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"One country, two networks" : China and the internet, a threat or opportunity to sovereignty? Rausenberg, Esther 2004

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"One Country, Two Networks:" China and the Internet, A Threat or Opportunity to Sovereignty? by Esther Rausenberg i BA, Simon Fraser University, 1982 A THESIS SUBMITTTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTERS OF ARTS in Department of Institute of Asian Research; Programme, Asia Pacific Policy Studies THE FACULTY OF GRADUATE STUDIES We accept this thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA April 2004 © Esther Rausenberg, 2004 Library Authorization In presenting this thesis in partial fulfillment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. Name of Author (please print) Date Year: A B S T R A C T "One Country, Two Networks:" China and the Internet, A Threat or Opportunity To Sovereignty? The purpose of this thesis is to determine whether there is a direct correlation between state sovereignty and the Internet and whether the Internet, which includes commercial initiatives will weaken state sovereignty in China. Through an analysis of the influences of state sovereignty such as globalisation, nationalism, power and territory, the first chapter contends that these factors are contributing to strengthening state sovereignty. In fact, the shape of state sovereignty may be retrenching to familiar territory and not eroding, as some contend. This notion is further reinforced through the examination of information communication technologies and the unique characteristics attributed to the Internet. It is further supported in the analysis of Singapore and Malaysia, two countries that have successfully balanced state control with the development of the Internet and e-commerce initiatives. The conclusion restates the main aspects that impact on nation-state sovereignty. It posits that various information communication technologies can actually serve to fortify state authoritarian control. iii TABLE OF CONTENTS Abstract ii Table of Contents iii List of Abbreviations iv Preface v Acknowledgements x C H A P T E R I State Sovereignty 1 1.1 Introduction 1 1.2 The Invisible Complex of the Global State 7 1.3 Factors of Influence: Nationalism, Power and Territory 20 1.4 Cyberspace, Information Sovereignty and National Security 27 1.5 Asian/China Context 34 1.6 Summary 37 C H A P T E R II The Information Communications Technology Revolution 41 2.1 Introduction 41 2.2 Overview - Communication Regulation and Deregulation 41 2.3 Analysing Cyberspace 44 2.4 Internet Controls and Properties: Unique or not? A threat or not? 48 2.5 Summary 59 C H A P T E R III Sovereignty and the Regulation of E-commerce 62 3.1 E-commerce Background 62 3.2 The Global Market-Place - Commercialization of Cyberspace 64 3.3 Is Cyberspace a Tax Free Haven? 66 3.4 Geography and Jurisdiction 69 3.5 Transparency and Accountability 70 3.6 Summary 72 C H A P T E R IV Singapore, Malaysia and China 74 4.1 Introduction 74 4.2 Singapore Background 76 4.2.2 Analysis 79 4.2.3 Censorship and Self-Censorship 83 4.2.4 Summary 86 4.3 Malaysia Background 87 4.3.1 Cyberspace Development 87 4.3.2 Draconian Laws, Cyber and Otherwise 90 4.3.3 Self- Censorship 92 4.3.4 Summary 97 4.4 China - Feeling the Stones While Crossing the River 99 4.4.1 Telecommunications Overview 100 4.4.2 China's Internet 103 4.4.3 Summary 111 C H A P T E R V Conclusion 114 Works Cited 116 iv ABBREVIATIONS ALA American Library Association CPC Communist Party of China CIA Central Intelligence Agency DARPA U.S. Defense Advanced Research Projects Agency EU European Union FCC Federal Communications Commission GATS General Agreement on Trade in Services GATT General Agreement on Trade and Tariffs IANA Internet Assigned Numbers Association ICANN Internet Corporation for Assigned Names and Numbers ICP Internet Content Provider ICT Information Communications Technology IMF International Monetary Fund ISA Internal Security Act (Singapore and Malaysia) ISP Internet Service Provider JARING Joint Advanced Research Integrated Networking Project MCMC Malaysian Communications and Multimedia Commission MM Ministry of Information Industry MOFTEC Ministry of Foreign Trade and Economic Cooperation NAFTA North American Free Trade Agreement NATO North Atlantic Treaty Organization NGO Non-Government Organization NPC National People's Congress OECD Organization for Economic Cooperation and Development PAP Peoples Action Party (Singapore) PLA Peoples Liberation Army PRC People's Republic of China SBA Singapore Broadcasting Authority UMNO United Malays National Organization UN ' United Nations WB World Bank WHO World Health Organization WTO World Trade Organization WWW World Wide Web W 3 C World Wide Web Consortium PREFACE v "Only by establishing our independent national information network and achieving the goal of "one country, two networks" (Internet and independent national information network), can the security interests of our country and nation be guaranteed under the new opening situation." Chinese President Jiang Zemin, (Lugong) The purpose of this thesis is to examine the contention that the Internet is an entity that can radically transform and erode sovereignty and the nation state. It will refute the prevailing theory that the presence of the Internet inevitably results in a progressive decline in Westphalian sovereignty.1 Nor does the advent of the Internet necessarily provide the catalyst for a radical change in state ideology. The findings in Chapter I acknowledge that state sovereignty is transforming, but also supports the notion that changes in "state" are on-going. Further, it will propose that in some instances, the Internet can even strengthen sovereignty. Referring to the nations China, Singapore and Malaysia, the paper examines and analyzes several key influences that intersect with sovereignty such as nationalism, territory, power, non-state actors and globalization. At the same time, it will demonstrate the primary elements that these states have implemented in order to retain state control such as self-regulation, censorship and indirect legal mechanisms. Chapter II reviews how the Internet has evolved to a state that is different from its genesis as a resource for research. Today, this intangible space has become highly commercialized. There is little question that the Internet is having a profound effect on economic globalization, and that it is an agent for change. Like any significant medium, such as television, radio, phones etc., it has impacted and transformed daily lives. There are specific properties to the Internet, however, that differ from these other vi mediums. These include speed, borderless, anonymity, language, customisation, and volume. These distinctive properties can, and do, disrupt the established order. It is these differing and sometimes elusive attributes that have contributed to a plethora of theories, proclaiming that the Internet will have profound effects on the nature of "nation-states" and that the ubiquitous nature of the medium will permeate systems and organizations to such a degree that it will eventually lead to the erosion of sovereignty as we know it. This would move authoritarian states towards greater democracy and, as some would argue, towards a "borderless world." In reviewing the properties that make up the Internet in this paper, the argument will be made that there are other intangible notions, such as nationalism, power, culture and history, that combined contribute significantly to both the maintenance and development of a nation-state. Historically, this has been proven in the aftermath of both the Korean and Vietnam wars. In each instance, it was a costly lesson for the United States to realize that force-feeding an ideology onto a culture would inevitably meet with resistance and tragic consequences. As the U.S.'s former Secretary of State Robert McNamara stated, "The Korean and Vietnam wars are only two - monumentally tragic -cases where ideological constructions of freedom and liberation have left a mark on world history." (McNamara 322) In Giacomello's and Mendez's research article, "State Sovereignty in the Age of the Internet," they advanced the notion that "politics matters" and point out that circumstances within any given state are complex. They posit that Internet growth does not immediately translate to the erosion of state authority, but in some instances can even strengthen control. They supported their hypothesis by analysing four cases in which the Internet has contributed to increasing and/or decreasing sovereignty: 1) 1 See Johnson and Post. vii domain names and Internet governance systems2, 2) French Yahoo!3, 3) taxation, and, 4) cyber-crime. These four cases-appear to support the validity of their hypothesis that, "it is thus imperative to analyze the process of "politicization" of the Internet in order to identify the correct causal explanation." Others, such as Drake, Kalathil, and Boas, through their comparative analysis of "Dictatorships in the Digital Age: Some Considerations Focusing on the Internet in China and Cuba," arrived at similar findings. Kalathil and Boas further explored the question in the paper titled, "The Internet and State Control in Authoritarian Regimes: China, Cuba, and the Counterevolution." They surmised, "...Many authoritarian regimes translate a long and successful history of control over other information and communication technologies into strong control of Internet development within their borders." (n.pag.) Chapter III, through its historical review and analysis of cyberspace today further reinforces this notion. In Chapter IV, this paper expands on their hypothesis that politics, history and culture matter through the examination of two states; Malaysia and Singapore. These states were selected for the reasons that the former is a loosely regulated model, and the latter a more highly regulated one. This analysis will explore the specific "political, cultural and legal4 constructs" such as national security, censorship etc. of these two countries, which allow them to maintain political control while still engaging in extensive 2 These include the Internet Corporation for Assigned Names and Numbers (ICANN), World Wide Web Consortium (W3C) and the Internet Engineering Task Force (IETF). 3 The French courts ruled in favour of prohibiting the display of Nazi memorabilia on the French Yahoo auction site. French users continue to access the auction site through the general Yahoo site. French officials threatened Yahoo with fines if it failed to implement measures. See "Law, Cyberspace and the Role of Nation States," by Michael MacNeil, 2001. 23 Mar. 2004 4 The examination will touch on numerous laws that have been enacted to secure control over the Internet and the state. It should be noted that it is only a review.of the various legislation that supports the hypotheses. Academics such as Cox support the question of cyberspace and its impact on national sovereignty through legal precedents. His findings support the notion that cyberspace is a threat to state ^ sovereignty and that economic and legal decisions in respect to this medium will have be made through international organizations. Vlll e-commerce activities. It will summarize by drawing parallels between these two countries and the current situation in China. Building on the aforementioned exploratory studies it supports their findings on the complex nature of the relationship between the Internet and sovereignty. In Chapter V it draws this conclusion: even though nation states are increasing their interactions legally5, economically and otherwise with non-state actors and trans-border activities, nation states are not moving the world closer to one that is without flags, borders and nations. Thus, the process of economic globalization is synonymous with neither liberalization nor democracy. There are many other variables at play, such as nationalism, culture and religion. These forces significantly infringe and impact on the varied nature of nation states. "We viewed the people and leaders of South Vietnam in terms of our own experience. We saw in them a thirst for - and a determination to fight for - freedom and democracy. We totally misjudged the political forces within the country. We underestimated the power of nationalism to motivate a people (in this case the North Vietnamese and the Viet Cong) to fight and die for their beliefs and values..." (McNamara 322) Faced with a world that is propelled by the forces of economic globalization and e-commerce, these Asian countries have carefully managed the integration of information communication technologies (ICT's). In respect to China, the central government has reformed dramatically since Deng Xiaoping's reign, but although China has opened up economically, it has neither significantly liberalized nor diminished its political control over the populace. Today, China's government is in the process of extensive reconstruction, but it continues to remain a dominant force domestically. At the same time, China is becoming a major actor internationally. China's political power 5 See Cox's analysis from a legalistic perspective on international electronic communications law. ix brokers, like many other nation states, continue to abide by the conviction that sovereignty is an essential requirement to their country's security and prosperity. What this translates to, for China and for policy-makers whose interests are in China, is the recognition that, although China is undertaking dramatic changes on the economic front, it is not necessarily changing on the political front. Economic activity, and in particular e-commerce, will require certain changes, such as a greater demand for transparency and accountability. However even with e-commerce activities, nation-states can continue to develop economically while still maintaining authority and control. The Internet through e-commerce activities can contribute to change, but it is not an agent of change. The question remains, is China's sovereignty threatened by the incursion of the Internet and the development of economic activities such as e-commerce? ACKNOWLEDGEMENTS x I would like to extend my deepest appreciation to Dr. Pitman Potter without whose comments and guidance I would have never completed this thesis. I would like to thank Dr. Scott MacLeod for his encouragement to pursue graduate studies. I would also like to thank Morgan Ashbridge and Eryn Krieger for guidance and friendship. Finally, I would like to thank Richard Tetrault not only for his unwavering support and encouragement, but also for making so many things possible. \ CHAPTER I State Sovereignty "It is crucial to remember that the modern international society was not just a society of sovereign states but a society for sovereign states, with its most basic role that of legitimizing and protecting their sovereign status." (Armstrong 32) 1.1 Introduction This section of the paper will primarily examine concerns surrounding the communication sector, and the potential impact this sector poses on the loss of domestic, or what is often referred to as "Westphalian," sovereignty.1 It will examine the relationship between the conventional authority of the state and the impact, through contemporary technology and communications, on that state. As well, it will look at control, particularly through the development of "interdependence" sovereignty. The latter is reflected in the instance of external bodies. The World Trade Organization (WTO), Internet Corporation for Assigned Names and Numbers (ICANN), and other new external challenges to this control as posed by the Internet, are examples. The entities and external bodies reviewed are primarily those that have an impact on regulating communications systems. Specifically, these are focused on e-commerce activities. It is difficult to pinpoint precisely what aspect of sovereignty could be eroded. The forms mentioned above all have underlying norms, principles and rules that are intertwined. (Alagappa et al. ch. 3) In other words, there is no clear demarcation between the different types of sovereignty that can be conveniently confined within a bordered definition. 1 See S. Krasner, for an elaboration on the distinctions between the four types of sovereignty -international legal sovereignty, Westphalian sovereignty, domestic sovereignty, and interdependence sovereignty p 1-2. 2 For the purpose of this paper, the term sovereignty, in an international context, can be defined as those forces that concern control and authority2, both domestically and internationally. In other words, it embodies supreme internal authority and immunity from external influence. (Alagappa et al. 107) "Westphalian sovereignty" refers to the absolute control over a states' territory. At this time, it is questionable whether there is any state that has been able to maintain an autonomous and independent system, allowing for healthy and viable economic development. But sovereignty is not just about economic development. Today, very few states operate within a vacuum. Therefore, one could argue that all states have entered into some degree of what Krasner defines as a "voluntary compromise of their polity." Key here is the power and authority that a nation state must exert to meld important connections, and the impact and repercussions that action might have both domestically and internationally. Given the complexity of the global stage and its myriad of non-state actors, it is challenging to determine the impact and influences that existing and new external organizations may have on a defined and recognized nation-state. Many possibilities are unknown. In this global playground, there is a potential for a domino effect that could inadvertently impact, many actors and states. States can be affected indirectly, without the ability to react or respond in a constructive manner. However, it can be argued that the converse is true, and that an increase in the sheer volume of players currently vying for recognition makes it virtually impossible for those non-state actors to take control. This vastly diminishes the degree of impact these players might have on any given state. In other "Embedded in these various usages of this term is a fundamental distinction between authority and control. Authority involves mutually recognized right for an actor to engage in specific kinds of activities. If authority is effective, force or compulsion would never have to be exercised. Authority would be coterminous with control. But control can be achieved simply through the use of brute force with no mutual recognition of authority at all. In practice, the boundary between control and authority are hazy." (Krasner10) 3 words, an increase in players might ultimately lead to a decrease in effectiveness, as the subsequent impact might be diffused over many actors. The two notions that are presented are purely speculative. Given the complexity of relationships and the numbers of external actors, it remains extremely difficult to evaluate their potential impact. Essentially, many variables would have to be considered in order to determine the impact on a state's ability, or inability, to control its territory. Economic interdependence and non-state actors are a few factors. Those who argue that sovereignty, as we have come to know it, is on its deathbed, are rushing to conclusions by disregarding the importance of elusive elements of history, culture, and nationalism. What leads to an erosion of sovereignty? Few could refute the fact that, over the last century, both the structure of the state and the playing fields have changed dramatically/However, divergent opinions exist. Many have argued that state sovereignty, in light of technological change, is an outmoded, archaic system that is on its way to extinction. Technology has not necessarily contributed to the nature of military and territorial control, the foundation of the nation-state as we presently know it. It has not been a significant contributing player in the erosion of a state. (Krasner 12) Other more extreme views, such as expressed by Omhae, are that the state is on its way to becoming extinct, and that non-state actors are gaining greater control and authority. One of the main forces that have profoundly impacted a changing global structure is this very technology. However, although technology has changed drastically, many aspects of decision-making and state control have not necessarily 'kept pace'. There is little doubt that the essential make-up of a nation-state is dramatically shifting. Change, 4 compromise, and the subsequent revisions of states, however, does not, either directly or indirectly, equate to a loss of power and authority. Neither do these factors necessarily imply a 'violation,' an essential catalyst in the diminishing of sovereignty. Krasner proposes that sovereignty can be violated in one of two ways. These are either through intervention or through invitation. Intervention is not only by way of force, such as by military means. Intervention can also be enacted by more subtle and in-obtrusive means. These can, for example, take the form of economic sanctions. South Africa and Cuba are recent examples of nations whose economies have been dramatically impacted through the imposition of this form of external intervention. Boycotts and embargos can have considerable effect on the efficiency of any nations' economy. By ways of invitation, on the other hand, it is debatable what a contemporary nation state can and cannot accept. In many respects, there is a fine line between voluntary invitation and necessary invitation. This contradictory term suggests the inescapable forces that come into play at all times, and in a myriad of instances world-wide. One might argue that there is very little that any state cannot accept. States have moved into a new realm. A states, "...inability to regulate the flow of goods, persons, pollutants, diseases and ideas across territorial boundaries has been described as a loss of sovereignty." (Krasner 12)3 Even though a state has been successful in maintaining territorial distinction (maintaining boundaries), and border control (certain goods and people), it is equally as critical for the state to maintain some form of control over that which flows electronically across their borders. Some of those transactions and exchanges, such as e-commerce activities, are largely invisible. 3 See also Mathews, J . T. (1997): "Power Shift" in: Foreign Affairs, vol. 76, no. 1, p 50-66; and, Wriston, W. B. (1997): "Bits, Bytes and Diplomacy" in: Foreign Affairs, vol. 76, no. 5, p 172-183. 5 Today, the sheer volume of transactions in communications and goods is overwhelming. This traffic is increasing exponentially through the development of e-commerce activities. In accepting and developing e-commerce activities, states have inadvertently accepted a development that has few controls and restrictions. It is this perceived form of anarchy that many argue will insinuate itself into a state infrastructure, thereby eroding its authoritarian structure; in other words, through invitation, both voluntary and necessary. Krasner supports the above notion by stressing two key points. "Increases in transnational flows have not made states impotent with regard to pursuing national policy agendas; increasing transnational controls have not undermined state control ... Unregulated trans-border movements do not imply that a state is subject to external structures of authority, which would be a violation of Westphalian sovereignty. Rulers can loose control of trans-border flows and still be recognized and be able to exclude external actors." (13). Given the sheer number of "non-state actors" and states, states today might move towards compromise, but compromise does not infer loss of control and absolute authority. Rulers can voluntarily compromise the autonomy of their own polity. (Krasner 7) Voluntarily accepting change or compromise does not lead to an erosion of state. Nor are the two notions a product of globalization. Ultimately, the authorities are making the choices and decisions. In respect to the Internet, the relationship that the current governing bodies have to a state and its sovereignty is particularly intriguing. The Internet is neither a state, nor an international legal entity, nor an external body. The Internet is connected to several organizations that partially regulate certain elements of the system. However, unlike traditional communications systems such as radio, telephone etc., the Internet is more of an abstract medium. It is a concept that, to date has eluded traditional regulatory 6 methods. And although filters and screening have become more common, such as is evidenced through the American Library Association (ALA)4 and its mandate to implement a degree of screening, the Internet continues to defy most manners of policing. By nature, it is both anarchistic and elusive. These intangible characteristics are what make it a challenge in defining its relationship to a nation state, and the impact it may have on sovereignty. Given the current myriad of players, many of which are formulated in a reactive and haphazard manner, it could be argued that, in the absence of global and/or international norms, restrictions and regulations, authoritarian states are now able to exercise even greater control. This is attained by developing regulations that will not only maintain the status quo, but augment it. E-commerce activities can provide states with numerous avenues of control, such as taxation, surveillance, and state-imposed regulations. This paper supports the argument that states remain 'relevant,' even in a contemporary and interconnected world. Regardless of the influences of e-commerce and the Internet, states and borders continue to exist. Religious, ethnic, ideological, political and social factors all contribute to the existence of national boundaries and the demarcation of territory. They provide a framework of rules for governing themselves and the Internet, and these can be altered and changed as deemed necessary. In the last few decades of the previous century and now into the 21 s t century, these controls are even more pervasive and tenacious. The intangible elements of power and nationalism support the concept of nation state more fervently then ever. This is evident 4 The A L A has a filtering system for pornographic sites. 7 not only in authoritarian states, but also in democratic ones. In a time of heightened security and control post 9/115, there has surfaced an unprecedented legitimacy for the persistence of "state". Additionally, several Asian states, including Singapore, China and Malaysia, firmly subscribe to the notion of "Westphalian" sovereignty. Furthermore they can, and do successfully develop e-commerce initiatives without surrendering or compromising their sovereignty. 1.2 The Invisible Complex of the Global State Globalization has been characterized as a phenomenon having powers that for the most part are beyond quantification. The effect of globalization has a profound influence on the social, cultural and political environs, posing fundamental challenges to governance and sovereignty. There is little question that tensions arising out of globalization have, to some degree, at least, impacted on the economy of states. "Two notions underlie much of the current discussion about globalization. One is the zero-sum game: whatever the global economy gains, the national state loses, and vice-versa. The other is that if an event takes place in a national territory, it is a national event, whether a business transaction or a judiciary decision..." (Smith et al.158) Much of the discourse revolves around these two polarities. This debate centres on the degree of impact and influence globalization has within a state. Nye and Keohane, in the introduction for "Governance in a Globalizing World," define "globalism" as a state of the world involving networks of interdependence at multi-continental distances. These networks can be linked through the flow and influence of capital and goods, information and ideas, people and force, as well as environmentally and biologically relevant substances (such as acid rain or pathogens). In addition, 5 On September 11, 2000 the twin World Trade Towers in New York City were attacked by terrorists. 8 globalism has two special characteristics: 1) Globalism refers to the networks of connections (multiple relationships), not simply single linkages. 