Putin has his troops on what most countries think to be Ukrainian soil this morning. Talk of sanctions is in the air. The fear as to what Putin will do next is palpable. Markets are already reacting with oil prices up about three per cent overnight. The UK cabinet meets this morning.
I am not going to forecast what will happen in any war: I simply do not know.
Nor am I going to suggest what sanctions might be imposed by the West, or how effective they might be. I, again, simply do not know.
But what I do know is that one of my few predictions has proved to be true. Putin waited until the Winter Olympics were over before acting. China is his vital ally, and we dismiss their reaction at our peril. I wrote this on 12 February:
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.
The possibility of conflict between East and West has existed for a very long time, always constrained by the fact that all the might seemed to rest in the West. That, however, is simply not true anymore. The locus of control has shifted to China. That's not because of its military might, formidable in terms of numbers that this might be. It has instead been quietly engineered by making China the labour source and supplier of cheap products to the world on which the economies of the West have become entirely dependent.
How dependent? A simple example is blood testing tubes. China makes them. Our health service is dependent upon them. Without them, our healthcare collapses. That's how dependent we are. China does not have to do much to make us come begging.
What are the potential outcomes here? Who knows with Russia? At best an agreement in Ukraine will be forged. Part will become Russian again. The rest will be barred from NATO and EU membership. We could have agreed that long ago.
But what happens with China? Will they make us realise that we now run to their tune? It's hard to see why they will not. If so there will not just be a major redistribution of power from the West to China, but also a major redistribution of economic resources as well. China has an economy that is in at least as perilous a state with regard to debt financing as those in the West, after all. Why wouldn't it want to exploit its financial power to solve its own domestic crises?
The chance that we are seeing the start of a fundamentally new economic era, starting today, appears to be quite high.
That we might not enjoy it is very likely.
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A few days ago we were being told that if only we’d stamped out money-laundering in London, then the territorial boundaries of Ukraine would not be under threat.
Anyway, the important thing to note is that Tories don’t care and it’s their fault.
You do realise it is the same issue, don’t you?
That quote from Keynes comes to mind as being particularly appropriate
But let goods be homespun whenever it is reasonably and conveniently possible, and, above all, let finance be primarily national.
You saved me a job John.
So to add then – let’s be clear – our vulnerability at this moment in time is the result of race to the bottom capitalism that has sought to put increasing returns to private investors over national security and the integrity of economies of sovereign states.
Or something like that. However it is put, we are at a bit of a disadvantage because business capitalism cannot see further that the end of it own nose.
So what was worse – trade unions and full employment or this?
How stupid have we been.
Well, that all seems completely plausible and in a way, with hindsight, the consequence of globalisation and exploitation of cheap labour.
“It has instead been quietly engineered by making China the labour source and supplier of cheap products to the world on which the economies of the West have become entirely dependent.” – isn’t it our large corporations and western government policies that have done this though?
Sure China has deliberately offered lower cost manufacturing and other incentives to move production to their country, but we didn’t have to do that if we accepted lesser profits and paying higher prices for goods, etc.
Could this be the end of globalisation? Or at least of off-shoring?
Richard Kirby.
I don’t think there was a choice. Growth was only maintained in the West by shipping out manufacturing to China.
Western manufacturing would have become uncompetitive against competition from developing economies.
It’s been the inevitable end game of western Capitalism.
Vinnie
There were choices – we just made the wrong ones – it was not inevitable.
Growth? Growth of what? Wealth of society at large or the individual wealth of the owners and stock holders?
If you lower the production costs and charge the same price – margins go up don’t they and if labour cost is then reduced well – hey! – profit nirvana to be creamed off by management and investors.
I’ve just started to read ‘How China Escaped Shock Therapy: The Market Reform Debate (Routledge Studies on the Chinese Economy) Paperback – 27 May 2021 by Isabella M. Weber.
Even the introductory chapter is a must read – avowedly anti-Neo-liberal from the off-set, it details and contrasts China’s ‘modernisation’ with Russia’s post communist experience (which explains my passion for holding Western economic ideas responsible for Putin’s Russia) and seems to me to nail the idea that China is indeed trying for a mix of state price management alongside market mechanisms in order to prevent the economic shocks suffered by Russia and others.
