Link back to the discussion thread.
Europe
- Oil is likely to hit $200 a barrel under the disastrous G7 plan to cap Russian prices, an SEB analyst says Business Insider
Ukraine
- IAEA loses transmission from Ukraine’s Russian-held nuclear power plant Reuters
The U.N. atomic watchdog said on Wednesday it had again lost its connection to its surveillance systems keeping track of nuclear material at the Russian-held Zaporizhzhia nuclear power plant in Ukraine, Europe’s largest, which the watchdog wants to inspect.
“The fact that our remote safeguards data transmission is down again – for the second time in the past month – only adds to the urgency to dispatch this mission (to Zaporizhzhia),” the International Atomic Energy Agency said in a statement. The connection was lost on Saturday “due to a disruption of the facility’s communication systems”, it added.
- U.S. sends Ukraine $1.3 billion in emergency economic aid WaPo
Russia
- Russian oil products may be increasingly headed to Saudi Arabia via Egypt Business Insider
While Egypt exported fuels to Saudi Arabia before Russia invaded Ukraine, Saudi Arabia is now taking 3.2 million barrels of power station fuel from Egypt this month, according to data from Vortexa cited by Bloomberg, marking a six-year high. Meanwhile, Egypt’s imports of the fuel from Russia are soaring to 1.8 million barrels, the highest since at least 2016.
“It appears that increasing volumes of Russian fuel oil are making their way to Saudi Arabia via Egypt,” Jonathan Leitch, an oil market analyst at Turner, Mason & Co., told Bloomberg.
The increased exports come as Saudi Arabia typically ramps up its appetite for fuel over the summer as scorching temperatures drive up energy demand.
- Tactics for masking Russian oil shipments are also being used for Black Sea grain cargoes, report says Business Insider
Vessels carrying grains are turning off their transponders and moving cargoes via ship-to-ship transfers in the Black Sea, according to a Financial Times investigation.
Those tactics are similar to those used for masking Russian oil shipments since President Vladimir Putin launched his invasion of Ukraine.
The report comes as Ukraine has accused Russia of looting its grain and exporting it. Ukrainian police claim that Russia is using ports in Crimea, a section of Ukraine illegally annexed by Moscow in 2014, to smuggle stolen grain from Ukraine, according to the FT. Using Crimea as a jumping off point for shipments was already illegal due to sanctions imposed after Russia’s annexation.
The FT said it didn’t uncover direct evidence that grains being shipped out of Crimea were looted from Ukraine, noting that it’s difficult to prove grains are stolen because they can easily be mixed with legally sourced products.
But the FT pointed to satellite images from Planet Labs that show a different course for Russian cargo than what Moscow is claiming, adding that ships are altering paperwork and turning off location devices to hide their origin or destination.
Satellite images from Planet Labs also show significant ship-to-ship transfers near the the Russian Black Sea port of Port Kavkaz, according to the FT.
- Russia’s Oil Production Jumps By 5% In June Oil Price
Norway
- Russia threatens retaliation against Norway over access to Arctic islands Reuters
Russia said on Wednesday that restrictions imposed by Norway were blocking goods for Russian-populated settlements on the Arctic archipelago of Svalbard, and threatened unspecified “retaliatory measures” unless Oslo resolves the issue.
Svalbard, midway between Norway’s north coast and the North Pole, is part of Norway, but Russia has the right to exploit the archipelago’s natural resources under a treaty signed in 1920, and some settlements there are populated mainly by Russians.
Norway, which is not in the EU but applies EU sanctions against Russia, has said sanctions would not affect the transport of goods by ship to Svalbard. But much of the freight for the archipelago’s Russian settlements passes first through a checkpoint into mainland Norway, which is closed to sanctioned goods.
The Russian foreign ministry said it had summoned Norway’s chargé d’affaires to protest against the restrictions, which it said have disrupted the delivery of critical supplies, including food and medical equipment.
- Norway blames “pro-Russian group” for cyber attack Reuters
A number of institutions in Norway have been subjected to a so-called distributed denial-of-service (DDoS) cyber attack in the last 24 hours, the Norwegian NSM security authority said on Wednesday, blaming a “criminal pro-Russian group”.
The attacks, which began overnight, targeted private and public institutions offering important services, the agency said, but did not name any of those that were affected.
“We are working to find out whether there is a link with state-sponsored actors,” NSM chief Sofie Nystroem later told broadcaster TV2.
“We are quite certain that no sensitive information was taken.”
United Kingdom
- Soaring Inflation to Hit Britain Harder Than Any Other Major Economy, BOE Warns Bloomberg
Soaring inflation will hit Britain harder than any other major economy during the current energy crisis, the governor of the Bank of England has warned.
Andrew Bailey said the UK’s economy would likely weaken earlier and be more intense than others as a result of the energy price shock that all European economies face.
The situation was further exacerbated in Britain by the “structural legacy” left by Covid in the labour market as companies struggled with a lack of workers.
- UK house price growth slows, as household incomes are squeezed The Guardian
Lender Nationwide reports that prices rose by 0.3% this month, a notable slowdown on May’s 0.9% house price inflation – but still the 11th monthly rise in a row.
Hungary
- Hungary decree allows govt to supervise energy firms if needed Reuters
Hungary has passed a decree empowering the government to take over supervision of vital energy firms and the gas pipeline network operator FGSZ in an emergency that requires it to ensure continuous supply.
