The Allies Get Played - The 'Genius' of American Strategy

Centred on a highly spurious and somewhat paranoid concern with security, Washington is 'playing' its allies. Whether European or East Asian, they are now being drawn into co-dependence on Washington within an increasingly closed bloc instead of being free as independent nations to compete and trade as part of a one world system. That might be fine if each of these nations had a proportionate 'vote' in their own destiny within this bloc but they do not. American nuclear and economic superiority creates an intrinsic subordination to its strategy. As the US prepares to plunder the Ukraine through 'investment' in recompense for the expenditures on its regime, it arranges with local elites that allied populations be terrified with fears of a Russian bear which cannot do much more than hold the territory it has gained to date and the admittedly more formidable Chinese dragon. The eagle can sit back comfortably and watch the profits roll in from the coming age of increased and unnecessary arms sales and demand for its surplus LNG. No wonder the American financial markets are shrugging off inflation and interest rates.

A form of shock treatment (not the invasion but the sanctions) has detached Europe from its cheap and reliable supply of energy and commodities as well as access to a near if not particularly important export market and has made it dependent on more expensive US 'spot' energy. The next stage is to weaken European ability to export to China and Chinese ability to invest in Europe, impoverishing the latter more than the former. Russophobia must now be replaced with Sinophobia. In East Asia, where some concern about China is reasonable but still over-excitable, a slower moving cold war approach is designed to detach these vibrant economies from what will be the largest and nearest consumer and industrial market, certainly at its high tech end. Instead they are to bind their industries into an American-centred industrial strategy and weaken their access to cheap and probably reliable energy and commodities from the Russian Far East.

The con trick is working. Based on narratives of fear and loathing, both wings of the so-called West are now seeing their economies battered by inflation and high interest rates - most notably the basket case that is now the United Kingdom after the depradations of the Member for Kiev Central and the idiot economics of his successor. The prospect of fiscal destabilisation and deindustrialisation now emerges for some key countries as vast sums have to go on more expensive energy and food supplies and on military expenditures at the expense of social cohesion.

This new division of the world into blocs does not do China or Russia too much harm in practice. Both lose some market access only to create new synergies with each other. Both are now circumventing the West to go straight to the emerging world for influence, deals and natural resources. Russia merely pivots East to China as the latter's junior economic partner - a commodity supplier playing a role similar to Australia and Canada within the Western system. Indeed, we now hear that any Chinese restrictions on taking Russian crude oil died in February in frustration at the confrontational approach of Washington. Germany, on the other hand, is threatened with deindustrialisation under its inept left-liberal coalition yet Chinese industry gets cheaper inputs for its industry in a reversal of the traditional cost of energy relationship between it and Europe. Those caught up in 'Western' (aka Washington's) strategy are seeing declining (Russia) and rising (China) nuclear superpowers brought into closer alignment, able to dominate the land mass of Eurasia, This new and strenghened Eurasian bloc can also co-operate in developing a shared approach to the emerging world, notably in the Middle East and Africa, as the 'West' retreats behind its cultural 'limes'. Europe and 'Western' East Asia are now just continental North America's 'front lines' rather than nodal points in a flourishing global economy. The developed world has circled its waggons and abandoned the emerging world to its rivals.

This new Cold War 2.0 does not do the US much harm at all - only its allies. The US may be a political basket case with gun violence and dreadful mortality figures amongst its young males but it is still the most significant economic and military power on the globe. Its constitutional arrangements ensure that systemic internal chaos has no real effect on its structures of military and economic power. We are looking at Rome revisited. The US will probably stay quasi-hegemonic for some time to come because it is largely self-sufficient in a crisis (as is the Sino-Russian bloc). It may be challenging its rivals on at least equal terms but at greater cost to its allies, as it drives those allies to blow huge sums of cash on feeding the maw of its arms sector because of exaggerated security threats.  Those allies (notably those in Europe) are losing the chance to become an independent global player to match at least China and India - and it is quite probable that Washington likes things that way. The US has all the comforts of the old Cold War in the new one. It and the SCO carve up the world between them just like the good old days with the old Soviet bloc. Of course, the first Cold War resulted in the collapse of one side from internal strains - the second one may see a similar outcome in another seventy years. It may not be the Eurasian bloc that crumbles this time. It may be the European Union and UK that need liberating when it happens.

