ESADEgeo Daily Digest, 17/11/2017

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Haaretz—Amos Harel / Israeli military chief gives unprecedented interview to Saudi media: ‘Ready to share intel on Iran’

  • For the first time, a senior Israel Defense Forces officer has been interviewed by a media organization in Saudi Arabia, which does not have diplomatic ties with Israel.
  • Lt. Gen. Gadi Eisenkot, the Israeli military chief, said Israel and Saudi Arabia are in complete agreement about Iran’s intentions, and noted that Israel and Saudi Arabia have never fought each other.
  • “With President Trump. there is an opportunity to build a new international coalition in the region. We need to carry out a large and inclusive strategic plan to stop the Iranian danger. We are willing to exchange information with moderate Arab countries, including intelligence information in order to deal with Iran,” added Eisenkot.
  • Eisenkot said Israel has no intention of initiating an attack on Hezbollah in Lebanon. “We see Iranian attempts at bringing about an escalation, but I don’t see a high chance for this at the moment.”

The New York Times—Brad Plumer & Nadja Popovich / 19 countries vow to phase out coal. There are some notable omissions.

  • At the COP23, Canada and Britain began a “Powering Past Coal Alliance” aimed at phasing out the use of coal power by 2030.
  • However, the countries that have joined the alliance so far account for less than 3 percent of coal use worldwide, and many were already on their way to retiring what little coal power they had left.
  • Coal is on retreat worldwide, but a recent report from the United Nations Environment Program warned that keeping global warming below 2 degrees Celsius would require either shutting down nearly every coal plant in the world before 2050 or outfitting the plants with technology to capture emissions and bury them.
  • The new anti-coal alliance has one notable omission: Germany, which still gets one quarter of its electricity from coal.

Politico—Emily Schultheis / German coalition talks head into overtime as parties miss deadline

  • German coalition talks will resume Friday, after the negotiating parties missed their self-imposed Thursday deadline for reaching an agreement to form a government.
  • The biggest sticking points remain migration and climate issues. The question of family reunification — whether refugees living in Germany can bring family members here — as well as to what extent Germany should shutter its coal plants, have been the most controversial.
  • “We’re convinced that we can come together if we want to come together,” Merkel chief of staff Peter Altmaier said.

Financial Times—David Sheppard / Norway wealth fund proposes end to oil and gas investment

  • Norway’s trillion-dollar sovereign wealth fund has proposed dropping its investments in oil and gas stocks, warning that the country already has enough exposure to petroleum.
  • The Norwegian central bank, which runs the Oslo-based fund, believed dumping its oil and gas holdings would make the country’s wealth “less vulnerable to a permanent drop in oil and gas prices”.
  • Although the proposal needs to be approved by the government and parliament, shares in some of the companies most affected fell immediately, with Shell down 2.5 per cent in London, and ExxonMobil down 1.3 per cent.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo. 

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ESADEgeo Daily Digest, 16/11/2017

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Financial Times—David Pilling / Zimbabwe’s military takeover fits the narrative of its patriarch

  • Robert Mugabe has not yet been formally deposed as Zimbabwean president, nor has General Constantino Chiwenga, the military commander who ordered yesterday’s takeover, declared himself head of state.
  • But Mugabe’s days as president seem to be numbered, and he may be replaced by Emmerson Mnangagwa, who was vice-president until he was sacked last week.
  • General Chiwenga has sought to portray the military intervention as a means of saving an increasingly frail and delusional Mr Mugabe from himself, as well as from “the criminals” around him.
  • The military’s purpose in taking over may well be to purge the ruling Zanu-PF party of its rogue elements — and thus ensure its continuation in power.
  • Members of the opposition suspect that the military intervention will not lead to a hoped-for opening up of the political system.

