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The EP3-E Crisis : The Aftermath
By John Pluenneke Jr. Los Angeles. April 13th 2001.

Even as relations between Washington and Beijing threatened to sink to their lowest point in recent memory, there were few signs that foreign businesses operating in China had been affected by the crisis.

According to a report filed by ChinaOnline.com - a web site specializing in news and analysis of conditions in the People's Republic, for the time being business is continuing as usual.

"China’s call for an apology and compensation from the United States might have faint echoes of the atmosphere after the May 1999 bombing of China’s Belgrade embassy, but the mood on the ground here is far different. No protesters are gathered outside the U.S. consulate in Shanghai, and a small group of would-be protesters were sent home by Chinese troops at the U.S. embassy in Beijing", writes correspondent Alysha Webb from Shanghai.

Then again - just what exactly does business as usual mean in China?


The Policy Police are Watching

The Brookings Institute - the respected (and sometimes equally resented) Research and Foreign policy group responded to the crisis by pushing it's resident China experts to the fore, presenting detailed policy analysis by authorities like the University of Michigan's Kenneth Lieberthal and George Washington's David Shambaugh.

Lieberthal, author of U.S. Policy Towards China, a set of policy recommendations presented to the Bush Administration in January, is one analyst well aware of the increasing role China will play in the global equation in the 21st century.

"Many critics do not appreciate the fundamental reality" Lieberthal writes, "that an effective approach to China vastly reduces the costs to the United States of pursuing its vital regional interests in Asia. Every country in that region looks at America's China policy as a key test of the American wisdom and staying power in Asia."

Required Reading: http://www.brook.edu/comm/policybriefs/pb072/pb72.htm

See Also: Thursday's Brooking's press briefing (archived webcast)

A New Kind of Virus Warning

Even the normally tech-centric Register -- the cheeky British news site that regularly breaks big stories well ahead of much larger competitors in the US like CNET and Wired News got into the crisis coverage business with a report on the Chinese Information Warfare Program.

According to the piece, by Reg Washington correspondent Thomas C. Greene the Chinese Government has been requiring major anti-virus vendors to turn over samples of computer viruses as a condition for entry into China's (potentially lucrative) software marketplace.

The explanation the Chinese offer: officials want to test the software to make sure it performs as advertised. The real reason?

According to the Register's theory, the Chinese are eager to acquire the samples in order to develop their own information warfare capabilities. By reverse-engineering common versions of dangerous viruses like Chernobyl and Melissa, Chinese computer scientists could theoretically develop new strains specifically designed to be harder to detect and to carry a more destructive payload.

In times of crisis, the theory continues, such weapons could prove decisive in a conflict against any nation which - like the United States - is dependent on Information Age technologies.

Never mind the fact that such viruses - and much nastier strains - are widely available around the Web to anybody with a modem. In the heat of the media battle there was no stopping the Reg. when it came time to put two and two together.

"....it's beyond question that the Chinese authorities intend to secure for themselves the capability of launching devastating cyber attacks. With that in mind, we might make sense of this trend if we consider that they might wish to see a broad sample of detectable viruses in hopes of modifying them to evade detection without diluting their effectiveness."

It is fairly common knowledge that all of the Western powers - including the United States - are working on Information Age weapons which exploit the vulnerabilities of difficult to protect computer networks and web sites.

Welcome to the 21st century.


Another Hunt for Red October?

Why was the EP3-E operating so close to Chinese territory? What did the United States hope to gain by eavesdropping on the People's Liberation Army? The real answers are, of course, classified.

However, according to a report published by Stratfor.com, the Austin-based Intelligence group which specializes in foreign policy analysis and strategic forecasting, the flight may in fact have been on a specific mission, a mission far removed from its ordinary intelligence gathering duties.

The STRATFOR report draws on Chinese sources in concluding that the flight may have been searching for evidence of a new submarine under development by the Chinese Navy.

The sub, which is believed to employ new technologies to make it far less detectable than anything the Chinese have, is the sort of weapon that could theoretically shift the balance of power away from the US Navy, giving China a tactical edge in any confrontation with US forces in the area. If this report is accurate, it would go a good ways towards explaining what happened two weeks ago over the South China Sea.


The Court of Public Opinion - Digital Style

Wired News reported that in the days following the incident, anti-American postings increased dramatically in chat rooms and on message boards popular with Chinese surfers, like those at China.com and Sohu.com, leading to concern on the part of some Internet security specialists that hacker attacks on US web sites might follow.

"How would the Americans feel if a Chinese spy plane flew close to their airspace with all the listening devices and cameras targeting their country below?" wrote a participant in one discussion..

"We should take these spies and cane them 40 times and just punish them by our laws," Wired quoted another Chinese surfer as writing.

The situation was little different in chat rooms and discussion boards popular with American surfers, where anti-Chinese sentiment was clearly in evidence - although few people were advocating beating anybody with sticks.

"It's a chess game … They (the Chinese) managed to get their hands on a piece of technology that they've been drooling over for years. Now they want us to apologize for giving them the opportunity to capture that piece?" commented one participant.

On Yahoo's message boards, which are popular with Internet users from around the world, ugly skirmishes broke out between supporters of the two sides, with thousands of angry messages exchanged.

Yahoo has said in the past it is impossible to monitor the messages posted on its discussion boards, a position typical of most large Internet service providers. By Saturday, nearly 40,000 messages had been posted in the message category the portal set up to handle discussion of the crisis.