Tuesday’s decree, signed by Prime Minister Viktor Orban, covers key firms in the power, gas and oil industries, as well as district heating firms and mining, along with gas pipeline operator FGSZ and a fuel and gas stockpiling association.
Hungary is about 85% reliant on Russian gas imports and 65% reliant on crude oil imports from Russia.
Asia and Oceania
China
- In China, more and more people want to save money as job worries grow CNBC
Chinese consumers’ inclination to save is at its highest in two decades, the People’s Bank of China found in a second quarter survey.
Rather than spend or invest, 58.3% of survey respondents said they preferred to save their money. That’s a jump from 54.7% in the first quarter, which already marked the highest on record for the data which goes back to 2002.
- China To Subsidize Refiners If Oil Prices Exceed $130 Oil Price
India
- India’s top cement maker paying for Russian coal in Chinese yuan Reuters
India’s biggest cement producer, UltraTech Cement, is importing a cargo of Russian coal and paying using Chinese yuan, according to an Indian customs document reviewed by Reuters, a rare payment method that traders say could become more common.
UltraTech is bringing in 157,000 tonnes of coal from Russian producer SUEK that loaded on the bulk carrier MV Mangas from the Russian Far East port of Vanino, the document showed. It cites an invoice dated June 5 that values the cargo at 172,652,900 yuan ($25.81 million).
Two trade sources familiar with the matter said the cargo’s sale was arranged by SUEK’s Dubai-based unit, adding that other companies have also placed orders for Russian coal using yuan payments.
The increasing use of the yuan to settle payments could help insulate Moscow from the effects of western sanctions imposed on Russia over its invasion of Ukraine and bolster Beijing’s push to further internationalise the currency and chip away at the dominance of the U.S. dollar in global trade.
Middle East
Turkey
- Biden administration shows support for F-16 sale to Turkey MEE
The US indicated a new willingness to sell Turkey upgraded F-16 fighter jets, a day after the country dropped its opposition to Sweden and Finland’s Nato membership.
- Biden praises Erdogan for doing a ‘great job’ after Turkey’s president finally relented on Sweden and Finland joining NATO Businss Insider
President Joe Biden on Wednesday heaped praise on Recep Tayyip Erdoğan after the Turkish president finally relented to Sweden and Finland joining NATO, approval that comes as Erdoğan increasingly amasses power in his country and amid widespread reports of human rights abuses there.
“I want to particularly thank you for what you did putting together the situation regarding Finland and Sweden,” Biden told reporters before meeting with Erdoğan on the sidelines of a major NATO summit in Madrid.
Biden briefly flubbed his praise for Turkish support of Ukraine during Russia’s invasion before adding, “You’re doing a great job.”
We live in hell.
Iran
- ‘No progress made’ on Iran nuclear talks: US State Department Iraqi News
Indirect talks in Qatar’s capital between Iran and the US on reviving a 2015 nuclear deal have concluded with “no progress made”, a State Department spokesperson said late Wednesday.
The negotiations in Doha were an attempt to reboot long-running European Union-mediated talks on a return to the 2015 agreement between Tehran and world powers.
Afghanistan
- Taliban to meet US on releasing frozen Afghan funds after quake Iraqi News
The United States and the Taliban plan talks Thursday in Qatar on unlocking some of Afghanistan’s reserves following a devastating earthquake, officials said, with Washington seeking ways to ensure the money goes to help the population.
The White House said it is working “urgently” on the effort, but a member of the Afghan central bank’s board said it could take time to finalise.
Jordan
- Jordan backs down from regional NATO idea, says all Arabs want good ties with Iran Tehran Times
These middle-eastern states ain’t loyal.
According to Al-Jazeera, Jordanian Foreign Minister Ayman al-Safadi stressed on Wednesday that no talks had been held on the formation of an Arab alliance with Israel.
He added that what was mentioned in the interview of the Jordan King’s interview with the CNBC was that the King stressed his support for the formation of an Arab defense pact.
It was natural for Jordan to “defend any joint Arab institutionalized action, whether security, defense or economy,” al-Safadi said.
Through his remarks the Jordanian chief diplomat dismissed as baseless reports by Western and Israeli media outlets about Tel Aviv’s attempt to establish a military alliance with several Arab countries against Iran with the help of the United States.
On the other hand, al-Safadi announced, several Arab countries are conducting joint coordination prior to the U.S. president’s visit to the region. He also said he was visiting Doha in the same direction to convey a message from the King of Jordan to the Emir of Qatar.
Elsewhere in the interview, al-Safadi called the issue of Palestine a fundamental issue.
He went on to call the Syrian crisis and the security of the Arab countries on the southern shores of the Persian Gulf “very important issues”. The chief diplomat added, “We all want mechanisms that will ensure our security through dialogue and resolving concerns.”
He also described the issue of energy and food security as important challenges that require the cooperation of Arab states.
All these issues will be discussed with the American president during his visit to the region.
Concluding his interview, the Jordanian foreign minister highlighted that all Arab countries seek to establish good relations with Iran, and “to reach this stage, we must eliminate the causes of tension through dialogue.”
