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Top 10 Shocking Moments of 2022
After 2 years of COVID lock-downs we were all feeling more optimistic about 2022. These are my list of most shocking moments in what turned out to be a shocking year. Wishing you all the Season’s best. Be good. Duncan 1. Russia’s Invasion of Ukraine On 24 February Russian troops mounted a full scale assault on Ukraine from multiple points on the Russian and Belorussian borders. It triggered the biggest conflict in Europe since 1945, with the most troops and territory involved, and tragically already the most causalities. With the US and NATO backing Ukraine, and Iran and (sometimes) China backing Russia, nearly a year later the destruction is still grinding on. I say the invasion was shocking, but the Western powers knew it was coming: President Putin is nothing if not consistent. Russian troops fought bloody battles in Grozny to prevent Chechnya seceding from the Russian Federation in 1999/2000; in 2008 Russia invaded Georgia and annexed South Ossetia and Abkhazia; Russia annexed Crimea in 2014, and destroyed Aleppo and other towns in Northern Syria in order to prop-up the Al Assad regime in 2016. Russia has been at war for much of President Putin’s time. 2. Europe’s Hottest Summer, Ever In the snow, wind and rain it is easy to forget that London and large parts of Western Europe had some 45c+ days in the Summer, which broke all records. Bushfires ran out of control, thousands of vulnerable people died, and crops were destroyed. One Sunday in July I was helping out at a summer fair, de-rigging a commercial stand in a field for a friend: the grass was turned to dust, and a hot wind blew great swirls in to our faces and dulled the green of the surrounding trees. We poured sweat as we worked and we were grimed in filth. It made the beautiful British countryside, which is usually so temperate and green, unpleasant to be in. We wished we were in energy-sapping and eco-unfriendly air-conditioning. Rather more significantly it damaged grain crops in Ukraine and Russia and added yet more pressure to global inflation, and once again led to destructive floods in Pakistan as glaciers melted. Another uncomfortable reminder of climate change and its multiple consequences. 3. FTX and the Crypto Implosion In some ways is is a surprise that it took so long for crypto to have a good old fashioned banking-style scandal. In November one of the two largest crypto exchanges in the world, FTX, which had been valued at $32bn not long before, imploded in a huge corporate ball of insolvent flame. The 30 year old founder and former CEO Sam Bankman-Fried, is accused of using clients funds to fuel his own trading firm, Alameda. If proved, this is the oldest trick in the book: get people to deposit or invest with you and use the money to trade on your own behalf at their cost and risk. Mr Bankman-Fried, some of his fellow executives and FTX itself also donated an extraordinary $70m to various US politicians, and Bankman-Fried was second only to George Soros in donations made to the Democratic party. It is no surprise that he swiftly became the poster boy for crypto in Washington DC, appearing as an expert in a number of Congressional hearings, typically advocating light-touch regulation for crypto. It is a sign of maturity that crypto has suffered this type of disaster; if anything bringing structured regulation to crypto - which may take time but now seems inevitable - will make it more viable to the mainstream. 4. The Reversal of Roe vs Wade by the US Supreme Court Whatever one’s belief about the rights and wrongs of the case, it was still a surprise that the US Supreme Court reversed a decision in favor of women’s rights made more than 50 years before (in 1969). In that seminal case a 25 year old single woman in Texas (anonymized at the time as “Jane Roe”, the feminine equivalent of “John Doe” which had been used in British legal actions where the defendants name was not known from as early as the 18th Century: Wade was the DA for Dallas) claimed that she should be allowed to terminate her pregnancy on the grounds that she had been raped. The original Supreme Court judgement came too late to prevent the birth of the unwanted child, but effectively gave women in the US the absolute right to abortion in the first trimester of their pregnancies; very much in line with the rest of the world’s developed economies. The recent reversal of that right in Federal law has left the US at odds with most other modernized nations and with a patchwork of different laws in different US States, and underscores the polarization of US politics and society in recent decades. 5. The Death of Queen Elizabeth II It wasn’t a shock - the late Queen was a great age - but the ending of the Elizabethan Age, with all its triumphs and tragedies felt like a real moment in history: a pivot in to a new world that will be very different from what came before. The late Queen’s husband, HRH The Duke of Edinburgh, fought with distinction in WWII, she served herself, two of her uncles were killed while serving (one in each war), and another uncle was murdered by the Provisional IRA (there are many IRA’s, as is often the case with extremists they fall out with each other regularly and easily). The Queen’s work schedule was relentless and she had limited right of reply to criticism. She died in Scotland, which seemed like an elegant reminder of the unique and positive characteristics of the United Kingdom that she vowed to defend. The 20th Century was a very different place, and HM The Queen displayed the best qualities of its inhabitants: selflessness, care for others, stoicism, physical and moral bravery, aversion to showing off or self-obsession and a sense of humor. None of these qualities are in fashion at the moment. 