Year of the demagogue 2016 - Financial Times

DECEMBER 15, 2016 by: Lionel Barber
On the morning of June 21, two days before the Brexit referendum, I met David Cameron in Downing Street. During a 25-minute conversation, the prime minister assured me that everything would be all right on the night. I wasn’t entirely convinced.
In hindsight, Brexit defined 2016. This was the year when the unthinkable became possible, the marginal invaded the mainstream, and Donald Trump, a property tycoon and television host, was elevated to US commander-in-chief.
In his memoir Present at the Creation (1969), Dean Acheson, a former US secretary of state, describes how he and fellow “Wise Men” helped President Harry Truman to build a new liberal, rule-based order after the second world war. It was founded on institutions: the UN, the IMF, the World Bank and the Nato alliance.
In 2016, as Trump dismissed Nato as “obsolete” and his consigliere Newt Gingrich described Estonia as a suburb of St Petersburg, it felt at times as if we were present at the destruction.
Acheson epitomised the East Coast establishment. He was a diplomat, lawyer and scholar — an expert, if you like. This year, the establishment was hammered, the experts humbled. Most missed Brexit. Many declared a Trump victory impossible. Michael Gove, a leading Brexiter, caught the public mood: “People in this country have had enough of experts.”
Brexit and the Trump triumph mark a revolutionary moment. Not quite 1789 or 1989, but certainly a thundering repudiation of the status quo. Some detect echoes of the 1930s, with Trump cast as an incipient fascist.
It was a good year for strongmen: Vladimir Putin in Russia; Recep Tayyip Erdogan in Turkey; Xi Jinping, now promoted to “core” leader in China. It was an even better year for demagogues, the crowd-pleasers and rabble-rousers who feed on emotions and prejudice. In the year of the demagogue, several vied for the lead role: Nigel Farage, then Ukip leader, godfather of Brexit and Trump acolyte; Rodrigo Duterte, a brutal newcomer to power, who pledged to slaughter millions of drug addicts to clean up the Philippines; and Trump himself, who constantly marvelled at the size of his crowds.
Yet the 1930s analogy is in many ways misplaced. We are nowhere near a Great Depression. The US economy is approaching full employment. The pre-Brexit UK economy has seen employment rise by just over two million since 2010. Credit is flowing. Corporate profits are up. The trouble is that swaths of the population, often those living outside the great cities, have little sense of the economic recovery.
Real incomes in the UK have not grown for the past decade. In the US, 95 per cent of households still had incomes last year that were below those in 2007, according to the Economic Policy Institute think-tank. In Europe, unemployment in the eurozone, especially in countries such as Greece, Spain and Italy, remains high. Yet the wealth of the top one per cent (“the privileged few”, to borrow Theresa May’s mantra) has continued to rise.

Something more profound is happening in advanced democracies. The forces at work are cultural, economic, social and political, driven in part by rapid technological change. Artificial intelligence, gene editing, self-driving cars — progress on all these groundbreaking technologies accelerated in 2016. Each is massively empowering (the smartphone has given everyone a voice) but also massively disruptive (the impact of artificial intelligence on jobs has barely begun to be felt).
The year of the demagogue: how 2016 changed democracy
From Brexit to Donald Trump, this year has seen a thundering repudiation of the status quo
Lionel Barber


DECEMBER 15, 2016 by: Lionel Barber
On the morning of June 21, two days before the Brexit referendum, I met David Cameron in Downing Street. During a 25-minute conversation, the prime minister assured me that everything would be all right on the night. I wasn’t entirely tight. In hindsight, Brexit defined 2016. This was the year when the unthinkable became possible, the marginal invaded the mainstream, and Donald Trump, a property tycoon and television host, was elevated to US commander-in-chief.
In his memoir Present at the Creation (1969), Dean Acheson, a former US secretary of state, describes how he and fellow “Wise Men” helped President Harry Truman to build a new liberal, rule-based order after the second world war. It was founded on institutions: the UN, the IMF, the World Bank and the Nato alliance.
Header Header wayve ad tag #12779








In 2016, as Trump dismissed Nato as “obsolete” and his consigliere Newt Gingrich described Estonia as a suburb of St Petersburg, it felt at times as if we were present at the destruction.
Acheson epitomised the East Coast establishment. He was a diplomat, lawyer and scholar — an expert, if you like. This year, the establishment was hammered, the experts humbled. Most missed Brexit. Many declared a Trump victory impossible. Michael Gove, a leading Brexiter, caught the public mood: “People in this country have had enough of experts.”

'Trump won by attacking the Republican party as much as his Democratic opponent' © Getty Images
Brexit and the Trump triumph mark a revolutionary moment. Not quite 1789 or 1989, but certainly a thundering repudiation of the status quo. Some detect echoes of the 1930s, with Trump cast as an incipient fascist.
It was a good year for strongmen: Vladimir Putin in Russia; Recep Tayyip Erdogan in Turkey; Xi Jinping, now promoted to “core” leader in China. It was an even better year for demagogues, the crowd-pleasers and rabble-rousers who feed on emotions and prejudice. In the year of the demagogue, several vied for the lead role: Nigel Farage, then Ukip leader, godfather of Brexit and Trump acolyte; Rodrigo Duterte, a brutal newcomer to power, who pledged to slaughter millions of drug addicts to clean up the Philippines; and Trump himself, who constantly marvelled at the size of his crowds.
Yet the 1930s analogy is in many ways misplaced. We are nowhere near a Great Depression. The US economy is approaching full employment. The pre-Brexit UK economy has seen employment rise by just over two million since 2010. Credit is flowing. Corporate profits are up. The trouble is that swaths of the population, often those living outside the great cities, have little sense of the economic recovery.
Real incomes in the UK have not grown for the past decade. In the US, 95 per cent of households still had incomes last year that were below those in 2007, according to the Economic Policy Institute think-tank. In Europe, unemployment in the eurozone, especially in countries such as Greece, Spain and Italy, remains high. Yet the wealth of the top one per cent (“the privileged few”, to borrow Theresa May’s mantra) has continued to rise.

Something more profound is happening in advanced democracies. The forces at work are cultural, economic, social and political, driven in part by rapid technological change. Artificial intelligence, gene editing, self-driving cars — progress on all these groundbreaking technologies accelerated in 2016. Each is massively empowering (the smartphone has given everyone a voice) but also massively disruptive (the impact of artificial intelligence on jobs has barely begun to be felt).
Header Header wayve ad tag #12792








In political terms, Brexit and the Trump triumph highlight the decline of the party system and the end of the old left/right divide. The centre-left appears in terminal decline. This month, François Hollande, whose approval rating hit a low of 4 per cent, ruled out a second run for the Elysée. Jeremy Corbyn, the hard-left leader of the opposition Labour party, had more to say about the death of Fidel Castro than Britain departing the EU. Matteo Renzi, the centre-left reformer in Italy, lost heavily in his own referendum on constitutional reform and promptly resigned.
In 2016, we saw, finally, that this period — call it Globalisation 2.0 — is over
The Conservative or Christian Democrat centre-right fared better but remains under pressure from an anti-immigrant, nationalist fringe, from Austria to England, France, Germany, Hungary, the Netherlands and, increasingly, Poland. In 2016, we witnessed the birth of the “Fourth Way” — a new brand of politics that is nativist, protectionist and bathed in a cultural nostalgia captured by Trump’s pledge to “Make America Great Again”.
The second development is a widespread disillusion among western democracies with globalisation, the postwar phenomenon marked by three trends: the Roaring Eighties deregulation of the Reagan-Thatcher era; the 1994 Uruguay Round agreement on global trade liberalisation; and the opening of a market economy in China. The progressive abandonment of controls on capital, goods, services and labour, epitomised by the launch of the single European market and the single currency, reached its apogee in the summer of 2007. In 2016, we saw, finally, that this period — call it Globalisation 2.0 — is over.
The year of the demagogue: how 2016 changed democracy
From Brexit to Donald Trump, this year has seen a thundering repudiation of the status quo
Lionel Barber


* Twitter
DECEMBER 15, 2016 by: Lionel Barber
On the morning of June 21, two days before the Brexit referendum, I met David Cameron in Downing Street. During a 25-minute conversation, the prime minister assured me that everything would be all right on the night. I wasn’t entirely convinced.
In hindsight, Brexit defined 2016. This was the year when the unthinkable became possible, the marginal invaded the mainstream, and Donald Trump, a property tycoon and television host, was elevated to US commander-in-chief.
In his memoir Present at the Creation (1969), Dean Acheson, a former US secretary of state, describes how he and fellow “Wise Men” helped President Harry Truman to build a new liberal, rule-based order after the second world war. It was founded on institutions: the UN, the IMF, the World Bank and the Nato alliance.
Header Header wayve ad tag #12779








In 2016, as Trump dismissed Nato as “obsolete” and his consigliere Newt Gingrich described Estonia as a suburb of St Petersburg, it felt at times as if we were present at the destruction.
Acheson epitomised the East Coast establishment. He was a diplomat, lawyer and scholar — an expert, if you like. This year, the establishment was hammered, the experts humbled. Most missed Brexit. Many declared a Trump victory impossible. Michael Gove, a leading Brexiter, caught the public mood: “People in this country have had enough of experts.”

'Trump won by attacking the Republican party as much as his Democratic opponent' © Getty Images
Brexit and the Trump triumph mark a revolutionary moment. Not quite 1789 or 1989, but certainly a thundering repudiation of the status quo. Some detect echoes of the 1930s, with Trump cast as an incipient fascist.
It was a good year for strongmen: Vladimir Putin in Russia; Recep Tayyip Erdogan in Turkey; Xi Jinping, now promoted to “core” leader in China. It was an even better year for demagogues, the crowd-pleasers and rabble-rousers who feed on emotions and prejudice. In the year of the demagogue, several vied for the lead role: Nigel Farage, then Ukip leader, godfather of Brexit and Trump acolyte; Rodrigo Duterte, a brutal newcomer to power, who pledged to slaughter millions of drug addicts to clean up the Philippines; and Trump himself, who constantly marvelled at the size of his crowds.
Yet the 1930s analogy is in many ways misplaced. We are nowhere near a Great Depression. The US economy is approaching full employment. The pre-Brexit UK economy has seen employment rise by just over two million since 2010. Credit is flowing. Corporate profits are up. The trouble is that swaths of the population, often those living outside the great cities, have little sense of the economic recovery.
Real incomes in the UK have not grown for the past decade. In the US, 95 per cent of households still had incomes last year that were below those in 2007, according to the Economic Policy Institute think-tank. In Europe, unemployment in the eurozone, especially in countries such as Greece, Spain and Italy, remains high. Yet the wealth of the top one per cent (“the privileged few”, to borrow Theresa May’s mantra) has continued to rise.

