How should India regulate the ticking time bomb called bitcoin?

Regulators in developing countries around the world have repeatedly expressed concern against the trade of cryptocurrencies like bitcoin. The gold rush, however, remains unabated, attracting many retail investors, and most Indian cryptocurrency exchanges are struggling to meet the demand.

Unsurprisingly, the clamour to introduce a regulatory regime for cryptocurrencies is rising.

Since 2013, the Reserve Bank of India (RBI) has periodically reiterated its concerns over cryptocurrencies but has done little else. Unlike its counterparts elsewhere who have banned or otherwise severely restricted the use of cryptocurrencies, the RBI’s studied silence is arguably progressive in nature, letting the technology play out in the market while the stakes are relatively low.

This has allowed the emergence of a nascent yet vibrant industry in India centred around developing blockchain technology, which underlies cryptocurrencies. However, the RBI’s continued silence (by design it seems), is now stalling the growth of the industry by creating legal ambiguity.

Blockchain technology represents a critical departure from the centralised institutions which currently regulate us today to a more decentralised future. Attempts to gingerly retrofit existing regulations on cryptocurrencies, or other blockchain-based applications, will not only prove to be inadequate but philosophically are an absurd choice.

Today, it is unclear if cryptocurrencies may even be considered financial assets or investments. For instance, India’s finance minister Arun Jaitley clarified in recent weeks that cryptocurrencies are definitely not “currency” or legal tender. Another approach favours interpreting cryptocurrencies merely as “software” and labelling all cryptocurrency transactions as essentially the sale or purchase of software. Although this definition does ring true from a legal standpoint, it is akin to calling currency notes or share certificates paper.

Without clear regulation, the blockchain industry is like a ticking time bomb. Anything from a failed initial coin offering (or ICO, where funds are raised for new cryptocurrency ventures) to a rogue cryptocurrency exchange will result in a public confidence crisis, forcing the government to take a quick decision that may be more politically motivated than it is grounded in reason. This tension has already manifested itself in the form of multiple public interest litigations before India’s supreme court to facilitate state intervention to regulate cryptocurrencies. Court-sponsored interventions, although popular for quick results, are ill suited for a subject like blockchain, which requires considerable original academic thought and investigation.

This begs the question: who should regulate blockchain technology and cryptocurrencies, and how should it be done?

Since different cryptocurrencies can exhibit different properties, broad-brush regulation will prove to be inadequate. Multiple regulators such as the RBI and the Securities and Exchange Board of India (SEBI) will likely have jurisdiction over cryptocurrencies, potentially causing more uncertainty and confusion—and, in some cases, a turf war.

If regulated as a fiat currency, cryptocurrencies will be subject to the control of a central bank as well as, among others, various foreign exchange regulations. Owing to its inherent decentralised nature, enforcing either of these regulations in their current form will be impractical at best. Moreover, regulating cryptocurrencies as a “security” is also a dead-end as very few forms of cryptocurrencies (such as certain ICO tokens) will mirror such features.

Ultimately, being regulated as a “commodity” remains, under extant laws, one of the few viable ways to regulate cryptocurrencies. The US Commodities and Futures Trading Commission, for example, considers virtual currencies as commodities. And its treatment as commodities allows more freedom in dealing with cryptocurrencies as they are regulated less onerously, in comparison to currencies and securities.

This approach, however, leaves much to be desired as the traditional use-cases for cryptocurrencies are more complex and require more nuanced regulation. For instance, there is well-placed concern around blockchain technology being used for money-laundering purposes. And unfortunately for much of the world, bitcoin regulation has been reduced to anti-money-laundering regulation, which as a regulatory response to cryptocurrencies basically misses the plot. In the past ten years it is clear that the cryptocurrency movement has successfully demonstrated both the decentralisation of money as a concept, as well as the durability of the technology that powers it. The cryptocurrency ecosystem is now charging through the mainstream economy, having long grown past its early-adopters. For regulators, therefore, treating cryptocurrencies merely as objects that facilitate money-laundering is an incredibly myopic view of the technological disruption that is well on its way to forever changing our understanding of money.

A progressive example of short-term regulation is being set by Japan and Singapore. The Japanese have quickly shed insecurities around “preserving” the Yen and gone on to declare bitcoin as legal tender without the excess baggage of central bank control on circulation. Having learnt from the infamous collapse of Mt.Gox in 2013 (then Japan’s and the world’s largest cryptocurrency exchange), Japan has mandated cryptocurrency exchanges to maintain capital reserves, restricted co-mingling of customer funds, and implemented stringent know-your-customer procedures. In Singapore, its regulator is offering a “regulatory sandbox” to innovative businesses that wish to raise funds in an ICO. The sandbox approach shows the openness of the Singaporean regulator to work with industry stake-holders in jointly figuring-out and solving for regulatory difficulties by experimenting and learning in a closely-controlled setting.

Howsoever inconvenient, the ideal approach to regulating cryptocurrencies in the long term will be to treat them as an asset-class of their own. While some may be given the status of legal tender, it is unlikely that all the 1400-odd “cryptocurrencies” on the market today will gain acceptance that is comparable to bitcoin. It then becomes imperative to decide what should be the legal status of these other digital assets that are, say, only a store of value, but not a legal tender. Apart from the basics, there will also be a need to build regulations for enabling services such as wallet and storage services, custodian services, KYC norms for investors, brokerage and trading rules for cryptocurrency exchanges, etc.

