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An Expanding Axis – Will Egypt and Pakistan Become Members?

by with No Comment Behavioral SentimentBusinessFeatured Highlights

An Expanding Axis - Will Egypt and Pakistan Become Members?

Opinion: The following article is commentary and its views are solely those of the author. This article was first published the 26th of May via The Angry Demagogue.

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China seems to be taking advantage of the transition from the Obama-Biden appeasement based foreign policy to the Trump commercial based system. Whereas Obama-Biden had no problem punishing allies that dared to oppose the US-EU appeasement and woke revolution, Trump is looking to create alliances based on commerce – and threatens allies that don’t go along. While the Obama-Biden policy failed utterly and arguably caused the wars in Ukraine and the Middle East, the Trump administration seems to be playing for time as it restructures the global security order.

China however does not seem to care to wait and are stretching their sway not only in the South China Sea but westward towards the Middle East. The four member Axis – Russia, China, Iran and North Korea seems to be expanding to other countries with strong military dictatorships. Egypt and Pakistan will be the next members of the Axis. While much of China’s belt and road policy deals with bankrupting poor, weak countries, they seem now to concentrate on strong military dictatorships. Egypt and Pakistan are being pried from the western camp as we speak.

Pakistan has, for awhile not been firmly in the western camp. It was a cold war U.S ally as India, while democratic, sided with the Soviets on most international issues. While the US was busy in Afghanistan, the Pakistanis played double agent. Now that the U.S is not in the region and the U.S and India have become closer, Pakistan is now firmly in the Chinese camp.

In addition to Pakistan, Egypt becoming the next major member of the Axis.

Let’s take a few steps back and examine the burgeoning relationship between Egypt – a military dictatorship and Communist China. As we have written China and Egypt had joint military maneuvers that included deliberate violations of the Egyptian-Israeli peace treaty guaranteed by the United States. Egypt, in thumbing its nose not only at Israel but at the United States, allowed Chinese planes to approach the Israeli border in order to test Israeli reaction to a possible invasion. Multiple Chinese military cargo jets flew in undisclosed hardware in the days leading up to the maneuvers.

Three more Chinese Y-20 cargo planes landed in Egypt last week again, carrying unknown hardware. At least one of these planes came from Pakistan. Egypt also seems to be signing major arms deals with France as Macron reeks of desperation in his attempt to remain relevant – but a de Gaulle he is not, and he will not be able to create a force or policy independent of the U.S. Egypt will be glad to take advanced French weaponry while it creates a stronger alliance with China.

Back to Pakistan one has to wonder if the Pakistan-Indian flareup a prelude to what can happen in other theatres – or worse, a purposeful conflagration to test Chinese weapons systems in actual combat and keep the West on its back feet? According to most reports they were able to shoot down between 3 and 5 of France’s most advanced Rafal fighters without even entering Indian territory. The confrontation started with a heinous terrorist attack against Indians in Kashmir by a terror group associated with the Pakistani armed forces. India claims that Pakistan is directly involved in the attack. If so, this would not have been the first one.

The downing of the Indian French built Rafal fighters by Pakistan’s Chinese produced 10-C was, according to expert reports, not just or even mainly superior piloting but with a Chinese strategy and technology that includes all aspects of air power – including recognition of the target, locking on and attack from distances in what an American air expert called a perfect air based killing machine. This would seem to be the first real test of Chinese advanced air-power and it something that needed to be done before any invasion of Taiwan. This may not test their own pilots but it does test the strategy and the technology.

China has a main medium term goal here and it is not a secret. They are planning to take Taiwan by force and need to make sure their soldiers, sailors and hardware are up to the job. They have seen how poorly the Russian army has performed and have seen how Israel has dismantled Iran’s defenses and swatted away Iran’s offensive attacks. China has not fought a major war for decades and for all the advances they say they have made – all have been untested. Until now.

China will not risk a war with India itself but would be more than happy to have its proxy involved. Chinese fighters and their new “over the horizon” missiles are key in their plans to deter the U.S from defending Taiwan – or in defeating U.S naval airpower if the U.S does get actively involved. However, as close as French technology is to America’s it is not the same and the one country that seems to have taken U.S technology to the next level is Israel. How would Chinese weaponry due against American arms in the hands of an air force equivalent in skill and bravery to the American air forces? That has yet to be tested but that brings us back to Egypt. Is it in China’s interests for Egypt to make a major break with the U.S at China’s urging much as they made a break with the Soviet Union at America’s urging? Of course. Would that mean that China might help Egypt provoke a military confrontation with Israel in order to test Chinese arms and relieve pressure on Iran? Maybe.

On to Iran then, where it does not seem that the Americans or Israelis understand the nature of the Iranian-Chinese relationship. Not only does China get the bulk of its oil (subsidized) from Iran but they have just completed a rail link from Xinjiang, China to Teheran, Iran – running through four countries. This rail line can ship oil as well as other cargo, cutting into the American (and Indian) naval superiority around the Persian Gulf and Indian Ocean. The assumption by military planners has always been that the U.S can cut off Chinese access to oil, if necessary. That is no longer the case.

China is not standing still – they are expanding their axis of dictatorships to countries in which the army is in control. Pakistan and Egypt qualify. Iran, while a theocracy is controlled by the Iranian Revolutionary Guards. No matter the “deal” that the Trump administration negotiates with Iran they will not be pried away from Iran. China has more to offer an ideological dictatorship then commercial deals with the United States. What the alleged realists in foreign policy refuse to understand is that dictatorships have no interest in commercial success if it weakens their grip on power. They are interested in deals that enrich their regimes since that also strengthens their grip on their people.

The trillion of so dollars in deals that the U.S has now made with the Persian Gulf states ensures that America remains a player in the middle east. Those who think that the Mideast is a tertiary region at best – after Asia and South America – need to rethink their strategies. As China closes in on control of the world from the Pacific to the Mediterranean the U.S is left with just two military powers it can depend on – Israel and India – to help defend its old/new commercial interests. It is not only oil – it is not Boeing jets, Nvidia chips and many other products that are moving from the US to the Gulf as opposed from the Gulf to the U.S. The U.S is no longer a commercial client of the Gulf states but the country who needs to protect its clients. The relationship has changed but the security relationship has only gotten more important.

The addition of Egypt and Pakistan to the Axis means that the Chinese threat has expanded. They are not giving up on Taiwan, nor are they giving up on South America and the Pacific Ocean but rather, China is using its experience as a dictatorship to strengthen ties with other freedom hating countries. We can all pretend that values and culture don’t matter, but that doesn’t mean that they don’t. This Axis is one where the interest of each member is to stay in power, force its will on its people and enrich itself at the expense of its people. This is an Axis, not only of the unfree, but of those who need to eradicate freedom to “thrive”.

Disclaimer: the views expressed in this opinion article are solely those of the author, and not necessarily the opinions reflected by angrymetatraders.com or its associated parties.

