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Afghanistan, Ukraine and the Nuclear Option
Know who your Friends are While the western powers were introspectively wrestling with Brexit, extending human rights and the political implications of Trump, others have been planning for a different geopolitical and strategic future. I have written before about the ejection of Russia from the G8 not being mirrored by the G20, and that China, Russia, India and others have all become better trading partners and defense collaborators with each other than the G7 had appreciated; https://the-perspective-pool.scriber.to/article/ukraine-democracy-and-the-most-dangerous-moment-in-human-history . In 2001 China, Russia, Kazakhstan, Kirgizstan, Uzbekistan, and Tajikistan established the Shanghai Cooperation Organization (SCO) as a permanent inter-governmental body to develop ties in the region. India and Pakistan joined in 2017. It also has four observer countries; Belarus, Iran and Mongolia, and since 2012, Afghanistan. The SCO’s stated goals are as follows (emphasis added): Amidst the idealistic rhetoric there is a clear implication that the SCO members feel that the current international political and economic order is neither fair nor rational . It also illustrates a more strategic and longer term vision of developing the world than the West - riven by divisive politics and short election cycles - now tends to engage in. What is interesting about Afghanistan achieving observer (akin to associate member) status with the SCO, which is fundamentally a group run by China and Russia, is that it was obtained while Afghanistan was being almost entirely bankrolled by the US. It is as if Afghanistan knew even then it would need friends in the region more than friends from thousands of miles away, like the US and its allies. Afghanistan, Karzai and Riding Two Horses Former President of Afghanistan, Hamed Karzai, was interviewed a couple of times last week by the BBC. Amidst some stuttering and coughing he managed to make his view clear, that Ukraine should be wary of the fate of Afghanistan, and make better friends in the region and world - implicitly with a different group than just the US and its allies. Karzai is a mercurial figure, and has had a complex and not entirely happy relationship with the West, but fairly cordial relations with President Putin. He originally became President of Afghanistan in 2002 with the explicit and enthusiastic backing of the US. By the start of his second (and constitutionally final) term in office in 2009, he had been accused of vote rigging and presiding over corruption in the Afghan government and the US and UK were finding him increasingly frustrating to deal with. Karzai is a Pashtun, from near Kandahar in the South of Afghanistan, the birthplace of the Taliban, and is a keen horseman (the Afghans look great on horseback, natural riders, even without a saddle and only a length of bailing twine as a halter). Karzai has always seemed to want to leave a door open for the Taliban, calling them “angry brothers” while the civil war against them was at its height; by November last year, after the Coalition’s humiliating withdrawal he was calling them just “brothers”. Bombings against non-Pashtun mosques and schools continue in Afghanistan, committed by Da’ish (IS) according to the Taliban, and by or at least with the complicity of the Taliban according to a young Hazara refugee I discussed this with recently. Just before leaving office in 2014 Karzai supported the Russian annexation of Crimea, with an official release saying “ The president said that Afghanistan respects the free will of the people of Crimea to decide about their own future ”. Despite Karzai’s patchy political history, he seemed to foresee that Afghanistan would need more friends than just the US Coalition that had been operating with unclear objectives in his country since 2001. By the time of the precipitous withdrawal of the US and its allies from Afghanistan in 2021, Karzai’s view seemed one of great prescience: he is a man open to the idea of riding two horses at once. The lesson is that in the Western liberal democracies priorities can shift quickly, on the turn of a single election. In particular, President Biden of the US believes in isolating and sanctioning his enemies, not fighting them. Ukraine and the Nuclear Option Russia’s objectives in Ukraine have now changed: from swiftly removing what it saw as an unpopular Ukrainian government and dominating the whole country, to seizing the Donbas, Crimea and the littoral of the Sea of Azov than connects them; and potentially denying all of Ukraine’s access to the Black Sea by pushing on to take Odessa. One overarching aspect of Moscow’s aims have not changed, however; it still intends to very damage and neutralize Ukraine as much as it can. Russia has so far been able to launch an assault on Ukraine, an independent country and member of the United Nations, displace millions of civilians, have allegations of organized murders and retribution killings of civilians made against it, and implicitly threaten the use of nuclear weapons if it is interfered with by foreign threats. No other country has ridden to the rescue of Ukraine with their own forces: yes, many neighbors and global power players have contributed arms and advice, but none dare impose a no-fly