Howard Epstein – IT IS ONLY IN THE BEST OF ALL WORLDS THAT ALL IS FOR THE BEST
It is hard, on the fifteenth anniversary of the day of horror that was 9/11, to claim that we have moved closer to a utopian world in our lifetimes. Granted, Steven Pinker, in his work The Better Angels of Our Nature (Viking Books), asserted in 2011 (before the Syrian civil war got into its stride) that there is less violence in the world today than at any other time in human history; but he would struggle to enlist disciples amongst the relatives and friends of those who died in the 9/11 disasters or those who have so far survived the Syrian civil war, in which perhaps some 500,000 have already died (with no end in sight) or any of the victims of the many other struggles alongside which we live, on the periphery – but only barely and only so far.
Granted, there are only a handful of war zones in the world today, namely those in Afghanistan, Syria, 
Iraq, Libya and Yemen. There is, however, much suffering at the hands of terrorist groups and so-called lone-wolf terrorists, everywhere from eastern China, through the Philippines, Thailand, Bangladesh, Kashmir, the Middle East, Africa and Europe to the USA.
There are also many potential war-zones: Israel faces the possibility of wars with Lebanon/Hezbollah, Gaza/Hamas and Iran. More immediately, Ukraine is a hair-trigger away from an invasion by Russia (however it may be dressed up) and the Baltic states are only several more hair-breadths away from a similar conflagration.
Putin needs his foreign adventures as a distraction from his abject failures everywhere else, for Russia is a fiscal and societal failure. Its foreign reserves are on a fast track to extinction, average lifespan in Russia is in free-fall, plus it is a fast-aging society (a paradoxical and lethal combination, unachieved elsewhere in modern times) and the Russians (as innately talented as any other nation, and more so than many) make nothing outside the military arena that anyone wants to buy.
Nevertheless, when oil prices were high, Putin invested heavily in his military and its morale is great, too. He could easily retake the peripheral states whose western 
orientation he resents and, whether or not the US and the Euros have the resolve to resist (which appears unlikely), they are just not “there” in sufficient numbers to withstand the onslaught of which the Russians are capable, and it would look like June 1967 all over again. And then what – more sanctions? A busted flush.
The outcome of a successful Russian invasion of Ukraine or (let alone and) the Baltic states would be a deep global depression, arising from the realisation that the West is on the slide to oblivion.
We should remember that that is where the USA – and Europe – was for the whole of the Thirties. We have allowed the post-WWII era of unprecedented wealth and growth to fool us into thinking the West was always affluent. Well, the opposite was the case for the whole of the Thirties, and improvement did 
not arrive until midway through the Fifties in the US, and ten years later in Europe and the UK.
Putin may just reckon that, if the Russian people have to suffer deprivation (which he blames on western sanctions, not entirely vacuously), there is no reason to allow those who oppress him to be any better off. He might even gamble that he could plunder conquered territories for the benefit of Russia. He would be thereby extending his kleptocracy in any event.
If America is politically, and otherwise, ill-equipped to respond to the challenges it faces from Russia, there is more about which to worry. The US 
(and the rest of the world) have no way of reining in Kim Jong Un, whose recent activities suggest he could soon be in a position to destroy Hawaii in a (nuclear) flash. He could survive that, since the US would be informed that, unless they undertook not to waste North Korea, the cities of California would, before Kim became, as the Americans put it, “toast”, be made toxic for half a millennium. This is not good for the markets (ie the western currency and stock markets). At best, watch out for more nuclear blackmail from the House of Kim, as practised by Jong Un’s father but, in future, to be considerably leveraged.
In the same region, the Chinese are constantly pressing the US by expanding their naval presence, with vast annual expenditures on their military, the creation of new islands (and airbases) by enlarging mere rocks breaking the surface of the South China Sea and the establishment of naval bases in Africa. China is increasingly intolerant of the presence of the US navy in its backyard and expresses its testy disposition by near-miss hardware provocations, to which the Americans respond with timidity, if at all.
It is the same in the Persian Gulf, with the Iranians prodding at the US Fifth Fleet with impunity, given the US’s supine posture. Both China and Iran are positioning themselves to impose their control over vital international sea lanes. Whilst the resultant rocketing oil price would be a godsend for Putin, it is anyone’s guess what it would do for the markets.
Russia, China and Iran are emboldened because there is no perceived deterrence about the US any more. This is the result of first visibly thrown away the big stick, and then 
walking quietly – for the past eight years. Now we have the prospect of that period being extended to half a generation, should Hillary Clinton be elected. We should remember, today of all days, that President Bill Clinton barely responded to seven Al Qaeda attacks on US interests in his eight years in the White House, paving the way (assisted by being a semi-detached president, by reason of the legal downtime arising from his scandals) to 9/11. Democratic Presidential flaccidity, not to say inertia, in the face of extreme provocation, is by now a well-established tradition.