I was reading ‘The Road to Mont Pelerin’ and was eyeing up my copy of Desan’s ‘Making Money’ next but I just could not resist. I’d recommend it to all here – ‘very interesting indeed – a must read in my view.
Note to John Warren – sorry John – yes, ANOTHER book.
I wish I had time for all your recommendations…..
This is of relevance (China, semiconductors & greater EU indepedence) – & could also be an entry into a competition for journalistic incoherence:
https://www.euractiv.com/section/digital/news/what-the-chips-act-doesnt-say-the-environmental-challenge-of-producing-semiconductors/
It also meshes quite well with Mr Boxall’s/Keynes comments.
The article witters on about IC envo’ impacts and then inserts this:
“Intel is due to open a new factory in Europe, for which it commits to 100% renewable energy, net positive water use, and zero waste to landfills.”
So envo impacts can be minimised, if there is a (corporate) will.
One question not asked: where are all the ICs being used? My guess is things such as adult pacifiers and cars (once mechnical devices – now 4 wheeled computers – with all the unreliability that implies).
To anyone who doesn’t know something about the history of Ukraine, and why what Putin said about the country only existing because of Lenin/the USSR is total bullshit, it’s worth watching this five minute clip of Anne Applebaum’s summary. The clip (from the Rachel Maddow Show) is four segments down in the right hand side bar, title: ‘Putin narrative to excuse Ukraine invasion rings hollow to experts’.
https://www.msnbc.com/rachel-maddow-show
Thanks
Anne Applebaum is as always articulate but, in this case, hardly convincing.
She argues that Putin fears Ukraine because it is a democratic country and not because it might host NATO missiles should it ever become a NATO member. Her proof of this is that Olaf Scholz promised Putin that Ukraine would never become a NATO member while Scholz was German chancellor. Since that promise did not change Putin’s attitude to Ukraine, she therefore concludes that membership of NATO is not the issue.
Whatever view one might have of Putin, he would be very foolish to base his country’s security on the word of a politician who may only be in power for a few years.
Also, the idea that Ukraine is a shining light of democracy leaves one doubting Applebaum’s judgement.
So whose judgement are you believing?
The old story goes that Gorbachev did a deal with Bush (senior).
Gorbachev agreed to the unification of Germany provided NATO did not expand eastward.
The USSR was collapsing and Russia was playing a weak hand.
NATO expanded eastward. The US ignored any deal or denied that one was ever made.
US military hardware eventually ended up on the Russian boarder.
We now live in a bi-polar World with America and China as potential cold War opponents, and a weaker Russia acting as the “king maker”. Rather than staying neutral, and thereby getting the best of both Worlds, it seems Russia (or at least Putin) has hitched his wagon to China.
This sounds bleak for the West, but China is likely to be more measured than Russia in flexing its muscles. The Chinese are consummate long term business managers, so less likely to freely choose a path that might cost them. The West still has the skills to repatriate much manufacturing over the long term if necessaey, which would not be to China’s advantage. For China, even invading Taiwan would put Global chip supply in serious jeopardy, guaranteeing a brutal Western economic response.
Of course its true to say that in war both sides inevitably loose. But unlike Russia, I expect China is very aware of this. Does that guarantee we can avoid worsening trade wars with China? Maybe not. But it certainly gives more grounds for hope than in dealing with Putin.
“The chance that we are seeing the start of a fundamentally new economic era, starting today, appears to be quite high”.
Today’s developments will drive EU (& possibly UK) towards autarky with respect to energy (& not before time). This will leave both the Russians and arabs in a bad place (sure in the short term China will buy gas etc – long term? – nope – they are on a similar trajectory to EU). & I see that Nord Stream has been cancelled. The oil shock of the 1970s triggered France to build nukes (oddly I knew one of the French team that brought PWR back from the USA) – this time around things could be more profound & hopefully this will kick-start a meaningful and fast energy transition. Russian prosperity rests on oil & gas and to some extent metals. The first two can be replaced and the third partly addressed with circular economy measures. Long term things don’t look to good for Russia.
That would be my desired direction
Can I suggest Bruno Macaes’ book, “The Dawn of Eurasia” for anyone interested in taking these geopolitical shifts further. I found it helpful and perceptive.