Politico—Emily Schultheis / German coalition talks go down to the wire

  • Angela Merkel’s Christian Democrats (CDU) and their Bavarian sister party, the CSU, have been in preliminary talks with the liberal Free Democrats and the Greens for more than three weeks.
  • As they approached today’s deadline set by Angela Merkel, the Greens and the FDP signaled that they were open to compromise, but the parties remain far apart on areas like migration, agriculture and climate policy.
  • Moreover, an internal document from the talks that surfaced last week showed there was still no agreement on a eurozone budget or the future of the eurozone bailout fund, the European Stability Mechanism (ESM), although the FDP’s Christian Lindner hinted at a compromise on the issue.
  • Should Germany have to go to the polls once again, support for Merkel’s conservatives would likely decline and the far-right Alternative for Germany (AfD) would be emboldened.

Foreign Affairs—Andrew Leber & Christopher Carothers / Is the Saudi purge really about corruption? Lessons from China

  • Analysts are not in agreement about the meaning of the Saudi purge. The arrests have nothing to do with corruption or everything to do with it; they are about consolidating power or a sign of power consolidated; they are the beginning of an era of transparency or further evidence of unchecked power.
  • The recent developments in Saudi Arabia have been compared with Xi Jinping’s “anti-corruption campaign”. The first takeaway from this comparison should be that autocrats like Xi can sometimes combine power grabs with substantial reforms.
  • The test of the Saudi reforms over the coming months will be whether the crackdown continues, whether Mohammad bin Salman (MbS) announces and enforces clear rules against official conduct, and whether purged elites are quietly released and “un-purged.”
  • Forthcoming analysis of 27 attempted authoritarian cleanups since 1945 suggests that leaders have succeeded when they had unconstrained authority to challenge the corrupt status quo and could count on strong state capacity to implement and enforce reforms.
  • Both Xi and MbS meet the first criterion, but MbS is far behind Xi when it comes to the second criterion. This could force MbS to drop the issue, because the arrests are imposing real costs on the Saudi economy in the short run.

Foreign Policy—Dan de Luce / Congress questions Trump’s exclusive hold on the nuclear football

  • For the first time in more than 40 years, U.S. lawmakers are holding a hearing to examine whether the president should have carte blanche to launch a nuclear strike.
  • The protocols for ordering a nuclear strike created during the Cold War were designed to ensure that the president — and not the military — had full authority over the nuclear arsenal. But instead of worrying about rogue military commanders, many lawmakers are now concerned the current occupant of the Oval Office.
  • Bruce Blair, a research scholar at Princeton University, and some former senior officials have argued for revising the nuclear protocol to add the defense secretary and the attorney general to the chain of command.
  • Some Democratic lawmakers have gone further, proposing legislation that would prohibit the president from initiating a nuclear first strike without a declaration of war from Congress. The billswould not affect the president’s authority to order a retaliation if the United States came under nuclear attack.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo. 

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ESADEgeo Daily Digest, 15/11/2017

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Al-Monitor—Bryant Harris / Congress moves bill jeopardizing Iran nuclear deal

  • The Strengthening Oversight of Iran’s Access to Finance Act, if passed by Congress, would make it much more difficult for Iran to purchase commercial aircraft from firms that do business in the United States.
  • The bill does not outright ban the sale of commercial aircraft to Iran. But it imposes reporting and certification requirements that could well prompt the Treasury Department to cease issuing licenses allowing for such sales.
  • “Iran would view [the bill’s] enactment into law as a breach of the JCPOA,” said Kenneth Katzman, an Iran expert at the Congressional Research Service. “The agreement contains a clear US commitment to undertake such sales to Iran.”
  • “My take on this bill is that if implemented the way I kind of expect, it probably would violate the JCPOA” said Richard Nephew, lead sanctions expert for the US negotiating team with Iran under the Barack Obama administration.

