It is not just Russia...

So say the highly intelligent, err, US intelligence agencies.


The USA is in a real bind with China.


On the one hand, China creates the mass market products that keep the American consumer market on the road, including the all-American Apple Iphone X - 100% China made of course by Foxconn.
The Chinese also finance this trade by being the willing buyer of trillions of dollars worth of US T-bills. So much so, that it has become a truly symbiotic relationship wherein unpicking it would really hurt both parties.


But China has also made many of its gains through stealth, subterfuge and outright theft. It's brand new FC-31 fighter is a copy of the US F-35 - America's own newest jet fighter. China stole the plans via industrial espionage. In the corporate world, most manufacturing companies from the West managed to destroy themselves in China, where with no intellectual property protection, their products were copied and delivered more cheaply with no recourse. Far fewer Western companies go to China now, the flow has turned the other way (which kind of works too, those expensive flats in Mayfair needed cocky buyers too....).


Moreover, just today the US is calling out China to be on a par with Russia in terms of a state threat. Not because it is as aggressive, but because it is so much richer and has its vast human intelligence network that Russia lacks.


Militarily too, there is no doubt China could defend its Eastern Hemisphere now from an US attack. It is 10 years since the Chinese sub famously emerged in the middle of the US 5th Fleet off Taiwan, since then they have been busy building even quitter nuclear and diesel subs and better missiles (recently tested in Syria by the Iranians, natch).


So what can the US do, one thing in their favour is that as much as the Chinese detest the West and still harbour deep hatred for the colonial period, they don't much care for the rest of the world beyond it being a source of raw materials. Not for China a global peacekeeper role. For all the talk of the Belt and Road, it is an aggressive economic strategy with little military input. Compare and contrast to the USA post 1945 with bases left and indeed, expanded, around the world.


China has problems at home too in the medium term as it tries to adapt its one-party rule state to the internet age and an impossibly large population to control. But time is on China's side.


How Trump and the US deal with China, always a canny negotiator (see since this month how European oil prices have increased after China/Russia agreed to reduce supplies going West and send them East instead), will be interesting to watch. No President yet has got it right, Trump at least tried with his Syria strike whilst dining with President Li.


What would you do?

When a deal is not a deal

Hmmmm....there are 2 international deals out there today and both seem to be a very bad idea on the part of the 'superpowers'

Firstly, to Greece, where the Parliament is expected to sign on to the EU bailout terms. These terms, as many commenting and contributing to this blog know full well (see Phil's comments on yesterday's post for a very clear example), are simply unachievable for a Country with Greece's problems.

We will be back at the Grexit table in due course.

Secondly, we have the nuclear deal with Iran. At no point have Iran said they will not develop nuclear weapons - as they have always said this. Nuclear Inspectors will not be allowed unfettered access which suggests that Iran still has much to hide.

Moreover, Iran is in nearly full control of Iraq, with many divisions now on the ground in the Country and the forces opposing ISIS all controlled by Iranian commanders.

That Obama wants to 'reset' the US position in the Middle East is simply crazy. Of course, plenty of Iranian oil will flow and this will further undermine Russia, Venezuela and ISIS, but the price for this is backing the Shia's against the Sunni's and further inflaming the Islamic civil war.

All for nothing as the Iranians won't really co-operate until it is too late.

How can it be that the Western leaders are so desperate and weak that they keep making mistake after mistake?

Bulgaria's Bank seems peculiarly inexplicable

Interesting to see the coverage of this story. So last week the US is putting pressure on Bulgaria to stop investing in the South Stream pipeline which Russia wants to use to avoid Ukraine.

This weekend, there was a bank run on two Banks in Bulgaria. Whilst the Country is known for its endemic corruption, the economy has actually been pootling along OK with plenty of Euro subsidy for the locals to feast one - €2 billion a year is a lot of money to share around.

So why the bank run? Why two random arrests of men said to be starting it via text messages? With Bond's at 3.7% yields and a deficit lower than the UK's what was the problem?

One view is this is an oligarch spat which has got out of control, but this feels implausible on its own.

Nobody currently knows, but I would be very suspicious of their friends in Moscow having had a little say in this. It can;t be much fun being a broke pawn in the great power game!

The great game anew

Poor little Bulgaria. Known for its endemic corruption, which even the EU has described as breath-taking, is having a hard time. In the recent past it has been known for its place as being the only Country in the EU where a former Prime Minister has been jailed for corruption.

Now though the US has stepped in to make sure Bulgaria is involved in the Great Games on the side of the EU and US. Bulgaria had agreed to help Russia build a South Stream gas pipeline (funded by Gazprom) which would mean that gas could come from Russia via the Balkan states and avoid Ukraine.

With the recent events in mind, the US has stepped in which EU backing to put a stop to this project and called into question the process of bidding  - as Russian and local firms helpfully won the tender process which seems to have not included major Western manufacturers, natch.

So little Bulgaria, caught rigging its own processes and taking the Russian rouble, will now have to be paid up member of the EU. Best of all Bulgaria has said this is unhelpful interference by the EU and just this morning the Energy minister has said the building of the pipeline will prove 'irreversible.'

Russia has yet to make a meaningful comment as it must decide what step to take next. Russia may well find it harder to work with full EU members than putting pressure on the Ukraine and former CIS Countries who have no NATO guarantees.

We will see how this plays out, it is possible the Russians have expected this and after all, if they conquer Ukraine they won't need the South Stream project anyway.