zone or put their own troops in direct conflict with Russia’s. And that, very simply, is because Russia has nuclear weapons, and the West finds President Putin’s threats to use them credible. The conflict in Ukraine has two clear geopolitical implications for the rest of the world looking on: Escalation, Finland and Sweden The very moment Russian armor rolled over the border in to Ukraine, Finland and Sweden, mindful of the points above, considered joining NATO, who’s members are very clearly obliged to support each other actively against attacks. This is decades of neutrality (centuries in Sweden’s case), overturned by the new realpolitik . If, as expected, Sweden and Finland apply for membership some time this year, that in itself will be an escalation of tensions with Russia. As the conflict in Ukraine grinds on, not only will it destroy more of Ukraine, it will chew up more of Russia’s conventional military capability. Such are the causalities and destruction of materiel it is suffering, it may take years for the Russian military to rebuild itself, so it seems unlikely that an invasion of the Baltic is imminent. A general mobilization of Russia would provide more capacity, and be a significant escalation of risk, tantamount to a declaration of war. In the meantime, Russia has said repeatedly it will rely on nuclear threat - or escalation - if it feels threatened. And that sense of threat will be dictated by how far Western countries go in actively supporting Ukraine or aggressively expanding NATO. Both sides know what the other is trying to do, and are explicit about it: on Monday (25 April) US Secretary of State Antony Blinken said that the US wanted to see Russia “ weakened to the degree that it cannot do the kinds of things that it has done in invading Ukraine ”. On the same day Russian foreign minister, Sergei Lavrov said that NATO was “ engaged in a war through a proxy ” against Russia by supplying arms to Ukraine. Inflation, Abandonment and Reconstruction The irony is that escalation is now in the hands of the West. It is probable that Russia will use all the destructive force of its military to flatten as much of Ukraine as it can: Russia’s military has no compunction about causing civilian casualties or destroying cities and farmland. Indeed destruction is very likely now one of its main aims. And it seems that the US and NATO’s main objective is now to destroy as much Russian military capability as possible through its indirect support to Ukraine. If we cast our minds forward to where this might end - and let’s hope the bloodshed ends sooner than later - Ukraine will be a shattered mess. Russia will not pay to reconstruct any parts of Ukraine it has not annexed. If Ukraine survives it will need to be reconstructed by the West: the IMF already foresees this; however, Ukraine is not a member of the EU, so its economic future would be debt-laden and very uncertain. Other political priorities, such as inflation and the cost of living pressures on voters will increasingly distract Western democracies. If military confrontation outside Ukraine is avoided a likely outcome is that - notwithstanding its indirect support - the West will stand by and watch the destruction of Ukraine. A bleak thought though it is, strategically that may be an acceptable outcome to NATO if enough of Russia’s military capability is also destroyed in the process. Further Reading
Duncan Wales
Apr 26, 2022 · 9 min read
Head spinning global events
Where do I begin? There seems to be too much going on right now, amid falling markets, but these are some of the things that have been intriguing/horrifying me this week. The UK currency collapse The new UK administration led by 40-something Liz Truss had a frustrating 10 days to wait to get going during the period of mourning for the late Queen Elizabeth II. Once the Queen was buried the new government could make their big policy announcements, with flagship tax cuts at their center. Everyone was cautiously optimistic. On Friday the new Chancellor of the Exchequer, Kwasi Kwarteng, briefed Parliament on an eye-poppingly extensive list of personal and corporate tax cuts and the prospect of the UK government borrowing as much as £165billion over the next year (forecasts vary) to support them. He also admitted that - contrary to modern expectations - he had not has his homework checked by the UK’s internal audit function the Office for Budget Responsibility (OBR). The combined effect of throwing everything including “the kitchen sink” (as the British would say) at policies to drive growth and failing to have the math checked by the grownups at the OBR spooked international markets and caused the Great British Pound to collapse against the US Dollar: that after a long downward slide of the value of GBP all year. Aiming for growth is great as is cutting tax for working people and companies hard-pressed by 10%+ inflation, but by trying to be too radical too quickly Liz and Kwasi look like they may have overcooked it. The FX market certainly thinks so: as I write GBP is at 1.0651, and earlier hit 1.03 its lowest level against the USD ever (i.e. since GBP decimalised back in 1971). Usually only Emerging Markets currencies collapse this far and fast. Italy’s New Right Wing It now appears inevitable that a right wing coalition led by Georgia Meloni, the ironically female leader