I cannot say I ever met the Queen, or that she had a clue who I was, so if you are looking for that, read no further.
I was at the Coronation amazingly enough, as my father went to England to study surgery and I was taken to the parade and was apparently old enough to wave a flag, but not old enough to remember doing so. (No sums please).
A friend from school, whose father was a parson and who was a very decent fellow went to London for life experience and got a lowly place at a respected PR firm. It turned out that the PR firm did the PR for the Queen and he was attached to the small unit that did it. His major boss was promoted to head the whole organisation and the next boss left suddenly and he, at a relatively young age became the Queen’s personal PR agent.
He was there for some years then came back to Australia, as he wanted his kids to grow up as Aussies. He was much admired for his work there and was naturally quizzed at some length about how things worked. He said that the Queen was very hard working and always very thoroughly briefed about everyone she was meeting, both their personal background the political or social issues that they were interested in. He said she was astute, conscientious, kind and decent. But she was not a Pollyanna. She was realistic about people. If they were silly, she would tacitly acknowledge this as she sought a strategy to deal with the situation. He was very discrete about specifics and did not mention that he was rushed back to London to deal with the Royal fallout from Diana’s famous TV interview, but he did let one significant issue slip. He was asked about the Queen’s attitude to Australia becoming a Republic.
You may recall that a majority of Australians wanted Australia to be a Republic but they were split over whether the President should be a figurehead like a Governor-General or Queen, or whether he/she should have executive powers as in the USA. John Howard therefore arranged that Electors were asked on 6 November 1999 whether they approved of:
A proposed law: To alter the Constitution to establish the Commonwealth of Australia as a republic with the Queen and Governor-General being replaced by a President appointed by a two-thirds majority of the members of the Commonwealth Parliament.
This naturally split those who wanted a Republic into those who wanted a President appointed by Parliament and those who wanted an elected President. This carefully crafted split allowed the No vote to win.
The Queen apparently felt that it was inevitable that Australia should become a Republic and that it should stop silly-shallying with it and get on with it as Canada had done. Naturally she did not say so, and my friend, who has since died would roll over in his grave if he knew that I was taking the role of a gossip columnist in writing this.
But I believe this story to be true, significant and a tribute to the Queen’s realism.
My view is that we should have a President who is non-executive, and we need major constitutional change as to how Parliament works at the same time. The latter half may be a hard ask.
But there is no doubt that the Republican debate is coming soon.
Liz Truss is Britain’s new Prime Minister. A few things are worthy of comment. She was elected by the members of the Conservative Party 81,326 votes to 60,399 for Rishi Sunak.
Prime Ministers used to be elected by their Parliamentary colleagues, which is obviously a lesser number but at least has people doing the job assessing the candidates’ competence. I am not a huge fan of Presidential systems, but the 141,725 Conservative members who were in the ballot are only 0.002% of the UK population and the Conservative party members are 63% male, 58% over 50 and 80% in the top half of the class demographic spectrum. So much for government ‘by the people’.
Her defeated rival, Rishi Sunak, had at least been Chancellor of the Exchequer (Treasurer) and had resigned to force Boris Johnson’s resignation. He was a multi-millionaire in his own right, having worked for Goldman Sachs and being involved in hedge funds. His wife, Akshata Nurty was one of India’s wealthiest women as an heiress of Infosys and worth 690 million. Together they were said to be worth 730 million pounds. He was also dogged by stories that his wife had the money offshore in various trusts and paid minimal tax. (ww.india.com/explainer/rishi-sunaks-net-worth-how-he-entered-uks-super-rich-list-explained-5523793/ ) Some commentators said that his Indian heritage may have been a problem with the Conservative party membership.
It is part of the continuation of mediocre candidates winning in Anglo elections. Trump, Johnson, Morrison, Truss. Something is clearly wrong with our systems. My view as often stated is to go to Swiss-style Direct Democracy. Politicians are part-time and keep their previous jobs, which they return to after the maximum two terms. People can collect signatures to force debate on issues or even overturn Federal legislation with quarterly referenda. Political parties exist as here and the Parliament in similar, but the party hierarchies are much less powerful as there is no long-term career as a politician.