2) For a network of relationships to be considered "global," it must include multi-continental distances, not simply regional networks. Globalization, thus, refers to the shrinkage of distance, but on a large scale. (Nye and Donahue) From the onset, it must be made clear that there is no formalized and accepted national global state. There are many institutions, organizations and transnational companies that orbit around defined and established nation states. These extra-territorial or non-state actors are now part of an economic complex whose tentacles are far-reaching and expansive. Today, they are ubiquitous, and for the most part an accepted part of the global infrastructure. The greatest concern regarding these global actors is accountability and transparency. Given that many are only loosely rooted within the boundaries of any given state, who, how, and what laws govern these institutions and businesses is relevant in determining their influence. How and who are "institutionalizing the "rights" of non-national firms, cross-border transactions, and super-national organizations" (Smith et al. 158) remains a question mark. The intersection of global actors and national law has come to a critical juncture, with each vying to position and assert their authority and control. The conflicts are just emerging, however, and the rules of engagement are in an ongoing state of revision, negotiation and debate. States are key players in this debate. Today, there are many different types of non-state actors. Some of these organizations are made up of other nation-states, while others remain bound by various treaties. The complexities and varying structures are immense. As will be illustrated further in this paper, there are a myriad of non-state structures that have developed, resulting in an increasingly complex global infrastructure that is interconnected and 9 interdependent. Having said this, the question is, does the increase in non-state actors in essence add up to the "withdrawal of the state from regulating its economy?" (Smith et al.158) What many analysts and academics such as Ohmae are now suggesting is, "the world's nation-states no longer dominate the global economy-they do not even give good multiples in the invisible continent...The economy of the invisible continent no longer needs to mediate through a national government apparatus, and national leaders can no longer compel economic fealty from their citizens, let alone from their companies." (122). He further goes on to say, "Instead, wealth will accrue to nation-state government only when they learn to let go." (Ohmae 133) In other words, nation-states must relinquish their control and give way to the invisible hand of the non-state players. As is evidenced from the following analysis, this hypothesis is somewhat short sighted and misleading. It appears to have been formulated from the premise that, in this new economic geography, nation-states are powerless and passive. It suggests that states must surrender unequivocally to this new and as-yet undefined global super structure. Although not the prevailing theory, some analysts present a different perspective to the discussion on the complexity of these issues. Equally relevant, and often overlooked in the debate, is the question, "does the presence of non-state actors actually enhance aspects of sovereignty?" States are not becoming obsolete. Changing, yes, and even in some instances solidifying and strengthening their power base. But how is this possible, given the challenging transformations and, to some extent unknown, forces of globalization? Some argue that, "...a key part of the global economy does not cross borders, or does not do so in the ways that investment and trade do, but are located inside national economies. Further, they tried to show how even the most digitized global financial 10 market is grounded in a set of very material resources and spaces largely embedded in national territories." (Smith et al.159). They substantiate their notion by stating that, "The strategic spaces where global processes are embedded are often national; the mechanisms through which new legal forms, necessary for globalization, are implemented are often part of national state institutions; the infrastructure that makes possible the hyper-mobility of financial capital at the global scale is embedded in various national territories." (Smith et al.167) In other words, it continues to be nation-states that are setting the boundaries and the rules of engagement and not some external body that is setting the agenda. States are unquestionably responding and reacting to external activities. But they are not at the point, as many have determined, of having restrictive choice, or even no choice, in the decision-making process. For the most part, states have become voluntary compromisers. This is largely due to economics, with technology playing a supporting role. The role of the state in accepting and cooperating with various non-state actors can be in different instances, either equitable or inequitable. Regardless of diverse power relationships, states continue to yield and maintain the sovereign right to decision-making. "The political world is a complex pattern of mutual and conflicting interests among states of varied power, and in certain issue areas there are quite simply not the common interests to sustain significant forms of cooperation. However, from the complex pattern of interests and international regimes in some issue areas do arise." (Zacher 2) Compromised sovereignty takes place when a sovereign state concedes part of its domestic or external sovereignty to external actors in return for some practical benefits. It might make some concessions, for example, when there are trade- offs between empirical and international legal sovereignty. (Krasner 22) To achieve national goals of survival prosperity, or integration, countries may give up elements of their 11 domestic or external sovereign claims. (Alagappa et al.122) They illustrate this by three examples: 1) South Korea's military sovereignty to the U.S., 2) Japans' post-war commitment to renounce war as a sovereign right, and, 3) China's compromise by negotiating special status with Hong Kong. In some respects, given the extensiveness of a state's membership within the WTO, it could be posited that all signatories to that agreement have given up domestic control over trade and commerce. Historically, as will be evidenced from reviewing the global communications infrastructure, there has been a similar type of mutually beneficial cooperation. Cooperation between states is not a new phenomenon. There is little doubt that the geography of economy has changed, and that nation-states are vulnerable to new authorities. But they are not passive, and certainly not without authority and control. This notion infers that the process of globalization is a one-way street, where power and control flow from non-state actors to nation-states. It dismisses any role or part that a state has in the decision-making process. As much as companies and non-state actors can transgress from state authorities and in essence be rooted elsewhere or nowhere, as might be the case with the Internet, so too can states deal directly with those companies and non-state actors that are not bound by the restrictions, sanctions etc of other nation states. This example illustrates some of the paradoxes that exist in the globalisation debate. 1.2.1 Not a one-way street... Globalization is a back and forth exchange, with power flowing both horizontally and vertically. Times have changed and, "...we are moving into a new economy that is characterized by a new set of dimensions - one of cyber connections, economic multiples, and "borderless" cross-national activity." (Ohmae 235) Within this new economic paradigm, nation-states are establishing and creating new relationships with 12 non-state actors. Many, out of economic necessity, have responded to this new milieu, forging alliances and relations. Much of what Ohmae forecasted regarding the relevance of non-state actors could have been prophetic, had events such as 9/11, the Asian economic meltdown, and the crash of the high tech market not occurred. Today, however, given the fallout of these and other pivotal events, states have strengthened their determination to govern. There is a general recognition that the role of a state is greater then the market. With a few exceptions, such as the recent incursions into Iraq, states continue to respect the unwritten law of a state's rights to sovereign authority. One could even debate whether states were moving towards obsolescence, or whether the underpinnings of an ideology are pushing a prescribed agenda, that of capital market liberalization. This is not presupposing some kind of grand conspiracy theory. Rather, given some of the following analyses, it is difficult to conclude the notion that states have outlived their purposes. For many, globalization is synonymous with markets. But who is actually sitting at the table making the policy decisions and affecting change? These decisions are on a much grander scale then just the markets. These players are not equal to the decision-making capacity of the state. In fact, it is questionable as to what the vested interests these market-driven agents have. Considering the magnitude of globalization and its influence worldwide, where it can be involved in every aspect of market forming and controls, these agents hold a great deal of power without any of the parameters and guidelines that influence states. The ease of capital flight is one such example. "...states not only still matter, but it makes no sense even to try and remove them, either physically or conceptually, from the economy. There is no inexorable logic of competition, capital accumulation, or technological imperatives driving neo-liberal reforms. Rather, these policies reflect a political choice made by state authorities, chiefly in response to domestic and international pressures as well as peer pressure of global ideological conformity. Markets should not be essentialized, as 13 natural things or arenas that assert the abstract laws of capitalist economics. Rather, they are social and political constructs; markets are embedded in political and social relations. Perhaps most importantly, the state is necessary to keep markets functioning and capitalism from destroying itself since capital is often short-sighted and markets irrational." (Smith et al. 7) Markets, as illustrated from the following chain of events, are short -sighted. They do not factor in multiple variables that contribute to the governance and stability of a society and nation-state. Taken to a logical extreme, if states were to relinquish power and control to the invisible-hand of the global market and non-state actors, then commodities such as drugs, guns, pornography and prostitution, which some cultures and societies find morally reprehensible, would be given free rein. In respect to capital flows, one only need review the outcome of the 1997 Asian Economic Crisis. The mishandling of that situation by the International Monetary Fund (IMF)6 supports the notion that non-state actors such as the IMF with their prescribed and generic fiscal measures can prove more harmful to countries in crisis. Three critical facts became apparent shortly after the IMFs' attempt to remedy the situation: 1) Organizations outside of states lack accountability and that they do not take responsibility for imposing faulty remedies; 2) There are no repercussions for erroneous decisions; and, 3) Remedies were driven more by ideology than attempts to stabilize an economic crisis. (Stiglitz) Further, one could add that it was the pursuit of a singular fiscal market-driven ideology, lacking in any consideration for country-specific situations, which contributed to this misdiagnosis. Interestingly, countries such as Malaysia shunned the prescribed antidote and developed their own remedy to the crisis. It was the controversial policy to control capital imposed by the Malaysian government 6 For an analysis on current governance and reform issues facing the IMF and other similar institutions see "Governing Globalization - Issues and Institutions," by Deppak Nayyar, ed. (UNU World Institute for Development Economics Research, Oxford UP, 2002). 14 that prevented a collapse in the Malaysian economy. Despite protests and criticism from many analysts and authorities, Malaysia was one of the few countries that maintained its sovereign right to make critical decisions on behalf of its citizenry. Unfortunately, other countries, such as Thailand and Indonesia, accepted the IMF's remedies and suffered drastically as a result. States are not only in the pursuit of strengthening economic development. Many are also in pursuit of the maintenance of stability. "In particular, it is important to start from the assumption that states are concerned about protecting their political autonomy from military incursions, from major economic and social intrusions by foreign organizations, and from excessive dependence on foreign states for their well-being." (Zacher 29) The pursuit of stability supports the notion that it matters little what prevailing ideology exists within any nation-state. Governments are necessary and vital entities, with a requirement not only to build institutions, but to maintain and support them. It is irrelevant whether they are democratic or authoritarian. "A strong state is one with the capacity to formulate, legitimate, and implement crucial policies." (Smith et al. 246) For other states, it does not necessarily matter whether the regimes are authoritarian or democratic, as long as they provide an environment that is cohesive, responsive and stable. It is important to acknowledge that states argue for the continued existence of other states, as they provide a stable and known framework from which to work. "Without the state's acceptance of each other's sovereign authority within defined territorial domains, their network of diplomatic conventions for communication and international law-making, and their obligations to comply with international agreements and to assure compliance by their citizens, it would be impossible to generate the kinds of specific regimes that are increasingly prevalent and important in the sphere of international relations." (Zacher 2) As will be presented further in the discourse, both Malaysia and Singapore are pertinent examples. The debate regarding the state versus non-state actors, and who or what will ultimately reign is an ongoing one. Much of it based on international regime theory (Krasner,1983; Rittberger, 1995)7 There is little doubt that international organizations, non-state actors and others are playing a more prominent role. However, given the facts presented thus far, it appears that the state is not a passive onlooker, but instead continues to wield a fair amount of power. The state actively engages in activities that it renders beneficial. "One frequently noted difference between the two traditions is that realism8 is attached to the primacy of the state in international relations, whereas liberalism9 is associated with the view that non-governmental actors are increasingly becoming more important on the world political scene." (Zacher 17) It is difficult to predict which of these tendencies will prevail. Suffice to say that history has proven the liberalists wrong. What we have witnessed to date supports the realist's theory, that which underscores the pre-eminence of the state. Nowhere is this more evident then within the communications sector that up to the present has set the precedents of fostering, protecting and enhancing sovereignty 7 International regime theory attempts to understand how sovereign and equal nation states intersect with global governance and cooperation. Krasner in the journal "International Organization" (1983) defined regimes "as a set of implicit or explicit principles, norms, rules and decision-making procedures around which actors' expectations converge in a given areas of international relations." Rittberger argued that international regime theory, once thought of as a passing fad, has maintained exceptional stability and integrative capabilities within the discipline of international relations... See "Regime Theory and International Relations," edited by Volker Rittberger, Publish info Oxford: Clarendon, 1993. 8 See Cogburn's "Globalization and Governance in Cyberspace," where he defines the realist/neo-realist schools as "focussing on the importance of power in the formation and maintenance of international regimes." 9 See fn. 8 where Cogburn defines "the liberal school of thought focus primarily on the impact that international regimes have in the creation of peace and in reducing transaction costs. These scholars argue that while regime actors to have self-interests, they are able to see the possibility of creating a global environment where the majority of good can be created for the majority of actors through cooperation." 16 1.2.2 The Sphere of Non-state Actors Non-state actors and/or organizations include all the players that are currently not beholden to, nor are necessarily governed by, a particular nation-state. Their intersection, and the degree of interdependence with any nation-state, varies dramatically. Some only include nation-states as their members, such as the WTO. Others are non-governmental organizations (NGO's) such as Amnesty International. "For the most part, they are willing to initiate or accept norms and rules that make economic and political interaction within the system run more smoothly. Sometimes, they are even willing to establish collective organizations either to serve as forums (the UN, many regional IGO's), or to pursue shared functional objectives (WHO, WTO, IAEA). This social wiring of the planet underpins everything from diplomacy and banking to trade and tourism." (Buzan and Little 296) Other actors include those that are truly 'outside'. They are not only orbiting outside the geographic territories of nations but are orbiting around their own galaxy. This would include organizations such as the Mafia and the Hell's Angels. To some extent, parallels can be drawn between the Internet and these rogue entities. There is a certain degree of anarchy and chaos surrounding the application of the Internet. Regardless of the degree of legitimacy, many of these non-state actors operate, in one form or another, on the fringes of state control. Non-state actors/organizations play a role in shaping policy as well as in determining who obtains what. There is a critical distinction to be made between power and control from the primary, versus secondary or tertiary powers. The sphere of influence, although powerful and persuasive, is not the ultimate authority. How influential and effective they are, is key to this analysis. The context of the development of any organization is critical in understanding the degree of power and authority that it wields. Institutions were not created in a vacuum, and their structures and rules of engagement are specific to time, place and circumstance. 17 "Institutions are historically specific, and for this reason it is necessary to be sensitive to historical context. This is particularly true for the dynamics of institutional change. Much of the development path of societies is conditioned by their past. Even after revolutions, institution builders do not start off in a historical vacuum. At any moment in time, actions are constrained by customs, norms, religious beliefs, and many other inherited institutions." (Alston et al. 25) A good example would be the Bretton Woods 1 0 conference of 1944. This conference resulted in the formulation of the IMF and the World Bank (WB). These two institutions have been dominant and influential players in the international arena for over half a century. They are anachronisms and, although not the purpose of this paper, there is much debate and speculation as to the role(s) they will continue to play. In a recent study11 conducted by the World Institute for Development Economics Research which is part of the United Nations (UN), it concluded that that these institutions along with the UN, " operate on badly outdated political and economic foundations and need to be overhauled before a crisis induced by globalization forces the changes required." (Nayyar et al.) Non-state actors are similar to states, in that they too are not fixed entities and they need to respond to developments outside their realm of influence. Non-state actors are changing and responding, albeit some not quickly enough, to forces and challenges that confront them. There are many differences between non-state actors and the degree of legitimacy that are accorded them by nation-states. With few exceptions, their very existence is contingent on the recognition granted to them by nations. Without that I U The IMF and World Bank were created at a meeting of 44 nations in Bretton Woods, New Hampshire, U.S.Ain 1944. 1 1 See Nayyar. The policy brief contends that international institutions have not kept pace with the changes and challenges of the 21 s t century and require major reform in order to be effective today. In addition, it recognizes that there toady there are many more actors that go beyond the Bretton Woods Institutions who do not approach problems from the perspective of national interests. Therefore, global governance needs to go beyond cooperation between nation states in order to address the problems of cross-border issues such as organized crime, environmental changes, capital flows, migration etc. 18 legitimacy, many would cease to exist. Perhaps the most current example of this might be the UN, and the stance the Security Council took in respect to Iraq. The U.S.'s complete disregard and disrespect for the decision-making process virtually brought the organization to the brink of collapse. Given this situation, the UN has started to reposition itself, re-establishing its credibility and legitimacy as a major broker of international relations. In addition to non-state actors that operate within and respond to nation states, other actors exist that could be classified as "outside" the traditional regulatory framework. Some of these actors have legitimacy, in that the activities and initiatives they are involved in are respected and accepted by a broad range of individuals, irrespective of nationalities. "Between the two extremes of non-state authorities welcomed and opposed by states lie certain non-state authorities whose relation to governments is variable or ambiguous. An example (NGO's such as Greenpeace) are those powerful associations of international enterprises, the transnational cartels, which draw up rules-systems of governance in the current parlance - and actively exercise direct authority over markets and in some respects over their members." (Strange 94) The current organizations responsible for regulating the Internet fall into this list.12 Other non-state actors generally not included in the debate, but yet who wield enormous power over both individuals and states, are religious organizations. Religious authority and power over human behaviour can be both domestic and transnational. Malaysia and the role of Islam is a good example of this. Increasingly religious organizations are taking on more prominent roles and are impacting and influencing the dynamics of nation-states. Some would argue (Alagappa) that states are now competing with non-1 2 This is further explored in chapter iii. 19 governmental actors. However these non-governmental actors, regardless of the clout they might have, (such as the IMF), or how legitimate they might be, do not have ultimate authority in the decision-making process. Partly, this could be attributed to their somewhat abstract construct. One could argue that physical boundaries provide the state with power that could never be accorded to a state-less entity, regardless of the degree of legitimacy. A good example that supports this is China's recent accession to the WTO.13 "By facilitating accords, international legal sovereignty offers the possibility for rulers to secure external resources that can enhance their ability to stay in power and to promote the security, economic, and ideational interests of their constituents. The rulers of internationally recognized states can sit at the table." (Krasner 17) In the case of China's recent accession into the WTO, it has done just that. In addition, given that the WTO is in its infancy and is still developing the rules and regulations that will ground this institution, China will be a major power in that decision-making process. This is contrary to what many believed to be the impact of China's accession. It was viewed as China relinquishing, and therefore in the process further eroding, it's autonomy and sovereignty. These states aren't bound forever to these agreements, and they usually maintain a right to withdraw.14 Further, as recently evidenced from the last WTO meeting held in 2003, there was no consensus reached in respect to the agenda items. In the absence of any agreement, there is no change or movement. 1 3 China was accepted as a member of the W T O on 14 t h of December 2001 as the 144 t h member. 1 4 Note. Given that the W T O is relatively recent organization established in 1995, there have been no members withdraw. Many countries have threatened to withdraw and there are provisions in the agreement for this. It is interesting to note the situation for the U.S. In the "Uruguay Round Agreements Act" authorized the acceptance by the President of United States for membership in the W T O . The URAA, also contains provisions spelling out the legislative procedure whereby the statutory approval of the United States' membership in the W T O can be withdrawn. The statute functionally ties the withdrawal of the United States from W T O membership to the requirement of periodic reports (every 5 years) on the operation of the W T O and its effects on the United States. 20 Has the role of the state diminished in the world post 9/11, or has it actually increased? Many argue that the role of the state has diminished over recent years. This appears to be a myth. It should not be overlooked that, "The intrusions of governments into our daily lives in the 1990's, as compared, say, with the 1980's, is palatably greater. Statutory or administrative law now rules on the hours of work, the conditions of safety in the work-place and in the home, on the behaviour of citizens on the road." (Strange xi) Many states, regardless of ideology, have laws governing what some consider as infringements on basic civil liberties. The notion that a states authority is declining in the face of the authority of the market, and that technological change is the primary cause of this paradigm shift, is highly suspect. It is more rational to subscribe to the concept that; "...sovereignty is constantly being constructed and deconstructed through interactions among agents and between agents and structures. Neither the state nor sovereignty can be taken as a given. Rather the state as an agent and sovereignty as an institution or discourse are mutually constitutive and constantly being transformed and changed." (Krasner 49) There is little doubt that states have changed and mutated in response to the various influences that have affected them. As Strange summarized, there is, a) increasing intrusiveness of the state - the interventionist state in terms of daily lives, perhaps a response to, or compensation for, the loss of wider powers internationally; and, b) increased desire for statehood, especially amongst former Communist states and ethnic minorities. Once established, lack of any control or power is real. 1.3 Factors of Influence: Nationalism, Power and Territory In addition to control, authority and legitimacy, sovereignty is very much tied into nationalism. In other words, control, authority and legitimacy would be difficult to 21 maintain in the absence of a sense of shared culture, language, history etc.15 Various people might want to come together to trade, but they want to be independent politically and culturally. The notion of ...domestic sovereignty alone cannot satisfy the conditions of a sovereign entity (Krasner ch.1). "These goals of sovereignty dovetail with the universally accepted notion of national interests, which are often defined in terms of territorial and political survival, economic well-being and prosperity, and prestige and identity." (Alagappa et al.109) Nationalism "welded government and society together into a mutually supportive framework, and it strengthened the bond between state and a particular expanse of territory... Nationalism overrode more extensive, cosmopolitan forms of shared identity such as religion." (Buzan and Little 253) This paper will not review the different views on how national identity is constructed. Rather, it will operate from the premise that, broadly speaking, nationalism, that is people identifying with a place, people and culture, does exist. This process of identification is strong not only with individuals within a given territory, but also with individuals who are defined as non-resident. Nationalism is truly, "a tie that binds." Furthermore, as posited earlier in this paper, sovereignty is not just about economics. "The market economy could not function properly without the political framework provided by the state. National sentiments and loyalty provided the glue that gave social cohesion to the political framework." (Strange xii) Nationalism is an emotive concept through which nationalist loyalties are fostered and maintained. According to Keohane and Hoffmann (31), nationalism acts to stabilize 15 "By nationalism we mean the political ideology that locates the right of self-government in a people who share a common culture. Nationalism can come in ethno form, where the cultural group is seen as pre-existing, organic, Gemeinschaft in nature (Russian, German, Japanese for example), or civic, where shared identity is more a matter of contractual, Gesellschaft type agreement among those who participate in a given political system (most obviously in New World countries such as the USA, Australia, Brazil, but also in some ways, France." (Buzan and Little 252) 22 the world order because it provides social organization and a sense of belonging for government leaders, business groups and citizens. As long as distinct nation-states exist, people within geographical and ideological territories will identify with a distinct heritage. This in turn can, and does, undermine the efficacy of non-state actors. Today, we are witnessing a resurgence of nationalistic fervour throughout the world. As Kong and Yeoh stated, "it could be a time of reassertion of nationalism and the "heightening of nation-state building." In China, two recent incidents, the bombing of the Chinese embassy in Belgrade by Americans and the first Chinese man in space1 6 reinforce the notion that not only is nationalism tied to sovereignty, but also, that sovereignty is strengthening or reaffirming its status on the global stage. The prevailing view of globalization as being synonymous with Americanization is fuelling nationalistic fever. "Globalization is a term that can refer to anything from the Internet to a hamburger. All too often, it is a polite euphemism for the continuing Americanization of consumer tastes and cultural practices." (Strange xiii) "In the cyber-dimension, the key platforms are currently all American and the key intellectual content is also American, and written in the English language." (Ohmae 237) Further, Ohmae boasts that U.S. has a unique and beneficial position in this new economy. It is this real and perceived advantage that further perpetuates the fear of domination and contributes to an anti-American sentiment. This is of course not specific to China, but it does further contribute to strengthening nationalism, as well as to solidifying identity and place. 1 6 1 ) On May 7 1999, the U.S. inadvertently bombed the Chinese Embassy in what is now the former Yugoslavia. In China, protesters hurled gas bombs, rocks and insults at diplomatic missions of the United States and other NATO countries, as tens of thousands protested .in Beijing and provincial capitals throughout the country Chinese citizens across the country vented their anger by vandalizing and attacking Western property, including embassies, consulates, and companies. 