6. The Assassination of Shinzo Abe Japan’s former Prime Minster, the great modernizer Shinzo Abe, was assassinated on 8 July. Abe was credited with kick-starting Japan out of stagflation with reflationary policies combined with greater government spending and economic competitiveness (the so-called “Abenomics”). He was also wary of a resurgent China and urged Japan’s rearmament as a priority, in a rejection of constitutionally imposed post-War pacifism. His policies led to Japan having its first operational aircraft carrier since the end of the Second World War, JS Izumo, which earlier this year conducted exercises with US F-35B’s roaring on and off its deck. With China in the ascendancy history will likely see him as a leader of vision and master of grand strategy. 7. Liz Truss Becomes UK Prime Minister Yes, a truly WTF moment for anyone who had ever seen or met hapless Liz Truss, or heard her speaking about cheese markets. We are now all used to seeing politicians thrown in to jobs they are wholly unqualified to do (that’s how democracy works for career politicians), but Ms Truss was an Olympian example of unsuitability for high public office. A senior civil servant contact of mine described her - before she was even a candidate for PM - as having the reputation within Whitehall of being an “unguided missile”: how true that proved to be. Thankfully Ms Truss - who created economic chaos within weeks - lasted less time in office than the duration of a wet lettuce; literally. 8. Inflation: Central Banks Asleep at the Wheel A year ago the US Federal Reserve, the European Central Bank and the Bank of England were all telling us that inflation was a brief and transitory side effect of two years of Covid lockdowns. They raised interest rates from their historically low levels gingerly and slowly as a result, confident that it would all be over soon. Accelerated by the conflict in Ukraine inflation rapidly rose across nearly all economies in to double digits for the first time in decades. The central bankers still didn’t react. Eventually panic set in as central bankers realized that they had to do something more radical in May 2022: the Fed started raising 0.75% each month until December, where the rate was raised by only 0.5% to 4.5% (up from 0.25% a year ago). My amateur prediction is that the Fed - which everyone else has to follow - will only really stop raising interest rates when it sees a painful and significant increase in unemployment. 2023 could be rough. 9. The Soviet Union’s Last General Secretary Those of us who lived through any part of the Cold War era will remember the world changing impact of the last Soviet leader, Mikhail Gorbachev, who died at the age of 91. Before his premiership the USSR was hostile and fearsome nuclear power, able to destroy the World, from the other side of the Iron Curtain and engaged in dangerous espionage and wars via proxies. By the end of Gorbachev’s time the Soviet Union and its communism-in-one-country experiment was ended, the Cold War was over and such was the sense of the significance that American thinker Francis Fukuyama predicted that liberal, enlightened capitalism was now accepted as the only really fair way to run society - what he described as the “end of history”. We all felt that Armageddon had been averted. Although much of what Gorbachev achieved has now been undone by the chaos of the USSR’s collapse in the 1990’s and the actions of President Putin, he still ranks as a great man to me. and finally 10. Nuclear Fusion Works! Sort of. Albert Einstein originally predicted that mass can be converted in to energy (the famous equation E=mc2); either by the division of atomic particles (nuclear fission: think nuclear powerstations and bombs) or the combination of two particles (nuclear fusion: the creation of a new element: think the power that runs the sun and stars). We know the former has been possible on Earth, for good and ill, but nobody has successfully managed the latter. That is until last week: scientists at the California based National Ignition Facility (NIF) claimed that they have generated more energy by combining atomic nuclei than the energy used to power the process. It does sound exciting and a potential near-limitless and pollution-free solution to the world’s energy problems. However, as I understand it the NIF team had to heat up two hydrogen isotopes (deuterium and tritium) to a temperature of 3 million degrees Kelvin with 192 massive lasers to encourage them to meld in to a single atom of helium, thereby releasing one neutron and an some new energy. 3 million Kelvin is nearly 3 million degrees Centigrade, which is hotter than the surface of the sun (in fact it is like the warmer parts of the sun, but not the maximum high pressure center which could be as much as 27 million C). Anyway, it is quite hot, and most things on earth (like potential fusion power stations) tend to melt or vaporize if you subject them to that sort of heat. And, if you include the energy needed to heat up the 192 lasers, the whole equation then becomes energy negative. It is an interesting breakthrough but given some of the obvious practical issues fusion power seems some way off. We should stick to wind, wave and solar for the time being, perhaps.
