12-14-2020, 06:52 PM
DYING CAPITALISM & THE NEW FEUDALISM
December 14, 2020
https://goldswitzerland.com/dying-capita...-feudalism
Matthew Piepenburg
A CRITICAL TURNING POINT
CAPITALISM RE-ASSESSED
FAIR COMPETITION VS. A RIGGED GAME
TESLA, APPLE AND AMAZON—THE NEW CAPITALISM?
TWO AMERICAS, ZERO CAPITALISM
THE NEW FEUDALISM
BREAD & CIRCUS, FEAR & DIVISION
December 14, 2020
https://goldswitzerland.com/dying-capita...-feudalism
Matthew Piepenburg
American exceptionalism, as current COVID and capitalism disasters confirm, has morphed into a distortion that resembles more of a comorbidity than a guiding light. Despite a prior reputation for leading the world in innovation, problem solving and health care, the U.S. is witnessing record hospitalizations in a nation comprising 5% of the global population yet 25% of its COVID infections.
Regardless of one’s politics, the COVID crisis is now an open symptom of failure, not exceptionalism. The same is true of the current crisis facing American capitalism. In its purest form, capitalism is an exceptional system, yet sadly one that is morphing into something that is anything but exceptional.
A CRITICAL TURNING POINT
Regardless of legitimately debatable views on how individuals and policy makers (from central bankers to health organizations) have handled the pandemic, we can all agree that COVID represents a turning point. The question now is whether it will be a turning point for the worse or the better. One way to forecast this direction is by tracking the current health of U.S. capitalism.
CAPITALISM RE-ASSESSED
Today, with central banks engaged in open Wall Street socialism wherein artificially repressed rates and unlimited QE have directly benefited the two largest asset classes in America, namely real estate and stocks, we can’t deny the cause-and-effect powers (as well as beneficiaries) of such “accommodation.”
It’s an objective fact that 80 % of those assets are owned by the top 10%. Does that feel like capitalism working at a national level, or something far more targeted and far less “free-market” driven? The very concept of central-bank supported (and Congress-lobbied) capitalism is itself an oxymoron, and requires on honest re-assessment (and some hard questions) regarding the true meaning of capitalism.
Can any system, market or sector, for example, that is directly and exclusively supported by trillions in fiat money creation and decades of artificially repressed (and unnaturally low) interest rates by definition be labeled “free market,” “natural” or even “capitalistic”?
Be honest.
And has the $6+ trillion in Fed money creation since 2008 truly “trickled down” to the real economy or has it primarily benefited risk asset markets like stocks on the S&P 500…
or real estate owners and commission-based brokers: Again: Be honest.Whether you be in the top 10% or the bottom 10%, the answer to such primary questions is empirically obvious. Such asset price inflation (i.e. bubbles) in everything from tech stocks to beach front real estate is not symbolic of the lauded and natural “Darwinism” of competitive, free-market capitalism.
Instead, such bubbles for the top 10% and the consequent wealth disparity that followed for the rest of the country are dangerous indicators of a kind of post-modern feudalism wherein a questionable cabal of policy makers subsidizes a distinct minority of beneficiaries and then calls the result “economic stimulus” as the rest of the country gets poorer by the day.
But again, is that capitalism?
Capitalism, whether defined by Adam Smith or abused by Gordon Gecko, is a dynamic, full-body contact sport of almost blood-thirsty competition played on a level playing field of new ideas, equal capital costs and individual effort. In addition, true capitalism, the kind our fathers knew, was equally designed to create a broad rather than narrow class of winners and prosperity over time.
Do the above charts suggest a broad class of winners?
Capitalism, of course, should reward executives. But by how much?
Since 1978, CEO compensation has grown by 940%, whereas worker compensation for the same period has grown by 12%. In 1965, the average ratio of CEO to median employee salaries was 21:1, today it’s over 320:1. For Jeff Bezos at Amazon, the ratio is 1.2 million to 1. Is such data a sign of an evolving capitalism or an indicator of something far more disturbing?
FAIR COMPETITION VS. A RIGGED GAME
Unfortunately, there are other and increasingly clear signs of rigged policies (from the Fed, Congress, SEC or White House) which have less to do with fair competition and compensation—the keystones of healthy capitalism—and far more do with an extended yet media-ignored paradigm of favoritism—i.e. cheating.