of the Brothers of Italy party will form the next government, following a general election at the weekend. Meloni and her party are accused by opponents of being neo-fascists, and are certainly likely to be more euro-skeptic and anti-immigration than the center-left government led former European Central Bank chief, Mario Draghi, which collapsed in the summer. The other irony is that Meloni’s main coalition partner, the re-branded League party (formerly the Northern League, which until recently did what it says on the tin and advocated autonomy for Northern Italy), led by Matteo Salvini, is more radical than Meloni and the Brothers: the third of the coalition triumvirate is none other than octogenarian Silvio Berlusconi and his Forza Italia party (yes, he of the orange spray-tan and notorious “bunga bunga” parties). Berlusconi - despite his advancing years - remains as controversial as ever: last week he told journalists that Russian President Vladimir Putin had been “pushed” by the Russian people in to invading Ukraine to install “a government of decent people”. Expect the new Italian administration to be another dissenting voice around the EU table, along with Hungary and increasingly Poland: the new Italian government will be less openly hostile to Russia, against further EU integration, anti-immigration and more fiscally loose; as I write the Italian 10yr bond yield is 4.7%, the highest in a decade, while the German 10yr - the Eurozone’s benchmark - is at just over 2%. That is a big credit spread for countries issuing debt in the same domestic currency. Russia Mobilizes, and Threatens Such is the attrition of the conflict in Ukraine, that Russia has found it necessary to mobilize - or conscript - former soldiers or those with relevant skills to back-fill its lost manpower. Western media reports that the mobilization has caused something of an exodus of people fearful of being called up. President Putin said that additional forces were needed to fight the “collective West”, which given the rhetoric of the G7 and equipment and training support of the US and UK in particular, one could have some sympathy with. This does indeed appear to be a conflict by proxy. In a thinly veiled threat to use nuclear weapons the President added that Russia retains “various means of destruction”, which are “more modern” than those of NATO, and that all necessary measures would be taken to defend Russia. Shortly after this speech the self-declared and Russian-backed People’s Republics of Donetsk and Luhansk said they would hold new referendums as to whether they become part of Russia. The result of these hastily arranged votes - however achieved - does not seem in doubt. It also means that any continued attempts by the Ukrainian military to retake land in those regions can be treated as an attack on Russia itself by Moscow. The G7 branded the referendums as sham and the US said that “catastrophic consequences for Russia” would ensue, if it resorts to nuclear weapons. This represents a serious escalation; ultimately caused by Ukraine’s recent success on the battlefield. Iran and the Morality Police Iranian state media reports that at least 41 people have been killed in a series of protests and demonstrations over 10 successive nights in nearly all corners of the country. Although the demonstrations have evolved to be against the hard-line Islamic regime in general, the original protests were triggered by the death in custody of a young woman arrested by the Morality Police for not wearing her hijab correctly. These violent events represent a significant enough challenge to the conservative Islamic government for the president, Ebrahim Raisi to say on Saturday that his government would crack down on the ongoing protests as a priority. Iran’s Islamic Republic is defended by a number of institutions created after the revolution that overthrew the last Shah in 1979, including the Moral Security Police and its “guidance patrols”, which are there to protect Islamic morals from inappropriate social behavior or clothing: the US Treasury added that agency and some of their leadership to the US sanctions list at the end of last week, more for symbolic reasons than anything else. It seems Iran is struggling with how to prevent people using social media to share ideas and arrange demonstrations; theocracies are designed with information control in mind. Let’s see how long that or the demonstrations last. And finally - economic bright spots In a world of inflation and recession fears, it is nice to see some positive analysis: first my colleague Rahul Shah at Tellimer Insights points to the companies with positive real yields even as interest rates rise ; good news/bad news though, as most are related to the extraction and carbon fuel industries: just shows - regrettably - what we in human society all rely on when times get tough; energy and raw materials. Second is the analysis of Ruchir Sharma in the FT - Ruchir is Chair of Rockefeller International, and is an analyst by background (with all due respect to our journalistic friends and colleagues) - and gives the examples of seven countries that are bucking the inflation and recession trend : Vietnam, Indonesia, India, Greece, Portugal, Saudi Arabia and Japan. Some surprises in there! Look after yourselves. Yours Duncan Please share the Perspective Pool with your friends!
