Doctor and activist


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Category: China

Cheaper EVs?

20 April 2024

Here is an article praising China’s Electric Vehicle industry and noting that Apple gave up trying to do EVs and China has successfully taken up the slack.

It also boasts that Chinese EV technology is excellent and that they have not lowered prices, and it warns that trade tariffs to stop Chinese exports will be counterproductive.

More conventional views are that China has a glut of EVs and a coming economic crisis due to their property bubble.

Australia has no tariffs on EVs and is currently paying too much for them.  Despite the tone of this article, China must want to dump EVs somewhere.

I am still not sure that EVs are good for the environment in that the carbon footprint from mining and processing their components is much greater than the simpler components of internal combustion engines, and the factories that manufacture them are mainly powered by coal-generated power.  It takes many km of petrol saved to overcome this initial deficit. Hopefully this situation will gradually improve in time, but in the shorter term, will Chinese EVs be cheaper here?

What does China’s electric vehicle rise mean for the global market?

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China’s Technology

The much hyped launch of the Apple iPhone 15 was presumed to announce the latest technology in phones. This presupposed that it would have the world’s best microchips, which are currently assumed to come  from TSMC (Taiwan Semiconductor Manufacturing Company).

But China’s Huawei, which is supposedly hampered by western sanctions on high-end chips has just produced a phone which seems as good or better than the Apple one.

It was commented that the Huawei phone has not had much attention in the Western mainstream media, but some reviews have said that it is actually better. Other writers have wondered (?hopefully) that the small, sold-out production run was because they did not have enough high-end chips to make more phones. 

www.johnmenadue.com/chinas-huawei-mate60-launch-set-to-challenge-iphone/

www.smh.com.au/technology/why-this-new-chinese-phone-has-rattled-the-us-20230905-p5e21c.html

Stephen Bartholomeusz in the SMH also mentions China’s dominance in EVs(Electric Vehicles). European and American car companies are unsure how to respond since they have major EV factories in China, so any tariffs will hurt them. They have moved their jobs offshore and the United Auto Workers strike in the US has the problem that there is a transfer from internal combustion engined (ICE) vehicles to EVs, as well as their wages being higher than the Chinese factories that they are competing against. It is a global world, so there are huge economic forces equalising wages across the world and favouring capital over labour.

And we had also better get used to the idea that China is going to be a world power, and any delays in achieving this will merely annoy them.  We need to accept their power, respect and trade with them and avoid any US dreams of fighting the inevitable.

www.smh.com.au/business/the-economy/how-china-sparked-chaos-in-the-world-of-cars-20230918-p5e5fn.html

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Modi’s Melbourne Rally has Australia Kow-Towing Again.

24 May 2023

The spectacle on tonight’s ABC news of visiting Indian Prime Minister addressing a rally in Melbourne sent shivers up my spine.

I had realised that Modi was acting as a Hindu nationalist, and doing quite bad things to Muslims Sikhs and other minority groups.  He was and is using religion as a way of increasing his vote as over 80% of Indians are Hindu.  But in a country of 1.3 billion people are lot are not Hindu, and areas in the North of the country have been suppressed, with the historic separation of Pakistan and Bangldesh (formers called East Pakistan), as well as problems in Sikh Kashmir, where the people actually want independence from both Hindu India who controls them and Muslim Pakistan who wants to.

Modi has used very authoritarian tactics, but has got away with it because the Indian economy has done well. 

Australia is very pro-India at present as the China trade embargos have meant that we are looking to diversify our markets and a rising nation with 1.3 billion people looks just the ideal partner.  Not to mention defence ties, though India has traditionally tried to create a group of non-aligned nations to cool whichever Cold War is going on at the time.

But the rally in Melbourne as shown on ABC News tonight had a huge stadium shouting with Modi in the centre like a rock star.  Our Prime Minister, Anthony Albanese, said that the last time he saw this was a Bruce Springsteen Concert and the crowd were more adoring of Modi than they had been of the Boss, Springsteen. They also hugged, like footballers after scoring.  But it went on. Modi stood alone in the centre and addressed the crowd in their own language.  It was doubtless staged for the Indian elections which are next year.  It seems that our government was complicit.  It is very hard to think that they were unaware of what was being organised, and their part was as direct an endorsement of Modi personally as could have been done.

