Orlov is one of our favorite essayists on Russia and all sorts of other things. He moved to the US as a child, and lives in the Boston area.
He is one of the better-known thinkers The New Yorker has dubbed ‘The Dystopians’ in an excellent 2009 profile, along with James Howard Kunstler, another regular contributor to RI (archive). These theorists believe that modern society is headed for a jarring and painful crack-up.
He is best known for his 2011 book comparing Soviet and American collapse (he thinks America’s will be worse). He is a prolific author on a wide array of subjects, and you can see his work by searching him on Amazon.
He has a large following on the web, and on Patreon, and we urge you to support him there, as Russia Insider does.
His current project is organizing the production of affordable house boats for living on. He lives on a boat himself.
If you haven’t discovered his work yet, please take a look at his archive of articles on RI. They are a real treasure, full of invaluable insight into both the US and Russia and how they are related.
For the past 500 years European nations—Portugal, the Netherlands, Spain, Britain, France and, briefly, Germany—were able to plunder much of the planet by projecting their naval power overseas. Since much of the world’s population lives along the coasts, and much of it trades over water, armed ships that arrived suddenly out of nowhere were able to put local populations at their mercy.
The armadas could plunder, impose tribute, punish the disobedient, and then use that plunder and tribute to build more ships, enlarging the scope of their naval empires. This allowed a small region with few natural resources and few native advantages beyond extreme orneriness and a wealth of communicable diseases to dominate the globe for half a millennium.
The ultimate inheritor of this naval imperial project is the United States, which, with the new addition of air power, and with its large aircraft carrier fleet and huge network of military bases throughout the planet, is supposedly able to impose Pax Americana on the entire world. Or, rather, was able to do so—during the brief period between the collapse of the USSR and the emergence of Russia and China as new global powers and their development of new anti-ship and antiaircraft technologies. But now this imperial project is at an end.
Prior to the Soviet collapse, the US military generally did not dare to directly threaten those countries to which the USSR had extended its protection. Nevertheless, by using its naval power to dominate the sea lanes that carried crude oil, and by insisting that oil be traded in US dollars, it was able to live beyond its means by issuing dollar-denominated debt instruments and forcing countries around the world to invest in them. It imported whatever it wanted using borrowed money while exporting inflation, expropriating the savings of people across the world. In the process, the US has accumulated absolutely stunning levels of national debt—beyond anything seen before in either absolute or relative terms. When this debt bomb finally explodes, it will spread economic devastation far beyond US borders. And it will explode, once the petrodollar wealth pump, imposed on the world through American naval and air superiority, stops working.
New missile technology has made a naval empire cheap to defeat. Previously, to fight a naval battle, one had to have ships that outmatched those of the enemy in their speed and artillery power. The Spanish Armada was sunk by the British armada. More recently, this meant that only those countries whose industrial might matched that of the United States could ever dream of opposing it militarily. But this has now changed: Russia’s new missiles can be launched from thousands of kilometers away, are unstoppable, and it takes just one to sink a destroyer and just two to sink an aircraft carrier. The American armada can now be sunk without having an armada of one’s own. The relative sizes of American and Russian economies or defense budgets are irrelevant: the Russians can build more hypersonic missiles much more quickly and cheaply than the Americans would be able to build more aircraft carriers.
Equally significant is the development of new Russian air defense capabilities: the S-300 and S-400 systems, which can essentially seal off a country’s airspace. Wherever these systems are deployed, such as in Syria, US forces are now forced to stay out of their range. With its naval and air superiority rapidly evaporating, all that the US can fall back on militarily is the use of large expeditionary forces—an option that is politically unpalatable and has proven to be ineffective in Iraq and Afghanistan. There is also the nuclear option, and while its nuclear arsenal is not likely to be neutralized any time soon, nuclear weapons are only useful as deterrents. Their special value is in preventing wars from escalating beyond a certain point, but that point lies beyond the elimination of their global naval and air dominance. Nuclear weapons are much worse than useless in augmenting one’s aggressive behavior against a nuclear-armed opponent; invariably, it would be a suicidal move. What the US now faces is essentially a financial problem of unrepayable debt and a failing wealth pump, and it should be a stunningly obvious point that setting off nuclear explosions anywhere in the world would not fix the problems of an empire that is going broke.