Duncan Wales
Sep 27, 2022 · 7 min read
Investing is Suffering from Growing Information Asymmetry
Researching Investments used to be a pro sport I have written before about how the world of investment related information has changed: https://the-perspective-pool.scriber.to/article/the-reason-we-built-scriber . Since the advent of the smart-phone in particular - the iPhone hit the market in 2007 - access to information, investing and other services has been transformed. The news at the moment all seems pretty grim, but in 2009, when I started thinking about what would ultimately become Scriber, the world was different: The world of financial research and data was a specialist sport played only by people who worked in financial services and was entirely invisible to everyone else: it was not (and still is not) possible to find the research that investment professionals use on the web. Professional and specialist research resides on closed platforms, designed - and priced - for professional, institutional users, such as Bloomberg, Refinitiv and S&P Global. There was literally a closed loop of information within the financial world: only professionals produced it and only professionals consumed it; in those days it made sense to play the entire investment game behind closed doors - it was complex, expensive, expert stuff - who else would possibly need access to it? Power to (all) the People The transformation in the demographics of investing has been rapid and dramatic. Armed with smartphone distribution, disruptive technology has put the ability to trade shares, futures, options, FX, and crypto in to the hands of at least 300 million people who have a trading account. That is before you include all the people who care about how the financial world works because they have a self-invested pension, a 401k, a mortgage, run their own business, or take a pro-active interest in their and/or their dependents’ financial position. Trading in some investments genuinely has been democratized. However, access to the information people need to make trading decisions has not. Professionals and the new class of semi-professional investor use very different tools for accessing insights: the professionals use Bloomberg, Refinitiv, FactSet, CapitalQ and other systems to access professional insights. Everyone else relies on Google and social media. But - ironically - now so do professionals: Twitter is a venue for serious thinkers and a vehicle to build an investment or business track-record in public. And even the Discord - a social platform designed for gamers - hosts a thriving community of investors and commentators. And as we at Tellimer know from our institutional clients, professionals turn to Google to find difficult to find information and expertise. While investing remained a rarefied and exclusive activity, finance professionals used to enjoy a huge information advantage over everyone else. However, the era of access to investing has created a new information asymmetry - perhaps counter-intuitively - that creates a problem for professionals as well as the new classes of semi-professional and democratized investors. Because there is a hard, opaque barrier between the professional networks - which are very good at what they do but were designed and built for the old world and have proportionality less access to unique information than they did - and the growing pool of expertise in the wider economic environment, both are separated from each other, to everyone’s detriment. Information is still too hard to find. More To Invest In - Less Research A feature of the rise in technology is that it has grown along side - and arguably actually created - new asset classes and themes for investment: not just DeFi, but all the complex dimensions of ESG, alternative energies, food production, cleaner extraction industries, alternative energies, evidence based ethical investing and procurement, e-commerce, food delivery apps, online shopping, super-apps, electric vehicles and also the economic rise of large developing economies such as China, India, Brazil and many others. There is much more to understand than ever before, and less and less coverage of it all from the traditional world of finance. It should be possible for a single person or small team, with big firm experience or equivalent quality to reach anyone who is searching for guidance on how to think about their personal - or professional - investments/economy/business. Much as everyone who needs it should have access to sophisticated thinking on financial and economic matters, but the traditional community of finance also needs new and different sources of expert information as well. Traditional Finance meets the Creator Economy The creator economy - in which individuals rather than platforms have control of their editorial agenda - now permeates a number of industries: journalism (think Substack or Medium) e-commerce (think Shopify), music (think TikToc), TV (think YouTube) and fashion (think Instagram): “influencers” have not brought an end to the platform model - the FT, WSJ, HBO and even Netflix still exist - but have added to and changed the landscape forever. The opportunity exists to give the increasingly savvy population at large as well as the frustrated professional audience access to the right expertise. The new democratized creator model will not replace the old, but rather interact with it in a controlled way: users of professional systems will still use those systems, but need more access to more and different information. Individuals will value high quality access in accessible forms. The new wave of tech will transform access to financial, economic and business expertise: the creator economy will provide selected permeability to the hard structural barriers that currently separate expertise and demand. It will; The free-for-all romance of a Web3 world in which everyone owns part of the internet may not quite come to pass, but it is entirely realistic to think of a world in which more professionals and experts have the ability to monetize their expertise without the need to be employed by a huge company. That still sounds like freedom to me. Further Reading:
