A Step Back From the Brink

I’ve been a worried about Europe.

The Continent faces a whole host of challenges, but of late my rising concern has been the broad-spectrum breakdown of the attitudes that make the European Union possible. Brexit is the loudest and sexiest example of this, but it is hardly the only one.

After nearly two decades of stability (admittedly the vigorous hand-gesture, prime minister-hosted orgy version of stability that only Italy could produce), Italy’s government is returning to a chaotic morass. Spain and Belgium are barely able to form governments. The Netherlands and Austria seem perilously close to going off the rails. Hungary’s executive seems to find democracy mildly offensive. Poland is now ruled by a team espousing the worst characteristics of Trump, Clinton, Pope Innocent III and Kanye.

But all is small fry in comparison to what has evolved this year in the two core countries: Germany and France.

The two Continental heavyweights are not just the European Union, they are Europe. When opposed, the only result is war. When united, something better can take shape. After World War II the French took over the Continent. They could do this because the defeated Germans were not allowed to have a foreign or strategic policy of their own. German defense planning was run from the Pentagon, while the Élysée Palace took care of most everything else. The result was the forging of the European Union and the harnessing of German economic power to elevate France to global relevance. Road bumps abounded but all in all it worked pretty well.

With the Cold War’s end, Germany has slowly evolved its foreign policy beyond “I’m sorry” and found its own voice. Germany and France now run the EU together. There is certainly tension (and the French aren’t happy about the Germans rediscovering their spine) but no breach is imminent. Good thing too. Any break between the two means the end of the EU writ large.

Yet nowhere in the Western world has been immune to the populist rise.

In France, President Francois Hollande is so delightfully out-of-touch that he’s dreaming idly of maybe returning to George W. Bush popularity lows; Hollande is now right at about 5% approval. With Hollande’s Socialists nearly as unpopular as he is (and even less organized), the only question for 2017’s presidential contest is who else will run? As of November 1, it looked like the race would be between former President Nicholas Sarkozy and Marine Le Pen of the National Front.

Not to put too fine a point on it, but the National Front is fairly…horrible. Critics call it anti-Semitic, anti-democratic, anti-European, anti-Arab, anti-market, and a fair number of other things you wouldn’t want folks to put on your Twitter feed. Sarko, as part of his effort to break back into national politics, has taken a hard turn for the fences and enumerated a not-short list of topics that normally are not considered part of the European mainstream. The race was shaping up to be a run between someone who wants to chip Muslims in the hundreds of thousands and put them in internment camps…and a racist.

That just leaves German Chancellor Angela Merkel as the only powerful, competent, relevant, moderate statesperson of note in the Union. Unfortunately, she is under siege from all sides. Her decision on purely humanitarian grounds to admit nearly 1 million Syrian refugees has cost her much of her political capital. It has emboldened not just the hard left and hard right, but it has also threatened the core of her own political coalition. Her term is up in 2017; the personalities testing the waters to replace her are, in a word, Trumpesque. Say what you will about Trump in the U.S., but the slogan “Make Germany great again” should make everyone a bit twitchy.

This week things brightened a bit.

In France, the conservatives’ primary delivered Sarko a crushing third place finish, leading the former president to announce his permanent retirement from politics. The two top place finishers — François Fillon and Alain Juppe — are both former prime ministers. There is much many undoubtedly dislike about both, but both are economic reformers and avowed Europeanists. They’d aim to regenerate France, but within the European rubric without any revanchist challenges to French or the European system. Whoever wins the second-round primary vote will easily defeat Le Pen to become the president of the Fifth Republic.

In Germany, the shift might prove to be even more substantial. Merkel decided to stand for re-election. Like Fillon and Juppe, not everyone is a fan of Frau Merkel, but even her opponents hail her as being a steady, consensus-building leader in troubling times. Barring some catastrophic event that involves her personally, it’s hard to see her losing the ability to lead her party coalition. The German socialists are nearly as disarrayed as their French peers, making Merkel a shoo-in for a fourth term.

At a time when everything in Europe is on a downward slide, it seems that these two critical countries are taking at least one small step back from the brink. Will it be enough? Hell no. As I began, Europe faces a whole host of problems:

  • America is ending the global trade order and there is no EU or modern, open, democratic Germany without it.
  • America’s commitment to NATO is nearly gone and without it the Germans must rearm, triggering a whole new avalanche of security problems throughout the Continent.
  • The European financial crisis is worse than ever, and has now been joined by a European banking crisis. Both crises are so deeply structural that recovery is impossible without a political reckoning and/or revolution.
  • The civil wars in Syria and Libya are only the leading edges of a broader Middle East and African breakdown; the refugee waves we’ve seen so far are just the beginning.
  • Europe is imploding demographically, not only making Europe more dependent upon the dissolving global trade order and exacerbating the financial and banking crises, but also soon putting zero percent economic growth out of reach. The ongoing existence of several European countries as modern societies is no longer assured.
  • And let’s not forget that Russia is only in the beginning stages of its Hail Mary effort to secure its western sphere of influence (i.e. control of parts of the EU’s eastern periphery) before its own problems overwhelm it.

