Back in the day when raiders were putting fear in the hearts of Corporate America, merger & acquisition pros were business media stars. One of the top shops back then, Lazard Frères, prided itself in its skills in abnormal psychology, aka managing CEOs. One of its most important bits of advice to them was danger of believing your own PR.

In corporate America, there’s a decent risk that fakery will get caught out by competitors, short sellers, whistleblowers, and just plain careful reading of audited financials. That said, Jack Welch kept reality at bay for a very very long time, to the detriment not only of GE but also his many imitators.

By contrast, in politics, reality avoidance is routinely the key to a long and successful-looking career, witness Eurocrats’ fondness for “kick the can” strategies. And that propensity is particularly dangerous when leadership groups have become both selfish and short-termist. There really was once upon a time some people who went into government service for the service part, and not for the revolving door and networking. There was also a time, before the rise of global elites, where the powerful had ties to particular physical communities and some took interest in their betterment. In other words, while there were plenty of self-promoting and mediocre people at the helm, there were often enough in the room who were concerned about long-term risks to put a check on the worst behavior.1

But now, the well-honed effectiveness of propaganda has encouraged politicians and their media amplifiers/allies to go hog wild with selling Big Lies. And the worst is there are no consequences for the perps. After the first systematic use of large-scale propaganda, by the Creel Committee during what was then called the Great War, was uncovered, the US public was aghast. In a comparatively short time, this multi-channel campaign turned American opinion from unconcerned to rabidly anti-German with fabricated atrocities, like German soldiers bayonetting babies. There was a lot of soul-searching, as well as rationalizations by the likes of Walter Lippmann of the need for experts to interpret not just technical information but matters of general interest for a citizenry inherently unable to perceive reality due to bias and incomplete information.

Not only has the reliance on tall tale-telling grown, but there has been perilous little self-reflection in the wake of abject fabrications like WMD in Iraq and Russiagate. Instead, it seems that Americans are all too eager to become pupils of the White Queen. From Lewis Carroll’s Through the Looking Glass:

“How old are you?” said the queen.

“I’m seven and a half exactly”

“You needn’t say “exactly” the queen remarked : “I can believe it without that. Now I’ll give you something to believe. I am just one hundred and one, five months and a day”

“I can’t believe that!” said Alice.

“Can’t you?” the Queen said in a pitying tone. “Try again: draw a long breath, and shut your eyes.”

Alice laughed. “There’s no use trying,” she said: “one can’t believe impossible things.”

“I daresay you haven’t had much practice,” said the Queen. “When I was your age, I always did it for half-an-hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.”

The wee problem with the war in Ukraine and the escalating US eye-poking of China is neither is going very well, to the degree that the propaganda started fizzling out very quickly in the Global South and is losing its potency in the West. It’s hard to keep up the pretense of a great inevitable Ukraine victory with Ukraine losing Bakhmut, after Zelensky made it the centerpiece of his Congressional love-fest last December. Oh, but Ukraine is still trying to deny it is lost, as they did for Mariupol and Soledar until well after the fact. Or how about Ukraine shooting 30 Patriot missiles in about two minutes, which is as much as 10% of total annual production for all countries, in an unsuccessful effort to stop a Kinzhal hypersonic missile?2 Or commander-in-chief General Zaluzhny, usually highly visible, being missing in action for weeks, and Ukraine legitimating rumors about him being critically injured in a Russian missile strike by presenting old footage of him as current?

Similarly, trying to bully countries that had no reason to take sides into aligning against Russia and then doubling down on coercion confirmed Putin’s messaging about colonial powers trying to reassert their historical, exploitative roles. This new cold war has seen many countries chose move to the allegedly “undemocratic” side of the Iron Curtain, much to the West’s impotent fury.

The US and NATO have needed to maintain an image of success with Ukraine because it quickly turned into a bizarrely public coalition exercise, with arguments among NATO members about who really ought to empty their stockpiles for the cause, and one suspects not so public discussions about Ukraine refugees. Even though the press in “collective West” countries has mainly been cheerleading the war, albeit with more and more admissions of late that the exercise has gone pear-shaped, there’s a growing sense in the US, and even reportedly in some parts of Europe like Germany, that enthusiasm on the man on the street level is waning.

