Dear Partners in Thought,

While we enjoy a constant media flood dealing with the November US elections, naturally focused on the presidency, I thought that I would give you my take focusing on key features that matter. I am not a US citizen but always loved America, not only for what it stood for, but also did to help save Europe and indeed the world last century. While a French citizen and proud to be a Transatlantic European of sorts, America was—and still is—my country “at heart,” given its foundations and history, but also the model it gave me in so many ways in terms of values and principles, even if never a perfect country.

Today we are faced with two candidates nominally still from the two parties that have shaped US politics for decades. While the Democratic Party is still broadly the same, even if opponents would criticize its radical left wing embracing Woke themes that are indeed arguable, the Republican Party is no longer the home of Ronald Reagan or George H.W. Bush with a simple but clear focus on free markets, smaller government, and a strong foreign policy as Western world leader. This change is a crucial feature in American politics, reflecting the rise of vote-grabbing populism with easy answers to complex issues seen in old democracies globally. This change is also reflected in the character of the individual who could lead America again, all the more creating a key leadership issue in our challenging domestic as well as geopolitical times.

Donald Trump highjacked the Republican Party, or Grand Old Party (GOP), as he was able to generate support from a sizeable number of voters nationally and especially in Red States, which changed the nature of the party to the point they ended up largely controlling its very own primary process as party members. Such a development resulted in many elected and would-be-elected Republican officials following Trump in order to stay in or access power in the various legislative houses states-wide or nationally. It is also possible that the traditional GOP, like the Democrats, became gradually seen as too weak or not forceful enough on key subjects we know, such as illegal immigration, always providing avenues to populist parties the world over. It is also fair to stress that social media, increasingly a hardship of our times, has not helped by shaping the minds of those who want simple answers to complex issues, that often need to be fixed. It is clear that this gradual transition seen since the mid-2010s was never wanted by the Republican establishment, most of whose members would despise an individual like Trump, but their existing and future roles took precedence over the essence and future of their very party. Today the GOP is the equivalent, even if better staffed with competent and experienced individuals, of a National Rally in France or similar extremist populist parties across Europe – even if many GOP officials would disagree, wanting their cake and eating it too. The dangerous feature in comparison is that they could and would, once in full power at the White House and Congress, deliver policies that could end up hurting America, the West and the World. As a “Reagan Republican” at heart I take no pleasure in stressing that very sad point.        

Character matters too, especially for key leaders in today’s world. Trump’s style, worse than when at the White House, has clearly debased the political discourse to low levels unseen before but which resonate with its MAGA hat-wearer base, even if he is not seeing that the majority of American voters does not identify with such despicable ways – as we would hope. It is rare today to hear him on the campaign trail without crossing the once acceptable lines on how political competitors treat their opponents, especially in America. It is actually almost funny that very few Trump voters do not realize that Trump only sees them as tools for his personal ambitions while sharing really nothing in common with them – as if someone with his personality traits, and who inherited US$ 400 million from his father to launch his business ever would. His recent falling in love with crypto is the latest vote-grabbing and need-for-funding moves, to the point that it is almost laughable given all the scandals experienced by this gambling scheme in recent years. Trump is simply the poster child for the antithesis of American values and principles while the artful master of bringing show business to the highest political process and office.      

His pick of JD Vance as VP nominee reflects the core features of Trump’s personality. While JD Vance certainly has qualities that led him to where he is today, he is also a “Trump mini me” who does not broaden the appeal of the former President’s candidacy but mainly shows his strong ego. Vance is also a clear opportunist, having been known in his late twenties as a writer defending the center right values for David Frum’s FrumForum while becoming shortly later a strong “Never-Trumper” during the 2016 presidential race, all on the back of his “Hillbilly Blues” book fame. His approach was very clumsy as he rallied Trump, following his Silicon Valley ex-boss Peter Thiel funding of his US Senate race in 2022, while keeping stressing his “working class” roots as a Yale Law graduate turned venture capitalist, who also married a classmate of Indian American origin, who should have made him nicer to Kamala Harris. It was almost funny to see and hear Republican Senators being annoyed and speechless by Vance’s past comments on “childless cat ladies” in addition to Trump’s recent ones on his opponent’s unclear black origins. Vance’s main danger for US society – and the world – is that he is young and could keep Trumpism alive for generations, likely not a small selection criterion for Trump himself.        

Today Trump is the key player of a world where actual and would-be autocrats have risen with names we all know globally. The rise of populists, especially in the leading country in the world (which the US still is) would have serious impacts on international affairs, all the more with a more unhinged Trump 2.0 given the campaign previews we have seen. It is clear that Trump is keen on isolationism which is sold as a way to protect Americans by raising tariffs or not being involved “overseas” but would hurt America’s and its citizens’ interests at all levels, including crucially the pocket book. His historical closeness to Putin (some once argued as the Russians had “something” on him) has led to very soft stances on Russia and its invasion of Ukraine. His approach to NATO and well-deserved demand that all its member countries commit 2% of their GDP seemed to have been a way to follow an isolationist route and leave Europe to deal alone with its longstanding historical threat. It is as if world or Western leadership would no longer matter to Trump, while at the same time he stays focused on China and Taiwan, which also happen to be a bipartisan feature even if the gradual nemesis, that needs to be checked, has other issues of a demographic and economic nature to focus on, actually making them keen on continued globalization (and, as an aside, abandoning NATO would not send the right signals to Tokyo and Seoul). Trump’s focus on isolationism is in fact totally driven “by getting easy votes” from people who believe that the White House under Trump 2.0 would be essentially focused on solving their own problems and issues – this eventually leading to clear disillusions.       

