with impressive military infographics and pie charts went viral on social media.

This would have carried on as Pentagon was blissfully unaware of this massive leak till New York Times broke a story on April 6th, prompting the U.S. Justice Department to open investigations and leading to many red faces and perhaps careers shattered in high offices in the Pentagon.

HOW SERIOUS WAS THE LEAK?

As per media reports, the size of the leak is one of the largest ever. It was a veritable treasure trove for a seasoned analyst and newshound- from interesting titbits about the U.S. spying on friends and allies to letting out the secrets of Ukraine’s battle preparations and future offensive plans.

The information appeared to have been gleaned from reports submitted for consideration by top ech-

RESEARCH TEAM

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elon leadership in the Pentagon, sourced from NSA, CIA, Defence Intelligence Agency, DEA, and National Reconnaissance Office (which manages U.S. spy satellites). Shamefacedly, Pentagon acknowledged that the papers were the real thing!

Most worryingly for Ukraine were its plans for an imminent spring counter-offensive in the East which the leak disclosed in uncanny details with pie charts and all.

It also disclosed the Russian military’s intentions to counter the Ukrainian offensive and maintain control over separatist regions.

The leak also revealed information about the types and capabilities of the weapons used by both parties. Luckily for Ukraine, the leaked document did not give any specific details - timelines, location or size of the planned counter-offensive.

This offensive is being presented to the world as a make-or-break moment for President Zelensky to change the battlefield dynamics in their favour, as a prelude to some kind of peace talks.

But Ukraine swallowed a bitter pill, calling the leak “Russian disinformation.” Meanwhile, the net debate raged around whether it was a misinformation ploy of the West!

Officials and analysts are concerned that Russian intelligence could use the information to obtain a strategic advantage in the conflict. For the first time,

it was publicly disclosed that U.S. special forces were deployed in Ukraine, thus seriously jeopardising their safety.

Beyond the military tactical level, the more serious damage caused by the leaks could be in the geopolitical arena.

Clearly, the U.S. had the UN Secretary-General based in New York under their surveillance. He was labelled in assessments as “too accommodating to the Russians”, and there were transcripts of his communications with his subordinates.

There were snippets of conversations obviously tapped through unauthorised means of highly placed Jordanian authorities, a close American ally in the Middle East.

Allegedly, as per the leaked documents, Egypt, another U.S. ally, was planning to manufacture 40,000 rockets for Russia.

South Korean National Security Adviser’s telephonic conversations were reproduced, highlighting concerns about supplying weapons to Ukraine under U.S. pressure and antagonising Moscow in the bargain. A via media was being considered to send the weapons/ ammunition to Poland rather than to Ukraine directly.

Of course, for military analysts, the leak provided many interesting takeaways. First, the leak suggests that this is now an all-out information war in which leaks, even if inadvertent, could have serious repercus-

sions due to the internet’s and social media’s infinite reach. This could be done deliberately also with sinister motives to undermine the preparations and external support of the adversary.

With the chief architect of the leak safely in the bag, in the instant case, it does not appear such devious intentions were the objective. But detailed investigations will reveal more, provided the information is made public.

Second, the released documents demonstrate that the conflict in Ukraine is, in fact, a multilateral conflict in which the West is a belligerent. The United States and its NATO allies provide Ukraine substantial financial and military assistance.

In addition, Western military strategists continue to assist Ukrainian military officials with their war plans. The documents also emphasise the potential military aid that is currently being provided to Russia, and that could be provided in the future.

Thirdly, the documents revealed that the currently stalemated war will last long. The much-touted Russian winter offensive appears to be waning, if not already concluded.

The battle of Bahkmut, which has been raging for the past few months, exemplifies how the war is currently in a stalemate, with neither party gaining ground despite great effort and expense. Russia has experienced modest advances along with substantial losses.

SNOWDEN LEAK V. PENTAGON LEAK

In 2013, a former National Security Agency (NSA) contractor, Edward Snowden released classified NSA information. However, the Pentagon leak and the Snowden breach differ in a variety of ways.

Initially, the scope of the disclosures varies. While working as a contractor for the National Security Agency (NSA), Snowden obtained an enormous cache of classified documents, which he subsequently leaked. These documents disclosed the scope of the NSA’s domestic and international surveillance programs.

On the other hand, the Pentagon leak appears to involve a solitary document source with access to an assortment of sensitive and potentially damaging documents passing through his desk. There is no single focus in the leaked document.

The motivations behind the disclosures are also diverse. Edward Snowden has stated that he released the documents to expose what he believed to be unconstitutional and intrusive government surveillance practices.

He argued that the public had a right to know about these programs and that they should be curtailed. In contrast, as per media reports, Teixeria, while fully aware of the gravity of what he was doing, did not act

in a malicious manner. It appears he was boasting of his proximity to classified information to impress a select group of online friends. Prima facie, it does not appear as a well-planned conspiracy, although it is a felony under U.S. Espionage Laws, just like the British-era Official Secrets Act of India.

The consequences of the breaches vary. Snowden’s disclosures had far-reaching implications for the United States government and the international community.

They prompted a global discussion about privacy, security, and the government’s role in the digital age. They also resulted in U.S. law and policy changes and diplomatic tensions with other nations.

It is too early to speculate on the potential repercussions of the Pentagon leak. Still, it is conceivable that they could be similarly significant, especially when the government has acknowledged the authenticity of the leaked document.

Although the Pentagon leak and the Snowden breach involved the unauthorised release of classified information, their scope, motivations, and consequences were distinct. The Snowden leaks were a watershed moment in the history of government surveillance, whereas the Pentagon leak, despite being significant, is relatively contained.

Assessment

The disclosure is regarded as a serious infringement of national security because it could compromise the security of military personnel and operations in the region. Furthermore, it is believed that the breach could provide valuable intelligence to the opposing forces and influence the outcome of the conflict.

More concerning is the use of gaming chat rooms where increasingly such classified information is being presented and discussed. Even technologically empowered state machinery like the U.S. has virtually no tools to detect such classified material on social media and take immediate action to isolate it and control the damage. This should give sleepless nights to those agencies entrusted with safeguarding the security and secrets of the nation, in the U.S. and elsewhere.

More importantly, the U.S. risks eroding its allies’ faith in its ability to protect intelligence and operatives. The disclosed documents will have a multiplicative effect of diverting officials’ attention away from other pressing national security matters. The disclosures have reignited the debate over the conflict between information and disinformation, espionage and counterespionage, and the veracity and dangers of leaked information.

