Transcription
Thank you so much for taking the time and joining us here this morning. Some of you have come quite a ways. Um, I know we have about 30 minutes to have this discussion. Obviously, it's a very timely one to have, uh, in the current geopolitical climate. So, let's start with a fairly big picture question. How are emerging technologies reshaping global power dynamics among major nations? I'd like to start with you, Cutlin.
Yeah, thank you so much. Good morning, everyone. I just said to Tracy earlier this morning, wow, that's a pretty heavy conversation we're having right at 10:30 a.m., right? I think you're all awake. Um, otherwise, it's a short one. It's only 30 minutes. Thanks Tracy for having me and the whole crowd, and it's great to be in Zurich today. Yes, I mean emerging technologies, we mentioned that a couple of times, is artificial intelligence and everything that is amongst it. Um, quantum computing, next-generation connectivity, and so on. I mean, it's just rapidly becoming new instruments of geopolitical power, right? Questions of sovereignty, are we still sovereign if we are using that as states? And these are big questions that are definitely discussed in politics at the moment. And, yeah, control over key points like semiconductor supply chains. Have we heard of that before? Right. I mean, not really. And all of this is really, really, um, on top of the agenda for politicians at the moment. Data infrastructure, um, control over oil and shipping lanes once was there. Now it's no longer. Now it's about the blockchain and, um, all the regulations that are, um, coming with that. So, yes, big conversations, big topics for politics, and I really, really hope they're taking that serious because the time is now.
Now, of course, Phillip, with the Swiss International Society, I'm curious to get your take on how we, we touched on major, major powers shifting. How do small states fit into this new sort of shifting geopolitical landscape?
Um, okay. I, I will bring a perspective which is different from, uh, from the one of Tracy because I'm not a former minister for, I'm not a politician. I'm sort of more, uh, lower level, down to earth. So, my, my experience is that, uh, technical norm, regulation, standard are extremely important in business. And then if, if it is not right for you as a company, you can be killed, but you can also kill your competitors easily if you can modify those, those standard regulation. On the challenge is that it's sometime very difficult to, to explain to, to key decision makers like minister or CEO of very large company what it is all about because it's very technical. And I can give you one or two example, but I will start with one. I was in charge of, of, um, of Swiss technology company for five countries based in Singapore. And then when I arrived in Singapore, we wanted to sell our technology product for the construction industry. And I noticed that the regulation was completely describing the solution of our Japanese competitors. And I found it was really unfair that, that why is it in the regulation? Why is it compulsory? Why do we have to adapt so much our product and the Japanese don't have to? So, fortunately, Singapore is a very, uh, dynamic, open, uh, forward-looking country. I could speak to the minister and in one year, he could modify this and he could have an open market which was very good for everybody. We tried the same in Japan where it was even much more, I would say, it was at five levels, at the low level, the ordinance level, at the directive level, a compulsory norm level. And we noticed we had zero success. So, we try first, it took us several years to understand what are the, what we have to do. And then we realized we had to modify everything on, so technologically. So we tried to change it the way we did it in Singapore, but it was much more complicated and we could not do it. And this is why in Japan, there are only, uh, only, um, only, um, I would say, um, Japanese competitors, nobody else from, no other country. And as a small country, it was not possible. Even we use the bundas to, to help us and so on. It was not possible to change. Maybe if you come from major country like USA or China, they would have had more luck because, because they have much more political power than we do as a small country. So it can play a direct role in market access, for example.
Yes. Um, Maro, of course, with the ICRC, and focusing specifically how technology is being used in warfare. How is emerging technology shaping and affecting longstanding alliances?