Something more profound is happening in advanced democracies. The forces at work are cultural, economic, social and political, driven in part by rapid technological change. Artificial intelligence, gene editing, self-driving cars — progress on all these groundbreaking technologies accelerated in 2016. Each is massively empowering (the smartphone has given everyone a voice) but also massively disruptive (the impact of artificial intelligence on jobs has barely begun to be felt).
Header Header wayve ad tag #12792








In political terms, Brexit and the Trump triumph highlight the decline of the party system and the end of the old left/right divide. The centre-left appears in terminal decline. This month, François Hollande, whose approval rating hit a low of 4 per cent, ruled out a second run for the Elysée. Jeremy Corbyn, the hard-left leader of the opposition Labour party, had more to say about the death of Fidel Castro than Britain departing the EU. Matteo Renzi, the centre-left reformer in Italy, lost heavily in his own referendum on constitutional reform and promptly resigned.
In 2016, we saw, finally, that this period — call it Globalisation 2.0 — is over
The Conservative or Christian Democrat centre-right fared better but remains under pressure from an anti-immigrant, nationalist fringe, from Austria to England, France, Germany, Hungary, the Netherlands and, increasingly, Poland. In 2016, we witnessed the birth of the “Fourth Way” — a new brand of politics that is nativist, protectionist and bathed in a cultural nostalgia captured by Trump’s pledge to “Make America Great Again”.
The second development is a widespread disillusion among western democracies with globalisation, the postwar phenomenon marked by three trends: the Roaring Eighties deregulation of the Reagan-Thatcher era; the 1994 Uruguay Round agreement on global trade liberalisation; and the opening of a market economy in China. The progressive abandonment of controls on capital, goods, services and labour, epitomised by the launch of the single European market and the single currency, reached its apogee in the summer of 2007. In 2016, we saw, finally, that this period — call it Globalisation 2.0 — is over.

'In the year of the demagogue, several vied for the lead role, including the Philippines' Rodrigo Duterte' © AFP/Getty Images
Free trade has become ever harder to sell to a public worried about job security and the competitive threat from developing countries. Trump denounced the Trans-Pacific Partnership pact between the US and 11 Pacific Rim countries, and the North American Free Trade Agreement with Canada and Mexico. Hillary Clinton, once a free trader, caved. No one countered that the US consumer, including many Trump voters, bought cheap goods at Target and Walmart thanks to efficient global supply chains and cheap labour in the developing world. Hostility to free trade was a vote winner. Only last-minute arm-twisting of the Walloon regional government in Belgium salvaged a Canada-EU trade pact seven years in the making.
Free movement is also in question. Europe has experienced mass migration on a scale not seen since the late 1940s. In 2016, the refugee flow from the Middle East and north Africa was stemmed at one end thanks to a German-brokered deal with Turkey but record numbers travelled (and drowned) on the treacherous route from the central Mediterranean to Italy. Terror attacks, notably in France, heightened public insecurity about immigrants. There was a sense governments had somehow lost control, of national borders and national identity.
This explains the power of Trump’s pledge to build a “beautiful” wall on the Mexican border, and Theresa May’s conference jibe about politically correct multiculturalism: “If you believe you are a citizen of the world, you are a citizen of nowhere.” The party faithful in Birmingham cheered but cosmopolitan London, home to hundreds of thousands of “foreigners”, including Mark Carney, the Canadian governor of the Bank of England, was not amused.
The Brexit referendum exposed an economic gap between winners and losers of globalisation; but also a cultural divide between those comfortable with the pace of change, from technology to same-sex marriage, and those wanting to slow down the clock and rediscover their roots in ethnicity, religion or nationality.
Leave’s slogan in the Brexit campaign, “Take Back Control”, was simple and brilliantly effective across classes and generations. Constitutionalists liked the idea of regaining sovereignty from EU institutions. Everyone liked the idea of reclaiming money from Brussels and diverting the savings to the NHS. Clamping down on immigration was a vote-winner. No matter that these claims were deeply misleading (as were Remain’s claims of imminent economic disaster in the event of a Brexit vote). Throughout the year, facts were elastic concepts.
In 2016, the world woke up to “fake news”, sponsored by political activists but also increasingly by state actors and their surrogates. The CIA accused Russia of being behind the leaking of emails from the Democratic National Committee, a shocking, brazen attempt to interfere in a US presidential election. Trump dismissed the claims as ridiculous, as did his supporters. Throughout this political cycle, many appeared to live in a parallel universe where facts were entirely subjugated to opinion.
Scottie Nell Hughes, a Trump supporter and CNN commentator, explained: “So one thing that’s been interesting this entire campaign season to watch, is that people that say facts are facts — they’re not really facts. Everybody has a way — it’s kind of like looking at ratings, or looking at a glass of half-full water. Everybody has a way of interpreting them to be the truth or not truth. There’s no such thing, unfortunately, anymore as facts.”
Trump’s victory gives succour to the demagogues-in-waiting in 2017
Welcome to the world of post-truth politics, turbocharged by technology such as the smartphone. A single device allows individuals to project in real time an unfiltered version of the news and (often highly partisan) views across Facebook, Google and Twitter. In the US election, journalists, once enjoying a degree of trust as the filter of last resort, were howled down or singled out on Twitter as “disgusting” or “lame”.
In the UK, both Leave and Remain regularly lambasted the BBC, which tried to remain neutral. Timothy Garton Ash, the Oxford historian, warned presciently about the risks of “fairness bias”. The danger was that the BBC, in seeking to remain impartial, would fail to be informative, especially on complex economic issues. “You give equal airtime to unequal arguments, without daring to say that, on this or that point, one side has more evidence, or a significantly larger body of expert opinion, than the other,” he wrote.
The Trump campaign presented “mainstream media” with a challenge on a different scale. His demagoguery broke every taboo in the book, casting Mexicans as “rapists”, eliding the difference between traditional Muslims and radical Islamic terrorists, and threatening to jail his Democratic opponent.
The TV networks, especially Rupert Murdoch’s Fox News, gave Trump far more airtime than other candidates. “It may not be good for America, but it’s damn good for CBS,” quipped Les Moonves, head of the media group.
Trump won by attacking the Republican party as much as his Democratic opponent. He spent hardly any of his own money, less than a fraction of the Clinton campaign’s war chest. His was the triumph of the brand.
Yet Clinton was a deeply flawed candidate at a moment when Americans wanted change — not a continuation of the Obama presidency by other means or a return to the Bush or Clinton dynasties. She had sky-high negative ratings, just like Trump. She was not liked, she was not trusted, and she was evasive. “Crooked Hillary”, Trump’s signature tweet, stuck for a good reason.
In this respect, it is misleading to suggest that the typical Trump supporter was an angry white man on opioids from West Virginia. Educated people voted for Trump. Women voted for Trump. As Salena Zito wrote in The Atlantic, Trump’s supporters took him seriously but not literally. By contrast, liberals, including the media, took Trump literally but not seriously. What this ignores is the damage the tycoon may have inflicted on public trust in American democracy. He coarsened civic discourse. He declared the political system corrupt. He even cast doubt on the legitimacy of the election not once but twice, declining to confirm he would accept the result if he lost.

In the late spring of 2016, I travelled to Houston, Texas, to have lunch with James Baker, a former Treasury secretary, US secretary of state and White House chief of staff under Ronald Reagan and George Bush Sr. I asked him whether America could survive a Trump presidency. “We are a country of laws, limited by bureaucracy. Presidents are not unilateral rulers,” Baker replied.
This confidence in the power of democratic institutions will be tested in the coming months. Trump wants to undo Obama’s legacy and unleash the animal spirits of American capitalism. The initial reaction in the stock market bordered on euphoric. Foreign policy is the bigger risk. Trump wants to pursue an America First foreign policy, renegotiating trade pacts and obliging allies to pay more for their collective defence. His world is about money not values: America the selfish superpower, as Robert Kagan has described it.
Trump’s victory gives succour to the demagogues-in-waiting in 2017, notably Marine Le Pen, who will almost certainly make it through to the run-off for the French presidency. A win for Le Pen on top of Brexit would surely spell the end of the European Union. Elections in the Netherlands may also signal a shift to the right. Even in Germany, Angela Merkel, running for a fourth term, faces a challenge from the populist right in the form of Alternative für Deutschland, which will make the task of forming a ruling coalition much harder.
Trump’s foreign policy, assuming action follows words, also leaves the door wide open for the rising power of China. His abandonment of the TPP — a geopolitical building block as well as a trade pact — has unsettled Japan and Pacific neighbours. His anti-Mexican rhetoric has undermined the peso and left Latin Americans wondering whether Beijing is a safer bet. Among the Baltic states and Scandinavia, many are fretting about Nato’s defence guarantee in the face of Russian aggrandisement under Putin.
For more than two centuries, the US has served as a beacon for democratic values such as pluralism, tolerance and the rule of law. For the most part, it has been on the right side of history. In 2016, Americans for the first time voted into the White House a man with no previous government or military experience. Like Brexit, it was a high-risk gamble with utterly unpredictable consequences.
Trump’s winner-takes-all approach and his lack of respect for minority rights violates a cornerstone of democracy and free society, as set out in the 10th of the Federalist Paperswritten by James Madison, one of the founding fathers. His position mirrors the more extreme Brexiter demands that the “will of the people” be respected at all costs. Anyone who raises objections — the media, the opposition or, indeed, the judiciary — risks being branded “enemies of the people”.
This is not merely populism run rampant. It is a denial of politics itself, which, as the late scholar Bernard Crick reminds us, is the only alternative to government by coercion and the tyranny of the majority.
We have been warned.
Lionel Barber is the FT’s editor
Financial Times