THE PRICE OF A PURELY CEREMONIAL MONARCHY

On May 6th, TV screens in Britain and around the world were filled with images of the coronation of King Charles III, a ceremony that combined crowns, robes, sceptres, anointing oil and much else besides, all designed to imply a religious basis for the monarchy and, above all, to symbolise continuity with all the previous coronations of kings and queens of England that have taken place in the same location, Westminster Abbey, for the past 900 years.

It was no doubt rather impressive, if you like that sort of thing, which many do. Yet even while marvelling at the spectacle it is worth reflecting upon just how unusual this regal practice is in the modern world and on the constitutional vacuum that has thereby been created, or, one might argue, deliberately concealed.

With regard to the unusualness — which, of course, is part of the attraction for the keenest monarchists — I am indebted to the always excellent UK in a Changing Europe network of academics and researchers that is led by Anand Menon and run from King’s College, London. They have produced, together with the Constitution Unit of University College, London, a marvellous new report on all aspects of the British monarchy: the accession process, the coronation itself, the cost of

The increase in the showiness of monarchical ceremonies over the past century and a half is a direct reflection of the disappearance of the institution’s political role. Style has been used to substitute for the total loss of substance.

the institution, the institution’s links with religion, and above all its constitutional role. This admirably crisp and clear report is well worth a read. One of the first things it revealed to me was that no other European monarchies have a coronation ceremony at all. Some — Belgium, the Netherlands, Luxembourg and post-unification Spain — have never had one. The Scandinavian monarchies abolished their coronations during the 19th or early 20th centuries.

Among the rich democracies, this puts the UK in a category of just two: the other is Japan. There too, the new emperor is enthroned in an elaborate ceremony that is designed to evoke historical continuity as well as to root the imperial idea in religious traditions even though the claimed actual divinity of the emperor was abandoned with defeat in 1945.

This, however, unites Japan and Britain in another important way: the elaborate ceremonies used in both countries are largely modern inventions. In Japan’s case, most of the “tradition” was devised after the Tokugawa dictatorship (or Shogunate) collapsed with a civil war which led to the restoration of the emperor to a central position in national life in 1868 (which was also when the-then Edo became Tokyo and replaced Kyoto

Looking at Britain’s losses by having an utterly powerless head of state

William John Emmott is an English journalist, author, and consultant, best known as the editor-in-chief of The Economist newspaper from 1993 to 2006.

as the official, rather than just de facto, capital).In Britain, according to the fine Canadian historian, Margaret MacMillan, in her 2009 book, “The Uses and Abuses of History”: the coronation ceremony is described in this manner-

In 1953, all around the world those who had televisions watched, with awe and fascination, the ancient coronation rituals—the monarch’s ride through London in the gilded state coach, the solemn procession into Westminster Abbey, the music, the decorations, the Archbishop of Canterbury in his magnificent robes, the elaborate ceremony of crowning. As a schoolchild in Canada, I was given a booklet that explained it all. What most of us did not know was that much of what we watched with such respect was a creation of the nineteenth century.

Earlier coronations had been slipshod, even embarrassing affairs. When a hugely fat George IV was crowned in 1821, his estranged Queen Caroline hammered on the door. At Queen Victoria’s coronation in 1837, the clergy stumbled through the service and the Archbishop of Canterbury had trouble with the ring, which was much too big for her finger.

By the end of the century, the monarchy was more important as the symbol of a much more powerful Britain. Royal occasions became grander and were much better rehearsed. New ones were added: David Lloyd George, the radical prime minister from Wales, found it useful to have a formal ceremony within the ancient walls of Caernarfon Castle to install the later Edward VIII as Prince of Wales.

So King Charles is no stranger to the invention of tradition. His own “investiture” as Prince of Wales in Caernarfon Castle in 1969 was the first time that Lloyd George’s 1911 ceremony had been repeated. And the 1911 ceremony had been invented pretty much from scratch, even if it drew upon medieval symbolism — which is exactly what the modern coronation does too. Following the semi-shambles of Queen Victoria’s coronation, the event was really given its modern, well-rehearsed, high-glamour form with the coronation of her son Edward VII in 1902, glamour which fitted well with the newly adopted title of Emperor of India.

It is therefore somewhat strange that such a recently invented tradition now itself resists much reinvention. This is so with all the gold coaches and bejewelled crowns, but especially so in the ceremony’s religious aspects.

King Charles says he wishes to be a “defender of faith” rather than “defender of the faith” as titular head of the Church of England, but nevertheless supposed institutional tradition demands he be anointed with holy oil taken from a 17th century golden vessel using a 12th century spoon, as if to signify that his new role is being blessed as monarchs have been for centuries by God, in a country containing fewer and fewer churchgoers. Representatives of other faiths attended the ceremony, but the God that King Charles will be blessed by will remain

the Anglican interpretation of that deity.

More importantly, however, what is that role that the holy oil will bless? Formally, we like to describe it as Head of State. Actually, the modern British monarch has no roles in the operations of the State beyond the purely ceremonial. A more accurate description, as the UK in a Changing Europe report says, would be “Head of Nation”: a national figurehead, crucially one that connects all four nations of the United Kingdom, i.e. Northern Ireland, Scotland, Wales and England. Here too the UK is aligned with Japan, where like King Charles Emperor Naruhito has no constitutional powers at all and is, in reality, Head of Nation.

This is the nub of the question surrounding the British monarchy. What is it for and what can it do? Walter Bagehot, my illustrious forebear as editor of The Economist, famously but unofficially defined the monarchy as being the “dignified” part of “The English Constitution”, as he titled his 1867 book, in contrast to the “efficient” part, namely the government and Parliament.

He claimed that the monarch had three powers or rights: to be consulted, to encourage and to warn. Even then, in the mid-19th century, Queen Victoria’s formal power to appoint prime ministers and to dissolve Parliament in order to hold new general elections was considered pretty theoretical and politically highly difficult to deploy. Those three rights were therefore dreamt up by Bagehot so as to suggest that nonetheless the monarch could, when necessary, have an important influence behind the scenes. The institution wasn’t, he sought to argue, as empty as it looked.

As far as I can tell, no historian of the 20th century has come up with convincing evidence that these rights have ever been exercised in anything more than a merely formulaic way. Certainly, King George VI, Elizabeth’s father, had an important public role during the Second World War, maintaining morale and perhaps even stiffening some sinews.

Since then, it is no coincidence that in all her seven decades on the throne Queen Elizabeth worked extremely hard to convey the notion that she had no political views at all. Moreover, at any time when she, her

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courtiers or her son were thought to have been interfering in matters governmental — e.g. over whether the monarch should pay income tax, or in the “black spider” letters Prince Charles sent to sundry ministers — there was quite a political stink about it. If ever the monarch could be political, even well behind the scenes, that time has long passed.

