TACO Trump signals he's had enough

Such has been the volatility of events in the Gulf, commentators have had very little of substance to offer beyond the macro comments that Trump has been dancing to Netanyahu's tune, that the mullahs' regime has a lot of intrinsic resilience & indeed strength in many dimension, and that the Gulf states need to come up with a new business plan.  OK, we can all conjure up lurid worst-case scenarios.  But what does it mean for mortgages and prices at the pump?  Etc etc.  

This uncertainty manifests itself in endless commentariat hedging (e.g. HMG, BBC) but also in outright hysteria.  The very dubious Fatih Birol of the IEA has delivered himself of the view that the current situation is like the first two oil crises (1973-4 & 1979) plus 2022, all rolled up into one.  Well, no, it isn't - yet.  Like, not even remotely.  I worry when people like him have influence on world affairs (if indeed he does).

Back, then, to Trumpety-Trump.  His demeaning and very public flailing and railing over the past week clearly signals he doesn't like how things have turned out, one little bit.  (Why wasn't I told Iran wasn't like Venezuela?)  So now we know that a combination of negative market sentiment and negative MAGA sentiment marks the limits of his manic confidence.  That's a comfortably low threshold for him recognising a need to sober up.  One might have feared his personal pride, running up against the brick wall of Iranian intransigence, would result in a ratchet effect all the way up to a small nuke.  We need our leaders to have some kind of restraints.

On the downside (and speaking of small nukes), we're left with the enduring problem of Netanyahu, who might very well find himself owning the broken vase in a short while from now.  Now there's a man who doesn't sober up just because the Dow Jones slips a few points and the neighbours are banging on the walls.

On the plus, we have a lot more realistic input on the thorny issue of what air defence needs to look like in the late 2020's, coupled with a pressing need for the west's armaments industry to gear up for several years of serious production.  We might also escape the nightmare of Iran becoming a failed state, which would make the Syrian and Afghan exodus of the last decade look like a picnic outing.

What it all means for NATO / Cuba / the mid-terms / Taiwan / Russia-Ukraine / Starmer etc etc etc ... time will tell. 

Finally, it seems Trump won't be going on the planned trip to Beijing in the immediate future.  Given that in all probability he'd have been induced to give away more of the family silver to the Chinese, that's a good thing.  Let's hope he never goes there again.

ND 

How the Romans felt when Nero was emperor

Some pretty dire scenarios are easily envisaged, but it's anyone's guess now, on any geopolitical question you care to speculate on.  Has global politics ever hinged on pettiness and petulance to this degree?  Even remotely?  "well, checks and balances ..."   Really?

There is, at least, one thing we may be sure of:  Xi will be determined to make his move on Taiwan before November 2028. 

ND

DeepSeek: capitalism at its finest!

Trump is right that DeepSeek is a wakeup call.  For a very long time many on the capitalist side of the argument (including myself) have taken a degree of complacent comfort in the highly derivative nature of Chinese technology.  One of out BTL commenters even went so far as to say that reports of a Chinese stealth fighter couldn't possibly be true.  Of course, we've long noted the undeniable, gargantuan successes of China's mercantile strategy, but hey, that's how Japan, S.Korea and Taiwan joined the club. 

And now, DeepSeek!   Assuming it isn't a fake - and I think we may - it represents an all-time classic example of capitalism at its finest:  people with strong commercial motivation, creativity, and sufficient political freedom - highly qualified, but sufficient - to give rein to it;  and the innovations flow!

And of course in a frontier space like LLMs, random disruptions and breakthroughs are to be expected.  We just need to recognise that a western cultural backdrop is not the only fertile context.  

So 'wakeup call' is all we need to say.  Provided that those who hear it are not just the complacent, comatose denizens of Silicon Valley.  Now, what was it about that stealth fighter again?

ND

The geo-politics of 2024: a seriously good read

Here's a seriously good offering by a heavyweight US historian of the geopolitics of the modern age.  We all have our amateur views on this stuff: but Zelikow is a professional, giving thought-provoking inputs from a range of telling 20th century precedents and parallels that I certainly wasn't familiar with and I'm guessing few others would be, either.  There are also some very basic history lessons the whole world should be taking  ... 