You can follow Ira Slomowitz via The Angry Demagogue on Substack https://iraslomowitz.substack.com/ 

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Impolite Opinion: BRICS and a Western Loss of Power Part 2

by with No Comment Central BanksCommoditiesFeatured Highlights

Impolite Opinion: BRICS and a Western Loss of Power Part 2

BRICS Future Members and Potential Strangleholds

The West is moving too slowly as if stuck in an abyss of indifference, this while BRICS adds members, including the prospects of Saudi Arabia, Malaysia and others to participate. The ability of BRICS to work alone via trade agreements and increase collective strength is growing.

Some BRICS nations have expressed their perspectives the West is an antagonist that practices unfair trade and environmental colonialism. The West is accused of attaining important resources from the developing world, destroying the habitats of these nations as minerals are mined, food is grown and harvested, and energy is sought and produced that create degraded ecosystems. The West is cited for keeping their landscapes pristine, while using the ‘cheap’ land and labor of the underprivileged to procure needs. And as the West has increased their reliance on commodities attained from afar, they have become vulnerable to the threat of a potential stranglehold on resources controlled by BRICS like rare metals.

BRICS will certainly attain additional nations via the FOMO adage. The enticement of membership and ability to cease underdog statuses and stop being mere supply conduits to richer nations is appealing. Mexico is said to be considering potential BRICS inclusion, and we are probably not far away from a European State asking to join.

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The Power of Commodity Prices and BRICS Influence

The West must engage and rethink associations and to make sure countries are not treated as lower tier. If nations like Mexico join the BRICS dynamic, and newly created cartels strengthen economic practices and policies of the organization, the prospects could eventually lead to the creation of a new fiat currency. For the moment BRICS has wisely pushed this goal to the side, but the idea of a unified currency is certainly being discussed openly. An increase of BRICS economic power derived from robust trade would tempt financial institutions to consider start buying bonds if offered as investments.

The West must ask what the dangers are if a needed commodity supply is controlled by a BRICS cartel that could suddenly initiate boycotts and trade limitations upon those BRICS does not agree. Food, energy, and mineral scarcity if controlled by nations not seen as allies of the West would be dangerous. Economic power within BRICS would certainly turn into geopolitical strength. The ability of developing nations to have a collective economic voice and create supply dynamics within commodities would ignite hazards for the West.

BRICS, U.S Government and USD Reserve Currency Status

While the West worries about domestic issues such as creating a politically correct happy tent for everyone, the larger powers within BRICS are engaged in the big picture which might be uglier but may carry more importance long-term. Because a lot of BRICS political power comes from more authoritarian stances, they are able to plan policy not only with five, but ten and twenty year outlooks. Western leadership needs to be willing to engage in a complex world and make sure nations that are not seen as natural bedfellows are treated with respect and brought under an economic umbrella that allows them to engage on equal terms.

The long-term future of the USD as a reserve currency is coming under increasing doubt, the trading of the currency in Forex is slowly and surely losing its footing via incremental percentage changes that point to deterioration. A void in solid leadership in the U.S and unrestrained spending are making the tasks harder for the Treasury and Federal Reserve to protect the strength of the USD. Fiscal deficits are one thing, 35.6 trillion USD of debt is another matter. How long can the U.S carnival sell tickets and expect people to be entertained in a magic act that prints money and backs it with increasingly vulnerable bonds? The U.S needs to change its fiscal policies efficiently.

There are ways of looking at this per different perspectives, but if BRICS does achieve its economic aim of creating more equitable trading coalitions, it could sustain alliances which the West may not be comfortable and actually be susceptible. The phrase that money talks and nonsense walks should be kept in mind regarding BRICS. The promise of fair trade among its members is important, but the ability to be unified politically and create economic transparency is important too. Many of the nations who are members of BRICS have not practiced solid economic policies and are still looked upon as suspicious fiscally.

Gold and a Decoupling of the USD

Importantly, we must begin to ask if financial institutions have figured a lot of what is mentioned above out and started to position themselves. Financial institutions and nations may be starting to look for a balance between the world’s reserve currency which is the USD, and the ambition stated by China’s Xi Jinping at the latest BRICS summit to create an alternative financial system.

If this alternative financial system includes BRICS as one of its foundations, and is based on organized cartels which use commodities as a backbone a new paradigm will be introduced. And if BRICS evolves and has the means to introduce a new currency along the lines of the EUR with a coalition of associated nations, the West will be faced with competitive questions. This new currency – let’s calls it the BRICS Unit (as reported by others), if it can trade calmly and with significant volume, and also offer innovation like a digital currency would change the balance of global power. The potential lose of status for the USD as the world’s reserve currency would weaken the U.S immeasurably. We have seen this show before via the GBP and the Britain.

A battle between a legacy reserve currency and an innovative upstart which wants to become a reserve currency could cause mayhem – potentially leading to a winner or all currencies losing confidence. Folks thinking ahead of the curve may already be putting money into gold because it is a historical store of value. Can the rise in gold seen the past year be quantified via not only a fear of inflation, speculation, and concerns about central banks, but also a reaction because of a looking glass into the future that does not trust the outlook of the USD? It is just a theory, but what if safe haven buying of gold signals a decoupling is taking place with the USD as its status weakens?

It should be added that the lack of a declared currency by BRICS as of yet, shows a level of political maturity and understanding of the current economic landscape. BRICS has shown the ability to take a long view and not act impulsively. A coalescing of commodity strength via gold, crude oil and other resources with organized cartels and solidified trading would give the BRICS Unit more credence upon its birth, but patience will be needed. And, like the EUR, the BRICS Unit could suffer from internal political strife, and particularly if the West wakes up and takes action to engage nations who are sitting on the economic fence and offers beneficial trading agreements.

The Western method of nonchalance that all will be well is naive. However, BRICS still face hurdles. Grievances could prevail in BRICS and cause it to falter and perish, some member nations which have had difficult relationships will need to put their distrust aside. An example of potential problems could come from Egypt and Ethiopia that have a long history with each other, both have massive populations and centuries of political intrigue when dealing with each other. However, BRICS represents the thinking of realpolitik vs. the winsome misguided aspirations of some Western nations with leaders who have their collective heads in the sand. The West needs to advocate collective interests, which includes freedom, solid enterprise agreements and large consumer markets. The West needs to focus on the competition emerging with BRICS. Pretending the danger doesn’t exist amounts to negligence and a potential lose of economic power the West cannot afford.

If you have not read Part 1, here is the link:

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Impolite Opinion: BRICS Long-Term Plans & Implications Part 1

by with No Comment AssetsBehavioral SentimentFeatured Highlights

Impolite Opinion: BRICS Long-Term Plans & Implications Part 1

The global Forex market is spastic and many major currencies are traversing within weaker whipsaw value ranges against the USD. The currency pairs are trading in price bands seen before the Fed cut its Federal Funds Rate by 0.50 basis points on the 18th of September. And there is still one and a half weeks of assured volatility that will be demonstrated. Crucial U.S data is on the schedule in the coming days via the Advance GDP and Non-Farm Employment Change statistics, and the U.S Presidential election is edging closer. Israel and Iran continue to play a game of cat and mouse in the Middle East, which thus far has led to a controlled chaos and not worldwide bedlam. Financial institutions have plenty of reasons to be apprehensive.

