Who's afraid of Y2K?

Global Report - Monitor reporters around the world take a look at how

Here's a pre-New Year's pop quiz: A Y2K failure in which of the following countries poses the greatest risk to the US economy?

A) Russia, with its nuclear power plants and arsenal.

B) Saudi Arabia, whose oil greases the world economy.

C) China, whose creaking industrial infrastructure includes factories and software obtained from the former Soviet bloc countries.

D) Canada, one of the world's most technologically advanced countries, with which the US shares the longest undefended border in the world.

Gotcha? It's Canada.

For extra credit, name the country Canada is most concerned about.

And the answer is: the United States.

A US Commerce Department report released last month found that "other ... countries ... probably do not pose any greater danger than Canada."

Though noting that "Canada has worked very hard to prepare for Y2K," the report goes on to to say, "The Canadian economy is IT-intensive, and therefore inherently vulnerable to IT [information technology] failures."

"You have to put all this into context," insists Guy Mc Kenzie, the Treasury Board official in Ottawa and official spokesman for Canada's Y2K efforts. It's not that Canada poses a big threat, just that it poses a bigger threat than other countries.

And interdependence works both ways, he adds: The US is the country posing the greatest Y2K threat to Canada. "For us, it's even worse: The US represents 85 percent of Canada's trade."

The US Commerce Department evaluated the Y2K threat from foreign countries according to four criteria: the technology intensity of their economies, their level of trade with the US, their technological links with the US, and their level of preparation for the moment when 1999 becomes 2000 and some computers may think they're back in 1900.

Saudi Arabia's oil is important -but the oil industry is seen as well prepared for Y2K. China may not be well prepared, but has "few channels through which ... disruptions could be transmitted to the US," according to the Commerce report. Russia's nuclear-power plants have been getting a lot of attention over the past couple of years.

But Mr. Mc Kenzie's counterpart in Washington, John Koskinen, told The New York Times he is "satisfied now that no operating system will fail for Y2K reasons."

Indeed, Russia's nuclear centers are so old that they pose little risk of computer problems in the new year, according to Vladimir Kuznetsov, an accidents analyst with the International Chernobyl Foundation, a Moscow-based watchdog association.

He said most were designed in the 1960s or '70s, employing now antiquated technology. "Therefore the year-2000 problem is not so dangerous for Russia as it is for the West."

Those that have updated technology have made provisions for Y2K preparedness, he says. A bigger problem, therefore, for Russia is that its stores of radioactive waste are up to 90 percent full, and that equipment generally is falling apart. There is also general lack of financial funding to keep stations in good shape. The same situation holds for other former Soviet states, he says.

The Russian newspaper Sevodnya recently cited a pessimistic assessment by the International Atomic Energy Agency in Vienna. It said there could be problems at Chernobyl in the Ukraine, a nuclear station in Armenia, another at Ignalinskaya in Lithuania.

But Western experts quoted in the newspaper differed with the prognosis, and say that Chernobyl in particular poses no great risk of problems due to Y2K.

Germans, like most other Europeans, have been relatively calm about "the millennium problem," as Y2K is known in Germany. Last week the economics minister and leading industrial representatives soothed any doubts about the country's preparedness.

In Berlin, where more than a million revelers are expected, the city transport company is taking extra precautions. It has drawn up down-to-the-minute plans to stop elevators in subway stations well before midnight and to pause service shortly before the new year.

Trains will resume service in a staggered manner to avoid overloading the power network. Utilities are confident that there will still be enough juice to keep the capital going. "The lights will not go out," says Heinz Klinger, president of the Association of German Electricity Works.

Commerce Department official Robert Shapiro has compared the Y2K issue to "something like a tangled shoelace for a world-class marathon runner," going on to add that because it's a marathon, there's been time to correct the problem.

But it ain't over till it's over, as the saying goes. In Ottawa, officials plan for their Year 2000 Project Office to be open 24 hours a day, seven days a week from Dec. 29 through Jan. 7, Mc Kenzie says. "We're leaving no stone unturned."