Aggressive Slow Flying Aircraft Spotted

A slightly more noteworthy response came from a participant who claimed to be a former pilot in the Taiwanese Air Force - generally not enthusiastic fans of the Chinese air force. The pilot wrote that he had witnessed aggressive behavior by EP3-E pilots during previous encounters, evidence he suggested supported the Chinese version of events.

"We often observed that the EP3s intentionally fly slowly, causing maneuvering difficulty for jet fighter pilot(s). They did not follow our instructions, and further more they often made sudden veers into our direction, in order to force us to fly ahead of them or get us into their swerving airflow."

One observer on the US side questioned the veracity of that account, asking why US Aircraft would engage in such behavior towards the Taiwanese. The posting, the source added, could easily have been the work of an impostor.

Internet Message Boards and Forums have few safeguards in place to prevent a user from misrepresenting themselves or assuming the identity of another person, making such abuse a fairly simple matter.

Despite such concerns, comments posted in Internet chat rooms and message boards are increasingly being scrutinized by researchers and the media. Many feel such postings reflect public opinion more accurately than more traditional methods of gauging public opinion such as polls, because such forums allow participants to freely express their opinions without interjecting interviewer bias into the equation.


DCX Story Continues to Unfold
Posted 4.2.2001 | By Myron D. Stokes

Only last week DaimlerChrysler officials were claiming that it was American managers who, because of escalating costs in vehicle production and ever increasing unsold inventory,"burned through" the Chrysler pre-merger cash hoard of $9-10 billion . This of course, flies in the face of reports in late December that within hours of the departure of the last American executive at the company, Jim Holden, approximately $6 billion was transferred to Daimler-Benz accounts.

Now, in what may be the most compelling evidence that DaimlerChrysler is no longer, or at least is rapidly becoming, a non-American company, Paul Lienert's GlobalAutoNet is reporting that "DaimlerChrysler ... admits U.S. investors are selling off shares and that the percentage of company shares held by U.S. investors is now less than 17%. Last year individuals held about 23% and at the time of the merger in 1998 it was closer to 44%."

GAN Editor Laura Sky Brown went into more detail for us: "About 75 percent of DaimlerChrysler stock is now held by Europeans. In the minds of many U.S. shareholders, DaimlerChrysler's turnaround is an object of skepticism, at best. The implication is that, following in the footsteps of Kirk Kerkorian - who sold a third of his DCX holdings in January - many former shareholding individuals and institutions may have already written the company off, and they're not sticking around to see the stock bottom out."

Time to buy?

Boeing Going Gone
3.30.2001 - | By John Pluenneke Jr.

n the aftermath of the media frenzy created by Boeing's announcement that it is contemplating a move from Seattle, the company has struck back with a dramatic announcement that may well put it back on the fast track in its battle with European rival AIRBUS Industrie: the news that it is developing a high-altitude commercial airliner capable of near-supersonic speeds. (ER followed up with the news that the Pentagon is interested in the project.)

As could be expected, Boeing's hometown paper, the Seattle-Post Intelligencer, gave the story prominent play, running the news on its front page. An in-depth story by reporter James Wallace examined the ramifications of the announcement in detail, devoting significant space to the likely effect the company's development plans will have on the aerospace giant's battle with archrival AIRBUS.

In an email interview, Wallace went into more detail for us, "My sense is that if Boeing has really found a way to build a plane that can cruise 15 or 20 percent faster than today's jets, and most important do it at about the same trip or seat mile costs of today's jets, then it has a plane that will knock the socks off the competition and will be as significant an advancement in aviation history, perhaps more so, than the 707 or 747."

Posted 2.27.2001 | By Myron D. Stokes

The days when the critics stood to one side without daring to question the method or motives of Herr Schrempp are clearly kaput. Consider this exerpt from the front page of Wednesday's Frankfurter Allgemeine Zeitung, Germany's largest newspaper.

  'DaimlerChrysler, spawn of Daimler's merger with Chrysler, has so far produced nothing but bitter disappointment for shareholders and employees alike. Chrysler especially has turned into a heavy mortgage. The question is now raised: Shouldn't Jürgen Schrempp, architect of the once-so-famous "World Inc.," be gone. Mr. Schrempp's answers at the company's recent press conference were less than satisfying. Was there a need for any personal consequences? "I am amazed you ask me that," the Daimler boss shot back, his irritation plain. "Do you think I decide this by myself?" What will it mean for him personally, then, if Chrysler cannot be turned around? "That's a hypothetical question. We will succeed." Go to FAZ Article

David Leggett, Editor of Just-Auto.com, and formerly an analyst with the Economist Intelligence Unit, also seems to agree with us. In Tuesday's edition of his Weekly Editor's Highlights newsletter the journalist wrote:

  "I think this is the very last chance for Jürgen Schrempp. His big backer is the largest shareholder, Deutsche Bank, and their patience must have almost run out now. 2001 will certainly be a pretty tough year. Much will hinge on the Chrysler recovery and the assumptions that underlay it. In particular, if the US economic and vehicle market slowdown turns out to be more severe than is assumed, Chrysler will be in even deeper trouble. If things are not proceeding to plan by the middle of this year, I think Jürgen Hubbert may well find himself at the helm and there will be even more cost cutbacks at Chrysler..."








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