The good news is that America will be able to vote “for” Kamala Harris and Tim Walz and not just “against” Donald Trump and JD Vance – even if both moves will be key drivers with the latter feature seen in recent elections like in France. Values and principles matter and a Harris-Walz ticket, also relatively well-balanced in its composition and quite personable, is the continuation of what America needs, as well as the West and frankly the world. While not reflecting a choice between Good and Evil (that some could argue about), the contrast between the two tickets should be clear. A Harris presidency would naturally be different at some levels than previous ones, also given the backgrounds involved, but expectations for sound continuity would be met. Society would of course not drastically change overnight, while an otherwise wealth-creative capitalism with its known excesses would likely go on, but would be clearly regulated and not subjected to political paybacks likely for Silicon Valley or the crypto crowd as could be expected with the GOP ticket. Opponents of the West would know that America would still be there to defend the values and principles that made it strong and ensure sound geopolitics in unison with its allies globally. Putting aside policies that can be discussed in detail ad nauseam, Harris-Walz is a vote for Reason and Stability, all the more so for America and in a world that needs wise and strong leadership in its challenging times, and the return of History as seen in Europe and the Middle East, if not globally.  

Warmest regards,

Serge

1-3-24

Dear Partners in Thought,

As we enter the third year of the invasion of Ukraine, we recently saw a flurry of tough comments from Donald Trump and the GOP on the relevance of NATO for America. Trump recently did something that no President since Harry Truman ever did. He hinted at a possible withdrawal from NATO on the basis that some European members do not commit the 2% of GDP they should, so are riding on the coattails of America. JD Vance, once the “Hillbilly Elegy” author and former but reformed harsh Trump critic, stressed recently that the US had provided a blanket of security to Europe for far too long. Trump’s statement was accompanied by another strange statement that Putin should indeed attack those defaulting NATO members as if there was a clear link between NATO funding and Russian imperialism – all at a time when Russia shows an increased hostility, now tainted of militarism (even if the latter is denied) towards the West. And all of these strong statements are taking place as Ukraine is under attack though, very critically, in the context of elections in November not only for the US Presidency but also for its Congress. In effect Trump has led the House GOP question the financial support of Ukraine and NATO members reliability – indeed putting the West and its US leadership not to mention credibility at risk – merely for wider domestic political gains and, for some observers, ultimately sorting out most of his legal problems by being back at the White House.    

Trump is of course an anomaly in American history and in a recent poll of American history university professors was found to be the worst White House resident ever, Abraham Lincoln winning the top spot. In spite of a previous presidency that can be defended in terms of policies (forget the Iran nuclear deal and Paris COP 15 commitment departures) Trump has now become dangerous as a potential leader both for America and the world. He is a disgrace to America in style today with no limits to insults he can make about his opponents as if his primary base, largely composed of MAGA hat wearers (some likely wearing the Trump golden $399 “No Surrender” sneakers that were all sold in one day and many cannot afford) were his sole focus. His history of court cases and 91 indictments is a mere reflection of the leader he would be while disqualifying him from any serious office anywhere in the West – even if strangely but effectively used to shore up support among his “cult” base. Going wildly and erratically against NATO that goes well beyond territorial integrity is not just about Europe as it is about the role of America in the world and tied to all the economic and political benefits derived from this leadership. If the US were to withdraw from NATO it would be the end of the West and thus American leadership leading to the gradual decline of an isolationist America and the rise of countries for which democracy is not there or does not really matter. And, while globalization receded post-pandemic, tensions with China and the Ukraine invasion, it still matters to America and the MAGA voters who would not like to discover the side effects of isolationism and an ill-thought America First on their purchasing powers. Finally talking about who is helping whom, maybe Trump and Mike Johnson should remember that the French helped a nascent America “endure” at Yorktown in 1781 – even if we are all together with the British in the successful NATO family now. And that the only time “Article 5” was called by one NATO member to be assisted by all others was after 9-11.  

While the Western world and its leaders rightly condemned Trump for his crazy comments about NATO it should be fair to stress that he may have a point, taken far more artfully by JD Vance in his Financial Times opinion piece dated 21^st February on “Europe must stand on its own two feet on defense”. It is true that some European countries have not spent enough on defense matters in recent decades though as the Western world – and indeed Europe – was going through a never-ending period of global peace through trade. Some countries like Germany were even accused of using their historical guilt to devote needed defense funding to the sheer development of its economy – today the third in the world having bypassed a challenged Japan. In fairness the new German focus on defense with a EUR 100bn program announced two years ago marked a change in conjunction with being the leading EU financial supporter of Ukraine in excess of EUR 19bn to date. At the same time the EU recently managed to get a rather Russia-friendly Hungary not to object (given the still-existing strange unanimity rule) to the latest EUR 50bn aid package agreed even if implementation is always too long while tactics on how to best assist Ukraine may differ, creating the occasional spat. It is also clear that the focus on globalization of the last three decades unwittingly led to a resulting weakness in the military industrial base or complex on both sides of the Atlantic. Putin if anything stressed the need for an end to the “business as usual” of the last thirty-five years. His invasion of Ukraine was a wake-up call that history indeed repeats itself. 

American domestic politics and an election year do not help. The GOP in Congress seems (for many representatives and fewer Senators – though still 26) to combine weaker support for Ukraine and NATO in a strange demonstration of a parallel world where it ends up supporting Putin and Russian aggression in ways that would make Ronald Reagan scream.  While Western unity is key today, we all see unfolding sad developments with a party losing its key foreign policy values and the Republican-controlled House of Representatives taken hostage by a tiny group of extremists and Mike Johnson, a smooth-looking and very Trump-accommodating new Speaker. They simply prefer to back Trump than supporting financially Ukraine (and incidentally Israel in spite of history and the ideological proximity with the Netanyahu government). Trump and his Congress group of followers would rather not give any win to the Biden administration pre-election even if the latest bill supporting Ukraine (also approved by 22 Republican Senators) would also cover a massive new focus on strengthening the border with Mexico, creating a situation that has lost any rationality. Speaker Like Johnson, aware of the stakes, shamefully preferred to opt for a two-week recess than putting the bill to a sensitive but winnable vote while Ukraine was losing a key city on the battlefield. It is also worth remembering that the GOP (albeit a very different one) had been very hard with Obama for seemingly accepting the Crimea takeover by Russia ten years ago. The fact is that the key driver for many in the GOP is to hide behind its hardliners so they can be seen as de facto supporting Trump, all the more when they will also face their own primaries in November where the MAGA base is a key voting bloc. Domestic politics, often at the very personal level, has de facto taken over international affairs rationality and American interests for the sake of seats in Congress.            