How Russia hacked the US election - New York Times

The Perfect Weapon: How Russian Cyberpower Invaded the U.S.
By ERIC LIPTON, DAVID E. SANGER and SCOTT SHANE
DECEMBER 13, 2016
WASHINGTON — When Special Agent Adrian Hawkins of the Federal Bureau of Investigation called the Democratic National Committee in September 2015 to pass along some troubling news about its computer network, he was transferred, naturally, to the help desk.
His message was brief, if alarming. At least one computer system belonging to the D.N.C. had been compromised by hackers federal investigators had named “the Dukes,” a cyberespionage team linked to the Russian government.
The F.B.I. knew it well: The bureau had spent the last few years trying to kick the Dukes out of the unclassified email systems of the White House, the State Department and even the Joint Chiefs of Staff, one of the government’s best-protected networks.
Yared Tamene, the tech-support contractor at the D.N.C. who fielded the call, was no expert in cyberattacks. His first moves were to check Google for “the Dukes” and conduct a cursory search of the D.N.C. computer system logs to look for hints of such a cyberintrusion. By his own account, he did not look too hard even after Special Agent Hawkins called back repeatedly over the next several weeks — in part because he wasn’t certain the caller was a real F.B.I. agent and not an impostor.
“I had no way of differentiating the call I just received from a prank call,” Mr. Tamene wrote in an internal memo, obtained by The New York Times, that detailed his contact with the F.B.I.
It was the cryptic first sign of a cyberespionage and information-warfare campaign devised to disrupt the 2016 presidential election, the first such attempt by a foreign power in American history. What started as an information-gathering operation, intelligence officials believe, ultimately morphed into an effort to harm one candidate, Hillary Clinton, and tip the election to her opponent, Donald J. Trump.
Like another famous American election scandal, it started with a break-in at the D.N.C. The first time, 44 years ago at the committee’s old offices in the Watergate complex, the burglars planted listening devices and jimmied a filing cabinet. This time, the burglary was conducted from afar, directed by the Kremlin, with spear-phishing emails and zeros and ones.
( at is phishing?
Phishing uses an innocent-looking email to entice unwary recipients to click on a deceptive link, giving hackers access to their information or a network. In “spear-phishing,” the email is tailored to fool a specific person. )
An examination by The Times of the Russian operation — based on interviews with dozens of players targeted in the attack, intelligence officials who investigated it and Obama administration officials who deliberated over the best response — reveals a series of missed signals, slow responses and a continuing underestimation of the seriousness of the cyberattack.
The D.N.C.’s fumbling encounter with the F.B.I. meant the best chance to halt the Russian intrusion was lost. The failure to grasp the scope of the attacks undercut efforts to minimize their impact. And the White House’s reluctance to respond forcefully meant the Russians have not paid a heavy price for their actions, a decision that could prove critical in deterring future cyberattacks.
The low-key approach of the F.B.I. meant that Russian hackers could roam freely through the committee’s network for nearly seven months before top D.N.C. officials were alerted to the attack and hired cyberexperts to protect their systems. In the meantime, the hackers moved on to targets outside the D.N.C., including Mrs. Clinton’s campaign chairman, John D. Podesta, whose private email account was hacked months later.
Even Mr. Podesta, a savvy Washington insider who had written a 2014 report on cyberprivacy for President Obama, did not truly understand the gravity of the hacking.
By last summer, Democrats watched in helpless fury as their private emails and confidential documents appeared online day after day — procured by Russian intelligence agents, posted on WikiLeaks and other websites, then eagerly reported on by the American media, including The Times. Mr. Trump gleefully cited many of the purloined emails on the campaign trail.
The fallout included the resignations of Representative Debbie Wasserman Schultz of Florida, the chairwoman of the D.N.C., and most of her top party aides. Leading Democrats were sidelined at the height of the campaign, silenced by revelations of embarrassing emails or consumed by the scramble to deal with the hacking. Though little-noticed by the public, confidential documents taken by the Russian hackers from the D.N.C.’s sister organization, the Democratic Congressional Campaign Committee, turned up in congressional races in a dozen states, tainting some of them with accusations of scandal.
In recent days, a skeptical president-elect, the nation’s intelligence agencies and the two major parties have become embroiled in an extraordinary public dispute over what evidence exists that President Vladimir V. Putin of Russia moved beyond mere espionage to deliberately try to subvert American democracy and pick the winner of the presidential election.
Many of Mrs. Clinton’s closest aides believe that the Russian assault had a profound impact on the election, while conceding that other factors — Mrs. Clinton’s weaknesses as a candidate; her private email server; the public statements of the F.B.I. director, James B. Comey, about her handling of classified information — were also important.
While there’s no way to be certain of the ultimate impact of the hack, this much is clear: A low-cost, high-impact weapon that Russia had test-fired in elections from Ukraine to Europe was trained on the United States, with devastating effectiveness. For Russia, with an enfeebled economy and a nuclear arsenal it cannot use short of all-out war, cyberpower proved the perfect weapon: cheap, hard to see coming, hard to trace.
“There shouldn’t be any doubt in anybody’s mind,” Adm. Michael S. Rogers, the director of the National Security Agency and commander of United States Cyber Command, said at a postelection conference. “This was not something that was done casually, this was not something that was done by chance, this was not a target that was selected purely arbitrarily,” he said. “This was a conscious effort by a nation-state to attempt to achieve a specific effect.”
For the people whose emails were stolen, this new form of political sabotage has left a trail of shock and professional damage. Neera Tanden, president of the Center for American Progress and a key Clinton supporter, recalls walking into the busy Clinton transition offices, humiliated to see her face on television screens as pundits discussed a leaked email in which she had called Mrs. Clinton’s instincts “suboptimal.”