Here is a better summary of Liz Truss than I could have written. It has been in a number of papers and journals:
It is about market failure. When public power utilities were privatised a market was set up and power producers could bid into a market to supply at a certain price for each period of time. But obviously if someone bid in at a low price for part of the market, they would then watch as others bid in higher and made more money. So the price to all producers was set at the last bid, so the cheap producers made a lot of money.
There were a few problems. The amount of electricity needed varies widely. Coal fired power is not very flexible-it needs a constant load, cannot be stopped and can vary its output only slowly and within a limited range. When renewables came, solar is only in the daytime, and wind varies, so the system had a problem with ‘stability’- the ability to dispatch power when it was needed.
Another problem was rorting, though no one wanted to talk about this. There were big players who could withhold power so that there was a shortage; the price went up, and then they all cashed in. ‘Imperfect competition’ as economists would call it. No one wanted to build coal plants and there was not enough storage to let renewable energy last overnight or for dull or windless days. So the Morrison government said that gas was a ‘transition fuel’ and more gas plants would be built.
Meanwhile the Australian gas industry agreed to massive export contracts on the assumption that they could frack Australia as the US had been fracked. But the environmentalists realised the harm this did and resisted. So our price of gas went up. So the companies pressured the Albanese government, which is now breaking its election promises and approving fracking. Sorry environment- what is a bit of permanently polluted groundwater and desertification between friends?
Of course years ago, publicly owned utilities run by professional engineers were charged with providing electricity and gas to the public on a non-profit basis. They charged enough to cover their costs with some money for maintenance and future planning. The price was the average price of generation, not the most expensive component. The model worked quite well and could again. The change to a ‘market’ was ideological.
At an international level, the problem is similar, but it all being blamed on Russia, which is only partly true. Naturally in a globalised world, we are also affected by the European gas market, but less directly, especially if we frack to get out of it; which is a very bad solution, substituting a long-term problem for a short-term one.
3 July 2022 One of my US friends quipped that ‘Republicans are pro-life until it is actually born’. During the birth process Republicans are against free health care and after the birth they are against welfare, child support, living wages, equal opportunity in education etc. The Pro-life senator in Oklahoma, Wendi Sherman, who was the proponent of the abortion ban there, said, “The purpose [of government] is to protect life, not to provide for citizens.” The practical corollary of this definition of the role of government is that women are forced to have children that they did not want and then forced to care for them, when they knew before the birth that this was too difficult to attempt. One might ask whether this is the same religious view that was extant when I was young that having a baby was punishment for the sin of having sex. There is no quote or evidence of a question on this subject, but these sort of fundamentalist views do seem extant in the US. I wonder if political hardheads in the Republican party just use abortion to shore up the significant religious vote. Abortion is painted as a ‘life and death’ issue and so has great weight. Other policies like foreign wars, tax cuts for the wealthy and cuts to Medicare and welfare programs can sail through because of this preoccupation/obsession. www.abc.net.au/news/2022-07-03/abortion-rights-oklahoma-roe-v-wade/101167280
22 June 2022 I am currently in Finland, holidaying after the EuPRA (European Peace Research Association) Conference in Tampere. I had hoped that there would be more insights on the Ukraine situation, but peace research has its topics and budgets set years ahead, so Ukraine was barely mentioned and no new insights given. Finland generally is very pro-Ukraine, with Ukrainian flags flying alongside Finnish ones at railway stations and even Ukrainian flag stickers on traffic poles. The conference was mainly about ‘positive peace’ which means trying to get harmonious social policy, with papers on minority, immigrants and disadvantaged groups, rather than ‘negative peace’ which is taken to be the absence of war. So there was surprisingly little on politics or foreign policy. The situation of the indigenous ‘Sami’ (formerly called Lapps) was also a big topic. Researchers claim it is very hard ever to get funding for peace research, and it has to be framed as ‘conflict resolution’. The conference had a distinctly feminist flavour both in attendance and in tone. It was very competently organised, principally by Masters and PhD students from the Tampere Institute of Peace Students. Despite their acronym, TIPSY, the students were very serious and organised. Participants were shepherded around by Norse goddesses, who seemed charmingly unaware of their aesthetic attributes. Finland is an affluent, modern country of 5.5 million with an ambience very like Sweden. They have the best education system in the world, and almost all speak excellent English. Signs used to be written in Finnish, Swedish and Russian, but there is a trend towards Finnish and English, as all Swedes speak English, and Russian is becoming less important to the Finnish