Category: ForeignPolicy

A MAGA Idea Wrongo Supports

The Daily Escape:

Sunset, Tucson, AZ – January 2023 photo by Leila Shehab

Sometimes your worst political enemies are on the same page with you. Axios reports that a:

“…threat of cuts to US defense spending has emerged as a flashpoint in House Republicans’ first week in the majority, widening the GOP’s isolationist fault line and exposing the fragility of Kevin McCarthy’s young speakership.”

The backstory here is that according to Bloomberg, among the concessions new House Speaker McCarthy made to secure the job was to agree to vote on a budget framework that caps 2024 discretionary spending at fiscal 2022 levels. Unless the Pentagon is exempted, that could result in a $75 billion drop in defense spending:

“National defense spending, which primarily funds the Pentagon, was about $782 billion in fiscal 2022 and rose $75 billion to $857 billion in fiscal 2023.”

The deal that McCarthy has apparently agreed to would have the House commit to passing bills that would cap all discretionary spending at fiscal year 2022 levels, or roughly $1.47 trillion.

But one of the big wins for Senate Republicans in last year’s budget talks was a bigger defense budget. Sen. McConnell might want to check in with the House MAGA Republicans, since they’re going in the opposite direction.

Wrongo agrees that the idea of cutting $75-$100 billion (or more) from the Pentagon should be up for discussion. Consider that in 2021, the Congressional Budget Office (CBO) released a study that outlined three options for saving over $1 trillion in Pentagon spending over the next ten years without damaging our defense capabilities.

All three options involved cutting the size of the armed forces, avoiding large boots-on-the-ground wars like Iraq and Afghanistan, and relying on allies to do more in their own defense.

Wrongo wrote about the 2021 CBO study here. The CBO report put the potential cut in historical perspective: A $1 trillion cut (14%) over a decade would be far smaller than the cuts to America’s military spending in 1988-1997 (30%), and the 25% cut we had in 2010-2015.

A $1 trillion saving isn’t chump change. Those funds could be used to prevent future pandemics, address climate change, or reduce economic injustice. These are all pressing American problems.

The MAGA’s ideas on defense spending cuts might find support from a few progressives in Congress, including Reps. Barbara Lee (D-CA) and Mark Pocan (D-WI), who pitched a $100 billion haircut for the DoD earlier this year. But this year’s Pentagon budget boost easily passed both the House and Senate on a bipartisan basis.

Both Republican and Democratic House war hawks will resist the idea of cutting defense spending. Some will cite the defense of Ukraine, which will only account for $45 billion of military spending in the coming year. Some will mention Taiwan, citing China’s aggressive military stance toward the island nation.

But how about developing a clear global military strategy along with the willingness to carry it out? Instead of simply talking about how many dollars we should spend.

And the CBO’s proposed strategic shifts don’t account for what could be saved by streamlining the Pentagon by reducing its cadre of over half a million private contractors, many of whom perform tasks at prices higher than it would cost to do the same work with government employees.

The likely outcome is that House Republicans will fail to cut defense spending while sticking to their plan of holding the 2024 discretionary spending flat. So Republicans will focus on social spending to reduce the fiscal 2024 budget to 2022 levels. But if you ask Americans what spending they want to see cut, they will never say that we ought to cut people’s retirement security.

Wrongo has little hope that this 118th Congress will work to solve the three great problems that face America: Our revenue problem, our social spending/cost inflation problem, and our defense spending problem. As Jennifer Rubin says in the WaPo:

“The danger for the GOP has always been that a short stint in irresponsible governance will wake up the electorate to their manifest unfitness, thereby dooming the party’s chances in 2024. The danger for the country is that, in the meantime, the MAGA extremists will do permanent damage to the U.S. economy and national security.”

The hard Right MAGAs and the anti-democracy Republican Party must be made into a permanent minority, as it was during the Roosevelt years, and for decades thereafter.

The battle for 2024 starts now.

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Saturday Soother – December 24, 2022

The Daily Escape:

Santas on the Grand Canal in Venice 2017 photo via WSJ

(This column is late coming to you since the big storm left the Mansion of Wrong with no internet for two days, due to a large tree falling across our road. The high winds prevented crews from working to remove it for 24 hours. It also may be Wrongo’s last column until Jan. 4th.)

The New Year will continue to bring us the chaos that we’ve sadly become accustomed to. The 118th Congress and its Republican House majority will again test America’s norms. The 2024 presidential election is going to bring an extra silly season of political news, so take a real break if you can.

One thought for year end is to set out a framework for thinking about America’s commitment to Ukraine.

We know that a significant number of Republicans and some Democrats want to pull the plug on our support for Ukraine in its war with Russia. For now, the majority think it should remain a “whatever it takes, for as long as it takes” situation. Implicit in the second viewpoint is that American soldiers are never going to be combatants in Ukraine, and that we’re not talking about another 20-year war like in Afghanistan.

A few things to think about. Do we have a choice to support Ukraine, or is supporting them a necessity? We have talked about the difference between “wars of choice” and “wars of necessity” throughout Wrongo’s adult life. Two of our worst military experiences were in wars of choice: Vietnam and Afghanistan. We didn’t have to intervene in either, but our political leaders decided that America’s national security had a true connection to both conflicts. The clear wars of necessity for America were the US Civil War, and the two World Wars. All threated the existence of the US homeland.