Africa
Egypt
- World Bank approves $500 million in development financing to Egypt Egypt Independent
North America
United States
- First Wall Street bank to call a U.S. recession now sees chance that inflation fails to decelerate MarketWatch
Deutsche Bank, the first major bank to predict a U.S. recession in the current inflationary era, now sees a chance that price gains won’t come off nearly as much as forecasters or Federal Reserve policy makers think they will.
Deutsche Bank macro strategist Tim Wessel said in a phone interview on Wednesday that “there’s a real chance that the market is underestimating the chance that inflation is accelerating or doesn’t decelerate fast enough.”
His remarks come as a few market participants — like Rob Daly of Glenmede Investment Management in Philadelphia — also warn that inflation could prove to be resistant to Fed rate hikes in the second half of this year. Financial markets may be ill-positioned for such an outcome and, if that scenario pans out, investors and traders may be in for further rounds of tumult similar to those of the first half — with some seeing a growing risk the Federal Reserve could be perceived as having lost control of inflation.
Are you telling me that the Fed’s policies of increasing interest rates might actually be unrelated to what inflation does? Well, I’ll be! That would imply that the mainstream understanding of economics is incorrect! It’s a shame that there isn’t an incredibly successful economic theory to use instead.
- The US will avoid stagflation and will suffer milder ‘slowflation’ instead, because inflation has already peaked: UBS Business Insider
The US is likely to dodge stagflation and will suffer “slowflation” instead, which history shows is a better environment for stocks, according to UBS strategists.
Stock markets have faltered in 2022 as investors grappled with inflation fears and the prospect of stalled growth, uncertain as to how deep the economic pain will be.
One keen worry has been the prospect of stagflation — a toxic mix of persistent inflation and sluggish growth. Investors' fears about stagflation are the highest they have been since the 2008 financial crisis, according to the most recent Bank of America fund manager survey.
But the market can expect the slowdown to be less severe, a team of UBS strategists led by Nicolas Le Roux said in a Tuesday note.
“In the next 12-36 months, we believe we are likely to enter a period of slowflation, which we have defined as a period of ‘medium to low’ growth combined with ‘medium to high’ inflation,” they wrote.
I guess we’re still in the Bargaining stage.
- Markets Are Signaling a Pyrrhic Inflation Victory Bloomberg
Inflation almost seems passe. The worry of the moment is now economic growth. That’s not unreasonable, as the latest update shows US gross domestic product declined at an annualized rate of 1.6% in the first quarter. With the huge exceptions of the Covid-scarred first two quarters of 2020, this was the weakest US growth since the spring of 2009:
That has had the effect of seemingly eliminating concerns about inflation, even though the battle against it has barely begun. Breakevens, derived from yields on inflation-linked bonds, have dropped all around the world. The 5-year, 5-year forward breakeven, which aims to capture average inflation for the five years starting five years hence and is the measure most closely followed by the Federal Reserve, has now dropped below its level from much of 2018, before the pandemic. Fast approaching the Fed’s target of 2%, the bond market is saying that inflation is no longer anything to worry about […]
The problem is that inflation forecasts have shifted because growth forecasts are also shifting. With a recession now named as a base case for many next year, the belief is gaining greater hold that the Fed will hike rates by a further 2 percentage points, but then swiftly start cutting again. The easing cycle, if you believe the fed funds futures market, will be well advanced by the end of next year.
- Federal Reserve chair Jerome Powell signals tough inflation battle ahead NBC
Federal Reserve Chair Jerome Powell said there’s “no guarantee″ the central bank can tame runaway inflation without hurting the job market.
Speaking Wednesday at a European Central Bank forum in Sintra, Portugal, Powell repeated his hope that the Fed can achieve a so-called soft landing — raising interest rates just enough to slow the economy and rein in surging consumer prices without causing a recession and sharply raising the unemployment rate.
“We believe we can do that. That is our aim,″ he said. But the Russian invasion of Ukraine, he said, had made the job more difficult by disrupting commerce and driving up the price of food, energy and chemicals.
- ‘An Act of Conquest’: Native Americans Condemn SCOTUS Tribal Sovereignty Ruling Common Dreams
Indigenous leaders on Wednesday condemned a U.S. Supreme Court ruling that allows authorities in Oklahoma and other states to prosecute certain crimes on sovereign tribal land, a narrowing of a landmark 2020 decision affirming Native treaty rights.
Writing for the majority in the 5-4 Oklahoma v. Castro-Huerta decision—in which Neil Gorsuch joined the three liberal justices in dissent—Justice Brett Kavanaugh asserted that “the federal government and the state have concurrent jurisdiction to prosecute crimes committed by non-Indians against Indians in Indian Country.”
The ruling rolls back the court’s 2020 McGirt v. Oklahoma ruling, which affirmed that nearly half of Oklahoma is actually Native American land and that Congress must honor an 1866 treaty between the U.S. government and the Muscogee Nation, one of the numerous tribes forcibly removed from the Southeast via the genocidal Trail of Tears in the 19th century.
The Muscogee Nation tweeted that the ruling “is an alarming step backward for justice on our reservation in cases where non-Native criminals commit crimes against Native people.”
“It hands jurisdictional responsibility in these cases to the state, which during its long, pre-McGirt history of illegal jurisdiction on our reservation, routinely failed to deliver justice for Native victims,” the tribe continued.
