Former Fed Chairman Arthur Burns said that, “A subtle understanding of economic change comes from a knowledge of history and large affairs, not from statistics or their processing alone.” So far as large affairs go, the recent events in Afghanistan could hardly be any larger.
On Sunday, 15 August Taliban fighters entered Kabul unopposed and Afghanistan’s president Ashraf Ghani fled the country. Two days later the acting Afghan central bank chief, Ajmal Ahmady did the same. The events took almost everyone by surprise and the foreign policy establishments in the U.S. and UK were extremely vexed about it all. The loss of Afghanistan was not just a small setback: the Empire’s ability to hang onto Afghanistan was the centerpiece of its Eurasia policy and the events we just witnessed will have very far-reaching repercussions. How important was Afghanistan? It was pivotal.
Historian Ramsay MacMullen suggested that in order for us to interpret history correctly, we must understand the motivations of groups and individuals who created history. Today’s empire builders are motivated by the overarching imperative to maintain hegemony over the Eurasian landmass. Sir Halford Mackinder explicitly formulated this ambition in 1904 in his Heartland Theory. He referred to the Eurasian continent as the World-island. In “Democratic Ideals and Reality,” he wrote:
“Who rules East Europe commands the Heartland; who rules the Heartland commands the World-island; who rules the World-island controls the world.“
In the aftermath of World War I, the Empire moved like a parasite to infiltrate the United States and co-opt its economic and military might to make it its own battering ram to subjugate other nations. In the process, it has made its own policy objectives American policies. Empire’s court intellectual, Zbigniew Brzezinski articulated these objectives as America’s own aspiration:
“For America, the chief geopolitical prize is Eurasia… Eurasia is the globe’s largest continent and is geopolitically axial. A power that dominates Eurasia would control two of the world’s three most advanced and economically productive regions. … About 75% of the world’s people live in Eurasia and most of the world’s physical wealth is there as well, both in its enterprises and underneath its soil. Eurasia accounts for 60% of the world’s GDP and about 3/4ths of the world’s known energy resources.” (“The Grand Chessboard,” 1997)
The same imperial obsession was reaffirmed again in August of 2018, in a briefing by the U.S. Assistant Secretary of State for European and Eurasian Affairs, Wes Mitchell to the U.S. Senate Foreign Relations Committee. Mitchell made it explicit that the “central aim of the Administration’s foreign policy is to defend US domination of Eurasian landmass as the foremost US national security interest and to prepare the nation for this challenge.” Mitchell also said that the Administration was “working with our close ally the UK to form an international coalition for coordinating efforts in this field.” This statement was not intended for public consumption and the US Department of State quickly removed the briefing from their website. It is however still available at the link I provided above.
Hysterical in London
The loss of Afghanistan will prove to be a huge setback to empire builders’ ambition to dominate the Eurasian landmass, which explains the avalanche of furious reactions and unanimous condemnation from London which is still the Empire’s intellectual and ideological headquarters.
Britain’s Defence Secretary Ben Wallace broke down in tears speaking about the evacuations of those people whom “we have obligation to.” At the House of Commons, MP Tom Tugendhat gave a theatrically emotional speech explaining how, “this last week has been one that has seen me struggle through anger and grief and rage…” Former PM Theresa May waxed lyrical about “the commitment and dedication of our armed forces,” who were all doing “what they could to give hope to the people of Afghanistan” who enjoyed wonderful freedoms “thanks to our presence there.” Ms. May also sharply condemned the unilateral decision by the US Administration to make a deal with the Taliban without consulting the UK Government.
In a London Times article published on 23 August, Foreign Secretary Dominic Raab is quoted denouncing American isolationism, adding that: “America has just signaled to the world that they are not that keen on playing a global role. The implications of that are absolutely huge. We need to get the integrated review out and reread it. We are going to have to do a hard-nosed revisit on all our assumptions and policies.”
For the offense of dropping Afghanistan for them in spite of strenuous warnings to Washington from her “majesty’s” government, Mr. Raab was incensed enough to drop the diplomatic decorum and resort to insults: “The US had to be dragged kicking and screaming into the First World War. They turned up late for the Second World War and now they are cutting and running in Afghanistan.” Former UK Prime Minister Tony Blair said that the U.S. withdrawal did not have to be done, and it was done, “in obedience to an imbecilic political slogan about ending ‘the forever wars’.”
