Arvind's Newsletter -Weekend edition

1.Chip Wars : Semi-conductor investments are booming, and not just in USA. The Financial Times reported that Micron plans to invest more than $600mn in its existing factory in the Chinese city of Xi’an, in a demonstration of its commitment to China just weeks after the US memory-chip maker was barred from supplying the country’s critical infrastructure operators. Last month, Beijing banned key operators from purchasing from the Idaho-based company after an investigation found its products “posed serious network security risks”. “This investment demonstrates Micron’s unwavering commitment to its China business and team,” said the group’s chief executive Sanjay Mehrotra.

At the same time Bloomberg reported that Micron is (also) close to an agreement to commit at least $1 billion toward setting up a semiconductor packaging factory in India, in a move to further diversify its geographic footprint at a time of US tensions with China. The US is pushing to diversify advanced chipmaking as growing Chinese tensions spur concerns about the world’s reliance on Asian manufacturing centres such as Taiwan. Micron, the largest American memory chipmaker, also secured financial support for a $3.6 billion next-generation plant it aims to establish in Japan.

Meanwhile, the Financial Times also reported that Germany is on the verge of an agreement to provide Intel with €10bn in subsidies to build a landmark chip plant as European countries race to reduce their reliance on Asian suppliers of semiconductors. The US semiconductor group is “close to a deal” with the government in Berlin over the construction of a mega fab, or manufacturing plant, in the eastern city of Magdeburg.

Intel also announced plans to build a $4.6bn semiconductor assembly and testing plant in Poland that the company said would help meet “critical demand for assembly and test capacity”. The company expects the plant in Wrocław to be ready by 2027, the same year that the Magdeburg facility is expected to be up and running.

2.The European Parliament approved a draft law regulating the use of artificial intelligence reported the Wall Street Journal. The legislation, which still needs to be approved by the EU’s member states and so will likely undergo significant change, highlights efforts worldwide to grapple with AI. The EU hopes to cement its favoured role as a global “regulatory superpower,” able to set the rules that others follow in order to retain access to its lucrative market.

The EU’s proposed AI Act identifies four risk tiers, from minimal to unacceptable. While AI for video games and spam filtering is acceptable, “predictive policing” and surveillance isn’t.

The draft legislation aims to regulate how companies train AI models with large data sets. It would, in some cases, require companies to disclose when content is generated using AI. Under the rules, companies would also need to design their AI models in a way that prevents them from creating illegal content, and they would be required to publish summaries of the copyrighted data used to train their models.

Such an obligation would give publishers and content creators a potential means to seek a share of profits when their works are used as source material for AI-generated content by tools like ChatGPT.

Violations will attract fines of up to $33 million or 6% of a company’s annual global revenue.

3.Eastern philosophy says there is no “self.” Science agrees, reports Chris Niebauer in the Big Think.

Western philosophy typically conceptualises the self as a stable, controlling entity, comparable to a pilot (Cogito, ergo sum,” or, “I think, therefore I am.”),
while Eastern philosophies such as Buddhism argue that the self is an illusion, a byproduct of our thought processes.
Modern neuroscience provides evidence that aligns with the Eastern view, revealing that the left hemisphere of the brain constantly
creates narratives to interpret reality, leading to a mistaken identification with these self-narratives.
This false sense of self, which is often equated with the incessant internal dialogue, contributes significantly to human mental suffering.

4.The worldwide boom in generative artificial intelligence will usher in an age of accelerated productivity and greater prosperity for some — and profound disruption for others, primarily knowledge workers, according to a new report by consultants McKinsey & Co.

Whole swaths of business activity, from sales and marketing to customer operations, are set to become more embedded in software— with potential economic benefits of as much as $4.4 trillion, about 4.4% of the world economy’s output — according to the study by McKinsey’s research arm.

5. The latest Economist’s cover features spotlights India, in the week before Prime Minister Narendra Modi visits USA. Among various articles on India is an interview with Foreign Minister Subrahmanyam Jaishankar, who makes no apologies for India’s self-interested diplomacy while discussing India’s ties with USA, Russia, and China. Long Read.
   

   In a recent interview with the Economist paper, Henry Kissinger, a former American secretary of state, gave a troubling assessment of a world in which old powers are fading, new ones are rising and superpower conflict threatens. Yet he offered, alongside few other hopeful notes, this accolade: “I have very high regard for the way the Indians conduct their foreign policy now, because it shows balance.”

