Sunday, 23 September 2018

Russian roulette

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Anthony Peters on the dangerous twists of Russia vs. Turkey… and odd market reactions.

If that wasn’t iconic television, what is? The pictures we saw of the Russian jet going down in flames over the horizon, followed by the clouds of smoke from it exploding on impact were a sight to behold and ones which we will see over and over again during the reviews of the year which will be popping up on the TV in the coming weeks.

Whether the 17 seconds during which the Russian jet is supposed to have been in Turkish airspace actually occurred or not is already being argued between Moscow and Ankara as is the Turkish claim that it warned the pilot 10 times that he at risk of encountering countermeasures, were he not to vacate the airspace in which he was flying.

What Russia was bombing is a moot point. The Russians claim they were after IS fighters, although the Turks believe more or less innocent Turkmen were the target. One way or the other, it is not hard to see a possible repeat of the Crimea conflict of 1853-1856.

Though the birthplace of Orthodox Christianity, Turkey is today a Muslim country – and probably more Muslim now under Recep Erdogan than the nation’s founder, Kemal Ataturk would have envisaged – which places it on the frontline where Islam meets Orthodox Christianity. Historically, the fault lines between Russian Orthodoxy and Islam run much deeper than do those between the latter and Roman Chrisitanity.

Turkey has been a cornerstone of NATO for many years which has also broadly helped to keep the peace between the Greeks and the Turks – Cyprus is a proxy side-show for historic Turkish-Greek enmity – and it has also long been flirting with the EU. The West sided with Turkey in the 19th Century in order to constrain the Russian bear and it will surely do the same again. We should ask ourselves, nevertheless, whether Turkey with its many split loyalties – think Armenia and think Kurdistan – might not be as much part of the problem as it is part of the solution.

The West loves good and bad, black and white, political certainties with clear demarcation lines. The Near Orient doesn’t and never has worked that way. My enemy’s enemy need by no means be my friend.

The West was just beginning to find common course with Russia and the first signs of some form negotiated cooperation were beginning to light up when the Turks decided, without as yet invoking unconditional NATO solidarity, to shoot down a Ruskie. As noted, is Turkey going to part of the problem or part of the solution? I can’t see the Russians going to war against the NATO backed Turks but as one chum of mine, a specialist on political economy, with whom I was on the phone when the headlined hit screens yesterday would say “The Neocons will love this!” The ideological undercurrents, especially the American ones, are still, in his view, very strong and not to be underestimated.

So markets traded down. Europe closed emphatically down but America forgot the Russian situation pretty quickly and rebounded sharply into the close even though they did only close up small. Was this part of the pre-Thanksgiving feel-good factor or was it a more fundamental belief that the downing of the jet is too small an event to derail the current quiet rapprochement between Moscow and Washington?

By lunchtime today, Wall Street will be all but deserted which will leave the rest of us to make up our own minds what we think of the world. European markets have a PhD in cowardice and I’d expect them to go into near hibernation until the Yanks come back in on Monday, by which time we’ll have the first flash estimates of how Black Friday retail sales looked. Russian jets? Who cares? Jokes abounded yesterday about Russia having Turkey for Thanksgiving. Rhetorically they will for sure but nothing significant beyond that is my guess.

George spins the hits

Today will be a highly political day in the UK with Chancellor George Osborne set to present his Comprehensive Spending Review (in other countries its termed a Five Year Plan) and his Autumn Statement to the House of Commons. The key objective is to bring the budget back into equilibrium before 2020 and away from the current 5% deficit/GDP ratio. Seeing as one can’t make an omelette without breaking eggs, whatever he announces is going hit some people harder than others.

Expect the usual House of Commons punch up followed by the customary TV and radio interviews with those who will lose out. Amongst the broad population which elected this government with a mandate to reduce the cost of the welfare state, the ire will be focused on the ring-fencing of the Overseas aid budget which many regard as superfluous when cash is so tight at home. What a clever political ruse this might just be as it keeps the flies off the bride.

We City folk will surely not be affected by the cuts to welfare but I repeat my view that we will not get away unscathed and that the treatment of pensions must be the obvious point of contact. Anyone care to bet against me?

To my American friends, I wish a happy Thanksgiving and, above all, safe travel. See you Monday.

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