Reads like a love letter to Biden. Interesting that it’s under the opinion section of the paper and not the news section. – Natylie

By David Ignatius, Washington Post, 5/27/22

The first instruction that Secretary of State Antony Blinken got from President Biden was to “reset” America’s alliances and partnerships abroad so that the United States could deal with the challenges ahead. That strategy would prove decisive in combating Russia’s aggression against Ukraine.

Blinken and other officials gave me new details this week, describing a series of behind-the-scenes meetings over the past year that helped forge the U.S.-led coalition to support Ukraine. His narrative validates President Dwight D. Eisenhower’s observation in a 1957 speech: “Plans are worthless, but planning is everything.”

The Biden administration’s secret planning began in April 2021 when Russia massed about 100,000 troops on the Ukrainian border. The buildup turned out to be a feint, but Blinken and other officials discussed U.S. intelligence about Russia’s actions with leaders of Britain, France and Germany at a NATO meeting in Brussels that month. Their message was, “We need to get ourselves prepared,” a senior State Department official said.

Germany was a reluctant but essential ally, and the Biden administration made a controversial decision last summer that was probably crucial in gaining German support against Russia. Biden gave Germany a pass on an initial round of sanctions against a company building the Nord Stream 2 pipeline in exchange for a pledge from Chancellor Angela Merkel that if Russia invaded, Nord Stream 2 would be scrapped. When the invasion came, Merkel was gone but her successor, Olaf Scholz, kept the promise.

By avoiding a crisis with Germany early on, Blinken said, “the net result was that the foundation was in place when the Russians went ahead with the aggression.”

This U.S. diplomacy gets high marks from Emily Haber, the German ambassador to Washington. “The wording in the joint statement [about Nord Stream] was vague, but the administration trusted the old — and later the new — chancellor to follow up on it. Which is what happened,” she told me. “A sublime form, I thought, of partnership management.”

The Ukraine threat got red-hot in October, when the United States gathered intelligence about a renewed Russian buildup on the border, along with “some detail about what Russian plans for those forces actually were,” Blinken said. This operational detail “was really the eye opener.” The Group of 20 nations were meeting at the end of October in Rome, and Biden pulled aside the leaders of Britain, France and Germany and gave them a detailed readout on the top-secret evidence.

“It was galvanizing enough that there was an agreement … to fleshing out the consequences for Russia if it went ahead with the aggression,” Blinken said.

CIA Director William J. Burns traveled to Moscow on Nov. 1 to warn President Vladimir Putin that the United States and its allies were prepared to arm Ukraine and impose crippling sanctions on Russia if he invaded. Putin apparently thought Biden wouldn’t be able to deliver.

Persuading Ukrainian President Volodymyr Zelensky to take the invasion danger seriously wasn’t easy, initially. Blinken spoke to him at the COP 21 climate summit in Glasgow in early November and provided a summary of intelligence about Russia’s plans. “I basically had the task of telling him that we thought it was likely that his country was going to be invaded,” Blinken recalled. Zelensky was skeptical, according to a State Department official.

Threatening sanctions can be an empty diplomatic ritual. But in December, Blinken and his colleagues began seriously discussing with allies what steps they would take. The initial venue was a Group of Seven foreign ministers meeting in Liverpool, England, on Dec. 11. The attendees publicly committed that there would be “massive consequences and severe costs,” Blinken remembered. As a result, he said, “when the aggression actually happened, we were able to move immediately.”

NATO military planning accelerated along with the diplomacy. Air Force Gen. Tod Wolters, the NATO commander, told me that his colleagues began preparing in December and January the “ground lines of communication” that would allow rapid shipment of arms into Ukraine. They studied entry points for supplies and other practical details. This weapons pipeline delivered Stinger and Javelin missiles before the invasion began Feb. 24 and has transferred huge numbers of heavier weapons since then.

U.S. intelligence provided Ukraine with a preview of Putin’s battle plan. Though Russia had surrounded Ukraine with 150,000 troops, Putin’s real strategy was a lightning, decapitating strike on Kyiv by a relatively small group of elite special forces. The Russians planned to seize Antonov Airport in Hostomel, west of the capital, and then use it to quickly pump troops into Kyiv.

The Ukrainians knew the Russians were coming. Burns had secretly traveled to Kyiv in January to brief Zelensky on the Russian plan, according to two knowledgeable officials. The Ukrainians used the U.S. intelligence to devastate the attacking force at Hostomel, in what may turn out to be the decisive battle of the war. “The Russians had no Plan B,” explained Marek Menkiszak, a Polish intelligence analyst with the Centre for Eastern Studies in Warsaw.