Somewhere in between wars of choice and necessity is Ukraine. It isn’t an ally where we are obligated by a treaty, like we have with Europe via NATO. We are obligated to defend any NATO member who is attacked. For example, that would mean a war against Latvia is a war against the US.

We spent 20+ years fighting in Afghanistan. Given what we learned there, would America ever spend a minute fighting for Latvia? When Trump was president he flirted with saying we wouldn’t immediately commit to defending just any NATO country, and he wasn’t alone in that thinking.

That means we could consider choosing not to defend NATO at all, or not to defend individual NATO countries.

We’re facing Cold War II with China and Russia. Our new Omnibus budget allocates 10% more money to national defense than last year, largely because of the possibility of fighting both countries at great distances from home. The budget implies that our national security is threated by both of them.

Russia’s invasion of Ukraine could become a generation-long rolling war between Russia and the small NATO countries that border either Russia or Belarus, if Ukraine loses. Would America then rally and support NATO? Where would we draw the red line? Support for Germany but not for Poland? Ok, we’ll support Poland, but not Latvia?

We need to think through our priorities. We fought in Afghanistan because we believed fighting a far enemy (al-Qaeda) was better than waiting and fighting them as a near enemy. That is also the basis of why we created and remain a member of NATO: Fighting Russia over there was smarter than fighting it nearby, like in Cuba.

Neither China nor Russia are presently our near enemies. If China invades Taiwan, direct involvement by the US would be another war of choice with a far enemy. Ukraine represents a war of choice with a different far enemy, but one in very close proximity to our treaty partners, an enemy that could cross NATO’s trip wire at any time.

Our history suggests that the American people will agree to wage wars of choice if they are relatively cheap and short in duration. What we call a cheap war is mostly a partisan political question. But talking about the cost of a war of choice is a proxy for how Americans value the country that we’re intent on supporting.

Ukraine is a proxy war of choice. We have very few people on the ground and none in a direct combat role. The twin goals are to preserve Ukrainian independence and to bleed Russia of its conventional military capability. Americans need to consider the following implications for national security:

  • Since our resources are limited, should we choose between containing Russia or containing China?
  • What is the goal of containing either or both?
  • How important are the small NATO counties to our national security?
  • If Ukraine loses its fight with Russia, would our national security be weakened?
  • If yes, can we live with that, or should we be doing more now?

On to a Saturday that’s also Christmas Eve! Forget tree-trimming and the last-minute Amazon shopping for a few minutes. It’s time to unplug and land on a small oasis of soothing in the midst of all of the chaos.

Gaze out at the last few leaves on the trees, and listen to the late Greg Lake, of Emerson, Lake, and Palmer, perform 1985’s “I Believe in Father Christmas”. Although most people think of it as a Christmas song, Lake wrote the song to protest the commercialization of Christmas. Here Lake, along with Jethro Tull’s Ian Anderson on flute perform it live at St. Bride’s Church, in the City of London along with the church’s choir:

The last line of the song says: “The Christmas you deserve is the Christmas you get.”

That might be considered harsh in some circumstances, but it might also be true. Anyway, Merry Christmas, Happy Festivus, Happy Chanukah, Happy Kwanzaa, and Happy New Year to all. Let’s hope the deep divisions in our country can be somehow healed by a seasonal miracle.

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Is Putin Bluffing?

The Daily Escape:

Sunset, foothills of the Superstition Mountains, Phoenix, AZ – September 2022 photo by Gary Robinson

Wrongo is a life-long peacenik. That started with his opposition to the Vietnam War, which didn’t prevent him from being drafted and spending his service time in Germany running a nuclear missile site for the US Army. His anti-war stance went forward through Grenada, Iraq (twice), Libya, Syria and of course, Afghanistan.

Curiously, he’s in favor of the US assisting Ukraine, largely because if Russia’s invasion of Ukraine is unchecked, it will create a continuing threat to Europe and to world peace. The fallout from NATO assisting Ukraine to date has been immense. Now, Russia appears to be trying to add holding Europe hostage to a nuclear threat to his already holding it hostage for energy.

In a speech Wednesday morning, Putin announced a partial mobilization of his military, saying the goals of his invasion of Ukraine had not changed and that the step was “necessary and urgent,” and effective immediately. They’re going to mobilize 300,000 troops who have prior military experience.

Contrast this to the 200,000 troops he used to invade Ukraine.

This is Russia’s reaction first, to getting bogged down in what was supposed to be a quick operation in Ukraine; and second, by Ukraine’s successful counter-offensive that has caused a significant Russian military retreat.

Russia’s plan is now to absorb the Donbas region into Russia after a sham referendum in the next few days. Once Russia annexes the Donbas, Putin says that part of Ukraine will henceforth be a part of Russia. He made his strategy explicit:

“If the territorial integrity of our country is threatened, we will certainly use all the means at our disposal to protect Russia and our people….This is not a bluff.”

From a Russian perspective, any further Ukrainian attacks in the Donbas could be construed as attacks on Russia. That means Russia might consider themselves free to interdict NATO resupply operations to Ukraine even within NATO countries.

We’re now in a situation that’s fast-moving, and potentially dangerous. Putin is reminding the West that he has his finger on the nuclear button. He also said:

“I want to remind you that our country also has various means of destruction, and some components are more modern than those of the NATO countries…”

Even though Putin said he isn’t bluffing, we have to ask: Is this a bluff?

