Global Currents: Perception Is Not Reality
No. 8 - Nov 5, 2023
Plans and events are currently in motion that may change something fundamental in how we think about the world. This is a humbling and important concept for anyone trying to make sense of things to never forget.
Our own view is a very small slice of reality. Whatever you see in your corners of the internet or in your day-to-day life is vastly different from what I see. The people who internalize this and seek out their own blind spots will have a view of the world that is more complete and accurate while also not being totally surprised by whatever events happen next.
Articles Highlighted This Week:
UAW ends historic strike after reaching tentative deals with Big 3 automakers (CBS)
A Record Oil Gusher Infuses Tiny Guyana With Wealth and Worries (WSJ)
Nobody Believes in Our Victory Like I Do.’ Inside Volodymyr Zelensky’s Struggle to Keep Ukraine in the Fight (TIME)
China’s Male Leaders Signal to Women That Their Place Is in the Home (NYT)
White House: Saudi Arabia is still interested in pursuing mega-deal (Axios)
Romania Is at a Dangerous Tipping Point (ForeignPolicy)
Business, Finance, and the Economy:
UAW ends historic strike after reaching tentative deals with Big 3 automakers (CBS)
TLDR: After six weeks of striking, UAW won new contracts from all three automakers of Detroit.
The first big story I wrote about is coming to a close. This was a big win for the auto workers and has inspired workers all over the country to continue to seek big wage increases.
The UAW workers got similar deals from all three automakers: ~25% wage increases over 4.5 years, cost of living adjustments to salaries, speeding up the timeline for promotions, and increases in 401K contributions.
The historic contract did have costs though. Approximately 5000 union workers were fired from the Big3 as well as $488M in lost wages for the UAW workers who did strike. Lastly, it is estimated the walkouts cost $4.2B for the Big3, $2.78B for suppliers, and $1.86B for customers and dealers.
History is filled with examples of unintended consequences. If the historic victory comes at the expense of the competitiveness of the auto industry in the United States and Michigan in particular, Shawn Fain (The UAW President) will not be remembered as the winner he is today.
Energy and Materials:
A Record Oil Gusher Infuses Tiny Guyana With Wealth and Worries (WSJ)
TLDR: In Guyana, a small South American country, American multi-national oil companies have discovered ~11B barrels of oil off the Guyanese coast. This has led to a massive boom in the economy and government revenue.
Eleven billion barrels of oil puts Guyana, a country of 800K people, between Algeria and Mexico with the 17th largest amount of oil reserves. Exxon, Hess, and Chevron have all been leading the charge in working to build up production as well as invest in the local economy and government to make sure their business is not interrupted.
The main part of the rationale for Chevron acquiring Hess last month, as we talked about in last week's newsletter, was to secure the runway of oil supply that Hess has in part because of its share in this discovery.
Guyana is bordered by Venezuela, the country with the largest oil reserves in the world and was at one time the main focus for American energy companies in the region, Venezuela has used its navy to harass exploration ships in water it claims as its own. In fact, Venezuela claims half of Guyana as its own territory. The U.S. under Biden’s direction has been conducting a rapprochement strategy with Venezuela ever since the start of Russia’s invasion of Ukraine in February of 2022. The main rationale was to try to get Venezuela to pump more oil and also stem the flow of illegal immigrants passing through Venezuela with the U.S. as their final destination.
The Guyanese territorial dispute is something that can damage relations and lead to more disruptions of oil. It would make sense that the U.S. through the UN would pressure Venezuela to settle the dispute and return to commercial relations with the energy companies that helped it become the richest country in South America in the 1970s. If Madura does not take the carrots being offered, the U.S. does have a long history of intervening in Latin America in support of U.S. commercial interests. Right or wrong, the U.S. has decided that protecting American business interests (especially interests as important as oil production) is something worth military intervening in.
The geopolitics of energy has been a factor in American foreign policy for the last 100 years. Regardless of the negative rhetoric coming from the White House, the U.S. is and will continue to be the dominant power in global energy markets. Whether that is increasing our production at home or defending our companies abroad, this is the reality we all live in.
Military and Industry:
‘Nobody Believes in Our Victory Like I Do.’ Inside Volodymyr Zelensky’s Struggle to Keep Ukraine in the Fight (TIME)
TLDR: The West is losing sympathy towards the war in Ukraine. As problems on the battlefield and corruption mount, Zelensky is being tasked with larger issues to deal with. Zelensky refuses to acknowledge any end besides a complete victory for Ukraine.