Duncan Wales
Aug 9, 2022 · 6 min read
The EU aspires to be the New Rome
The EU is Roman The European Union is a self-avowed political project. The forerunner of the EU, the European Economic Community (EEC), was founded by the Treaty of Rome in 1957, in order to “ lay the foundations of an ever closer union among the peoples of Europe ” and “ preserve and strengthen peace and liberty ”. In 1957 Europe was still reeling from the destruction and upheavals of the Second World War, which had swept over its founding members: Belgium, The Federal Republic of Germany (“West Germany”: Germany was two countries at the time, and the Warsaw Pact German Democratic Republic was not a party), France, Italy, Luxembourg and the Netherlands. The “European Union” itself was only formerly created by the Maastricht treaty in 1992, with the objective of continuing the process of “ ever closer union ” - albeit the UK had an opt out for that political aim. People of my generation who were in the UK at the time will remember it was the great political subject of the day (as well as the butt of many Spitting Image jokes), and the origins of the UK Conservative Party’s great schism over Europe, which ultimately led to Brexit. The EEC’s overriding aim was to prevent another destructive European war, albeit predominantly through a series of economic measures: but even these had a political aim for the Members to reduce “ the differences existing between the various regions and the backwardness of the less favoured regions ” amongst other things. With this grand project of European integration in mind, it was not a coincidence that Rome was chosen as the location and name for the EEC’s founding treaty. The EEC wanted to conjure the image - the fantasy perhaps - of the last time Europe was politically and culturally coherent; under the Emperors. Ukraine in, Turkey Out Although the EU had its origin in the romance of Rome - or perhaps for the extract same reason - it mattered which “Emperor” one followed. The European project was always just that, European. The inheritors of the erstwhile Eastern Roman Empire, Byzantium, ruled from Constantinople by “Roman” emperors for a thousand years after the fall of Rome itself and the Empire in the West was (and is) not invited to the party. Byzantium fell to the Ottoman Turks in 1453 (in fact is was a process of decline, culminating in the fall of Constantinople). The Ottoman Empire ruled the Balkans, large parts of what is now Ukraine and much of the Middle East until it collapsed after the First World War, and Mustafa Kemal “Ataturk” created the modern, secular state of Turkey in 1923. Turkey applied for EEC membership in 1959, and it still waiting to be admitted. Turkey has customs and cooperation agreements with the EU, which smooths some trade, and in recent times it was paid by the EU to absorb refugees from Syria and Iraq. Turkey is the 6th largest economy in Europe and its airbases were used by Coalition forces in the “war on terror”. However after many attempts at joining the European club Turkey has not been admitted, nor has it yet been flatly refused. The EU was implicitly designed as a Christian club, or at least - explicitly - with Western European Christian culture at its core. Last week Ursula von der Leyen, the German politician who is current President of the European Commission (the EU’s permanent administrative infrastructure and civil service), advocated that Ukraine be admitted to the EU as a Member, saying “ Ukraine has clearly demonstrated the country’s aspiration and the country’s determination to live up to European values and standards ” and that “ Ukrainians are ready to die for the European perspective. We want them to live with us the European dream .” So it appears Ukraine, which has an unenviable record as far as perceived corruption goes (see the “The Forge of Institutions” paragraph in my last Scriber https://the-perspective-pool.scriber.to/article/the-jubilee-and-the-end-of-the-elizabethan-age ) has done enough in its defiance of Russia to be European. However, it seems that Turkey has not. The EU may ultimately go the way of the Eurovision Song Contest, in which geography has become irrelevant and far away Australia has been admitted; one must assume because it lives up to “ European values and standards” . “Alexander, Caesar, Charlemagne and I have founded empires….” (Napoleon Bonaparte) The 207th anniversary of the battle of Waterloo was on Sunday. The main battle took place in Belgium on 18 June 1815, and British, Dutch and Prussian troops defeated the army of the Emperor Napoleon, another man who was trying to create a unified Europe and liked to invoke the glories of the ancient world. His quote above ignores the empires of Atilla, Genghis, the Ottomans, and the Mughals: he cared about Europe and a European political vision. At the time the United Kingdom of Great Britain and Ireland made a single country of all the British Isles. The UK exerted economic and military force to prevent the domination of Europe by one power; in fact preventing a single power dominating Europe has been one of the