The answer may turn on whether we’re talking about Russia attacking the West outside of Ukraine, and whether they use nukes or conventional weapons in that attack. If they use nukes, the question is whether they use tactical nukes (usually 2-200 kilotons) or heavy ballistic missiles. The Hiroshima bomb was 15 kt. The US has deployed about 100 tactical nuclear bombs, called the B61, in Italy, Germany, Turkey, Belgium, and the Netherlands.

Russia going nuclear would confront NATO with two unpalatable choices: One, back down and accede to Russian demands with the near certainty of having to face additional attempts at nuclear blackmail farther down the road. The other option would be for NATO to hit back with its own nuclear arsenal with the obvious risk of having the Ukrainian War escalate into a general nuclear war.

A third possibility is for NATO to retaliate with a large conventional weapon strike. If NATO wants maximum shock value for their nonnuclear counterstroke, striking Crimea would be a serious response.

But whether there is a conventional or nuclear response, the possibility of escalation seems high. OTOH, if Putin used a tactical nuke in Ukraine, it could signal the start of the end game for him. Even the most opportunistic of Russia’s allies would cut them off, both diplomatically and economically.

But the problem with playing chicken is that sometimes the other guy just holds the wheel straight, presses the accelerator, and closes his eyes.

What counters this is that the people surrounding Putin have as much to lose as anyone in the West in the event of an escalation that brings NATO into the fray. Will Putin actually resort to using nukes in Ukraine or Europe? Nobody knows.

Putin knows that everyone knows he knows that he can’t actually win using nukes. The threat is that he will tip the geopolitical board over in a tantrum. Putin’s actual use of nukes will result in a tremendous blowback of either retaliatory nuclear strikes or large-scale conventional weapons strikes, depending on how he actually used his nukes.

Something to consider is speed of response. Putin can nuke Ukraine with a transit time of around 8 minutes from launch to detonation for a ballistic missile, and slightly longer for a cruise missile. Rest assured that the US/NATO have some nuclear-armed submarines in the Arctic that could hit Moscow in 8-10 minutes if it came to that.

Sitting in the comfort of the US, Wrongo can’t support adopting a Chamberlain-esque policy of appeasement with Russia.

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Saturday Soother, Taiwan Edition – August 6, 2022

The Daily Escape:

El Morro National Monument, NM – monsoon rains have turned the brown landscape green – July 2022 photo by Kirk Shoemaker

We need to talk about Taiwan. China said that they wouldn’t tolerate a visit to Taiwan by House Speaker Nancy Pelosi (D-CA), and that there would be severe consequences if she failed to heed China’s warning. But she ignored China, and went anyway.

China then launched a comprehensive set of war games, showing clearly how they might invade and take over Taiwan militarily at some point in the future. China then announced it sanctioned Pelosi and her family. Now, according to the BBC, China has said all dialogue between US and Chinese defense officials would be cancelled, while co-operation on returning illegal immigrants, climate change, and on investigating international crime would be suspended.

You know the broad outline of the issues: China viewed Pelosi’s visit as a challenge to its claims of sovereignty over Taiwan, even though Taiwan is self-ruled, and sees itself as distinct from the mainland.

As China has become a global leader, their abilities and ambitions have shifted. A 1997 trip to Taiwan by then US House Speaker Newt Gingrich, was met with little opposition, while the Speaker Pelosi visit has been met with missiles. This is a complicated issue. China doesn’t control Taiwan; it doesn’t issue travel visas for it, either. In April, a group of US Senators visited Taiwan. At the time, China’s Foreign Ministry condemned the visit in a series of tweets and press statements, but nothing more.

The US has wanted to keep Taiwan in its orbit at least since the 1950’s when General Douglas MacArthur, then the Supreme Commander of allied powers in Japan, sent a top secret “Memorandum on Formosa” to President Truman (Back then, Formosa was the name of Taiwan). To contain communism, MacArthur insisted that Truman consider the strategically located Formosa (Taiwan) as a counterbalance to the Soviet and Chinese regional expansion:

“Formosa in the hands of the Communists can be compared to an unsinkable aircraft carrier….”

He argued that Taiwan should instead be an unsinkable US aircraft carrier, projecting American power in the Pacific. As China grew in power and importance, the US adopted a policy of strategic ambiguity with respect to the two countries, wanting good relations with both and wanting to finesse the question of political control of Taiwan.

But lately, the US has been slowly walking away from the doctrine of strategic ambiguity, increasingly signaling to China that it considers Taiwan a core US interest in North Asia. That’s why the Chinese reacted so strongly to a high level politician like Pelosi visiting Taiwan.

It’s also true that the South China Sea and the Taiwan Straits are among the world’s busiest seaways, and that’s where China’s military exercises are now taking place:

Source: Bloomberg. The dots are vessels, the polygons are China’s military drill areas

The NYT’s Tom Friedman connected Pelosi’s trip to the Biden administration’s previous efforts to keep China from getting involved in Ukraine on Russia’s side:

“There are moments in international relations when you need to keep your eyes on the prize. Today that prize is crystal clear: We must ensure that Ukraine is able, at a minimum, to blunt — and, at a maximum, reverse — Vladimir Putin’s unprovoked invasion…”

Biden had held a series of tough meetings with Xi, trying to keep Beijing out of the Ukraine conflict. Friedman says that Biden told President Xi that if China entered the war in Ukraine on Russia’s side, Beijing would be risking access to its two most important export markets — the US and the EU. More from Friedman:

“By all indications…China has responded by not providing military aid to Putin — at a time when the US and NATO have been giving Ukraine intelligence support and a significant number of advanced weapons that have done serious damage to the military of Russia, China’s ostensible ally.”