For a sensible discussion about Ukraine, I suggest this 2014 article. Too old, you may think, but I assure you it is not. It is a Guardian article by Seumas Milne, “It’s not Russia that’s pushed Ukraine to the brink of war”. It could have been written this morning, give or take a name or two.
It was Russia that has pushed Ukraine to the brink of this war
I am in little mood to tolerate crap on this issue
I am well aware of the faults of the West and the inappropriate pursuit of NATO expansion but if you want to excuse Putin you have one last chance to do so and like others seeking to d0o so you will be banned
“For a sensible discussion about Ukraine”: maybe we need to revisit a 1994, when a treaty was signed (by various parties including Russia, USA and Ukraine) with two core elements:
a) Ukraine gave up all nuclear weapons
b) territorial integrity of Ukraine was guaranteed by all the signatories in return for giving up nuclear weapons.
Remind me how things are working out now on that score & who has broken this international treaty.
Today IS the beginning of the new era – the old one started exactly 50 years ago yesterday.
Bear with me. I’ll try and keep it short and cite the substantive articles which have informed my opinion.
1) Geo-Politics
Exactly 50 years ago yesterday Nixon landed in China. The world changed.
The USSR collapsed, USA became a hegemony and China became a industrial giant. Today China and Russia have been thrown together and developed the Shanghai Cooperative Organisation and with the Belt and Road Initiative are not only resisting the never satisfied lust of the ‘West’ to the resources of EurAsia and indeed the Rest of the World.
‘US hegemony over
The historical diplomatic breakthrough opened up by Nixon’s visit has now been symbolically closed – and was actually reversed in Beijing on 4 February 2022, when Chinese and Russian leaders Xi Jinping and Vladimir Putin issued an unprecedented 6,000-word joint statement which challenged all the premises upon which the current US-led rules-based world order was founded. ‘
https://www.middleeasteye.net/opinion/us-taiwan-ukraine-biden-forgotten-nixon-lesson-china
By Marco Carnelos
Published date: 21 February 2022
2) Political Economy
(There is a great chart here showing GDP/capita change from the linked article below.)
Source: WP/21/100 Assessing the Macroeconomic Impact of Structural Reforms in Ukraine by Anil Ari and Gabor Pula, April 2021.
Ukraine has gone from being the Bread Basket to being a simple Basket Case.
It’s industrial might from Steel , shipbuilding , aviation etc has been stripped since its independence.
It has always been a mainly agrarian land with rich soils that can still feed a very large part of the world. Yet it has got the poorest people in Europe and lowest gdp growth in the world.
There had been a concerted effort by the World Bank and likes to get Ownership of that land open to foreigners. The Ukrainian Parliament has RESISTED that even as Zalensky has tried to acquiesce to the West’s demands.
https://adamtooze.substack.com/p/chartbook-81-permanent-crisis-or?utm_source=url
3) Nato/Russia
I don’t think it was the end of the Olympics that brought the move in Russia yesterday it was the escalation of the attacks in these areas as logged by the OSCE observers on the ground and the need to stop the mercenaries and neo-nazis blitzkrieg into these Russian speaking Regions.
The Russian leadership went to enormous length to broadcast and document with clear English translation in real time to show that this is an existential move for them.
Putins grasp and statement of history is epic in his speech yesterday – I don’t know enough to know if has made it up. It needs to be read in full. (Thanks to Karlof at MoA)
https://m.vk.com/@580896205-putins-speech-prior-to-recognizing-donbass-republics
With respect, nonsense
There did not need to be 180,000- troops on the border because of 3
I am offering a warning here in general: be an apologist for Putin once and you may get away with it
Twice and it’s game over
And this is pro-Putin nonsense
The exercise Russia broadcast yesterday has been shown to have been recorded in 2010
I have been busy for few days with mundane but necessary accounts stuff so have missed your response. I think I should try and respond even if it is slightly out of date. I will not object if you choose not to post it.
I reiterate what I say regularly it is your blog and it is not mine or anyone else’s right to have any of our comments published or expect a response.
I don’t understand how my point 3 means I am Putin supporter? I do say that his speech seemed a bit epic and I don’t know enough to know if has made it up.
(I have seen your link to Professor Snyder – who I have never come across in til now – and will look into his writings ASAP.)
My first 2 points and links were the more relevant I thought.