The Axis powers all ... hoped America would decide to stay in its hemisphere and mind its own business. They were not sure just when or whether they should do anything that would bring the United States into the war. Though each side started from a posture of basic hostility, they had to make new choices. The United States decided to arm Germany’s enemies. And it decided not to abandon beleaguered China ... Roosevelt did try hard to find an accommodation with Japan. His efforts in the first half of 1941 were entirely fruitless ... At all times Japan was prepared to negotiate about Indochina. It was even prepared to forego the great plans for the southward advance into resource-rich British and Dutch colonies. But Japan was not prepared to yield its domination of China ... Tokyo redoubled its efforts, diplomatically and militarily. The new government decided that it would either conclude a deal by the end of November - even a temporary one - or it would go to war. In this crunch time, the United States still would not write China off. This U.S. commitment to China was not well-understood at the time or by historians now. For Roosevelt, the commitment mainly arose from his complex calculations about the war in Europe - the need to keep the Soviet Union from collapse and therefore the need to keep Japanese troops tied down in China.   It is worth recalling today, as Russia and China confront the United States, that the proximate reason for America’s entry into World War II was its determination to save those two countries from extinction.  (my emphasis)

He feeds all the historical considerations into his analysis of today's situation for America (and Russia, China, Taiwan, Japan, Iran ...).   His lengthy conclusions start thus: 

I believe the anti-American partnership has probably decided to double down. They are probably preparing in earnest for a period of major confrontation. My view on this rests on my analysis of the history presented above as well as some key assessments of Moscow, Tehran, Beijing, and - to a lesser extent - Pyongyang. Xi and Putin regard themselves as world-historical men of destiny. They believe they are capable of decisive, strategic action. Xi ranks himself with Mao and Stalin. Putin evokes the memory of Peter the Great. In China, Russia, and Iran the information and decision environments are cloistered. In China, Russia, and Iran the propaganda ministries have already been preparing their populations for a time of war, great sacrifice, and existential struggle ...  I believe that some Iranians have now stored up so much resentment and hatred that they may be desperate to do almost anything to get at Israel. The North Korean intentions seem driven, but as opaque as usual. My working hypothesis is that they are preparing for a period of conflict and that they are wondering about possible opportunities to play an important role. In each capital there are arguments for retrenchment on one side and, on the other, for more militancy. The more militant factions have likely been arguing and speculating about ways to turn over the table. Beijing’s outlook is both the most important and the most difficult to assess, since its government has visibly sought a policy of “peaceful coexistence” with the United States. I think it is most likely that Beijing has assessed that the die has been cast for a period of escalating confrontation**.

Strongly recommended.  Incidentally, given the foregoing, the idea that appeasing Putin over Ukraine makes things better, or would have if we'd done it prior to 2022, seems to me a very odd one.

ND 

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**He has a very interesting view on China's most likely strategy for Taiwan

Iran / Israel: George Bush Snr's 1991 doctrine needed

Prisoners of Geography (Tim Marshall) is a well known, oft-quoted book on geopolitics.  It's really an A-level text - first-year university stuff at best.  I don't have a copy to hand.  But the weekend's news from the middle east brings one of Marshall's often quite blunt assessments to mind, which from memory runs roughly thus: 

A lot of people in middle eastern nations harbour vicious and irreconcilable hatreds against each other.  It's a typical mistake made by western folks, not to believe middle easterners when they say they hate someone, and what they intend to do about it.

OK, so we believe it: this whole matter is filled with irreconcilable hatreds, and people hell-bent on killing their neighbours.  And that these hatreds can spill out all over the place, not least the www.  So let's try to keep this thread strategic.

1) Looks like Netanyahu, in furtherance of his political / personal goals, has played Biden ruthlessly, successfully - and transparently.  Plenty of commentators saw a canny, US-suckering escalation coming.  Forewarned isn't always forearmed.  Still, Biden should have been able to do better than this for the furtherance of his own goals - not least of which is retaining independence of agency.  That said ...

2)  "Can the USA be relied upon any more to protect its friends then, eh?"  And indeed, can coordinated onslaughts of massed, mix-&-match missiles be defended against - by anyone?  Russia thought it had proven the answers were "no", and "no".  Well, there's a bit more to ponder now, on the part of the many people in the RoW who have been wondering about that.  Including ...      

