The new world of disorder
Honestly, I’ve been trying not to think about it all. I’ve been blockading my thoughts with audiobooks, so my thoughts on this are very much top of the head. And, everytime I’ve written something, another new and stupid event occurs. Maybe Trump makes the move on NATO tonight (March 4th) at the joint sitting of Congress? Maybe enough rich people got spooked by yesterday’s GDP figures and Trump gets leaned on, who knows?
That said, DOGE is wilder than I imagined which will hurt the States more than the tariff autarky I was expecting. This is going to be a disaster for states dependent on the Federal Government (red states) and there could well be Hoover towns developing around cities if the Fema response this year will be as bad as I suspect it will be.
God knows how the Red states will react to be honest, I can’t see them interrogating their hubris so they’ll probably just distract themselves by hunting trans people and women looking for abortions, or if they’re more extreme they’ll actively blame their suffering on the ZOG and may actually start shooting up aid convoys like the accelerationists were trying to instigate after hurricane Helene.
Security Russia/Ukraine:
Trump is at the bad end of the range I’d have put him on, though it was a narrow range so I don’t think that a better Trump would have been that much better.
I think the Zelensky farce on Friday has done us a favour as it smoked out the peers of Sholtz who would have wanted to play pretend about what the Yanks have become (a State that is somewhere between unreliable at best, an enemy at worst, with degrees of antagonistic opposition interspersed between the extremes).
The ambiguity that had developed regarding how reliable the US had become tipped in Russia’s favour with Trump II – Even after Vance in Munich some of the Europeans were still trying to placate Trump as though nothing had changed, or at least they believed that they could change him. Aost of the uncertainty that was being experienced was occurring within the EUR camp, not the RU camp, the advantage arising out of ambiguity fell to the Russians therefore the clarity that has emerged since the Oval Office haranguing of Zelensky is a net positive.
Obviously, Starmer et al. want to continue to play pretend, but at best that will just undermine GB’s long term effectiveness. By delaying GB’s decoupling from the US they’re going to inherit the US’s unreliable partner status.
Having failed on Friday, Trump’s next steps will be to blame and punish EUR for not doing what they’re told. There’ll be a lot of bluster but there’s only three levers; more tariffs, NATO disinvestment in EUR, and moving towards neutrality/active support of RU. The first two are unavoidable, it is only a matter of the degree to which they are put into effect. The third has a question mark over it as EUR has leverage within the US and a breach as large as this will affect many in Trump’s camp.
A real concern with the Canada tariffs is that Trump’s people will very quickly suggest that Russian supplies will fill the energy gap (they won’t, but it may be enough to set Trump upon the path of breaking the sanctions regime if he moves quickly).
Business of war:
All the market signals point towards a major European rearmament (daily double digit growth in the proce of Rhinemetall since Friday after shares already increasing by a third since late January) at the expense of the US arms industry, the friend-shoring narrative will apply even more strongly. I hope my pension was more invested in Leonardo than Tesla.
I’m glad it’s Merz and not Sholtz who’ll be taking over DE. He also seems to be enthusiastic about removing the DE debt-brake, which is good for EUR generally.
I can see the tariffs, and Trump’s defence posture, moving Brussels even further into the friend-shoring space, and anyone who has traditionally relied upon the US to back them up needs to do the same. If I was working for Aérospatiale I’d have a plane full of guys in Taiwan looking to open an exocet missile Factory for them there already. I think JAP and SK are already there when it comes to their perspective on US reliability, whereas AUS has the potential to be as batshit as the US. Though I think that AUS is also never seeing those AUKUS SSNs, so I hope they didn’t put down too much of a down payment and that they have a contingency plan in place as the French shipyards are going to be busy for a long time and AUS is owed no favours.