“It was just a sucker punch to the gut every day,” Ms. Tanden said. “It was the worst professional experience of my life.”
The United States, too, has carried out cyberattacks, and in decades past the C.I.A. tried to subvert foreign elections. But the Russian attack is increasingly understood across the political spectrum as an ominous historic landmark — with one notable exception: Mr. Trump has rejected the findings of the intelligence agencies he will soon oversee as “ridiculous,” insisting that the hacker may be American, or Chinese, but that “they have no idea.”
Mr. Trump cited the reported disagreements between the agencies about whether Mr. Putin intended to help elect him. On Tuesday, a Russian government spokesman echoed Mr. Trump’s scorn.
“This tale of ‘hacks’ resembles a banal brawl between American security officials over spheres of influence,” Maria Zakharova, the spokeswoman for the Russian Foreign Ministry, wrote on Facebook.
Over the weekend, four prominent senators — two Republicans and two Democrats — joined forces to pledge an investigation while pointedly ignoring Mr. Trump’s skeptical claims.
“Democrats and Republicans must work together, and across the jurisdictional lines of the Congress, to examine these recent incidents thoroughly and devise comprehensive solutions to deter and defend against further cyberattacks,” said Senators John McCain, Lindsey Graham, Chuck Schumer and Jack Reed.
“This cannot become a partisan issue,” they said. “The stakes are too high for our country.”
A Target for Break-Ins
Sitting in the basement of the Democratic National Committee headquarters, below a wall-size 2012 portrait of a smiling Barack Obama, is a 1960s-era filing cabinet missing the handle on the bottom drawer. Only a framed newspaper story hanging on the wall hints at the importance of this aged piece of office furniture.
“GOP Security Aide Among 5 Arrested in Bugging Affair,” reads the headline from the front page of The Washington Post on June 19, 1972, with the bylines of Bob Woodward and Carl Bernstein.
Andrew Brown, 37, the technology director at the D.N.C., was born after that famous break-in. But as he began to plan for this year’s election cycle, he was well aware that the D.N.C. could become a break-in target again.
There were aspirations to ensure that the D.N.C. was well protected against cyberintruders — and then there was the reality, Mr. Brown and his bosses at the organization acknowledged: The D.N.C. was a nonprofit group, dependent on donations, with a fraction of the security budget that a corporation its size would have.
“There was never enough money to do everything we needed to do,” Mr. Brown said.
The D.N.C. had a standard email spam-filtering service, intended to block phishing attacks and malware created to resemble legitimate email. But when Russian hackers started in on the D.N.C., the committee did not have the most advanced systems in place to track suspicious traffic, internal D.N.C. memos show.
Mr. Tamene, who reports to Mr. Brown and fielded the call from the F.B.I. agent, was not a full-time D.N.C. employee; he works for a Chicago-based contracting firm called The MIS Department. He was left to figure out, largely on his own, how to respond — and even whether the man who had called in to the D.N.C. switchboard was really an F.B.I. agent.
“The F.B.I. thinks the D.N.C. has at least one compromised computer on its network and the F.B.I. wanted to know if the D.N.C. is aware, and if so, what the D.N.C. is doing about it,” Mr. Tamene wrote in an internal memo about his contacts with the F.B.I. He added that “the Special Agent told me to look for a specific type of malware dubbed ‘Dukes’ by the U.S. intelligence community and in cybersecurity circles.”
Part of the problem was that Special Agent Hawkins did not show up in person at the D.N.C. Nor could he email anyone there, as that risked alerting the hackers that the F.B.I. knew they were in the system.
Mr. Tamene’s initial scan of the D.N.C. system — using his less-than-optimal tools and incomplete targeting information from the F.B.I. — found nothing. So when Special Agent Hawkins called repeatedly in October, leaving voice mail messages for Mr. Tamene, urging him to call back, “I did not return his calls, as I had nothing to report,” Mr. Tamene explained in his memo.
In November, Special Agent Hawkins called with more ominous news. A D.N.C. computer was “calling home, where home meant Russia,” Mr. Tamene’s memo says, referring to software sending information to Moscow. “SA Hawkins added that the F.B.I. thinks that this calling home behavior could be the result of a state-sponsored attack.”
Mr. Brown knew that Mr. Tamene, who declined to comment, was fielding calls from the F.B.I. But he was tied up on a different problem: evidence suggesting that the campaign of Senator Bernie Sanders of Vermont, Mrs. Clinton’s main Democratic opponent, had improperly gained access to her campaign data.
Ms. Wasserman Schultz, then the D.N.C.’s chairwoman, and Amy Dacey, then its chief executive, said in interviews that neither of them was notified about the early reports that the committee’s system had likely been compromised.
Shawn Henry, who once led the F.B.I.’s cyber division and is now president of CrowdStrike Services, the cybersecurity firm retained by the D.N.C. in April, said he was baffled that the F.B.I. did not call a more senior official at the D.N.C. or send an agent in person to the party headquarters to try to force a more vigorous response.
“We are not talking about an office that is in the middle of the woods of Montana,” Mr. Henry said. “We are talking about an office that is half a mile from the F.B.I. office that is getting the notification.”
“This is not a mom-and-pop delicatessen or a local library. This is a critical piece of the U.S. infrastructure because it relates to our electoral process, our elected officials, our legislative process, our executive process,” he added. “To me it is a high-level, serious issue, and if after a couple of months you don’t see any results, somebody ought to raise that to a higher level.”
The F.B.I. declined to comment on the agency’s handling of the hack. “The F.B.I. takes very seriously any compromise of public and private sector systems,” it said in a statement, adding that agents “will continue to share information” to help targets “safeguard their systems against the actions of persistent cybercriminals.”
By March, Mr. Tamene and his team had met at least twice in person with the F.B.I. and concluded that Agent Hawkins was really a federal employee. But then the situation took a dire turn.
A second team of Russian-affiliated hackers began to target the D.N.C. and other players in the political world, particularly Democrats. Billy Rinehart, a former D.N.C. regional field director who was then working for Mrs. Clinton’s campaign, got an odd email warning from Google.
“Someone just used your password to try to sign into your Google account,” the March 22 email said, adding that the sign-in attempt had occurred in Ukraine. “Google stopped this sign-in attempt. You should change your password immediately.”
Mr. Rinehart was in Hawaii at the time. He remembers checking his email at 4 a.m. for messages from East Coast associates. Without thinking much about the notification, he clicked on the “change password” button and half asleep, as best he can remember, he typed in a new password.
What he did not know until months later is that he had just given the Russian hackers access to his email account.
Hundreds of similar phishing emails were being sent to American political targets, including an identical email sent on March 19 to Mr. Podesta, chairman of the Clinton campaign. Given how many emails Mr. Podesta received through this personal email account, several aides also had access to it, and one of them noticed the warning email, sending it to a computer technician to make sure it was legitimate before anyone clicked on the “change password” button.
“This is a legitimate email,” Charles Delavan, a Clinton campaign aide, replied to another of Mr. Podesta’s aides, who had noticed the alert. “John needs to change his password immediately.”
With another click, a decade of emails that Mr. Podesta maintained in his Gmail account — a total of about 60,000 — were unlocked for the Russian hackers. Mr. Delavan, in an interview, said that his bad advice was a result of a typo: He knew this was a phishing attack, as the campaign was getting dozens of them. He said he had meant to type that it was an “illegitimate” email, an error that he said has plagued him ever since.
During this second wave, the hackers also gained access to the Democratic Congressional Campaign Committee, and then, through a virtual private network connection, to the main computer network of the D.N.C.
The F.B.I. observed this surge of activity as well, again reaching out to Mr. Tamene to warn him. Yet Mr. Tamene still saw no reason to be alarmed: He found copies of the phishing emails in the D.N.C.’s spam filter. But he had no reason, he said, to believe that the computer systems had been infiltrated.
One bit of progress had finally been made by the middle of April: The D.N.C., seven months after it had first been warned, finally installed a “robust set of monitoring tools,” Mr. Tamene’s internal memo says.
Honing Stealthy Tactics
The United States had two decades of warning that Russia’s intelligence agencies were trying to break into America’s most sensitive computer networks. But the Russians have always managed to stay a step ahead.
Their first major attack was detected on Oct. 7, 1996, when a computer operator at the Colorado School of Mines discovered some nighttime computer activity he could not explain. The school had a major contract with the Navy, and the operator warned his contacts there. But as happened two decades later at the D.N.C., at first “everyone was unable to connect the dots,” said Thomas Rid, a scholar at King’s College in London who has studied the attack.
Investigators gave it a name — Moonlight Maze — and spent two years, often working day and night, tracing how it hopped from the Navy to the Department of Energy to the Air Force and NASA. In the end, they concluded that the total number of files stolen, if printed and stacked, would be taller than the Washington Monument.
Whole weapons designs were flowing out the door, and it was a first taste of what was to come: an escalating campaign of cyberattacks around the world.
But for years, the Russians stayed largely out of the headlines, thanks to the Chinese — who took bigger risks, and often got caught. They stole the designs for the F-35 fighter jet, corporate secrets for rolling steel, even the blueprints for gas pipelines that supply much of the United States. And during the 2008 presidential election cycle, Chinese intelligence hacked into the campaigns of Mr. Obama and Mr. McCain, making off with internal position papers and communications. But they didn’t publish any of it.
The Russians had not gone away, of course. “They were just a lot more stealthy,” said Kevin Mandia, a former Air Force intelligence officer who spent most of his days fighting off Russian cyberattacks before founding Mandiant, a cybersecurity firm that is now a division of FireEye — and the company the Clinton campaign brought in to secure its own systems.
The Russians were also quicker to turn their attacks to political purposes. A 2007 cyberattack on Estonia, a former Soviet republic that had joined NATO, sent a message that Russia could paralyze the country without invading it. The next year cyberattacks were used during Russia’s war with Georgia.
But American officials did not imagine that the Russians would dare try those techniques inside the United States. They were largely focused on preventing what former Defense Secretary Leon E. Panetta warned was an approaching “cyber Pearl Harbor” — a shutdown of the power grid or cellphone networks.
But in 2014 and 2015, a Russian hacking group began systematically targeting the State Department, the White House and the Joint Chiefs of Staff. “Each time, they eventually met with some form of success,” Michael Sulmeyer, a former cyberexpert for the secretary of defense, and Ben Buchanan, now both of the Harvard Cyber Security Project, wrote recently in a soon-to-be published paper for the Carnegie Endowment.
The Russians grew stealthier and stealthier, tricking government computers into sending out data while disguising the electronic “command and control” messages that set off alarms for anyone looking for malicious actions. The State Department was so crippled that it repeatedly closed its systems to throw out the intruders. At one point, officials traveling to Vienna with Secretary of State John Kerry for the Iran nuclear negotiations had to set up commercial Gmail accounts just to communicate with one another and with reporters traveling with them.
2016 Election Hacking Coverage
Mr. Obama was briefed regularly on all this, but he made a decision that many in the White House now regret: He did not name Russians publicly, or issue sanctions. There was always a reason: fear of escalating a cyberwar, and concern that the United States needed Russia’s cooperation in negotiations over Syria.
“We’d have all these circular meetings,” one senior State Department official said, “in which everyone agreed you had to push back at the Russians and push back hard. But it didn’t happen.”
So the Russians escalated again — breaking into systems not just for espionage, but to publish or broadcast what they found, known as “doxing” in the cyberworld.
It was a brazen change in tactics, moving the Russians from espionage to influence operations. In February 2014, they broadcast an intercepted phone callbetween Victoria Nuland, the assistant secretary of state who handles Russian affairs and has a contentious relationship with Mr. Putin, and Geoffrey Pyatt, the United States ambassador to Ukraine. Ms. Nuland was heard describing a little-known American effort to broker a deal in Ukraine, then in political turmoil.
They were not the only ones on whom the Russians used the steal-and-leak strategy. The Open Society Foundation, run by George Soros, was a major target, and when its documents were released, some turned out to have been altered to make it appear as if the foundation was financing Russian opposition members.
Last year, the attacks became more aggressive. Russia hacked a major French television station, frying critical hardware. Around Christmas, it attacked part of the power grid in Ukraine, dropping a portion of the country into darkness, killing backup generators and taking control of generators. In retrospect, it was a warning shot.
The attacks “were not fully integrated military operations,” Mr. Sulmeyer said. But they showed an increasing boldness.
 The day before the White House Correspondents’ Association dinner in April, Ms. Dacey, the D.N.C.’s chief executive, was preparing for a night of parties when she got an urgent phone call.
With the new monitoring system in place, Mr. Tamene had examined administrative logs of the D.N.C.’s computer system and found something very suspicious: An unauthorized person, with administrator-level security status, had gained access to the D.N.C.’s computers.
“Not sure it is related to what the F.B.I. has been noticing,” said one internal D.N.C. email sent on April 29. “The D.N.C. may have been hacked in a serious way this week, with password theft, etc.”
No one knew just how bad the breach was — but it was clear that a lot more than a single filing cabinet worth of materials might have been taken. A secret committee was immediately created, including Ms. Dacey, Ms. Wasserman Schultz, Mr. Brown and Michael Sussmann, a former cybercrimes prosecutor at the Department of Justice who now works at Perkins Coie, the Washington law firm that handles D.N.C. political matters.
“Three most important questions,” Mr. Sussmann wrote to his clients the night the break-in was confirmed. “1) What data was accessed? 2) How was it done? 3) How do we stop it?”
Mr. Sussmann instructed his clients not to use D.N.C. email because they had just one opportunity to lock the hackers out — an effort that could be foiled if the hackers knew that the D.N.C. was on to them.
“You only get one chance to raise the drawbridge,” Mr. Sussmann said. “If the adversaries know you are aware of their presence, they will take steps to burrow in, or erase the logs that show they were present.”
The D.N.C. immediately hired CrowdStrike, a cybersecurity firm, to scan its computers, identify the intruders and build a new computer and telephone system from scratch. Within a day, CrowdStrike confirmed that the intrusion had originated in Russia, Mr. Sussmann said.