What, then, is left? The simple answer is flummery, designed to represent history albeit in a largely fake way. The increase in the showiness of monarchical ceremonies over the past century and a half is a direct reflection of the disappearance of the institution’s political role. Style has been used to substitute for the total loss of substance.

A more complicated and charitable answer is that the institution, through the monarch and the “working royals”, is there to provide non-political reassurance, encouragement and good cheer, by being patrons of thousands of charities, by appearing at public ceremonies and, occasionally, by making broadcasts at times of crisis. This is “head of nation” stuff, as UK in a Changing Europe puts it, and we can all have our points of view about whether the King and the royal family form good or bad figureheads. What it is not is a real head of state role, and certainly any sort of check or balance for Britain’s political system.

After Queen Elizabeth’s death last September, a number of media outlets — including, it has to be said, my former employer, The Economist — that were hunting for some way to sum up her contribution resorted to the word “continuity”. Given that she had been the longest-reigning monarch in the country’s history, such a word was hard to gainsay. Yet some of those dwelling upon the word sought to see something in it more than mere longevity.

In an editorial headlined “Why the monarchy matters”, The Economist made a bold claim that, during all the upheaval of those seven decades, “the continuity that monarchy displays has been a moderating influence”, a claim so bold that the writers did not feel the need to provide any evidence or even argument for it, beyond a supportive quotation from George Orwell. No wonder, because there isn’t any.

One just has to mention that in the middle of those seven decades the UK suffered the deadliest civil war of any Western European country since 1945, the euphemistically labelled “Troubles” in Northern Ireland in which one side was trying to boot the British out as imperialist occupiers and the other side were (and still are) known as “loyalists” thanks to their allegiance to the crown and the union with Britain.

This is not to claim the opposite, i.e. that the monarchy had any part to play in this or any other political instability that has taken place in the UK. Rather, it is to say that the statement is meaningless. The monarchy has been neither a moderating influence nor a disturbing one. It has been

essentially irrelevant. The problem, actually, is that the monarchy doesn’t matter. That is not meant as a criticism: you can like or dislike the monarchy for reasons other than its influence. But it is to point out the awkward reality: at what is supposedly the centre of its constitutional arrangements, the UK has a hole, a vacuum. More even than reinventing the monarchy, what the UK needs to do is to find ways to fill that vacuum.

The second chamber, the House of Lords, was stripped of most of its power in 1911 and has been a weak check on governments ever since. The best that can be said of it is that it provides some expert scrutiny of legislation which the House of Commons fails adequately to do. Boris Johnson showed that when most checks on a government holding a strong majority in Parliament depend on codes and conventions they can be disregarded at will.

Old powers to boss Parliaments and governments about, known as “the Royal Prerogative”, no longer work. The problem is that nothing has been put in their place. The Supreme Court’s decision in September 2019 to rule Johnson’s prorogation of Parliament as unlawful did act as a check on him, but the basis of the check was the view that the Queen — acting at his behest — did not in fact hold the power to prorogue Parliament in the way that Johnson had tried to argue she did.

In a sense, this elevated the Supreme Court to the status of a Constitutional Court, except that the UK has no codified, written constitution.

The Court can rule on laws as they stand, but no more than that. There are plenty of ways in which checks and balances could be restored to British political life beyond replacing the monarch with an elected head of state — though that could be one way, depending upon what powers such a post is given.

Others could include the replacement of the Lords with an elected chamber along the lines of other countries’ Senates, giving it legitimacy and reserve powers; or the establishment of a special Constitutional Body, perhaps as a joint committee of the two Houses, to rule on constitutional issues; or the replacement of codes and conventions by statutes; or a combination of all of them. An answer needs to be found, and it is not the monarchy.

This is why the invitation made by the Palace that during the coronation the public can, if they wish to, “swear allegiance” to King Charles and his successors and heirs, is both absurd and a continuation of the contrick that the modern purely ceremonial monarchy has become. How can you swear allegiance to an irrelevance, to an institution that has no powers and which reigns but doesn’t in any sense rule? You can like or even love it, just as you can love a beautiful old building or, indeed, a tradition. But the idea of “allegiance” is just another part of the fakery: it is to say that the public should think of themselves as extras in this piece of theatre.

ISRAELI TECH SCENE: IS IT TIME TO GO?

In a recent interview with CNN’s Fareed Zakaria, Prime Minister Benjamin Netanyahu indirectly acknowledged the impact of his disruptive policies on his nation’s future. When questioned on the rising tendency amidst Israel’s tech innovators to seek greener pastures overseas, Mr Netanyahu brushed it aside, stating that it would be the loss of the tech entrepreneurs as nowhere else would they get the same safety net provided by the Israeli government. Allaying fears, the beleaguered prime minister opined that it was a passing fad and that Israel was so deeply entrenched as the ‘fount of technology and innovation’ that the exodus would have little impact.

There was an element of truth in what Mr Netanyahu said- Israel has for decades nurtured an ecosystem that encouraged innovation to bloom, allowing the natural genius of the Jewish people to flourish in a land that they could finally claim as their own.

Unsurprisingly, Israel has enjoyed a technology boom for the last five decades, coming up with technological solutions that ensured not only the political survivability of this tiny nation surrounded by large enemies but also made its hardworking people prosperous and world leaders in many tech arenas. It has been the nursery for numerous tech start-ups emerging as global leaders in their respective industries. But the claim that the exodus will have little impact on the vibrantly inno-

Several factors have contributed to the growing sentiment among Israeli tech leaders that it might be time to leave their homeland. These factors can be broadly categorized as push factors, which make staying in Israel less appealing, and pull factors, which make other countries more attractive.

vative tech industry must be taken with a pinch of salt.

HOW REAL IS THE DANGER?

After the coming to power of an ultra-right-wing coalition, the ecosystem has been taking a battering exposing fears that Israel will lose its attractiveness for FDI if it structurally weakens its centrist policies and the rule of law.

These negative sentiments have been all-pervasive, spreading across the entire spectrum of the Israeli business community and critical organs like defence. The negativity has been especially noteworthy in the tech industry as the tech leaders have been most vocal about it.

Worryingly, some of the best names in the Israeli tech world have publicly announced their decision to explore fresh horizons. Adam Neumann, Co-founder of WeWork, has reportedly been considering a move to New York City, where he believes there are greater opportunities for collaboration and growth. Shai Agas-

Israel’s powerful technological ecosphere is at an inflexion point, with many seeing little future.

Sambratha Shetty is the COO at Synergia Foundation and holds a Masters’ in Science from the University of Greenwich, UK.