2). The New York Times headline on October 15, 2003 read, "China Sends Man Into Orbit, Entering U.S. - Russian Club. The mission also carries broad political significance for the Chinese government, which hopes to win good will and inspire nationalism in its citizens, many of whom regard the Communist Party as an increasingly irrelevant political dinosaur. National awe and pride in this achievement was evident with the success of this mission. (Yardley) 23 The control of currency is both a symbolic and tangible example of a nationalistic tendency. "For much of recorded history, it has been almost as jealously guarded from the rivalry of others as the management of defence forces protecting the state territory and the conduct of relations with other states." (Strange 33) A recent example are the European countries that now are a part of the European Union (EU). Many of these countries have been reluctant to let go of their own distinctive currency, solely adopting the new "Euro". Largely, this can be attributed to the tendency to view a national currency as a symbol of the state. Eliminating control of the national currency further implies that there is a loss of autonomy and that "others" are now in a position to impose their desire/will to control the market. But is this the case, or is it no more than an illusion? Nationalism has continued in the post-War era with respect to regional and international agendas. With proposed global movements into politically contentious areas, nationalism continues to re-affirm a state's position. The success of any form of global integration depends upon the creation of a "global identity." Given the cultural histories and differences of states, this "global identity" requires that national identity be diminished. Diffusing or relinquishing national identity would be a difficult argument for global integrationists to make. Power is another key factor contributing to the maintenance of a nation state." It is said that it is easy to recognize an elephant - but much harder to define one. The same with power. We all think that we can easily recognize the exercise of power when we witness it though It is often true that those who have to give in to power of others will recognize power more readily than the top-dogs who have it and use it." (Strange 18) The question of who has it and what it is remains an elusive one. Politics and power are 24 not confined to politicians and bureaucrats. There'are also market powers, whose outcomes are determined or exercised impersonally, as well as the legitimate authority of non-state actors. "Power is simply the ability of a person or group of persons to affect outcomes that their preferences take precedence over the preferences of others." (Strange 17) This could be out of national interest, class interest, or, economic interest. Strange posited three points in respect to power. These are as follows: 1) that there is a growing asymmetry and disparities among and between states in terms of authority. "The authority - the "power over" global outcomes enjoyed by American society to that of any society or any other government." (Strange 25) Even though many, including Strange, believe that the U.S.'s power is in decline, the U.S. is still superior and is not going to easily relinquish its dominance and global control. There is an intangible element here; the desire to reign supreme. The U.S., like many states, is committed to maintaining its sovereignty, and it is not about to relinquish its power on a global scale. Historically, it is not only the U.S. that has sought a form of global domination. Until recently, Russia was a major player. Perhaps, as the global state geography changes, China will emerge as the next player waiting to step into this role. China has many advantages that could position it to become a leading power.17 2) That a state authority is weakened by technological /financial change, plus the integration into a single, global market economy. Much of this has been previously addressed. The analysis so far concludes otherwise. And, 3) that there exists a vacuum at the international level -fundamental responsibilities not discharged either by state, market or international institutions. "The diffusion of authority away from national governments has left a 1 7 There is much debate as to the role China will play in this century given that the Soviet Union has dismantled. China's influence has penetrated other Asian countries, it has nuclear capacity, and, an increasing population. It also has an outdated military infrastructure, and is still considered a developing economy. 25 yawning hole of non-authority, "un-governance" it might be called. (Strange 14) There is little question that a new phenomenon of diffused and ambiguous authority exists over the global political economy. There is this, but there is not a diminished competition for territory, or for control over natural resources of territory, as the "name of the game" between states as proposed by Stopford and Strange. The current U.S. war in Iraq is anything but that. Power does not always operate in a rational manner as it is largely driven by the desire to maintain control often at any cost. "Political systems confronted by socio-economic change can respond in a variety of ways, not all of which are "rational" from the perspective of enhancing the overall performance of the system. Political systems can simply ignore socio-economic change, leading to stagnation (both economic and political) and collapse. (Fewsmith 9) The former Soviet Union is a good case and could be viewed as a relevant example of irrationality in the quest for power. This, ultimately, was one of the factors of its demise. States are not the only institutions that exercise power, but I would argue that currently they wield the most. In some instances, those states will undertake irrational and illogical policies in order to maintain this power. Any analysis regarding sovereignty would be negligent if it failed to touch upon one of the primary foundations of any state, which is that of territory. "A final ingredient of sovereignty is territoriality, also a feature of political authority in modernity. Territoriality is a principle by which members of a community are defined. It specifies that their membership derive from residence within borders. It is a powerful principle, for it defines membership in a way that may not correspond with identity. The borders of a sovereign state may not at all circumscribe a "people" or a "nation," and may in fact encompass several of these identities, as national self-determination and irredentist movements make evident. It is rather by simple virtue of their location within geographic borders that people belong to a state and fall under the authority of its ruler. It is within a geographic territory that modern sovereigns are supremely authoritative." (Philpott n. pag.) 26 Defining physical borders in Asia, and specifically in China, has been one of the most contentious threats to sovereignty. Internal conflicts brought on by minority ethnic groups, such as China's controversial occupation of Tibet, and conflict over political and cultural differences, as in the case of Taiwan,18 could severely alter China's borders. China has adamantly asserted its control over Taiwan, for example, and it is symbolically viewed as an indicator of China's sovereign territory. "First, the world will continue for the foreseeable future to be organized politically into nation-states with sovereign governments. Second, increasing economic integration will continue to erode differences among national economies and undermine the autonomy of national governments." (Haggard xiii) It is easy to agree with the former as boundaries and territories have traditionally defined the nation-state and there is little evidence that this has changed. A country such as China, faced with many potential separatist threats, has been vigilant on all fronts in maintaining and preserving its borders. In respect to the second statement, I can concur to the extent that there will be binding agreements made that might affect the government of China and its ability to make decisions. But, the caveat here is that those agreements must be palatable to the citizens or the government, otherwise they will either find ways to avoid and or stall through legal mechanisms, and/or simply not comply. What recourse or power do other nations, or these various organizations, have in upholding the law and keeping nations in check? Compliance with certain agreements is a key issue, and it is inextricably intertwined with the concepts of nationalism, power and territory. Compliance, as well, requires the cooperation of states. 1 8 Since 1949, Taiwan has maintained it is independent of China. China, has maintained a "one-China" policy in respect to Taiwan's demands for independence. Taiwan will be conducting elections in March of 2004. The results generally are an indicator of Taiwan's future direction in respect to its' relationship with mainland China. 27 1.4 Cyberspace, Information Sovereignty and National Security Does the advent of the Internet represent a shift in sovereignty, from ruler to people? Can the Internet pose such a threat to a nation? The future of the sovereign state as we have come to know it, may be reaching a point of transition. In areas such as the environment, weapons procurement, civil and ethnic unrest, and human rights, there is both debate and action regarding intervention. In recent years, the world has witnessed pressures and military interventions, both condoned and not, by other states and organizations. Bosnia and Iraq are the two countries most recently affected by external forces. These interventions might further lead to an erosion of nation-state's power. Can the same be said for Internet intrusions, and for e-commerce activities? Modern global banking, and the new international economic realities it has created, challenge the world's political systems. International financial intermediation has multiplied a hundred-fold in twenty years. (Spruyt 183) They suggest that although economic interdependence might be high, it is subject to the interests of the state... If a state desires, they can extricate themselves from this economic interaction at any time.19 (Spruyt 188) Although a state has the option to extricate itself from many, if not all economic agreements, the resulting repercussions of the severance of an agreement is unknown. For some countries, it could be devastating. How a state responds to the aftermath of such an upheaval is both complex and situational. The degree of impact is unpredictable, and is contingent on the context. What is known is the response that 1 9 Recently there has been much debate in respect to the North American Free Trade Agreement (NAFTA) and whether it has or hasn't benefited the three parties involved. The country most affected is the U.S. There has been debate about the value of being a party to NAFTA. See fn. 14 withdrawing membership from the W T O . 28 states have had in respect to national security issues and liberalization of the telecommunications networks. This is a pertinent example of economics going head-to-head with the notion of state. National security is inextricably tied to sovereignty, and it is used to justify the complexity and rigidity of the regulatory framework and controls that are placed on communication systems. Within the communication sector, there are a myriad of international bodies. These are dating from the late 1900's, and cover all facets governing communications including jurisdictional rights, damage or interference problems, technical and procedure barriers and price and market shares. (Zacher 130,131) This is a fact that can be applied to any country. In respect to liberalizing telecommunication networks, two main areas of concern dominate the debate. These, not surprisingly, focus on issues of national security. First, would foreign control of a country's essential infrastructure produce a dependency on the service provision, thus threatening national security and dependency? And, where would the interruption of this service leave a country? Second, would state military and police authorities have insufficient control over the foreign-owned infrastructure to protect national security? (Janda 24) In order to respond to these questions, it is appropriate to review various examples from other countries. In the United States, the implementation of the Reference Paper (RP) 2 0 provides the U.S. Federal Communications Commission (FCC) the right to deny a license for international communications if there are national security, law enforcement and, even more worrisome, foreign policy or trade concerns raised by 2 0 The Reference Paper (RP) was negotiated in 1996, and is part of W T O Basic Telecommunications Agreement. The RP had three primary areas of concern: 1) anti-competitive behaviour, 2) interconnection and, 3) universal service. In addition, the signatories committed themselves to developing an independent regulatory structure, transparency of licensing criteria, and allocation and use of scarce resources. 29 the Executive Branch. Denial of a license based on national security or law enforcement is consistent with General Agreements on Trade in Services (GATS) provision regarding general exceptions (article. 14)(Blouin 25) The U.S., in its Open Entry Order of November, 1997, through the FCC has made it clear that national security concerns will be taken into account in the granting of licenses to foreign carriers: "We conclude we should continue to find national security, law enforcement, foreign policy and trade policy concerns relevant to our decision to grant or deny Section 214 and 310 (b)(4) applications from the WTO members. (FCC) GATS article XIV (a) general exception relating to public order and Article XIV bis security exception relating to essential security interests.21 While it is clear that this provision was originally meant to address threats to national security in time of war or other similar emergency. "Emergency in international relations" has been interpreted by many countries not the least the United States, as lying fully within the discretion of Member interpretation. This is the position the United States has adopted in defending the "Cuban Liberty and Solidarity Act" (Helms-Burton Act) as well as the "Iran-Libya Sanctions Act" both passed in 1996. (Janda 26) In addition to Article XIV bis, Article XIV contains a provision relevant to China's concerns: 'necessary to protect public morals or to maintain public order." (Janda 26) Through these articles, a nation has the necessary legal instruments to address national security concerns at the same time as it liberalizes the telecommunications market. It is of particular interest that the U.S included trade policy as being intertwined with national 2 1 "Nothing in this agreement shall be construed: (b) to prevent any Member from taking any action which it considers necessary for the protection of its essential security interests: (i) relating to the supply of services as carried out directly or indirectly for the purposes of provisioning a military establishment; (ii) relating to fissionable and fushionable materials or the materials from which they are derived; (iii) taken in time of war or other emergency in international relations." 30 security. A similar and peculiar parallel in China is their, stance that agricultural tariffs are tied to national security concerns. In addition, China has in place the "National Security Law" (1993) and its criminal law allows it to assert control over telecommunications facilities for the purposes of defending national security.22 This security legislation provides China with the protection against external forces colluding with internal organizations and individuals in acts that endanger the stability of the socialist system. Even though the Chinese Constitution grants citizens similar rights to those accorded to citizens of Western countries, such as freedom of speech and of the press,23 there are many other laws that restrict these freedoms, primarily in the name of national security. Both the "Telecommunication Regulations" and the "Measures for the Administration of Internet Services" in China prohibit telecommunications operators from the creating, copying, publishing and transmitting of prohibited content. The "Rights and Obligations Appendix" repeats this obligation, defining the nine types of content that may not be disseminated. Briefly, they include: anything contrary to the principles in the People's Republic of China (PRC) Constitution; endangering state security, disclosing state secrets; infringing upon the honour of the state; inciting ethnic hostility and disrupting public harmony; disrupting religious policy; disrupting the social order; disseminating hate propaganda, pornography, gambling; insulting or defaming others; and, other content prohibited under laws or administrative regulations. (Lim n.pag.) Article 4 provides that "an act endangers China's national security when organizations or individuals outside China commit, request or support others in committing, collude with organizations and individuals within China to commit acts that endanger national security. 2 3 Constitution of the People's Republic of China art. 35, 1982. 31 As is evidenced from above,24 there are many laws that restrict the freedoms outlined in the constitution in the name of national security. The flow of information has been maintained through a tight control of the press, media and telecommunications sector. Even though the rules are similar to those found in more open or democratic countries, the enforcement mechanisms, the way enforcement occurs, and the norms of behaviour are not. Clearly, in the setting of the WTO, international law is intermingling and penetrating into each member's domestic formal institutions and playing a much more important role in policy-making processes than before. Keeping this in mind, it is safe to say that "legally binding rules of the WTO as an exogenous formal institution would impose influence on the member's domestic institutions including telecommunications regulation." (Zhang 4) What countries are concerned about is the degree of penetration, and whether that will ultimately lead to the erosion of sovereignty. Is there a point of no return, and how does a country safeguard against this? There is no denying that the information revolution, economic liberalization, and globalization have had a significant influence and impact on the manner in which governments govern. However, one significant point needs to be emphasised. Liberalization of the economy is not synonymous with political liberalization. Many neo-liberals equate the acceptance of WTO economic liberalization rules as a de facto political liberalization. This is decidedly not the case, however. The WTO is a trade organization. It has never been mandated, nor is it likely to implement, a social charter. The WTO can demand increased liberalization for commercial purposes, but its primary clout stops at the commercial door. This will be further elaborated on within the context of the specific countries analyzed in ch.IV. 32 "Although national regulatory environments necessarily reflect the specific social, economic, and political needs of each individual country, the essentially global nature of the markets for telecommunications, information technologies, and information services require that the national regulations be responsive to global developments." (Cowhey and Klimenko 24) 'Responsive' clearly does not mean submitting to international laws that are counter to domestic laws, or compromise any nations' right to sovereignty and security. At this time, it is worthwhile to reinforce the point developed earlier in this paper. There is a commonly held view that international bodies are somewhat anarchistic. This view is held in spite of there being a structure, and rules and regulations that govern them that are agreed upon by the members of these organizations. It can be argued that this view is largely attributable to the importance that is attached to communication systems. Communication systems are seen as vehicles of power, authority and control. Being governed from the 'outside' for a resource that is sensitive to national security interests demands a big leap in faith. That leap, for many countries, at least, has been a slow and calculated one, and one that wasn't necessarily accelerated by the markets. Many individuals, including scholars, policymakers and members of the business community believe that the Internet, or cyberspace, belongs to no one in particular; not the government, an individual, a corporation or an institution. The Internet is an entity that has often been described as anarchistic, ungovernable and not answerable to any governing bodies. It is believed that this medium should be self-regulatory, and that the users should establish rules of governance. Whether the regulations governing cyberspace should be self-regulatory, or governed by its own users, is now a moot question. I would argue that the awareness of the potential offered by this medium has finally caught up to the technology. There is little question as to whether nation-states 33 would relinquish control over informational sovereignty to unpredictable and unidentifiable users. Control, regulation and accountability are even more pertinent since the terrorist attack on 9/11, and the potential security risks, such as cyber-terrorism, that communication technologies present. Further, within the communications sector the Internet, and hence e-commerce, are an anomaly. These structures lack even a semi- controlled "anarchistic" organization. Granted, certain regulatory organizations exist that are responsible for aspects of the Internet, such as domain names. But largely, this is an unregulated system, both nationally and internationally. The global extension of the Internet - a natural and predictable development of computer networking - was destined to clash with traditional principles of national security. (Chapman 14) As will be supported later in this paper, this special status is changing dramatically, for different reasons, and largely dependent upon national interests. As well, many argue that a unilateral promulgation of rules governing certain facets of the Internet will not work. This notion is based primarily on an ideological premise that believes in the users' rights to access all information and to be freely interconnected. It is not derived from any governments' stance for maintaining power and control and preserving cultural identity, or of upholding any certain moral belief. Governments are, for many reasons, reluctant and resistant to allowing any international organization to be the governors of key information. The idea of relinquishing informational control to some form of centralized international body runs contrary to the aims of most governments. This is particularly in respect to sensitive issues that might have a significant impact on the country's national security and sovereignty. It is also interesting to note that users are often defined as individuals and corporations, and rarely are they viewed as states that, it could be argued, are the 34 largest Internet constituency, creating and providing much of the information. The state, in many instances has been the key initiator, developer and financer of the communications infrastructure. It has invested the most in terms of research and capital infrastructure.25 Given both the financial and security stakes, the state is unlikely to give up its interests. There exists a diverse community of nations, with a vested interest in preserving their political, cultural and informational autonomy. To date, there is no sovereign authority or international enforcement mechanism that can claim ownership over the Internet. The likelihood that such a body would be established appears highly remote. There will always be inconsistent and incompatible rules governing the Internet, as nations continue to assert their laws and policies upon the nature of the flow of information. 1.5 Asian/China Context "As Asian states have been liberated from colonial or semi-colonial rule only in the last five decades and many are still engaged in the process of nation and state building, they zealously guard their right to supreme jurisdiction in domestic affairs and their autonomy in decision making on international affairs." (Alagappa et al. 82) The three countries Singapore, Malaysia and China, analyzed in ch.IV, subscribe to a strong identification with "Westphalian" sovereignty. In the context of Asia, nation building is of prime importance. As will be further elaborated in ch. IV, these countries are relative newcomers in respect to their current political territorial configuration. Varying forms of colonization have impacted all three states at different times and in 2 5 The best example of this is the U.S. Defence Advanced Research Projects Agency (DARPA), which conducted research necessary to interlink networks. The system that emerged was the Internet. In 1986, the U.S. National Science Foundation developed NSFNET, which today is the major communication backbone service for the Internet. In the case of China, the government developed the Golden Projects, a series of communication infrastructure projects. See ch. IV. 35 different ways. In addition, all three states are at different stages of development. The three countries represent a diverse array of languages, religions and cultural traditions, while encompassing regions that were never unified in the manner in which they are today as independent states. As a result of this history, all three countries have been pre-occupied with developing and strengthening the nation state. In the region, there are varying reasons for resisting Americanization. This is particularly true for China. The anti-Americanization stance cannot be exaggerated, as it is connected not only to economics but also to culture and religion, as is the case in China and Malaysia. Much of this was fuelled by the 1997 Asian Financial Crisis, which threw several Asian countries into financial chaos. Singapore and Hong Kong were deeply affected by the flight of capital. The pill administered by the U.S.-backed IMF further deepened the financial woes of the region, adding greatly to an anti-American and anti-globalization, (often equated with anti-American) sentiment. The crisis contributed to, what "... was a deep seated suspicion of multinational firms and capitalism. But whereas such criticisms in the West tend to be fuelled more by concerns with the environment and labour standards, In China they are fuelled by nationalism -the fear that China will be entrapped by global capital and the U.S. "hegemony" in particular." (Fewsmith 205) Given the global situation since 9/11, and current actions undertaken by the United States, as well as the political and economic support by other countries, it is appears unlikely that the essence of Westphalian-based sovereignty is being eroded. In Asia, as in many other parts of the world, borders are being strengthened. As well, so have internal security measures, regardless of political ideology. Of particular poignancy are the current changes occurring between China and the United States. The U.S. is supporting China's sovereign right to Taiwan probably with the aim of galvanizing some 36 degree of political stability in the trade-off. This proposition was not open for discussion, let alone for support, just one year ago. One might speculate that this action is a preventative manoeuvre, considering the very real damage that could occur through not only internal domestic conflicts, but also through China's evolving role within the region. "The continuing centrality of the state, of policy, and of political institutions is highlighted by the rise of China as part of a resurgent Asianization of the world, that is, the return of Asia to a global centrality that had been lost in the nineteenth century." (Smith et al. 248) China has been opening its own huge market to the nations of Southeast Asia, and at the same time applying a "relationship investing" approach to countries such as Indonesia. China has been increasingly interested in building the host nation's economy, and building lasting political and economic relationships, than in short-term profits and guaranteed results at the expense of the hosts. This form of investment leads many to speculate that China is "empire building." An example is the recent coverage of the "China-Indonesian Relations" conference in the Nov. 20 issue of The Far Eastern Economic Review, titled "How China Is Building an Empire." The theme is expressed in the subhead: "With its booming economic power as its overseas spearhead, China is now moving stealthily toward establishing a common Southeast Asian security community, possibly at the expense of U.S. power and influence in the region." (Vatikiotis and Hiebert n.pag.) For China, a pivotal moment was the protest in Tiananmen Square. This incident, one could argue changed the course of debate and ironically, perhaps even strengthened the nation state. If analysts thought that China, at this point in it's history, had accepted "liberalization" above economics, they were proven wrong. China was not willing to relinquish any authority, even if it meant killing its own citizens, which it did. This, too, in spite of the fact that the incident at Tiananmen Square resulted in over 100 37 secret executions, 27 public executions and over 120,000 arrests. The Chinese Red Cross reported over 2,600 people killed and at least 700 wounded. (Duke 139) Even with these staggering numbers of casualties brought upon its own, China has seen a strong resurgence of nationalist sentiment. "The Chinese tend to be most sensitive about issues involving national sovereignty or (what they perceive to be) the interference by foreigners in Chinese domestic affairs." (Sutter 184) Interference by other states in Tiananmen Square leads to a further fuelling of nationalism. Apparently, this event led to a greater interest in studies about China. "The rise in interest in national studies in the 1990's marked the assertion of cultural nationalism, but it was not without a certain amount of official sponsorship. Cultural nationalism arose in response both to the perceived decline in values in China and to the belief that Western values could not solve the problems of the modern world." (Fewsmith 108) Today, as mentioned previously in this section, the reaction to the U.S. bombing of the Chinese Embassy in the former Yugoslavia, along with China sending a man in orbit, are two strong indicators that a passion for nationalism has been ignited. Adding additional fuel to Chinese nationalistic fervour are the elements of rampant corruption, cronyism, and commercialism. These are viewed as contributing to a decline in values, and potentially they could lead to an erosion of the state and its power. Worse still, they could lead to a state of relative instability. 1.6 Summary Today, ever-changing global norms and rules of engagement have altered the global environment dramatically. This is not just a post 9/11 change, as the use of force, for example in dispute settlement, was seen in countries such as Bosnia. It is now taking place in Afghanistan and Iraq. This flies in the face of one of the primary principles of international law, which is the obligation of non-interference in the internal 38 affairs of nation states. This law, until recently, was inviolable. Many current interventions have contravened this rule. Granted that intervention has occurred primarily in situations of aggression and terrorism, but the principle of non-interference has been breached. Globally, we have reached a critical impasse that now and in the future will have major implications on a nation's right to govern. We have reached a crossroad that poses a profound question of priorities, values and levels of human freedom. These current acts of aggression have contributed to a re-trenching and solidification of nation states as they utilize every means possible in the name of national security. "Under what circumstances can the international community intervene in the domestic affairs of states to bring governments to account for failing to meet treaty obligations, whether to provide their citizens with basic human rights and fundamental freedoms, to control the deployment of weapons of mass destruction, or to meet the standards and goals that the international community determines are needed to arrest the degradation of the global environment? From whence does the international community derive its authority to intervene in matters that are traditionally recognized as falling under the domestic jurisdiction of states?"