The pressures on the next US President are multifarious: apart from the multiple military challenges, the nation is split down the middle on every major issue from Darwin, through abortion to health-care and beyond; their politicians are hide-bound by political dogma (with appeasement top of the list); and their fiscal position is weak, with the slowest US emergence from recession (emanating from the nadir of the Credit Crunch of 2008) in modern times. Markets are driven – both up and down – by sentiment.
There is little good to be said about the Europeans, as they ready themselves for fresh onslaughts on Israel. Europe suffers from the humiliation of the prestigious UK rejecting them, resultant loss of self-confidence, uncontrollable immigration from Africa via Libya and Italy, fundamental weaknesses in several economies (especially 
Greece and Italy) and significant demographic challenges, with more deaths than births in Europe last year (pace Caroline B Glick, see below).
As for the UK, Theresa May received several nasty messages at the G20 summit in China last week. Cold-shouldered by the Europeans and told (again) by Obama that the UK should expect to be pushed to the back of the queue on trade deals, she returned home to learn that Lloyds of London may leave London! That would be one heck of a market for the Square Mile to lose. Others would follow.
So what about Israel? As I have written in several economics-centric blogs, Israel has shown its ability to turn necessity (outside pressures) into a virtue. This may be seen in our strong export-led economy – growing year-on-year, despite Israel having one of the world’s strongest currencies – a balance of trade surplus and resultant substantial foreign currency reserves. In contra-distinction to European demographics, Israeli trends in this connection are healthy (see the expert article on this subject by my friend and colleague Steve Kramer§) unlike those of Europe (and Russia). Further, whilst Europe is struggling to cope with an influx of a well over a million indigent refugees (most of them into Germany alone) in one year, we welcome our immigrants – and face the uplifting prospect of many more being driven here by the worsening situation of a million Jews in Europe and Ukraine. Each one that comes will be a net contributor to our economy within months of his/her arrival.
Israel, already diversifying its markets eastwards, and wary of what the future holds in terms of US policy towards it, should look to the Chinese for financing. With its massive credit account balance (it is actually the world’s largest creditor nation, whilst the US is the world’s largest debtor nation), and new global banking ambitions, with the launch last January of the Asia International Investment Bank (AIIB) as a rival to the US-led World Bank, China should be Israel’s funder of first resort. Then we should be able to break free of the US monopoly-hold over our fighter/bomber aircraft, free to develop our own version of the F22 or F35 and freed from US oversight of every mission through software that speaks to the US manufacturer. (Talk about the Nanny State? This is Big Brother in the cockpit.)
As Israel continues to buck the downwards trends of the West, we should take pleasure from the words of Caroline B Glick in this weekend’s Jerusalem Post*:
…most Israelis today also have come to realize that our national self-confidence is a vital component of our long-term survival.
But, you ask, if the US has to worry about a North Korean nuclear strike, does Israel not have to fear the possibility of the same from Iran? (Note that both threats were facilitated by the same inept US negotiating team, led by the hapless Wendy Sherman, whom Hillary Clinton has tipped as a future member of her team in the White House.) Well, here our vulnerability becomes the guarantor of our longevity for, whilst Kim may be able to bluff his way out of Mutual Assured Destruction, America being as large as it is, we have no such strategic depth. The zero-sum game that follows means that Iran knows that if we fry, they fry. (We have the technology and the matériel to give a life-time guarantee on that to Tehran.) Say what you like about ayatollahs that yearn for the return of the Twelfth Imam and the consequent apocalypse, I am content to quote Zionist Union MK, Amir Peretz, who according to the Jerusalem Post of August 14 last observed about the leader of Hezbollah in Lebanon:-
“While Nasrallah has hid in a bunker for the past 10 years, children in Kiryat Shmona have been playing at playgrounds and going to school without fear”
Israel may not yet have achieved a utopian status, but we seem to be closer to it than our detractors.
Have a great week. Shavuah tov.
* http://www.jpost.com/Opinion/Column-One-Mahmoud-Abbas-and-other-Soviet-ghosts-467303
© Howard David Epstein, September 2016
Coda:
As usual, I have borrowed from my recently-published book (see below) for the allusions to America and its disappointing leaders.
E-Book Kindle USA
Paperback – Amazon USA
https://www.createspace.com/6478702
E-Book Kindle UK
Paperback – Amazon UK
https://www.amazon.co.uk/Guns-Traumas-Exceptionalism-cultural-approach/dp/1536926922/ref=sr_1_2?s=books&ie=UTF8&qid=1471770473&sr=1-2&keywords=guns+traumas
