As the big questions surrounding the future of the Ukraine crisis persist, the countries neighboring the former communist nation, and especially the Baltic states which are members of NATO, are asking for safeguards should Russian ambitions end up just a little too big to be contained solely by the Ukraine. As a result, the WSJ reports, they are considering calling for a greater North Atlantic Treaty Organization presence in their countries “if the situation gets worse” in the Ukraine, Ojars Kalnins, the chairman of the foreign-affairs committee of the Latvian parliament, said Monday. Mr. Kalnins said that a worsening of the Ukraine crisis “such as an outright invasion” of areas outside Crimea would present a threat to all of Russia’s neighbors, including the Baltic states–which are members of NATO. Such an expanded conflict should be reason for NATO to “bring extra military support to the Baltic region as a safeguard.”
We were perhaps even more amused than our readers by our Friday headline "Stocks Close At New Record High On Russian Invasion, GDP Decline And Pending Home Sales Miss." It appears that today the market forgot to take its lithium, and is finally focusing on the Ukraine part of the headline, at least until 3:30 pm again when everything should once again be back to market ramp normal. As expected, the PMI data from China and Europe in February, was promptly ignored and it was all about Ukraine again, where Russia sternly refuses to yield to Western demands, forcing the shocked market to retreat lower, and sending Russian stocks lower by over 11%. This is happening even as Ukraine is sending Russian gas to European consumers as normal, gas transport monopoly Ukrtransgas said on Monday. "Ukrtransgas is carrying out all its obligations, fulfilling all agreements with Gazprom. The transit (via Ukraine to Europe) totalled 200 million cubic meters as of March 1," Ukrtransgas spokesman Maksim Belyavsky said. In other words, it can easily get worse should Russia indeed use its trump card.
Why is the periphery crumbling? It's simple: the conditions that enabled rising national surpluses and the distribution of spoils is breaking down for three reasons:
- Energy is no longer cheap (compared to past prices)
- The low-hanging fruit of higher productivity has all been plucked
- The free-money flood of cheap, limitless credit is drying up
As regimes find surplus and credit are both contracting, their ability to placate every key group with spoils is also declining, and the conflicts between them can no longer be patched over with bribery or brutality. Instability starts on the periphery and moves into the core.
President Of China's Marine Institute For Security: "Glory Drenched In Blood Will Pave China’s Road To Revitalization"Submitted by Tyler Durden on 02/27/2014 22:02 -0500
"In 2013, China embarks on a new road after the conclusion of the Third Plenum of the 18th National Congress of the Chinese Communist Party. On December 26, China solemnly commemorated the 120th anniversary of the birth of Mao Zedong. On this same day, Japanese Prime Minister Shinzo Abe provoked China by visiting the Yaksukuni Shrine in Tokyo. In response, the Chinese Foreign Ministry spokesman quoted Mao Zedong’s “On Protracted War,” and implied that the final victory will belong to China. The new China is born in blood and fire, and is not only unafraid of war, but also courageous in welcoming reasonable and lawful conflict, because defending the country from aggression serves to further boost the development of the state’s power. The Chinese nation loves peace, but there is little doubt that glory drenched in blood will pave China’s road to revitalization. This is the glory that generations to come will treasure. Sound the alarms for war preparation, remold our firm convictions, wake up the fearless people, and revive our strategic industries—our country is moving forward and our future is bright!" - President Of China's Marine Institute For Security And Cooperation
All signs suggest that North Korea is laying the groundwork to begin a new round of provocations. Despite its deliberate (and successful, in the U.S. at least) attempts to portray itself as an irrational actor, North Korea’s provocations usually follow a well-worn playbook. North Korea has carefully put all these pieces into place over the past few weeks.
The world is now beginning to realize Japanese Prime Minister Shinzo Abe’s true intentions. With his controversial visit to the Yasukuni shrine, which memorializes war dead, including Class A war criminals such as Hideki Tojo, he is no longer hesitant to reveal his true nature: without question, the most conservative leader in Japan’s postwar history. By encouraging a spirit of nationalism, Abe is hoping to engender self-confidence and patriotism among the Japanese public. But what exactly is his future agenda?
