By Christian Takushi MA UZH, 6 October 2015 – Switzerland.
We are so self-centered in the West, we are missing the silent shift in public opinion around the world concerning the West and Russia. This is now affecting the backup plans for energy security in Europe.
This week Russia is striking back in a three-pronged military-geopolitical-economic initiative, advancing several fronts. Russia’s effective actions have shell-shocked IS militias. Additionally the all-too phobic reaction of the West is only reducing the little credibility our Western Middle East Policies have around the world. Given the dramatic & tragic consequences of US-UK-F military & political interventions in the Middle East (in particular since 2010), Washington and London would be better advised – out of self-interest – to show some restrain in their unrelenting criticism of Russia. The campaign by our Western capitals and media against Russia even after the tragic bombing of a major Humanitarian Hospital in Afghanistan by US forces is counterproductive and leading many outside the West to show more understanding for Russia’s response. It would be the time to put particular interests aside for the sake of civilians in Syria and Iraq.
During the Crimea crisis we criticized Russian media for its biased reporting, but to millions around the world our Western media was just as biased. Our media narrative was seldom questioned by our citizens. Many independent observers in Asia, Africa and specially Latin America were puzzled at our double moral standard. When the USA invaded Panama to seize the Panama Canal, we all knew the official reason was an excuse to protect our Western military and economic interests. None of our political leaders went on to condemn Washington or demand a War Crime tribunal for the hundreds of lost lives. Thus, when we break international law to advance our national interests, we celebrate it. When Beijing, Teheran or Ankara does it, we are silent in order to protect our business interests. When Russia does it, we react with violent fury. Our double moral standard made it easier for Moscow to get acceptance around the world for the necessary evil of protecting their national interests. To many in Asia, the unrelenting expansion of NATO towards Russia and the long presence of strategic US NGO’s and security personal in a perennially unstable nation bordering Russia raised troubling questions. The fact that Western media barely addressed these questions and labeled Russia “expansionist” made our narrative only less credible outside the West. I still think the USA had to protect our interests in Panama, but we should not use flawed moral arguments to bring down our contenders. All nations try to advance their national interests: that is the reality of geopolitics. This year we are adding to our loss of credibility around the world. Does it matter? Yes.
The West no longer writes history alone and we no longer live in a world where most educated people live in the West – in fact hundreds of millions of well-educated people in middle classes around the world are basing their world views less and less on our Western media (i.e. CNN, BBC..). They watch rather to compare and understand our position. Do we care about theirs? Many around the world have noticed that most Western media is systematically omitting critical facts:
- Although the USA, Britain and France bear a good deal of responsibility for thrusting the Middle East into political vacuum and civil wars, (1) they have not apologized to Arab peoples nor shown any remorse, (2) these nations are only reluctantly welcoming the war refugees (Germany, the one nation that abstained to bomb the Sunni-Arab regimes in 2011-2012 is the one taking most of them), and (3) despite their own 12 years (France rather 4) of failed military interventions they are too quick to tear down the initiatives by Russia and Germany to end the war in Syria. The reaction by the current US administration of President Obama and the US State Department is simply not in the best longterm interest of the USA, nor the Middle East.
- The current administrations in Washington and London say Mr. Assad in Syria kills those who oppose him, so he has to be removed. But at the same time, they are eager to treat Mr. Khamenei in Iran as a partner, although he also executes all those who oppose his regime. But who are we to decide which regime leader in the Middle East stays and which one has to die? We show no respect for cultures and peoples in the Middle East. If we really care for human rights everywhere, why is that our leaders and our media are worryingly silent about the endless executions of brave Iranian citizens by their own regime? To advance our interests we had to (1) let down thousands of courageous Iranian people that stood up to their regime in Teheran and (2) downgrade the safety of our Israeli and Arab allies, but we shouldn’t shift our moral compass to fit our agenda. Do we really think people around the world are so naive they didn’t notice that in 2010-2012 we destabilized only Sunni-Arab regimes but shielded the regime in Teheran? Since we are overly rational, we think we are fine, but people in the Orient are more historical and circular in their thinking and catch our flawed moral patterns.