Today, a kind of pseudo capitalism has emerged which is neither empathetic toward (or beneficial to) its host nation. Instead, we have a distorted model of capitalism whose benefits and empathies are uniquely targeted to a singular (parasitic?) group of companies, individuals and markets. For every member of Congress, for example, there are at least four financial lobbyists (from banks and big-tech) scurrying to influence (i.e. purchase) favorable policy decisions. This suggests healthy capitalism is under the influence of bribery not policy, and backroom deals rather than fair competition.
Of course, any system that is inherently rigged, like the 1919 World Series, is inherently flawed.
Capitalism, when rigged, is no less disgraceful. We see this rigged game playing out in real time as the weak majority get weaker and the strong minority get stronger in a backdrop that is not a capitalistic “survival of the fittest,” but rather a feudalistic survival of the best-connected. Record breaking wealth disparity as well as the open and shameful disconnect between a tanking economy and a rising (Fed-supported) securities market is not an homage to capitalism, but rather open proof of its failure.TESLA, APPLE AND AMAZON—THE NEW CAPITALISM?
Take Tesla. It’s a visionary company, but its stock has been skyrocketing on growth projections and historically low borrowing costs, easily managed by exaggerated share price inflation. In March, it was the 4th most valuable auto company in the world, today it is now the most valuable, worth more than Daimler, Toyota and Volkswagen combined. Or Apple. It took 12 years to get a $1 trillion market cap, but only 5 months to recently reach $2 trillion. Are such growth stories a consequence of fair, legitimate and natural free-market capitalism, or have they enjoyed an unfair advantage from the policy jocks?
Consider Amazon. With online sales skyrocketing as citizens are locked at home, Amazon has hired hundreds of thousands of minimum-wage warehouse workers to keep boxes coming to your doorsteps. We can applaud Amazon for its job creation and raising of the minimum wage. But let us not forget the larger picture in which AMAZON has gamified municipalities through its absurd HQ2 plan which transfers wealth from city police, fire and school districts to its shareholders. Nor should we forget that despite years of a profitless balance sheet and legal tax avoidance, Amazon’s share price bubble has allowed it to literally kill, gut and bury small businesses across the nation. At the same time, by owning the rails and engaging in anti-competitive behavior while dumping products and prices due to their access to cheap capital (against which no other companies can compete), Amazon has slaughtered rather than leveled the fair “playing field” upon which true capitalism was designed to be played.
Instead, names like Amazon, Tesla and Apple have prompted openly pro-capitalist thought leaders like Scott Galloway to question whether the pandemic was created, or at least co-opted, for taking the top 10% into the top 1% while sending the remaining 90% downward.
TWO AMERICAS, ZERO CAPITALISM
A recent study by the Robin Hood Foundation, for example, revealed that 32% of the people in New York, the homefield of Wall Street, have been forced to go to a food bank since the onset of the pandemic. That’s more people in the Empire State seeking free food than those who possess a college degree. Meanwhile, 1/3 of greater America is worried about paying their rent.
By pure math, we now live in a Dickensonian backdrop by which it is the “best of times” for a tiny minority (from Face-shot real estate brokers to Facebook tech investors) and the “worst of times” for the broader population. Is it truly fair to castigate the real America as “losers” in a so-called Capitalistic competition whose rigged rules and policies ensured who the winners would be before the game could even start?
The rigged game playing right under our noses in the U.S. is not free market capitalism, just as an S&P sitting atop a big, fat, $7+ trillion Fed air-bag, sure as hell aint a free market. Natural price discovery, as all honest Wall Street veterans know, died years ago. Nod to Greenspan, Bernanke, Yellen and Powell.
As a member of the Wall Street elite who benefited from such anti-capitalistic capitalism, I can’t ignore facts to alleviate a fake conscience. The simple truth is that current U.S. markets, competition and politics have nothing to do with fair competition and hence nothing to do with capitalism.
THE NEW FEUDALISM
As Galloway recently observed, “we are barreling toward a nation where 3 million lords are being served by 350 million serfs,” simply because US policy decided to favor corporations over populations as capitalism “collapses upon itself.”
Nor can this modern version of so-called capitalism rely on the “better angel” generosities of billionaires like Bezos or Musk to save the system. The moral character of overpaid CEO’s will not bring the dying middle class back to its glory days. Frankly, it’s up to the citizens themselves to get informed rather than angry. Knowledge begets better results than pitch forks.