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Expansion of BRICS Feels Inevitable

Now let’s turn our attention to a tectonic foundational shift building in global trade and geopolitics. Attention on short-term behavioral sentiment which is fragile and has a less than clear mid-term perspective, needs long-term considerations too. Investors are required to contemplate possible dangers that are hiding in open sight and will pose a problem in the future.

The BRICS 2024 Summit was conducted this week in Kazan, Russia. This included the new member nations of Egypt, Ethiopia, Iran and the United Arab Emirates. I am not here to give you a major recap on what took place behind closed doors. I wasn’t invited. But we should look at some of the results and statements made and what they imply strategically.

The BRICS attendees to this year’s conference included powerful dignitaries from approximately 36 nations. One major result of this BRICS conference was to award Partner State status to 13 countries including Algeria, Turkey, Malaysia, Indonesia, Vietnam, Thailand, Nigeria, Uganda, Kazakhstan, Uzbekistan, Belarus, Cuba and Bolivia. Saudi Arabia was invited last year and has not made their full participation official yet, but they attended this year’s conference as an invited guest. The trend appears clear, we are entering a new paradigm in which long-term thinking by the BRICS nations could out maneuver the short-term nonchalance of the West and this has implications for the USD long-term.

There were high level meetings between leaders of BRICS countries including China, India and Russia. Perhaps, more importantly was Vladimir Putin’s bold statement about BRICS desire to start its own grain exchange. Putin also advocated for the creation of a BRICS cartel in other commodities such as metals, including gold. Gemstones such as diamonds and emeralds could develop into a sizeable entity too. This needs to be taken seriously by the West.

Credence must be given because the BRICS nations already are among the largest producers of grains, legumes and oilseeds. The scope of commodity production and supply capabilities by BRICS could certainly turn into a painful thorn in the side of existing large trading companies. And a potentially coordinated energy sector via Iran, Saudi Arabia, Nigeria, Russia and others must be taken into account.

Russia and China as Friends of the Underdogs

Historical entanglements put Western nations like France and others in a vulnerable spot diplomatically as they try to maintain alliances with many BRICS nations. France serves as a good example of diminishing Western influence. France remains on the ground overtly in Africa while dealing with vestiges of a colonial past. But France’s influence in Africa is under stress and their ability to use the continent as a source of power and financial gain is being confronted. France still maintains the Presidential Council for Africa, but France is likely perceived by many of the participants as a wolf dressed in sheep’s clothing. Coups in French influenced African nations have a bloody and present history when political diplomacy does not go well.

Exploiters of the past in many African nations are looked upon with derision and scorn. Russia and China are often viewed as friendly countries who helped fight along the side of certain African nations who sought and achieved independence. The ability to create ascendancy in Africa by Russia and China needs to be looked at within a prism that suggests additional spheres of power will develop in BRICS. Many nations that dealt with colonial statuses in the past are rightfully intent on shaking off the notion of being considered laggards.

The West certainly knows in no uncertain terms it cannot return to colonialism. However, African governments should make sure they are not replacing old masters for new. While some might say it is wishful thinking – and I am still on the fence contemplating the notion – on the part of Russia and China to create powerful commodity cartels, if achieved this actually could prove to be an emphatic first step in attempting to secure a new and powerful currency by backing it with a foundation of intrinsic value. Brazil and South Africa would be a big part of this underpinning too. Russia and China’s foray into Africa via their military and money lending excursions, and the already created organizational and trade structures which exists within BRICS opens the door for the perceived underdogs to battle together against the power of Western riches.

A competition is certainly underway between the West and BRICS. What exactly is the U.S doing in Angola? The planed visit of Joe Biden in the first week of December, which was supposed to take place in mid-October was postponed due to the recent hurricanes. Will the U.S presidential visit be anything more than a sideshow, particularly if the Democrats do not win the election on November the 5th? Angola has a massive amount of Crude Oil and is an OPEC member. American energy companies and other Western corporations are active commercial participants in the African nation. However, China has a firm financial stake in Angola via infrastructure projects too. The political and financial implications between BRICS and the West is a growing dynamic, one that will be further discussed in Part 2.

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Make Common Sense Great Again: On Moving Away from Nuance

by with No Comment Featured HighlightsRisk ManagementWorld

Make Common Sense Great Again: On Moving Away from Nuance

Opinion: The following article is commentary and its views are solely those of the author. This article was first published the 23rd of July 2024 via The Angry Demagogue.

Has there been a total breakdown of readiness in the West? When we look at seemingly unrelated events we see that people in responsible positions in governments around the Western world have missed signs that are obvious – and not only after the fact. The attempted Trump assassination just got me thinking how no one seems to react to the obvious anymore. It seems that both the local police and the Secret Service knew that this young man was on a roof with a rifle and no one took the most elementary actions of delaying Trump’s appearance or trying to stop the shooter or even ascertain his motives all of which was obvious to everyone else. We are not talking about someone missing a shot at him or even forgetting to check a specific place, but an active decision was made – to do nothing.

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On October 6 and 7 the IDF Chief of Staff and his senior advisors on the General Staff heard of possible Hamas plans to attack, knew of previous intelligence that detailed the exact attack that happened and even refused a request of the head of the Southern Command to move 4 helicopters closer to Gaza. Instead of doing even the minimum, they just did nothing. They ignored the obvious and ruled purposely against common sense and in favor of their own preconceived notions.

As Russia was massing troops on the border and as Putin’s talk was becoming more and more belligerent the US administration did nothing that might have at least hinted to Putin that this could only lead to disaster. Putting US troops on a higher alert, inviting the Ukrainian ambassador to the White House as a show of support – anything really, might have given Putin food for thought. As Iran moves closer and closer to attaining a nuclear weapon and taking control of the middle east, the West just does nothing. Destroying Houthi assets (as the Israelis have just done), sending B52’s into the sky for training missions to destroy Islamic Republic assets – all that might have made the Iranian rulers wonder what was in store for them and limiting the war to Gaza. But again, against common sense, nothing was done because …. Wishful thinking.

If those responsible were acting like boys in the school playground (are boys still allowed to play in the playground?) they would have done more than they did in all these cases. 

Since the end of the Cold War we have seen the abandonment of common sense in favor of sophisticated analyses where nuance trumps simplicity and bias dominates the analysis of data and where cliches overtake serious policy. In classical Jewish biblical exegesis, there is one rule which nearly all (non-mystical) commentators hold and that is that the exegesis cannot contradict the simple meaning of the words of the Bible.  True enough, that is stretched to points of wonder sometimes – but they still cling to the rule. 

Common sense is underrated in policy analysis and often in business, but those who ignore it now will be challenged later. Common sense means the acceptance of what people say and looking at data without bias. Common sense means that you have to understand the person you are talking to and don’t assume they think like you. 

Back in my university days I read a lot of Hannah Arendt, who, in spite of the banality of her banality of evil theory had a lot to say. In her book “The Human Condition” she speaks of common sense – or as she often puts it “the sense of the common”.

I would like to quote her here, even though I tend to think she would not have thought that it was the rulers, the policy makers and the writers who are ignoring common sense:

“The only character of the world by which to gauge its reality is its being common to us all, and common sense occupies such a high rank in the hierarchy of political qualities because it is the one sense that fits into reality as a whole our five strictly individual senses and the strictly particular data they perceive.  It is by virtue of common sense that the other sense perceptions are known to disclose reality …. A noticeable decrease in common sense in any given community and a noticeable increase in superstition and gullibility are therefore almost infallible signs of alienation from the world.”