Notwithstanding the adverse impact of American domestic politicization at play today, it is possible that a perceived American protectorate might have made it easier for Europe to ignore comfortably its own security, also as the threats were not great, all the more as Russia was working hard at remaking itself at all levels in the early 1990s. As the world we knew is drastically changing, there is no doubt that European NATO member states should adhere fully to the membership terms of the organization that ensured their security since 1949. There is no longer any excuse for not reaching the 2% GDP commitment to re-develop a defense infrastructure but also a troop readiness on the ground. While Europe should take the right steps to ensure its defense, as it now will, it should do so in close coordination and partnership with the US inside NATO. There is simply no other way for both Europe and the US to remain strong globally but also individually as the world becomes more autocratic and adventurous in essence. 

Warmest regards

Serge   

17-11-23

Dear Partners in Thought,

While we see the tragic developments in Gaza today, some of us may feel lost as to which side to support – unless we are strong campus-like activists or of course Jews or Muslims (if not Palestinians) and “who we are” simply dictates our support.

We should, however, take a look at the facts and not the features. It is not religion, race, or history that should matter when we look at the events we saw on October 7. We were faced with unquestionable acts of horror, targeted often at babies and older people who were clearly not active representatives of their government, as if it would ever make the case easier. October 7 was a 9-11 that would have meant a terrorist attack of 45,000 dead in the US (or 10,000 dead in France or the UK). Nobody needed the horror and the way it was delivered – all the more in 2023. It is then very natural that Israel, a democracy, however challenged, in an autocratic and theocratic ocean, wants to stop once and for all Hamas, a devilish organisation if there was ever one, acting supposedly in the interest of the Palestinians in Gaza but actually against them—and indeed for Iran. While the heavy retaliation was predictable, and likely wanted by Hamas to worsen, if ever possible, the abyss they created while unsettling the full region, there is zero doubt that it was justified.

Justification is strong regardless of any short-term political agendas at the top to shift any blame for a massive intelligence failure and likely political mismanagement – that will be addressed when the war is over. Simply put yourself in the shoes of the young mother seeing her baby without a head or yourself seeing your father gone for good after you said hello that nice morning. Terrorism of that scale and abjectly-planned nature was unheard of in living modern history. There is only one way to deal with it, as Israel did even if it is challenging. War is never clean, but such a crime and those perpetrators should be dealt with. Once and for all, “whatever it takes” – but also with a careful and understandably challenging approach to limiting civilian casualties, so as not to be seen as another Hamas with bigger means, and to preserve an image of decency.

There is no question that the Palestinian people of Gaza are hostages, under another name, of Hamas and thus Iran. We can certainly feel very bad about what has happened to them but this should not make us forget they let Hamas take over Gaza and their own lives (whatever tactical preferences at the time from Jerusalem). The fact that they were powerless in shaping their own future is reflecting other issues linked to regional historical traditions, but is no excuse. They sadly pay today the price for something they could have changed if a Palestinian leadership had been more productive. In the end, while they are indeed human shields (as The Washington Post aptly cartooned before feeling strangely guilty) they sadly should not be a reason for Israel to stop destroying Hamas strongholds even if hidden within hospitals, a feature that speaks for itself even if to be perennially denied. It is clear that careful targeting and execution are needed but not to the point of avoiding measures that would let masters of horrors avoid just retribution. The eradication of Hamas, which is needed to avoid a repeat of October 7, should benefit Gazans and be the basis to create the foundations of a workable Israeli-Palestinian partnership going forward.

This new war is not about Jews against Arabs, islamophobia or antisemitism—as we often hear shouted in Western streets or American campuses as a natural development of our times. This new war is not about religion or race. It is about making sure it will never happen again. There might actually be some further steps to take to ensure peace in the Middle East that would involve going back to old fashioned direct intervention, which might also be in the best Western interests. Hamas and indeed Iran did not understand the game they started, which should potentially lead to regime change and another Middle East. There is no doubt that many in Iran would actually want this, all the more those wearing the hijab. 

In the meantime, let’s keep hoping that as many hostages make their way back to their families however daunting it may look while Israel makes sure, with our support, that there will never be another October 7. Let’s clearly ensure that this war sets the stage for a true and fair refocus on creating a genuinely viable and pawn-free future for the Gazans, this eventually leading the way to a mutually productive two-state solution. But for now, let’s be together to defend the values and ways of life that matter. Let’s remember October 7. Today and while Gazan civilian casualties should be kept to a minimum, we are all Israelis.

Warmest regards

Serge     

2-8-23

Dear Partners in Thought,

While the West has shown remarkable unity to date in supporting a country invaded, for unacceptable and largely forgotten imperialistic reasons, by another in the heart of an otherwise rather peaceful Europe since WW2, it is also experiencing issues that may undermine its very future.   

I have wanted to cover a sensitive topic for some time: the need for the West to evolve in its approach to what is democracy today, so it keeps thriving in a much-needed new wave.

Rather than producing a long note I would rather draw your attention to eight key points to enable further thinking, and hopefully a change in Western patterns.

• Western liberal democracy needs not to be “weak”, as if moderates needed to be by definition, and in contrast to political extremists. 

• National identity that defined “who we are” and sensible immigration control matter, and should not be the topic owned and exploited by extremist parties of the hard right.

• Law and order matter, and there is no excuse for the looting and destruction of nearly EUR 1bn in less than a week by disgruntled individuals—whatever their roots and “easy” excuses—like recently seen in the suburbs of Paris and other French cities.    

• Reclaiming ownership of key values that defined the West should make extremist parties (with vote-grabbing easy answers to complex issues and few public management capabilities) less politically relevant.

• A stronger and more secure West at home will be more impactful in its dealings globally, especially concerning rising nations with aspiring world leadership like China.  

• A stronger West should combine an America at peace with itself and a Europe more autonomous at all levels, including defence, so as to strengthen the key partnership.

• While Western style democracy can work in the West and should be offered to the world, the West should realise that many countries are not able to follow that path due to many factors, at times combined, such as their historical roots, corrupt leadership, theocratic approach or even sheer size.

• While focusing on the challenges of our times like climate change, Western democracy should also ensure it controls and indeed regulates better the excesses found in both capitalism and indeed “tech”, big or small, and its adverse developments into unsettling social media, cryptocurrency and now AI, so as to ensure more societal equity and soundness at all levels.    