Yeah, I think we have to look at also historically speaking, um, how the, the shift of power being captured by the technology. So, we started with the mainframe technology 40 years ago. Then we move to decentralized computing, right? And we are living in a decentralized environment at the moment. And and this mean that the power shift from a central power structure, which is the one of the state, and shift to the first shift to the tech companies with the decentralization of the of the computing. And now we are entering a new stage of autonomy, which is reinforcing again the power of tech companies by playing a kind of new, um, new version of the power. So, the power is no more in the protocols, but is shifting and going to the agentic. We're going to have agentic everywhere. So, you're going to have your personal agent on your phone, on the car, at home. It's going to be always the same person, always the same voice. And this is going to be impacting, influencing your condition, the cognitive aspect. And and and this is the new power of tech companies that are shaping the whole geopolitics environment. So, how we deal with this, how we can be sure that the, the agent we are using is coming from a specific state where there is the specific companies. This is all the question of regulating or the fragmentation of regulations because we see the fragmentation of technologies. So, this is the challenge we're going to, we're going to, we're going to have in the next years. And this, I think, the main source of tensions between states in the coming future.
We'll get into some of the regulatory topics in just a second, but I quickly want to touch on something that you, um, mentioned in your first answer, Captain, and that is the infrastructure side of things. Now, suddenly becoming hardware, suddenly becoming, um, a key topic in a lot of geopolitical discourse. So, in what ways is digital infrastructure and hardware becoming a site of geopolitical competition or collaboration?
I mean, digital infrastructure, let's name it, cables, data centers, cloud architecture. And I'm working for, I'm a board member of the on digital. And what we do is exactly, we're providing these architectures for everything out there. And also at Rulematch, I'm advising Rulematch, the one and only regulated digital exchange here based in Zurich, right? Huge data centers here in Switzerland, or 5G networks and so on. I mean, that's the new geopolitical battlefield, right? And countries are definitely raising to build secure as far as possible or influence these systems, right? As strategic assets, of course, big assets for them, but also whether through public-private partnership or international landing seems. And yes, I mean, this is competition. That's the competition we're living in right now. And I think just, I mean, we could escalate into digital spheres definitely of influence. Um, we see it with the big powers out there definitely already, or in, it could also be in intensifying global fragmentation, right? And dependency trips, especially in the global, in the global South. And maybe if you allow me to make one additional point that just Philip went into. I mean, I'm coming from a very small state. You mentioned Singapore, right? I mean, Liechtenstein is much smaller. It's one of the smallest on earth, I believe. It's like 38,000 citizens living there and, um, about the same number commuting in and out every day. Long story. I mean, for me, I was there while we were having that blockchain act and we were implementing that in January 2020 when I was foreign minister of the country. And you know, looking back, I mean, we were really fast. And for us, it helped that we had those short lines, definitely, because that made us so quick and so powerful being the one, the first one out there on earth that has a blockchain, blockchain act. I mean, we called it the Token and Trustworthy Technology Service Blockchain Provider Act, right? The TVG. And I think when we now see what the EU is doing with the MiCA regulation and everything, we really took influence on that as a small state. So, I wouldn't say that the small states take longer or you need to go through the Bundes here in Switzerland. No, I think the small states are really eager to be ahead of things because that gives us power. What I just mentioned before, it's all about a power game, right? Who is the first one out there and who can really leverage it and bring new industries to their country. And just specifically Rulematch, I mentioned before, they're based in Zurich, but I just supported them in getting a license in Liechtenstein. And they just, yes, yesterday, Sunday was the 1st of June, right? Sunday was the 1st of June. They just started their new business there. They've got a, a dollar company now in Liechtenstein. And for the MiCA regulation, that's outstanding, right? Because that gives them the full European, European area. So, there's an opportunity to capitalize on the agility that small states have in order to strategically position those.
Um, exactly. I'd be curious now that we have sort of this bigger picture, uh, on the infrastructure and hardware side, to what extent do we see these spheres also becoming potential target vectors in the, in the conflict discussion?