(Lyons 5) These questions are key and the answers impact all facets of international governance and the line between a nation's fundamental right to govern and intervention by other outside groups or entities. It is the crux of the debate when it comes to considering and accepting external entities to control and manage a politically charged resource, such as the Internet. Traditionally, intervention has applied to the physical crossing of borders, cutting of ties, or isolating by imposing sanctions or boycotts. Up to now, there has been little consideration given to cyber wars and/or cyber intervention. Throughout most countries in the world, regulatory controls have predominantly been concerned with content and the threat inherent in "information." It is ironic that much of the focus has been on 39 "information censorship" and so little focus has been placed on the threat of cyber terrorism and cyber intervention, which could incapacitate a state dramatically. "In a Central Intelligence Agency (CIA) report issued in January of 2001, experts warned that adversaries could threaten the electronic infrastructure, and that several countries, including China, were developing cyber-arsenals that could attack systems and create serious damage. Disruption of such service could someday, it is feared, resemble or approach in severity and actual physical attack such as a military strike or a major terrorist incident." (Chapman n.pag.) The fears and threats are real, and there is a grounded cause for concern. This is still unknown territory. If we consider that the Internet, unlike traditional warfare, provides millions of entry points, the destruction and havoc that could rapidly be created, is phenomenal. In respect to trade, and specifically e-commerce, it could be argued that the global and regional treaties and non-state actors such as WTO, UN, and the North American Free Trade Agreement (NAFTA) to name a few, serve as the starting point for scrutinizing state behaviour according to some objective standard. (Ratner n.pag.) There remains the question, which is tied into the dispute, of who has the right to govern? As we have seen from the above analysis, there are many divergent views on this. Many are of the belief today that the notion of national sovereignty is dated and that we are moving into an era of global governance. Perhaps this will play out to be a truism, but it is premature to speculate on exactly what the impact these international agreements that are accountableto non-state actors will have on nation states. There appears to be a general consensus that the traditional notion of sovereignty, at least in the trade arena is adapting to the changing environment; but I would argue not at the expense of a state's sovereign rights. c 40 Up to this point, this analysis has primarily focused on issues affecting sovereignty, particularly those related to international multilateral groups and new challenges such as the Internet, and how they affect and impact domestic laws. Thus far, it has supported that, as "the Internet began to be widely used, others suggested that the nation-state itself would be replaced by a variety of sub-national, supranational, and transnational forms of governance. For the foreseeable future, at least the next twenty-five years, it seems unlikely that bureaucracy will be superseded by any other organization or structure. Moreover, evidence is accumulating that the nation-state not only retains its importance but has taken on new roles as globalization continues." (Kamarck and Nye 118) The above analysis has supported this conclusion. 41 CHAPTER II The Information Communications Technology Revolution "The personal computer and the Internet, will, we are told, transform economic, social and political life, including international relations by creating new forms of community and interaction not yet imaginable." (Allison et al. 25) "This new civilization, as it challenges the old, will topple bureaucracies, reduce the role of the nation-state, and give rise to semiautonomous economies in a post-imperialist world." (Toffler 10-11) 2.1 Introduction The primary purpose of this section is to briefly review the historical regulatory developments of communications systems and analyze the properties that are specific to the Internet. These properties include speed, borderless, cost, anonymity, customization, language, regulation, and information quality and quantity. The latter part will deconstruct some of the myths attributable to information communications technologies (ICT's) and establish the background to support the findings in chapter IV. Further, the analysis will lay the groundwork for distinguishing the difference between the Internet and e-commerce. The characteristics of the latter will be reviewed in chapter III. In addition, it will summarize and speculate on the social and political impact that the Internet might have on sovereign states, particularly those that are closed, or authoritarian, systems. 2.2 Overview - Communication Regulation and Deregulation Regulation regarding communications systems is not a new phenomenon. In fact, it is one of the few systems/resources that, since its inception, has been bound by both domestic and international laws. Implicit in the development of international communication regulation has been the sovereign right of states to control access, disseminate information and develop communication technologies. Largely because of 42 a "states" commitment to control their communications systems this sector, until very recently, was "one of the most protected, insulated, and monopolized industries in the economies of virtually all nations." (Zacher 162) The communications sector, similar to others such as the power sector, requires major capital investments to develop its infrastructure. It was partially this aspect that deemed this sector to be a "natural monopoly." Over the past decade, there has been a radical shift in this sector, and the industry has restructured dramatically. The communications sector now embraces a multitude of players in every aspect of the system. Much of what was defined as a "natural monopoly," highly controlled and owned primarily by governments, has been slowly deconstructed into smaller parts. As the industry deregulated in areas of infrastructure and products and services, states also continued to increase regulation in other areas, primarily in what is often referred to as the 'soft' infrastructure, such as content and economics. Despite the relaxing of certain regulation, one still questions why the ICT environment continues to be highly regulated1 by state authorities regardless of the prevailing ideology. There are three primary reasons for such extensive regulations, 1) national security, 2) economics, and, 3) upholding moral, religious, and/or social values. Virtually all nation states have been reluctant to relinquish control over ICT's. Many have viewed the impact of technology as having potential influence on their ability to govern and control their people and territory. This fear, along with the ongoing 1 Regulation takes on many forms. Some is direct such as the U.S.'s "Childrens' Online Pornography Act," 1998, and, some indirect, such as Malaysia's "Internal Security Act." Historically, the monopolistic market structure of the communications sector required intervention to ensure access. Today, many open market states have de-regulated the infrastructure, but continue economic and content regulation. "Economic" regulation in many instances is in place to ensure a degree of market competition. In some respects, it could be argued that states recognized that they can control information and content and de-regulate the infrastructure. In essence, information sovereignty was not being eroded. Closed state systems continue to control many aspects of the communications sector. 43 determination to control this sector, is ironic given that "the implicit norms concerning the jurisdictional status of the airwaves and outer space have promoted the principles of the free movement of commerce and information while giving states the ultimate right to curtail foreign transmissions when they threaten domestic order." (Zacher 135) Technology has traditionally been viewed, and continues to be viewed by many, as a prime force of change. There are many analysts,2 authorities, and policy-makers who posit that ICT's, and in particular the impact of the Internet, can be instrumental in not only overhauling entire ideological systems, but also threatening the very nature of sovereignty. Although many states have been willing to "globalize" technical standards, they are not so willing to "globalize" or relinquish information sovereignty. Many attribute almost mythic qualities to this illusive and somewhat invisible entity. There is a prevailing belief that certain properties make the Internet a radically different mode of communication, which has the ability to transform states and society. The second reason for regulation is that the communications industry/sector is extremely lucrative. During the 1980's the move to deregulate arid promote greater competition also lead to a reduction in costs. Future revenues from the Internet and e-commerce activities and taxation promise increasingly greater returns to nation states. Third, there are contentions of both a political and moral nature. These include concerns focused on the potential erosion of cultural standards and values, the loss of control and authority with the populace, and the widespread proliferation of material such as pornography. There are few states that do not have some form of regulation touching on each of these areas. Their concerns have inspired a sophisticated electronic game of cat and 2 Communication theorists who hold the view that technology leads to democratization include: M. McLuhan, 1954; D. J . Boorstin, 1978; A. Toffler, 1980; J . Naisbitt, 1982; B.J. Barber, 1984; and M. Hauben, 1996, to name a few. 44 mouse, and have led to the development of filters, controls, encryption and numerous other means that are employed when one of these issues becomes too pervasive or influential for a state to ignore. Today, given the rather hostile international climate, one can safely predict that surveillance will become increasingly prevalent and the norms that currently govern this medium will become more restrictive. Deregulation in respect to the infrastructure or hardware will continue, but regulation regarding content and economics will proliferate. 2.3 Analyzing Cyberspace In order to forward the discourse, a definition of this "potentially" threatening new medium that will be responsible for a paradigm shift is required. "The Internet, what we call cyberspace, is an interconnected electronic communications network. It has no physical existence as a whole, though comprised of a large number of individual networks." (Cox) Cox and others3 further define it as not being rooted in a "real, geographical world." The developments in ICT's have moved rapidly since the development of the Internet. They are contributing to new and innovative ways of conducting business, such as e-commerce. Some analysts have argued that the Internet is revolutionary, and some prophecise the development of a global information infrastructure governed outside sovereign states. Perhaps this will be the situation in respect to technical standards, but it is a far stretch in regards to content and information. Others downplay the impact viewing the Internet as being more akin to another step in an evolutionary direction, as opposed to a major leap. They are more cautious and reserved in their views on its impact. 3 Real or geographical could be a semantic argument. Much of what happens on the Internet doesn't appear to be grounded in a physical place but appears to be out in space. The debate over the geographic or physical place of the Internet is addressed further in this section. 45 "These developments had major impacts on all kinds of human activities. They greatly accelerated the movement of information, and the range of people to whom it could be available. Governments could now know about political and military developments almost as they happened, and business people had much faster access to information about worldwide market movements and the factors that might affect prices. One consequence was to enable much more concentrated command structures to extend over long distances." (Buzan and Little 287) Buzan and Little also make the point that the impact of ICT's is in no way comparable to that of the breakthroughs of the revolution of speed through physical technologies such as transport (air and sea) and communication systems that no longer required a material form, and therefore could be transmitted through the frequency spectrum. There is the recognition that the Internet is not as ubiquitous as was initially thought. "The Internet is not a Utopian public good available to everyone, whether core or periphery. Perhaps more importantly it is not available at the same level of technology and service to all locations." (Leinbach and Brunn 104) Buzan and Little acknowledge that an unigue aspect of the Internet is the capacity for both great reach and speed. Nonetheless, it is not as revolutionary a breakthrough as when the advent of printing made possible the "separation of information from paper for the purposes of transporting it." They go on to state, "...these developments greatly increase the social reach and impact of the communications revolution, though they extend what was done before rather than amounting to a new breakthrough in interaction capacity. They do not increase the range or the speed of communication, although they do add mightily to its volume, and in myriad ways to its content... But in interaction capacity terms, they do not compare to the fundamental breakthroughs of the late nineteenth and early twentieth centuries that forever demolished the historic role of distance as a barrier to human communication." (Buzan and Little 288) Volume and content, as will be demonstrated further in this section, can present problems that restrict or impede any tangible and jarring impact that information might have on a given society. Further, the accessibility, availability, and validity of information 46 can be highly questionable and suspect. The prediction that information alone has the power to revolutionize and overthrow the polity is both dramatic and unrealistic. This brief analysis further strengthens and supports the argument that the Internet, in and of itself, does not, or will not, greatly impact the state and its governing ideology. More understated notions suggest that, "the Internet is a network of interconnected computer networks... Thus, the first reason that the ubiquity and success of the Internet demands attention from governments is that it will likely not be replaced by the next incarnation of the information highway, but will rather be integrated into it." (Wisebrod 21) This notion subscribes to the school that technology is a neutral element. Virtually lost in this debate over the impact of the Internet are two notions that have not yet been explored with rigour: These are: 1) ICT's are not a one way street and the acceptance of new ICT's, along with all of its ensuing baggage, is not necessarily a passive endeavour, and, 2) information originates from a geographic place. It is geographically infused with the political, social and cultural standards of any given locale. As mentioned above, there are numerous studies and debates circulating that argue how the Internet will bring about change to societies particularly democratic and ideological change. Much of this is premised on a one-way flow of communications and information and on the embracement, unequivocally, of this information. In some respects, the one-way street notion is similar to the analysis on sovereignty. It assumes that a state is complacent, static and passive and that the state is not a pro-active disseminator of counter information. It also assumes that merely presenting the information ensures it will be absorbed and acted upon with no critical discourse. What 47 underlies much of the debate is the notion that every country aspires to be "Americanized" and democratic (generally defined as market/capitalist driven). However, information is a two-way street, with states accepting or rejecting systems and information dependent upon the degree to which it is beneficial to them. There is little recognition by the one-way street theorists that information and information technology works both ways. A marked imbalance in the available literature exists, and very few theorists have advanced the two-sided concept as Nye and Donahue have. "Technology affects society and government, but the causal arrows work in both directions. Technological change creates new challenges and opportunities for social and political organization, but the response to those challenges depends on history, culture, institutions, and paths already taken or forgone." (2,3) If we explore the two-way street theory one step further as Nye and Donahue suggest, these mediums actually can support totalitarian states by providing the technology to suppress information and control. If one was to look at countries such as Singapore, Malaysia and China,4 where control and suppression of information is the norm, those states have successfully utilized ICT's for censorship, disinformation, and propaganda purposes. Countries not only control information, but also employ surveillance mechanisms, both overtly and covertly. These mediums have not just supported autocracies. It could be argued that it has changed the very nature of them by strengthening them. Therefore, it becomes clear that there are decidedly contrary issues surrounding the advent of Internet technologies. ICT's phenomenal proliferation can serve to reinforce matters of state control and the states' ability to control the freedom of the individual. 4 This point is further explored in ch.IV. 48 2.4 Internet Controls and Properties: Unique or not? A threat or not? The following section supports the notion that, first, current technology allows a country to maintain its sovereignty by controlling the communication highway through a number of means; and, second, that the properties attributed to the uniqueness of the Internet are infused with mythic capabilities that far outreach the reality of the medium. The death of distance is not synonymous with death of geography, and an abundance of information does not inevitably lead to an enlightened and progressive citizenry and government. For those arguing that the Internet is a revolutionary and unique medium that has distinctive properties not attributable to other mediums, they might not have considered and investigated the depth of the issue thoroughly enough.5 In the first place, the myth that the Internet is some free-form organism operating outside of any framework needs to be debunked. "The Internet is not a physical object with a tangible existence, but it is itself a set of network protocols that has been adopted by a large number of individual networks allowing information among them." (Zekos 1) "The development, continued adjustments and maintenance of the protocols have origins in a specific place. In addition, the Internet has a physical and hierarchical structure... Since the Internet is composed of a wide range of different networks, owners, operators and technologies, it relies on a structured hierarchy and protocol to operate." (Lienbach and Brunn 91) Protocol, regarding issues such as frequency spectrum6 allocation (a necessary 5 Johnson D. and D. Post posit that the old rules regarding sovereign states no longer apply as cyberspace activity has no physical location, therefore the behaviour of individuals is no longer subjected to the physical control of the state. 6 "In the atmosphere there are electromagnetic waves whose magnetic and electrical polarities vary at fixed rates per second. The range of those electromagnetic waves is called the frequency spectrum..." (Zacher133) 49 determination) is an ongoing contested area, and one that requires continued cooperation and negotiation by numerous actors. It is the necessity for a structured and sophisticated system that strengthens the states control over the technology and transmission. States currently have at its disposal the following mechanisms to impede the flow of information: 1) Increase monitoring of online activity through the construction of state-controlled Intranets, which track web traffic and individual user traffic. There are some problems with this route, as "cookies" as trackers are impractical due to storage limitations. Responding to the difficulties states such as the U.S have developed controversial systems such as DCS1000, nicknamed "Carnivore."7 This system is used by the F.B.I to tap into e-mails at the source and as a surveillance tool for data networks. At the heart of the project is CarnivorePE, a software application that listens to all Internet traffic (email, web surfing, etc.) on a specific local network. Stewart Baker, former general consul to the National Security Agency, said "the FBI has plans to change the architecture of the Internet and route traffic through central servers that it would be able to monitor e-mail more easily. The plan goes well beyond the Carnivore e-mail-sniffing..." (Vlahos n.pag.) This system, along with Malaysia's MyKad's,8 are initiatives with "Orwellian" overtones. They can be utilized in both covert and overt ways 2) Install firewalls9 that control traffic routed through the Internet. Other traffic can still bypass it and go around. The Singapore Broadcasting Authority (SBA) has been 7 See CarnivorePE site at for commercial applications of the software. 8 Further reviewed in chapter IV. 9 "A firewall is a system or group of systems that enforces an access control policy between two networks. The actual means by which this is accomplished varies widely, but in principle, the firewall can be thought of as a pair of mechanisms: one which exists to block traffic, and the other which exists to permit traffic. Some firewalls place a greater emphasis on blocking traffic, while others emphasize permitting traffic. Probably the most important thing to recognize about a firewall is that it implements an access control policy." Curtin, Matt. "Internet Firewalls: FAQ's," 12 Jan. 2000. 4 Apr. 2004 <> 50 successful with this mechanism and uses a firewall operating at the application level. 3) Open access and enforce self-censorship/policing. This is proving to be highly successful and is currently quite common with Internet users and entrepreneurs. Some have even hired individuals to police bulletin boards. Making Internet companies responsible for content posted on their sites coupled with a few well-placed crackdowns, presents a strong deterrent. Authoritarian countries are looking towards Singapore for advice on how to control the Internet. "Singapore's "twin-track" system of regulation; which allows businesses to operate freely while attempting to closely control individual users." (Knight 1) 4) Develop a strategy to deal with encryption. States could require companies to use "back-door" decryption software. 5) The commercialization of the Internet along with taxation requirements payment by subscribers. For individuals in developing countries, this alone restricts access. In addition, taxation can be a means to track and control Internet activities and individuals. In addition, states can: "limit or control access by blocking certain sites, such as content filtering; control spectrum allocation rights; ban or regulate equipment; apply special business restrictions for foreign corporations; and provide its own propaganda campaigns, posting counter-information on government and government sponsored web sites to influence both domestic and international opinion." (Kalathi and Boas 9) The properties consider unique to the Internet include: 1) speed, 2) borderless, 3) cost and access, 4) anonymity, 5) customization, 6) language, 7) regulation and deregulation, and, 8) information quantity and quality. 1. Speed There is little question that speed is probably the one property that makes the Internet distinctive. There are few mediums that allow for instantaneous transmission, 51 making irrelevant issues of time, distance and place. It has contributed to the annihilation of distance as a factor in all aspects of information dissemination. A recent example is the connection made between the terrorist bombing in Spain and the surprising outcome of the elections. One could contend that information presented within a very short period of time via television, radio and the Internet contributed to the overthrow of the political party considered prior to the elections to be the front-runner. 2. Borderless There is much debate regarding the borderless nature or invisibility of the Internet. Essentially, the Internet is nowhere in particular, existing somewhere in cyberspace. "However the information revolution has not transformed world politics to a new politic of complete complex interdependence. One reason is that information does not flow in a vacuum; rather, it moves through political space that is already occupied. States have for the past four centuries established the political structure within which information flows across borders and other transactions take place." (Katzenstein et al.165) Borderless is not synonymous however, with lawlessness, with lack of jurisdiction and the absence of ideology. This notion is somewhat misleading, and has possibly been developed due, in part at least, to the coding of Internet addresses that do not correspond literally to any physical location. These addresses are however, housed and controlled somewhere. In addition, although the Internet can cross borders with relative ease, the flow of Internet information can be controlled and restricted. It is important to note that the borderless nature does not take into consideration where the information is flowing from, or where it is flowing. Rather, it only considers that it can cross 'sans passport' or detection from state officials and authorities. The information originates and is housed somewhere. There is a geographic location to it. These information locations are becoming increasing consolidated through e-hubs located in cities like Singapore, 52 Hong Kong and New York and becoming the hotbeds where information and knowledge originate. There is not only a concern over where the information originates, but also who controls the information. For countries like China, Singapore and Cuba, there is a concern of control over the identifiers, or domain name suffixes, such as ".com", ".edu" and ".org." These suffixes allow computers on the Internet to reach each other. Further, the main organization that governs domain names is the Internet Assigned Numbers Association (IANA), operated under the legal authority and with the financial support of the U.S. government. (Drake "Democracy," 74) As well, 10 of the 13 major Internet servers are located in the United States. (Drake "Democracy," 75) Given the above realities, it is no wonder that governments are apprehensive about relinquishing control over territory to a force that is predominantly monopolized by the U.S. Most states, do not consider this to be neutral information or "borderless," as controls are very much within U.S. territory. "It is true, that the Internet involves access to information through a variety of means, including newsgroups, World Wide Web (WWW), email, gopher, Telnet, file transfer protocol, and Internet relay chat. These avenues can successfully circumvent authorities and numerous technical control mechanisms. The first three are by far the most common currently in use. Newsgroups provide a format for discussion that has enabled individuals to exchange views and information across the globe. There are thousands of specialized newsgroups, most of which are un-moderated. WWW sites (or home pages), of which there are currently about 30 million, provide individuals, organizations and corporations the opportunity to transmit and receive information in text and graphic formats. Email is an electronic mail system that is one of the oldest and most popular uses of the Internet." (Rodan) However, it is equally true that states, through technological developments such as encryption, server control, self-censorship etc., have numerous means of controlling the "invisible information border," which to those countries is manifest as a tangible border. 53 3. Cost and Access Much has been expressed about the relatively low costs of ICT's. One can assume that the low cost exists in those developed countries where telephone and cable lines have already been installed and where individuals can support their connections through the purchase of computers and monthly connectivity access fees. To these individuals, the cost is probably relatively low. For developing countries, it is unclear as to how a determination is made regarding costs and it is unclear as to the logic behind low cost. There are many costly factors required to get "connected." Linkage is a considerable concern. Transmission and infrastructure are others. In most parts of the world, the reality is that the infrastructure is not in place to allow for the use of ICT. "Technological change has not only been rapid, and increasingly so. It has been expensive." (Strange 102) In spite of the fact that many countries are leapfrogging technological developments and changes, and that they will in some respects benefit from research and innovations undertaken by others, current ICT infrastructure remains costly both to develop. Further, maintaining currency and a competitive edge requires ongoing updates and changes. Even if a country factors the leapfrogging element into the equation, many countries still have a long way to go and many dollars to spend before the "low cost" of this medium is realized. Infrastructure costs, although decreasing dramatically continue to be expensive to construct. As technology develops and its inroads deepen, it becomes not simply a question of accessing information. There is now a greater commercialization of information, and this in turn translates into additional costs for online databases, subscriptions to magazines and the like. Increasingly, sites are charging a fee for usage and/or service. Commercialization further restricts access to information and knowledge. Furthermore, it fuels the argument that many countries, and in particular 54 China, will not necessarily have to work hard to control it. Given the average per capital income in China, it remains a decidedly costly venture for individuals to afford Internet access. Therefore, it further strengthens the argument that the Internet remains ^relatively ineffective as a catalyst and medium for political and social change. For many it simply does not exist. In addition, there is a direct correlation between cost and linkage and/or access. "The terms and conditions of access to telecom services are instrumental in determining who can participate fully in the social, cultural, political and economic life of society." (Mansell x) To further illustrate this a brief look at connectivity is necessary. The 2002 report by the Organization for Economic Cooperation and Development (OECD) measured the information economy and indicated that there were 94 million Internet hosts11 in the world, with 95.6 percent in the OECD area and 4.4 percent outside the OECD area. Of that figure, Chinese Taipei, Singapore, Hong Kong and Israel account for 52 percent of all Internet hosts outside OECD. According to the International Telecommunications Union, less than 5 percent of the computers that are connected to the Internet are in developing countries. BBC Online Networks in 1999 quoted that 80 percent of people in the world have never even heard a dial tone, let alone surfed the net. It is estimated that half the world's population live further than three miles from a telephone. One half of the people of the world have never made a telephone call. 1 0 This is part of an ongoing debate on the digital divide that initially focused on the basic issue of access to information technology. Wiring schools, putting computers into the libraries of disadvantaged communities, and donating old computers to developing countries was seen as cutting-edge solutions. The content/relevance concerns came to be recognized as perhaps even more important then access as the tremendous impact of ICT on every aspect of society became more apparent. 