Another problem is NATO is simply not fit for this purpose. It was designed for defense, with many nations designing their own very compatible weapons, which each requires their own logistics tail (why not better pork-sharing via common designs and divvying of the manufacturing pie, as the EU did successfully with Airbus?). Brian Berletic, Douglas Macgregor, and Scott Ritter have explained repeatedly why deliveries of disparate weapons systems, mainly new to Ukraine, is a prescription for yet more failure. Oh and to the extent NATO forces have seen combat, it’s been in small insurgent wars, and so not helpful in Ukraine.

The balkanized weapon systems are symptomatic of a lack of NATO cohesiveness at the level of institutional design, which is now being tested to destruction by this conflict. Article 5, often incorrectly presented as a “one for all and all for one” mutual defense pact. In fact, all Article 5 obligated member states to do is to taking action as it deems necessary. Each state gets to decide on its own if it wants to commit armed forces…or indeed, anything else.

Similarly, US officials may have told themselves that much of the world regarded China with suspicion due to its often-overheated rhetoric and hypersensitivity to slights. But these self-comforting beliefs about China’s position on the world stage got a big wake up call with China brokering a normalization of relations between Saudi Arabia and Iran, and then Syria. Now China is making more trouble by wandering into America’s back yard, as in Europe, and talking up its napkin-doodle Ukraine peace plan. That scheme will go nowhere but China’s campaign has the effect of identifying it trying to end conflicts (as contrasted with the US trying to keep them going) and intensifying already apparent splits among the alliance.

So the US efforts to pretend everything is going swimmingly are now looking a bit frayed. Not to overdo an analogy, but the US seems to be in a weird phase of the Kübler-Ross five stages of grief paradigm, which are denial, anger bargaining, depression, and acceptance. There’s still plenty of denial, witness the someday-gonna-arrive game-changing Great Ukrainian Counteroffensive, following many game-changing weapons deliveries like Bayraktars, Javelins, HIMARS and Leopard tanks, and other efforts at unduly upbeat messaging about generally terrible conditions on the ground. Zelensky has just given two self-sabotaging ire-filled lectures about how he’s entitled to more support and where the hell is it, to the Arab League and G-7.

But to me, the most intriguing is the weird bargaining, which very much like bargaining over death, is bargaining with yourself. For some time, since at least General Mark Milley’s quickly deflated trial balloon last November, there has been more and more talk from pundits and even sometimes from officials how Ukraine should negotiate with Russia, after some sort of retaking of ground so as to better Ukraine’s bargaining position.

Of course, the idea that Russia will do anything more than go through the motions of negotiating for appearances’ sake is delusional. As former Indian diplomat M. K. Bhadrakumar reminded readers in his latest post, Putin warned Ukraine and its backers last July, the longer the conflict lasted, “the harder it will be to negotiate with us.” That was before Merkel and Hollande bragged about their Minsk Accords duplicity, which has led Putin to make embittered statements about what a mistake it had been to try to cooperate.

Putin has a history of endeavoring not to repeat mistakes. Russia was already depicting the US as “not agreement capable” even before the Minsk disclosures. And even if there were a regime change in Washington, Putin has repeatedly seen presidents make commitments to him that they reneged on later. He (perhaps charitably) attributed that to a permanent bureaucracy really being in charge.3

The US is again negotiating with itself in approving having allies supply F-16s to Ukraine, then trying to claim this isn’t an escalation because they won’t be used against Russian territory, ignoring the Russian view that not just Crimea but also the four annexed oblasts are Russian territory. Russia’s tart response, per TASS:

Western countries continue down the path of escalation and Moscow will take their plans to send F-16 aircraft to Ukraine into account, Russian Deputy Foreign Minister Alexander Grushko told TASS on Saturday.

“We can see that Western countries continue to stick to an escalation scenario, which carries enormous risks for them. In any case, we will take it into account when making plans. We have all the necessary means to achieve our goals,” he said on the sidelines of the 31st Assembly of the Council for Foreign and Defense Policy, when asked to comment on the possible supplies of F-16 aircraft to Ukraine.