- Western media is subtly but systematically dis-informing: it is barely covering the crimes committed by radicalized Shia Islamists, in particular those backed by Teheran’s Islamic Regime. The obvious reason: Washington is closely cooperating with them on the ground in combat operations, because it lacks troops on the ground. The fact is that thousands of radical Shia Islamists and radical Sunni Islamists are fighting each other in different countries. To many independent observers President Obama has been advancing the cause of Teheran and Turkey since 2010, which opened the door for a nuclear deal, a closer cooperation with Teheran and access to Iranian Gas. And our media has played along to portray Sunni-Arab Islamists and IS as the only threat our world faces. In fact all radicalized armed Islamist terrorists – whether Shia or Sunni – are a potential threat to the world including to Muslim people. The West may sadly harvest what it is sowing. President Obama – against the advice of many US military leaders – is supporting radicalized Shia Islamists to fight radicalized Sunni Islamists. Both, devout Shia and Sunni people – law abiding Muslims – would warn the West that our Middle East Strategy is very dangerous. The radicalized and battle-hardened Islamist fighters we now support might turn on the West later.
- Unaware that the center of Christianity has already shifted to Asia, Africa and Latin America – and thriving – our Western media and policy makers overlook facts that hundreds of millions of Christians in Asia, Africa and Latin America are very concerned and appalled about the systematic slaughter and execution of Christians by Sunni and Shia Islamist militias in the Middle East, this going on for years now. The systematic Religious Cleansing of Christians goes on underreported and unaddressed. In many cases the Western coalition on the ground has let Christian towns fall in the hands of Islamists although they had the intel reports to warn them. As a result a deal with Teheran and Ryad to de-christianize the region is rumored, one we have not been able to confirm. Not far-fetched indeed, the West once closed an eye when most of the Middle East and North Africa was cleansed of Jews. A growing number of people outside the West are embracing the view that – ironically – Russia might be the only world power left willing to protect Christians. Moscow has told Christians in the West, that if persecuted they could come to Russia. Seeing the apathy in our post-Christian Western societies, young Christian nations (many of whose leaders are practicing believers) from East to West have asked for Russia to intervene and to protect Christian minorities, not only from IS. Many in the West say Moscow does it simply to win supporters. But to those persecuted by Islamists and nationalistic forces, Moscow’s ulterior motives are secondary. Many weeks of long deliberations preceded Moscow’s decision, but the tragic fate of Christians in Iraq and Syria has also played a role – whether out of real concern or political considerations, time will tell. I personally think Moscow is strategically filling a military and moral vacuum left by the West, but it is effectively addressing concerns by believers all over the globe appalled at the lack of coverage and action by Western leaders and media. Overly self-centered on our post-Christian societies, we overlook that Christianity is growing fast in many parts of the world, shaping public perception in large and small nations alike: China, South Korea, Singapore, Brazil, Uganda etc. We should care, because in 2014 developing and emerging economies surpassed the advanced economies of the West in economic output (in PPP-terms of the IMF). With economic power comes political & military power.
- Just after Iran-US deal was sealed Iran’s Supreme Leader released a book on how he intends to “take out” Israel. We can only speculate on the reason for this timing: to humiliate President Obama or to strengthen the nationalistic fervor? His commanders confirmed the supreme orders to annihilate Israel and to take Saudi Arabia and other Sunni-Arab states by force, mentioning them even by name. Just as Israel’s PM Netanyahu was to address this before the UN Assembly – in a rare demonstration of joint security cooperation with Sunni-Arab states, a US college shooting took place and UN coverage was dropped by Western media to cover the shooting. Many outside the West have growing doubts about the consequences of an Islamist regime in Teheran bound on destroying her neighbors having access to billions of USD in fresh cash to buy the enriched uranium it can’t produce fast enough. While our energy centers on unilateral inspections (something that has never worked in human history), we miss the fact that the Revolutionary Guard can now simply buy what it lacks to upgrade her mid-range ballistic missiles that can reach Western Europe. Nuclear Security over Europe is fading away. We should nevertheless keep a balanced view, the US-Iran deal has a great positive side-effect: the potential lessening of the daily hardship experienced by Iranian citizens. They have endured 35 years of an autocratic regime and many years of material hardship. The unleashed course of war though, poses a threat to the lives of millions of Iranian, Sunni-Arab and Israeli citizens.
All of this is only reducing the moral standing of the West around the world. And it is playing into the hands of Russia. Thus, Mr. Putin might be disliked in the West, but he is winning some understanding in the rest of the World.
We owe respect to all nations and peoples, Iran and Syria included – all nations try to advance their national interests
I personally believe it is time we stop dividing nations between evil and good ones. Aren’t all our nations constantly striving to advance their national interests? And who sets the rules? we? Thus, I make the case that Iran also has the legitimate right to advance her interests, just as Israel, the USA and the EU have the legitimate right to defend themselves. We can than argue about what is permissible or not – and that vowing to annihilate a neighbor goes too far. But allowing a foe a certain space and respect can do a lot in reducing tensions in order to keep communication lines open.