Menkiszak explained the significance of the intelligence coup that revealed the decapitation plan: “The Russians trapped themselves. … It was not meant to be a full-scale war but a special operation” that would topple Zelensky’s government and install a pliant, pro-Moscow regime.

Through the buildup to war, Biden sometimes seemed to misspeak. But he had a clear-eyed view of the evolving strategic terrain. Early on, for example, Biden concluded that the best way to derail Putin’s hope for dividing NATO would be the accession of two strong new members, Finland and Sweden.

Biden wooed Finnish President Sauli Niinisto. He called him in December and then in January to talk about the Russian threat, Blinken said. Biden then invited Niinisto to visit the White House in March, and while they were sitting in the Oval Office, Biden suggested they call Swedish Prime Minister Magdalena Andersson, reaching her late at night. By May, the two were visiting the White House together, celebrating their countries’ plans to join NATO.

The Biden administration’s organization of this coalition to support Ukraine may look simple in retrospect. But it was a complicated coordination of diplomatic, military and intelligence resources that pulled together dozens of nations at what may prove to be a hinge point in modern history. Putin thought he could roll through Biden and the West to an easy victory in Kyiv. The Russian leader made a catastrophic mistake in overvaluing his own strength and underestimating the resolve of Biden and his team.

By Arnaud Bertrand, Tablet, 5/24/22

Arnaud Bertrand is an entrepreneur and commentator on economics and geopolitics. He founded HouseTrip and Me & Qi.

Remember the claims that Russia’s economy was more or less irrelevant, merely the equivalent of a small, not very impressive European country? “Putin, who has an economy the size of Italy,” Sen. Lindsey Graham, R-S.C., said in 2014 after the invasion of Crimea, “[is] playing a poker game with a pair of twos and winning.” Of increasing Russian diplomatic and geopolitical influence in Europe, the Middle East, and East Asia, The Economist asked in 2019, “How did a country with an economy the size of Spain … achieve all this?”

Seldom has the West so grossly misjudged an economy’s global significance. French economist Jacques Sapir, a renowned specialist of the Russian economy who teaches at the Moscow and Paris schools of economics, explained recently that the war in Ukraine has “made us realize that the Russian economy is considerably more important than what we thought.” For Sapir, one big reason for this miscalculation is exchange rates. If you compare Russia’s gross domestic product (GDP) by simply converting it from rubles into U.S. dollars, you indeed get an economy the size of Spain’s. But such a comparison makes no sense without adjusting for purchasing power parity (PPP), which accounts for productivity and standards of living, and thus per capita welfare and resource use. Indeed, PPP is the measure favored by most international institutions, from the IMF to the OECD. And when you measure Russia’s GDP based on PPP, it’s clear that Russia’s economy is actually more like the size of Germany’s, about $4.4 trillion for Russia versus $4.6 trillion for Germany. From the size of a small and somewhat ailing European economy to the biggest economy in Europe and one of the largest in the world—not a negligible difference.

Sapir also encourages us to ask, “What is the share of the service sector versus the share of the commodities and industrial sector?” To him, the service sector today is grossly overvalued compared with the industrial sector and commodities like oil, gas, copper, and agricultural products. If we reduce the proportional importance of services in the global economy, Sapir says that “Russia’s economy is vastly larger than that of Germany and represents probably 5% or 6% of the world economy,” more like Japan than Spain.

This makes intuitive sense. When push comes to shove, we know there is more value in providing people with the things they really need to survive like food and energy than there is in intangible things like entertainment or financial services. When a company like Netflix has a price-earnings ratio three times higher than that of Nestlé, the world’s largest food company, it’s more likely than not a reflection of market froth than of physical reality. Netflix is a great service, but as long as an estimated 800 million people in the world remain undernourished, Nestlé is still going to provide more value.

All of which is to say that the current crisis in Ukraine has helpfully clarified how much we’ve taken for granted the “antiquated” side of modern economies like industry and commodities—prices for which have surged this year—and perhaps overvalued services and “tech,” whose value has recently crashed.

The size and importance of Russia’s economy is further distorted by ignoring global trade flows, in which Sapir estimates that Russia “may account for maybe as much as 15%.” While Russia is not the largest producer of oil in the world, for example, it has been the largest exporter of it, ahead even of Saudi Arabia. The same is true for many other essential products such as wheat—the world’s most important food crop, with Russia controlling about 19.5% of global exports—nickel (20.4%), semi-finished iron (18.8%), platinum (16.6%), and frozen fishes (11.2%).

Such commanding importance in the production of so many essential commodities means that Russia, like few other countries on the planet, is in many respects a linchpin of the globalized production chain. Unlike “maximum sanctions” on a country like Iran or Venezuela, attempting to cut the Russian link has meant and will likely continue to mean a dramatic reorganization of the global economy.