Anne Stirling, a network specialist in London, Ont., is a little less bullish. She has in mind a mental image, she explains, of a factory in China or elsewhere in the developing world where microprocessors come off the assembly line and then are tossed into a bin. Someone "may have a new computer," she says, "but the real-time clock is a chip that was sitting in a bin for who knows how long -five years?"

Indeed, most companies' software collection has more in common with one of Grandma's patchwork quilts than we might think. "In most companies, the software is not all shiny and new; it's not a homogenous environment," says Nick Gogerty, senior analyst at the consulting firm International Monitoring, in London. Rather, a head office will use one version, branch offices use another version or versions, or an important program may have been cobbled together using elements from other programs - "legacy software" is the elegant euphemism.

In fact, Y2K prep has brought to light for some how many technical glitches happen every day -phone calls that don't go through, automatic-teller transactions canceled on a whim. But, Mr. Gogerty continues, "We have experience-based learning that tells us ... that computer failure is something that is solved in a minute and a half ... this will be different."

He adds, "There's been surprisingly little demand for third-party verification" of Y2K compliance. He explains this phenomenon thus: "A lot of guys like to work on their own cars."

He relates the experience of Shell, the oil giant, which had its vendors survey its facilities -including offshore oil rigs with microprocessors embedded in them. The vendors reported back that 10 percent of these so-called embedded systems were at risk. A third party was then called in -and that firm found 20 percent at risk.

Embedded systems, microprocessors in everything from cars to elevators to toasters, number anywhere from 25 billion to 50 billion around the world.

They are the computers that people may have forgotten to count.

The nature of the Y2K problem is such that "you can't catch up by throwing time and money at it," Gogerty adds. Not that some people aren't trying to. "Italy's probably the best example of this," he says, with the government saying the country will rise to the challenge with "an incredible burst of Italian energy," he adds in a tone that might be described as sympathetic skepticism.

Consultant Michael Fletcher of HighSpin Corp. in Ottawa has a darker view. He is concerned that businesses "don't get the supply-chain issue -they really don't."

Just back from Outer Mongolia, one of the 30 some governments with which he's been consulting as a World Bank contractor, he cites an example of what he means: A small Canadian clothing store that will order a few thousand dollars' worth of cashmere garments this spring for the fall 2000 season may not be able to get them.

Somewhere between Outer Mongolia -whose leading export is cashmere -and small-town Ontario, for instance, some computer glitch could keep that store from making a sale: a warehouse inventory system that locks up, perhaps. "So that's a couple of thousand dollars' profit that company was counting on that it won't see. And the same thing could happen with T-shirts from Thailand or silks from the Philippines."

The Y2K challenge won't be over Jan. 2, either, he cautions. He sees instead six- month to nine-month timelines for working the bugs out.

Mr. Fletcher faults governments generally, and the US in particular, for what he calls a "Don't worry, be happy" approach to Y2K, and for failing to provide international agencies with enough funding to help developing countries get ready. "Mr. Koskinen promised the money, but frankly that has not happened," he says, referring to the US Y2K czar.

Fletcher also faults businesses for seeing Y2K as a computer issue, to which the solution is, as he puts it, "Cousin Fred is going to buy me a new computer," rather than as a business issue.

An area of particular concern to him: the maritime shipping industry, which is computerized just enough to have Y2K problems.

"Is the world ready for Y2K? Yes, it's ready -but not necessarily Y2K-compliant," says Dale Vecchio, a research director at the Gartner Group, a consulting firm in Stamford, Conn. "But full compliance isn't required." Rather, companies have to be "ready enough" to cope with whatever failures occur.

The New Year;s holiday weekend that was so much ballyhooed a year ago has largely fizzled, and airlines have canceled large parts of their usual schedule.

They play down such cancellations as due to general lack of demand not much different from other New Year's holidays.

But Mr. Vecchio attributes at least some of the softness in the market to the fact that people will be working the holiday weekend. Here in Toronto, for example, downtown hotels are doing a brisk New Year's business -but less with revelers and more because corporate brass need to stay close to their offices over the holiday weekend.

The question of Y2K readiness "boils down to a philosophical question," Vecchio says.

"Do you have faith in man? Or do you believe people are going to sit around looking at each other while the end of the world comes?"

(c) Copyright 1999. The Christian Science Publishing Society

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