economy. Finnish is quite a distinct and unusual language, quite different from Swedish, which was used by the elite when Sweden occupied Finland, and is widely spoken. Finland has high taxes, a good welfare system and a very high standard of public facilities. Incomes seem high as prices are about 50% higher than in Australia. Petrol is about $A3.75/litre. There is a Universal Basic Income and no visible poverty. I had not known much about Finnish history, but it had been something of a rural backwater with a very low agricultural population, principally populated from Sweden. It was under Sweden until the Swedish-Russian war of 1721, when it came under Russia. The Swedes took it back in 1788, and Russia took it back in 1809, but left it relatively autonomous. Finnish nationalism was relatively late to develop, starting in the 1850s. A Scot, Finlayson, set up textile factories in Tampere in the 1850s, based on the model of Manchester, England. Tampere became the industrial heart of Finland. Lenin came to Finland and stayed for some time in Tampere as it had a high population of workers. He promised to give the Finns autonomy if the revolution succeeded. He actually met Stalin in Tampere so the Lenin Museum there claims that there was the birthplace of the Soviet Republic. Stalin had his own methods of funding the revolution, which included robbing banks such as the Helsinki branch of the Russian bank. Relations between the Russians and the semi-autonomous Finns had generally been good, though the Tsar in his last days from 1899 tried a policy of Russification, which was not popular. Lenin had to flee Finland from the Tsarist police, but after the revolution succeeded in 1917 the Finnish Senate declared independence. Lenin kept his promise and supported the new republic but
he hoped for world revolution, so sent help to the Reds in Finland who initiated a civil war in 1917. The Reds were strong in the industrial cities such as Tampere. The White nationalists were more middle class and rural. The war was short and brutal with victory to the new White republic but many were killed and there were considerable recriminations. Russia at that time was fully occupied with its own internal strife, but Finland respected their power, remained neutral and benefitted from trade with Russia, as it increasingly industrialised. In 1939, Hitler and Stalin signed the Molotov-Ribbentrop Agreement, which pledged non-aggression between Germany and Russia and gave the western half of Poland and Lithuania to Germany. The eastern half of Poland and all the countries east of it were ‘given’ to Russia. The Baltic States, Latvia and Estonia were in this agreement, and so was Finland. Safe from attack by Russia, Hitler then started WW2 by attacking Poland, and the Russians moved to take their half (so that Poland ceased to exist). The Baltic States quickly fell to Russia, but Finland resisted, successfully at first, but the Russians overcame them and took some territory in an unfavourable settlement, but left them some degree of independence. When Germany invaded Russia, they demanded passage through Finland to attack Norway, and the Finns agreed, not having much option. The Finns then supported the Germans to get some of their territory back from the Russians, so in the settlement after the war in 1944, the Russians took even more territory from the Finns, including part of Lappland in the north, so that Finland no longer reaches the Arctic Ocean and Russia meets Norway above them. After WW2 the Finns built a Nordic welfare state and developed their industries, Nokia being the best known example. Farm forestry is still a major industry, particularly pine and silver birch. There are almost no grazing animals. They concentrated on education and industrialisation and their economy grew as fast as many of the Asian ones, but with higher wages. They took a very neutral foreign policy stance not to offend Russia, but did join the Euro currency launch in 2002. Geographically, Finland is quite a large country as it extends so far north. It has no mountains and only low hills and a large number of lakes which tend to have their long axes to the south-west due to fact that the country was covered by a huge sheet of ice in the Ice Age, which moved to the south west. It is quite warm in summer (now) and the Finns go to their summer cottages on the lakes. In winter it is very cold, so all the houses are triple glazed and well insulated. There are no solar panels and they are trying to become carbon-dioxide neutral, telling you on the tickets how much carbon dioxide is produced by your bus or train journey. 28% of the electricity used is of nuclear origin. Travelling is reasonably easy, though the Finnish language is difficult but almost everyone speaks reasonable English. Getting used to cars on the right side of the road is a bit of a challenge, and walking on the footpaths also, and the latter is rendered more complicated by the fact that the footpaths also have a section for bikes and electric scooters which takes half the footpath, but there is no consistency on which half. Finns smoke more than Australians and seem to have a lot of junk food restaurants, so I suspect that the prevalence of obesity will be rising, especially as electric scooters now considerably outnumber bikes, and are available everywhere to be picked up and used after buying a plan and putting in a code. It is a question of getting used to things, but in the meantime I am enjoying the capital of Lappland, Rovaniemi. It is not possible to see the Northern Lights as these are at the Winter solstice in
December- here at present the sun sets for about half an hour a day and it never gets dark. The 8am temperature is 14 degrees. I have heard that it is cold in Australia.
