Monday March 25th
It is a strange world that sees Vladimir Putin make half-hearted attempts to blame Ukraine for Friday’s terrorist attacks in Moscow, while at the same time ISIS release several statements, with just a hint of increasingly desperate attention seeking, that claim responsibility.
Mark Champion, a Bloomberg columnist, reminds us that prior to the Ukraine war, Putin had a tacit understanding with the West, one driven by a mutual recognition that ISIS and Al Qaeda make little distinction between Russia and the U.S. The version of Putin that existed before his invasion of Ukraine would have taken seriously America’s intelligence briefings about an imminent terrorist attack on Russian concert venues. His accusations that America was somehow seeking to ‘destabilise’ Russia with public warnings about high risks of terrorism made no sense. The U.S. stands to gain nothing by playing games involving fictitious ISIS threats. Pre-war Putin would have known this.
Something has changed, probably Putin’s level of paranoia. Less speculatively, it is clear that the focus of Russian intelligence and security services - suppressing dissent about the war - has come at the cost of neglecting other threats. Putin has had remarkable success in persuading the ‘Global South’ that he is their champion in waging war against the imperialist West. ISIS and its offshoots are having none of it. Russian military bases in places like Tajikistan are as big an abomination as is the U.S. presence in the Middle East.
Russia continues to lose large quantities of men and materiel on the front line as it makes incremental progress but no major breakthrough along the front line. The air war has, however, significantly stepped up. Ukraine is suffering under the largest ever series of attacks from ballistic, cruise and hypersonic missiles, as well as drones. Ukraine for its part is still attacking Russian oil refineries and parts of Crimea with its own drones and cruise missiles. Indeed, some analysts think the war is increasingly moving into the air.
Tuesday March 26th
Different countries have different ways of measuring and describing the prospect of terrorist attacks. In the U.K. there are five levels of threat. According to the MI5 website (yes, the secret service has a public face), there is both a national threat and a specific threat to Northern Ireland from “Northern Ireland related terrorism”. Whether these two different threats are additive or subsets of each other is not immediately obvious. A committee called JTAC - Joint Terrorism Analysis Centre - is responsible for the national threat assessment while MI5 looks after the Northern Irish issue. JTAC’s own website reveals that it is wholly nested within MI5. Your correspondent is assured that the Northern Ireland border within MI5 is not Brexit related.
The current assessment is that both forms of terrorism are bang in the middle of a five point scale, ranging from ‘low’ to ‘critical’, and are rated as ‘substantial’. That means that an attack is ‘likely’. Clearly, that is a probabilistic assessment, albeit one without enumeration. 50% likely? 10%? We don’t know. Even if numbers were attached, they wouldn’t mean much. The threat assessment from Northern Ireland related terrorism was reduced recently, during the first week of March.
France, by contrast, has just raised its intelligence based assessment of the terrorist threat to its highest possible level - the French have a simpler three point scale . “Attack emergency” is one translation of that level and was announced by the French Prime Minister a short while after news broke of the Moscow attack. President Macron said that ISIS-k, the group that has claimed responsibility for that atrocity, has recently been thwarted a number of times from attacking on French soil. France, of course, has the Paris Olympics to look forward to over the Summer months.
Wednesday March 27th
Can something be both half-baked and half-hearted? Metaphors shouldn’t be mixed but an exception could be granted for a Russia’s attempts to blame Ukraine for the Crocus attacks. The head of the FSB (successor to the KGB) is the latest to try and link Kyiv to last weekend’s atrocity. FSB director Alexander Bortnikov reckons Ukrainian operatives travelled to the Middle East to train terrorists. Russian Presidents past and present have been joined by the usual suspects on Moscow’s nightly chat shows in the suggestion that the Crocus attackers were arrested while trying to escape to Ukraine.
Putin’s chum, Belorusian President Alexander Lukashenko hasn’t read the script. Yesterday, he said that the terrorists were, in fact, headed for Belarus. According to Lukashenko, the militants only turned towards the Ukrainian border once they realised that the Russian-Belorusian frontier was likely to be too difficult to cross. That begs the question: why were the terrorists heading for Belarus in the first place? And, of course, the whole ‘Ukraine is responsible’ narrative is somewhat undermined. The truth is out there somewhere.
News that China’s leader, Xi Jinping, has had an unusual meeting with Western C-suite executives is consistent with a developing idea in trade policy circles. ‘The China Shock’ is how that country’s accession to the World Trade Organisation is now commonly described by economists. It is not widely appreciated how the profession’s instinctive approval for free trade has largely disappeared. The devastation caused by China to American (in particular) manufacturing jobs during the noughties has ended the ‘free trade is good’ mantra of economists.
