Tom Arms’ World Review

United States

US presidential hopeful Ron DeSantis this week said Ukraine is a territorial dispute. He also said that Ukraine is not one of America’s vital national interests. This puts him seriously at odds with President Joe Biden, America’s NATO allies and about 50 other countries who firmly believe that the war in Ukraine is a battle between democracy and autocracy, good and evil.

DeSantis was not always of this opinion. In 2014, when Russia annexed the Crimea, the Florida governor was in the forefront of those calling for Ukraine to be armed. The reason for the shift appears to be his political ambitions.

First hurdle in the race to the White House is securing the Republican Party nomination and at the moment  the opinion polls show him trailing his main opponent – Donald Trump, who is well known for his pro-Russian, anti-NATO and anti-Ukraine politics.

DeSantis clearly reckons that the only way to beat Trump is to out-Trump the former president. The problem he will face – once in 1600 Pennsylvania Ave – is moving from an anti to pro-Ukraine policy. De Santis’s rhetoric is a strategic gift to Vladimir Putin. He and his Kremlin coterie are banking heavily on a Republican victory in 2024. This means they only have to hold on for another 18 months or so before American disenchantment becomes official foreign policy.

France

The French, it is said, work to live. Americans, Brits, Japanese, Germans … live to work. This basic difference in outlook goes a long way to explaining why millions of Frenchmen and women are protesting and striking against President Emmanuel Macron’s plans to raise the start of the state pension from 62 to 64 years. It will deprive them of two years “living time” or, as the neighbouring Italians would say: “La Dolce Vita.”

The problem with this idyllic view of life is that it clashes with hard-nosed demographics. France’s population is growing older and less productive. The French Treasury can’t afford to arm Ukraine, switch to a green economy and pay for the pandemic as well as continue to pay for one of the world’s most generous pension schemes. Especially as the French population is clinging to life much longer than the insurance actuaries estimated when today’s retirees entered the workforce.

In fact, when estimating premiums and pay-outs, insurance companies calculate that their customers will live for five years after they start taking their pension. The current average life expectancy of a Frenchman is 82. The maths no longer work.

The demographic problems faced by France, are common throughout the developed world. Which is why governments are pushing up state retirement ages. But this has not stopped the French from arguing that their national motto of “Liberté, Egalité et Fraternité” makes them a special case.

As a result, for the last few weeks they have been out in their hundreds of thousands to protest against Macron’s plans. They were heard. More importantly, the Deputies to the National Assembly listened. This week Macron failed to garner the necessary Assembly votes to push through his pension plans. So he used Article 49:3 of the constitution which permits the government to enact legislation without parliamentary approval, but allows the opposition to table a quick vote of no confidence.

The reaction was immediate and brutal. Opposition Deputies banged their desks, waved flags and placards and sang the Marsellaise. They also tabled the aforementioned vote of no confidence in the government. Outside the National Assembly riots broke out across the country. More than 150 people were arrested by Friday morning.

If the no confidence vote is passed then the government of Prime Minister Elisabeth Borne will fall and parliamentary elections will be held. Macron’s Renaissance party is already in a minority in the National Assembly. After an election with the pension age as the only issue, his representation will almost certainly fall further. This will make it more difficult for him to govern and be grist for the mill of his far-right opponent Jean-Marine LePen.

Ukraine

Bakhmut is beginning to look like Ukraine’s Alamo. The dogged defense of the mission station in San Antonio, Texas, gave the army of Sam Houston inspiration and vital time to regroup and train. They were thus able to secure Texas independence from Mexico at the Battle of San Jacinto.

The Ukrainians are not short of sources of inspiration. But they definitely need time. They need time for NATO tanks, missiles, anti-aircraft systems, armoured vehicles… to reach them. And they need time to take delivery and train Ukrainian soldiers to use them. Meanwhile, the Russians continue to hurl themselves against the Ukrainian defences in Bakhmut at the cost of about 200 lives a day. Ukrainian losses are a secret.

Another target of the Russian missiles is Ukraine’s electricity infrastructure. Hundreds of millions of dollars’ worth of explosives have been targeted on generating stations and Ukraine’s national grid. In this case the Ukrainian heroes bear not arms but screw drivers and spanners. They are the engineers who are repairing the network faster than the Russian missiles can destroy it. At the end of this week, Kyiv had enjoyed five weeks of consecutive electricity.

Silicon Valley Bank

Every Action, declared Sir Isaac Newton, has a reaction. The truth of his third law has been underscored by the current world banking crisis.

In the wake of the Ukraine War and the energy crisis, inflation became the number one financial bogeyman. We can deal with that said the America’s Federal Reserve Bank. All we have to is tighten the money supply by raising interest rates. So they did and other central banks followed suit.

It worked, up to a point, inflation either stopped rising or came down a bit. A sort of success. Then came the reaction. The collapse of Signature Bank and, more importantly, the techie’s favourite, Silicon Valley Bank.

The problem is that both these banks, and many others, hold a large proportion of their depositors’ money in US Treasury Bonds. The interest rates on these bonds are fixed for 20 to 30 years. US Treasury Bonds are generally considered the safest of safe investments. After all, Uncle Sam really is too big to fail.

Buying bonds was fine when interest rates were low. But when they quadrupled the bonds quickly lost their value. In the case of SVB, 53 percent of their money was invested in Treasury bonds. The result was a run on the bank and the bank’s collapse. Because SVB is America’s 16th largest bank and the number one lender to the vital tech industry, the collapse of SVB caused billions to be wiped off the value of all US banks. Internationally, Credit Suisse, one of the pillars of the world banking community, lost 24 percent of its share value.

