Geopolitical Compass #24

The military heavy edition.

Aug 13, 2023

Bitcoin

The power of NOT asking for permission.

Hydrocarbon Financing

Just when you thought energy is becoming expensive enough from the stupidity of renewable energy virtue signalling, a new factor is creeping in:

This should work wonders for the supply side of these commodities!

For those not familiar, here’s a quick explanation of what Scope 3 emissions are:

Scope 3 encompasses emissions that are not produced by the company itself and are not the result of activities from assets owned or controlled by them, but by those that it's indirectly responsible for up and down its value chain.

Got that? So factors completely out of the energy producers control, like what you or I do with the resultant energy we use to power our homes and the emissions that creates.

How on earth can you calculate that accurately in the first place, and then hold the producers accountable for it after they’ve sold their product? Who knows, but I am certain it will involve lots of highly paid consultancy firms, ‘experts’ and government audits.

So what occurs to energy prices when demand keeps increasing, but new exploration and supply growth is hindered due to insufficient funding? And for good measure throw in burdensome government regulations, compliance requirements and additional taxes?

NATO

I’ve said repeatedly that the Ukraine conflict is a weapons recycling facility. Dump all the old weapons into Ukraine (and no doubt quietly rack up additional foreign and IMF debt that will need to be repaid by Ukrainians) and all the Western defence contractors get to see billions in new orders come flooding in.

But Dmitry Orlov points out why the West needs to abandon its support for Ukraine sooner rather than later:

US-made weapons tend to be overly complex (so that their makers can charge more for the useless extra features) and rather fragile (never tested against a peer adversary like Russia or China, or even against Iran), developed slowly (to clean up on R&D funding), built slowly (because what's the rush?) and very high-maintenance (so that US defense contractors can get even richer delivering spare parts and service). These weapons were supposed to be tested every so gently by giving hell to backward tribesmen armed with old Kalashnikovs and RPGs.
Ukraine is a different story altogether. There, the Ukrainians, with their mismatched hand-me-down Western armor, are being asked to penetrate three lines of hardened Russian defenses. After about a month of effort and staggering losses of men and equipment, they haven't yet been able to reach the first defensive line. The sight of Western armor ablaze does not make good advertising. Consequently, the US defense contractors must be very eager to stop this steady stream of negative advertising for their products to stop right this second — before their reputations end up completely ruined; hence the unseemly haste with which the entire Ukrainian project is being orphaned.

The West is being increasingly embarrassed as their wonder weapons are being convincingly destroyed on the battlefield by a supposedly inferior Russia supposedly only hours away from complete defeat, military mutiny, political turmoil, economic collapse, yadda yadda yadda…

Watching your best weaponry - the stuff you’re eagerly flogging off to other nations at inflated prices - go up in flames is bad for business of the military industrial complex. Better to move back to a cold war situation where you can trumpet how magnificent your weapons are on a controlled, domestic test ground than see the realities against a competent opponent.

Ukraine

So considering the above, here comes the pivot:

There is, of course, another American anxiety; one that is perhaps greater than the fear of drawn-out battle. That is a level of Ukrainian victory that could lead to collapse in the Kremlin and possible fragmentation and chaos across the country with potentially catastrophic geostrategic consequences and untold global economic harm. This immediate vision of doom may or may not be right – but it endures in the back of the minds of White House officials.

Oohhhhhh ok I get it! So Ukraine could have achieved outright glorious victory, but if it did, Russia would collapse and that would be a big problem, so we can’t let Ukraine win, so can only support them enough to ensure they lose the war as well as hundreds of thousands of men, so Russia who we said must be destroyed can actually triumph.

In effect, Russia will only win because the US is going to let them. Sounds plausible.

United States

In addition to the military spend above, in 2022 the United States also contributed more than USD 113 Billion to Ukraine - more than the entire Russian military budget. This shows you that throwing money at a conflict without understanding it does not engender good results.

You’d think after decades of US military failures they would learn this. The US hasn’t ‘won’ a war since WWII and that was with the Soviets doing the heavy lifting of taking out 80% of German forces.

To clarify, ‘declaring victory’ and running away - Afghanistan being the most recent example - is not a win.

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