Arendt of course assumed that the lower or working classes were susceptible to superstition and gullibility but in these times it is the ruling classes that have abandoned common sense in favor of superstition and gullibility. It is they who are alienated from the world. Preconceived notions that contradict the plain meaning of the world is today’s superstition – and it is no less dangerous and irrational than the superstitions of times past.

Let’s take a brief look at these policy decisions by nearly all western countries, regardless of their geographical location or economic outlooks, their demographic trends or the overall culture of their people and their neighbors resulting directly or indirectly of the perilous situation the free world is now in.

Defense Spending and Force Size

The post-cold war “peace dividend” became an idol of western policy makers.  Massive cuts in defense spending even in things that were very necessary to the maintenance of said “peace dividend” – like naval power – was the preferred way of dealing with the end of the Soviet Union. The “End of History” was read simplistically instead of realizing that other ideologies and other powers might very soon challenge the victorious west. Some thinkers, I think of a professor of mine (Elie Krakowski) who back in 1979-80, before the collapse of the Soviet Union, spoke of Islam as the third force which will challenge the West and the East. I studied in a small university and if we were discussing it back then how are policy makers in Washington, London, Tel Aviv and Paris not speaking of it today?

While Edward Said’s “Orientalism” was the talk of the town, Bernard Lewis and Fouad Ajami were, despite their posts at Princeton and Johns Hopkins, not taken seriously enough. If they were, the US Navy would not have gone from 594 ships in 1987 to 275 in 2016. The British Navy  went from about 170 ships in 1970 to well under 50 in 2017. The rest of Western Europe we all know about. But at least countries like Netherlands, Belgium and Denmark don’t face hostile neighbors and were never meant to have forces that would do more than assist in minor operations.

Israel on the other hand has always faced neighbors who have desired to destroy it.  Even the countries with which it signed peace treaters, Jordan and Egypt, have never been able to translate these treaties into popular support and are always a coup away from belligerence. The history of dictatorships in general and of the Middle East in particular ought to have given the Israeli high command at least a hint as to what they might be facing. With the advent of Iran as a major regional power with the means and desire to spread its theo-revolutionary ideology, Israel ought to have realized that the era of wars was not over. Yet, since 2000 Israel has cut 6 divisions and decommissioned 2,000 tanks from its forces. It has cut military service for men from 36 to 32 months, even as it has not increased the mandatory service for woman from 24 months even though it has increased the amount of women in combat and combat support roles. The ultra-orthodox still don’t serve (they are about 16% of the draft class) zero even after October 7 and the number of youth who have received exemptions due to “psychological” reasons has skyrocketed to nearly 13% of the draft class. I don’t mean to belittle those with true psychological issues but rather the high numbers signify that many if not most are of a class that allows them to afford to pay psychologists for convenient diagnoses.

In other words – the IDF, the Finance Ministry and the political class all found it convenient to reduce the size of the army – both manpower and equipment – and used the excuse that there will be no more ground wars to justify the move.

The Ukraine conflict revealed to the world that US arms production of even the most basic arms is not enough for the US itself to maintain minimal levels during wartime.   The current Middle East conflict has magnified this disaster.

Common sense readiness has been ignored throughout the Western world due to sophisticated thinking more wishful than realistic. This is nothing less than a messianic and superstitious belief in the end of wars.

Immigration and Assimilation

If there is one issue that common sense has missed it is immigration. The reactions of average citizens to unlimited immigration in Western democratic countries has been uniform – NO! In some countries the yelling is louder but in all western countries there is significant opposition, on common sense grounds often, to the establishment immigration policies.

I am an immigrant to Israel and my grandparents were immigrants to the United States. Immigration, the movement of peoples from place to place has been going on since people left Africa – and before. But there is no separating immigration from assimilation unless your immigration is due to imperialism and conquest.  The Romans, Greeks, Chinese and Persians of ancient times, the Arabs of late antiquity were all imperialists. There was of course the age of imperialism that ended in WWI. But 21st century immigration is not of national conquest but of individual movement of people and families. One by definition must adapt to the local cultures – in the widest sense of the word. If a cotton farmer from Arizona wants to move to Iowa, he better adapt to the climate and figure out how to grow wheat or soybeans instead of cotton. If an aristocrat from England decides to move to the United States, he needs to know that his family heritage and titles won’t get him much. If a Spanish or Chinese speaker moves to Germany, the expectation is that he will learn to speak German.

An immigrant who does not respect the local culture in all its manifestations needs to get permission in order to stay in the new country. That is the way of the nation-state that has protected freedom in the western world so well (if not always so well). We can’t compare the 21st century to the pre-WWI world where borders were porous and people that survived the trip across a continent or an ocean could settle in that new land. Some more successfully than others. 

Common sense dictates that an immigrant that does not respect the laws of his new home has no right to live there. Yet, time and again, immigration policy has been separated from the law and being law abiding has no bearing on future citizenship.  Therefore, there is no demand from the immigrant and no opportunity for the immigrant to assimilate and be part of the social fabric of his new country. That being said, the mass Islamic immigration into Europe could be said to be imperialistic as the leaders of these communities have discouraged any type of rapprochement with Western values and law. That, along with the demographic collapse of indigenous Europe has put Europe on the brink of either a civil war or a peaceful surrender to Islamic imperial forces.  

Free Trade and Social Peace

There is no doubting that free trade brings prosperity and that economic growth better than any other global trading system. Free trade  is also the best way to lift the global poor out of poverty. The U.S constitution understood the importance of free trade, as states were prohibited from starting trade wars with each other.   This has also been the “good” in the E.U and has produced much prosperity in that Union.

Yet, free trade with allies needs to be differentiated between free trade with enemies  – meaning those that oppose our system. Free trade that allows your enemies to defeat you militarily is not free trade but suicide. So too, trade policies need to have social issues taken into consideration. This is not a call for tariffs or against free trade pacts, especially with neighbors, but rather they need to be adjusted with common sense solutions to employment and other problems that will arise from any economic change. 

Social peace is the second half of this section because, besides immigration, the erosion, not to say destruction of physically intensive jobs can and often does lead to social violence for reasons obvious to those with common sense.

Energy and Food Supply

For the most part, you would think that after national defense, it is a government’s first responsibility to its citizens to guarantee the food and energy supply of its citizens. Before we get to luxury and access to travel, the ready supply of food and energy seems to be the minimum that a government ought to do. And yet, when we speak of issues related to climate change (and lets not get into the “is it or isn’t it real” argument) the solutions first mandated to the problem have to do with limiting both of these items without which we cannot live. In California, farmer’s access to water is limited even after the drought due to concerns about some fish and climate, and in the Netherlands they want to pay farmers to stop producing food so that the Earth will not suffer. 

What is the plan here? Regarding energy supply, one would think that shoring up access to alternative energy would take priority over banning current ways of producing energy. In California, they have been having rolling blackouts in the summer for years and they are looking to ban gas stoves and ovens and gasoline powered cars. Private jets and yachts though are off limits for obvious reasons. What is the plan there? Is there any real preparation?