These eight features, some of which may be contentious, point to a certain direction that should help the West reposition and strengthen itself in the 21^st century, and still offer what we see as workable liberal democracy, this in absolute and relative terms. Geopolitical risk management starts at home.

Warmest regards

Serge

5-7-23

Dear Partners in Thought,

As we enter the summer holiday season, I thought I would give you a shorter and more concise Interlude, focused on some of the key recent geopolitical developments of our times—indeed not always “fun facts”. I stopped at thirteen, given the special ring to it, but the list could be extended, contested and changing week after week. Will the recent events in Jenin lead to major regional disruption in the Middle East and thus qualify? Should AI, in spite of the many concerns it brings (together with clear benefits), ever be seen as a geopolitical tool or development?         

1. The Ukraine invasion united the West against Russia more than ever expected, on old-fashioned principles of territorial sovereignty, though focused on its European heart.

2. The Ukraine invasion showed Russia failing in the pursuit of illusory imperial ambitions, while suffering unheard of political disruptions, showing deep internal weaknesses, and reverting to old ways of domestic control and erratic nuclear tactics.

3. The Ukraine invasion propelled oil production-cutting Saudi Arabia as a major world player in many areas (not only golf) thanks to the impact of Western sanctions on Russian oil and gas fueling its leading world GDP growth in 2022.

4. The Ukraine invasion showed a newly-named Global South wanting to be non-aligned to either the West or Russia, while each of its major components pursued its own domestic agenda, and still pragmatically dealing with both (and also China in our times of simmering tensions) on what primarily matters to them.

5. China, gradually lost between a thirst for global leadership and socio-economic viability, became a world peacemaker with its involvement in getting Iran and Saudi Arabia to resume diplomatic relations, or wanting to play a role in the never-ending Israeli-Palestinian conflict.

6. While declining, the US still leads the world for now but is suffering from self-inflicted wounds such as mass-shootings and social media-fueled existential expressions of extremism, with Donald Trump being a clear example of deepening societal failure. 

7. The old European powers like France or Britain are no longer the European powers they once were, with the EU being their key existential leadership option (sadly for the latter) and the building of European defense being key, even if NATO keeps going.  

8. While Germany is slowly changing its attitude to defense matters and its traditional focus on the economy due to Ukraine, it is still wavering in its approach to China, given the importance of this market to its automakers and other industries.

9. While Europe is united on Ukraine, Taiwan is usually not seen in the same light as in Washington (but for the Baltic states given the proximity of their own mainland China or Czechia to reverse past politics) and its focus will be on not creating unneeded tensions often driven by domestic US politics.

10. Covid, which had, and still has, many unforeseen impacts on society worldwide, did not help diplomacy when it might have been needed, due to sheer distancing and remote communication amongst world leaders.

11. While democracy, where it still exists, is challenged by its illiberal versions and vote-grabbing populism (with its easy answers to complex issues), the EU should stop with its unanimity voting system, and adopt a super-majority in its decision-making. 

12. Globalization is receding, following decades-old corporate investments lost in Russia and the US-China on-and-off warming cold war, and protectionist measures often hidden behind green policies and supply chain de-risking, even if more of a slogan—given the scale and complexity of, and reliance upon, China’s manufacturing make-up.   

13.  AI became an unpredictable existential threat at the “wrong” geopolitical time for the world, while venture capital went further in its gambling “spray and pray” investment approach as previously seen with the crypto and metaverse labels.  

Warmest regards,

Serge

28-01-23

Dear Partners in thought,

As we go into its first anniversary, it is useful to try clarifying where the war in Ukraine may lead—all the more given the massive production of opinions and the fluctuating situation on the battlefield and in the world capitals. In the absence of scenarios for how this war could develop, it is also necessary to realise where the current conflict may evolve, this in a realistic and sober way.

The first and unquestionable conclusion is that Russia (read Putin and the Kremlin) lost so far, and massively. Russia did not take Kyiv in a week. Russia did not take it in 11 months. Its armed forces have even retreated from parts of invaded Ukraine, surprisingly showing poor military management and “command and control”, understandably poor morale and aged equipment. If anything, Russia showed weaknesses at all key levels, doing away with any myth of traditional military strength. Mobilisation, also botched, drove many young men, among them qualified professionals, away from Russia, including in areas which were not targeted like key urban centres, drawing a blow to the long-term prospects of the Russian economy. Western sanctions will gradually be felt throughout the country and its many sectors, if only in terms of key industrial spare parts and, for many, no longer having access to Western goods and lifestyle, or enjoying the pretence of living in a free society. Reasons for invading Ukraine—from following the example of Peter the Great in returning territories, to liberating brothers from neo-Nazis—have been laughable, furthering the decline of the image of Russia, which is becoming gradually isolated. Even China is now adopting a far more cautious and practical de facto approach to the war, leaving Moscow only with the active support of the likes of Iran or North Korea. Russia’s image has been further destroyed by targeting civilian infrastructure (supposedly as it built most of it in Soviet days) and the many atrocities its army and the infamous Wagner Group mercenaries have committed in Ukraine. Russia will gradually face a dual battlefield in Ukraine and at home, the latter to maintain a domestic support that, despite a century of a traditional and well-engineered quasi-“Stockholm Syndrome,” is gradually declining—and is bound to further decrease over time. It is hard to see how the Kremlin hopes to “win” anything today at any level, or to see Putin backing down in the face of reality—which are dangerous factors for Europe and the world.

The second conclusion is that Russia united the West to an unprecedented level while giving rise to a strong Ukrainian identity. Ukraine has now become a fully-fledged nation as shown by the clear response of its citizens to the invasion.  NATO has been given a new and needed fresh wind, and is looking to welcome Sweden and Finland who changed their longstanding minds on defence matters, assuming that a tricky Turkey does not use its right of veto for quasi-existential purposes. Germany very quickly decided to launch a massive and un-heard of defence spending programme, even while still battling with demons of its past. While Germany’s post-WW2 focus was always very practical (the economy first) it became too hard not to becoming more engaged in its support of Ukraine. The recent Leopard 2 tank developments have shown the conundrum of either not helping Ukraine enough militarily, thereby facilitating a Russian victory, or providing it with offensive-type weapons, and then also potentially sliding into a direct NATO-Russia conflict—the latter still not being an unlikely scenario. Largely speaking (and acting as one) the West has also managed the energy shocks arising from the invasion surprisingly well. Even though, for most of Europe, its prior dependence on Russia was partly designed to integrate the latter more into a globalised and thus peaceful world. Lastly, it is clear that Western unity was also required to prevent copycats in other parts of the world like Taiwan, especially at a time when China was more aggressive towards it in 2022 as it struggled to define the new course it now seems to have hopefully achieved.     