While the brutal tactics of the Russians in Ukraine make horrendous continuing news, significant aspects of the origins of Russia’s Ukraine invasion have been ignored by Western media. This does not justify the invasion, but one might wonder if the Donbas region in the East could ever have been retained within Ukraine.
It is well known that there is a gradation across the Ukraine from West to East, those in the West favouring Europe about 90%, but those in the East, the Donsek region, has almost 90% keen to merge with Russia. There was a strong separatist movement in these provinces, with ongoing fighting. The Ukrainian army was not keen to fight other Ukrainians and it was said that neo-Nazi groups were involved in fighting the separatists using very Fascist tactics.
Historically there had been some strong right wing groups in the Ukraine, and it might be noted that when Germany invaded, troops from Ukraine were recruited and fought with them against the Russians. At the end of the war, naturally these groups were not seen, but it has been said that the CIA was in touch with them, and that they facilitated the successful storming of the Ukrainian Parliament in the coup in 2014, which led to the Donbas region in the east attempting to secede from Ukraine and Russia seizing Crimea. It might be noted that Crimea was given to Ukraine by Russia in 1954 when they were both part of the USSR. The transfer was facilitated by Nikita Khrushchev who needed the Ukrainian votes to further his own career, and made little difference while Ukraine was in the USSR.
Fighting continued in the Donbas region which includes the provinces of Luhansk and Donetsk. The fighting led to the Minsk Agreement in September 2014, but the agreement failed leading to Minsk II in February 2015. Luhansk and Donetsk were supposed to become autonomous regions, but it has never happened. Fighting has continued, so Russia’s claim that they are fighting Nazis is not as absurd as it has been painted, at least in those regions.
When the USSR was collapsing the US Secretary of State James Baker promised Russian President Mikhail Gorbachev on 9 February 1990 that NATO would not recruit countries to the East. However, those countries were fearful of a Russian resurgence and wanted to join NATO. The USSR collapsed in 1991. The Czech Republic, Hungary and Poland joined in 1999 and Russia objected. Lithuania, Latvia, Estonia, Bulgaria, Romania, Slovakia and Slovenia joined in 2004. Note the marked move of NATO to the East. Albania and Croatia joined in 2009, Montenegro in 2017 and North Macedonia in 2020. The Balkan countries presumably joined as protection against Serbia, which started the wars as Yugoslavia disintegrated in 1991-1999. Serbia was a strong Russian ally.
Prior to invading Ukraine, Russia wanted a guarantee that Ukraine would not join NATO, but Ukraine along with Georgia and Bosnia-Herzegovina have expressed membership aspirations. No one was willing to give a guarantee the Ukraine would not join NATO even as the Russian troops massed for the invasion, though some hoped that Putin was bluffing.
Russia is now the 11th biggest economy in the world, ahead of Spain and Australia at 12th and 13th, so economically it is only a middle power, but having been a superpower with an empire recently, it has weapons far in excess of other middle powers and as it pursues a commodities-led recovery it hankers for its old Empire.
The German Social Democrats, the coalition partners of Angela Merkel, assumed that if Russia were integrated into the European economy by Germany buying their gas there would be no wars. This has been a major miscalculation. Germany was dependent on Russia for 55% of their gas, this having gone up when then they closed their nuclear plants after the Fukushima disaster. They still get 39% of their gas from Russia and are reluctant to turn it off as it would cause a major recession there. This is very controversial in Germany at present. Someone calculated that German purchase of Russian gas can pay for a tank every 20 seconds.