As for food supply, is the  plan to reduce population or to reduce calory intake? To what levels? Is there an expectation that people will starve themselves to “save the planet”? Again – I am not arguing for or against human causes of climate change but rather, for the common sense understanding that securing the world’s food supply takes priority over closing farms or turning them into organic utopias.

A perfect example is Sri Lanka where those in power bought into the organic farming ideology of Western aristocrats and they ended all non-organic farming causing a famine and a depression. People who worked hard their whole lives lost all their savings as they were unwilling participants in a cruel experiment to see if organic farming can feed a small island nation.  

In sum – a bit less nuance and a bit more common sense – a bit more sensing what is “common to us all” would be welcome in political and policy matters. Maybe if we pursued more common sense policies and a lot less superstition and bias there would be less yelling and screaming in the public square. 

Disclaimer: the views expressed in this opinion article are solely those of the author, and not necessarily the opinions reflected by angrymetatraders.com or its associated parties.

You can follow Ira Slomowitz via The Angry Demagogue on Substack https://iraslomowitz.substack.com/ 

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An India-Israel Alliance: Prospects to Serve Global Freedom

by with No Comment BusinessCorporateFeatured Highlights

An India-Israel Alliance: Prospects to Serve Global Freedom

Opinion: The following article is commentary and its views are solely those of the author.

We wrote a few weeks ago in response to Nassim Taleb’s claim that Israel was fragile due to its over-dependence on the United States, and we came to the conclusion that in general he was correct although not in every aspect Is Israel a Fragile Country?.

Also, we compared Israel’s fragility with that of other free or status-quo countries (as opposed to revolutionary countries like Russia, Iran and China) and thought that Israel was certainly not more fragile than other free countries in difficult neighborhoods.  We then gave a general outline of how the free-status-quo world might look should we actually see the end of America’s commitment to global freedom The Day After Pax Americana.  

I would like to examine in a more detailed way about Israel and India and how their potential relationship could be a model for this world. With the U.S reluctantly and belatedly responding to attacks from Iranian backed groups in Syria, Iraq and Yemen and their stubborn resistance to attacking Iran itself each free or status-quo country needs to look into its own defense. The U.S also needs to see how it can help midwife these alliances so as to guarantee a free world after their voluntary end to the Pax Americana.

Israel will need  to expand its reach and move towards a more anti-fragile existence without damaging the all important U.S relationship. We can’t underestimate the importance of the U.S relationship to Israel and how important it is to maintain and even expand it – but as the U.S political landscape is changing and as the elite part of the younger generation is, for some reason, excusing violence against Jews in general and Israel in particular, Israel needs new strategic partners if it is to thrive and move at least part of the way towards anti-fragility.

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Israel’s relationships with the Arab world, the Abraham Accords along with its older peace treaties with Jordan and Egypt are dependent upon dictators remaining in power. The most vocal and belligerent voice against Israel by a government in the (non-Iranian influenced) Arab comes from Jordan and the most vocal and belligerent non-governmental voice in the (non-Iranian influenced) Arab world probably comes from Egypt. These treaties are all important and they are based upon the self interest of the current rulers of the countries (which is a good thing), but no one can know how long they can last and how firm they really are.

Israel also has a strong and growing relationship with Greece and Cyprus in the eastern Mediterranean and have joint military exercises together. Their navies and air forces train together and even their ground forces have joint exercises but neither of those two countries have the economic, military or diplomatic heft that Israel needs.

If Israel is looking for a second strong ally but one that itself lives in a dangerous neighborhood then the place to turn to is India. With the largest population in the world, a democratic government and a growing economy, India is the ideal strategic ally for Israel. Both are countries that live in dangerous neighborhoods, are working democracies and have experience dealing with terrorism. India, under with the premiership of Narendra Modi already has a strong relationship with the Israeli military. Israel has sold more than $600 million worth of military equipment to India (second only to Russia) and the two militaries have cooperated on anti-terror policy. The Israeli navy also reportedly has close ties to the Indian navy including submarine exercises in the Indian Ocean. Israel already has nearly $5 billion in trade with India (import and export) and it is time for Israel to start purchasing basic military supplies from India. India has five domestic manufacturers of the standard 155 mm artillery shells and it has large small arms industry – this should be an alternative to total dependence on the U.S for this standard equipment.

There is now a consensus in the country that Israel needs to broaden its military manufacturing and acquisition and the best way to do this would be to expand its relations with India. In order for this to make sense the time has come for Israel to say a very big “thank you very much” to the United States for the $3.9 billion in military aide it gets annually and instead purchase directly from the U.S and other sources.   India could also help in building factories in Israel – which could even be operated by Indian nationals through Israel’s guest worker program.

The military cooperation should be expanded to the air-force as well as ground forces.  There ought to be joint officer training, just as there is now with the U.S and some European countries. There should be a process in place that will eventually lead to a freedom of the seas treaty in the waters between India and Israel’s Gulf of Eilat. This should include cooperation between naval, air and anti-missile forces. 

The foreign worker program should also be expanded. Israel is trying to free itself from dependence upon Palestinian labor – from both Gaza and the West Bank – and India and Israel have been talking about an expanded guest worker program. Currently there are Indian citizens working as aides to the elderly and disabled and that needs to be expanded to construction and agriculture. 

Israel is a small country with around 10 million people and due to its large birthrate and legal immigration there is a lack of new housing construction in the country. The guest worker program in place with countries like Philippines, Thailand, Sri Lanka and others allows workers to work for up to five years and earn much more than they can earn in their home countries. They are provided with the same health care as Israeli citizens (paid for by their employers) and are even given pension benefits which they take with them when they return to their home countries. Israel could probably host up to 100,000 Indian workers a year.  

Scientific and student cooperation should be increased. This will not only help both countries develop important technology in areas such as healthcare and biotech, but will help India and Israel retain some of the scientists that would otherwise emigrate to the U.S and U.K. The exchange programs at university science and technology departments could lead to the creation of world class companies in the respective fields. 

Finally, cooperation regarding the capital markets could help both countries develop world class markets. India has the potential to be a global financial center in the coming decades and Israel, while far from being a financial powerhouse could be a link to European markets and investors with the time zone 1-2 hours ahead and close connections with those markets. 

The United States will be Israel’s main ally for the next few decades but it will be healthy for both countries if Israel was able to share interests – political, diplomatic, cultural and military with another major country. While France was that country until 1967 no European power has the position or the disposition to ally with Israel. India is democratic and attained its independence at the same period Israel did and from the same (then) major colonial power.  Also, both countries have overcome their socialist beginnings to thrive on the global economic stage. 

Now is the time for Israel and India to take the next step on the road to a true alliance. If we have truly reached the end of the Pax Americana, then this can be an example to the rest of the free-Status-quo world on how to manage without the vast power that is the United States. If somehow America shows the will to continue to lead the free world an Israel-India alliance will only contribute to the freedom that a continued Pax Americana protects. It would be helpful in any future conflict in the Pacific and the alliance could expand to the Gulf countries, East Africa and maybe even Egypt. 