But I’ll take my good news where I can get it these days. There may still be a trigger-happy platoon full of guns aimed at Europe’s head, but as of this week there are two less.

For now at least.

Scared New World

This isn’t a brag piece.

Many have credited me with predicting the Trump rise. To be clear, I never predicted Trump’s entry into politics, or that he’d win the Republican party nomination or that he’d carry the presidency.

But this is still a bit of an “I told you so.”

Everything about the American position in the international system is based upon the Americans holding together what we currently call the international order. Americans have been doing this since 1944. At that point the Americans re-forged the global system, shifting it from a series of warring imperial networks into a global system they personally managed. The Americans imposed global order — the first global order — and created free trade as a means of purchasing the loyalty of the Western and Asian allies, the defeated Axis powers, and in time Communist China. It was all about paying for alliance networks to contain and defeat the Soviet Union. When the Cold War ended the Americans neglected to shift their policies. The Americans continued to provide global security and empower global trade, but did so without the requisite security quid pro quo.

People noticed. The Brazil/Russia/China/India boom could only happen in such a strategic moment in time. The euro could only exist when economics were protected and security was free. But it wasn’t just in the wider world that people noticed. Free trade isn’t really free. Free trade requires someone providing the physical security and global ballast and market access to indirectly subsidize the rest of the system. The Americans have provided that for seven decades, and for the last three decades they have done so without asking for anything in return. With the Trump rise, this whole thing is now in its final years. Perhaps in its final months.

The reason for the accelerated timeframe isn’t just temperament, although I agree TrumpTantrumsTM will certainly play a role. It is far more structural than that. The entire webwork of elite relations that maintains the free-trade system just found itself without access to the leader of the free world. It’s not so much that the new American president is populist, although that is definitely a piece of it, but that he is not really affiliated with either American political party or the overall American business community or any other institutions that are linked into international trade. Trump is a purely domestic entity, disconnected from U.S. governance at all levels. Presidential history isn’t my strong point, but I think the United States hasn’t had one of those since Andrew Jackson, another strongly populist president who didn’t think all that highly of the wider world. But Jackson didn’t inherit responsibility for the global system. Trump has. And if there is one point on which Trump has been consistent, it is that that responsibility will be abandoned.

Yet this isn’t all Trump. The United States has been moving this way for a good 25 years, and I’ve little doubt that even a President Hillary Clinton would have ended the global system one way or another. I have been saying for months that the primary difference to the international order of Trump versus Clinton is timeframe. Clinton would move the United States away from the international order in a relatively slow manner. Probably 4 to 8 years. Trump would do it in 4 to 8 months.

To me the timeframe never really mattered. One way or another the global system was going to breakdown and we would find ourselves in the Disorder. This allowed me to view the world from afar and focus on the structure. The details would take care of themselves in time.

Well, that mode of operation is now about as relevant as the Clinton family.

With a shorter runway, a few things have clarified.

  • Almost everything from the Obama presidency will be undone by the end of January 2017. Obama has shown next to no ability/interest in having conversations with Congress, even with members of his own party. The only large law passed during his entire tenure is Obamacare, so only it cannot be undone with a few strokes of a pen. How that law is modified or unwound requires Congressional involvement, and since Congress remains in the hands of the Republicans, that too is on deck — it will just take a bit more time. Any international treaties negotiated by Obama — whether they be the Paris Climate Accords or the TransPacific Partnership — are dead.
  • The World Trade Organization has less than a year to respond to what will undoubtedly be a tidal wave of U.S. cases. Should those cases not be dealt with in adjudication at a pace and in the way the new White House desires, the United States will start taking unilateral moves which will, in essence, obviate the global trade order.
  • One of those first moves — which might not even wait for the WTO to try and act — will be to declare China a currency manipulator as well as revoke its status as a free market economy. Any countries that attempt to relabel Chinese goods are likely to be caught in a dragnet. This one push should be enough to throw China into its first recession in 30 years. The question now is whether or not President Xi’s political consolidation efforts have progressed enough that China can weather the resultant internal political and economic explosion.
  • NATO is for all intents and purposes dead. Russia’s moves into Ukraine will increase, and broadscale Russian plans for its entire western periphery — everything from Latvia to Poland to Romania to Azerbaijan — will accelerate. The only way forward for Europe is for Sweden and Germany to massively rearm.
  • Formal talks between the United States and the United Kingdom on some sort of post-Brexit trade deal will open. (Technically these are illegal under EU law, but what is Brussels going to do? Kick the Brits out?) The only question is whether these talks herald British entrance into NAFTA.
  • The alliance with Korea and Japan will no longer require U.S. troops in those countries, and even that assumes the alliance isn’t ended outright. Both countries will have little choice but to beef up their power projection capabilities, which is highly likely to include nuclear weapons. A much more aggressive Japan ends China’s creeping power projection to the northeast.
  • Alberta may have just gotten a fresh lease on life. One of those Obama executive orders that will be scratched out is the Keystone pipeline. Its construction will enable Albertan crude to access the U.S. refining network where it will be blended with light/sweet U.S. shale crude. The resultant blend will save U.S. refiners a couple hundred billion in refinery overhauls, resulting in lower cost gasoline for the country. It also just might provide Alberta with enough income to climb out of what would have otherwise been a multi-year recession. The question now is how much of that income will Ottawa take, and how Alberta will respond to the forced transfer.
  • Mexico now has no choice but to work with Donald Trump. Since most of the migration that comes into the U.S. actually comes from Central America and not Mexico, the most constructive path forward will indeed be a border wall that Mexico will indeed pay for…but on Mexico’s southern border rather than its northern one. How Mexico City handles this issue will determine the future success of both Mexico and NAFTA.

