About everything in the world
As China’s balloon deflates, a new space race is rising.
Now that the US military has shot down a suspected spy balloon from China, there will be debates about the balloon’s meaning, its capabilities, and why it was up there in the first place.
Though on Friday former CIA director Michael Hayden said its threat to the welfare of Americans was vastly inflated, others described the incident as a wake-up call. Former Trump national security adviser H.R. McMaster hopes it will lead to a “sputnik moment,” harkening back to the US space race with the Soviet Union. The Wall Street Journal even warned of a “balloon gap” with China.
The balloon was flying at about 60,000 feet and may have been collecting intelligence. It flew over military sites, and the Pentagon said it was a surveillance balloon, which China’s Ministry of Foreign Affairs denied, saying “it is a civilian airship used for research, mainly meteorological, purposes.” The balloon’s debris are now being recovered and examined to learn more about the Chinese technology.
As the rhetoric around the threat of China hits a hyperbolic pitch, one thing is clear: space is the place — for military contractors and private capital, that is. When I’ve asked military industry experts and investors in recent months about broad trends to watch in the coming year, many have emphasized that space-related technologies, as well as satellites and drones, are a booming industry. Though each of those technologies do different things and operate at different altitudes, they each are arenas of intensive US competition with China — and technologies where artificial intelligence and autonomy will be tested.
Former President Donald Trump did launch the Space Force, but this new space race playing out is not the exclusive domain of governments. Private investors compete to pick darling startups, with former US national security leaders joining advisory boards to provide strategic insights into the geopolitical landscape.
More than $45.7 billion of private capital was invested in the space industry in 2021. Last year was slower ($21.9 billion), but that might have been a function of 2021 being so fire hot. Despite the tech layoffs of late, companies that have both cutting-edge software and hardware are attracting big investments.
And now balloons will enter the conversation.
A ballooning commercial space industry
Balloons, it turns out, are already part of that US arsenal, with the Pentagon spending $3.8 billion over the past two years on them, according to Politico. As industry expert George Howell posted on LinkedIn, “High Altitude Balloons are actually a pretty smart thing to invest in, they’re cheap, easy to transport, can be fielded in large numbers and are payload agnostic,” meaning that while they’re most likely to be carrying cameras or radar, in certain situations balloons could field a weapon.
The military contractor and balloon-maker Aerostar put it even more bluntly in a video it posted to social media this week: “Not even the sky is the limit!”
Balloons are an old technology, susceptible to high winds, but their vulnerabilities also translate into advantages, as they fly low enough to avoid detection, says George Nacouzi, a senior engineer at the Rand Corporation. He predicts “some focus on anti-balloon technology,” including “balloon killers.”
Kevin Liu Huang, an entrepreneur who writes the Chiral Defense newsletter about trends in military tech investments and startups, is not concerned about a balloon gap per se, but he sees this episode as emblematic of US-China competition over satellites and drones. “It’s all a very thriving kind of geopolitical competition,” he told me. “It’s also a very thriving industry and market.”
These trends are now likely to be capitalized on by private US technology companies, military contractors, and the researchers who study the space race who are often underwritten by the industry itself. “Beijing is rapidly expanding its government and commercial space sectors,” Kari Bingen of the Center for Strategic and International Studies in a recent congressional hearing. “We must take urgent and purposeful steps to maintain our space advantage.” Last year, Rep. Mike Gallagher, a rising Republican national security figure, argued that the Pentagon should purchase commercial satellite technologies, which he said are moving faster than rigid government purchasing efforts.
One signal of how hot satellite and space startups are is that they’ve become a revolving-door home to retired military and intelligence officials. Satellite imagery provider Planet is one of former Google CEO Eric Schmidt’s big investments. There’s also HawkEye 360, whose constellation of satellites use radio frequency to help military and intelligence clients track goings-on below, to which many former US policymakers have decamped, and Maxar Technologies, a satellite company known for its high-resolution images of Earth.
The implications of the balloon incident for the space and satellite industry won’t be felt immediately, but a sense of what might come was apparent at an event last week — before the balloon news broke — in midtown Manhattan hosted by Silicon Valley Bank. A member of the venture group America’s Frontier Fund spoke on a panel and offered rare forthrightness about the benefits of investing in advanced technologies to counter China. “If the China/Taiwan situation happens, some of our investments could 10x, like overnight,” the representative of America’s Frontier Fund said at the event.
The fund is backed by Schmidt and tech tycoon Peter Thiel, and in its own marketing compares its cutting-edge investments to the urgency of the US-Soviet space race. McMaster, for his part, serves on the fund’s board of directors and as a board member of Shield Capital, another military-focused investment group whose portfolio companies include satellite companies, like Hawkeye, as well as drone producers.
“Remember 1957 with the Soviet satellite,” McMaster said. “Maybe this is a wake-up call that, hey, we need to compete more effectively against the CCP, the Chinese Community Party, and its actions against us.”
The massive earthquakes come on top of decades of civil war in the region, which has created millions of refugees and a spiraling economic crisis.
Editor’s note, February 6, 5 pm ET: This is a developing story and will be updated as new information becomes available.
More than 5,000 people were killed after a magnitude 7.8 earthquake struck Turkey and Syria in the early morning hours of February 6. A magnitude 7.5 earthquake followed later that afternoon, along with scores of powerful aftershocks, adding to the devastation in a region already roiling from years of conflict and economic and humanitarian crises.
