New Eastern Outlook
With the world on fire in so many places, trying to write an overview can be a daunting task when a book-sized effort is really needed. But our commentaries here can help readers begin to connect the dots as to why this is all happening, what the downside risks are to us, and what options we have to try to approach it better.
I got the idea for the title from comments in General Mattis’ new book, No Better Friend, No Worse Enemy. He holds the position as the most respected person in the Trump administration so far.
“We all know that we’re better than our current politics… Unlike in the past, where we were unified and drew in allies…We are dividing into hostile tribes cheering against each other, fueled by emotion and a mutual disdain that jeopardizes our future, instead of rediscovering our common ground and finding solutions,” he said.
France’s Macron also contributed a major comment, that Russian isolation would be Europe’s “Profound Error.” I agree with both of these men, that we are heading into more dangerous waters and time is getting short for being able to make a mid-course correction.
Like the rumblings of miniquakes that seismologists tell us often precede “the big one”, I am feeling tremors below my feet now. The wars of course are at the top of the list, both those that are currently shooting events, and those in the US-Western incubator, ready to replace any that are ended somehow.
The Mideast is a tinder keg whose temperature can go from warn to hot in a day, but we are just one bad event away from a major shooting war there. Admiral Trump’s naval police force for the Persian Gulf is but a token of what he had wanted, with most European allies viewing it as nonsense to send ships there, making it more dangerous.
We have Israel making preemptive attacks on Iraq, Syria, and Lebanon in just one week, and of course all for “defensive purposes”. This is something that only Israel can do. If it is tried “on” Israel, then someone gets nuked.
Lebanon has managed to keep its head down during all the Syrian mayhem, having its hands full with Palestinian refugees and a diverse coalition government, which is a monster to control in itself. We recently came close to a war there after the Israeli drone strike on the Hezbollah media office in Beirut killing two Hezbollah people.
Then we waited for Hezbollah’s retaliatory strike that we knew would come. Veterans Today’s analysis of the footage of the double missile strike showed the large diesel tank in the MRAP vehicle going up in a 50-foot diameter fireball which would certainly have caused serious injuries.
The IDF put out a cover story of minor damage, which few believed. Netanyahu did not escalate by initiating more intensive attacks, probably because he did not want a shooting war in the runup to the election. He can always start one after the election.
The admitted IDF drone attacks on Iraq’s anti-terrorist militias using US and Kurdish bases has lit another dangerous fuse. And in Syria, the IDF hit the new Iran anti-terrorism base being built to protect the al-Bakumal border crossing. It is almost ready to be opened and provide transport security for the commerce that hopefully will be soon flowing.
The Venezuelan standoff has not blown up yet, but the US continues its stranglehold on the country, with sanctions that are severely punishing those it says it wants to help. Trump sees nothing wrong with this.
But on a good note in Ukraine, new president Zelenski wants to talk with Putin to solve “the terrible war” in Donbass and restart the Minsk agreements, where “guarantors” France and Germany did nothing to push Kiev to follow through with them before. “Dear Mr. Zelenski, get off the dead horse and get on a new one, if you want to conclude a deal.”
And last, a peek into where the new war might be starting. US Defense Department Secretary Mark Esper gave us the interesting news that chaos in Venezuela, Libya, and the Mideast is not enough. He is looking for greener pastures. At a recent Naval War College event, he called for building more US bases in the Pacific, saying that the Indo-Pacific region was to be “our priority theater”. I do not remember a word of debate on this in Congress or the US media, but the US military industrial complex is jumping for joy.
Sure, China has been building bases in the South China Sea; but the US already had bases there and its Navy sails around as it pleases. But China has good reason to be building their bases – an explanation avoided by corporate media.
China was not a signatory to the medium range missile treaty, which only covered land-based missiles. The US has had floating batteries of medium-range nuclear missiles on its naval ships, which when they are in the strait of Taiwan, can strike deep into China with little warning. In a potential conflict, China needs to keep the US naval ships as far out as possible, as that still leaves the US subs to launch missiles
In addition to these geopolitical developments, economic tectonic plates are also moving. EU growth is in the half percent range, a major long term problem. The US had moderate growth, but we are in a manufacturing recession already, with two quarters of declining production. Consumer spending has been carrying the growth load, but that is subject to change quickly.