And now if you’ll excuse me, I’d better get back to that book writing. Apparently I have less time to get these projects out than I had thought.

RNC And U.S. Domestic Politics

Think November will bring an end to the shenanigans of the 2016 election cycle? Don’t hold your breath.

If there is one thing that drives editors batty, it’s an author who can’t keep his grimy fingers out of the editing process. So for the past three weeks I’ve been backpacking through Yosemite and the Thorofare while my team beats the text of Shale New World into shape. We’re aiming for an October release. (BTW – free case of books for anyone who can come up with a sexier title. I’m dry.)

Anywho, I hiked in to my taxi-out lodge this morning, did some laundry (mostly throwing away clothes that should never be worn ever again), and started getting caught up on the world. All y’all have been busy: a near-coup in Turkey, a devastating attack in Nice, the Brits throwing yet more spanners into the European project, the Chinese economy in a nose dive, India’s central bank chief stepping down, Japan’s prime minister looking particularly wounded, Justin Trudeau’s hair still rockin’ and so on. So much to work with! (The world has been so very good to me this year!)

But by far the most notable item of the past three weeks happened just yesterday when Texas Senator Ted Cruz addressed the Republican convention. His supporters gave him a hero’s welcome, and when it became apparent that he was not going to support Donald Trump, the nominee, a giant auditorium full of Republicans…booed him off stage.

You can parse this dozens of different ways, and I’m certain that the pro-Trump crowd did everything they could to whip the crowd into a frenzy once it became clear that an endorsement wasn’t going to materialize — but the bottom line is that a speaker being jeered to stage left hasn’t happened at a Republican convention in the past several decades.

Most pundits are making hay about the disunified nature of the Republican Party and the impact it will have on the general election. I certainly agree this adds a bit more gravel to what is already a gritty process, but let’s be honest here. Did anyone really expect Senator Cruz, the person in the sitting Congress with the blackest track record for throwing anyone and their grandmother under any available mass transit vehicle if it served his personal interest of the moment, to not be an ass at the convention?

Get real. In this election such is par for the course.

Instead, there are three other things that I’m thinking.

First, as a national political figure, Ted Cruz is likely dead. You just don’t come back from a convention rejection. Unless the Tea Party splits off from the Republicans formally, we are done hearing from Mr Cruz at the national level. Your personal politics will tell you whether this is fabulous or disastrous.

Second, a deeper question is what does this mean for Cruz’s Tea Party movement? I’ve never considered a billionaire like Mr Trump to be a stable representative of a group that prides itself on being less well-off than the average American (and living nowhere near Manhattan). The illuminating item for me was when Trump supporters were so nearly-physically hostile to Mr Cruz’s wife, Heidi, that security had to escort her from the convention floor under the assault of jeers of “Goldman Sachs”. Needless to say, the Tea Partiers are having a bit of a leadership crisis. I’d expect an identity crisis to follow shortly.

But the true geopolitical issue is the third one: Cruz’s fall isn’t exceptional, but instead representative of the in-flux nature of the entire American political spectrum.

The two American political parties are in reality coalitions of coalitions, and the stability of those coalitions of coalitions has proved remarkably stable since 1935-1945.

Let’s start with the Right.

The Republican coalition is comprised of five pieces: national security conservatives, evangelicals, the business community, populists and pro-lifers. At first blush this doesn’t seem like a very large grouping. But what it lacks in size it makes up in cohesion; These five groups don’t contradict each other. Folks who use religion to guide their votes don’t tend to stress about business regulation, while voters who shoot from the hip (figuratively and literally) tend to not have strong opinions on abortion. It’s easy to construct a political platform that addresses the pet issues of all five groups without alienating any of them. As such the Republican coalition is a reliable one that tends to carry the day.