The cover for all this imperial posturing is, of course, a rather spurious 'defence of democracy' argument. Yet, to be frank, democracy has never been at threat within the West from any of its authoritarian rivals. It is threatened from within by the manipulative and authoritarian instincts of its own elites and the countervailing forces of an angry populism. If there is a threat to democracy it almost certainly comes from the greed, lack of strategic thinking and ineptitude of the political classes within the West. Ukraine and Taiwan are merely 'imperial border' issues which have no necessary implications for the security of either NATO or Japan or South Korea any more than Vietnam, Iraq or Afghanistan proved to have for the West. However, American strategy does have the unfortunate possible consequence of creating the conditions for security threats that did not exist before. Washington might eventually say 'I told you so' to its allies but only because it had prodded its rivals into action. It is now more likely than it was in February 2022 that China will assert its claimed sovereignty over Taiwan. It is more likely than it was in April 2022 that Russia will switch off the gas for Europe and plant tactical nuclear weaponry on the borders of an EU that remains fragmented and weak.

The major threat to Japan and South Korea has actually been North Korea. The new Cold War mentality has increased that threat because Beijing and Moscow have no incentive to collaborate with Washington on containing the country. The North Koreans have proportionately raised the local stakes in the last year. The Russian Pacific Fleet has lodged itself alongside the Kuriles while China mounts ever more provocative exercises around Taiwan. In other words, the break-down in relations between the West and the SCO has created the SCO as general threat out of a very particular and containable situation in Ukraine. Similarly, not only has Russia not had any material interest (quite the contrary) in challenging NATO until now (after all, the flow of energy to the EU and East-West trade argued to the contrary) but everyone's real interest should have been in the de-nuclearisation of Europe. This is what Russia always wanted. The skill for Europe would have been to ensure that price for denuclearisation West of the Urals would actually mean demilitarisation but the military-industrial complexes of the West and Mr. Stoltenberg cannot have that, can they?

It gets worse by the month - two Baltic nations have now been bamboozled into joining NATO quite unnecessarily (adding to their risks if there is a confrontation between blocs) while Europe in general is being bounced into an economic confrontation with China when it has no essential geo-political interest in getting involved in conflict with a superpower on the other side of the world just to buttress the defensive concerns of Washington. It all comes down to the fact that 'democratic' leaders in Europe and East Asia are almost certainly not strategically very bright. They are trapped in ideological formulations derived from experiences seventy years old (three decades in the case of Eastern Europe). They have been 'spun' into policies that work directly against their first duty which is to the lives and livelihoods of their own peoples. Europe and Pacific Rim East Asia have been played by Washington. Their peoples have been played by their elites.

 

Evading the Causes of the Current Cost of Living Crisis

We need a more open debate about the causes of the current cost of living crisis. The elites would like us to blame a pathogen and an alleged autocrat but this is far too simple. It is certainly not caused solely by Vladimir Putin’s alleged weaponisation of Russia’s immense gas supplies. In fact, despite the furore over the Nordstream explosions and the closure of the Baltic pipelines, Europe continues to be supplied with gas at rates not dissimilar to those that applied before the war. Supply chain issues related to COVID recovery and many other fundamentals have certainly contributed to price rises not forgetting the pressure on commodity prices from the disruptions involved in the Green Agenda and problems with food supply accentuated by climate issues. But the disruption to trade caused both by the economic sanctions on Russia and threats of sanctions on China are a significant contributing factor and these policies are those of our leaders.