Don’t they speak directly to the main points about the benighted Ukrainians and how China is also the invisible invader of these regions?
I don’t see how Russian leadership could make such a move without acquiescence of their Chinese counterparts.
Reading the other comments here I see that opinions are febrile.
For the record I say that a lot of well deserved Putin criticism had evolved into general Russophobia over the years and that has escalated to general xenophobia.
E.g the comments today by our defence minister about ‘tonto’
“It’s going to be a busy army. Unfortunately we’ve got a busy adversary now in Putin, who has gone full tonto.”
Wallace said the UK had 1,000 personnel on standby to respond to the crisis, adding:
“The Scots Guards kicked the backside of Tsar Nicholas I in 1853 in Crimea – we can always do it again.”
Such is the level of banter within our leadership (which we know is neo-fascist) about a crises that has been building for a long time.
I believe most of us agree what is happening is not just about the Ukrainian Peoples. It is even worse for them now than it has been since 2014. I do know we have little say in what happens.
I just try to understand it with reading independent experts and make my own opinions.
Jon Pilger reports on Twitter:
“Tory scandals are a facade for war. The unreported facts are: Russian troops are in Russia. British troops are on Russia’s borders. Russia is ringed by US missiles. The elected govt in Ukraine was overthrown by Obama and replaced with an anti Russian regime infested with Nazis.”
https://twitter.com/johnpilger/status/1483768478951784453?cxt=HHwWioC-zb_ks5cpAAAA
This is complete garbage
If you’re stupid enough to be an apologist for Putin you are banned
I have no great love of the Ukrainian government
But to suggest Russia is now only on Russian soil is wrong
It has broken the Minsk agreement
I don’t welcome idiots here
Richard,
the fog of war obscures most of the realities on the ground and the political manoeuvres of the Russians, EU, UK and US are all completely opaque. The geopolitical situation is incredibly complicated and interwoven with oil wealth, energy needs, corruption and a tangled history that goes back to the horrors of the 20th century and then centuries back before that. When you block and ban people here on your blog for raising the point that there are more complicated reasons than simply “Putin bad” you are not living up to the standards that you claim to expect from others. It is possible to utterly condemn Putin and his kleptocracy, while simultaneously believing that the expansionist neo-liberal machinations of the US, Uk and EU are at least partly culpable in the fiasco that is happening to ordinary Ukrainians.
Welcome to the banned list
Of course the situation is complicated
I am not stupid
But equally if you want to argue a case can be made for Putin then you are part of the problem
Why the enthusiasm for exonerating a violent oppressor?
I have no problem with reasoned debate, at all
But quoting idiots like John Pilger who want to claim it is all the West’s fault is amply good enough reason to ban someone – because that reduces debate to a level of crassness that is simply designed to excuse abuse
And for the record, I decide the standards I use hee. It’s called editorial freedom
Richard,
I am very disappointed. I was not and would never argue a case for Putin. That is just twisting my words. I specifically said that it is possible to utterly condemn Putin and his kleptocracy – which I do – but this does not mean that the western powers and NATO are innocent of malevolent intent either.
I enjoy your posts and have subscribed and made contributions in the past, but the intolerance to nuance that you have shown in today’s interactions has served to confirm my suspicions that you are not particularly well informed on a lot of international issues and that you are far too willing to accept the establishment line on them. To call John Pilger an idiot is a line crossed and is a telling insight into your narrow world view.
I bear you no ill will and wish you well.
I have held that opinion of Pilger for decades
If you think his judgement sound I am delighted to see you go
I have no time for the Establishment view – including on this issue – and only an idiot on the far left could think so. I am happy to conclude that you are just that.
Try reading the posts by Snyder and stop making a fool of yourself I suggest
Richard.
I think you need to read some Chomsky.
The book.
“How The World Works” is a good starting place.
I have read some Chomsky
What are you trying to tell me?
From this weeks New European, in Paul Mason’s column.
“In the future, we’ll decide what democracy means, say Russia and China. So forget fair elections and meaningful multi party elections. Above all, forget the so-callled……The idea of a rules based global order, in which universal human rights override national politics, and where the UN exisits to enforce international law: all that is old hat”.