The Democrat crew is more motley: greens, socialists, unions, gays, unmarried women, blacks, under 30s and pro-choicers. They disagree on pretty much everything. Greens and unions fight over every aspect of industrial policy. Gays and blacks have wildly different views on what the term ‘civil rights’ actually means. The under-30s and socialists expect single mothers to help pay for their college debt. And there’s always the threat that if the rest of the Democrats manage to cobble something together, the pro-choicers will blow it up if their single-issue voting style isn’t respected. Now if a charismatic personality — say, a Barack Obama — can inspire the lot, the Democrats will breezily walk away with the election. Their numbers are simply so much bigger than the Republicans. But shy of such a unifying candidate the biggest obstacle to the Democrats is themselves.

This is how things have been for decades. Yet in this election cycle it has all blown apart.

Within the Republican coalition the pro-lifers simply don’t trust Trump, as he was pro-choice just two years ago. The national security conservatives remain furious with Trump for insulting U.S. military’s poster boy, veteran Senator John McCain. (The same crew also views Hillary Clinton, in her role of Secretary of State, to be the only person in the Obama administration to really “get it”.) The party loyalty of the evangelicals — who considered Ted Cruz to be their man — to Trump is, at best, suspect. And because of campaign finance reform the business community never had a candidate in the race in the first place. (Ironically by taking money out of politics we Americans have replaced it with a hefty dollop of crazy.) That just leaves the populists running the show and so that’s what Trump has ridden to the nomination.

If anything the damage is even deeper, if less obvious, on the Left.

The gays got most of what they were after with the Supreme Court settling the gay marriage issue, and in the aftermath of the Orlando attacks are thinking of immigration and national security in ways new and terrifying. Pro-choicers look at Trump’s record on abortion and don’t see all that much at stake this time around. Trump’s anti-free trade rhetoric is a siren song for organized labor, particularly in light that Hillary Clinton’s husband presided over the greatest expansion of free trade in recent memory. Working-class white men and unions—once the backbone of the party—seem to be favoring Trump over Clinton in several swing states. The socialists and under-30s were so vehemently pro-Bernie Sanders (and vehemently anti-Hillary Clinton) that many walked out of the rally when Sanders bowed to the inevitable and endorsed his rival. Many won’t bother to even show up to vote (I even have a pro-Sanders buddy who is considering emigrating not over the possibility the Donald moving into the Oval Office, but over “Crooked Hillary” sitting there.)

This motion isn’t bad for American democracy. In fact, it is perfectly normal. Parties change. They evolve. Sometimes they even die. Before 1935 it was the Republicans, not the Democrats, who favored big government. Anyone remember the Whigs? Life moves on.

But new coalitions do not form overnight. The last time the Democrats and Republicans swapped factions it was the Great Depression and World War II, and that reshuffling took the better part of a decade. No matter who wins the election in November, the new president will neither have a functional party to rule with nor a function party across the aisle to negotiate with. U.S. politics are about to stall for a while.

Now spackle that atop what’s going on in the rest of the world.

The American security and economic commitment to the free trade era is what has enabled the world to evolve into its current form, making everything from the European Union to independent Africa to global energy markets to the Chinese Communist Party possible. It made this commitment to bribe up an alliance to confront the Soviets. The Cold War ended in 1989 and American foreign policy has been on cruise control ever since. Now, for reasons geographic, military, economic and demographic the United States is finally backing away from these commitments — a process on vivid display on both the American Left and American Right. As the scaffolding that supports the broader global system is pulled away, global structures big and small will collapse while the Americans ride off into the sunset, blithely unaware of the consequences in their self-contained continental system.

Even if Americans were internationally-minded, even if they were convinced that their economic and physical security were dependent upon international engagement, even if they could appeal to their better natures, the simple fact remains that for the next few years they will be obsessed with their domestic political restructuring.

In this light, whether the next president is someone with bad hair or Donald Trump just doesn’t matter very much. The Americans are going out to lunch — and it is going to be a long lunch.

Brexit

With 28 countries it is easy to get lost in the geopolitical maelstrom that is the European Union. Over the next few days (and couple of years) there will be literally thousands of stories to tell about the Britain-EU breakup. All will matter hugely to someone, but only a few will matter hugely to everyone. So let’s focus on the major points.

The United States is withdrawing from the world. The United States created and maintained the global free trade order. Without the United States’ smothering security presence, much of the world either will devolve as local powers fight for the scraps or return to their pre-1945 state of affairs. In Europe it will be a bit of both. One outcome among many is that the geopolitical environment of enforced peace and open trade that enabled the Europeans to form the EU in the first place is disappearing. For reasons well beyond the Europeans’ control, the EU is ending.

And for reasons well within the Europeans’ control, the EU is ending. If there is anything that the European Union has shown us in the past decade, it is that even in the face of an existential crisis its constituent members cannot come up with a common plan, much less a common vision. The European financial crisis — complete with the Greek crisis — began in 2006 and slides further down the rabbit hole with every passing year. The continent has suffered five recessions since this all started with most of its members now possessing smaller economies than before the Great Recession.