The invasion itself need never have been much of a factor in itself - it is just that Western leaders (without much consultation with their own peoples) decided that the costs of economic warfare against Russia were a 'price worth paying' and then got suprised by just how open-ended that price would turn out to be. It is not only the effects on trade and inflation but also the ridiculously high commitments of capital being made to prosecute an unwinnable war (shades here of Afghanistan) and eventually to the reconstruction of a nation that has been encouraged to fight that unwinnable war. The Ukraine War had emerged from a failure of diplomatic dialogue between the West and Russia over the previous two decades and the fault for that lies as much in London and Washington as in Moscow. The UK must take part (though certainly not all) of the blame for that and so for the immensely damaging rise in the British cost of living which is to a considerable extent attributable to the disruption caused by its foreign policy priorities and its extremely poor understanding of the consequences of its actions. 

Over a year on from the invasion, we have to draw some distinction between the energy component of inflation and 'core' inflation - the underlying inflation in food and services that has triggered high interest rates. Energy inflation if it does not go on for too long is something one works through. European governments could deal with it by adding to their fiscal burden with what amounted to massive dole outs - another price that might not be worth paying as national debt levels, already burdened by COVID social cohesion doles and green agenda doles (soon to be added to with increases in defence budget expectations) reach levels that require austerity and high taxes under conditions of low growth, that is, if the Western system is not to crumble under the weight of its own debt mountain. But energy inflation has triggered core inflation so that as energy prices fall, the lag in wage and commodity inflation continues to drive prices and forces up interest rates.

Nevertheless, funds to deal with energy inflation could be regarded (like the Green Agenda), at least in part, as a debatably necessary adjustment and an 'investment' in future energy security. After another year of recessionary misery (or soft landing from an optimistic point ov view) everything will be fine and recovery from 2024 and after will allow the debts to be paid off and prosperity to return. Except that the game is not over. The Europeans (which includes us) have just shifted their energy dependence from being one on Moscow to one based on the US and Gulf dominated spot markets. Renewables are not managing to fill the gap left by the decline in hudro and nuclear energy. Europe is still vulnerable not only to increases in the spot price of LNG and OPEC+s determination to maintain fairly high oil prices in at least the $80-$90 band (Brent Crude) but to the Russians deciding to turn off the spigot for gas or oil directed at Europe because they have (eventually) an adequate market in East Asia and have just had enough of European insults and support for Ukraine. The Chinese are busy committing to long term Gulf contractual terms while dilatory Europeans sit and hope for pries to come down regardless.

In other words, the 'headline' inflation problem has not gone away - it has just been pushed forward to next winter if the Europeans in particular do not manage to sign their own long term contracts for energy, Chinese recovery sucks in energy from elsewhere, there is a cold winter, the spot markets rise and the alternative energy structures that are supposed to displace Eurasian energy are not in place. If conditions deteriorate between Russia and the West to the extent that Eurasian gas is no longer available in Europe at all and the grey market in Russian crude going to refined products that serve Europe dies off in favour of East Asian needs, then European governments may face a fiscally destructive demand for yet more social cohesion payments to protect the most vulnerable households and businesses and this will be ... inflationary. 

So, we are in a position where markets are convinced that recessionary tendencies must mean that interest rates have peaked and are buoyant but a) the continuing rise in 'core' inflation means that, even if interest rates peak, central banks may be obliged to hold them at near peak levels for a considerable period of time while the mounting costs of all this to governments, households and businesses starts to unwind the viability of at least some of all three in a slow-burning creative destruction that weakens confidence and contains multiple political risks while b) the current relatively beneficial state of the energy market could simply be the eye of the hurricane, vulnerable at any time to a whole number of political grey swans and risking, if things go down hill, significant fiscal interventions for which there may no longer be united national political consent (or the cash) as the costs mount.

Looking at the world before February 2002 and after that date, we can see only one major trigger for a polycrisis that was probably waiting to happen on many other fundamentals - an ill-thought-out sanctions approach that was supposed to bring Russia 'to its senses' or even trigger regime change and Russia's economic collapse. It has clearly not done so nor is Russia isolated. At best, sanctions may achieve their ends only at immense cost to the poor and vulnerable at home and overseas, to working households and to those small businesses who may not survive beyond the doles they have been given to survive the next round of energy price hikes. A lot of the damage caused by COVID and sanctions is silent. About a year into COVID, I produced a list of local Kent and Sussex small breweries and put it to one side. This week I went back to it to see what had happened to them. Roughly a quarter seem to have crashed and burned as independent businesses. Walking around our mid-sized Kentish town, we see the gaps where shops used to be.