America is falling not just because capitalism lost its way or policy-supported CEO’s lack the character and accountabilities of the past. It’s because citizens and their lobbied (bribed) leaders—red, blue and purple–have lost their sanity and are screaming at each other rather than opening a single economics, math, ethics, history or anti-trust book.
Today, the crowd gets its education from tweets and twits, not informed thoughts, sound leadership and patient knowledge or actual book reading.
BREAD & CIRCUS, FEAR & DIVISION
This, of course, makes the mal-informed majority (i.e. the bottom 90%) easier to trick and manipulate. Decision-makers on top, from ancient Rome to Herr Goebbels, have always understood, and hence exploited, such wide-spread ignorance.
In short, policy anti-heroes serve a mal-informed population a mixed cocktail of either: 1) bread & circus (from Netflix to celebrity virtue-signaling) or 2) fear (from “social-distancing” to COVID death rates) to keep the crowd ignorant, divided and afraid.
Today, most U.S. citizens are blind to the rudimentary basics of Fed policy, currency debasement, lobbying tricks, anti-trust principles, or even viral facts. Thus, as the middle-class flounders and a new financial feudalism replaces genuine capitalism, the mad crowd has no idea where to place its madness other than at each other in an historically divisive era of identity politics replacing anything resembling informed and unifying politics or policies.
Meanwhile, Amazon’s stock climbs as true capitalism crawls, and ancient assets like gold rise, as broken currencies like the dollar, fall. Such are the symptoms of modern feudalism. Get ready for more.
AMERICA's 'SUEZ MOMENT ' :
ANOTHER STRATEGIC MISTAKE WOULD BE ITS LAST
David Hearst
In 2021, President Joe Biden truly reaped a bitter harvest from the strategic foreign policy errors of four of his predecessors. But Washington would do well to think before it makes its next move.
"The chance of a global conflict involving real armies and real arms has never been higher. Biden should bear this in mind"
"America has just had its Suez Crisis," commented a member of the Iranian delegation at the nuclear talks in Vienna about the fall of Afghanistan to the Taliban, "but it has yet to see it."
It's not just the fall of Kabul.
In 2021, President Joe Biden truly reaped a bitter harvest from the strategic foreign policy errors of four of his predecessors. As he was the vice president for one of them, Barack Obama, he has trouble seeing this as well. The seeds of each of the major global conflict zones post - Afghanistan, Ukraine, Taiwan, and Iran were planted long ago.
It's not just the fall of Kabul. What unravelled this year was no less than three decades of bungled US global governanceWhat unravelled this year was no less than three decades of bungled US global governance.
Each US president in the post-Soviet period shared the belief that he had the file to himself. It was not something to be shared at the UN Security Council. He was the commander-in-chief of the largest, best-equipped and most mobile armed force in the world, one that could stage over the horizon attacks with devastating accuracy. The US president controls 750 military bases in 80 different countries. He also had the biggest pocket, the world's reserve currency, so, ergo, he could now set the rules.
What could possibly go wrong?
With that belief came two assumptions that proved to be fatally flawed: that the US monopoly on the use of force would last forever - it ended with Russia's intervention in Syria - and that the US could continue to enforce a "rules-based" world order - so long as it continued to make the rules. Biden has quietly buried both assumptions by admitting that great powers will be forced to "manage" their competition to avoid conflict that no one can win. But hang on a moment. There is something not quite right here.
The cause and effect theory
Major conflicts, which have the potential to produce tank battles not seen since World War II, like Ukraine, do not just happen. There is cause and effect. The cause was the unilateral but at the time uncontroversial decision to expand Nato eastwards in the 1990s, abandoning the model of a largely demilitarised and missile-free Eastern Europe that had been discussed with president Mikhail Gorbachev a decade earlier. Why global conflict is no longer unthinkable.
This was done to give new meaning to Nato, a military pact whose purpose died when its enemy did. Complete rubbish was talked about Nato "cementing" democracy in Eastern Europe by guaranteeing its independence from Moscow. But remember the mood at the time. It was triumphalist. Not only was capitalism the only economic system left, but its neo-liberal brand was the only brand worth promoting.
For a brief moment, Moscow became an eastern gold rush, a Klondike for venture capitalists, Ikea, Carrefour, Irish pubs, and bible bashers. The Russians, meanwhile, were obsessed with designer labels, not politics.