So, first of all, I would like to say that, I mean, what we are seeing also in, because of conflict, mainly, it's the fragmentation of technologies, right? The fragment. I mean, it's possible that in the future, we not have 77,000 autonomous systems connected together, but there's going to be regional internet connected with one connectivity that is highly, uh, observed and analyzed by the different regions to avoid any influence, any capability or delay. So, the, the trend is, and we look with Russia, we look with China, we look with the Western countries, that we have already different platforms in different regions. So, the, the, the basic connectivity is still the same. The technology is still the same, but we go in the direction of of this, uh, segregation, segmentation. The problem for international organization like ours and other is to be able to operate on both sides of the conflicts with the same analogy. And this become a challenge because if we are not allowed to use, I don't know, Microsoft in one country, and we have Microsoft on our computers, this is becoming a very, um, um, serious situation. On the threat act of perspective, this holds the following aspect of, and probably going to discuss later, of of influencing population on the other side, right? And, this is the game that the states are playing at the moment and trying to have more impact on the cognitive side of people by using those technologies. And this is something that is going to increase in the future by state and non-state actors.
We'll touch on the influence, uh, portion in, uh, a second as well. But, uh, Phillip, you previously shared your experience of taking a company into another jurisdiction, having to lobby at the end of the day with, uh, with local, um, policy makers. To what extent are global tech companies acting as geopolitical actors in their own right at this point?
Um, I will answer this point, but before I will comment on what, what Katherine has said. Um, I think that if you're a small country, you can be very fast, and it is an advantage. And I think a good example is Singapore. In Singapore, they have one political party which is extremely strong. They more or less control the parliament, and of course, they control the government. They only have one chamber. It's not in, in the parliament. So, when they decided to have digital signature in '96, I think it took one month to implement it before every other country. And I think this is a big advantage. On Switzerland is also closed on, on, can be relatively fast, not probably very fast, but when you have to open markets, um, it's an advantage to be a big country, uh, if you want to use your politician to, and I think the USA can be very good at it. They can make a lot of pressure on Japan, like in the automotive industry. China can be also very good at it. Switzerland, we have to play a little bit smarter. And, and there is a law in Switzerland which say we cannot have our own technical norm. We must take the one of our biggest, uh, commercial partner, which mean EU. So, in Switzerland, we by law, we have to have the CE norm, the CE norm automatically valid in Switzerland. We cannot have our own technical norm. We have to take. And I think it, it makes a lot of sense and it give us some, some, um, some practical way to approach this, uh, uh, technical norm fight. And of course, I mean, the big companies like Microsoft, like Google, uh, they are very good at at, they have a lot of means, and they're very good at establishing, uh, norm for many different way. It can be from the market that that everybody has to use Microsoft Word because otherwise you cannot communicate. Um, they can also, they, they have in their board maybe former minister, they, they are very, very good access to, to politician. And of course, they can have a lot of influence on, on many, many countries.
How do small companies then navigate, uh, this sphere?
We have to be smarter. I mean, I, I used to be in the board of, of a company based in Zurich, which was specialized in a technological product for the car industry, for sort of augmented reality for the car industry. And then we realized that the norm for the car industry, they are mostly made in the UN in Geneva, in a place called UNICE. The, the 50 big countries, they gather or they decide a technical norm. On I noticed those countries or those 50 countries, they could kill us. They could put some norm that would make our product impossible to sell, or the opposite, they could make some norm that only our product could be sold. And I noticed that in this organization, you had 50 countries and officially they decide, but practically in the meeting, there were about 30 companies, our big competitors, Bosch, and so on, Continental, and so on. So, we try to be part of this committee to define norm for our product. And for many reasons, they say it's not possible. First, you and then I wrote a letter to Mr. Guterres and I say, it's really unfair that the UN is doing something which is against a small country, a small company in a small country. And if we are not allowed to be into this committee, I will make a scandal out of it. And then more or less one week later, we got an invitation to participate, even not an association because we were the only one in this industry, but as a company to, to be next to sit next to BMW, Mercedes, and so, to, to try to influence also the technical norm, uh, which became, then, law in 50 countries. So, it's to fight to have a seat at the table in order to participate in those discussions.