In the short term, regulating it as a commodity may rock the boat. But in the medium to long term, it is essential that cryptocurrencies and other digital assets are regulated as an asset class of their own. And governments that move progressively and move early will set benchmarks for others.

For most regulators, including the Indian government, it will be essential to develop the right approach. The decentralised nature of blockchain will allow very limited control to any centralized institutions, and their seamless application across borders will also make it difficult for a solitary government to regulate it as per its own whims and fancies.

But blockchain networks are built on widespread consensus and any effective regulation will also be through consensus—at least amongst major world governments. As a rising global power, India has both the responsibility and the influence to move regulations in a manner that suits the developing world.

If the rise of bitcoin or other cryptocurrencies are anything to go by, it is clear that bans or other stifling measures will be difficult to enforce. Regulators are already finding it tough to adjust to the new world order and let go of the absolute control they are so used to exercising. Regulatory models will either have to evolve, or as the Bitcoin community puts it, risk getting #Rekt!

We welcome your comments at ideas.india@qz.com.

Article originally posted by qz.

No loans, big protests, naked models: Adani’s coal mine project in Australia has seen it all

Adani’s plans for the controversial Carmichael coal mine in Australia have received another blow.

On Dec. 18, the Indian multinational announced that its inability to secure government funding for a part of the project had forced it to cancel its A$2 billion ($1.5 billion) contract with Downer EDI, an Australian’s engineering and infrastructure services provider.

Last week, the Queensland government decided to veto the A$900 million ($689.59 million) potential federal funding for a new rail link required for Australia’s largest coal mine, which would’ve come from the Northern Australia Infrastructure Facility (NAIF).

“Following on from the NAIF veto last week and in line with its vision to achieve the lowest quartile cost of production by ensuring flexibility and efficiencies in the supply chain, Adani has decided to develop and operate the mine on an owner operator basis,” the company said in a statement.

Even though Adani’s Carmichael mine had received support from Australia’s federal and state governments previously, the newly re-elected administration in Queensland shot down the NAIF funding, arguing that the project must be viable without taxpayer funds. The Carmichael mine, including related infrastructure development, is expected to cost more than $15 billion.

Gujarat-based Adani bought the Carmichael mine in northeastern Australia’s Galilee Basin for $500 million in 2010, and should likely have been aware of the project’s infrastructural complexities. The mine requires a 388km railway line to connect it to the Queensland coast, apart from an expansion of the Abbot Point coal terminal, which could pose a risk to the Great Barrier Reef.

The project has faced consistent opposition within Australia, with activists describing the campaign against the Carmichael mine as “the biggest environmental movement” in the country’s history. From smaller protests in 2014, when a prominent Australian model shed her clothes in opposition to the mine, the momentum against the project has grown in recent months. In early October, for instance, thousands came out across the country in protest against Adani’s plans.

Environmental concerns aside, Adani has had trouble getting its finances in order to build the largest coal mine in Australia. At least 21 banks, both Australian and international, have reportedly declined funding for the project. This includes lenders like Deutsche Bank, Commonwealth Bank of Australia, and other Chinese firms. The company is looking to raise $1.5 billion by March 2018 in order to complete the first stage of its proposed mine.

None of this was entirely unexpected. “The Australian coal projects require large allied infrastructure investment and high leverage, making it challenging to achieve financial closure,” Debasish Mishra, a partner at Deloitte Touche Tohmatsu, told Bloomberg back in 2014. “Some of the Indian players who have invested in Australia may be better off exiting these investment even at a loss.” Moreover, the rise of the renewable energy industry, alongside concerns over large fossil fuel projects, have only added to the momentum against gigantic mines like Carmichael.

Despite these roadblocks, Adani said it remains committed to the Carmichael project and that the jobs of the 800 people it employs in Queensland will not be affected by this move: “This is simply a change in management structure and ensures that the mine will ultimately be run out of our Adani Australia offices in Townsville.”

Article originally posted by qz.

The case against library fines—according to the head of The New York Public Library

There’s no doubt that we are currently living in a fractured world, one in which the divide between rich and poor is widening, opportunities for the disenfranchised are declining, and the lines between fact and fiction are increasingly blurred.

Public libraries are on the front lines every day, combatting these threats to our democracy. Whether loaning wi-fi hotspots to give patrons access to the internet and help close the digital divide, helping immigrants learn English, offering free citizenship classes, providing early literacy programs to close the reading gap, or simply loaning books (and, yes, people still read books—circulation at The New York Public Library went up 7% last year over the previous year), libraries ensure that no one—regardless of beliefs or background—faces barriers to learning, growing, and strengthening our communities.

It is because of this role, so crucial to our democracy of informed citizens, that I and many others at libraries across the country have been seriously evaluating the complex and long-standing issue of library fines – and whether to do away with them.

While relatively small library fines have been a punchline in pop culture over the years (Jerry Seinfeld’s “library cop” is an icon, for example), the fact is that for many families across the US, library fines are a true barrier to access. At The New York Public Library, $15 in accrued fines prohibits one from checking out materials. The reason for this policy may be obvious—it’s incentive to get books returned and back on our shelves—but is it really effective? For those who can afford the fines, paying a small late fee is no problem, so the fines are not a particularly strong incentive. On the other hand, for those who can’t afford the fines, they have a disproportionately negative impact.