Founder of Better Place, has expressed interest in relocating his electric vehicle infrastructure company to Silicon Valley, where he sees potential for increased investment and access to a more extensive network of partners. Gil Shwed, Founder and CEO of Check Point Software Technologies, has been exploring options for expanding his cybersecurity company’s operations in Europe and the United States.

Several factors have contributed to the growing sentiment among Israeli tech leaders that it might be time to leave their homeland. These factors can be broadly categorized as push factors, which make staying in Israel less appealing, and pull factors, which make other countries more attractive.

PUSH FACTORS

Israel’s tumultuous geopolitical landscape has always been a concern for businesses operating in the country. Ongoing regional conflicts and tensions can create uncertainty and adversely impact investor confidence.

Israel has a very high cost of living, with cities like Tel Aviv ranking after Singapore and New York as the third most expensive cities to live in as per the website Visual Capitalist (the list includes three of the least expensive cities to live in India-Bangalore (161), Chennai (164) and Ahmedabad (165)). Obviously, start-ups would have to pay higher salaries to keep their employees happy, and operating costs would increase.

Population base matters when scouting high-quality talent to man the tech entities or conduct cutting-edge research. With a population of only 9.65 million (Bangalore Metro area has over 13 million inhabitants), Israel has hard pressed to find new talent, despite being known for the large number of world-class STEM graduates that its academic institutions churn out.

There is, therefore, a significant talent gap in the tech industry. As the demand for skilled professionals grows, Israeli tech leaders may find it increasingly challenging to build and scale their companies.

Israel’s relatively small population translates into an insignificant domestic market forcing the industry to look at exports as the chief source of revenue.

With the unstable domestic situation and worsening external relations that such disruptions can potentially engender, Israel- based tech market may not be able to unlock new export opportunities. Countries like India, which have a significant and growing tech partnership with Israel, should be justifiably concerned.

PULL FACTORS

Tech leaders may be attracted to the prospect of moving their operations to countries with larger markets, such as the United States or China or even India. This could provide them with a more extensive customer base and increased growth potential. Relocating to a

larger tech hub may provide Israeli tech leaders with more significant investment opportunities and access to a more extensive network of partners, suppliers, and customers.

Even more important, these tech countries operating from other countries may offer a larger and more diverse talent pool, enabling Israeli tech leaders to build more robust and competitive teams.

After all, with images of rocket attacks and suicide bombings filling TV news screens on an almost daily basis, Israel holds little attraction for the talented but unadventurous expat techies seeking to sell their skills abroad. And if such countries have a low cost of living, so much the better.

ARE THE PROPOSED JUDICIAL REFORMS TO BE BLAMED?

The judicial changes in Israel are set to impact all businesses, but the tech sector’s response is particularly critical due to its significant contribution to the nation’s economy. High-tech products and services account for 54 per cent of Israel’s exports, as reported by the Israel Innovation Authority, a government support agency.

Israeli entrepreneurs have established over 90 “unicorns” or privately held companies valued at over $1 billion, such as Moon Active and eToro. The departure of top-earning individuals and the companies they lead could have severe consequences, considering 20 per cent of the population generates 81 per cent of the nation’s tax revenue.

The recently formed government, which includes ultra-Orthodox and ultranationalist party members, heavily depends on government subsidies. Ultra-Orthodox parties need these subsidies as a low number of their members participate in the labour market, while ultranationalist parties require funds to maintain settlements in the West Bank.

IMPLICATIONS

A Times of Israel article, sounding the warning bell, claims that the health tech subsector could be the worst impacted. This sector needs massive amounts of longterm foreign investments, top scientific brains and international academic and commercial collaborations, making it the most vulnerable if Israel loses its perception as a liberal democracy with a functional rule of the law.

Health tech leaders are already reporting a steady drop in FDI, and their top-notch researchers mining for opportunities abroad.

It must be noted that health tech constitutes 20 per cent of the tech ecosystem in Israel, with over 1500 companies employing some 30,000 employees, sustained by FDI worth more than $4.6 billion in the last two years alone. According to Israel Innovation Author-

ity figures, in 2022 alone, health tech alone saw investments worth $ 2 billion.

Early this month, 56 American economists sent a letter to Mr Netanyahu arguing that his government’s judicial proposals “would adversely affect the Israeli economy by weakening the rule of law and thereby moving Israel in the direction of Hungary and Poland.”

Historically, bolstered by its impeccable reputation for high-quality scientific culture, Israel has attracted a disproportionate amount of funding from the EU as grants for academic and commercial R&D; all this may seem a backslide as the EU gets distracted by the unending political turmoil and rise of the extreme right, tightening its purse strings.

IS THERE A SILVER LINING?

While the potential departure of some of Israel’s tech leaders may seem concerning, it is essential to consider the potential benefits. Brain drain is always a worrying development for any nation that prides itself as a cradle of innovation- the departure of tech leaders would be the worst drain.

On the other hand, Israeli tech leaders relocating their businesses to other countries may increase global awareness and recognition of Israeli innovation. Israeli tech leaders relocating to other countries may forge new international partnerships and facilitate cross-border collaboration, which could benefit the broader Israeli tech sector.

The departure of established tech leaders could create space for a new generation of entrepreneurs to emerge and build their businesses within Israel. This could lead to the development of a more diverse and robust start-up ecosystem in the country. The potential

exodus of tech leaders may prompt the Israeli government to address the concerns driving this trend. This could include implementing policies to improve the business environment, reduce the cost of living, and invest in the local tech talent pool.

The prospect of Israeli tech leaders leaving the country raises several important questions and concerns about the future of the nation’s technology sector. While the potential exodus may have some negative implications, such as brain drain and a loss of innovation, it could also lead to new opportunities for international expansion, collaboration, and the development of a stronger startup ecosystem.

Ultimately, whether to leave Israel will depend on each tech leader’s circumstances and goals. As the global technology landscape evolves, Israeli tech leaders must carefully weigh the potential benefits and drawbacks of relocating their businesses, considering both the short-term and long-term implications for themselves, their companies, and the broader Israeli tech sector.

For India, the concern should come as a wake-up call because it has seldom given importance to this brain drain for the last seven decades of its independence when its most talented people have been lured overseas. India, too, needs to finally plug this hole, albeit in a democratic manner.

OSINT: A GROWING TREND

The OSINT (Open Source Intelligence) is the new gold mine of operational and strategic intelligence, as evidenced by the Ukraine war.

Maj. Gen. Ajay. Sah SM, VSM (Retd), is the CIO at Synergia Foundation, with experience in conflict resolution, peacekeeping and counterterrorism.

Ukraine has proved to be the most transparent war in history, with every aspect being beamed straight from the battlefield to anyone mining the Internet in real time. Perhaps, social media has done more to turn global public opinion in favour of the underdog Ukraine than any high-brow session in the UN Security Council could have achieved.