The war in Ukraine continues to be by far the most consequential event going on in the world.
Here are some sad facts: 1. Over 100K people have died on both the Ukrainian and Russian sides since the start of the war. 2. Russia continues to hold roughly 20% of Ukraine’s pre-2014 territory. 3. Corruption remains an issue at the highest levels of Ukrainian leadership. 4. The support among Americans to continue to supply military aid has gone down to 41% compared to 65% in June of this year.
However, Ukrainian President Volodymyr Zelensky has refused to shift his stance on what the final outcome of the war must be. The following is a long quote from a few of his top aids,
But his convictions haven’t changed. Despite the recent setbacks on the battlefield, he does not intend to give up fighting or to sue for any kind of peace. On the contrary, his belief in Ukraine’s ultimate victory over Russia has hardened into a form that worries some of his advisers. It is immovable, verging on the messianic. “He deludes himself,” one of his closest aides tells me in frustration. “We’re out of options. We’re not winning. But try telling him that.”
Zelensky’s stubbornness, some of his aides say, has hurt their team’s efforts to come up with a new strategy, a new message. As they have debated the future of the war, one issue has remained taboo: the possibility of negotiating a peace deal with the Russians. Judging by recent surveys, most Ukrainians would reject such a move, especially if it entailed the loss of any occupied territory.
Zelensky remains dead set against even a temporary truce. “For us, it would mean leaving this wound open for future generations,” the President tells me. “Maybe it will calm some people down inside our country, and outside, at least those who want to wrap things up at any price. But for me, that’s a problem, because we are left with this explosive force. We only delay its detonation.”
Part of me respects the determination and steadfastness of Zelensky. That part of me is reminded of Churchill and his famous “never surrender” speech given in 1940 after the fall of France and before the Nazi failed invasion of the Soviet Union. It was when it felt like the odds were against the British and when, to some, it might have felt like a wise move to sow some sort of peace with Hitler. We know the end of the story and Churchill is immortalized in history for his leadership during this time.
Another part of me is reminded of other lessons learned during WW2. Mainly the folly of when a delusional leader tries to manage troop movements from HQ without any regard for the facts on the ground,
“We’re not moving forward,” says one of Zelensky’s close aides. Some front-line commanders, he continues, have begun refusing orders to advance, even when they came directly from the office of the President. “They just want to sit in the trenches and hold the line,” he says. “But we can’t win a war that way.”
At one point in early October, he said, the political leadership in Kyiv demanded an operation to “retake” the city of Horlivka, a strategic outpost in eastern Ukraine that the Russians have held and fiercely defended for nearly a decade. The answer came back in the form of a question: With what? “They don’t have the men or the weapons,” says the officer. “Where are the weapons? Where is the artillery? Where are the new recruits?”
Overall, the situation is far from favorable for either the Ukrainians or the Russians. I believe that continual military support for Ukraine is in the interest of the United States. Proxy wars are a cheap and powerful way to weaken adversaries (Just ask the Iranians in the Middle East.) However, we do need to make sure that we are not funneling resources into supporting a cause that may be impossible to achieve. The Ukrainians have the will to keep fighting but if the current mission, which is to take back all territory from pre-2014, leads to ruin someone needs to be able to reset the expectations. If it can not happen from the inside, it is the duty of the U.S. to set it from the outside. Otherwise, Ukrainians will continue to die and Americans will continue to lose support for a war that is going nowhere.
America and China:
China’s Male Leaders Signal to Women That Their Place Is in the Home (NYT)
TLDR: The CCP wants women to focus on the family and birthing children.
I am currently reading Special Providence by Walter Russel Mead and in it, he made the argument that the 21st century could be the century of the Woman. This reminded me of an idea I heard him make before in a podcast appearance that Feminism was the most successful -ism of the 20th century. For the last few months, I have been thinking about this idea and what it can/should mean for U.S. foreign policy.
When I read the article on the CCP's current position on the role of women it strengthened my belief that the U.S. should probably make it an explicit mission to promote Women’s rights abroad while not impeding their rise at home.
Here are some lines that stood out to me. The first comes from Xi Jinping’s speech at the Women’s Congress last week.
“We should actively foster a new type of marriage and childbearing culture,” he said in a speech, adding that it was the role of party officials to influence young people’s views on “love and marriage, fertility and family.”
The second is from Yaqiu Wang, the research director for Hong Kong, China and Taiwan at Freedom House.