3)  Taiwan and, errr, China.   Ah yes, China.  We read that, once again, the Chinese are "very interested" in what's going on in the middle east.  But, once again, just as in the case of their some-time client Libya, China's role seems to be that of a rather academically interested spectator.  When are they going to become that global great power they keep billing themselves as?  And it's back to the drawing board for that invasion of his own Xi keeps toying with.  ("One Iron Dome system, please, for the oriental gentleman to the north of the Philippines.") 

So, back to Netanyahu.  In 1991, Saddam Hussein launched a wave of Scuds on Israel (and Saudi).  George Bush Snr told Israel to stay its hand - which was just as well, because the pointy end of the  Israeli airforce had taken off moments before the first missile landed (we could detect Scuds at launch even in those days) and was in a holding pattern, waiting for the order to nuke Baghdad etc.  (You might like to refer back to my 30th anniversary account of this episode.) 

We all need "Ironclad" Biden** to dust off his history and make that call, firmly and credibly.  Is he up to it?  

ND

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**Wasn't that subtle of him, eh?  See, he does have some advisers with their heads screwed on.  They just seem to go missing at vital moments.

USA: withdrawing from world affairs?

It may seem perverse to wonder whether the USA is withdrawing into an isolationist shell only a couple of days after it has orchestrated a rather modest coalition[1] into military action against the Houthis.  World Policeman, or what?  Yet I can't help feeling this may be the reflex action of a former bruiser who was in the process of retreating from the fray ("leave it babe, he ain't wurf it") when somebody rushed up to take another swipe at him anyway.

Well, maybe that will persuade him to get stuck right back in there again.  People inside and outside America have been urging its government since the first few years of the Monroe Doctrine to disengage from the ROTW and concentrate on self-sufficiency and domestic affairs.  That long-lived policy saw American governments intervening all over the place, to no obvious good effect, for many years.  There was always a "leave it babe" faction advocating the opposite[2].  But overseas intervention is a hard habit to break.

But what would getting stuck right back in there entail, in a world of truculent Russians, increasingly confident & capable Turks, Iranians and N.Koreans, an out-of-control Netanyahu, and, errr, China?

For one thing, it would require military spending on an implausible scale.  The USA of Bush / Clinton / Bush / early-Obama not only operated with no serious Russian threat and only the early signs of Chinese (and Iranian) upsurgence, but also with far and away the biggest & best-equipped armed forces on the planet.  Not any more.  The Peace Dividend[3] has been taken in no uncertain terms, and the USA could no more fight the fabled "two big wars and one small one, all at the same time" than fly over the moon.  (And it's not very good at flying over the moon any more, either.)

So what are the voices that will prevail, longer-term, in Washington?  There is certainly a bellicose "pivot to China" lobby, which thinks in terms of defending Taiwan and the South China Seas.  There's another modest coalition of nations behind this one, too (always us and the Aussies, eh?  Us with our two naked aircraft carriers and all.)  But drill down deeper, and the practical measures being advocated by all except the outright headbangers are a great deal less offensively-minded than in years gone by.  The talk is of porcupine defence, stand-off weapons, drone-swarms etc - not marine divisions storming up the beaches under 100% air-superiority.  Just as with the Roman Empire: when you trade in your stabbing sword for a long-sword, you're basically on the defensive, however widely you cast the perimeter. 

And that's the warlike lobby - many of whom would withdraw substantially from the Middle East, too - not to mention looking to Europe for the bulk of support for Ukraine.  The outright isolationists & Trumpists would cheerfully deal with China - perhaps in return for their taking N.Korea out of the equation.

And what will Starmer do then, poor thing?  Some, of course, think he'll rush to Rejoin.  There could conceivably be an intelligent offering from the EU on that score.  But, interestingly, his track record as DPP was of shameful, grovelling obeisance to Washington, which seems to be a deep instinct for him.  

He'd certainly keep the RAF busily bombing on whatever coordinates Biden dictates.  While old Joe is still slugging it out at the bar.

ND

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[1] What were we doing there?  The answer is obvious: the traditional combination of (a) the general policy of sticking with our biggest & most important ally, come what may (not entirely without merit, though Wilson never saw fit to gratify Johnson in Vietnam); and (b) the age-old tradition of us in these islands:  show us a good fight, and we're in!  (a.k.a. oi'll foight any t'ree of yuz!) 

