Entry 12 – War (second phase)

I am doing this for the double reason that events have happened recently that I believe should be mentioned in this series of entries, as well as for having thought that I should reread the whole series, and try to share if, as of today, I ratify what has been said, or if I consider that there are errors. That is why I have given this entry the title of “epilogue”. Unfortunately it is an epilogue of this series, not of the War, but it is not so impossible that the War is near.

As for recent events that I consider noteworthy are:

Second UN vote

On February 23, the second vote on the Ukrainian war took place at the UN. In this case the Russian withdrawal from Ukraine was called for.

The result was as follows:

I see it important to remember that on April 7, 2022, a vote was taken at the UN to expel Russia. I addressed the issue in entry 6 of my previous series (the one I called “Thinking about the Ukraine War).

I have done the exercise of comparing the two votes to see which countries have changed the direction of their vote, and to try to draw conclusions.

Although it should be clarified that the votes did not have identical wording of the proposal (in the first case it was to expel Russia from the UN, and in the second it was to ask it to withdraw from Ukraine), it is nevertheless true that both seek to identify countries that are against Russia’s actions.

The result of the comparison is that:

The countries that previously voted against expelling Russia, and now have not voted against, have all gone in the direction of abstention. China is the main one of them, so it is almost deducible that the other 16 countries that have changed their vote are “supportive partners” of China.

The countries that previously abstained, and have now changed their vote, have all done so in the sense of voting in favor. India has maintained its abstention, along with 12 other countries.

Thirty-nine countries have changed their vote from abstention to vote in favor, with a total population of 1.38 billion inhabitants and a GDP of 10.5 trillion dollars (which is not small). Of these 39 countries, the following are significant: Brazil, Egypt, Indonesia, Mexico, Nigeria, and almost all the oil-producing countries of the Persian Gulf. It can be thought that these are the “hinge” countries for choosing a bloc.

The summary of the result of this second ballot is:

	GDP (GDP)	GDP (% worldwide)	MM inhab.	Inhab (% world
Against	2	2,08	232,72	2,90
Abstention	29,14	30,19	4.033,95	50,31
For	65,37	67,73	3.751,34	46,79

In other words, although the news that most countries voted in favor is reported, since the UN voting system (one country – one vote) makes Monaco’s vote worth the same as China’s, the fact is that the countries that voted in favor do not account for half of the world’s population, and they do account for well over half of the world’s GDP.

If it turns out to be true that this vote indicates in which bloc each country will end up aligned (I think it is a good indicator), there are some interesting conclusions from this new vote (in addition to those made on population and GDP of each bloc).

In entry 10 of the series “thinking about the Ukrainian War” I talked about what I called “signing up countries”. There I explained that there were countries that, despite having characteristics that made it logical for them to join one of the blocs, could be “incentive-fished” to change bloc, because of the extent to which they solved problems of that bloc.

At the end of entry 7 I commented on an interview with Ivo Sarjanovic. There Ivo said that the Western bloc was bad on energy and mining issues, and the Chinese bloc was bad on agricultural issues.

If the change of vote of the Persian Gulf countries and Nigeria means their “joining” the Western bloc, this will greatly improve the West’s energy situation.

Likewise, the change in Brazil’s vote may mean its signing up with the West. If so, that further improves the agricultural position of the West, and further spoils that of the Chinese bloc. Incidentally, I discussed the suspicion that Brazil may be trying to sign up for the West at the beginning of entry 10.

Mining in the West, which is essential for the implementation of new energies (lithium for batteries, among other things), is still not well resolved.

Of course, as I explained at the beginning, the two votes I am comparing here had different questions (in the first case it was to expel Russia from the UN, and in the second it was to ask it to withdraw from Ukraine). Therefore, it must be taken into account that the changes of vote may be due to other causes.

China’s proposal for peace.

Last February 24 (is it a coincidence that it is only one day after the UN vote, I don’t think so), China has communicated its “12-point plan for peace in Ukraine”. It can be seen here.

With this, China sends several messages to the West:

We (China and its allies) are not at the orders of the West. We think and act in our own way.

If the West wants our collaboration, within these 12 points it has it. Outside them, we will have to negotiate.

If the West does not listen to us, the solution to the war will not be easy. Nor to its consequences of inflation in the West, supply chain problems, and grain supply problems. Nor to the anger of Western society that these consequences entail.