From the military perspective, open-source intelligence, referred to as OSINT in military parlance, has been a remarkable development of this conflict. The war is like an open book to the discerning miner of the world wide web, equipped with the right search engines and the most appropriately phrased queries. Apparently, both sides are making the best use of this to seek out the vulnerabilities of the opposite side and inflict death and destruction. A recent graphic example is how nearly a hundred Russian servicemen surfing their smartphones in comfort and assuming the safety of their barracks pinpointed their location for missiles to blow them into eternity. Obviously, commercial-grade trackers were used to pinpoint the location of this cluster of smartphones just as Google Maps does to indicate congestion in its road maps!

If there were any doubters, their scepticism was laid to rest by 21-year-old Jack Teixeira, a part-time airman, who released into the cyber world a treasure trove of

The Internet has changed the entire concept of military secrecy just as it has done to the individual right to privacy. In an interconnected world, securing military information is becoming extremely difficult, as some Indian naval officers learnt at the cost of their careers when their Facebook / Instagram posts revealed the location of their naval ships.

intelligence covering a collage stretching from the secrets of Ukraine’s preparations for the much-publicised spring offensive to American snooping of friends and allies. An embarrassed Pentagon acknowledged the authenticity of the leaks made in a messaging portal frequented by diehard gamers.

THE WORLD AS A GLASS HOUSE

The Internet has changed the entire concept of military secrecy just as it has done to the individual right to privacy. In an interconnected world, securing military information is becoming extremely difficult, as some Indian naval officers learnt at the cost of their careers when their Facebook / Instagram posts revealed the location of their naval ships. It is not only trained intelligence operatives who have learnt the art of mining the web for military-grade information but also journalists, gamers, military enthusiasts and plain hobbyists, garnering intelligence from publicly available sources like social media sites, flight trackers and news clippings

posted on the net. This is a grave concern for military planners and commanders as the ubiquitous smartphone has become the biggest ‘Mata Hari’ of them all. If operational plans and movements are not concealed, achieving strategic surprise would become almost impossible. More importantly, it makes state entities vulnerable to attack by non-state actors who have identified lucrative targets on the net.

NEW SOURCES OF INTELLIGENCE

As per intelligence experts, user-generated content is the principal source of OSINT. Individuals and groups, including business establishments, share information, pictures, and data on social networking websites like YouTube, Instagram, Twitter and Facebook. Today’s smartphones are equipped with geolocating systems that tag all posts with the user’s location. Militaries have been trying to ban smartphones from the battlefield for some time but have failed miserably, as the recent Ukrainian attack on the Russian barrack indicates.

It is not only individuals broadcasting their data abashedly; unknown to most users, many machines do the same. Most cars now come with GPS transponders to locate them in case of theft. Since 2020 the aviation industry has made it mandatory for civil and military aircraft to constantly beam their location through transponders, especially while transiting through U.S. airspace. Not surprisingly, the flight tracker is an interesting app for aviation enthusiasts to monitor global air traffic densities and predict incidents when traffic patterns are disrupted. Any smart military could use this facility to pinpoint the flight patterns and location of its adversaries’ military assets with minimum covert efforts. In fact, the proliferation and craze for ‘interneting’ personal and public vehicles will ensure that within the next decade, most surface vehicles, on land and sea, will similarly be incessantly broadcasting their location.

Of course, the careless use of modern devices can be exploited by state entities to strike at terror camps and terrorist leadership. The U.S., with its vast network of satellite-based eavesdropping capability, has since 9/11 monitored and tracked down many potential terror threats and neutralised them before they turned into headline news of the worst kind. Bellingcat is a Netherlands-based investigative journalism group specialising in fact-checking and open-source intelligence. It can glean valuable data from open-sourced information. An article published on the web by Belfer Centre for Science and International Affairs, Harvard Kennedy School, quotes Paul Kolbe, Director of the Intelligence Project, stating that “Vast troves of data” are now available, which, “if analysed and purposed, can provide stunning insights into areas that were previously only discoverable through risky, expensive, and restricted intelligence collection.”

INTELLIGENCE- A FORCE MULTIPLIER

At the strategic level, intelligence analysts tasked by their political and military hierarchy to shape the

strategic understanding of the adversaries’ political and military objectives can do an effective job through OSINT. The pulse of the military is available in military seminars, project papers, thesis and even in carelessly uploaded private pictures and group discussions. Similarly, today digital news services and blogs are updating news constantly at a dizzying pace and, in their desire to be the first to break the news, let much important information slip past.

Of course, open societies like Western democracies and even India are more vulnerable as there is no culture or awareness for a citizen concerning operational or national security. On the other hand, authoritarian regimes like China and North Korea do not trust their citizens with even the blandest and most commonplace type of information and restrict their access to global networking sites. They create domestic clones of popular social media sites that can be easily monitored and, blanked out where needed.

General Hockenhull, Commander of UK’s Strategic Command, while discussing the use of open-source intelligence in the war in Ukraine at a RUSI Members Webinar, said, “The conflict in Ukraine can in some ways be viewed as the first digital war, and much of that digital capability is coming from commercially available services rather than necessarily traditional military capabilities.” The easy availability of commercial satellites, including Elon Musk’s Starlink constellation, has extended the military’s situational awareness and Intelligence, Surveillance and Reconnaissance (ISR) capability. Artificial Intelligence (AI) clubbed with commercial off-the-shelf software, can seek useful information from the billions of bits of data floating in the cyber world. “ We’re seeing an attempt to sense and understand the environment, to decide and orchestrate, to act and then to learn and adapt. Those four stages are about being able to do that with sufficient pace to be able to outpace the adversary, and whoever learns fastest is going to win,” says General Hockenhull.

Assessment

For military analysts, OSINT can help lift the fog of war as the experts have a wide mosaic of information available to them without any constraint and with the help of specially designed search engines suitably embedded with AI, the task can be done.

This can potentially change how intelligence preparation of the battlefield is done at the strategic, operational and tactical levels. Any nation and its organs that lag run the serious risk of suffering from strategic surprises.

The reduction in the fog of war has heightened friction, with the risk of misinterpretation from data mining and emotional bias. Relying solely on open-source intelligence (OSINT) can misguide political leadership, so it should be used corroboratively to avoid catastrophic consequences.

AI SUFFERS A VOTE OF NO CONFIDENCE

As AI’s pioneer raises existential questions about the proper functioning and usage of the technology, it is time to examine what is at stake.

