Geopolitical Update : Middle East, Israel’s first religious PM, Brexit

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By Christian Takushi, Independent Macro Economist & Geopolitical Strategist – Zurich 11 July 2021 (delayed & truncated release to the public on 3 Aug 2021)

the geopolitical landscape has not been dominating the headline news in recent weeks, but it is time to give you a roundup of what is going on under the surface.  We continue to closely monitor the advance of the political-monetary reset in the West. The ever bigger systemic Financial Repression is moving from punishing savers and those that want to escape excessive taxation to threatening to tax global wealth and incomes retroactively and introducing citizen taxation. We shall report on the Total Reset separately.

Middle East heats up

The current heatwave across the Middle East has brought temperatures of 50 degrees Celsius at a time when mismanagement and corruption had led to the collapse of electricity networks across many countries in the region. In Iraq, Syria, Iran, Afghanistan and Lebanon millions of people are on survival mode due to the heat and the lack of power.  The desperation and the political discontent have reached such levels, that many governments have begun to deflect on old time enemies.  Almost everyone needs to pick up a fight with a foreign enemy.

The US retreats – Turkey, Iran & Taliban advance  

Armed to the teeth, the Middle East is literally heating up and reaching a boiling point .. just at a time when the US forces are leaving Afghanistan. And how they are leaving. In the Middle East the Americans are seen as leaving the battle field as a defeated nation. The Taliban is boldly claiming victory and demanding influence all across the Middle East.

I have always believed that sending ground troops to Iraq, Afghanistan and Syria was a strategic mistake. There can only be defeat or a pullout that feels like a defeat. It is in Syria that the USA begun to use ground troops for time-constrained specific tactical goals -pulling them out as soon as those goals were achieved. This helped reduce the human toll. At least Washington seems to have learnt a lesson – President Biden refused to send troops to Haiti last week. There are theatres around the world, where you cannot afford to go in with US ground troops.

The recent protracted, pre-announced and mis-managed US pullouts from Afghanistan, Iraq and Syria are a militarypolitical disaster. Leaving your bases and your equipment to Turkey, Iran and the Taliban nearly on their terms has only greatly emboldened the radical forces and offensive regimes across the Orient. I say it again: Orientals don’t think like Westerners – they “tick” differently. The West is likely to pay the price in the years to come.

There are surely many respectable views for and against, but I stick to my assessment that the US military intervention in the aforementioned countries should have been limited to time-constrained bombardments, tactical missile attacks and special operations (on the ground). Political  Washington has sacrificed the lives of many American service men and women by sticking too long to a permanent boots on the ground doctrine. Nevertheless, this analysis doesn’t take away from the respect due to all those that have served in the operation Enduring Freedom.  A hero is a hero regardless of the outcome of a war.

Although I believe America should avoid stationing US troops permanently in highly hostile theatres, we cannot negate that the war on terror with troops on the ground has kept the enemy busy at its home front for almost 20 years. Without operation Enduring Freedom, I believe, Western cities would have endured many more acts of terror over that time.

Israel’s first religious Prime Minister

Religion is the world’s most underestimated geopolitical factor. Those that don’t understand it, will be overrun in the coming years.

Very few observers in the West are paying attention to or fully comprehending what is happening in Israel. Liberal leaders in the West congratulated each other after Mr. Netanyahu was ousted from power – “this time we succeeded” was the cry they cheered. That indeed was the result of a major international and domestic effort. In Israel .. across the media, academics, government agencies and many political parties the ouster of Prime Minister Netanyahu was far more important than the question of who will succeed him. It is my assessment that many of the liberal leaders across the West and Israel itself that celebrated the demise of Mr. Netanyahu may come to regret the 2021 shakeup: Israel has shifted right.

Prime Minister Naftali Bennett, Netanyahu’s successor, is the first religious observant Jew to run the country since its re-birth in 1948. On the surface he is seen by Western experts and investors as a kind of familiar Israeli leader: he is a former commander of an elite military unit and a successful high tech entrepreneur.

But the world is about to have a moment of reckoning: Most Israeli prime ministers have so far been either atheists, liberal Socialists or political conservatives. They used the religious vote to win elections and stay in power. When they talked about settlements in the West Bank, they talked “politics”. Settlements were a negotiating chip of pragmatic Realpolitik. But religiously observant Jewish leaders like Mr. Bennett believe in God’s promises for Israel and they speak of resettling the heartland of their ancient homeland: Judea and Samaria. This is what the West calls the West Bank. Most of the great events we read in the bible took place in Judea and Samaria, reason why the religious far-right in Israel cannot settle for an unbiblical compromise or two state solution.

I believe Prime Minister Bennett is overall far more conservative and religious than Mr. Netanyahu – something Washington, Paris and Berlin are going to find out very soon. Should Iran attack Israel again using one of its proxies, I wouldn’t rule out that Prime Minister Bennett will order a massive retaliation or an attack against Iran itself. Mr. Bennett may bring an end to this decades-long cat & mouse game of limited attacks and limited retaliations. Chances are that Western leaders and journalists will soon wish Mr. Bennett were as politically versed and even-keeled as Mr. Netanyahu. Where politicians seek popularity at home and abroad, entrepreneurs and commanders seeks results.  Mr. Bennett is no typical politician, he entered politics only because of what he experienced in the battle fields of the 2nd Lebanon War: politicians’ prioritising politics rather than the lives of Israeli soldiers.

Prime Minister Bennett is likely to speak the only language that is understood and respected in the Orient: strength. But that is a language that Western capitals will abhor. The West cannot afford a war or major clash in the Middle East at the moment. Why? Western nations are highly vulnerable after artificially inflating their stock markets, bond markets and real estate markets. They are for the most part bankrupt, over-indebted beyond repair, printing money to finance deficits & big handouts and living way beyond their means. They are doing everything they taught developing nations never to do.

The worst possible external shock

After 20 years of seizing financial markets, key Western economies are now increasingly looking like over-regulated Central Command Economies boasting the biggest bubbles that have ever existed. This only works with policy makers controlling and manipulating markets and ever bigger parts of the economy. Western policy makers  already control short term interest rates, long term interest rates, bond prices, stock prices, real estate prices, market volatility (risk), the velocity of money, .. and increasingly aggregate demand and aggregate supply.

The downside? The West is highly vulnerable to a real external shock. The worst possible shock for our current Financial System? A serious conflict or war in the Middle East. Unlike the past, Washington will not be able to tell Israel when and how it should retaliate to an enemy attack. Jerusalem cannot trust Washington more than Berlin can rely on Washington to defend Germany in case of an attack. It is to some extent everyone for himself.

Watch Lebanon and Gaza

In 2005 the West pressed Israel to return the Gaza Strip to the Palestinians in exchange for peace. Investors should know that Mr. Bennett would have never believed that peace offer ..

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By Christian Takushi MA UZH, Independent Macro Economist & Geopolitical Strategist – Zurich 11 July 2021

Disclaimer: None of our comments should be interpreted or construed as an investment recommendation

A distinct broad approach to geopolitical research

(a) All nations & groups advance their geostrategic interests with all the means at their disposal

(b) A balance between Western linear-logical and Oriental circular-historical-religious thinking is crucial given the rise of Oriental powers

(c) As a geopolitical analyst with an economic mindset Takushi does research with little regard for political ideology and conspiracy theories

(d) Independent time series data aggregation & propriety risk models

(e) Takushi only releases a report when his analysis deviates from Consensus