Inflation driven by huge fiscal inputs to deal with both crises and ideological convictions (such as Net Zero and the insanity of increased weapons expenditure) and by incompetently drawn up economic warfare policies, added to COVID-related supply chain problems, have meant interest rate rises. Short term subsidies to the population have meant high borrowings. High borrowing has meant weakened currencies against the dollar. Weakened currencies mean imported inflation which means yet more interest rate rises. Interest rate rises eventually mean recession. Recession means job losses and business failures. High borrowing eventually means high taxation yet recession means lower tax take. Increased taxation to deal with this and high interest rates mean a drag on growth. And so it goes ... a spiral of failure. All this is, at root, not down to Putin but to our collective paranoid and hysterical reaction to Putin led by a bunch of loopy ideological Tories and their fellow travellers in the Labour Party.

These have been many serious failures of policy derived from poor analysis and intelligence. We know this now whereas a year ago we only surmised that this might be so. Exactly how bad Western analytical intelligence has been perhaps only became clear with the release of the latest batch of Pentagon Papers. It is said that the professional foreign policy and intelligence community in Washington are distraught at the poor quality of their own political masters who are driven by simplistic ideological seat of the pants policy-making. Western democracies are, in any case, no longer fitted for the sort of long-range planning that seems to be the norm in Moscow and Beijing. A 'price worth paying', seen originally perhaps in terms of eighteenth century type war subsidies (wasteful but not critical to our own economy), has been transformed into a massive price for war and the reconstructive integration into the European and Western system of a basket case of a state riddled with corruption .

This is a price certainly not worth paying, incurred at the expense of national populations, long term economic prospects and future generations yet a reversal of policy is no longer acceptable to elites not for simple ostensible moral reasons but because back-tracking will shatter confidence in them. Like Macbeth, they are so steeped in metaphorical blood they may as well go forward as back but their doubling down constantly increases the risks that a serious situation could become a critical one. The financial technocrats remain extremely worried about more bank failures and so should we be, The system is under enormous strain and yet there is no way forward for Western leaders to do anything more than carry on being as stupid as they were in the far less critical situations of Iraq and Afghanistan. As in those two cases, the end game is now predictable - defeat or a victory earned at such cost as to be Pyrrhic.

Here, in the UK, the Government, the media and the political class are all in denial about these truths because are fully complicit in February's blunders and the even worse blunder of not using British influence to encourage peace talks back in April. We all know Boris was a chancer but his gambling sucked in everyone around him. Now our political addicts think that just one more throw of the dice (presumably this time it is the touted Ukrainian counter-offensive) will win back the shirt they are losing off their back. They now have no way out of the hole they have dug except to dig ever deeper and then cross their fingers, hoping that if they do so vigorously enough they will come out in Australia and all will be well. It is now no longer theoretically possible that Russia, clearly backed by a China throughly alienated by the incompetents in the State Department and in Brussels and Berlin, will collapse, be forced to withdraw from Ukraine or the Putin regime be replaced. Even if these events happened, none of them are likely to take place within the time frame required to avert serious damage to the Anglo-European economy and social cohesion. The cheap and hitherto reliable Eurasian energy resources in question are Russian and not ours so we cannot seize them any more than we can seize its massive mineral resources (much of it vital for Western industrial development) and grain output. They, not us, decide what is to be done with these assets of global importance.