A new flavor of Western copium is the latest idea of a “frozen conflict” per a trial balloon in Politico:

U.S. officials are planning for the growing possibility that the Russia-Ukraine war will turn into a frozen conflict that lasts many years — perhaps decades — and joins the ranks of similar lengthy face-offs in the Korean peninsula, South Asia and beyond.

The options discussed within the Biden administration for a long-term “freeze” include where to set potential lines that Ukraine and Russia would agree not to cross, but which would not have to be official borders. The discussions — while provisional — have taken place across various U.S. agencies and in the White House.

Again, this is intellectual masturbation the US a little too obviously talking to itself. It’s become more and more clear from the Russian side that it must prosecute the war until Ukraine is decisively defeated, which means Russia dictates terms and either installs a puppet regime or somehow manages to tee off the Medvedev scenario of Poland, Hungary and Romania eating big bits of Western Ukraine, leaving only “Ukraine” as Greater Kiev, as in too small to serve as a platform for much of anything.

We have pointed out Russia could create a DMZ, which is not the same as agreeing to one with the West, by creating a very large de-electrified zone which only the Eastern European versions of preppers might inhabit. And now that the West has decided to deploy Storm Shadows, it would have to be at least 250 miles wide so as to keep Russian territory out of strike range.

On China, the US position is just as internally driven and therefore incoherent. As we and others have pointed out, the China hawks have been quietly duking it out with the Russia haters for a while. The implied compromise, that Russia would be dispatched quickly so the US could pivot to China, is not working out. China hardliner Charles Brown is expected to replace Mark Milley at the Joint Chiefs of Staff, but that may not be sufficient to shift the US focus decisively to China and allow for Ukraine to be quietly abandoned. Biden, Blinken and Nuland are heavily invested in the “get Putin” project and are likely to be incapable of abandoning it. And with the US $100 billion or so into this investment, some Congresscritters are likely to demand either results or an explanation.

The latest display on the China front was the decidedly China-hostile G-7 meeting. Admittedly, the official statement was in flabby NGO-speak and did start with a handwave about UN principles and sticking with Ukraine “for as long as it takes”. Even so, the anti-China barbs stood out. For instance:

2. We will champion international principles and shared values by:

…strongly opposing any unilateral attempts to change the peacefully established status of territories by force or coercion anywhere in the world and reaffirming that the acquisition of territory by force is prohibited….

51. We stand together as G7 partners on the following elements, which underpin our respective relations with China:

We stand prepared to build constructive and stable relations with China, recognizing the importance of engaging candidly with and expressing our concerns directly to China. We act in our national interest. It is necessary to cooperate with China, given its role in the international community and the size of its economy, on global challenges as well as areas of common interest.

We call on China to engage with us, including in international fora, on areas such as the climate and biodiversity crisis and the conservation of natural resources in the framework of the Paris and Kunming-Montreal Agreements, addressing vulnerable countries’ debt sustainability and financing needs, global health and macroeconomic stability.

Our policy approaches are not designed to harm China nor do we seek to thwart China’s economic progress and development. A growing China that plays by international rules would be of global interest. We are not decoupling or turning inwards. At the same time, we recognize that economic resilience requires de-risking and diversifying. We will take steps, individually and collectively, to invest in our own economic vibrancy. We will reduce excessive dependencies in our critical supply chains.

With a view to enabling sustainable economic relations with China, and strengthening the international trading system, we will push for a level playing field for our workers and companies. We will seek to address the challenges posed by China’s non-market policies and practices, which distort the global economy. We will counter malign practices, such as illegitimate technology transfer or data disclosure. We will foster resilience to economic coercion. We also recognize the necessity of protecting certain advanced technologies that could be used to threaten our national security without unduly limiting trade and investment.

There’s plenty more in Section 51 but you get the drift of the gist. There’s a lot to lambaste, but I found the “not seeking to harm China” and “not decoupling but de-risking” bits to be particularly rich.

The Financial Times’ interpretation of the G-7 statement, in what at the time was a lead story: G7 issues strongest condemnation of China as it intensifies response to Beijing

Yet somehow Biden thinks all of this nastiness will lead to improved relations, as if China were some sort of battered wife that would meekly accept abuse as better than neglect. From a new story in the pink paper, Joe Biden expects imminent ‘thaw’ in China relations:

Joe Biden has said he expects to see a “thaw” in US relations with Beijing, even as he concluded a G7 summit in Japan that made a concerted effort to counter military and economic security threats from China.