Since ancient times, the concept of inanimate objects gaining sentience and intelligence has existed, with myths about robots in Greek culture and the creation of automatons by Chinese and Egyptian engineers. The term “artificial intelligence” was coined at a conference at Dartmouth College in 1956, marking the formal establishment of the field.

The history of AI has seen periods of intense activity followed by lulls, including a notable drop in progress from 1974 to 1980, known as the “AI winter”. However, funding from the British government in the 1980s reignited interest in the field, to compete with Japanese efforts.

Another AI winter occurred from 1987 to 1993, coinciding with the collapse of the market for early general-purpose computers and a reduction in government funding.

Nevertheless, research in AI continued, culminating in IBM’s Deep Blue computer defeating Russian grandmaster Garry Kasparov in a game of chess in 1997. More recently, in 2011, IBM’s question-answering system Watson beat reigning champions Brad Rutter and Ken Jennings on the quiz show “Jeopardy!”, signalling a significant milestone in the field of AI. Today, AI is behind the algorithms that dictate what video-streaming plat-

The recent acceleration in both the power and visibility of AI systems and growing awareness of their abilities and defects have raised fears that the technology is advancing so quickly that it cannot be safely controlled. Hence the call for a pause and growing concern that AI could threaten not just jobs, factual accuracy, and reputations but the existence of humanity itself.

forms decide you should watch next. It can be used in recruitment to filter job applications, by insurers to calculate premiums, it can diagnose medical conditions.

THE BIOLOGY BEHIND THE SCIENCE

In 2012, Geoffrey Hinton and two of his graduate students, Ilya Sutskever and Alex Krishevsky, developed a neural network capable of analysing thousands of photos and self-teaching to recognise common objects like flowers, dogs, and cars.

Google recognised the enormous potential of this technology and quickly purchased the company Hinton and his students founded for $44 million (€40.18 million). This technology paved the way for AI chatbots like ChatGPT and Google’s Bard. Sutskever, one of Hinton’s students, eventually became the chief scientist at OpenAI, the company that created ChatGPT. Although large language models are built from massive

Suchitra Padmanabhan is the Policy Research Associate at Synergia Foundation and has Post Graduate Degree in Social Policy & Planning from the London School of Economics

neural networks with millions of connections, they are still tiny compared to the human brain.

Hinton explains that while our brains have roughly 100 trillion connections, large language models have up to half a trillion or, at most, a trillion. However, models like GPT-4 possess knowledge far exceeding that of any individual person, leading Hinton to suggest that perhaps they employ a superior learning algorithm than our brains.

Training neural networks is widely considered inefficient compared to the human brain. It takes massive amounts of data and energy to train them, whereas the brain can learn new concepts and skills quickly, using only a fraction of the energy required by neural networks.

According to Hinton, when comparing the speed of learning a task such as this between a pretrained large language model and a human, the human’s advantage disappears. It is worth noting that AI chatbots are just one aspect of artificial intelligence, albeit the most popular one at present.

What we are seeing now, though is the rise of AGIartificial general intelligence - which can be trained to do a number of things within a remit. So, for example, ChatGPT can only offer text answers to a query, but the possibilities within that, as we are seeing, are endless. This space has a few options, including ChatGPT, Bing, Bard, and Ernie.

Since its release in November, ChatGPT has been making headlines for its remarkable abilities, including responding to complex questions, generating code, planning vacations, translating languages, and even writing poetry.

Just two months after ChatGPT’s debut, Microsoft, OpenAI’s primary investor and partner, introduced Bing, which can engage in open-ended conversations on almost any topic, to its Bing engine.

Meanwhile, Google’s chatbot, Bard, was released in March to a limited number of users in the United States and Brit ain. Initially designed as a creative tool for drafting emails and poems, Bard can generate ideas, write blog posts, and provide factual or opinion-based answers to questions.

In March, China’s search giant, Baidu, unveiled its first major ri val to ChatGPT, called Ernie (Enhanced Representation through Knowledge Integra tion). However, the bot’s de but was marred by a failed “live” demonstration, which

turned out to have been pre-recorded.

LEADING LIGHT EXPOSES UNCOMFORTABLE GLARE

Hinton is a pioneer of deep learning who helped develop some of the most important techniques at the heart of modern AI, but after a decade at Google, he is stepping down to focus on new concerns he now has about AI.

Hinton is best known for his work on a technique called backpropagation, which he proposed (with a pair of colleagues) in the 1980s. In a nutshell, this is the algorithm that allows machines to learn. It underpins almost all neural networks today, from computer vision systems to large language models.

They also trained a neural network to predict the next letters in a sentence, a precursor to today’s large language models. One of these graduate students was Ilya Sutskever, who went on to cofound OpenAI and lead the development of ChatGPT.

Hinton says that the new generation of large language models—especially GPT-4, which OpenAI released in March—has made him realise that machines are on track to be a lot smarter than he thought they would be. And he is scared about how that might play out.

These models stand to transform humans’ relationships with computers, knowledge and even with themselves. Proponents of AI argue for its potential to solve big problems by developing new drugs, designing new materials to help fight climate change, or untangling the complexities of fusion power.

To others, the fact that AI’s capabilities are already outrunning their creators’ understanding risks bringing to life the science-fiction disaster scenario of the machine that outsmarts its inventor, often with fatal

Those capabilities became apparent to a wider public when ChatGPT was released in November. A million people had used it within a week; 100m within two months. It was soon being used to generate school essays and wedding speeches. ChatGPT popularity, and Microsoft’s move to incorporate it into Bing, its search engine, prompted rival firms to release chatbots too.

The recent acceleration in both the power and visibility of AI systems and growing awareness of their abilities and defects have raised fears that the technology is advancing so quickly that it cannot be safely controlled. Hence the call for a

pause and growing concern that AI could threaten not just jobs, factual accuracy, and reputations but the existence of humanity itself.

In Hinton’s view, work in this field should be halted until it is well understood whether it will be possible to control AI.

“It is hard to see how you can prevent the bad actors from using it for bad things,” Hinton said in the interview, in which he warns about the excessive speed at which advances are being made. He admits that even he thought this rapid pace of development was 30 to 50 years away, but it is evident that they are much closer than that! He added he was also concerned about the “existential risk of what happens when these things get more intelligent than us.

In addition, the rate at which this intelligence multiplies is astronomical and when one person learns anything new, it gets transferred automatically to the rest of the community. This makes chatbots a huge Pandora’s box that automatically gets updated every few seconds with reams of information that makes them much smarter than any human.

Other leaders in the field of AI research share his concern that the technology may present a significant risk to humanity. In a similar vein, last month, Elon Musk revealed that he had a disagreement with Google’s co-founder Larry Page over the latter’s apparent lack of attention to AI safety.