The Chinese Foreign Minister has gone deeper into this matter on March 7 (news here), warning that, if the USA does not change its attitude, he foresees serious global problems.

On the contrary, if the West listens to us, it is clear that:
- There will be no nuclear bombs.
- There will be no problems with supply chains, nor with grain and fertilizer prices (which does not imply that prices will be the same in both blocks of countries).
- Trade issues, which will alleviate inflation, will be agreed upon.
- It is implied that China will convince Russia to seek an end to the war, which will probably involve Ukraine giving up part of its territory.

In short, they are calling for the new Yalta Conference I have been talking about since the beginning of these entries. After it, the new world order would begin.

Putin’s speech

A few days earlier, on February 21, Putin delivered a speech (it can be read here).

It is an aggressive discourse against the West, and against the type of society promoted there, which it considers decadent. It defends Russia’s right to protect its “glorious” civilization.

He insists that there are parts of Ukraine that have always been Russian, and must become Russian again to defend its Russian population from extermination.

And, … announces the suspension of Russian participation in the START treaty (the nuclear arms control treaty). It also warns that it will use these weapons if forced to do so.

In short, no sign of stopping the war, but rather of increasing the pressure. It could very well be the result of a “good cop – bad cop” type of agreement with China, whereby Russia plays the aggressive role, and China plays the dialogue role (from its tough position).

USA recognizes the situation.

Also, on dates very close to those of the previous points, last February 28th, the meetings of a new committee in the American Congress on the strategic competition between the USA and China began (news here).

The chairman of that committee, Mike Gallagher (R-Ariz.), began by saying that “China and the US are locked in an existential struggle over what life will be like in the 21st century.” He also said that “time is not on our side.”

I see this way of summarizing the situation as very appropriate.

In other speeches, it was recognized that the long-standing attempt to integrate China into the Western system by promoting its economic integration has failed. And that this implies that policies need to be changed.

The journalist reporting the news is surprised by the unity on these issues between Republicans and Democrats, which is very rare in today’s times. In other words, the entire USA is aware of the situation.

From my point of view, this means that the USA is beginning to recognize China’s “near-equal” position, and the need to decide how to deal with them the future of the world.

China ends its “election period”.

Following the re-election of Xi Jinping as General Secretary of the Chinese Communist Party on March 10, Li Quiang has been appointed as Premier of China, i.e. as the country’s number two (news here).

As is logical, he is fully trusted by Xi Jinping, who with this appointment completes his total control of the country and ends his “electoral period”, which forced him to devote his time to maintaining and expanding his power, and not to make any major international moves that would harm his domestic objectives.

China can now “show its international cards”. And, … it is doing so.

Blackstone defaults, and SVB falls.

On March 2, Blackstone (the large investment fund) declared default on a €531 million bond (news here). It must be said that Blackstone had already been in difficulties for some time, in fact, I mentioned the matter in entry 7.

It is surprising (or not so surprising) that little publicity has been given to the news. Of course, Blackstone’s default means that the state of solvency of the Western financial world is not good at all.

On the other hand, US regulators have intervened Silicon Valley Bank. It was the sixteenth largest bank in the USA, and is the second largest bankruptcy in the history of the country (news here and here).

It is important to point out that this bank has fallen due to a liquidity crisis. The balance sheets were more or less correct, but, faced with excessive withdrawals of funds, it had to try to sell its assets (basically bonds). It turns out that it has not been able to sell them in time, because the bonds have fallen in price following the rise in interest rates. In other words, government debt is starting to become not so safe and not so liquid. If you apply that criterion to any bank, not a single one can hold up. It is little wonder that this has not been widely reported, in an attempt to avoid a domino effect.

This is certainly not good news for the Western financial world. In fact, all stock markets have panicked.

Other matters of interest.

There are other publications that I would like to mention, although they are not strictly news, nor do they have the relevance of the previous ones. They are the following:

Visualcapitalist has published a graph of which countries have bought Russian energy since the start of the War (it can be seen here). Although there have been big changes from the past, it is clear that Europe still buys a lot, despite sanctions, and that China buys all the surplus.