It is imperative that we stop ridiculing and defaming other nations and their leaders, even if their leaders are in the wrong. When we ridicule their leaders, we indirectly shame a whole nation and its people. How conducive is that to positive change? By the way, our leaders also err. Ridiculing and defamation doesn’t produce any positive results. We should strive instead to show respect to those we disagree with, even if we need to act. Yes, showing respect to Iran, its people and its leaders; showing respect to Russia, its people and its leaders. China, Turkey and Brazil would be encouraged to do the same with all their neighbors. After all, any encounter with Iranian and Russian people will show us how much they have to offer to the world and how much we can learn from them. In this respect PM Netanyahu should be a bit more differentiating when he speaks of Iran, it would serve Israel’s interests better. Millions of Iranians who have endured decades under an autocratic regime feel thrown into the same basket as their revolutionary leaders. And singling out Iran doesn’t help Israel’s broader geo-strategic position either. Many Iranians and Arabs would say “wait a moment, isn’t the current leadership in Ankara and Washington undermining Israel security as well?”. Thus, even when we address the Supreme Leader of Iran’s Revolution and State we should endeavor to separate his foreign policy from his religious beliefs, otherwise we fail to show respect to the Shia religion. If we fail, even the law-abiding well-educated devout Shia population in Iran will feel attacked in their faith. It is time we in the West begin to show respect to the cultures and peoples of the Middle East. We are running out of time.
It is not too late for Realpolitik for the Middle East
Since we don’t have the moral standing nor moral superiority to point fingers on other nations – we lost this over the past 15 years, the least we could do is to try to find common ground with all parties involved in all conflict spots of the world to find workable solutions.
I support the call to policy leaders around the World to support the German Chancellor’s initiative for a Realpolitik solution for Syria – one that includes all involved parties. Our biggest priority now should be to reduce and end the suffering of millions of people in Syria. After Berlin’s bold step to suggest a more pragmatic approach to the Syrian Crisis, it is likely that France, Germany, Russia and China may be ready to compromise in favor of a pragmatic solution or stabilization. If they do, Washington and London are likely to join. Out of self-interest both would be advised to take a lower profile as other world powers try to contain a mess the USA and Britain helped to usher in 2003 and again in 2011. Paris‘ decision thus carries a lot of weight in coming days. President Hollande seems to see the potential consequences of what is at stake for the world and the risks for Europe. It is rare to hear a European leader display so much understanding for the significant geopolitical risks to our security. That strategic perspective may sway him towards supporting Berlin’s proposal for a dialogue where all parties involved can participate. This may involve a limited role for Mr. Assad under the conditionality that his rule will be limited or curtailed. One thing is clear, Paris and Berlin now well appreciate Moscow’s concern that another toppled regime in the Middle East could bring yet more chaos and religious war. A criticism Washington and London have yet to digest and address. But even in the USA, the mood is shifting.
Kentucky Sen. Rand Paul – a US presidential candidate – is pushing for a less interventionist foreign policy. He recently said to NBC: “I think it’s a recurring question in the Middle East: Is it a good idea to topple secular dictators? And what happens when we do?” “I think when Hussein was toppled, we got chaos,” – “We still have chaos in Iraq. I think it emboldened Iran. I think — we now have the rise of radical Islam in Iraq as well.” Mr. Paul may be right, whenever we well-meaningly toppled secular dictators by force, religious war & civil war allowed radical Islamists to come to power or shape the agenda. This threatens Russia and China too. China’s exports go through the Middle East.
When we toppled Mr. Hussein in Iraq, Moscow could not intervene. Neither was it ready to intervene when we toppled Mr. Gadhaffi, Mr. Mubarack etc. But Moscow is not willing to watch how we topple Mr. Assad this time. Facing several tough options, Moscow seems to prefer a strong secular regime rather than another radicalized Islamist regime or open religious war on his Southern flank. An Arab taxi driver and devout Moslem once told me “We are not ready for democracy yet, don’t push it on us. Democracy will be used by Islamist movements to come to power and dominate us ruthlessly”. I think this gentleman has a valid point. If we look into our own Western history we can see that the Nazis, despite being a minority party, quickly dominated German politics in the 1930’s. A strong violent minority will always dominate way beyond its weight .. a whole nation – the majority will always accommodate to try to stay out of trouble and survive. Once part of a ruling power, the most violent group sets the narrative in oppressive ways. Some analysts believe that this is what democratic elections brought about in Egypt, the Islamists went so far, a backlash set in. But whether we like it or not, a significant portion of popular masses in the Middle East want Islamist and Sharia rule (i.e. Turkey, Egypt etc) and soon or later we’ll need to respect it. This is probably the West’s biggest shortcoming in recent years: it has utterly neglected to understand the dramatic shifts in religion and society not only in the Middle East, but also in developing and emerging economies.