Now, Maro, you touched on the, the sort of fragmentation of, um, the sector. We're seeing quite clear signs of states moving more and more to protectionist practices when it comes to their technologies, both on the import and export front, IP rights protection, etc., in order to safeguard their domestic industries. What are the potential benefits and risks or consequences of this trend?
So, I think, consequences of fragmentation is actually that we will not be compatible anymore from one region to the other. Then, in question are also the role of international standardization body like the Internet Engineering Task Force, that is standardizing our technologies, internet technologies since 40 years now. What going to happen with those entities that are super state? And, how we going to regulate further the integration of technology? So, this will impact, the distribution, the digital supply chains, the supply chain at all, not just the digital one. But we see this trend in, in different flavors, right? We see now the Trump administration with the tariff. We see this, this concern of trying to build an alter in China. We see that they are producing more and more high-end chips. So, we see this trend of being able to be sovereign and having this technology. The question is about the interaction of this because we need this, right? Is we cannot live in an anarchic world. No one is able to produce everything on their territory. So, there is a need of exchange. And this is the big question, if we go towards this direction of disruption and fragmentation, how this can work in a, in such a world of connectivity that we build in the last 50 years.
Kathleen, as former foreign minister for a small state, what does that balancing act look like of protecting the local industry while also ensuring, sort of, global market access?
I mean, for me, from a political point of view, it's more about the question around sovereignty, which I kind of mentioned earlier on. You know, I mean, there are benefits, we discussed them before, benefits in what you just mentioned, Maro, but also like the sovereignty aspect, right? Is a state still sovereign? And I, I believe, I mean, sovereignty is no longer just about borders, right? And I think that's something that a state and a foreign minister needs to be aware of. And of course, it's about who controls the digital standards, and it's about the critical data and the algorithmic infrastructure as a whole. And I think that's what the European Union is also pushing towards, like a regulatory sovereignty, aiming to shape global tech governance, um, through normative power rather than sheer market size, right? And that's what the European Union is trying at the moment to, to achieve. But of course, conflicts are becoming hybrid. And I think that's also something that really makes it harder to grasp because it's just disinformation, cyber attacks, right? Digital disruption. And of course, um, yes, all the big things that we've just experienced in the last couple of months, also, we weren't sure what happened with that, for example, airport, right, a while ago. I mean, no one is really aware. So, that disinformation and also the media plays a big role. And I think some, that's something that states, specifically politicians, need to be, need to take into account. And of course, the smaller the state, again, the smaller, the shorter the lines, the easier maybe to communicate, but also the risks, yes, I mean, economic inefficiency, digital fragmentation, over protection, but also bureaucracy can be a risk, right? Being too bureaucratic rather than a speed ship out there. And Liechtenstein always tried to be regulated or at least, um, um, powered through a, through a parliament and through a government that tried to be a small, small speed ship out there. And I think that's what matters. Time is, time is very critical.
Now, Phillip, on the, sort of, corporate, on, on the corporate side of things, how do companies navigate a period with high levels of uncertainty when it comes to, um, jurisdictional conditions, market access, etc.?
You know, I don't think there is a silver bullet. I think that you have to, to make assumptions. You have to try to guess. It's a, it's a, I think that now, one of the, of course, the very, very big uncertainty, the tariff from the USA. I mean, for instance, if you're a pharmaceutical Swiss company, are you going to invest, I don't know, 100 million in USA and you don't know what will happen in two years? Maybe after the midterm, it will be something different. After four years, Mr. Trump will be gone. So, are you going to make this major investment that will take four years to, to implement? Or you? So, I think that big and small company, uh, because of this uncertainty, they are all sort of in a, in a very difficult situation and have to make a lot of assumptions and take a lot of risk based on those assumptions.
Certainly. Now, Maro, I'd like to zoom in on, uh, a topic that we touched on briefly earlier, and that is the weaponization of platforms through disinformation, deep fakes, and different influence operations. Um, how is this changing the nature of soft power and diplomacy?