So why mess with Biden’s Ukraine power play, Nancy? That’s Friedman’s question. OTOH, everyone knows that the minute we bend a knee to China is when we lose our ability to defend Taiwan and hold on to the unsinkable aircraft carrier.

China hasn’t proven itself capable of dealing with Taiwan except through threats since Chiang Kai-Shek left the mainland and took over in Taiwan in 1950. If China wants to control Taiwan without a fight, it has to stop threatening to rape her if she doesn’t want to date. Every Chinese threat increases Taiwan’s separate national identity, and decreases the chance of a peaceful Chinese takeover.

Time to leave geopolitics behind, it’s time for our Saturday Soother, where we focus on clearing our minds for the week to come. Here on the fields of Wrong, we have a crew rebuilding a stone wall by the road that was hit by a large truck a few years ago.

Let’s start by finding that one last can of nitro cold brew in the back of the refrigerator and grab a seat by a large window. Now put on your wireless headphones and listen to “Danse Bacchanale” by Camille Saint-Saëns from his opera “Samson et Dalila”, played here by the Orquesta Sinfónica Juvenil de Caracas, Venezuela in 2010:

This is played at a very quick tempo, and with passion!

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The US Jobs Market and The EU vs. Russia

The Daily Escape:

Sunset, Lake Sammamish, Issaquah, WA – June 2022 photo by Gary Hamburgh

Two pieces of news to think about today.

First, you can always tell when an economic boom is nearing its end, because the jobs market begins to get shaky. That seems to be starting. The WSJ reports that:

“Businesses in several different industries are rescinding job offers they made just a few months ago, in a sign the tightest labor market in decades may be showing cracks.”

No need to panic just yet, the labor market remains strong, with an unemployment rate at 3.6%, near a half-century low. But signs of retrenchment in hiring shows that executives are having trouble predicting the economy over the next 12 months.

And when companies revoke job offers, it indicates their view of the future business outlook has changed so quickly that it’s undoing hiring plans made only a few weeks before.

Many hiring managers say signing up new recruits remains highly competitive. The WSJ reports on a Gartner survey of more than 350 HR executives conducted in May that found around 50% thought the competition for talent would increase over the next six months. Nearly two-thirds said they hadn’t made any changes to their hiring practices or HR budgets in response to economic volatility.

But it seems there are changes afoot. Country wisdom says that a storm rarely hits us without warning. The skies turn dark, the wind picks up, the birds go quiet. It’s possible to see the signs before the storm hits if you know what to look for. We’re seeing signs now of what’s to come.

Second, there’s an adage, attributed to Trotsky, but difficult to verify, that says: “You may not be interested in war, but war is interested in you.” Those words are apt in today’s situation between Europe and Russia. CNN is reporting about an emerging flashpoint between Russia and the EU:

“Tensions are mounting around…the Russian exclave of Kaliningrad, an isolated but strategically significant territory on the Baltic coast…Russia has reacted furiously after Lithuania banned the passage of sanctioned goods…into Kaliningrad. But Lithuania says it is merely upholding European Union sanctions, and the European bloc has backed it.”

Kaliningrad is Russia’s westernmost territory and it has no land connection to Russia. It’s the only part of Russia that is completely surrounded by EU states. Here’s a map:

Estonia, Latvia, Lithuania, and Poland are all members of NATO, surrounding Kaliningrad militarily. Since Russia invaded Ukraine, experts have feared that Kaliningrad might become the next flashpoint in tensions between Moscow and Europe.

Russia says that Lithuania’s sanctions on goods transit is a blockade in violation of a 2002 agreement to allow goods to flow between Kaliningrad and Russia. Sanctions apply to about 50% of Russian shipments. The sanctioned products include construction machinery, machine tools and other industrial equipment. But food and personal travel are not sanctioned.

Since the Baltic freezes during the winter, resupplying Kaliningrad will become particularly difficult in about six months. Lithuania has also closed its airspace to Russia. A Berlin-style airlift could prove problematic as well.

Lithuania has spent years building a liquid natural gas (LNG) port and the infrastructure necessary to connect to Nordic and EU grids. She was therefore able to shut off Russian oil, gas, and coal quickly and is in a better position to do without Russia’s gas than the rest of the EU.

Lithuania imports 70% of its electricity from Sweden through a dedicated underwater cable. Sweden’s power is nuclear and hydroelectric, thus independent of Russia as well. Lithuania is also in a position to supply gas to Latvia, Estonia, and Poland through their LNG terminal.

So is Europe at a flashpoint? There’s little Moscow can do to Lithuania beyond threaten.

Is it just a matter of time before NATO and Russia are in a shooting war? Doubtful. Russia could try cutting off all oil, gas, and coal exports to the other NATO countries. Russia could then say they would sell to any countries that left NATO. That might not pop NATO’s balloon, but it might take some of the air out of it.

If Russia decided to do that, it would have to find a way to transport it’s oil, gas, and coal to alternate customers. That can’t happen quickly. Given that the adversarial relationship between Europe and Russia may last a decade or more, Russia will probably have to find alternative customers regardless.

Neither side wants to undertake drastic changes in energy supply too precipitously.

Wrongo doubts the Kaliningrad situation will lead to war, but each provocation and escalation increases the odds. We’re playing in a very high stakes game, given the nuclear weapons on all sides. But Europe and NATO can’t automatically bow to Russia’s threats.

