Taking a wider view; the Putin/Biden summit

Looking back in time

Jun 13, 2021

We are marching right, two, three, four, …

Here is my first “real” publication. I expect them to be shorter in future, but I thought I’d start with a deeper dive into how I view modern geopolitics.

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There is much talk of the upcoming meeting set for 2021-06-16 in Geneva between the current USA president Biden and his Russian counterpart Putin. Whilst it is quite appropriate to look at this in light of recent geopolitical events, be they military conflicts (Ukraine, Syria) or economic conflicts (Iran, Venezuela, Syria) or the recent announcement by Russia of its new missile technologies, I think it is useful to look back a little further in time before considering more recent events.

During WWII the US established a world economic order which would come into being post war in the form of the Bretton Woods Agreement. This was combined with the rebirth of the League of Nations as the United Nations. Aligned with the UN was the World Bank which was tasked with financing the reconstruction of infrastructure which had been destroyed during the war. Its sister organisation, the International Monetary Fund was tasked with stabilising the international financial system. These were bold initiatives and served well for some time.

However, the elephant in the room was the US, which essentially had designed this system and had around half of the world economy (50% of global GDP) at the end of the war and was the only major power the had only suffered mildly during the war. It now sat atop the world order and began its period of dominance.

On the one hand the UN/WB/IMF served US allies reasonably well, and allowed US greater influence during the rebuilding of Germany, Japan and Italy. There was a parallel problem; the dissolution of the British and French empires. The problem here was that many of these newly independent states chose a more socialist form of government policy than the US liked. As Major General Smedley Butler has observed, the US military has always been the enforcement arm of the US financial elites ("War is a Racket"). The US now had a reorganised military and covert operations wing due to the 1947 National Security Act. It was the covert arm that became the key enforcer of ensuring that US business interests were met in this newly developing world, especially amongst the newly independent states released from their former colonial masters. The US would routinely overthrow governments which were not willing to give preferential treatment to its business interests, or for political ideological reasons. I cite Iran (1953), Guatemala (1954), Cuba (1961, a rare failure; see also JFK below), Indonesia (1965), Chile (1973) amongst a very long list of US led, sometimes with support from the UK, interventions. It is worth noting that many of these countries wanted to be part of a "non-aligned" group who wished to be independent from communist Russia and China, and the capitalist US. They wanted to choose their own way.

The US was doing rather horrid things at home too to any upstart who wants to change its political-economic system (Martin Luther King, Malcom X, John and Robert Kennedy, ...), not to mention its entrenched racism against its non-white population (Native/African/Latin Americans, ...).

Taking a look at "the other side" you have mass starvation in China due to a confluence of horrid mismanagement and unfortunate weather coupled with cultural repression in both China and Russia to say nothing of things happening under various dictators in Africa.

I mention these to show that there are no roses here. Plenty of nasty/horrid things were happening all over the world during this period of power reconfiguration, just as there had been before WWII under various colonial occupations. Take the multi-generational genocide of the Australian indigenous population as an horrific example.

Let’s fast forward to the 1990s in which the Soviet Union is dissolved and has its capital assets rapaciously stolen by both US and Russian oligarchs, whilst a massive investment is made in China following its move towards a mixed economy. I believe that what we are seeing today is informed by US behaviour from 1945 to 1990, but largely caused by the behaviour from 1990 to the present.

What we are seeing is the coming to fruition of Mackinder's Heartland theory. The "West" has always had a fear of an alliance between Germany and Russia for the two combined have excellent engineering/manufacturing skills and would have access to vast amounts of natural resources. Due to a quirk of fate or deft planning, or both, the result of the investment in China and China's insistence that it learn the technologies used by businesses that operate there (overtly or covertly), China is the new Germany, and now Russia is quasi-aligned with it. Thus, the heartland is born. Whilst Russia has twice been invaded by Europeans across the fields of eastern Europe, and thus Russia is very sensitive about these areas, the Chinese were given a "century of shame" as they were routinely abused by particularly the British and French, also other western operators (US families, for instance). I recommend learning about the Opium Wars (here for example) as a component of the period of embarrassment visited upon China by the West. So, just as Russia as a nation has a sensitivity to its western and south western borders (*), the Chinese have a sensitivity to not being abused by foreign powers. Just as every part of habitable earth has millennia of history (e.g Australia at least 60 000 years of human habitation), the Russian and Chinese have at least a millennia of documented history. Let us not forget that the Chinese invented paper about 2000 years ago.

Since the early 2010's China's economy was strong enough to plan to essentially build a new "Silk Road". This is known as the Bridge and Road (or Rail) Initiative or BRI. For a window into this and some of the structures behind it I recommend this editorial by James Corbett. Why would China spend all of this money to build transport infrastructure? Obviously, they need access to the raw materials which their manufacturing industries turn into secondary and tertiary products. Shipping is great, and it is a major part of BRI, but a diversified transport plan is less vulnerable to disruption. Not only will the BRI facilitate inflows of raw materials but also enable the outflow of trade products. The same is true in reverse; raw materials that China is in excess of can be exported and trade products which they cannot make enough of can be imported. It is a Trade Nework being built all across eastern and central asia and soon to encompass the Middle East, Africa and Europe. Thus, Heartland.

Now, this is obviously a huge threat to US hegemony. China already has an economy at least as large as the US' and is not saddled by such a huge debt. What both China and Russia have seen over the last two decades is that the US is "unreliable". It has not been behaving in ways that have any real strategic depth; it changes policies on a dime and creates problems for them both. Additionally, they have seen each other acting towards strategic goals, calmly. Thus, they make a more reliable partner, together with the fact that the BRI will strengthen them both.