It is clear that Ukraine cannot win (nor indeed regain its invaded territories) without Western assistance. NATO countries have gradually provided defensive weapons, notably anti-missile ones, and gradually shifted to light and not-so-light tanks like the UK Challenger, French AMX-10, German infantry Marder vehicle and now Leopard 2 and soon US Abrams tanks. Military jets like F 16s are likely to be the next step in assisting Ukraine through various ways. NATO is clearly sliding into a phase where it is indirectly—via Ukrainian troops for now—at war with Russia (the recent terrorist attack on the French railways cable network by a yet unnamed “foreign group” is an example of things to come alongside initial cyber-attacks).  Germany’s wavering government stance, while showing flip-flops and being unproductive in terms of clearly wanting to defeat Russia, put its future prospects of relations with Ukraine and other CEE countries at risk—as demonstrated by a statement from the German PM, that jets were out of the question, following previous similar ones regarding the provision of Leopard tanks.  It is also fair to stress that Germany has provided much financial assistance, and that many German leaders (including Annalena Baerbock, current Minister for Foreign Affairs and impressively ex co-leader of the Greens), have been unequivocal regarding Germany’s need to support Ukraine from the onset of the invasion. While fully supporting Ukraine with full-range military equipment and training, the West should also ensure that Kyiv focuses on regaining territories lost since February 2022 but does not aim, feeling strong enough, at recouping Crimea, this to give Moscow a peace escape route, however wrong in nature, and given the affinity of the Crimean population with Russia.         

The Ukraine war could be seen as the war also opposing—again to date only indirectly—the old powers that ruled the world for centuries (some could even daringly call it “the war of the white man”, if forgetting the many Russian minorities being mobilised as less problematic for the Kremlin, and the fact that Japan is a clear supporter of Kyiv). Key non-Western nations seem not much directly involved in the conflict from a strategic standpoint. China clearly would prefer a return to peace so global trade could still prevail, but still keeps a neutrality not devoid of measured criticism towards Moscow (which the West is welcoming after months of unclarity) while India is thinking more about its future as the most populous world nation and how to maximise its status to the point of enhancing energy supply from Russia.  Many developing countries in Africa, Latin America or the Middle East refused to condemn Russia at the UN at the time of the invasion, this for diverse reasons including not wanting to be aligned with the West. While nominally neutral, South Africa recently welcomed Foreign Minister Lavrov, showing some “understanding” for the Russian position while fragile states Mali and Burkina Faso have welcomed the Wagner Group and sent France back home (at the same time countries like Angola, Botswana and others, at times with trade ties with Russia, still condemn the invasion).  Saudi Arabia and many of the Gulf countries are taking a practical stance in relation to the conflict, for many reasons driven by sheer economics. It is clear that the Ukraine war is also seen by many emerging countries as a way to obtain the best deals, trade or otherwise, from the West or Russia. All that being said and seen, the Ukraine war is clearly perceived by the unified West as a return to previous centuries, where neighbours would invade neighbours. The West is thus focusing on other means of managing international relations productively and peacefully, hence its unwavering, if at times domestically challenging, support for Kyiv (as a key matter of geostrategic principle, admittedly) and all the more given its location in the centre of Europe.  

There are not many scenarios on offer given the irrationality of the Kremlin and what clear defeat would mean to both sides. The West most likely faces an ultimately binary outcome: either Putin stops, more likely but not only via a coup, or a WW3-type conflict facing NATO countries and Russia could happen either though miscalculations or clear decision-making of last resort. Russia could not win, all the more so, given its poor showing against Ukraine. However, the potential damage tied to the latter may be immense, especially (but not only) for Europe. In a far worse repeat of history (Napoleon’s France, Hitler’s Germany) the Russian military would be eventually destroyed if facing a coalition comprising the US, the UK, France, Germany and other NATO members. The risk of nuclear conflagration, triggered by an overwhelmed Russia for tactical purposes, or even targeting Western capital cities, especially in Europe, would be real, but might not lead to actual strikes, as it would also very likely trigger a quick regime change in Moscow—many in Putin’s inner circle being loyal to date but not crazy.  

A direct conflict of the West via NATO with Russia, while highly possible an outcome, is clearly not to be desired. However, it looks like the best way to deal with Russia, while avoiding a conflict, is to be strong—and unwaveringly so. Being weak or half-hearted in supporting Ukraine would only help Russia achieve its goals from another era, while not preventing a later wider conflict or encouraging the Kremlin from further geographical expansion, like in the Baltics. While the risk of direct conflict is real for NATO, being strong for its members is the only way to either make Putin stop, however unlikely it would be, or foster a coup driven by practical judgement on the part of the Russian elite (obviously not the ultra-nationalists). It would not be unthinkable for the West to also explore ways to facilitate such a latter option, and help and even entice those Russians—be they part of the current leadership, security apparatus or oligarchy—who really want a sound future for their country that could again “one day” return to the global community.

Warmest regards,

Serge               

 

11-12-22

Dear Partners in Thought,

The world drastically changed in early 2022. The Russian invasion of Ukraine brought “a return of history” not seen for 77 years in Europe, and triggered gradual (and often inadequately noticed) shifts in the global geopolitical order. A new cold war, at times quite warm, now seems to be in motion, with the West facing opponents that will act on and off together—and to different degrees—on specific issues that serve their strategic purposes. This new cold war may also encourage more drastic and less diplomatic developments among many countries globally that may starkly focus on their own strategic needs in a less collegial world.