Here is an article by Gregory Clark, who spent 10 years with the Australian Dept. of External Affairs (which was the Foreign Relations Dept.) and resigned in 1965 in protest at Australia going into Vietnam. He went to Tokyo and was the lead correspondent for The Australian in Japan 1969-74 and a Japanese academic. He came back as an advisor to Prime Minister and Cabinet in 1974-76 (the Whitlam era), and returned to Japan after that.
Now that the election is called, progressives might delight in the bad publicity associated with the Liberals pre-selection battle.
The Saturday Paper had 3 articles yesterday, a front page about Morrison’s personal pre-selection scheming double-cross, an article about ‘How Morrison became a tin-pot dictator’, by Stephen Mutch, a moderate Liberal who was a NSW State MLC and briefly member for Cook, and a comment by ex-Federal leader John Hewson saying that Morrison’s willingness to ride roughshod over constituent processes shows total disregard for rank and file members.
In the immediate term of this election, it may hurt the Liberals, though 6 weeks is long time in politics so many people will forget. In my own experience door-knocking in the North Sydney by-election when Treasurer Joe Hockey resigned to go to New York, a Liberal told me that the local branch had pre-selected a candidate with 36 votes out of 40, and Trent Zimmerman had 2. But Head office and the branch both had 40 votes, and put in Zimmerman with all their votes, giving him 42. The local branch members were disgusted and did not help hand out. Liberals came from other areas to staff the booth; it was a blue ribbon seat and a predictable victory. Zimmerman is a moderate and the branch had a harder Right candidate, so head office favoured the moderate, who is now asking us to vote for him so that there are some moderates left in the Liberal party.
Similarly, Felicity Wilson, a moderate was parachuted into the State seat of North Sydney against the branch’s desire and against the branch’s more Right-wing candidate.
Craig Kelly was kept in his seat when the branch wanted to dis-endorse him before last election, but were over-ruled by Morrison’s intervention. What a success he turned out to be; anti-climate change, and then an anti-vaxxer. The Libs stuck with him as they needed his vote only to be rewarded as he became an independent and now fronts Clive Palmer’s United Australia Party.
According to Mutch a ‘troika’ determines pre-selections in NSW; Morrison, Perrottet and he does not name the third person. The question must be asked, what would happen if the troika did not control the numbers. Who controls the branches and who would control the pre-selections if it were democratic?
Morrison has claimed to be a moderate, but Alex Hawke, Morrison’s hatchet man as the minder of David Campbell an evangelical Liberal right-wing numbers man in the NSW Upper house in the early 2000s, and was then given a safe seat. The Right are in control.
The US Republican Party is completely out of touch with the common person in the US and acts in the interests of banks, big business, the gun lobby, fossil fuels, voter restriction and gerrymandering to maintain power. They seem totally beholden to Donald Trump. This has happened in about 15 years. In their campaigning and some of the philosophy the Liberals follow the Republicans closely. We must ask, ‘Who is joining the Liberal party?’ Fewer and fewer people join political parties, so they are correspondingly easier to stack or influence. Lobby groups work on politicians, but if they can have members beholden to them for their pre-selections, it would make their lobbying much easier. The Liberals are perceived as very right wing and very influenced by the right-wing Christian lobby. Why would anyone else join? And if they don’t, who will be left to control the grass roots?
In an article in the Sun Herald today (‘Infighting could cost seats: top Liberals) Liberal Federal Vice President Teena McQueen said that sitting members like Trent Zimmerman and Katie Allen could lose their seats but ‘with a couple of lefties gone we can get back to our core philosophy’.
This may not matter for 6 years if Labor wins and gets a second term, or even 9 years if they get a rare third term, but in a binary system the Libs will win eventually, which is why the nature of a major party membership and their pre-selection processes are of interest. If the Liberals go the way of the US Republicans we are in danger.
Australians generally are sick of the two major parties and their capture by their lobby groups. The High Court declining to intervene to support the branches was on the ground that political parties are Private entities. They are not mentioned anywhere in the Constitution so have become almost privatised lobbies. Labor have declined to release many policies to remain a small target because negative campaigning is more cost-effective than positive ideas. The question is whether Labor will actually do the right thing when they get in, or will they be conservative, do very little and leave things as the Liberals have made them in order to stay in power? Pundits have described the ‘right-wing ratchet’ where the Conservative parties privatise and increase social inequality and the Progressive parties make noise and minor changes, but never actually undo what the Right has done.