Now that President Joe Biden has publicly renounced America’s decades-old policy of “strategic ambiguity” with regard to Taiwan, it’s worth thinking about what China’s economy looks like when we remove the same blinkers with which we’d always viewed Russia. If we consider the Chinese economy based on exchange rates—by simply converting China’s GDP from Chinese yuan to U.S. dollars—it is valued at about $17.7 trillion (as of 2021), compared to $23 trillion for the United States and $17 trillion for the European Union.

But if we adjust for PPP, we see that the Chinese economy reached almost $27.21 trillion in 2021, compared with $20.5 trillion for the EU and $23 trillion for the United States. In terms of PPP, in fact, China’s economy overtook America’s back as much as six years ago.

And what if we reduce the proportional importance of the service sector relative to industry and commodities? Services account for approximately 53.3% of China’s GDP, even less than in Russia (56.7%). If we roughly apply Sapir’s ratio of doubling the valuation of the nonservice sector to China, we may have to consider that in a very real and relevant way, the Chinese economy accounts for something like 25%-30% of the global economy on a PPP basis, rather than the current estimates of 18%-19%. That would put the combined Chinese and Russian economies at about 30%-35% of the global economy (again, adjusting for PPP and the overvaluation of the service sector)—a behemoth and likely unsustainable challenge for a trans-Atlantic community that looks increasingly focused on using maximalist economic sanctions to punish bad actors and achieve desired policy outcomes. That challenge becomes even more daunting when we consider that the service sector accounts for roughly 77% of the U.S. economy and 70% of the EU’s—suggesting a potentially significant degree of overvaluation in Western economic heft, and far more parity in relative economic power with China and Russia.

How much does any of this hairsplitting matter? For one, the war in Ukraine and tensions in the Pacific look to be accelerating a division of the world into Cold War-like political and economic blocs. But whereas the West accounted for over 50% of global GDP at the beginning of the Cold War—with the United States dominating global manufacturing and running huge annual trade surpluses—the West looks to be in a weaker if more entrenched position of power today, and its major adversaries stronger in certain ways than the communist bloc was in 1948.

Before we enthusiastically embrace a new Iron Curtain, therefore, it’s worth pausing to consider how many countries in the world will voluntarily place themselves on our side. The countries of what we consider “the West” will—for ideological and historical reasons, in addition to economic and military enmeshment—undoubtedly remain relatively united. But the West only accounts for about 13% of the world’s population, with China and Russia together making up about 20%. That leaves about two-thirds of humanity “nonaligned,” a position that most of them would like to maintain. If we force them to choose a side, we may be surprised by many of the results.

A tally of the countries participating in current sanctions on Russia, in fact, makes it hard to say whether a new Iron Curtain is being drawn around our adversaries or around the West itself. Countries and nominal U.S. allies as significant as India and Saudi Arabia have been particularly vocal in their refusal to take sides in the conflict in Ukraine.

One telling barometer for this dynamic is oil. With Western oil sanctions on the world’s largest oil exporter, prices have predictably skyrocketed, rising from around $75 a barrel at the beginning of the year up to over $110 today. But countries that have refused to participate in sanctions are now taking advantage of the opportunity to negotiate for Russian energy deliveries at steep discounts. If Russia is still able to sell oil around the world, countries like India are able to negotiate for below-market prices, and Western consumers are being hammered with inflated prices, who is really being sanctioned? A similar principle applies to the weaponization of the U.S. dollar and the Western financial system in general: If non-Western countries are increasingly told that access to dollars and transaction systems like SWIFT are conditional on policies made in Washington that may not necessarily be in their own self-interest, the result may be a de-dollarization of the global economy, not a strengthening of the Western order.

None of this is to say that the brutal invasion of Ukraine has been anything less than an atrocity, and that extraordinary measures may indeed be called for in order to counter Russian expansionism and its implications for global peace and stability. But it’s possible that the West, in a fit of self-righteousness and a need to satisfy various domestic demands, may be diving headlong into a future in which the global South and many others besides feel increasingly pressured to make a choice they don’t want to have to make, and which may leave the West more isolated than ever before in modern times.

This is interesting speculation. I’m interested to hear what my readers think in the comments about it. – Natylie

By Ben Aris, Intellinews, 5/27/22

Russians’ attitudes towards the US have nose-dived to their second worst level on record and the overwhelming majority (87%) believe the Kremlin should not make concessions to the West in order to have the extreme sanctions on Russia lifted.

Only 13% of Russians believe that their country should make concessions to the West. Young respondents under the age of 40 are a little more likely (18%) to believe Russia should make concessions. Older respondents, on the contrary, are the least likely to accept concessions from Russia (only 9% in the age group of 55 years and older), Levada found in its latest survey. 