At our 125th Street Library in Harlem, for instance, a young mother tried to check out a wi-fi hotspot so her daughter could do her homework. Homeless, the family couldn’t afford broadband internet, and her daughter’s grades suffered. Unfortunately, her library card was blocked, not because the family was irresponsible, but because one night, they were abruptly moved from one shelter to another, and in their haste to leave, they left behind a library book and DVD. The fines accumulated quickly, and without any way to pay them, their only hope for internet access was no longer available.

Our branch managers have the authority to use their good judgment to waive fines, and in this case, that’s exactly what happened. But that piecemeal, personal approach isn’t a solution.

In October, The New York Public Library, along with the Brooklyn Public Library and Queens Library, took a step in the right direction, offering a one-time fine amnesty for kids and teens. All students got a fresh start, no questions asked, hopefully prompting them to return and use our array of free resources.

Kids rekindled their relationship with reading, learning, and libraries after we offered the amnesty.

One month in, we saw successes. About 41,000 kids and teens, or 10% of those who previously had fines, used their library cards to access library resources. Of those 41,000, 11,000 had blocked cards or a lapsed relationship with the library, meaning they hadn’t used the library for at least a year. So we know 11,000 kids and teens have rekindled their relationship with reading, learning, and libraries one month after we offered the amnesty. We will continue to monitor this, as we expect numbers to continue to increase as we continue to get the word out about the program.

While I am proud of this initiative, it is a one-time solution to a problem that is not going away. Before the fine forgiveness program, at The New York Public Library, 20% of our 400,000 juvenile and young adult patrons had blocked library cards; nearly half of those were concentrated in the poorest quartile of our branches. In addition, we know the heartbreaking truth: that there are families who refuse to even use the library for fear of accumulating fines.

These realities have prompted several library systems to experiment with fine elimination over the last few years. The relatively small Stark County District Library system in Ohio, as one example, waived fines in 2014, and one year in, saw positive results – an 11% increase in circulation, an increase in items checked out, and no significant increase in lost items, those never returned. The Columbus Metropolitan Library announced a fine-free 2017. Just this month, the Yankton Community Library in South Dakota—inspired by our efforts in New York—decided to experiment with fine-free borrowing. And the Omaha Public Library recently announced that is exploring the possibility of fine free borrowing in its system.

In 2011, The New York Public Library launched a program called MyLibraryNYC to provide fine-free borrowing to students at eligible NYC public schools. Kids in the program borrow 37% more materials than kids who are not in the program; teens 35% more. At the same time, the number of lost items represents a small percentage of all items checked out as part of the program, showing that kids are indeed bringing the books back. Positive test cases like this show that fine-free lending is an experiment worth broadening. I would like to lead the way, but for large urban systems, the lost revenue would be significant, and a serious issue that must be addressed before we can move forward. While library systems have many sources of funding, the fact is fines do contribute (sometimes millions of dollars) and that needs to be addressed.

What is truly the greater moral hazard? Having fines or not having fines?

Over the next year, I plan to meet with my counterparts at library systems across the US to discuss this issue, and develop innovative ideas that would allow systems big and small to eliminate this barrier to access. I hope that we can count on our partners in government and on the private side—those who support early literacy, the end of the digital divide, and opportunity for all—to work with us, perhaps to help libraries recoup lost revenue and examine eliminating library fines. Support from the JPB Foundation, which works to improve quality of life for low-income people, is what allowed us to do New York City’s one-time amnesty. Innovative, consistent support could ensure that financial hardships do not prohibit a family from taking advantage of a public resource built to help them.

I understand there are some who will balk at this experiment, wondering if the elimination of fines poses a “moral hazard”? To be clear, I’m not advocating a system with zero accountability. Patrons would need to return their items before checking out new ones, and still pay for lost items. I’m advocating a system in which a family does not need to choose between dinner and using the public library.

And so I must ask—what is truly the greater moral hazard? Having fines or not having fines? In my view, teaching kids that the library is not an option for the poorest among them is absolutely unacceptable.

Learn how to write for Quartz Ideas. We welcome your comments at ideas@qz.com.

Gujarat: The force is still with Modi but the resistance is rising

Prime minister Narendra Modi has passed his toughest test of 2017.

A year-and-a-half before India chooses its next national government, the key state of Gujarat has handed Modi and his Bharatiya Janata Party (BJP) a victory, but also a lot to worry about.

In the legislative elections held in the western Indian state on Dec. 08 and 14, the BJP has managed to hold on to power, adding another term to its 22-year-long run. At the time of publishing, it was poised to win 99 seats in the 182-member assembly, a remarkable performance considering the Indian electorate’s penchant for anti-incumbency.

However, by the standards set by its own narrative, the BJP victory rings somewhat hollow. Modi and his party poured everything into this campaign: launch of grand development projects, plenty of ultra-nationalist rhetoric, and crude religious innuendoes. And although BJP president Amit Shah’s target of winning 150 seats looked like a long shot, the party was expected to finish somewhere in the vicinity of the previous tally of 119.

Instead, aided by multiple grass-root rebellions in Gujarat, the rival Congress party put up a spirited show. Led by its recently anointed president, Rahul Gandhi, the party was staled to win 77 seats, 17 more than its 2012 figure.

So, while the victory will come as relief to the BJP as it builds up momentum for 2019, the Congress hasn’t crumpled either. After all, Gandhi, for long branded a part-time politician, did manage to take the fight to the enemy.