The West, which had shaped the world for centuries, and which still represents the key force in international affairs, is no longer without major rivals. Rivals, indeed, who are more assertive than they were in the past. Some of these, like Russia, who had been in deep relative decline, have resorted to old ways of supremacy—like full scale wars for existential purposes (and likely to secure a dual “negative power” in the energy and grain sectors). Others, like China, with world leading ambitions (but also deep internal challenges and a more dangerous Taiwan focus), have taken advantage of the current turmoil to play tactical games in relation to a resurgent Russia and the likes of key oil rich Saudi Arabia—the latter also tactically wanting to create a more “balanced” relationship with the US.

At the same time, Iran is going through a largely self-induced 1979-like existential crisis, all the while using theocracy to justify its inhumane ways, and thus digging itself further into an unmanageable situation. North Korea seems happy to follow an increasingly erratic and dangerous demonstration of its relevance, affecting not only Seoul now but also the whole world. Turkey, while a NATO member, has been able to play a useful mediator role in the Ukraine crisis, though at the cost of not having a clear identity in relation to the West. Only these past weeks the world has seen disruptions of different magnitudes at the country and leadership levels in Pakistan, Bangladesh, Jamaica, Tunisia, Peru, Brazil and even South Africa —to name but a few.

The West itself is no stranger to political disruptions—as seen by the impact of Brexit, that made both Britain and the EU weaker, or in the travails of Brussels with Budapest and its veto power on key EU programmes. Even Germany, a model of democratic stability, unimaginably faced the recent prospects of a coup led by an extremist group intent on restoring the monarchy. America itself, the leader of the Free World as it was known, has been weakened by a political divide since the mid-2010s that has hampered its very essence and smooth functioning. Extremism has been more vocal, and the two main parties have seen their very existence and nature challenged. More generally, globalisation (while not yet in peril) is receding. Supply chains are redefined, with a gradual repatriation to domestic markets. The fight against climate change, while supported by many (if not all) countries is taking a back seat to energy independence. Geopolitical risk has risen and created many challenging issues requiring management at all levels.  

Planning for the future has become arduous not only at the country and government levels, but also at the corporate and investment levels. Geopolitical risk management has become the rising key focus of corporations and investors acting globally but also domestically. The key features of market entry, management and exit, have become essential steps to be reviewed with great attention to geopolitical risk. Due diligence is no longer mainly about numbers and whether there is a market to develop. Political stability and partner identification have become key. All these geopolitical risk aspects are still mainly related to emerging markets, although they increasingly need to be considered for domestic or outward investments also in the West, mainly due to the rise of populism and its unpredictability. The Private Equity sector, with its USD 10 trillion of investments worldwide, is one of the natural business segments needing to assess geopolitical risks globally, much like corporations when conducting mergers & acquisitions internationally to develop their business. Even a private equity manager mainly focused on its domestic market will need to assess the quality of a foreign investor coming from a less well-known geography, or plan for the potential impact on its investment activities of the vagaries of a currently divided legislature, like in the US. In this new era of world disorder that can still be managed efficiently, it will be key for world actors to receive the proper geopolitical risk management input that combines superior human and digital intelligence—the former remaining crucial even in our fast-changing tech world. Experience, judgement and networks will be essential in managing geopolitical risk as a key component of corporate and investment decision-making.

Warmest regards

Serge         

26-07-22

Dear Partners in Thought,

As the Russian invasion of Ukraine enters its sixth month, it is worth stressing a few facts and considerations in the midst of a still regular, but now reduced, news flow. As time goes by and the new normal sets in, the Western media are also now more focused on the issues of the day such as climate change-related heat or other daily concerns—rising inflation, energy prices and food scarcity as if the latter three are somehow rootless.

1. The winner is not clear but…

By not winning outright, Russia has already “lost.” However, the fight is going on and may be a long game in the making. While the protracted and exhausting game may at first glance seem to favor Russia—having made a few wins in the East and now wanting to annex more territories in the South to link Crimea to the Donbas—its military resources are depleted both in terms of manpower and equipment. At the same time, Ukraine, having suffered a few setbacks in the Donbas, is now using pivotal new long-range US rockets, inflicting heavy damage to Russian supply lines, ammunition depots and massive but outdated artillery. At this stage it is hard to predict how the war will unfold, while more analysts are betting on an embattled and theoretically weaker Ukraine eventually winning, given the deep systemic Russian flaws at play, and the natural advantage given to the defenders of their land—all borne out by facts on the ground. However, in order to win, Ukraine will have to get not only more efficient weapons, but also more troops trained (the West, like Britain. being key now) and start launching large scale counter-offensives in such areas near strategic Kherson.

2. The West’s resolve is not the strongest but…

The West wants to support Ukraine and the rule of international law, but is not keen on waging a war against Russia—despite effectively doing so by sending weapons and ammunitions (albeit in a way that seems at times reserved). The West therefore does not know where it stands, and is still somewhat afraid of eventually facing Russia militarily (even if the latter proved to be very inadequate, though very nuclear strong) while struggling with the impact of their own sanctions and trying to keep some gas (and grain) flowing. The West is still digesting the failure of peace through trade, exemplified by Angela Merkel, and now paying for it by having trusted and allowed an always undemocratic and unpredictable Russia control its energy future. However, while the West could be much stronger and stress the direct military option more (predictably unpopular at home), it has still managed to strengthen itself in rallying together—as seen with a stronger NATO welcoming former, traditionally neutral, now new-cold-war frontline countries, like Sweden and Finland. The EU green parties have also shown resolve, notably in Germany, to sacrifice temporarily both of their coal and nuclear energy policies on the altar of support of Ukraine and what it stands for – all while an EU-level energy transition should take place in order to break the costly dependence on Russia and also in the context of the now unavoidable fight against climate change. However, such a resolve is also dependent upon political leadership at the country level, especially among leading Western countries—domestic events like the unexpected resignation of Prime Minister Draghi following the “betrayal” of his Five Stars and League coalition partners (incidentally Putin’s Russia’s old friends), may have an adverse strategic impact.