At the same time, negative feelings towards the US have increased dramatically, with 72% of respondents in March saying their feelings were “bad” against 17% that felt “good” and 1% undecided.

That is a turnabout from a slight majority for “good” (45%) versus “bad” (42%) in November last year right at the beginning of the rising geopolitical tensions.

Indeed, the population’s attitude towards the US has been broadly positive for almost all of the last three decades since the collapse of the Soviet Union in 1991.

In the very early days Russians were optimistic that after the animosities of the Cold War ended with the fall of the USSR that the US would step in with its famous entrepreneurial skills and actively participate in rebuilding Russia’s collapsed economy. Aid, such as food relief delivered in 1992 to deal with shortages, was seen as a sign of this co-operation. However, those expectations crashed in the 1998 financial crisis when Russia was left to fend for itself after the ruble collapsed on August 17, 1998.

Friendly feelings towards the US recovered during the booming noughties but crashed again in 2008 thanks to the double whammy of the US-induced global economic crisis and Washington’s backing of Georgia during a short war it fought with Russia.

Relations recovered again in the next decade, only to comprehensively collapse for a third time following Russia’s annexation of Crimea and the start of the international sanctions regime, which remains in place to this day. That collapse was a permanent change, as Russia was always willing to give the US the benefit of the doubt until the sanctions were imposed.

Attitudes towards the US started to improve slowly as the last decade wore on, despite the sanctions, as Russia emerged from a four-year long recession and the feel-good factor of returning prosperity in 2018 and 2019 made itself felt. Attitudes to the US even turned a net positive briefly in 2018 and at the start of 2020, until the coronavirus (COVID-19) pandemic broke out. But feelings towards the US have turned sharply negative again since the war broke out on February 24.

The number of Russians that feel it is necessary to co-operate with the US has fallen by 30%, Levada said, since the war started, but worry that dangers to the country are rising. The share of Russians that feel relations with the US are bad now reached 72% in March, the second worst result since January 2015, when 81% of the population felt negatively about the US and just ahead of April 2018, when 69% said the same.

“Respondents were offered a set of phenomena and processes and asked how dangerous they are for Russia. When comparing the results with the last wave of the survey, which took place in 2016, attention is drawn to the general increase in anxiety and the increase in the proportion of answers “very dangerous” for all the proposed options. At the same time, the greatest increase in fears is associated with foreign policy factors: the actions of the Nato alliance and the growth of US military power,” Levada said in a note.

Older respondents are more optimistic and more likely to expect changes for the better in terms of Russia’s global political influence (42%). Young people, on the contrary, are more sceptical: only 28% expect the strengthening of Russian influence, Levada found.

The number of Russians who believe that Russia was and remains part of Europe has remained virtually unchanged at 68%, against the results of a comparable study conducted in 2016 (64%).

There is noticeable age differentiation in the respondents’ answers: young people are less likely to agree with the statement that Russia is part of Europe than older people.

When asked which countries have respect in the world, the most respondents (88%) believed that China enjoys global respect, followed by Russia (66%) and Germany (52%). But only a third of Russians (34%) thought the US was respected with one in five (18%) saying Ukraine was respected.

Amongst respected world leaders, Russian President Vladimir Putin scored best amongst Levada’s respondents with 87% believing the Russian president is respected. Russian allies also scored well with Belarus’ president Alexander Lukashenko’s 82% and China’s president Xi Jinping’s 82%. Attitudes to western leaders did less well: French President Emmanuel Macron (24%), German Chancellor Olaf Scholz (14%), US president Joe Biden and Ukrainian President Volodymyr Zelenskiy (both 6%).

Levada compared the results of its survey amongst Russians with those in the US, in a parallel survey conducted by the Chicago Council on Global Affairs, which found a mirror image amongst American respondents. Asked which world leaders were respected, the US respondents put Zelenskiy at the top of the list with 81%, followed by Biden (52%), Xi (10%) and Putin (4%).

Virtually all of the revenue is from external sources, debt and printing money.

Interfax News Agency, 5/26/22

Allocations from the European Union in the amount of $603 million and from the United States in the amount of $500 million, as well as $431-million return on war bonds were the primary sources of Ukrainian budget revenue last week, the Ukrainian Finance Ministry said in a statement on its website.

Between February 24 and May 25, war bonds yielded $3.068 billion, and the budget gained $1.382 billion from the European Union and $986 million from the United States, while the largest contributions were received from the National Bank of Ukraine – $4.103 billion, or UAH 120 billion, it said.

Loans from international financial institutions, bilateral loans and grants are other primary sources of Ukrainian budget revenue, the ministry said.