The Economy:
I’m not strongly negative about the economic impact of a lot of this for Europe, I think it’s lower growth territory rather than neg-growth for the EU. Most of the work that’s needed to manage the decoupling was carried out as part of the covid, Russia, and the green energy transition. I can see a big contraction in trade that occurs outside of EU trade agreements, but more investment within the EU, particularly in Eastern-EUR. I can see the EU states using the economic machinery of the COVID response to support investment and EU can absorb a lot of investment. I can see a lot of European pension funds trying to disentangle from the US so that should reduce capital cost here. The signal to watch out for is whether there’s actual movement in the Capital Markets Union here, or not. Still a strong possibility that the German constitutional court might send us into a regional depression though, a lot depends on how Merz handles the Debt brake
Locally, I can imagine people in Kildare Street fretting about the disintegration in globalised trade, but they won’t matter, and they’ll probably be wrong in the long term. Anyone exporting from US to EU will double their margin if they produce here, so things like pharma will be fine. And, we can just sell Botox to Mexico and let them do the smuggling into the States for us.
As part of the EU’s response, I believe that the US could be very vulnerable to taxes on services so I can see Microsoft and the rest being useful levers for manipulating those in the States. Also, I think Microsoft (and their peers) have made themselves enemies of the Commission – I think the likes of Zuck, Bezos, Musk, Thiel, etc. lining up with Trump was in part a reaction to the Brussels effect – they sought an opportunity to use US power to push back on EU efforts. But they’ve put themselves in the middle of the fight while the US is losing advantage, and all while their AI bet looks like it’s going bust.
NATO:
Big problems in NATO, hard to see the US legally withdrawing from NATO, but easy to foresee a defacto withdrawal – troops and materiel returning to the States, nukes being withdrawn from Belgium, Germany and Turkey etc.
In that context it’s difficult to see how US continues to hold SACEUR, but also hard to see how EUR can relieve them of it. Probably easier to introduce two more DSACEUR, though they need to be Polish (biggest ground army) and French (non-US controlled nukes). The present DSACEUR is British (and usually is) but their nukes are controlled by the yanks (Lockheed Martin) once they leave the boats so they’re not to be relied upon.
EUR needs to assume that in a crisis the US will defect (assuming they don’t do so before they precipitate a crisis), so EUR needs to build a non-US Command and Control structure (which also, given the above, needs to be non-GB too) for their article 42(7) commitments.
NATO have already been working on this, under the cover of European self-sufficiency which is why Steadfast Dart in Romania has no US involvement, why the last year’s Steadfast Defender involved so many regional, and non-US, battlegroups, and also why CTF Baltic is run out of Rostock etc.
The problem will be what happens if there is a crisis and the current NATO structures are dominated by Brits, and the Brits are too close to the Yanks. If we could get the Brits to step outside that circle then there could be a plug-and-play “I can’t believe it’s not NATO” style org in a crisis. If however they won’t, then there needs to be an EU led alternative, and that will be tough in the context of Orbán and Fico. I’d say that through these proxies, the Russians are going to continue to use the tactic of the liberum veto to undermine the EU (as they did with the Polish-Lithuanian Commonwealth, I think that Putin enjoys the symmetry) which means that there won’t be an EU structure introduced until after a crisis emerges. In the interim the current NATO players will need to continue to practice without the Yanks, there will need to be efforts to widen the breach between the US and GB, and we also need to backfill the capacities that the Yanks currently serve.
These include intelligence (particularly SigInt and ISR) and logistics (both in terms of what is warehoused and how it gets moved). This is going to be a catastrophe for the five-eyes. Given their shared history, there’s barely tissue paper GCHQ and NSA but the yanks own all the toys therefore GB is locked into the US view of the world or are otherwise blind. As a result of all this, none of the other five-eyes can rely on the US to keep their Intel secret and also can’t trust what the US tells them.
The response to this requires a massive duplication of effort around satellites as the five eyes (ex-us) have to develop their own compartmentalised sources, and the EUR people have to do the same (because GB will leak to the US and won’t be about to avoid doing so). Good times ahead for Airbus shares.