Having kow-towed to the US on defence last week, and mumbled a few platitudes about Julian Assange, this was another example of the Albanese government being very weak on human rights, or even standing up for anything.  We should have been friends with India without such a party-political statement.

www.themonthly.com.au/the-politics/rachel-withers/2023/05/24/yes-boss?utm_medium=email&utm_campaign=The Politics%20 Wednesday 24 May 2023&utm_content=The Politics%20 Wednesday 24 May 2023+CID_646eeca792ac1e467a7fad04b06e163a&utm_source=EDM&utm_term=Read on free&cid=646eeca792ac1e467a7fad04b06e163a

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UN Security Council Rejects an Investigation into Nordstream Pipeline Sabotage

29 March 2023

On 27 March the UN Security Council rejected a Russian motion to have a UN investigation into the sabotage of the Nordstream pipelines on 22 September 2022.

Interestingly there were 3 votes in favour, Brazil, Russia and China and 12 Abstentions.  No votes against!  The abstentions were from the US, UK, France, Gabon, Switzerland, Ghana, Ecuador, Malta, Japan, Albania and the United Arab Emirates. The reason mostly given for the abstentions was that there are already investigations going on by Germany, Denmark and Sweden.

China’s representative pointed out that the UN investigation could encompass and cooperate with all these, and that blocking the Council from launching and investigation only raises suspicions that ‘something is being hidden’.  He tactfully did not say that any national investigation would have to be filtered through that country’s foreign policy considerations.

Of course, the elephant in the room was the report published on February 8 by renowned journalist Seymour Hersh which claims that U.S. President Joe Biden and his senior White House staff ordered the Pentagon to take out the natural gas pipeline that runs along the Baltic Sea bed from Russia to Germany.

https://press.un.org/en/2023/sc15243.doc.htm
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Keating Attacks the AUKUS Submarine Deal at the National Press Club

15 March 2023

Paul Keating attacked the AUKUS submarine deal at a conference at the National Press Club today.  He was at his scathing best, and put together the arguments well, as he always does.

In essence he said that a scare campaign had demonised China with a lot of Cold War rhetoric from the ‘spooks’ and convinced Morrison, who was always happy for a headline to get some publicity for his flailing government. 

Labor was scared to losing the election by being ‘soft on defence’ so went along with whatever the Liberals wanted. So Labor has been conned by the spooks and the Liberals as well.

Keating says we have a defence policy, rather than a foreign policy, and Senator Wong running around the Pacific ‘handing out money with a lei around her neck’ is not a foreign policy.

The US wants bases here, to lock Australia into their side in the confrontation with China and to sell expensive submarines.  As Keating points out, at the circus in San Diego, only one country was actually paying- Australia.

He also ridiculed Australia for involving Britain, pointing out that in 1942 they left Singapore and in 1968 announced an ‘East of Suez’ policy that meant that they would not do much here. They then joined the EU, leaving the Commonwealth to its economic fate, and would have stayed with the EU, but for the mistake of Brexit, created by Boris Johnson et al who had silly dreams of bygone Empires. Since the UK has left the EU they are trying to have a ‘global strategy’, but they do not have much choice. But this is not economic relevance, and Australia is just being silly to go back to there for its military security.

As far as the submarines are concerned, he points out that the cost of 9 nuclear submarines would  pay for about 45 conventional ones.  If one about 1 in 3 can be at sea at the same time, which is what most navies manage, that means 3 nuclear at sea rather than 15 conventional  ones. And even if the 15 have to surface, this is only about every 3 days if they are cruising, and there are 15 for an enemy to worry about.  The nuclear subs are 8,000 tonnes as opposed to 4,000 tons, so are likely to be able to be found almost as easily as the conventional ones as detection technology evolves. They will also only carry the same torpedoes as the conventional ones, so their strike power will be 3 v 15.