If an ice storm can cause this much panic in our major cities, what will a real crisis look like? The biggest news story in the United States right now is the "historic ice storm" that is hammering the South. Travel will be a nightmare, schools and businesses will be closed, and hundreds of thousands of people will lose power. In fact, it is being projected that some people could be without power for up to a week. But at the end of the day, the truth is that this ice storm is just an inconvenience. Yes, the lives of millions of Americans will be disrupted for a few days, but soon the ice will melt and life will be back to normal. Unfortunately, it doesn't take much for people to start behaving like crazed lunatics. As you will see below, the winter weather is causing average Americans to ransack grocery stores, fight over food items and even pull guns on one another. If this is how people will behave during a temporary weather emergency, how will they behave when we are facing a real disaster?
East Asia is becoming, in the language of international relations theory, "bipolar." Until recently, Asia was arguably “multipolar” - there was no one state large enough to dominate and many roughly equal states competed for influence. China’s dramatic rise has unbalanced that rough equity. Until recently, China pursued a “peaceful rise” strategy, one of accommodation and mutual adjustment. This approach sought to forestall an anti-Chinese encircling coalition. Since 2009 however, China has increasingly resorted to bullying and threats. All this then sets up a bipolar contest between China and Japan, in the context of China’s rapid rise toward regional dominance and such goals would broadly fit with what we have seen in the behavior of previous hegemons and a potential Sinic Monroe Doctrine.
Many have sought to draw comparisons between Asia today and Europe in the run-up to WWI. Most notably, in a widely covered speech at the World Economic Forum in Davos last month, Japanese Prime Minister Shinzo Abe compared his country’s current bilateral relationship with China to that of England and Germany before WWI. Specifically, Abe used the example of London and Berlin before WWI to warn that China and Japan’s extensive economic ties do not necessarily preclude them from going to war. Now it appears that some in Asia believe the current regional environment is more similar to Europe just before WWII. However, there appears to be some disagreement over which country in Asia most resembles Nazi Germany.
A common interpretation of history, Jordan's Prince Zeid told the UN this week, helps smooth tensions between former enemies, "as we have seen repeatedly, fighting that ends without reconciliation – especially fighting inside States – is fighting that can, and often does, resume." To those following the tensions between Japan and China (as well as South Korea), the implications are obvious. While the fighting between these nations ended almost 70 years ago, the process of reconciliation remains incomplete. The “deeper reconciliation” Zeid described, one based on “a shared memory of a troubled past,” has not yet emerged. The current tensions in Northeast Asia have another analogue: the conflicted legacy of the U.S. Civil War.
China and Japan’s war of words reveals a larger struggle for regional influence akin to a mini Cold War. Last week's tempestuous pissing contest in Davos, which The FT's Gideon Rachman notes left people with the belief that "this is not a situation that is getting better; it is getting worse." Following Abe's analogies to WWI, China's Yi compared Abe's visit to the Yasukuni shrine to Merkel visiting the graves of Nazi war criminals and as the rhetoric grows the US has asked for reassurance from Abe that he will not do it again. So we have two countries, each building up their militaries while insisting they must do so to counter the threat of their regional rival. Added to this, a deep distrust of each other’s different political systems coupled with a history of animosity makes the two nations deeply suspicious of each other. Each country insists it loves peace, and uses scare tactics to try to paint its opponent as a hawkish boogeyman. Sound familiar to anyone else?
On a satellite interview from Pyongyang, North Korea, former NBA player Dennis Rodman 'lost it' this morning with the anchor from CNN's "New Day" show. Describing his (and his team's) visit to North Korea as a "great trip for the world," Rodman started to get frustrated when questioned about whether he will use the opportunity to speak about Kenneth Bae, an American citizen who has been held in North Korea. "Do you understand what he did?" Rodman exclaimed, "You tell me! You tell me! Why is he held captive?" Having described Kim Jong Un as a "friend for life," Rodman went on to tell the CNN anchor, "I don't give a rat's ass what you think." Ah, the new normal diplomacy. We wonder if Kim's uncle also described him as a 'friend for life.'? As WaPo reports, The White House is not happy.
Fed's action or inaction remains an under-appreciated risk to the global economy.
The following 8 key dynamics (from government over-reach and economic stagnation to civil discontent and beyond) will play out over the next two to three years...
Without question, 2013 was a jam-packed year for national security, defense and foreign policy watchers in the Asia-Pacific. Don’t expect the Asia-Pacific to be any less fraught next year.