So, at the moment, there are five domains of operations: so land, sea, space, um, cyberspace, and then we are entering also the domain of cognitive operations. So, now states call this cognitive warfare. So, if this is in, in the period of a war, uh, or cognitive supremacy, if we are in a pre-conflict situation, right? The goal here is to polarize populations, is to create a distrust, is to, um, actually to create, um, a social problem in the opponent without using the typical war capabilities. So, this is happening. We see, uh, many of these examples. So, from the 2016 election in the US, Cambridge Analytica example, from microtargeting. Uh, we see that the population are polarized. COVID-19 was a high situation of polarization, and states are using, and non-state actors are using these means to continue polarize and destabilize societies. And that is the new, the new mantra in, in armed conflict or prior arm conflict. And the arrival of AI, it's exactly matching this situation of influencing, uh, brains. This is matched also with other technologies that are evolving very rapid the last 20 years. I'm thinking about neuroscience and neuro technologies, cognitive psychology, and everything united with AI that is generating this capability of of faking, of of not relying anymore in a, in a very trust source of information. It's creating this situation of, I don't know anymore where to get my reality in this space. So, and this is the, the new situation we have to live in. And we have to find mechanism to defend the population, or the population has to find mechanism to defend themselves against this cognitive manipulation, which is not easy because in a cybersecurity environment, you don't have to spend the cognitive energy to defend yourself because you have an antivirus, right? It's doing everything. In the cognitive space, you have to invest yourself and spend your energy to be able to understand if this is a fake news, if this is something that you can trust or not, and avoiding to be polarized in one or the other direction. So, having more empathy toward the others, and, and all, all these kind of mechanism which request the investment of each and one in, in protecting themselves. We're here, and here is a, is a, is a big shift compared to the cybersecurity, to the cognitive security.
Now, we're slowly but surely coming to the end of our discussion, but to close us out, I'd like to ask one final question. Um, Katrine, you, as a former member of an EU, you know, of an EU, uh, member, as a former government representative of a former EU, uh, member state. How should international institutions evolve in order to help govern cross-border technological challenges that we are now seeing slowly but surely arriving around data governance, AI ethics, etc.?
Yeah, very quickly. Maybe Liechtenstein is not in the European Union. Sorry, no worries. We are, um, in the European Economic Area together with Norway and Iceland. It's like the little door, not the big one. Um, for smaller states, we are here in Switzerland and a non-European Union member, right? Having stayed neutral, tried to engage them as much as I could for our Brexit conversations and negotiations and so on. So, we're trying to really, um, be closely connected to Switzerland also, of course, but, yeah, I mean, what, um, is needed, right? We need definitely governance frameworks that move beyond, um, national states and include civil society. That's what we tried to do in Liechtenstein. The private sector, we included the private sector, and we included the technical experts, right? And I think that's key because I believe AI ethics, um, everything that comes next, cross-border data flows, right? I mean, big conversations around digital trade that cannot be resolved by national, national law alone. So, um, that's very important. I believe that we are really inclusive, we're including all the different sectors. And very importantly, I mean, you guys, everyone in this room, but not only you, everyone around this globe that has internet is filling those data centers, right? Data is key, data power. We've got two big powers out there that are pretty much, um, ahead of everything. But we just discussed that later before. Sorry, Maro. I think how many on earth are not yet having internet access? So, we have a penetration of 67%. So, meaning, all 30-something are still not connected. Wow. Yeah. 67% of this earth are not yet having internet access. So, who is playing this game, right? The 32 percentage out there, the privileged ones. And sometimes we just need to remember also as citizens, we are extremely privileged. Please make the right thing out of this new era. Make it correct for the next generation to come, but not only also for the ones that are not in that inner circle.
Indeed. Thank you all so, so much. It's been a real pleasure. What a way to kick things off this morning. We hope it wasn't too heavy a discussion, uh, in order to get the day started. Let's give our panel a very warm round of applause.
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