Visualcapitalist also presents a very interesting graph on the evolution over time of energy consumption from different sources worldwide, and carbon emissions (you can see it here). There are two clear conclusions:
- The increase in global energy consumption over time is very large.
- Even today, the percentage of renewable energies in relation to the total is little more than 20% (and that is counting nuclear as “clean”).

Research efforts are being made to improve energy issues. That is good and necessary. One of the problems in thinking about increasing renewables is the need for batteries, along with not having enough access to lithium in the West. There is an interesting alternative (news here). They propose to use geothermal energy as a battery. That is, with the energy that is not consumed on the spot and needs to be stored, they propose to heat water and introduce it into deep wells, where geological conditions allow it not to lose temperature naturally. Then, when energy is needed, the water is pumped upwards and its heat is converted into electricity. The idea is nice, and the numbers are profitable, but only to take advantage of the oil wells already built and now abandoned. Another thing is to drill new wells. And there are not so many abandoned wells (not by far) for this technology to be a relevant percentage of the world’s energy.

Regarding cryptocurrencies, I really liked the video made by Michael Saylor, the CEO of MicroStrategy (you can watch it here). In it he explains very well the differences between different types of cryptocurrencies and related strategies.

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I have reread my previous entries.

As I said at the beginning of this entry, one of the reasons for writing this entry was to tell the important developments since I wrote the previous entry 11, which is what I have done above.

The other reason was to do my own critical reading of the previous entries, to check if the evolution of events had made me change my mind about something, or if I had detected errors.

I have to admit that I was a little afraid to reread what I had written, and I also have to say that, after doing so, I am calmer. At least I have not found things that I am ashamed to have said.

In general terms, I ratify what has been written. As for particular aspects, I make the following mentions:

At entry 1 I said:
- “For economic issues, Russia holds out as long as it takes, and the West weakens in the meantime.
- For sociological reasons, Russia runs out sooner”.

The first is already happening. The second is not so clear. Perhaps societal support for the West is also weakening.

I also stated at that entry 1 my opinion, in colloquial language, of what Xi Jinping might have said to Putin at their meeting in Samarkand on September 15. It was this:
- “OK, make this new ordago, but don’t bring in anything but fear (don’t activate strong military operations) until we have finished our Congress and have a long-term leader. Then we’ll tell you whether you go it alone in your wars, whether we support you, or whether we propose global solutions.”

The fact is that time has passed since that meeting: Russia has not activated these “strong military operations”; China has completed the reorganization of its government; and very soon after, it has presented its proposal for a 12-point global solution. The interpretation did not seem unfocused.

Also at entry 2, under “China’s Position,” talk about China’s aspirations and possible actions. The result is that it almost coincides with the 12-point proposal that China has recently made and which I discussed above.

At entry 4, under “Pact vs Total War,” I said:
- “the present situation has only two very different ways out: either we make a pact on almost everything (the new Yalta conference) very soon, …or we start World War III”.

I think it is still true. I prefer the first option. And, … I think the circumstances are helping to make it so.

However, I have to admit an error in that entry 4, since, at the end of the note, I said that I saw the great pact as possible before the end of the year. It is clear that I was overly optimistic.

At entry 5, at the beginning, I made my prediction of what I thought would happen in the War. After arguing for it (in my own way), I said:
- “…the likelihood is that we will go to a scenario of military peace, maintaining some energy and food warfare, but with trade between blocs not entirely eliminated.
  
  It will be a transitory period. Countries, companies and individuals will have that time to implement their strategies for the next phase, which will be one of very closed borders between blocs of countries, and in which the gradual degradation of the West will manifest itself”.

As of today, I stand by this, which does not mean that I like the situation. I think that this transitional period is the one that will be devoted to negotiating the “new Yalta conference” and the “new Bretton Woods”.

Precisely because I see things that way, it seems to me that it is better to recognize the realities than not wanting to accept them. This makes it possible to look for ways to adapt to them, which is what I did in the subsequent entries. I am not evaluating these proposals now because it is too early to know if they are correct.

This is the end of this cycle of entries. I suppose that soon I will begin another cycle. My wish is that it can be dedicated to the creation of a new world that, with its difficulties, will be a pleasant world to live in.

I invite all readers to do their bit in building the new world and in making the process of adaptation as painless as possible. We need to think hard; talk to everyone, especially those who think differently; seek points of understanding; and make many decisions.

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