A big problem they both have is the US' control over international financial infrastructure. For example when Russia asked that transactions in Visa or MasterCard be processed within Russia, the two companies said no, but soon got outplayed. This meant that US firms had all of the financial records of everyday Russians as they buy bread or bicycles, which in turn give these companies a potentially detailed understanding of the economics of Russia to the street level. Russia's response was to develop Mir, their own credit card company which is now available almost everywhere in Russia. Equivalently, Russia which has been suffering unilateral financial sanctions (illegal unless approved by the UN Security Council) by the US for decades. The system used to enforce this is SWIFT. Russia has feared being disconnected from this network and thus has formed a parallel SWIFT which can be activated very quickly if the US and its allies decide to do this. Of course, this would be a very costly act, and we come back to trade. Europe, particularly northern Europe is dependent upon Russian gas to power its electrical systems and heat its homes.

Earlier I said that the UN/WB/IMF had been doing a pretty good job for a while. In the end what happens is corruption; loans are made through the ruling elite of a country to build some infrastructure, on conditions. The infrastructure is built by companies, usually US but with local contractors. So, the IMF is paying US companies via the indebted country. The local elites have stakes in these local contractors and can thus benefit from the transaction, if they dont just outright steal some of it. The conditions are for "structural adjustments" which amounts to selling off local utilities (power, water etc.) to other US and/or multinational companies. Another classic example is food production. The deal is you, country X, can make cash crops like melons or oranges, but you are not allowed to grow grain. The grain must be purchased from "international markets" (i.e US subsidized grain producers). This is another form of foreign control. When a foreign entity has control of your utilities/food you have lost all autonomy. They can turn your lights off or starve your population. Both the Russians and Chinese (and many others, hi BRICS) has seen this behaviour and understand it for what it is; its a new empire building mechanism. Colonization via financial capital and foreign control of key industries, particularly energy production, utilities and food. Why do we need armies when we’ve got you by the everything your people need?

Here is where the rubber meets the road. Lets take Venezuela as an example. Its government had largely been in the hands of the US for generations (the "Monroe Doctrine") and its key industries were controlled by companies heavily influenced by US financial institutions or companies. At the beginning of the "Pink Tide", a sequence of government changes in Latin America towards a more socialist form of government policy, Hugo Chavez was elected as the president of the country. Although an elite military officer he came from a poor background, and did not forget his roots. Under his direction, despite numerous coup attempts by the US, he instigated policies to do crazy things like reduce poverty and increase literacy. He was so wildly successful that his achievements had to be acknowledged by the UN/WB/IMF. The other things that he did were the same things that caused the overthrow of numerous non-aligned governments; the nationalization of key industries and/or land reform. See Iran, Guatemala, .... This reduced US influence of and/or profits from these industries, and Chavez chose the industry most likely to annoy the US: Oil. So, despite numerous failed coup attempts going on for at least the last 15 years, the US proclaiming someone who had never even stood for election as the president as the president, having their sovereign gold impounded (stolen?) by a bank in the independently governed City of London, their embassy in Washington D.C. invaded by US law enforcement, the Venezuelan government under Chavez's named successor continued on. Meanwhile, US sanctions prevented US companies from processing Venezuelan oil, denying them profits. This is an example of the “irrational behaviour” of US foreign policy as witnessed by the world at large.

Now we re-connect with the IMF loan game. Venezuela has the largest reserves of oil on the planet, but it is a heavy crude which requires much refining to turn it into the lighter fuels which are far easier to burn. Venezuela is under sanctions from the US and is having a difficult time of it. China comes in and says, we'll give you a loan to be repaid in oil. We are not going to demand ownership of your infrastructure or dictate government policy. Now, I'm sure there were strictures attached, but they are almost certainly lighter than equivalents from the IMF. Thus, China is under-bidding the IMF.

THAT is the affront the US cannot permit.

Not only is China (in cahoots with Russia and Iran and anyone else who wants to escape the neo-colonial nexus) building BRI which will create a trading empire with which the US in unable to compete (largely due to its complete lack of investment in the exact same infrastructure which the Chinese are building), but those Chinese have the audacity to undermine the US' chief neo-colonial policy enforcement mechanism.

So, back to that Putin/Biden summit. They will emit statements about "issues of concern". I expect an initiative (**) for arms control because the US is years behind Russia on missile offense and defence. There will certainly be something about COVID-19 because that, although of short term importance, is completely irrelevant to larger strategic objectives. There’ll also be something about climate change. It will thus be an inconsequential mealy mouthed press release. The Russian ministries and diplomats know this already and will be annoyed at having to send one or two senior diplomats to Geneva to facilitate this gruel.

There will certainly be nothing about the slowly solidifying Mackinderesque trade block being developed from the South China Sea to the Baltic, because that is for the foreign policy wonks and not you plebes. Did I mention the announcement of the 25 year strategic alliance between China and Iran?

(*) Military planners understand geography because it is essential to troop movements and logistics. Why does Russia care so much about its western and south-western borders? Because that is the easiest way in! And, boy have they learnt about how to use that land to defend themselves, twice over. You could sail across the northern Pacific and fight the Siberian army that saved Moscow in frozen temperatures, or you can trek the Himalayas into Russia’s southern borders via the “stans”. Thus, Russia cares very much about its western and south-western borders and neighboring states for those routes are historically proven as the most accessible.

(**) This is a potentially very interesting thing. Russia has already done the research and spent the money on building and deploying these new missile offense/defence capabilities. I can expect them to wish to work on nuclear non-proliferation because they are not stupid. But, I expect them to avoid any curtailment of their recently developed Mach-10 capable missiles because that forces the US to spend money on their development. This is a reverse end of the Soviet Union; i.e Russia can now add to China's economic dominance by forcing the US to economically weaken itself in this effort, and doubly so by providing the Chinese with the earlier generations of this technology, which I am confident they have done already.

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