Europe is also dying for reasons independent of geopolitics and policy. All but six of its 27 members (the UK is one of the six) have already aged past any hope of demographic recovery. Germany — the country the EU seems to be pinning its hopes on — has the world’s most distorted population structure, with more people in their 50s than 40s than 30s than 20s than teenagers than children. Which means that all three forms of economic growth — consumption, investment and export — are about to prove beyond them. In essence, Europe’s aging is transforming it into a collection of old folks’ homes.

It isn’t hard to make the case that the UK jumping ship might not be all that bad of an idea.

So what happens next?

  • The Brits will need a replacement trade association. There are two options. The easier of the two is a broad scale reinvigoration of the Commonwealth which will give the UK greater access to its old empire with countries large and small, near and far. The second is both simpler and more complicated: joining NAFTA. Simple in that the Canadians will make Brentrance a cause célèbre but complicated in that the Americans will make the Brits pay through the nose (think Lend-Lease). The Brits will ultimately succeed at both. Expect the Brits to be the only country in the world with a meaningful trade deal with India, and expect all the former British colonies that trade with the EU to shift loyalties.
  • The EU leadership will want to hurt the UK, and hurt it badly, in order to dissuade others from following suit. In this they will fail. As the UK demonstrates that the EU isn’t inevitable a number of countries will see their own political systems reorder to the new reality. In particular, I’d keep my eye on Hungary (whose political system is departing from democracy and so just doesn’t fit in the club any longer), France (who feels the whole European project has gotten away from them), and Sweden (who only joined the EU because a united Europe served as a hedge against Russia).

  • The UK was the one big country constantly pushing for the EU to expand and liberalize. Without London’s influence the EU’s slide towards parochialism, protectionism and a Fortress Europe mentality will harden. No more expansions. No more common foreign policy. No more Airbus.
  • Expect the broad scale weakening of the European financial sector. Most of the EU’s financial business is settled in London and undoubtedly some of that will now relocate to the Continent. But most — to the EU leadership’s chagrin — will not. This will induce the EU to attempt to force its relocation using regulatory means. Considering that capital flight from the eurozone is already at record highs, expect such regulatory efforts to backfire. Horribly.

America and Vietnam Set Sights on China

President Obama kicked off a trip to Asia with a visit to Vietnam, where he announced that the United States is fully lifting the arms embargo on Hanoi. In a joint press conference with Vietnamese president Tran Dai Quang, President Obama finished a process that has been proceeding incrementally throughout much of his term in office, namely slowly rolling back the vestiges of the United States’ bitter two-decade war against Vietnamese communists. Sentiments among many American Baby Boomers regarding Washington’s slow-but-steady outreach to Hanoi are mixed, but President Obama’s visit and decision to end the arms embargo reflect the United States’ determination to restructure Cold War alliances in a nod to today’s shifting global environment.

Countries like Vietnam are emblematic of the future of American alliance structures.

  • Hanoi is an inveterate land power—having proven itself sufficiently scrappy to resist centuries of Chinese encroachment and both French and US military might.
  • Lifting the arms embargo is unlikely to cause serious heartburn down the line for other friendly US states in Southeast Asia — namely Thailand and Singapore — because Southeast Asian geography is sufficiently rugged that Vietnam does not pose a threat to these states.

  • It helps strengthen pro-US sentiments among Vietnam’s vehemently anti-Chinese military leadership, a vital bulwark against Beijing’s regional interests for both Washington and Hanoi’s fellow ASEAN member-states.
  • Vietnam’s long eastern coastline is home to Cam Ranh Bay, the finest natural deep water harbor in South East Asia. Cam Ranh has hosted French, American and Soviet fleets in the past century.
  • Vietnam lies along the South China Sea and claims the Paracel and the Spratly Islands, rocky outposts that have become flashpoints in the powder keg of the South China Sea. Vietnam’s views on China and the South China Sea mean that its geographic and strategic positions are now in-line with American interests, rather than threatening them. Vietnam’s geographic position is now more strategic than ever, and its stance on China has opened the door for American influence.

  • Washington’s outreach to Vietnam cannot be defined purely through military or anti-Chinese positions. Vietnam’s large and youthful population represents a strong future growth market, and getting in on the ground floor of Vietnam’s push toward industrialization will be a boon to American manufacturers looking for both cheap skilled labor and a market for higher-end, US made goods. Vietnamese power and transport infrastructure is in desperate need of foreign technology and investment, and the country’s offshore energy assets represent several opportunities for US supermajors experienced in deep-water energy production.

The United States and Vietnam are burying the hatchet. Hanoi still has work to do on its end—economic and political reforms and the kinds of asides about human rights concerns US leaders habitually mumble about in front of journalists—but Washington is committed to working with the Vietnamese leadership to see that this process is carried out in-line with American regional interests. The process will have hiccups and headaches along the way, but the United States is committed to moving forward in what will be the bedrock of expanded US-ASEAN cooperation.