To prevent a general run on the banks, President Joe Biden intervened to guarantee deposits above the normal $250,000 threshold. In the UK, HSBC bank intervened to buy the British arm of of SVB and guaranteed that bank’s deposits. It is not clear what will happen to SVB’s non-British and non-American customers. Indian tech companies, for instance, were big users of SVB because they could open an account remotely and the bank did not require a social security number.

For now, a financial Armageddon similar to 2008-2009 has been averted. But the issue of how to deal with the underlying problem—inflation – remains on the table.

Beware the Ides of March

“Beware the Ides of March,” The seer warned Julius Caesar before his assassination on the floor of the Roman Senate. This week saw the 2,067th anniversary of the event that brought an end to the life of Caesar and the Roman Republic. It is also witnessed the 20th anniversary of the US-UK invasion of Iraq and just over a year since Vladimir Putin invaded Ukraine.

There are parallel lessons to be learned from all of them. Each event has involved hubris and each resulted in unintended consequences.

Caesar was assassinated because the assassins feared that this powerful figure would destroy the Roman Republic. But they had no plans beyond the assassination. The result was civil war which resulted in their deaths and the destruction of the republic forever.

On the eve of the Iraq War, America was the world’s only super power. The neo-conservatives in Washington felt that they could intervene in the shifting sands of Arabia to topple an enemy and introduce democracy with impunity. But George W. Bush and Co had no plan beyond the removal of Saddam Hussein. The result was a civil war in Iraq, the rise of ISIS, a stronger Iran and significantly reduced American influence in the region.

At the start of 2022, Vladimir Putin had been in power for 23 years. He was at the pinnacle of his power. He had successfully imposed political order in a vast country, restored the economy and rebuilt the military. It was time to reverse what he regarded as one of history’s geopolitical disasters – the breakup of the Soviet/Russian empire. However, he miscalculated opposition to his vanity project and is now bogged down in the fields of the Donbas.

Hubris, vanity and the failure to fully examine the consequences of our actions have been with us throughout history. So, Beware the Ides of March, and any other day you want to do some stupid thoughtless action driven more by hubris then common sense.

* Tom Arms is foreign editor of Liberal Democrat Voice and author of “The Encyclopaedia of the Cold War” and “America Made in Britain". To subscribe to his email alerts on world affairs click here.

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7 Comments

  • Mel Borthwaite 19th Mar '23 - 10:30am

    The Alamo and Texas is an interesting analogy when considering the war in Ukraine. The Alamo was a battle that came about as a result of people living within Mexico wanting to break away and unite with an neighbouring country – the USA. The conflict ended with Texas leaving Mexico and 11 years later, joining the USA.
    The Russian view of the war is that people in the Donbass wanted to break away from Ukraine following the overthrow of the democratically elected, pro-Russian president who was huge supported in the Donbass. Perhaps this war, also, will end with the territory being recognised as part of the neighbouring county.

  • In fact, when estimating premiums and pay-outs, insurance companies calculate that their customers will live for five years after they start taking their pension. The current average life expectancy of a Frenchman is 82.

    That’s from birth. For someone who actually reaches 62 years old, remaining average life expectancy will be longer than 20 years (and for someone who reaches 64 it will be less than two years shorter).

    The problem is that both these banks, and many others, hold a large proportion of their depositors’ money in US Treasury Bonds.

    The failure was in not hedging their exposure to rate rises. It’s what derivative markets are for.

    ‘What Is an Interest-Rate Derivative? Definition and Examples’:
    https://www.investopedia.com/terms/i/interest-rate-derivative.asp

  • nigel hunter 19th Mar '23 - 1:04pm

    The war in Ukraine,therefore, has to end in the next 18 months? If so the supply of armaments will have to be stepped up for this to happen.As to a ‘peace treaty’ would the parties settle for Luhansk and Donbas become Russian AND NO MORE?
    Being cynical we hear reports in the UK that we are not living as long as we used to.Financially less funding for the NHS continues this and state pension payments will decrease.I understand the French have no secondary income pensions to fall back on,so, to them,they are being robbed of a happy retirement.Cannot migrants supply the care that both in France and the UK will be needed as the population becomes older?

  • Martin Gray 19th Mar '23 - 2:14pm

    “It is also witnessed the 20th anniversary of the US-UK invasion of Iraq and just over a year since Vladimir Putin invaded Ukraine”….
    Hundreds of thousands of civilian deaths – many of them children…No ICC arrest warrants for those responsible for Iraq….Just lauded on the world stage as international statesman…

  • Mel Borthwaite 19th Mar '23 - 5:56pm

    @Martin Gray
    You raise an important point. I read a post on Twitter this morning that pointed out: Bush and Blair launch an illegal war on Iraq that kills innocent children – no ICC charges – but Putin moves children out of a war zone to safer locations and gets ICC charges. People in the UK will not be presented with this point by the BBC and other mainstream media, but you can guarantee that the Russian population will be made fully aware by its state controlled media.

  • Zachary Adam Barker 19th Mar '23 - 8:07pm

    “Bush and Blair launch an illegal war on Iraq that kills innocent children – no ICC charges – but Putin moves children out of a war zone to safer locations and gets ICC charges”

    How much of the territory of Iraq did Bush and Blair claim to annex Mel? None? Then the two cases are not comparable.

  • Mel Borthwaite 21st Mar '23 - 6:36pm

    @zachary Adam Barker
    On the contrary, the ICC charges relate to treatment of children rather than motivation for invasion. I don’t know how many Iraqi children died as a result of Bush and Blair’s illegal was but the fact the ICC ignore that but focus on the issue of moving children out of a war zone tells you all you need to know about the political bias of the ICC.

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