Here a brief summary of other issues we are currently monitoring:
1) Geopolitics: Western double standard vs Russia is increasing understanding for Russia’s position around the globe
- Russian fighter jets challenge NATO fighter jets in the air over Syria. Russia coordinated with Israel before launching attacks. Russia’s engagement on the ground has many Western leaders panicking, because (1) if it manages to stem the war, it could ridicule the West’s intervention of the past 5-10 years. (2) Additionally Russia could hinder the so-called Humanitarian corridor of NATO-Turkey in Syria which is also meant to allow gas pipelines in the future – NATO’s backup plan for energy to hedge against Russian Gas.
- After the US bombing of a Humanitarian Hospital in Afghanistan alluring MSF was harboring terrorists and later acknowledging it was a mistake, Medecins sans Frontiers (MSF) has demanded an international WAR CRIME investigation and eventual tribunal. A bad week for US Supreme Commander, Pres. Obama, that started the week attacking Russia for killing civilians. It seems we are all more similar than what we’d like to think.
- Latest polls show more British voters want to exit the EU than those wanting to stay – pressure on the Pound is likely
- Historic deal: Trans-Pacific Partnership TPP is agreed: USA, Canada, Mexico, Chile, Peru, Japan, Australia, New Zealand, Singapore, Malaysia, Vietnam, Brunei. It covers 40% of World Output and unlike other trade blocks it encourages production to be concentrated in a few countries. China is excluded, but it has hedged herself by investing heavily in countries like Peru, that are seen as one of the beneficiaries. Railway connection between Brazil and Peru is being planned.
- Large investors demanded last week more Government stimulus to stop market correction, Policy Makers react with yet more money printing & stimulus. Seems to be working in short term.
- US, German and Japanese economic data points to weakness and manufacturing orders are down sharply in USA (see chart). Exceptions: US service sector shows resilience and India benefits from lower oil prices.
- Management by Fear: Despite clear empirical facts that the West is facing Japan-style Price Stickiness (annual CPI change stuck between -1% to 1%) most economists and central bankers keep spreading fear about a non-existent run-away Deflation.
- The IMF has lowered the Global Economic Forecast to 3.1% in 2015 citing rising risks
- Analysts have taken their “negativity” towards Emerging Economies and Commodities too far. Expectations are extreme
3) Financial Markets
- Despite many weakening signs in the economy we should not rule out possibility of leading US Q3 Earnings surprising positively in the coming weeks
- Global financial markets have reached a technical support level, thus a short relief rally should be under way – Policy makers are again supporting markets!
- Gold at crucial point, if it breaks out (upwards), it could rise further, signaling risk of a global economic recession
- Emerging Markets and Energy stocks have hit oversold levels
4) Some suggestions for Institutional & Qualified Investors
- Given the (almost) maximum negativity on Emerging Economies and Commodities I think institutional investors should begin considering to “start” accumulating some solid individual names in the West and in specific markets in commodities and emerging economies (Silver, Food. Also Indonesia, Philippines, Peru, Singapore etc). Western markets should fall further to find a natural bottom, but policy makers are supporting them again. Thus, they may want to buy carefully in several stages to get a decent average entry price.
- Currency Volatility could rise significantly in coming months – also sparked by the Pound. Policy Makers are again artificially stabilizing markets, but underneath uncertainty continues to build as global tensions mount.
- Countries like Brazil could face a serious political destabilization before they touch the bottom. They subsidized consumer spending with commodity export revenue – a lethal combination. Thus, the slowdown in China is being “magnified” by the somewhat extreme Socialist policies of the past decade. Social spending was right but the structure to finance them was macro-economically irresponsible. Higher corporate and personal taxes are now a possibility. Brazil could learn from Chile some proactive counter-cyclical macroeconomic policy. Saving in fat years, spending in lean years.
Christian Takushi, Macro Economist, 6 October 2015, Switzerland
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