An OPINION of the Russia-Ukraine war

[DAKA]

A New Era – A New World Order Presented at City Club March 10, 2022 By Al Tuchfarber

My analysis is that the Russia Ukraine War will have bigger consequences for the World Order than any specific event since WWII. It will change the World Order more than the Korean War, Vietnam War, the two Gulf Wars, 9/11, and anything more recently. The current war is not even a very large war, but its impact will be huge. It will cause enormous changes on most areas of modern life including investing, national security, politics, business, and the question about what political-economic model dominates the next generation or two. I could write a book about the implications for the globe but will limit myself to a couple dozen of points for today. Russia

1. Vladimir Putin has lost this war. It is not now winnable for Putin, even if he uses nukes. His choice is now how to lose and how to minimize the losses.

2. One US dollar is now worth about 140 Russian rubles meaning that since the end of 2021 the Russian GDP has fallen from $1.6T to about $0.8T, compared to a stable US GDP of $24T. An Apple iPhone13 cost 72,000 rubles in December, one now costs 144,000 rubles, except Apple totally pulled out of Russia a few days ago.

3. Hundreds of major US and European firms have pulled out of Russia. Millions of Russians are now out of work overnight. Many, if not most of those firms, will not come back for years, if ever

4. Russia is already in a recession because of the war. It is headed for a depression within weeks and will see negative growth for at least several years

5. Russia has already lost many of its energy customers in Europe, and will permanently lose more than half over the next five years.

6. Putin’s personal prestige is destroyed, and he will be lucky to survive in power.

7. Miserable logistics, training, and outdated weapons doomed Russia to defeat as did the magnificence of the Ukrainian leaders, people, and military. Also critical were weapons and other aid from NATO countries.

8. Given its other major problems Russia will never fully recover unless it joins the West.

9. The spring thaw is only a week or two away and Russia’s tanks, troop carriers, and heavy trucks will be sitting ducks as they wallow in the spring mud.

China –

is the other massive loser.

1. Before the Russia – Ukraine war, I estimated the probability of China invading Taiwan at 10% by 2027. I now rate it at 1%. Why?

2. China now knows how the West will react to an invasion of Taiwan. [The West is the US, Canada, European NATO, Japan, Australia, and other free democratic, capitalist countries.]

3. China was already on the verge of economic stagnation before the war. Because of the way that Russia and China are politically and economically intertwined, China is going to go into a recession as Russia goes into a depression.

4. China CANNOT feed or fuel itself. It is far more vulnerable to sanctions than Russia, which CAN fuel and feed itself. It would be quite easy for the West to starve China and shut down its economy.

5. The free world’s companies will realize China is too dangerous with which to be tightly integrated and many will pull back over the coming decade.

The West United –

The West is now more united than it has been since the mid-1980s.

1. Putin has united NATO like it has not been for 40 years.

2. Europe is now united more than it has EVER been in history.

3. It is obvious now that Europe must have the US as a partner.

Military Spending in the West

1. Germany has been spending far too little on defense. Two weeks ago, it announced a decision to double its defense spending and bring it above the NATO standard of 2% of GDP. For the next several years that will amount to an addition of about $150B; by contrast, with its currency collapsed Russia’s defense spending will collapse to less than $30B per year.

2. Because of the Chinese threat to Japan, Japan has recently announced it will double its defense spending to over $100B per year.

3. The US and many other countries in the West are raising their defense spending significantly.

Climate Change Hysteria

1. The war and Russia’s role in it is the final nail in the coffin that the use of fossil fuels can be meaningfully reduced in my lifetime – 25 more years????

2. The US Green New Deal is a total pipedream and will never be achieved. [BOOK]

Other Issues

1. US inflation will stay high for months longer because of the war.

2. The US economy is very strong and will not go into recession.

THE FINAL POINT IS THAT THERE WILL BE HUNDREDS OF ADDITIONAL SECONDARY AND TERTIARY CHANGES OF IMPORTANCE CAUSED BY THE WAR AND ITS AFTERMATH. 

[pipedreams]

I'm not sure I buy much of that.  "The West is now more united than it has been since the mid-1980s."  Don't buy that with the world thinking Biden is a joke.   "Vladimir Putin has lost this war." Just my opinion but Putin's objective was to stop NATO and the West's eastward creep on Russia's border.  If you look at history you will find the eastern part of Ukraine was at one time part of Russia and other parts of Ukraine were part of Poland.  This is what happens when western politicians get involved in creating borders and countries.

Why should we believe anything the media puts out about Ukraine or anything else, though we learned that lesson recently. 

Al Tuchfarber: University of Cincinnati Professor Emeritus of Political Science.  Another one that probably never did an honest days work in his life.

 

[DAKA]

My son has this to say

As I'm plugged in to the aviation industry, I've seen massive impact to the Russian aviation economy.

 

Putin has nationalized (stolen) about $10 B worth of leased aircraft flown by Russian carriers that were inside the border when the air routes closed. These planes could be repossessed if they were anywhere else but now cannot due to the Russian border being closed. Effectively, these planes cannot ever be flown to even a semi-friendly nation as they'll be repossessed by the lease holders. As the embargo continues, the planes will be cannibalized for spare parts and the number of flyable planes will decrease. See Iran for an example of how that works.

 

If the planes get "black market" parts, they will lose any certification to ever fly to the west, even if the embargo ends.

 

Airlines use a system called "Sabre" for selling and managing tickets Aeroflot and Rossiya were cut off from Sabre and can't sell tickets through any western online travel agency. They're pretty much reduced to accepting rubles in person at ticket counters. Think of how air travel worked in the 1980s. They've also lost any interline partnerships and airline alliance membership. No feeder routes, ie Delta sells JFK-Moscow and then the traver might connect on Aeroflot to Odessa or some other Russian airport. That's off the table now.

 

Putin set Russian international cooperation and interdependence back 30 years in just two weeks.