3. The West may also get tired but…

The West may get tired, over time, in its support of Ukraine, even if it could always be more decisive, while the long game may favor Putin (or not according to Richard Moore, the head of MI6). The streets of the West will gradually focus more on the long-forgotten rising inflation, and the price of petrol/gas at the pump, than what is happening in Ukraine—as seen in parts of America—regardless of the values, principles and geopolitics at play. Communication from Western governments, to explain the rationality of unwavering support of Ukraine to their own populations, will be key. There is also a need to reconcile the gap between promises and action on financial aid to Ukraine made by the EU, which has only disbursed EUR 1bn out of the EUR 9bn pledged in April, while the US has already disbursed USD 4bn to Kyiv, and plans to send another USD 6.2bn in September. The European gap is also linked to domestic reactions to rising inflation (directly attributable to Putin’s energy and grain blockage backlash) even if some of it is naturally Covid era-related. And Putin is obviously betting on the populations of the West to put pressures on their governments to focus on the economy, away from the geopolitics and moral principles, reflecting in some ways what the recent Biden trip to Saudi Arabia has been—even if linked to the Russian invasion. It is also key for Ukraine to ensure that side problems, like arms smuggling, are properly and publicly managed, as it would be a trigger or an easier excuse for reduced Western support, on the back of a challenging but practical admission that Ukraine had always been a very corrupt “environment,” and new cold war borders have now been redrawn and should be lived with.

4. Russia is delusional – no, but…

The Kremlin is living in a parallel world in 2022. It behaves as if nothing abnormal had really happened in its forcefully returning territories à la Peter the Great. Bravado is back center stage at the Kremlin, which is re-stressing the initial invasion “rationale” that Russia is fighting to remove the Ukraine leadership, so as to “de-Nazify the state;” as if the first initial statements had not been crazy enough at all levels— including when dealing with President Zelensky who is notoriously Jewish. When all is said and done, Putin’s move made Russia i) a war crime-ridden pariah state for at least one generation, and certainly until he is gone from the Kremlin; ii) a perceived much weaker military power with command issues, troop deficiencies at many levels, and obsolete equipment on display and iii) a gradually-isolated and economically-suffering country with ties to shaky democracies and dictatorships, that will also suffer from their indirect support of Russia. Peter the Great would not be too happy about these developments, not to mention seeing the new Czar needing Iran for drones. Moscow today also benefits more from anti-Western rather than pro-Russian support, with China being the lead example of an early fair-weather friend caught—if not trapped—by the surprise invasion, but which still needs globalization, and claims that national sovereignty matters (except naturally for Taiwan, which explains the enduring “friendship” in the east China seas that currently annoys Japan). Putin today is facing the key challenge of maintaining the integrity of the Russian army, and wants to stay away from what would be a deeply unpopular—but required—mobilization, that would also stress nation-wide the collapse of his “limited special operation.” The most militarily cost-effective option for Putin, while maintaining ongoing economic pressures and cyberattacks on the West, would be to declare victory when and if Russia controls the Donbas (so forgetting the South and its “link rationale”), and start multilateral negotiations to end the war just as the West is pressured on the energy front as Winter comes.

5. Sanctions are a challenging tool – for all

Sanctions—which made sense for the West and the world, in order to punish unacceptable old geopolitical ways, all the more so in Europe—may also hurt the West, without impacting Russia, as the Kremlin does not really care about what is happening to its own population in the way that Western governments would need to. As shown in the domestic support for Putin, the Stockholm syndrome is powerful, and what matters to the Russian people, all the more in non-urban areas and with few connections to the world, is national pride (however flawed), rather than the quality of daily life. The Russian people, however, also live in the 21st century and may grow tired—by the combination of an ever-going war and, indeed sanctions—though they seem ill-equipped for societal change-making from the grassroots, in the controlled environment that always was Russia. It is clear that Putin is betting on the economic pain resulting from food and energy shortage, and rising inflation to force the West, especially the EU that is also more on the frontlines, to advise Kyiv to negotiate an end of the war on good terms for Moscow—so far without results, though it is early days, and recession and shortages are only starting (even if a “complex” geopolitical actor like Turkey just led Moscow to soften the blockade imposed on Ukrainian Black Sea ports grain exports, via a UN-sponsored agreement in Istanbul).

6. The neutral developing world is suffering – and may further do so

Apart from India, that still benefits from its high-wire exercise between the West and Russia, the less wealthy world, which did not initially condemn Russia at the UN for many different reasons, is hit very hard by food shortages—especially on the African continent. Many countries, having perennially suffered from war and civil strife, are clearly not interested in the multiple political aspects of an unusual large-scale war in Europe. One of the unexpected developments of the conflict may be a Western handling of the neutral developing world in a more tactical way than it has done so far, even if a new cold war with China, if it developed further, may soften the process. The recent collapse of the Sri Lankan government, with all its violent features, illustrates what could be a wider crisis among developing countries that suffer from the rising energy prices, food shortages and costs, and much stronger US dollar—all by-products of an invasion from another time in the heart of far-away Europe. It is, however, also possible that many of these developing countries and their peoples gradually feel that the roots of their problems lie with Russia’s initial war move, which may not create the best of future relationships with an ever-isolated and less-appealing Russian partner. The recent UN deal, brokered by Turkey, to reopen the exports of Ukrainian grain doubtless results from Moscow’s realization, that many of these “neutral” countries (and even partners) were deeply suffering from its war blockades globally. And, of course, some countries may welcome the start of a new cold war, that brings more geopolitical clarity—like Iran supplying Russia with drones; the latter example not being a strong point for the Kremlin and its military wherewithal.

7. Russia may not be as tough as it shows (with history eventually repeating itself)

While many Russians suffer from historical and enhanced Stockholm Syndrome, it is still not clear that a long war would not create conditions for domestic reactions at some point. It is, however, an increasingly-challenging (if not impossible) scenario, as many of the urban, educated Russians have fled Russia (especially academics and tech specialists)—no longer wanting to stay in such an autocratic environment, thus indirectly helping Putin deal with reduced natural opposition, but also hurting Russia at its value creative core. While Putin and his self-centered inner circle seem to control Russia, and bet on its ancestral resilience, the latter—possibly not oblivious to popular sentiment—may at some point find the costs of Putin’s new cold war strategy no longer acceptable. Some of the key oligarchs, who may seem obedient so far, but have likely suffered greatly financially and leisurely globally, may start plotting, even if the Kremlin risk-management measures are likely in full force. On a closer look, time may not actually be on Putin’s side, as he finds himself increasingly alone in the Kremlin. Back in 1917 another war helped bring down another Czar.