Russia:
Not an immediate military threat to us (the EUR states) I think that they’re averaging at about 2/3rds of a tank per day over the last year, and that costs about 1000 casualties (dead/wounded/missing). If they did try anything they’d have half a million poles annexing Belarus within a week and would be having to burn Moscow to keep it from their hands, meanwhile the Finns would be getting sentimental about Karelia.
The bigger Russian threat, at this point, is in them trying to unhinge Europeans in the same way that the Yanks have become unhinged. I think that the Russians are likely to have claimed the collapse in the credibility of the US as an RU success story even if it is the case that the Yanks have actually unhinged themselves (my view: I think that the Russians have tried to destabilise the Yanks, and that to the extent that they were effective, this could only have happened if the Yanks had already walked themselves up to the edge of the precipice).
Sick an effort is going to be more challenging too accomplish in the EU but, because of the structure of the EU, they only need control of a couple of players to introduce a lot of friction. While they have a couple of pieces on the board, I can also see anti-Trump sentiment reducing the opportunity for pro-Trump iconoclasts which could make further gains for Russia’s proxies difficult. In the absence of a more effective assassin for Fico, or a Hungarian equivalent, Brussels will continue the technique of strategic bribery to minimise the effect of Russian proxies like them.
In response to RU, the EU needs to keep supporting UA (and it fits into their self image as the champions of the rule of law – looks like McGrath’s portfolio will be much more important than the backbenchers in FF thought). If you want to be principled, it’s the right think to do and helps differentiate between the EU and the US. If you want to be consequentialist – then letting the Russians away with an aggressive war mean that they will continue using this tactic, and it will encourage the Yanks (and others) to behave the same way. If you want to be a ruthless realist – having Ukrainians bleed the Russians white (while annihilating Russian strategic reserves) is a very cost effective means of securing regional dominance. I don’t really see an EUR play that gives a win to Trump and Putin in the absence of a thorough collapse in democratic norms in the large EU states.
If I was Putin I’d continue to press all the buttons to see what works. But I’d also be doubling down on places where that has been effective with a real focus on GB and E-Eur. The former Warsaw Pact countries have lots of pain points that can be pressed to create divisions (internally and as part of the EU) even if they won’t be as effective as the Visigrád group was (I’m just glad that the Poles hate Russians more than they hate gays and women). It is very likely that Putin will seek to repeat what’s happened in the States in GB, and that there will be as many Quislings there as he found in the States. Aside from reinforcing success (and regardless of whether the debacle that is British politics is a consequence of Russian undermining of British politics, it will look like a Russian success story to the Russians), British politics is a shit show (god knows what kind of nonsense they’ll come out with next) and political weakness there, of wherever kind, will weaken NATO, which is Russia’s strategic goal in Europe.
I think that an unjust peace in Ukraine will be spun by Putin as a Russian triumph, and I can see him or his successors reviving as NATO weakens. I can also imagine a revanchist Ukraine being manipulated into supporting a post-war rearmament of Russian in response to the stab in the back.
Turkey:
Opportunities aplenty for Erdoğan; a weakened Syria, Iran, and Russia means that it can press it’s advantages across the Levant and the Caucasus. It should take advantage of the Russian collapse in Syria regardless of what the Israelis say, the facts on the ground will be more important than Israel’s concerns about a stronger Turkey. Their support for the FSA will undermine HTS allowing them to continue their pressure on the Kurds across the region.
Asia:
Japan, SK, Taiwan and the Philippines should all be assuming that China/Russia will be able to outbid them should US support be needed. I don’t think they’ll need to go as far as a mutual defence pact but they need a lot of security cooperation (and likely involving Vietnam), and a lot of matériel if they are to weather these storms. Awkwardly for China, China needs to take Taiwan before they do anything else and that will be a capital intensive attack and Taiwan will be relatively easy to defend (so long as the Taiwanese have the magazine depth and the logistics train they need to keep in the fight). This logistics train dies not currently exist but it’s hard to see how China would be able to maintain air superiority out beyond the first island chain and given some time and the advances the Ukrainians have made with sea drones, the Japanese will have their versions making multiple trips a day to carry missiles to Taiwan and I can see the supply of a blockaded Taiwan becoming trivial. Therefore, a Taiwan that is closely aligned with Japan against China has a real chance of survival.