Foreign Affairs—J. Berkshire Miller / How Abe and Modi can save the Indo-Pacific

  • The relationship between India and Japan—historically strategically distant—has grown increasingly robust under the stewardship of Prime Ministers Narendra Modi and Shinzo Abe. One reason the two countries are coming together is a common strategic anxiety about China’s rise.
  • Both countries have come to share a sense of purpose in promoting the current order in the region, which is based on transparent institutions, good governance, and international law.
  • Delhi and Tokyo see the importance of building complementary diplomatic relationships that largely align with Washington but are not led by the United States. Both sides agreed in a joint statement to align their two regional strategies: Japan’s Free and Open Indo-Pacific Strategy and India’s Act East Policy.
  • Delhi sees Tokyo as a natural partner, with growing defense capabilities, that has developed a number of key relationships in the region. And Tokyo sees Delhi as a crucial geopolitical balancer that, despite some difference in strategic thinking, is increasingly willing to step up and contribute to regional security. However, how the two countries’ strategies will converge in practice remains to be seen.

Project Syndicate—Kemal Derviş / Democracy beyond the nation-state

  • Rodrik’s concept of a “political trilemma of the world economy,” which Javier Solana also recently explored, is useful, but incomplete. To get the most out of Rodrik’s concept, it is necessary to account for another dimension: the many levels of governance that exist in today’s world.
  • The tension between democracy and globalization seems to be less acute at the municipal level. The ways in which these dynamics can complicate Rodrik’s political trilemma have been on display in Catalonia, where the tension between local democracy and the nation-state is even more acute than that with globalization.
  • What if we adopted a new approach, in which local-level democracy and sovereignty were strengthened?
  • However, there are also serious risks linked with this approach. As metropolitan areas attract a growing share of capital, skilled labor, and innovative capacity, rural areas are likely to face economic decline. That trend creates fertile ground for populist politicians.
  • The nation-state would therefore have to retain a major redistributive role, though an appropriate balance must be struck, in order to prevent the trilemma from reasserting itself.

Financial Times—Sarah Murray / Mo Ibrahim: ‘It is the head of the fish that goes rotten first’

  • “It was obvious to me . . . working in Africa, that the problem is our failure to construct the right system of governance in our countries,” Mo Ibrahim says.
  • “When the colonial system collapsed and power was handed over in a rush, independence was a flag and a national anthem . . . We didn’t pay attention to building institutions.”
  • “It is the head of the fish that goes rotten first . . . So what is needed is to shed a light on the performance of the leadership.” That is what the Mo Ibrahim Foundation strives to do, by rewarding leaders who were democratically elected, strengthened their country’s democracy and human rights, worked towards increased prosperity and relinquished power voluntarily.
  • If no leaders can be found who meet the criteria laid out, the prize is not awarded. This has been the case in several years.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo. 

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ESADEgeo Daily Digest, 14/11/2017

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Politico—Jacopo Barigazzi / Mogherini hails ‘historic’ EU defense pact

  • 23 countries have declared they will participate in the EU’s Permanent Structured Cooperation (PESCO), an initiative proposed by France and Germany last year, and whose success was made easier by the UK’s decision to leave the bloc.
  • The UK, Ireland, Malta, Denmark and Portugal did not sign up to the pact, but by the time PESCO is launched at a summit next month, diplomats expect Ireland and Portugal to be on board.
  • Participants have signed up to a list of commitments which include “increasing the share of expenditure allocated to defense research and technology with a view to nearing the 2 percent of total defense spending” and to “regularly increasing defense budgets in real terms.”
  • At the moment, Europe spends 50 percent as much as the United States on defense yet only has 15 percent of its military efficiency.
  • La Vanguardia—Beatriz Navarro / Interview with Jorge Domecq / “Europa debe dejar de ser vista como sólo un poder blando”

Financial Times—Anne-Sylvaine Chassany & David Keohane  / French minister turns up heat on EDF over shift to renewables

  • France is considering changing the governance of state-owned utility EDF to shift its focus from nuclear to renewable energy as Emmanuel Macron’s government seeks to cut the country’s reliance on atomic power.
  • Nicolas Hulot, the popular energy and environment minister, said France’s largest electricity producer needed to embrace a transition towards environmentally friendly energy rather than “resist” it.
  • EDF shares dropped more than 10 per cent on Monday after it cut its profit and cash flow targets owing to falling demand and delays in restarting some of its ageing reactors. “EDF can revitalise itself through renewables,” said Hulot.
  • In a “pragmatic” move, Hulot announced last week that France would aim to reduce the share of nuclear power from 75 to 50 per cent of total energy consumption by 2035, from 2025 previously.