The IMF will not say a recession is in sight, but it is concerned that the trade wars could trigger one. I have bigger concerns. With the high debt loads the world economy carries, a major event like a shooting war in the Persian Gulf and the closure of the Hormuz Straights will push oil up to $200 per barrel. That alone could trigger a panic with a bank domino collapse, which most of us have already lived through and remember the ripple effect it had.
The ongoing trade wars have the world economy weakened, as long term planning cannot be done. Trump campaigned on bringing US trade deficits down, and that was popular with those who did not even like him; and he still has a lot of base support for it now.
But the China-US showdown has hidden dangers. By cutting China off from buying US-made smartphone chips, they produced quick pain on those Chinese companies targeted like Huawei. It is now scrambling to rebuild its business model to domestically source critical components for its most successful exports.
Even if an agreement is reached with the US, I fear that US manufacturers have lost their Chinese business forever. Why would anyone want to take the risk with the unipolar power, after watching what it has done?
Russia has been going through a similar process, even having to replace food imports from the EU over its sanctions, despite hurting EU farmers badly. Now that a huge Russian domestic investment has been made for that domestic agricultural expansion, the EU cannot flick the switch and have things go back to the good old days. Putin promised he would not leave Russian producers hanging when the sanctions were removed.
Iran is having similar economic difficulties. The sanctions have hurt, especially the reduction in oil revenue. It is slowing down the economic recovery that it has planned from the JCPOA, but not stopped it. Like Russia, it has had years to domestically produce many of the sanctioned items, due to its strong industrial base with a well-educated and trained work force.
It has made progress in the defense sector, much to the chagrin of the US. But Iran had a duty to protect its people from Israel, which has been threatening Iran with preemptive strikes for two decades. Iran has pumped a lot of domestic capital into projects to make sure that its large pool of technical talent and engineers are employed.
Iran has major development projects in the works, like piping water over long distances to dry areas in its northeast, like the holy city of Mashad, with its huge religious tourism business for the Imam Reza Shrine complex. Small business development has not been overlooked, as those diverse products are not on the sanctions list.
Iran does not stand alone – it has friends. When China signed the recent deal to pump $400+ billion into Iranian energy development over 25 years, that caught my attention, and even more so when China said 70% of that would be “front loaded” into the first five years. I suspect that with the huge investment in Iranian oil and gas infrastructure will come a state-of-the-art missile defense program to keep the crazy Likuds from blowing China’s investments up.
Can the US name anyone that would do such a deal with it, besides buying weapons? How about the EU? Is anyone from the Old World contemplating a similar Silk Road project, say with North and South America? Does anyone have $3 trillion in foreign reserves?
China has them and does not like the current small return, so it is planning to spend a lot of that money on the Silk Road economy and get a much higher long term return.
We are seeing signs of the US-Gulf State Coalition juggernaut cracking. While the US will not be banned from the area, the cash-rich sheiks are looking East now. The UAE and Abu Dhabi have been big investors, with the latter recently signing an $11-billion mega project for the Beijing Daxing International Airport, to be completed in 10 years.
At the recent Eastern Economic Forum in Vladivostok, India’s Modi signed 15 agreements, ranging from defense to energy, and pledged a $1 billion credit line for the Russian Far East. The US has been trying to stop Modi from buying Russian S-400s, but chances of halting that look slim.
Britain is looking at a hard Brexit, which could be a jump off the cliff. It would not help the EU’s struggling economy either, as I have a hard time seeing a Tory party paying anything near a $40 billion divorce bill.
The yellow vests in France remain on the streets; and now the anti-austerity strikes are beginning. If these are rotated through all the unions, the economy will suffer more than a bump in the road. We find the US up to its eyeballs in the Hong Kong protests, once again interfering in another country’s affairs, while seeing it as a terrible thing when others do it to Uncle Sam.
The UK Independent is reporting from unconfirmed sources that Putin told Bibi the airstrikes on Syria had to stop. Bibi had wanted to bring some good news back from Sochi to boost his election prospects, and there was none. Bibi had publicized that he wanted freedom of action to bomb Iranians in Syria. If he had gotten it, I would suspect he would have publicized it to show what a good dealmaker he is.
But on the other hand, leaders sometimes agree not to make public the results of their meetings. If the IDF continues attacks on the Iranian militias, we still may not know.
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