The Independents are a fresh start, and the negative campaigning does not work as well against them. There is a website ‘notindependent.com’ that is owned by the Liberals asking which party the independent will support? This of course tries to turn the whole thing into a binary contest again and the Independent effectively into a major party backbencher. They also want the Independents to have a comprehensive set of policies, as if the Liberals do!
In the medium term, it may be reassuring to think that if a tradition of Independents can be established the major parties will not have it all their way, but this does not solve the problem of a Republican-like Liberal Party.
My own answer is a major change to the constitution with citizen-initiated referenda at 3 levels of government able to overturn Parliamentary decisions, part-time politicians limited to 2 terms so that politics is not a career and there are no significant party hierarchies to climb, multiple political parties so that no single one ever has an absolute majority and the members’ retirement plan is their current job. This will take years of campaigning to achieve, so we’d better get on with it, or the increasing power and vulnerability of a private political party will have us following the US model, just a few years behind.
The media is trumpeting how successful the doughty Ukrainians have been against the Russian aggressors, and the war crimes of the Russians assassinating civilians and destroying civilian facilities. There has been a lot of discussion about Russia’s lack of success; Putin’s surrounding himself by Yes-men and getting wrong information or having political insecurity or mental health problems. This is all somewhat hopeful. Russia is still immensely more powerful than the Ukraine and is likely to get control of the skies, which will give them an even greater advantage.
The West seemed surprised initially by the Russian invasion as they had assumed that if everyone was involved in trade and had increasing national incomes that there would be no war. Since 2000 Russia’s per capita income had risen much more rapidly than the European average since they had increased their fossil fuel exports.
The Social Democrats in Germany had been happy to buy Russian gas on the assumption of trade guaranteeing peace. Germany was also building the Nordstream gas pipeline under the Baltic Sea to make it easier to get Russian gas. Currently Europe overall gets 40% of its gas, 27% of its oil and 46% of its coal from Russia.
After the invasion, the West initially started sanctions in a very unified effort. The rouble fell dramatically from about 13 US cents to 7, but as European countries continued to buy the gas the Russian economy was seen to be less damaged. So the rouble has recovered to about 11, either because the Russian economy is holding up due to the continued income, or that peace is likely to be negotiated soon. Sadly, the former explanation is more likely.
Europe will take some time to make the infrastructure changes to replace Russian gas with liquefied US gas, as the methane gas has to be frozen to minus 160 degrees at atmospheric pressure before it liquefies (or minus 83 at 45 atmospheres of pressure) and then transported by ship at high pressure to ports that can distribute it. Europe currently takes 120 Billion cubic metres (Bcm) of Russian gas. Also production cannot be ramped up quickly. The US has said that it can produce and extra 15 Bcm by the end of the year and 50 by 2030. Australia and Qatar, the other big exporters do not have much uncontracted gas. Environmental limits on fracking have stopped Australia increasing production. Germany has cut its dependence on Russian gas from 55% to 40%, but major cuts would do a lot of harm to their economy. (SMH 28/3/22)
Russia will also try either to get control of Ukraine or to get some part of it, or demonstrate its power in other ways so that it can claim victory. There is a small eastern area of Moldova with a Russian separatist movement and there is a temptation for Russia to link them to Crimea by capturing Odessa and the Baltic coast of Ukraine. The idea that they are defeated may be very premature.
Here is a graph of the Rouble v. US dollar, which shows the Russian currency has largely recovered.
It is interesting that a recent (UK) Telegraph column by Ben Marlow quoted in the SMH 5/4/22 urges stronger sanctions are needed if they are to be successful.
Opinion
The West must wage total economic war against Putin
By Ben Marlow
April 4, 2022 — 11.02am
Russia’s pledge to reduce military activity around Kyiv, as part of what it calls “de-escalation”, has rightly been met with scepticism in the West, though sadly not nearly enough.
The move has prompted talk at the highest levels about whether sanctions should be lifted if Russia retreats and commits to peace. The possibility of sanctions removal was first raised by Antony Blinken, US secretary of state, a fortnight ago, on the basis that Vladimir Putin agreed to an “irreversible” withdrawal from Ukraine.