The work that such companies do is a computer version of old-fashioned crime scene investigation, with fingerprints, bullet casings and DNA swabs replaced by an electronic trail that can be just as incriminating. And just as police detectives learn to identify the telltale methods of a veteran burglar, so CrowdStrike investigators recognized the distinctive handiwork of Cozy Bear and Fancy Bear.
Those are CrowdStrike’s nicknames for the two Russian hacking groups that the firm found at work inside the D.N.C. network. Cozy Bear — the group also known as the Dukes or A.P.T. 29, for “advanced persistent threat” — may or may not be associated with the F.S.B., the main successor to the Soviet-era K.G.B., but it is widely believed to be a Russian government operation. It made its first appearance in 2014, said Dmitri Alperovitch, CrowdStrike’s co-founder and chief technology officer.
It was Cozy Bear, CrowdStrike concluded, that first penetrated the D.N.C. in the summer of 2015, by sending spear-phishing emails to a long list of American government agencies, Washington nonprofits and government contractors. Whenever someone clicked on a phishing message, the Russians would enter the network, “exfiltrate” documents of interest and stockpile them for intelligence purposes.
“Once they got into the D.N.C., they found the data valuable and decided to continue the operation,” said Mr. Alperovitch, who was born in Russia and moved to the United States as a teenager.
Only in March 2016 did Fancy Bear show up — first penetrating the computers of the Democratic Congressional Campaign Committee, and then jumping to the D.N.C., investigators believe. Fancy Bear, sometimes called A.P.T. 28 and believed to be directed by the G.R.U., Russia’s military intelligence agency, is an older outfit, tracked by Western investigators for nearly a decade. It was Fancy Bear that got hold of Mr. Podesta’s email.
Attribution, as the skill of identifying a cyberattacker is known, is more art than science. It is often impossible to name an attacker with absolute certainty. But over time, by accumulating a reference library of hacking techniques and targets, it is possible to spot repeat offenders. Fancy Bear, for instance, has gone after military and political targets in Ukraine and Georgia, and at NATO installations.
That largely rules out cybercriminals and most countries, Mr. Alperovitch said. “There’s no plausible actor that has an interest in all those victims other than Russia,” he said. Another clue: The Russian hacking groups tended to be active during working hours in the Moscow time zone.
To their astonishment, Mr. Alperovitch said, CrowdStrike experts found signs that the two Russian hacking groups had not coordinated their attacks. Fancy Bear, apparently not knowing that Cozy Bear had been rummaging in D.N.C. files for months, took many of the same documents.
In the six weeks after CrowdStrike’s arrival, in total secrecy, the computer system at the D.N.C. was replaced. For a weekend, email and phones were shut off; employees were told it was a system upgrade. All laptops were turned in and the hard drives wiped clean, with the uninfected information on them imaged to new drives.
Though D.N.C. officials had learned that the Democratic Congressional Campaign Committee had been infected, too, they did not notify their sister organization, which was in the same building, because they were afraid that it would leak.
All of this work took place as the bitter contest for the Democratic nomination continued to play out between Mrs. Clinton and Mr. Sanders, and it was already causing a major distraction for Ms. Wasserman Schultz and the D.N.C.’s chief executive.
“This was not a bump in the road — bumps in the road happen all the time,” she said in an interview. “Two different Russian spy agencies had hacked into our network and stolen our property. And we did not yet know what they had taken. But we knew they had very broad access to our network. There was a tremendous amount of uncertainty. And it was chilling.”
The D.N.C. executives and their lawyer had their first formal meeting with senior F.B.I. officials in mid-June, nine months after the bureau’s first call to the tech-support contractor. Among the early requests at that meeting, according to participants: that the federal government make a quick “attribution” formally blaming actors with ties to Russian government for the attack to make clear that it was not routine hacking but foreign espionage.
“You have a presidential election underway here and you know that the Russians have hacked into the D.N.C.,” Mr. Sussmann said, recalling the message to the F.B.I. “We need to tell the American public that. And soon.”
In mid-June, on Mr. Sussmann’s advice, D.N.C. leaders decided to take a bold step. Concerned that word of the hacking might leak, they decided to go public in The Washington Post with the news that the committee had been attacked. That way, they figured, they could get ahead of the story, win a little sympathy from voters for being victimized by Russian hackers and refocus on the campaign.
But the very next day, a new, deeply unsettling shock awaited them. Someone calling himself Guccifer 2.0 appeared on the web, claiming to be the D.N.C. hacker — and he posted a confidential committee document detailing Mr. Trump’s record and half a dozen other documents to prove his bona fides.
“And it’s just a tiny part of all docs I downloaded from the Democrats networks,” he wrote. Then something more ominous: “The main part of the papers, thousands of files and mails, I gave to WikiLeaks. They will publish them soon.”
It was bad enough that Russian hackers had been spying inside the committee’s network for months. Now the public release of documents had turned a conventional espionage operation into something far more menacing: political sabotage, an unpredictable, uncontrollable menace for Democratic campaigns.
Guccifer 2.0 borrowed the moniker of an earlier hacker, a Romanian who called himself Guccifer and was jailed for breaking into the personal computers of former President George W. Bush, former Secretary of State Colin L. Powell and other notables. This new attacker seemed intent on showing that the D.N.C.’s cyberexperts at CrowdStrike were wrong to blame Russia. Guccifer 2.0 called himself a “lone hacker” and mocked CrowdStrike for calling the attackers “sophisticated.”
But online investigators quickly undercut his story. On a whim, Lorenzo Franceschi-Bicchierai, a writer for Motherboard, the tech and culture site of Vice, tried to contact Guccifer 2.0 by direct message on Twitter.
“Surprisingly, he answered right away,” Mr. Franceschi-Bicchierai said. But whoever was on the other end seemed to be mocking him. “I asked him why he did it, and he said he wanted to expose the Illuminati. He called himself a Gucci lover. And he said he was Romanian.”
That gave Mr. Franceschi-Bicchierai an idea. Using Google Translate, he sent the purported hacker some questions in Romanian. The answers came back in Romanian. But when he was offline, Mr. Franceschi-Bicchierai checked with a couple of native speakers, who told him Guccifer 2.0 had apparently been using Google Translate as well — and was clearly not the Romanian he claimed to be.
Cyberresearchers found other clues pointing to Russia. Microsoft Word documents posted by Guccifer 2.0 had been edited by someone calling himself, in Russian, Felix Edmundovich — an obvious nom de guerre honoring the founder of the Soviet secret police, Felix Edmundovich Dzerzhinsky. Bad links in the texts were marked by warnings in Russian, generated by what was clearly a Russian-language version of Word.
When Mr. Franceschi-Bicchierai managed to engage Guccifer 2.0 over a period of weeks, he found that his interlocutor’s tone and manner changed. “At first he was careless and colloquial. Weeks later, he was curt and more calculating,” he said. “It seemed like a group of people, and a very sloppy attempt to cover up.”
Computer experts drew the same conclusion about DCLeaks.com, a site that sprang up in June, claiming to be the work of “hacktivists” but posting more stolen documents. It, too, seemed to be a clumsy front for the same Russians who had stolen the documents. Notably, the website was registered in April, suggesting that the Russian hacking team planned well in advance to make public what it stole.
In addition to what Guccifer 2.0 published on his site, he provided material directly on request to some bloggers and publications. The steady flow of Guccifer 2.0 documents constantly undercut Democratic messaging efforts. On July 6, 12 days before the Republican National Convention began in Cleveland, Guccifer released the D.N.C.’s battle plan and budget for countering it. For Republican operatives, it was insider gold.
Then WikiLeaks, a far more established outlet, began to publish the hacked material — just as Guccifer 2.0 had promised. On July 22, three days before the start of the Democratic National Convention in Philadelphia, WikiLeaks dumped out 44,053 D.N.C. emails with 17,761 attachments. Some of the messages made clear that some D.N.C. officials favored Mrs. Clinton over her progressive challenger, Mr. Sanders.
That was no shock; Mr. Sanders, after all, had been an independent socialist, not a Democrat, during his long career in Congress, while Mrs. Clinton had been one of the party’s stars for decades. But the emails, some of them crude or insulting, infuriated Sanders delegates as they arrived in Philadelphia. Ms. Wasserman Schultz resigned under pressure on the eve of the convention where she had planned to preside.
Mr. Trump, by now the Republican nominee, expressed delight at the continuing jolts to his opponent, and he began to use Twitter and his stump speeches to highlight the WikiLeaks releases. On July 25, he sent out a lighthearted tweet: “The new joke in town,” he wrote, “is that Russia leaked the disastrous D.N.C. e-mails, which should never have been written (stupid), because Putin likes me.”
But WikiLeaks was far from finished. On Oct. 7, a month before the election, the site began the serial publication of thousands of private emails to and from Mr. Podesta, Mrs. Clinton’s campaign manager.
The same day, the United States formally accused the Russian government of being behind the hackings, in a joint statement by the director of national intelligence and the Department of Homeland Security, and Mr. Trump suffered his worst blow to date, with the release of a recording in which he bragged about sexually assaulting women.
The Podesta emails were nowhere near as sensational as the Trump video. But, released by WikiLeaks day after day over the last month of the campaign, they provided material for countless news reports. They disclosed the contents of Mrs. Clinton’s speeches to large banks, which she had refused to release. They exposed tensions inside the campaign, including disagreements over donations to the Clinton Foundation that staff members thought might look bad for the candidate and Ms. Tanden’s complaint that Mrs. Clinton’s instincts were “suboptimal.”
“I was just mortified,” Ms. Tanden said in an interview. Her emails were released on the eve of one of the presidential debates, she recalled. “I put my hands over my head and said, ‘I can’t believe this is happening to me.’” Though she had regularly appeared on television to support Mrs. Clinton, she canceled her appearances because all the questions were about what she had said in the emails.
Ms. Tanden, like other Democrats whose messages became public, said it was obvious to her that WikiLeaks was trying its best to damage the Clinton campaign. “If you care about transparency, you put all the emails out at once,” she said. “But they wanted to hurt her. So they put them out 1,800 to 3,000 a day.”
The Trump campaign knew in advance about WikiLeaks’ plans. Days before the Podesta email release began, Roger Stone, a Republican operative working with the Trump campaign, sent out an excited tweet about what was coming.
But in an interview, Mr. Stone said he had no role in the leaks; he had just heard from an American with ties to WikiLeaks that damning emails were coming.
Julian Assange, the WikiLeaks founder and editor, has resisted the conclusion that his site became a pass-through for Russian hackers working for Mr. Putin’s government or that he was deliberately trying to undermine Mrs. Clinton’s candidacy. But the evidence on both counts appears compelling.
In a series of email exchanges, Mr. Assange refused to say anything about WikiLeaks’ source for the hacked material. He denied that he had made his animus toward Mrs. Clinton clear in public statements (“False. But what is this? Junior high?”) or that the site had timed the releases for maximum negative effect on her campaign. “WikiLeaks makes its decisions based on newsworthiness, including for its recent epic scoops,” he wrote.
Mr. Assange disputed the conclusion of the Oct. 7 statement from the intelligence agencies that the leaks were “intended to interfere with the U.S. election process.”
“This is false,” he wrote. “As the disclosing party we know that this was not the intent. Publishers publishing newsworthy information during an election is part of a free election.”
But asked whether he believed the leaks were one reason for Mr. Trump’s election, Mr. Assange seemed happy to take credit. “Americans extensively engaged with our publications,” he wrote. “According to Facebook statistics WikiLeaks was the most referenced political topic during October.”
Though Mr. Assange did not say so, WikiLeaks’ best defense may be the conduct of the mainstream American media. Every major publication, including The Times, published multiple stories citing the D.N.C. and Podesta emails posted by WikiLeaks, becoming a de facto instrument of Russian intelligence.
Mr. Putin, a student of martial arts, had turned two institutions at the core of American democracy — political campaigns and independent media — to his own ends. The media’s appetite for the hacked material, and its focus on the gossipy content instead of the Russian source, disturbed some of those whose personal emails were being reposted across the web.
“What was really surprising to me?” Ms. Tanden said. “I could not believe that reporters were covering it.”
Inside the White House, as Mr. Obama’s advisers debated their response, their conversation turned to North Korea.
In late 2014, hackers working for Kim Jong-un, the North’s young and unpredictable leader, had carried out a well-planned attack on Sony Pictures Entertainment intended to stop the Christmastime release of a comedy about a C.I.A. plot to kill Mr. Kim.
In that case, embarrassing emails had also been released. But the real damage was done to Sony’s own systems: More than 70 percent of its computers melted down when a particularly virulent form of malware was released. Within weeks, intelligence agencies traced the attack back to the North and its leadership. Mr. Obama called North Korea out in public, and issued some not-very-effective sanctions. The Chinese even cooperated, briefly cutting off the North’s internet connections.
As the first Situation Room meetings on the Russian hacking began in July, “it was clear that Russia was going to be a much more complicated case,” said one participant. The Russians clearly had a more sophisticated understanding of American politics, and they were masters of “kompromat,” their term for compromising information.
But a formal “attribution report” still had not been forwarded to the president.
“It took forever,” one senior administration official said, complaining about the pace at which the intelligence assessments moved through the system.
In August a group that called itself the “Shadow Brokers” published a set of software tools that looked like what the N.S.A. uses to break into foreign computer networks and install “implants,” malware that can be used for surveillance or attack. The code came from the Tailored Access Operations unit of the N.S.A., a secretive group that mastered the arts of surveillance and cyberwar.
The assumption — still unproved — was that the code was put out in the open by the Russians as a warning: Retaliate for the D.N.C., and there are a lot more secrets, from the hackings of the State Department, the White House and the Pentagon, that might be spilled as well. One senior official compared it to the scene in “The Godfather” where the head of a favorite horse is left in a bed, as a warning.
The N.S.A. said nothing. But by late August, Admiral Rogers, its director, was pressing for a more muscular response to the Russians. In his role as director of the Pentagon’s Cyber Command, he proposed a series of potential counter-cyberstrikes.
Main Menu