- U.S. power companies face supply-chain crisis this summer Reuters
U.S. power companies are facing supply crunches that may hamper their ability to keep the lights on as the nation heads into the heat of summer and the peak hurricane season.
Extreme weather events such as storms, wildfires and drought are becoming more common in the United States. Consumer power use is expected to hit all-time highs this summer, which could strain electric grids at a time when federal agencies are warning the weather could pose reliability issues.
- Gas Prices Are Being Lowered Temporarily Across U.S. by Conservative Group Newsweek
As gas prices continue to increase nationwide, one group is staging promotions that involve temporarily lowering prices at the pump at individual stations across the country.
Gas prices have hit record highs in the U.S. for the last several months. According to data from the American Automobile Association, the national average price of gas on Wednesday is $4.868. In comparison, on the same day last year, the national average gas price was $3.109.
Now, Americans for Prosperity (AFP), a libertarian conservative political advocacy group that is funded by David and Charles Koch, has started The True Cost of Washington Tour, which plans to hit 100 cities in a little over 90 days. In collaboration with the group, participating stations across the U.S. are lowering the price of gas, most for limited amounts of time, to $2.38—the average cost of a gallon of gas on January 20, 2021, the day that President Joe Biden was inaugurated.
The first stop on the tour, which is still going on, was on May 3 in Greensboro, North Carolina. Several gas stations in Illinois slashed prices to $2.38 over the Memorial Day weekend. For a two-hour event, AFP paid stations the difference while they offered customers cheaper gas.
…
A station in Lower Burrell, Pennsylvania, discounted the fuel only to the first 150 cars in line on June 22, and the tickets being handed out to those in line were sold out 45 minutes before the event began.
South America
Argentina
- With world short of wheat, Argentina farmers worry about crop Reuters
Drought is only the beginning of worries for growers like Juan Francisco Arregui in Argentina’s breadbasket farmlands, who the world is relying on more than usual these days to fill a supply crunch of the grain needed to make bread and flour.
“This season for wheat is complicated,” Arregui told Reuters, as he stood in a dusty field that he said had not received rainfall for two months. He said the crop needs rain to arrive soon but weather forecasts were not promising.
In addition to prolonged dry weather, spiking fertilizer costs and political uncertainty over export rules are prompting him and other farmers to devote more land to soybeans and cut back on land devoted to wheat in Argentina, the world’s No. 6 exporter of the grain.
While there was enough moisture to plant the seeds, “there is not much left,” he said. “It means that the wheat crop is not sure by any means. We can get it started, but hey then we are waiting for rain.”
Argentina had a record 2021/22 wheat harvest of 22.4 million tonnes, so global grain markets had hoped the country could help fill the shortfall of grain lost after Russia’s invasion of Ukraine. The conflict between the two major wheat exporters has sent prices soaring.
But now, both of Argentina’s main grains exchanges, Buenos Aires and Rosario, have cut wheat planting forecasts and warned of more cuts if the weather does not improve.
“Today anything that goes wrong with wheat is more important and means greater losses. That is what we are seeing,” said Cristian Russo, head agronomist at the Rosario grains exchange which estimates a harvest of 18.5 million tonnes in a best case scenario.
The exchange has warned about the worst wheat planting conditions in 12 years and says sowing of the grains has been stuck at 65% by the dryness, risking lots being left empty.
“In the short term, the rain trend is still very scarce,” said Buenos Aires-based meteorologist Leonardo De Benedictis, adding their could be some limited and isolated showers.
Venezuela
- Venezuela’s second largest refinery suspends gasoline production Reuters
Venezuela’s state company PDVSA has suspended gasoline production at the country’s second largest refinery due to an outage at its reformer, five sources with knowledge of the operations said on Wednesday.
An intermittent scarcity of fuel has hit the South American country in recent years as PDVSA’s aging refineries operate at a fraction of its 1.3 million barrel per day (bpd) joint capacity and U.S. sanctions block the arrival of imported gasoline.
The Cardon refinery’s naphtha reformer, which produces high-octane components for gasoline, is key for fuel production in the OPEC-member nation. The unit will be out of service while in maintenance, planned to last 18-21 days, the sources said.
“This is an unplanned maintenance program for repairs in the refomer’s reactors,” one of the people said.
Global
- Shell Warns Spare Oil Capacity Is Running Very Low Oil Price
“Spare capacity is running very, very low,” Shell’s CEO Ben van Beurden said on Wednesday, as carried by Reuters.
While global spare energy capacity continues to deplete, demand for oil and gas is still recovering despite the current economic and pandemic challenges, van Beurden told reporters.
“I do believe that we’re going to be facing quite a bit of uncertainty in markets for some time to come,” Shell’s top executive added.
Global spare capacity for crude oil production is believed to be held mostly by the large producers in the Middle East, such as Saudi Arabia and the United Arab Emirates (UAE). However, Saudi Arabia, the world’s biggest crude oil exporter, has never tested the 12 million bpd capacity it claims to have, while it has never produced more than 11 million bpd for a prolonged period.
Military
The Ukraine War
- UK pledges more military aid to Ukraine RT
The UK will provide “sophisticated air defense systems,” drones, electronic warfare equipment and “thousands of pieces of vital kit” worth 1 billion pounds ($1.2 billion) to Ukraine amid its conflict with Russia, the British government announced on Wednesday.