One silver lining of this fundamental reappraisal of the centuries old belief in free trade was that it was thought that there can only be one China shock and that it is mostly over. That is inconsistent with Xi Jinping’s strategic fondness for manufacturing and his evident belief that the route out of China’s economic woes is another surge of domestic manufacturing output.
The sudden disappearance of many different kinds of manufacturing industries throughout the West was a strategic bonus accompanying the first Chinese manufacturing boom. That contributed to the destabilising rise of populist politics. Xi now wants to repeat the trick. Yet more cheap manufactures are on the way, unless the West responds very differently compared with how the first China shock was dealt with. Early signs are that China might not find it so easy this time. But the siren lure of cheap imports was very difficult to resist the first time around - as consumers, we love them. Workers, many of them, not so much.
Thursday March 28th
Wading through the data on the various ways countries assist and support Ukraine is not a task for the faint-hearted. Nor, incidentally, is it a job well-suited for AI chatbots: ‘hallucination’ is good description of the random numbers that emerge from any AI interrogation of who has contributed how much.
The Kiel Institute for the World Economy, on the other hand, does a very good job. Even with their valiant efforts, the numbers can be confusing. European countries give aid bilaterally and also via EU institutions. There is straight cash aid, help for refugees and transfers (and purchases from 3rd parties) of arms. Then there are commitments versus deliveries - promises are cheap, hard cash not so much. The EU, for example, has promised lots of fiscal support but, so far, has only delivered a third of its stated commitments (in fairness, lots of support is deliberately and appropriately planned to arrive over time). Similarly, the U.K. has been big on budgetary promises but tardy in terms of delivery, at least so far.
In terms of overall commitments, the EU has promised a lot more than the US, although that could change should Congress ever get around to approving Joe Biden’s latest $60 billion package. Serious commentators think there is a good chance that Putin will be staging a victory parade in Kyiv before that happens.
A big outlier is Denmark. Particularly (but not exclusively) in terms of military aid. It is, perhaps, unsurprising that the closer a country is to Ukraine - the Baltics, Poland and Finland - the more keen they are to help their neighbour. Enlightened self interest is at work here. But Denmark is also up there with the largest contributors, particularly when measured as a percentage of GDP. The small Scandinavian country has roughly the same population as the Republic of Ireland.
Denmark is the fourth largest military contributor to Ukraine - in absolute, not relative, terms. It made headlines last month with a donation of 100% of its artillery stocks. The foreign ministers of Ukraine and Denmark today penned a Bloomberg column announcing joint efforts - including hard cash - to support the rebuilding of Ukraine’s economy and infrastructure. It’s not just Macron that gets it.
Friday March 29th
An ex-President of Taiwan is scheduled to make a rare visit to China during April. Given the tensions surrounding Taiwan’s relationship with Beijing, even that simple statement needs careful clarification. Whether or not there are two China’s is the question at the heart of the problem.
Today, there are two China’s - in one version of reality at least. The People’s Republic of China (PRC) is the big one, while the Republic of China (ROC) is the island also known as Taiwan, formerly Formosa (and other names).
Taiwan has long been fought over. It was actually occupied and wholly controlled by Japan for 50 years up to 1945. Many Taiwanese citizens fought for Japan during the Second World War. Japan surrender its claims over Taiwan after the war, with some historians noting that it was never made clear who the islands were being surrendered to.
Taiwan is actually a state comprised of 168 islands. Water-based incidents are almost a daily occurrences. Over the last few days, PRC gunboats have been accused of using water cannons against fishing vessels of varying nationalities. ‘Accidents’ are commonplace. China is reported is to be holding on to a rescued Taiwanese fisherman because they suspect he may be a spy.
Cynical commentators sometimes suggest that the world would be less interested in the security of Taiwan if it wasn’t an important manufacturer of semiconductors. Taiwan Semiconductor Manufacturing Company (TSMC) is on some measures the world’s second largest manufacturer of silicon chips. Joe Biden is trying very hard to reshore (or ‘friend-shore’) strategically important industries, particularly semiconductors, mostly to reduce the risks associated with exposure to China rather than for old fashioned mercantilist reasons.
That ex-President on his way to Beijing is from the Kuomintang party that agreed to the ‘1992 consensus’ between Taiwan and China That agreement formally stated there is only ‘one China’. The current President of Taiwan is from the Party that disagrees. Even the Kuomintang seems to think that ‘one China’ is something quite different to the one imagined by Beijing.
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