Putin is a murderous kleptocrat who has been allowed to get away with far too much for far too long. Helping the murderous Assad in Syria, annexing Crimea, shooting down the KLM flight, and ordering assassinations of his opponents in the UK as in the Skripal case, where, lets not forget,an innocent UK citizen was killed.
And now we see the consequences. Bluntly, he has to be stood up to. And if that means NATO putting forces into Ukraine (if the Ukranian government would agree), that’s what needs to be done.
Richard, you are entirely correct to criticize those on the left who side with him or make excuses for his imperialism. Just as you were to attack those supporting the idiots who hassled Starmer.
Thank you
Sickoftaxdodgers.
“In the future, we’ll decide what democracy means, say Russia and China. So forget fair elections and meaningful multi party elections. Above all, forget the so-called……The idea of a rules based global order, in which universal human rights override national politics, and where the UN exisits to enforce international law: all that is old hat”.
I’m not sure that any of that has ever really existed. It’s always realpolitik. We kid ourselves in the West that we champion universal Human rights override all else.
The US (and the UK) has a dirty past of toppling democratically elected governments and putting dictators in their place.
Just to add.
This is a quote by George Kennan in 1948. He was one of the architects if US post war foreign policy.
we have about 50% of the world’s wealth, but only 6.3% of its population…. In this situation, we cannot fail to be the object of envy and resentment. Our real task in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity…. To do so, we will have to dispense with all sentimentality and day-dreaming; and our attention will have to be concentrated everywhere on our immediate national objectives…. We should cease to talk about vague and … unreal objectives such as human rights, the raising of the living standards, and democratization. The day is not far off when we are going to have to deal in straight power concepts. The less we are then hampered by idealistic slogans, the better.
Vinnie, nobody here is saying the West has a spotless record in foreign affairs, or has always upheld universal human rights around the globe since the foundation of the UN after WW2. The US in Chile in 1973 and Britian in Iran in 1953 are, as you say, examples of the US and UK toppling other governments. The UN itself where the 5 permanent members of the Security Council (the ones with the nuclear arsenals in other words) have a veto is far from perfect.
But it, and the rules based order of international law are better than nothing, and can, and do, do some good. Putin’s attitude that Ukraine has no right to be an independent state is not justified by history as Richard has pointed out, and his justifications for annexing the so-called Donetsk and Lukansk independent republics by claiming Ukranian aggression are patently absurd.
As is the appeasement of his regime by some on the left, trying to claim a false equivalence between the West and Russia. I would go so far as to say what’s happening now bears an unpleasant resemblance to the rise of Hitler prior to WW2. Hitler was allowed to get away with reoccupying the Rhineland, then the Anschluss, then Czechoslovakia, before finally having war declared in him over his invasion of Poland.
Putin has backed the dictator in Belarus in oppressing his own people, backed Assad in Syria, annexed the Crimea and ‘backed’ (i.e equipped and funded) the separatists in the East of Ukraine. And every time he’s been allowed to get away with it with little consequence. So now he believes he can take over the entire country, at the cost of tens of thousands of lives and the shattering of any semblance of international law.
If he’s not stood up to now, I don’t think he will stop at Ukraine. He is now eyeing the Baltic states and other Eastern European countries that used to be under Russian control. But as these are now NATO states, if he attacks one we will be obliged to go to war to protect it.
I therefore cannot see how anyone on the left can take his side in this issue.
Thanks
Just to add, were th US and Britain following international based rules when they invaded Iraq?
No
And please don’t be an idiot and suggest that this gave permission to Russia
My willingness to ban fools is very high right now
Others please note
You are surviving by the skin of your teeth
PS I have now read your other comments….you’ve gone
PSR – I would also recommend James Stent’s book “China’s Banking Transformation” as well as Isabella Weber’s book. We have a lot to learn from them about managing the economy. One of the big takeaways for me from the Weber book is how the CCP were able to establish their new currency and displace the Nationalist currency through active intervention in the markets for essentials. Their successful management of the economy in the regions under their control was the critical ingredient to their ultimate victory in the struggle for power at the end of the war of independence against Japanese occupation. I think we need to look beyond our abhorrence of one party rule and look at what they have got right. Weber’s book is a fascinating insight into the vigorous debates which took place in China about the right way forward in transforming from a centrally planned economy to “market socialism”.