A Missed Opportunity in Alberta

During post-presentation Q&A at an event last week, an acquaintance decided to have a bit of fun at my expense by slipping a question on Albertan separatism into the deck. Considering that the event was in Montreal and the audience was two-thirds Canadian, I’m sure said acquaintance considered the pot well-stirred. I made a few comments about how Canadians should take the issue of Albertan separatism seriously and moved on.

Within a few hours this graphic was waiting for me on-line.


Part of me finds it a bit sexy to be associated in any way with the word ‘provocateur’ and so is eager to engage on the topic. More of me dreads the hate mail I know I’ll get from diving in. And yet I now feel obliged to comment.

To be blunt, Canada is flirting with a national crisis. The signs are there for those who can check their preconceived notions at the door:

How about that the province of Alberta has been the only net contributor to Canada’s federal budget for several years running? Or that Alberta is the only province that isn’t aging into mass retirement, and therefore is the only province that will have the capacity to continue to pay in the future? Or that Alberta’s primary income stream — oil exports — are being actively stymied by local politics in a host of other provinces? Or that Alberta’s in-pay level to the federal budget has already been penciled in to fund the new Canadian government’s spending plans regardless of what happens to Alberta’s oil income? Or that the Edmonton-Ottawa funds transfers are already the greatest of their kind from any province to any central government in the modern world? Or that Canada can no longer maintain its standard of living without draining Alberta dry, or that Alberta cannot maintain its standard of living so long as it remains in Canada?

Separatist risks are not new in Canada, and in the past they’ve been handled fairly adroitly. Last century Ontario managed the Quebecois separatism threat by, in essence, paying Quebec to remain in Canada. It’s a variation of what the United States has done with my adopted state of Texas (a state as wealthy as Texas has little justification for gobbling up as many defense, infrastructure, health care and education funds from DC as it does). There’s just one problem: With Ontario aging into mass retirement, Ontario can no longer afford to fund Quebec’s inclusion. So the bill has been — quite nonchalantly — passed on to Alberta. Anywhere else in the world, artillery would have already been exchanged. But this isn’t anywhere in the world. This is Canada, and everyone is just so damned polite.

Thing is, as big as the financial gap is, that’s not what has me worried these days. Two new developments may be pushing the Albertans past the tipping point.

First, this is no longer about ‘right-wing Albertans’ in ‘left-wing Canada’. Albertan exasperation now spans the political spectrum. Even current Albertan Premier Rachel Notley — whose personal ideology tends to be distrustful of someone as conservative as Bernie Sanders — is sounding an awful lot like her Conservative predecessors on topics such as financial transfers and pipeline politics.

Second, the rest of Canada just had a serendipitous opportunity to nip Albertan separatism in the bud. Wildfires raging through the Fort McMurray region have forced some 100,000 Albertans from their homes in what is to my knowledge Canada’s costliest natural disaster. Considering Canadians’ well-deserved reputation for being charitable and caring in all things international, I expected to see a mass cross-country effort by Canadians to assist their own.

The reality has proven to be somewhat less … flattering. Social media has been abuzz with commentary that skirts the line of rude and hateful. The one that made me stop short was “Welcome to climate change, Alberta. Feel free to keep denying it.” For Americans, the least imperfect comparison would be if the rest of the country had heckled the citizens of New Orleans for their levee engineering skills while their city was drowning in the aftermath of 2005’s Hurricane Katrina.

Canadian Prime Minister Justin Trudeau didn’t improve matters last week when he made a quick day trip to Alberta for some photo-ops in and flyovers of deserted, smoldering urban areas. Visiting the area was a solid call, but not making time to actually press the flesh with the world’s largest group of first-world homeless was not. As an American who has been involved in all things political throughout the George W Bush and Barack Obama years, I recognize political tone deafness when I see it.

Bottom line? Albertans are coming to the conclusion that the rest of their countrymen just don’t care.

In a country where secession has been codified as legal by both parliament and the supreme court, I would think that this would be setting off alarm bells in Toronto and Quebec City. Instead, I’m continually stunned that most Canadians do not view Trudeau as either cold or off-base. In fact, every time I converse with Ontarians and Quebecois I walk away confused as to just how blasé they are as to the Albertans’ circumstances.

And so here I sit, accused of working towards the ‘destruction of Canada’. I’m afraid that with the way things are going, Ontario and Quebec are doing a bang-up job on that without any help from me. =[

Saudi Arabia Takes Stock

Deputy Crown Prince Mohammed bid Salman laid out part of his country’s strategic challenge in an April 25 interview.

“We have a problem with military spending,” the prince told Al Arabiya. “When I enter a Saud military base, the floor is tiled with marble, the walls are decorated and the finishing is five stars. I enter a base in the U.S., you can see the pipes in the ceiling, the floor is bare, no marble and no carpets. It’s made of cement. … We are the third- or fourth-largest in terms of military spending in the world, yet our army is ranked in the twenties.”

