Struggling to Find the Exit From War
GPF-Friedman:Struggling to Find the Exit From War
By?George Friedman?- June 7, 2022
French President Emmanuel Macron said last week that an off-ramp must be found for Russian President Vladimir Putin in Ukraine. This is not a novel idea. Negotiators know what they must have and what they must leave on the table for the other party. That’s the way it is done when passionate hatred doesn’t reign. Consider your friends’ divorce negotiations. The goal of each party was many times not to find a reasonable exit but rather to inflict as much pain as possible on the other one. A skillful lawyer might find an exit ramp and convince them to take it. But war can be more bitter than the angriest divorce. Taking the exit ramp can be seen as a betrayal of the dead. Ukrainians will point to their dead and be appalled by providing Putin with a gracious exit. Russia’s problem is even graver. In order to exit regardless of the ramp, they will be conceding that the invasion of Ukraine was a mistake. Sometimes it is easier to move beyond the dead than it is to admit error.
Any peace agreement founders on Putin’s miscalculation. He launched the war expecting Ukraine to be incapable of waging war, believing that NATO and Europe would refuse to form a united front, and miscalculating the economic power the United States might muster against Russia or the massive amount of weapons it was prepared to provide.
This can be seen in the initial deployment of Russian armor. One force attacked from Belarus toward Kyiv. Another came out of Crimea moving toward Odesa, and another was moving into the Donbas in the east. The Russians were moving to seize the entire country in a single coordinated attack. There appears to be little thought given to resistance. Before the war began, the United Kingdom sent Ukraine Javelin anti-tank missiles, precisely the right weapon to blunt the Russian attack. The Ukrainians used them well and formed forces to resist what Russian infantry was supporting the tanks.
In Putin’s assumptions, there was a fundamental geopolitical error. The attack was on Ukraine, and it was assumed by observers that his entire intent was to take Ukraine. Putin’s mistake was not putting himself in the place of the Europeans and Americans, in not viewing the battlefield through their eyes – a rookie error.
The Europeans in particular had to ask this question: What happens after Ukraine? If the Russians enveloped and controlled Ukraine, what would they do next? The Russians had spoken of the threat posed by NATO. That was their justification for the invasion of Ukraine. But taking Ukraine did not solve the NATO problem. Rather, it brought the Russians to the border of NATO from the Baltic to the Black Sea. Russia’s intent was unclear. Russia’s potential threat was clearer. Russia might not intend a move against NATO on its new western border, but it was altogether possible that military success in Ukraine would give them the opportunity and confidence to strike directly against Russia’s stated enemy, NATO. Had Moscow swept Ukraine with the first armored strike, Russia would be seen as a great power, one that had to be placated, not resisted.
I don’t know what went through the minds of NATO and national planners, but the idea that Putin would stop at Ukraine and Belarus’ border was not self-evident. In any case, most of Europe and the United States acted as if preventing Russia’s occupation of Ukraine was essential to their own national defense. Substantial cost was spent to weaken Russia militarily and economically. If Putin’s enemy was NATO, these actions were essential.
So far, the actions have worked. Russia is fighting in eastern Ukraine, far away from the borders of NATO. The war is less about European grand strategy than about showing that Russia is capable of achieving a regional victory, and then forcing Ukraine into accepting a peace that Russia can claim as victory, at least domestically. The war is now very much about Putin’s judgment and expertise. It was said that Soviet leader Nikita Khrushchev was ousted because of hare-brained scheming. The post-communist regime justified itself by competence rather than ideology. Russia was to be a technocracy claiming expertise. Ukraine can certainly be regarded – thus far – as a hare-brained scheme to the extreme. Putin overestimated his military, underestimated his enemy and failed to grasp how identifying NATO as an enemy would provoke a massive response. He should have seen all of these things. He didn’t.
He has spoken of using missiles against Ukraine. Air-launched explosives have been used since World War II, and though they have had a significant effect in wars such as Vietnam, they didn’t end either conflict. In war, the enemy’s territory must be seized and held. Putin’s talk of missiles will not substitute for substandard ground combat.
Putin cannot accept peace while he appears to be incompetent, whether because of mounting opposition or his place in history. Macron’s off-ramp for Putin is an illusion. He has no off-ramp that doesn’t lead to an abyss. He cannot reach a peace agreement until he demonstrates – convincingly and not by his assertion – that his initial failures have been recovered. He must not only cripple the Ukrainian army but also seize a significant part of Ukraine. And he must do this in a way that eliminates the economic warfare he faces. It is not impossible that he has a massive reserve unknown to Western intelligence and will move with it. But if that reserve exists then he would surely have hurled it into battle before now. Perhaps the Europeans will opt out, but the German vote on rearmament doesn’t indicate a major move to the exits.