A more than 10-year civil war in Syria has destabilized the region for years, which is still suffering from an ongoing — and chronically underfunded — humanitarian emergency. Millions are displaced within Syria or have fled to Turkey, which is contending with high inflation and a deepening economic crisis. The earthquake unleashed widespread damage and destruction in some of the most at-risk areas in the region.
Thousands are injured, and the death toll continues rise as search and rescue operations continue in difficult, cold, and stormy conditions. Freezing, wintery conditions are hampering some of the recovery efforts, as the window to find survivors gets narrower and narrower.
The magnitude 7.8 earthquake struck near Nurdağı, in southern Turkey, according to the United States Geological Survey around 4:17am local time on February 6. Southeastern Turkey and northern Syria were among the hardest hit areas, but the quake was felt as far away as Lebanon, Egypt, Jordan, and Israel. Another quake, this one about 7.5-magnitude, struck around 1pm local time.
This catastrophe hit an already fragile region, which has been marred by decades of civil war in Syria, and economic, humanitarian, and public health crises. Turkey is facing a profound economic crisis, with a collapsing currency and extraordinary inflation that hit around 80 percent last year, the highest in about 25 years. A survey from late summer found that almost 70 percent of those polled in Turkey had trouble affording food. For years, Turkish President Recep Tayyip Erdoğan has embraced a heterodox economic policy, which involves keeping interest rates low, leaving the Turkish Central Bank with few tools to cool down the overheating economy. The economic costs of the earthquake are not fully clear, but the United States Geological Survey estimates it could be about 2 percent of Turkey’s GDP.
This part of Turkey — including Gaziantep, which is near where the quake hit — also hosts a large population of Syrian refugees. The economic crisis in Turkey has helped fuel a backlash against the approximately 3.6 million Syrian refugees in the country, who are already facing poverty, discrimination, an increase in violent attacks, and the risks of deportation.
Within Syria, the civil war continues, and it has created one of the world’s most persistent — and persistently underfunded — humanitarian crises. The earthquake created widespread destruction in northern Syria, including the last rebel-held holdout in the northwest where it is estimated hundreds of people were killed. About 4 million people there, many of them displaced from other parts of Syria many times over, depend on international humanitarian assistance. Much of that food and medical aid arrives from one border crossing from Turkey, which the United Nations says is closed because of earthquake damage.
Humanitarian groups in the region fear the earthquake will deepen the humanitarian emergency. “Our colleagues in North West Syria reported that the situation is catastrophic, with the area affected by the earthquake being the center for over 1.8 million displaced Syrians who were already suffering after a decade of conflict in Syria,” said Kieren Barnes, Mercy Corps Country Director for Syria, in a statement. “Already, 4.1 million people were going hungry in North West Syria and food insecurity has worsened since the war in Ukraine started, with prices of essential food items spiking and shortages of staples in some communities.”
About 2.1 million people in northwestern Syria are also at risk of a deadly cholera outbreak. The outbreak began in northeastern Syria, attributed to contaminated water from the Euphrates River — which people were relying on, in part, because of the water infrastructure destroyed by years of fighting. About 47 percent of people in Syria rely on unsafe drinking water, a potentially even bigger risk after the massive infrastructure damage wrought by the earthquake. In northwest Syria, in particular, this outbreak was straining an already stretched and under-resourced health system, which will now also need to find ways to treat those injured in the earthquake.
“Many in northwest Syria have been displaced up to 20 times, and with health facilities strained beyond capacity, even before this tragedy many did not have access to the health care they critically need,” Tanya Evans, Syria country director for the International Rescue Committee, said in a statement.
Ground fighting still breaks out in northwestern Syria, as do deadly airstrikes, usually from pro-government forces, which hit northwestern Syria. But for years, the Syrian government, with help from Russia, battered cities in northern Syria, like Idlib and Aleppo, and the surrounding area, all of which has weakened and damaged buildings and infrastructure. Tens of thousands already living in makeshift shelters, camps, or tents. “What makes it more dangerous is that the bombing has affected the buildings, which have almost destroyed infrastructure,” a White Helmets representative told the Washington Post.
The devastation extends beyond northwest Syria as the country as a whole has been overwhelmed by years of war and destruction. International sanctions against Syria are also deepening the economic crisis Syrians face. The country faces record and widespread poverty and food shortages. About 90 percent of Syrian live below the poverty line, and nearly 75 percent of Syrians struggle to meet their most basic needs. The war in Ukraine, which has raised food and fuel prices worldwide, has also strained the Syrian economy.
In Syria, too, where pro-government and opposition groups have control in different areas, there is a risk of unequal aid access and assistance in the wake of the quake. Syria’s President Bashar al-Assad has few international friends, and though partners like Russia and Iran have offered support, it is likely that most Western governments will support the UN and other humanitarian organizations, rather than provide direct support. John Kirby, the National Security Council’s chief coordinator, said Monday on a call that the US is working with “humanitarian aid organizations that we routinely partner with to assist them in their efforts on the ground and Syria.” But, again, now the primary aid route into Syria is now shut.
And across the region, the crisis is still acute, as agencies and officials rush to find survivors in the rubble as temperatures drop. The White House has described the situation as “fluid,” and many humanitarian agencies are trying to fully assess the situation. The Guardian also reports that there are questions about the response ability of many aid agencies in the region, as many of them are based in places like Gaziantep, ravaged by the quake.
The earthquake compounds catastrophe upon catastrophe in Syria and Turkey. It is likely to exacerbate those that already exist — displacement, food, economic, and health — while creating new, unpredictable ones.