Economically and technologically the obvious expansion would be towards South Korea and Japan. Militarily, it could aide and potentially replace the U.S naval presence in the Persian Gulf and allow it to concentrate its forces more in the Pacific. We are not talking here of a relationship that will replace the U.S military tomorrow or even next year. 

This is a long term process and requires the governments, corporations and individuals in both countries to be aggressive in turning a relationship into an alliance.  And it will require the cooperation and encouragement of the United States which will have to agree to support this and similar alliances even if it does not agree with all the tactics used in a moment of crisis.     

It is time to start looking forward and to stop depending on the goodwill of the American people as America, too faces major fiscal, strategic and military challenges of its own. 

Disclaimer: the views expressed in this opinion article are solely those of the author, and not necessarily the opinions reflected by angrymetatraders.com or its associated parties.

You can follow Ira Slomowitz via The Angry Demagogue on Substack https://iraslomowitz.substack.com/ 

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Is Israel a Fragile Country? Can it Move Towards Anti-Fragility?

by with No Comment Behavioral SentimentBooksFeatured Highlights

Is Israel a Fragile Country? Can it Move Towards Anti-Fragility?

Opinion: The following article is commentary and its views are solely those of the author.

One of the great books of the last decade is Nassim Taleb’s “Anti-Fragile”. 

I read it years ago and bought one for each of my (grown) children and suggested they read it and think about it when making decisions. I said at the time that this should be required reading for all IDF officers. In a nutshell, Taleb differentiates between fragile, non-fragile and anti-fragile. Glass is the classic fragile substance and concrete the classic non-fragile. Both can be destroyed with correct instruments and non-fragile items will slowly decay when things like water infect them.  

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Anti-fragile items on the other hand, gain strength from chaos. The more an anti-fragile substance gets hit, the stronger it gets. Nature for Taleb is the classic anti-fragile system. Nature “knows” how to respond to any disturbance, and it “learns” how to adapt and survive. This adaption and survival might hurt parts of the natural world – but nature as a system will survive and be stronger – think of natural immunity from a virus. 

Another of the ideas in Taleb’s book is “optionality” – decisions in life are often like buying options. When buying an option, you want a high upside and a low downside.   A simple non-financial example is crossing a street. If you see a car 50 yards away and are pretty sure you can make it across the street without getting hit – you can take that “pretty sure” chance and save yourself the 10 seconds it takes for the car to pass, or you can wait the 10 seconds. The upside here is saving 10 seconds. The downside is getting hit by the car. The decision is pretty obvious for those who think of optionality.

In short – Taleb is a serious man and a serious thinker. Born in Lebanon in 1960 he is a polymath, making his name in trading and finance, and his previous book “The Black Swan”.

In any event, in a recent interview with the French newspaper L’Orient Le-Jour he called Israel a fragile country due to its dependence on the United States and said that top-down peace agreements, like that between Israel and Egypt, or the Abraham accords are doomed to fail (I don’t read French and read a summary of the interview in the Hebrew language Globes financial newspaper – the original is here – if you read French and I got it wrong, please let me know).

Is Israel a fragile country? And if so, is it more fragile than other small free countries? And finally, how can it move on the road to anti-fragility? And are fragile peace agreements worthless?

Taleb’s claim that Israel is fragile due to its dependence on the US is true in an of itself. Changes in U.S foreign policy either via elections or changes in US interests have in the past put Israel in difficult situations. When Prime Minister Yitzchak Shamir requested U.S loan guarantees from then President Bush (1) in order to fund the absorption of masses of emigrants from the falling Soviet Union he was turned down until Israel halted settlement activity in the West Bank and attended the (failed) Madrid peace conference. Today, it is very clear that if the US would decide to halt arms shipments to Israel or to stop supporting it in the Security Council, the country would be put in a situation many believe would be existential.

A big issue in Israel at the moment has to do not only with Israel’s dependence on the US for military hardware but in the relationship of its top generals with the Pentagon. There is a claim that much of the “globalized” attitudes of Israeli generals comes from the influence of the politically correct elite in the US Defense Department. It reached a point where, just a few weeks before the current war broke out, the general in charge of military intelligence stated that he fears that global warming is a greater threat to Israel than Hamas. Whatever one’s views on global warming or climate change it does seem odd that the one Israeli in charge of making life and death intelligence assessments has the time to worry about those issues to such an extent that he feels it is his job – as intelligence chief – to warn Israel about it. Further, the October 7 attack itself showed the fragility of the defense strategy of Israel’s top generals and politicians. It had a conception of Hamas and other enemies and had no allowance for its being wrong. 

However, the initial response of Israel’s soldiers and officers, without the centralized support of the General Staff, show how many of Israel’s combat soldiers are “anti-fragile”. Israel’s people can also be said to be anti-fragile in Taleb’s definition of it where chaos or tragedy make one stronger. Over the 48 hours after October 7 Israel already had 350,000 reservists mobilized who were all motivated to fight for their country. That is no mean feat – for the most part these reservists went to their units before being called up or called their commanders demanding to be called up. Many thousands returned from abroad at their own expense in order to join their units and fight. In contrast – Ukraine had to forbid all men under 50 from leaving the country.   In Israel, a divided, shocked and demoralized people became a strong fighting force with the home-front in total support, within hours.

Military tactics are another area where Israel is anti-fragile. Due to the utter failure of military intelligence and the lack of central control over the first hours of the war that Saturday morning, the junior and mid-level officers and soldiers took command and figured out on their own how to face down the thousands of terrorists who took over towns and villages as well as military bases. Instead of waiting for orders and making sure everything was organized for attack, a delay which would have cost many more civilian lives, Israel’s soldiers improvised with what they had and took back the territory under very difficult circumstances. Many soldiers lost their lives through many acts of bravery but the decisions they made on the spot made them, the army and the country stronger.

The same can be said in the fighting now in Gaza. Israeli intelligence understood that there were tunnels, but it seems that they didn’t know the extent of the network and therefore had no good tactics to defeat it. It was the need to penetrate them without causing casualties to soldiers as well as the potential of hostages in the tunnels, that caused them to developed tactics to deal with it. We won’t know for sure how well it has or will work, since this is now classified information, but this could be an area of anti-fragility.

But this does not disprove Taleb’s point since Israel is clearly has a “single point of failure” and that is the U.S Government. However, nearly all free countries in the world have that single point of failure and have had it since the start of the atomic age.   One of Konrad Adenauer’s great fears in developing West Germany’s defense policy was that, when push came to shove, there would be no US nuclear umbrella. He was not convinced that the US would risk its own cities in defense of Europe in general and West Germany in particular. That is why he supported France’s independent nuclear deterrent and why he and De Gaulle were so close. The U.K too, when deciding on its Trident nuclear submarines had the same doubts. 

Today, we can say the same about the Baltic countries. They are part of NATO now, but, like the rest of NATO are totally dependent upon the United States military to keep the Russians at bay. The rest of Europe is dependent upon the U.S but they are no longer front line states so it is less important. Newly NATO-ized Finland is probably closer to Israel in its combination of fragility and anti-fragility.