What is Trump enjoy doing in the run up to president? - New York Times

You would think forcing Mitt Romney to eat frog legs, while swallowing his dignity, would have been enough humiliation during the dinner segment of his failed tryout for secretary of state. You would think.
But the president-elect wanted more. Romney was a “choker,” in Donald Trump’s earlier put-down; that, and he walked “like a penguin.” If Romney could take his flightless bird-in-a-tuxedo-act outside and apologize for calling Trump a fraud, then maybe the job was his. Romney would waddle no further. Apologize? Cripes, the title of his book is “No Apology.”
Still, high-five! For Trump, the debasement of Romney was just another hit of dopamine — the neurotransmitter once called the Kim Kardashian of molecules. He needs a jolt several times a day. But in turn, he gives it back to you, the millions in his personality cult, and certainly the click-bait web and cable press, who need it just as much.
Earlier this month, Representative Jim McDermott, Democrat of Washington, took to the floor of the House to plead for one thing from the incoming leader of the free world: “Stop tweeting, Mr. President-elect.” Not a chance. His tiny fingers can launch 140 predawn characters from the fortress of his gilded tower and mighty Boeing will lose more than a billion dollars in stock value a few hours later.
At the other end, his 17.3 million followers wake up every day eager for a shot of unfiltered Trump. It’s a dangerous codependency. “Saturday Night Live”? “Unwatchable!” Vanity Fair, after a scathing review of a Trump restaurant? “Dead!” The slaughter of civilians in the ancient city of Aleppo? Nothing. The real-world consequences of weaponized hatred are no concern for a man with a shameful incuriosity and a profound lack of empathy.
But look again at the Trump Tower stage — it’s Kanye! Who cares about Aleppo, or a foreign adversary deliberately trying to undermine an American election, when you’ve got a troubled rapper stopping by for his hit of Trump. The Orange One recognizes him — on CNN, now cutting away from Syria.
And so we see the clear design that Trump will use to rule: He will give us showmanship and cheap drama, put-downs and promises — the stagecraft of the world’s most powerful narcissist. And meanwhile, the nation will be governed by oil oligarchs, climate change deniers and Goldman Sachs tycoons brought in to do the real work.
The Koch brothers didn’t support Trump. But they got their dream team of hold-back-the-clock fossil fools and corporate sycophants. The bullet-headed nominee for labor secretary, Andrew Puzder, is against expanding the minimum wage for all the poor souls who voted for Trump. The Energy Department nominee, Rick Perry, vowed to eliminate that very agency. And he sits on the board of the pipeline company that wants to carry oil directly under a tribal water supply in North Dakota.
Pay no attention — it’s back on the road with the thank you tour. This traveling gloat-fest is an excuse for more of the Trump narcotic. He is having trouble getting A-list musicians to perform at his inauguration. The sound of an angry mob is music enough. The rallies are a contact high for both sides and — as in Wisconsin the other day — a chance for one more chant of “Lock her up!”
But locking Hillary Clinton up for careless management of her email could be problematic when it seems that Trump’s future national security adviser, the fake news enthusiast Michael Flynn, was himself investigated for wrongly sharing classified information with foreign leaders.
Time for another tweet, a put-down of a union man who dared to question how Trump played Indiana workers for suckers in his big factory stroll. Trump helped to save, at most, a thousand jobs. If President Obama had held a big press tour for all the 15 million new jobs created on his watch, he could boast of 36,000 jobs, once a week, throughout his eight years in office.
It’s boring stuff, anyway. Just like that daily intelligence briefing, which Trump says he doesn’t need because “I’m, like, a smart person.” But more to the point: for Trump, there’s no thrill in basic information. He’ll certainly feel something if there’s a catastrophic terrorist attack and, as with George W. Bush, there was an intelligence community warning of a looming threat.
Back to Trump Tower — oh look, all the tech titans! They didn’t back him, these captains of Apple and Facebook, Tesla and Amazon. And, given his record of boasting on tape of being a sexual predator, Trump couldn’t get hired as deputy office boy at any one of those companies. But as with the Romney grovel, he gets another hit by bringing them to heel. For another day, at least, it’s all a president-elect needs.
I invite you to follow me on Twitter (@nytegan).
New York Times

How Japan’s Radically Different Approach to AI Could Lead to Wild New Tech - TIME Business

How Japan’s Radically Different Approach to AI Could Lead to Wild New Tech Posted: 14 Dec 2016 12:33 PM PST Thanks to artificial intelligence, the automobile — that most American of possessions — is being remade. Self-driving cars from Google’s new Waymo subsidiary will hit the streets next year. Tesla’s fully automated cars will arrive in 2018. Uber is testing its own self-driving fleet in Pittsburgh. More than a dozen other companies have AI-powered vehicles in the works. Conspicuously left out out from the self-driving car boom has been Japanese auto makers. While Toyota is belatedly creating a $1 billion research center for AI-powered vehicles, most of Japan’s auto giants will need five or 10 years to catch up, by some estimates. But there is another, wildly different way that Japan has been deploying AI in cars: to make them more lovable. Next month, Honda will take the wraps off a concept vehicle, named the NeuV, which will use AI technologies from Softbank to, in Honda’s words, “enable machines to artificially generate their own emotions.” Honda has released few details, but says the boxy electric commuting car will have an “emotion engine” that promises car lovers an automobile that will love them right back. In a news release last July, Honda said it would work with Softbank to create an AI technology that could converse with a driver and use sensors and cameras “to perceive the emotions of the driver and to engage in dialogue based on the vehicle’s own emotions.” The NeuV seems to be Honda’s first effort to include the technology inside a vehicle. Softbank’s robotics division earlier developed an “emotion engine” for Pepper, a humanoid robot that retailed for $2,000 and learned the habits and preferences of family members. But Pepper didn’t catch on with consumers. According to Bloomberg, “bad decision making and missed opportunities” left the AI software buggy. Pepper is now being rented out for menial tasks like store greeting jobs, lottery-ball selection and handing out tissue packets, a form of advertising in Japan. Meanwhile, Toyota plans to sell its own humanoid robot next year. Kirobo Mini is a four-inch-tall version of an astronaut robot that spent 18 months aboard the International Space Station. It’s designed as a companion who can recognize faces and locations, talk and gesture to humans, and detect and respond to emotions. Kirobo’s solemnly stated mission is to “help solve the problems brought about by a society that has become more individualized and less communicative.” Toyota also believes the technology could make cars more emotionally interactive. The average person spends nearly four and a half years inside cars, giving Toyota ample personal data that can “better the everyday lives of drivers all over the world.” So like the American companies building self-driving cars, Japanese automakers are aspiring to improve lives with their own AI projects. But in some ways, the impulse is radically different from the way AI is thought of in the U.S., where it’s directed toward faceless, if highly practical innovations, like safer driving and smoother traffic. In Japan, the AI is directed toward alleviating loneliness. iRobot’s Roomba can clean your floors, but aren’t really cute unless kittens hop on board. Japan’s robotic baby seals are so adorable they’re used as a form of therapy. In general, Japan’s approach to AI and robots has less anxiety and ambivalence than in the West. And while industrial-robot makers like Fanuc are adopting machine-learning, much of the innovative work in Japanese robotics over the years has centered on humanoid robots that can interact with and help humans. In the U.S., the discussion of AI and robotics often centers around displacing jobs. Tech leaders like Elon Musk talk openly about their misgivings about AI’s destructive potential even as their companies grow dependent on the software. In a recent interview with The Guardian, Genevieve Bell, an anthropologist employed by Intel to research how humans interact with technology, underscored the different approaches cultures take toward artificial intelligence: What we are seeing now isn’t an anxiety about artificial intelligence per se, it’s about what it says about us. That if you can make something like us, where does it leave us? And that concern isn’t universal, as other cultures have very different responses to AI, to big data. The most obvious one to me would be the Japanese robotic tradition, where people are willing to imagine the role of robots as far more expansive than you find in the west. Bell pointed to the work of Masahiro Mori, a pioneer of Japan’s robotics industry best known for the uncanny valley hypothesis, in which humans are repulsed by robots that look nearly but not exactly like humans. In his book The Buddha in the Robot, Mori offers a perspective on human-automobile interaction that seems radical by western standards. In Mori’s view, humans and robots have a connection that is more egalitarian than master-slave: Depending on how you look at it, I could be regarded as managing the automobile, or it could be regarded as managing me. To control, in effect, is to be controlled: by driving the car properly I enable it to play a safe and useful role in life; but by controlling me, the automobile enables me to be a reliable and effective driver. The same relationship links human beings with all machines. They don’t do what you want them to do unless you do what they force you to do. Such a view has taken Japanese AI researchers down a different road. It’s also left them, for now, lagging behind their Western counterparts, at least in the auto industry. The software powering Pepper or Kirobo may not bring us a futuristic Herbie the Love Bug any time soon, but in time it could lead to a different kind of self-driving car than Google has in mind. After all, the word for “love” in Japanese, when rendered into English, is spelled “A-I.”