Duncan Wales
Dec 20, 2022 · 10 min read
Parties, Protests & Politics
Beware Physicists The last edition of The Perspective Pool was entitled “ October Entropy ”: the reference was intended as an amusing and somewhat throw-away quip about the significant geopolitical events that seem to be destroying the accepted world order, as “entropy” implies a tendency for order to disintegrate in to chaos (and by further extension that process occurs in a single direction, thereby giving a direction and structure to time ). I thought it was a mildly entertaining comparison that would bring a wry smile to those who appreciate such things; in fact I hope it did. However, it also resulted in a number of over-attentive readers engaging me in some very complicated debates on the Second Law of Thermodynamics , which - after a short period of bluffing - I felt very under-qualified to engage in. The moral of the story is “do not meddle in the affairs of physicists”; maybe the other lesson is don’t try to be a smartass… Record Breaking President Xi As predicted, the Congress of the Chinese Communist Party anointed Xi Jinping as its leader for an unprecedented (and hitherto un-constitutional) third term. Not only did President Xi take on the mantle of the greatest, and longest serving leader of The Communist Party and therefore of the People’s Republic of China since Chairman Mao, he arranged to have his predecessor, Hu Jintao forcibly removed from the seat next to him on the front rank of the Politburo in full sight of the Congress, and global media. We may think of President Putin of Russia as a “strongman”, but having your elderly predecessor of a decade before carted off for the sin of not being you is more resonant of the glory days of that other great Communist leader, Joseph Stalin . Xi now appears to be unassailable and unimpeachable, with a clear vision of how the PRC will dominate the world, and much greater capacity than ever to do so . As the UK and US were explicit and swift to point out this is very dangerous for everyone else. Record Breaking Liz Truss While President Xi was breaking records and brutalizing his opponents, hapless Liz Truss had already resigned as UK Prime Minister, after a record breaking 44 days in office - the shortest since the job began in 1721 - and that is including the 10 days of hiatus caused by the official mourning for HM The Queen. In that short time Ms Truss launched a mini-budget that had not been checked by the OBR, induced a record low for GBP against USD, spiked 30yr Gilt yields (and therefore the cost of Government borrowing) at over 5% for the first time in 20 years, threw the pension market in to chaos, caused the Bank of England to intervene with more QE when its stated objective was to do the opposite, sacked her long-time friend and newly appointed Chancellor Kwasi Kwarteng, made all British mortgages, bank loans and corporate debt more expensive, caused the ratings agencies to put the UK on negative watch and achieved a popularity rating lower than the 10.1% inflation rate. The resignation of Ms Truss caused former PM, Boris Johnson, her immediate predecessor recently removed by his own Conservative party for - in the view of some - his cavalier relationship with veracity, to fly back from his holiday in the Caribbean to assess his chances of a miraculous Lazarine comeback. The Tories came to their senses, and Boris didn’t run, which left the way clear for Boris’ former Chancellor Rishi Sunak to take over. The markets reacted well (look at the chart), but Rishi takes on an unenviable mess of high energy prices, Brexit headwinds and a war in Europe, needlessly made worse by the Truss era. Mr Sunak is British-Asian, and rather more encouragingly for UK democracy amidst the political turmoil the first person of color to occupy 10 Downing Street. Mr Sunak is also only 42 years of age, making him the youngest Prime Minister since Robert Jenkinson the 2nd Earl of Liverpool in 1812 (the year France invaded Russia). Iran’s One Way Attack Drones The wave of protests triggered by the death in police custody of Mahsa Amini, a 22 year old woman accused of wearing her hijab too loosely, are entering their sixth week. The Iranian government forces have - according to dissident news outlet Hrana - killed nearly 250 demonstrators in that time, in protests across all parts of the country. On Saturday a huge crowd, estimated to be as many as 100,000, demonstrated against the Iranian theocracy in Berlin (Germany has a large population of the Iranian diaspora, after the UK, Canada and the US). In Iran the demonstrations are predominantly organised by students and younger people; somewhat redolent of the demonstrations against the Communist Party in China in the mid-1980’s; which tragically culminated with the massacre in Tienanmen Square in 1989. Although the Iranian government appears to remain in control for the time being, these demonstrations have achieved a couple of things: (i) greater unity of the notoriously fragmented and often foreign-based opposition, and (ii) an even more negative view of the US, the UK and their allies against Iran: the US Pentagon has publicly confirmed that Iran is supplying “one way attack drones” - miniature modern day “doodlebugs” - to Russia and that it regards them as “militarily ineffective”, although a weapon of terror against civilians. The UK Ministry of Defence said that Iranian Revolutionary Guards were in Ukraine actively training Russian forces, which means Iran is now embroiled in a proxy war with NATO. The theocratic government will come under more pressure internally and externally, and dictatorial countries under pressure - as we have seen in the case of Russia - are capable of making very bad decisions indeed. Saudi’s MBS allegedly mocks Pres Biden The Wall Street Journal has reported on the deteriorating relationship between the youthful ruler of the Kingdom of Saudi Arabia (KSA), Mohamed Bin Salman (MBS) and the 79 year old President Biden of the US. According to the WSJ, MBS is alleged to have mocked President Biden’s “gaffes” and “mental acuity”; in private at least, which MBS has denied. This is the latest round of unedifying power politics between the US and KSA centered on the oil price. The US Administration is very frustrated with KSA for its role in the latest OPEC+ decision to reduce the production of oil, thereby maintaining the price, and a direct rejection of President Biden’s request to push prices down made in person to MBS in June. The US Administration says the OPEC+ decision helps Russia, but a cynic would also add that high energy prices add to US inflation - which President Biden said would be transitory and has turned out to be anything but. KSA has also been exporting fuel oil to Russia, which has added to the annoyance in DC. This brings to an end a warm period of relations between the US and KSA, albeit they have to live with each other in defiance of Iran. And finally.. President Biden welcomed the appointment of the new UK Prime Minister as an “ astounding milestone ”, although as that clip shows the President may have pronounced him as “Rushi Sinook”, which let the noble sentiment down a little bit, I could not help feeling. Be good, everybody. Duncan If you enjoyed The Perspective Pool please share it! It is free to subscribe.
Duncan Wales
Oct 25, 2022 · 7 min read
While Russia Fights, China Prepares for War
History doesn’t repeat itself, but it often rhymes In March 1936 the Germany’s Army reoccupied the Rhineland region of Western Germany. The Rhineland had been demilitarized under the Treaty of Versailles in 1919, to create a buffer region between Germany and France in the aftermath of the Great War of 1914-18. For Nazi Germany in March 1936 the “retaking” of the Rhineland was a hugely symbolic event, and its relative lack of reaction from other powers emboldened German Chancellor, Adolf Hitler who’s armies moved on to invade Czechoslovakia almost exactly three years later, setting the World ablaze in another global conflagration. However, as the Great War had illustrated, it takes more than one event, one leader or one country to create a World War; it tends to be a culmination of multiple factors that cause the worst outcomes. A year after German troops reoccupied the Rhineland, Japan mounted an invasion on a politically divided China. Japanese imperial troops mounted an attack on the fractured forces of the nationalist Kuomintang and the insurgent Communist Party, which (temporarily) allied to resist it, in a conflict against Japan that raged from 1937 to 1945. The temptation is to be mesmerized by Russia and its invasion of Ukraine - a country divided by an 8 year civil war and run by an (at the time) unpopular government - but it is also worth thinking further East, to other, apparently disconnected events, that make the global situation more uncertain than just the direct byproducts of the first “tank war” in Europe since 1945. Now it is Russia, rather than Germany taking on unfinished business on its Western flank in Europe, and it appears China, rather than Japan, is intent on dominating the East China sea. It has unhappy echoes of the late 1930’s. China and Taiwan - the Unfinished Civil War Taiwan (the Island of Formosa) had been under Chinese imperial control since the 17th Century. It was ceded by Imperial China to the Empire of Japan under the Treaty of Shimonoseki after the first Sino-Japanese War in 1895: a strategic byproduct of Japan’s invasion of the Korean peninsular. This added to the pressures on the imperial Qing Dynasty of China, which had in prior decades already suffered the humiliations of losing both Opium Wars (1839-42, and 1856-60) and control of Hong Kong (ceded by the Qing to the British in 1841). By the time the Qing administration had been further knocked by territorial losses to Imperial Russia in the Sino-Russian War of 1904-5, the light was fading on centuries of imperial rule. Despite belated attempts at reform the Qing Dynasty and the imperial throne itself was deposed by a revolution in 1911, resulting in the abdication of the last Emperor Puyi, and the creation of the Republic of China. It was this Republic of China that was riven by internal divisions when Japan attacked it in 1937. The mainstream Kuomintang (KMT) and revolutionary Chinese Communists (CCP) had been fighting each other since 1927 but