The Americans in Moscow - at the time - did not bother
much about what their hosts thought or did. Russia became irrelevant on the international stage. US advisers boasted about writing the decrees the Russian president Boris Yeltsin issued. And Yeltsin returned the favour by handing over the designs of the latest Russian tank and the wiring diagram of bugs placed by the KGB in the concrete foundation of an extension being built in the US embassy.
Then-US president George Bush and his Soviet counterpart Mikhail Gorbachev after a two-day US-Soviet summit dedicated to disarmament, on 31 July 1991 (AFP)For Russian nationalists, this was nothing less than an act of treason. But doors were open so wide to the West that literally everything that was not nailed down flew through them - nuclear scientists, missile engineers, the cream of the KGB, and suitcases full of cash. Where do you think the Russians who settled in Highgate in North London, or the Hamptons on Long Island, or Cyprus,
or Israel got their money from? For a time, even the word "West" dropped out of Russian political vocabulary because the new Russians thought they had just joined it.
Ukraine, the West's victim
The first US ambassador to the newly created Russian Federation, Robert Strauss, spent more time defending what happened in the Kremlin than the White House. Western embassies became spokesmen for a Russia they thought they now owned.
It is now in the US' strategic interest to staunch any more bloodletting in the battlefields it created this century. Strauss downplayed the first reports of the rise of the Russian mafia state, as a mere bagatelle. "This is what Chicago was like in the 20s," he told me. This was followed by inanities about the green shoots of democracy and the time it took to mow an English lawn. As if he knew.
Bill Clinton and Tony Blair were similarly blasé about what they did in Russia.The Russian army was "a joke". When the Russians sent their armoured columns into Grozny in December 1994, the West thought it could be stopped by small bands of determined Chechens; their pilots had only three hours flying time each month: their frigates sailed in pairs - one to patrol, the second to tow back the first one when it broke down; their submarines sunk.And so Nato pushed eastwards.
No one at the time bought the argument that all Nato would do was to push the line of confrontation eastwards. Russia's pleas to negotiate a security architecture for Eastern Europe fell on deaf ears. They are not falling on deaf ears now, with 90,000 Russian troops massed on Ukraine's borders.
The victim of this gross act of western stupidity was Ukraine, which for at least the first decade after the fall of the Soviets had survived intact and largely in peace. Civil wars raged all around it, but Ukraine itself maintained its political and social unity despite being comprised of very different communities. With the exception of Western Ukraine, which never forgot that it had been captured by the Bolsheviks from the crumbling Austro-Hungarian empire, Russian and Ukrainian speakers lived in peace.
Now it is divided forever, scared by a civil war from which it will never recover. Ukraine will never regain its lost unity, and for that, Brussels is as much to thank as the bully boys from Moscow.
Ukrainian servicemen take part in the joint Rapid Trident military exercises with the US and other Nato countries not far from Lviv, on 24 September 2021 (AFP)
The new cold war
Then there is China. Pivoting eastwards surely did not mean ending one Cold War and starting a new one with China, but that too is inexorably happening. Biden cannot decide whether to calm President Xi down or confront him, but doing each in sequence will not work.
To get a measure of what mainland China feels when British warships sail through the Taiwan Strait, how would Britain react if Chinese warships appeared in the Irish Sea and sailed between Scotland and Northern Ireland? How to avert a global conflict between China, Russia and the West
The game of "managing" competition has human consequences as devastating as the superpower triumphalism of the 1990s, and those can be observed in Afghanistan today. The Afghanistan of the ousted Afghani president Ashraf Ghani truly was a Potemkin village, a facade of independent statehood.
An astonishing 300,000 troops and soldiers on its government's books did not exist. "Ghost soldiers" were added to official lists so that generals would pocket their wages, Afghanistan’s former finance minister Khalid Payenda told the BBC. The black hole of the former corrupt regime's finances was an open secret long before Biden set a date for withdrawal. A report for the US special inspector general for Afghanistan (SIGAR) warned in 2016: "Neither the United States nor its Afghan allies know how many Afghan soldiers and police actually exist, how many are in fact available for duty, or, by extension, the true nature of their operational capabilities."
Now that the tap of US income has been turned off, Afghanistan is on the verge of a nationwide famine. But, incredibly, the US is blaming this situation on the Taliban. It withholds money on the grounds of human rights, the night-time revenge killings on former state employees, or the suppression of education for women.Much of the Afghan central bank's $10bn in assets is parked overseas, including $1.3bn in gold reserves in New York. The US Treasury is using this money as a lever to pressure the Taliban on women's rights and the rule of law. It has granted a licence to the US government and its partners to facilitate humanitarian aid and it gave Western Union permission to resume processing personal remittances from migrants overseas.
