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2019/01/02National Sovereignty in the Age of Network Defence (By Guy-Philippe Goldstein, Advisor to PwC France)

Since the end of the Thirty Years’ War and the signing of the Treaty of Westphalia in 1648, the State has been the bedrock of international relations. Sovereignty is based on power, the power of the State, whose will is independent of other States — otherwise, it is no longer sovereign. But how is the independence of this will defended in reality? This question is really two questions. First, how is wealth, being fundamental to the development of a State, created? Second, how is this wealth defended in a military sense?

In pre-industrial times, the answers were simple. In a subsistence economy, wealth is essentially derived from farming of agricultural land, a limited resource. A State remains powerful because it is capable of establishing borders that protect this agricultural land and its riches. This is what is enshrined in the Treaty of Westphalia. It may be added, in the vein of the great American sociologist and historian Charles Tilly, that one State can increase its wealth because it can steal the land of another. The instrument of mass violence that is the army threatens the agricultural land on the other side of the border. It is a tool for power par excellence in national sovereignty. A perfect illustration of this pre-industrial strategy lies in Prussia’s development of its own power in the 18th century by enlarging and modernising its army.

The digital revolution deeply challenges these principles. In this revolution, wealth is created in information networks, which may grow without limits as connections multiply. The network economy effectively glorifies interdependence. To be sure, the phenomenon had already arisen with the industrial revolution and the new importance conferred upon international trade. However, after 1945, it was coupled with the phenomenon of the development of nuclear weapons, those ultimate instruments of mass violence. For a power like France, nuclear weapons strengthen sovereignty. Once it had acquired nuclear capabilities after the first nuclear tests and the commissioning of the Mirage IV, France could withdraw from NATO’s integrated military command in 1966 while continuing the cooperation written into the Ailleret–Lemnitzer agreements. Therein lay a form of equilibrium between independence and interdependence.

The emergence of cyberspace also changed the calculus. Nuclear armament still belongs to the hardware realm: once acquired, the “atomic machine” does not require constant updating and can serve as a deterrent for several years with no need for an international cooperation effort. Cyberspace, by contrast, is an environment that sees the appearance of new generations of cyber weapons every 18 months — and, at the same time, accelerated development of both the field of application and software variety of the attack surface. Gaining the advantage of acquiring the best information on an adversary requires having the largest and densest information network. Thus an informal WhiteNet for western cyber defence is born. This involves State cooperation according to concentric circles of trust woven with exchanges with academic institutes, private groups and even freelance hackers joining bug bounty platforms. This network renews and reinforces the concept of collective security.

How, then, can a State defend its sovereignty? In other words, how can a State build a system of influence in this network of interdependence in order to preserve its most vital interests while participating in reciprocal exchanges? Small countries such as Israel and Estonia may be setting an example. In a network, wealth is not built by erecting borders and protecting limited resources. Quite the contrary. Wealth in a network is built by adhering to Metcalfe’s law: the more connected a node is, the more valuable it is. If the links are determined based on the usefulness of the contributions made (not imposed by force, which would undermine the information network), then the economic, military and political conclusion is that the node that contributes the most to the other nodes is the node that has the most value. In other words, the more useful a small country is to other countries, the more esteemed it will be in the game of interdependence with its big brothers (America, NATO, etc.) and the better its vital interests will be preserved.

Maximising “usefulness” in an information network involves a special effort and a particular focus on digital innovation. Again, Estonia and Israel act as examples. For strategic reasons, in the 1990s, political decisions were made to pursue digital development as a national priority. This includes an introduction as early as possible to information technology, a selection of the most talented people for cyber elite units detected several years before military service, and above all an economy geared towards the small units that constitute start-ups over major organisations to bring about breakthrough innovation. Even when it comes to cyber defence, a country like Israel prefers that its former young officers go found a start-up rather than remain in the armed forces. Similarly, Estonia has the largest number of start-ups per capita thanks to the emphasis it puts on these small organisations. Start-ups are funded by turning to VC financing, especially from abroad. This ‘smart money’, often coordinated by a former entrepreneur, offers the irreplaceable experience of developing an eminently fragile organisation and, at the same time, grants access to international networks. VC financing accounts for 1.0% of the GDP of Estonia and 1.5% of that of Israel — as opposed to 0.1% of that of a country like France. The underlying challenges are not those involved in the creation of national “gems,” but those involved in the funding and development of a human ecosystem — i.e. a potentially dual civil–cyber talent network consisting of IT professionals and entrepreneurs and constituting the core of this new power in the digital age.

Only the development of this connected ecosystem, influential for its ingenuity and its “usefulness” to other powers, grants a nation greater influence and therefore better preservation of its particular interests. Such is one of the major influence strategies in this new digital century, marked by new and deep interdependencies arising from the global network.