The US president said in a news conference at the end of the three-day summit that talks between the two countries had shut down after a “silly balloon” carrying spying equipment flew over North America in February, before being shot down by the US military.

Yes, the fact that the US and China are now talking is technically an improvement, but that’s not saying much. The “silly balloon” remark comes off as Biden trying to minimize and shift blame for the US hysterical reaction ont China, which is not going to improve matters. And the G-7 was insultingly acting as if it was the upholder of territorial integrity as the US is persistently promoting and funding separatism in Taiwan.

Confirm the notion that any improvement is marginal, the May 12 (as in pre G-7) press conference by China’s Foreign Ministry Spokesperson Wang Wenbin had Agence France-Press quizzing why an 8 hour meeting between CPC Central Committee and Director of the Office for Foreign Affairs Wang Yi and Jake Sullivan produced short readouts. The answer was terse and contained a nugget: “The two sides held candid, in-depth, substantive and constructive discussions on ways to …stabilize the relationship from deterioration.” That points to extremely low expectations on the China side.

The interview also included a detailed complaint about The PRC Is Not a Developing Country Act, passed by the US House, which instructs the Department of State to press the WTO and other international organizations to revoke China’s developing nation status. Wenbin cited key metrics by which China is still a developing nation and argued the US had no authority to seek changes like this.

But the answers were measured until one reporter asked about the expectation that the G-7, as indeed happened, would accuse China of engaging in economic coercion. From the official translation:

If any country should be criticized for economic coercion, it should be the United States. The US has been overstretching the concept of national security, abusing export control and taking discriminatory and unfair measures against foreign companies. This seriously violates the principles of market economy and fair competition.

According to media reports, US government sanctions designations soared by 933% between 2000 and 2021. The Trump administration alone imposed more than 3,900 sanctions, or three per day on average within four years. More than 9,400 sanctions designations had come into effect in the US by fiscal year 2021. The US has slapped unilateral economic sanctions on nearly 40 countries, affecting nearly half of the world’s population.

Not even G7 members have been spared from US economic coercion and bullying. Companies such as Toshiba from Japan, Siemens from Germany and Alstom from France, were all victims of US suppression. If the G7 Summit is to discuss response to economic coercion, perhaps it should first discuss what the US has done. As the G7 host, would Japan express some of those concerns to the US on behalf of the rest of the group who have been bullied by the US? Or at least speak a few words of the truth?

Instead of a perpetrator, China is a victim of US economic coercion. We have been firmly opposed to economic coercion by any country in the world and urge the G7 to embrace the trend of openness and inclusiveness in the world, stop forming exclusive blocs and not become complicit in any economic coercion.

Due to the length of this post, I’ll spare you more Chinese reactions, but the English language government house organ Global Times lays it on thick in G7 has descended into an ‘anti-China workshop’ and Manipulative G7 slammed for exclusiveness, against trend.

Bloomberg shows how this G-7 was less than a rousing success:

This sort of thing would normally be merely cringe-making, like catching a performance in Britain’s Got Talent where the performer energetically delivered a lousy act, and lacked the self-awareness to know how bad it was. But the stakes are high and we will have to live with the consequences.

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1 I am not saying the old system was wonderful. It brought us Vietnam and an undue fondness for regime change operations. But there was far less open corruption.

2 The UK press has maintained that the Patriots hit some Kinzhals, but even the Ukraine military has denied that. The initial reports that they did may be due to the fact that each Kinzhal shoots 6 dummies, per reader JW, shortly before impact. And yes, the 10% of global production is from Brian Berletic. Recent annual output is 300 missiles a year, with plans underway to increase that to 500 a year. So perhaps production is now above 300 missiles annually, but likely not that much more.

3 In the Oliver Stone interviews, apropos Bush. Putin may have made similar remarks els

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This entry was posted in China, Doomsday scenarios, Economic fundamentals, Europe, Free markets and their discontents, Globalization, Income disparity, Politics, Russia on by Yves Smith.