Some years ago, I read an excellent book, ‘The Secret State’ by Richard Hall published in 1978 which looked at the reports from the spy agencies during the Cold War in the 1950 and 1960s and contrasted these with the conventional media editorials and opinion pieces of the time. The spy analyses were full of paranoia and worries about the Russian threat if we did not immediately spend a lot of money on defence.  The major newspapers looked at what was happening and made more sanguine comments about economic and trade relations.  Years later, things had panned out much as was expected in the major media.  The spy scare stories were almost absurdly laughable.  It seems that in this case the spies have convinced Morrison, who has taken the Liberals, now Labor down this absurd path that we and our children will pay for.   

The Liberals have said that they will be bi-partisan as Labor makes budget cuts to pay for it.  What will go? Stage 3 tax cuts?  Jobseeker pay rises?  Pensions?  Medicare? NDIS?  Subsidies to private schools or private health insurance?  Tax exemptions to religious organisations or Super contributions?  The Liberals were happy to cut all social welfare, but no doubt having made the initial commitment to bipartisanship will still criticise any actual cuts as they come along.

The Chinese, presumably will now continue to make our trade difficult. They are a rising power that is unlikely to invade us, and we should work within this framework.  It is called realism.

Here is an article on SBS:  ww.sbs.com.au/news/article/former-colonial-master-paul-keating-launches-astonishing-attack-on-labor-aukus-deal/we38qsi9s

Here is the interview on youtube:

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Outrageous Nonsense on China and Defence

8 March 2023

I confess I was flabbergasted at the SMH front page yesterday (7 March), which blazed ‘Red Alert: War Risk Exposed’ with an illustration of many aircraft taking off from China.   On pages 4-6, there was more tub-thumping. 

Today’s SMH has a front page ‘Conflict over Taiwan could reach our shores’; and pages 4-5 continue the story.

It might be noted that the Government in a foolish but bi-partisan (i.e. Liberal + Labor) decision will announce the AUKUS nuclear submarine delivery shortly.

Perhaps this silly story is to mute any criticism of the AUKUS decision.

To make a few relevant comments:

There is sadly not a Peace voice that is consulted. To be blunt the activist groups have not structured themselves effectively.

China is now a rising world power and will overtake the US, which like many declining powers is spending too much on arms, largely because the privatised US arms industry needs markets. China does not need to be belligerent.  Its expansion to the Belt and Road initiative is to take it all the way across Asia and Europe by land, and merely relies on people wanted to trade with it. It is effectively the biggest market in the world.  China has fortified some islands in the South China Sea, but it is the US that has bases close to China, not China to the US.  No Chinese warships sail around the Caribbean.

China will eventually reach an accommodation with Taiwan, whether the world likes it or not.  The US may want to delay this as the Taiwanese have the world’s best microchip technology and they do not want this to fall into Chinese hands, but most technological secrets leak eventually.  The US has accepted a ‘One China’ policy for years so it can import Chinese goods.  It is concerned about the ‘democratic rights’ of the Taiwanese, but the US has been very selective about whose democratic rights they support or don’t.  If they seek to have a war ‘sooner rather than later’, this would seem to be a bad long-term strategy.  Germany continued to rise after its WW1 defeat because its economic fundamentals were right.  Militarily Taiwan does not have the manpower to hold out against China in a military conflict, 24 million v. 1.4 billion says it all.  The US has aircraft carriers, but hypersonic missiles will sink them as soon as their guidance systems improve, so the carriers are soon likely to be as obsolete as battleships were in WW2.

As far as Australia is concerned, we can be a quarry, a food bowl and manufacture as we are able in the world economic system, and we should retain control of our resources and bargain intelligently with our customers.  China, however powerful, is likely to accept this situation.

The AUKUS submarines are a very expensive step into nuclear confrontation.  We are buying submarines at top dollar with an uncertain delivery date and huge opportunity cost for other projects, defence and civil.  We will have to have a base that services them, and no doubt the US will want to use that base for its nuclear fleet.  So we are being sold subs that we do not need and being locked into a US confrontation that benefits no one but the US arms industry.  Since China is unlikely to attack us, and our subs would not be decisive in any highly improbable direct conflict with the Chinese, they are merely a needless insult and a decisive move into the American camp in a polarised paradigm.