The deliveries will represent the “first step” to allow Ukrainian forces to go beyond their “valiant defense” efforts and move towards “mounting offensive operations” to regain territory lost to Russia, the UK authorities claimed.
“UK weapons, equipment and training are transforming Ukraine’s defenses against this onslaught. And we will continue to stand squarely behind the Ukrainian people to ensure Putin fails in Ukraine,” British Prime Minister Boris Johnson was quoted as saying in the statement.
- In New Poll, 89% of Ukrainians Reject Ceding Land to Reach Peace With Russia WSJ
An overwhelming share of Ukrainians—some 89%—say it would be unacceptable to reach a peace deal with Moscow by ceding Ukrainian territory that Russian forces have seized in their invasion this year, a new Wall Street Journal-NORC poll finds.
The survey, conducted in conjunction with a Ukrainian polling firm, also finds that 78% of Ukrainians approve of President Volodymyr Zelensky’s response to the Russian invasion, with only 7% saying he has handled the war poorly. With little sign that Russian President Vladimir Putin is facing popular revolt over the war, the new Journal-NORC survey suggests that the leader of neither nation is feeling immediate pressure from public opinion to make concessions that could lead to a settlement of the conflict.
Climate and Space
Dipshittery and Cope
- NATO to monitor migration as risk of instability to members Reuters
Irregular mass migration is among the “hybrid threats” that hostile powers can use to undermine the stability of NATO countries, the alliance said in its new Strategic Concept agreed at a summit in Madrid on Wednesday.
Including such threats was an explicit request made byalliance countries on NATO’s outer rims, including the summit’s host Spain, which have seen neighbours use migration as a weapon of political pressure.
Poland’s border crisis with Belarus last year was another example.
The Strategic Concept twice mentions migration as an element to monitor in the next decade, and points to the southern flank as a new source of risk to stability.
“Conflict, fragility and instability in Africa and the Middle East directly affect our security and the security of our partners,” the document said.
Awesome. This is how the climate migrations are gonna be dealt with. They’re actually intentional threats by hostile nations and must be dealt with accordingly. Can’t wait until a hundred million climate refugees show up on the West’s borders in 2030 and everybody starts crying about how it’s Putin’s fault.
Russia/Ukraine
- NATO is united on Ukraine. Good, but plenty could still go wrong. WaPo
Brussels — NATO solidarity was on display at a summit meeting this week in Madrid. One after another, officials pledged to stay the course and combat Russian President Vladimir Putin’s invasion of Ukraine.
But as this war bleeds into summer and civilians continue to perish in horrific rocket attacks, NATO needs to ask how its strategy might fail. We can imagine some of the ways in which a hypothetical “Red Team” analysis might reveal how Ukraine’s allies could squander their current advantages and lose this conflict.
When you look at the scorecard so far, Putin appears to be failing in his war aims. Russian troops are bogged down in a bloody battle of attrition. Ukraine, rather than bowing to Moscow’s hegemony, is joining Europe with candidate status to the European Union. A revitalized NATO is bolstering its eastern and northern flanks, with Sweden and Finland joining the alliance. And Russia is on the way to losing its energy markets in Europe and its access to Western technology.
The West is “sending an unmistakable message” to Putin, President Biden asserted in Madrid on Wednesday. The Pentagon plans to send an Army corps headquarters to Poland; more U.S. troops to the Baltic states and Romania; two more Navy destroyers to Spain; and two more squadrons of F-35 fighters to Britain. “We’re stepping up,” Biden said in announcing the expanded U.S. commitment.
What could go wrong with this picture? Plenty, the Red Team would argue.
The biggest challenge is the battlefield itself. U.S. and British intelligence analysts are forecasting a slow, static campaign in the Donbas region, with the Ukrainians able to contain Russian breakouts with newly arriving multiple-launch rocket systems (MLRS), additional artillery ammunition and more ground-to-air missiles.
But what if the weapons pipeline is slow or inadequate? The Pentagon has been limiting its deliveries of the MLRS — wanting a “proof of concept” — and has provided only a fraction of what the Ukrainians say they need. Deliveries of some other weapons have been slow, too, sources say — with far fewer on the battlefield than the Ukrainians want.
An example is the small but lethal Switchblade drone, which can attack Russian tanks, ships or command centers. The drone comes in two models, with flight time ranges of 15 to 40 minutes. Back in March, the Biden administration announced plans to send Ukraine the first of what would be 400 of the smaller drones, according to a source familiar with the weapons system. But the source said the Pentagon sent just 10 of the larger models. The Ukrainians have requested several thousand more of each version, but there has been no U.S. response, according to this source. The drones are made by AeroVironment.
Political fatigue is another problem for the United States and its NATO allies. The war in Ukraine is relatively popular now, but complaints will surely grow as U.S. gasoline prices remain high, natural gas supplies dwindle in Europe during a cold winter and voters ask why money isn’t being spent on domestic needs.
At a conference here this week linked to the NATO summit, sponsored by the German Marshall Fund (of which I’m a trustee), I heard calls for victory in Ukraine from attendees from Germany, Poland, Latvia, Romania, Greece, Spain, Britain and the United States. They all argued that the fight is worth the sacrifices. But many also worried that it lacked sufficient political support at home.
