I have no idea whether or not Russia will invade Ukraine this week, as the USA is now suggesting it might. I have largely ignored the issue precisely because I have not been able to really appraise the risk, much of which appears to arise from posturing. However, if a war is likely it seems appropriate to consider the possible economic consequences.
Many would appear to think that these are small. For example, recent economic forecast from the government, Bank of England, Office for Budget Responsibility and others seem to take little account of this conflict. Superficially, that may be justifiable as the chance that the UK will be directly involved in any war is low, and if it is, the cost will be limited, although I would regret any loss of human life for any reason.
This is, however, to ignore the real probable consequences of any such conflict. As we know, there is no major western power who appears to have any willingness to intervene, directly, in this dispute. Obvious logistical reasons suggest why that is the case. It will be hard enough for Putin to manage such a conflict. For anyone else to assist Ukraine in mounting an effective defence would appear to be much harder still. Instead, sanctions appear to be the chosen weapon of choice against Russia.
As I have already noted this morning, the Russian influence over the City of London and the UK economy is strong. There are good reasons why the USA thinks that the UK will be the weakest link when it comes to imposing sanctions. What, however, astonishes me is the failure to take into account the consequences of those sanctions. We might have noticed the impact on energy costs, which will skyrocket still further if any form of conflict breaks out because of the threat to gas supplies from Russia to the likes of Germany. These, though, are only the first impact.
My economic concern is not for energy prices, significant as they are. Instead I note that China has very deliberately aligned itself with Russia, and that Russia appears to be very deliberately deferring any invasion until the Winter Olympics in China are over. The chance that that is by accident is remote.
It is also incredibly unlikely that China would want to be directly involved in any conflict in Ukraine. There will be almost no benefit from such an engagement for it. But, it does not need to take any such action. All it has to do to create mayhem for the West by disrupting supply chains for the products that it supplies and economic turmoil will be guaranteed in the economies of the countries that oppose Russia.
Supply chain disruption during the Covid crisis must have convinced China of the economic power that it holds over a great many economies in the world. It does not need direct investment, or ownership of assets, or the purchase of influence to create a stranglehold on the economies of countries like the UK. All it needs to do is to withhold supplies of the goods that we want to purchase from China and it can, quite deliberately, and with planned aforethought, guarantee very high levels of economic disorder that threaten our economic stability.
In complex, integrated, global supply chains we saw during the Covid crisis that the limitation of supply of just some components could create disruption. The shortage of chips to the motor industry was a perfect example of that. I have no doubt at all that this will be China's weapon of choice when it comes into conflict with the West to support its ally Russia after we seek to impose probably futile economic sanctions on the Russian economy.
In that case, anyone who thinks that this conflict is without economic consequence for the UK in coming weeks, months and most likely, years is fooling themselves. With luck not many people will die as a direct consequence of the dispute in Ukraine. That, at least, is my hope. However, this dispute has the potential to create greater consequence for the economies of the West than the oil conflicts of the early 1970s, and the resulting price increases did. Mayhem might be coming our way.
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Ha – now what was it that Keynes said about the benefits of domestic production over globalisation?
Well, you can’t say he was wrong on many levels – especially this one.
Once again, the needs of greedy finance exposing nations to more risk.
What about the effect sanctions will have on Russian people? Surely this is a major concern. They are not the decision makers. Putin won’t suffer. Not to mention the loss of innocent lives in both countries. It is truly shocking that war is still seen as a tool by bullies to get their own way. Have we learnt nothing from the war to end all wars? Why do predominantly men think they can ruin lives and nations for their own vanity? Why can they not just enjoy what they have already? But no, they want more carnage and devastation in the name of what? It makes me sick. Putin, go out and enjoy the dawn chorus and the sunshine. Listening to the rain. Enjoy what we have. A beautiful planet that sustains us.Make it a better place, not a worse one. Life is precious. Preserve it all costs and put your vanity in the bin.
And economic sanctions for us? That is our fault for buying all the chinese goods like vultures. Most of it is tat that nobody needs and it ends up in landfill polluting the ground. We allowed China to become powerful by importing all their products in the first place. Globalisation is also the enemy of the environment.
Might the following quotation indicate a significant reason for the current sabre rattling”?
“The only way for the United States to sustain its international financial balance is by —spreading neoliberal economic policy throughout the world in a way which obliges other countries to depend on U. S loans and investments.”
w.counterpunch.org/2022/02/11/americas-real-adversaries-are-its-european-and-other-allies/
No. Not for one moment.
Here’s how I would deal with this:
1) Disband NATO. It is a creature of the cold war and not relevant and certainly more divisive than originally intended. We don’t need military based confections like this; we need instead global economic and technical partnerships to deal with getting us off the carbon titty before we all drown in water and much worse. I’d pull the UK out of NATO tomorrow. Bye, Bye.