The New York Times—Stanley Reed / America’s ‘Renaissance’ to gains for renewables: global energy trends

  • The International Energy Agency is publishing its annual World Energy Outlook today.
  • By the 2030s, the United States is expected to produce more than 30 million barrels of oil and gas a day, the report says. That is 50 percent more than any other country has ever produced in a single year.
  • The sharp falloff in the price of oil in recent years has transformed the shale sector, which is now “leaner and hungrier” than ever before.
  • The United States is also on track to surpass traditional giants like Qatar and Russia and become the world’s largest exporter of liquefied natural gas.
  • The report forecasts that gas will be traded more widely and freely, potentially pushing down prices and making it more attractive to developing countries like India and China, which could bring major environmental benefits.
  • Renewables will continue to get cheaper, but the report forecasts that the share of fossil fuels used to meet overall energy demand will still be 75% in 2040, compared with 81% last year.

Foreign Policy—Stephen M. Walt / Trump isn’t sure if democracy is better than autocracy

  • It would have been hard to imagine in the 1990s, but it seems that in 2017 autocracy is back in vogue.
  • Instead of standing up for the United States as a beacon of democracy, Trump seems easily dazzled by vulgar displays of excess and unable to distinguish between the interests of the US and the self-interest of his extended family.
  • The US has often been inconsistent in its support for democracy. But it is one thing to acknowledge tradeoffs between core political values and other interests and sometimes to favor the latter, and quite another to cast off our ideals completely and rush to praise those who trample on them daily.
  • Does all of this mean that we are entering a new “Age of Autocracy” globally? Not so fast. The long-run track record of most autocracies isn’t that great, whereas the US and other democracies retain a capacity for self-correction.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo. 

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ESADEgeo Daily Digest, 13/11/2017

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Project Syndicate—Moon Jae-in / Toward a people-centered ASEAN community

  • ASEAN 2025: Forging Ahead Together, endorsed by ASEAN leaders at their 27th Summit in November 2015, states that the group strives to be a “people-centered, people-oriented community” that seeks to build a caring, sharing and inclusive society.
  • “My vision is to create, in cooperation with ASEAN, a ‘peace-loving, people-centered community where all members are better off together.’ This can be summed up in ‘three Ps’: People, Prosperity, and Peace.”
  • “We should also work to build a community of peace where people are safe. In Asia, we all are facing the threat posed by North Korea’s nuclear weapons and missiles, as well as non-traditional security threats, including terrorism, violent extremism, and cyber-attacks.”
  • “Creating a structure for mutual prosperity requires lowering regional and transnational barriers to facilitate the flow of goods and promote people-to-people interactions.” That is why “we will [...] accelerate the pace of negotiations for the further liberalization of a Korea-ASEAN Free Trade Agreement (FTA).”

Brookings–Adel Abdel Ghafar / Muhammed bin Salman and the push to establish a new Saudi political order

  • The recent purge in Saudi Arabia has targeted three groups: (1) princes, (2) technocrats and non-royal officials, and (3) businessmen and corporate leaders.
  • By targeting senior and prominent princes, crown prince Mohammed bin Salman (MBS) is signaling to the House of Saud and its estimated 15,000 princes that the old, consensus-based order and previous power-sharing arrangements amongst the various branches of the ruling family are effectively over.
  • The arrest of technocrats and businessmen is a signal to the public and private sectors that no one is above the law.
  • Finally, the arrests send a powerful signal to a key constituency for MBS: Saudi youth. To this constituency, economic problems—including unemployment and corruption—and the kingdom’s social conservatism are key issues. That is why MBS has also shown his willingness to take on the religious establishment.
  • So far, the arrests have been met with approval from youth and the population at large. However, according to Brookings’ Bruce Riedel, the breakdown of consensus within the royal family is likely to create “a much less stable kingdom with increasingly impulsive and erratic policies.”