Why Gujarat?

The last time India held its breath awaiting the results of legislative polls was in the northern state of Uttar Pradesh, the country’s most populous and politically the most significant, in February-March this year. The BJP swept 312 seats out of the total 403 and returned to power after 15 years.

Although Gujarat isn’t as much of a weather-wane as Uttar Pradesh, it is nonetheless important.

First, because the state is where prime minister Modi burnished his credentials as an administrator and development-oriented leader—he ruled here as chief minister between 2001 and 2014 without losing an election. His three consecutive stints as chief minister of India’s third-most industrialised and fourth-most urbanised state were central to his political aura. A loss here would have severely dented his image. Now, with the home base secure, Modi can turn his focus to other states.

The second reason is the opposition Congress’s newfound energy. In the doldrums since its humiliating defeat in the 2014 general elections, the 132-year-old party has been struggling to find its feet. Apart from the odd victories in states like Punjab, the party has had no visible success in either forming governments or a national alternative to Modi’s blitzy narrative. Nobody was betting on it forming a government, but the fact that the Congress has considerably improved on its 2012 tally is being seen as a sign of a revival.

Here are the seat counts of the two main parties from the past few elections in Gujarat:

Year BJP Congress
2002 127 51
2007 117 59
2012 119 57
2017 99* 77*

The following is the percentage vote share of the two parties over these years:

Year BJP Congress
2002 49.85% 39.45%
2007 49.12% 39.63%
2012 47.9% 38.9%
2017 49.1%* 41.4%*

From its peak of 49.85% vote-share in the year 2002, when the state erupted in an orgy of communal violence, the BJP has steadily lost its support base, though never enough to threaten its hold over the state (This doesn’t include the handsome 60% vote-share it got in the 2014 national elections).

Yet, Amit Shah’s “Mission 150” clearly looks like a bridge too far now.

Acerbic campaign

The BJP was quick to point out the success of its development agenda in Gujarat.

However, development was hardly the party’s plank.

In a prestige battle for the two main parties and their leaders, the campaigns featured much acrimony and bad blood.

Modi, who had made the “Gujarat Model of Development” his calling card to woo national voters, didn’t quite deploy this supposed ace. Instead, during the nearly 40 rallies he attended in the state during the campaign, he mostly touched upon volatile subjects such as ultra-nationalism, Pakistan, the plan to build a temple at the site of a demolished medieval mosque in Uttar Pradesh, and of course the Gandhi family. Some accused Modi of lowering the stature of the prime minister’s position, besides puncturing his own aura by indulging in muckraking.

The Congress, on the other hand, had sought to ride on anti-incumbency by stitching together a coalition of castes—the Patidars or Patels, Dalits, and groups that form the other backward communities category. Over the past few years, the state had experienced several upheavals led by these communities, which have blamed the BJP for several of the social and economic grievances. Evidently, India’s grand old party wasn’t entirely successful.

What next?

Both the BJP and the Congress will end 2017 on a good note. The former particularly so as its Gujarat win was sweetened by another victory—also announced on Dec. 18—in Himachal Pradesh. Modi’s party cornered 44 of the total 68 seats in the northern hill state to defeat the incumbent Congress government.

Now as the two parties gear up for the 2019 national show, the two have a few more states to battle for in 2018 and 2019, including some key BJP-ruled provinces like Chhattisgarh and Madhya Pradesh where, too, anti-incumbency is likely to be a strong factor.

State End of the government’s tenure
Meghalaya March 2018
Nagaland March 2018
Tripura March 2018
Karnataka May 2018
Mizoram December 2018
Chhattisgarh January 2019
Madhya Pradesh January 2019
Rajasthan January 2019

However, given what the BJP managed in Gujarat even after 22 years, these states could be anything but easy for the Congress. Yet, after giving the Modi-Shah juggernaut something of a scare, there’ll be a newfound confidence that the Congress will count on.

Article originally posted by qz.

Crypto hedge funds are beating their benchmarks

Hedge fund managers have been under pressure of late, criticized for charging high fees (paywall) while often failing to outperform inexpensive index trackers. But investors in hedge funds that bet on cryptoassets have less reason to gripe: these funds are comfortably beating broad measures of market performance.

As usual with cryptocurrencies, the returns are mind boggling. Crypto hedge funds have gained 1,641% in the year to November, according to data-tracking firm HFR. The funds in HFR’s index hold a portfolio of assets like bitcoin, ethereum, litecoin, as well as tokens from initial coin offerings (ICOs).

A value-weighted index of the 10 biggest cryptoassets has gained a mere 1,226% over the same period, according to the HOLD 10 Index. A measure of bitcoin prices provided by CME Group—the CME CF Bitcoin Reference Rate—is up 857%.

The funds’ bumper performance could be explained by their investments in ICOs, which blend aspects of digital tokens with crowdfunding. Just about every government watchdog has warned investors to think twice before investing in them. But despite their slippery legal status, some ICOs have recorded immense gains, either on their own merits or often simply because the tokens are denominated in ether, which has gained more than 6,000% in price this year.

Article originally posted by qz.

Beijing is cultivating the next generation of African elites by training them in China

Juba, South Sudan

Anthony Kpandu took a delegation from his party, the Sudan People’s Liberation Movement (SPLM), to China last year to train with the Chinese Communist Party (CCP). Kpandu is in charge of special working groups at the general secretariat for the SPLM, the liberation movement turned government party that helped South Sudan gain independence from Sudan in 2011. Wearing a button that says, “I love SPLM,” a paisley tie, and a loose tan jacket, he reminisces about his trip to China in detail, down to every day’s itinerary.