Taiwan too, is fragile in this sense and so are the weaker Indo-Pacific nations like Philippines and Singapore. It would be difficult to find a non-Axis free or semi-free country that is not dependent upon the U.S to defend its freedom – either with sailors and soldiers or with arms, money and diplomacy.  

But the question Taleb poses, or the claim he makes, deals with Israel. Israel is clearly partly fragile – but is it too fragile currently that it can’t survive without the US? Or can Israel do anything to make it, if not more anti-fragile, at least more non-fragile? We have to separate out Israel’s fragility due to its dependence on the U.S and the free world’s fragility due to the same dependence. The Pax Americana that free (and non-free) countries have enjoyed since the end of WWII has probably contributed more to freedom, economic growth and a reduction of poverty in the world than any other force in human history. The question for all free countries then is how to make them less dependent upon the U.S if they want to remain strong and free -and less fragile.  

That is as true for Israel as it is for Latvia, Finland, Australia and Japan. 

But we will only look at solutions for Israel and leave the general question for a later time.

Israel receives from the US $3.8 billion in military aide, all of which must be spent in the United States. The annual aide started in 1999 and was $2.67 billion. Israel’s GDP in 1999 was $120.92 billion – meaning the aide constituted 4.5% of Israel’s GDP.  In 2022 Israel’s GDP stood at $525 billion so its $3.8 billion in aide was just 0.7% of GDP. Israel’s 2022 defense budget was $23.4 billion – 4.45% of GDP.

Giving up the entire U.S aide is certainly do-able from an economic perspective and there have been economists in Israel who claim that the aide actually hurts the Israeli economy since all the money must be spent in the U.S. One result of this has been the demise of Israel’s textile industry since the IDF no longer purchases uniforms from Israeli companies (one has to wonder that, since clothes bought in the U.S are rarely made in the U.S, if Israel is buying uniforms made in Bangladesh but sold via U.S middlemen). Giving up the aide would be one step towards a less fragile existence for a number of reasons.

The first would be, in my opinion, to cement the U.S public’s support for Israel. Giving up U.S taxpayer aide during a time of fiscal uncertainty would certainly be looked upon positively, in spite of the fact that all the aide gets recycled into the U.S economy (there has been some money that Israel has been allowed to spend on R&D in Israel). Israel is not the same country it was in 1999 and its economy is robust and probably more anti-fragile than most other western economies.

A second positive would be in allowing Israel to spread out its arms purchases. It could buy small arms from India, artillery from South Korea, etc. It could also rejuvenate local Israeli arms manufacturing. There is no doubt that all the large ticket items like fighter jets and smart bombs will still be purchased in the U.S and there is no doubt the U.S arms industry will continue its good relations with Israel – and in fact might be made more competitive since the IDF will be free to chose from amongst many providers for various weapons systems. 

Another move that Israel can make that would decrease its fragility would be to make sure it always has a 12 month supply of weapons and spare parts in order to fight a three front land war and a 5 front air war. It would have to beef up its navy and ground forces without hurting its crown jewel – the Air Force. This would make it less dependent upon the importation of arms in case of war.

An area where it will be difficult to be less fragile is the diplomatic arena as woke-ness takes over the western narrative about the world and many of the less and non free countries can’t manage to fight off Arab money and propaganda. India could be a country that could help diplomatically as they are large and powerful enough to ignore much of the pressure from the Arab and western-woke world. The problem is that the Security Council still holds sway in the world and India is not a permanent member with a veto. Of course they should replace the U.K and probably France but that won’t happen as long as India doesn’t have a reliable, permanent left-wing majority – which it won’t have for some time.

The only other major country that could help diplomatically would be Japan – but they have historically not been friendly to Israel and only in the current war have they backed it fully. They are certainly sympathetic to Israel’s plight as they figure out how to face a hegemonic China.

But under the current global situation, Israel relies on the U.S for diplomatic cover making it fragile, diplomatically. That won’t change for some time.

Economically, Israel is probably more anti-fragile than most other countries in the world. This is true for two reasons. First, Israel has a strong domestic market including a very productive real estate market. It has an agricultural center that produces enough for export and of course world class hi-tech and bio-tech industries. Most important – it has children. It is the only western country that has a high birthrate and that is something that has been underestimated in the west. Israel’s fertility rate – births per woman – stands at 2.9. The next highest western country is France at 1.8.  Replacement rate is 2.1.  Search out Nicholas Eberstadt for all the details.

Regarding the top-down peace agreements, Taleb himself understands for sure that the non-democratic top-down nature of most Arab countries makes this less important than in western-free countries. However, he does have a point here. Regarding Egypt, from the beginning the people – or more accurately, the professional and intellectual classes, have been opposed to Sadat’s peace. However, in spite of that, the peace has held for 45 years, which is quite a long time. I remember as a child reading the Biblical Book of Judges where the Israelites would sin, to be saved by a Judge who would rule and keep the country “quiet” for 40 years. At the time I thought – what is the big deal of 40 years of peace? As I grew (much) older I realized that 40 years of peace would be an incredible feat. So, 45 years of non-war between Israel and Egypt is quite a success. Will this continue for another 45 years? I think that if Israel remains strong, it will. 

Regarding the Abraham accords, the jury is still out. We will have to see where it all progresses. This war has certainly shown that even mass violence has not caused violent reactions from the Abraham accord countries. The one peace agreement most fragile and more worrisome though is the one with Jordan. The Hashemites are first and foremost survivors and if survival means breaking the agreement, they will do it in a second.

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In summary, Israel’s dependence on the US is crucial for its survival and that in itself makes it fragile. However, there are things Israel can do to make it less fragile and the will and determination of its people make it, in many senses anti-fragile in Taleb’s description (invention?) of that term. Compared to other small, free countries though, all of whom depend on the US for at least part of its defense, it is difficult to say that Israel is worse off – except that, besides the Baltic countries, its neighbors are worse and more dangerous.

In the coming days we will examine a more radical solution to the “fragility” problem of Israel and other free countries.

Disclaimer: the views expressed in this opinion article are solely those of the author, and not necessarily the opinions reflected by angrymetatraders.com or its associated parties.

You can follow Ira Slomowitz via The Angry Demagogue on Substack https://iraslomowitz.substack.com/

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AMT Top Ten Miscellaneous Morsels for 5th of January 2024

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

AMT Top Ten Miscellaneous Morsels for 5th of January 2024

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10. Book: Truth to Power – My Three Years Inside Eskom by Andre de Ruyter, an insider’s account about South Africa’s public energy company amidst corruption, mismanagement and scandal.

9. NBA: Last night’s Milwaukee and San Antonio game was the first ‘match’ of Giannis Antetokounmpo and Victor Wembanyama. Basketball is global and spectacular.

8. Noise: Clickbait media headlines about nervous results in financial markets this week have been exaggerated.

7. Horn of Africa: Ethiopia and Somalia are arguing about a port passage through ‘Somaliland’, astute eyes should be kept on the region and Egypt.

6. Diplomacy: U.S foreign policy has delivered poor statesmanship with India recently, allowing Russia to reinitiate its longstanding relationship with the nation.

5. Taiwan: Presidential election is on the 13th of January. President Tsai Ing-wen is not eligible to run again because she has now served two terms.

