Six Problems Over Which To Lose Sleep
As the war drags on in Ukraine, we're starting to see all kinds of problems poking their heads over the horizon. These problems were latent problems of the world, but thanks to the war, they have become blatant problems of the world.
No.1 with a bullet for the Europeans is what they're going to do for heating in winter. Too many European countries are dependent on natural gas from Russia. This used to be a vague hypothetical problem, but this northern winter, it's going to be very real, front and centre. There are no easy answers for this because it's not like there are substitute sources, and it's not like there's an alternative fuel to replace it.
No.2 is the grain export problem. Both Russia and Ukraine were major exporters of grains. Now those exports have been hampered by the war. The last time there were major issues with food in North Africa, it brought about the Arab Spring. That is to say, if you're a dictator in North Africa and your country is dependent on imported grains for food, then this is not a good situation at al.
No.3 on the list is fertilisers. Russia is the biggest exporter of potash and now that's off the market. Agricultural inputs are pretty unforgiving so growers the world over will make changes to what they plant next year which means globally speaking, we might not have enough food sometime soon. China would be in the shit if that happens because, they are major food importers. And as with the dictators sitting on a hungry population in No.2 above, Xi Jinping's China stands to be in trouble the most over this problem, when it has the problems of its own (more on that below at No.6).
No.4 is crude oil. We've already seen the oil prices sky rocket and with it inflation. While the immediate peak has passed, oil is going to remain high because Russia was the largest exporter of crude just before the Ukraine invasion. now with sanctions, Russia theoretically can't sell their oil. In practical terms, they're probably keeping their pipelines open to North Korea, but if they stop the oil pipelines, that's it. The pipeline is dead. Meanwhile the world without oil can try and accelerate towards alternative fuel sources but are we geared towards accomplishing that? If we're relying on China to produce the cheap solar panels going into the future, we might be in for a rude shock.
No.5 is the new model of war that America seems to be trialling in Ukraine. After spending 20 years fighting in Afghanistan, trying to bolster any kind of state there only to see it fall in a week, it is clear the Americans were leery of fighting anywhere to bolster any state. If you add in the chances of a nuclear war, America has had the best reason not to engage in direct fire with the Russians. That said, unlike the Afghans, the Ukrainians have fought hard to keep their state and sovereignty, which has given the world a window to operate. What the Americans have opted to do is give arms to the Ukrainians to fight their war, but have decidedly kept their troops out. This may work well for Ukraine and in the end if they do defeat Russia, it will have worked very well with America. Because success in this model means America will have a new way of managing their wars - they don't send troops and ships, they just send the weapons. It signals a retreat from Pax Americana.
No.6 is China. China probably deserves an entry all of its own but it can be broken down into three components. The first is political. The concentration of power Xi Jinping has managed to accrue makes China a dictatorship with no checks or balances. China might make the unfortunate call to invade Taiwan and if they do, it would be because one person wanted it, and not necessarily the polity of China. The second is its management of Covid where it is still in the Zero Covid method that was more common before there was the vaccine. China is still doing these because their Sinovax doesn't work. The third component is the property bubble bursting. It's so bad there have been bank runs. China is not going to be the growth engine of the world economy as it has been for the last 30 years. It's probably not even going to stay as the underpants factory of the world. Globalisation is retreating and the combination of the above three component problems mean it is leaving from China the fastest. In this global context, the rise of Xi Jinping, unreformed-Maoist-Totalitarian, is most unfortunate.
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