They visited the Central Party school in Beijing, toured industrial zones, drank various types of green tea, and walked part of the Great Wall. Kpandu’s favorite part was Shanghai, with its glittery commercial district, Pudong, high-speed Maglev train, and sprawling airport. “It was magnificent. You can’t believe it, but it’s there. I’ve never seen anything like it,” he says from his office in Juba.

In the 1970s, China actively tried to export its communist revolution to Africa, one of Beijing’s few diplomatic engagements at the time. Now, Beijing is promoting a more subtle movement: support for China and and its model of development. Instead of relying on Chinese emissaries in African countries, Beijing is bringing thousands of African leaders, bureaucrats, students, and business people to China.

It’s a campaign that achieves several goals at once. The trips help solidify political and business ties between China and its partners on the continent. Like other development partners, China gets to help build capacity in African countries. Most importantly these exchanges cultivate partners on the continent who are more likely to be sympathetic to China and its way of doing things.

China has been hosting these trainings and exchanges in Africa since as far back as the 1950s when it first established diplomatic ties with Egypt. Over the past decade, the trainings have grown in both volume and profile. Kenya’s Jubilee party, created the year before the country’s contentious election this year, received trainings from the Chinese Communist Party in China. The Ethiopian People’s Revolutionary Democratic Front also takes inspiration from the the CCP while South Africa’s African National Congress regularly attends workshops in China and has modeled much of its party teachings on the CCP.

China is particularly interested in the next generation of African elites. Last year, China said it would invite 1,000 young African politicians for trainings in China, after hosting more than 200 between 2011 and 2015. Thousands of African students are pursuing undergraduate and graduate degrees in China on scholarship programs funded by Beijing. As of this year, more Anglophone African students study in China than the United States or the United Kingdom, the traditional destinations of choice.

Chinese officials are quick to say these scholarships and trainings are not an attempt to remake Africa in its own image. In theme with China’s self-avowed policy of noninterference, Beijing likes to stress that it does not tell its partners what to do.

“We’re not saying the Chinese model should be copied but to share lessons. It’s to give them the concepts so that they can adapt and find their own solutions,” says Zhang Yi, China’s economic attache in Juba.

“When you go to China they will not be talking about democracy.”

But South Sudan, the world’s youngest country, may be particularly impressionable. It is still developing its government institutions and political system, amid a four-year civil war that has split the former liberation party into several factions. China, which has major oil interests in the country, was one of the first countries to recognize South Sudan and remains engaged with the country, with 2,600 peacekeepers and more than 100 Chinese businesses and investors.

“The SPLM seems to believe that given shared experience in historical struggle against imperialism and colonialism, there are much similarity and common ground between SPLM and the [Chinese Communist Party’s] origins,” says Yun Sun, a fellow at Brookings Institution who has written about party to party exchanges between China and African countries.

“It does raise the question what kind of political future South Sudan faces as a result. If we do believe in the universality and desirability of the democratic system, the model represented by the Chinese experience and its popularity may not be the most encouraging,” she says.

Chinese Peacekeepers in the United Nations Mission to South Sudan (UNMISS) parade in Juba.
Chinese Peacekeepers in the United Nations Mission to South Sudan (UNMISS) parade in Juba.(Reuters/Samir Bol)

Hundreds of South Sudanese government officials, business people, and students, attend training or schooling in China, every year. Delegations from the SPLM in Juba travel to China several times a year to study with the communist party. Bureaucrats from the government’s ministries of culture, transport, health and more go every month for trainings. Even before South Sudan became an official state, officials were hosted in China in workshops on poverty alleviation, managing public opinion, and building a party.

China has given at least 4,100 scholarships and training programs to South Sudanese students and officials since 2011, when the young country was established. In August, China pledged to offer at least 240more scholarships. The China-South Sudan Friendship Association, headed by a former foreign minister and partly sponsored by the Chinese embassy, embeds South Sudanese business people with Chinese companies.

South Sudanese and Chinese officials like to say they are learning from each other, sharing experiences from one former liberation movement to another. Both the Chinese Communist Party and the SPLA grew out of armed guerrilla movements. The SPLM fought for decades for independence from the north. The party also has its roots in socialism, identifying first with the Soviet Union during the Cold War. After the fall of the Soviet Union, the SPLM turned to the United States as an ally but even today, SPLM officials still use the title “comrade.”

But that’s where the similarities end. The Chinese communist party transformed itself into a government that maintains one-party rule over a country that is mostly one ethnicity, Han Chinese. In contrast, the SPLM in Juba is locked in a civil war with splinter parties, divided by region and ethnicity in a country home to more than 60 ethnic groups.

South Sudan President Salva Kiir Mayardit (centre L) and his Chinese counterpart Hu Jintao (centre R) attend a signing ceremony at the Great Hall of the People in Beijing April 24, 2012. Hu told Kiir on Tuesday that he hoped for calm and restraint between the two Sudans, state television reported. Kiir's visit to Beijing comes days after he ordered troops to withdraw from the oil-rich Heglig region after seizing it from Sudan, a move that brought the two countries to the brink of all-out war.
South Sudan President Salva Kiir (centre L) and then Chinese president Hu Jintao (centre R) attend a signing ceremony at the Great Hall of the People in Beijing April 24, 2012.(Reuters/Kazuhiro Ibuki)

Zhang, China’s economic attaché to Juba, believes some aspects of China’s model of government could help South Sudan, for instance, a stronger central government. “There’s no history of a centralized government in the past, which means there’s no process of nationalism. So the people, they still stay grouped by tribe.”