It is probably true that our defence has been neglected for a decade; the decadent Liberal government had precious little coherent policy on anything, but that is not an argument for AUKUS submarines.

The Herald has been extremely disappointing.  Paul Keating has said some sensible stuff. Will no one in power speak some realistic truth?

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China Relaxes COVID Zero Policy

11 December 2022

President Xi Jinping has relaxed China’s Zero Covid policy.

One is reminded of King Canute, who wished to show his flatterers that there were limits to his power, so he took them to the seaside, planted his throne on the sand and commanded the tide to come in no further.  Naturally it came in and his legs got wet.

President Xi Jinping recently made himself the most powerful man in China since Mao Zedong, but has also insisted on the Zero Covid policy.

As viruses evolve, they usually change to strains that are less lethal but more infectious, which helps them to spread.  So trying to go back to zero was almost certainly impossible and the attempt was obviously disrupting Chinese society a lot.  It may have been that while Xi was impregnable within the People’s Congress, if his Covid policies totally lost him support in the population change would still occur.

Relaxing the policy is likely to cause a big spike in infections.  This will cause a lot of problems as older Chinese are less vaccinated- perhaps only two thirds, though 90% of younger people are.  Older folk are therefore more likely to die, particularly as the Chinese vaccines are not quite as good as the Western ones.

From an Australian perspective the improvement in the Chinese economy is likely to help us. We rode through the last global recession, with the Government congratulating itself on our resilience and their wisdom, but the point was that our trade was principally with China, which was not having a recession. If China starts growing again, it may help us a lot.  Hopefully this time, if things go well, we will take an opportunity, rather than just handing out tax cuts to the rich.

https://www.pbs.org/newshour/world/china-relaxes-covid-restrictions-braces-for-wave-of-infections
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Albanese seeks to meet Chinese President, Xi Jinping

12 November 2022

Anthony Albanese has made no secret of his desire to meet the Chinese President, Xi Jinping, or the Premier, Li Keqiang at the current pair of Summits in Cambodia and Indonesia.

There is an ASEAN meeting in Phnom Penh. Australia is not a member of ASEAN, but there is also an East Asian Summit at the same time with major world leaders. President Biden is there, with Chinese Premier, Li Keqiang, South Korean President Yoon Suk-yeol as well as Ukrainain Foreigh Minister, Dmytro Kuleba, Russian Foreign Minister, Sergei Lavrov and others.

The G20 Conference in Bali immediately after Cambodia will have both Biden and Xi Jinping.

Albanese wants to get the Chinese to lift sanctions on Australian products. He will have some work to do. Going for him is the fact that he is not Morrison and presumably would not have been so inept as to demand the UN investigate China’s early handling of the COVID crisis that caused such needless offence to the Chinese, but he has stuck with the silly AUKUS submarine deal, which just seemed to be Morrison finding a foreign distraction for his own ineptitude. Albanese has also allowed the US to put B52 bombers in Darwin- surely another silly and needless provocation that he is responsible for.

Here is an excellent analysis of what is wrong with the submarine deal.
www.thesaturdaypaper.com.au/opinion/topic/2022/11/12/the-definitive-case-against-nuclear-subs#mtr

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China may get a naval base less than 2,000km from Australia

24 March 2022

This is a worry!  Here is the article from the SMH

China set to sign first security deal in the Pacific on Australia’s doorstep

By Eryk Bagshaw  March 24, 2022 — 7.33pm

Singapore: China and Solomon Islands are set to sign off on a security deal that will see Chinese warships based in the Pacific and shift the balance of power in Australia’s region.

The agreement will give China the power to use its military to protect the safety of Chinese personnel and major projects in Solomon Islands and give Beijing a base for its navy less than 2000 kilometres off Australia’s coast. The base would be the first time Australia has had a strategic adversary within striking distance of its coastline since World War II.