The leaders of the Group of Seven discussed two of the trickiest problems at their summit in Elmau, Germany, this week — lowering energy prices and easing food shortages caused by the Russian blockade of Ukraine’s Black Sea ports, from which it exports grain. The G-7 leaders have ideas, but few specific plans. These problems can’t wait; the costs could become unbearable for the West.
One way to lose wars is through unwise provocations. Lithuania’s recent decision to block transit to the neighboring Russian enclave of Kaliningrad was meant to enforce E.U. sanctions, but was it sensible? Several European and U.S. officials told me they were dubious, since the move could provoke a Russian counterattack and then a Lithuanian invocation of NATO’s Article 5 mutual-defense pact.
NATO is right to avoid direct attacks on Russia that might lead to catastrophic nuclear escalation. But that doesn’t mean Ukraine shouldn’t fight back against missiles fired from inside Russia. If Putin uses his territory as a sanctuary for launching rockets in an unprovoked, illegal war, the protection of his border dissolves.
If Ukraine can stop Russia on the battlefield, it will have to decide eventually what kind of settlement it wants — since an unconditional surrender by a nuclear-armed Russia is unlikely. But that diplomatic moment is probably a long way off.
This is Ukraine’s war to fight. But NATO needs to plan its strategy as if the alliance’s own credibility and survival were at stake.
- Ukraine’s War of Attrition Exacts Heavy Toll on Both Sides WSJ
With Russian shells pouring down over the Ukrainian city of Severodonetsk earlier this month, the captain called in artillery fire.
“We don’t have enough,” came the response over a crackly radio. The captain, who gave his name only as Bohdan, and a dozen men had held out for two weeks, resisting an enemy with more men and more guns.
Finally, with Russian tanks advancing and his unit taking heavy losses, he withdrew, leading his men 7 miles on foot through a forest to reach Ukrainian-controlled territory.
Days later, Severodonetsk city fell to the Russians, handing Moscow a victory in the grinding battle for control over Ukraine’s eastern Donbas area.
“It’s impossible to fight if you have no ammunition,” said Capt. Bohdan while on leave in Kramatorsk, a town 40 miles west of Severodonetsk, before heading back to the next front line.
The battle for Severodonetsk has emerged as an emblem of Ukrainian resistance to Russia’s invasion and of Kyiv’s determination to wear down enemy forces, even at great cost to Ukraine. Much as Ukraine did in Mariupol, where a small number of fighters held off the Russians for weeks, Kyiv fought for two months to prevent the Russians from taking Severodonetsk, whose fall carried political significance for both sides.
Efforts such as those of Capt. Bohdan—who says he lost about half his men in the battle for Severodonetsk—represent a success for Kyiv’s stretched military, keeping Russia’s advance in eastern Ukraine to a slow crawl.
…
The Ukrainian military has sought to tie up large numbers of Russian troops by holding out for weeks in ever-smaller pockets, wearing the enemy down and then pulling out to fight another day.
Ukraine has made the invading forces pay dearly for every patch of land they seize, Ukrainian and Western officials say. By holding out, the Ukrainians are winning time for their military to rush more modern and powerful weapons, supplied by the U.S. and its allies, to the front lines.
But this strategy comes at a cost for the Ukrainians, who have incurred heavy casualties defending, and ultimately losing, one grueling fight after another. As soldiers hold on by sheer will, questions are emerging as to which side will be exhausted first.
Earlier this month, President Volodymyr Zelensky said in a video address that Donbas would go down in military history as one of the most brutal battles in Europe. “The price of this battle for us is very high. It’s just scary,” he said. “And we draw the attention of our partners on a daily basis to the fact that only a sufficient number of modern artillery for Ukraine will ensure our advantage and finally the end of Russian torture of the Ukrainian Donbas.”
Infantrymen deployed to the front line are outgunned in what has become mainly an artillery battle that traps them in the middle. Under the cover of darkness, the Ukrainians try to deepen trenches to hide in from Russian shelling the next day.
I would be genuinely astounded if Russian casualties were even a tenth of Ukrainian casualties - it’s likely lower. They can “both sides” this until the Donbass is covered in the gore of hundreds of thousands Ukrainian troops if they want (and it looks like they will) - Russia has time on its side and will win this conflict.
Acceptance
- NATO boasts unity but potential for division lies ahead Responsible Statecraft
As the leaders of NATO gathered in Madrid for their summit on June 29, they predictably made a show of unity and solidarity in countering the Russian war of aggression against Ukraine and in defense of the “rules-based international order.” The final statement and the new “strategic concept” adopted at the summit project an image of an organization that has gone from being declared “braindead” by French president Emmanuel Macron only few years ago to one facing the future with a reinvigorated sense of mission and resolve.
Yet below the surface of unity and determination, fundamental questions about the future of the alliance abound. While all its members agree that Russia is responsible for the war, and support Ukraine’s defensive efforts, there are clear differences on what should constitute the West’s ultimate strategic goals.
The United States, United Kingdom, and nations in eastern Europe seem to embrace the view that a permanent weakening of Russia should be the goal. In the case of Poland and the Baltic trio of Estonia, Latvia, and Lithuania, that imperative is fueled by the traumatic history of their relations with Russia and a well-justified fear of Russian intentions — only recently President Putin delivered a speech in which he appeared to be laying territorial claims on Estonia. Weakening the aggressor’s capabilities is a sensible self-defense policy.