But not all lessons from China should be learned. Under Xi Jinping, China has tightened its stranglehold over civil society. South Sudan is already familiar with some of these tactics. Local journalists are intimidated into silence or killed.

“When you go to China they will not be talking about democracy,” says Samson Wasara, vice chancellor at the University of Bahr el Ghazel in Wau state, where he says as many as 300 graduate students are pursuing degrees in China. “In 10 years time, one of [these students] will be the leader of South Sudan.”

Wasara fears the SPLM already sees the Chinese communist party as its role model, a trend that he sees replicated across the continent. “Most Africans are switching from the West to China,” he says. He worries that China will become South Sudan’s main role model. The United States and other Western powers supported South Sudan’s bid for independence and are still involved in aid and mediation efforts in the country today. “It will be a disaster for us, especially for those who know the value of human rights, democracy, free speech,” Wasara says.

That may already be happening. The SPLM is at least taking inspiration from the CCP. Kpandu says he reads from his copy of Concise History of the Chinese Communist Party every day. He wants to establish a youth arm of the SPLM, modeled after the Communist Youth League of China. After reading about Mao Zedong’s famous declaration that women “hold up half the sky,” he has pledged to recruit more women into the party.

Xi Jinping (second from left) at the Forum on China-Africa Cooperation in Johannesburg.
Xi Jinping (second from left) at the Forum on China-Africa Cooperation in Johannesburg. (DIRCO ZA)

“China has been an example to us. We will always look up to them,” he says from his office at the General Secretariat for the SPLM. The secretariat manages the day to day operations of the party, and he is preparing an SPLM training on code of conduct and party structure.

Kpandu says South Sudan won’t copy everything from China, claiming that South Sudan won’t be a one-party state. President Silva Kir, head of the SPLM in Juba, is pushing for an election in 2018 despite warningsfrom the United Nations that a legitimate election is near impossible and risks causing more violence.

The exchanges and scholarships may be more about inspiring admiration and sympathy than emulation. Others who have attended diplomatic trainings say the teaching is basic — how to shake hands or how to sit with a senior dignitary. (If you’re the host, the dignitary should be to your right.)

A South Sudanese diplomat who spent a month in China for a training of diplomats said his trip was mostly focused on showing off China’s achievements. He was taken to visit villages built from scratch, well-run rural hospitals.

“When we went they told us a lot of stuff about China itself and China’s industrialization. It’s more about public relations,” he says, asking not to be named because he was not authorized to speak to media.

This public relations campaign is at least partly working. The so-called China model is gaining traction across the African continent. According to an Afrobarometer survey last year of 56,000 people in 36 African countries, 30% of respondents said the United States was a better model for development, compared 24% who ranked China first. In Southern Africa, North Africa, and Central Africa, China was on par or ahead of the US.

On his trip to China, Kpandu was also impressed with the surveillance. He visited a police control room in Nanjing and when his group was taken to a special economic zone outside the southern Chinese city, a drone filmed them the entire 72 mile journey.

Back in Juba, he wrote a report recommending his government buy some of these drones to deal with “unknown gunmen,” a moniker that often includes government soldiers themselves who rob and attack civilians in the capital. “We have learned quite a lot from the CCP,” he says.

Sign up for the Quartz Africa Weekly Brief — the most important and interesting news from across the continent, in your inbox.

Article originally posted by qz.

Americans! See if your identity was used to make fake net neutrality comments

Identity theft is usually used to scam you for cash, but this time you’ll want to check if you have been impersonated for political purposes.

“As many as 2 million comments” on the US Federal Communications Commission’s proposal to repeal Obama-era net neutrality rules were faked, the office of the attorney general of New York has found. The attorney general’s office has set up a handy page that allows you to enter your name and find out if your identity has been used without your consent. You can look for your own name at their site.

Screen Shot 2017-12-14 at 10.08.35 AM
(NY attorney general)

Eric Schneiderman, the state’s attorney general, has been trying to flag this to the FCC for some time. Yesterday (Dec. 13), he wrote a letter(pdf) to the FCC, urging them once again to look in to the purported identity theft, which likely amounts to a crime.

Article originally posted by qz.

Selfie obsession, extreme weather risks, and eight other stories you might have missed

1. Me, myself, and in focus

The other day I saw an in-store display that featured a model taking a selfie using a high-end digital camera with a flip up LCD screen. It struck me as the perfect metaphor for America in 2017. But, of course, I was being narrow minded. It’s really a perfect metaphor for the world. In an era when our regional cultures can feel increasingly isolated, it’s nice to know there’s still at least one characteristic that binds us: Self obsession. And Americans aren’t the only ones turning that obsession into a business. The New Yorker on China’s Selfie Obsession. “Internet celebrities themselves—the name wang hong means ‘Internet red’—are newly ubiquitous in China. The most famous of them rival the country’s biggest pop singers, and outrank most TV and movie stars, in recognition and earnings.”

