Indicting Putin, Visiting Putin
The War in Ukraine is redefining our global order at the speed of light
You may think that the warrant for Putin’s arrest by the International Criminal Court (ICC) last week may not have a lot of effect because, what are the chances Putin will ever set foot outside Russia and get arrested? Well you can ask Slobodan Milošević that question, he died in a prison cell in The Hague while on trial at the ICC. International justice does work, sometimes. But what is more important, regardless of whether Putin will ever show up in court, is that he is now branded by the international justice system, the ‘rules based world’ if you like, as one of the worst possible criminals. The list of crimes is long, this story (with at least a happy end) is illustrative of the Russian practice of child kidnappings or deportations. And that is only the tip of the iceberg.
This development now confers an entirely different status on those who keep supporting Putin, think of the many politicians and media types in Europe and the US who keep doing that for whatever reason. But it also raises some real concerns about those who will continue to visit and deal with him and this week that honour goes to no other than Xi Jinping. Xi’s visit and warm welcome in Moscow turned out to be a love fest between the two leaders, they both needed a thing or two from each other but the globally isolated war criminal needed it more than the man from Beijing. There are many things at play here.
Firstly, there is China’s increasingly cold war with the United States which involves of course the stand-off over Taiwan. The longer the US and its allies are occupied in Ukraine, the more of a distraction it is for them and the less resources and time they have to focus on China. Xi’s therefore has a direct interest in supporting Putin and keep the war in Ukraine going. His peace plan therefore is seen as just a token to the rest of the world and not to be taken too seriously, few expect that anything will come out of it. China having access to cheap Russian resources is another core motivator for Xi, and in return the Russians will need access to whatever they need to keep the war going. Note however that China so far has stopped from delivering state of the art weaponry, but who knows what is crossing the border, anything might be useful for the Russian side to keep the war in Ukraine going.
Xi is banking on a useful partner in Moscow, but also one that is not too strong so that China can be the dominant player in that relationship and reap the benefits on all fronts. Putin needs Xi more than anything and the latter is thus automatically the stronger player in the relationship as evidenced by the extremely warm welcome he got in Moscow this week. But whatever label we attach to the relationship between Moscow and Beijing, it is one that is rooted in breaking Washington’s hegemony when it comes to exercising global power. That process continues unabated and the war in Ukraine is now accelerating that, not just affecting American power, but also rapidly chipping away at the old rules based order that we once hoped would govern the world and end devastating armed conflicts and human rights abuses.
Banking Swiss Style
A short note on the ‘banking’ crisis which ensured another trusted name, Credit Suisse, is relegated to the history books. The Swiss central bank orchestrated a takeover by UBS (my former employer and resulting entity of the old Union Bank of Switzerland and Swiss Banking Corporation) which is the largest and only remaining Swiss bank with a global presence. Again it points to banks inability to manage their risks and even the trusted Swiss are dropping the ball here. Important to note that the contagion seems to be limited as stock markets recovered at the beginning of the week and today, but I will reiterate that the volatility in the markets is far from gone.
I am no longer convinced that the contagion is limited. A list of institutional investors that bought treasuries when interest rates were low would be illuminating. I am sure the short sellers are all over this. I expect Japan and China will need to bail out their banks (or are bailing out their banks) in the next few months, though they will likely be very quiet about it.