allied - not always coherently - to resist the Japanese invasion. Global power politics played a hand, and the KMT was backed by the US and the CCP by the Soviet Union. The CCP tended to be more successful in their military operations than the KMT, and when the Japanese surrendered to the Western Allies in late 1945, the friction between the two groups reignited in violence. After several more years of conflict in which the KMT suffered a series of reverses the KMT and its leader Chiang Kai-shek escaped to Formosa in 1949, leaving mainland China to the victorious CCP. The mainland became the Communist People’s Republic of China (PRC), and the nationalists remained the exiled government of the Republic of China (ROC) in Taiwan. Nancy Pelosi Visits Despite the warm rhetoric of the US and others, the ROC is diplomatically recognized by only a handful of countries (14 to be exact, mainly in the Caribbean and Latin America, but also including the Embassy of the Holy See (Vatican); compared with the 172 foreign embassies hosted by the PRC). The USA continued to recognize the ROC in Taiwan until 1979 and then cut its formal recognition in favor of the PRC on the mainland, and now has no formal diplomatic relations with the ROC. The US may not have an embassy but it does have a significant presence in the form of the American Institute in Taiwan, a unique body mandated by the Taiwan Relations Act of 1979; a “strategic ambiguity” that is more complex and subtle than the foreign policy stance of the Pope, it would seem. However, Taiwan is the United States’ eighth-largest trading partner, a globally important manufacturer of microchips, and the United States is Taiwan’s second-largest trading partner (ironically after the PRC, which is the largest). With this background in mind, the visit of House of Representatives Speaker, Nancy Pelosi to Taiwan last week was strange for at least three reasons: The Speaker has therefore ignited more tension between the US and PRC - one must assume deliberately - but it is not clear for what strategic purpose. The PRC responded in predictable manner, by increasing the number of its military air sorties in to or near ROC airspace ; but it also engaged in a new escalation by commencing a series of live-fire exercises in the waters around Taiwan itself. The PRC Arms Itself The PRC exercises around Taiwan resulting from Speaker Pelosi’s visit differ in nature from the type of exercises that have gone before: The PRC increased its defense budget by 7.1% this year to Yuan 1,45 trillion ($230bn), despite its economy being under pressure from “zero covid” lockdowns, reduced domestic demand and some food inflation (2 - 6% depending on the food - still modest compared with the inflation seen in the G7 economies). This is still dwarfed by US defense spending of circa $700bn. However, in context, the Chinese defense budget has more than doubled in the last decade. The Creation of AUKUS and Japan Rearms In September 2021 the governments of the US, UK and Australia announced the creation of an “ enhanced trilateral security partnership called “AUKUS ” - Australia, the United Kingdom and United States ”, much to the chagrin of other countries with historic ties to the Indo-Pacific region, notably France. The military pact is more like a series of agreements starting with the US and UK helping develop nuclear powered submarine capability for Australia and extending to collaboration on a number of other security related capabilities, including cyber, AI, quantum computing (useful for a number of things) and “ additional undersea capabilities ” (which is likely to be a euphemism for undersea drones or UUV’s, Unmanned Underwater Vehicles). The late, great Shinzo Abe, who was so tragically assassinated on 8 July, had as Prime Minister of Japan urged rearmament as a priority, in a rejection of the constitutionally imposed pacifism since the Second World War. His quiet urging led to Japan converting helicopter carriers to fully fledged aircraft carriers, and in October 2021, two locally stationed US Marine Corps F-35B’s landed on the deck of JS Izumo, the first operational aircraft carrier Japan has had since the end of the Second World War. The US has its largest permanent overseas military presence in Japan; as it nearly invariably has been since 1945. More than 55,000 military personnel occupy around one hundred and twenty bases throughout Japan’s islands, including a large part of Okinawa. The US has another 26,000 troops stationed in South Korea. As I write the USS Ronald Reagan carrier strike group is bobbing about on the South China Sea: the USS Ronald Reagan is a Nimitz class nuclear powered super-carrier, accompanied by cruiser USS Antietam and destroyer USS Higgins and - one would have to assume - one or two nuclear powered submarines, lurking darkly beneath the surface, listening. Wake Up Call With war in Europe and military rearmament in East Asia, Western politicians - distracted by inflation and domestic issues - should have a more strategic eye on the risks of an increasingly confident PRC and an increasingly frustrated Russia. As slowness to build military capability and strong diplomatic relationships proved in the 1930’s, mistakes now will prove costly in years to come. Further Reading