1 1 Note: There is a pronounced distinction between Internet hosts and Internet usage. The latter is difficult to measure. In addition, it is difficult to estimate the precise number of hosts as domain names such as edu., org. etc. are not physically located in a specific place. To date, there are no means to provide an accurate measurement of usage and host origination. 55 Technology is prompting the Internet in other new directions. Increasingly there are additional restrictions that impact Internet access. This is often referred to as "private tunnelling12 or funnelling" and allows businesses and institutions to bypass the public networks, establishing links between themselves that are off-limits to others. The further privatization of the information highway denies access outright to the individual. 4. Anonymity One could argue quite emphatically that there is no such thing as anonymity on the Internet. It is interesting to note that individuals who promote cyberspace as a democratic and unsupervised space controlled exclusively by its users fail to recognize this. It is, after all, by way of this medium and through the use of "cookies," that trackers find out about users online habits and communications. The Internet provides a false illusion of security and invisibility. This type of information appears innocuous enough and is often referred to as "transactional information." However, "cookies" and other programs track personal information that is routinely and automatically collected, most often without the individual's knowledge or consent. (Leinbach and Brunn 267) For the most part, the information gathered has been used in democratic countries for marketing and administrative purposes. However, there is no reason as to why it cannot be extended for use by state law enforcement and tax authorities. Since 9/11, U.S. authorities have, in the name of "homeland security," been granted sweeping powers in order to secure information. This was previously considered a breach of privacy. If the authorities can find "hackers" who are probably the most sophisticated and knowledgeable of those capable of penetrating ICT systems, then they can find most individuals who are lacking in that degree of technological sophistication. Authoritarian 1 2 The term was coined by Saskia Sassen who went on to refer to tunnels as "the new citadels on the Net." ("Impact" 203) 56 regimes such as China, Singapore and Malaysia, have used these tools to effectively control the flow of information. 5. Customization The Internet fluctuates between being a mass and being a specialized medium. It can be referred to as a mass medium in that its reach can be infinite, simultaneous and specialized. ICT can be targeted toward specific groups and/or individual(s). However, much of the information available on the Internet is not intended for the mass audience. The majority of Usenet groups and web sites, for example, are intended to cater to a specific audience. The customization of the Internet means that much of the information is diverse, frequency of concurrence is small, interest groups are fractionalized, and most of the activity is not by nature, political. Given these elements, it would be difficult to support the branding of the medium as either revolutionary or progressive. One questions the impact of a medium that is fragmented both in audience and message. This could hardly be considered a threatening medium leading to massive upheaval and change. For authoritarian countries, which employ a 'divide and conquer' strategy, it is likely to work to their advantage. 6. Language The fact that English is the prevailing language on the Internet, and that English is not a universal language, coupled with the fact that in many parts of the world literacy has not yet been eradicated, are some issues that have been sidelined in this debate. In the U.N.'s Human Development report it sated that, even if telecommunication systems were in place, most of the world's poor would still be excluded from the information revolution because of illiteracy and a lack of basic computer skills. In Benin, for example, more than 60 percent of the population is illiterate. The other 40 percent are similarly out of luck, as four- fifths of the web sites are in English. English is a language 57 understood by one person in ten worldwide. (BBC) This is a significant issue for Internet access. For countries such as China, the majority of the population, with the exception of a few of the country's elite, are unable to comprehend much on the Internet because they do not understand English. 7. Regulation and Deregulation Many advocates propose that an international body should govern the Internet and cyberspace. Governments, however, find this notion unacceptable, and are establishing their own set rules of for the medium. The Internet has evolved from a research and academic network to one that has a myriad of applications that could impact on a governments ability to govern. Governments across the political spectrum have found concerns for establishing and maintaining authority over the medium. It appears extremely unlikely that governments will allow the industry or private sector carte blanche on self-regulation. In fact there are many indicators to support that the opposite is true, whether it is through the control of content such as pornography in the U.S. through licensing, or backbone infrastructure restrictions, or through foreign investment limitations. "Free information will flow faster in the absence of regulation. Strategic information will be protected as much as possible - for example by encryption technologies. The flow of commercial information will depend on whether effective rules that protect property rights in cyberspace are established by governments, business, or non-governmental organizations. Politics will affect the direction of the information revolution as much as it will affected by it." (Katzenstein 168) In respect to the WTO, it has maintained a clear and distant stance regarding the . various domestic laws that have been promulgated for the Internet. WTO Director General, Mike Moore at an e-Commerce conference in 2002 stated: "We are not in the business of regulating the Internet and we never shall be. Over-regulation and 58 interference may yet stifle the huge potential of electronic commerce by governments. But if that happens, it will be despite, not because of, the WTO." Obviously, there is an acknowledgement that domestic Internet laws might very well impact, and even conflict with, WTO regulations. The WTO recognizes that their rules are specific to trade. If trade is not technology-neutral, how can the rules of trading become technology-neutral? If law per se is technology-neutral, then why are we required to think of cyber-laws? No country in the world is pursuing the concept of technological neutrality in terms of domestic cyber legislation. This has provided lawmakers as well as those involved in negotiating trade rules, with an interesting dilemma. This is still a relatively new way to conduct trade. The technology is constantly evolving and the directions it will go are unpredictable. This, coupled with a slow reaction and response in adapting to this rapidly changing technology, poses much uncertainty. An additional factor often overlooked, and which is touched upon in ch. IV, is that many states and citizens advocate restrictions on content, either for religious or cultural reasons. Many do not want their history, religion or culture polluted or colonised by Americans. "Many third-world countries and even some well developed nations are revisiting what they call "electronic colonisation" or "electronic imperialism". They do not want their minds, governments, news, or any other aspect of their lives to be Americanised. Countries want to control the nature of the messages that their people... receive." (Byrd and Chetans n.pag.) 8. Information Quality and Quantity Today, the usefulness and the effectiveness of the Internet are coming under scrutiny. "...information is not like goods or pollution, for which quantities flowing across borders are meaningful. The quantity of information available in cyberspace means little by itself. To focus only on the quantity of 59 information, and on attention to that information, would be to overlook the issue of information quality and distinctions among types of information. Information does not just exist; it is created." (Katzenstein et al.166) Without delving into the different types of information, it is sufficient to state that much of the Internet is becoming increasingly commercialized and banal. Quantity is there in abundance, but the quality is questionable. Although historically this was not the case, today, much of the substantive information requires an access fee. On-line newspapers present a brief encapsulation of a story for free, but if one requires depth and analysis, there is a fee. This is becoming a ubiquitous aspect of the Internet. Further, studies indicate that usage is increasing for mundane tasks and growing for e-commerce initiatives, as well as other activities, such as pornography. But it is not a well of information. And although certain political, environmental and socially aware groups use the Internet, it is not proving to be the ultimate tool for mobilizing thousands into action and protest. 2.5 Summary In a speech during the G8 Summit in Kyushu-Okinawa (2000), Japanese Prime Minister Yoshiro Mori stated that he believes "the ICT revolution has the potential to dramatically effect, in a very short time, structural economic and social changes comparable to the Industrial Revolution." Proponents of this technology movement often utilize strong and emotional rhetoric, evoking an almost missionary zeal in promoting their views and beliefs of this trans-formative technology. But it is rhetoric, and it cannot be substantiated by sound quantitative or qualitative research. The cost is immeasurable, but one can conclude that no matter what ICT's are developed, it is an expensive medium. Perhaps the Internet is an unwieldy genie that has been let out of its bottle before its time. It follows that one might not be able to regulate ICT, as ICT's have developed 60 far too quickly. One could speculate that the lack of regulation, security, and lack of accountability will diminish its social and political impact, but not its impact on global commerce. As country after country reacts and responds to the anarchistic nature of the medium 'after the fact,' it is constantly racing or chasing after technology. Regulation is always behind the applications. Even through regulators are generally running behind the developments of the Internet, this does not mean that access to it affects change. The following example, Guyanan Weavers Go Dot.Com, encapsulates many of the issues presented above and illustrates just how tenacious and determined states can be in defending their interests. Weavers in Lethem, a village in Guyana, had been making and selling hammocks through the postal system. The Guyana Telephone and Telegraph offered the group of weavers access to two phone lines, with free Internet access and equipment. The weavers developed a web site and were quickly becoming successful in selling their wares. Within a year, however, the regional leaders took control of the weavers business, and the group has been struggling ever since. In this particular instance, it was more economic then political. The authorities seem to catch up quickly. (Leinbach and Brunn 24) There appears to be a sense of malaise or disillusionment regarding this medium as the ultimate resource and provider of all things. Even the lofty expectations for revenue generation have been downsized considerably with the collapse of the dot.coms in the spring of 2000. The promised land, the horizons of a new economy, never really materialized. It wasn't just a case of ill-conceived business plans, lack of expertise or over-exuberant risk takers. For many, the realization that this medium was not the panacea has had a significant backlash in the start of the new millennium. Speed and information couldn't deliver. There have been many problems with the Internet that have caused this environment of doubt and cynicism. The most 61 prominent of these is the proliferation of porn and the development of the cybersex industry. Another problem is the inundation of Spam that is directed at email accounts, further frustrating individuals and keeping them from completely embracing the medium. And although email has proven to be a useful tool, time has led to the questioning of the degree and extent of its usefulness. Suggestions for improvement in the management and regulation of the medium are abhorrent to those who support the anarchistic nature of the Internet. These individuals embrace the vision of a medium that eludes all levels of control and influence, thereby exemplifying freedom of choice and free access to information. They fight vehemently for a "no regulation" policy. However, as previous arguments point out, there is little indication that this is the direction that the Internet is presently heading. In fact, the tentacles of business and the prospects of control continue to show their impact on the medium. Certainly, for a country such as China, whose government has a long history of asserting its political will on its people, the Internet begins to take on the nature of a mirage... offering much, but ultimately, unable to deliver. This present conundrum, a tug-of-war between the will of individuals and their desire for unconstrained use and access, and the forces of systems, markets and governments will continue for some time. Equally, harmonization of national laws and regulations between states and international bodies is a distant outcome as there is no single international organization that governs the Internet and no one single set of rules governing and few international dispute settlement mechanisms. And although probably not signalling the demise of the medium, this might all the same explain its pending descent from a position of unquestioned authority in the early years. 62 CHAPTER III Sovereignty and the Regulation of E-commerce 3.1 E-commerce Background This section will examine the scope of electronic commerce (e-commerce) activities globally and focus on developments in Asia. It will posit that there has been a fundamental shift in how the Internet is being utilized, in that it is becoming increasingly commercialized. Extensive commercialization of the Internet is redefining the medium, transforming it from an information/research entity to one that primarily will be concerned with market information and activities. Foremost in these activities is e-commerce. Further, it will support the notion that the nature of taxation, a revenue base that most states rely heavily on, actually serves to increase regulation of activities, and in some respects acts as a censor to content. The primary issue currently impacting e-commerce activities is that of taxation. Additional issues that are emerging that could impact on sovereignty include geography/jurisdiction and accountability. This paper will examine the impact that geography and the increased demand for accountability might have on state sovereignty. As e-commerce is still very much in its infancy, there are endless legal concerns and issues relating to it. This section is primarily concerned with issues that potentially impact state sovereignty directly, either through domestic or international regulation. It will not address the various issues surrounding the rules for a globally connected economy.1 1 See Picciotto, Sol and Ruth Mayne. "Regulating International Business: Beyond Liberalization." For an examination of the institutions and rules, which govern the world economy. 63 Pinpointing a definition of electronic commerce or e-commerce2 is complex. Its dependence is largely on who uses it, and to what extent. Defining e-commerce activities represent remains an allusive undertaking for all of the various bodies that are intersecting with its activities.3 For example, one of the major challenges presently facing the WTO is to establish both a definition and a scope for electronic transmissions.4 This is in order to determine its linkage with relevant WTO agreements. (Kaushik 5) Is the General Agreement on Trade and Tariffs (GATT) the main agreement, or is it the General Agreement on Trade in Services (GATS)5? Or, is it a combination of the two, contingent upon definitions applied to such items such as software? The WTO work programme on electronic commerce has been mandated to review these agreements, and to sort out where GATT, GATS and TRIPS 6 are applicable. In many respects, defining what e-commerce is would help in determining key issues, such as jurisdiction. This, in turn, would untangle the web of conflicting tax bases. For the purposes of this paper, e-commerce combines information and communication technologies. E-commerce is made possible through the convergence 2 The O E C D has identified the following organizations to play a role in developing and implementing solutions to specific problems confronting e-commerce: UNCITRAL for the revision of commercial law and digital signatures; the World Intellectual Property Organization (WIPO) for intellectual property rights; the World Wide Web Consortium (W3C) for Internet standards and technological protocols for self-regulatory mechanisms; the W T O for telecommunications access agreements; and, the World Customs Organizations (WCO) for simplifying customs clearance. "Dismantling the Barriers to Global Electronic . Commerce." DSTI/ICCP (98) 13/Final Report from O E C D , distributed 6 July 1998. 3 The O E C D has held three conferences on Electronic Commerce including: Turku Conference (Nov. 1997) on "Dismantling the Barriers to Global Electronic Commerce," Ottawa Conference (Oct. 1998), on "A Borderless World- Realising the Potential of Global Electronic Commerce," and, O E C D Forum on Electronic Commerce, Paris (Oct. 1999). 4 The "Sacher Report," commissioned by the O E C D in 1997, is one of the first comprehensive reports on e-commerce. See "Electronic Commerce-Opportunities and Challenges for Government," 12 June 1997 <> 5 G A T S (1995) covers the delivery of services by any means including electronic. 6 "Agreement on Trade Related Aspects of Intellectual Property Rights," negotiated during the Uruguay Round 1986-94. 64 of three previously distinct communication channels. These are; data transmissions (associated with computers); voice transmissions (associated with telecommunication services); and video transmissions (connected with entertainment, cable and television companies). This is in order to network economic activities and processes, thereby reducing information-related transaction costs and/or to gain strategic information advantages (Leinbach and Brunn 14) Specifically, "e-commerce is the production, distribution, marketing, sale or delivery of goods and services by electronic means." (Cogburn n.pag.) 3.2 The Global Marketplace - Commercialization of Cyberspace E-commerce, very much in its infancy, currently represents less then 1 percent of retail sales. In addition, only 2.3 percent of the world population is on-line. (Nellen 5) These two figures are important given that the growth potential for e-commerce is staggering. Some interesting facts include: Dell computers sell up to $40 million a day in business; Forrester Research predicts that in 2003, Internet activity will account for 5 percent of the world's GDP; at September 2002, 50.5 percent of households in the U.S. had Internet connections; and, offers over 2.5 million book titles, and to date has sold to over 17 million customers in over 160 countries. (Nellan 9)7 It is estimated that globally, e-commerce will be worth about U.S. $1 trillion by the year 2005. This is roughly 25 percent of all global trade. (Kaushik 1) Economics is just one aspect of e-commerce. The application of e-commerce activities however, is heavily dependent on many other factors. The introduction to the WTO Basic Telecommunications Agreement, it states that the "complexity of the Internet and e-commerce goes far beyond that of trade liberalization. ... It has become clear to the leadership of the WTO, and that of other international organizations, that these sectors 65 are all part of a more comprehensive development, driven in large part by electronic information technologies, which bind together transportation and content, trade, culture and politics." (Taylor and Jussawalla n.pag.) E-commerce is on the verge of reinventing a social and commercial relationship. Various debates on the topic of the regulation of e-commerce centre on one key question: who is more empowered through the development of e-commerce initiatives, the market or the state? As has been previously demonstrated, the communications industry has shifted dramatically. One of the pivotal changes has been, "the fact that telecommunications is now seen as a tradable commodity - rather than as a state-provided service..." (Tarjanne n. pag.) It is this fundamental shift in thinking and application of the communication sector that has led to an abundance of theories arguing "...the principal of internal political control is being gradually traded off in favour of a stronger priority for the principles of efficiency and the free flow of commerce." (Zacher 135) Analysis of key elements supports that e-commerce activities might be changing the nature of the Internet and the way it is used, as increasingly it becomes the domain for finance or commerce that then is channelled through "private information tunnels." These are managed by global financial cities. But it does not support that e-commerce activities will fundamentally change or alter the nature of the sovereign state. "At present, there is little question that the use of the Internet, along with other forms of electronic commerce, exceeds the commercialization of these communication channels. Most users still expect to 'surf the 'Net' for free, or for minimal access fees. Currently, most income that is Internet-related is generated by "telecommunications and access" providers rather than by "content" providers. However, the gap between utilization and commercialization rapidly becomes narrower. One could argue that the Internet has dramatically shifted its focus from a resource and research tool to a highly commercialized one. It has been 7 For an extensive overview on e-commerce impact see Annette Nellan's e-study on e-commerce. 66 commercially successful for many reasons, but primarily because it is a convergent medium that provides unlimited opportunities for innovation as well as for revenue generation. The range and uses of the Internet as a marketing tool will continue to expand, regardless of what governances are put in place." (Buresh and Stanislawski n.pag.) Their analysis is critical to any discussion surrounding the Internet and e-commerce as it the beginning of addressing the changing role of the Internet and the possible implications of such a shift. In essence, what is emerging is a dramatic shift in purpose and intent of the Internet. It is undoubtedly becoming more commercialized. It has become costlier for "users" to simply "surf the net" for information without either paying for information or, being bombarded by advertising and marketing. (Sassen "lmpact")lt is also costlier to be a content provider. The implication in respect to nation states is that, as the substance and depth of information deteriorates, so too does the degree of threat to information sovereignty. 3.3 Is Cyberspace a Tax Free Haven? One of the most complex issues confronting e-commerce is that of taxation. Who, what, and where taxation might be applied are questions that require much discussion.8 However, the question of "if is no longer up for debate. Rather, it is merely a question of "when." Currently, many states have a mish-mash of rules and regulations, pieced together in an attempt to capture revenues before they fall through the cracks. Internationally, the picture is radically different. At the Second (Geneva) Ministerial Conference in 1998, the WTO adopted to establish a comprehensive work programme in order to examine all trade-related issues arising from global e-For a comparative analysis on policy and approaches to e-commerce regulations see "Comparative U.S. & EU Approaches to E-commerce Regulation: Jurisdiction, Electronic Contract, Electronic Signatures and Taxation," by Christopher William Pappas. 29 Oct. 2003. 24 Mar. 2004 <http://\> 67 commerce.9 That same year major changes were made to the Internet. These included changes to the infrastructure, and the rules governing e-commerce. On May 20 1998, members of the WTO agreed to declare the Internet a duty-free zone for e-commerce for at least one year. (Drake "Toward")10 Although some would argue for no taxes of any form, in reality taxation supports various activities critical to the governance and to the stability of a country. In respect to the Internet, there are several areas where states will participate in regulating e-commerce activities. This includes taxation on products and services. Another key area that will contribute to increased cyber-laws is that of copyright or intellectual property.11 Interestingly Asian countries, which have perhaps the most stringent laws regarding content and the Internet, are also the most lenient when it comes to copyright and intellectual property issues. It can be argued that the current success the Internet is experiencing is largely attributable to the lack of taxation regulation, as well as to the presence of muddy jurisdictional boundaries and services, including those pertaining to products such as digitalized software. This, even through a technical glitch, is not included in any legislation. Many argue that any attempts to regulate it will stifle growth and creativity in cyberspace. However, the likelihood that states will relinquish any claims on the taxation of products and services on the Internet is a foregone conclusion. Virtually 9 A report on further progress was due at the 5 t h Ministerial Conference, Mexico, 2003. 1 0 At the 4 t h Ministerial Conference in 2001 held in Dohu, members agreed to continue the Work Programme on Electronic Commerce. They concluded that the Internet creates new challenges and opportunities for trade for members at al l stages of development, and the need to recognize the importance of creating and maintaining an environment that is favourable to the future development of electronic commerce. They instructed the General Council to report on further progress to the Fifth Session of the Ministerial conference. In addition, they declared that members must maintain their current practice of not imposing customs duties on electronic transmissions until the Fifth Session. (<> 21 Nov. 2001) At the fifth session held in Cancun in Nov. 2003, no agreement was signed. 68 every state has already imposed taxes on e-commerce activities and products. Authorities view it simply as another means of facilitating business. The Internet fulfills roles that traditional forms of communications, such as television and radio, have done up to the present. It is used for selling products and services, but it just does it somewhat differently. The crux of the issue surrounding taxation, however, really is not if, but how. Determining taxation jurisdiction is pre-occupying many, and there are numerous unanswered questions regarding who qualifies as the beneficiaries of taxation revenue. Do e-commerce activities fall under national, regional and/or local governments? Which activities fall under which jurisdiction? This paper will not delve into the various complexities of tax jurisdiction. With any given product or service, jurisdictions can be numerous and highly varied. Suffice to say that the authorities of different states that are concerned with taxation revenues are unwilling to see a decrease in current taxation revenues, and relinquish potential revenue-generating opportunities. Determining jurisdiction is a complex undertaking, and it will undoubtedly take many years to untangle. As states attempt to wade through the quagmire of jurisdictional issues tied into taxation, other issues have arisen that acknowledge a more insidious side to taxation. Although not its original intent, taxation can be a means for states to track activity and content. This is an aspect to taxation that rarely is addressed with much rigour. Taxation provides states not only with a means of revenue, but also a means of control. It provides a channel of access to vital information. Specifically, this is the case with information regarding the goods and services that flow to and from other states, domestically and internationally. There is little doubt that the Internet and all its services 1 1 See TRIPS fn.6. 69 and products have been, and will continue to be, subject to some form of taxation. Like many other ICT spin-offs the intersection of taxation and cyberspace was unforeseen and not necessarily factored in by states. However, for authoritarian countries, taxation can be an effective and indirect surveillance tool. 3.4 Geography and Jurisdiction One cannot question the importance that physical location appears to have, even on activities that purportedly, like the Internet, are "invisible," cannot be overestimated. Much of the discussion surrounding aspects of borderless and invisibility have been previously addressed in the Internet properties section. Hand-in-hand with those concerns, and supporting the discussion regarding the relevance of territory is the matter of where information originates and where it is held. An interesting phenomenon in respect to cyberspace, and one that impacts e-commerce activity is the concentration of economic activities in key cities. This is a stunning paradox, given the hyperbole regarding the dispersal of information and economic activities providing a more equitable balance of opportunities. What the studies are indicating is that, "we are seeing the consolidation of a transnational economic system that has its center of gravity in North America, both in terms of intensity and value of transactions, and in terms of the emerging body of rules and standards. This system is articulated with a growing network of sites for investment, trade and financial transactions in the rest of the world. It is, however, a complex geography." (Sassen "Global" 12) Sassen attributes this illogical occurrence to two factors: "1) it is most effective if one is to maximize the use of ICT's, and, 2) there are two types of information. One is datum, which may be complex yet is standard knowledge: the level at which a stock market closes, a privitization of a public utility, the bankruptcy of a bank. But there is a far more difficult type of "information," akin to an interpretation/evaluation/judgement." 