If anything, the crown prince-designate is being overly generous to his military establishment. Going back to the foundation of modern Saudi Arabia, the Saudi military has been an expensive paperweight. Riyadh has used its oil heft to purchase foreigners to fight its wars. When Saddam Hussein’s Iraq invaded Kuwait in 1990, the Saudis flat-out paid a coalition to defend their country and liberate their neighbor. In the years since, Riyadh hired so many Pakistani pilots that the Saudi air force for a time felt as Pakistani as Pakistan’s own. Even today Riyadh maintains vast warehouses packed with shrink-wrapped Abrams tanks and Apache attack helicopters awaiting foreign operators to fight wars on Riyadh’s behalf.

In the Saudi mind those operators would always be American, a people so dependent upon energy imports and so wrapped up in maintaining the global order that they would fight and die to defend the Saudi nation and way of life.

America’s shale revolution has changed all that. Shale oil production has proven increasingly cost-effective. So much so that U.S. oil output is holding steady despite the oil price collapse. This is doing more than edge the Americans towards energy independence, it is also remaking American industry. Cheap oil and nearly free natural gas is overhauling sectors ranging from petrochemicals to electricity to manufacturing and placing an extra $2000 a year per family in the citizenry’s pockets.

Between shale’s cavalcade of changes and a rationalization of America’s foreign policy that is as long-overdue as it is all-encompassing, the Americans no longer need Saudi oil and no longer really care if the Persian Gulf stays open.

And so the Saudis are taking their first (grumbling) steps towards standing on their own feet — and firing their own guns. It will be a long, hard, costly slog. Saudi Arabia has no indigenous regular military expertise, no related skill sets in logistics or industry to call upon. What they do have is loads of pre-purchased equipment and a metric butt-ton of cash to hire trainers from every corner of the globe. And even before the crown-prince-to-be’s announcement, their new stratagem is bearing fruit.

The Saudis’ primary concern is Iran, a country eager to move into the vacuum the Americans’ absence is creating. An early Iranian move helped trigger (another) civil war in Yemen, a country in southern Arabia largely irrelevant to anyone who doesn’t border it. Unfortunately for the Saudis, their country is one of the two. In the war, the Saudis have intervened directly, boldly, and at the head of an alliance of states who likewise fear the Iranian rise. The Saudi effort has been marred by a mess of mistakes: high civilian casualties, lots of friendly fire, logistical bottlenecks and outright shortages, extreme unit attrition caused by inexperience in fighting guerrilla forces, and so on.

Yet I cannot help but be impressed by what the Saudis have achieved. A year ago I felt that Yemen presented the Saudis with a chance to showcase their utter military incompetence. Instead Iran’s efforts have been heavily unwound and there is absolutely no chance that Iran’s proxies will carry on to victory so long as the Saudis remain committed. Yemen has proven to be a great test of the Saudis’ war-fighting, and it is a test in which they get a passable grade. Just as importantly, the Saudis have not been fighting alone or limited their activities to Yemen; they now lead a coalition of Gulf Arab states in Syria and Libya as well.

This military and diplomatic activity will prove great practice for the fight to come.

Iran is beginning to comprehend that the Saudis see this as a fight to the death. When that truly sinks in, Iran will realize it has to go for the throat and remove the Saudis’ primary enabler: the Saudi oil fields. That can only be done via outright military occupation. Prince Salman realized this nearly two years ago and everything — from the oil price war to destabilize Iran’s finances to the Yemen and Syrian conflicts to challenge Iran’s strategic position to today’s announcement on military rationalization — is about preparing Saudi Arabia to fend off a direct Iranian assault, and to do so without meaningful American assistance.

Cuba: Life After the Cold War

Outside of the political protestations regarding Obama’s visit to Cuba (it is a presidential election year, after all), the United States has a strong strategic interest in returning Havana to the American sphere of influence.

The geopolitical rationale is twofold:

A hostile Cuba, backed by a meaningful external power (such as the Soviet Union during the Cold War) could threaten control of America’s internal waterways—most notably anything exiting the Mississippi, as these exports have to pass either the Florida or Yucatan straits. Also at risk are the Intracoastal Waterway along the Gulf Coast. As the US becomes less interested in international trade, domestic exchange becomes more important, and so too does the political relationship with and within Cuba.

Cuba is the only portion of the Western Hemisphere through which American power does not thoroughly penetrate. That it is so close to US shores only heightens Washington’s interest.

After the collapse of the Soviet Union, Venezuela became Cuba’s key political and economic ally. With Caracas itself caught in the throes of political and social unrest, Cuba has no choice but to normalize relations with the US. And so it is.

There will be three primary changes that will emerge from the thawing of the last vestiges of the Cold War:

1) Tourism. Already underway, Cuba’s tourism sector is poised to soon become the top Caribbean destination for American tourists, and within a decade should be well on its way to resume its position as a sort of tropical Las Vegas. The embargo doesn’t even have to be lifted for this to happen.