 “China may, according to its own needs and with the consent of Solomon Islands, make ship visits to, carry out logistical replenishment in and have stopover and transition in the Solomon Islands,” the draft framework agreement states.

“Solomon Islands may, according to its own needs, request China to send police, armed police, military personnel and other law enforcement and armed forces to Solomon Islands to assist in maintaining social order, protecting people’s lives and property.”

The draft, released online on Thursday afternoon and verified by the Australian government, is a sharp escalation in the relationship between the two governments after protests, riots and looting gripped the island nation in November.

The conflict was driven by COVID-19 measures, ethnic tensions and regional tensions between Honiara, the capital, and its most populous province, Malaita, but it was also linked to allegations of corruption involving Chinese infrastructure deals and Honiara’s decision to switch its diplomatic allegiance from Taiwan to China.

The draft states Beijing and Honiara will enter into the agreement with the view of “strengthening security co-operation, mutual respect for sovereignty, equality and mutual benefit”.

Anna Powles, a senior lecturer in international security and a Pacific diplomacy expert at New Zealand’s Massey University, said the draft agreement was “very significant”.

“The security agreement is one of the first of its kind in the Pacific; its scope is broad and suitably vague and its provisions range from maintaining public order through to protecting Chinese citizens and assets, and providing humanitarian and disaster relief,” Powles said.

“The agreement also contains several ambiguous and potentially ambitious provisions with geopolitical implications including that China is seeking logistical supply capabilities and material assets located in Solomon Islands to support ship visits.”

Powles said the agreement suggests logistics and supplies will be available in the Solomons to support the People’s Liberation Army Navy.

“If it comes under force, the agreement also contains references to China’s ‘own needs’, which could refer to China’s strategic interests; China’s pursuit of its strategic interests in the Pacific is of direct concern to Australia and its allies and partners.”

Australia also sent troops and federal police to the Solomon Islands after a request for assistance from its Prime Minister, Manasseh Sogavare, in November. The request was made under a 2017 treaty between Australia and Solomon Islands to request help from Australian armed forces and the Australian Federal Police in the event of civil unrest, but that agreement would be put under a cloud if the deal with Beijing goes through.

Solomon’s opposition MP Peter Kenilorea told the ABC he was deeply concerned by the development. “This has implications for the Pacific islands region, including Australia,” he said.

China has been courting Pacific island nations to establish a military presence in the area, but the Solomons deal would be the first time the Chinese navy has an operational presence in the region beyond the South China Sea.

In 2018 China approached Vanuatu about building a permanent military presence in the South Pacific, triggering urgent discussions at the highest levels in Canberra and Washington. Thursday afternoon’s draft document, first released by a Solomons’ opposition adviser, sent officials in Canberra scrambling to verify its authenticity. The Sydney Morning Herald and The Age confirmed on Thursday evening that the Australian government believes the document is genuine, deepening concerns about China’s intentions in the Pacific.

Foreign Affairs Minister Marise Payne and Defence Minister Peter Dutton were contacted for comment.

The base will increase the risk of confrontation between the US and China as Beijing ramps up its competition with Washington, threatens Taiwan’s airspace and refuses to condemn Russia’s invasion of Ukraine.

The Chinese embassy in Canberra was contacted for comment.

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Ukraine- a Perspective

6 March 2022

Putin had said that he would not invade, so clearly he was lying.

It may be true that Russia wants buffer states between it and Western Europe and this is why it demanded from the US that Ukraine never be allowed into NATO. 

It is also true that the US promised Russia as its empire collapsed in 1990 that the newly independent countries would not be allowed to join NATO and that NATO would not move eastward.

Of course the countries that had just escaped from the Soviet Union wanted a security guarantee by to joining NATO.   NATO did not have to approach them, and may have appeared cowardly not to offer them the protection that they sought.  Whether NATO could defend Estonia against a Russian land-based approach is another question.  It is likely that NATO would not have let Ukraine join, as being surrounded by Russia on three sides, it might have been considered indefensible.