It will take years for Europe to put in the infrastructure necessary to restore permanently lowered energy and commodity price structures in a global context. Europe will be competing with Asia for both sets of input and its competitive advantage in having cheap Eurasian energy to hand is now lost, almost certainly forever. Germany, apart clearly from the unstable coalition that rules it, has begun to fear de-industrialisation and has just, with immense stupidity, managed to undo all Macron's good work in China ten days or so ago. The German Foreign Minister alienated China under the massive illusion that its opinion on the Ukraine matter actually matters to Beijing. Macron to a great extent and Orban to a complete extent 'get' what is at stake for Europe and 'get' that it (and we in Britain) have been played by Washington. The embarrassment of watching Sunak kow-tow like all his predecessors to a President who touts a united Ireland tells us all we need to know about national decline. A nation has liberated itself from Brussels only to be a vassal to Washington.

The confrontation between Putin and Western liberal elites is likely to last years as Russia pivots to Asia while a Trump victory and growing European resentments and fragmentation could leave us Britons high and dry in any case. We could take the economic hit now only to see the rug pulled out from under us later. Whatever short term wheezes are being promoted by this Government to take the heat off itself and secure its position for an election, the huge damage to our economy of yet further tranches of borrowing (following the COVID experience) and to social cohesion from the inevitable austerity and increased taxation in the long term are certainly not 'prices worth paying' for the bulk of the population. It is as if (surely not) Government continues to undertake every wheeze to protect the asset rich middle classes in the rather stupid belief that they are the majority of voters and the rest of the electorate has no choice other than to vote for a variant of the liberal establishment that protects that class. This is true in a world made up of Red, Green, Orange and Blue 'Tories' but all four are skating on thin ice. That world may collapse under sufficient economic pressure.

These are all self-inflicted wounds on the British nation not so much by the Government alone but by an entire political class that continues its arrogant neglect of its own population in order to meet the needs of moral philosophy (as interpreted by Oxbridge, the media and the liberal intellectual class) and its own self-serving class interests. The media is wholly complicit. The butterfly minds of the elite have left an apparently powerless population to do what it can to get by - the Government has simply stopped inflation becoming intolerable for the middling sort but pushed those costs forward in time. Huge numbers of the Crown's loyal subjects will face a serious loss of living standards regardless. Perhaps the assumption of the liberal establishment that they are too stupid to see this and who is responsible will be its eventual downfall.

For a brief moment (maybe this coronation) we will now get to see what our nation can be at its most romantic but we note that the strong national engagement in respect for the late Queen Elizabeth has already diminished for her successor in opinion polls. We are seeing how national decision-makers are divorced from the condition of the people as much now as in the age of Victoria. The open debate we need may never happen - evasion of the conditions under which power is exercised may be what holds this nation together as it sinks slowly but steadily into penury. But never mind ... perhaps the upper middle classes think they can survive and since this is their Kingdom more than ours, then we must judge that all is good in the world. Why question such good order, they may ask. Why not, we should reply.

America - Learning Nothing and Forgetting Nothing

What is that cliche about the Bourbon restoration - learned nothing and forgotten nothing?  This certainly applies to American policy wonks who were trying to work out what was to be done after the Afghan fiasco. The result would appear to have been another fiasco in the making over in the Eastern bloodlands of Europe. The insistent political ambition of the American elite to engage in ideological intervention overseas at the expense of their own taxpayers remains dominant regardless of past errors (an ideological mind-set shared by many in our own British political elite and now infecting Europe at its highest levels). And yet dreadful domestic problems continue to rot the US just as the social democratic consensus in Europe collapses under the pressure of liberal economics. Poverty, lack of healthcare, poor education and collapsing infrastructure, guns out of control (which makes the FT's insistence that Russia is lawless look stupid to say the least). American foreign policy incompetence adds to domestic disenchantment and foreign doubt. It feeds populism by the back door.

Exactly what is America's game here? The cynical view is that its upper middle class political leaderships have abandoned their own people because growing empires require constant expansion and increasing asset values for its upper middle class clientele is all that matters in American politics. The fraying theory, of course, remains that the rich 'trickle down' wealth to the poor. The 'trickle down' of the alleged benefits at home was supposed to be sufficient to retain power in democracies fixed by party machines and big money. This, of course, looks a highly problematic strategy at the moment. Russia, far from isolated, has turned to a receptive China that has a ready ear for its own anti-imperialist narrative across Africa and Latin America. Multipolarity is becoming a fact this year rather than just the propaganda fantasy of the Kremlin. Constant market and asset expansion was to be enabled by building up equally neglectful and narcissistic upper middle class elites elsewhere in the world yet these elites have developed the same resistance to being patronised by the West as the working classes within the West. Markets are shrinking and not expanding. Perhaps those 'fixes' can continue for quite some time - but what happens when the money runs out?