Duncan Wales
Aug 16, 2022 · 9 min read
Turning Thoughts in to Dollars
Scriber - the new infrastructure of investment information We have just launched the operational version of Scriber - https://scriber.to/ - which has been in open beta since the end of March. Before launch Scriber has attracted 500 writers who are already delivering their own unique insights to circa 150,000 of their own subscribers via Scriber’s tech. From today they and any new user will not just be able to create professional emails, web-presence and a structured way to share insights through social channels, but also introduce a paywall and get paid for their work. Scriber gives experts the ability to set up and grow their own subscription businesses, giving anyone who needs it access to their expertise for a fee. Financial information and insight is no longer trapped in the opaque world of traditional finance or on systems that most people have never heard of and do not have access to. By the same token even the investment professionals who do have access to those systems are increasingly separated from new markets and have less access to research than they used to: a combination of changing market dynamics, regulation and costs has meant that there is less research and analysis available at a time when the investment universe is in fact expanding: fintech, biotech, crypto and DeFi, deep dives on companies and the complex of opportunities and risks in sustainability, climate and ESG. That is the gap that Scriber will close. It dramatically lowers the access point to high-end expertise for the new class of semi-professional and retail investor and gives greater range and diversity of analysis to investment professionals, everywhere. The Power of Ideas Humans are good with ideas. We use concepts that are entirely fictional to create reality and drive civilization and our lives: money, ownership, contracts, qualifications, jobs, pensions, insurance and laws - the components that hold together society - are all human fictions. So powerful are these concepts that they start to feel very real to us all: a friend challenged me on this point, and I reminded her that there are plenty of places in the world now - and of course in the past - where humans abound but none of these concepts exist (at least not in a way that most of us would recognize). Humans used to transmit ideas and information with speech, stories, songs, drawing and writing. Each step in technology increases the potency of ideas: the creation of the mechanical printing press by Gutenberg in 1450 (movable type printing had be pioneered in China long before that), revolutionized the transmission of ideas and information and paved the way for the Enlightenment and Industrial Revolution: because the printed word does not just facilitate the transmission of ideas and information through space, and the words of the author through time, it also allows the rapid, mass multiplication of ideas and duplication of information. The revolution in ideas preceded the revolution in industry. However, the means of creating publications was expensive and controlled by companies and institutions, who charge for access to information and decide what to pay the writers and experts. In the new digital era, we can not just separate ourselves from the shackles of physical paper, or closed tech systems, we can liberate expertise and insights from people outside a big franchise platform - former and aspiring professionals and subject matter experts: no one to edit you out, not select you for a role, or tell you what to write. We can all be judged on what we do, and the value we create with greater transparency than every before. That is what Scriber is for. Turning Thoughts in to Dollars The digital revolution of the 21st Century means that anyone, anywhere with expertise and ideas can be accessed by anyone else, anywhere else, at any time who is searching for information or ideas. I am writing this on a machine no bigger than a medium sized book, sitting at the kitchen table of a cottage in the rural UK - the sun is shining, sheep are bleating in the field next door and a dog is asleep at my feet - and you, dear reader, are reading it on email, the web or via social media, wherever you are. Technology has truly collapsed the time, space and geography gap between us. As the erudite and eclectic Jim O’Shaughnessey pointed out “Bill Gates figured out a way to turn his thoughts in to billions and billions of dollars”. Scriber now let’s anyone, anywhere perform the same alchemy. Further Reading:
Duncan Wales
Aug 1, 2022 · 4 min read
Pariah Swap: Biden reverses on Saudi and Russia