Empires don’t go quietly into the night
Mr. Blair’s statements in fact revealed what the loss of Afghanistan is all about for the Empire (recently rebranded as Global Britain): “… we are at risk of relegation to the second division of global powers.” Indeed, empires do not go quietly into the night and reactions and contingency plans were considered with some urgency in the British halls of power.
DailyMail dramatically announced that “Across Whitehall and in British embassies around the world, officials and diplomats are adjusting to the fact that Mr. Biden has adopted an America First policy every bit as isolationist as his predecessor’s.” What ensued, was a mad multi-pronged scramble to stir the Afghanistan pot anew, disguised as a rescue mission. British government sent 900 elite paratroopers and the soldiers were told to expect face to face combat with the Taliban. They were also instructed to watch the Americans in case they leave, because without the 6,000 US troops on the ground, the Brits could easily be overwhelmed.
The humanitarian face of the intervention
But in addition to fighting terrorism, the Empire also has humanitarian reasons not to let go of Afghanistan. In a well-coordinated campaign, corporate media has provided a suitable narrative to accompany the ongoing British rescue operation.
Suddenly we have a deluge of articles about how terrible the Taliban are and how the American troops are hardly any better; how the people in Afghanistan (especially “women and girls,” as almost every article emphasizes) are terrified and desperate; and how heroic, compassionate and wonderful the British soldiers are. So compassionate that they are “livid at the way America is treating Afghans who are desperate to flee the Taliban.” So wonderful that the desperate Afghan women toss their babies into razor wire fences toward British soldiers to get them out of the country. So sentimental that one “senior officer” told SkyNews, “I’m worried for my men, I’m counselling some, everyone cried last night.”
But where was all this compassion and wonderfulness for the last 20 years? Where were the heroic rescue missions when four million displaced Afghans who fled fighting were abandoned to starvation, sickness and death in makeshift shelters as Amnesty International recently reported? Where was the compassion about the child hunger which has been among the worst in the world? Did everyone cry over the fact that under the Empire’s occupation, 55% of Afghan children suffered irreversible harm from malnutrition? Did anyone care that after 20 years of occupation, 90% of the Afghans still live below the poverty line? Did the Empire’s exalted MPs and ministers feel any “anger, grief and rage” about the relentless drone strikes that killed 90% innocent bystanders and 40% children?
It’s about plunder and corruption, not about women’s rights
Only the most deluded consumers of the mainstream narrative have by now failed to understand that the Empire is not and has never been about democracy, freedoms or the subjugated people’s rights. The Empire is about conquest, control, resources (including the cheap labor force coerced from the local populations), collateral and ruthless extraction of wealth. To organize and manage the plunder, the Empire recruits local collaborators and incentivizes them with a share of the loot. In this way the Empire sponsors a vast network of deeply corrupt officials and provides them with power and protection.
Matt Taibbi recently reviewed a report by the Special Inspector General for Afghan Reconstruction (SIGAR) which probed approximately $63 billion disbursed in Afghanistan. They found that about $19 billion (30%) of the money was lost to waste, fraud and abuse. Of course, the $63 billion was only the tip of the iceberg of the industrial-scale waste, fraud and abuse that have immiserated life in Afghanistan for two decades. The 20 year occupation of Afghanistan was estimated at $2.3 trillion, according to the new figures published by the Brown University Costs of War project.
Some mind-numbing details of this abuse were already detailed in December 2019 in the “Afghanistan Papers” expose. In 2010, a US diplomatic cable released by Wikileaks quoted the Afghan national security adviser saying “corruption is not just a problem for the system of governance in Afghanistan – it is the system of governance” Corruption’s toxic effect on the Afghan society was not unknown to the Empire builders. As US special envoy Richard Holbrooke noted almost from the outset, the corruption was destroying efforts to create a fledgling democracy. Indeed, he said corruption was the Taliban’s “No 1 recruiting tool.”
So how bad is the loss of Afghanistan? It may be terminal.