2) Sugar. Cuba’s sugar industry is historically far stronger than America’s, and has operated with far lower costs. The island’s proximity to the Intracoastal Waterway and the Mississippi will vastly simplify the logistics of the sugar trade and distribution within the US market. Sugar production is set to at least double in the half-decade following the lifting of the embargo as investment flows into Cuba’s cash-and-tech starved sugar industry. The biggest obstacle is the US sugar lobby (far more powerful than most people realize), but America’s other agricultural producers will likely prove more formidable as they clamor to access a Cuban market heavily dependent on food imports.

3) Manufacturing. Perhaps one of the most frequently overlooked impacts of an American détente with Cuba. Although Cuba’s educational and vocational training system is vastly outpaced by the United States, Cuban wages are a mere fraction of what they are in the US. Cuba’s proximity means that the island can be integrated into US infrastructure and supply chains relatively easily, as well as NAFTA/CAFTA. Training, infrastructure and industrial plant buildout will take a decade, but the economic argument behind integration is solid.

Making the Next Mao

Chinese President Xi Jinping is already poised to be the most powerful man in Chinese history after Mao Zedong, and proposed reforms to the country’s paramilitary police force would all but guarantee that position if they are passed. The People’s Armed Police Internal Guard Corps is a 600,000 strong paramilitary police force with military-grade weapons and specialized training in counter-terrorism and anti-riot policing. Right now, the Corps answers to China’s civilian leadership as well as the Communist Party’s Central Military Commission. Proposed reforms would place the paramilitary force under the control of the Chinese president, relocating a key structure in containing social unrest and domestic security from a fractured control system scattered throughout the Chinese system to the direct control of Xi Jinping.

As Beijing and the Communist Party ready themselves for the 19th Party Congress in 2017, President Xi has been in the midst of a frequently mentioned but often misunderstood factional reshuffling. President Xi is consolidating authority and attempting to control the evolution of China’s political and social reforms in the face of an unavoidable slowing of the economy. If the proposed reforms to the leadership of the People’s Armed Police go through, expect Xi to follow through with reforms targeting the most ossified and entrenched (read: corrupt and powerful) factions of the Party, with the full force of 600,000 paramilitary forces poised to reign in any threats of resistance or unrest.

Brussels Attacks Are Just a Symptom

Coordinated terror attacks rocked Brussels this morning, following a successful raid earlier this week that saw French and Belgian security forces capture the surviving would-be suicide bomber and participant in Paris’ November 2015 terror attacks. ISIS affiliates have claimed responsibility for the attack, leaving today’s coordinated bombings at a metro station and the Brussels airport the latest of the organization’s high profile actions in Europe.

Belgium’s Arab community have come under greater scrutiny in recent months, as have many of Western Europe’s Muslim and Arab communities, but Brussels faces an uphill climb in guaranteeing its own security. The basic definition of statecraft is the ability to control one’s borders—as the de facto capital of the European Union, Belgium sits in the middle of a conglomeration of relatively wealthy European governments with little to no border controls. Add to this years of political deadlock and a police system that favors human rights and adheres to strict privacy protections at the expense of security, and it’s easy to see why Belgium and terrorism have been occupying headlines so frequently as of late.

Europe is still clinging to a world that functionally no longer exists. European capitals are digging in their heels and pushing for civility and, well, Europeaness while the Continent’s broader periphery rapidly devolves into chaos. The most obvious (but far from the only) source of the disruption is Syria, a state that is rapidly de-civilizing. Considering the weakness of next-door Iraq, Lebanon and Jordan, this is only the beginning of a larger civilizational breakdown.

So morally, the European position is worthy of respect and acclaim. Functionally, however, it is idiotic.

The problem — well, part of the problem — is that there’s been a geopolitical shift immediately on Europe’s southeastern border. Turkey, for all intents and purposes, is no longer part of the civilizational block that is known as the “West.” You can certainly argue (accurately) that Turkey never fully joined the West in whole — there were always a host of linguistic, religious, ethnic, historical and cultural barriers to true merger — but in the past decade Europe and Turkey have slid further and further apart, and in recent weeks the Turkish government took over the last remaining independent media outlet of significance. From an ethical point of view, the split is now complete.

Persian Gulf Image

Turkey is now unhinged — as seen by last week’s suicide bombings in Ankara and Istanbul — eliminating any chance that the Europeans had of managing their terror or migration problems. For now, the best case scenario for the Europeans is that Turkey rounds up the migrants into camps, and then invades and occupies Syria in order to destroy both the Assad government and the Islamic State.

Put simply, the EU’s anti-terror, migration and strategic policies are now little more than hope that Turkey, a freshly illiberal state that doesn’t think very highly of Europe (and is technically in a state of war with one of its members) fully militarizes and starts invading its neighbors.

This will end (very) badly.