 

With recession on the way we can already see a class war looming where the asset holders will want the system they think they own to ease up on interest rates and allow more inflation. Yet the intelligent part of the elite understands that their rule may collapse on sustained high inflation because it hurts the asset-poor (the majority of voters) far more than high interest rates hurt the asset-rich. The asset rich are relying on the asset poor to remain 'stupid' and disorganised which is why they so deeply resent the arrival of politicians like Trump who organise far from stupid people using only apparently stupid political tropes. A less economically cynical view, however, is that middle class politicians in the West simply have nothing to say to their own masses any more. Their culture is simply different. They only want to talk to people like them who they can nurture in foreign climes ... they had hoped that a nice liberal middle class would emerge in Moscow, Beijing, Tehran and Kabul, one that would construct the institutional forms that would require no concern for the 'damned of the earth' except as beneficiaries of aid, 'trickle down' and 'culture' from on high while the ownership of the assets around them remained theirs. When a Prime Minister of the United Kingdom (now removed) can effectively abandon his own constituency and become de facto Member for Kiev Central in Parliament, then you know this propensity for class internationalism has reached its most decadent phase.

As to the official American strategy in relation to Ukraine, it is simply a sign of weakness ... pouring funds into the Ukrainian money pit, evading the use of hard power, promoting an economic war that is undermining the West itself and dying to the last Ukrainian with weaponry whose use only enriches the major arms manufacturers. Apparently there are 40,000 committed Ukrainians in eight brigades (or whatever) armed to the teeth by the West just waiting to enter the meat grinder without perhaps realising that any victory will be Pyrrhic - their land and assets are already assigned to Western private capital as the only means of getting the finance for reconstruction. Blood and soil is not going to mean much when the blood of the most fit leaches out onto the soil and that soil belongs to some corporation listed on the NYSE or operating from a headquarters in Berlin or Tokyo.

But do Japan and South Korea (or Taipei) really believe that the US will do anything much more than they have done for Ukraine (prolong a devastating war at the expense of a people and a land) if China moves against Taiwan? I doubt it - it will be moral posturing once again, psy-ops directed at the homeland suckers and rhetorical gestures. Even the moralising American middle class know that they will be the losers if a strategy that largely hurts the poor, the young and the developing world ever became a real war. Those assets will eventually become cinders. Fortunately, the Chinese almost certainly have no intention of going into Taiwan with military force in the short to medium term - they are hoping the opposition Kuomintang will do that job for them. We should perhaps hope that they are right.

As for legislatures of 'hawks' getting involved in international relations, little makes me more scared - whether Congress, the Duma (which has to be restrained by the Kremlin as much as used), the UK Parliament or the greatest ineffectual moral posturing organisation in the world, the European Parliament. Congress is scariest of them all because Congress is at the heart of the most terrifying war machine the planet has ever seen and the most excitably irrational. The Taiwanese situation had been significantly worsened by Pelosi's blundering into it. Just as bad, here in the UK, Parliamentary hawks in the Tory Party, copied slavishly by one of the intellectually weakest Labour leaders in its history, have set the agenda for the nation. Their policies have resulted in 10% plus inflation, actual shortages and rising interest rates. It is not much better in Russia where nationalist expectations almost certainly limit the ability of the Kremlin to cut any reasonable deal with the comedian who runs Ukraine. Zelensky, in turn, is trapped by the nationalists on his own side and his need to keep on trucking to ensure he gets what he really needs - huge tranches of post-war reconstruction aid and support to rebuild his military as cat's paw for NATO in the East. Really, we 'ordinary folk' in all countries need to start standing up to the political class before they destroy us all. We need alternatives and we need them fast.