4. USD/JPY has ebbed higher and next week’s results promise to be rather insightful regarding the outlooks of financial institutions. Reversals coming?

3. China: Economic concerns in the Asian giant continue to mount as deflation threatens to become intractable and investors fret.

2. Data: U.S jobs numbers coming today, the results are anticipated to be slightly weaker. A reaction in the broad markets is certain, but it is full market volume next week which will set the tone.

1. Outlook: Anxious short-term trading results from the past two weeks are likely going to be confronted by optimism and risk appetite next week. Who will win?

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Broader Alliances: Sustaining Economic and Political Power

by with No Comment Featured HighlightsRisk AnalysisRisk Management

Broader Alliances: Sustaining Economic and Political Power

The following article is commentary and its views are solely those of the author.

If the United States decides to abandon its role as the premier global superpower and shall only be a Pacific and Atlantic power, withdrawing as defender of free seas, free trade and freedom in general, its democratic allies will have to start looking elsewhere for broader military alliances. This large group of nations would have to defend their interests against a revanchist China tied to Iran, Russia, North Korea and many of the Latin American countries – possibly including Brazil, and South Africa who have questionable politics and outlooks.

Eastern Mediterranean Alliance: A Strong Sea Power

Here is a speculative, yet reasonable look at the future of the free world. Let’s start with the Eastern Mediterranean where the two major powers are Israel and Turkey. One cannot deny that both these countries outclass all others regarding military might in the region. Israel’s air force is second to none and its navy is becoming a strategic necessity as it needs to defend its natural gas fields miles offshore. It now has six submarines that are capable of projecting power anywhere in the Mediterranean and even into the Indian Ocean and Persian Gulf. Turkey is currently a NATO member, but it is not clear that this will outlast the first half of the 21st century.

There is currently an informal alliance among Israel, Greece and Cyprus (both NATO countries) via joint military exercises and intelligence sharing. The Israeli navy and air force train regularly with Greece and its special forces train in the Cyprian mountains with its army. It would be in all three countries interests to formalize a treaty – if not of mutual defense, at least of mutual aid during times of war. All three of these countries are democracies and all three have mutual economic interests.

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A formalization of this alliance makes sense now and if there is a NATO collapse it turns into a necessity for Greece and Cyprus. Adding Egypt (although it would be the only non-democracy) to this group would only strengthen the alliance and keep Turkey at bay. A post-Erdogan Turkey that is comfortable with its Islamic character and its modern society could even join this grouping with Israel as a potential peacemaker between the historic Greek-Turkish rivalry.

This alliance without Turkey is a powerful force in the eastern Mediterranean, and this alliance with Turkey could neutralize a nuclear Iran. A Post-Hezbollah Lebanon which is in the interests of all of these alliance members (including Turkey and Egypt), could become a reality and another member.

A New Alignment: The United Border Nations

What about Eastern and Central Europe? Poland is rapidly becoming the major non-nuclear European military power. Within the next few years it will outshine Germany and the U.K and rival France. It is quite clear, nuclear weapons aside, Poland would probably defeat Russia in a number of weeks, if not days if a conflict were to ignite.

Whether the Russian-Ukrainian war ends in a Russian defeat or in some sort of face saving armistice, Russia will not lose its aggressive nature or nuclear capabilities and it will inevitably become aligned more closely with China and Iran because of its current political nature.

The important new alignment will be categorization of ‘countries bordering Russia’. A new alliance of Poland, Finland, Sweden, Norway and the Baltic states – Lithuania, Estonia and Latvia together would have the land, sea and air power necessary to deter and defeat, if necessary, any Russian imperialist expansion. Even with closer ties to China it would be difficult to imagine that, over the next 50 years, Russia would be a threat to this alliance. Adding Ukraine to this grouping would make a powerful force. Its joint population of over 100 million people, while not quite Russia’s 150 million – would be a formidable adversary, especially as the technological skills of these countries is first world and continuing to improve. Adding the other former Warsaw Pact countries like Czech, Slovakia, Romania, Moldova and Bulgaria can only increase its potency.

Unlike the Eastern Mediterranean alliance mentioned above, this would have to be based on a mutual defense treaty in order to properly deter any Russian-Chinese-Iranian attack. Linking up, informally with the ‘new’ Eastern Mediterranean Alliance would create a powerful grouping of free countries against any attempt by authoritarian adversaries. Adding an economic aspect to these border nations and an alliance with the Eastern Med group with free trade zones would create a strong challenge to any attempted Chinese hegemony.

Asian Border Nations Group: Potential Look Ahead at Potential

If we were to unite the Eastern Mediterranean and Border Alliances to an admittedly non-democratic Asian ‘stans nations, including Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan with a joint population of around 80 million, we are beginning to see the creation of a multi-cultural alliance that extends from the Arctic Ocean through Central Europe, Northern Africa and into Asia.

The Crucial Partner in Order to Balance Power: India

Which leads us to the Indian Ocean; a dominant India can help control the sea lanes from the Persian Gulf to the Bay of Bengal and down to Australia. An Indian-Australian alliance, along with Israel would create a democratic economic and military force that would keep China and Iran from dominating the region. This would require an Indian navy that is not only large, but effective also because it would hold a main responsibility for patrolling the seas from the Persian Gulf up to Australia strongholds.

As India also reaches its potential as a global manufacturing giant, it will be a force to be reckoned with. Including into this potent mix of nations, is the possibility of adding authoritarian countries like Saudi Arabia and the other Gulf states; along with Thailand, Myanmar, Malaysia and Indonesia who have strong ‘western’ economic interests and would create a formidable bulwark against China’s imperialist Belt and Road project.

Without the need to project naval power worldwide the Unites States could use it massive naval, air and ground forces to take better control of the Pacific Ocean along with Japan, South Korea and Australia.

If we add countries like the Philippines and Vietnam, then China would be deterred from further aggression. The only other region that would fall under American responsibility would be the Atlantic Ocean – the shipping lanes to Europe, West Africa and the Mediterranean. Along with the UK and France there would be no challenger to the control of the Atlantic. This could also lead to a revival of the old Monroe Doctrine and maybe free South America from the destructive influences of Iran, China and Russia.

The Global Economy and Free Trade Zones with a Stable USD as Reserve Currency

What does all this mean for the global economy? The free world along with its less than free allies who fear China, Russia and Iran could still maintain a U.S dollar based world. Free trade zones amongst and between the various alliances along with a revival of manufacturing led by a technology revolution using AI, quantum computing, renewable energy and space exploration could lead to a global resurgence of free countries that could stop the authoritarian appetites of Russia, China and Iran in its tracks. This can only happen with a stable reserve currency the ‘West’ can rely upon which is the USD.

Potentially a U.S freed from being the sole defender of freedom in the world, would help get America’s fiscal house in order and allow it to focus on being a dominant economic power. Is there a future for the ‘free world’ without a United States that projects power globally? Currently, a U.S withdrawal from global military assertion would certainly cause the end of freedom (economic and political) in the world for many nations. However, with the new alliances described above and a fiscally responsible United States, freedom could yet make a comeback.

Disclaimer: the views expressed in this article are solely those of the author, and not necessarily the opinions reflected by angrymetatraders.com or its associated parties.