But the US does not hold itself to account for having nurtured
a state that cannot function without the money that it is now withholding. The US has direct responsibility for the famine that is now taking place in Afghanistan. To withhold money from the Taliban because they took power militarily, rather than negotiate their re-entry with other Afghan warlords, also wears somewhat thin.
Same story
The Taliban walked into Kabul with barely a shot fired because everything crumbled before them. The speed of the collapse of Afghan forces blindsided everybody - even Pakistan’s Inter-Services Intelligence (ISI), who are accused by India and western governments of running the Haqqani network of the Taliban. The only country that really knew what was happening was Iran, because officers of the Islamic Revolutionary Guard Corps (IRGC) were with the Taliban as they walked in, according to Iranian sources close to the IRGC.
A child cries on a sidewalk in Kabul, on 27 December 2021 (AFP) Even the ISI were blindsided by the speed of this collapse. An informed source told me in Islamabad: "We had expected the NDS [National Directorate of Security] to put up a fight in Mazar-i-Sharif, Herat, Kandahar and Kunduz. That would have produced a stalemate and the possibility for negotiation a more inclusive government."But we are where we are. "There were some improvements in the last 20 years. There was a middle class in Kabul, women's education. But if you want to lose everything, this is the way to do it. The Taliban will go hardline if the place runs out of money. If you want to protect the liberal elements, you have to make Afghanistan stable."
Pivoting eastwards surely did not mean ending one Cold War and starting a new one with China, but that too is inexorably happening.
The Pakistani source listed 10 jihadi groups, as opposed to the one jihadi group, al-Qaeda, that was around in 2001. And the ISI do not know what happened to the arms the Americans left behind.
"We simply don't know in whose hands they have ended up,"
he said. When they pressed the Taliban on forming an inclusive government, the Taliban shot back at them: "Do you have an inclusive government? Do you have a government that includes the PML-N? What do you think it would be like in Pakistan if you had to reconcile groups of fighters who had killed each other’s sons and cousins?"
Starved of funds, there is only one way for the breakaway groups to go - into the hands of the jihadists. He ended his analysis with the following thought: is it really in the US interest to stabilise Afghanistan? If they let the money through, it would mean supporting the very axis of China, Russia and Pakistan that they were now determined to push back. The faltering talks in Vienna, the crisis on Ukraine's border, renewed tension and military posturing in Taiwan, are all part of the same story.
Strategic mistakes
Washington would do well to look at the map of the world and think before it makes its next move. A long period of reflection is needed. Thus far it has obtained the dubious distinction of getting every conflict it has engaged with in this century wrong. The US has entered a new era where it can no longer change regimes by force of arms or sanctions. The chance of a global conflict involving real armies and real arms has never been higher and the tripwire to using weapons of mass destruction has never been strung tighter. Nor have all the world's military powers been better armed, able and willing to start their own inventions. Biden should bear this in mind.
It is now in the US' strategic interest to staunch any more bloodletting in the battlefields it created this century. That means the US should come to a deal with Iran by lifting the sanctions it imposed on Tehran since the 2015 JCPOA. If it wants to balance the growing Chinese and Russian influence in the Middle East, that is the surest way to do it. Iran is not going to give up its missiles any more than Israel is going to ground its air force. But a deal in Vienna could be a precursor to regional Gulf security negotiations. The Emiratis, Qataris, Omanis and Kuwaitis are all ready for it. If Washington wants to apply rules, let it do so first with its allies, who have extraordinary impunity for their brutal actions.
If Washington is the champion of human rights it claims to be, start with Saudi Arabia or Egypt. If it is the enforcer of international law, let's see Washington make Israel pay a price for its continued settlement policy, which makes a mockery of UN Security Council resolutions, and the US' own policy for a resolution to the Palestinian conflict. The Abraham Accords were devised to establish Israel as America's declared and open regional surrogate. Had Donald Trump secured a second term, such a policy would have been a disaster for US strategic interests in the Middle East. Already Israel thinks it has a veto on US decision making in the region. With this policy fully in place, it would have been in charge of it, which would have meant permanent conflict created by a military power that always strikes first.