The situation is Ukraine is unclear, and the above facts show a disconnected—and at times incoherent—picture. The outcome of the war could go anywhere. Resolve is still the key ingredient to beating Russia, or bringing it to the negotiating table on acceptable terms.

Warmest regards,

Serge

08-07-22

Dear Partners in Thought,

Most commentators of the results of the last French legislative elections seemed to point to an ungovernable France and a President Macron lost at sea, while Europe and the world are in the midst of a dual economic and geopolitical crisis. It is time for more clarity.

While President Macron lost his parliamentary majority (as was expected) and it may not be business as usual in terms of his legislative agenda, France will remain a “governed” country and Macron’s agenda will go forward – even if not in full.

Macron’s mistake, which he may not see as one, was to neglect his party or, more correctly, opportunistic movement of five years ago known as La République en Marche (the republic going forward), this also reflecting the fact that since 2017 France went from party politics to personality politics, as Marine Le Pen would agree. It is symptomatic to notice that the two emanations of the parties that governed France on the left and the right, for nearly sixty years with an aggregate of 80-90% of the votes, only gathered less than 7% at the first round of the most recent presidential election last May.

As such, Macron will still govern France, even if more arduously. There are many reasons for this:

1. While the left wing opposition, created in no time as a coalition of four different parties (the radical left La France Insoumise (Rebellious or usually Unbowed France) led by the radical leftist Jean-Luc Mélanchon, the Socialist Party, once ruler of France, the dwarfed Communist Party and the popular Greens) gathered 131 MPs (députés in French) they are unlikely to act as one parliamentary group, as each of the three partners of Rebellious France would prefer having their own group. They also do not share the same political agenda – short of defeating Macron at the last election.

The chair of the crucial National Assembly’s finance committee being given to a radical leftist, opponent of capitalism and neoliberalism, is a mere technical step. Such a committee chairmanship is traditionally given to the opposition, admittedly usually so far sharing the same values as to the prevailing world economic system. This step will not prevent the government from controlling the budgetary process and passing legislation, even if requiring working with other, mostly centrist and centre right, individual parliamentarians or their formations.

2. The Rassemblement National or RN (National Rally), that was created by Jean-Marie Le Pen in the early 1970s as the Front National and was reset as a less racist (though Islamophobic, immigration hostile) and anti-EU extreme right party, created the surprise in multiplying by ten the number of its MPs (all while giving the short-lived extreme right disrupter Eric Zemmour, even more radical than Le Pen, the image of a forgotten soufflé). It was a great feat, but 89 MPs do not make law, even if the RN will be the leading single opposition party in the French Assembly.

So, there will be no really strongly-structured parliamentary opposition to Macron, even if he has no absolute majority and the passing of laws will no longer technically and superficially be “business as usual”. Offers of a national unity government initially made by Macron, while showing a willingness to cooperate, will not go far with opposition parties naturally wanting to oppose. As such, the French President will rely on the Les Républicains party (LR), the neo-Gaullist party of the day, that has been in deep existential crisis having been squeezed for five years between Macron and the RN, while at the same time losing its identity as a centre right “government party”, to act as its right wing in passing many laws. LR will do so, as they wish to survive and not be seen as blocking the constitutional process. And when Macron seeks to lead the EU in five years, when he can no longer run for the French Presidency, LR will likely then try reappearing again as the party of the moderate and sensible right that should naturally take over the affairs of France – all the more if the Socialist Party keeps vanishing due to its dearth of talents, and RN shows its ineptitude to play a constructive legislative role as extremist parties often do when its members are elected.

In the meantime, Macron will ensure that the foreign and defence policies of France stay as they have been so far, as he will remain in sole charge of this presidential domain under the constitution of the Vth Republic made for Charles de Gaulle. Ukraine, the EU and the West should not lose any sleep.

Two points should be noted when reviewing the last election outcome: the high abstention level and the very young age of some of the new MPs. The first point should be seen in the context of the view that, having ensured that Le Pen did not go to the Elysée Palace, voters might have decided not to give full power to a “distant” President by weakening his legislative agenda. However, it is not sure that the outcome of the National Assembly election was so well crafted. Abstention was at 54% which is high for any European parliamentary election though not so uncommon after a presidential election that focused more minds two months earlier. It should be stressed that the “young” (the 18-26 age group) – not unlike for the Brexit referendum – abstained at a high 70% level putting into question whether they are interested in their future or trusting the traditional electoral and political processes. It is also clear that such a high general and “young generation” abstention rate favoured extremist parties, left and right, as their followers tend to go voting – resulting in a poor, but officially valid, reflection of actual public opinion and an over-representation of extremist parties, e.g. Rebellious France (via NUPES this time) or Marine Le Pen’s extreme right party. The second point stressed by commentators, many times as a good feature, is the much younger age of some the MPs, at times being elected in their early to mid-twenties (like for the RN as Marine Le Pen worked hard to sway the few very young talents who wanted to be engaged politically), or the unusual background of some (a cleaning lady known for having organised a strike against hotel group Accor was elected as a Rebellious France-NUPES MP). While the average MP age of 48.5 does not change from 2017 (it was 55 in 2007) this last development should also be assessed against experience and indeed competence for the tasks required from an MP in an advanced democracy. Being young is great and can usefully bring another key societal input to the National Assembly. However, sheer youth does not usually yield tested expertise, while France is also known for the expertise and management skills, at times called and criticised as “technocracy”, of its political leaders who often went through the well-known elitist (though meritocratic) ENA school. And if looking at similar themes of our days alongside age (actually while ageism should be fought against fashionably in today’s times), like gender, the new National Assembly may be less representative of French society as it has fewer women than in 2017, when many new MPs in the Macron movement were indeed women, a feature that Macron’s opponents understandably kept low key.

So, going back to an “ungovernable France” and as the French saying goes if applied to the outcome of the latest French elections “a lot of noise for not much or indeed nothing”. As always, the real opposition to Macron, as he has known it since 2017, will be in the street.

Warmest regards,

Serge