The loss of Afghanistan not only stops the gravy train out of that nation, it also jeopardizes the Empire’s hegemony over its coveted Eurasian world-island and ultimately everywhere else. The spectacle of the Afghan president and central bank chief scrambling to flee the country with bags of cash reveals the dying empire’s inability to prop up and protect its servants. Afghan president Ghani fled to Tajikistan but he was not welcome to stay there. Allegedly he then sought refuge in Uzbekistan but was turned away again, before fleeing to the UAE. This episode and its implications will not be lost on other servants of the Empire. Will the its corrupt puppets in the Middle East, Africa, South America and elsewhere be comfortable following the Empire’s dictates? Will they obediently “build back better,” ploughing over their economies and social fabric, destroying their people’s lives?
After Afghanistan they will have to think about making nice with their own people and seek cooperation with other global powers, primarily China and Russia. The Empire has already been check-mated in Ukraine; it lost Syria and their hold on Iraq has all but slipped away. Afghanistan may well prove to be its mortal wound. Through history empires have almost invariably been sordid business – as Tacitus wrote, “they plunder, they butcher, they ravish, and they call it by the lying name of ‘empire.’ They make a desert and call it ‘peace.’” So if today’s empire has been mortally wounded, and I believe it has, then good riddance.
What’s coming next?
Afghan rescue missions will have to wrap up by 31 August deadline. After that date, all foreign troops must withdraw from Afghanistan. But the Empire was not a party to the American administration’s deal with the Taliban and it is all but certain that the imperial establishment will seek to sabotage it and hold onto Afghanistan by hook or by crook.
On cue, only 11 days after the Taliban takeover, ISIS (allegedly ISIS-K variant) emerged out of nowhere to stage a terror attack at Kabul airport killing at least 103 people, including 13 American soldiers and 28 Taliban fighters. The very next day, former head of the CIA and President Obama Defense Secretary Leon Panetta went on CNN to state that the U.S. troops would have to go back into combat in Afghanistan to fight ISIS, of course.
We can expect the media and other swamp creatures to amplify these calls over the coming weeks. ISIS can be expected to provide further elements of persuasion for any hesitant policymakers. Recall, ISIS, which only had marginal presence in Afghanistan since 2014, is the creation of the rogue elements of Western intelligence agencies and has always faithfully aligned its terrorist activities with the Empire’s agenda in the Middle East and North Africa.
The economic repercussions
The fallout from Afghan events will have far-reaching consequences but in the short and medium term, volatility is about all we can predict. Ultimately, this will exacerbate the already acute economic crisis in the west, primarily in the guise of higher interest rates which in turn affect pretty much everything else. One of the casualties could be the still inflating asset buble.
Quantitative easing and financial repression through artificially low interest rates is how we got that asset bubble in the first place. High interest rates could be the sharp object moving in the direction of the bubble. Furthermore, commodity prices will likely move significantly higher, putting upward pressure on inflation. In fact, even without Afghanistan, commodity prices have been relatively depressed compared to other assets, reaching recently all-time lows relative to equities. What this means is that there’s a great deal of liquidity – some $200 trillion dollars – in the shadow banking system. This money might at some point start spilling over into commodities and fuel the anticipated super-cycle which could define the next ten to twenty-five years.
How to navigate the changes?
While nobody can predict the timing or magnitude of these events, one thing we know is that large-scale price events (LSPEs) invariably unfold as trends that can span years and as such perhaps the most reliable way to navigate the coming turbulence will be through high quality trend following strategies. This is precisely the kind of decision support we offer through daily I-System TrendCompass reports that deliver reliable trend following signals on more than 200 different financial and commodities markets with monthly subscriptions starting from 100 Euros. One month test-drive is always free of charge. For more information about the I-System and about the TrendCompass reports please visit ISystem-TF.com.
Alex Krainer - @NakedHedgie has worked as a market analyst, researcher, trader and hedge fund manager for over 25 years. He is the creator of I-System Trend Following, publisher of the "super impressive" (as one of my subscribers tagged them) TrendCompass reports. His views and opinions are not always for polite society but they are always expressed in sincere pursuit of true knowledge and clear understanding of stuff that matters.