DANGER SIGNALS

Hinton expresses deep concern over the potential misuse of the very tools he helped create, particularly in shaping pivotal human events such as elections and

wars. He warns that as smart machines advance, their ability to create their own subgoals could have dangerous consequences, especially if applied to immoral objectives.

Some experimental projects, such as BabyAGI and AutoGPT, already connect chatbots to other programs, enabling them to carry out simple tasks. While these may seem like small steps, they point towards a troubling direction that some individuals wish to pursue.

Even without malicious intent, subgoals pose a risk. For example, one subgoal a machine might set for itself is to replicate, leading to an alarming question: is this something we want?

In March, a group of over 1,000 technology leaders, researchers, and experts in the field of artificial intelligence signed an open letter expressing concern about the potential risks that AI technologies pose to society and humanity.

The group, which included high-profile figures such as Elon Musk and the owner of Twitter, called for a sixmonth halt to the development of the most powerful AI systems in order to better understand the dangers associated with the technology.

While AI systems, such as large language models, can assist workers in generating ideas and completing tasks more efficiently, experts like Dr Bengio have warned that these models can also learn unwanted and unexpected behaviours. For example, these systems may generate untruthful, biased, and toxic information. Additionally, even advanced models like GPT-4 may produce inaccurate or fabricated information, which is referred to as “hallucination.” Experts have analysed the risks posed by AI in the short, medium and long

term. In the immediate short term, disinformation is the biggest threat. They worry that the persuasive nature of these systems could blur the line between fact and fiction, making it challenging to differentiate between truth and falsehood. This could lead people to rely on these systems for making critical decisions, such as seeking medical advice or emotional support.

Moreover, there is a growing concern that these systems could be intentionally used to spread misinformation, leveraging their human-like conversational abilities to deceive and manipulate people. Dr Bengio has pointed out that “We now have systems that can interact with us through natural language, and we can’t distinguish the real from the fake.”

In the medium term, job loss is of grave concern. While technologies like GPT-4 currently work in collaboration with human workers, there are worries that they could eventually replace certain professions, such as content moderators.

While they are not yet capable of completely replicating the work of lawyers, accountants, or doctors, they could potentially replace jobs such as those of paralegals, personal assistants, and translators.

The long-term risk is perhaps the most worrying because it refers to an overall loss of control. Over 1,000 technology leaders signed an open letter expressing concerns about the potential unexpected problems that could arise from the development of artificial intelligence.

While some people fear that A.I. could become uncontrollable or even pose a threat to humanity, many experts believe that such fears are exaggerated. Instead, they warn that as A.I. systems learn from vast amounts of data, they may acquire unexpected behaviours that could be problematic. Additionally, they worry that integrating A.I. with other internet services could give these systems unanticipated powers by allowing them to write their own code.

The chatbots’ capabilities rely on probabilistic prediction models and large training data sets provided by humans, which can be directed to achieve any desired outcome. This raises concerns about their potential to create a convincing reality and foster trust where it should not exist.

The development and implementation of A.I. technologies can surpass our capacity to comprehend their impacts, leading to unintended consequences. Therefore, we must assess these consequences before placing blind faith in A.I., as the problem with A.I. is not its lack of artificial intelligence but rather our blind reliance on it.

RESPONSIBLE APPROACH

Hinton is advocating a responsible approach to the development of AI by attempting to collaborate with technology leaders to address the potential risks associ-

ated with this rapidly-evolving technology. He suggests that the international ban on chemical weapons could serve as a model for regulating the development and use of dangerous AI.

However, given the fast-paced advancement of AI, it is difficult for society to keep up with its capabilities. Therefore, regulation, legislation, and international treaties must be adapted to address the real concerns about bias, privacy, and intellectual-property rights raised by existing AI systems. It is crucial to balance the potential benefits of AI with an assessment of the risks and to remain prepared to adjust regulations accordingly.

At present, there are three distinct approaches taken by governments regarding AI regulation. At one end of the spectrum, the UK has proposed a “light-touch” approach that involves no new regulations or regulatory bodies but applies existing rules to AI systems. The US has taken a similar approach, though the Biden administration is seeking public views on what a regulatory framework might look like.

On the other hand, the EU is taking a tougher stance. Its proposed law categorises different uses of AI by the level of risk involved and mandates increasingly strict monitoring and disclosure as the risk level rises. For instance, the regulation forbids certain uses of AI, such as subliminal advertising and remote biometrics.

Some argue that an even more rigorous approach is required. Governments must regulate AI like medicines with a dedicated regulator, stringent testing, and pre-approval before public release.

China is already taking some measures in this direction by requiring companies to register AI products and undergo a security review before release.

Assessment

AI has entered everyday life as we know it through the use of CHatGPT, Bing, Bard, and Ernie to name a few. While AI chatbots have gained significant popularity, they represent only one facet of artificial intelligence. As science advances rapidly, concerns about the effective and judicious use of this feature gain prominence.

It is clear that AI offers enormous opportunities, but it is essential that this tech revolution is cushioned with safety and control. While pioneers such as Dr Hinton are experts on the science, there is clearly more that needs to be done on the policy front, which is the responsibility of the government. Leaders have gone on to suggest that we might need to press the pause button on the pace of this tech development in order to fully understand the possibilities.

AI-TRANSFORMING OUR LIVES

AI bots are quickly and insidiously infiltrating every aspect of human activity, including the economy and business. Is it safe?

Sambratha Shetty is the COO at Synergia Foundation and holds a Masters’ in Science from the University of Greenwich, UK.

The rise of AI-powered language models has been nothing short of a new-age miracle, and leading the charge is ChatGPT, based on the GPT-4 architecture by OpenAI.

Now there are reports of AI bots like Chat GPT venturing into the crucial field of the economy and trying to shape the future of many critical industries.

That this innovation is at the forefront of tech disruptions cannot be overstated. This is amply demonstrated by the furore it has created in a creative industry like screenplay writing, with Hollywood writers up in arms, fearing that AI tools like ChatGPT could render them jobless in a few years. In fact, thousands of screenwriters for the film and TV industry picketed streets in Los Angeles and New York, demanding restrictions on the use of AI on creative projects.

The influential Writers Guild of America demanded that studios and networks stop the use of AI for creating or editing literary material; their demand is that such creative pursuits should be left in human hands!

The questions that arise are whether we are letting technology get so far ahead that we may ultimately lose our control over it or, in our endeavour to cut costs, we will render whole sections of the working population jobless. What are the ethical challenges, and how can regulatory processes keep pace with the lightning speed

The questions that arise are whether we are letting technology get so far ahead that we may ultimately lose our control over it or, in our endeavour to cut costs, we will render whole sections of the working population jobless.

at which these ground-breaking technologies are being deployed?