Events that signal vast, epochal changes in the world often appear minor when viewed in isolation. Julius Caesar’s crossing of the Rubicon was just one river crossing; Soviet and American troops meeting and fraternizing at the Elbe was, relatively speaking, a minor event—nowhere near the scale of the siege of Leningrad, the battle of Stalingrad or the fall of Berlin. Yet they signaled a tectonic shift in the historical landscape. And perhaps we have just witnessed something similar with the recent pathetically tiny Battle of East Gouta in Syria, where the US used a make-believe chemical weapons incident as a pretense to launch an equally make-believe attack on some airfields and buildings in Syria. The US foreign policy establishment wanted to show that it still matters and has a role to play, but what really happened was that US naval and air power were demonstrated to be almost entirely beside the point.
Of course, all of this is terrible news to the US military and foreign policy establishments, as well as to the many US Congressmen in whose districts military contractors operate or military bases are situated. Obviously, this is also bad news for the defense contractors, for personnel at the military bases, and for many others as well. It is also simply awful news economically, since defense spending is about the only effective means of economic stimulus of which the US government is politically capable. Obama’s “shovel-ready jobs,” if you recall, did nothing to forestall the dramatic slide in the labor participation rate, which is a euphemism for the inverse of the real unemployment rate. There is also the wonderful plan to throw lots of money at Elon Musk’s SpaceX (while continuing to buy vitally important rocket engines from the Russians—who are currently discussing blocking their export to the US in retaliation for more US sanctions). In short, take away the defense stimulus, and the US economy will make a loud popping sound followed by a gradually diminishing hissing noise.
Needless to say, all those involved will do their best to deny or hide for as long as possible the fact that the US foreign policy and defense establishments have now been neutralized. My prediction is that America’s naval and air empire will not fail because it will be defeated militarily, nor will it be dismantled once the news sinks in that it is useless; instead, it will be forced to curtail its operations due to lack of funds. There may still be a few loud bangs before it gives up, but mostly what we will hear is a whole lot of whimpering. That’s how the USSR went; that’s how the USA will go too.
Macron presses Biden for ‘clarifications’ over submarine snub
Macron was left furious by Australia’s decision last week to ditch a 2016 deal to buy diesel submarines from France in favour of nuclear-powered ones from the United States and Britain.
After a cabinet meeting, government spokesman Gabriel Attal made clear French anger had not abated with an unusually frank statement of Macron’s expectations from the scheduled conversation with 78-year-old Biden.
The exchange would be an opportunity to “clarify both the way in which this announcement was made and the way for an American re-engagement in its relationship with an ally,” Attal said.
Paris was particularly outraged that Australia negotiated with Washington and London in secret, which French Foreign Minister Jean-Yves Le Drian denounced as “treachery” and a “stab in the back”.
French officials were notified about the loss of the contract just hours before Biden unveiled the new AUKUS security and defence partnership between the three English-speaking countries.
Macron was expecting “clarifications about the American decision to keep a European ally outside of fundamental talks about cooperation in the Indo-Pacific,” Attal added, without giving the schedule time for the exchange.
“We expect our allies to acknowledge that the exchanges and consultations that should have taken place did not, and that this poses a question about confidence, which all of us need to draw conclusions about now.”
The submarine row has plunged Franco-US ties into what some analysts view as the most acute crisis since the US-led invasion of Iraq in 2003, which Paris opposed.
After four years of tumultuous relations with ex-president Donald Trump, the spat has also dashed hopes of a complete reset under Biden, who took office in January aiming to rebuild frazzled ties with Europe.
As the row drags on, observers and some of France’s European partners are wondering how and when the French leader will call an end to the face-off, which is playing out just seven months ahead of presidential elections.