NATO can’t be unwilling to fight, but there’s a difference between that and provoking a war. Right now, it’s difficult to see a peaceful end game between the US, NATO, and Russia

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Monday Wake Up Call – May 9, 2022

The Daily Escape:

Sunset, Lynden, WA – May 2022 photo by Randy Small Photography

A final thought about our radical Supreme Court: They should give up their black robes. White robes would be much more appropriate.

But for today, let’s talk about the Victory Day celebrations in Russia. This year marks the 77th anniversary of the end of World War II, and Russia observes it every year with military parades and patriotic messages.

Wrongo is publishing this before we learn exactly how Putin will mark the celebration. Certain pundits think that Putin will use the occasion to escalate his war in Ukraine.

UPI reported that in remarks Putin made to commemorate Victory Day, he blasted what he described as “Nazi filth” in Ukraine. He also sent congratulatory messages to the Russian-appointed figureheads of the Donetsk and Luhansk regions of eastern Ukraine, which together make up the Donbas region, for “fighting shoulder to shoulder for the liberation of their native land.”

That certainly doesn’t sound like he’s backing down on his currently stalemated war.

Others think that Putin is more likely to make the political choice to declare victory, or partial victory in the “special military operation”. They think that Putin will postpone any decision regarding mobilizing more troops, which could be politically difficult. Pat Lang, a former US intelligence officer, worries about Russia using a tactical nuclear weapon against the steel plant in Mariupol, a frightening possibility for the world.

Despite the speculation, let’s spend a few moments thinking about how the Ukraine war might end.

“Tell me how this ends” is what General Petraeus famously asked in 2003 at the outset of the Iraq War. It lasted until 2011, and then morphed into the war on ISIS, that lasted until 2017.

Since the Russian war hasn’t resulted in a clear victory, certain US and British officials are talking more openly about a “victory” in Ukraine, meaning that the West decisively degrades the Russian military’s capability. Also, there’s some talk about regime change in Moscow.

A more likely scenario is that we’ll see an extended standoff between Ukraine and Russia, without an agreed end to the war, but where neither side wishes to continue active combat. In this case, Western sanctions would continue. Russian forces would occupy all or most of the Donbass region and control a land corridor linking Crimea with the Donbass and Russia.

This outcome would have few rules of engagement, since most of the guardrails that would be part of a negotiated settlement wouldn’t exist. The US and Europe would face years of instability and the constant threat of a military miscalculation causing a spillover in Europe. A forever war in Ukraine also runs the risk of eroding support for Kyiv in the US. America isn’t emotionally able to endure another grinding military conflict, even with no troops on the ground.

Finally, there may be a negotiated settlement. But what is the compromise that all parties can live with?

Zelensky has indicated that Ukraine might agree to be a neutral country; but only on condition of stringent security guarantees, the terms of which both the US and Russia might find objectionable.

Ukraine has understandably ruled out territorial concessions, but Putin would almost certainly not agree to any settlement in which Russia were forced to leave the Donbass and Mariupol. And separatist groups there would be unhappy living under Kyiv’s rule after years of war. Also, it’s hard to see Putin compromising unless the US and Europe ease economic sanctions as part of a settlement. Removing sanctions without a Ukraine “victory” might be a difficult political pill for Biden in particular, to swallow.

We like to think that all wars end, and eventually, they do. Remember that may not happen quickly or completely. The surrender of the Confederate Army at Appomattox didn’t settle hostilities, or political and cultural tensions in the US. It didn’t resolve the related racial prejudices and political differences, which still linger today.

It shouldn’t surprise anyone that in the Ukraine war, there may not be a discrete moment marking the war’s end for many years. A protracted war would be a favorable outcome for Moscow. It would certainly be a terrible outcome for Ukraine, which is already devastated as a country.

Time to wake up, America! What’s our strategy in Ukraine? Are we even following a strategy in the Ukraine war? To help you wake up, listen to Jon Batiste perform McCartney’s “Blackbird” on The Late Show in 2016:

Note Batiste’s overture on piano which McCartney originally wrote for guitar, was inspired by Johann Sebastian Bach’s Bourrée in E minor, a well-known lute piece.

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Ukraine War Escalates

The Daily Escape:

Lupine, Rocky Mountain Front, MT – April 2022 photo by Jack Bell Photography

After just a few months, the Ukraine war is escalating dangerously. Russia decided to shut off gas exports to two EU nations, Poland and Bulgaria because they won’t pay Russia in Rubles. This escalation came one day after the US and other Western allies met to coordinate speeding up deliveries of more and better weapons to Ukraine.

Cutting off gas was called blackmail by the EU. But it isn’t blackmail, it’s war by other means. And it was totally foreseeable years ago when Europe happily set up its bulk gas buying relationships with Russia’s Gazprom.

There also were explosions in both Russia and in Transnistria (a separatist part of Moldova) that knocked out two powerful radio antennas and hit the state security ministry. Transnistria houses Europe’s largest ammo dump, filled with old Soviet armaments. It’s just 1km from the Ukraine border. Russia has blamed Ukraine. Ukraine blamed Russia.

Inside Russia’s Belgorod province, near the border with Ukraine, Newsweek reported that an ammunition depot was on fire. It’s unclear whether this was caused by poor local management, Ukraine, or sabotage.