70 ("Global" 22) What this means for states as they open up their markets is that the national and local economic norms and regulations will be challenged. In addition states, in order to maintain a competitive edge, must not only ensure that information is accessible, but they must be actively participating in the generation of the information and providing "value-added". How this potentially impacts issues of sovereignty in societies that heavily control information will depend on the management of information, and in the assurance that the competitive intelligence required in order to compete be both current and profound. Thus far, countries such as Malaysia and Singapore have been successful in generating the pertinent market information without impacting or compromising social, cultural, political and religious norms. Suffice to say that the reality is that "London, New York and Tokyo combined account for 58 percent of the foreign exchange market, ...and together with Singapore, Hong Kong, Zurich, Geneva, Frankfurt, and Paris, they account for 85 percent in this, the most global of all markets" (Sassen "Global" 20) is an immense force on a states ability to act independently of outside influences. However, the consolidation of financial centers is very much rooted within a specific state. Contrary to what many believe, physical space does matter in the information age and provides states with a solid base to maintain and control e-commerce activities. This latter notion will be supported in chapter IV. 3.5 Transparency and Accountability One of the primary areas that might lead to changes in the nation-state is a requirement by many of the non-state trade actors for the provision of transparency and accountability in economic transactions and regulations. The terms, "transparency" and "accountability" are often linked. Ann Florini, in her analysis of transparency for the World Bank Conference on Economic Development, argued that transparency is always 71 closely connected to accountability. The purpose of calls for transparency is to permit citizens, markets or governments to hold others accountable for their policies and performances. Thus, transparency could be defined as the release of information by institutions that are qualified at evaluating those institutions. Institutions, governments, and corporations do provide what might be deemed 'relevant' information, that which is useful for evaluation. This, however, does not automatically lead to accountability. In addition to the information being relevant, it is crucial that this information be truthful and accurate. The implications of this requirement for e-commerce can be vast. E-commerce, and conventional commerce, relies heavily not only on data, but data that are current and relevant. Investment is reluctant to enter situations where the regulatory environment is muddy and incoherent and might not provide critical market information necessary to make informed decisions. Many closed systems become more costly as the absence of information increases the risk factor dramatically. It becomes riskier for foreigners to invest funds in a country in which the key decisions are made in an opaque fashion. Transparency is becoming a key asset for countries seeking foreign investments. (Katzenstein et al.176) A state cannot downplay the importance of this. This is an area that closed systems will have to manage much more carefully and increasingly open up and expose themselves to others which perhaps will, in the process, make them more vulnerable. On the flip side, it can be argued that, given the scale of China's market, it is not so much in search of investors as much as investors are in search of her markets. Recent economic reforms have increased ICT usage in order to meet commercial objectives. They have also increased the demand for market information. For some, the logical progression that results from commercial transparency is 72 accountability. It is frequently argued that transparency and accountability will ultimately lead to a change in ideology, that of greater democracy. This conclusion, however, does not necessarily follow. Commerce objectives differ from public sector objectives. The private sector is primarily accountable to its shareholders. The public sector encompasses a broader agenda, including social, political and economic factors. It has broad political and legal accountability. Consequently, "legal norms and political requirements make themselves known throughout the building processes of ICT systems and influence the systems from the outset."(Willcocks 18) Meeting the demands for enhanced and developed ICT systems does not automatically change or dismantle current systems. In fact, it can be argued that the opposite is taking place. 3.6 Summary What the above analysis indicates is that the Internet has changed, and is evolving into a more commercial sphere of activity. This further implies that, to some degree it has lost its edge as a provider of non-economic or non-market information. Many states, found this type of information threatening, potentially impacting their sovereignty. However, it is becoming increasingly apparent that the Internet is no longer the cyber guru. As the Internet moves into a more commercial realm, the implications for issues of sovereignty are diminishing. Further, if states encourage the development of an e-commerce core, then they can better manage and regulate e-commerce activities. Both Malaysia and Singapore have already accomplished this, and there is every reason and indication that China is moving in this direction. In addition, it can be concluded that the increased demand for market, or commercial information, does not increase the vulnerability of a state as form of information changes little in respect to other systems and regulations. Lastly, taxation is not only a revenue generator for states. Taxation also provides states with a means to control flows of goods and services and, if it chooses to do so, track other non-commercial activities and individuals. ICT's can provide states with an even more sophisticated tool then ever before. Much of what is summarized in this section will be reinforced through the analysis of Internet/communication systems in China, Singapore and Malaysia. 74 CHAPTER IV Singapore, Malaysia and China 4.1 Introduction Up until, the mid 1990's, development of the Internet for both commercial and information purposes was concentrated primarily in the West. Although it had a sluggish start in Asia, by the mid-1990's it developed rapidly.1 "Generally, the Internet in Asia tended to be more centralized and dominated by governments. In many Asian countries, regulatory systems were adopted to reduce foreign domination of the Internet (Ang and Loh n.pag.) The following section will provide an overview of the regulatory, legal, cultural and religious norms that affect and impact the development of the Internet that, in turn, might have an impact on e-commerce activities. This review considers evidence from a wide range of sources, and the analysis is built around a comparison of two countries, Malaysia and Singapore. The two countries were selected for examination primarily because of their similarities. They are both Asian countries; they both have an authoritarian governing structure; and they both are countries that have sophisticated telecommunications infrastructures. Singapore and Malaysia, alongside Hong Kong, have been vying to be the "electronic hub" for the Asia Pacific region. Each of these states has invested heavily into their communications infrastructure. Both, in their own way seek to maintain a grip on their population, keeping a vigilant eye on anything that might look like political or social dissent. 1 Although the Internet in Asia developed later then in the West, seven economies including South Korea, Japan, Australia, China, Hong Kong, India and New Zealand are among the top 25 countries with domain registries. (Loo and Wong 115) 75 In addition, these countries were chosen as examples because one is representative of a highly regulated and controlled Internet system (Singapore) and the other, a more loosely regulated system (Malaysia). The primary concern here is to demonstrate that 1) the Internet has not lead to an erosion of the sovereign state; and, 2) countries can successfully develop and participate in e-commerce activities without a critical impact to the control and authority of a nation state. The following analysis will demonstrate some of the tensions that exist between the maintenance of political control and economic development. Through reviewing the countries' specifics, it will provide evidence in support of the premise that the Internet, although of great impact in some areas, does not alter the structure or change the ideology of any given state. The analysis will summarize that there are a myriad of ways for states to control information and bypass the traditional forms of communication control. These include censorship, the blocking of web sites and other, subtler forms such as self-censorship, self-regulation and various legal mechanisms. This analysis will explore the different regulations and policies enacted by these governments to ensure information control. The examples presented are intended to demonstrate the various control mechanisms that "nation-states" have available to ensure and protect information sovereignty. It is not the purpose of this paper to explore aspects of censorship within a civil rights context. Finally, the comparisons will tie into the current situation in China and conclude that the Internet, although an agent of change, is not necessarily an active force of change. There are many other factors that contribute to change, but access to the Internet or information that it facilitates, is not as powerful or significant as these other factors. 76 In addition, it will provide the evidence required to conclude that both Singapore and Malaysia have been successful, through legal forms of control as well as through co-optive methods, in balancing opposing tensions. These are means of pursuing vigorously the development of e-commerce initiatives while maintaining political and social control over the population. This further reinforces the notion that China, at least in the foreseeable future, can continue to explore and develop e-commerce activities with few threats or reprisals to state authority. 4.2 Singapore Background Singapore turned 38 in 2003. It has been concerned with nation building since its inception. Although a city-state with a small landmass, Singapore has been successful in developing a very strong economy. Economic development, along with nation-state building, have been the key doctrines guiding the Singaporean government to the present. It has been so successful in this mission that many Asian countries have attempted to transfer the success of this model to their own countries.2 Singapore separated and subsequently obtained independence from Malaysia in 1965. Although the one party (People's Action Party, PAP) state gives the appearance of embracing a more democratic approach as it holds regular elections, it is in fact, a one-party state that has ruled Singapore since 1959. "Singapore's national institutions emerged in the 1960's as the country faced a diverse set of external challenges: security threats from Indonesia, the loss of a domestic market and access to natural resources after its 1965 expulsion from Malaysia, and the departure of British military protection. In response, the PAP developed a security strategy with a strong economic 2 Much of the interest in Singapore was pre 1997 Asian Economic Crisis. Deng Xiaoping visited in 1978, in order to adopt the success of the "Lion City" as a model. The number of foreign leaders visiting Singapore during 1990-93 increased from 48-123. In 1995, it was ranked as the second-most competitive country in the world, after the United States. 77 component." (McKendrick et al. 246) The authorities at that time were plagued with racial riots and tensions. Their primary concern was to maintain political stability. "...The state engaged almost vehemently in a "cleaning up" of people and places to remove social/moral an physical pollution." (Kong and Yeoh 32) The state has been pre-occupied with maintaining social order and purging society of immoral elements ever since. Upholding certain moral standards has coloured every aspect of activity in Singapore, including e-commerce. Despite the repression and apparent contradictions inherent in maintaining political and social control and ensuring economic development, the city-state has prospered, establishing itself as one of the major players in the regions. How Singapore officials balance what appears to be two conflicting objectives, namely that of economic development and authoritarian control, will be reviewed in the following analysis. Key to the success of the Singaporean government has been ensuring transparency 3and a liberalized economic system. This is juxtaposed against a state that maintains control not only on content of information but in every aspect of a citizens' life, including actions such as spitting and toilet flushing. 4.2.1 E-commerce Snapshot Singapore has spent heavily to create an "intelligent island" based on an extensive state-owned broadband network. Its aim is to encourage computer use, but its control on Internet content are seen by critics as stifling opposition views. Set against this backdrop is a country that has positioned itself to become the e-hub of Asia, in fierce competition with Hong Kong and Malaysia. Singapore continues to proclaim itself a futuristic, high-tech information society, while at the same time clinging to a heavy-3 Singapore has developed one of the most sophisticated online government services through its "e-Government Action Plan." Further, it has strongly advocated and supported all its citizens to access and use the Internet. - 78 handed authoritarianism in its regulation of the media. There is little free debate in the country. Without a government permit, even speaking in public is illegal. Despite this repressive moral code of conduct, Singapore has been on the leading edge in developing e-commerce activities. In respect to economic initiatives and development, Singapore is considered to be a progressive and advanced environment. Since the 1980's, Singapore has had an ICT policy plan encompassing four distinct phases. In the early to mid-80's, it was the development of a computerization program for the civil service, and in the mid-80's it was the establishment of a National IT Plan, targeting the private and IT sectors. By the early 90's there were IT 2000 initiatives that developed industry and communities; and in the mid-90's, there was a re-structuring IT plan that focussed on the Internet. (Leinbach and Brunn 155) Singapore took the lead in 1998 when it adopted legislation and policies that would contribute to the advancement of cyberspace activities. It was in that year that it established the "Electronics Transactions Act"4 among many other related acts to ICT's. It was one of the first states to have done so. Since the introduction of the Electronic Commerce Hotbed Programme in August 1996, Singapore has made much progress in its electronic commerce landscape. The legal framework for electronic commerce is in place, and the basic infrastructure services are available. (IDA n.pag.) In 1998, the government launched an Electronic Commerce Plan to drive the pervasive use of electronic commerce in Singapore, and to strengthen it's position as an international e-commerce hub. The target then was to have S$4 billion worth of products and services transacted electronically through Singapore, and 50 percent of businesses to use some 4 For a concise review of e-commerce regulations and policy see the government web site at <> 79 form of e-commerce by the year 2003. (IDA n.pag.) Singapore has been successful in achieving this target. Singapore's continued success in the e-commerce arena is contingent on how quickly rival states develop to the same level. At the moment, Singapore's competitive advantage is that it was one of the first states in the region to develop and execute a comprehensive ICT plan. 4.2.2 Analysis In any evaluation of the impact of ICT on authoritarian political structures, Singapore presents itself as a fascinating and essential case study. However, a cautionary note is required. The island of Singapore is often referred to as a "city-state" with a population of around 4.5million.5 In respect to this analysis, it must be remembered that the unique size and scope of Singapore is not the case elsewhere. Therefore, one cannot conclude that the techniques and policy instruments developed can be replicated elsewhere. Here is one of the most comprehensive strategies for the development of ICT anywhere in the world, supported by huge state-led infrastructure investments. "Indeed, Singapore's policymakers are committed to the transformation of the island economy into an information hub, trading in ideas rather than commodities. Yet Singapore's authoritarian leaders have no intention of surrendering political control in the process. Certainly they recognize the existence of some tension between their economic and political objectives. However, to date they have shown some capacity for reconciling the two. One technique has involved giving businesses privileged access to satellite television, while steering the general population toward the more content-controllable cable television. More generally, authoritarian rule in Singapore is comparatively sophisticated with legalistic and co-optive methods of political control being especially pronounced and effective." (Rodan n.pag.) 5 Source Asia Source 5 Apr. 2004 <> 80 The Singaporean authorities have developed extremely sophisticated methods in order to ensure control. They have inextricably linked the success of economic development to that of strong nation-hood. There is little doubt in many Singaporean's mind that it has been Singapore's relentless pursuit of economic development, and its success in this endeavour, that has allowed for an acceptance and tolerance of a restrictive and highly controlled polity. "As a result, the increasing affluence of many Singaporeans has gone hand in hand with a growing dependence on the state, producing vulnerability to both co-option and political discipline." (Rodan n.pag.) One of the most effective control methods that Singapore has utilized is that of nation-building, dictating the notion that the interests of state must be put first, ahead of the interests and rights of the individuals. "One of the key tenets of the state's construction of a Singapore "nation" is the call on communitarianism, a sense of putting "nation" before self. (Kong and Yeoh 90) The state goes even further by stating that public interest must be ahead of all else including God. Religion, although an integral part of many Singaporeans' lives, takes a back seat when considerations are made regarding the public interest. But as Kong and Yeoh indicated in their analysis, there is no definition or discussion as to what constitutes public interest or who defines it. There is a prevailing view that the diversity and self-interest of minority groups which exist in Singapore could not make decisions for the whole, which would be in the best of public interest. This justification of course provides the government with the legitimacy to act any way it deems necessary for the greater good. Given this, the PAP works on the premise that the government alone has the legitimate right to represent the whole nation. In a white paper on "Shared Values"6 adopted by parliament in 1992, the government developed five core values, which would serve as the guiding principles for governance in the country. They included: nation before community, and society before self, family as the basic unit of society, regard and community support for the individual, consensus instead of contention and, racial and religious harmony. (Kong and Yeoh 39) In 2000, Prime Minister Goh Chok Tong launched the "S21 Campaign" promoting the vision of a united people, wherein "all citizens unite in a common passion for the country." The key ideas of this social engineering crusade included the importance of strong families, inclusivity, opportunities for all, the Singapore heartbeat and active citizenship. The connectivity between economics and that of nation poses an interesting and perplexing paradox that has emerged in Singapore. This is a paradox that China and Malaysia have in common with Singapore. On the one hand, the state ties economic development to nation-hood, which supports and reinforces the importance of the state to control. In turn, it then chastises and regulates its citizens for desiring material goods that are viewed as immoral, and yet are an integral part of their economic success. "Concomitant with the concern that Singaporeans would adopt "unhealthy "Western values" associated with "yellow culture" and decadent lifestyles, the state also began in the late 1970's and early 1980's to caution against what it saw to be an "excessive material consumption" that belied "excessive individualism" on the part of younger Singaporeans in particular. (Kong and Yeoh 37) 6 The aim of this "National Ideology" was to sculpt a Singaporean identity by incorporating relevant parts of their various cultural heritages as well as the attitudes and values that have helped them survive as a nation. It would also help safeguard against undesirable values. The concept of 'Shared Values" was first mentioned in October 1988 by the then First Deputy Prime Minister, Mr Goh Chok Tong. It was to be a blueprint for the development of a "National Ideology" which Singaporeans of all races and faiths could subscribe to and live by. This concept of a "National Ideology" was already in practice by some of their neighbours. For example, Indonesia had drawn up the 'Pancasila', a set of common beliefs to unite its peoples. See Singapore Ministry of Information, Communications and the Arts, 2002 <> 82 One is hard pressed to determine how this contradiction is reconciled, both with the authorities and the citizens. Part of the answer could lie in the notion that there are other forces operating simultaneously tug at Singaporeans. One of those factors might be the prevailing ideology of sameness, the "...we are all one" concept, and we accept and adhere to the same value and belief system."... the Gramscian notion of "hegemony" is proposed as the means by which domination and rule is achieved . Hegemony does not involve controls that are clearly recognizable as constraints in the traditional, coercive sense. Instead, hegemonic controls involve a set of ideas and values that the majority are persuaded to adopt as their own. In order to persuade the majority, these ideas and values are portrayed as "natural" and "common-sense." This is ideological hegemony. (Kong and Yeoh 11,12) It is the latter, that is the most insidious, that which is natural and common sense. "Policy instruments applied for economic development and social control are presented as rationale and logical for healthy advancement. As a result, the increasing affluence of many Singaporeans has gone hand in hand with a growing dependence on the state, producing vulnerability to both co-option and political discipline." (Rodan) In addition to an extensive and insidious social engineering program, the Singaporean authorities have developed "... a sophisticated and systematic combination of legal limits on independent social and political activities on the one hand, and extensive mechanisms of political cooption to channel contention through state-controlled institutions on the other... An even more significant feature of contemporary authoritarian rule in Singapore has been the increasing recourse to legal techniques of political control. Certainly, extensive surveillance by the Internal Security Department continues within Singapore. However, with the communist threat long extinguished, stable domestic race relations, and no challenges to the sovereignty of the Singapore state, the use of the "Internal Security Act" (ISA) to imprison PAP critics is more open to question." (Rodan n.pag.) It is a well known fact the authorities do not tolerate any form of political and social dissent. As mentioned above, the government provides an "illusion" of openness in elections. The reality is anything but that. "Singapore takes a dim view of political 83 dissenters. The government has vast powers to stifle dissent. The ISA7, viewed by many as draconian, allows for detentions without trial, sharp restrictions on any statement that has the potential to stir racial or religious tensions, and extremely tough libel and slander laws. Strict fines are imposed on any who break the unwritten code of public conduct." (Naisbitt 254) In authoritarian states, concern for national security is often the premise used to justify restrictions and controls. There are always new potential threats looming on the horizon, and the 9/11 incident was a justification to strengthen and develop new regulations that would further protect national security interests. The "Computer Misuse Act"8 revised on November 11, 2003, was developed in response to cyber hackers. (CNN) The potential threat of cyber-terrorism permitted the authorities to further clamp down on Internet use and provides authorities wide-ranging powers to police the Internet. Ho Peng Kee, Senior Minister of State for Law and Home Affairs, said the law aimed to fight "cyber-terrorism," but would be used sparingly - chiefly against threats to national security, essential services such as banking and finance, and foreign relations." (CNN n.pag.) 4.2.3 Censorship and Self-censorship Singapore is widely acknowledged and respected as a country that is economically advanced and modern. At the same time, Singapore resonates with a climate of fear. "Democracy is often misrepresented, misunderstood or treated as a dirty word. When it comes to politics, it is pure paranoia. Few question why by-elections are not called or why the presidential process ends in no contest. 7 The 'ISA' was passed into law in 1960. It is considered by many to be one of the toughest acts to protect state security. Detention under this Act is at the order of the President and detainees have no right to challenge the basis for detention in the courts. In 2002, it was used to detain 21 Singaporeans for alleged terrorism related activities. 8 For complete "Act" see < >27 Nov. 2003. 84 Instead, what is common is the practice of self-censorship. Frequently, it ends in the censorship of others. It is interesting to see that self-censorship operates without direct intervention of the ruling party. What causes most citizens, residents and foreigners living and working in Singapore to behave in this way? Why does the majority avoid alternative political expression? How do they censor themselves and others?" (Gomez 98) Censorship laws9 in Singapore are some of the most restrictive in the world, permeating every aspect of information dissemination. There are media content standards, which disallow any content that undermines public order and the nation's security. In respect to the Internet, there exists what some refer to as a "symbolic ban" on 100 websites, which are viewed as harmful in their content. "A recent survey concluded that censorship was able to survive because of the widespread support of Singaporeans. On a censorship scale of 1 to 7, the three areas where Singaporeans wanted most censorship were materials for the young, news leading to race conflict and racially offensive public expression in that order." (Ang and Nadarajan n.pag.) A rather insidious form of censorship is that of self-censorship.10 Facing the harsh penalty journalists may get if they publish something going against the government view, the press in Singapore has long practised: "...A sort of self-censorship. Although Singapore's press is one of the most restrictive in non-communist Asia, instances of the government shutting down publications and jailing journalists are relatively infrequent. In Singapore, publishing rules are stringent, and a culture of self-restraint prevents challenges to the dominant view, a feature of its one-party-9 A Censorship Review Committee (CRC) was formed in April 2002. The purpose of the committee was to review the policies and guidelines on regulation of media content. The C R C submitted a report in 2003, which recommended some changes to content standards and artistic expression. In respect to the Internet, it proposed the continuation of the ban on the 100 web sites until a suitable alternative was proposed. It also, proposed continuation of "light-touch" regulation, use of an international content rating system, ISP's to develop and subscribe to a code of conduct to name a few. See "Censorship Committee submits Recommendations" < censorshippreviewcommittee.htm>. 1 0 Singapore has an "Internet Code of Practice," which specifies taboo areas in cyberspace. It relies on industry self-regulation and parental guidelines to ensure compliance. See Singapore Broadcasting Authority <http://www.sba.qov.sq>. 