USHERING A NEW ERA OF EFFICIENCY?

The business world has always been the first to recognise the worth of innovation and quickly harness it to its monetary advantage- the electric telegraph, the telephone, radiotelephony, steam-powered industrial machines and now the computer and the internet. Therefore, we should not be surprised that we will witness a rapid integration of AI tools like ChatGPT into a host of industrial applications taking various decision-making and creative aspects away from human hands for the sake of efficiency and error-free execution.

This is becoming increasingly visible in sectors such as customer service, finance, healthcare, education etc., that appear to be reaping the benefits of AI-supported business tools.

ChatGPT-powered chatbots are transforming the customer service industry by providing instant and accurate responses to customer queries. These AI-driven virtual assistants are available 24/7, reducing wait times

and improving customer satisfaction. Furthermore, they reduce labour costs for companies while increasing productivity. Are we witnessing the demise of ‘call centres’ and ‘back offices’, which propelled the service industry of developing economies like India and the Philippines?

ChatGPT is being harnessed in the financial sector to analyse gargantuan amounts of data, providing valuable insights to investors, financial institutions, and regulators. ChatGPT assists in risk assessment, fraud detection, and decision-making processes by processing complex financial data and generating comprehensible summaries.

Health care holds the maximum promise for exploiting AI-supported technology, where ChatGPT is employed to assist medical professionals in diagnosing and treating patients.

By analysing medical records, research papers, and clinical trial data, ChatGPT can help doctors make informed decisions and save precious time. Additionally, AI-driven chatbots can provide health advice to patients, improving access to healthcare in underserved areas.

Prof Chas Bountra, Pro Vice Chancellor for Innovation at the University of Oxford, says, “What is going to cause an absolute revolution in the health industry is AI and machine learning.

And this is where a technology hub like Bangalore and Hyderabad has a real opportunity if they are ready to seize it. In the U.S., there are companies on the doorstep of Stanford University worth more than a trillion dollars each- Apple, Microsoft, Amazon, and Tesla.

These are all technology and data companies that have been created in the last 25 years. In the pharma field, the most valuable company is J&J, which is around $ 440 billion and has existed for over a century! But the time is not far when somebody, some genius, will create a digital AI data-driven healthcare company that will become the first trillion-dollar pharma giant. It could happen in Bangalore!”

AI machine learning will make things very exciting, helping us identify better targets for drug discovery and biomarker signatures that can be used for clinical trials and identify new drug combinations for treating complex diseases. This technology will enable cross-usage of existing drugs because there are many drugs in use that, unknown to us, would work a lot better in other conditions too.

Education is fast developing as a lucrative industry. With its vast network of higher learning institutions, every developed country attracts thousands of foreign students to these expensive academic centres. Therefore, it should not come as a surprise when the Education industry adopts large-scale induction of AI bots.

The application of this technology in the field of education covers a vast canvas- from assisting teachers in creating personalised lesson plans and grading assignments to providing tutoring services to students. By automating some aspects of the educational process, teachers can focus on delivering a more engaging and effective learning experience.

ETHICAL CONCERNS

As with any ground-breaking technology, the rise of ChatGPT brings about ethical concerns that must be

Source : CartoonStock

addressed to ensure its responsible use. As highlighted in the introduction of this article, job displacement remains the greatest worry. The automation driven by ChatGPT has the potential to displace human jobs in various sectors.

As AI-powered chatbots become more capable, the need for human labour in some industries may decrease. While this can lead to cost savings for businesses, it can also exacerbate income inequality and contribute to unemployment.

Tools like ChatGPT are quick learners and can be programmed to generate coherent and persuasive text that will appear so appealing and genuine that it will be an ideal tool to create material for the sole purpose of spreading misinformation and facilitating manipulation. Bad actors could use the technology to create fake news, ma nipulate public opinion, or even engage in criminal activities.

Programmed tools tend to adopt their program mers’ bias and prejudices. This has been practically experienced in various fields where AI-assisted tools were employed. The most glaring has been AI-assisted face recognition technology used by law enforcement agencies in many countries.

It was conclusively proved that the face recognition tools tended to focus more often on a particular ethnic class for surveillance. Since AI models learn from vast amounts of data, they may inadvertently adopt biases present in that data. These biases can be harmful and perpetuate stereotypes, resulting in unfair treatment and discrimination.

CREATING A MONITORING ECOSYSTEM

To mitigate these ethical concerns and promote the responsible use of ChatGPT, several measures can be taken by developers, regulators, and users alike:

The regulators of this technology, and the industry itself, must continuously monitor the disruptive technology being introduced to ensure all wrinkles are removed before opening it for mass use. Developers should continue to invest in refining ChatGPT’s algorithms to minimise biases and reduce potential misuse. Regular audits and monitoring should be conducted to ensure the technology remains ethical and effective.

Inter-sector and intra-sector collaboration is critical to keep refining the product with stakeholders existing over a vast spectrum. OpenAI, the organisation behind ChatGPT, has initiated a cooperative approach to AI development and governance.

A more comprehensive understanding of potential risks and benefits can be achieved by involving stakeholders from different backgrounds, such as academia, industry, civil society, and governments. This collaborative approach can help create guidelines and regulations

that promote responsible AI deployment. Workers whose jobs are at risk of being taken over by AI must undergo reskilling programmes. Governments and industries should invest in such programmes to address the potential job displacement caused by AI-driven automation. By preparing the workforce for the changing job market, we can help mitigate the negative impacts of automation on employment.

With many AI chatbots competing for the huge market that awaits the ultimate winner, there is a tendency to keep a veil over such tools’ development and actual functioning.

This is dangerous as a disruptive technology of this nature that can totally transform the way we live and work needs a high degree of transparency and accountability in developing and using AI technologies like ChatGPT.

This is essential for building trust and fostering responsible adoption. Companies should disclose their methodologies and the data used in training their AI models, allowing for independent audits and evaluations.

National governments have a major role in formulating ethical AI frameworks and regulations. Of course, the universal nature of the development of the technology and its application makes global collaboration a pre-requisite.

Developing ethical AI frameworks and guidelines can help establish a foundation for responsible AI use. These frameworks can serve as a reference for developers, policymakers, and organisations to ensure that AI technologies, like ChatGPT, are used in a way that respects human rights and promotes social good.

Assessment

The ChatGPT revolution is transforming the economy, opening up new possibilities for automation and efficiency across industries. This ground-breaking technology has the potential to bring about significant benefits in areas such as customer service, finance, healthcare, and education. However, addressing the ethical concerns associated with AI is crucial, such as job displacement, misinformation, and biases.