Donald Trump’s Denial About Russia - New York Times

Donald Trump’s Denial About Russia
By THE EDITORIAL BOARD
DECEMBER 15, 2016
No matter how divided our politics and our times, Americans can agree that our status as a strong, democratic nation rests on the bedrock of free and fair elections. That confidence is what was targeted when Russia, one of our oldest, most determined foreign adversaries, invaded American computer networks and released thousands of pages of documents to undermine the legitimacy of the 2016 election.
This news emerged last summer. Last month, the Central Intelligence Agencyshared a further conclusion, based on months of analysis, that the Russian hacking was intended to favor Donald Trump.
“There shouldn’t be any doubt in anybody’s mind,” Adm. Michael Rogers, the director of the National Security Agency and commander of United States Cyber Command, said recently. “This was not something that was done casually, this was not something that was done by chance, this was not a target that was selected purely arbitrarily,” he said. “This was a conscious effort by a nation-state to attempt to achieve a specific effect.”
Extrapolating motive from evidence is always tricky. But after the C.I.A. provided classified briefings for Congress and the White House, members of both political parties were convinced.
But not President-elect Trump.
Mr. Trump’s instant rejection of the C.I.A. findings as “ridiculous,” based on no review of its work, echoed Moscow’s. “This tale of ‘hacks’ resembles a banal brawl between American security officials over spheres of influence,” Maria Zakharova, the spokeswoman for the Russian Foreign Ministry, wrote on Facebook. Mr. Trump said of American security officials, “They’re fighting among themselves.”
On Nov. 10, two days after the election, Sergei Ryabkov, Russia’s deputy foreign minister, said “there were contacts” between Moscow and Mr. Trump’s campaign. “I cannot say that all of them, but quite a few have been staying in touch with Russian representatives,” Mr. Ryabkov said.
Paul Manafort, one of Mr. Trump’s campaign managers, resigned after reports described his political ties to Russia. Lt. Gen. Michael Flynn, Mr. Trump’s national security adviser, sat with Mr. Putin at a gala for Russian state television, where he has appeared as a commentator.
Mr. Trump’s own business ties to Moscow date to the late 1980s. His son Donald Trump Jr. told a real estate gathering in 2008 that “Russians make up a pretty disproportionate cross-section of a lot of our assets,” adding “we see a lot of money pouring in from Russia.”
Mr. Trump hasn’t released tax returns or other records that could ease fears that he has financial deals in Russia to protect. And he’s refusing to divest his business interests, so whatever ties there may be are likely to remain.
Kremlin meddling in the 2016 electionwarrants further investigation, with an eye toward preventive or retaliatory measures. President Obama has asked the nation’s intelligence community to deliver a fuller report on its findings before he leaves office on Jan. 20, and a bipartisan group of lawmakers is pushing for a congressional investigation. The results of that inquiry should be made public, and the intelligence community should tell Americans as much as it can about the cyberattack and its goals.
Mr. Trump’s reaction to the C.I.A.’s findings leaves him isolated, and underscores his dangerous unfamiliarity with the role of intelligence in maintaining national security. There could be no more “useful idiot,” to use Lenin’s term of art, than an American president who doesn’t know he’s being played by a wily foreign power. Or maybe it’s as Mr. Trump says: He’s “a smart person,” and avoids presidential intelligence briefings because they repeat what he already knows. If so, what else does he know about Russia that the intelligence agencies don’t?
New York Times

Donald Trump Meets With Silicon Valley Executives to Smooth Over Post-Election Friction - TIME

Donald Trump Meets With Silicon Valley Executives to Smooth Over Post-Election Friction Posted: 14 Dec 2016 01:37 PM PST (NEW YORK) — U.S. President-elect Donald Trump and some of Silicon Valley’s most powerful executives met at his Manhattan tower on Wednesday, a summit convened to smooth over frictions after both sides made no secret of their disdain for each other during the presidential campaign. The meeting was expected to focus on economic issues and skirt the numerous disagreements the tech industry has with Trump – including on immigration, the trade relationship with China and digital privacy – in favor of a focus on shared priorities, sources said. “There’s nobody like the people in this room, and anything we can do to help this go along we’re going to do that for you,” Trump told the executives gathered in a conference room on the 25th floor of Trump Tower. “You call my people, you call me, it doesn’t make any difference. We have no formal chain of command,” he said. Three of Trump’s adult children, Donald Jr., Eric and Ivanka, sat at the head of a large rectangular table as the meeting began. Their attendance may fuel further concern about potential conflicts of interests for Trump, who has said he would hand over control of his business empire to his children while he occupies the White House. Vice President-elect Mike Pence was also in attendance. Guests sat in front of paper name plates and bottles of water sporting the Trump brand logo. The meeting between tech luminaries, including Apple Inc’s Tim Cook, Facebook Inc’s Sheryl Sandberg and Tesla Motors Inc’s Elon Musk, took place as Trump has alarmed some U.S. corporations with his rhetoric challenging long-established policy toward China, a main market for Silicon Valley. A senior Chinese state planning official told the China Daily newspaper Wednesday that Beijing could slap a penalty on a U.S. automaker for monopolistic behavior, a warning delivered days after Trump questioned acknowledging Taiwan as part of “one China.” The official did not identify the automaker. The tech summit is being billed as an introductory session, said sources briefed on the talks. Several company executives thanked Trump for hosting the meeting during introductions attended by reporters. Sandberg said she was most interested in discussing job creation. Other expected participants include Alphabet Inc’s Larry Page and Eric Schmidt, Amazon.com’s Jeff Bezos, Microsoft Corp’s Satya Nadella, and Ginni Rometty from IBM, sources said. Cook and Musk will join Trump for a smaller meeting after the other technology executives leave, a spokesman for Trump’s transition team said. The CEOs of Airbnb and Uber were invited but are not attending. Uber’s Travis Kalanick will instead be traveling in India all week, according to a person familiar with his plans. ‘SOME HESITATION’ Trump clashed with Silicon Valley on several issues during the election campaign, including immigration, government surveillance and encryption, and his surprise victory last month alarmed many companies that feared he might follow through on his pledges. He has said that many tech companies are overvalued by investors. “You look at some of these tech stocks that are so, so weak as a concept and a company and they’re selling for so much money,” he told Reuters in an interview in May. Those concerns have not been assuaged in recent weeks as Trump has threatened to upset trade relationships with China and appoint officials who favor expanded surveillance programs. “For some of the companies, there was some hesitation about whether to attend” because of sharp political and personal differences with Trump, one tech industry source said. More than 600 employees of technology companies pledged in an open letter on Tuesday to refuse to help Trump’s administration build a data registry to track people based on their religion or assist in mass deportations. Silicon Valley enjoyed a warm rapport with President Barack Obama and heavily supported Democrat Hillary Clinton during the presidential campaign. Schmidt was photographed on election night at Clinton headquarters wearing a staff badge, and Musk said in interviews before the election that Trump’s character reflected poorly on the United States. Despite those tensions, Trump named Musk to a business advisory council that will give private-sector input to Trump after he takes office on Jan. 20. Uber’s Kalanick was also appointed to the council. From the employees of the 10 largest Fortune 500 tech companies, Trump raised just $179,400 from 982 campaign donors who contributed more than $200. Clinton raised $4.4 million from the employees of the same companies, with more than 20,400 donations, a Reuters review of contribution data found. Trump publicly bashed the industry during the campaign. He urged his supporters to boycott Apple products over the company’s refusal to help the FBI unlock an iPhone associated with last year’s San Bernardino, California, shootings, threatened antitrust action against Amazon and demanded that tech companies build their products in the United States. Trump has also been an opponent of the Obama administration’s “net neutrality” rules barring internet service providers from obstructing or slowing consumer access to web content. Two advisers to his Federal Communications Commission transition team are opponents of the rules, as are the two Republicans on the FCC. Last week, the two Republicans on the panel urged a quick reversal of many Obama policies and one, Commissioner Ajit Pai, said he believed that net neutrality’s “days are numbered.”

China’s exports to the US fall for first time since crisis ( GFC ) in 2008 - Financial Times

China’s exports to the US are set to fall this year for the first time since the height of the global financial crisis.

Select topic    Top Stories  Brexit  US Election 2016  China slowdown  Millennial Economy  March of the Robot  Plunging oil price  Global Terror  Tech disruption  Advertising  Connected Cars 

Enter email address

InvaThe value of US merchandise imports from the Middle Kingdom has fallen 4.7 per cent this year, based on annualised data for the first 10 months of 2016, according to Standard Chartered, putting them in line for their first annual decline since 2009, as the first chart shows.

The figures come ahead of the inauguration as US president of Donald Trump, who has threatened to impose tariffs of up to 45 per cent on imports from China, a country he considers a “currency manipulator”, suggesting that China’s exports to the US could decline still further in the coming years.

This year’s decline marks a sharp turnround from the period between 2010 and 2015, when Chinese exports to the US rose at a compound annualised growth rate of 5.6 per cent, according to StanChart, outstripping nominal US gross domestic product growth of 3.7 per cent a year.

Although the renminbi has fallen 5.9 per cent against the dollar so far this year, Thomas Costerg, senior US economist at StanChart, does not believe it was a factor in the declining dollar value of China’s exports to the US, arguing that these exports tended to be priced in greenbacks, not redbacks.

Instead, he says a decline in exports of electronic goods was the “main culprit” behind the overall fall in trade.

Exports of Chinese mobile phones, tablets, laptops and related accessories to the US have fallen in value by 4.8 per cent this year. These categories accounted for 28 per cent of China’s total merchandise exports to the US in 2015, worth some $132bn, giving China a 40.8 per cent market share for such products, according to analysis by Mizuho Securities Asia.

This year’s fall appears to be driven by a declining American appetite for new electronic gadgets, with imports of mobile phones (from all countries) falling 4.9 per cent in unit terms in the first 10 months of the year, to 176m, according to figures from the US Department of Commerce and US International Trade Commission. 

“We have seen a drop in phone sales recently in the US,” says Mr Costerg, who speculates this is linked to the product cycle, with few “must-buy” gadgets being launched.

“We have seen a huge increase in demand for phones, which seems to be coming to an end. It’s unlikely to accelerate [again]. I think the US market is saturated in terms of phones and tablets,” he adds, arguing that a recovery in US electronics imports may be reliant on a new mass-market product emerging, with drones one possibility cited by some commentators. 

The decline in Chinese exports to the US has been far more pronounced in areas such as clothing and footwear, however. 

Chinese footwear sales to the US have slumped 14.4 per cent year to date in 2016 (compared with January-October 2015), from $14.9bn to $12.7bn, far outstripping the 7 per cent decline in American boot and shoe imports in general.

As of 2015, China accounted for 62.5 per cent of US footwear imports, but its market share is being rapidly eroded by Vietnam, which has enjoyed a 12.4 per rise in YTD exports to $4.1bn in the 10 months to October, as the second chart illustrates. Third-placed Indonesia has retained its sales at $1.1bn in a declining market

A similar story is unfolding for apparel and clothing accessories, where China’s exports to the US are down 9 per cent to $27bn year to date, again a bigger fall than the 5.7 per cent decline in the overall market.

Here, too, China’s market share, some 36.4 per cent in 2015, is being eroded by Vietnam, which has seen a 2.3 per cent rise in exports year to date to $9.2bn, as well as Bangladesh, Indonesia and India, as the third chart indicates.

“It does surprise me that clothing and footwear are struggling. [Chinese exports] have been weak for the past two to three years, but they seem to be falling more quickly [now], and that’s not just the exchange rate,” says Mr Costerg.

He believes this is a long-term structural shift, with heightened competition from Vietnam and other low-wage Asian economies increasingly meaning Chinese goods are “crowded out”.

China has also been attempting to move up the value chain as part of its government’s strategy to lessen the country’s reliance on low value-added exports.

This may also be behind weakness in Chinese toy exports to the US, which have fallen 2.2 per cent year on year, according to StanChart. The Middle Kingdom accounted for 82.4 per cent of America’s toy imports in 2015, worth some $25.7bn, according to Mizuho. 

However Gareth Leather, senior Asia economist at Capital Economics, believes China’s exports to the US will bounce back in dollar terms in the coming months.

He argues that the price of many finished goods has fallen in the past couple of years because weak commodity prices have lowered the cost of raw materials, such as steel. 