Israel acts with ruthless logic. It will use any opportunity to expand its borders until a Palestinian state becomes an impossibility. It probably has already succeeded in that aim. However, this is not US policy. But this expansion continues, almost week in, week out, because no one in Washington will lift a finger to stop it. Doing nothing about armed lynch mobs of settlers attacking unarmed Palestinian villagers in the West Bank is the same as agreeing to them.
If you want to be a champion of rules, apply those rules to yourself first. This is the only way
to regain lost global authority. The US has entered a new era where it can no longer change regimes by force of arms or sanctions. It has discovered the uselessness of force. It should drop the stick and start handing out bucket loads of carrots. It should get on with the urgent task of deconfliction.
After the damage done this century by conflicts ordered, created and backed by US presidents - Afghanistan, Iraq, Syria, Yemen, Libya - that is not only a responsibility but a duty. Another US strategic mistake would be its, and Western Europe's, last.
ANOTHER STRATEGIC MISTAKE WOULD BE ITS LAST
David Hearst
In 2021, President Joe Biden truly reaped a bitter harvest from the strategic foreign policy errors of four of his predecessors. But Washington would do well to think before it makes its next move.
"The chance of a global conflict involving real armies and real arms has never been higher. Biden should bear this in mind"
"America has just had its Suez Crisis," commented a member of the Iranian delegation at the nuclear talks in Vienna about the fall of Afghanistan to the Taliban, "but it has yet to see it."
It's not just the fall of Kabul.
In 2021, President Joe Biden truly reaped a bitter harvest from the strategic foreign policy errors of four of his predecessors. As he was the vice president for one of them, Barack Obama, he has trouble seeing this as well. The seeds of each of the major global conflict zones post - Afghanistan, Ukraine, Taiwan, and Iran were planted long ago.
It's not just the fall of Kabul. What unravelled this year was no less than three decades of bungled US global governanceWhat unravelled this year was no less than three decades of bungled US global governance.
Each US president in the post-Soviet period shared the belief that he had the file to himself. It was not something to be shared at the UN Security Council. He was the commander-in-chief of the largest, best-equipped and most mobile armed force in the world, one that could stage over the horizon attacks with devastating accuracy. The US president controls 750 military bases in 80 different countries. He also had the biggest pocket, the world's reserve currency, so, ergo, he could now set the rules.
What could possibly go wrong?
With that belief came two assumptions that proved to be fatally flawed: that the US monopoly on the use of force would last forever - it ended with Russia's intervention in Syria - and that the US could continue to enforce a "rules-based" world order - so long as it continued to make the rules. Biden has quietly buried both assumptions by admitting that great powers will be forced to "manage" their competition to avoid conflict that no one can win. But hang on a moment. There is something not quite right here.
The cause and effect theory
Major conflicts, which have the potential to produce tank battles not seen since World War II, like Ukraine, do not just happen. There is cause and effect. The cause was the unilateral but at the time uncontroversial decision to expand Nato eastwards in the 1990s, abandoning the model of a largely demilitarised and missile-free Eastern Europe that had been discussed with president Mikhail Gorbachev a decade earlier. Why global conflict is no longer unthinkable.
This was done to give new meaning to Nato, a military pact whose purpose died when its enemy did. Complete rubbish was talked about Nato "cementing" democracy in Eastern Europe by guaranteeing its independence from Moscow. But remember the mood at the time. It was triumphalist. Not only was capitalism the only economic system left, but its neo-liberal brand was the only brand worth promoting.
For a brief moment, Moscow became an eastern gold rush, a Klondike for venture capitalists, Ikea, Carrefour, Irish pubs, and bible bashers. The Russians, meanwhile, were obsessed with designer labels, not politics.
The Americans in Moscow - at the time - did not bother
much about what their hosts thought or did. Russia became irrelevant on the international stage. US advisers boasted about writing the decrees the Russian president Boris Yeltsin issued. And Yeltsin returned the favour by handing over the designs of the latest Russian tank and the wiring diagram of bugs placed by the KGB in the concrete foundation of an extension being built in the US embassy.
Then-US president George Bush and his Soviet counterpart Mikhail Gorbachev after a two-day US-Soviet summit dedicated to disarmament, on 31 July 1991 (AFP)For Russian nationalists, this was nothing less than an act of treason. But doors were open so wide to the West that literally everything that was not nailed down flew through them - nuclear scientists, missile engineers, the cream of the KGB, and suitcases full of cash. Where do you think the Russians who settled in Highgate in North London, or the Hamptons on Long Island, or Cyprus,
or Israel got their money from? For a time, even the word "West" dropped out of Russian political vocabulary because the new Russians thought they had just joined it.