85 dominated State. Under the "Newspaper and Printing Presses Act," all publishers of periodicals are compelled to apply for a license from the Ministry of Information and the Arts (MITA)" (Gomez n.pag.)11 It is somewhat ironic that within this restrictive cyber-climate, authorities have not only developed e-commerce activities, but also one of the most highly sophisticated e-government sites. China and Malaysia have similar sites. What makes Singapore somewhat different is the reach and scope of their e-government activities, which is ranked as one of the most developed in the world. Although a relatively new area, e-government systems generally deliver government services and information on-line. Often e-government initiatives are designed to post government functions on-line, such as administrative procedures, rules and regulations; to post documents databases, and to communicate government activities. E-government does provide a certain degree of transparency, but it should not be confused with e-governance, which basically re-defines the relationship government has with its citizens. E-governance embraces accountability, responsibility, and openness. It also encourages and supports dialogue, exchange and direct participation in the decision-making process. Even though e-government has changed the nature by which citizens interact with government, like e-commerce activities it has not changed or had an impact in the manner in which they are governed. ' ' Additionally, there are various sections within the 'Internal Security Act," "Official Secrets Act," "Penal Code," "Undesirable Publications Act," "Criminal Law (Temporary Provisions) Act" and "Sedition Act" that can be employed against violations. These acts are not exhaustive and need to be taken together with case law surrounding defamation suits decided by the courts in Singapore to comprehend the full extent of possible censorship. Although Article 14 of the Constitution of the Republic of Singapore guarantees the right of freedom of speech and expression, which has been accepted in legal circles to include freedom of the media, operationally, the above provisions imposed by Parliament stand to restrict these rights. (Gomez) 86 4.2.4 Summary In summation, Singapore has been exceptionally creative in developing policy instruments to control the populace, and authorities have developed sophisticated legal tools to support their continued authority. "The centrality and distinctiveness of legalism to the reproduction of authoritarian rule in Singapore has not escaped theorists' attention. Essentially making the same point, Kanishka Jayasuriya describes this as "rule through law rather than rule of law, while Christopher Tremewan characterizes it as "thinly disguised rule by decree". In contrast with legal institutions in liberal democratic systems, where challenges to state power are not only possible but common, in Singapore they serve more to consolidate and expand the power of the state and to enforce the government's objectives and policies." (Rodan n.pag.) Creating fear of prosecution, social and political instability leading to economic chaos all play a role in maintaining the status quo in Singapore. The authorities also encourage and support self-censorship. The notion of seeing without being seen has proven to be an effective control mechanism. Foucault's 'Panopticon,' that is explained as "asymmetry of seeing-without-being-seen is, in fact, the very essence of power." To some extent the development of the Internet, and in particular e-commerce, has forced Singaporean authorities to undertake some regulatory and legal changes, particularly in respect to censorship. However, it appears that the changes are superficial dressing, and that they are designed to appease the public. No sooner are changes made in certain areas, than new controls seep in that reinforce and even enhance existing draconian security measures. Many of the measures are justification for maintaining stability, pursuit of economic development and solidifying state sovereignty. Although Singapore's situation is unique regarding size, in many respects, there are parallels that can de drawn between this country, and Malaysia and China. The 87 primary link is the strong intent and desire to control.and regulate the "nation-state." There might be different applications and approaches to achieving this end, but the result has been a successful attainment of maintaining the nation-state and developing e-commerce. 4.3 Malaysia Background Malaysia became an independent sovereign member of the British Commonwealth in 1957. Malaysia is a multi-ethnic nation with citizens consisting of Malay (60 percent), Chinese (26 percent), Indians (8 percent) and various indigenous groups. Non-citizens comprise almost six percent of the population. The official religion is Islam and about 60 percent of the population is Muslim. Some 19 percent are Buddhist, nine percent Christian and six per cent Hindu. Malaysia's official language is Bahasa Melayu with Chinese, Tamil and indigenous languages used among their respective ethnic groups. English is also widely spoken. (Minges and Gray 8) 4.3.1 Cyberspace Development Malaysia's current telephone policy indicates that they have made a conscientious effort to reach out and connect their citizens, even in the remotest areas of the country. It is important to briefly review these policies and development, as they are an indication of a government's willingness to electronically connect the population. Although the government is ensuring access is available to all citizens, many continue to be disconnected. According to figures on teledensity from Telekom Malaysia, new residential telephone lines reached a peak of some 340,000 in1994 and has since been in decline. Surprisingly, 37 percent of Malaysian households do not yet have a fixed line telephone, and there was a waiting list of 98,000 at the end of the year 2000. It appears unlikely that the lack of fixed home telephones is solely due to economic reasons, as the government has developed a socially progressive tariff rates. The cost of owning a telephone is less than two percent of a households' income. Malaysia has taken a number of steps to reduce discrepancies in nationwide telephone access. Despite these measures, it may be that it is too costly to connect those still without home telephones, particularly in remote rural areas. Malaysians may also be opting for mobile services, a trend throughout Asia. All the same, the countries' rural public telephone programme has been successful in installing at least one public telephone in all of Malaysia's 40,000 villages. The telephone tariffs are also pro-rural, in that fixed line rentals are cheaper for inhabitants of Sabah and Sarawak. (Minges and Gray 20) The roots of Malaysia's Internet development can be traced back to1988 when the Malaysian Institute of Microelectronic Systems (MIMOS) set up a university computer network called Rangkaian Komputer Malaysia (Malaysian Computer Network), RangKom. At that time, it had four dial-up lines to Australia, the Republic of Korea, Netherlands and the U.S. and offered e-mail and participation in newsgroups. In 1992, the expensive dial-up connections were replaced by a satellite link to the U.S. and Malaysia obtained a permanent connection to the Internet. MIMOS established the Joint Advanced Research Integrated Networking Project (JARING) as an Internet Service Provider (ISP). JARING remained the country's only ISP until Telekom Malaysia Berhad's (TMB) TMnet received a license in July 1996 and launched its service in November. The market remained a duopoly until the year 2000 when additional licenses were granted. According to the Malaysian Communications and Multimedia Commission (MCMC), there were two million Internet subscribers in June 2001. PIKOM, the Association of Computer and Multimedia Industry of Malaysia, estimates that there were 89 four million users at December 2000, translating into a penetration of 17.2 percent of the population. Though the ISP market has been liberalized, TMnet continues to maintain control. At June 2001, TMnet had 1.05 million subscribers, claiming 70 percent of the Malaysian market, and making it the largest ISP in South East Asia. Despite the strong government emphasis on multimedia and the establishment of the Multimedia Super Corridor (MSC), 1 2 Malaysia has a low level of local broadband access to the Internet. (Minges and Gray 25) Teledensity across Malaysia's states ranges from a low of 8 percent in the far western state of Sabah to 36 percent in the west central peninsula state of Selangor (also the site of the new airport and the Multimedia Super Corridor) (Minges and Gray 20) Problems associated with the rural/urban divide are similar to those in China. Internet connections are concentrated in urbanized areas such as the capital Kuala Lumpur and Klang Valley. This means that only select groups in this country of 24.4 million people have access to information resources on-line. Kuala Lumpur has the highest penetration rate with about 104 subscribers per 1,000. Plans for increasing Internet penetration aims to enhance accessibility in rural areas. (Loo n.pag.) A market survey in May 2001 projected a total of six million Internet users in Malaysia by 2006. In order to achieve this target, the government is running a concerted campaign to wire as many households as possible through the Internet Desa programme... (Theophilus n.pag.) The Internet penetration rate was approximately 7 percent in 2001. Given the telephone connectivity rate, this goal might be difficult to achieve. 1 2 Malaysia's Multimedia Super Corridor (MSC) is a major national initiative designed to achieve the goal as set out in the "Vision 2020" document to become a "fully developed country by the year 2020."The M S C is intended to leapfrog Malaysia into the information age, providing initiatives and incentive opportunities for national and international IT companies. 90 4.3.2 Draconian Laws, Cyber, and Otherwise The MCMC 1 3 was established in November 1998 under the framework of the Malaysian Communications and "Multiumedia Commission Act" 199814 to be the industry regulator. (Minges and Gray 12) In tandem with these laws a plethora of new legislation has also brought into play legislation dealing with new technologies principally those in connection with the Internet and telecommunication. These laws include: "The Computer Crimes Act" (1997), "The Digital Signature Act" (1997), "The Telemedicine Act" (1997), "The Communication and Multimedia Act' (1998), "The Optical Disc Act" (2000), and, "The Layout Designs of Integrated Circuits Act" (2000). In addition, the Multimedia Super Corridor has established a 10 point Bill of Guarantees. Although the Internet has been proclaimed "censorship free,"15 other regulations and laws greatly affect and challenge this. "The Communications and Multimedia Act" prohibits unlawful interception of communications, establishing rules for searches of computers, mandating access to encryption keys, and authorizing police to intercept communications without a warrant if a public prosecutor believes a communication is likely to contain information relevant to an investigation. "The Companies Act," grants the Registrar of Companies broad powers to block or disband organizations deemed prejudicial to national security or the national interest. "The Computer Crime Act" (CCA) 1 3 See law/legislation.asp for an extensive listing of related statues and acts. 1 4 This "Act" is the most significant legislation in respect to Communications and was brought into force on the 1st April 1999. The legislation provides the policy and regulatory framework for convergence of the telecommunications, broadcasting and computer industries. The "Act" is based on the basic principles of transparency and clarity; more competition and less regulations; bias towards generic rules; regulatory forbearances; emphasis on process rather than content; administrative and sector transparency; and industry self-regulation. See Ministry of Energy, Communications and Multimedia Malaysia < > 1 5 In section 3 (3) of the "Communication and Multimedia Act" (1998) states "nothing in this Act shall be construed as permitting the censorship of the Internet." 91 allows police to inspect and seize without a warrant a suspect's computer equipment. Suspects are also required to turn over all encryption keys for any encrypted data on their equipment. In addition, there is the "Anti-Corruption Act," the "Computer Misuse Act" and the "Penal Code." A recent illustration of how authorities react to situations that contravene these acts is the raid on the offices of On January 22, 2003, acting on a complaint by ruling-party officials, about a dozen police personnel swooped down on the office of award-winning independent news portal (Netto n.pag.) The foray into the Malaysiakini office highlights an archaic, sweeping law: the "Sedition Act"16, yet another legacy of colonial rule, alongside the "Internal Security Act" (ISA) and the "Official Secrets Act."17 (Netto n.pag.) In addition, on par with these draconian acts is the "Printing and Presses Act" (1984),18 which provides authorities with even greater power to restrict freedoms. "The police raid on Malaysiakini was ostensibly made in connection with an investigation into a report lodged by the youth wing of Prime Minister 1 6 "The Sedition Act" (1948), which was originally enacted by British colonial authorities, limits free expression by broadly criminalizing any speech that is judged to have a "seditious tendency," including speech which tends to "bring into hatred or contempt or to excite disaffection against" the government, promote "feelings of ill-will and hostility between different races," or question constitutional preferences in business, education, and government employment opportunities... The speaker's intent and the statements' veracity are irrelevant. The act's vague language invites selective application against political opponents for any kind of criticism. It was used in January 2000, shortly after the national elections, against opposition figures who criticized the government. Human Rights Watch (2000) 1 7 Malaysia's "Official Secrets Act" (1972) is also a broadly-worded law which carries a maximum penalty of life imprisonment, as well as significant lesser penalties for wrongful possession or communication of official information. "Any public officer can declare any material an official secret - a certification which cannot be questioned in court. The act allows for arrest and detention without a warrant, and substantially reverses the burden of proof. It states that "until the contrary is proven," any of the activities proscribed under the act will be presumed to have been undertaken "for a purpose prejudicial to the safety or interests of Malaysia..." Human Rights Watch (1998) <> 1 8 The 1984 "Printing Presses and Publications Act" requires all print media to obtain a permit and renew it annually. The Home Affairs Ministry can restrict or ban a publication outright if it is considered "likely to be prejudicial to public order, morality, [or] security"; likely to "alarm public opinion"; or likely to "be prejudicial to... national interest." (Article 7). If the Minister refuses to grant or renew a permit, no legal remedy or judicial review is available: (Article 13A-13B.) Human Rights Watch (2000) <> 92 Mahathir Mohamad's United Malays National Organization (UMNO) about an allegedly "seditious" letter posted on the website on January 9. UMNO Youth had complained that the letter questioned Malay "special privileges" and contained "false allegations" about the government's treatment of other ethnic groups and the indigenous Orang Asli. They also alleged that the letter had likened UMNO Youth with the Ku Klux Klan, the white-supremacist group ...The swoop on Malaysiakini is the latest in a series of actions that have curtailed freedom on the web. Recently, police detained 10 Malaysians under the harsh ISA for spreading terror rumours on the web - but it was also a chilling reminder that Internet e-mail users could be traced and surfers could take little comfort in anonymity." (Netto n.pag.) 4.3.3 Self-Censorship The Internet backbone, JARING, also comes under the jurisdiction of the government agency called Malaysian Institute of Microelectronics Operating System. Content regulations place the onus on list owners to ensure that what is communicated in bulletin boards does not break the law, thus compelling providers and list owners to become indirect censors to avoid prosecution. This type of self-regulation or self-censorship is not dissimilar to the situation in Singapore. It will also be touched upon in the China section. He question of how the Internet can plant seeds of openness also touches on factors such as degree of community interest, and participation in public affairs. Experts say these are not high in countries like Malaysia and Singapore. "In a society where the citizenry is not interested in making themselves heard, when newspapers, radio and television are owned and operated by a member of the governing coalition, and when important public issues are never, as a rule, articulated in public, the coming of the Internet cannot lead to freer and more open critical discussion of public issues," said MGG Pillai, civic advocate, journalist and list owner of Sang Kancil at (Loo n.pag.) According to the Human Rights Watch Bulletin of 2003, the Internet, which the government had pledged to spare from censorship, has also begun to come under government pressure. An article in the Straights Times in 1999, quoted Tan Sri Datuk Dr Othman Yeop Abdullah as stating "There will be no censorship." In the same breath 93 he added, "existing laws will apply, once you download content and disseminate it... but if you just access and look at it, it's OK." The government imposed new rules in December of that same year that required cyber-cafes to register their customers in order to stop "irresponsible elements from spreading rumours on the Internet." In addition, the government stepped up pressure on the online news daily after it was alleged that the site had received start-up funding from a foundation controlled by U.S. businessman George Soros (who Mahathir branded an enemy of that country's financial system and responsible for the 1997 "Asian Economic Crisis.") Although Malaysiakini denied the report, Mahathir informed the nation that "loyal Malaysians" should stop reading Malaysiakini and barred Malaysiakini reporters from attending government press conferences on the grounds that "their credibility is doubtful." On May 23, the deputy home affairs minister told parliament that the government was monitoring "every article" published by to ensure that its writings did not upset public order. Throughout the year, other government officials threatened that the site would be prosecuted if its' reporting "endangered national security." In May 2001, the prime minister's office announced that laws were being prepared requiring online journalists to observe the same severe restrictions that impede the rest of the media. Civil servants are required to take an oath of loyalty to king, country and government. Academics and undergraduate students are also now required to take the '"Akujanji Pledge,' an oath of good conduct, requiring signatories to heed all existing and future government directives and orders. An explanatory note in a circular on the pledge reads: "An officer who goes against or criticizes a government policy will undermine the integrity and stability of the civil service as a whole." (Human Rights Watch) 94 Each country reviewed in this section has established its own particular brand of self-censorship or self-regulation. Malaysia is no different. The Malaysian version is called the "Content Code."19 It has been touted as a model of self-regulation among industry and is drafted by members20 representing all key industries. Although compliance is voluntary, as it is the industry's own regulation, compliance in many respects is not seen as an issue. Compliance with the Code can bring a number of benefits, such as providing a strong defence against any prosecution, action or proceeding of any nature. As the likelihood that industry players could be sued or charged for hosting illegal or unlawful content is clear, taking note of their obligation under the Code has proven to be a pre-emptive judgment. The Code sets out guidelines on approved and prohibited content21 in Malaysia, with respect to broadcasting, online, audio text hosting services, and closed content guidelines.22 As far as printed materials are concerned, the present guidelines under the Printing Presses and Publications Act are applicable. Under the Code, the term 'content' is defined as any sound, text, still picture, moving picture or other audio-visual representation, tactile representation or any combination of the preceding, which is capable of being created, manipulated, stored, retrieved or communicated i a See Azmi. Malaysia's "Content Code" is similar to the "Singapore Internet Code of Conduct" in that section 28 enables authorities to issue directions to ISP's and ICP's requiring them to comply with the Internet Code of Practice. In addition, Clause 4(2) has a similar array of prohibited material which were reviewed in the Singapore section of this paper. 2 0 Ibid. The "Code" is applicable to ISP's, Internet Access Service Providers, ICP's, Web Page Developers, Access providers of webcast and streamed content, Online Content Aggregators, and Link P roviders. Section 5.1. 2 1 Ibid. The nine broad areas of prohibited content include: Indecent, Obscene, Violence, Menacing, Bad Language, False, Family Values, and People with Disabilities. 2 2 Ibid. There are a few content exclusions such as private e-mail, content submitted through other forms such as facsimile intended for personal use, content that is not available to the general public. However, this means that bulk e-mail for example is subject to the Code. 95 electronically. The definition draws its origin from the definition of the term cyberspace message, in the Communication and Multimedia Act. 2 3 Several general principles have been spelled out in the Code. These principles are reflective of the present national and policy objectives of their national information infrastructure. It is evident from the policy statement, that whatever policy objectives they have implemented with respect to traditional forms of mass communication, they are equally applicable to the Internet. To a certain extent, this is reflective of the European Union (EU) approach which states that whatever is "illegal offline is illegal online." (Azmi n.pag.) Ironically, the EU content restrictions are much broader then Malaysia's. They include many areas that the Malaysian government covers through additional acts, such as sedition, pornography etc. The main principles in the Code are: there shall be no indecent, obscene, false, menacing or offensive content; there is a need to maintain a balance between the desire of viewers, listeners and users to have a wide range of content options and access to information on the one hand, and the necessity to preserve law, order and morality on the other; there is a need to respect cultural, ethnic and religious, gender, socio-economic status diversity in Malaysia; and particular attention is to be given to content that is created for children and in which children are portrayed. (Azmi n.pag.) As evidenced from the above summary of laws, Malaysia has quite extensive and direct regulations that impact cyber activity. In addition, the government has indirect tools that also serve to restrict activities and censor the Internet. The Constitution of Malaysia does not specifically recognize the right to privacy, but it does provide for several related rights, including freedom of assembly, speech and movement. 2 3 Section 3 of the "Communication and Multimedia Act" 1998. 96 Historically, the government has circumscribed all of these rights by law or practice; increasingly so now in the name of anti-terrorism. The most controversial of these laws remains the ISA,2 4 which was originally enacted in the 1960's in response to Communist insurgency. The ISA allows police to without a warrant enter and search the homes of persons suspected of threatening national security. They can also seize evidence. The ISA also provides for indefinite detention without charge or trial. Section 73 empowers police to arrest those suspected of committing activities prejudicial to national security, allowing for initial detention of up to 60 days. In addition to provisions for arrest, the ISA permits restrictions on freedom of assembly, association, and expression, freedom of movement, residence and employment. It also allows for the closing of schools and educational institutions if they are used as a meeting place for an unlawful organization or for any other reason deemed detrimental to the interests of Malaysia or the public. (Azmi n.pag.) In respect to the Internet, the ISA is an act that has been used both directly and indirectly in suppressing speech and action by its citizens. In essence, it is censorship disguised as protecting the interests of the country and its citizens. As with Singapore, and in general many other countries,25 the 9/11 incident provided governments with carte blanche to implement stringent security measures that infringe on individual and privacy rights. Minister Yatim has stated that laws like the ISA are even more relevant post-September 11, and that "submission to idealistic rights was not safeguarding domestic integrity and security." The Prime Minister Malaysia's "Internal Security Act" (ISA) is a preventive detention law originally enacted in the early 1960s during a national state of emergency as a temporary measure to fight a communist rebellion. 2 5 For example, in the U.S., the government implemented the U.S.A. "PATRIOT Act" (an acronym that stands for "Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001). The act gives the government unprecedented freedom to collect information with little regard to civil rights or privacy concerns. 97 responded to any criticism of the ISA by stating that "if someone commits an act that violates the human rights of the majority, then he...will lose his basic rights." It is interesting to note that since 1999, Malaysia began to gradually phase in a multi-purpose national ID smart card. The card, known as 'MyKad', incorporates both photo identification and fingerprint biometric technology. It is designed with several main functions: identification, driver's license, passport information, and an e-cash function. There are plans for adding additional applications for ATM access and digital signatures for e-commerce transactions. On the surface, the development of MyKad appears innocuous enough. Yet, if one scratches the surface the potential for abuse, control and surveillance is immeasurable. Knowing how authorities have successfully and creatively controlled the Internet, one can speculate that this new initiative was intended to provide access to a variety of information on its' citizens activities. It is ironic that this type of initiative, despite its being a commercial product/service, serves to reinforce the notion that the development of e-commerce, or commerce in general doesn't have an impact on the state. Instead, it provides the state with new means to control its citizens. A relatively new development has been the drafting of the "Personal Data Protection Act," which will likely be introduced into Parliament this year. Although in its final draft stage, the Act will introduce penalties including fines and imprisonment for those who abuse cyber-information. 4.3.4 Summary Steven Gan, editor-in-chief of the popular online news site, states that Malaysia's approach to information technology is one where "the government does not want to encourage e-democracy. E-commerce, yes. E-government, particularly in terms of reducing bureaucracy paperwork, yes. But e-democracy, viable 98 or not, contains the fear factor stifling open discussion. The writers normally use pseudonyms. Subscribers to mailing lists are also afraid, so they use the anonymous e-mail," he added. (Loo n.pag.) "Malaysia's national IT agenda has only served to fan the fires of reform among the dissenters and those disenchanted with the tame and lame coverage of events by mainstream media, especially when the media bosses themselves openly proclaim to be the government's propaganda tool. Of course they hide behind official catch-phrases such as nation-building, preserving racial harmony and protecting national security. These are phrases which go hand-in-hand with the country's preventive detention and anti-free speech laws." (Theopilus n.pag.) It is ironic that for the past 10 years, Malaysia has been positioning the country to become a major player and central IT hub in the region. In many respects it has managed to attract a sufficient number of companies to participate in the Multi-Media Super Corridor. This development is despite a legal and draconian environment where the Internet is subject to an onslaught of restrictive legislation. At the same time, the Malaysian government has been actively ensuring that its citizens have access to ICT resources. What has been presented is a review of some of Malaysia's regulatory and legal mechanisms directly impacting the Internet. Even though not an exhaustive study, it clearly indicates that such repressive and authoritarian control has little impact on economics. When it comes to business for investors, political controls are acceptable as long as it doesn't impede on conducting business. It is clear that restrictive laws hardly matter to those who have signed on to the MSC concept. If investments and profits can be made in a stable and protected environment, then it matters little that there are laws that restrict civil rights and freedoms. 99 4.4 China - "Feeling the Stones While Crossing the River' What systems and safeguards has China put in place in order to manage and promote Internet development vital to its long-term economic health, while at the same time limiting the impact of this new technology on its traditional control mechanisms? Given the overwhelming regulations that have been instated to ensure its sovereignty, can China successfully compete against countries that have fewer restrictions? Is China at a disadvantage with the restrictive laws regulating the Internet, and do those regulations impede e-commerce development? The aim of this section is to address the above questions, analyzing and identifying the principle players and key issues within China concerning its Internet and telecommunication strategic development. Chinese government policies will be examined in light of the desire to move forward in an electronically connected, global economy and at the same time limit the impact of this new technology on its traditional control mechanisms. China's current focus has been to enter the global marketplace in a significant manner through managing and promoting ICT development. To achieve this goal, China for many years strived to become a member to the WTO. In December 2001, it was successful in this pursuit. Behind the. scenes, China, similar to Singapore and Malaysia, has created an electronic infrastructure that provides the government with the capacity to pursue the goals of e-commerce development while maintaining social/political authority. To this end, it can be argued that the government of China will be able to control the domestic information environment, countering the potential political impact of Internet use without impeding e-commerce development. 100 4.4.1 Telecommunications Overview Since the revolution in 1949, China has focused largely on agrarian and land reform, lagging behind other Asian countries in telecommunication development. At the same time, it can be argued that China greatly benefited from its rather sluggish embrace of new technology. Telecommunication growth began to accelerate after the Mao Zedong era (1976) with the advent of Deng Xiaoping's "market reforms." From that time to the present, China's reformers have placed economic development at the top of their agenda. With that priority came the realization that the communication infrastructure required a massive infusion of both money and resources. In 1993, China embarked on a major communication infrastructure endeavour called the "Golden Projects."1 As a late entrant in developing a modern communication system, it has been able to leap frog several stages of technological innovation and reap the benefits of newly developed technology from other parts of the world, largely Japan and the U.S. China is the world's fastest growing telecommunications market, and it is the second largest telecommunications market in the world. Each year, China installs enough phone lines to replace networks the size of Pacific Bell in the U.S. China is a country where the main telephone lines per hundred inhabitants is 8.64 percent (1999). 