UK’s main foreign policy aims for centuries. Now the aftermath of Brexit seems to have imperiled the Union of the British Kingdoms further, with another Scottish independence referendum being suggested, political stalemate in Northern Ireland as the UK government considers introducing legislation to reverse elements of the “Protocol” it agreed with the EU and Republic of Ireland at the time of its exit. Part of the problem with the British political class since 1975 is that it convinced itself that the EU was about economics, not politics. Their political predecessors knew all too well that Europe is always about politics. The Return of the Emperor The narrative of the EU has always recalled the distantly echoing glory of the Roman Empire. However, like Napoleon it is not the first European leader to invoke the power and glory of Rome to support their own legitimacy. In the Dark Ages, nostalgia for the relative peace and order of the pax romana of earlier centuries led French warlord Charlemagne to travel to the crumbling Rome, centuries after its fall, to be anointed “Emperor” by the Pope amidst the chaos of the 8th century and to use Christianity as a political weapon to create order; a political technique repeated by the German warlord Otto who was similarly anointed Emperor by the Pope in the 10th century. Voltaire wittily remarked that the Holy Roman Empire, was “ neither holy, nor Roman, nor an empire ”. It will remain to be seen if the European Union actually ever becomes a union or stays European. Further Reading
Duncan Wales
Jun 21, 2022 · 6 min read
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The Jubilee and the end of the Elizabethan Age
The Era of Global Super-growth The UK and Commonwealth have just celebrated the Platinum Jubilee of “ Elizabeth the Second, by the Grace of God, of the United Kingdom of Great Britain and Northern Ireland and of Her other Realms and Territories Queen, Head of the Commonwealth, Defender of the Faith ”, to give the Sovereign her more formal titles. An amazing achievement never before reached by any monarch of the British Isles, though their kingship has lasted a thousand years. A 70 year reign that started 1952 while the UK and Europe was still recovering from the travails and destruction of the Second World War (elements of rationing remained in place in the UK until 1958, more than a dozen years after the War had ended) to the current time with the advent of Web3, crypto, global connectivity and an app for just about everything. A 70 year period that has seen changes to society, populations and the economy that have been as - if not more - radical than any other period of human history. In 1952 the human population of the world was 2.6 billion. Now it is nearly 8 billion. The overwhelming economic drivers of the last 70 years have been (i) this population explosion and (ii) the introduction of technology in to every aspect of our working and personal lives. And although there have been small wars, recessions the global financial crisis, on a global basis during this period the economy has boomed, life expectancy has risen, child mortality has dropped, diseases have been bested by antibiotics and vaccines, literacy and access to information has grown and violence has reduced. Global GDP rose from circa $10 trillion at the end of the 1950’s to more than $80 trillion (on a constant currency basis) in 2020. The Elizabethan era genuinely has been one where the sacrifices of earlier generations - the wars against despotism, the investment in science, the creation of national health and social services - have given a better standard of living and longer life to their descendants. Jubilees, Guards and Palace Coups Although the UK remains generally supportive of its Monarchy as an institution (in a recent YouGov survey 62% approved of the constitutional monarchy and only 22% preferred the idea of an elected Head of State), the longer running trend is slowly declining approval, particularly among young adults, where the percentages are closer to 50/50. This is perhaps not surprising: a combination of modern social and mainstream media coverage means that much more of the Royal Family’s actions are under constant scrutiny (and criticism), and for others the only apparent function of the institution of the Monarchy is opening new hospitals and encouraging tourism. Watching the Jubilee celebrations on TV, with squadrons of armored cavalry, swords flashing and tack jingling, it could indeed all seem rather anachronistic; however, those mounted “Guards” have their regimental origins in the Restoration of the Monarchy in 1660, created as a bodyguard to the newly restored Charles II, after the Civil War of the 1640’s that saw his father, Charles I publicly tried and executed. Following the deposition of Charles I the British engaging in a short experiment with republicanism in the 1650’s. When the republic’s “president” the Lord High Protector Oliver Cromwell died in 1658 a period of political uncertainty followed and the British decided that Monarchy had its uses - even after a bloody Civil War that should have settled the issue - and brought the Monarchy back, albeit with more constraints, and have slowly adjusted down its powers ever since. The British in fact staged another coup against Charles II successor and younger brother, the catholic-inclined James II in the “Glorious Revolution” of 1688, quietly replacing him with the protestant William of Orange and William’s wife, Mary who was James’ child from an earlier (protestant) marriage. Much of the pomp and circumstance of the Jubilee has its origins in the political tumult of Britain