[2] It's been argued that the only thrust under the Monroe Doctrine, broadly conceived, with genuinely strategic justification was the annexation of Hawaii in 1898.  The others, all over Latin America and even beyond, were generally deeply controversial within the USA itself

[3] What peace? - Ed

Ukraine / Biden / Taiwan: where does this lead?

Here's a headline to wake up to on a dull Monday morning: 

US would defend Taiwan if attacked by China, says Biden.   President says US’s responsibility to protect island is ‘even stronger’ after Russia’s invasion of Ukraine

Blimey.  If he isn't immediately made to "walk this back" by his own people (which is what generally happens when Biden's been talking in his sleep again), this is an absolute blockbuster, and will shake the Chinese rigid.

The only offset is the technicality that he paid lip-service to the 'One China' policy - followed, however, by "but".

What a turnaround.  Back in February, Xi must have been expecting that Putin's Ukraine gambit (a) would turn out to be a quick win of some sort; and (b) could be parlayed to give China more options - and maybe opportunity - vis-à-vis their own designs upon Taiwan.  Make it clear that the USA is a paper tiger, etc.  That sanctions don't work.  That the RoW doesn't fall in line with the west.  That India is with him.

But that would have been based on the notion that China had already secured a satisfactory baseline of non-commitment from the USA.  Xi would never have given Putin the thumbs-up otherwise: not in a million years.  

If Ukraine's success in dragging Putin into the mire has actually emboldened Biden in this regard (plus giving a fine public demonstration of the efficacy of good defensive weaponry + intelligence + tactics), Xi must wonder if Taiwan is now out of reach in his lifetime.  

Actually, of course, that might make things even more dangerous.  We're having quite enough of Old (& sick) Men In A Hurry just now.

ND

Russia Has A Painful Precedent In Mind

 ... and it's Finland, 1939-1940.

Russia hasn't had stellar success of late, even in Georgia and Chechnya, both a damn' sight easier to chew off than Ukraine.  

But the real pain must come whenever they think of Finland, whose heavily outnumbered forces dealt them a serious bloody nose.  It's generally reckoned the Soviet casualties in the 'Winter War' were of the same order of magnitude as Britain suffered during the whole of WW2 - and that in just three and a half months.  For not much gain  (a bit of Donbass-style land-grab), and substantial international opprobrium.   (Not that Joe Stalin cared very much.  Nor about casualties, for that matter.)

That's what can happen when you take on a nation that is (a) very big, geographically, with unlimited ability for tactical retreat by the defender, and overstretch trouble for the attacker;  (b) fiercely nationalistic.   Given their own dealings with Napoleon and Hitler, we might imagine that for the Russians, this lesson is not lost ...

It's been fairly noted recently that successful guerilla wars are fought by youthful fanatics, not middle-aged populations - with the suggestion that under this precept Ukraine has the wrong demographics for that kind of resistance.  Maybe so: but surely Finland is a much more relevant case study.

Oh, and that extremely interested observer President Xi will also be recalling China's own less-than-glorious attack on Vietnam in 1979.  Still, at least Putin hasn't pooped on Xi's Winter Olympics party in the unseemly way he did with Georgia, slap bang in the middle of Beijing's 2008 summer games, to China's profound disgust.  Well - not yet, anyway.

ND

Evergrande: What Happens Now?

For all their clever CCP-directed, "with-Chinese-characteristics" tweaks to classic western capitalism, somehow they couldn't avoid, errrr, a property bubble.  How demeaning for a communist country!  How ironic.

And how we'd all laugh, were it not for the plethora of predictions that the demise of Evergrande will send out shockwaves across the globe, at a time when we're all a bit fragile.

Really?  Well, perhaps.  I'm no authority on this kind of thing: and in my own sphere I already told you in February that gas prices in the far east were the start of serious energy-price inflation.  But my gut feeling is that if the west could ride the banking crisis of 2007-09, the CCP can engineer a soft landing for Evergrande.  The underlying issue, to my mind, is the impact it has on Chinese politics, both inward- and outward-looking.