From a Russian point of view, the presence of close US bases is very disturbing and they are now in Bulgaria and Kyrgyzstan.  One of Russia’s major demands was that there be a buffer zone between it and the West.  The history is relevant.  Russia has had the armies of Napoleon and Hitler sweep across their land where there are no natural barriers. By the same token, they swept the Germans back in WW2 and retained part of Germany and all of Poland Romania, Bulgaria, Moldova, Czechoslavakia and the Baltic States of Estonia, Latvia and Lithuania. They kept them, dropping the ‘Iron Curtain’ and engaging in the ‘Cold War’ until the inefficiency of their communist economy made it crumble, leading to the collapse of the USSR, Russia’s empire.

The Russian economy is now the 11th in the world with GDP of $1.6 trillion, only two places ahead of Australia on $1.4, (with Spain in between).   They have however, the legacy of the immense military power and high military and space technology, and the memories of Empire that must be very important to Putin, the Cold War warrior who used to head the KGB.  Whether Putin is motivated by fear of the West, dreams of recreating the Russian Empire, difficulties in domestic politics or deluded foreign intelligence reports seems hard to say.  It is unlikely that just promising that the Ukraine would not be in NATO would probably not have stopped the invasion, but Russia was treated with a contempt that must have rankled.  The Eastern European Countries joined NATO, which must have seemed in danger of irrelevance if peace had reigned.   Russia’s worries about encirclement were ignored, presumably because it was assumed that there was nothing that they could do about it and they were economically weak.

It is interesting to look at Western assumptions since WW2. Because both world wars were over access to markets, the pressure at the Bretton Wood conference in 1944 was to have free markets so that if countries traded well they would rise, and if poorly they would fall, but either way, there was no world war. Germany and Japan rose in this system.  The US, which was responsible for 40% of world GDP in 1960 has been quietly sinking and is now only 24%. Much of their manufacturing has gone offshore so the arms industry has greater significance.  The US have had ownership of major companies, but as these have become global they are not under control or fully taxed by any country.  The US has been the only superpower since the collapse of the Soviet Union and has had an assumed superiority, which is helped by the fact that as the US Dollar is the world’s currency and since the Gold standard was abolished in 1980, they can simply print more money.

The key Western assumption after Bretton Woods was that major powers would trade and hence territorial wars would be unnecessary.  Just as the medieval folk assumed that God would fix everything, the West largely assumed that having the world a market would fix things.  Unsurprisingly this has proved too simplistic.  Unfair trade, national and corporate predatory behaviour and the ability of some to set prices better than others has led to some countries becoming poorer as their assets are stripped, like the losers in a Monopoly game that never ends.  The assumption that no countries wanted empires stood in ironic contrast to the behaviour of the US, which has had many little wars to further its interests, not to mention Russia and China.

Germany is worthy of mention here.  It was punished by the Treaty of Versailles at the end of WW1 and the resentment and economic hardship led to the rise of Hitler and WW2. After WW2 the Allies had learned their lesson and the US aid of the Marshall Plan poured in to stop communism.  Germany was rebuilt and joined its traditional enemy France to form the EU, which it then dominated.  Internal EU trade made war extremely unlikely, though there is a still significant friction in the Balkans. Germany went one step further, getting gas from Russia, which creates a mutual inter-dependency, which was assumed to make war less likely.

But when Russia collapsed in 1990 due to uncompetitive nature of its industries and it consequent foreign trade problems, it received no sympathy, and no aid. Predatory capitalism bought assets at rock bottom prices from those within the power structure who had power to sell them, and organised crime was significant.  Putin, an ex-KGB chief took the trouble to become personally rich, but moved in to control the oligarchs, lessen corruption, get foreign capital and industries and develop oil and gas.  His deal with the oligarchs was basically to control them somewhat, but let them keep their money as long as they did not get into politics.  Per capita GDP in Russia has risen 385% since 2000 as against the EU’s 162%, helped by high oil and gas prices in the early years. But Russian per capital income is still $US28,219 a year as opposed to the EU average of $US41, 539.  Russia has also had an inflation rate almost double the EU, which has somewhat taken the gloss off the wage rise.