and Ireland in the 17th Century; the regiments, crown jewels (most of the medieval versions were destroyed by Cromwell), royal symbols, flags, and protocols; and so to does the core of the political apparatus of the modern UK; and also several of its most challenging political issues; Brexit, Northern Ireland, Scottish independence and the continuation of the Union. Many institutions do not seem to have much relevance while the economy and life in general seem to be progressing well, or at least progressing, but can become much more relevant in times of crisis, war or insurrection. The Forge of Institutions The obvious recent example is Ukraine: before the Russian invasion the government of President Volodomir Zelensky was incredibly unpopular, with an approval rating of only 23%. Ukraine also had a reputation for being extremely corrupt: in the 2022 Transparency International Corruption Perception Index published in January (again before the invasion) Ukraine scored 32 out of a maximum 100 points, putting it in the same category as Gabon, Mexico, Niger and Papua New Guinea, and scoring worse than Sierra Leone, Bosnia and El Salvador. Near the top-end of the list the UK scores 78, and New Zealand, Denmark and Finland jointly-lead with scores of 88. However, the conflict in Ukraine has made a local and international hero of Zelensky, and politicians everywhere now fly the Ukraine flag on their buildings and wear it proudly on their lapels. For Ukraine the current crisis — assuming Ukraine survives it - will be a nation defining event, and will solidify the institutions that have been perceived to be doing well in the crisis; the Presidency, the law courts that have already tried their first Russian war criminals and the central bank, finance, defense and foreign ministries that have raised billions from foreign donors. The idea of heroism and effectiveness of these institutions could in fact make Ukraine less corrupt. The Queen’s War Her Majesty the Queen is perhaps the only current Head of State on the planet who lived through the Second World War - serving in uniform herself - and therefore understands some of what Zelensky is going through. Her first Prime Minister, Winston Churchill, developed a successful working relationship with the Queen’s late father, King George VI, during darkest moments of the War: Churchill had political primacy of course, and a tough, bombastic personal style, but could not ignore the “soft power” influence of the Monarch. The King and indeed the young Princess Elizabeth provided calm reassurance to many, in public radio broadcasts, messages and visits to see troops (my grandfather, a doctor and then a Lt Col in the Royal Army Medical Corps, looked after the King when he visited British and Allied troops in North Africa in 1943). The King and Princess provided another form of leadership, separate from the politicians, when it was needed. Churchill was promptly voted out of power at the end of the War in 1945, but the King was not, providing continuity for the new - and first ever - Labour administration (the new Prime Minister, Clement Atlee was famously surprised and impressed by the warm and positive reception he received from the King after his election win). Because of the great events they had seen out together, when King George VI died in 1952, Churchill said of him that “ His conduct on the Throne may well be a model and a guide to constitutional sovereigns throughout the world today and also in future generations”. It is that guiding experience that makes the Queen’s approach to public service what it is: she is stoic, practical and disciplined, and has put her duty first in her life. Her Majesty understands that the role of the Monarch has been forged in crisis and is therefore much more important and bigger than the flesh and blood individual that occupies it. The End of the Elizabethan Age Now, towards the end of her reign (the Queen is 96, and still working, although visibly slowing down), the era of post-Second World War super-growth appears to be at an end. Population growth rates are slowing everywhere except Sub-Saharan Africa and parts of the Middle East, and the increasing cost of money - and of things - is denting the high valuations of tech stocks that have been leading the growth in investor portfolios for the last two decades. Technology businesses will still grow and be valuable, but we are entering a period when physical security, energy security, supply chain resilience and good old-fashioned cash generation are more important than they were. Central banks are raising interest rates to curb inflation - making borrowing more costly for companies and governments - inflation is on the rise, and the very low rates of unemployment we see in the G7 economies seem destined to rise again as those forces exert themselves on businesses everywhere resulting in job losses. Globalization has ended, and new economic drivers will replace the old. At the same time the geopolitical world order is changing, as I have written before: https://the-perspective-pool.scriber.to/article/ukraine-democracy-and-the-most-dangerous-moment-in-human-history . The Elizabethan era is near its end, and the Carolingian will follow it (let’s hope rather more successfully than the prior Kings Charles). We should all appreciate the golden era we have just lived through, for all its faults. As an optimist I still believe the future will be better, even if we have to traverse difficult times to get there. Whatever the future holds I will always be proud and think myself fortunate to have been an Elizabethan. Further reading
Duncan Wales
Jun 6, 2022 · 9 min read