But with most commodity prices now markedly above the lows they plummeted to early this year, “the dollar value [of Chinese exported goods] is going to rebound over the next few months as the base effect from falling commodity prices falls out,” Mr Leather says.

As for the longer-term outlook, he argues that Chinese exports to the US are likely to be bolstered by stronger US economic growth if Mr Trump pursues the expansionary fiscal policy he outlined on the campaign trail, suggesting that the president-elect may turn out be good news for China’s exporters, rather than bad.

Follow us on Twitter @em_sqrd

What Is America Without Influence? Trump Will Find Out - New York Times

What Is America Without Influence? Trump Will Find Out.
*
* 580
By ANTONY J. BLINKEN
DECEMBER 13, 2016
WASHINGTON — In February 1945, in the twilight of World War II, Franklin D. Roosevelt, Joseph Stalin and Winston Churchill convened in Yalta, a Russian resort town in the Crimea, to deliberate on the direction of the war and the peace to follow. They agreed to a postwar order managed by Roosevelt’s “Four Policemen” — the United States, Britain, Russia and China.
Roosevelt was convinced he could cajole Stalin into keeping his Yalta commitments to collective security and an undivided Europe. Stalin had a very different vision: a world shaped by spheres of influence within which the will of the strongest prevails. In the Soviet sphere, darkness descended on Eastern Europe for 45 years.
It fell to President Harry Truman to contain Soviet expansionism. He built America’s first peacetime alliances, starting in Western Europe, then in Asia. The United States took the lead in shaping the norms, rules and institutions of what became the liberal international order, including the United Nations, the international financial institutions and the Marshall Plan.


From left, Winston Churchill, Franklin Roosevelt, and Josef Stalin in 1945, at Yalta.
ASSOCIATED PRESS
The liberal order led by the United States favored an open world connected by the free flow of people, goods, ideas and capital, a world grounded in the principles of self-determination and sovereignty for nations and basic rights for their citizens. It did fall short of its ideals, often in Latin America and Southeast Asia. Yet despite the hair-trigger tensions of the Cold War, it produced decades of peace between the great powers while building shared prosperity.
The postwar order that America built now is facing acute challenges, including from old competitors. Russia’s president, Vladimir Putin, is no Stalin and Russia is no Soviet Union. But Mr. Putin does seek to recreate a Russian sphere of influence while picking apart the liberal international order that prevailed in the Cold War. China remains focused on stability at home, but the “new model of great power relations” it has proposed to the United States would have us stick to our side of the Pacific and let China play the pre-eminent role on its side.
America’s allies in Europe and Asia are fixated on whether the Donald Trump administration will reject the re-emergence of spheres of influence or embrace them. They worry that, in his campaign, Mr. Trump seemed to approve of the “strong” leadership of autocrats and favor a transactional approach to Mr. Putin. He showed little concern about Russia’s cybermeddling in our election or aggression in Ukraine while suggesting that NATO is “obsolete.” He argued that the United States should get out of the business of “defending the world” and described Japan and South Korea as free riders that should pick up the burden of their own defense and nuclear deterrence.
He has promised to jettison the Trans-Pacific Partnership trade agreement, ceding to China economic leadership and strategic influence in Asia. For many Europeans and Asians, these proclamations translate into a world in which the United States retreats into its cocoon, and Russia and China dominate them in both political and economic spheres.
The United States must not see China or Russia through a zero-sum prism. The Obama administration has deepened areas of cooperation with Beijing, from the Paris climate agreement, the handling of the Ebola epidemic, the Iran nuclear deal and North Korea to joint projects in developing countries. It negotiated the New Start nuclear arms reduction treaty with Moscow and championed Russia’s admission into the World Trade Organization.
Yet when Russia or China challenge the principles of the liberal international order, the United States must stand up to them. In Ukraine, Mr. Putin has sought to change the borders of Russia’s neighbor by force while denying its people the right to decide with which countries, unions or alliances they associate. It is why American support for Ukraine matters.
So does our resolute support for international law in the South China Sea. There, China’s conduct in claiming vast territorial waters and building military outposts on artificial islands risks undermining the freedom of navigation and free flow of commerce upon which our prosperity depends, the peaceful resolution of disputes that undergirds stability and the rights of allies we have vowed to defend.
A sphere-of-influence world would not be peaceful or stable; the United States will not be immune to its violent disruptions. Hegemons are rarely content with what they’ve got; the demand to expand their zones as well as cycles of rebellion and repression within them will lead to conflicts that draw us in. The United States would have to accept permanent commercial disadvantage as economic spheres of influence shut us out or incite a race to the bottom for workers, the environment, intellectual property and transparency.
America’s greatest contribution to peace and progress has been laying the foundation for an open, rules-based, connected world. Now we have to decide whether to continue to defend, amend and build upon that foundation or become complicit in dismantling it.
Antony J. Blinken is the deputy secretary of state.
New York Times

Four key points from the Fed’s meeting - Financial Times

Federal Reserve
Four key points from the Fed’s meeting
Policymakers’ ‘dot plot’ for 2017 overshadows expected decision to raise rates

© AP
4 HOURS AGO by: Eric Platt and Joe Rennison in New York
US government bond markets were jolted by the Federal Reserve’s unexpectedly hawkish turn on Wednesday, when the US central bank increased interest rates for the second time since the financial crisis and set a more aggressive path for tightening than investors had anticipated.
A sell-off accelerated into the close of trading, with the yield on the two-year note climbing 10 basis points to 1.263 per cent, the highest level since August 2009 shortly after the US emerged from recession. Yields rise as bond prices fall.
Losses were concentrated in the shortest-dated US Treasuries, with the three- and five-year Treasury yields rising 11 and 13 basis points, respectively. The dollar clinched its best daily performance in a month, rising 0.9 per cent against a basket of currencies, while commodities including oil and gold sank.
Stock markets weakened, led by declining shares of energy, utility and real estate companies, the latter two highly sensitive to changes in monetary policy expectations. The S&P 500 dipped 0.8 per cent and the Dow Jones Industrial Average, which at one point in the day was 34 points from eclipsing the 20,000 level, fell 0.6 per cent.
Several investors said they had expected a more dovish announcement, given the uncertainty of President-elect Donald Trump’splans to boost government spending and cut taxes that the incoming administration hopes will accelerate economic activity. But momentum in the US economy that began before the election won a vote of confidence from policymakers, with Fed chair Janet Yellen saying she expects progress to continue.
“The surprise and what the market is reacting to is that most people expected a wait-and-see stance from the [Fed] in terms of how they would consider the impact of Trump-enomics in the year ahead,” said Ian Lyngen, a strategist with BMO Capital Markets. “It was a bit of a surprise seeing the Fed buy into the market’s optimism.”
Four key points from the meeting . . .
Three not two
The widely anticipated decision to raise interest rates was overshadowed by the Fed’s policy projections. Along with its decision to lift the target range of federal funds futures to between 0.5 and 0.75 per cent, policymakers at the US central bank plotted a more aggressive path for 2017. The so-called dot plot — the individual projections of officials on the Federal Open Market Committee — showed policymakers projecting three quarter-point rate rises in 2017, up from the committee’s forecast for two when it met in September.
It is a signal from the Fed of confidence in the strength of the US economy, with firming inflation expectations and a healthy labour market, Ms Yellen said.
“We have opened the door” to a faster tightening cycle, said Scott Minerd, chief investment officer of Guggenheim Investments. “If the data continue to come in how we expect, the Fed will have to move faster than people were expecting.”
Beyond 2017, the Fed policymakers projected two increases a year through 2019 and lifted their long-term view of where rates will find equilibrium.
It is a signal from the Fed of confidence in the strength of the US economy, with firming inflation expectations and a healthy labour market, Ms Yellen said.
“We have opened the door” to a faster tightening cycle, said Scott Minerd, chief investment officer of Guggenheim Investments. “If the data continue to come in how we expect, the Fed will have to move faster than people were expecting.”
Beyond 2017, the Fed policymakers projected two increases a year through 2019 and lifted their long-term view of where rates will find equilibrium.

Fixed income pummeled
The sell-off was swift in government bond markets, with knock-on effects felt in investment-grade corporate bonds and emerging market debt.
Yields across the Treasury curve climbed as investors cut positions in US government debt, but this was concentrated on shorter-dated notes. The yield on the 10-year Treasury closed above 2.5 per cent for the first time since September 2014 while the five-year note passed 2 per cent for the first time since May 2011.
“We’re on our way to a 2.75 per cent [yielding] 10-year,” said Rick Rieder, BlackRock’s chief investment officer of fixed income. “I don’t subscribe to the thesis we’re moving to much higher interest rates, but it will be pretty hard until we get other information from the Fed for interest rates to do anything other than drift higher.”
US paper has suffered as investors prepare for faster economic growth and a more aggressive Fed, as well as with the concern that deficits could be funded with a spurt of new Treasury issuance. The yield curve flattened materially, with the difference between five and 30-year paper declining 9 basis points to 113bp, the lowest since September.
The weakness spread to Asian sovereign bond markets as they opened, with yields on 10-year Japanese, Australian and New Zealand government debt rising.

The boon to the dollar
The surge in yields have bolstered the greenback’s appeal, with the DXY dollar index hitting its highest level since 2003 on Wednesday.
The gain has been propelled by the accelerating divergence between US and global rates, with the attraction of higher yields on US sovereign bonds drawing investors to the country’s currency.
The difference between the yield on two-year Treasuries and the safe-haven two-year German Bund hit a high of 205 basis points on Wednesday, a level last touched in 2000. The premium to Japanese two-year notes surged to nearly 150bp, the highest since 2008.
The yen subsequently fell to a 10-month low while the euro slipped below $1.05. As central banks in Europe and Japan retool policy to jumpstart economic activity and inflation, they remain at stark odds with the Fed as the latter tightens policy.
“The US dollar may have been ahead of the Fed in digesting what the US election result might mean for growth, but it will still likely strengthen further on the Fed’s swifter than expected conversion to a possible fiscal reflation theme,” said Daragh Maher, a currency strategist with HSBC.

The market is now (mostly) in agreement with the Fed
The Fed has repeatedly overestimated how quickly it would raise interest rates, drawing the ire of investors and traders who last December put the odds on four quarter-point hikes — as the central bank then projected — at roughly 9 per cent.
On Wednesday traders put the odds on three 25bp rises in 2017 at roughly 45 per cent. Two or more? Traders put those odds at more than 76 per cent, according to calculations on federal funds futures by Bloomberg.
The alignment is visible in December fed funds futures contracts, which climbed to 1.165 per cent on Wednesday. The median of the Fed’s projection: 1.375 per cent.
“The Fed won’t feel constrained because the market isn’t pricing in the level of tightening that they wanted to deliver, which is what we saw in 2016,” Mr Lyngen added.

Copyright The Financial Times Limited 2016. All rights reserved. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.
Financial Times