Politico—Harry Cooper / Guy Verhofstadt struggles to herd Cat(alan)s in fractious party

  • The disputed Catalan independence vote — and Madrid’s response to it — has sparked an internal spat at ALDE, in particular between Ciudadanos and pro-independence MEP Ramon Tremosa.
  • Verhofstadt has sided with the seven pro-union Spanish MEPs in the group.
  • The desire to protect its numbers — which dictate funding, committee chairmanships and speaking time — can  sometimes lead to contradictions in ALDE’s professed pro-EU stance.
  • Andrej Babiš, whose party belongs to ALDE, is set to become the Czech prime minister after running a campaign that appealed to voters’ hostility to joining the eurozone — something Verhofstadt regards as sacrosanct.
  • French President Emmanuel Macron has so far declined to align his La République en Marche with ALDE, and has flirted with Ciudadanos, Belgian Prime Minister Charles Michel and Luxembourg’s Xavier Bettel — parties with 10 MEPs that currently belong to ALDE.

Politico—Sara Stefanini / Climate activists sour on Paris accord

  • The climate pledges countries have so far submitted under the Paris deal would actually make a temperature increase of at least 3 degrees by the end of the century “very likely,” U.N. Environment said last week.
  • The COP 23 talks in Bonn are stuck on complex rules that fail to spark much public or political excitement.
  • It’s very difficult for countries to pull back from the intricacies of negotiating global accounting standards and look at the broader picture of whether the Paris process is going to end up being enough to bring global warming under control.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo. 

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ESADEgeo Daily Digest, 10/11/2017

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South China Morning Post—A. John & Y. Xie / China to ease ownership limits on foreign joint ventures in finance sector

  • China’s financial services sector will be relaxed over the next five years. According to Zhu Guangyao, the Chinese deputy finance minister, all foreign players will be allowed to hold a majority stake in joint ventures with mainland Chinese securities companies and life insurance companies.
  • Foreign bank’s stakes in Chinese banks, which had previously been capped at 25 per cent, will be removed.
  • “The significant opening up in the banking industry [...] is above expectation,” said Chen Shujin, chief financial analyst with Huatai Securities in Hong Kong.
  • Analysts said the announcement was good news for foreign banks, though they were cautious on the impact on China’s overall financial system.

Financial Times—M. Sandbu / Globalisation is proving the optimists right

  • Around 2011, the growth rate of international trade volumes fell behind the rate of global economic growth. But this year, trade has begun to outpace economic growth again, reversing this deglobalisation.
  • The increased momentum in most regions of the world over the past 18 months or so suggests that the drag on growth from weak investment demand is set to wane.
  • The EU –and also to some extent Japan, which has been working to rescue the TPP—have found a sense of purpose in doubling down on efforts to liberalise international trade to fill the US leadership gap. And President Trump is also being constrained domestically.

The New York Times—S. Reed / As wind power sector grows, turbine makers feel the squeeze

  • Wind power is an increasingly important source of electricity around the world, and prices for the technology are dropping fast. But governments across Europe and North America are phasing out subsidies and tax incentives that had helped the industry grow, squeezing companies.
  • Siemens Gamesa Renewable Energy reported a €147 million loss for the third quarter. The Madrid-listed company said it would have to shed 6,000 jobs.
  • In addition to the phasing out of tax credits and guaranteed prices by some governments, prices for solar power have fallen rapidly, making it a competitor to wind in some parts of the world.
  • Perhaps more significant, countries like Britain, Chile and Germany are using competitive auctions more often to award enormous wind and solar power projects, helping push down costs.

Politico—G. Allison / Will Trump and Xi ‘solve’ North Korea?