Economically, I can see things getting more difficult for China both as a result of the US tariffs and the EU’s friend-shoring. Things tended to be a bit more fragile with Xi even before all this began. I don’t think time is on his side vis-à-vis Taiwan. I think US weakness makes conflict there more likely in the short term (and have seen reports today that Chinese activities around Taiwan have already picked up). The longer Xi leaves it, the more time the Taiwanese will have to coordinate with their co-threatened peer nations. At the same time though, I don’t think that the PLAN is ready for Taiwan yet. The PLAAF is probably better prepared which could lead to a roll of the dice that involves a high rate of attrition for the Chinese fleet (under the assumption that there’re enough ships available relative to the Taiwanese defence capacity to act as a sponge). The dynamics are such that the PLAN will always want more time for more ships, the Taiwanese want more time for more missiles, the PLAAF will want to do it fairly quickly, but not immediately (they can probably get 100 J-20s in the air now, with that increase by about 30/year from now). Meanwhile Xi will want to both move quickly and be assured of a win. Should Trump’s economic moves destabilise the economy of the US then I can see Xi trying to take advantage of that distraction in 12-15 months if the shit continues to hit the fan. This is a recipe for regional instability.
Proliferation:
Its a great time to be in the uranium mining industry (unfortunately a Russian strength). A lot of countries that thought that they had lived under the US nuclear umbrella will be doubting its resilience.Only France, India, Pakistan, China (+ the US, who have a mothballed plant, & Japan which is building one now) all have reprocessing plants so they’ll be capable of delivering plutonium weapons, everyone else will need to get looking at HEU.
There’s three zones where proliferation is likely: Eastern Europe – a lot of civilian nuclear power systems, and a clear and present threat, which makes nuclear weapon capacity attractive. Almost all the countries east of DE/AT/IT axis and west of RU have a nuclear power industry, are planning one, or expanding what they have. The IAEA wouldn’t be happy, but if/when Iran tests a nuclear weapon then the IAEAs objections will be irrelevant. I’d say that most nuclear power states have a contingency plan for a crash program for weapons (just in case). And I can’t imagine the French won’t be giving Poles and Balts interesting internships in the meantime.
Secondly, there’s the Levant. Iran is a nuclear state and how badly affected their weapons programme has been by the Israeli bombings is uncertain. The recent claim is that they have enough material for at least six bombs and it will take less than a week to get enough for a bomb from whenever they start the final stage of enrichment. Given the capacity of the Israelis, the Iranians won’t do a test until after they’ve a few of them built (and have them scattered so that a single hit won’t take out all their bombs). And they shouldn’t need to test, the hard part is the lensing of explosions but that’s doable without fission. If they test a nuke it’s because they are signalling for political purposes (rather than engineering ones). It seems be possible to get a 1950’s era 5Mt warhead onto a Shahed-3 and with their missile test last year they’ll know how many missiles and warheads they’ll need to start getting strikes in on Israel should the time come. I believe that probably won’t do a test until they have an NK pattern thermonuclear weapon though – I can’t imagine that they don’t have the specs for that from Pyongyang already.
Turkey is building a civilian nuclear system, and so too is Egypt but I can’t see either of them leaving it there, especially in the case of Iran getting the bomb. I think Saudi is talking about nuclear power but i can’t imagine them making any moves unless after Iran publicly has the bomb.
Asia:
Japan, Taiwan, and SK have civilian nuclear industries, and the Philippines is developing one. Probably the theatre that has the greatest likelihood of a nuclear weapon being used too. An airburst over ocean is probably the quickest way to dissuade an invasion fleet, and you don’t have to concern yourself about being a city killer.