Ukraine, the West's victim
The first US ambassador to the newly created Russian Federation, Robert Strauss, spent more time defending what happened in the Kremlin than the White House. Western embassies became spokesmen for a Russia they thought they now owned.
It is now in the US' strategic interest to staunch any more bloodletting in the battlefields it created this century. Strauss downplayed the first reports of the rise of the Russian mafia state, as a mere bagatelle. "This is what Chicago was like in the 20s," he told me. This was followed by inanities about the green shoots of democracy and the time it took to mow an English lawn. As if he knew.
Bill Clinton and Tony Blair were similarly blasé about what they did in Russia.The Russian army was "a joke". When the Russians sent their armoured columns into Grozny in December 1994, the West thought it could be stopped by small bands of determined Chechens; their pilots had only three hours flying time each month: their frigates sailed in pairs - one to patrol, the second to tow back the first one when it broke down; their submarines sunk.And so Nato pushed eastwards.
No one at the time bought the argument that all Nato would do was to push the line of confrontation eastwards. Russia's pleas to negotiate a security architecture for Eastern Europe fell on deaf ears. They are not falling on deaf ears now, with 90,000 Russian troops massed on Ukraine's borders.
The victim of this gross act of western stupidity was Ukraine, which for at least the first decade after the fall of the Soviets had survived intact and largely in peace. Civil wars raged all around it, but Ukraine itself maintained its political and social unity despite being comprised of very different communities. With the exception of Western Ukraine, which never forgot that it had been captured by the Bolsheviks from the crumbling Austro-Hungarian empire, Russian and Ukrainian speakers lived in peace.
Now it is divided forever, scared by a civil war from which it will never recover. Ukraine will never regain its lost unity, and for that, Brussels is as much to thank as the bully boys from Moscow.
Ukrainian servicemen take part in the joint Rapid Trident military exercises with the US and other Nato countries not far from Lviv, on 24 September 2021 (AFP)
The new cold war
Then there is China. Pivoting eastwards surely did not mean ending one Cold War and starting a new one with China, but that too is inexorably happening. Biden cannot decide whether to calm President Xi down or confront him, but doing each in sequence will not work.
To get a measure of what mainland China feels when British warships sail through the Taiwan Strait, how would Britain react if Chinese warships appeared in the Irish Sea and sailed between Scotland and Northern Ireland? How to avert a global conflict between China, Russia and the West
The game of "managing" competition has human consequences as devastating as the superpower triumphalism of the 1990s, and those can be observed in Afghanistan today. The Afghanistan of the ousted Afghani president Ashraf Ghani truly was a Potemkin village, a facade of independent statehood.
An astonishing 300,000 troops and soldiers on its government's books did not exist. "Ghost soldiers" were added to official lists so that generals would pocket their wages, Afghanistan’s former finance minister Khalid Payenda told the BBC. The black hole of the former corrupt regime's finances was an open secret long before Biden set a date for withdrawal. A report for the US special inspector general for Afghanistan (SIGAR) warned in 2016: "Neither the United States nor its Afghan allies know how many Afghan soldiers and police actually exist, how many are in fact available for duty, or, by extension, the true nature of their operational capabilities."
Now that the tap of US income has been turned off, Afghanistan is on the verge of a nationwide famine. But, incredibly, the US is blaming this situation on the Taliban. It withholds money on the grounds of human rights, the night-time revenge killings on former state employees, or the suppression of education for women.Much of the Afghan central bank's $10bn in assets is parked overseas, including $1.3bn in gold reserves in New York. The US Treasury is using this money as a lever to pressure the Taliban on women's rights and the rule of law. It has granted a licence to the US government and its partners to facilitate humanitarian aid and it gave Western Union permission to resume processing personal remittances from migrants overseas.
But the US does not hold itself to account for having nurtured
a state that cannot function without the money that it is now withholding. The US has direct responsibility for the famine that is now taking place in Afghanistan. To withhold money from the Taliban because they took power militarily, rather than negotiate their re-entry with other Afghan warlords, also wears somewhat thin.
Same story
The Taliban walked into Kabul with barely a shot fired because everything crumbled before them. The speed of the collapse of Afghan forces blindsided everybody - even Pakistan’s Inter-Services Intelligence (ISI), who are accused by India and western governments of running the Haqqani network of the Taliban. The only country that really knew what was happening was Iran, because officers of the Islamic Revolutionary Guard Corps (IRGC) were with the Taliban as they walked in, according to Iranian sources close to the IRGC.