   Among the ways this was striking was the fact that Mr Kissinger is known in India as the former enabler of a viscerally anti-Indian president. “The Indians are bastards,” he told Richard Nixon, after the president had hosted India’s prime minister at the time, Indira Gandhi, at the White House in 1971. “They are the most aggressive goddamn people around.”

   What has changed in Indian diplomacy in the intervening decades? In some ways, everything. Over the past quarter of a century, as India has added economic heft to its vast populace, America and its allies have come to see it as an indispensable counterweight to an assertive China. And India, which under Mrs Gandhi was closer to the Soviet Union than America, has seized with growing enthusiasm the opportunities for closer ties that the West has offered. Narendra Modi, in Washington next week to accept praise and goodies—including the possible In other ways, however, Indian foreign policy remains distinctly challenging to America. India does not really believe in alliances. An immutable feature of its foreign policy, from Nehruvian non-alignment to today, is a deep, post-colonial fear of being beholden to a richer power. That in itself might raise doubts about the extent of its pro-Western tilt. And indeed, it has embraced America’s outreach mainly as an economic opportunity, less fulsomely as a strategic one—albeit that its desire for defence and security ties is growing, especially following border clashes with China in 2020. India has also retained its close ties to Russia, whose invasion of Ukraine it refuses to condemn. Russia supplies most of its arms and, thanks to a generous wartime discount, nearly half of its oil. of a step-up in co-operation on high-tech weapons—has gone so far as to describe India and America as “natural allies”.

   Mr Kissinger reserved particular praise for India’s foreign minister, Subrahmanyam Jaishankar—calling him “the practising political leader that is quite close to my views”. To discuss the geopolitical oddity that India’s rising power represents, Mr Jaishankar sat down with The Economist for a rare, hour-long interview in his airy, sandstone office in Delhi.

   Formerly India’s top diplomat (and ambassador to both Washington and Beijing), Mr Jaishankar is one of the brains behind India’s balancing act. Besides the familiar diffidence about alliances, he espouses above all a commitment to multipolarity. Unlike many in Washington, India does not see the world in terms of a cold-war-style duality, pitting American-led countries against those hewing to China. It sees an emerging dance of big powers—chiefly America, China, Russia and itself—in which it will engage multiple partners, albeit to different degrees. “We would like to have multiple choices. And obviously try to make the best of it,” says Mr Jaishankar, a dapper 68-year-old. “Every country would like to do that. Some may be constrained by other obligations, some may not.”

   That transactional view (in a recent book, Mr Jaishankar describes a “multipolar world with frenemies”) does not preclude long-term partnerships. On the contrary, the “transformation of the India-US relationship”, he says, is “the big change in my professional life”. He attributes much of this to Mr Modi, crediting the prime minister with having jettisoned the “ideological hesitations”—by which he means anti-Americanism—of India’s former left-leaning elite. Now, he says, the relationship is “getting more consequential by the day… moving forward very, very rapidly”. He believes it will be further boosted by two big economic changes: diversification of supply chains away from China and increased digitisation. Both processes, which he describes as a “new globalisation”, in theory depend on the sort of mutual trust India and America are building.
   

   If America wants proof of India’s reliability, he implies, it should not look to it to unwind its ties with Russia, but, counter-intuitively, the opposite. India’s relationship with Russia, which he terms “a cardinal principle of our foreign policy”, has been an enduring feature of it for “60 years of history”—including, he notes pointedly, an American arms embargo on India in 1965 that pushed it to the Soviets. This is clearly self-serving, but so is India’s foreign policy. That is rather the point. Mr Jaishankar, far from apologising for India’s eagerness to get economic advantage from Vladimir Putin’s illegal war, openly relishes the prospect of getting more. He believes Russia is being economically reoriented towards Asia. “What I suspect this whole Ukraine issue is going to mean is that Russia, a country which was actually truly Eurasian, is probably today discovering or is anticipating that a large part of its relationship with the West will no longer work.” Meanwhile, India’s growth is fuelling its hunger for Russian resources. “It’s common sense that the two trends intersect.”

   Under its urbane first prime minister, Jawaharlal Nehru, India was known for demanding a more moral world order. It can now sound like the world’s most untrammelled realist. In truth, the change is not that marked. India was not so much virtuously “non-aligned” as simply marginal to world affairs, because it was weak and introspective. Despite its tendency to grandstand against the West, it was still willing to align itself with America when threatened, as when it accepted its military aid during a war with China in 1962. In recent years, no doubt, it has engaged with America more openly and decisively. Yet the transformative change in India’s global position has to do with its fortunes.

