Moscow and London: How signals are interpreted

 

How signals are interpreted

In 1991, the Soviet Union came to an end and this was very much the consequence of the efforts to remain ahead during the so called Cold War. The Soviet Union had to invest a vast amount of resources to remain significant in the arms race and it came the point when it could no longer afford to keep up because it did not have the financial muscle to do so.

The resignation of Mikhail Gorbachev as Soviet President is very much the end as soon after the Soviet Union disintegrated, leaving the USA as the one major superpower without any close competitors as China itself was far from being what China is today - economically, technologically and militarily. It could be said that the USA could attack Yugoslavia and dismember Yugoslavia without a UN mandate and without any real opposition and this is something that could not have happened if the Soviet Union had been around with the power to prevent such attack.

Having said that, 2022 is a different story. The Russian Federation is much more powerful than the Soviet Union for several reasons and one of them is the fact that the Russian Federation like China are much more homogenous countries with less ethnic and political contradictions. The Russian intelligence networks was magnifically helped by the fact that former Warsaw Pacto countries and regions were integrated into the European Union. If you were to look for an image to represent what has happened the Trojan Horse comes to mind.

The USA has used Britain as an extension of the USA in Europe and beyond. The USA has used Britain to justify USA agendas before the American people. If Tony Blair had not joined forces with George Bush Junior, it would have been difficult for the American President to sell his agenda to the American people. Britain has been used as a junior partner and as a propaganda tool and Britain has had to pay a very high price for it. It happened in Iraq and it happened in Afghanistan and it is happening in Europe. Inflation and financial difficulties that Britain is facing don't come out of nowhere. They are the direct result of sanctions and other measures taken against the Russian Federation that have had a boomerang effect not just in Europe, but worldwide. What happens when oil prices measured in US Dollars go up? Britain will pay higher prices not just because of market prices going up, but also because the loss of value of Pound means that Britain will need a lot more Dollars to pay for energy supplies and this has a direct impact on the British economy. If the Treasury cannot keep up with increasing expenditure and if the private sector in Britain has to translate cost into prices charged to consumers, industrial unrest is already on the horizon.

Just a few days ago, the British government was offering salary increases of 3% when inflation was already at 9% and more. Active workers will suffer and pensioners will suffer when the government is not able to adjust salaries and pensions taking into account the rate of inflation. The private sector already hit very badly by Covid, hit now both by inflation and consumption reduction will face an even harsher economic environment.

Liz Truss as Foreign Secretary said that she was in favour of cutting down the manpower of the British Armed Forces at a time when tensions are rising and there is the prospect of open conflict with both the Russian Federation and China. While would the UK be talking about cutting down its military capabilities? While is she asking other countries to increase their defense budget? My educated guess is that Britain does not have what it takes to beef up its Armed Forces and is therefore asking others to invest more to level the field in terms of what NATO can do or not do. President Donald Trump raised the concern that USA was the one feeling the pain created by military expenditure while other NATO members were not doing enough. Chancellor Olaf Scholz talked about hundred billions of EUROs to beef up German military capabilities, but how does this fit in with the fact that Germany is facing serious issues when it comes not just to the availability of energy sources, but also to the cost of existing energy sources. When both big economic players like Bayer and Thyssen-Krupp and the trade unions talk about the risk of economic collapse, what will Olaf Scholz be willing to sacrifice to beef up the German military capabilities? When you look East, Poland was offering to send their outdated Mig fighter jets to Ukraine if the USA could give Poland F35s in exchange, something that was rejected outrightly by the USA. What about other countries of the NATO block and what about those who are not members of NATO? Do they have the financial muscle to beef up their military capabilities or will they always depend on what USA or Britain can give them? Germany made many promises, but has delivered none of them.

Behind the speeches, this is the reality and today the British Primer Minister Boris Johnson fell not because of the scandals involving sexual misconduct of Conservative MPs. He fell because of economic realities. What were Conservative MPs talking about? VAT and Corporation Tax. Britain has been overspending for several reasons, including the fight against COVID when caution regarding budget was put aside to deal with a national emergency. On top of that, there is another national emergency created by British geopolitical decisions that have backfired. 

Look at the economy. For decades, Britain had remained relatively stable with very low interest rates and a significantly higher rate of employment and low prices in the shops. As the CEO of Poundland explained, he used to pay about 2,000 Pound for a container and now the price has jumped and it costs 20,000 Pound to bring imported products to the United Kingdom. Add to that fixed overheads and utilities and economic margins are dramatically reduced. This is not sustainable and on top of it the devaluation of the Pound compared to the US Dollar will make imports ever more expensive. Put aside Poundland and the situation many importers and exporters face and focus on food supplies. If Britain imports 60 per cent of what Britain consumes, then the costs of food will rise exponentially combining importation, transportation and distribution and costs involved in retail operations. Retail costs have been reducing by reducing manpower at the shops. You see today that the number of employees employed by retailers has been reduced with the introduction of automation. Automation reduces the numbers of jobs across the board whether we are talking about banking and financial institution, retailers and even transport. Much of the dispute affecting transport and leading to strikes is due to the declared intention of cutting jobs to cut costs. Having said that, if jobs been eliminated in one segment of activity are not created in other areas, the welfare bill will have to rise to pay for unemployment benefits and other social benefits in a country in which the number of non active population is rising while the number of those active at work is falling. This happens naturally because of an ageing population, but it is accelerated when people who are still fit to remain active lose their jobs.

What happened to the Soviet Union will happen to Britain. There is a time when your economy is not strong enough and everything is translated into accumulated and rising debt and when this happens there are social and political consequences.