British Prime Minister Johnson said it was “time for some of our dearest friends around the world to ‘prenez un grip’ (get a grip)” in comments in Washington that mixed French and English.
“‘Donnez-moi un break’ because this is fundamentally a great step forward for global security,” he told Sky News.
Danish Prime Minister Mette Frederiksen, whose country is staunchly pro-American, defended Biden as “very loyal” and warned against turning “challenges which will always exist between allies into something they should not be.”
Attal said that France and the US needed to begin a process “to create the conditions for confidence to be restored”.
As well as an acknowledgement of French interests in the Pacific region, the process should include “full recognition by our American allies of the need to boost European sovereignty as well as the importance of the growing commitment by the Europeans to their own defence and security.”
This latter point is a source of tension between Biden and Macron, who has pushed hard during his four-and-a-half years in office for Europeans to invest more in defence and pool resources in order to increase their joint military capabilities.
The US, and some EU members including Denmark and Baltic countries, see this as a potential challenge to NATO, the US-led transatlantic military alliance that has been the cornerstone of European defence since World War II.
French Defence Minister Florence Parly argued against the idea of France withdrawing from NATO command structures, which some politicians in France have suggested in the wake of the submarines snub.
“Is it worth slamming the door on NATO? I don’t think so,” she said, while adding that “political dialogue is non-existent in NATO.”
Australia’s decision to order nuclear-powered submarines was driven by concern about China’s commercial and military assertiveness in the Pacific region, where Biden is seeking to build an alliance of democratic states to help contain Beijing.
Paschal Donohoe plans bank levy extension but lower haul
Minister for Finance Paschal Donohoe will continue the Irish banking levy beyond its scheduled conclusion date at the end of this year, but plans to lower the targeted annual haul from the current €150 million as overseas lenders Ulster Bank and KBC Bank Ireland retreat from the market, according to sources.
Reducing the industry overall levy target will avoid the remaining three banks facing higher levy bills at a time when the Government is seeking to lower its stakes in the bailed-out lenders.
AIB, Bank of Ireland and Permanent TSB paid a combined €93 million levy in each of the last two years, according to their latest annual reports. A decision on the new targeted yield, currently linked to deposit interest retention tax (DIRT) collected by banks on customers’ savings, will be announced at the unveiling of Budget 2022 on October 12th.
Originally introduced in 2014 by then minister for finance Michael Noonan for three years to ensure banks made a “contribution” to a recovering economy after the sector’s multibillion-euro taxpayer bailout, the annual banking levy has since been extended to the end of 2021.
A further extension of the levy has largely been expected by the banks and industry analysts, as the sector has been able to use multibillion euro losses racked up during the financial crisis to reduce their tax bills. A spokesman for the Department of Finance declined to comment on the future status of the banking levy as planning for Budget 2022 continues.
AIB, Bank of Ireland and Permanent TSB (PTSB) alone have utilised almost €500 million of tax losses against their corporation tax bills between 2017 and 2019, according to Department of Finance figures.
Sources said that the Government will be keen not to land a levy increase on the three lenders at a time when it is currently selling down its stake in Bank of Ireland and plotting a course for the reduction of its positions in AIB and PTSB in time.
The Ireland Strategic Investment Fund (ISIF), which holds the Bank of Ireland stake on behalf of the Minister for Finance, sold 2 percentage points of holding in the market between July and August, reducing its interest to just below 12 per cent.
Meanwhile, it has been reported in recent days that the UK government is planning to lower an 8 per cent surcharge that it has applied to bank profits since the start of 2016. It comes as the general UK corporation tax is set to rise from 19 per cent to 25 per cent in 2023.
“The optics of reducing the surcharge might still be bad politically, but it would signal the partial rehabilitation for the nation’s banking sector,” said Eamonn Hughes, an analyst with Goodbody Stockbrokers, in a note to clients on Tuesday, adding that he continues to factor in a retention of the Irish banking levy in his financial estimates for banks over the medium term.
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