It should be remembered that war is filled with shifts. The Ukrainian forces have been engaged in intense combat on many fronts. Their troops clearly have greater morale than Russian troops, and morale, as Napoleon noted, is a key dimension of war. Months of intense conflict involving a significant portion of Ukrainian troops can break morale. But fighting for the homeland, fighting on the defensive and fighting with superior American weapons have thus far made the Ukrainian army more effective and perhaps less exhausted than the Russians. The Ukrainian weak point is that the United States in particular could halt weapons flows or ease the economic war on Russia. A peace negotiation is now an option for Ukraine. In this case, it would be essential. But the United States now needs Ukraine buffering Russia from Europe and is unlikely to shift strategy at this point.
The geopolitical point is that Russia has failed to take Ukraine or split NATO. The political fact is that Putin has failed. He cannot achieve his strategic goals. He has welded NATO into a solid force it hasn’t been for a long time. More important, he has governed as the final authority on all things. The last is the bog he is caught in. He may blame others, but his country will blame him. That means that unlike the harshest divorce, he cannot concede without destroying himself. He will continue to fight. He has no one to answer to unless the regime evolves. There can be peace only if it is understood by Putin that in due course he will enter history.
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Vatikan News: Russland: Metropolit Hilarion überraschend abberufen
Die russisch-orthodoxe Kirche hat überraschend den Leiter ihres Au?enamtes, Metropolit Hilarion (55), abberufen. Das Leitungsgremium, der vom Moskauer Patriarchen Kyrill I. geleitete Heilige Synod, ernannte am Dienstag den Metropoliten von Korsun und Westeuropa, Antonij (Sevrjuk) (37), zu seinem Nachfolger.
Metropolit Antonij hatte im M?rz 2009 die Leitung des wichtigen Au?enamtes von Kyrill übernommen, nachdem dieser zwei Monate zuvor zum Patriarchen gew?hlt worden war. Er galt als die Nummer Zwei der russisch-orthodoxen Kirche und pr?gte ihre Beziehungen zu den anderen orthodoxen Kirchen und den ?kumenischen Dialog mit der katholischen Kirche und anderen Konfessionen. Der Heilige Synod ernannte Hilarion zum neuen Metropoliten der Di?zese (Eparchie) Budapest und Ungarn.
Der neue Au?enamtschef Antonij war einst pers?nlicher Sekret?r von Patriarch Kyrill. Er gilt seit 2004 als einer seiner engsten Vertrauten. Erzbischof Antonij war zudem von Anfang 2018 bis Mitte 2019 russisch-orthodoxer Bischof von ?sterreich.
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World Bank: Stagflation Risk Rises Amid Sharp Slowdown in Growth
War in Ukraine leading to higher inflation, tighter financial conditions
WASHINGTON, June 07, 2022—Compounding the damage from the COVID-19 pandemic, the Russian invasion of Ukraine has magnified the slowdown in the global economy, which is entering what could become a protracted period of feeble growth and elevated inflation, according to the World Bank’s latest?Global Economic Prospects?report. This raises the risk of stagflation, with potentially harmful consequences for middle- and low-income economies alike.
Global growth is expected to slump from 5.7 percent in 2021 to 2.9 percent in 2022— significantly lower than 4.1 percent that was anticipated in January. It is expected to hover around that pace over 2023-24, as the war in Ukraine disrupts activity, investment, and trade in the near term, pent-up demand fades, and fiscal and monetary policy accommodation is withdrawn. As a result of the damage from the pandemic and the war, the level of per capita income in developing economies this year will be nearly 5 percent below its pre-pandemic trend.
“The war in Ukraine, lockdowns in China, supply-chain disruptions, and the risk of stagflation are hammering growth. For many countries, recession will be hard to avoid,” said World Bank President?David Malpass. “Markets look forward, so it is urgent to encourage production and avoid trade restrictions. Changes in fiscal, monetary, climate and debt policy are needed to counter capital misallocation and inequality.”
The June?Global Economic Prospects?report offers the first systematic assessment of how current global economic conditions compare with the stagflation of the 1970s—with a particular emphasis on how stagflation could affect emerging market and developing economies. The recovery from the stagflation of the 1970s required steep increases in interest rates in major advanced economies, which played a prominent role in triggering a string of financial crises in emerging market and developing economies.
“Developing economies will have to balance the need to ensure fiscal sustainability with the need to mitigate the effects of today’s overlapping crises on their poorest citizens,”?said?Ayhan Kose,?Director of the World Bank’s Prospects Group.?“Communicating?monetary policy decisions clearly, leveraging credible monetary policy frameworks, and protecting central bank independence can effectively anchor inflation expectations and reduce the amount of policy tightening required to achieve the desired effects on inflation and activity.”??