2) Apologise to Russia for the bad economic advice we gave it when its communist system collapsed and for making it take loans and bankrupting it given that without it, we’d have been fighting Nazi Germany I think well into the 1950s. We need to heal the cold war, where one minute we were united against fascism; the next it was communism or even socialism. What gives? We can have a Good Friday agreement in Ireland, attempts at reconciliation in South Africa all to deal with past horrors but somehow Russia is not apparently worthy of any of that. Why? I’m tired of the West and its cod moral superiority – it’s like throwing stones around glass houses. The U.S and U.K never hurt anyone in their history of the governments did they? FACT: Bollocks – they did – OK? Loads of people have died in the name of our so-called ‘moral upper hand’ in the name of our ‘democracy’.
3) Encourage Ukraine to be a sovereign neutral country and help it to see that it does not want to be part of a boys club where they’ll only be used to make profits for Western arms dealers and manufacturers. And I’m sure they’ve got more needs in their society than having the latest missiles, tanks and other toys.
Disband NATO, apologise to Russia… what world do you live in?
I live in a conscious world Jo. Sorry about that.
We need some sort of rapprochement with Russia – we need to start again. The way we did not really help Russia to adapt to it’s post communist self meant that Russia suffered enormously and we encouraged it to change too fast. This led to it being rather diminished in stature and with huge domestic problems. The West had a role in that and Putin wants revenge. We should have brought Russia in from the cold.
But we didn’t. We gave it loads of crappy ideas and then pissed off and left it.
The whole thing could have been done a lot better. And then there is the Wests’ problems with it’s own moral and economic ideas aren’t there? Corruption; inequality – all part of the exported neo-lib system we are addicted to.
We are far from perfect ourselves – look at what we ignore. But we still exported our crappy, faulty Neo-liberalism to Russia and elsewhere. We’re reaping what we sowed Jo.
As for NATO – who was the risk after the iron curtain came down? NATO was designed to fight the communist bloc – not the consequences of the falling apart of the communist bloc which was another matter. All the West saw were opportunities to exploit former Yugoslavia and not to help it to live peacefully and the rest is an awful recent history where no one emerges with any credit. What a mess. NATO were so effective weren’t they?
There was a time when we did not need NATO. Now because of our stupidity people are going to argue that we need it again. All it will do is act as a negative focus for a reemergent Russia and very savvy China whom are free markets gave all our industrial capacity to in the name of profit. Nice job guys!
Whilst we are it, lets get the Americans to close some of their pacific bases that they never left after World War II. That will take some of the tensions away with China.
As I see it, for a long time USA, Russia and China have successfully pursued a low-cost, low-risk policy of war by proxy. In Central and South America, if any country shows signs of setting up a left of centre democracy, a local general can be installed to take over and impose a US-friendly dictatorship. Putin has used a variant of the same strategy very successfully. Why fight another country if you can destroy it from within? Putin’s rational strategy now would be to carve out another little piece of Ukraine. I think there is another Black Sea port he might like. There are enough Russia supporters in Ukraine to make this a low-risk strategy.
I suspect China will be watching closely to see if he goes further. Will this create an opportunity to grab Taiwan?
China has the disadvantage that I don’t think there is a strong pro-China movement in Taiwan. But if Putin can annex Ukraine at the price of a lot of senseless killing and a few sanctions, China can annex Taiwan on the same basis.
Quite plausible
I see that China and Russia are aligned. I get that China will stay out of any military conflict in Ukraine. And I’m sure China could interfere with supply chains. But what I don’t get is why it would choose to do so? Its economy would surely suffer as much as the economies dependent on its exports. The gain, as far as I can see, would be all Putin’s. Given that China could disrupt supply chains at any time, what makes the Ukrainian dispute a special moment for Chinese action?
They are seeking a precedent for annexing Taiwan
Putin is Trump without the US constitution (or vice versa!) but the West’s demonization of Russia, briefly on hold during demolition of the Wall, has gone hand in glove with aggressive eastward expansion of NATO. Russian reaction was guaranteed and intended. The Monroe Doctrine is fine for the US. A Russian equivalent is not. Peace only survives on the back of real politik. I note fearfully Richard’s analysis of the vulnerability of our economic system and democracy.
Both “Naked Capitalism” and “Craig Murray” blogs are confident that Putin is not planning to invaded Ukraine.
See
https://www.nakedcapitalism.com/2022/02/blinkens-booby-traps-how-the-us-propaganda-paper-released-in-madrid-proposes-to-go-to-war-with-russia-while-claiming-to-do-the-opposite.html
https://www.nakedcapitalism.com/2022/02/michael-hudson-americas-real-adversaries-are-its-european-and-other-allies.html
I am not convinced either, but I also really do not know
Merrscheimer contended in 2015 that Putin had claimed in 2014 that he had no intention of invading Ukraine but rather wanted to wreck it, which he could do without invading the country. Perhaps he has a similar objective this time around.
Meerscheimer suggested at the time that the US and Russia come to a resolution whereby Ukraine was a neutral country serving as a buffer zone between the two blocs. The situation has become somewhat more complicated since then.