2. Worth, wind, and fire

“This job is an engineer’s dream. You get to build stuff, then you get to blow them up.” If you’re still on the fence about the nearterm threats posed by climate change, I suggest you follow the money and check in with the big corporations with the most to lose. Insurers and reinsurers don’t need any more convincing that climate change is a real threat, and some of them see 2017 as a tipping point. The NYT takes you inside a lab where a team of researchers is destroying things—with wind, water and fire—to help insurers manage the increasing risks of extreme weather.

+ “You look at the media images and you see new subdivisions, new strip malls and new buildings with water up to the rooftop … Those shouldn’t be happening.” Even if insurers come up with stiffer building requirements, it won’t matter if people and politicians don’t enforce those rules. Reuters: Unfettered building, scant oversight add to cost of hurricanes in US.

France trolls Trump by funding US climate scientists. (The program is called Make Our Planet Great Again…)

3. Takes one to know one

“I believe that the conditions in the [North] Korean prison camps are as terrible, or even worse, than those I saw and experienced in my youth in these Nazi camps and in my long professional career in the human rights field.” North Korea’s prisons are as bad as Nazi camps, says judge who survived Auschwitz. (We spend so much time considering the possibility that Kim Jung Un could turn us into victims that we forget he already has millions of them.)

4. Alabama shakes

After Democrats (and many Republicans) pulled out all the stops, Doug Jones might eke out a narrow victory over Roy Moore; an ill-informed, racist, misogynist, anti-gay, child molesting criminal. And that’s the best case scenario. After a bitter campaign, the Alabama Senate race finally goes to voters.

+ An Alabama peanut farmer speaks about his daughter outside a Roy Moore campaign event: “I was anti-gay myself. I said bad things to my daughter, which I regret.”

+ A Pro-Trump Super PAC Sent a 12-Year-Old Girl to Interview Roy Moore. (The only thing that could have made this more sick is if they had filmed it at the mall…)

+ Roy Moore’s wife gave the last day of campaigning a fitting end: “One of our attorneys is a Jew.” (Uh, Happy Hanukkah?)

+ “In 2011, Alabama lawmakers passed a photo ID law, ostensibly to combat voter fraud. But “voter impersonation” at polling places virtually never happens. The truth is that the lawmakers wanted to keep black and Latino voters from the ballot box. We know this because they’ve always been clear about their intentions.” NYTWhy the Alabama Senate race may have already been decided.

5. Assad ending to a sad story

You haven’t been seeing nearly as many headlines about Syria in recent weeks. That’s in part because the US is almost entirely out of the picture when it comes to negotiating a deal. And that Putin-driven deal will include Assad staying in power, maybe for years to come.

6. The drug deal

“Legislators continue to pass laws that emphasize punishment over treatment, even as rehab is seen as the answer to substance abuse. These policies have crowded jails and prisons, while making it harder for blacks to get help for addiction.” There are two very different domestic drug wars in America. And their differences are as stark as black and white. The Sarasota Herald Tribune investigates the differences between the war on opioids and the war on cocaine. This is a culture war.

+ An Alabama peanut farmer speaks about his daughter outside a Roy Moore campaign event: “I was anti-gay myself. I said bad things to my daughter, which I regret.”

+ A Pro-Trump Super PAC Sent a 12-Year-Old Girl to Interview Roy Moore. (The only thing that could have made this more sick is if they had filmed it at the mall…)

+ Roy Moore’s wife gave the last day of campaigning a fitting end: “One of our attorneys is a Jew.” (Uh, Happy Hanukkah?)

+ “In 2011, Alabama lawmakers passed a photo ID law, ostensibly to combat voter fraud. But “voter impersonation” at polling places virtually never happens. The truth is that the lawmakers wanted to keep black and Latino voters from the ballot box. We know this because they’ve always been clear about their intentions.” NYTWhy the Alabama Senate race may have already been decided.

5. Assad ending to a sad story

You haven’t been seeing nearly as many headlines about Syria in recent weeks. That’s in part because the US is almost entirely out of the picture when it comes to negotiating a deal. And that Putin-driven deal will include Assad staying in power, maybe for years to come.

6. The drug deal

“Legislators continue to pass laws that emphasize punishment over treatment, even as rehab is seen as the answer to substance abuse. These policies have crowded jails and prisons, while making it harder for blacks to get help for addiction.” There are two very different domestic drug wars in America. And their differences are as stark as black and white. The Sarasota Herald Tribune investigates the differences between the war on opioids and the war on cocaine. This is a culture war.

Article originally posted by qz.

So you want to invest in crypto? These are the questions to ask, says the SEC

Every investor knows the mantra: Buy low, sell high. But as bitcoin surges to new milestones—and one particularly bullish trader predicts it could go to $100,000 in the not-too-distant future—fear of missing out is grabbing investors. After all, bitcoin was trading at around $800 this time last year, and now it’s at over 20 times that.

Over the weekend, the Financial Times reported that (paywall) Coinbase, a bitcoin trading service, became the most popular free app on the Apple store. While some warn we’re in the midst of a big crypto bubble, others say the underlying blockchain technology has such enormous potential for changing finance that euphoria is warranted. So in addition to acquiring bitcoin, investors are hoping to discover the next bitcoin, or get in on an initial coin offering (ICO), an increasingly popular funding mechanism, to buy into the next big thing.

Not so fast, says the US Securities and Exchange Commission.