On internal politics, I presume a serious property bubble - with the attendant political shame this represents for communists, as alluded to above - strengthens the hands of the socio-economic puritans of the CCP, led by this chap, Wang Huning, (whom I only became aware of recently).  2021 has already seen a striking social-media purge of individualistic content (and social media stars!) that follows hard on the humbling of tall poppies Jack Ma & co.  All this goes by the benign-sounding slogan of "Common Prosperity", but extends to a "clamp-down" on private tutoring (FFS), which must have a major impact down the road.  Does the middle-class man in the street care about Jack Ma?  Not really, I guess.  But his kid's education & perceived life-chances ..?

Then there's the long-awaited Chinese digital currency.  I have absolutely no idea how Evergrande impacts that project - does anyone here? - but it probably does.  Given that it's designed to strip the USD of its strategic role in world finance, it's kinda important for the long run.

It's the "physical" externals, though, that should surely trouble us most directly.  Last year we debated the possibility of "Peak China" having already passed.  The decades of extraordinary Chinese softly-softly patience and (rather successful) attempts to build a kind of soft power to rival that of the USA seem to have come to an end with Xi's assaults, physical and otherwise, on HK, India, the South China Sea etc etc etc.  These suggest that either (a) he doesn't care anymore about staying with the soft stuff; or (b) things weren't moving as fast as he wants.

And what's that?  Taiwan, of course - and in his time in the top slot.  By hook or by full-scale attack.

Old Man in a Hurry can be a comical phenomenon; but it can also be dangerous.  Very dangerous.  We have our own in the shape of Biden.  There's an awful lot that can go wrong here.  I've long suggested that Soviet caution in not invading western Europe when it was at its peak state of military advantage, speaks well for Politburo political maturity at that time.  But equally, they weren't in any kind of hurry - hey, they were real Marxist-Leninists; they thought it was going to fall in their laps eventually anyhow. 

But Xi, like Mao before him, is (mainly) a nationalist.  Evergrande?  Pff - a sideshow.  IMHO.

Thoughts?

ND

Here it comes...

 https://www.reuters.com/world/asia-pacific/taiwan-reports-largest-incursion-yet-by-chinese-air-force-2021-06-15/

Made a prediction last week, turns out I was a bit on the cautious side, China look to be getting ready for this imminently whilst Old Man Joe gets sipping his horlix. 

Can China avoid the Taiwan gambit?

 I am back, after sometime away in a country that makes the UK feel very cheap indeed. 

Watching the Afghan disaster from afar, as we all did, I could not help but see the Chinese rush in behind, like the fools they are, thinking that for them it will be different. As different, as it was for the Americans from the Russians, is the predictable outcome. The Chinese have invaded with money at least, rather than weapons, but it will soon be frittered on corruption, just like home for them.

However, as much as the US did need to back out of the Country, the cack-handed way it has been done has created a new post-Vietnam environment. For a good decade or more after Vietnam, the US was very isolationist and not very interested in policing the world. Reagan made do with an arms race against the Ruskies which he won at a canter, but involved no hot war at all. Only a little bit of hanky panky in Iran and Iraq was allowed, to keep the hawks busy.

Now Biden has really shaken the game, by ending it. The US is engaged nowhere in the world, certainly not Africa and won't be going into the Middle East anytime soon, save for some face-saving drone strikes against ISIS when it can find them. 

Meanwhile, in the economic world, the huge shortage of silicon chips continues to drag on the economy and push up prices everywhere. UK car sales have cratered, as there are a lack of vehicles to sell, just as the second hand market has taken off. Computer abusers have not had new gaming or mining chips for nearly 2 years - unheard of. 

Over 50% of the world's production sits in Taiwan. Just off the coast of China, a boat ride away. Taking this over would give a hug short-term boost to China, just taking the factories off line for a few weeks would wreak more havoc on the West to go with the Virus they gave us. 

President Xi must be very tempted by this play. The US has no appetite for hot wars and would be a huge risk trying to defend Taiwan. China, with good planning, could do a Crimea and present it as a fait accomplit, welcomed by a new puppet Government etc. 

China will do this one day, today is an opportune time as the adversary is weak and distracted and led by a senile and unpopular President. It could well be now. There are risks of course, the untested PLA could prove a disaster and the whole escapade resemble more the Bay of Pigs than Crimea, this will weigh in the thoughts of the Politburo who are very conservative, so we shall see in the near future how they fall.