A child cries on a sidewalk in Kabul, on 27 December 2021 (AFP) Even the ISI were blindsided by the speed of this collapse. An informed source told me in Islamabad: "We had expected the NDS [National Directorate of Security] to put up a fight in Mazar-i-Sharif, Herat, Kandahar and Kunduz. That would have produced a stalemate and the possibility for negotiation a more inclusive government."But we are where we are. "There were some improvements in the last 20 years. There was a middle class in Kabul, women's education. But if you want to lose everything, this is the way to do it. The Taliban will go hardline if the place runs out of money. If you want to protect the liberal elements, you have to make Afghanistan stable."
Pivoting eastwards surely did not mean ending one Cold War and starting a new one with China, but that too is inexorably happening.
The Pakistani source listed 10 jihadi groups, as opposed to the one jihadi group, al-Qaeda, that was around in 2001. And the ISI do not know what happened to the arms the Americans left behind.
"We simply don't know in whose hands they have ended up,"
he said. When they pressed the Taliban on forming an inclusive government, the Taliban shot back at them: "Do you have an inclusive government? Do you have a government that includes the PML-N? What do you think it would be like in Pakistan if you had to reconcile groups of fighters who had killed each other’s sons and cousins?"
Starved of funds, there is only one way for the breakaway groups to go - into the hands of the jihadists. He ended his analysis with the following thought: is it really in the US interest to stabilise Afghanistan? If they let the money through, it would mean supporting the very axis of China, Russia and Pakistan that they were now determined to push back. The faltering talks in Vienna, the crisis on Ukraine's border, renewed tension and military posturing in Taiwan, are all part of the same story.
Strategic mistakes
Washington would do well to look at the map of the world and think before it makes its next move. A long period of reflection is needed. Thus far it has obtained the dubious distinction of getting every conflict it has engaged with in this century wrong. The US has entered a new era where it can no longer change regimes by force of arms or sanctions. The chance of a global conflict involving real armies and real arms has never been higher and the tripwire to using weapons of mass destruction has never been strung tighter. Nor have all the world's military powers been better armed, able and willing to start their own inventions. Biden should bear this in mind.
It is now in the US' strategic interest to staunch any more bloodletting in the battlefields it created this century. That means the US should come to a deal with Iran by lifting the sanctions it imposed on Tehran since the 2015 JCPOA. If it wants to balance the growing Chinese and Russian influence in the Middle East, that is the surest way to do it. Iran is not going to give up its missiles any more than Israel is going to ground its air force. But a deal in Vienna could be a precursor to regional Gulf security negotiations. The Emiratis, Qataris, Omanis and Kuwaitis are all ready for it. If Washington wants to apply rules, let it do so first with its allies, who have extraordinary impunity for their brutal actions.
If Washington is the champion of human rights it claims to be, start with Saudi Arabia or Egypt. If it is the enforcer of international law, let's see Washington make Israel pay a price for its continued settlement policy, which makes a mockery of UN Security Council resolutions, and the US' own policy for a resolution to the Palestinian conflict. The Abraham Accords were devised to establish Israel as America's declared and open regional surrogate. Had Donald Trump secured a second term, such a policy would have been a disaster for US strategic interests in the Middle East. Already Israel thinks it has a veto on US decision making in the region. With this policy fully in place, it would have been in charge of it, which would have meant permanent conflict created by a military power that always strikes first.
Israel acts with ruthless logic. It will use any opportunity to expand its borders until a Palestinian state becomes an impossibility. It probably has already succeeded in that aim. However, this is not US policy. But this expansion continues, almost week in, week out, because no one in Washington will lift a finger to stop it. Doing nothing about armed lynch mobs of settlers attacking unarmed Palestinian villagers in the West Bank is the same as agreeing to them.
If you want to be a champion of rules, apply those rules to yourself first. This is the only way
to regain lost global authority. The US has entered a new era where it can no longer change regimes by force of arms or sanctions. It has discovered the uselessness of force. It should drop the stick and start handing out bucket loads of carrots. It should get on with the urgent task of deconfliction.
After the damage done this century by conflicts ordered, created and backed by US presidents - Afghanistan, Iraq, Syria, Yemen, Libya - that is not only a responsibility but a duty. Another US strategic mistake would be its, and Western Europe's, last.