The current juncture resembles the 1970s in three key aspects: persistent supply-side disturbances fueling inflation, preceded by a protracted period of highly accommodative monetary policy in major advanced economies, prospects for weakening growth, and vulnerabilities that emerging market and developing economies face with respect to the monetary policy tightening that will be needed to rein in inflation.
However, the ongoing episode also differs from the 1970s in multiple dimensions: the dollar is strong, a sharp contrast with its severe weakness in the 1970s; the percentage increases in commodity prices are smaller; and the balance sheets of major financial institutions are generally strong. More importantly, unlike the 1970s, central banks in advanced economies and many developing economies now have clear mandates for price stability, and, over the past three decades, they have established a credible track record of achieving their inflation targets.
Global inflation is expected to moderate next year but it will likely remain above inflation targets in many economies.?The report notes that if inflation remains elevated, a repeat of the resolution of the earlier stagflation episode could translate into a sharp global downturn along with financial crises in some emerging market and developing economies.
The report also offers fresh insights on how the war’s effects on energy markets are clouding the global growth outlook. The war in Ukraine has led to a surge in prices across a wide range of energy-related commodities. Higher energy prices will lower real incomes, raise production costs, tighten financial conditions, and constrain macroeconomic policy especially in energy-importing countries.
Growth in advanced economies is projected to sharply decelerate from 5.1 percent in 2021 to 2.6 percent in 2022—1.2 percentage point below projections in January. Growth is expected to further moderate to 2.2 percent in 2023, largely reflecting the further unwinding of the fiscal and monetary policy support provided during the pandemic.
Among emerging market and developing economies, growth is also projected to fall from 6.6 percent in 2021 to 3.4 percent in 2022—well below the annual average of 4.8 percent over 2011-2019. The negative spillovers from the war will more than offset any near-term boost to some commodity exporters from higher energy prices. Forecasts for 2022 growth have been revised down in nearly 70 percent of EMDEs, including most commodity importing countries as well as four-fifths of low-income countries.
The report highlights the need for decisive global and national policy action to avert the worst consequences of the war in Ukraine for the global economy. This will involve global efforts to limit the harm to those affected by the war, to cushion the blow from surging oil and food prices, to speed up debt relief, and to expand vaccinations in low-income countries. It will also involve vigorous supply responses at the national level while keeping global commodity markets functioning well.
Policymakers, moreover, should refrain from distortionary policies such as price controls, subsidies, and export bans, which could worsen the recent increase in commodity prices. Against the challenging backdrop of higher inflation, weaker growth, tighter financial conditions, and limited fiscal policy space, governments will need to reprioritize spending toward targeted relief for vulnerable populations.
https://openknowledge.worldbank.org/bitstream/handle/10986/37224/9781464818431.pdf
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Reichen die Vorr?te? Weniger Neon-Gas wegen Ukraine-Krieg
Durch den Krieg in der Ukraine wird Neon-Gas knapp. Das ist vor allem für die Halbleiterindustrie ein weiterer Nackenschlag.?
Zahlreiche Rohstoffe sind in das Fadenkreuz des Krieges zwischen Russland und der Ukraine geraten, was Preissteigerungen unvermeidlich macht, und es wachsen die Bedenken hinsichtlich der Beschaffung dieser Rohstoffe von au?erhalb der Ukraine und Russlands. Es gibt viele Auswirkungen des Krieges auf bestimmte Sektoren und die m?glichen Nebeneffekte, die in anderen Branchen?zu spüren sein k?nnten. Ein solcher Rohstoff, der negativ beeinflusst wird, ist?Neongas, ein wichtiger Rohstoff für die Halbleiterindustrie. Sch?tzungen zeigen, dass 80 Prozent der derzeit hergestellten Halbleiter mit Neongas hergestellt werden.
Die Halbleiterhersteller z?gern, Neongas durch neue Quellen zu ersetzen, da der Herstellungsprozess in der Regel sechs Monate lang angepasst werden muss, um die Produktion wieder auf ein optimales Niveau zu bringen. Eine genaue Sch?tzung des Anteils des Neongases, das in der Halbleiterfertigung verwendet wird und aus der Ukraine und Russland stammt, ist schwierig, aber Branchenexperten gehen von bis zu 70 Prozent und nicht weniger als 25 Prozent aus.
Neon-Reserven reichen für ein halbes Jahr
Mehrere Chiphersteller haben ?ffentlich erkl?rt, dass der Krieg zwischen Russland und der Ukraine kurzfristig keine Auswirkungen auf die Produktion haben wird, da die Managementteams Neongasvorr?te von drei bis sechs Monaten angelegt haben.