The emerging peace camp, led by Germany, France, and Italy, by contrast, advocates for a swift ceasefire and ensuing negotiations leading to a diplomatic settlement between Russia and Ukraine. They do not feel threatened by Russia directly and are worried about the economic costs of a protracted conflict on their industries and living standards. Hence Macron’s rhetoric about the need to find a “face-saving exit” for Putin and Italy’s peace initiative (that didn’t receive the recognition its authors hoped for).
Such differences are only bound to increase as the boomerang effects of anti-Russian sanctions set in. Reduced or interrupted energy supplies from Russia (which it redirects to other markets, like China and India, to its benefit), higher inflation, and lower growth could conspire to incite public unrest in Western Europe. These are the kind of consequences that a German business leader had in mind when he warned against “punishing ourselves more severely than the aggressor.”
The Russian economy is certainly taking a hit from Western sanctions, but Putin has an advantage of running an authoritarian state where the discontent can be violently quelled. Democratic Western leaders can afford no such luxury and will have to pay attention to the plight of their electorates. The rhetoric of unity alone will not be able to bridge the differences between the two camps.
Another fundamental question facing NATO is the U.S.’s long-term commitment to the alliance. That may sound counter-intuitive when Washington just announced new deployments to Europe, including creation of a permanent headquarters for the U.S. Army in Poland, and additional and “enhanced” deployments in Romania, the Baltic states, the UK, Spain, Italy, and Germany.
Yet the United States is gearing inexorably toward great power competition with China, which will be an organizing principle of its foreign policy in the decades to come. Even if the Madrid statement envisages a role for NATO in countering the Chinese threat, Washington’s primary partners in this endeavor are going to be the Indo-Asia-Pacific nations, not Europeans, except perhaps UK.
The relative importance of Europe in U.S. grand strategy will inevitably decline. There is already a growing discontent in the Republican and conservative ranks in the United States that an excessive entanglement in the European affairs is diverting attention and resources from containing China. When the former President Donald Trump suggested that the United States might withdraw from NATO, it should not be seen as a mere temporary aberration, but a sign of an enduring shift in the U.S. strategic focus.
Good Takes that are Dope
- Sustainable Practices, Less Chemical Fertilizer Lead To Higher Crop Yields Popular Resistance
In farming, high crop yields are often associated with the use of human-made fertilizers. But what if these abundant results could instead be achieved by using farming practices that were more environmentally friendly?
An extensive new study of 30 farms in Africa and Europe has shown that the combination of small amounts of fertilizer with natural farming methods like mixing compost or manure with the soil, cultivating a wider variety of crops and cultivating plants like clover or beans that amplify soil’s fertility can result in high crop yields while maintaining the harmony of agricultural ecosystems, a press release from Rothamsted Research said.
The study found that a significant amount of chemical fertilizers could be replaced by adopting these more natural techniques, which would have multiple benefits.
“Reducing reliance on chemical fertilisers would help to buffer farmers and consumers against economic shocks, such as the current spike in fertiliser costs and consequent increase in food prices,” said plant ecologist at Rothamsted Research in the UK Dr. Chloe MacLaren, who was the lead author of the paper, as The Guardian reported.
Bloomerism and Hope
- Key Takeaways From BRICS Summit Popular Resistance
Last week the 14th BRICS Summit took place virtually, chaired by Chinese President Xi Jinping. The BRICS bloc (Brasil, Russia, India, China and South Africa) represents a key political, economic, and scientific force in the international arena. These nations represent half of the world’s population and their collective GDP is greater that $20 trillion.
In today’s context, the significance of the BRICS summit is increased to the extent that the bloc represents an alternative to the unipolar world of the decaying West.
What follows are some of the key points from the Summit’s in Beijing:
Multilateral compromise in the defense of international law, which includes being more inclusive with less developed countries;
Promote peace and international security without compromising the environment;
Support for a an open, multilateral, transparent, inclusive, rules-based, non-discriminatory commercial system;
Cooperation to combat COVID-19, with support for multilateral organizations but also searching for medicinal alternatives;
Support dialogue between Russia and Ukraine from an impartial perspective;
“We strongly support a peaceful, safe, and stable Afghanistan while we emphasize our respect for its sovereignty independence, territorial integrity, national unity, and non-interference in its internal affairs.”;
The necessity to resolve the nuclear problem in Iran through peaceful and diplomatic means in accordance with international law;
Support for bilateral and multilateral negotiations in order to solve the problems related to the Korean peninsula;
Compromise for a world free of nuclear arms;
Cooperation against terrorism and the reaffirmation of the exclusive authority of the UN Security Council;
International cooperation against corruption;
Compromise to continue bettering the coordination of macroeconomic policy, to further practical economic cooperation, and to work to achieve post-COVID-19 economic recovery in a sustainable, balanced, and inclusive manner;
“We commit to strengthening intra-BRICS cooperation to intensify the BRICS Partnership on New Industrial Revolution (PartNIR) and collectively create new opportunities for development.”;
“We encourage the BRICS Interbank Cooperation Mechanism to continue playing an important role in supporting BRICS economic and trade cooperation.”;
Opposition to green commercial barriers and support for coordination on this issue;
Cooperation in agriculture.