Then in an interview last weekend, Britain’s foreign secretary Liz Truss said the West could relent if Moscow withdraws and commits to “no further aggression”. This is naive in the extreme and suggests America, Europe and Britain have learnt nothing about Russia’s psychotic regime. Have they forgotten what two decades of appeasement achieved?
Putin played the West for fools right up until the invasion. Even now, Emmanuel Macron continues to pander to Russia’s warmongering leader with zero to show for nearly 20 phone conversations and a little tête-à-tête in Moscow.
Indeed there is a strong argument for doing the opposite – instead of lifting sanctions, the international community should be preparing to hit the Kremlin with a new round of even more punishing measures, not least because the current ones are clearly losing their effectiveness.
The sanctions that were imposed on Russia at the end of February were unlike anything seen before in terms of speed, scale and Western collaboration. But they certainly couldn’t be called exhaustive and the impact has clearly waned.
The Russian economy has not been crushed despite all the excitable predictions from analysts and commentators. It suffered something akin to a financial heart attack and though a full recovery will take some time, it hasn’t proved fatal and there are signs it is already on the mend thanks to the decisive action of highly regarded central bank governor, Elvira Nabiullina.
The Russian stock market has reopened after a month-long deep freeze.
A temporary stop on equity sales by non-residents, along with a short-selling ban and a short trading window, was introduced. Although there are obviously questions about how sustainable such interventionary measures are, a crash was averted.
Russia’s banking system has stabilised. Measures such as capital controls and freezes on foreign exchange deposits have helped to prevent a run on the country’s banks.
The West needs to leap into action, pressing home its advantage with a new round of sanctions that completely devastate the Russian economy, starting with a full energy embargo. Without that sanctions will ultimately fail.
Helped by a doubling of interest rates and a ban on residents transferring money out of Russia, the rouble has staged a strong rally. After slumping as much as 33 per cent against the US dollar the day after Russia’s invasion, it is now close to pre-war levels of 85 to the dollar. It might have been a nice soundbite but the rouble has not been “turned to rubble” as Joe Biden declared last week in Poland.
Much of the recovery is artificial but as long as oil and gas receipts continue to flood into the country, Russia can keep rebuilding its hard currency reserves and weather the storm.
“Self-sanctioning” in the shipping industry has been a resounding failure. Oil tankers continue to arrive in Russian ports. Traffic in March has been only slightly lower than it was a year ago, and is higher than it was during the same month in 2016 and 2015, according to research from the Institute for International Finance. Even when the discount on Russian crude is factored in, oil revenues are near record levels, the IIF says.
That’s not to say that sanctions have been toothless. Goldman Sachs is forecasting a 10 per cent downturn in Russia this year, while Barclays predicts a 12.4 per cent slump. But while Barclays expects another 3.5 per cent decline in 2023, Goldman thinks growth will have returned already with GDP expanding by 2.4 per cent and has pencilled in a record current account surplus of $US200 billion by the end of the year.
The West needs to leap into action, pressing home its advantage with a new round of sanctions that completely devastate the Russian economy, starting with a full energy embargo. Without that sanctions will ultimately fail.
Germany could withstand the shock. Robert Habeck, its own economic minister, has admitted that it would at least be able to make it through the summer. It is just too afraid to inflict further hardship on the German people, but if Lithuania and Poland are prepared to then why shouldn’t Europe’s biggest economy? They are even more dependent on the Kremlin’s oil and gas.
It may not come to that, of course, if Putin follows through with a threat to turn off the taps because the West refuses to meet Russian demands to pay for gas in roubles.
There also needs to be a widening of the ban on Russian banks using the Swift payments system. Just seven have been cut off from using it, and of the five biggest, Sberbank is the only one that has been shut out.
What else can be done? Wally Adeyemo, the US deputy Treasury secretary, has talked about additional export controls – some experts advocate for a full commodities ban or at least a broader raw materials embargo – and Volodymyr Zelensky has called for a trade and shipping blockade, something Adeyemo has refused to rule out. There should also be punishment for Western companies that continue to do business in Russia.
But as things stand, if the price Putin was meant to pay for his invasion was the crippling of Russia’s economy, then sanctions have undoubtedly failed.
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.