And Germany decided to send anti-aircraft self-propelled guns to Ukraine. The Gepard, a tank with two 35-millimeter anti-air cannons, was phased out from the German army more than 10 years ago. But Germany still has many available. One problem is Switzerland, a key supplier of ammunition for the Gepard, has banned the export of that ammo to Ukraine.

It’s clear that the US and NATO are dipping their toes deeper into this conflict, and that Russia is expanding its efforts as well. The question is: whose toes get nipped first?

The Express is reporting that on Wednesday, Putin told Russian lawmakers in St. Petersburg:

“If anyone decides to meddle in ongoing events and create unacceptable strategic threats for Russia, they must know our response will be lightning-quick….We have all the instruments for this, ones nobody else can boast of. And we will use them, if we have to….We have already taken all the decisions on this.”

The big question today is whether the EU and NATO will say cutting off gas to one of us is cutting off gas to all of us. That would be a substantial escalation from where both stood on Russian gas in February.

By cutting off gas supplies, Russia may be making the same strategic mistake that the Confederacy made with its Cotton Embargo at the beginning of the US Civil War. That initially caused considerable economic pain, but both the French and British started importing Egyptian and Indian cotton. The South lost a long term market by its action. By the time the Confederacy realized it, they’d lost their key cotton export ports because of the US Naval blockade.

This is really Russia’s attempt to bully its biggest Western customer, Germany. As the Confederacy discovered, cutting off your big customers creates an aspect of Mutually Assured Destruction (MAD). It will be interesting to see how the rest of the EU deals with Russia’s demand for Ruble payments.

A few weeks ago it seemed Germany would blink first, but after its announcement to send armored vehicles, that seems less certain. The Russians are simply driving Europe to reduce their reliance on Russian gas and oil, with imports from other sources and renewables.

This is certainly an existential war for Ukraine and, given the current round of escalations and the bellicose talk out of Moscow, it’s becoming an existential war for all of Europe as well.

There’s an emerging feeling in the EU that Ukraine must win for Europe to feel secure. Winning is everything for both Ukraine and Russia. While Russia seems to be winning on the ground in Ukraine, they’ve been mostly stagnant for nearly a month while steadily getting chewed up by Ukraine’s defensive tactics. Ukraine on the other hand, is being bombed and shelled back to the 19th Century.

In the short term, things look bleak for Ukraine. In the longer term, if the West’s weapons resupply works, things look bleaker for Russia. And in the sanctions war, it also looks bleak for Russia in the longer term.

Europe probably can replace most of its Russian oil and gas imports within 12-18 months. OTOH, the Russian war machine is dependent on the West’s chips, optics, and other high tech, all of which are embargoed. It will take Russia years to replace them.

A final thought. Corruption in Russia’s military has been a serious problem since at least the 1970s. That time frame is important, because it means that no current Russian military officer has ever lived in an un-corrupt military culture. That doesn’t mean their military isn’t dangerous, but maybe we’ve exaggerated their prowess.

Wrongo asked Ms. Right if she could name a city in Moldova. She came up with bupkis. Wrongo understands that Bupkis has lovely churches and museums.

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Will Sanctions Hurt the Dollar’s Role in Trade?

The Daily Escape:

Cherry Blossoms, Univ of Washington, Seattle, WA – March 2022 photo by Erwin Buske Photography

One of the most important elements in the undeclared war between the West and Russia is how sanctions are changing both international trade and the international payments system.

The West has basically frozen Russia out of both. First, by taking Russia out of the SWIFT payments messaging system, and second, by sanctioning Russian banks and the Russian Central Bank. Third, by seizing Russia’s currency reserves that were held in the West.

All of this means that Russia can’t easily accept dollar/euro payments for exports and then convert them into rubles for use at home. By losing access to the international currency markets, it’s become impossible for Russian businesses exporting their energy, goods, or commodities to get paid. This may be a historic moment in economic history.

By freezing hundreds of billions of dollars of Russian reserves, the Russians no longer can access those dollars or euros. Sanctions mean that even the dollars and euros they could create through trade cannot buy much in the countries that support the sanctions.

Naturally Russia is looking for work-arounds for this dilemma. Selling the West anything in dollars or euros no longer makes sense: They can’t use them at home without exchanging them for rubles. And sanctions make that very difficult, since they’re closed out of our banking system.

There are two ways around this. Either use Russian banks that are not banned from SWIFT or go through an informal third-country currency exchange. Russia’s first effort is to only accept payment in rubles for its exports to “hostile nations”. That is, those nations who have imposed sanctions because of Ukraine.

In order to buy Russian oil and gas which they desperately need, Europeans will have to pay in rubles. That means either selling dollars/euros for rubles or selling them for yuan (China) or rupees (India), two countries that are not part of the sanctions regime.

The West’s move has the potential to upend the world’s trading system which today relies on payments in dollars. The dollar has been the world’s principal reserve currency since the end of World War II and is the most widely used currency for settling international trade. The dollar represents about 62% of global trade, down from much higher levels before the euro was established. The other important currencies are the euro at 20.1% and the Japanese yen at 5.7%. China’s yuan is at just 2.0% of trade settlements.

It is increasingly likely that Russia’s move will result in a further “de-dollarization” of trade. Recently, there have been new attempts to abandon the dollar. Saudi Arabia and China are planning to use the yuan in a new oil deal. Russia and India are negotiating to pay for trade in rupees.