- The Workers of the World Are Uniting Again Bloomberg
Don’t get too excited for that title coming from Bloomberg - there’s still a lot of brainworms here. But still, I’ll take what I can get from this piece of shit media outlet.
For decades, workers made do with a smaller share of the spoils of capitalism, and the labor unions who represented them shed members and influence. Now employees are finding their collective voice again, and not before time.
Tight job markets and the soaring cost of living are fueling demands for higher pay and better working conditions on both sides of the Atlantic. Petitions to elect a union and enquiries about joining one are increasing, albeit from historically low levels.
Britain may face a summer of labor unrest due to strikes by railway and postal workers, teachers, aviation staff and nurses. In the US, a wave of industrial action at companies such as Deere & Co. and Kellogg Co. last year has been followed by grassroots efforts to organize employees at Apple Inc., Amazon.com Inc. and Starbucks Corp. Meanwhile, a union representing millions of German manufacturing workers is calling for an up to 8% pay hike, the highest in 13 years.
Although still modest compared with the worker activism of the 1970s, this incipient labor resurgence may worry central bankers as higher pay could cause consumer prices to rise even more. But urging employees to moderate pay demands, as Bank of England Governor Andrew Bailey did in February, is both unfair and unrealistic.
Companies haven’t hesitated to mark up prices to protect their profit margins, which last year reached their highest level since the 1950s. Why should workers — especially those at the lower-end of the income scale — make concessions now they finally have some leverage?
Globalization is in retreat and the pandemic has slowed international migration, with Brexit throwing up a further barrier. Workers are opting out of exhausting or mind-numbing manual work such as airport baggage handling, which has contributed to the travel chaos we’ve seen.
Barring a deep recession that causes high unemployment and renewed job insecurity, higher wage pressure and tighter corporate profit margins may be here to stay. While tackling excessive inflation will inevitably require sacrifices from better-off workers, a more collaborative approach to labor relations and a more equal division of the profits of capitalism will be necessary too.
Until recently, central banks of the richest countries appeared to have all-but-abolished high inflation: Unemployment was low, corporate profits and the stock market boomed, and consumer prices remained in check. However, our monetary guardians may have overestimated their own brilliance and underplayed the impact of diminished worker bargaining power.
Manufacturing’s decline and outsourcing to low-wage countries, the rise of corporate monopolies and labor-replacing automation all made it harder for workers to win higher pay in recent decades. But shrinking labor union membership, looser worker protections (including inadequate minimum wages) and shareholder pressure to cut labor costs were perhaps even more harmful for workers, as economists Anna Stansbury and Larry Summers have argued.
Today, only 10% of the US workforce belongs to a union — around half the level of four decades ago. In the private sector, the figure is just 6%. In the UK, the proportion of union members has declined to 23%, the lowest on record.
No wonder labor’s share of national income has only recently begun to recover in the US, having fallen sharply since the early 1980s. Many British workers experienced an income squeeze in real terms in the years following the 2008 crisis, including those in the public sector.
And yet Boris Johnson’s Conservative government and the mostly right-wing British tabloid media are aghast that Margaret Thatcher’s anti-union legacy is being so brazenly challenged.
Attempts to characterize striking workers as Marxist dinosaurs holding the British economy to ransom underestimate the level of public sympathy for those on picket lines. The pandemic revealed just how reliant we are on key workers, who often didn’t have the luxury of working at home.
The plainspoken head of the National Union of Rail, Maritime and Transport Workers, Mick Lynch, has proven a particularly effective foil of hapless ministers and television interlocutors. His withering putdowns are widely shared on social media, which must be a first for a union boss.
In the US, public approval of trade unions is the highest since 1965, not withstanding the recent jailing of former United Auto Workers union leaders for embezzlement.
US president Joe Biden is the most pro-union occupant of the White House in decades and has used appointments and executive orders to advance a labor-friendly agenda, despite Congressional opposition to his Protecting the Right to Organize Act.
Of course, renewing the labor movement won’t happen quickly, and it’s unlikely unions will ever regain the sway they once had over business. More than 40% of UK union members are over the age of 50 and a majority work in the public sector.
But instead of resisting worker efforts to organize, businesses and governments should foster the kind of relations that exists in places like Germany. Though here, too, union membership has declined, worker representatives sit on company boards, giving them a better idea of the competitive and cost pressures that employers face. Chancellor Olaf Scholz will meet next week with labor unions and business leaders to discuss how to avoid a wage-price spiral.
French president Emmanuel Macron hopes to head off perennial worker unrest and “rebuild the social contract between labor and capital” via employee profit-participation plans. Even the most hard-nosed US capitalists have realized they must change: Because KKR & Co. granted equity to employees at one of its portfolio companies, they received six-digit payouts when the business was acquired last month.
What better way to neutralize the debate about inflation-stoking corporate profiteering than by giving workers their fair share of the spoils?
Extra
- German man leaves severed human head at courthouse EU Reporter
Police seize the area surrounding a Bonn district court, Germany after a man left a severed head in front Bonn’s court building, June 28, 2022. A newspaper reported that police had arrested a man. The homicide commission would also start an investigation. Police are investigating the connection between the body and the head.
A body was discovered on the Rhine River, just a few hundred metres away. The body was found by police near the Rhine River.