  • Will Trump really “solve” North Korea, as he says he will? The answer is most certainly no. When Trump leaves office, a nuclear-armed North Korea will remain a major challenge for his successor.
  • Where will we be a year from now? There are three alternatives: (1) North Korea will have completed the next series of ICBM tests and be able to hold American cities hostage; (2) Trump will have ordered airstrikes on North Korea to prevent that happening; or (3) a minor miracle will have avoided the first two possibilities.
  • “If forced to place my bet, I’d wager that Kim wins. He will conduct the tests, and U.S. intelligence will report that he now has a credible threat to hit the continental United States.”
  • North Korea may then decide to sell nuclear weapons to another rogue state.
  • Currently, most of Washington’s national security experts are not only expecting, but even hoping for the first option, since they find the second unacceptable and the third too remote a possibility to believe.
  • But Xi and Trump may still be able to persuade Kim to halt his nuclear advance. In order to do that, it should be possible to find adjustments the U.S. could make in exercises, bomber flights and troop levels in South Korea.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo. 

Política Internacional | Permalink

ESADEgeo Daily Digest, 08/11/2017

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European Council on Foreign Relations—J. Barnes-Dacey / Destabilising Lebanon will only strengthen Hezbollah

  • The recent resignation of the Lebanese Prime Minister, Saad Hariri, appears driven by the Saudi leadership’s desire to confront Iranian regional ascendancy.
  • Riyadh is unwilling to see Hariri provide legitimising cover for Iran’s Lebanese ally, Hezbollah, which is part of the current government of national unity.
  • While the resignation and wider strategy aims to pull the rug from beneath Hezbollah’s feet, it is more likely to destabilise the country and ultimately strengthen the group’s hand.
  • Rather than follow the U.S. and Saudi lead, Europeans should veer the other way, taking measures that aim to preserve Lebanon’s stability and governance structures, and to prevent wider conflagration.
  • Europeans should look to persuade the Saudi leadership and its US backers of the merits of a policy in line with the Kingdom’s recent reversal in Iraq, where Riyadh is now re-engaging the Baghdad government in a bid to balance Iranian influence.

Bruegel—E. Mourlon-Druol / Rethinking Franco-German relations: a historical perspective

  • The re-election of Angela Merkel and the election of Emmanuel Macron in 2017 created a new potential basis for a strong, like-minded Franco-German alliance that would be able to agree on substantial policy issues.
  • However, an examination of some of the past major Franco-German agreements reveals a more complex picture than is usually recorded.
  • The Schuman Plan (1950), the European Monetary System (1979) and the Maastricht Treaty (1992) left their mark as European integration milestones, but these Franco-German bargains were often one-sided and incomplete.
  • Most of these agreements also involved critical input from other EU members, and suggest that the Franco-German tandem alone cannot lead the EU27 in the twenty-first century.

The New York Times—S. Reed / Iraqi Kurds’ independence vote exposed risks to energy strategy

  • After Iraqi Kurdistan’s independence referendum, the loss of territory to Iraqi troops has come on top of worsening trends in the local oil sector and continued tensions between the region and its neighbors.
  • Those factors raise questions about the Kurds’ strategy of achieving political independence through energy, which provides nearly of all the regional government’s revenue.
  • Drilling in Iraqi Kurdistan has not produced the large finds that some oil companies had hoped for, leading them to back off. Chevron said recently that it was suspending operations in the region, and Total relinquished its exploration blocks last year.
  • Massoud Barzani, Kurdistan’s longtime regional president, has said he will leave his post. That could create a power vacuum, threatening the region’s domestic stability and complicating talks with the federal government and neighbors like Turkey.

Financial Times—H. Kuchler / Cost of cyber crime rises rapidly as attacks increase

  • The June “NotPetya” cyberattack, which exploited a vulnerability in Ukrainian accounting software, ended up being much more extensive than “WannaCry”.
  • Overall, the cost of cyber security for companies rose 22.7 per cent last year to an average of $11.7m, mainly due to a rising number of security breaches. The number of breaches is up an average 27.4 per cent year on year.
  • Ransomware attacks doubled in frequency in the last year to make up 27 per cent of all incidents.
  • With so much uncertainty, companies are inevitably turning to the cyber insurance market for protection.

The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo.

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