Every investor knows the mantra: Buy low, sell high. But as bitcoin surges to new milestones—and one particularly bullish trader predicts it could go to $100,000 in the not-too-distant future—fear of missing out is grabbing investors. After all, bitcoin was trading at around $800 this time last year, and now it’s at over 20 times that.

Over the weekend, the Financial Times reported that (paywall) Coinbase, a bitcoin trading service, became the most popular free app on the Apple store. While some warn we’re in the midst of a big crypto bubble, others say the underlying blockchain technology has such enormous potential for changing finance that euphoria is warranted. So in addition to acquiring bitcoin, investors are hoping to discover the next bitcoin, or get in on an initial coin offering (ICO), an increasingly popular funding mechanism, to buy into the next big thing.

Not so fast, says the US Securities and Exchange Commission.

Every investor knows the mantra: Buy low, sell high. But as bitcoin surges to new milestones—and one particularly bullish trader predicts it could go to $100,000 in the not-too-distant future—fear of missing out is grabbing investors. After all, bitcoin was trading at around $800 this time last year, and now it’s at over 20 times that.

Over the weekend, the Financial Times reported that (paywall) Coinbase, a bitcoin trading service, became the most popular free app on the Apple store. While some warn we’re in the midst of a big crypto bubble, others say the underlying blockchain technology has such enormous potential for changing finance that euphoria is warranted. So in addition to acquiring bitcoin, investors are hoping to discover the next bitcoin, or get in on an initial coin offering (ICO), an increasingly popular funding mechanism, to buy into the next big thing.

Not so fast, says the US Securities and Exchange Commission.

Article originally posted by qz.

Indians Are In a Frenzy To Become Overnight Crorepatis With This New Opportunity But Time Is Running Out…

The digital currency Bitcoin is rallying at phenomenal speed, leaving many high and others dry in markets around the world. But why are prices higher in India than elsewhere? The BBC’s Devina Gupta explains.

While the Bitcoin bull run has been welcomed by many, financial regulators in emerging economies are still trying to find a way to understand it.

The central bank of China has shut down Bitcoin exchanges in the country. Indonesia and Bangladesh have banned its use as a payment tool.

In India the government has made it clear that, while it doesn’t recognise Bitcoin as “legal tender” like paper money, there are no guidelines on Bitcoin trading.

In the absence of any specific legal framework, online Bitcoin trading platforms are operating freely, even as the Indian central bank is getting jittery.

It has issued its third warning this week, cautioning “users, holders and traders of virtual currencies including Bitcoin” of “economic, financial, operational, legal, consumer protection and security-related risks”.

But is anyone listening?

Experts claim that demand outweighs supply in India, pushing the Bitcoin price in the country up to 20% higher than international prices.

There are at least 11 Indian Bitcoin trading platforms online which claim that about 30,000 customers are actively trading at any given point of time. With a simple click, an investor can open an account and choose whether to purchase an entire Bitcoin or a fraction to trade with.

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What is Bitcoin?

There are two key traits of Bitcoin: it is digital and it is seen as an alternative currency.

Unlike the notes or coins in your pocket, it largely exists online.

Secondly, Bitcoin is not printed by governments or traditional banks.

A small but growing number of businesses, including Expedia and Microsoft, accept Bitcoins – which work like virtual tokens.

However, the vast majority of users now buy and sell them as a financial investment.

Presentational grey line

“Last year this time we had 100,000 registered customers. Now we have gone up to 850,000. The price is surging and from my analysis the people who are investing in Bitcoins are investors who have big pockets and are willing to take risks on their portfolio,” Satvik Vishwanathan, co-founder of Unocoin, told the BBC.

And it’s not just online trading. Some Indian e-commerce platforms have started recognising the digital currency as well. FlipKart and Amazon are already giving customers the option to convert Bitcoin into regular currency and purchase goods with it.

But at the end of the day, Bitcoin is just an open software with a digital code. Is it more secure than depositing money in a bank?

“There is no architecture to hold the Bitcoins safely, so right now people are taking a physical print out and keeping that in a locker. What the government can do is start a global wallet registry so that we know who is transacting and where the transactions are being done. If my Bitcoin is stolen then with this global wallet at least you can track it,” Vishal Gupta, co-founder of Diro Labs, told the BBC.

But the time for just issuing warnings may be over.

With the popularity of Bitcoin, other digital currencies like Ethereum and Litecoin are also attracting Indian investors. So is it time for the government to make its policy clear?

“There are revolutionary changes in this sector and huge progressive moves here. Technology is always ahead of government and is a big disruptor. It is important that we keep pace with technology and make regulatory changes. It is an issue that finance ministry has to debate and do inter-ministerial discussions to take it forward,” Amitabh Kant, the CEO of India’s premier think-tank Niti Aayog, told the BBC.

Every high has a low. A look at the past five years of Bitcoin shows several stomach-churning moments where it has tumbled by 40% to 50% in a single day without any warning. The April 2013 Bitcoin meltdown where the currency fell by over 70% overnight from $233 to $67 still haunts many.

But perhaps the biggest shot in the arm for Bitcoin investors is the recent green light from the US for futures trading. This decision has fuelled the recent Bitcoin rally. But Wall Street banks are raising concerns and heavyweights like Warren Buffet have red flagged Bitcoin as “a real bubble”.

This leads us to the big question: Is the digital currency an idea whose time has come or is it destined for disaster?

Only time will tell.