Wenn der Krieg allerdings weitergeht und Anlagen zerst?rt werden, wird dies in den n?chsten sechs bis neun Monaten wahrscheinlich erhebliche Auswirkungen auf die Lieferkette haben. In der Zwischenzeit haben die bestehenden Unterbrechungen in der Neongasproduktion neuen Anbietern die M?glichkeit gegeben, in den Markt einzutreten, wobei der gr??te Produzent China ist.
Der Gro?teil der chinesischen Lieferungen unterstützt die asiatischen Chiphersteller, aber m?gliche Neongas-Engp?sse in Verbindung mit den zunehmenden Covid-19-bedingten Schlie?ungen in China machen es weniger wahrscheinlich, dass die Halbleiter-Lieferkette in absehbarer Zeit in der Lage sein wird, die erh?hte Nachfrage zu decken. Infolgedessen glauben einige Experten, dass die Chiphersteller?in den USA und Europa in naher Zukunft st?rker von Neon-Knappheit bedroht sind, da sch?tzungsweise 70 % des Neon-Gases immer noch aus Osteuropa bezogen werden.
Kleinere Unternehmen eher betroffen
Sollte es zu einer Verknappung von Neongas kommen, würden gro?e, bekannte Unternehmen wahrscheinlich kaum betroffen sein. Kleinere Abnehmer (weniger h?ufige Produktionsl?ufe/kleinere Mengen) werden jedoch wahrscheinlich zur Unterstützung der gr??eren Unternehmen gezwungen sein.
Aus der Sicht des Verbrauchers zum Beispiel werden die Verknappung von Neongas und der darauf folgende Preisanstieg wahrscheinlich nur minimale Auswirkungen auf die Gesamtpreise auf dem Endmarkt für Produkte wie Laptops und Smartphones haben.
Die meisten Unterhaltungselektronikger?te werden von den gr??ten Technologieunternehmen der Welt hergestellt, die aufgrund langfristiger Beziehungen und erwarteter künftiger Mengen als erste mit Chips beliefert werden. Au?erdem werden in High-End-Ger?ten wahrscheinlich die modernsten Halbleiterchips verwendet, die mit EUV-Anlagen (Extreme Ultraviolet) hergestellt werden, die kein Neongas ben?tigen.
Dennoch k?nnte die Produktion bestimmter Chips für Kunden mit kleineren Stückzahlen, zum Beispiel in der Automobilindustrie, deutlich zurückgehen, was die Lieferkette in den kommenden Wochen und Monaten vor noch gr??ere Herausforderungen stellen wird.
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WSJ: Deutsche Bank Moves Hundreds of Employees From Russia to Berlin
German lender offered Russian employees and their families to relocate to a new tech development hub
Deutsche Bank?AG?DB?1.92%?relocated hundreds of employees from its technology center in Russia to Berlin and decided to make the German capital a tech center for its investment and corporate banking activities.?
The German lender offered the roughly 1,500 staff who were in Russia the chance to move to Berlin with their families, and about half accepted, according to a person familiar with the move. The bank hasn’t decided what will happen to the Russian center and the staff who decided to stay. Their main task is to develop and maintain software for trading and corporate banking.
Deutsche Bank said in March that it was?winding down its operations in the country?following the invasion of Ukraine. It reported limited exposure to Russia through loans and collateral, but its staff presence there through its technology center was significant and carried cybersecurity risks.?
The Russian staff accounted for 5% of its internal and external technology workforce, and the bank had been stress-testing the ability of other centers, including in Asia, to cover for the Russian operations in case of a stoppage.
About 1,000 employees will be working at the Berlin site. The bank also has technology centers in Bucharest, the U.S. and Asia.
Other European banks have bigger exposures in Russia. Two large lenders, Italy’s?UniCredit SpA?and French lender?Société Générale SA,?both had local operations in the country before the war broke out. The French bank?agreed to sell its local bank?to its former owner and one of Russia’s richest people, Vladimir Potanin.
UniCredit, meanwhile, said it is evaluating all options for the business, including a sale. It?booked a $1.4 billion loan-loss provision?in the first three months of the year and said that as of the end of April its total exposure to Russia was €7 billion, equivalent to $7.5 billion, which besides the local business included cross-border and derivative exposures.
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INSS - Tel Aviv: The Gaza Strip and the Climate Crisis
Major heat waves, floods, rising sea levels, and less rainfall: while the Israeli security establishment continuously reviews the effect of Gaza’s economic plight on the security situation, it ignores a factor that could wield decisive influence on the possibility of quiet or escalation in the Gaza Strip – climate change. Therefore, INSS, with the International Committee of the Red Cross, convened a special conference on the issue. The findings presented are presented in this article.
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