China’s energy trade with Russia uses the dollar. Chinese energy imports from Russia soared 47.4%, an increase of more than $52.9 billion from 2021. This accounts for more than 65% of China’s total imports from Russia. Since the sanctions, both countries have stated their intention to move more of this trade to yuan.

A new multilateral financial system is emerging before our eyes. Who the participants will be, and what rules they will follow, are up in the air. The dollar will remain primary between the US and its allies, but alongside it, there could develop Russia-yuan, Saudi-yuan and India-yuan arrangements for trade in oil, minerals, and industrial products. Shifting just part of the global oil trade into the yuan is potentially huge. Oil is the world’s most traded commodity, with an annual trade value of around $14 trillion, roughly equivalent to China’s GDP last year.

We’re likely to see more trade occurring in more currencies, probably on a number of exchanges. We will see the world realign into different trading and monetary blocs, like there were in the past.

However the Ukraine war is settled, the Russian claims that the US has shot itself in the foot about the dollar’s dominating role in trade has a ring of truth. In the past, the US took Iran’s reserves after the Shah was overthrown. We froze Afghanistan’s foreign reserves earlier this year and now the West has done the same to Russia. A few years ago, the UK froze Venezuela’s gold in the Bank of England.

These systems are built on trust, and for the next few decades, trust may be lacking. So we’re looking at the possibility that there will be two quite different geo-political philosophies operating as trading partners as the non-US world develops its alternatives to the dollar as the world’s dominant trading currency.

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China’s Reaction to Putin’s War

The Daily Escape:

Snow on the Fields of Wrong, March 10, 2022                 Sand on the beaches of Florida, March 2022

(This is the last column for the week. New content next week will be light and variable as Wrongo and Ms. Right make our annual pilgrimage to Florida to visit Wrongo’s sisters.)

Subsequent to the meeting between Putin and Xi Jinping in Beijing at the start of the Winter Olympics, the Chinese government’s statements and actions about Putin’s War in Ukraine have been a kind of doublespeak.

With its public statements, China’s been supportive. The foreign minister has referred to Russia as its “most important strategic partner.” China hasn’t endorsed Russian sanctions and its state media seems to repeat a lot of Russian disinformation about Ukraine.

On the actions side, the Chinese government has called for an end to violence and has promised to send humanitarian aid to Ukraine.

One thing that hasn’t been public is Chinese financial institution’s hesitancy about new deals with Russia. Chief Investment Officer magazine (CIO) quotes Yuan Jiang, a Chinese PhD candidate at Queensland University who specializes in Russia-China relations:

“Currently, the risk is simply too huge…”

Jiang said that traditionally, only state-funded institutions or large corporations would transact or directly invest in Russia, but even these institutions were wary of Russia:

“Russian markets are full of political corruption and other dangers…”

China’s financial sector has been leery of being caught up in the Western sanctions. Two major Chinese state-owned banks are now restricted from financing Russian commodities, according to Bloomberg. Reuters reports that the Bank of China in Singapore stopped financing Russian oil trades.

CIO also reports that some banks with partial Chinese state ownership have also been backing out of Russian deals. The Asian Infrastructure Investment Bank, which has many Asian governments as shareholders, suspended its business in both Russia and Belarus after the invasion. Similarly, the Shanghai-based New Development Bank, which has China as one of its founding members, also has terminated its business with Russia.

Now Russia is barred from participating in SWIFT, the global financial messaging system. In the past, China’s large banks have complied with American sanctions against Iran and North Korea because of the importance of clearing via SWIFT. The Chinese distancing from Russian transactions makes it clear that Beijing intends to continue complying with this Western sanction.

The Russians are looking to China as a lifeline in the midst of the sanctions. And the Chinese government is providing some help. China’s UnionPay card service will serve as an alternative for credit and debit card holders now that MasterCard and Visa have ended the ability of Russian citizens to use their cards abroad. UnionPay is accepted in 180 countries.

But China is shying away from a full rescue. Former US Treasury official Peter Piatetsky said in an interview with RadioFreeEurope:

“China can essentially do one thing here, which is to buy more Russian goods, but they don’t seem to be willing to do that….Russia doesn’t have that many different goods that China is willing to buy….The relationship between Russia and China is very transactional….They both dislike the US and dislike the US-led world order, but aside from that, I don’t think there’s much there.”

China could buy up Russia’s oil that’s no longer going to Europe if it wanted, but it doesn’t appear to be doing so, at least not yet. According to Jiang, ultimately the US has much more to offer China economically:

“Investing in the West is much simpler and more secure. No more unnecessary economic risk, not many political factors, and more transparent…”

And importantly, the US is China’s largest trading partner. The US buys 16.75% of all Chinese exports, creating a relationship that the Chinese government can’t afford to lose. Although ideological differences might dominate headlines, the US-China relationship is strategic for both.

It’s likely China will continue to keep Russia close and expand the relationship should relations with the West shift. And since the stated US strategy is to use Ukraine to destabilize Putin’s hold on power, China worries that it’s next.

Jiang says that Beijing is particularly afraid of “color revolutions,” a phenomenon in which popular uprisings result in regime change:

“Moscow and Beijing share almost indistinguishable views on the potential domestic and international security threats posed by color revolutions, and both nations view these revolutionary movements as being orchestrated by the US and its Western democratic partners to advance geopolitical ambitions.”

Despite the havoc that Western sanctions have brought on the financial system, China’s strong economic relationship with the West will help it keep Russia at arm’s length. If anything, the Ukraine war has shown just how much China relies on the West for its economic prosperity.