“Women in China have been alarmed by the trend and have been fighting back over the years. Many women in China are empowered and united in their fight against the twin repressions in China: the authoritarian government and the patriarchal society.”
And lastly Minglu Chen, a senior lecturer at the University of Sydney who studies gender and politics in China.
“Women have always been viewed as an instrument of the state in one way or another, but now we have to think about China’s political economy. It benefits the party to emphasize women returning to the home, where they can care for children and for the elderly.”
Anyone who has been paying attention knows why the CCP wants women to forget about their own careers and independence to focus on the family. It is the reason why China’s problems are set to get a lot more serious as well as an example of the massive downsides of a centrally controlled system dictating what individuals should do. The slow-moving but primary issue facing the CCP is demographics and the falling of the Chinese birth rate.
I believe that if the U.S. seriously picks up the mantle of feminism it can win the hearts and minds of a major portion of the population in not only China but also the Islamic and developing world. Vast parts of the world that the U.S. wants to influence is tired of hearing about Democracy, but the empowerment of woman is something that most non-radicalized people can get behind.
The U.S. is nowhere close to perfect on this issue, but if we embrace and ride the wave of woman empowerment that is already going on (Another article I read this week is that women are starting to make up 50% of the MBA classes at many top business schools) it will help us continue to be on the right side of history. If we want our nation to continue to shape the direction of our common civilization, we will need to empower our best men and women to do it.
White House: Saudi Arabia is still interested in pursuing mega-deal (Axios)
TLDR: The White House claims that Saudi Arabia is still interested in pursuing a normalization agreement with Israel.
Khalid Bin Salman, the Saudi Defense Minister, met with Jake Sullivan, U.S. National Security Advisor, this week in DC for some high level talks. After the meetings the White House claimed the following.
"They further emphasized the importance of working towards a sustainable peace between Israelis and Palestinians, building on the work that was already underway between Saudi Arabia and the United States over recent months,"
The key to this is that Saudi Arabia wants to normalize relations, but can not afford to look weak on the Palestinian issue. This is good and makes sense for both parties. Saudi Arabia wants to partner with the most technologically advanced country in the region and further enmesh itself into the U.S. security blanket. Having a normalization process is politically hard to do while the shooting is going on, but they do not want lose the momentum they had built up.
My reading of the situation is that after Israel has sufficiently destroyed Hamas and is thinking about “what’s next for Gaza?” they will bring in the Saudi’s and other Arab powers to create a plan that cements a path for Palestinian development and overall Arab-Israeli peace for the long term. This would be in the best interest for all parties who are opposed to Iran and its extreme Islamic terror cells throughout the region.
Our Global Village:
Romania Is at a Dangerous Tipping Point (ForeignPolicy)
TLDR: Romanian politics is increasingly dysfunctional as the countries importance to Europe grows. The hope in the development of the gas industry in Romania as a counter to Russia is facing hurdles due to the influence of Russia in the energy industry in Romania.
This is a story that is a bit familiar to anyone who has been following Eastern European politics for the last few years. As economic and social pressure builds, right-wing politicians and parties begin to gain popularity. This has happened in Hungary, Slovakia, Poland, and seemingly now Romania.
The result of the Polish election last month was an important pushback against the growing influence of the right-wing and pushed politics closer to the center in that country. Romania has elections next year where the current leading party, the AUR, is more of a Russia-leaning party. So much so, that both Ukraine and Moldova have banned its leader from entering their countries.
This is important for two main reasons, the first is the strategic role Romania has played in support of Ukraine against the invasion of Russia.
Romania plays a major role in providing humanitarian aid and delivering military equipment to Ukraine, but most importantly, it is the linchpin ally in enabling grain to reach world markets. More than half of Ukrainian grain has been exported via Romania since Russia’s full-scale invasion began last February.
The second is related to the potential reserves and development of Romania’s gas industry.
This June, Austria-based multinational OMV and Romanian gas company Romgaz announced that they plan to invest up to 4 billion euros (about $4.26 billion) in developing natural gas fields in the Black Sea, a project that the companies believe could produce at least 10 billion cubic meters of natural gas per year. Infrastructure development is due to begin next year, and it is hoped that production will begin in 2027.
If next year the AUR wins, both the short-term and medium-term plans (from the perspective of the EU and U.S.) to counter Russia would become nearly unfeasible.
Thanks for reading. Please me know if I may have missed anything historic from the last week.