Putin himself is still a Cold War warrior, who resents Russia’s loss of power.  He has eliminated dissident voices in his immediate circle, and so the advice he gets may be quite distorted.  There were stories from the Communist period that Russian intelligence was skewed to favour a Kremlin faction who might reward the source of the intelligence.  The pro-Russian nature of the Donbas region provinces of Donetsk and Luhansk and of Crimea may have led Putin to believe that Ukrainians either wanted to join Russia, or would accept it relatively easily if it happened.   He had marched into Georgia, taken the countryside easily and the people had given little resistance.  The referenda in Donetsk and Luhansk in May 2021, which were highly controversial in their legitimacy and execution because of both separatist and Ukrainian army violence, may have also given him reason for his belief.

Russia has 146 million people Ukraine 44 million, so taking over the country and occupying it will be extremely difficult even if military victory is achieved.  Bombarding residential areas was done by the Russian in Syria and achieved victory there, but the Russians left the local Dictator, Assad, to deal with the consequences.  Assad’s humanitarian record is appalling, and there has been little publicity about the outcome.  But the Ukrainians are the same ethnic stock as Russia and such a traumatic victory is very unlikely to achieve a stable transition of government if Russia chooses to stay. 

The role of the US has been criticised. They have been keen for NATO to take a hard line, broke their word in NATO’s eastward extension, put bases in Bulgaria and Kyrgyzstan and dismissed Putin’s request for a promise not to offer Ukraine membership, saying it was a Ukrainian decision.  A harder line from NATO will help US arms sales, a disruption of oil and gas will favour their own industries, and after all they are separated from any problems by the Atlantic Ocean.

The Germans are having a major re-think on their priorities, as they rely on Russian gas for 15% of their generation. They were phasing out nuclear power since Fukushima in 2011, and like many other countries are a little delayed in the difficult switch to renewable power.  A power shortage is likely to affect their industrial competitiveness and they are now signing up to the US demand for 2% of national income to be spent on arms.

China is likely to help Russia as it can turn it into a vassal state.  The Chinese economy is $17 trillion, which is roughly ten times the Russian one, so the cost of bailing them out by buying their energy and wheat is really only small change. They will take a bit of criticism from the rest of the world, but it will be worth it.  They will continue to work with the Russians to lessen the power of the US dollar as the world’s currency.  They will see how much Russia has suffered financially and in reputation from the invasion, and may then ease up on Taiwan- after all they only have to wait until a pro-Beijing government gets power there, and if that takes 30 years, so be it- they can afford to wait.  They harbour historical resentments against the West as Russia does, so with an economy ten times the size of Russia and growing have a capacity that Russia lacks.  This remains a problem.  They have consolidated Tibet and the Xinjiang Uyghur Autonomous Region and are expanding the area they control in the South China Sea.  What they will conclude from Putin’s Ukraine adventure remains in the realm of speculation.

The rise in gas prices should help Australian producers, but it will take a long time to scale up to meet the demand, and shipping is a problem. The other problem that the Australian gas industry has is that they sold gas on the assumption that could frack large parts of Australia, and resistance from groups concerned about the effect of this on the water table and farming has made this gas less available, so they have already have trouble meeting their contracted obligations. 

So what are the effects of the Ukraine invasion likely to be?

Putin will be very reluctant to stop and is likely to kill a lot of civilians in his efforts to save face and win.  This is tragic for the people of Ukraine and will result in a lot of refugees.  If he tries to hold Ukraine against a widely supported insurgency there will be a large number of Russian casualties continuing.  The Afghan war led to the fall of the then Russian government and many believe that even with the worst repression Putin will not survive this folly, particularly as he has created a Europe much more united against him and sanctions that will be significant for the Russian people.  An assumption is that he cannot reactivate the Gulag system of Stalin in this day and age, but a number of our other assumptions seem to have been wrong.

As stated above Russian and China will become closer and China will redouble its efforts to undermine the US dollar as the world’s currency.  This will succeed eventually, but will be gradual and not necessarily a problem for us.

In the short-term we need to help the Ukrainians as much as reasonably possible.

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