China and the US are particularly intertwined financially, and despite ideological differences, China will continue to prioritize its economic relationship with the US.

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Monday Wake Up Call – NATO edition, January 24, 2022

The Daily Escape:

Landscape Arch, Arches NP, UT – January 2022 photo by Peter Ferenz

Let’s talk about the elephant in the room in the standoff between Russia and Ukraine: NATO. Back in the early 1990s, Clinton wanted to have it both ways with his Russian counterpart, Boris Yeltsin. He wanted to expand NATO while at the same time, partnering with Russia.

Yeltsin wasn’t having any of that. He accused Clinton at a summit of the Conference on Security and Cooperation in Europe, (CSCE) that the US was “trying to split [the] continent again” through NATO expansion. Putin believes that today.

NATO’s expansion, either in the form of full members (or in increased military activities), has now been the policy of five US presidents: Clinton, GW Bush, Obama, Trump, and now, Biden. So, a couple of questions:

  • Did NATO’s expansion to the east of a reunified Germany increase the security in Europe and reduce the risk of a major war in Europe?
  • Did NATO’s expansion in membership increase the safety and security of the American people?

The answer to both is a no. NATO expansion post 1990 hasn’t helped the original European allies and has done nothing to improve the security of the US. Arguably, we’re worse off today than in 1990.

Today there are true splits within NATO. Germany, its most important country, isn’t on the same page about Russia. From Der Spiegel:

“The US wants to impose harsh sanctions on Russia if it invades Ukraine. But the German government is putting on the brakes out of fears over the economic consequences and what punitive measures could mean for energy supplies for a country that gets much of its gas from Moscow.”

Germany’s conflicted about Ukraine. Der Spiegel reports that last week, the US CIA director William Burns held a meeting in Bonn with German Chancellor Olaf Scholz. Burns told him that if Russia attacks Ukraine, Berlin must take a clear stand.

Biden also wanted to meet with Scholz in Washington. It would have been an opportunity for them to closely coordinate steps in dealing with Russia, but Scholz refused to go and meet him. We have a problem when Russia is building up to the biggest European military threat since the end of the Cold War, and the German Chancellor is unable to clear his schedule to meet with the American president.

Having declined the Washington visit, Biden dispatched Secretary of State Blinken to Berlin, and like the CIA director, his message was – Germany must participate in tough financial and economic sanctions if Putin strikes.

Despite the European ambivalence, Russia’s move to surround Ukraine with troops may be a strategic error. Europe has wanted to become a kind of giant economic Switzerland, independent but neutral. Today, it’s trying to come to grips with the fact that Russia wants to push NATO as far back as it can by recovering former Soviet territory.

Russia making NATO into a target seems to have revivified NATO a bit. It was more or less in slumber before Putin’s move against Ukraine and his demands of NATO and the US. Europe, the US, and NATO are walking a tightrope now, since there’s a fine line between diplomacy and “appeasement”.

The US and NATO countries all have entrenched maximalist military hawks who will attack any politician that surrenders an inch to Russia in the current situation. That’s an understandable position. In the last decade, Russia broke up Georgia, it ended the revolution against Assad in Syria, while securing its naval base there. It annexed Crimea albeit with local popular support, sent troops to Libya and Africa, supported Armenia against Azerbaijan, and recently “preserved” the non-elected government of Kazakhstan.

Can/should this be allowed go on forever? Is this the right time to push back hard?

There is no military solution that will keep Russia out of Ukraine. When Wrongo was a member of the NATO forces, the accepted strategy was that US and European troops on the ground were a “tripwire”. It was clear that the Soviet Union had vastly superior military assets amassed on Europe’s border. And Europe’s border was at that time, East Germany. Berlin was just 300 miles from Bonn, a day’s trip.

The counter to the Soviet’s military superiority was NATO’s potential use of tactical nuclear weapons. We could stop their ground forces reasonably effectively before they could get to Germany’s capital. The basic NATO position was to fight long enough with conventional forces to make the possibility of nuclear escalation plausible.

Today the situation is similar. Russia has vastly superior military assets amassed on Europe’s border, but the distances are greater: From Smolensk on Russia’s western border to Warsaw in Poland is about 500 miles, and it’s 1,075 miles from Smolensk to Bonn, Germany.

That breathing room explains Clinton’s flawed reasoning for NATO expansion. But, since the West has said that it will no longer use tactical nuclear weapons, it has limited options if it faces a limited invasion of say, Ukraine, a non-NATO member.

This leaves the US with trying to find a diplomatic solution, one which doesn’t look like appeasement, one that the many NATO members will also find acceptable. Having to compromise will mean finally admitting that we are part of a multipolar world.

Is Washington ready to go there yet? Very doubtful. Our path is fraught with danger as we careen from crisis to crisis. Something has to change or we’ll misplay a hand and be back where we were in 1939.

It’s time for NATO, Europe, and the US to wake up! It’s hard to see a sensible compromise that doesn’t look like appeasement, but it’s their job to find it for the rest of us.

To help them wake up, listen to John Mellencamp and Bruce Springsteen perform “Wasted Days”, from Mellencamp’s “Strictly a One-Eyed Jack” album, released this week, it’s one of the three songs featuring Springsteen:

Sample lyric:

How much sorrow is there left to climb
How many promises are worth a dime
Who on earth is worth our time?

Think about that NATO!

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