1 Through the State Council, the Joint Committee of National Economic Informationization was developed. China moved towards taking the first major leap in building a national information infrastructure in what was known as the "Golden Projects." The "Golden Projects" had three overarching objectives: to build a national information highway as a path to modernisation, to drive development of information technology in China, and, to unify the country by tying Beijing to the provinces. Initially, there were three key Golden Projects: 1) the Golden Bridge Project was responsible for developing the infrastructure backbone combining satellite and cable line networks. Its goal was to roll out a wide bandwidth from which all "Golden Projects" can transmit and receive data. 2) The Golden Card is an electronic money project for facilitating banking and credit card systems. 3) Golden Gate is a foreign trade centralized information network. Since the initial three projects, there have been numerous "Golden Projects" including the "Golden Seal" project which connects China's top government leaders with immediate access to data from institutions, organizations and offices. 101 This is similar to the figure of the U.S. in the 1920's... (Xu n.pag.) Today, "two million cellular phone users are being added every month... In 1994 a cell phone in China cost US $2,000 but by 2002, the cost declined to $200." (Taylor and Jussawalla 210) This is an important statistic as this reduced cost allows a greater percentage of the population phone and also, Internet access. According to the China Internet Network Information Centre, as of June 30, 2003 there were close to 80 million Internet users in China, compared with the 8.9 million four years ago.2 There are a number of key players instrumental in overseeing aspects of the Internet. They include: the Ministry of Information Industry (Mil), established during the 15th People's Congress in 1998. The MM consolidated the Ministry of Post and Telecommunications (MPT) and Ministry of Electronics and Information (MEI). The MM3 was not established as an arms length regulator, a requirement of the WTO agreement, rather it consolidated several aspects of the telecom sector. The major players vying for their share of the sector are, China Telecom, China Unicom and the People's Liberation Army (PLA). The Ministry of Foreign Trade and Economic Co-operation, or MFOTEC, over-sees China's foreign investment in telecommunications. The State Administration for Industry and Commerce (SAIC) is the arm responsible for regulations governing ICP's and ISP's. There are several other ministries involved with the Internet, including: The State Press and Publication Administration, which regulates news content; The 2 Computer hosts are estimated at 30,900 million and web sites at 595,550 according to the 13th Statistical Survey on Internet Development in China, which contains the most recent figures on the Internet, see China Internet Network Information Centre.<> 3 The Mil formulates national strategies, policies, plans, regulations and technical standards for the information industry; promotes development of electronics manufacturing, telecommunications and the software industry; oversees public information and broadcasting networks and the special networks of the military and other government departments; and supervises the telecom and information service market. <http://chinaonline.eom/refer/ministry_profiles/Mllb3:asp> 102 Ministry of Public Security and the Bureau for the Protection of State Secrets that supervises Internet security, including banned material and registration by Internet users. Other groups include he State Informization Leading Group, which was established under the State Council, and is responsible for setting central government policy. (McKenzie n.pag.) This is not an exhaustive list of all the players involved, but it does provide a glimpse of the varying interests that are vying for a slice of this medium. China, like many countries around the world, has regulations governing telecommunications that are a peculiar mix. As in many countries both politically open and closed, the telecom sector is viewed as sensitive, tied into national sovereignty and identity. Sovereignty is also inextricably linked to cultural identity. There are concerns, by many of these states that liberalization of telecommunication systems will erode the uniqueness of a particular culture. For many countries, what has been at stake here is far greater then a loss of economic control. The take-over of this sector through foreign ownership strikes at the heart of national sentiment. There are many parallels that can be drawn between China, Singapore and Malaysia. Regulations in all three of these states are heavily entangled with other laws, most notably those protecting national security. Traditionally the broadcast and print media have been the primary areas of concern. It is less so now as governments have found effective means to regulate and control content in an attempt to ensure cultural preservation and national security. Currently, the main arena of contention, for China and others, is penetration of the Internet. How critical and important this is to the Chinese government is reflected in the onslaught of regulations that have been put in place alongside the number of ministries currently involved in one aspect or another of the governance of this medium. China 103 has a veritable labyrinth of systems in place, all of which are intended to oversee and guide the country through these recent technological advances. 4.4.2 China's Internet The main governing body for the Internet4, the Mil5, is accountable to the State Council. China has been actively developing the technical infrastructure or backbone that would provide it greater control over content and transmission. When China successfully developed the Internet it then proceeded to launch a commercial Internet in May 1994. Along with several electronic initiatives, its development was so rapid that it leapt 400 percent in 1999, from about US $8 million to over $40 million. The total transaction amount of online shopping was US $62.9 million in 2000. It is predicted to soar to US $3.2 billion by 2004. (Jianhai) The figures say it all. Given that approximately 80 million individuals have access to the Internet, market potential remains of another 1.2 billion users. It is China's largest growing industry. This is not a market the Chinese government has shied away from. In fact, it has openly encouraged all of its ministries to develop an online presence, and to date some 70 percent of them have established some form of presence. Telecommunication liberalization, and in particular the Internet, will pose many new challenges for the Chinese government, as it has for other governments around the world. The question surrounding the impact that these new regulations will have on 4 Legislation that has been promulgated around the Internet includes: Telecommunications Regulations Sep. 2000; Internet Regulations Oct. 2000 which governs services; the Internet Information Release Services; Administration of Internet Publishing (online content) Aug. 2002, the joint regulations by Mil and the State Administration of Press and Publication Measures on the Administration of Internet Information Services (ISS) Aug. 2001; Encryption - Administration of Commercial Encryption Regulations Oct. 1999 (State Council); National People's Congress on Safeguarding Internet Safety - 19 t h meeting of the National Peoples Congress, Dec. 2000; The State Secrets Bureau - Regulations on the Administration of the Maintenance of Secrets in the International Networking of Computer Information Systems Jan. 2000; and Advertising regulations that were developed well before the advent of the Internet. 5 The MM is responsible for the regulation of ISP's and not ICP's. However, it does have the final authority to connect ISP's to ICP's. 104 national sovereignty, domestic economic regulations and moral and ethical values in China are mediated through stringent domestic regulations, political control and enforcement. China has been preparing to enter the WTO for well over 15 years. During those years, it did not sit back passively hoping for acceptance. It made a calculated decision for a regulated and tightly controlled sector. In addition, China has not handed over the telecommunications sector to foreign control, as it only allows for 49 percent ownership. It continues to maintain control over many of the more critical aspects of this sector. This is not to say that liberalization will have no effect or impact on the social, cultural and political development of China. It does, however, indicate that the impact will be slow and gradual, as the walls in cyberspace have developed a few cracks, but have not yet been demolished or destroyed. The traditional concept of a sovereign nation-state might be eroding. Nevertheless, there does not, at present exist a paradigm to replace it. However, the WTO presents a bold and fundamental set of questions, both by its nature and its avowed mandate. Not surprisingly, there has been a strong reluctance, and even outspoken opposition by many, to relinquish control if even for trade. There have been recent trade-offs, and many treaties and agreements signed, but at present, most continue to recognize a nation's right to govern its own affairs. Further, there has been a fundamental shift in the manner that the communication sector is viewed. Traditionally, states sought control over the infrastructure (hardware) and software. Today states, and China specifically, have become managers of information and not necessarily of concrete infrastructure. This shift has allowed closed countries to reap the benefits from a de-regularized infrastructure while still maintaining control over content. It is still premature to speculate as to whether or not the stringent measures taken to monitor 105 and control the Internet will have economic repercussions further down the road. Judging from the analysis in the Singapore section, Internet content restrictions have not dramatically altered economic development. China did open its door to the telecommunications sector with the WTO 6 , but with control restrictions. The signing of an agreement such as the WTO neither mandates nor regulates a country toward political reform. The WTO Agreement is a template for changing the telecommunications market. It does not contemplate a uniform set of national practices, but it does bind countries to common principles of governance. (Cowhey and Klimenko 9) Given the sheer volume and magnitude of the Internet, it is not surprising that China's policy-makers have concerns over changes in telecommunications policy and the impact this might have on sovereignty. Chinese authorities want to ensure "healthy and orderly development" of the Internet.7 With this goal in mind, they developed a "three-part strategy for maintaining a networked society -by providing economic growth and some personal freedoms, managing the Internet's risks, and harnessing its potential..." ('China's' 1) China is able to censor and block web sites, and relies heavily on its citizen's to self-censor and police unwanted material. In addition, given the suspicions and anti-American sentiment previously addressed, China did not enter into the WTO agreement without thoroughly examining the pros and cons of engagement with this international non-state body. "China's proposed entrance into the WTO thus stuck an uneasy balance between the desire of Chinese leaders to demonstrate China's "great power" status and to further economic development by joining the 6 Entry into the W T O accelerated regulatory change and ICT development. However, the W T O agreement states that the telecom market will go through a regulated step-by-step process. After two years, China is required to open up its value-added services. Foreign investment in these areas will initially be limited to 30 percent and eventually increased to 50 percent. They cannot have controlling stakes. 7 It is interesting to note that China left the door shut in respect to broadcasting, which includes television and radio. These are considered by government authorities to be primary mediums of information dissemination and control. 106 international economy on one side, and, on the other, the protectionist instincts of some regions and bureaucracies, the ideological and political concerns that such integration might prove socially disruptive, the concern of postmodernist intellectuals, and the populist nationalism of a large segment of the public." (Fewsmith 205) China calculated the social, political and economic risks of this membership. Membership undoubtedly has its price. But China in joining now established itself as an "insider," and therefore has power and influence in determining future rules of engagement. A pressing dilemma for Chinese authorities is that in the process of negotiating the WTO agreement, they neglected to extensively consult and involve the domestic players. This naturally has posed challenges for the embracement of this initiative. It potentially could contribute to prolonging the liberalization of this sector, as domestic groups are unwilling to relinquish control and often invoke an argument of national security to defend their position. This has further fuelled a resistance to acceptance and compromise. As was evidenced with Singapore and Malaysia, concerns and issues surrounding national security and nationalism are vital to authorities and citizens. In 2000, Chinese president Zhu Rongi stated," The Chinese people are ready to shed blood and sacrifice their lives to defend the sovereignty and territorial integrity of their motherland." And Jiang Zemin at the UN Millenium Summit (2000) stated, "The Chinese people know full well that a country that is unable to safeguard its sovereignty can not possibly protect human rights. Therefore, we cherish dearly our national liberation and state sovereignty that the Chinese people won through protracted and sanguinary struggles. I am sure that this is true of all nations..." (People's Daily) "In this context, Chinese foreign policy, including relations with the United States, is less important. The Chinese leaders will seek out opportunities when foreign relations assist Chinese development; and they will seek to 107 avoid entanglements and interactions abroad that would hamper effective growth. The Chinese authorities have other aspirations aside from economic development; they include protecting sovereignty and independence, and pursuing regionaland global power influence - but these have been generally tailored with a few exceptions (for example, Taiwan) to be generally consistent with Chinese development goals." (Sutter 205-6) Two keys distinctions need to be made between China, on one hand, and Malaysia and Singapore, on the other. First, China has clout largely due to its vast territory and population, currently at around1.2 billion people. Additional factors are the Chinese interspersed across the globe. These continue to have some impact, and many harbour strong nationalist sentiment. There continues to be some loyalty to ancestry, family and culture. Capital markets fail to register this characteristic,. It defies what they are about, which is money. For China and other countries, the singular pursuit of dollars does not supersede values, culture, norms and history. Second, China as a nation is much older then the other two cited, and it is at a different state of development. Although China continues to maintain a healthy and steady rate of growth, it would be difficult to predict when this mammoth nation will be defined as a developed country. Unlike the circumstances in Malaysia and Singapore, which tend to be more openly market driven, China has to contend with and answer to its socialist roots and history. The emergence of Internet technology poses a complex challenge to the traditional legislative bodies and structure of the Chinese government. On one hand, the government intends to utilize the Internet and its potential e-commerce capacity to boost China's socio-economic development. On the other hand, the Chinese government intends to maintain the socio-political control over the general population in order to maintain its traditional socialist system by curbing public socio-political insurgence. There are potential legal problems in cyberspace that the Chinese 108 government will face as it opens its doors wider to e-commerce liberalization. These include: 1) cyberspace is nowhere in particular; 2) events and transactions have no tie to a physical space; and, 3) cyberspace supports many activities by individuals and corporate entities with no ability to determine their physically location. (Post n.pag.) The Chinese authorities, in a similar fashion to Singapore and Malaysia, recognize the potential threat the Internet might pose. They, too, responded quickly and have been extremely calculating in their efforts to develop e-commerce activities. Like the other two countries, they have been successful in controlling the Internet through several mechanisms, both directly and indirectly. Given that such a small percentage of the population is connected to the Internet, its impact has been mitigated. Further, in respect to China and its ICT's resources, the picture will most probably mirror that of other states. What this means, then, is a greater digital divide between the urban and the rural. The census for 1997 indicates that the rural population is 70.1 percent and the urban stands at 29.01 percent.8 This divide deepens when you consider that workers in Shanghai earn eight times the national per capita average income, and a rural worker earns an average per capita of US $166 annually. (Mansell et al. 211) Defining and defending economic reforms in ideological terms has been daunting for the Communist Party of China (CPC). It raises questions regarding the nature of socialism. Given these potential hurdles, the state has ensured its controls and ownership of the Internet, domain names and the connections. They have also brought in measures holding individuals, ISP's and ICP's criminally responsible for all that is China Statistical Yearbook, Beijing, 105, 1998. 109 posted on the net. Through intimidation, electronic surveillance, censorship9, self-censorship, and filters10 they have been extremely successful in curtailing and preventing unwanted information from flowing through their lines. This does not imply that unwanted information doesn't seep through. As extensive the control mechanisms are, they are not full proof. As evidenced from both the 1989 student pro-democracy . movement and the recent Falun Gong movement, it appears that the effectiveness of China's public security apparatus has been somewhat weakened as a result of new economic reforms and social mobility. The ability of China's security apparatus to identify, monitor and locate anti-government groups and organizations is severely challenged and compromised with the advent of the Internet. Traditional methods of state control, such as penetration and surveillance11, are becoming increasingly difficult to maintain and manage. Nonetheless, China continues to be vigilant, taking appropriate measures even when viewed as being unpopular. Given China's clamp down on Internet cafes in 200212, the government's blocking of certain search engines such as Google13, and the M On-line censorship is part of a series of Internet-related security protection regulations including: the "Administrative Measures on Security Protection for International Connections to Computer Information Networks" (MPS, 30 Dec . 1997) and the" Rules of the P R C " on "Security Protection for Computer Information Systems" (State Council, 18 Feb.1994). 1 0 In Zittrains' and Edelman's extensive study of Internet filtering the findings support that the Internet in China is scrutinized on an-going basis and that numerous sites are blocked from access, they are not merely unreachable due to temporary glitches. From their data, it appears that the set of sites blocked in China is by no means static: whoever maintains the lists is actively updating them, and certain general-interest high-profile sites whose content changes frequently appear to be blocked and unblocked as those changes are evaluated. 1 1 It is estimated that there are over 30,000 state employees who have been assigned to watch the Internet, blocking sites and monitoring e-mail messages and chat rooms. (York A14) 1 2 Ibid. In October 2002, Chinese authorities cracked down on Internet cafes, closing down 14,000. Several thousand cafes were not permitted to re-open and the rest were forced to install devices to block unauthorized sites. 1 3 Ibid. Months after the crackdown on the Internet cafes, authorities shut down Google and Alta Vista search engines. They were eventually allowed to operate but banned web sites were permanently disabled. 110 arrest of pro-democracy activist Jiang Lijun in 2003,14 (for posting Internet articles calling for the overthrow of the Communist Party) it is apparent that China is not prepared to relinquish both its physical sovereignty and its information sovereignty. Blocked sites include sites about democracy and human rights, along with sites specific to China... Some blocked sites include Amnesty International, Human Rights Watch, the Hong Kong Voice of Democracy, the Direct Democracy Center, and dozens of Falun Gong and Falun Dafa sites. "It is interesting to note that not only do authorities ban local sites but they extend their targets beyond their borders. "Computer operators traced to the Ministry have attacked and crashed Falun Gung web sites in several countries. And when the Taiwanese President Lee Teng-hui announced that Taipei should deal with Beijing on a "state-to-state" basis, 20 Taiwanese government web sites came under attack." (Hachigian, "China's") Similar to Malaysia and Singapore, China has developed its unique form of self-censorship directed primarily at Internet content providers. "Regulations released in January 2000 prohibits on-line transmission of "state-secrets" serves as a useful catchall for limiting content, as do extensive regulations issued in October prohibiting content that subverts state powers, "disturbs social order," undermines reunification efforts with Taiwan, spreads rumours, "preaches the teachings of evil cults," distributes "salacious materials," dispenses pornography, slanders others, or harms the "honour" of China." (Hachigian, "China") Once again, the parallels between China, Malaysia and Singapore are pronounced. All three countries successfully control their citizen's through the fear of persecution. In respect to the Internet, authorities are not only in pursuit of economic gain. "The Chinese government is attempting to exploit the Internet for its distinct 1 4 Jiang Lijun was found guilty in Jan. 2003 and sentenced to four years in prison. He was one of five activists accused of subversive activities for signing ah open letter posted on the Internet (Vancouver SunA17) 111 administrative and political benefits, in particular, the regime seeks to streamline many of its. government operations through networked information management, distribution of propaganda online at national and local levels, and consolidate Beijing's central authority." (Drake et al.) An example of the latter is the Centralised National Automated ) Payments System (CNAPS), a national financial communications network. This national bank clearing system is slowly dissolving and replacing the provincial branches. In doing so, it is solidifying and concentrating monetary policy and control to the central bank's headquarters. In some respects, the consolidation of information on individuals resonates with Malaysia's MyKad. Although not part of its initial intent, states are finding new means to utilize the technology for control purposes. As evidenced from the above, China has managed to stay on its course of developing e-commerce activities and continues to control the Internet. There is a point where the two areas intersect and this is the point where state control could potentially have a negative effect on commercial endeavours. In order for capital to flow, markets to flourish, and competition to thrive, access is required to a constant and current flow of information. Authorities, recognizing that a fine balance is needed, have reacted quickly to situations where commerce might be impacted. 4.4.3 S u m m a r y What we have analyzed here points to the fact that the Internet in and of itself is neither the starting or finishing point of this debate. The Internet is built on the back of China's national information infrastructure which was rolled out over the last decade through the "Golden Projects." The government is the primary force in driving Internet development. Authorities have been in the driver's seat, overseeing a calculated and slow process of rolling the Internet out from the top down. Much as other 112 communication mediums such as print and broadcast, the Internet is viewed as key to exercising and maintaining administrative control. Since Deng's reforms were first put in place, liberalization has been the catch phrase for China. However, this is not necessarily a transition from authoritarian rule to democratic rule, rather it is viewed as liberalizing the economic infrastructure through a series of reforms. There is little question that tensions exist in China, however the degree of these tensions is critical in assessing the challenges presented to the authorities. For the past five years, China's growth rate has ranged between7.5 percent and 11 percent. There is little evidence to point to a decrease in this rate. In fact it has been predicted that growth will continue for many years to come. On the world stage, China has become an internal player and is no longer on the outside. It has been embraced through its accession in the WTO and numerous other international bodies. Acceptance into the WTO provides legitimacy and recognition on an international level. There does not exist, at least for the time being, an economic crisis that would precipitate economic mass protest, defection of business elites, or a major internal rift between political and military elites. This does not assume that there isn't.political and social dissent and conflict. On the contrary, there have been numerous outbreaks and protests in both the urban and rural areas. The government has maintained control and continues to exert strong control over terms of changes. (Haggard and Kaufman 38)15 China has adjusted to a myriad of crisis such as Tiananmen Square (more political in nature then economic) and been able to reassert control and authority through repressing opposition and regaining business loyalty. China can be considered a country in transition, spawning a new form of authoritarian rule. (Haggard and Kaufman 1 5 Haggard and Kaufman's analysis primarily focuses on the political economic transition from authoritarian to democratic rule. 113 28) There is no doubt that the inherent personal freedoms accepted as part of the Internet will be tested, by the evolving and ambiguous situation in China. At the same time as the government of China is overseeing Internet development for the economic benefit of the country, it remains highly vigilant to the long-reaching effects of this medium, both on national security and ultimately on the very fabric of modern China. One of the main questions today is, can the government of China develop commercial interests to its fullest potential, given its strict political control? Nonetheless, in spite of the so-called political risks, China has moved forward. Is the country's government naive in the belief that it can maintain control? It is difficult to project China's long-term future regarding trade liberalization within a socialist market economy. The strength of China's ability to withstand and endure as a system will be profoundly tested in the future. China today, is "feeling the stones while crossing the river." It has power and clout, it has become an "insider" on the world stage, and it has a history, culture and language that many authorities and individuals are ardent on preserving. 114 CHAPTER V Conclusion The broad-reaching impact of Internet Technology has created a profound effect on the modern global landscape. The beginning of the 21 s t Century has been, for many, a time of rapid-paced developments, electronically driven. However, as has been stated in this paper, the impact politically, socially and economically is significant for some, but not for all. Not only is access to the various forms of electronic media limited, the previously held belief in the omnipotence of it has proven to be falsely grounded. Numerous elements play into this, and, as has been pointed out with examples, countries have adapted well to the characteristics of e-technologies by using it to their own ends. Thus, the idealistic concept of a free media, accessible and usable by all, a vehicle of change and world-democratization, becomes more a question of who is controlling what. In a short period of time, the interpolation of a new technology has taken its place as a 'tool' of the nation-state. Can any state physically control the Internet, blocking unwanted materials from crossing their borders? The answer is, yes. Although this could change in the future, there are now several countries that have employed a variety of measures instigated to curtail an open access to the Internet. Our primary example of China is a case in point. As explored in chapter IV, China, Malaysia and Singapore presently have several security and control options available to them. Some of those measures, such as censorship, might not be as palatable from an investment perspective. At the same time, in the example of Singapore, it does appear to impact on economic development. The state is able to provide other enticing economic incentives, and can implement many measures to this end. These, however, come with the price of a sacrifice of personal freedoms. 115 Regardless of the measures states employ to restrict and control the Internet, the system is far from impenetrable, and there exists numerous ways and means that bypass existing measures. The fact remains that the Internet, in and of itself is neither the starting or finishing point of this debate. There remain many unanswered questions. Today, there are numerous opportunities and justifications for states to implement stringent controls and regulations on the Internet in the name of national security concerns. The current international climate post-9/11, the present Iraq-war era, and future economic globalization all have broad-reaching implications resulting in threatened boarders, heightened securities and a deep-seated need for political assurances. Is there, then, bound to be a new and a strengthened nationalism as a result? What we have seen is evidence that the Internet can be as conducive to contributing to fortifying the various institutions of democracy as to entrenching institutions of authoratarianism. 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