Biden’s first overseas trip In June 2021 the newly elected US President Biden made his first overseas trip, which included an in-person meeting with President Putin of Russia. The pair met with their foreign ministers, Anthony Blinken and Sergey Lavrov, in Geneva, in what was supposed to be two meetings; the first, in a small group with interpreters, and a second longer - less confidential - meeting with more officials discussing a longer agenda. Biden used the more discreet of the two meetings as an opportunity to ask Putin to stop cyber attacks on the US, and provide a lecture on the importance of human rights, while Putin used it as an opportunity to size up Biden’s personality and resolve. As far as anyone can tell from outside the room the two Presidents quickly ran out of things to talk about. To both Biden’s own officials and the Russian delegation it was painfully clear that Biden’s rather indistinct approach represented a significant shift in the conduct of US foreign policy. It was certainly less robust than that of the prior Administration, which for all the unhelpful eccentricities of former President Trump was otherwise remarkably coherent. Saudi, Oil, Standards and Values The foreign policy issue that Biden was very robust about during his election campaign in 2019 was on the Kingdom of Saudi Arabia (“KSA”). Biden said it deserved to be made an international “pariah” as a result of its involvement in the murder of Saudi journalist, Jamal Khashoggi. In a policy volte face President Biden has just visited KSA, and met with its ruler, Crown Prince Mohammed Bin Salman (MBS) with a jovial fist bump, whom he had previously blamed for the Khashoggi murder. In the period since Biden’s original rhetoric the price of oil has nearly tripled, Russia has invaded Ukraine and put its nuclear weapons on alert, the deal to prevent Iran developing nuclear weapons of their own torn up by the Trump Administration is no nearer being rehabilitated, relations with China remain fraught, and USD rates and inflation are rising at their fastest in a generation. A cynic might say that Biden has conveniently ditched is moral outrage in order to ask the KSA to produce more oil to bring down its price and curb inflation in the US. The first duty of government is to maintain the economy and prevent rioting in the streets; standards and values matter of course, but not as much as the price of gasoline or inflation, as it turns out. It is far from clear that he will succeed in this objective; there are limited reasons for KSA or any other GCC country to release more of their reserves of oil to depress the price. in fact as I write the price of oil (Brent crude benchmark) has just pushed back above $100 per barrel because the market doesn’t believe the KSA will release more reserves. However, the general entente between the US and the KSA - even if Biden’s key request has been rejected - is also despite the fact that due to limitations on processing capacity the KSA is buying more fuel oil from Russia to generate power than before the conflict in Ukraine. KSA doubled its imports of Russian fuel oil in Q2. In February of this year, President Biden said that Russia should be made a “pariah” because of the invasion of Ukraine. Biden obviously likes dishing out pariah status, but perhaps nobody should take the epithet too seriously. Iran, Oil and Nuclear Proliferation The other reason for President Biden’s trip to the Middle East was to try to reignite the Iran nuclear deal: the Joint Comprehensive Plan of Action (JCPOA). Under the JCPOA - which involved the UK, France, China, Russia, Germany and the EU, but President Trump tore up in 2018 - Iran was allowed to export more of its oil in exchange for limiting its nuclear ambitions, which again would help the US with inflation. However, now the deal is dead, it has strong resistance from both KSA and Israel, who have been on better terms with each other than ever before - in large part due to their distrust of Iran. Both are key political and economic allies of the US in the region. In a recent news interview the Saudi Minister of State for Foreign Affairs, Adel al-Jubeir was asked about the meeting between President Biden and MBS and what was said about the Khashoggi case. With his customary and disarming charm, Adel al-Jubeir alluded to the fact that what is said on the campaign trail “ sometimes doesn’t get reflected in terms of being in office, because [Presidents] have access to more intelligence and because they have access to a fuller and broader picture ”. Having swept that diplomatic embarrassment to one side as an understandable feature of the real politik it seems that the KSA team wanted to focus much more on what Adel al-Jubeir described as the “ threat from Iran ”. US Foreign Policy Mistakes have Driven both Russia and Iran in to the Arms of China Just as Russia’s pariah status has driven it to do more business with China, and the energy crisis has caused the KSA to buy more Russian fuel oil, so the failure of the JCPOA has caused China to import record amounts of Iranian oil: China now imports more Iranian oil than it did before the imposition of sanctions on Iran in 2017. President Biden has just fist bumped in to contact with two pieces of political reality: Over the last year, President Biden’s approval rating has fallen from 52% to 38%, and the annualized rate of inflation has nearly doubled to 9.1%: gasoline prices were one of the most significant components of that, having risen 59.9%. The President’s visit to the Middle East is unlikely to have turned either of those around. Further Reading
Duncan Wales
Jul 18, 2022 · 6 min read