   Its economic rise has brought it to the centre of global affairs—and Mr Jaishankar predicts demography alone will ensure that growth continues: India “churns out” trained people on a scale no other democratic society can. India’s new importance, in turn, is giving it many more opportunities to pursue the same preoccupations—including its economy and territorial integrity—it has always prioritised. And if it seems unusually upfront or unapologetic about those goals, that points to an even more momentous geopolitical change.

   The emergence of new great powers—for now China and arguably India; in future perhaps Brazil, Indonesia and Nigeria—is making geopolitics more complicated and prone to the sorts of contradictions and trade-offs that Indian foreign policy embraces. India is not only maintaining its lucrative relationship with Russia as a hedge against the West. It also considers its partnership with Russia a means to limit Russian support for its two major adversaries, Pakistan and China.

   Mr Jaishankar insists that those around Joe Biden, America’s president, well understand the looser, more uncertain and sometimes contradictory international relations that a multipolar world will foster. “I think they’re acutely conscious that the post-1945 order has been severely challenged and that they need a new template, new partners, that they need to look beyond alliance constructs.” There is evidence for this, despite Mr Biden’s talk of a new “alliance of democracies”. In a recent speech, Jake Sullivan, his national security adviser, envisaged a world in which America will pursue its economic self-interest more overtly than it has in recent years, while working with a cast of friends and allies who will do likewise. In describing this apparently more-contingent American-led order, Mr Sullivan used the word “partners” 24 times but “allies” only twice.

   Perhaps that is the best the West can hope for. Emerging powers such as India, with huge economic needs and complicated domestic politics, will not line up behind America, or for that matter China, in the old cold-war fashion. Whether the new geopolitical reality they represent will be stable is another question. India’s relationship with China may be an early test. Always fraught, it is the pole around which revolve America’s approach to India, India’s receptiveness to America, and ultimately, it might be argued, Asian security.

   Mr Jaishankar denies that India’s military embrace of America—with whom the Indian armed forces now conduct more exercises than with any other power—has tightened in response to the border clashes of 2020. Yet the Asian powers’ territorial dispute is clearly a big factor in their rivalry and, it follows, a spur to defence co-operation between America and India. It is therefore worth pondering the implications for India’s ties with America if India and China were to succeed in their current effort to resolve the dispute, at least for now, by negotiating a demilitarised “buffer zone” along their frontier.

   Some American strategists are already questioning India’s utility on security. As the chief proponent of the civil-nuclear co-operation deal that America negotiated with India in 2005, Ashley Tellis, now of the Carnegie Endowment, a think-tank in Washington, was instrumental in the bilateral rapprochement. Yet, in a recent essay in Foreign Affairs entitled “America’s bad bet on India”, he sought to temper American hopes that India will be a pivotal security partner. India wants American help only to defend itself against possible Chinese aggression, he argued; it cannot be counted on to help America fight China.

   Mr Jaishankar will not be drawn on the buffer-zone talks, or, hypothetically, on how a deal might affect Indian relations with China or America. “We know that solving the boundary question will take time,” he says, adding that ensuring “peace and tranquillity” and “no acts of violence” should be the minimum condition for “moving the relationship forward”. “Unless we find a resolution to that, no government can, at least in my opinion, pretend that everything is ok, and let’s do business in every other part of our relationship.”

   It may be that Mr Tellis and others are worrying too much about India’s commitment to America. Over the past two decades, the relationship has developed significant ballast and momentum, based on shared interests, a vigorous Indian-American diaspora and enthusiastic cross-party support in both countries. Most of that will endure. Comparing India with its dysfunctional neighbour, Stephen Cohen, a late scholar of South Asia, used to say that Pakistan was an American ally but never a friend, and India the opposite. That is truer now than ever.

   Even so, the doubt about what sort of partnership America and its allies should expect of India, a rising power that rejects alliances and juggles competing priorities, is a significant one. “You have an India which is looking at multiple opportunities across multiple geographies, often polities which have contradictory interests. And it is trying to advance on all fronts,” says Mr Jaishankar. It is a good appraisal of India’s challenging new role in the world. It also underlines the uncertainties, and threat to stability, that Mr Kissinger warned of in an increasingly multipolar world. ■